<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
May 8, 2000 (March 31, 2000)
------------------------------------------------------
Date of Report (Date of earliest event reported)
PHILIP SERVICES CORPORATION
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(Exact name of Registrant as specified in its charter)
Delaware 0-30417 98-0131394
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(State or other jurisdiction) (Commission File (IRS Employer
of incorporation) Number) Identification No.)
100 King Street West, P.O. Box 2440, LCD1, Hamilton, Ontario, Canada L8N 4J6
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(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (905) 521-1600
______________________________________________________________
(Former name or former address, if changed since last report.)
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ITEM 5. OTHER EVENTS
On Friday, April 7, 2000 Philip Services Corp., an Ontario Corporation
("PSC") and certain of its subsidiaries, including Philip Services Corporation,
a Delaware corporation ("Philip"), emerged from bankruptcy pursuant to a plan of
reorganization under Chapter 11 of the United States Bankruptcy Code. By virtue
of the consummation of the reorganization, Philip emerged as the successor
entity to PSC. The public parent is now Philip.
As of March 31, 2000, Philip entered into a credit agreement with various
of its lenders (the "Secured PIK/Term Agreement").
On the same date Philip also entered into the following agreements: An exit
loan agreement with certain of its lenders, with Foothill Capital Corporation
acting as Arranger and Administrative Agent (the "Exit Loan Agreement"); a
registration rights agreement between Philip and certain securities holders
pertaining to shares of common stock issued in connection with the bankruptcy
("New Common Stock Registration Rights Agreement"); a registration rights
agreement between Philip and certain securities holders pertaining to shares of
common stock issuable upon conversion of Philip's 3% convertible subordinated
notes due 2020 ("Unsecured PIK Notes Registration Rights Agreement"); a
registration rights agreement between Philip and certain securities holders
pertaining to shares of common stock issuable upon conversion of a portion of
the Secured PIK/Term Agreement ("Secured PIK Notes Registration Rights
Agreement"); and a shareholder rights agreement between Philip and American
Securities Transfer & Trust, Inc. ("Shareholder Rights Agreement").
Following the reorganization, Philip approved the Philip Services
Corporation Stock Option Plan (the "Stock Option Plan").
A copy of the Secured PIK/Term Agreement is attached hereto as Exhibit
99.1. A copy of the Exit Loan Agreement is attached hereto as Exhibit 99.2. A
copy of the New Common Stock Registration Rights Agreement is attached hereto as
Exhibit 99.3. A copy of the Unsecured PIK Notes Registration Rights Agreement is
attached hereto as Exhibit 99.4. A copy of the Secured PIK Notes Registration
Rights Agreement is attached hereto as Exhibit 99.5. A copy of the Shareholder
Rights Agreement is attached hereto as Exhibit 99.6. A copy of the Stock Option
Plan is attached hereto as Exhibit 99.7.
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<TABLE>
<CAPTION>
Exhibit
Number Description
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<S> <C>
99.1 Credit agreement, dated as of March 31, 2000, between Philip
and various of its lenders.
99.2 Loan agreement, dated as of March 31, 2000, between Philip and
certain of its lenders, with Foothill Capital Corporation
acting as Arranger and Administrative Agent.
99.3 Registration rights agreement, dated as of March 31, 2000,
between Philip and certain securities holders pertaining to
shares of common stock issued in connection with the
bankruptcy.
99.4 Registration rights agreement, dated as of March 31, 2000,
between Philip and certain securities holders pertaining to
shares of common stock issuable upon conversion of Philip's
3% convertible subordinated notes due 2020.
99.5 Registration rights agreement, dated as of March 31, 2000,
between Philip and certain securities holders pertaining to
shares of common stock issuable upon conversion of a portion
of the Secured PIK/Term Agreement.
99.6 Shareholder rights agreement, dated as of March 31, 2000,
between Philip and American Securities Transfer & Trust, Inc.
99.7 The Philip Stock Option Plan.
</TABLE>
3
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PHILIP SERVICES CORPORATION
By: /s/ Colin H. Soule
------------------
Colin H. Soule
Executive Vice President,
General Counsel and
Corporate Secretary
Date: May 8, 2000
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
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<S> <C>
99.1 Credit agreement, dated as of March 31, 2000, between Philip
and various of its lenders.
99.2 Loan agreement, dated as of March 31, 2000, between Philip and
certain of its lenders, with Foothill Capital Corporation
acting as Arranger and Administrative Agent.
99.3 Registration rights agreement, dated as of March 31, 2000,
between Philip and certain securities holders pertaining to
shares of common stock issued in connection with the
bankruptcy.
99.4 Registration rights agreement, dated as of March 31, 2000,
between Philip and certain securities holders pertaining to
shares of common stock issuable upon conversion of Philip's
3% convertible subordinated notes due 2020.
99.5 Registration rights agreement, dated as of March 31, 2000,
between Philip and certain securities holders pertaining to
shares of common stock issuable upon conversion of a portion
of the Secured PIK/Term Agreement.
99.6 Shareholder rights agreement, dated as of March 31, 2000,
between Philip and American Securities Transfer & Trust, Inc.
99.7 The Philip Stock Option Plan.
</TABLE>
5
<PAGE> 1
Exhibit 99.1
CREDIT AGREEMENT
(Secured PIK/Term)
among
PHILIP SERVICES CORPORATION,
as Borrower
Canadian Imperial Bank of Commerce,
as Administrative Agent
and
The Various Persons
from time to time parties to this Agreement,
as Lenders
$335,825,362.22
DATED AS OF MARCH 31, 2000
WHITE & CASE LLP
BLAKE, CASSELS & GRAYDON, LLP
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TABLE OF CONTENTS
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Section 1. Amount and Terms of Credit............................................................................2
1.01 Loans..............................................................................................2
1.02 Notes..............................................................................................2
1.03 Interest...........................................................................................3
1.04 Increased Costs, Illegality, etc...................................................................6
1.05 Change of Applicable Lending Office................................................................6
1.06 Replacement of Lenders.............................................................................6
1.07 Conversion Features of PIK Loans...................................................................7
Section 2. Fees; Prepayments; Payments..........................................................................15
2.01 Fees..............................................................................................15
2.02 Voluntary Prepayments.............................................................................15
2.03 Mandatory Prepayments.............................................................................17
2.04 PIK Loan Redemption Notice........................................................................23
2.05 Method and Place of Payment.......................................................................23
2.06 Net Payments......................................................................................23
Section 3. Conditions Precedent.................................................................................27
3.01 Conditions Precedent to Term Loans and PIK Loans..................................................27
Section 4. Representations, Warranties and Agreements...........................................................32
4.01 No Encumbrances...................................................................................32
4.02 Equipment.........................................................................................32
4.03 Location of Inventory and Equipment...............................................................33
4.04 Inventory Records.................................................................................33
4.05 Location of Chief Executive Office; FEIN..........................................................33
4.06 Due Organization and Qualification; Subsidiaries..................................................33
4.07 Due Authorization; No Conflict....................................................................34
4.08 Litigation........................................................................................35
4.09 No Material Adverse Change........................................................................35
4.10 Fraudulent Transfer...............................................................................35
4.11 Employee Benefits.................................................................................35
4.12 Environmental Condition...........................................................................35
4.13 Intellectual Property.............................................................................36
4.14 Leases............................................................................................36
4.15 DDAs..............................................................................................36
4.16 Owned Real Property and Material Leases...........................................................36
4.17 Complete Disclosure...............................................................................36
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(i)
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<TABLE>
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4.18 Indebtedness......................................................................................36
4.19 Project Accounts..................................................................................37
4.20 Directors' Compensation...........................................................................37
4.21 Rights Agreement..................................................................................37
Section 5. Affirmative Covenants................................................................................37
5.01 Accounting System.................................................................................37
5.02 Financial Statements, Reports, Certificates.......................................................37
5.03 Tax Returns.......................................................................................39
5.04 Certificates of Title.............................................................................39
5.05 Maintenance of Equipment..........................................................................39
5.06 Taxes.............................................................................................39
5.07 Insurance.........................................................................................40
5.08 Location of Inventory and Equipment...............................................................41
5.09 Employee Benefits.................................................................................41
5.10 Compliance with Laws..............................................................................42
5.11 Leases............................................................................................42
5.12 Projections.......................................................................................42
5.13 Corporate Existence, etc..........................................................................43
5.14 Disclosure Updates................................................................................43
5.15 Publication of Notice of the Effective Date of the Reorganization Plan............................43
5.16 PSC Common Stock..................................................................................43
5.17 Further Assurances................................................................................43
5.18 Right to Inspect..................................................................................44
5.19 Control Agreements................................................................................44
5.20 Payment of Prepetition Expenses...................................................................44
5.21 Existing Letters of Credit........................................................................44
5.22 Omitted Good Standing Certificates................................................................44
Section 6. Negative Covenants...................................................................................44
6.01 Indebtedness......................................................................................44
6.02 Liens.............................................................................................46
6.03 Restrictions on Fundamental Changes...............................................................46
6.04 Disposal of Assets................................................................................46
6.05 Change Name.......................................................................................46
6.06 Guarantee.........................................................................................47
6.07 Nature of Business................................................................................47
6.08 Prepayments and Amendments........................................................................47
6.09 Consignments......................................................................................48
6.10 Distributions.....................................................................................48
6.11 Accounting Methods................................................................................48
6.12 Investments.......................................................................................48
6.13 Transactions with Affiliates......................................................................48
6.14 Suspension........................................................................................48
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(ii)
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Page
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6.15 Directors' Compensation...........................................................................49
6.16 Change in Location of Chief Executive Office; Inventory and Equipment with Bailees................49
6.17 Financial Covenants...............................................................................49
6.18 Securities Accounts...............................................................................50
6.19 ERISA Concerns....................................................................................51
Section 7. Events of Default....................................................................................51
7.01 Payments..........................................................................................52
7.02 Covenants.........................................................................................52
7.03 Collateral........................................................................................52
7.04 Bankruptcy........................................................................................52
7.05 Lien..............................................................................................52
7.06 Judgments.........................................................................................53
7.07 Default Under Other Agreements....................................................................53
7.08 Payment of Indebtedness...........................................................................53
7.09 Representation....................................................................................53
7.10 Subsidiary Guaranty...............................................................................54
Section 8. Definitions..........................................................................................54
Section 9. The Administrative Agent.............................................................................87
9.01 Appointment.......................................................................................87
9.02 Nature of Duties of Administrative Agent..........................................................88
9.03 Lack of Reliance on Administrative Agent..........................................................88
9.04 Certain Rights of the Administrative Agent........................................................89
9.05 Reliance by Administrative Agent..................................................................89
9.06 Indemnification of Administrative Agent...........................................................89
9.07 The Administrative Agent in its Individual Capacity...............................................89
9.08 Holders of Notes..................................................................................90
9.09 Successor Administrative Agent....................................................................90
9.10 Actions with Respect to Defaults..................................................................90
9.11 Delivery of Information...........................................................................91
9.12 Collateral Agent to Hold Quebec Irrevocable Power of Attorney.....................................91
9.13 Deep Subordination Agreement......................................................................91
Section 10. Miscellaneous.......................................................................................92
10.01 Payment of Expenses, etc.........................................................................92
10.02 Survival.........................................................................................93
10.03 Notices..........................................................................................93
10.04 Benefit of Agreement.............................................................................93
10.05 No Waiver; Remedies Cumulative...................................................................95
10.06 Payments Pro Rata................................................................................95
10.07 Calculations; Computations.......................................................................96
</TABLE>
(iii)
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10.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JULY TRIAL...........................97
10.09 Counterparts.....................................................................................98
10.10 Headings Descriptive.............................................................................98
10.11 Amendment or Waiver; Release.....................................................................98
10.12 Domicile of Loans................................................................................99
10.13 Confidentiality.................................................................................100
10.14 Registry........................................................................................100
10.15 Limitation on Additional Amounts, etc...........................................................101
10.16 Currency of Payments............................................................................101
10.17 Right of Setoff.................................................................................102
</TABLE>
(iv)
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<TABLE>
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Exhibit A-1 Term Note
Exhibit A-2 PIK Note
Exhibit B Notice of Conversion of PIK Loan
Exhibit C Section 2.06(c)(ii) Certificate
Exhibit D Officer's Certificate
Exhibit E-1 Opinion of Skadden, Arps, Slate, Meagher & Flom (Illinois)
Exhibit E-2 Opinion of Stikeman, Elliott
Exhibit E-3 Opinion of Colin Soule, Esq.
Exhibit E-4 Local counsel opinions:
Kaufman & Rothfeder (Alabama)
Brobeck, Phleger & Harrison (California)
Otten, Johnson, Robinson, Neff & Ragonetti P.C. (Colorado)
Richard, Layton & Finger, PA (Delaware)
Paul, Hastings, Janofsky & Walker (Georgia)
Skadden Arps, Slate, Meagher & Flom (Illinois) (Illinois)
Andrews, Harrell, Mann, Chapman & Coyne (Indiana)
Wyatt, Tarrant & Combs (Kentucky)
Sher, Gump, Strauss, Hauer & Feld, LLP (Maryland)
Akin, Gump, Strauss, Hauer & Feld, LLP (Maryland)
Drummond, Woodsum, Plimpton & MacMahon (Maine)
Jaffe, Raitt, Heuer & Weiss (Michigan)
Bryan Cave (Missouri)
Dorsey & Whitney (Montana)
Lionel, Sawyer and Colins (Nevada)
Skadden Arps, Slate, Meagher & Flom (LLP) (New York)
Wilentz, Goldman & Spitzer (New Jersey)
Smith Helms Mulliss & Moore, LLP (North Carolina)
Vorys, Sater, Seymour & Pease (Ohio)
Crowe & Dunlevy (Oklahoma)
Obermayer, Rebmann, Maxwell & Hippel LLP (Pennsylvania)
Hickley, Allen & Snyder (Rhode Island)
Moore & Van Allen (South Carolina)
Patton Boggs (Texas)
Bass, Berry & Sims (Tennessee)
Stoel Rives LLP (Washington)
Spilman, Thomas, Battle & Klostermeyer (West Virginia)
Blake, Cassels & Graydon (British Columbia and Alberta)
Patterson, Palmer, Hunt & Murphy (Atlantic Provinces)
Exhibit F-1 US Confirmation Order
Exhibit F-2 Canadian Orders
Exhibit G-1 Security Agreement
Exhibit G-2 Copyright Security Agreement
Exhibit G-3 Patent Security Agreement
Exhibit G-4 Trademark Security Agreement
Exhibit G-5 Rolling Stock Security Agreement
Exhibit G-6 Canadian Security Agreement
Exhibit G-7 Guarantor Security Agreement
Exhibit G-8 Quebec Security Agreement; Hypothec
Exhibit H-1 US Subsidiary Guaranty
Exhibit H-2 Canadian Subsidiary Guaranty
Exhibit I Stock Pledge Agreement
Exhibit J-1 UK Compliance Certificate (CFO of Borrower)
Exhibit J-2 UK Compliance Certificate (CFO of Philip Services (Europe)
Limited)
Exhibit K Assignment and Assumption Agreement
Exhibit L Compliance Certificate
Exhibit M Rights Agreement
Exhibit N Confidentiality Agreement
Exhibit O Subordination and Intercreditor Agreement
Exhibit P Tax Escrow Agreement
</TABLE>
(v)
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<TABLE>
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SCHEDULE I Debt to Term Lenders on the Closing Date
SCHEDULE II Debt to PIK Lenders on the Closing Date
SCHEDULE III Permitted Existing Indebtedness
SCHEDULE IV Pro forma Balance Sheet
SCHEDULE V Insurance
SCHEDULE VI Equipment and Inventory Location
SCHEDULE VII Chief Executive Offices; FEIN
SCHEDULE VIII Capitalization; Subsidiaries
SCHEDULE IX Litigation
SCHEDULE X ERISA
SCHEDULE XI Violations of Environmental Laws
SCHEDULE XII Designation of Disposal Sites
SCHEDULE XIII Notices of Environmental Liens
SCHEDULE XIV Environmental Citations
SCHEDULE XV Intellectual Property
SCHEDULE XVI Demand Deposit Accounts
SCHEDULE XVII Real Property
SCHEDULE XVIII Owned Real Property and Material Leases
SCHEDULE XIX Project Accounts
SCHEDULE XX Directors' Compensation
SCHEDULE XXI Permitted Purchase Money Indebtedness
SCHEDULE XXII Guaranties
SCHEDULE XXIII Affiliate Transactions
SCHEDULE XXIV Approved Fixed Obligation Arrangements
SCHEDULE XXV Permitted Dispositions
SCHEDULE XXVI Permitted Investments
SCHEDULE XXVII Permitted Liens
SCHEDULE XXVIII Pre-Closing Merger Subsidiaries
SCHEDULE XXIX Pre-Closing Restructuring Transactions
SCHEDULE XXX Existing Letters of Credit
</TABLE>
(vi)
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CREDIT AGREEMENT, dated as of March 31, 2000 among PHILIP SERVICES
CORPORATION, a corporation existing under the laws of Delaware (the "Borrower"),
Canadian Imperial Bank of Commerce, as administrative agent (in such capacity,
the "Administrative Agent") for the Term Lenders and the PIK Lenders
(collectively, the "Lenders").
W I T N E S S E T H:
WHEREAS, Philip Services Corp. ("PSC"), the Borrower, formerly known
as Philip Services (Delaware), Inc. ("PSDI"), Canadian Imperial Bank of Commerce
("CIBC"), as administrative agent, CIBC and Bankers Trust Company ("BTCo"), as
co-arrangers, BTCo, as syndication agent, and the various Persons parties to
such agreement as lenders (the "Pre-Petition Lenders") are parties to a credit
agreement dated as of August 11, 1997, as amended by amending agreements dated
as of October 31, 1997, February 19, 1998, June 24, 1998, October 20, 1998 and
December 4, 1998 (collectively, the "1997 Credit Agreement") pursuant to which
certain credit facilities as more particularly described in such agreement were
established in favor of each of the Borrower and PSC;
WHEREAS, on June 25, 1999, PSC and certain of its Canadian
Subsidiaries commenced voluntary pre-arranged insolvency proceedings under the
Companies' Creditors Arrangement Act ("CCAA" and the proceedings commenced
thereunder, the "Canadian Cases") and on June 25, 1999, the Borrower and PSC and
certain of their US Subsidiaries (collectively, the "US Debtors") filed
voluntary petitions with the Clerk of the US Bankruptcy Court of the District of
Delaware and initiated pre-arranged insolvency proceedings under Chapter 11 of
the US Bankruptcy Code (the "US Cases", and together with the Canadian Cases,
the "Bankruptcy Cases");
WHEREAS, PSC, the Borrower, BTCo, as DIP Agent, CIBC and BTCo as DIP
co-arrangers and the various Persons parties to such agreement as lenders (the
"DIP Lenders") are parties to a credit agreement dated as of June 25, 1999 (the
"DIP Credit Agreement") pursuant to which certain credit facilities as more
particularly described in such agreement were established in favor of each of
the Borrower and PSC;
WHEREAS, on November 26, 1999, the Canadian Court approved and
sanctioned the Canadian Reorganization Plan;
WHEREAS, on November 30, 1999 the US Bankruptcy Court confirmed the
Reorganization Plan and entered the US Confirmation Order;
WHEREAS, the Reorganization Plan provides for the restructuring of a
portion of the indebtedness remaining outstanding under the 1997 Credit
Agreement and such indebtedness will be restructured according to the terms of
this Agreement;
WHEREAS, the obligations of the Borrower and the US Subsidiary
Guarantors under the 1997 Credit Agreement have been discharged and replaced by
their obligations under the Reorganization Plan;
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WHEREAS, the Pre-Petition Lenders shall retain their claims against
PSC and the other Canadian Debtors and security interests in assets of PSC and
the other Canadian Debtors retained and not transferred in connection with the
Canadian Transactions and such claims shall continue to be governed by the 1997
Credit Agreement;
WHEREAS, the DIP Credit Agreement will terminate upon the date hereof.
NOW, THEREFORE, IT IS AGREED:
Section 1. Amount and Terms of Credit.
1.01 Loans. (a) Term Loans. The Borrower acknowledges and agrees that,
as of the Closing Date and after giving effect to the Reorganization Plan, the
Borrower shall be indebted to each Term Lender and subject to and upon the terms
and conditions set forth herein, each such Term Lender shall be deemed to have
made, on and as of the Closing Date, a third lien secured term loan or loans to
the Borrower (each a "Term Loan" and collectively the "Term Loans") in the
amounts set forth on Schedule I, which Term Loans shall be equal in the
aggregate to the Total Term Loan Amount.
(b) PIK Loans. The Borrower acknowledges and agrees that, as of the
Closing Date and after giving effect to the Reorganization Plan, the Borrower
shall be indebted to each PIK Lender and subject to and upon the terms and
conditions set forth herein, each such PIK Lender shall be deemed to have made,
on and as of the Closing Date, a third lien secured accreting convertible loan
to the Borrower (each a "PIK Loan" and collectively the "PIK Loans") in the
amounts set forth on Schedule II which PIK Loans shall be equal, in the
aggregate, to the Total PIK Loan Amount.
1.02 Notes. (a) Term Notes. (i) The Borrower's obligation to pay the
principal of, and interest on, all Term Loans owed to each Term Lender shall be
evidenced by a promissory note duly executed and delivered to such Term Lender
by the Borrower substantially in the form of Exhibit A-1 hereto (each a "Term
Note" and collectively the "Term Notes").
(ii) Each Term Note issued to each Term Lender shall (i) be payable to
the order of such Term Lender or its registered assigns and be dated the Closing
Date, (ii) be in a stated Principal Amount equal to the amount set forth on
Schedule I for the corresponding Term Lender and be payable in the outstanding
Principal Amount of the Term Loans evidenced thereby from time to time, (iii)
mature on the Term Loan Maturity Date, (iv) bear interest as provided in Section
1.03 and (v) be entitled to the benefits of this Agreement and all other Loan
Documents.
(iii) Each Term Lender will note on its internal records the amount of
each Term Loan made by it and each payment in respect thereof and will, prior to
any transfer of any of its Term Notes, endorse on the reverse side thereof the
outstanding principal amount of Term Loans evidenced thereby. Failure to make
any such notation or any error in any such notation or endorsement shall not
affect the Borrower's obligations in respect of such Term Loans.
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(b) PIK Notes. (i) The Borrower's obligation to pay the principal of,
and interest on, all PIK Loans owed to each PIK Lender shall be evidenced by a
senior secured accreting convertible note duly executed and delivered to such
PIK Lender by the Borrower substantially in the form of Exhibit A-2 hereto (each
a "PIK Note" and collectively the "PIK Notes").
(ii) Each PIK Note issued to each PIK Lender shall (i) be payable to
the order of such PIK Lender or its registered assigns and be dated the Closing
Date, (ii) be in a stated Principal Amount equal to the amount set forth on
Schedule II for the corresponding PIK Lender and be payable in the outstanding
Principal Amount of the PIK Loans evidenced thereby from time to time, (iii)
mature on the PIK Loan Maturity Date, (iv) bear interest as provided in Section
1.03 and (v) be entitled to the benefits of this Agreement and all other Loan
Documents.
(iii) Each PIK Lender will note on its internal records the amount of
each PIK Loan made by it and each payment in respect thereof and will, prior to
any transfer of any of its PIK Notes, endorse on the reverse side thereof the
outstanding Principal Amount of PIK Loans evidenced thereby. Failure to make any
such notation or any error in any such notation or endorsement shall not affect
the Borrower's obligations in respect of such PIK Loans.
1.03 Interest. (1) Term Loans. (a) Each Term Loan shall bear interest
from and including the Closing Date to but not including the date on which all
amounts owing under such Term Loan have been paid in full on the unpaid
Principal Amount of, and on all unpaid Deferred Interest Amounts under, such
Term Loan payable in Dollars and calculated (but not compounded) daily at the
rate of 9% per annum expressed on the basis of a year of 360 days and the actual
number of days elapsed.
(b) Interest on the Term Loans shall be payable as follows:
(x) During the one year period from and including the Closing
Date to, but not including, the first anniversary of the Closing Date
(the "First Year Partial Interest Deferral Period"):
(i) accrued and unpaid interest on the Term Loans (including
without duplication, all accrued and unpaid interest on the
outstanding Principal Amount from time to time of, all unpaid
Deferred Interest Amounts under, and all accrued and unpaid
interest on Deferred Interest Amounts from time to time under,
each Term Loan) shall be due and payable in arrears on each
Interest Payment Date which occurs during the First Year Partial
Interest Deferral Period to a maximum amount payable on each such
Interest Payment Date equal to the lesser of (x) the accrued and
unpaid interest on such date and (y) $20,000,000 less the
aggregate amount of interest paid on the Term Loans on each
preceding Interest Payment Date during the First Year Partial
Interest Deferral Period pursuant to the provisions of this
clause; and
(ii) the balance of all such interest (including all accrued
and unpaid interest on the outstanding Principal Amount from time
to time of, all unpaid
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Deferred Interest Amounts under, and all accrued and unpaid
interest on Deferred Interest Amounts from time to time under,
each Term Loan) which has accrued to any Interest Payment Date
which occurs during the First Year Partial Interest Deferral
Period and is not payable on such date pursuant to the provisions
of clause 1.03(1)(b)(x)(i) (the "Deferred Interest Amount") shall
remain outstanding until such interest becomes due and payable
under paragraph 1.03(1)(b)(y) or paragraph 1.03(1)(b)(z), as
applicable, and shall bear interest at the rate specified in, and
in accordance with, the provisions of subsection 1.03(1)(a) from
and including such Interest Payment Date until paid in full;
(y) From and after the first day following the end of the
First Year Partial Interest Deferral Period, accrued and unpaid
interest on the Term Loans (including without duplication all
accrued and unpaid interest on the outstanding Principal Amount
from time to time of, all unpaid Deferred Interest Amounts under,
and all accrued and unpaid interest on Deferred Interest Amounts
from time to time under, each Term Loan) shall be due and payable
in arrears on each Interest Payment Date occurring on or after
such date; and
(z) Accrued and unpaid interest on the Term Loans (including
without duplication all accrued and unpaid interest on the
outstanding Principal Amount from time to time of, all unpaid
Deferred Interest Amounts under, and all accrued and unpaid
interest on Deferred Interest Amounts from time to time under,
each Term Loan) shall also be due and payable:
(i) at the time of any redemption and prepayment of any
Principal Amounts or Deferred Interest Amounts owing under
such Term Loans on the amounts so redeemed or prepaid as
provided for in Section 2.02(b);
(ii) at the times and in the amounts provided for in
Sections 2.03(A)(b) and 2.03(A)(c); and
(iii) on the Term Loan Maturity Date.
(2) PIK Loans. (a) Each PIK Loan shall bear interest from and
including the Closing Date to but not including the date on which all amounts
owing under such PIK Loans have been paid in full (or in the case of interest on
any Principal Amount, the date on which such Principal Amount is converted into
PSC Common Stock) on the unpaid Principal Amount of, and on all unpaid Accreted
Interest Amounts under, such Loans payable in Dollars and calculated (but not
compounded) daily at the rate of 10% per annum expressed on the basis of a year
of 360 days and the actual number of days elapsed.
(b) Accrued and unpaid interest on each PIK Loan (including, accrued
and unpaid interest on the outstanding Principal Amount from time to time of,
and accrued and unpaid interest on all unpaid Accreted Interest Amounts from
time to time under, such PIK Loan) shall be calculated on each Interest Payment
Date (for each such PIK Loan on each such Interest Payment Date, the "Accreted
Interest") and the Accreted Interest for such PIK Loan on such
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Interest Payment Date, to the extent such Accreted Interest is not paid in
accordance with the terms of Section 1.03(2)(c), shall be added on such date to
all then unpaid Accreted Interest for such PIK Loan accreted on all previous
Interest Payment Dates (such aggregate amount at any time for such PIK Loan
being the "Accreted Interest Amount" at such time) and all such Accreted
Interest Amounts for all PIK Loans shall bear interest at the rate specified in,
and in accordance with the provisions of Section 1.03(2)(a) from and including
each such Interest Payment Date until paid in full. All amounts of interest
calculated on each Interest Payment Date shall no longer be deemed to be accrued
and unpaid interest on the outstanding Principal Amount, but shall be considered
unpaid Accreted Interest until such Accreted Interest shall be paid.
(c) Accrued and unpaid interest on the PIK Loans (including without
duplication, all accrued and unpaid interest on the outstanding Principal Amount
from time to time of, all unpaid Accreted Interest Amounts under, and all
accrued and unpaid interest on all unpaid Accreted Interest Amounts from time to
time under, each PIK Loan) shall also be due and payable:
(x) at the time of any redemption and prepayment of any Principal
Amounts or Accreted Interest Amounts owing under such PIK Loans on the amounts
so redeemed or prepaid as provided for in Section 2.02(a);
(y) at the times and in the amounts provided for in subsections
2.03(A)(b) and 2.03(A)(c); and
(z) on the PIK Loan Maturity Date.
(3) Default Interest. At any time that a default in the payment of
principal of, or interest on, any Loan has occurred and is continuing, to the
extent permitted by law, principal and interest in respect of each such Loan
shall bear interest at a rate per annum which shall be 2% in excess of the rate
of interest otherwise applicable to such Loan. Interest which accrues under this
Section 1.03(3) shall be payable on demand.
(4) Cash Flow Difference Amount. On the applicable Cash Flow Payment
Date with respect to which (x) the Notional Cash Flow Difference Amount, or (y)
the Deferred Prepayment Amount, is calculated, interest shall accrue with
respect to the Notional Cash Flow Difference Amount and the Deferred Prepayment
Amount at the rate of 9% per annum and shall (I) be payable without duplication
to each Term Lender on a pro rata basis according to the respective percentage
of the Term Loans held by each such Term Lender, if any Term Loans should then
be outstanding or (II) be payable without duplication to each PIK Lender on a
pro rata basis according to the respective percentage of PIK Loans held by each
such PIK Lender, if no Term Loans should then be outstanding, and such interest
shall be payable in addition to the interest otherwise applicable to any
outstanding Loans pursuant to this Section 1.03, expressed on the basis of a
year of 360 days and the actual number of days elapsed. Interest which accrues
under this Section 1.03(4), (x) on the Notional Cash Flow Difference Amount and
(y) on the Deferred Prepayment Amount, shall be payable as provided in Section
2.03 (A)(c)(vi).
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1.04 Increased Costs, Illegality, etc. If at any time after the date
of this Agreement any Lender determines that the introduction of or any change
in any applicable law or governmental rule, regulation, order, guideline,
directive or request (whether or not having the force of law) concerning capital
adequacy, or any change in interpretation or administration thereof by any
Governmental Authority (including any central bank, Superintendent of Financial
Institutions or other comparable authority or agency) will have the effect of
increasing the amount of capital required or expected to be maintained by such
Lender or any corporation controlling such Lender based on the existence of such
Lender's outstanding Loans hereunder or its obligations hereunder, then the
Borrower shall, subject to the provisions of Section 10.15 (to the extent
applicable), pay to such Lender, as applicable upon its written demand therefor,
such additional amounts as shall be required to compensate such Lender or such
other corporation for the increased cost to such Lender or such other
corporation or the reduction in the rate of return to such Lender or such other
corporation as a result of such increase or reduction of capital as the case may
be. In determining such additional amounts, each Lender will act reasonably and
in good faith and will use averaging and attribution methods which are
reasonable, provided that such Lender's reasonable good faith determination of
compensation owing under this Section 1.04 shall, absent manifest error, be
final and conclusive and binding on all the parties hereto. Each Lender, upon
determining that any additional amounts will be payable pursuant to this Section
1.04, will give prompt written notice thereof to the Borrower, which notice
shall show the basis for calculation of such additional amounts.
1.05 Change of Applicable Lending Office. Each Lender agrees that,
upon the occurrence of any event giving rise to the operation of Section 1.04 or
2.06 (b) (except with respect to Section 2.06(b), with respect an Original
Canadian Lender), such Lender, will, if requested by the Borrower, use
reasonable efforts (subject to overall policy considerations of such Lender) to
designate another lending office for any Loans affected by such event, provided
that such designation is made on such terms that such Lender and its applicable
lending office suffer no economic, legal or regulatory disadvantage, with the
object of avoiding the consequence of the event giving rise to the operation of
any such Section. Nothing in this Section 1.05 shall affect or postpone any of
the obligations of the Borrower or the rights of any Lender provided in Sections
1.04 and 2.06, as applicable.
1.06 Replacement of Lenders. Upon the occurrence of any event giving
rise to the operation of Section 1.04 or 2.06(b) with respect to any Lender
which results in such Lender charging to the Borrower increased costs in excess
of those being generally charged by the other Lenders or as provided in Section
10.11(b), in the case of certain refusals by a Lender to consent to certain
proposed changes, waivers, discharges or terminations with respect to this
Agreement which have been approved by the Required Lenders, the Borrower shall
have the right, if no Default or Event of Default will exist immediately after
giving effect to the respective replacement, to replace such Lender (the
"Replaced Lender") with one or more other Eligible Transferee or Transferees
(collectively, the "Replacement Lender") reasonably acceptable to the
Administrative Agent, provided that (i) at the time of any replacement pursuant
to this Section 1.06, the Replacement Lender shall enter into one or more
Assignment and Assumption Agreements pursuant to Section 10.04(b) (and with all
fees payable pursuant to said Section 10.04(b) to be paid at such time) pursuant
to which the Replacement Lender shall acquire all of
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the outstanding Loans (including all Deferred Interest Amounts and Accreted
Interest Amounts) of the Replaced Lender and, in connection therewith, shall pay
to the Replaced Lender in respect thereof an amount equal to the sum of an
amount equal to the principal of, and all accrued interest on, all outstanding
Loans of the Replaced Lender and (ii) all obligations of the Borrower owing to
the Replaced Lender (other than those specifically described in clause (i) above
in respect of which the assignment purchase price has been, or is concurrently
being, paid) shall be paid in full to such Replaced Lender concurrently with
such replacement. Upon the execution of the respective Assignment and Assumption
Agreements, the payment of amounts referred to in clauses (i) and (ii) above
and, if so requested by the Replacement Lender, delivery to the Replacement
Lender of the appropriate Note executed by the Borrower, the Replacement Lender
shall become a Lender hereunder and the Replaced Lender shall cease to
constitute a Lender hereunder, except with respect to indemnification provisions
under this Agreement (including, without limitation, Sections 1.03, 1.04, 2.06,
10.01 and 10.06), which shall survive as to such Replaced Lender.
1.07 Conversion Features of PIK Loans. (a) Conversion Privilege and
Conversion Price. (i) Subject to and upon compliance with the provisions of this
Section 1.07, each PIK Lender shall have the right, at such PIK Lender's option,
at any time prior to the earlier of 4:00 p.m. on the Business Day immediately
preceding (A) the PIK Loan Maturity Date, and (B) with respect to any portion of
such PIK Lender's PIK Loan called for redemption, subject to Section 1.07(b)(i),
4:00 p.m. (New York time) on the Business Day immediately preceding the date of
such redemption for such portion of such PIK Loan, to convert the then
outstanding Principal Amount of such PIK Loan or any portion (which is $400,000
or an amount in excess thereof which is an integral multiple of $1,000, or if
lesser the entire unpaid Principal Amount of such Loan) of the Principal Amount
thereof into fully paid and non-assessable PSC Common Stock at the Conversion
Price then in effect. Each PIK Lender that has exercised its conversion
privilege with respect to a portion of its PIK Loan, shall receive a new PIK
Note duly executed and delivered by the Borrower to such PIK Lender evidencing
the portion of the Principal Amount of such PIK Lender's PIK Loans that was not
converted into PSC Common Stock as provided in this Section 1.07.
(ii) The initial Conversion Price at which the Principal Amount of PIK
Loans shall be convertible into PSC Common Stock shall be $11.72 per share of
PSC Common Stock, which is a rate of 85.3 shares of PSC Common Stock for each
$1,000 Principal Amount of PIK Loans.
(b) Conversion Privilege. (i) In order to exercise the conversion
privilege, a PIK Lender shall, within the time specified in Section 1.07(a),
deliver to the Borrower and the Administrative Agent a written notice (which
shall be irrevocable) in the form of the "Notice of Conversion of PIK Loans" set
out in Exhibit B, duly signed by such PIK Lender or its executors,
administrators or other legal representatives or its or their attorney duly
appointed by an instrument in writing in form and execution satisfactory to the
Borrower and the Administrative Agent, stating:
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<PAGE> 15
(x) that such PIK Lender elects to convert the Principal Amount of its
PIK Loan or a specified portion (which shall be an amount permitted under
Section 1.07(a)(i)) of the Principal Amount thereof; and
(y) the names (with addresses) in which the certificates representing
the PSC Common Stock issuable upon such conversion are to be registered
and, if there is more than one name, the number of shares to be registered
in each of such names.
If any of the PSC Common Stock into which such PIK Loan or specified
portion thereof is to be converted are to be issued to a Person or Persons other
than the PIK Lender or an Eligible Transferee that is to receive not fewer than
1,000,000 shares of PSC Common Stock, such notice shall be accompanied by (i) an
opinion of counsel reasonably satisfactory to the Borrower to the effect that
such PSC Common Stock may be delivered to such Person or Persons without
registration under the US Securities Act and otherwise in accordance with the
Applicable Securities Legislation, and (ii) payment of any transfer tax which
may be payable by reason thereof. Upon receipt of such written notice,
(1) the PIK Lender shall have subscribed for the number of PSC Common
Stock to which such holder shall be entitled to receive on such conversion;
(2) subject to Section 1.07(b)(ii), the PIK Lender shall have and be
deemed to have released the Borrower from all liability with respect to the
Principal Amount of its PIK Loan or the portion of the Principal Amount
thereof to be converted, as the case may be, effective upon such
conversion; and
(3) such release shall constitute full payment of the Conversion Price
for the PSC Common Stock issuable upon such conversion.
(ii) As promptly as practicable after the Conversion Date of a PIK
Loan (or a portion thereof), the Borrower shall issue or cause to be issued and
deliver or cause to be delivered to the PIK Lender that has given the Notice of
Conversion of PIK Loans, or on the written order of such PIK Lender, a
certificate or certificates in the name or names of the Person or Persons
specified in such notice for the number of shares of PSC Common Stock
deliverable upon the conversion of such PIK Lender's PIK Loan (or specified
portion thereof) and provision shall be made in respect of any fraction of a
share as provided in Section 1.07(c). Such conversion shall be deemed to have
been effected immediately at 4:00 p.m. on the Conversion Date and, at that time,
the rights of the PIK Lender in respect of that portion of the Principal Amount
of the PIK Loan so converted shall cease and the Person or Persons in whose name
or names any certificate or certificates for PSC Common Stock shall be
deliverable upon such conversion shall be deemed to have become on such date the
holder or holders of record of the PSC Common Stock represented thereby;
provided, however, that, if the Conversion Date is a date on which the transfer
registers for PSC Common Stock shall be closed, the Person or Persons entitled
to receive such PSC Common Stock on such date shall become the holder or holders
of record thereof for all purposes at 4:00 p.m. on the next succeeding date on
which such transfer registers are open. No payment or adjustment shall be made
upon any conversion on account of any dividends on the PSC Common Stock issuable
upon conversion.
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<PAGE> 16
(iii) Subject to clause (iv) hereof, certificates representing PSC
Common Stock issuable upon conversion of any PIK Loan, and any certificate
representing PSC Common Stock issued in exchange therefore or in substitution
thereof, shall bear the following legend:
"The securities represented by this certificate were issued upon the
conversion of other securities that were issued pursuant to an exemption from
registration under the United States Securities Act of 1933, as amended (the
"Act"), and may be offered, sold or otherwise transferred only pursuant to a
Registration Statement effective under the Act or an exemption from the
registration requirements of Section 5 of the Act."
(iv) Certificates representing PSC Common Stock issuable upon
conversion of any PIK Loan shall not bear the legend set forth in clause (iii)
if the Notice of Conversion of PIK Loans in connection with such conversion is
accompanied by a certificate to the effect that such Lender is not an affiliate
of the Borrower within the meaning of Rule 144 under the US Securities Act or an
"underwriter" with respect to the PIK Loans that are being converted within the
meaning of section 1145(b) of the US Bankruptcy Code, and, upon request of the
Borrower, an opinion of counsel reasonably satisfactory to the Borrower to such
effect and to the effect that such shares may be sold without registration under
the US Securities Act has been delivered to the Borrower.
(v) A holder of a certificate evidencing PSC Common Stock bearing the
legend specified in subsection (iii) shall be entitled to receive from the
Borrower, whether or not in connection with a sale or proposed sale, a new
certificate or certificates evidencing an identical number of shares of PSC
Common Stock (the transfer expenses for which shall be paid by the Borrower) but
without such legend at such time as (i) such shares are sold pursuant to a
Registration Statement effective under the US Securities Act, or (ii) such
holder furnishes the Borrower with a certificate to the effect that such holder
is not an affiliate of the Borrower within the meaning of Rule 144 under the US
Securities Act or an "underwriter" with respect to such PSC Common Stock within
the meaning of Section 1145(b) of the US Bankruptcy Code and, upon the request
of the Borrower, an opinion of counsel reasonably satisfactory to the Borrower
to such effect is delivered to the Borrower and to the effect that such shares
may be sold without registration under the US Securities Act.
(c) No Fractional Shares. Notwithstanding anything herein contained,
the Borrower shall in no case be required to issue fractional PSC Common Stock
upon the conversion of any PIK Loan. If any fractional interest in a PSC Common
Stock would, except for the provisions of this Section 1.07(c), be deliverable
upon the conversion of any PIK Loan, the Borrower shall satisfy such fractional
interest by payment to the holder of such PIK Loan of an amount equal (to the
nearest cent) to the product of such fractional interest and the Conversion
Price in effect on the Conversion Date of such PIK Loan.
(d) Adjustment of Conversion Privilege. (i) Subject to Section
1.07(e), if and whenever the Borrower shall:
(x) subdivide its outstanding PSC Common Stock into a greater number
of shares;
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(y) consolidate its outstanding PSC Common Stock into a smaller number
of shares; or
(z) issue PSC Common Stock or Convertible Securities as a stock
dividend or otherwise to all or substantially all the holders of PSC Common
Stock (except by way of a Dividend in the Ordinary Course);
(any of such events being herein called a "Share Reorganization"), the
Conversion Price shall be adjusted, effective immediately after the record date
at which the holders of PSC Common Stock are determined for the purposes of the
Share Reorganization or, if no record date is fixed, the effective date of the
Share Reorganization, by multiplying the Conversion Price in effect on such
record or effective date, as the case may be, by a fraction in which:
(1) the numerator shall be the number of shares of PSC Common Stock
outstanding on such record or effective date before giving effect to the
Share Reorganization; and
(2) the denominator shall be the number of shares of PSC Common Stock
outstanding after giving effect to such Share Reorganization, including, in
the case of a distribution of Convertible Securities, the number of shares
of PSC Common Stock that would have been outstanding if such securities had
been converted into or exchanged for PSC Common Stock on such record or
effective date.
(ii) If and whenever the Borrower shall fix a record date to issue to
all or substantially all of the holders of PSC Common Stock, rights, options or
warrants under which such holders are entitled, during a period expiring not
more than 45 days after the record date for such issue, to subscribe for or
purchase PSC Common Stock or Convertible Securities, at a price per share (or
having a conversion or exchange price per share) at the date of issue of such
securities of less than 95% of the Current Market Price of the PSC Common Stock
on such record date (any such event being herein called a "Rights Offering"),
the Conversion Price shall be adjusted, effective immediately after the record
date at which holders of PSC Common Stock are determined for the purposes of the
Rights Offering, by multiplying the Conversion Price in effect on such record
date by a fraction of which (x) the numerator shall be the sum of:
(1) the number of shares of PSC Common Stock outstanding on such
record date; and
(2) a number obtained by dividing:
(A) either, (I) the product of the total number of shares of PSC
Common Stock so offered for subscription or purchase and the price at
which such shares are so offered (which for such purposes shall be
converted, if necessary, as of the record date for the Rights
Offering, into the US Dollar Equivalent of the currency in which the
Current Market Price is expressed), or (II) the product of the maximum
number of shares of PSC Common Stock into or for which the Convertible
Securities so offered for subscription or purchase may
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<PAGE> 18
be converted or exchanged and the conversion or exchange price of such
securities (which for such purposes shall be converted, if necessary,
as of the record date for the Rights Offering, into the US Dollar
Equivalent of the currency in which the Current Market Price is
expressed), as the case may be,
by
(B) the Current Market Price of the PSC Common Stock on such
record date; and
(y) the denominator shall be the sum of:
(1) the number of PSC Common Stock outstanding on such record date;
and
(2) the number of PSC Common Stock so offered for subscription or
purchase (or, in the case of Convertible Securities, the maximum number of
PSC Common Stock for or into which the securities so offered for
subscription or purchase may be converted or exchanged).
To the extent that such rights, options or warrants are not exercised
prior to the expiry time thereof, the Conversion Price shall be readjusted
effective immediately after such expiry time to the Conversion Price which would
then have been in effect based upon the number of PSC Common Stock or
Convertible Securities actually delivered upon the exercise of such rights,
options or warrants.
(iii) If and whenever the Borrower shall fix a record date to issue or
distribute to all or substantially all the holders of PSC Common Stock: (w)
shares of the Borrower of any class, including PSC Common Stock and Convertible
Securities, (x) evidences of indebtedness, (y) any property; or (z) rights,
options or warrants to acquire any of the foregoing, and if such issuance or
distribution does not constitute Dividends in the Ordinary Course, a Share
Reorganization or a Rights Offering (any such event being herein called a
"Special Distribution"), the Conversion Price shall be adjusted, effective
immediately after the record date at which the holders of PSC Common Stock are
determined for purposes of the Special Distribution, by multiplying the
Conversion Price in effect on such record date by a fraction of which:
(1) the numerator shall be the difference between:
(A) the product of the number of shares of PSC Common Stock
outstanding on such record date and the Current Market Price of the
PSC Common Stock on such date; and
(B) the fair market value (expressed in the same currency as is
used to express Current Market Price) as determined by the board of
directors of the Borrower (whose determination shall be conclusive),
to the holders of PSC
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<PAGE> 19
Common Stock of the shares, rights, options, warrants, evidences of
indebtedness or property or other assets issued or distributed in the
Special Distribution, and
(2) the denominator shall be the product of the number of shares
of PSC Common Stock outstanding on such record date and the Current
Market Price of the PSC Common Stock on such date.
To the extent that such Special Distribution is not so made, the
Conversion Price shall then be readjusted to the Conversion Price which would
then be in effect if such record date had not been fixed or to the Conversion
Price which would then be in effect based upon such shares or rights, options or
warrants or evidences of indebtedness or property or other assets actually
distributed, as the case may be. To the extent that any rights, options or
warrants issued or distributed in a Special Distribution are not exercised prior
to the expiry time thereof, the Conversion Price shall be readjusted effective
immediately after such expiry time to the Conversion Price which would then have
been in effect based upon the number of PSC Common Stock or Convertible
Securities actually delivered upon the exercise of such rights, options or
warrants.
(iv) If and whenever there shall occur:
(x) a reclassification or redesignation of the PSC Common Stock or any
change of the PSC Common Stock into other shares, otherwise than in a Share
Reorganization;
(y) a consolidation, merger, reorganization, dissolution or
liquidation of the Borrower with or into another Person; or
(z) the transfer of all or substantially all of the property of the
Borrower to another Person;
(any such event being herein called a "Capital Reorganization"), any Lender who
exercises the Conversion Privilege after the record date of such Capital
Reorganization shall be entitled to receive and shall accept, upon the exercise
of such right, in lieu of the number of PSC Common Stock to which such holder
was theretofore entitled upon exercise of the Conversion Privilege, the
aggregate number of shares or other securities or property of the Borrower or of
the Company resulting from such Capital Reorganization that such Lender would
have been entitled to receive as a result of such Capital Reorganization if, on
the record date thereof, such Lender had been the holder of the number of shares
of PSC Common Stock to which such Lender was theretofore entitled upon
conversion; provided, however, that no such Capital Reorganization shall be
carried into effect unless all necessary steps shall have been taken so that the
Lenders shall thereafter be entitled to receive such number of shares or other
securities of the Borrower or of the Company resulting from such Capital
Reorganization, subject to adjustment thereafter in accordance with provisions
the same, as nearly as may be possible, as those contained in this Section
1.07(d) and in Section 1.07(e). If necessary as a result of any such Capital
Reorganization, appropriate adjustments shall be made in the application of the
provisions set forth in this Section 1.07 with respect to the rights and
interests thereafter of the PIK Lenders to the end that the provisions set forth
in this Section 1.07 shall thereafter correspondingly be made applicable
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as nearly as may be in relation to any shares or other securities or property
thereafter deliverable upon the exercise of the Conversion Privilege. Any such
adjustments shall be made by and set forth in an agreement supplemental hereto
approved by action by the board of directors of the Borrower and shall, absent
error, fraud or bad faith, for all purposes be conclusively deemed to be an
appropriate adjustment.
(e) Adjustment Rules. The following rules and procedures shall be
applicable to adjustments of the Conversion Price and the Conversion Privilege
made pursuant to Section 1.07(d):
(i) no adjustment in the Conversion Price shall be required unless
such adjustment would result in a change of at least 1% in the Conversion
Price then in effect; provided, however, that any adjustment which, but for
the provisions of this Section 1.07(e), would otherwise have been required
to be made, shall be carried forward and taken into account in any
subsequent adjustment;
(ii) no adjustment in the Conversion Price shall be made in respect of
any event described in Section 1.07(d) (other than an event described in
paragraphs 1.07(d)(i)(x) or (y) or in paragraph 1.07(d)(iv)(x)), if the PIK
Lenders are entitled to participate in such event on the same terms mutatis
mutandis as if they had converted their PIK Loans prior to the Effective
Date or record date of such event;
(iii) no adjustment in the Conversion Price shall be made pursuant to
Section 1.07(d) in respect of the issue from time to time of PSC Common
Stock or Convertible Securities to holders of PSC Common Stock who exercise
an option to receive substantially equivalent dividends in PSC Common Stock
or Convertible Securities in lieu of receiving Dividends in the Ordinary
Course in the form of cash payments;
(iv) if the Borrower shall set a record date to determine the holders
of the PSC Common Stock for the purpose of entitling them to receive any
dividends or distribution or any subscription or purchase rights and shall,
thereafter and before the distribution to such shareholders of any such
dividend, distribution or subscription or purchase rights, legally abandon
its plan to pay or deliver such dividend, distribution or subscription or
purchase rights then no adjustment in the Conversion Price or the number of
PSC Common Stock issuable upon exercise of the Conversion Privilege shall
be required by reason of the setting of such record date;
(v) if a dispute shall at any time arise with respect to any
adjustment of the Conversion Price or the Conversion Privilege, such
dispute shall be conclusively determined by a nationally recognized firm of
investment dealers selected by the Administrative Agent and any such
determination shall be binding upon the Borrower and the Lenders;
(vi) in case the Borrower after the date hereof shall take any action
affecting the PSC Common Stock, other than an action described in Section
1.07(d), which in the opinion of the board of directors of the Borrower
would materially affect the rights of the
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<PAGE> 21
PIK Lenders, the Conversion Price and/or the number of PSC Common Stock
issuable upon exercise of the Conversion Privilege shall be adjusted in
such manner, if any, and at such time, by action by the board of directors
of the Borrower, in their sole discretion as they may determine to be
equitable in the circumstances. Failure by the board of directors of the
Borrower to take action so as to provide for an adjustment prior to the
effective date of any actions by the Borrower affecting the PSC Common
Stock shall, absent error, fraud or bad faith, be conclusive evidence that
the board of directors of the Borrower have determined that it is equitable
to make no adjustment in the circumstances; and
(vii) any adjustment shall, subject to this Section, be made
successively whenever an event referred to in Section 1.07(d) shall occur.
(f) Postponement of Issuance. In any case where the application of
Section 1.07(d) results in an adjustment to the Conversion Price taking effect
immediately after the record or effective date for a specific event, if any
Conversion Privilege is exercised after that record or effective date and prior
to completion of the event, the Borrower may postpone the issuance of the PSC
Common Stock to which a PIK Lender is entitled by reason of the adjustment to
the Conversion Price but such PSC Common Stock shall be so issued and delivered
to that PIK Lender upon completion of that event, with the number of such PSC
Common Stock calculated on the basis of the Conversion Price on the Conversion
Date adjusted for completion of that event, and the Borrower shall deliver to
the Person or Persons in whose name or names the PSC Common Stock are to be
issued an appropriate instrument evidencing its or their right to receive such
PSC Common Stock.
(g) Certificate as to Adjustment. The Borrower shall from time to time
immediately after the occurrence of any event which requires an adjustment in
the Conversion Price or Conversion Privilege give notice to the Administrative
Agent specifying the nature of the event requiring the adjustment and the amount
of the adjustment necessitated thereby and setting forth, in reasonable detail,
the method of calculation and the facts upon which such calculation is based.
(h) Notice to PIK Lenders. (i) If and whenever the Borrower intends to
implement a record date for:
(1) any Share Reorganization (other than the subdivision of
outstanding PSC Common Stock into a greater number of shares or the
consolidation of outstanding PSC Common Stock into a smaller number of
shares);
(2) any Rights Offering;
(3) any Special Distribution; or
(4) any Capital Reorganization (other than a reclassification or
redesignation of the PSC Common Stock into other shares);
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<PAGE> 22
which will require an adjustment to the Conversion Privilege, the Borrower
shall, not less than 20 days prior to the record date or, if no record date is
fixed, prior to the effective date, of such event give to the PIK Lenders,
notice of the particulars of the proposed event and, if determinable, the
required adjustment and the computation of such adjustment.
(ii) In case any adjustment for which a notice in Section 1.07(h)(i)
has been given is not then determinable, the Borrower shall promptly after such
adjustment is determinable give notice to the PIK Lenders of the adjustment.
(i) Termination and Revival of Right to Convert. (a) The right to
convert any PIK Loan or any part of a PIK Loan which is called for redemption
shall terminate and expire at 4:00 p.m. (New York time) on the Business Day
immediately preceding the date fixed for redemption unless the Borrower shall
default in the payment of amounts owing on redemption.
(b) If payment of all amounts owing on redemption in respect of any
PIK Loan called for redemption is not duly made, the right to convert such PIK
Loan shall revive and continue until the earlier of payment of all amounts owing
on redemption and 4:00 p.m. (New York time) on the Business Day immediately
preceding the PIK Loan Maturity Date.
(j) Reservation of Shares. The Borrower shall at all times while any
Principal Amount under any of the PIK Loans remains outstanding reserve and keep
available out of its authorized and unissued PSC Common Stock for the purpose of
effecting the conversion of the PIK Loans, such number of PSC Common Stock as
shall from time to time be sufficient to effect the conversion of all PIK Loans.
All PSC Common Stock issued upon exercise of the Conversion Privilege shall be
duly and validly issued as fully paid and non-assessable. As a condition
precedent to the taking of any action which would require an adjustment to the
Conversion Price, the Borrower shall take any corporate action which may, in the
opinion of counsel to the Borrower, be necessary in order that the Borrower
shall have unissued and reserved in its authorized capital, and may validly and
legally issue, the shares to which the PIK Lenders are entitled on the full
exercise of their conversion rights in accordance with the provisions of this
Section 1.07.
Section 2. Fees; Prepayments; Payments.
2.01 Fees. (a) The Borrower shall pay to the Administrative Agent, for
its own account, such fees as have been mutually agreed by the Administrative
Agent and the Borrower, including amounts under the Fee Letter.
(b) All computations of fees shall be made in accordance with Section
10.07(b).
2.02 Voluntary Prepayments.
(a) PIK Loans. (i) Except as expressly permitted by this Agreement,
under no circumstances may the Borrower voluntarily prepay or redeem any amount
owing under the PIK
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Loans except pursuant to a PIK Loan Redemption Notice and as expressly permitted
pursuant to the provisions of this Section 2.02(a).
(ii) If an Offeror delivers written notice to the Borrower at or prior
to the closing of an Offer requesting that the Borrower redeem the PIK Loans in
connection with the closing of the Offeror's Offer, then the Borrower may
concurrently with, or within the 30 day period immediately following, a
Successful Closing of such Offer issue a PIK Loan Redemption Notice to prepay or
redeem all, but not less than all, of the PIK Loans upon payment in Dollars for
each such Loan of an amount equal to the greater of (A) 115% of the unpaid
Principal Amount of such Loan, plus all accrued and unpaid interest on such Loan
to the date of such redemption (which, for greater certainty, will include
without duplication, all accrued and unpaid interest on the Principal Amount of
such Loan, all unpaid Accreted Interest Amounts under such Loan and all accrued
and unpaid interest on all Accreted Interest Amounts under such Loan); and (B)
the fair market value (as determined by the board of directors of the Borrower)
of the property which the PIK Lenders would have received if they had converted
the Principal Amount of their PIK Loans to PSC Common Stock and tendered such
PSC Common Stock to the Offeror under such Offer.
(iii) At any time from and after the first anniversary of the Closing
Date and prior to the PIK Loan Maturity Date, provided that all outstanding Exit
Loans have been repaid and the Termination of the Exit Facility has occurred on
the date of such prepayment and redemption, the Borrower may prepay and redeem
all, but not less than all, of the PIK Loans upon payment in Dollars for each
such Loan of an amount equal to the sum of:
(v) the unpaid Cash Flow Additional Interest, if any, payable to the
PIK Lenders in accordance with Section 1.03(4);
(w) the unpaid Deferred Prepayment Interest, if any, payable to the
PIK Lenders in accordance with Section 1.03(4);
(x) the unpaid Principal Amount of such PIK Loans then outstanding;
(y) the Redemption Premium in effect on the date of such prepayment
and redemption for the unpaid Principal Amount of such PIK Loans then
outstanding; and
(z) all accrued and unpaid interest and all accrued and unpaid
Accreted Interest on the unpaid Principal Amount of such PIK Loans to the
date of such prepayment and redemption (which will include without
duplication all accrued and unpaid interest on the unpaid Principal Amount
of such PIK Loans then outstanding, all unpaid Accreted Interest Amounts
under such PIK Loans then outstanding, and all accrued and unpaid interest
on all such Accreted Interest Amounts under the PIK Loans, then
outstanding).
(b) Term Loans. (i) Except as required by this Agreement, the Borrower
shall not voluntarily prepay or redeem any amount owing under the Term Loans
except as expressly permitted pursuant to the provisions of this Section
2.02(b).
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(ii) At any time prior to the Term Loan Maturity Date, provided that
all outstanding Exit Loans have been repaid and the Termination of the Exit
Facility has occurred on the date of such prepayment and redemption, the
Borrower may prepay and redeem all, or any portion (provided that in the event
of the prepayment and redemption of a portion only of the Term Loans such
prepayment and redemption shall be made pro rata based on the respective
Principal Amounts at such time of all Term Loans at such time) of the Term Loans
upon payment in Dollars for each such Loan of an amount equal to the sum of:
(w) (i) if the Borrower is seeking to repay and redeem any portion of
the Term Loans in an amount greater than or equal to the sum of the
Notional Cash Flow Difference Amount and the Deferred Prepayment Amount
then outstanding, the unpaid Deferred Prepayment Interest and unpaid Cash
Flow Additional Interest, if any, payable to the Term Lenders in accordance
with Section 1.03(4), or (ii) if the Borrower is seeking to repay and
redeem any portion of the Term Loans in an amount less than the sum of the
Notional Cash Flow Difference Amount and the Deferred Prepayment Amount
then outstanding, the unpaid Deferred Prepayment Interest and unpaid Cash
Flow Additional Interest, if any, with respect to the portion of the
Principal Amount of the Term Loans being prepaid and redeemed. The Notional
Cash Flow Difference Amount and Deferred Prepayment Amount owed on any date
is reduced by the portion of the Principal Amount of the Term Loans being
prepaid and redeemed as described in this sub-clause (ii) above.
(x) the portion of the unpaid Principal Amount of such Term Loan being
prepaid and redeemed;
(y) the Redemption Premium for the portion of the Principal Amount of
such Term Loan being prepaid and redeemed in effect on the date of such
prepayment and redemption; and
(z) all accrued and unpaid interest on the portion of the Principal
Amount of such Term Loan being prepaid and redeemed to the date of such
prepayment and redemption (which will include, without duplication, all
accrued and unpaid interest on the portion of the Principal Amount of such
Term Loan being prepaid and redeemed, all unpaid Deferred Interest Amounts
under the portion of such Term Loan being prepaid and redeemed and all
accrued and unpaid interest on all Deferred Interest Amounts under the
portion of such Term Loan being prepaid and redeemed).
2.03 Mandatory Prepayments. (A) Requirements. (a) Notwithstanding
anything to the contrary contained elsewhere in this Agreement, (i) all then
outstanding Term Loans (which will include without duplication all accrued and
unpaid interest on the Principal Amount of such Loans, all unpaid Deferred
Interest Amounts under such Loans and all accrued and unpaid interest or all
Deferred Interests under such Loans) shall be repaid in full on the Term Loan
Maturity Date and (ii) all then outstanding PIK Loans (which will include
without duplication all accrued and unpaid interest on the Principal Amount of
such Loans, all unpaid Accreted Interest Amounts under such Loans and all
accrued and unpaid interest on all Accreted Interest Amounts under such Loans)
shall be repaid in full on the PIK Loan Maturity Date.
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<PAGE> 25
(b) In addition to any other mandatory repayment or prepayment under
this Section 2.03, (x) prior to the date of Termination of the Exit Facility, an
amount equal to (i) the Net Asset Sale Proceeds from the Disposition of any
assets of Borrower or the Subsidiary Guarantors (including, without limitation,
from the Permitted Dispositions, but excluding Dispositions of assets pursuant
to clauses (a), (b), (c), (d), (e), or (g) of the definition of Permitted
Dispositions) (ii) any Foreign Subsidiary Proceeds, and (iii) proceeds of the UK
Sale will be applied as provided in the Collateral Agency and Intercreditor
Agreement and (y) thereafter, an amount equal to (i) 66 and 2/3 % of the first
$200,000,000 of the Net Asset Sale Proceeds from the sale of the US Ferrous
Division, (ii) 75% of the amount, if any, of the Net Asset Sale Proceeds from
the sale of the US Ferrous Division that is not covered by clause (i), and (iii)
75% of the amount of (a) the Net Asset Sale Proceeds from the Disposition of any
other assets of Borrower or any Subsidiary Guarantor including assets sold
pursuant to clauses (f), (h) and (j) of the definition of Permitted Dispositions
but specifically excluding assets sold pursuant to Permitted Dispositions
described in clauses (a) through (e) and (g), of the definition of Permitted
Dispositions except as otherwise provided in Section 5.07(c) and (b) any Foreign
Subsidiary Proceeds (such amounts, the "Net Sale Proceeds Repayment Amount"),
shall be paid to the Administrative Agent and shall be applied (1) on the
closing date of such sale to repay the then outstanding Term Loans and (2) after
the Term Loans are paid off in full, to repay the then outstanding PIK Loans on
the date specified in the PIK Loan Redemption Notice, in accordance with the
requirements of Section 2.03(B)(i); provided that with respect to Foreign
Subsidiary Proceeds, such amounts shall be paid when actually received by a US
Subsidiary Guarantor.
(c) In addition to any other mandatory repayment or prepayment under
this Section 2.03, the following amounts shall be paid to the Administrative
Agent and shall be applied on the dates set forth below, to repay the
outstanding Term Loans and accrued interest on the outstanding PIK Loans in
accordance with the requirements of Section 2.03(B)(ii) and no PIK Loan
Redemption Notice shall be required:
(i) on the First Annual Cash Flow Payment Date, 75% of the Cash Flow
Available for Debt Service for the period from and including the Closing
Date to and including the last day of the fourth Post Plan Implementation
Fiscal Quarter (such amount, if a positive amount, the "First Cash Flow
Payment");
(ii) on the Second Annual Cash Flow Payment Date, the lesser of (x)
75% of Cash Flow Available for Debt Service for the period from and
including the first day of the fifth Post Plan Implementation Fiscal
Quarter to and including the last day of the eighth Post Plan
Implementation Fiscal Quarter and (y) 75% of an amount equal to Cash Flow
Available for Debt Service for the period from and including the Closing
Date to and including the last day of the eighth Post Plan Implementation
Fiscal Quarter minus the First Cash Flow Payment (such amount, if a
positive amount, the "Second Cash Flow Payment" and if the amount in
sub-clause (x) is greater than the amount in sub-clause (y) of this
sub-clause 2.03(A)(c)(ii), the difference between the amounts described in
sub-clauses (x) and (y) of this Section 2.03(A)(c)(ii), the "First Notional
Cash Flow Difference Amount" (provided, that if the amount determined
pursuant to clause (y) of
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this Section 2.03(A)(c)(ii) is less than zero, such amount shall be deemed
to be zero for purposes of calculating the First Notional Cash Flow
Difference Amount));
(iii) on the first Quarterly Cash Flow Payment Date, the lesser of (x)
75% of Cash Flow Available for Debt Service for the immediately preceding
Fiscal Quarter and (y) 75% of an amount equal to Cash Flow Available for
Debt Service for the period from and including the Closing Date to and
including the last day of the immediately preceding Fiscal Quarter minus
the First Cash Flow Payment and the Second Cash Flow Payment (such amount,
if a positive amount, the "Third Cash Flow Payment" and together with the
First Cash Flow Payment and the Second Cash Flow Payment, the "Cash Flow
Payments", and each a "Cash Flow Payment" and if the amount in sub-clause
(x) is greater than the amount in sub-clause (y) of this sub-clause 2.03
(A)(c)(iii), the difference between the amounts described in sub-clauses
(x) and (y) of this Section 2.03(c)(iii), the "Second Notional Cash Flow
Difference Amount" (provided, that if the amount determined pursuant to
clause (y) of this Section 2.03(A)(c)(iii) is less than zero, such amount
shall be deemed to be zero for purposes of calculating the Second Notional
Cash Flow Difference Amount));
(iv) on the second Quarterly Cash Flow Payment Date, the lesser of (x)
75% of Cash Flow Available for Debt Service for the immediately preceding
Fiscal Quarter and (y) 75% of an amount equal to Cash Flow Available for
Debt Service for the period from and including the Closing Date to and
including the last day of the immediately preceding Fiscal Quarter minus
the sum of the Cash Flow Payments (if the amount in sub-clause (x) is
greater than the amount in sub-clause (y) of this sub-clause 2.03
(A)(c)(iv), the difference between the amounts described in sub-clauses (x)
and (y) of this Section 2.03 (c)(iv), the "Third Notional Cash Flow
Difference Amount" (provided, that if the amount determined pursuant to
clause (y) of this Section 2.03(A)(c)(iv) is less than zero, such amount
shall be deemed to be zero for purposes of calculating the Third Notional
Cash Flow Difference Amount) and together with the First Notional Cash Flow
Difference Amount and the Second Notional Cash Flow Difference Amount, the
"Notional Cash Flow Difference Amounts");
(v) on each Quarterly Cash Flow Payment Date starting with the 12th
Post Plan Implementation Fiscal Quarter, 75% of the Cash Flow Available for
Debt Service for the immediately preceding Fiscal Quarter;
(vi) interest shall accrue as provided in Section 1.03(4) until the
date of termination of this Agreement on (a) an amount equal to the
Notional Cash Flow Difference Amounts (the "Cash Flow Additional Interest")
and (b) on an amount equal to the portion of the Cash Flow Payment due on
any Quarterly Cash Flow Payment Date that has been applied to pay the Cash
Flow Additional Interest accrued and unpaid on such date (such amount, the
"Deferred Prepayment Amount" and such interest accruing on any such
Deferred Prepayment Amount, the "Deferred Prepayment Interest"); provided
that (x) any Cash Flow Payment due on any following Quarterly Cash Flow
Payment Date shall be applied first to repay the Cash Flow Additional
Interest and second to repay the Deferred
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Prepayment Interest accrued and unpaid at such time in accordance with
Section 2.03(B)(ii) and any Deferred Prepayment Interest or Cash Flow
Additional Interest accrued and unpaid at such time that is in excess of
such Cash Flow Payment due at such time shall be paid from the Cash Flow
Payment due on any following Quarterly Cash Flow Payment Date and (y) the
Notional Cash Flow Difference Amounts are calculated solely to calculate
the Cash Flow Additional Interest and no payment of the Notional Cash Flow
Difference Amounts shall be required to be made hereunder;
(vii) Notwithstanding anything to the contrary contained in this
Section 2.03(A)(c), Cash Flow Additional Interest and Deferred Prepayment
Interest shall continue to accrue on the Notional Cash Flow Difference
Amounts and the Deferred Prepayment Amounts, respectively for the benefit
of the Term Lenders or the PIK Lenders, as applicable, until such time as
the Term Loans and/or the PIK Loans have been repaid in full, unless the
Borrower chooses to voluntarily prepay the following amounts pursuant to
Section 2.02 in the following order and the Borrower shall have the right
at any time to prepay such amount in whole or in part in such order: (i)
first, all accrued and unpaid interest on the Term Loans (or if the Term
Loans have been paid in full, on the PIK Loans) as of such date (including,
without limitation, all accrued and unpaid Deferred Prepayment Interest,
Cash Flow Additional Interest, Deferred Interest Amounts, and all accrued
and unpaid interest on such Deferred Interest Amounts), and (ii) second, a
prepayment of the Loans equal to the sum of the Notional Cash Flow
Difference Amounts and the Deferred Prepayment Amounts then outstanding;
provided that any amounts not so prepaid shall continue to accrue interest
as provided in this Section 2.03(A)(c); provided further, that any amounts
owed by the Borrower pursuant to this Section 2.03(A)(c) on the date of
termination of this Agreement shall be due and payable on such date and
shall be applied as specified in this Section 2.03(A)(c).
(d) In addition to any other mandatory repayment or prepayment under
this Section 2.03, (i) prior to the Termination of the Exit Facility, any monies
to be received as payment for any loss under any insurance policy mentioned in
Section 5.7 (other than liability insurance policies) or as payment of any award
or compensation for condemnation or taking by eminent domain, shall be applied
in accordance with the Collateral Agency and Intercreditor Agreement, and (ii)
thereafter, any such monies shall (i) if no Event of Default has occurred and is
continuing and if such proceeds are $5,000,000, or less, be paid over to the
Borrower for application solely to the cost of repairs, replacements, or
restorations, and (ii) in all other cases (except proceeds constituting Net
Asset Sale Proceeds from the Disposition of assets permitted pursuant to clause
(f) of the definition of Permitted Dispositions will be applied in accordance
with Section 2.03(A)(b)(iii)), be paid over to the Administrative Agent to be
applied at the option of the Administrative Agent either to the prepayment of
the Obligations without premium, in accordance with Section 2.03(B)(i) hereof or
be disbursed under staged terms satisfactory to the Administrative Agent for
application solely to the cost of repairs, replacements or restorations. The
Borrower agrees that if the Borrower or any US Subsidiary Guarantor receives any
payment for any loss under any insurance policy mentioned above or any payment
of any award or compensation for condemnation or taking by eminent domain, to
the extent the Borrower or US Subsidiary Guarantor is not entitled to retain
same in accordance with the previous sentence, the
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Borrower or such US Subsidiary Guarantor shall hold such proceeds in trust for,
and promptly pay such proceeds over to, the Collateral Agent. All repairs,
replacements, or restorations shall be effected within one year after the date
of receipt of such proceeds (unless the Administrative Agent otherwise consents)
and shall be of a value at least equal to the value of the items or property
destroyed prior to such damage or destruction; provided that if any portion of
such proceeds are not applied to the cost of repairs, replacements or
restorations within such one year period, such remaining portion not used shall
be applied on the last day of such one year period as a mandatory repayment in
accordance with Section 2.03(B)(i).
(B) Application. (i) All amounts paid to the Administrative Agent
pursuant to the provisions of Section 2.03(A)(b) or 5.07(c) are to be paid and
applied by the Administrative Agent in the following order:
(a) First, to the pro rata payment (based on the respective
proportions of such amounts owing under the Term Loans at such time) to all
Term Lenders of all unpaid Deferred Interest Amounts, together with all
accrued and unpaid interest on all such Deferred Interest Amounts, under
the Term Loans on the date of payment;
(b) Second, after payment of all amounts referred to in paragraph (a)
of this subsection, to the pro rata payment (based on the respective
proportions of such amounts owing under the Term Loans at such time) to all
Term Lenders of all other accrued and unpaid interest under the Term Loans
on the date of payment;
(c) Third, after payment of all amounts referred to in paragraphs (a)
and (b) of this subsection, to the pro rata payment (based on the
respective proportions of such amounts owing under the Term Loans at such
time) to all Term Lenders of all then unpaid Principal Amounts under the
Term Loans;
(d) Fourth, after payment of all amounts referred to in paragraphs
(a), (b) and (c) of this subsection, to the pro rata payment (based on the
respective proportions of such amounts owing under the PIK Loans at such
time) to all PIK Lenders of all accrued and unpaid interest (which, for
greater certainty will include without duplication, all accrued and unpaid
interest on the Principal Amount of such Loans, all unpaid Accreted
Interest Amounts under such Loans and all accrued and unpaid interest on
all Accreted Interest Amounts under such Loans) under the PIK Loans on the
date of payment;
(e) Fifth, after payment of all amounts referred to in paragraphs (a),
(b), (c) and (d) of this subsection, to the pro rata payment (based on the
respective proportions of such amounts owing under the PIK Loans at such
time) to all PIK Lenders of all then unpaid Principal Amounts of the PIK
Loans; and
(f) Sixth, after payment of all amounts referred to in paragraphs (a),
(b), (c), (d) and (e) of this subsection, and provided that no Default or
Event of Default has occurred and is continuing or would result therefrom,
release of the balance, if any, of such amount to or as directed by the
Borrower or as otherwise required by applicable law;
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and all of the interest and principal payments required to be paid under
paragraphs (a), (b), (c), (d), (e) and (f) of this subsection shall have
become, and shall be conclusively deemed for all purposes to have become,
due and payable on the applicable payment date set forth in Section
2.03(A)(b).
(ii) All amounts paid to the Administrative Agent pursuant to the
provisions of Section 2.03(A)(c), are to be paid and applied by the
Administrative Agent in the following order:
(a) First, to any unpaid Cash Flow Additional Interest;
(b) Second, after payment of all amounts referred to in paragraph (a)
of this subsection, to any unpaid Deferred Prepayment Interest;
(c) Third, after payment of all amounts referred to in paragraphs (a)
and (b) of this subsection, to the pro rata payment (based on the
respective proportions of such amounts owing under the Term Loans at such
time) to all Term Lenders of all unpaid Deferred Interest Amounts, together
with all accrued and unpaid interest on all Deferred Interest Amounts,
under the Term Loans on the date of payment;
(d) Fourth, after payment of all amounts referred to in paragraph (a),
(b) and (c) of this subsection, to the pro rata payment (based on the
respective proportions of such amounts owing under the Term Loans at such
time) to all Term Lenders of all other accrued and unpaid interest under
the Term Loans on the date of payment;
(e) Fifth, after payment of all amounts referred to in paragraphs (a),
(b), (c) and (d) of this subsection, to the pro rata payment (based on the
respective proportions of such amounts owing under the PIK Loans at such
time) to all PIK Lenders of all accrued and unpaid interest (which, for
greater certainty, will include without duplication all accrued and unpaid
interest on the Principal Amount of such Loans, all unpaid Accreted
Interest Amounts under such Loans and all accrued and unpaid interest on
all Accreted Interest Amounts under such Loans) under the PIK Loans on the
date of payment;
(f) Sixth, after payment of all amounts referred to in paragraphs (a),
(b), (c), (d) and (e) of this subsection, to the pro rata payment (based on
the respective proportions of such amounts owing under the Term Loans at
such time) to all Term Lenders of all then unpaid Principal Amounts under
the Term Loans; and
(g) Seventh, after payment of all amounts referred to in paragraphs
(a), (b), (c), (d) and (f) of this subsection, and provided that no Default
or Event of Default has occurred and is continuing or would result
therefrom, release of the balance, if any, of such amount to or as directed
by the Borrower or as otherwise required by applicable law;
and all of the interest and principal payments required to be paid under
paragraphs (a), (b), (c), (d), (e), (f), and (g) of this subsection shall have
become, and shall be conclusively deemed for
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all purposes to have become, due and payable on the applicable payment date set
forth in subsections (i), (ii), (iii), (iv), (v), (vi) and (vii) of Section
2.03(A)(c).
2.04 PIK Loan Redemption Notice. Notice of prepayment or redemptions
of the PIK Loans (each a "PIK Loan Redemption Notice") shall be given by
first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days
prior to the date of such prepayment or redemption, to each holder of PIK Notes,
at the address provided by the Administrative Agent.
All PIK Loan Redemption Notices shall set forth:
(i) the date of such prepayment or redemption,
(ii) the price at which the PIK Notes will be prepaid or redeemed,
(iii) a brief statement setting forth the Borrower's right to effect
such prepayment or redemption and the Borrower's basis therefor,
(iv) that such prepayment or redemption is in respect of all PIK Notes
then outstanding (together with any accrued and unpaid interest in respect
of such PIK Notes), and
(v) that on the date of such repayment or redemption, the PIK Notes
will become due and payable, that interest thereon will cease to accrue and
that the conversion features of the PIK Loans set forth in Section 1.07 of
this Agreement shall no longer be operative. Each PIK Loan Redemption
Notice shall be given by the Borrower or at the Borrower's request by the
Administrative Agent in the name and at the expense of the Borrower.
2.05 Method and Place of Payment. Except as otherwise specifically
provided herein, all payments under this Agreement or any Note shall be made to
the Administrative Agent for the account of the Lenders entitled thereto no
later than 12:00 noon (New York City time) on the date when due and shall be
made in Dollars in immediately available funds at the Payment Office of the
Administrative Agent. Whenever any payment to be made hereunder or under any
Note shall be stated to be due on a day which is not a Business Day, the due
date thereof shall be extended to the next succeeding Business Day and, with
respect to payments of principal, interest shall be payable at the applicable
rate during such extension.
2.06 Net Payments. (a) All payments made by the Borrower hereunder or
under any Note will be made without setoff, counterclaim or other defense.
(b) Except as provided in Section 2.06(c), all such payments will be
made free and clear of, and without deduction or withholding for, any present or
future taxes, levies, imposts, duties, fees, assessments or other charges of
whatever nature now or hereafter imposed by any jurisdiction or by any political
subdivision or taxing authority thereof or therein with respect to such payments
(but excluding, any tax imposed on or measured by the net income or net profits
of a Lender (including any indemnities arising as a result of the operation of
this
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<PAGE> 31
Section 2.06), as applicable, or any franchise tax based on the net income or
net profits of a Lender, as applicable in either case pursuant to the laws of
the jurisdiction in which it is incorporated or organized or the jurisdiction in
which the principal office or applicable lending office of such Lender is
located or any subdivision thereof or therein) and all interest, penalties or
similar liabilities with respect thereto (all such non-excluded taxes, levies,
imposts, duties, fees, assessments or other charges being referred to
collectively as "Taxes"). If any Taxes are so levied or imposed, the Borrower
agrees to pay the full amount of such Taxes, and such additional amounts as may
be necessary so that every payment of all amounts due under this Agreement or
under any Note, including without limitation any amount paid pursuant to this
Section 2.06 after withholding or deduction for or on account of any Taxes, will
not be less than the amount provided for herein or in such Note. Notwithstanding
anything to the contrary contained in this Section 2.06(b), the Borrower shall
not be required to increase any such amounts payable pursuant to this Section
2.06 to the Administrative Agent or any Lender (i) that is not organized under
the laws of the United States or is an Original Canadian Lender if such Person
fails to comply with the requirements of subsection 2.06(c) or (ii) if the
increase in such amount payable results from the Administrative Agent's or
Lender's own willful misconduct or gross negligence. The Borrower will furnish
to the Administrative Agent as promptly as possible after the date the payment
of any Taxes is due pursuant to applicable law certified copies of tax receipts
evidencing such payment by the Borrower. The Borrower agrees to indemnify and
hold harmless each Lender, and reimburse such Lender upon its written request,
for the amount of any Taxes so levied or imposed and paid by such Lender.
(c) Each Lender other than an Original Canadian Lender that is not a
United States person (as such term is defined in Section 7701(a)(30) of the
Code) and that is deemed to have made Loans to the Borrower agrees to deliver to
the Borrower and the Administrative Agent on or prior to the Closing Date, and
each such Lender that is an assignee or transferee of an interest under this
Agreement pursuant to Section 1.06 or 10.04 (unless the respective Lender was
already a Lender hereunder immediately prior to such assignment or transfer) and
that is not such a United States person agrees to deliver to the Borrower and
the Administrative Agent on or prior to the date of such assignment or transfer
to such Lender (i) two accurate and complete original signed copies of Internal
Revenue Service Form W-8 ECI or Form W-8 BEN (with respect to a complete
exemption under an income tax treaty) certifying such Lender's entitlement as of
such date to a complete exemption from United States withholding tax with
respect to payments to be made under this Agreement and under any Note, or (ii)
if such Lender is not a "bank" within the meaning of Section 881(c)(3)(A) of the
Code and cannot deliver either Internal Revenue Service Form W-8 ECI or Form W-8
BEN (with respect to a complete exemption under an income tax treaty) pursuant
to clause (i) above, (x) a certificate substantially in the form of Exhibit C
(any such certificate, a "Section 2.06(c)(ii) Certificate") and (y) two accurate
and complete original signed copies of Internal Revenue Service Form W-8 BEN
(with respect to the portfolio interest exemption) certifying such Lender's
entitlement to a complete exemption from United States withholding tax with
respect to payments of interest to be made under this Agreement and under any
Note. In addition, each Lender described in the preceding sentence (a "Specified
Lender") agrees that from time to time after the Closing Date, when a lapse in
time or change in circumstances renders the previous certification obsolete or
inaccurate in any material respect, it will deliver to the Borrower and the
Administrative Agent two new accurate and
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complete original signed copies of Internal Revenue Service Form W-8 ECI or Form
W-8 BEN (with respect to a complete exemption under an income tax treaty) or
Form W-8 BEN (with respect to the portfolio interest exemption) and a Section
2.06(c)(ii) Certificate, as the case may be, and such other forms as may be
required in order to confirm or establish the entitlement of such Specified
Lender to a continued exemption from or reduction in United States withholding
tax with respect to payments by the Borrower under this Agreement and any Note,
or it shall immediately notify the Borrower and the Administrative Agent of its
inability to deliver any such Form or Certificate in which case such lender
shall not be required to deliver any such form of certificate pursuant to this
Section 2.06(c). Notwithstanding anything to the contrary contained in Section
2.06(b), but subject to Section 10.04(b) and the immediately succeeding
sentence, (x) the Borrower shall be entitled, to the extent it is required to do
so by law, to deduct or withhold income or similar taxes imposed by the United
States (or any political subdivision or taxing authority thereof or therein)
from interest, fees or other amounts payable hereunder for the account of any
Specified Lender for U.S. federal income tax purposes to the extent that such
Specified Lender has not provided to the Borrower U.S. Internal Revenue Service
Forms that establish a complete exemption from such deduction or withholding and
(y) the Borrower shall not be obligated pursuant to Section 2.06(b) hereof to
gross-up payments to be made to a Specified Lender in respect of income or
similar taxes imposed by the United States if (I) such Specified Lender has not
provided to the Borrower the Internal Revenue Service Forms required to be
provided to the Borrower pursuant to this Section 2.06(c) or (II) in the case of
a payment other than interest to a Specified Lender described in clause (ii)
above, to the extent that such forms do not establish a complete exemption from
withholding of such taxes. Notwithstanding anything to the contrary contained in
the preceding sentence or elsewhere in this Section 2.06 and except as set forth
in Section 10.04(b), the Borrower agrees to pay additional amounts and to
indemnify each Lender in the manner set forth in Section 2.06(b) in respect of
any amounts either paid by a Lender or deducted or withheld by the Borrower as
described in the immediately preceding sentence as a result of any changes that
are effective after the Closing Date (or, with respect to any assignee of any
Lender, after the date on which the assignment to such assignee becomes
effective) in any applicable law, treaty, governmental rule, regulation,
guideline or order, or in the interpretation thereof, relating to the deducting
or withholding of such Taxes that is imposed by the United States or any
political sub-division in or of the United States.
(d) Each Original Canadian Lender agrees to deliver to the Borrower
and the Administrative Agent on or prior to the Closing Date, or promptly
thereafter, two accurate and complete original signed copies of Internal Revenue
Service Form W-8 ECI or Form W-8 BEN (or successor forms) certifying to such
Lender's entitlement to a reduced rate of, or complete exemption from, United
States withholding tax with respect to payments to be made under this Agreement
and under any Note. In addition, each Original Canadian Lender agrees that from
time to time after the Closing Date, when a lapse in time or change in
circumstances renders the previous certification obsolete or inaccurate in any
material respect, it will deliver to the Borrower and the Administrative Agent
two new accurate and complete original signed copies of Internal Revenue Service
Form W-8 ECI or W-8 BEN, or it shall immediately notify each of the Borrower and
the Administrative Agent of its inability to deliver any such Form, in which
latter case such Original Canadian Lender shall not be required to deliver any
such Form pursuant to this Section 2.06(d). Notwithstanding anything to the
contrary contained in Section 2.06(b), but
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subject to Section 10.04(b), the Borrower shall, to the extent it is required to
do so by law, deduct or withhold income or similar taxes imposed by the United
States (or any political subdivision or taxing authority thereof or therein)
from interest, fees or other amounts payable hereunder for the account of an
Original Canadian Lender for U.S. federal income tax purposes. The Borrower
shall not be obligated pursuant to Section 2.06(b) hereof to gross-up payments
to be made to an Original Canadian Lender in respect of income or similar taxes
imposed by the United States if such Original Canadian Lender has not provided
to the Borrower the Internal Revenue Service Forms required to be provided to
the Borrower pursuant to this Section 2.06(d). Notwithstanding anything to the
contrary contained in the preceding sentence or elsewhere in this Section 2.06,
the Borrower agrees to pay any additional amounts and to indemnify each Original
Canadian Lender in the manner set forth in Section 2.06(b) in respect of any
amounts either paid by an Original Canadian Lender or deducted or withheld by
the Borrower if such Original Canadian Lender has not provided either Internal
Revenue Service Form W-8 BEN or Form W-8 ECI after determining in its reasonable
discretion that it will suffer any economic, legal or regulatory disadvantage as
a result of having provided such form.
(e) If the Borrower pays any additional amount under Section 2.06(b)
to a Lender and such Lender determines in its sole discretion that it has
actually received or realized in connection therewith any refund or any
reduction of, or credit against, its Tax liabilities in or with respect to the
taxable year in which the additional amount is paid (a "Tax Benefit"), such
Lender shall pay to the Borrower an amount that the Lender shall, in its sole
discretion, determine is equal to the net benefit, after tax, which was obtained
by the Lender in such year as a consequence of such Tax Benefit; provided,
however, that (i) any Lender may determine, in its sole discretion consistent
with the policies of such Bank, whether to seek a Tax Benefit; (ii) any Taxes
that are imposed on a Lender as a result of a disallowance or reduction
(including through the expiration of any tax credit carryover or carryback of
such Lender that otherwise would not have expired) of any Tax Benefit with
respect to which such Lender has made a payment to the Borrower pursuant to this
Section 2.06(e) shall be treated as a Tax for which the Borrower is obligated to
indemnify such Lender pursuant to this Section 2.06 without any exclusions or
defenses; and (iii) nothing in this Section 2.06(e) shall require the Lender to
disclose any confidential information to the Borrower (including , without
limitation, its tax returns).
(f) At or before the Closing Date, or promptly thereafter, and at such
subsequent times reasonably requested in writing by the Borrower or the
Administrative Agent, each U.S. Lender shall provide each of the Borrower and
the Administrative Agent with a duly executed and valid Internal Revenue Service
Form W-9 (or appropriate successor form), provided, that the Administrative
Agent is not a United States Person as defined in ss.7701(a)(30) of the Code;
provided, further, that a U.S. Lender shall not be required to provide such form
if such U.S. Lender determines in its reasonable discretion that it will suffer
any economic, legal or regulatory disadvantage as a result of having provided
such form.
(g) At or prior to the Closing Date, and at such subsequent times
reasonably requested in writing by the Borrower, the Administrative Agent shall
provide the Borrower with IRS Form W-8IMY.
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(h) The provisions of this Section 2.06 are subject to the provisions
of Section 10.15 (to the extent applicable).
Section 3. Conditions Precedent.
3.01 Conditions Precedent to Term Loans and PIK Loans. This Agreement
shall become effective on the date (the "Closing Date") on which each of the
conditions contained in this Section 3 is satisfied. Unless the Administrative
Agent has received actual notice from any Lender that the conditions set forth
in this Section 3 have not been met to its satisfaction, upon the Administrative
Agent's good faith determination that the conditions described in this Section 3
have been met to the Administrative Agent's satisfaction, the Closing Date shall
be deemed to have occurred, regardless of any subsequent determination that one
or more of the conditions thereto had not been met (although the occurrence of
the Closing Date shall not release the Borrower or any other Obligor from any
liability for failure to satisfy one or more of the applicable conditions
contained in this Section 3; provided that all items, actions or determinations
which are required to be acceptable to the Administrative Agent or the Required
Pre-Petition Lenders under this Section 3, shall be deemed satisfactory to the
Required Pre-Petition Lenders upon the occurrence of the Closing Date). The
Administrative Agent will give the Borrower and each Lender prompt written
notice of the occurrence of the Closing Date. Notwithstanding that this
Agreement is expressed to be dated as of March 31, 2000, it is agreed that this
Agreement shall be deemed to be delivered on and take effect as of and from the
Closing Date.
(a) Execution of Agreement; Notes. (i) Each Obligor, the
Administrative Agent and the Required Pre-Petition Lenders shall have
signed a copy hereof (whether the same or different copies) and shall have
delivered the same to the Administrative Agent at its Notice Office or, in
the case of the Required Pre-Petition Lenders, shall have given to the
Administrative Agent telephonic (confirmed in writing) or written notice
(actually received) at such office that the same has been signed and mailed
to it and (ii) there shall have been delivered to the Administrative Agent
for the account of each of the Lenders, the appropriate Notes and other
Loan Documents executed by the Borrower (and/or any other Person required
thereunder) in the amount, maturity and as otherwise provided herein and as
satisfactory to the Administrative Agent.
(b) Exit Facility. On the Closing Date, the Exit Facility shall have
been executed and delivered and a copy thereof shall have been received by
the Administrative Agent in a form satisfactory to the Administrative Agent
and the Required Pre-Petition Lenders, and the initial extension of credit
having occurred (or simultaneously shall occur) thereunder.
(c) Intercreditor Agreements. On the Closing Date, the Administrative
Agent shall have received fully executed and delivered originals of (i) the
Collateral Agency and Intercreditor Agreement, (ii) the Prepetition Lien
Subordination and Intercreditor Agreement and (iii) the Bonding Lien
Intercreditor Agreement, the form and substance of
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each of which shall be satisfactory to the Administrative Agent and the
Required Pre-Petition Lenders.
(d) Corporate Documents; Proceedings; Officer's Certificates. (i) The
Administrative Agent shall have received from each Obligor a certificate,
dated the Closing Date, signed by a Responsible Officer, Secretary or
Assistant Secretary of such Obligor and attested to by the Secretary or any
Assistant Secretary of such Obligor in the form of Exhibit D with
appropriate insertions, together with copies of the Certificate of
Incorporation and By-Laws (and in the case of the Borrower, the
Registration Rights Agreements and Shareholders Rights Agreement) of each
Obligor and the resolutions of the Board of Directors of each Obligor
referred to in such certificate, authorizing and approving the transactions
contemplated by this Agreement, and the foregoing shall be satisfactory in
form and substance to the Administrative Agent.
(ii) All corporate and legal proceedings and all instruments and
agreements in connection with the transactions contemplated in this
Agreement and the other Loan Documents shall be satisfactory in form and
substance to the Administrative Agent, and the Administrative Agent shall
have received all information and copies of all documents and papers,
including records of corporate proceedings and governmental approvals, if
any, which the Administrative Agent reasonably may have requested in
connection therewith, such documents and papers where appropriate to be
certified by proper corporate officers or Governmental Authorities.
(e) Opinions of Counsel. The Administrative Agent shall have received
an opinion in form and substance satisfactory to it, addressed to each of
the Lenders and dated the Closing Date, from (i) Skadden, Arps, Slate,
Meagher & Flom (Illinois), special counsel to the Borrower and the
Subsidiary Guarantors, covering the matters set forth in Exhibit E-1 and
such other matters incident to the transactions contemplated herein as the
Administrative Agent may reasonably request, (ii) from Stikeman Elliott,
Canadian counsel to the Borrower and the Subsidiary Guarantors, covering
the matters set forth in Exhibit E-2 and such other matters incident to the
transactions contemplated herein as the Administrative Agent may reasonably
request, (iii) from Colin Soule, Esq., as General Counsel to the Borrower,
covering the matters set forth in Exhibit E-3 and such other matters
incident to the transactions contemplated herein as the Administrative
Agent may reasonably request and (iv) from local counsels to the Borrower
and the Subsidiary Guarantors, as requested by the Administrative Agent
covering the matter set forth in Exhibit E-4 and such other matters
incident to the transactions contemplated herein as the Administrative
Agent may reasonably request.
(f) Order. The Administrative Agent shall have received (i) a copy of
the US Confirmation Order, (ii) a copy of the Stipulation and Order and
(iii) a copy of the Canadian Vesting Order and the Canadian Confirmation
Order (collectively, the "Canadian Orders"), which US Confirmation Order,
Stipulation Order and Canadian Orders shall be in full force and effect and
shall not have been stayed, reversed, vacated, rescinded or otherwise
modified without the prior written consent of the Administrative
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Agent and the Required Pre-Petition Lenders, shall be satisfactory to the
Administrative Agent and the Required Pre-Petition Lenders and shall,
except as shall be acceptable to the Administrative Agent, be a Final Order
with respect to the US Confirmation Order and the Canadian equivalent of a
Final Order with respect to the Canadian Orders.
(g) Consummation of the Reorganization Plan. (i) On the Closing Date,
the Reorganization Plan shall have been consummated (except to the extent
distributions are to be made after the Plan Effective Date) and become
effective in accordance with its terms and applicable law, the Plan
Effective Date and the consummation thereof shall have occurred thereunder
and all conditions to the Plan Effective Date and such consummation shall
have been satisfied or waived (with the consent of the Administrative Agent
and the Required Pre-Petition Lenders).
(ii) The Canadian Transactions shall have been fully consummated in
accordance with the terms and conditions of the Canadian Orders.
(iii) The Pre-Closing Restructuring Transactions shall have been fully
consummated.
(h) Payment of Fees, etc. The Borrower shall have paid all costs, fees
and expenses owing under or in connection with the Loan Documents and the
Fee Letter to the extent due to the Administrative Agent or the Lenders on
or before the Closing Date and shall have paid all fees and disbursements
of the advisors of the Administrative Agent and the Lenders which shall be
due and payable on or prior to the Closing Date (including all fees and
disbursements payable relative to the 1997 Credit Agreement and the
Reorganization Plan) to the extent due and notified to the Borrower
(including, without limitation, reasonable fees and expenses of counsel).
(i) Approvals. On the Closing Date, all necessary governmental and
third party approvals in connection with the transactions contemplated by
the Reorganization Plan and the Loan Documents and otherwise referred to
herein or therein shall have been obtained and remain in effect, and all
applicable waiting periods shall have expired without any action being
taken by any competent authority which restrains, prevents or imposes, in
the judgment of the Borrower, the Required Pre-Petition Lenders and the
Administrative Agent, materially adverse conditions upon the consummation
of such transactions. Additionally, there shall not exist any judgment,
order, injunction or other restraint prohibiting or imposing material
adverse conditions upon the consummation of the Reorganization Plan or the
transactions contemplated by the Loan Documents.
(j) Existing Obligations and Liens. (i) On or prior to the Closing
Date, the commitments under the DIP Credit Agreement shall have been
terminated, and all loans thereunder, together with interest thereon, and
all other amounts (including, without limitation, fees) owing pursuant to
the DIP Credit Agreement, shall have been repaid in full and any priority
status, security interest or Liens relating thereto shall have been
released or terminated and be of no further force and effect. On the
Closing Date, all Existing Letters of Credit shall have been either (x)
terminated or returned to the issuer
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thereof undrawn and canceled or (y) back-stopped under the Exit Facility in
a manner satisfactory to the issuers of such Existing Letters of Credit.
The Administrative Agent and the Required Pre-Petition Lenders shall have
received evidence in form, scope and substance satisfactory to the
Administrative Agent that the matters set forth in this Section 3.01(j)(i)
have been satisfied at such time.
(ii) On the Closing Date, all Existing Indebtedness of the Borrower
and its Subsidiaries is set forth on Schedule III, and all Liens securing
Existing Indebtedness, shall be evidenced by the agreements relating
thereto, and neither the Borrower nor any of its Subsidiaries shall be
obligated with respect to any other Indebtedness, nor shall the Borrower or
any of its Subsidiaries, or any of their respective assets or properties,
be subject to Liens (other than Permitted Liens).
(iii) On the Closing Date, all Indebtedness (other than Existing
Indebtedness and the indebtedness of PSC and the other Canadian Debtors to
the Pre-Petition Lenders) of the Released Creditors shall have been
canceled, repaid or converted into equity and all security interests and
Liens held by or on behalf of such Released Creditors (other than to the
extent securing Existing Indebtedness) on the assets owned by the Borrower
or its Subsidiaries shall have been terminated and released, and any
collateral in possession of any Released Creditor shall have been returned
to the Borrower. The Administrative Agent shall have received evidence in
form, scope and substance satisfactory to the Administrative Agent that the
matters set forth in this Section 3.01(j)(iii) have been satisfied at such
time, which may include (i) termination statements (Form UCC-3 or the
appropriate equivalent) for filing under the UCC of each jurisdiction where
a financing statement (Form UCC-1 or the appropriate equivalent) was filed
with respect to the Borrower, its Subsidiaries and their predecessors in
interest in connection with the security interests created with respect to
such Released Creditors and the documentation related thereto and (ii) a
termination or assignment of any security interest in, or Lien on, any
patents, trademarks, copyrights, or similar interests of the Borrower, its
Subsidiaries and their predecessors in interest on which filings have been
made.
(k) Financial Statements. On the Closing Date, the Administrative
Agent shall have received the financial statements set forth on Schedule
IV.
(l) Insurance Certificates. On the Closing Date, the Borrower shall
have delivered to the Administrative Agent certificates of insurance and
other evidence of such insurance, if any, with respect to the insurance
policies described on Schedule V naming the Collateral Agents as loss
payees in respect of any casualty loss policies covering Collateral, and
naming the Collateral Agents as additional insured with respect to any
liability policy and stating that such insurance shall not be canceled or
materially revised without 30 days' prior written notice by the insurer to
the Collateral Agents.
(m) Unsecured Notes. On or prior to the Closing Date, the Lenders
shall have received true and correct copies of the Unsecured Notes
Documents, and all of the terms and conditions thereof shall be in form and
substance satisfactory to the Administrative
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Agent and the Required Pre-Petition Lenders. All of the Unsecured Notes
Documents (other than the Unsecured Notes) shall have been duly executed
and delivered by the parties thereto, shall be in full force and effect.
(n) Security Agreements. On the Closing Date, (i) the Borrower and
each US Subsidiary Guarantor shall have executed and delivered a Security
Agreement in the form of Exhibit G-1 (as modified, supplemented or amended
from time to time, the "Security Agreement") together with the U.S. motor
vehicle registrations requested by the Exit Agent, a Copyright Security
Agreement in the form of Exhibit G-2 (as modified, supplemented, or amended
from time to time, the "Copyright Security Agreement"), a Patent Security
Agreement in the form of Exhibit G-3 (as modified, supplemented, or amended
from time to time, the "Patent Security Agreement"), a Trademark Security
Agreement in the form of Exhibit G-4 (as modified, supplemented, or amended
from time to time, the "Trademark Security Agreement"), a Rolling Stock
Security Agreement in the form of Exhibit G-5 (as modified, supplemented or
amended from time to time, the "Rolling Stock Security Agreement"), (ii)
each Canadian Guarantor shall have executed and delivered a Canadian
Security Agreement in the form of Exhibit G-6 (as modified, supplemented,
or amended from time to time, the "Canadian Security Agreement"), (iii)
each Non-US Guarantor shall have executed and delivered a Guarantor
Security Agreement in the form of Exhibit G-7 (as modified, supplemented,
or amended from time to time, the "Guarantor Security Agreement") and (iv)
the Borrower shall have delivered properly executed Quebec Security
Documents in the form of Exhibit G-8.
(o) Mortgages. On the Closing Date, the Collateral Agents shall have
received fully executed counterparts of the mortgages, debentures or deeds
to be filed to secure the debt to the Lenders, in form and substance
satisfactory to the Administrative Agent, (each, as modified, supplemented,
or amended from time to time, a "Mortgage" and, collectively, the
"Mortgages"), to effectively create a valid and enforceable mortgage lien
subject to no other Liens other than the Permitted Liens against the Real
Property Collateral owned or leased by an Obligor as of the Closing Date in
favor of the Collateral Agents for the benefit of the PIK Lenders and the
Term Lenders.
(p) Subsidiary Guaranty. Each Subsidiary Guarantor shall have duly
authorized, executed and delivered either (i) the US Subsidiary Guaranty in
the form of Exhibit H-1, or (ii) the Canadian Subsidiary Guaranty in the
form of Exhibit H-2, and the US Subsidiary Guaranty and the Canadian
Subsidiary Guaranty shall each be in full force and effect.
(q) Stock Pledge Agreement. Each Obligor shall have duly authorized,
executed and delivered the Stock Pledge Agreement in the form of Exhibit I
hereto (as amended, restated, supplemented or modified from time to time,
the "Stock Pledge Agreement"), which shall be in full force and effect, and
shall have delivered the collateral subject thereto to the appropriate
Collateral Agent as determined by the Collateral Agency and Intercreditor
Agreement, as secured party, (x) endorsed in blank in
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the case of promissory notes and (y) together with executed and undated
stock powers, in the case of Stock, endorsed in blank.
(r) UK Operations. The Administrative Agent shall have received
executed UK Compliance Certificates and such certificates and all exhibits
attached thereto shall be in form and substance satisfactory to the
Administrative Agent;
(s) Cost Sharing Agreement. The Cost Sharing Agreement shall have been
executed and the Administrative Agent shall have received a copy thereof
which shall be in form and substance satisfactory to the Administrative
Agent.
(t) Funding of Claims. The Pre-Petition Lenders shall have entered
into an agreement (the "Funding Agreement") in form and substance
satisfactory to the Administrative Agent, regarding the funding of certain
retained claims which are property of PSC and its Canadian Subsidiaries.
(u) Excess Proceeds Account. 75% of all amounts deposited in the
Excess Proceeds Account shall have been delivered to the Term Lenders or as
they direct, which amounts shall reduce dollar-for-dollar the initial
principal amount of the Term Loans and the remaining 25% of such proceeds
shall have been released to the Borrower.
(v) UK Sale. The Administrative Agent shall have received evidence
satisfactory to it that all the conditions precedent to the sale of the
shares of Philip Services (Europe) Limited other than the Plan Effective
Date, have been satisfied.
(w) Exit Facility. There shall be no default or event of default under
the Exit Facility.
(x) Backstopping Letters of Credit. The Existing Letters of Credit
shall have been backstopped by letters of credit issued under the Exit
Facility in a manner satisfactory to the respective issuer thereof which
shall be in form and substance satisfactory to the issuers of the Existing
Letters of Credit.
Section 4. Representations, Warranties and Agreements. In order to
induce the Lenders to enter into this Agreement, the Borrower makes the
following representations and warranties to the Lenders which shall be true,
correct, and complete, in all material respects, as of the Closing Date (except
to the extent that such representations and warranties relate solely to an
earlier date) and such representations and warranties shall survive the
execution and delivery of this Agreement and the Notes.
4.01 No Encumbrances. Each Obligor has good and indefeasible title to
its Collateral, free and clear of Liens except for Permitted Liens.
4.02 Equipment. Except for immaterial amounts of idle Equipment, all
of the Equipment is used or held for use in the Obligors' business and is fit
for such purposes.
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4.03 Location of Inventory and Equipment. Except for railcars, other
rolling stock, registered motor vehicles, aircraft, vessels, and immaterial
(less than $10,000,000 in market value as reasonably determined by the
Collateral Agent) amounts of Inventory and other Equipment (i) no Inventory or
Equipment is stored with a bailee, warehouseman, or similar party and (ii) no
Inventory or Equipment is located at any location other than the locations
identified on Schedule VI.
4.04 Inventory Records. The Obligors, taken as a whole, keep records
that are accurate, in all material respects, and that itemize and describe the
type and quantity of its Inventory held for sale and its cost therefor.
4.05 Location of Chief Executive Office; FEIN. The chief executive
office of each of the Obligors is located at the address indicated in Schedule
VII and the Borrower's and each US Subsidiary Guarantor's FEIN is identified in
Schedule VII.
4.06 Due Organization and Qualification; Subsidiaries. (a) Each
Obligor (except for Oneida Asbestos Removal Inc.) is duly organized and existing
and in good standing under the laws of the jurisdiction of its organization and
qualified to do business in any state where the failure to be so qualified
reasonably could be expected to have a Material Adverse Change.
(b) Set forth on Schedule VIII, is a complete and accurate description
of the authorized capital Stock of the Borrower, by class, and a description of
the number of shares of each such class that are issued and outstanding. Other
than as described on Schedule VIII, and other than the conversion rights
applicable under the Unsecured Notes Documents entered into with respect to the
Unsecured Convertible Debt Indenture and the PIK Loans, there are no
subscriptions, options, warrants, or calls relating to any shares of the capital
Stock of the Borrower, including any right of conversion or exchange under any
outstanding security or other instrument. Except for any such obligations set
forth under this Agreement or under the Unsecured Notes Documents entered into
with respect to the Unsecured Convertible Debt Indenture, the Borrower is not
subject to any obligation (contingent or otherwise) to repurchase or otherwise
acquire or retire any shares of its capital Stock or any security convertible
into or exchangeable for any of its capital Stock.
(c) Set forth on Schedule VIII, is a complete and accurate list of the
Borrower's direct and indirect Subsidiaries, showing: (i) the jurisdiction of
their incorporation; (ii) the number of shares of each class of common and
preferred Stock authorized for each of such Subsidiaries; and (iii) the number
and the percentage of the outstanding shares of each such class owned directly
or indirectly by the Borrower. All of the outstanding capital Stock of each such
Subsidiary has been validly issued and is fully paid and non-assessable.
(d) Except as set forth on Schedule VIII, no capital Stock (or any
securities, instruments, warrants, options, purchase rights, conversion or
exchange rights, calls, commitments or claims of any character convertible into
or exercisable for Stock) of any direct or indirect Subsidiary of the Borrower
is subject to the issuance of any security, instrument, warrant, option,
purchase right, conversion or exchange right, call, commitment or claim of any
right, title, or interest therein or thereto.
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4.07 Due Authorization; No Conflict. (a) The execution, delivery, and
performance by each Obligor of the Loan Documents to which it is a party have
been duly authorized by all necessary action on the part of such Obligor.
(b) The execution, delivery, and performance by each Obligor of the
Loan Documents to which it is a party do not and will not (i) violate any
provision of federal, state, or local law or regulation applicable to such
Obligor, the Governing Documents of such Obligor, or any order, judgment, or
decree of any court or other Governmental Authority binding on such Obligor,
(ii) conflict with, result in a breach of, or constitute (with due notice or
lapse of time or both) a default under any material contractual obligation of
such Obligor except that the Borrower does not make the foregoing representation
and warranty as to whether the grant of Collateral Agents' Liens in and to any
Obligor's right, title, and interest in and to any agreement, instrument,
license, permit or other document or General Intangible conflicts with or
constitutes a default under such agreement, instrument, license, permit or other
document or General Intangible if and to the extent such agreement, instrument,
license, permit or other document or General Intangible purports to prohibit the
assignment thereof or grant of a security interest therein, (iii) result in or
require the creation or imposition of any Lien of any nature whatsoever upon any
properties or assets of such Obligor, other than Permitted Liens, or (iv) except
to the extent obtained as of the Closing Date, require any approval of
stockholders or any approval or consent of any Person under any material
contractual obligation of such Obligor.
(c) Other than the filing of financing statements, fixture filings,
Mortgages, filings under the PPSA, and filings necessary to perfect security
interests in aircraft, rail cars, vessels and certificated motor vehicles, the
execution, delivery, and performance by each Obligor of the Loan Documents to
which such Obligor is a party do not and will not require any registration with,
consent, or approval of, or notice to, or other action with or by, any
Governmental Authority or other Person.
(d) The Loan Documents to which each Obligor is a party, and all other
documents contemplated hereby and thereby, when executed and delivered by such
Obligor will be the legally valid and binding obligations of such Obligor,
enforceable against such Obligor in accordance with their respective terms,
except as enforcement may be limited by equitable principles or by bankruptcy,
insolvency, reorganization, moratorium, or similar laws relating to or limiting
creditors' rights generally.
(e) Except (x) to the extent expressly set forth in the Collateral
Documents and (y) that the Collateral may be subject to the security interests
evidenced by Permitted Liens relating thereto, the Collateral Agents' Liens
granted by the Obligors for the benefit of the Lenders in and to their
properties and assets pursuant to this Agreement and the other Loan Documents
create, as security for the Obligations purported to be secured thereby, a valid
and enforceable perfected security interest in, and Lien on, all the Collateral
subject thereto, superior to and prior to the rights of all third Persons other
than the holders of the Senior Liens and certain Permitted Liens that are
specifically identified on Schedule XXVI as being entitled to priority over the
Collateral Agents' Liens.
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4.08 Litigation. Other than those matters disclosed on Schedule IX,
there are no actions, suits, or proceedings pending or, to the best knowledge of
the Borrower and the US Subsidiary Guarantors, threatened against any Obligor,
except for matters that are fully covered by insurance (subject to customary
deductibles).
4.09 No Material Adverse Change. Attached hereto as Schedule IV is a
pro forma balance sheet of the Borrower and its Subsidiaries that is dated as of
the Closing Date, which was prepared based upon the most recent balance sheet of
the Borrower and its Subsidiaries available prior to the Closing Date, which was
prepared in accordance with GAAP (except for the omission of footnotes, and
certain reclassifications and interim period adjustments and accruals (all of
which are of a recurring nature and none of which individually, or in the
aggregate, would be material)) and presents fairly in all material respects the
consolidated financial position of the Borrower and its Subsidiaries as of the
Closing Date.
4.10 Fraudulent Transfer. (a) The Obligors, taken as a whole, are
Solvent.
(b) No transfer of property is being made by an Obligor and no
obligation is being incurred by an Obligor in connection with the transactions
contemplated by this Agreement or the other Loan Documents with the intent to
hinder, delay, or defraud either present or future creditors of such Obligor.
4.11 Employee Benefits. Neither the Borrower nor any of its
Subsidiaries, or any of their ERISA Affiliates maintains or contributes or is
required to contribute to any Benefit Plan or any Multiemployer Plan, other than
those listed on Schedule X. As of the Closing Date, the Borrower, the US
Subsidiary Guarantors and each ERISA Affiliate have satisfied the minimum
funding standards of ERISA and the Code with respect to each Benefit Plan to
which it is obligated to contribute. Full payment has been made by the Borrower,
the US Subsidiary Guarantors or any of their ERISA Affiliates of all minimum
amounts which such entities are required to contribute under the terms of each
Plan and Multiemployer Plan except where the failure to so comply, taking all
instances in the aggregate, would not reasonably be expected to result in
liability in respect of such minimum amounts in excess of $35,000. No ERISA
Event has occurred nor has any other event occurred that may result in an ERISA
Event that reasonably could be expected to result in a Material Adverse Change.
Neither the Borrower nor any of its Subsidiaries, any ERISA Affiliate, or any
fiduciary of any Plan is subject to any direct or indirect liability with
respect to any Plan under any applicable law, treaty, rule, regulation, or
agreement.
4.12 Environmental Condition. Except as set forth on Schedule XI, to
the Borrower's knowledge, none of the Obligors' properties or assets has ever
been used by an Obligor or by previous owners or operators in the disposal of,
or to produce, store, handle, treat, release, or transport, any Hazardous
Materials, where such production, storage, handling, treatment, release or
transport was in violation of applicable Environmental Law in a manner that
reasonably is likely, individually or in the aggregate, to result in a Material
Adverse Change. Except as set forth on Schedule XII, to the Borrower's
knowledge, none of the Obligors' properties or assets has ever been designated
or identified in any manner pursuant to any environmental protection statute as
a Hazardous Materials disposal site (where the effect that reasonably
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could be expected to result from such designation or identification reasonably
could be expected to result in a Material Adverse Change), or as a candidate for
closure pursuant to any environmental protection statute. Except as set forth on
Schedule XIII, no Obligor has received notice that a Lien arising under any
Environmental Law has attached to any revenues or to any real or personal
property owned or operated by an Obligor. Except as set forth on Schedule XIV,
no Obligor has received a summons, citation, notice, or directive from the
Environmental Protection Agency or any other federal or state governmental
agency concerning any action or omission by such Obligor resulting in the
releasing or disposing of Hazardous Materials into the environment, other than
such summons, citations, notices, or directives that individually or in the
aggregate are not reasonably likely to result in a Material Adverse Change.
4.13 Intellectual Property. The Obligors, taken as a whole, own, or
hold adequate licenses or rights to use, all trademarks, trade names,
copyrights, patents, patent rights, and licenses that are necessary to the
conduct of their business, taken as a whole, as currently conducted. Attached
hereto as Schedule XV is a true, correct, and complete listing of all patents,
patent applications, trademarks, trademark applications, copyrights, and
copyright registrations as to which an Obligor is the owner or is an exclusive
licensee.
4.14 Leases. The Obligors, taken as a whole, enjoy peaceful and
undisturbed possession under all leases material to the business of the
Obligors, taken as a whole, and to which they are parties or under which they
are operating. All of such leases are valid and subsisting and no material
default by the Obligors exists under any of them.
4.15 DDAs. Set forth on Schedule XVI are all of the Obligors' current
DDAs, including, with respect to each depository (i) the name and address of
that depository; and (ii) the account number(s) of the account(s) maintained
with such depository.
4.16 Owned Real Property and Material Leases. Schedule XVIII is a
listing of all Real Property that is either (a) owned in fee by the Obligors, or
(b) leased by the Obligors and identified by the Obligors as being material to
the business of the Obligors taken as a whole.
4.17 Complete Disclosure. All factual information (taken as a whole)
furnished by or on behalf of the Obligors in writing to the Administrative Agent
or any Lender (including all information contained in the Schedules hereto or in
the other Loan Documents) for purposes of or in connection with this Agreement,
the other Loan Documents or any transaction contemplated herein or therein is,
and all other such factual information (taken as a whole) hereafter furnished by
or on behalf of the Obligors in writing to the Administrative Agent or any
Lender will be, true and accurate in all material respects on the date as of
which such information is dated or certified and not incomplete by omitting to
state any fact necessary to make such information (taken as a whole) not
misleading in any material respect at such time in light of the circumstances
under which such information was provided.
4.18 Indebtedness. Set forth on Schedule III is a true and complete
list of all (a) Indebtedness of the Obligors outstanding immediately prior to
the Closing Date that is to remain outstanding after the Closing Date, and (b)
agreements existing immediately prior to the Closing Date that are to remain
outstanding after the Closing Date pursuant to which the
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Obligors are entitled to incur Indebtedness, in each case showing the aggregate
principal amount thereof and the name of the Obligor which directly or
indirectly is obligated on account of such Indebtedness (collectively, the
"Existing Indebtedness").
4.19 Project Accounts. Set forth on Schedule XIX is a true and
complete list of all Project Accounts.
4.20 Directors' Compensation. Set forth on Schedule XX is a
description of the annual fee or per-meeting fees to be paid to directors by
each Obligor for the current fiscal year.
4.21 Rights Agreement. Exhibit M is a true, correct and complete copy
of the executed Rights Agreement, and the Rights Agreement has not been amended,
supplemented or modified in any way, and remains in full force and effect.
Section 5. Affirmative Covenants. The Borrower covenants and agrees
that, unless the Required Lenders otherwise consent, on and after the Closing
Date and until the Term Loans, the PIK Loans, the Term Notes and the PIK Notes,
together with interest, fees and all other Obligations incurred hereunder and
thereunder, are paid in full, the Borrower shall do, and unless the context
otherwise requires, shall cause each Obligor to do, all of the following:
5.01 Accounting System. Maintain a system of accounting that enables
the Borrower to produce consolidated financial statements in accordance with
GAAP and maintain records pertaining to the Collateral that contain information
as from time to time reasonably may be requested by the Administrative Agent.
The Obligors taken as a whole also shall keep an inventory reporting system that
shows all additions, sales, claims, returns, and allowances with respect to the
Inventory.
5.02 Financial Statements, Reports, Certificates. Deliver to the
Administrative Agent, with sufficient copies for each Lender of the following
documents (or, with the consent of the Administrative Agent, the electronic
equivalent of such documents) (it being understood that, absent request by the
Administrative Agent for information with respect to a particular Obligor, this
covenant shall be deemed satisfied to the extent that the Borrower provides the
following information for the Obligors taken as a whole):
(a) as soon as available, but in any event within 45 days after the
end of each month during each of the Borrower's fiscal years,
(i) a company prepared consolidated balance sheet, statement of
earnings, and statement of cash flow covering the Borrower's and its
Subsidiaries operations during such period,
(ii) a certificate signed by the chief financial officer of the
Borrower on behalf of the Borrower to the effect that:
(A) the financial statements delivered hereunder have been
prepared in accordance with GAAP (except for the lack of
footnotes and
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being subject to year-end audit adjustments) and present fairly
in all material respects the financial condition of the Borrower
and its Subsidiaries,
(B) there does not exist any condition or event that
constitutes a Default or Event of Default (or, to the extent of
any non-compliance, describing such non-compliance as to which he
or she may have knowledge and what action the applicable Obligor
has taken, is taking, or proposes to take with respect thereto),
(iii) for each month that is the date on which a financial
covenant in Section 6.17 is to be tested, a Compliance Certificate
demonstrating in reasonable detail, compliance at the end of such
period with the applicable financial covenants contained in Section
6.17, and
(iv) for each month that ends immediately prior to a Cash Flow
Payment Date, a calculation of the payment required to be made by the
Borrower on such Cash Flow Payment Date.
(b) as soon as available, but in any event within 120 days after the
end of each of the Borrower's fiscal years that occurs after the Closing
Date.
(i) consolidated financial statements of the Borrower and its
Subsidiaries for each such fiscal year, audited by
PriceWaterhouseCoopers or other independent certified public
accountants reasonably acceptable to the Administrative Agent and
certified, without any qualifications, by such accountants to have
been prepared in accordance with GAAP (such audited financial
statements to include a balance sheet, statement of earnings, and
statement of cash flow and, if prepared, such accountants' letter to
management),
(ii) a certificate of such accountants addressed to the
Administrative Agent and the Lenders stating that such accountants do
not have knowledge of the existence of any Default or Event of Default
under Section 6.17,
(c) if and when filed by the Borrower,
(i) 10-Q quarterly reports, Form 10-K annual reports, and Form
8-K current reports,
(ii) any other filings made by the Borrower with the SEC, and
(iii) any other information that is provided by the Borrower to
its shareholders generally,
(d) upon the request of the Administrative Agent,
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(i) any other report reasonably requested relating to the financial
condition of the Borrower or any of the other Obligors.
In addition to the financial statements referred to above, the Borrower and
the US Subsidiary Guarantors agree to deliver promptly to the Administrative
Agent (with copies (or, with the consent of the Administrative Agent, the
electronic equivalent thereof) for each Lender) copies of management reports, in
the form historically prepared by the Borrower, that reflect the operational
performance of each of the individual business segments of the Borrower and the
US Subsidiary Guarantors taken as a whole. Without limiting the foregoing, the
Borrower and the US Subsidiary Guarantors agree (unless and until the UK Metals
Operations have been sold) that each of the financial statements to be delivered
hereunder shall be prepared on a consolidated basis reflecting the financial
performance of the Borrower and its Subsidiaries (exclusive of the financial
performance of the UK Metals Operations) and reflecting the UK Metals
Operations. The Borrower and the US Subsidiary Guarantors agree that their
independent certified public accountants are authorized to communicate with the
Administrative Agent and to release to the Administrative Agent whatever
financial information concerning the Obligors that the Administrative Agent
reasonably may request; provided, however, that, prior to contacting such
independent certified public accountants, the Administrative Agent shall
attempt, in good faith, to obtain such information from the Borrower and the US
Subsidiary Guarantors.
5.03 Tax Returns. Upon the request of the Administrative Agent, deliver
copies of all federal income tax returns as soon as the same are available and
in any event no later than 45 days after the same are required to be filed by
law (after giving effect to any applicable duly filed extensions).
5.04 Certificates of Title. Upon the Collateral Agent's request, promptly
deliver to the Collateral Agents, properly endorsed, any and all certificates of
title to any items of Equipment.
5.05 Maintenance of Equipment. Maintain the Equipment in good operating
condition and repair (ordinary wear and tear excepted), and make all necessary
replacements thereto so that the value and operating efficiency thereof shall at
all times be maintained and preserved, except where the Borrower and the US
Subsidiary Guarantors determine that to do so would not be economic and where
the failure to do so is not reasonably likely to result in a Material Adverse
Change. Other than those items of Equipment that constitute fixtures on the
Closing Date, each Obligor shall use its commercially reasonable efforts to
prevent any item of Equipment from becoming a fixture to real estate (other than
Real Property Collateral) or an accession to other property, and such Equipment
shall at all times remain personal property.
5.06 Taxes. Cause all assessments and taxes, whether real, personal, or
otherwise, due or payable by, or imposed, levied, or assessed against any
Obligor or any of its property to be paid in full, before delinquency or before
the expiration of any extension period, except to the extent that the validity
of such assessment or tax shall be the subject of a Permitted Protest. The
Obligors will make timely payment or deposit of all tax payments and withholding
taxes required of it by applicable laws, including those laws concerning
F.I.C.A., F.U.T.A., state
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disability, and local, state, and federal income taxes, and will, upon request,
furnish the Administrative Agent with proof satisfactory to the Administrative
Agent indicating that each Obligor has made such payments or deposits. Upon the
request of the Administrative Agent, each Obligor shall deliver satisfactory
evidence of payment of applicable excise taxes in each jurisdiction in which (a)
such Obligor conducts business or is required to pay any such excise tax, (b)
where such Obligor's failure to pay any such applicable excise tax would result
in a Lien on the properties or assets of such Obligor, or (c) where such
Obligor's failure to pay any such applicable excise tax would constitute a
Material Adverse Change. The foregoing notwithstanding, Obligors may have at any
one time outstanding: (i) an amount of $500,000 in unpaid and delinquent taxes
and assessments (exclusive of those subject to Permitted Protests); plus (ii)
delinquent taxes owing by BEC/Philip in the approximate amount of $338,000 owing
to Jefferson County, Alabama; plus (iii) provincial sales taxes in arrears in
the approximate amount of $305,000 as identified on that certain document
labeled as "Receiver's Reserve Estimate" (collectively, "Permitted Delinquent
Taxes"), Obligors shall use their commercially reasonable efforts to promptly
discharge and pay the Permitted Delinquent Taxes.
5.07 Insurance. (a) At the Obligors' expense, maintain insurance respecting
the Collateral, wherever located, and with respect to the Obligors' business,
covering loss or damage by fire, theft, explosion, and all other hazards and
risks as ordinarily are insured against by other Persons engaged in the same or
similar businesses. The Obligors also shall maintain business interruption,
public liability, and product liability insurance, as well as insurance against
larceny, embezzlement, and criminal misappropriation All such policies of
insurance shall be in such amounts and with such insurance companies as are
reasonably satisfactory to the Administrative Agent. The Obligors shall deliver
copies of all such policies to the Administrative Agent with 438 BFU lender's
loss payable endorsements or other reasonably satisfactory lender's loss payable
endorsements, naming (i) prior to Termination of the Exit Facility, such Person
as is required under the Collateral Agency and Intercreditor Agreement, and (ii)
thereafter, the Collateral Agents, as loss payee, or additional insured, as
appropriate. Each policy of insurance or endorsement shall contain a clause
requiring the insurer to give not less than 30 days' prior written notice to the
Administrative Agent in the event of cancellation of the policy for any reason
whatsoever. If the Obligors fail to provide and pay for such insurance, the
Administrative Agent may, at its option, but shall not be required to, procure
the same and charge the Borrower therefor.
(b) At the Obligors' expense, obtain and maintain (i) insurance of the type
necessary to insure the Collateral and all improvements to the Real Property,
for the full replacement cost thereof, against any loss by fire, lightning,
windstorm, hail, explosion, aircraft, smoke damage, vehicle damage, earthquakes,
and other risks from time to time included under "extended coverage" policies,
in such amounts as the Administrative Agent may require, but in any event in
amounts sufficient to prevent the Obligors from becoming a co-insurer under such
policies; (ii) combined single limit bodily injury insurance against any loss,
liability, or damages per occurrence in an amount not less than that
historically maintained by the Obligors; and (iii) insurance for such other
risks as the Administrative Agent may require in its Permitted Discretion.
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(c) The Obligors shall give the Administrative Agent prompt notice of any
material loss covered by such insurance. Prior to the Termination of the Exit
Facility, losses payable under any such insurance policies shall be adjusted as
provided in the Exit Facility, and thereafter, the Administrative Agent shall
have the exclusive right to adjust any losses payable under any such insurance
policies, without any liability to the Obligors whatsoever in respect of such
adjustments; provided, however, so long as no Event of Default exists, the
Obligors shall have the right to adjust any losses payable under any such
insurance policies involving amounts less than $5,000,000.
(d) Neither the Borrower nor any US Subsidiary Guarantor will take out
separate insurance concurrent in form or contributing in the event of loss with
that required to be maintained under this Section 5.07, unless the Collateral
Agents as required by Section 5.07(a) are included thereon as named insured with
the loss payable to the Collateral Agents under a standard 438BFU endorsement or
its equivalent. The Borrower or the applicable US Subsidiary Guarantor
immediately shall notify the Administrative Agent whenever such separate
insurance is taken out, specifying the insurer thereunder and full particulars
as to the policies evidencing the same, and copies of such policies immediately
shall be provided to the Administrative Agent.
5.08 Location of Inventory and Equipment. Keep the Inventory and Equipment
(other than railcars, other rolling stock, registered motor vehicles, aircraft,
vessels and immaterial (less than $10,000,000 in market value as reasonably
determined by the Collateral Agent) amounts of Inventory and other Equipment) at
no locations other than those identified on Schedule VI; provided, however, that
Borrower may amend Schedule VI so long as such amendment occurs by written
notice to the Collateral Agent not less than 30 days prior to the date on which
the Inventory or Equipment is moved to such new location, so long as such new
location is within the continental United States or Canada, and so long as, at
the time of such written notification, the applicable Obligor provides any
financing statements, fixture filings, or other filings necessary to perfect and
continue perfected the Collateral Agents' Liens on such assets.
5.09 Employee Benefits. (a) Cause to be delivered to the Administrative
Agent, each of the following: (i) promptly, and in any event within 10 Business
Days after the Borrower, any US Subsidiary Guarantor or any of its ERISA
Affiliates knows or has reason to know that an ERISA Event has occurred that
reasonably could be expected to result in a Material Adverse Change, a written
statement of the chief financial officer of the Borrower or such US Subsidiary
Guarantor describing such ERISA Event and any action that is being taking with
respect thereto by the Borrower or such US Subsidiary Guarantor, or ERISA
Affiliate, and any action taken or threatened by the IRS, Department of Labor,
or PBGC. The Borrower, such US Subsidiary Guarantor or such ERISA Affiliate, as
applicable, shall be deemed to know all facts known by the administrator of any
Benefit Plan of which it is the plan sponsor, (ii) promptly, and in any event
within 3 Business Days after the filing thereof with the IRS, a copy of each
funding waiver request filed with respect to any Benefit Plan and all
communications received by the Borrower or any US Subsidiary Guarantor, any of
its Subsidiaries or, to the knowledge of the Borrower, or any US Subsidiary
Guarantor, any ERISA Affiliate with respect to such request, and (iii) promptly,
and in any event within 3 Business Days after receipt by the Borrower or any of
its Subsidiaries, or, to the knowledge of the Borrower or any ERISA Affiliate,
of the PBGC's
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intention to terminate a Benefit Plan or to have a trustee appointed to
administer a Benefit Plan, copies of each such notice.
(b) Cause to be delivered to the Administrative Agent, upon the
Administrative Agent's request, each of the following: (i) a copy of each Plan
(or, where any such plan is not in writing, complete description thereof) (and
if applicable, related trust agreements or other funding instruments) and all
amendments thereto, all written interpretations thereof and written descriptions
thereof that have been distributed to employees or former employees of the
Borrower or the applicable US Subsidiary Guarantor or its ERISA Affiliates; (ii)
the most recent determination letter issued by the IRS with respect to each
Benefit Plan and each other plan intended to be qualified under Section 401(a)
of the Code; (iii) for the three most recent plan years, annual reports on Form
5500 Series required to be filed with any governmental agency for each Benefit
Plan; (iv) all actuarial reports prepared for the last three plan years for each
Benefit Plan; (v) a listing of all Multiemployer Plans, with the aggregate
amount of the most recent annual contributions required to be made by the
Borrower or the applicable US Subsidiary Guarantor or any ERISA Affiliate to
each such plan and copies of the collective bargaining agreements requiring such
contributions; (vi) any information that has been provided to Borrower or such
US Subsidiary Guarantor or any ERISA Affiliate regarding withdrawal liability
under any Multiemployer Plan; and (vii) the aggregate amount of the most recent
annual payments made to former employees of the Borrower or the applicable US
Subsidiary Guarantor or its Subsidiaries under any Retiree Health Plan.
5.10 Compliance with Laws. Comply with the requirements of all applicable
laws, rules, regulations, and orders of any Governmental Authority, including
the Fair Labor Standards Act and the Americans With Disabilities Act, other than
laws, rules, regulations, and orders the non-compliance with which, individually
or in the aggregate, would not result in and reasonably could not be expected to
result in a Material Adverse Change.
5.11 Leases. Pay when due all rents and other amounts payable under any
leases to which each Obligor is a party or by which an Obligor's properties and
assets are bound, unless such payments are the subject of a Permitted Protest.
5.12 Projections. Not later than 30 days after the end of each fiscal year
of the Borrower, commencing with fiscal year 2001, deliver to the Administrative
Agent Projections, in form and substance (including as to scope and underlying
assumptions) satisfactory to the Administrative Agent, in its Permitted
Discretion, for the forthcoming 2 years, year by year, and for the forthcoming
fiscal year, month by month, certified by the chief financial officer of the
Borrower as being such officer's good faith estimate of the financial
performance of the Obligors projected to be achieved during the period covered
thereby. The foregoing to the contrary notwithstanding, (a) projections in the
form of the projections delivered to the Borrower prior to the Closing Date
shall be presumed to be in form acceptable to the Administrative Agent, and (b)
the Administrative Agent may not deem projections to be unsatisfactory to it
solely because it is not satisfied with the financial condition or prospects of
the Borrower and its Subsidiaries as described in such projections.
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5.13 Corporate Existence, etc. Other than as may be affected by the
consummation of Permitted Transactions, at all times preserve and keep in full
force and effect each Obligor's valid corporate existence and good standing and
any rights and franchises material to the Obligors' businesses.
5.14 Disclosure Updates. Promptly and in no event later than 5 Business
Days after an officer of the Borrower obtains knowledge thereof, (i) notify the
Administrative Agent if any written information, exhibit, or report furnished to
the Lenders contained any untrue statement of a material fact or omitted to
state any material fact necessary to make the statements contained therein not
misleading in light of the circumstances in which made, and (ii) correct any
defect or error that may be discovered therein or in any Loan Document or in the
execution, acknowledgment, filing, or recordation thereof.
5.15 Publication of Notice of the Effective Date of the Reorganization
Plan. No later than five Business Days after the Effective Date of the
Reorganization Plan, publish notice of the occurrence of the Effective Date of
the Reorganization Plan as required by paragraph 25 of the Confirmation Order.
5.16 PSC Common Stock. The PSC Common Stock issuable upon the conversion of
the PIK Loans (i) has been set aside, reserved and allotted for issuance, (ii)
has been authorized for issuance to the holders of the PIK Loans from time to
time and (iii) upon issuance in accordance with the terms of the PIK Loans,
shall be validly issued as fully paid and non-assessable. At all times that any
Principal Amount remains outstanding under any PIK Loan, the Borrower shall use
its best efforts to ensure that (i) the PSC Common Stock is listed and posted
for trading on a national securities exchange registered under the Securities
Exchange Act of 1934, as amended (a "National Securities Exchange") or the
Nasdaq Stock Market ("Nasdaq"), (ii) the Borrower, from and after the Closing
Date, will be and thereafter remain a reporting company under the Securities
Exchange Act of 1934, as amended, and in each jurisdiction in which it is a
reporting issuer, will remain a reporting issuer in good standing under all
other Applicable Securities Legislation, and, in each case, shall timely make
all filings thereunder, (iii) the PSC Common Stock to be issued on conversion of
any PIK Loan will be Freely Tradeable, and (iv) at the relevant times and on
exercise of the relevant conversion rights, promptly, diligently and in good
faith comply and take all measures and actions necessary to comply at all times
with Section 1.07.
5.17 Further Assurances. Whenever and so often as reasonably requested by
the Administrative Agent, the Borrower shall, and shall cause each of its
Subsidiary Guarantors to promptly execute and deliver or cause to be executed
and delivered all such other and further instruments, documents or assurances,
and promptly do or cause to be done all such other and further things as may be
necessary and reasonably required in order to further and more fully vest in the
Collateral Agents, the Administrative Agent and the Lenders all rights,
interests, powers, benefits, privileges and advantages conferred or intended to
be conferred by this Agreement and the other Loan Documents.
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5.18 Right to Inspect. The Administrative Agent (through any of its
respective officers, employees, or agents) shall have the right, from time to
time hereafter to inspect the Books and to check, test, and appraise the
Collateral in order to verify Borrower's or any US Subsidiary Guarantor's
financial condition or the amount, quality, value, condition of, or any other
matter relating to, the Collateral.
5.19 Control Agreements. The Borrower shall not and shall not permit the US
Subsidiary Guarantors to transfer assets out of any Securities Accounts other
than as permitted under Section 6.18 and, if to another securities intermediary,
unless each of the Borrower and the applicable US Subsidiary Guarantors,
Collateral Agents, and the substitute securities intermediary has entered into a
Control Agreement. No arrangement contemplated hereby or by any Control
Agreement in respect of any Securities Accounts or other investment property
shall be modified by the Borrower or any US Subsidiary Guarantor without the
prior written consent of the Collateral Agent.
5.20 Payment of Prepetition Expenses. The Borrower shall and shall cause
each of its Subsidiaries, to pay (i) all reasonable out-of-pocket costs and
expenses of the Pre-Petition Lenders (including without limitation, reasonable
legal fees and disbursements) that have arisen in connection with the rights and
obligations of the Pre-Petition Lenders incurred by the Pre-Petition Lenders
prior to the Closing Date and (ii) all obligations of the Borrower and its
Subsidiaries with respect to the funding and sharing of certain claims as
described in the Cost Sharing Agreement.
5.21 Existing Letters of Credit. The Borrower will use its reasonable best
efforts to negotiate with the beneficiaries of any existing letters of credit
listed on Schedule XXX for the replacement of such existing letters of credit,
whether or not such existing letters of credit have been backstopped by a letter
of credit issued under the Exit Facility.
5.22 Omitted Good Standing Certificates. The Borrower will use its
commercially reasonable efforts to obtain good standing qualifications and
certificates of good standing for Oneida Asbestos Removal Inc. in its
jurisdiction of organization and in the jurisdiction of its Chief Executive
Office. Promptly upon such entity receiving notice that such entity is in good
standing in its jurisdiction of incorporation, but in no event later than ten
Business Days after an officer of such entity obtains knowledge thereof, the
Borrower shall cause Oneida Asbestos Removal Inc. to ratify its, as the case may
be, execution, delivery and performance of this Agreement and all other Loan
Documents by documentation acceptable to the Administrative Agent.
Section 6. Negative Covenants. The Borrower agrees that, unless the
Required Lenders otherwise consent, on and after the Closing Date and until all
Term Loans, all PIK Loans, the Term Notes and the PIK Notes, together with
interest, fees and all other Obligations incurred hereunder and thereunder, are
paid in full, the Borrower shall not do, and unless the context otherwise
requires, shall not permit any Obligor to do any of the following:
6.01 Indebtedness. Create, incur, assume, permit, guarantee, or otherwise
become or remain, directly or indirectly, liable with respect to any
Indebtedness, except:
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(a) Indebtedness evidenced by this Agreement and the other Loan Documents;
(b) Indebtedness set forth on Schedule III;
(c) (i) Purchase Money Indebtedness having a principal amount of $100,000
or greater per holder of such Indebtedness, which such Indebtedness exists as of
the Closing Date and is described on Schedule XXI, (ii) Purchase Money
Indebtedness having a principal amount less than the amount set forth in clause
(i) above per holder of such Indebtedness, which such Indebtedness exists as of
the Closing Date, and (iii) Purchase Money Indebtedness incurred after the
Closing Date in an aggregate amount outstanding at any one time not to exceed
(y) $25,000,000, minus (z) the amount of Indebtedness outstanding under clauses
(i) and (ii) of this subsection (collectively, "Permitted Purchase Money
Indebtedness");
(d) (i) $190,000,000 in principal amount (plus the amount of accrued
interest and including any letters of credit issued under the Exit Facility) of
Indebtedness created under the Exit Facility and (ii) Indebtedness pursuant to
reimbursement obligations under letters of credit that are backstopped or
indemnified under the Exit Facility.
(e) Indebtedness created under the PIK Unsecured Debt Indenture in a
principal amount equal to $48,000,000 (plus the amount of (i) unpaid interest,
fees and costs accrued thereunder and (ii) accrued interest paid in kind);
(f) $18,000,000 in principal amount of Indebtedness issued under the
Unsecured Convertible Debt Indenture (plus the amount of accrued and unpaid
interest);
(g) refinancings, renewals, replacements or extensions of Indebtedness
permitted under clauses (b), (c), (d), (e), and (f) of this Section 6.01 (and
continuance, replacement or renewal of any Permitted Liens associated therewith)
so long as: (i) the terms and conditions of such refinancings, renewals,
replacements or extensions do not materially impair the prospects of repayment
of the Obligations by the Borrower, (ii) the net cash proceeds of such
refinancings, renewals, replacements or extensions do not result in an increase
in the aggregate principal amount of the Indebtedness so refinanced, renewed,
replaced or extended, (iii) such refinancings, renewals, replacements or
extensions do not result in a shortening of the average weighted maturity of the
Indebtedness so refinanced, renewed, replaced or extended, (iv) to the extent
that Indebtedness that is refinanced, renewed, replaced or extended was
subordinated in right of payment to the Obligations, then the terms and
conditions of the refinancing, renewal, replacement or extension Indebtedness
must (x) provide for (i) an interest rate equal to or lower than the interest
rate of the Indebtedness so refinanced, renewed, replaced or extended and (ii)
for the option to make payments-in-kind to the extent such option existed under
the Indebtedness so refinanced, renewed, replaced or extended and (y) must
provide for subordination provisions at least as favorable to the Lenders as
those applicable to the refinanced, renewed, replaced or extended Indebtedness,
and (v) such refinancing, renewal, replacement or extension shall not obligate
any Obligor which was
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not previously obligated with respect to the Indebtedness that is the subject of
such refinancing, renewal, replacement or extension;
(h) Indebtedness owed (i) by the Borrower to any Subsidiary Guarantor, (ii)
by any Wholly-Owned Subsidiary Guarantor to the Borrower, or (iii) by any
Wholly-Owned Subsidiary Guarantor to any other Wholly-Owned Subsidiary
Guarantor;
(i) Indebtedness necessary to comply with the Obligors' bonding
requirements, as approved from time to time, by the Required Lenders;
(j) guaranties permitted by Section 6.06 hereof; or
(k) Indebtedness not covered by subclause (a) through (j) of this Section
6.01 in an aggregate amount not to exceed $5,000,000 per year.
6.02 Liens. Create, incur, assume, or permit to exist, directly or
indirectly, any Lien on or with respect to any of its property or assets, of any
kind, whether now owned or hereafter acquired, or any income or profits
therefrom, except for Permitted Liens (including Liens that are replacements of
Permitted Liens to the extent that the original Indebtedness is refinanced,
renewed, replaced or extended under Section 6.01(g) and so long as the
replacement Liens only encumber those assets or property that secured the
original Indebtedness).
6.03 Restrictions on Fundamental Changes. Except for the consummation of
the Canadian Transactions, except for Permitted Transactions and Permitted
Dispositions,
(a) Enter into any merger, consolidation, reorganization, or
recapitalization, or reclassify its Stock.
(b) Liquidate, wind up, or dissolve itself (or suffer any liquidation or
dissolution).
(c) Convey, sell, assign, lease, transfer, or otherwise dispose of, in one
transaction or a series of transactions, all or any substantial part of its
property or assets, provided, that nothing contained in this Agreement shall be
construed to restrict or limit any offering, issuance, or sale by the Borrower,
in one or more transactions, public or private, of its Stock (including any
concomitant increase in the number of authorized shares of Stock of the Borrower
or in the authorized share capital of the Borrower), so long as such offerings,
issuances, and sales are made in compliance with all applicable laws and
regulations.
6.04 Disposal of Assets. Sell, lease, assign, transfer, or otherwise
dispose of any of the Obligors' properties or assets, other than pursuant to
Permitted Dispositions, the Canadian Transactions and Permitted Transactions.
6.05 Change Name. Except for the consummation of the Canadian Transactions,
and Permitted Transactions, change any Obligor's name, FEIN, corporate structure
(within the
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meaning of Section 9-402(7) of the Code), or identity, or add any new fictitious
name, except that any Obligor may do so upon at least 30 days prior written
notice to the Collateral Agent of such change and so long as, at the time of
such written notification, such Obligor provides any financing statements or
fixture filings necessary to perfect and continue perfected Collateral Agents'
Liens in the Collateral.
6.06 Guarantee. Guarantee or otherwise become in any way liable with
respect to the obligations of any Person other than:
(a) guaranties by one Obligor of the Obligations of another Obligor;
(b) so long as no Default or Event of Default has occurred and is
continuing or would result therefrom, guaranties entered into by an Obligor of
the obligations of a Subsidiary of the Borrower that is not an Obligor in an
amount per year not to exceed in the aggregate, for all such guaranties made
during such year the result per year of (i) $10,000,000 minus (ii) the aggregate
amount of Permitted Investments that were made during such year pursuant to
clause (c) of the definition of Permitted Investment as of the date of
determination);
(c) guaranties existing as of the Closing Date and described on Schedule
XXI hereto and extensions or renewals of such guaranties, so long as the
principal amount of the obligations guaranteed is not increased beyond the
principal amount of the applicable guaranty as of the date of such extension or
renewal ; or
(d) endorsement of instruments or items of payment for deposit to the
account of an Obligor or which are transmitted or turned over to the Collateral
Agent.
6.07 Nature of Business. Make any material change in the principal nature
of the Obligors' business, taken as a whole.
6.08 Prepayments and Amendments. (a) Except in connection with a
refinancing permitted by Section 6.01(g) or as provided in subsection (c) below,
and other than with respect to Indebtedness permitted under Section 6.01 (d) or
(h), prepay, redeem, retire, defease, purchase, or otherwise acquire any
Indebtedness owing to any Person, other than the Obligations in accordance with
this Agreement.
(b) Except in connection with a refinancing permitted by Section 6.01(g),
directly or indirectly, amend, modify, alter, increase, or change any of the
terms or conditions of any agreement, instrument, document, indenture, or other
writing evidencing or concerning Indebtedness permitted under Sections 6.01(b),
(c), (e), or (f) in any manner that is or reasonably could be expected to be
materially adverse to the Obligors or to the interests of the Lenders or that
materially impairs the prospects of timely repayment of the Obligations.
(c) Amend, supplement, or modify any Unsecured Notes Document or repay the
principal of, or make any other payment in relation to, the Indebtedness
governed by the Unsecured Notes Documents; provided, so long as no Event of
Default has occurred and is
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continuing or would result therefrom, the foregoing shall not prohibit (i) the
repayment of all or a portion of the Unsecured Notes, including Deferred Period
Interest as defined therein upon the occurrence of a "Change of Control" as
provided in the Unsecured Notes Documents as in effect on the Closing Date (ii)
the payment of regularly scheduled payments of interest on the Indebtedness
governed by the Unsecured Notes Documents; provided, however, that the Obligors
shall not pay any interest in cash that they have the contractual right to pay
in kind, and (iii) the repayment of all or a portion of the Unsecured Notes with
the proceeds of any refinancings thereof (provided that such refinancing
Indebtedness complies with the requirements of Section 6.01(g)).
6.09 Consignments. Consign any Inventory or sell any Inventory on bill and
hold, sale or return, sale on approval, or other conditional terms of sale, or,
except in connection with the businesses of brokering or entering into tolling
agreements regarding scrap metal, have possession of any property on consignment
to an Obligor.
6.10 Distributions. Other than distributions or declaration and payment of
dividends by an Obligor to the Borrower or a Wholly-Owned Obligor, make any
distribution or declare or pay any dividends (in cash or other property, other
than Stock) on, or purchase, acquire, redeem, or retire any of any Obligor's
Stock, of any class, whether now or hereafter outstanding.
6.11 Accounting Methods. Modify or change its method of accounting (other
than as may be required to conform to GAAP). The Borrower and each US Subsidiary
Guarantor waives the right to assert a confidential relationship, if any, it may
have with any accounting firm or service bureau in connection with any
information requested by the Administrative Agent pursuant to or in accordance
with this Agreement, and agrees that the Administrative Agent may contact
directly any such accounting firm or service bureau in order to obtain such
information; provided, however, that prior to contacting such accounting firm or
service bureau, the Administrative Agent shall attempt in good faith, to obtain
such information from the Borrower and the US Subsidiary Guarantors.
6.12 Investments. Except for Permitted Investments and Permitted
Acquisitions, directly or indirectly make, acquire, or incur any liabilities
(including contingent obligations) for or in connection with any Investment.
6.13 Transactions with Affiliates. Except as set forth on Schedule XXII
directly or indirectly enter into or permit to exist any material transaction
with any Affiliate of any Obligor except for transactions between Obligors
(other than Obligors that are neither the Borrower, a US Subsidiary Guarantor,
nor a Canadian Subsidiary Guarantor) and except for transactions that are in the
ordinary course of such Obligor's business, upon fair and reasonable terms, that
are fully disclosed to the Administrative Agent, and that are no less favorable
to such Obligor than would be obtained in an arm's length transaction with a
non-Affiliate.
6.14 Suspension. Permit the Obligors, taken as a whole, to suspend or go
out of a substantial portion of its business.
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6.15 Directors' Compensation. Increase the annual fee or per-meeting fees
paid to directors of any Obligor during any year by more than 15% over the prior
year.
6.16 Change in Location of Chief Executive Office; Inventory and Equipment
with Bailees. Relocate its chief executive office to a new location without
providing 30 days prior written notification thereof to the Collateral Agent and
the Administrative Agent and so long as, at the time of such written
notification, such Obligor provides any financing statements or fixture filings
necessary to perfect and continue perfected the Collateral Agents' Liens. Except
for immaterial (less than $10,000,000 in market value as reasonably determined
by the Collateral Agent) amounts of Inventory and Equipment that is stored with
a bailee, warehouseman, or similar party in the ordinary course of business, no
Inventory or Equipment shall at any time now or hereafter be stored with a
bailee, warehouseman, or similar party without the Collateral Agent's prior
written consent.
6.17 Financial Covenants. Fail to maintain:
(a) EBITDA. EBITDA of the Borrower and its Subsidiaries (exclusive however
of all results of operation (including EBITDA) attributable to the UK Metals
Operations), on a consolidated basis, for the trailing period ended as of the
end of the applicable Fiscal Quarter set forth below, of at least the amount
corresponding thereto:
<TABLE>
<CAPTION>
Fiscal Quarter Ending Minimum EBITDA
- --------------------- --------------
<S> <C>
for the 3 months ended March 31, 2000 $3,000,000
for the 6 months ended June 30, 2000 $7,500,000
for the 9 months ended September 30, 2000 $20,000,000
for the 12 months ended December 31, 2000 $38,000,000
for the 12 months ended March 31, 2001 $58,500,000
for the 12 months ended June 30, 2001 $71,550,000
for the 12 months ended September 30, 2001 $80,100,000
for the 12 months ended December 31, 2001, $86,400,000
and for the 12 months ended as of the end of
each Fiscal Quarter thereafter
</TABLE>
(b) Interest Coverage Ratio. An Interest Coverage Ratio for the Borrower
and its Subsidiaries (exclusive, however, of all results of operation (including
EBITDA and Cash Interest Expense) attributable to the UK Metals Operations) on a
consolidated basis, for the trailing period ended as of the end of the
applicable Fiscal Quarter set forth below, of at least the amount corresponding
thereto:
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<TABLE>
<CAPTION>
Fiscal Quarter Ending Minimum Interest Coverage Ratio
- ------------------------------------ -------------------------------
<S> <C>
for the 3 months ended March 31, 2000 0.35:1.00
for the 6 months ended June 30, 2000 0.50:1.00
for the 9 months ended September 0.90:1.00
30, 2000
for the 12 months ended December 1.25:1.00
31, 2000
for the 12 months ended March 31, 2001 1.80:1.00
for the 12 months ended June 30, 2001 2.16:1.00
for the 12 months ended September 30, 2001 2.25:1.00
for the 12 months ended December 2.25:1.00
31, 2001, and for the 12 months ended
as of the end of each Fiscal Quarter thereafter
</TABLE>
(c) Capital Expenditures. (i) For the period commencing on the Closing Date
through and including, the last day of the eighth Post Plan Implementation
Fiscal Quarter, make capital expenditures in the aggregate, in any fiscal year
in excess of $85,000,000 (which amount shall include all expenditures made in
connection with any Permitted Acquisition), and (ii) for the period from and
including the first day of the ninth Post Plan Implementation Fiscal Quarter to
and including the last day of the twentieth Post Plan Implementation Fiscal
Quarter, make capital expenditures in the aggregate, in any fiscal year in
excess of $95,000,000 (which amount shall include all expenditures made in
connection with any Permitted Acquisition).
6.18 Securities Accounts. No Obligor shall establish or maintain any
Securities Account unless the Collateral Agents shall have received a Control
Agreement, duly executed and in full force and effect, in respect of such
Securities Account. Each Obligor agrees that it will not transfer assets out of
any Securities Accounts; provided, however, that, so long as no Event of Default
has occurred and is continuing or would result therefrom, such Obligor may use
such assets to the extent permitted by this Agreement.
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6.19 ERISA Concerns. Neither the Borrower, nor any US Subsidiary Guarantor
shall directly or indirectly:
(a) engage, or permit any Subsidiary of the Borrower or any US Subsidiary
Guarantor to engage, in any prohibited transaction which is reasonably likely to
result in a civil penalty or excise tax described in Sections 406 of ERISA or
4975 of the Code for which a statutory or class exemption is not available or a
private exemption has not been previously obtained from the Department of Labor;
(b) permit to exist with respect to any Benefit Plan any accumulated
funding deficiency (as defined in Sections 302 of ERISA and 412 of the Code),
whether or not waived;
(c) fail, or permit any of its ERISA Affiliates to fail, to pay timely
required contributions or annual installments due with respect to any waived
funding deficiency to any Benefit Plan;
(d) terminate, or permit any of its ERISA Affiliates to terminate, any
Benefit Plan where such event would result in any liability of the Borrower or
such US Subsidiary Guarantor, any of its Subsidiaries or any ERISA Affiliate
under Title IV of ERISA;
(e) fail, or permit any of its ERISA Affiliates to fail, to make any
required contribution or payment to any Multiemployer Plan;
(f) fail, or permit any of its ERISA Affiliates to fail, to pay any
required installment or any other payment required under Section 412 of the Code
on or before the due date for such installment or other payment;
(g) amend, or permit any of its ERISA Affiliates to amend, a Plan resulting
in an increase in current liability for the plan year such that either of
Borrower, any Subsidiary of Borrower or any ERISA Affiliate is required to
provide security to such Plan under Section 401(a)(29) of the Code; or
(h) withdraw, or permit any of its ERISA Affiliates to withdraw, from any
Multiemployer Plan where such withdrawal is reasonably likely to result in any
liability of any such entity under Title IV of ERISA;
which, individually or in the aggregate, results in or reasonably would be
expected to result in a claim against or liability of the Borrower or any US
Subsidiary Guarantor, any of its Subsidiaries or any ERISA Affiliate in excess
of $5,000,000.
Section 7. Events of Default. Upon the occurrence and during the
continuation of any of the following specified events (each an "Event of
Default"):
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7.01 Payments. If any Obligor fails to pay when due and payable, or when
declared due and payable, (i) any portion of principal due the Lenders hereunder
or (ii) any portion of the Obligations (other than principal), including fees
and charges due the Lenders hereunder, reimbursement of expenses required to be
paid hereunder, interest (including any interest which, but for the provisions
of the Bankruptcy Code, would have accrued on such amounts), and other amounts
constituting Obligations, and such failure is not cured within 5 Business Days
after the date on which the Administrative Agent notifies the Borrower of such
failure;
7.02 Covenants. If any Obligor fails or neglects to (a) perform, keep, or
observe any covenant or other provision contained in Sections 5.02, 5.04, 5.05,
5.08, 5.10 and 5.11 hereof and such failure or neglect continues for a period of
30 days after the date on which such failure or neglect first occurs, or (b)
perform, keep, or observe any covenant or other provision contained in any
Section of this Agreement (other than a Section that is expressly dealt with
elsewhere in this Section 7) or the other Loan Documents (other than a Section
of such other Loan Documents expressly dealt with elsewhere in this Section 7)
and such failure or neglect is not cured within 30 days after the date on which
the Administrative Agent notifies the Borrower of such failure or neglect, or
(c) perform, keep, or observe any covenant or other provision contained in
Sections 1, 5 (other than a subsection of Section 1 or 5 that is dealt with
elsewhere in this Section 7) and 6 of this Agreement or any comparable provision
contained in any of the other Loan Documents;
7.03 Collateral. If any portion of an Obligor's property or assets with a
value greater than $5,000,000 individually or in the aggregate, is attached,
seized, subjected to a writ or distress warrant, or is levied upon, or comes
into the possession of any third Person and the same is not discharged before
the earlier of 30 days after the date it first arises or 5 days prior to the
date on which such property or asset is subject to forfeiture by such Obligor;
7.04 Bankruptcy. (a) If an Insolvency Proceeding is commenced by any
Obligor;
(b) If an Insolvency Proceeding is commenced against Obligor and any of the
following events occur: (i) any such Obligor consents to the institution of the
Insolvency Proceeding against it; (ii) the petition commencing the Insolvency
Proceeding is not timely controverted; (iii) the petition commencing the
Insolvency Proceeding is not dismissed within 45 calendar days of the date of
the filing thereof; provided, however, that, during the pendency of such period,
each Lender shall be relieved of its obligation to extend credit hereunder; (iv)
an interim trustee is appointed to take possession of all or a substantial
portion of the properties or assets of, or to operate all or any substantial
portion of the business of, such Obligor; or (v) an order for relief shall have
been issued or entered therein;
(c) If any one or more of the Obligors is enjoined, restrained, or in any
way prevented by court order from continuing to conduct all or any material part
of the business affairs of the Obligors taken as a whole;
7.05 Lien. (a) If a notice of Lien, levy, or assessment is filed of record
with respect to any Obligor's properties or assets by the United States
Government, or any department, agency, or instrumentality thereof, or if any
taxes or debts owing at any time hereafter to
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any one or more of such entities becomes a Lien, whether choate or otherwise,
upon any Obligor's properties or assets and the same is not paid on the payment
date thereof, or (b) if notices of Lien, levy, or assessment in an aggregate
amount in excess of $5,000,000 are filed of record with respect to any Obligor's
properties or assets by any state, county, municipal, or governmental agency, or
if any taxes or debts owing at any time hereafter to any one or more of such
entities becomes a Lien exceeding the foregoing aggregate limitation, whether
choate or otherwise, upon any Obligor's properties or assets and the same is not
paid on the payment date thereof;
7.06 Judgments. If one or more judgments or other claims involving an
aggregate amount of $5,000,000, or more, in excess of the amount covered by
insurance, becomes a Lien or encumbrance upon any material portion of any
Obligor's assets and the same is not released, discharged, bonded against, or
stayed pending appeal before the earlier of 30 days after the date it first
arises or 5 days prior to the date on which such asset is subject to being
forfeited by such Obligor;
7.07 Default Under Other Agreements. (a) If there is a default in the Exit
Facility and such default (i) derives from the Borrower's failure to pay its
obligations thereunder at final maturity, (ii) results in the acceleration of
the maturity of the obligations thereunder, or (iii) results in the termination
of the commitments under the Exit Facility and the Exit Loans under such
commitments are therefore due and payable (other than as a result of a
refinancing, modification, replacement or renewal of the Exit Loans);
(b) If there is a default in any agreement to which an Obligor is a party
under which Indebtedness (other than as provided in Section 7.07(a)) of such
Obligor involving not less than $5,000,000 is owing and such default (i) occurs
at the final maturity of the obligations thereunder, or (ii) results in a right
of the holder of such Indebtedness, irrespective of whether exercised, to
accelerate the maturity of such Obligor's obligations thereunder and such
default is not cured or waived prior to the date that is the earlier of (y) the
date that is 15 days after the date on which such default first occurred, and
(z) the date on which such Obligor's obligations thereunder are accelerated, or
(iii) results in the termination of such agreement;
(c) If there is a default by an Obligor with respect to any performance or
payment bond having a face amount of not less than $5,000,000 and such default
(i) occurs at the final maturity of the obligations thereunder, or (ii) results
in a right of the issuer of such performance or payment bond, irrespective of
whether exercised, to accelerate the maturity of such Obligor's obligations
thereunder;
7.08 Payment of Indebtedness. If any Obligor makes any payment on account
of Indebtedness that has been contractually subordinated in right of payment to
the payment of the Obligations, except to the extent such payment is permitted
by the terms hereof and by the terms of the subordination provisions applicable
to such Indebtedness.
7.09 Representation. If any material misstatement or misrepresentation
exists now or hereafter in any warranty, representation, statement, or report
made to the Lenders by any Obligor or any officer, employee, agent, or director
of any Obligor in any Record furnished in
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compliance with this Agreement or any other Loan Document or otherwise furnished
in connection with the transactions contemplated by this Agreement or any other
Loan Document; or
7.10 Subsidiary Guaranty. If the obligation of any Subsidiary Guarantor
under its guaranty under any Loan Document is limited or terminated by operation
of law or by such Subsidiary Guarantor thereunder;
the Required Lenders (at their election but without notice of their election and
without demand) may, except to the extent otherwise expressly provided or
required below, authorize and instruct the Administrative Agent to do any one or
more of the following on behalf of the Lenders (and the Administrative Agent,
acting upon the instructions of the Required Lenders, shall do the same on
behalf of the Lenders), all of which are authorized by Borrower:
(a) Declare all Obligations, whether evidenced by this Agreement, by any of
the other Loan Documents, or otherwise, immediately due and payable;
(b) Terminate this Agreement and any of the other Loan Documents as to any
future liability or obligation of the Lenders, but without affecting Collateral
Agents' Liens in the Collateral and without affecting the Obligations;
(c) Without notice to or demand upon any Obligor, make such payments and do
such acts as the Administrative Agent considers necessary or reasonable to
protect the Collateral Agents' Liens in and to the Collateral;
(d) Hold, as cash collateral, any and all balances and deposits of Borrower
held by the Lenders to secure the full and final repayment of all of the
Obligations; or
(e) (i) Prior to the Termination of the Exit Facility, exercise any and all
other rights and remedies available to it at law or in equity or pursuant to any
other Loan Documents except to the extent restricted by the provisions of the
Collateral Agency and Intercreditor Agreement and (ii) after the Termination of
the Exit Facility, exercise any and all other rights and remedies available to
it at law or in equity or pursuant to any other Loan Documents.
The rights and remedies of the Lenders under this Agreement, the other Loan
Documents, and all other agreements shall be cumulative. The Lenders shall have
all other rights and remedies not inconsistent herewith as provided under the
UCC, by law, or in equity. No exercise by the Lenders of one right or remedy
shall be deemed an election, and no waiver by the Lenders of any Event of
Default shall be deemed a continuing waiver. No delay by the Lenders shall
constitute a waiver, election, or acquiescence by any of them.
Section 8. Definitions.
As used in this Agreement, the following terms shall have the following
meanings (such meanings to be equally applicable to both the singular and plural
forms of the terms defined):
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"Accounting Change" shall have the meaning provided in Section 10.07.
"Accounts" shall mean all of the Obligors' "accounts" (as that term is
defined in the UCC), and any and all credit insurance, guaranties, or security
therefor.
"Accreted Interest" with respect to any PIK Loan, shall have the meaning
specified in Section 1.03(2)(b).
"Accreted Interest Amounts" shall have the meaning provided in Section
1.03(2)(b).
"Acquisition" shall mean any purchase or other acquisition, by the Borrower
or a Subsidiary Guarantor, of the assets of any other Person other than the
purchase of Inventory or Equipment in the ordinary course of business.
"Act" shall have the meaning provided in Section 1.07(b)(iii).
"Administrative Agent" shall have the meaning set forth in the preamble to
this Agreement.
"Affiliate" shall mean as applied to any Person, any other Person who,
directly or indirectly, controls, is controlled by, or is under common control
with, such Person. For purposes of this definition, "control" means the
possession, directly or indirectly, of the power to direct the management and
policies of a Person, whether through the ownership of Stock, by contract, or
otherwise; provided, however, that, in any event: (a) any Person which owns
directly or indirectly ten percent (10%) or more of the securities having
ordinary voting power for the election of directors or other members of the
governing body of a Person or ten percent (10%) or more of the partnership or
other ownership interests of a Person (other than as a limited partner of such
Person) shall be deemed to control such Person; (b) each director or officer of
a Person shall be deemed to be an Affiliate of such Person; and (c) each
partnership or joint venture in which a Person is a partner or joint venturer
shall be deemed to be an Affiliate of such Person.
"Agreement" shall mean this Credit Agreement, as modified, supplemented or
amended from time to time.
"AIG Liens" shall mean the liens granted by the Obligors to the American
Insurance Group in connection with the insurance financing provided to the
Borrower.
"Applicable Securities Legislation" shall mean applicable securities laws,
rules, statutes, regulations, treaties, orders, judgments and decrees and all
official directives, rules, guidelines, orders, policies and other requirements
of the United States of America and any Governmental Authority (whether or not
having the force of law) in each of the Provinces of Canada.
"Approved Fixed Obligation Arrangements" shall mean those arrangements
described on Schedule XXIV.
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"Assignment and Assumption Agreement" shall mean the Assignment and
Assumption Agreement in the form of Exhibit K hereto appropriately completed.
"Bankruptcy Cases" shall have the meaning provided in the recitals to this
Agreement.
"Benefit Plan" shall mean a "defined benefit plan" (as defined in Section
3(35) of ERISA) that is subject to Title IV of ERISA and for which the Borrower
or any US Subsidiary Guarantor or ERISA Affiliate of such Borrower is an
"employer" (as defined in Section 3(5) of ERISA).
"Board of Directors" means the Board of Directors of an Obligor or any
committee thereof duly authorized to act on behalf of the Board of Directors.
"Bonding Lien Intercreditor Agreement" means that certain Intercreditor
Agreement by and among the Collateral Agents and the agent for bonding creditors
of the Obligors.
"Books" means all of each Obligor's books and records (including all of its
records indicating, summarizing, or evidencing its assets (including the
Collateral) or liabilities, all of its information relating to its business
operations or financial condition, and all of its computer programs, disks,
files, printouts, runs, or other computer prepared information).
"Borrower" shall have the meaning set forth in the preamble of this
Agreement.
"Borrower's Obligations" shall mean the principal of and interest on each
of the Notes issued under this Agreement, and all other obligations and
indebtedness (including, without limitation, indemnities, fees, costs and
interest thereon) of the Borrower, now existing or hereafter incurred under,
arising out of or in connection with this Agreement and the other Loan Documents
and the due performance and compliance with the terms of this Agreement and the
other Loan Documents by the Borrower.
"BTCo" shall have the meaning provided in the first paragraph of this
Agreement.
"Business Day" shall mean for all purposes, any day except Saturday, Sunday
and any day which shall be in New York City a legal holiday or a day on which
banking institutions are authorized by law or other government action to close.
"Canadian Cases" shall have the meaning provided in the recitals to this
Agreement.
"Canadian Confirmation Order" means, collectively, the orders of the
Canadian Bankruptcy Court pursuant to which the Canadian Transactions were
sanctioned and approved dated November 26, 1999, and March 8, 2000, copies of
which are attached hereto as Exhibit F-2.
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"Canadian Court" shall mean the Ontario Superior Court of Justice.
"Canadian Debtors" means PSC and those of its Subsidiaries that commenced
proceedings in the Canadian Court under the CCAA.
"Canadian Dollars" shall mean freely transferable lawful money of Canada
(expressed in dollars).
"Canadian Guarantors" shall mean (a) PSI, (b) PAS, (c) Nortru, Ltd., an
Ontario corporation, (d) Allies Staffing Ltd., an Ontario corporation, (e)
ServTech Canada Inc., an Ontario corporation, (f) Philip Investment Corp., an
Ontario corporation, (g) Recyclage d' Aluminium Quebec Inc., a Canadian
corporation, and (h) ST Delta Canada, Inc., an Ontario corporation.
"Canadian Orders" shall have the meaning provided in Section 3.01(f).
"Canadian Reorganization Plan" shall mean the plan approved and sanctioned
by the Canadian Court.
"Canadian Security Agreement" shall have the meaning provided in Section
3.01(n).
"Canadian Security Documents" means the Canadian Security Agreement, the
Hypothec, and such other instruments, agreements, and documents governed by the
laws of Canada or any political subdivision thereof, as the Exit Agent or its
Canadian counsel reasonably may require to secure the whole or any part of the
Obligations as guaranteed by the Canadian Guarantors.
"Canadian Subsidiary" shall mean all direct and indirect Subsidiaries of
the Borrower incorporated in Canada or any province or territory thereof.
"Canadian Subsidiary Guaranty" shall mean that certain guaranty executed
and delivered by the Canadian Guarantors in favor of the Administrative Agent,
for the benefit of the Lenders in the form of Exhibit H-2 and, after execution
and delivery thereof, as modified, supplemented or amended from time to time.
"Canadian Transaction" shall mean the series of transactions pursuant to
which certain assets of the Canadian Debtors are transferred as going concerns
to PSI, PAS, and PSII.
"Canadian Vesting Order" shall mean the order of the Canadian Bankruptcy
Court made on January 7, 2000, pursuant to which title to the assets to be
transferred pursuant to the Canadian Transactions is to be vested in the
Subsidiary Guarantors free and clear of certain Liens or other claims, a copy of
which is attached hereto as Exhibit F-2.
"Capital Lease" shall mean a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.
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"Capital Reorganization" shall have the meaning provided in Section
1.07(d)(iv).
"Capital Reserve Account" shall mean an account established and maintained
by the Borrower with the Administrative Agent for the purpose of accumulating
and holding cash reserves to meet future capital expenditure requirements of the
Obligors.
"Capitalized Lease Obligations" shall mean any Indebtedness represented by
obligations under a Capital Lease.
"Cash Collateral Order" shall mean that certain Amended Final Stipulation
and Order Authorizing and Restricting Use of Cash Collateral and Granting
Adequate Protection of Certain Secured Claims of the US Bankruptcy Court, dated
as of July 29, 1999.
"Cash Equivalents" shall mean, (a) marketable direct obligations issued or
unconditionally guaranteed by the United States Government or the government of
Canada or issued by any agency or instrumentality of either of them and backed
by the full faith and credit of the United States or the government of Canada,
in each case maturing within one (1) year from the date of acquisition thereof;
(b) marketable direct obligations issued by any state of the United States of
America or any province of Canada or any political subdivision of any such state
or province or any public instrumentality thereof maturing within one (1) year
from the date of acquisition thereof and, at the time of acquisition, having the
highest rating obtainable from either S&P or Moody's or an equivalent rating
from Canadian Bond Rating Service Inc. or Dominion Bond Rating Service Limited;
(c) commercial paper maturing no more than one (1) year from the date of
acquisition thereof and, at the time of acquisition, having a rating of A-2 or
P-2, or better, from S&P or Moody's or an equivalent rating from Canadian Bond
Rating Service Inc. or Dominion Bond Rating Service Limited; (d) certificates of
deposit or bankers' acceptances maturing within one (1) year from the date of
acquisition thereof either (i) issued by any bank organized under the laws of
the United States of America or any state thereof or the District of Columbia or
under the laws of the government of Canada, or any province thereof, which bank
has a rating of A or A2, or better, from S&P or Moody's or an equivalent rating
from Canadian Bond Rating Service Inc. or Dominion Bond Rating Service Limited,
or (ii) certificates of deposit less than or equal to $100,000 in the aggregate
issued by any other bank insured by the Federal Deposit Insurance Corporation.
"Cash Flow Additional Interest" shall have the meaning provided in Section
2.03(A)(c)(vi).
"Cash Flow Available for Debt Service" shall mean with respect to any
period, that amount, if any, which is a positive number and which is equal to:
(a) Net Income for such period plus, to the extent deducted in arriving at
Net Income for such period, (i) Depreciation Expenses for such period, (ii)
interest paid-in-kind for such period relating to the PIK Loans and the
Indebtedness under the PIK Unsecured Debt Indenture and (iii) Deferred Income
Tax Expenses for such period
less
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(b) the sum of (i) the proceeds of any dispositions made by the Obligors to
the extent that the same were included in the calculation of Net Income for such
period, (ii) Permitted Capital Expenditures on account of such period (less the
amount of commitments for Permitted Capital Expenditures deducted under clause
(iv) during the preceding period in the calculation of Cash Flow Available for
Debt Service), (iii) Fixed Obligation Debt Service Requirements during such
period and (iv) the amount of unexpended commitments made for future Permitted
Capital Expenditures, which will be made in compliance with this Agreement.
"Cash Flow Payment" shall have the meaning provided in Section
2.03(A)(c)(iii).
"Cash Flow Payment Date" shall mean the First Annual Cash Flow Payment
Date, the Second Annual Cash Flow Payment Date and the Quarterly Cash Flow
Payment Dates and "Cash Flow Payment Date" shall mean any one of the Cash Flow
Payment Dates.
"Cash Interest Expense" means, with respect to any period of determination,
the consolidated interest expense of a Person accrued during such period as
determined in accordance with GAAP plus, without duplication, the fees for
letters of credit issued under the Exit Facility accrued thereunder during such
period, but excluding, to the extent included, without duplication, (a) non-cash
Interest Expense, (b) Exit Facility Fees, and (c) any other amounts (such as the
amortization of debt discount) that would be classified as Depreciation
Expenses.
"CCAA" shall have the meaning provided in the recitals to this Agreement.
"CERCLA" shall mean the Comprehensive Environmental Response Compensation
and Liability Act of 1980, as same may be amended from time to time.
"Chief Executive Office" shall mean where a Person is deemed located
pursuant to Section 9-103(3) of the Code.
"CIBC" shall have the meaning provided in the recitals to this Agreement.
"Closing Date" shall have the meaning provided in Section 3.01.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time, and the regulations promulgated and rulings issued thereunder. Section
references to the Code are to the Code, as in effect at the date of this
Agreement and any subsequent provisions of the Code amendatory thereof,
supplemental thereto or substituted therefor.
"Collateral" shall mean all of the Personal Property Collateral and the
Real Property Collateral.
"Collateral Agency and Intercreditor Agreement" shall mean that certain
Collateral Agency and Intercreditor Agreement by and among Foothill, the
Borrower and the Subsidiaries of the Borrower identified on the signature pages
thereto, the Collateral Agents, the
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Exit Agent and the Administrative Agent, in form and substance satisfactory to
the Administrative Agent, as amended, restated or otherwise modified.
"Collateral Agents" shall mean (i) prior to the termination of the
Collateral Agency and Intercreditor Agreement, Foothill Capital Corporation in
its various capacities as collateral agents under the Collateral Agency and
Intercreditor Agreement, and any successor thereto and (ii) after the Collateral
Agency and Intercreditor Agreement has been terminated, the collateral agent or
collateral agents as designated by the Lenders pursuant to Section 9.01 hereof.
"Collateral Agents' Liens" shall mean (a) the Liens granted by Borrower to
Collateral Agents pursuant to the Security Agreement, the Stock Pledge
Agreement, the Copyright Security Agreement, the Rolling Stock Security
Agreement, the Patent Security Agreement, and the Trademark Security Agreement,
(b) the Liens granted by Subsidiary Guarantors to Collateral Agents pursuant to
the Canadian Security Agreement and the Guarantor Security Agreement, and (c)
the Liens granted by the Obligors to Collateral Agents pursuant to the
Mortgages.
"Collateral Documents" shall mean all contracts, instruments and other
documents now or hereafter executed and delivered by an Obligor in connection
with this Agreement, pursuant to which liens and security interests are granted
to the Collateral Agents in the Collateral for the benefit of the Lenders,
including, without limitation, the Stock Pledge Agreement, the Security
Agreement, the Canadian Security Agreement, the Copyright Security Agreement,
the Patent Security Agreement, the Trademark Security Agreement and the
Mortgages.
"Compliance Certificate" shall mean a certificate substantially in the form
of Exhibit L delivered by the chief financial officer of Borrower to the
Administrative Agent.
"Confidential Material" shall have the meaning provided in Section
10.13(a).
"Confidentiality Agreement" shall mean an agreement in the form of Exhibit
N hereto.
"Control Agreement" shall mean a control agreement, in form and substance
reasonably satisfactory to the Administrative Agent, between the Borrower, the
applicable US Subsidiary Guarantors, the Collateral Agents, and the applicable
securities intermediary with respect to the applicable Securities Account and
related Investment Property.
"Conversion Date" shall mean the date of receipt of the Notice of
Conversion of PIK Loans by the Borrower.
"Conversion Price" shall mean the price per share of PSC Common Stock at
which the Principal Amount of a PIK Loan shall from time to time be convertible
into PSC Common Stock in accordance with the provisions of Section 1.07.
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"Conversion Privilege" shall mean the right to convert any PIK Loan into
PSC Common Stock in accordance with the provisions of Section 1.07.
"Convertible Securities" shall mean a security of the Borrower (other than
PSC Common Stock) convertible into or exchangeable for PSC Common Stock.
"Copyright Security Agreement" shall have the meaning provided in Section
3.01(n).
"Cost Sharing Agreement" shall mean the agreement dated as of March 31,
2000 between CIBC, as administrative agent for the Pre-Petition Lenders and the
Borrower on behalf of itself and each of its Subsidiaries regarding the release
of cash collateral and the funding and sharing of certain claims which are
property retained by PSC and the Canadian Subsidiaries, as amended, restated or
otherwise modified from time to time.
"Credit Agreement Obligations" shall have the meaning provided in the
definition of Obligations.
"Current Market Price" of the PSC Common Stock on any date shall mean a
price per share equal to the weighted average price at which the PSC Common
Stock have traded on the New York Stock Exchange, or if the PSC Common Stock are
not then listed on the New York Stock Exchange, on such other National
Securities Exchanges on which such shares are listed as may be selected for such
purpose by the board of directors of the Borrower, or if not so listed on any
such National Securities Exchanges on the Nasdaq, or if not so listed on the
Nasdaq, on the Toronto Stock Exchange, or if not so listed on the Toronto Stock
Exchange on such other stock exchange or over the counter market as may be
selected by the board of directors of the Borrower for such purpose, during the
period of 20 consecutive Trading Days ending on the fifth Trading Day before
such date.
"DDA" shall mean any checking or other demand deposit account maintained by
the Borrower or the Subsidiary Guarantors.
"Default" shall mean any event, act or condition which with notice or lapse
of time, or both, would constitute an Event of Default.
"Deferred Income Tax Expense" shall mean, with respect to any period, the
aggregate of all deferred taxes on the income of the Obligors for such period
(net of any incentive tax credits or other similar credits) determined on a
consolidated basis in accordance with GAAP.
"Deferred Interest Amount" with respect to any Term Loan, shall have the
meaning provided in Section 1.03(1)(b)(x)(ii).
"Deferred Prepayment Amount" shall have the meaning provided in Section
2.03(A)(c)(vi).
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"Deferred Prepayment Interest" shall have the meaning provided in Section
2.03(A)(c)(vi).
"Demand Notes" shall mean each of the demand notes to be delivered by
certain of the Canadian Guarantors in favor of the Collateral Agents acting for
the PIK Lenders and the Term Lenders.
"Depreciation Expense" means, with respect to any period of determination,
the consolidated depreciation, amortization, and other similar reductions to
income of a Person for such period as determined in accordance with GAAP.
"DIP Credit Agreement" shall have the meaning provided in the recitals to
this Agreement.
"DIP Lenders" shall have the meaning provided in the recitals to this
Agreement.
"DIP Letters of Credit" shall mean the letters of credit and payment
obligations thereunder issued under the DIP Credit Agreement.
"Disposition" shall mean any sale, assignment, transfer, conveyance, lease,
license or other disposition of any nature or kind whatsoever of any property or
of any right, title or interest in or to any property.
"Dividend" with respect to any Person shall mean that such Person has
declared or paid a dividend (including, without limitation, Dividends in the
Ordinary Course) or returned any equity capital to its stockholders or
authorized or made any other distribution, payment or delivery of property
(other than common stock of such Person) or cash to its stockholders as such, or
redeemed, retired, purchased or otherwise acquired, directly or indirectly, for
consideration any shares of any class of its capital stock outstanding on or
after the Closing Date (or any options or warrants issued by such Person with
respect to its capital stock), or set aside any funds for any of the foregoing
purposes, or shall have permitted any of its Subsidiaries to purchase or
otherwise acquire for consideration any shares of any class of the capital stock
of such Person outstanding on or after the Closing Date (or any options or
warrants issued by such Person with respect to its capital stock). Without
limiting the foregoing, "Dividends" with respect to any Person shall also
include all payments made or required to be made by such Person with respect to
any stock appreciation rights, plans, equity incentive or achievement plans or
any similar plans or setting aside of any funds for the foregoing purposes.
"Dividends in the Ordinary Course" shall mean Dividends paid on PSC Common
Stock in any fiscal year, whether in (i) cash, (ii) shares of the Borrower,
(iii) warrants or similar rights to purchase any shares of the Borrower or
property of the Borrower, or (iv) property of the Borrower, provided that the
value of such Dividends (any such shares, warrants or similar rights, or
property or other assets so distributed to be valued at their fair market value
as determined by the board of directors on the date of such distribution), does
not in such fiscal year exceed the greatest of:
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(a) 100% of the aggregate amount of Dividends paid by the Borrower on the
PSC Common Stock in the period of 36 consecutive months ended immediately prior
to the first day of such fiscal year; or
(b) 100% of EBITDA for the period of the 12 consecutive months ended
immediately prior to the first day of such fiscal year.
"Dollars" and the sign "$" shall each mean freely transferable lawful money
of the United States (expressed in dollars).
"EBITDA" shall mean, with respect to any fiscal period, the consolidated
net earnings (or loss) of the Borrower before Interest Expense, income taxes,
and Depreciation Expense for such period, as determined in accordance with GAAP
and excluding, to the extent included, without duplication (a) net of applicable
taxes, any loss or gain arising from the closure of businesses or locations, (b)
net of applicable taxes, any loss arising from the write-down of long-term
assets, (c) professional fees and other restructuring costs (including retention
payments) incurred in connection with the Bankruptcy Cases and the proceedings
before the Canadian Court and the closing of the transactions contemplated by
this Agreement, and (d) Exit Facility Fees including, without limitation, any
replacement facility fees.
"Eligible Transferee" shall mean and include a commercial bank, trust
company, insurance company, financial institution, any fund that invests solely
in bank loans and any other institutional "accredited investor" within the
meaning of Rule 501(a)(1), (2), (3) or (7) of Regulation D under the US
Securities Act.
"Environmental Law" means any applicable federal, state, provincial,
foreign or local statute, law, rule, regulation, ordinance, code, binding and
enforceable guideline, binding and enforceable written policy or rule of common
law now or hereafter in effect and in each case as amended, or any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, to the extent binding on the Obligors,
relating to the environment, employee health and safety or Hazardous Materials,
including, without limitation, CERCLA; RCRA; the Federal Water Pollution Control
Act, 33 USC. ss. 1251 et seq.; the Toxic Substances Control Act, 15 USC. ss.
2601 et seq.; the Clean Air Act, 42 USC. ss. 7401 et seq.; the Safe Drinking
Water Act, 42 USC. ss. 3803 et seq.; the Oil Pollution Act of 1990, 33 USC. ss.
2701 et seq.; the Emergency Planning and the Community Right-to-Know Act of
1986, 42 USC. ss. 11001 et seq.; the Hazardous Material Transportation Act, 49
USC. ss. 1801 et seq.; and the Occupational Safety and Health Act, 29 USC.
ss.651 et seq. (to the extent it regulates occupational exposure to Hazardous
Materials); any state and local or foreign counterparts or equivalents, in each
case as amended from time to time; and any similar statute, law, rule,
regulation, ordinance, code, binding and enforceable guideline, binding and
enforceable written policy or rule of common law now or hereafter in effect in
Canada and in each case as amended, or any judicial or administrative
interpretation thereof, including any judicial or administrative order, consent,
decree or judgment to the extent binding on the Borrower or the other Obligors.
"Equipment" shall mean all of the Obligors' present and hereafter acquired
machinery, machine tools, motors, equipment, furniture, furnishings, fixtures,
vehicles (including
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motor vehicles and trailers), tools, parts, goods (other than consumer goods,
farm products, or Inventory), wherever located, including all attachments,
accessories, accessions, replacements, substitutions, additions, and
improvements to any of the foregoing.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended and any successor statute thereto.
"ERISA Affiliate" shall mean (a) any corporation whose employees are
treated as employed by the same employer as the employees of the Borrower or a
US Subsidiary Guarantor under Code Section 414(b), (b) any trade or business
subject to ERISA whose employees are treated as employed by the same employer as
the employees of the Borrower or a US Subsidiary Guarantor under Code Section
414(c), (c) solely for purposes of Section 302 of ERISA and Section 412 of the
Code, any organization that is a member of an affiliated service group of which
the Borrower or a US Subsidiary Guarantor is a member under Code Section 414(m),
or (d) solely for purposes of Section 302 of ERISA and Section 412 of the Code,
any party that is a party to an arrangement with the Borrower or a US Subsidiary
Guarantor and whose employees are aggregated with the employees of the Borrower
or a US Subsidiary Guarantor under Code Section 414(o).
"ERISA Event" means (a) a Reportable Event with respect to any Benefit Plan
or Multiemployer Plan, (b) the withdrawal of the Borrower, any US Subsidiary
Guarantor or any of its ERISA Affiliates from a Benefit Plan during a plan year
in which it was a "substantial employer" (as defined in Section 4001(a)(2) of
ERISA), (c) the providing of notice of intent to terminate a Benefit Plan in a
distress termination (as described in Section 4041(c) or ERISA), (d) the
institution by the PBGC of proceedings to terminate a Benefit Plan or
Multiemployer Plan, (e) any event or condition (i) that provides a basis under
Section 4042(a)(1), (2), or (3) of ERISA for the termination of, or the
appointment of a trustee to administer, any Benefit Plan or Multiemployer Plan,
or (ii) that may result in termination of a Multiemployer Plan pursuant to
Section 4041A of ERISA, (f) the partial or complete withdrawal within the
meaning of Sections 4203 and 4205 of ERISA, of the Borrower, any US Subsidiary
Guarantor, any of their ERISA Affiliates from a Multiemployer Plan, or (g)
providing any security to any Plan under Section 401(a)(29) of the Code by the
Borrower, any US Subsidiary Guarantor or any of its ERISA Affiliates or (h) the
termination, reorganization or insolvency of any Multiemployer Plan to which the
Borrower, any US Subsidiary Guarantor or any of its ERISA Affiliates is required
to contribute.
"Event of Default" shall have the meaning provided in Section 7.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Excess Proceeds Account" shall have the meaning set forth in the Cash
Collateral Order.
"Existing Indebtedness" shall have the meaning provided in Section 4.18.
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"Existing Letters of Credit" shall mean the DIP Letters of Credit, the 1997
Letters of Credit and the Permitted LC Facility Letters of Credit, as listed on
Schedule XXX.
"Exit Agent" shall mean Foothill Capital Corporation or any successor
entity as the administrative agent under the Exit Facility (including any agent
under any amendment, restatement, other modification, refinancing, extension,
replacement, renewal or other restructuring of the Exit Facility).
"Exit Facility" shall mean the credit agreement dated the date hereof among
the Borrower, the US Subsidiary Guarantors, the Exit Agent and the Exit Lenders
(as amended, restated or otherwise modified, refinanced, replaced, renewed,
extended or otherwise restructured and whether by the same or any other agent,
lender or group of lenders).
"Exit Facility Fees" shall mean, as of any date of determination, (a) for
any fiscal period ended on or before the date that is the first anniversary of
the Closing Date, fees paid or payable on or prior to the Closing Date relative
to the execution and delivery of the Exit Facility and, without duplication,
fees paid or payable pursuant to Sections 2.12(b), (c) and (d) thereof during
such period, and any other similar fees payable under any modification,
refinancing, replacement or renewal of such Exit Facility and (b) for any fiscal
period ended after the date that is the date of the first anniversary of the
Closing Date, fees paid or payable pursuant to Sections 2.12(b), (c) and (d)
thereof during such period, and any other similar fees payable under any
modification, refinancing, replacement or renewal of such Exit Facility.
"Exit Lenders" shall mean the lenders party to the Exit Facility from time
to time.
"Exit Liens" shall mean the liens granted by the Obligors to the Exit
Lenders.
"Exit Loans" shall mean the loans made to, and the other extensions of
credit made for the benefit of, the Obligors under the Exit Facility.
"Fee Letter" shall mean the fee letter dated as of March 31, 2000 between
the Administrative Agent and the Borrower.
"Final Order" shall mean an order of the US Bankruptcy Court:
(a) as to which the time to appeal, petition for certiorari, or move for
reargument, rehearing or new trial has expired and as to which no appeal,
petition for certiorari, motion or other proceedings for reargument, rehearing
or new trial shall then be pending; or
(b) as to which any right to appeal, petition for certiorari, reargue,
rehear or retry shall have been waived by the Borrower in writing in form and
substance reasonably satisfactory to the Administrative Agent; or
(c) in the event that an appeal, writ of certiorari, or reargument or
rehearing or new trial has been sought, as to which
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(i) such order of the US Bankruptcy Court shall have been affirmed by the
highest court to which such order may be appealed, or
(ii) certiorari has been denied as to such order, or
(iii) reargument or rehearing or new trial from such order shall have been
denied,
and, in each case, the time to take any further appeal, petition for certiorari
or move for reargument, rehearing or new trial shall have expired.
"First Annual Cash Flow Payment Date" shall mean the 45th day of the fifth
Post Plan Implementation Fiscal Quarter.
"First Cash Flow Payment" shall have the meaning provided in Section
2.03(A)(c)(i).
"First Notional Cash Flow Difference Amount" shall have the meaning
provided in Section 2.03(A)(c)(ii).
"First Year Partial Interest Deferral Period" shall have the meaning
provided in Section 1.03(1)(b)(x).
"Fiscal Quarter" shall mean quarters of the Obligors being the periods of
(a) January, February and March, (b) April, May and June, (c) July, August and
September, and (d) October, November and December.
"Fixed Obligation Debt Service Requirement" shall mean, for any period, all
Cash Interest Expense paid, and all cash principal payments made, during such
period by the Obligors under Approved Fixed Obligation Arrangements.
"Foreign Asset Sales" shall mean any Disposition (other than the UK Sale)
by any Subsidiary of the Borrower that is neither an Obligor nor organized in
the United States (a "Non-Obligor Foreign Subsidiary") of any assets of such
Non-Obligor Foreign Subsidiary, but excluding (a) sales, exchanges, trade-ins,
or other dispositions of equipment that is substantially worn, damaged, or
obsolete in the ordinary course of a Non-Obligor Foreign Subsidiary's business,
(b) sales of inventory to Persons (including another Subsidiary) who are buyers
in the ordinary course of the selling a Non-Obligor Foreign Subsidiary's
business, (c) the use or transfer of money or cash equivalents by a Non-Obligor
Foreign Subsidiary, (d) the licensing or sub-licensing by any Non-Obligor
Foreign Subsidiary, on a non-exclusive basis, of patents, trademarks,
copyrights, and other intellectual property rights in the ordinary course of
such Non-Obligor Foreign Subsidiary's business, (e) discounts so long as no
Default or Event of Default has occurred and is continuing, without recourse and
in the ordinary course of business, of overdue Accounts arising in the ordinary
course of business, but only in connection with the compromise or collection
thereof consistent with customary industry practice (and not as part of any bulk
sale or financing of receivables), (f) transfers of condemned property to the
respective
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Governmental Authority that has condemned same (whether by deed in lieu of
condemnation or otherwise), and transfers of properties that have been subject
to a casualty to the respective insurer of such property as part of an insurance
settlement and (g) transfers or lease of assets by any Non-Obligor Foreign
Subsidiary to any Subsidiary of the Borrower.
"Foreign Subsidiary Proceeds" shall mean (i) the Net Cash Proceeds received
by an Obligor from Foreign Asset Sales by Non-Obligor Foreign Subsidiaries of
such Obligor (but only to the extent that payment of any such Net Cash Proceeds
as a dividend or other equity distribution directly or indirectly to an Obligor
would not be in violation of applicable law in effect at the relevant time or
the organizational documents of such Non-Obligor Foreign Subsidiary or any other
contract restricting the payment of such dividend or distribution in effect on
the date hereof), (ii) in each case reduced by the amount of any taxes based
upon income or earnings that would be incurred by non-Obligors, the Borrower or
any Subsidiary as a result of such Net Cash Proceeds being distributed or
dividended to the relevant Obligor, (iii) but only to the extent that the
aggregate amount of all such Net Cash Proceeds, as reduced by such tax
considerations, in any one year period exceeds $1,000,000.
"Freely Tradeable" shall mean, in respect of shares of PSC Common Stock,
that such shares can be traded by the holder thereof without any restriction
under Applicable Securities Legislation, such as hold periods, except in the
case of a sale (i) by an underwriter (as defined in Section 1145 of the
Bankruptcy Code) with respect to such shares or an affiliate (as defined in Rule
144 under the US Securities Act) of the Borrower or (ii) that constitutes a
distribution as defined in Section (c) of the definition of distribution in the
Securities Act (Ontario).
"Funding Agreement" shall have the meaning provided in Section 3.01(t).
"GAAP" shall mean generally accepted accounting principles as in effect
from time to time in the United States, consistently applied.
"General Intangibles" shall mean all of the Obligors' general intangibles
and other personal property (including contract rights, rights to payment,
rights arising under common law, statutes, or regulations, choses or things in
action, goodwill, patents, trade names, trademarks, servicemarks, copyrights,
blueprints, drawings, purchase orders, customer lists, monies due or recoverable
from pension funds, route lists, rights to payment and other rights under any
royalty or licensing agreements, infringement claims, computer programs,
information contained on computer disks or tapes, literature, reports, catalogs,
money, deposit accounts, insurance premium rebates, tax refunds, and tax refund
claims), other than goods, Accounts, Investment Property, and Negotiable
Collateral.
"Governing Documents" shall mean, with respect to any Person, the
certificate or articles of incorporation, by-laws, or other organizational
documents of such Person.
"Governmental Authority" shall mean any federal, state, local, or other
governmental or administrative body, instrumentality, department, or agency or
any court, tribunal,
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administrative hearing body, arbitration panel, commission, or other similar
dispute-resolving panel or body.
"Guarantor Security Agreement" shall have the meaning provided in Section
3.01(n).
"Hazardous Materials" shall mean (a) substances that are defined or listed
in, or otherwise classified pursuant to, any applicable laws or regulations as
"hazardous substances," "hazardous materials," "hazardous wastes," "toxic
substances," or any other formulation intended to define, list, or classify
substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP
toxicity", (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.
"Hypothec" means the security document executed by certain of the Canadian
Guarantors in favor of Collateral Agents, in form and substance (including being
governed by the laws of Quebec) satisfactory to the Administrative Agent, as
amended, restated, supplemented or otherwise modified from time to time.
"Indebtedness" shall mean, as to any Person and without duplication, (a)
all obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes, or other similar instruments and
all reimbursement or other obligations of such Person in respect of letters of
credit, bankers acceptances, interest rate swaps, or other financial products,
(c) all obligations of such Person under Capital Leases, (d) all obligations or
liabilities of the types described in clauses (a) through (c) above of others
secured by a Lien on any property or asset of such Person, irrespective of
whether such obligation or liability is assumed, and (e) any obligation of such
Person guaranteeing or intended to guarantee (whether guaranteed, endorsed,
co-made, discounted, or sold with recourse to such Person) any obligation or
liability of the types described in clauses (a) through (c) above of any other
Person; provided, however, that Indebtedness shall not include trade payables
and accrued expenses, in each case arising in the ordinary course of business or
any reimbursement obligations of such Person under any performance bond issued
for the account of such Person.
"Indemnified Amount" shall have the meaning provided in Section 10.01.
"Indemnitee" shall have the meaning provided in Section 10.01.
"Insolvency Proceeding" shall mean any proceeding commenced by or against
any Person under any provision of the Bankruptcy Code or under any other
bankruptcy or insolvency law of any jurisdiction, assignments for the benefit of
creditors, formal or informal moratoria, compositions, extensions generally with
creditors, or proceedings seeking reorganization, arrangement, or other similar
relief.
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"Interest Coverage Ratio" shall mean, with respect to any period of
determination, the ratio of (i) EBITDA to (ii) Cash Interest Expense and Exit
Facility Fees for such period, all as determined in accordance with GAAP minus
any Cash Interest Expense paid with respect to the exercise of a change of
control put under the Unsecured Notes Documents.
"Interest Expense" shall mean, with respect to any period of determination,
the consolidated interest expense of a Person incurred during such period as
determined in accordance with GAAP plus, without duplication, the Letter of
Credit fees accrued under the Exit Facility during such period, but excluding,
to the extent included, without duplication, (a) Exit Facility Fees, and (b) any
other amounts incurred on account of money borrowed (such as the amortization of
debt discount) that would be classified as Depreciation Expenses.
"Interest Payment Date" shall mean the first Business Day of each Fiscal
Quarter commencing with the first Business Day after July 1, 2000.
"Inventory" shall mean all of the Obligors' inventory, including goods held
for sale or lease or to be furnished under a contract of service and all of the
Obligors' raw materials, work in process, finished goods, and all materials used
or consumed in the Obligors' business, wherever located.
"Investment" means, with respect to any Person, any investment by such
Person in any other Person in the form of loans, guarantees, advances, or
capital contributions (excluding (a) commission, travel, and similar advances to
officers and employees of such Person made in the ordinary course of business,
and (b) bona fide accounts receivable arising from the sale of goods or services
in the ordinary course of business consistent with past practice), purchases or
other acquisitions for consideration of Indebtedness or Stock, and any other
items that are or would be classified as investments on a balance sheet prepared
in accordance with GAAP.
"Investment Property" shall mean all of the Obligors' "investment property"
as that term is defined in the UCC.
"Lender" shall have the meaning provided in the recitals to this Agreement.
"Lien" shall mean any interest in property securing an obligation owed to,
or a claim by, any Person other than the owner of the property, whether such
interest shall be based on the common law, statute, or contract, whether such
interest shall be recorded or perfected, and whether such interest shall be
contingent upon the occurrence of some future event or events or the existence
of some future circumstance or circumstances, including the lien or security
interest arising from a mortgage, deed of trust, encumbrance, pledge,
hypothecation, assignment, deposit arrangement, security agreement, conditional
sale or trust receipt, or from a lease, consignment, or bailment for security
purposes and also including reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions, leases, and other title
exceptions and encumbrances affecting Real Property.
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"Loan Documents" shall mean this Agreement, the Subsidiary Guaranties, the
Security Documents, and any other agreement entered into, now or in the future,
by the Borrower and the Lenders in connection with this Agreement.
"Loans" shall mean the PIK Loans and the Term Loans and "Loan" shall mean
any one of the Loans.
"Material Adverse Change" shall mean (a) a material adverse change in the
business, prospects, operations, results of operations, assets, liabilities or
condition (financial or otherwise) of the Obligors (taken as a whole), (b) the
material impairment of the ability of the Obligors (taken as a whole) to perform
their obligations under the Loan Documents or of the Lenders' ability to enforce
the Obligations or realize upon a material portion of the Collateral, or (c) a
material impairment of the priority of the Liens of the applicable Collateral
Agents for the benefit of the PIK Lenders or the Term Lenders with respect to a
material portion of the Collateral as a result of an action or failure to act on
the part of any Obligor.
"Mortgage" shall have the meaning provided in Section 3.01(o).
"Multiemployer Plan" means a "Multiemployer plan" (as defined in Section
4001(a)(3) of ERISA) to which the Borrower, any US Subsidiary Guarantor, or any
ERISA Affiliate is obligated to contribute.
"Nasdaq" shall have the meaning provided in Section 5.16.
"National Securities Exchange" shall have the meaning provided in Section
5.16.
"Negotiable Collateral" shall mean all of the Obligors' letters of credit,
notes, drafts, instruments, certificated securities, documents, and chattel
paper.
"Net Asset Sale Proceeds" means the gross cash proceeds (including any cash
received by way of deferred payment pursuant to a promissory note, receivable or
otherwise, but only as and when received) of asset sales of any Person, net only
of direct costs and expenses related to such sales (but excluding income taxes
or other taxes incurred as a result of such sale) and the payment of Other
Senior Indebtedness secured by such assets; provided that after Termination of
the Exit Facility, there shall be excluded from "Net Asset Sale Proceeds" up to
an aggregate amount of $500,000 in each fiscal year of proceeds from asset sales
for purposes of Section 2.03(A)(b).
"Net Income" shall mean, for any period, the net income (loss) of the
Obligors for such period, determined on a consolidated basis in accordance with
GAAP provided that, when used in the definition of Cash Flow Available for Debt
Service, "Net Income" shall mean the net income (loss) of the Obligors for such
period, determined on a consolidated basis in accordance with GAAP but
excluding, in each case, net of applicable taxes, (a) any gain or loss arising
from discontinued operation or from Disposition of any property (other than
sales of inventory in the ordinary course of business), (b) any gain or loss
arising from any write-up or write-down of any property, (c) any income or
losses of any other Person which has been acquired, or substantially
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all the assets of which have been acquired, by an Obligor in any manner to the
extent that such income or losses were realized by such other Person prior to
the effective date of such acquisition, (d) income or losses of any person which
is not an Obligor except to the extent of the amount of cash dividends or other
distributions actually received by the Obligors during such period, (e) income
of any Obligor (other than the Borrower) to the extent that the declaration or
payment of dividends or similar distributions by that Obligor of that income is
not at the time permitted by the terms of its corporate documents, by any
applicable law or by any contractual obligation of such Person, (f) the income
or losses of any Person which is not an Obligor to which assets of an Obligor
have been disposed of or into which an Obligor has merged or amalgamated, to the
extent that such income or losses arose prior to the date of such transaction,
and (g) to the extent not included in the foregoing clauses, any net
extraordinary, unusual or non recurring gains or non-cash extraordinary, unusual
or non-recurring losses.
"Net Sale Proceeds Repayment Amount" shall have the meaning provided in
Section 2.03(A)(b)(iii).
"1997 Credit Agreement" shall mean the meaning provided in the recitals to
this Agreement.
"1997 Letters of Credit" shall mean the letters of credit and all payment
obligations thereunder issued under the 1997 Credit Agreement.
"Non-Obligor Foreign Subsidiary" shall have the meaning provided in the
definition of "Foreign Asset Sales".
"Non-US Guarantor" shall mean each Canadian Subsidiary Guarantor and Arc
Dust Processing (Barbados) Limited, a Barbados corporation, and Philip
International Development Inc., a Barbados corporation.
"Notes" shall mean the Term Notes and the PIK Notes.
"Notice of Conversion of PIK Loans" shall have the meaning provided in
Section 1.07(b)(i).
"Notice Office" shall mean the office of the Administrative Agent, shown
opposite its name on the signature pages hereof, or such other office as the
Administrative Agent, may hereafter designate in writing as such to the other
parties hereto.
"Notional Cash Flow Difference Amounts" shall have the meaning provided in
Section 2.03(A)(c)(iv).
"Obligations" shall mean all amounts owing to the Administrative Agent, the
Collateral Agents or any Lender pursuant to the terms of this Agreement, any
other Loan Document, including, without limitation, (i) (x) with respect to the
Borrower, the Borrower's Obligations, and (y) with respect to each Obligor which
is a Subsidiary Guarantor, all obligations and indebtedness of such Subsidiary
Guarantor, now existing or hereinafter incurred under,
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arising out of or in connection with the Guaranty and the other Loan Documents
and the due performance and compliance with the terms of this Agreement and the
other Loan Documents by such Subsidiary Guarantor (all such obligations and
indebtedness under this clause (i) (including interest that, but for the
provisions of the Bankruptcy Code, would have accrued) being herein collectively
called the "Credit Agreement Obligations"), (ii) any and all sums advanced by
the Collateral Agents in order to preserve the Collateral or preserve their
security interest in the Collateral, and (iii) in the event of any proceeding
for the collection or enforcement of any indebtedness, obligations, or
liabilities of any Obligor referred to in clause (i), after an Event of Default
shall have occurred and be continuing, the reasonable expenses of re-taking,
holding, preparing for sale or lease, selling or otherwise disposing of or
realizing on the Collateral, or of any exercise by the Collateral Agents of
their rights hereunder, together with reasonable attorneys' fees and court
costs.
"Obligors" shall mean, individually and collectively, the Borrower and the
Subsidiary Guarantors, and "Obligor" means any one of them.
"Offer" shall mean a Take-Over Bid made by an Offeror to purchase all PSC
Common Stock other than the Offeror's Existing Holdings, or any other
transaction which has the same effect (including any amalgamation, arrangement,
consolidation, merger or other transaction involving the Borrower, as a
consequence of which some or all of the PSC Common Stock outstanding immediately
prior to the transaction are exchanged for cash, securities or other property of
the Borrower or another Person) whereby the holders of outstanding PSC Common
Stock would be entitled, by reason of Applicable Securities Legislation or the
requirements of a stock exchange on which the PSC Common Stock are listed, to
tender any or all of their PSC Common Stock and receive cash or other securities
or property or a combination of cash or other securities or property.
"Offer to Acquire" shall include: (i) an offer to purchase, or a
solicitation of an offer to sell securities and (ii) an acceptance of an offer
to sell securities, whether or not such offer to sell has been solicited; or any
combination thereof, and the Person accepting an offer to sell shall be deemed
to be making an offer to acquire to the Person that made the offer to sell.
"Offeror" shall mean one or more Persons making an Offer.
"Offeror's Existing Holdings" shall mean, in connection with any Offer, all
PSC Common Stock which the Offeror, and each Person which is acting jointly or
in concert with such Offeror with respect to such Offer, Beneficially Own at the
time such Offer is made. A Person shall be deemed to "Beneficially Own":
(a) any securities as to which such Person or any of such Person's
Affiliates or Associates is the owner at law or equity;
(b) any securities as to which such Person or any of such Person's
Affiliates or Associates has:
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(i) the right to become the owner at law or in equity (whether such right
is exercisable immediately or after the lapse or passage of time and whether or
not on condition or the happening of any contingency or otherwise) pursuant to
any agreement, arrangement, pledge or understanding, whether or not in writing
(other than customary agreements with and between underwriters and/or banking
group members and/or selling group members with respect to a bona fide public
offering of securities in the ordinary course of business), or upon the exercise
of any conversion right, exchange rights, share purchase right (other than the
rights under any shareholder rights plan adopted by the Borrower), warrant or
option, or otherwise; or
(ii) the right to vote such securities (whether such right is exercisable
immediately or after the lapse or passage of time and whether or not on
condition or the happening of any contingency or otherwise) pursuant to any
agreement, arrangement, pledge (other than bona fide pledges of securities in
the ordinary course of business), or understanding (whether or not in writing)
or otherwise; and
(c) any securities that are Beneficially Owned within the meaning of
clauses (a) or (b) above by any other Person with which such Person is acting
jointly or in concert.
"Original Canadian Lender" shall mean each Lender party to this Agreement
on the Closing Date that is a resident of Canada within the meaning of the
Income Tax Act of Canada but only to the extent that such Original Canadian
Lender beneficially owns a Loan for its own account and shall not include any
portion of such Loan in which a participation has been granted under Section
10.04 hereof or otherwise.
"Other Senior Indebtedness" means indebtedness secured by the Collateral
that is secured by liens that are senior to the liens and security interests of
the Collateral Agents, other than indebtedness in respect of the Exit Facility.
"PAS" means Philip Analytical Services, Inc., an Ontario corporation.
"Patent Security Agreement" shall have the meaning contained in Section
3.01(n).
"Payment Office" shall mean the office of the Administrative Agent located
at Box 25, Commerce Court West, Toronto, Ontario M5L 1A9 or such other office as
the Administrative Agent may designate to the Borrower from time to time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, as defined in
Title IV of ERISA, or any successor thereto.
"Permitted Acquisition" means an Acquisition by an Obligor of all or
substantially all of the assets of another Person (exclusive of any Stock issued
or owned by such Person) so long as (a) no Default or Event of Default shall
have occurred and be continuing or would result from the consummation of the
proposed Acquisition, (b) the assets being acquired
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are useful in the business of the Obligors as such business exists on the
Closing Date, (c) the Borrower and the Subsidiary Guarantors have complied with
their obligations under Section 5.17 hereof and under the Security Documents in
connection therewith, and (d) the total cash consideration paid in respect of
such Acquisition and all other Permitted Acquisitions does not exceed $5,000,000
per year during the period of time from and after the Closing Date.
"Permitted Capital Expenditures" shall mean, during any period, the amount
of capital expenditures of the Obligors paid in cash by the Obligors during such
period permitted to be made hereunder.
"Permitted Discretion" shall mean, with respect to any determination by the
Administrative Agent or a Lender, means a determination made in good faith and
in the exercise of reasonable business judgment.
"Permitted Dispositions" means (a) sales, exchanges, trade-ins, or other
dispositions of Equipment that is substantially worn, damaged, or obsolete in
the ordinary course of Obligors' business, (b) sales of Inventory to Persons
(including another Obligor) who are buyers in the ordinary course of the selling
Obligor's business, (c) the use or transfer of money or Cash Equivalents by
Obligors (i) to pay taxes, trade payables and other ordinary operating expenses
in the ordinary course of business, (ii) to make capital expenditures to the
extent permitted hereby, (iii) to pay Capitalized Lease Obligations to the
extent permitted hereby, (iv) to repay Indebtedness in connection with the
refinancing of Indebtedness to the extent permitted hereby, (v) to make
Permitted Investments, or (vi) in any other manner that is not prohibited by the
terms of this Agreement or the other Loan Documents, (d) the licensing or
sub-licensing by any Obligor, on a non-exclusive basis, of patents, trademarks,
copyrights, and other intellectual property rights in the ordinary course of
such Obligor's business, (e) discounts so long as no Default or Event of Default
has occurred and is continuing, without recourse and in the ordinary course of
business, of overdue Accounts arising in the ordinary course of business, but
only in connection with the compromise or collection thereof consistent with
customary industry practice (and not as part of any bulk sale or financing of
receivables), (f) transfers of condemned property to the respective Governmental
Authority that has condemned same (whether by deed in lieu of condemnation or
otherwise), and transfers of properties that have been subject to a casualty to
the respective insurer of such property as part of an insurance settlement, so
long as the proceeds thereof are applied in accordance with the provisions of
the Collateral Agency and Intercreditor Agreement and after the Termination of
the Exit Facility, in accordance with Section 2.03(A)(b), (g) transfers or
leases of assets by the Borrower to any Wholly-Owned Subsidiary Guarantor, by
any Obligor to the Borrower, or by any Obligor to any Wholly-Owned Obligor, (h)
so long as no Default or Event of Default has occurred and is continuing, any
disposition described on Schedule XXIV, (i) prior to the date of Termination of
the Exit Facility (A) so long as no Default or Event of Default has occurred and
is continuing or would result therefrom, any Obligor may make any other sale
exchange, or other disposition of assets (exclusive of Accounts, General
Intangibles, or Negotiable Collateral, other than in connection with the sale of
the business out of which they arose) in an amount not in excess of (1)
$10,000,000 in any transaction or series of related transactions, and (2)
$50,000,000 in any twelve month period with the valuation of the assets under
this clause (A) to be determined on
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the basis of the fair market value of such assets as mutually agreed upon by the
Borrower and the Administrative Agent in good faith and based upon the facts and
circumstances as of the date of the consummation of the applicable transaction
and (B) if a Default or Event of Default has occurred and is continuing under
the Exit Facility or would result therefrom and the requisite Exit Lenders under
the Exit Facility have approved such sale, any other sale, exchange or other
disposition of assets (exclusive of Accounts, General Intangibles, or Negotiable
Collateral, other than in connection with the sale of the business out of which
they arose), and (j) after the date of Termination of the Exit Facility, so long
as no Default or Event of Default has occurred and is continuing or would result
therefrom or be created thereby and provided that such Disposition would not
have, or be reasonably likely to have, a Material Adverse Change, the Obligors
may dispose of property (other than any property which is material to, or to the
value of, the ongoing business, operations or property of the Obligors taken as
a whole) in any fiscal year; provided, however, that, solely for dispositions
under this clause (j):
(i) at least 70% of the consideration therefor is paid in cash;
(ii) the aggregate fair market value of (or if greater the aggregate
purchase price payable for) all property so disposed of in such fiscal year does
not exceed (x) $5,000,000 on an individual basis or (y) $25,000,000 in the
aggregate; and
(iii) such Disposition is treated as a Disposition to which Section
2.03(A)(b) is applicable and that amount (based on the Net Asset Sales Proceeds
relative to such Disposition) required to be paid to the Administrative Agent
under Section 2.03(A)(b) in connection with such Disposition is paid to the
Administrative Agent in accordance with the requirements of such Section.
"Permitted Investments" shall mean (a) investments in cash and Cash
Equivalents, (b) so long as no Default or Event of Default has occurred and is
continuing or would result therefrom, (i) contributions to, and investments in,
joint ventures to the extent specified on Schedule XXV, (ii) investments
resulting from performance under one or more of the guaranties described on
Schedule XXI, (iii) equity investments by any US Subsidiary Guarantor or the
Borrower in any other US Subsidiary Guarantor or the Borrower, (iv) equity
investments by any Canadian Subsidiary Guarantor in any other Canadian
Subsidiary Guarantor and (v) equity investments by any Canadian Subsidiary
Guarantor in the Borrower or any US Subsidiary Guarantor, (c) so long as no
Default or Event of Default has occurred and is continuing or would result
therefrom, discretionary Investments in Subsidiaries of the Borrower that are
not Obligors not in excess of: from and after the Closing Date (y) $10,000,000
per year minus (z) the aggregate amount of guaranties that were entered into
during such year to the extent such guaranties remain outstanding during such
year pursuant to Section 6.06, (d) investments in commercial paper rated at
least A-1 or P-1 maturing within one year after the date of acquisition thereof,
(e) money market accounts maintained at a commercial bank headquartered in the
United States or Canada having combined capital and surplus of no less than
$500,000,000 or at any other financial institution reasonably satisfactory to
the Administrative Agent, (f) investments in negotiable
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instruments for collection, (g) advances made in connection with purchases of
goods or services in the ordinary course of business, and (h) investments
resulting from the making of loans or advances permitted by Section 6.01(h).
"Permitted LC Facility Letters of Credit" means letters of credit issued
under the "Permitted LC Facility", as such term is defined in the 1997 Credit
Agreement.
"Permitted Liens" shall mean (a) Liens held by Collateral Agents pursuant
to the Security Documents and subject to the terms and conditions of the
Collateral Agency and Intercreditor Agreement, (b) Liens for unpaid taxes that
either (i) are not yet delinquent, or (ii) do not constitute an Event of Default
hereunder and are the subject of Permitted Protests or Liens for unpaid taxes
filed against a landlord or owner of a real property in which an Obligor owns
only a leasehold estate, (c) Liens set forth on Schedule XXVI, (d) the interests
of lessors under operating leases, (e) Purchase Money Liens or the interests of
lessors under Capital Leases to the extent that such Liens or interests secure
Permitted Purchase Money Indebtedness and so long as the Lien attaches only to
the asset purchased or acquired and the proceeds thereof, (f) Liens arising by
operation of law in favor of warehousemen, landlords, carriers, mechanics,
materialmen, laborers, or suppliers, incurred in the ordinary course of business
of the Obligors and not in connection with the borrowing of money, and which
Liens either (i) are for sums not yet delinquent, (ii) are the subject of
Permitted Protests, or (iii) which in the aggregate do not detract from the
value of the subject property or assets or materially impair the use thereof in
the operation of the business of the Obligors, (g) Liens arising from deposits
made in connection with obtaining worker's compensation or other unemployment
insurance, (h) Liens or deposits to secure performance of bids, tenders, or
leases incurred in the ordinary course of business of the Obligors and not in
connection with the borrowing of money, (i) Liens granted as security for surety
or appeal bonds in connection with obtaining such bonds in the ordinary course
of business of the Obligors, (j) Liens resulting from any judgment or award that
is not an Event of Default hereunder, (k) with respect to any Real Property,
easements, rights of way, restrictions (including zoning restrictions),
encroachments, protrusions, municipal agreements and other similar charges and
minor title deficiencies, in each case whether now or hereafter in existence,
not securing Indebtedness and not materially interfering with the conduct of the
business of the Obligors conducted at such Real Property, (l) rights of tenants,
subtenants, franchisees, or other parties in possession (other than a debtor in
possession, trustee in bankruptcy or receiver of Obligors) of Real Property, or
options or rights of first refusal respecting Real Property, whether pursuant to
leases, subleases, franchise agreements, other occupancy agreements, or
otherwise, if such rights were vested on the Closing Date or created thereafter
in the ordinary course of business in transactions permitted under this
Agreement, (m) any interest or title of a lessor, sublessor, licensee or
licensor under any lease or license agreement permitted by this Agreement, (n)
Liens in favor of a banking institution arising as a matter of law or pursuant
to the banking institution's standard form agreements regulating the DDAs, (o)
Liens in favor of customs and revenue authorities arising as a matter of law to
secure the payment of customs duties in connection with the importation of
goods, (p) deposits made to secure statutory obligations in the form of excise
taxes, (q) Liens arising from precautionary UCC financing statement filings
regarding operating leases or consignment arrangements entered into by any
Obligor in transactions permitted under this Agreement, (r) the Senior Liens,
(s) Liens given to a public
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utility or any municipality or governmental or other public authority when
required by such utility or other authority in connection with the operation of
the business or the ownership of the assets of the Obligors, (t) reservations,
limits and conditions in the original grant from the Crown, (u) undetermined or
inchoate Liens arising under the Construction Lien Act (Ontario) and which Liens
either (i) are for sums not yet delinquent, (ii) are the subject of Permitted
Protests, or (iii) which in the aggregate do not detract from the value of the
subject property or assets or materially impair the use thereof in the operation
of the business of the Obligors and (v) Liens not otherwise permitted by the
foregoing clauses (a) through (u) to the extent attaching to tangible properties
and assets with an aggregate fair market value (to be mutually agreed upon by
the Borrower and the Administrative Agent in good faith and based upon the facts
and circumstances as of the date of determination) not in excess of, and
securing liabilities otherwise permitted hereunder not in excess of, $2,500,000
in the aggregate.
"Permitted Protest" shall mean the right of the Obligors to protest any
Lien (other than any such Lien that secures the Obligations), tax (other than
taxes that are the subject of a United States federal tax lien), or rental
payment, provided that (a) if and to the extent required by GAAP, a reserve with
respect to such obligation is established on the Books in such amount as is
required under GAAP, (b) any such protest is instituted and diligently
prosecuted by the applicable Obligor in good faith, and (c) the Administrative
Agent is satisfied that, while any such protest is pending, there will be no
impairment of the enforceability, validity, or priority of any of the Collateral
Agents' Liens.
"Permitted Purchase Money Indebtedness" shall have the meaning set forth in
Section 6.01(c).
"Permitted Transactions" shall mean, so long as the Borrower and the US
Subsidiary Guarantors give the Administrative Agent not less then 60 days prior
written notice and, prior to the consummation thereof, comply with their
obligations under Sections 1.07 and 5.17 hereof and under the Security Agreement
in connection therewith, any (a) recapitalization, or reclassifications of Stock
or merger, consolidation, reorganization, between (i) any Wholly-Owned
Subsidiary Guarantors, (ii) any Wholly-Owned Subsidiary Guarantor and any
Wholly-Owned US Subsidiary Guarantor, so long as the Wholly-Owned US Subsidiary
Guarantor is the surviving entity in such transaction, and (iii) any
Wholly-Owned Subsidiary Guarantor and the Borrower, so long as the Borrower is
the surviving entity in such transaction, (b) liquidation, winding up, or
dissolution by any US Subsidiary Guarantor or Subsidiary Guarantor, so long as
the properties and assets resulting from such transactions are vested in or
transferred to the Borrower or a Wholly-Owned US Subsidiary Guarantor or, in the
case of a transaction undertaken by a Subsidiary Guarantor, to a Wholly-Owned
Subsidiary Guarantor, (c) sale, assignment, lease, transfer, or other
disposition of, in one transaction or a series of transactions, all or any
substantial part of any US Subsidiary Guarantor or Subsidiary Guarantor's
property or assets, so long as the relevant properties or assets that are the
subject of such sale, assignment, lease, transfer, or other disposition are
sold, assigned, leased, transferred, or otherwise disposed of to the Borrower or
to a Wholly-Owned US Subsidiary Guarantor, or, in the case of a transaction
undertaken by a Subsidiary Guarantor, to a Wholly-Owned Subsidiary Guarantor.
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"Person" shall mean natural persons, corporations, limited liability
companies, limited partnerships, general partnerships, limited liability
partnerships, joint ventures, trusts, land trusts, business trusts, or other
organizations, irrespective of whether they are legal entities, and governments
and agencies and political subdivisions thereof.
"Personal Property Collateral" shall mean all of each Obligor's personal
property and fixtures, and the proceeds thereof.
"PIK Lender" shall mean each Lender listed on Schedule II to whom the
Borrower is indebted on the Closing Date under and in respect of the PIK Loans,
as well as any Person who becomes a "PIK Lender" hereunder pursuant to Sections
1.06 and 10.04(b).
"PIK Loan" shall have the meaning provided in Section 1.01(b).
"PIK Loan Maturity Date" shall mean March 31, 2005.
"PIK Loan Redemption Notice" shall have the meaning provided in Section
2.04 of this Agreement.
"PIK Note" shall have the meaning provided in Section 1.02(b).
"PIK Unsecured Debt Indenture" means that certain Indenture dated as of the
Closing Date by and among the Borrower and the PIK Unsecured Debt Trustee, in
form and substance satisfactory to the Administrative Agent and the Lenders, as
amended, restated or otherwise modified in accordance with the terms hereof.
"PIK Unsecured Debt Trustee" means Wilmington Trust Company, as agent for
the holders of the indebtedness issued under the PIK Unsecured Debt Indenture.
"Plan" means any written or oral employee benefit plan, fund, program, or
arrangement or contract maintained or contributed to or required to be
contributed to by the Borrower or any US Subsidiary Guarantor or with respect to
which it may incur liability.
"Plan Effective Date" shall mean the "Effective Date" under and as defined
in the Reorganization Plan.
"Post Plan Implementation Fiscal Quarter" shall mean any Fiscal Quarter
which begins on or after the Closing Date, and reference to a Post Plan
Implementation Fiscal Quarter preceded by a number (such as the fourth Post Plan
Implementation Fiscal Quarter) shall be reference to the Fiscal Quarter which is
that number of Fiscal Quarters which have begun on or after the Closing Date (in
the above referenced example, the fourth Fiscal Quarter to have begun on or
after the Closing Date).
"PPSA" shall mean the Personal Property Security Act (Ontario) as currently
in effect.
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"Pre-Closing Merger Subsidiaries" shall mean each of the Subsidiaries of
the Borrower identified on Schedule XXVIII.
"Pre-Closing Restructuring Transactions" shall mean the series of
transactions described on Schedule XXIX pursuant to which each of the
Pre-Closing Merger Subsidiaries are merged, directly or indirectly, with and
into one of the US Subsidiary Guarantors or such Pre-Closing Merger Subsidiary
was dissolved or liquidated.
"Pre-Petition Lender" shall have the meaning provided in the recitals to
this Agreement.
"Pre-Petition Lien Subordination and Intercreditor Agreement" means that
certain Subordination and Intercreditor Agreement by and among Collateral Agents
and the agent for the Pre-Petition Lenders, as amended, restated or otherwise
modified from time to time.
"Principal Amount" shall mean at any time, with respect to any Loan, the
principal amount outstanding at such time under such Loan (which for greater
certainty, shall be the principal amount of such Loan on the Closing Date less
all repayments of the principal amount under such Loan to the date in question
and shall not include any Accreted Interest Amount under any PIK Loan or any
Deferred Interest Amount under any Term Loan).
"Project Accounts" means those bank accounts set forth on Schedule XIX.
"Projections" means the Borrower's forecasted (a) balance sheets, (b)
statements of earnings, and (c) cash flow statements, all prepared on a
consistent basis with the Borrower's historical financial statements that have
been prepared in accordance with GAAP, together with appropriate supporting
details and a statement of underlying assumptions. The foregoing
notwithstanding, it is the express understanding of the parties hereto that the
Projections themselves are not prepared in accordance with GAAP.
"PSC" shall have the meaning provided in the recitals to this Agreement.
"PSC Common Stock" shall mean common shares in the capital of the Borrower
as such shares exist at the close of business on the Closing Date or, upon any
subdivision or consolidation of the common shares, the shares resulting
therefrom or, upon the occurrence of a Capital Reorganization, the shares and/or
other securities and/or property substituted for the common shares or into which
common shares are reclassified or changed.
"PSDI" shall have the meaning provided in the recitals to this Agreement.
"PSI" shall mean Philip Services Inc., an Ontario corporation.
"PSII" shall mean Philip Services (International) Inc., a Delaware
corporation.
"Purchase Money Indebtedness" means Indebtedness (other than the
Obligations, but including Capitalized Lease Obligations), incurred at the time
of, or within 60 days after, the
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acquisition of any fixed assets for the purpose of financing all or any part of
the acquisition cost thereof.
"Quarterly Cash Flow Payment Date" shall mean the 45th day of each Post
Plan Implementation Fiscal Quarter beginning with the tenth Post Plan
Implementation Fiscal Quarter.
"Quebec Security Documents" shall mean the Quebec Security Agreement and
the Hypothec executed by certain of the Canadian Guarantors in favor of the
Collateral Agents in form and substance (including being governed by the laws of
Quebec) satisfactory to the Administrative Agent, as amended, restated,
supplemented or otherwise modified from time to time.
"RCRA" shall mean the Resource Conservation and Recovery Act, as same may
be amended from time to time 42 USC.ss. 6901 et seq.
"Real Property" shall mean any estates or interests in real property now
owned or hereafter acquired by an Obligor, and the improvements related thereto.
"Real Property Collateral" shall mean the parcel or parcels of Real
Property identified on Schedule XVII, and any Real Property hereafter acquired
in fee by an Obligor.
"Record" shall mean information that is inscribed on a tangible medium or
which is stored in an electronic or other medium and is retrievable in
perceivable form.
"Redemption Premium" shall mean:
(a) at any time, with respect to the prepayment and redemption of all or
any portion of any PIK Loan, pursuant to Section 2.02(a)(iii)(y) of this
Agreement an amount equal to the product obtained by multiplying (x) the portion
of the Principal Amount of such Loan being prepaid and redeemed at such time by
(y) that percentage indicated below as being applicable at such time:
<TABLE>
<CAPTION>
BEGINNING OF PERIOD END OF PERIOD APPLICABLE PERCENTAGE
- ------------------- ------------- ---------------------
<S> <C> <C>
From and including the first day To and including the third 25%
following the first anniversary of the anniversary of the Closing Date
Closing Date
From and including the first day To and including the fourth 16 and 2/3%
following the third anniversary of the anniversary of the Closing Date
Closing Date
</TABLE>
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<TABLE>
<S> <C> <C>
From and including the first day To and including the day immediately 8 and 1/3%
following the fourth anniversary of preceding the PIK Loan Maturity Date
the Closing Date
</TABLE>
(b) at any time, with respect to the prepayment and redemption of all or
any portion of any Term Loan pursuant to Section 2.02(b)(ii)(y), an amount equal
to the product obtained by multiplying (x) the portion of the Principal Amount
of such Loan being prepaid and redeemed at such time by (y) that percentage
indicated below as being applicable at such time:
<TABLE>
<CAPTION>
BEGINNING OF PERIOD END OF PERIOD APPLICABLE PERCENTAGE
- ------------------- ------------- ---------------------
<S> <C> <C>
From and including the Closing Date To and including the first 5%
anniversary of the Closing Date
From and including the first day To and including the second 4%
following the first anniversary of anniversary of the Closing Date
the Closing Date
From and including the first day To and including the third 3%
following the second anniversary anniversary of the Closing Date
of the Closing Date
From and including the first day To and including the fourth 2%
following the third anniversary anniversary of the Closing Date
of the Closing Date
From and including the first day To and including the day immediately 1%
following the fourth anniversary preceding the Term Loan Maturity Date
of the Closing Date
</TABLE>
"Register" shall have the meaning provided in Section 10.14.
"Regulation D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or a portion thereof establishing reserve requirements.
"Released Creditors" shall mean and include all creditors holding any
claims relating to Indebtedness or otherwise of the Borrower or its Subsidiaries
(or their predecessors in
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interest) which are repaid, converted into equity or indebtedness, canceled or
extinguished in connection with the consummation of the Reorganization Plan.
"Released Equity" shall have the meaning provided in Section 10.11(c).
"Reorganization Plan" shall mean the plan of reorganization respecting the
US Debtors as modified confirmed by the US Bankruptcy Court on November 30, 1999
under Chapter 11 of the Bankruptcy Code.
"Replaced Lender" shall have the meaning provided in Section 1.06.
"Replacement Lender" shall have the meaning provided in Section 1.06.
"Reportable Event" means any of the events described in Section 4043(c) of
ERISA or the regulations thereunder other than a Reportable Event as to which
the provision of 30 days notice to the PBGC is waived under applicable
regulations.
"Required Lenders" shall mean, at any time, the Lenders whose outstanding
Term Loans and PIK Loans represent an amount greater than 66 and 2/3% of the sum
of the Principal Amount of all outstanding Term Loans and PIK Loans.
"Required PIK Lenders" shall mean, at any time, the PIK Lenders holding at
least 66 and 2/3% of the sum of the outstanding Principal Amount of, and all
accrued and unpaid interest (including unpaid Accreted Interest Amounts) under,
the PIK Loans at such time.
"Required Pre-Petition Lenders" shall mean the "Required Lenders" as such
term is defined in the 1997 Credit Agreement.
"Required Term Lenders" shall mean, at any time, Term Lenders holding at
least 66 and 2/3% of the outstanding Principal Amount of, and all accrued and
unpaid interest (including unpaid Deferred Interest Amounts) under, the Term
Loans at such time.
"Responsible Officer" shall mean any of the Chairman of the Board of
Directors, Vice Chairman of the Board of Directors, President, Executive Vice
President, Vice President/Corporate Accounting, Vice President/Treasurer or
Chief Financial Officer of the relevant Obligor.
"Restricted PIK Loan" means any PIK Loan, the lender of which (i) is an
affiliate of the Borrower within the meaning of Rule 144 under the US Securities
Act or (ii) would be an underwriter with respect to the securities of the
Borrower within the meaning of section 1145(b) of the US Bankruptcy Code.
"Restricted PIK Note" means any PIK Note representing obligations in
respect of a Restricted PIK Loan.
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"Retiree Health Plan" means an "employee welfare benefit plan" within the
meaning of Section 3(1) of ERISA that provides benefits to individuals after
termination of their employment, other than as required by Section 601 of ERISA.
"Revised Exit Facility" shall have the meaning provided in Section
10.11(d).
"Rights Agreement" shall mean that certain rights agreement, a copy of
which is attached hereto as Exhibit L.
"Rights Offering" shall have the meaning provided in Section 1.07(d).
"Rolling Stock Security Agreement" means a Rolling Stock Security Agreement
in favor of Collateral Agents encumbering U.S. railcars owned by Obligors, in
form and substance satisfactory to the Administrative Agent, as amended,
restated or otherwise modified.
"SEC" shall mean the Securities and Exchange Commission.
"Second Annual Cash Flow Payment Date" shall mean the 45th day of the ninth
Post Plan Implementation Fiscal Quarter.
"Second Cash Flow Payment" shall have the meaning provided in Section
2.03(A)(c)(ii).
"Second Notional Cash Flow Difference Amount" shall have the meaning
provided in Section 2.03(A)(c)(iii).
"Section 2.06(b)(ii) Certificate" shall have the meaning provided in
Section 2.06(b)(ii).
"Securities Account" shall mean a "securities account" as that term is
defined in Section 8-501 of the UCC.
"Security Agreement" shall have the meaning provided in Section 3.01(n).
"Security Documents" shall mean the Security Agreement, the Stock Pledge
Agreement, the Trademark Security Agreement, the Patent Security Agreement, the
Copyright Security Agreement, the Rolling Stock Security Agreement, the First
Preferred Ships Mortgage, the Mortgages, the Canadian Security Documents, and
such other instruments, agreements and documents as the Administrative Agent
reasonably may require to secure the whole or any part of the Obligations.
"Senior Liens" shall mean the Exit Liens, the AIG Liens, the pre-existing
bonding liens and miscellaneous secured claims, and bonding liens granted after
the Closing Date.
"Share Reorganization" shall have the meaning provided in Section
1.07(d)(i).
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"Solvent" shall mean, with respect to any Person on a particular date, that
such Person is not insolvent (as such term is defined in the Uniform Fraudulent
Transfer Act).
"Special Distribution" shall have the meaning provided in Section
1.07(d)(iii).
"Specified Lender" shall have the meaning provided in Section 2.06(b)(A).
"Stipulation and Order" shall mean the Stipulation and Order entered on
January 13, 2000, clarifying that any dispute or claim arising under or related
to this Agreement or the other Loan Documents arising after the Effective Date
of the Plan or Reorganization will not be submitted to or heard by the US
Bankruptcy Court.
"Stock" shall mean all shares, options, warrants, interests,
participations, or other equivalents (regardless of how designated) of or in a
Person, whether voting or nonvoting, including common stock, preferred stock, or
any other "equity security" (as such term is defined in Rule 3a11-1 of the
General Rules and Regulations promulgated by the SEC under the Exchange Act).
"Stock Pledge Agreement" shall have the meaning provided in Section
3.01(q).
"Subordination and Intercreditor Agreement" shall mean the deep
subordination and intercreditor agreement, in form and substance satisfactory to
the Administrative Agent, substantially in the form of Exhibit O, as amended or
otherwise modified.
"Subsidiary" shall mean, a corporation, partnership, limited liability
company, or other entity in which that Person directly or indirectly owns or
controls the shares of Stock having ordinary voting power to elect a majority of
the board of directors (or appoint other comparable managers) of such
corporation, partnership, limited liability company, or other entity.
"Subsidiary Guaranties" shall mean the US Subsidiary Guaranty and the
Canadian Subsidiary Guaranty.
"Subsidiary Guarantor" shall mean each US Subsidiary Guarantor and each
Non-US Guarantor.
"Successful Closing" shall mean, with respect to any Offer, a closing under
such Offer under which the Offeror has taken up and paid for at least that
number of PSC Common Stock which is equal to the greater of:
(a) the number of shares of PSC Common Stock which when added to the
Offeror's Existing Holdings would constitute 67% of the issued and outstanding
PSC Common Stock at such time; and
(b) a majority of the issued and outstanding PSC Common Stock which do not
form part of the Offeror's Existing Holdings.
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"Take-Over Bid" shall mean either (a) an Offer to Acquire outstanding
voting or equity securities of a class of a corporation where the securities
that are the subject of such offer, together with the Offeror's Existing
Holdings, constitute at least 20% of the outstanding securities of that class of
securities on the date the offer is made, or (b) any other event which is a
take-over bid within the meaning attributed to such term by any law, treaty,
rule, regulation, or requirement of any stock exchange or securities commission,
or determination of any arbitrator, court, stock exchange, securities commission
or other Governmental Authority, in each case, applicable to or binding on any
Obligor.
"Tax Benefit" shall have the meaning provided in Section 2.06(e).
"Taxes" shall have the meaning provided in Section 2.06.
"Term Lender" shall mean each Lender listed on Schedule I, to whom the
Borrower is indebted on the Closing Date under and in respect of the Term Loans,
as well as any Person who becomes a "Term Lender" hereunder pursuant to Section
1.06 or 10.04(b).
"Term Loan" shall have the meaning provided in Section 1.01(a).
"Term Loan Maturity Date" shall mean March 31, 2005.
"Term Note" shall have the meaning provided in Section 1.02(b).
"Termination of the Exit Facility" shall mean the payment in full of all of
the obligations of the borrowers under the Exit Facility and the termination of
the commitments of the Exit Lenders thereunder (other than termination of
letters of credit outstanding under the Exit Facility that have been cash
collateralized); provided that any refinancing, extension, renewal, replacement
or other restructuring of the Exit Facility shall not be deemed to be a
"Termination of the Exit Facility."
"Third Cash Flow Payment" shall have the meaning provided in Section
2.03(A)(c)(iii).
"Third Notional Cash Flow Difference Amount" shall have the meaning
provided in Section 2.03(A)(c)(iv).
"Total PIK Loan Amount" shall be equal to $100,000,000.
"Total Term Loan Amount" shall be equal to $235,825,362.22.
"Trademark Security Agreement" shall have the meaning provided in Section
3.01(n).
"Trading Day" shall mean, with reference to a National Securities Exchange,
any day on which such National Securities Exchange is open for trading.
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"UCC" shall mean the New York Uniform Commercial Code as amended from time
to time.
"UK Compliance Certificate" shall mean the certificates from (i) the chief
financial officer of the Borrower substantially in the form of Exhibit J-1 and
(ii) the chief financial officer of Philip Services (Europe) Limited,
substantially in the form of Exhibit J-2, in form and substance satisfactory to
the Administrative Agent.
"UK Entities" means Philip Services (Europe) Limited, Allied Metals
Limited, B.M. Metals (Recycling) Ltd., Bath Reclamation (Avonmouth) Co. Limited,
Blackbushe Limited, Blackbushe Metals (Western) Limited, Elliot Metal Company
Limited, South Hauliers Limited, T.C. Fraser (Metals) Limited, E. Pearse
(Holdings) Limited, E. Pearse & Co. Limited, C. Philipp and Sons (Bristol)
Limited, Mayer Pearse Limited, Widsite Limited, Philip Metals (Europe) Limited.
"UK Metals Operations" shall mean the metal recycling and mill services
business of the UK Entities.
"UK Sale" has the meaning provided in Section 3.01(v).
"United States" and "US" shall each mean the United States of America.
"Unsecured Convertible Debt Indenture" means that certain Indenture dated
as of the Closing Date by and among the Borrower and the Unsecured Convertible
Debt Trustee, as amended, restated or otherwise modified in accordance with the
terms hereof.
"Unsecured Convertible Debt Trustee" means Wilmington Trust Company, as
trustee for the holders of the Indebtedness issued under the Unsecured
Convertible Debt Indenture.
"Unsecured Notes" shall mean the 3% convertible subordinated notes of the
Borrower due 2020 and the 6% subordinated notes of the Borrower due 2010.
"Unsecured Notes Documents" shall mean the Unsecured Notes, the Unsecured
Convertible Debt Indenture, the PIK Unsecured Debt Indenture, and all other
documents entered into or delivered in connection with the Unsecured Notes.
"US Bankruptcy Code" shall mean title 11 of the United States Code entitled
"Bankruptcy", as in effect from time to time.
"US Bankruptcy Court" shall mean the United States Bankruptcy Court for the
District of Delaware.
"US Cases" shall have the meaning provided in the recitals to this
Agreement.
"US Confirmation Order" shall mean, collectively, the orders of the US
Bankruptcy Court dated November 3, 1999, November 30, 1999 and March 20, 2000,
pursuant
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to which the Plan of Reorganization was confirmed, copies of which are attached
hereto as Exhibit F-1.
"US Debtors" shall have the meaning provided in the recitals to this
Agreement.
"US Dollar Equivalent" of an amount denominated in Canadian Dollars shall
mean, at any time for the determination thereof, the amount of Dollars necessary
to purchase Canadian Dollars at the spot exchange rate quoted by the
Administrative Agent as of 12:00 noon (New York time) on the date two Business
Days prior to the date of determination thereof for purchase on such date.
"US Lender" shall mean any Lender that is a "United States Person," as
defined in Section 7701(a)(30) of the Code.
"US Securities Act" shall mean the Securities Act of 1933, as amended, as
in effect from time to time.
"US Subsidiary Guarantor" shall mean all direct and indirect subsidiaries
of the Borrower incorporated in the United States that are party to the US
Subsidiary Guaranty.
"US Subsidiary Guaranty" shall mean that certain Guaranty executed and
delivered by the US Subsidiary Guarantors in favor of the Administrative Agent
and each of the Lenders, substantially in the form of Exhibit H-1 (approximately
completed) and, after the execution and delivery thereof, as modified,
supplemented or amended from time to time.
"Wholly-Owned" shall mean, as to any Person, (i) any corporation 100% of
whose capital stock (other than directors' qualifying shares) is at the time
owned by such Person and/or one or more Wholly-Owned Subsidiaries of such Person
and (ii) any partnership, association, joint venture or other entity in which
such Person and/or one or more Wholly-Owned Subsidiaries of such Person has a
100% equity interest at such time.
"written" or "in writing" shall mean any form of written communication or a
communication by means of telex, telecopier or facsimile device, telegraph or
cable.
Section 9. The Administrative Agent.
9.01 Appointment. (a) Each Lender hereby designates Canadian Imperial Bank
of Commerce as Administrative Agent. Each Term Lender hereby designates Foothill
Capital Corporation as Collateral Agent for the Term Lenders. Each PIK Lender
hereby designates Foothill Capital Corporation as Collateral Agent for the PIK
Lenders. Each Lender hereby irrevocably authorizes the Administrative Agent to
take such action and execute such agreements on its behalf under the provisions
of this Agreement and any other instruments and agreements referred to herein
and to exercise such powers and to perform such duties hereunder and thereunder
as are specifically delegated to or required of the Administrative Agent by the
terms hereof and thereof and such other powers as are reasonably incidental
thereto. The Collateral Agents shall hold all Collateral and the Administrative
Agent shall hold all payments of
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principal, interest, charges and other expenses received pursuant to this
Agreement or any other Loan Document for the benefit of the Lenders to be
distributed as provided herein. The Administrative Agent may perform any of its
duties hereunder by or through its agents or employees.
(b) The provisions of this Section 9 are solely for the benefit of the
Administrative Agent and the Lenders, and neither the Borrower nor any of the
Borrower's Subsidiaries shall have any rights as a third party beneficiary of
any of the provisions hereof (other than Section 9.09). In performing its
functions and duties under this Agreement, the Administrative Agent shall act
solely as agent of the Lenders and does not assume and shall not be deemed to
have assumed any obligation toward or relationship of agency or trust with or
for the Borrower or any of the Borrower's Subsidiaries.
(c) If an Event of Default has occurred, all fees owed to the
Administrative Agent pursuant to this Agreement shall be paid prior to any
payment by the Borrower of principal or interest on the Loans.
9.02 Nature of Duties of Administrative Agent. The Administrative Agent
shall have no duties or responsibilities except those expressly set forth in
this Agreement and the other Loan Documents. Neither the Administrative Agent,
nor any of its officers, directors, employees or agents shall be liable for any
action taken or omitted by it as such hereunder or in connection herewith,
unless caused by its or their gross negligence or willful misconduct. The duties
of the Administrative Agent shall be mechanical and administrative in nature;
the Administrative Agent shall not have by reason of this Agreement or the other
Loan Documents a fiduciary relationship in respect of any Lender; and nothing in
this Agreement or the other Loan Documents, expressed or implied, is intended to
or shall be so construed as to impose upon the Administrative Agent any
obligations in respect of this Agreement or the other Loan Documents except as
expressly set forth herein or therein.
9.03 Lack of Reliance on Administrative Agent. (a) Independently and
without reliance upon the Administrative Agent, each Lender, to the extent it
deems appropriate, has made and shall continue to make (i) its own independent
investigation of the financial or other condition and affairs of the Borrower
and its Subsidiaries in connection with the taking or not taking of any action
in connection herewith and (ii) its own appraisal of the creditworthiness of the
Borrower and its Subsidiaries, and, except as expressly provided in this
Agreement, the Administrative Agent shall not have any duty or responsibility,
either initially or on a continuing basis, to provide any Lender with any credit
or other information with respect thereto, whether coming into its possession
before the making of the Loans or at any time or times thereafter.
(b) The Administrative Agent shall not be responsible to any Lender for any
recitals, statements, information, representations or warranties herein or in
any document, certificate or other writing delivered in connection herewith or
for the execution, effectiveness, genuineness, validity, enforceability,
collectibility, priority or sufficiency of this Agreement or the other Loan
Documents or the financial or other condition of the Borrower or any of its
Subsidiaries. The Administrative Agent shall not be required to make any inquiry
concerning
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either the performance or observance of any of the terms, provisions or
conditions of this Agreement or the other Loan Documents, or the financial
condition of the Borrower or any of Borrower's Subsidiaries, or the existence or
possible existence of any Default or Event of Default, unless specifically
requested to do so in writing by any Lender.
9.04 Certain Rights of the Administrative Agent. The Administrative Agent
shall have the right to request instructions from the Required Lenders at any
time. If the Administrative Agent shall request instructions from the Required
Lenders with respect to any act or action (including the failure to act) in
connection with this Agreement or the other Loan Documents, the Administrative
Agent shall be entitled to refrain from such act or taking such action unless
and until the Administrative Agent shall have received instructions from the
Required Lenders, and the Administrative Agent shall not incur liability to any
Person by reason of so refraining. Without limiting the foregoing, no Lender
shall have any right of action whatsoever against the Administrative Agent as a
result of the Administrative Agent acting or refraining from acting hereunder in
accordance with the instructions of the Required Lenders.
9.05 Reliance by Administrative Agent. The Administrative Agent shall be
entitled to rely, and shall be fully protected in relying, upon any note,
writing, resolution, notice, statement, certificate, e-mail, telex, teletype or
telecopier message, cablegram, radiogram, order or other documentary,
teletransmission or telephone message believed by it to be genuine and correct
and to have been signed, sent or made by the proper person. The Administrative
Agent may consult with legal counsel (including counsel for the Borrower with
the consent of the Borrower and with respect to matters concerning the Borrower
and their Subsidiaries), independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken by it in good faith in accordance with the advice of such counsel,
accountants or experts.
9.06 Indemnification of Administrative Agent. To the extent the
Administrative Agent and its advisors are not reimbursed and indemnified by the
Borrower, each Lender will reimburse and indemnify the Administrative Agent and
its advisors in proportion to its respective outstanding credit exposure, for
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses (including reasonable counsel fees
and disbursements) or disbursements of any kind or nature whatsoever (including
all reasonable expenses) which may be imposed on, incurred by or asserted
against the Administrative Agent in performing its duties hereunder, in any way
relating to or arising out of this Agreement or for any payments made by the
Administrative Agent to its advisors; provided that no Lender shall be liable
for any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from the
Administrative Agent's gross negligence or willful misconduct. The agreements
contained in this Section shall survive any termination of this Agreement and
the other Loan Documents and the payment in full of the Obligations.
9.07 The Administrative Agent in its Individual Capacity. With respect to
their obligation to lend under this Agreement, the Term Loans and PIK Loans
deemed to be made by them and the Term Notes and PIK Notes issued to them, the
Administrative Agent shall have the
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same rights and powers hereunder as any other Lender or holder of a Term Note or
PIK Note or participation interests and may exercise the same as though it was
not performing the duties specified herein. The Administrative Agent may accept
deposits from, lend money to, acquire equity interests in, and generally engage
in any kind of banking, trust, financial advisory or other business with the
Borrower or any Affiliate of the Borrower as if it were not performing the
duties specified herein, and may accept fees and other consideration from the
Borrower for services in connection with this Agreement and otherwise without
having to account for the same to the Lenders.
9.08 Holders of Notes. The Administrative Agent may deem and treat the
payee of any Note as the owner thereof for all purposes hereof unless and until
a written notice of the assignment or transfer thereof shall have been filed
with the Administrative Agent. Any request, authority or consent of any Person
who, at the time of making such request or giving such authority or consent, is
the holder of any Note, shall be conclusive and binding on any subsequent
holder, transferee or assignee of such Note or of any Note or Notes issued in
exchange therefor.
9.09 Successor Administrative Agent. (a) The Administrative Agent may, upon
five Business Days' notice to the Lenders and the Borrower, resign at any time
(effective pursuant to the following provisions of this Section 9.09) by giving
written notice thereof to the Lenders and the Borrower. Upon any such
resignation, the Required Lenders shall have the right, upon five days' notice
and approval by the Borrower (which approval shall not be unreasonably withheld
or delayed), to appoint a successor Administrative Agent. If no successor
Administrative Agent (i) shall have been so appointed by the Required Lenders
and (ii) shall have accepted such appointment, within thirty days after the
retiring Administrative Agent's giving of notice of resignation, then, upon five
days' notice and approval by the Borrower (which approval shall not be
unreasonably withheld or delayed), the retiring Administrative Agent may, on
behalf of the Lenders, appoint a successor Administrative Agent. In the event
that no successor Administrative Agent is appointed pursuant to the foregoing
provisions, the Administrative Agent's resignation shall become effective on the
date which is forty-five days after the retiring Administrative Agent's giving
of notice of resignation, and the Required Lenders shall perform the duties of
the Administrative Agent hereunder. The provisions of this Section 9.09 shall
apply to the Collateral Agent after the Termination of the Exit Facility.
(b) Upon the acceptance of any appointment as Administrative Agent
hereunder by a successor Administrative Agent, such successor Administrative
Agent shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from his duties and obligations under
this Agreement. After any retiring Administrative Agent resignation hereunder as
Administrative Agent, the provisions of this Section 9 shall inure to his
benefit as to any actions taken or omitted to be taken by them while they were
Administrative Agent under this Agreement.
9.10 Actions with Respect to Defaults. In addition to the Administrative
Agent's right to take actions on its own accord as permitted under this
Agreement, the Administrative
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Agent shall take such action with respect to an Event of Default as shall be
directed by the Required Lenders; provided that until the Administrative Agent
shall have received such directions, the Administrative Agent may (but shall not
be obligated to) take such action, or refrain from taking such action, with
respect to such Event of Default as it shall deem advisable and in the best
interests of the Lenders.
9.11 Delivery of Information. The Administrative Agent shall not be
required to deliver to any Lender originals or copies of any documents,
instruments, notices, communications or other information received by the
Administrative Agent from the Borrower, any Subsidiary, the Required Lenders,
any Lender or any other Person under or in connection with this Agreement or any
other Loan Document except (i) as specifically provided in this Agreement or any
other Loan Document and (ii) as specifically requested from time to time in
writing by any Lender with respect to a specific document, instrument, notice or
other written communication received by and in the possession of the
Administrative Agent at the time of receipt of such request and then only in
accordance with such specific request.
9.12 Collateral Agent to Hold Quebec Irrevocable Power of Attorney. For
greater certainty, and without limiting the powers of the Administrative Agent
or Collateral Agents hereunder or under any of the Loan Documents, each of the
Lenders and the Borrower hereby acknowledges that each of the Collateral Agents
acting for the PIK Lenders and the Term Lenders shall, for purposes of holding
any security granted by the Canadian Guarantors on the Canadian Guarantors'
respective property pursuant to the laws of the Province of Quebec to secure
payment of the Demand Notes, be the holder of an irrevocable power of attorney
(fonde de pouvoir) (within the meaning of the Civil Code of Quebec) for
themselves and all present and future Lenders and in particular for all present
and future holders of such Demand Notes. The Administrative Agent and each of
the Lenders hereby irrevocably constitute, to the extent necessary, each of the
Collateral Agents acting for the PIK Lenders and the Term Lenders as the holders
of an irrevocable power of attorney (fonde de pouvoir) (within the meaning of
Article 2692 of the Civil Code of Quebec) in order to secure such Demand Notes.
Each permitted assignee of the Lenders shall be deemed to have confirmed and
ratified the constitution of the Collateral Agents as the holder of such
irrevocable power of attorney (fonde de pouvoir) by execution of the relevant
assignment of its interest. Notwithstanding the provisions of Section 32 of the
Special Corporate Powers Act (Quebec), each Collateral Agent may acquire and be
the holder of such Demand Notes. The Borrower on its own behalf and on behalf of
the Canadian Guarantors hereby acknowledges that the Demand Notes issued by each
Canadian Guarantor to each of the Collateral Agents constitute a title of
indebtedness, as such term is used in Article 2692 of the Civil Code of Quebec.
9.13 Deep Subordination Agreement. Each Lender hereby authorizes and
appoints the Administrative Agent to sign the Subordination and Intercreditor
Agreement dated the date hereof between the Collateral Agents and CIBC as
administrative agent under the 1997 Credit Agreement.
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Section 10. Miscellaneous.
10.01 Payment of Expenses, etc. The Borrower shall: (i) whether or not the
transactions herein contemplated are consummated, pay all reasonable
out-of-pocket costs and expenses of the Administrative Agent and the Collateral
Agents (including, without limitation, the reasonable fees and disbursements of
White & Case LLP, Blake, Cassels & Graydon, LLP, and local counsel) in
connection with the preparation, execution, delivery and administration of this
Agreement and the other Loan Documents and the documents and instruments
referred to herein and therein and any amendment, waiver or consent relating
hereto or thereto (including, without limitation, fees or charges for
photocopying, notarization, couriers, messengers and telecommunications), of the
Administrative Agent in connection with its syndication efforts with respect to
this Agreement and of the Administrative Agent and the Collateral Agents and,
following and during the continuation of an Event of Default, each of the
Lenders in connection with the enforcement of this Agreement and the other Loan
Documents and the documents and instruments referred to herein and therein
(including, without limitation, the reasonable fees and disbursements of counsel
for the Administrative Agent and the Collateral Agents and, following and during
the continuation of an Event of Default, for each of the Lenders) which expenses
shall include, without being limited to, the cost of record searches (including,
without limitation tax lien, litigation, and UCC searches and searches with the
patent and trademark office, the copyright office or the department of motor
vehicles), filing, recording, publication, and real estate title policies and
endorsements, the reasonable fees and expenses of attorneys and paralegals, all
reasonable costs and expenses incurred by the Administrative Agent and the
Collateral Agents in opening bank accounts, depositing checks, electronically or
otherwise receiving and transferring funds, and any charges imposed on the
Administrative Agent and the Collateral Agents due to insufficient funds of
deposited checks and the standard fees of the Administrative Agent and the
Collateral Agents relating thereto, collateral examination fees and expenses,
reasonable fees and expenses of accountants, appraisers or other consultants,
experts or advisors employed or retained by the Administrative Agent and the
Collateral Agents; (ii) pay and hold each of the Lenders harmless from and
against any and all present and future stamp, excise and other similar taxes
with respect to the foregoing matters and save each of the Lenders harmless from
and against any and all liabilities with respect to or resulting from any delay
or omission (other than to the extent attributable to such Lender) to pay such
taxes; and (iii) indemnify the Administrative Agent, the Collateral Agents and
each Lender, and each of their respective officers, directors, employees,
representatives (each, an "Indemnitee") from and hold each of them harmless
against any and all liabilities, obligations (including removal or remedial
actions), losses, damages, penalties, claims, actions, judgments, suits, costs,
expenses and disbursements (including reasonable attorneys' and consultants'
fees and disbursements) (all of such liabilities, obligations, losses, damages,
penalties, claims, actions, judgments, suits, costs, expenses and disbursements
collectively, the "Indemnified Amounts") incurred by, imposed on or assessed
against any of them as a result of, or arising out of, or in any way related to,
or by reason of, (a) any investigation, litigation or other proceeding (whether
or not the Administrative Agent, the Collateral Agents or any Lender is a party
thereto) related to the entering into and/or performance of this Agreement or
any other Loan Document or the consummation of any transactions contemplated
herein or in any other Loan Document, the exercise of any of their rights or
remedies provided herein or in the other Loan Documents, or (b) the actual or
alleged presence of
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Hazardous Materials in the air, surface water or groundwater or on the surface
or subsurface of any Real Property owned or at any time operated by the Borrower
or any of its Subsidiaries, the generation, storage, transportation, handling or
disposal of Hazardous Materials at any location, whether or not owned or
operated by the Borrower or any of its Subsidiaries, the non-compliance of any
Real Property with foreign, federal, state, provincial and local laws,
regulations, and ordinances (including applicable permits thereunder) applicable
to any Real Property, or any Environmental Claim asserted against the Borrower,
any of its Subsidiaries or any Real Property owned or at any time operated by
the Borrower or any of its Subsidiaries, including, in each case, without
limitation, the reasonable fees and disbursements of counsel and other
consultants incurred in connection with any such investigation, litigation or
other proceeding (but excluding any losses, liabilities, claims, damages or
expenses to the extent incurred by reason of the gross negligence or willful
misconduct of the Person to be indemnified); provided, however, that the
Borrower shall have no obligation to any Indemnitee for any Indemnified Amounts
to the extent such Indemnified Amounts resulted from the gross negligence or
willful misconduct of such Indemnitee as determined by a court of competent
jurisdiction. To the extent that the undertaking to indemnify, pay or hold
harmless the Administrative Agent, the Collateral Agents or any Lender set forth
in the preceding sentence may be unenforceable because it is violative of any
law or public policy, the Borrower shall make the maximum contribution to the
payment and satisfaction of each of the indemnified liabilities which is
permissible under applicable law.
10.02 Survival. All indemnities set forth herein including, without
limitation, in Sections 1.04, 2.06, 10.01 and 10.06 shall, subject to Section
10.15 (to the extent applicable), survive the execution and delivery of this
Agreement and the Notes and the repayment of the Loans.
10.03 Notices. Except as otherwise expressly provided herein, all notices
and other communications provided for hereunder shall be in writing (including
telegraphic, telex, telecopier or cable communication) and mailed, telegraphed,
telexed, telecopied, cabled or delivered: if to the Borrower, at the Borrower's
address specified opposite its signature below; if to a Subsidiary Guarantor, at
such Subsidiary Guarantor's address specified opposite its signature below; if
to any Lender, at its address specified opposite its signature below; and if to
the Administrative Agent, at its Notice Office; or, as to any Obligor or the
Administrative Agent, at such other address as shall be designated by such party
in a written notice to the other parties hereto and, as to each Lender, at such
other address as shall be designated by such Lender in a written notice to the
Borrower and the Administrative Agent. All such notices and communications
shall, when mailed, telegraphed, telexed, telecopied, or cabled or sent by
overnight courier, be effective when deposited in the mails with first-class
postage prepaid, delivered to the telegraph company, cable company or overnight
courier, as the case may be, or sent by telex or telecopier, except that notices
and communications to the Administrative Agent and the Borrower shall not be
effective until received by the Administrative Agent or the Borrower, as the
case may be.
10.04 Benefit of Agreement. (a) This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto; provided, however, the Borrower may not assign or
transfer any of its rights, obligations
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or interests hereunder or under any Loan Document without the prior written
consent of the Lenders; provided further, that no Lender shall sell, assign,
participate or transfer all or any of its rights, obligations or interests
hereunder or under any Note except as permitted under this Section 10.04. Each
Lender may at any time grant participations in any of its rights hereunder or
under any of the Notes (other than any Restricted PIK Notes, except to the
extent set forth in paragraph (b) below) to another financial institution,
including, without limitation, investment funds, provided that in the case of
any such participation, the participant shall not have any rights under this
Agreement or any of the other Loan Documents (the participant's rights against
such Lender in respect of such participation to be those set forth in the
agreement executed by such Lender in favor of the participant relating thereto)
and all amounts payable by the Borrower hereunder shall be determined as if such
Lender had not sold such participation, except that the participant shall be
entitled to the benefits of Sections 1.04 and 2.06 to the extent that such
Lender would be entitled to such benefits if the participation had not been
entered into or sold, and, provided further, that (A) no Lender shall transfer,
grant or assign any participation under which the participant shall have rights
to approve any amendment to or waiver of this Agreement or any other Loan
Document except to the extent such amendment or waiver would (i) release all or
substantially all of the Collateral which support the Loans in which such
participant is participating (except as expressly permitted in any Loan
Documents), (ii) consent to the assignment or transfer by the Borrower of any of
its rights and obligations under this Agreement, (iii) amend, modify or waive
any provision of this Section 10.04, or (iv) increase such participant's
participating interest in any Loan over the amount thereof then in effect.
(b) Notwithstanding the foregoing, any Lender may, with the consent of the
Administrative Agent (which consent shall not be unreasonably withheld or
delayed), (x) assign all or a portion of its outstanding PIK Loans (other than
Restricted PIK Loans) and/or Term Loans (and related outstanding Obligations
hereunder) to (i) its parent company or individual parent and/or any Affiliate
of such Lender which is at least 50% owned by such Lender, its parent company or
individual parent or to one or more Lenders or (ii) in the case of any Lender
that is a fund that invests in loans, any other fund that invests in loans and
is managed or advised by the same investment advisor of such Lender or by an
Affiliate of such investment advisor or (y) assign all, or if less than all, a
portion equal to at least $1,000,000 in the aggregate for the assigning Lender
or assigning Lenders, of such PIK Loans, and/or Term Loans hereunder (provided
that in no case should an assignment of PIK Loans be for an aggregate amount of
less than $1,000,000 unless such Lender is transferring all of its PIK Loans) to
one or more Eligible Transferees (treating any fund that invests in loans and
any other fund that invests in loans and is managed by the same investment
advisor of such fund or by an Affiliate of such investment advisor as a single
Eligible Transferee), each of which assignees shall become a party to this
Agreement as a Lender by execution of an Assignment and Assumption Agreement in
the form of Exhibit K (the "Assignment and Assumption Agreement"), provided
that, (i) at such time Schedules I and II shall be deemed modified to reflect
the outstanding Loans of such new Lender and of the existing Lenders, (ii) upon
surrender of the old Notes, new Notes will be issued, at the Borrower's expense,
to such new Lender and to the assigning Lender, such new Notes to be in
conformity with the requirements of Section 1.02 (with appropriate
modifications) to the extent needed to reflect the revised outstanding Loans,
and (iii) the Administrative Agent shall receive at the time of each such
assignment from the assigning or assignee Lender other than an
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assignment to an Affiliate of such Lender, the payment of a non-refundable
assignment fee of $3,000 and, provided further, the Administrative Agent shall
notify the Borrower of the identity of the assignee and the rights and
obligations assigned or transferred to the assignee and that such transfer or
assignment will not be effective until recorded by the Administrative Agent on
the Register pursuant to Section 10.14 hereof. To the extent of any assignment
pursuant to this Section 10.04(b), the assigning Lender shall be relieved of its
obligations hereunder with respect to its assigned outstanding Loans. At the
time of each assignment pursuant to this Section 10.04(b) to a Person which is
not already a Lender hereunder and which is not a United States person (as such
term is defined in Section 7701(a)(30) of the Code) for federal income tax
purposes, the respective assignee Specified Lender shall provide to the Borrower
and the Administrative Agent the appropriate Internal Revenue Service Forms
(and, if applicable, a Section 2.06(b)(ii) Certificate) described in Section
2.06(b). To the extent that an assignment of all or any portion of a Lender's
Loans and related outstanding Obligations pursuant to Section 1.06 or this
Section 10.04(b) would, at the time of such assignment, result in increased
costs under Sections 1.04 or 2.06(b) from those being charged by or incurred
with respect to the respective assigning Lender prior to such assignment, then
the Borrower shall not be obligated to pay such increased costs (although the
Borrower shall be obligated to pay any other increased costs of the type
described above resulting from changes after the date of the respective
assignment).
(c) Nothing in this Agreement shall prevent or prohibit any Lender from
pledging its rights under this Agreement and/or its Loans and/or Note hereunder
to a Federal Reserve Bank in support of borrowings made by such Lender from such
Federal Reserve Bank and, with the consent of the Administrative Agent, any
Lender which is a fund may pledge all or any portion of its Loans and Notes to
its trustee in support of its obligations to its trustee. No pledge pursuant to
this clause (c) shall release the transferor Lender from any of its obligations
hereunder.
10.05 No Waiver; Remedies Cumulative. No failure or delay on the part of
the Administrative Agent, the Collateral Agents, any Lender or any holder of a
Note in exercising any right, power or privilege hereunder or under any other
Loan Document and no course of dealing between any Obligor and the
Administrative Agent, the Collateral Agents, or any Lender or the holder of any
Note shall operate as a waiver thereof; nor shall any single or partial exercise
of any right, power or privilege hereunder or under any other Loan Document
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege hereunder or thereunder. The rights, powers and
remedies herein or in any other Loan Document expressly provided are cumulative
and not exclusive of any rights, powers or remedies which the Administrative
Agent, the Collateral Agents, or any Lender or the holder of any Note would
otherwise have. No notice to or demand on any Obligor in any case shall entitle
any Obligor to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the Administrative Agent,
the Collateral Agents, the Lenders or the holder of any Note to any other or
further action in any circumstances without notice or demand.
10.06 Payments Pro Rata. (a) Except as otherwise provided in this
Agreement, the Administrative Agent agrees that promptly after its receipt of
each payment from or on behalf
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of the Borrower in respect of any Obligations of the Borrower hereunder or under
any Loan Document, it shall distribute such payment to the Lenders (other than
any Lender which has consented in writing to waive its pro rata share of any
such payment) pro rata based upon their respective shares, if any, of the
Obligations with respect to which such payment was received.
(b) Each of the Lenders agrees that, if it should receive any amount
hereunder (whether by voluntary payment, by realization upon security, by the
exercise of the right of setoff or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Loan Documents, or otherwise),
which is applicable to the payment of the principal of, or interest on, the
Loans, of a sum which with respect to the related sum or sums received by other
Lenders is in a greater proportion than the total of such Obligation then owed
and due to such Lender bears to the total of such Obligation then owed and due
to all of the Lenders immediately prior to such receipt, then such Lender
receiving such excess payment shall purchase for cash without recourse or
warranty from the other Lenders an interest in the Obligations of the respective
Obligor to such Lenders in such amount as shall result in a proportional
participation by all the Lenders in such amount; provided that if all or any
portion of such excess amount is thereafter recovered from such Lender, such
purchase shall be rescinded and the purchase price restored to the extent of
such recovery, but without interest.
(c) The provisions of Sections 10.06(a) and 10.06(b) shall not apply to any
payments made by the Borrower to the Administrative Agent to be applied as
provided in Section 9.01(c) of this Agreement.
10.07 Calculations; Computations. (a) All accounting terms not specifically
defined herein shall be construed in accordance with GAAP. When used herein, the
term "financial statements" shall include the notes and schedules thereto.
Whenever the terms "the Borrower and the US Subsidiary Guarantors" are used in
respect of a financial covenant or a related definition, it shall be understood
to mean the Borrower and the US Subsidiary Guarantors on a consolidated basis
unless the context clearly requires otherwise. In the event that any "Accounting
Change" (as defined below) shall occur and such change results in a change in
the method of calculation of financial covenants, standards, or terms in this
Agreement, then the Borrower, the US Subsidiary Guarantors, the Administrative
Agent, and the Lenders agree to enter into negotiations in order to amend such
provisions of this Agreement so as to equitably reflect such Accounting Change
with the intended result that the criteria for evaluating the Borrower's and the
US Subsidiary Guarantors' financial condition shall be the same after such
Accounting Change as if such Accounting Change had not been made. Until such
time as such an amendment shall have been executed and delivered by Borrower and
the Administrative Agent (acting upon the instructions of the Required Lenders),
all financial covenants, standards, and terms in this Agreement shall continue
to be calculated or construed as if such Accounting Change had not occurred.
"Accounting Change" refers to any change in accounting principles, or in the
application or interpretation thereof by Borrower's independent certified public
accountants, required, or determined by such accountants to be required, by any
rule, regulations, pronouncement or opinion by the Financial Accounting
Standards Board of the American Institute of Certified Public Accountants, or,
if applicable, the Securities and Exchange Commission, or in each case, any
successor to such entities.
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(b) All computations of interest and fees hereunder shall be made by the
Administrative Agent on the basis of a year of 360 days for the actual number of
days (including the first day but excluding the last day) occurring in the
period for which such interest or fees are payable.
(c) For purposes of this Agreement, the US Dollar Equivalent of Canadian
Dollars shall be calculated on the second Business Day of each week. The US
Dollar Equivalent for Canadian Dollars shall remain in effect until the same is
recalculated by the Administrative Agent as provided above and notice of such
recalculation is received by the Borrower, it being understood that until such
notice is received, the US Dollar Equivalent shall be that US Dollar Equivalent
as last reported to the Borrower by the Administrative Agent. The Administrative
Agent shall promptly notify the Borrower and the Lenders of each determination
of the US Dollar Equivalent for Canadian Dollars.
10.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JULY
TRIAL. (A) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL, EXCEPT AS OTHERWISE
PROVIDED IN CERTAIN OF THE MORTGAGES, BE CONSTRUED IN ACCORDANCE WITH AND BE
GOVERNED BY THE LAW OF THE STATE OF NEW YORK. ANY LEGAL ACTION OR PROCEEDING
WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE
COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN
DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE
BORROWER HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. THE
BORROWER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES
THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE BORROWER AT ITS
ADDRESS SET FORTH OPPOSITE ITS SIGNATURE BELOW, SUCH SERVICE TO BECOME EFFECTIVE
30 DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE
ADMINISTRATIVE AGENT UNDER THIS AGREEMENT, ANY LENDER OR THE HOLDER OF ANY NOTE
TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE BORROWER IN ANY OTHER JURISDICTION.
(C) THE BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR
PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (A) ABOVE AND HEREBY
FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT
THAT ANY SUCH ACTION OR PROCEEDING
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BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(D) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL
RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT
OF OR RELATING TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
10.09 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with the Borrower and the
Administrative Agent.
10.10 Headings Descriptive. The headings of the several sections and
subsections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
10.11 Amendment or Waiver; Release. (a) Neither this Agreement nor any
other Loan Document nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or termination is
in writing signed by the respective Obligor thereto and the Required Lenders
except Schedule VI can be amended as provided in Section 5.08; provided,
however, that (A) no waiver or alteration shall be made to the required
application of any prepayments as between the PIK Lenders and the Term Lenders
without the consent of the Required PIK Lenders or the Required Term Lenders as
applicable for the category of Lenders which is being allocated a lesser
prepayment as a result thereof (although the Required Lenders may waive in whole
or in part any such prepayment, so long as the application as amongst the PIK
Lenders and the Term Lenders of any such prepayment which is still being
required to be made is not altered unless the Required PIK Lenders or Required
Term Lenders affected thereby consent to such alteration as provided in this
clause (A)), (B) no change, waiver or discharge or termination shall without the
consent of each PIK Lender change the conversion terms of any PIK Loans and (C)
no change, waiver or discharge or termination shall, without the consent of each
Lender directly affected thereby, (i) extend the PIK Loan Maturity Date or the
Term Loan Maturity Date, as the case may be, or reduce the rate or extend the
time of payment of interest, or reduce the principal amount thereof, (it being
understood that any amendment or modification to the financial definitions in
this Agreement shall not constitute a reduction in the rate of interest for
purposes of this clause (i)), (ii) release all or substantially all of the
Collateral from the security interests and Liens created pursuant to the Loan
Documents (except as set forth in the Loan Documents), (iii) amend, modify or
waive any provision of this section 10.11, (iv) consent to the assignment or
transfer by the Borrower of any of its rights and obligations under this
Agreement, or (v) reduce the percentage specified in the definition of Required
Lenders, Required PIK Lenders or Required Term Lenders; provided further, that
no such change, waiver, discharge or termination shall (y) without the consent
of the Administrative Agent, amend, modify or waive any provision of Section 9
as same applies to such
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<PAGE> 106
Administrative Agent or any other provision as same relates to the rights or
obligations of such Administrative Agent, (z) without the consent of the
Collateral Agents, amend, modify or waive any provision relating to the rights
or obligations of the Collateral Agents. Notwithstanding anything to the
contrary contained herein, the modifications contemplated by Section 10.04, to
the extent needed to make new Lenders party to this Agreement, shall be
permitted in accordance with the terms thereof. All amendments effected in
compliance with this Section 10.11 shall be effective and enforceable against
all parties hereto.
(b) If, in connection with any proposed change, waiver, discharge or
termination to or of any of the provisions of this Agreement as contemplated by
clause (C) of the first proviso to Section 10.11(a), the consent of the Required
Lenders of the relevant class of Lenders is obtained but the consent of one or
more of such other Lenders whose consent is required is not obtained, then the
Borrower shall have the right, so long as all non-consenting Lenders whose
individual consent is required are treated as described herein, to replace each
such non-consenting Lender or Lenders with one or more Replacement Lenders
pursuant to Section 1.06 so long as at the time of such replacement, each such
Replacement Lender consents to the proposed change, waiver, discharge or
termination.
(c) If for any reason (i) any Canadian Subsidiary is released from its
guarantee under the Exit Facility, (ii) any collateral pledged by any Canadian
Subsidiary to secure any obligations under the Exit Facility is released or
(iii) less than 100% but no less than 66-2/3% of the equity of such Canadian
Subsidiary is required by the terms of the Exit Facility to be pledged to secure
any obligations under the Exit Facility (the equity not required to be so
pledged is hereinafter referred to as the "Released Equity"), then immediately
upon any such release, such Canadian Subsidiary, all such collateral owned by
such Canadian Subsidiary and all such Released Equity shall be automatically
deemed released from all Loan Documents and the Administrative Agent and the
Collateral Agents shall take all actions reasonably requested by the Borrower to
evidence any such release.
(d) Upon any amendment, restatement, modification, refinancing,
replacement, extension, renewal or other restructuring of the Exit Facility (in
each case, the "Revised Exit Facility"), each of the Administrative Agent and
the Collateral Agent hereby agrees and is authorized by the Lenders to enter
into such instruments, documents and financing statements, and take all further
actions, in each case that the borrower or any agent or lender under any such
Revised Exit Facility may reasonably request to (a) give any such agent and such
lenders under any such Revised Exit Facility liens on all of the assets of the
Borrower and its Subsidiaries that are prior to any liens on such assets granted
in favor of the Lenders or any agent or collateral agent for the benefit of the
Lenders and (b) give any such agent and such Lenders under any such Revised Exit
Facility rights and remedies with respect to such assets that are as favorable
to any such agent and such lenders under any such Revised Exit Facility as the
rights and remedies of the Exit Agent and the Exit Lenders in effect immediately
prior to the effectiveness of any such Revised Exit Facility.
10.12 Domicile of Loans. Each Lender may transfer and carry its Loans at,
to or for the account of any office, Subsidiary or Affiliate of such Lender.
Notwithstanding anything to the contrary contained herein, to the extent that a
transfer of Loans pursuant to this Section
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10.12 would, at the time of such transfer, result in increased costs under
Section 1.04 or 2.06 from those being charged by the respective Lender prior to
such transfer, then the Borrower shall not be obligated to pay such increased
costs (although the Borrower shall be obligated to pay any other increased costs
of the type described above resulting from changes giving rise to such increased
costs after the date of the respective transfer).
10.13 Confidentiality. (a) Subject to the provisions of clause (b) of this
Section 10.13, each Lender agrees that it will use its best efforts not to
disclose without the prior consent of the Borrower (other than to its employees,
auditors, advisors or counsel or to another Lender if the Lender or such
Lender's holding or parent company in its sole discretion determines that any
such party should have access to such information, provided such Persons shall
be subject to the provisions of this Section 10.13 to the same extent as such
Lender) any information with respect to the Borrower or any of its Subsidiaries
which is now or in the future furnished pursuant to this Agreement or any other
Loan Document and which is designated by the Borrower to the Lenders in writing
as confidential (collectively, the "Confidential Material"), provided that any
Lender may disclose any Confidential Material (a) as has become generally
available to the public, other than as a result of a breach of this Section
10.13, (b) as may be required or appropriate in any report, statement or
testimony submitted to any municipal, state, provincial or federal regulatory
body having or claiming to have jurisdiction over such Lender or to the Federal
Reserve Board or the Federal Deposit Insurance Corporation or similar
organizations (whether in the United States, Canada or elsewhere) or their
successors, (c) as may be required or appropriate in respect to any summons or
subpoena or in connection with any litigation, (d) in order to comply with any
law, order, regulation or ruling applicable to such Lender, (e) to the
Administrative Agent or the Collateral Agents and (f) to any prospective or
actual transferee or participant in connection with any contemplated transfer of
any of the Notes or any interest therein by such Lender, provided, that such
prospective transferee or participant executes a Confidentiality Agreement in
the form of Exhibit M (the "Confidentiality Agreement") with such Lender
containing provisions substantially the same as to those contained in this
Section.
(b) Each Obligor hereby acknowledges and agrees that each Lender may share
with any of its Affiliates any Confidential Material related to any Obligor
(including, without limitation, any nonpublic customer information regarding the
creditworthiness of the Obligors,) provided such Persons shall be subject to the
provisions of this Section 10.13 to the same extent as such Lender (but for
greater certainty not with any affiliates which are brokers or investment
dealers unless any such affiliate is an institution which has both a lending
division and a broker dealer division).
10.14 Registry. The Borrower hereby designates the Administrative Agent to
serve as the Borrower's agent, solely for purposes of this Section 10.14, to
maintain a register (the "Register") on which it will record the outstanding
credit exposure of each of the Lenders, and each repayment in respect of the
principal amount of the Term Loans and the PIK Loans of the Lenders. Failure to
make any such recordation, or any error in such recordation shall not affect the
Borrower's obligations in respect of such Loans. With respect to any Lender, the
transfer of the outstanding Loans of such Lender and the rights to the principal
of, and interest on, any such Loan shall not be effective until such transfer is
recorded on the Register
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<PAGE> 108
maintained by the Administrative Agent with respect to ownership of such Loans
and prior to such recordation all amounts owing to the transferor with respect
to such Loans shall remain owing to the transferor. The registration of
assignment or transfer of all or part of any Loans shall be recorded by the
Administrative Agent on the Register only upon the acceptance by the
Administrative Agent of a properly executed and delivered Assignment and
Assumption Agreement pursuant to Section 10.04(b). Coincident with the delivery
of such an Assignment and Assumption Agreement to the Administrative Agent for
acceptance and registration of assignment or transfer of all or part of a Loan,
or as soon thereafter as practicable, the assigning or transferor Lender shall
surrender the Note evidencing such Loan, and thereupon one or more new Notes in
the same aggregate principal amount shall be issued to the assigning or
transferor Lender and/or the new Lender. The Borrower agrees to indemnify the
Administrative Agent from and against any and all losses, claims, damages and
liabilities of whatsoever nature which may be imposed on, asserted against or
incurred by the Administrative Agent in performing its duties under this Section
10.14.
10.15 Limitation on Additional Amounts, etc. Notwithstanding anything to
the contrary contained in Sections 1.04 or 2.06 of this Agreement, unless a
Lender gives notice to the Borrower that it is obligated to pay an amount under
any such Section within one year after the later of (x) the date the Lender
incurs the respective increased costs, Taxes, loss, expense or liability,
reduction in amounts received or receivable or reduction in return on capital or
(y) the date such Lender has actual knowledge of its expense or liability,
reductions in amounts received or receivable or reduction in return on capital,
then such Lender shall only be entitled to be compensated for such amount by the
Borrower pursuant to said Section 1.04 or 2.06, as the case may be, to the
extent the costs, Taxes, loss, expense or liability, reduction in amounts
received or receivable or reduction in return on capital are incurred or
suffered on or after the date which occurs one year prior to such Lender giving
notice to the Borrower that it is obligated to pay the respective amounts
pursuant to said Section 1.04 or 2.06, as the case may be. This Section 10.15
shall have no applicability to any Section of this Agreement other than said
Sections 1.04 or 2.06.
10.16 Currency of Payments. All Obligations shall be repaid by the Borrower
as required under this Agreement in Dollars. Any payment on account of an amount
payable under any Loan Document in Dollars made to or for the account of the
Administrative Agent or a Lender in a currency (the "other currency") other than
Dollars, whether pursuant to a judgment or order of any court or tribunal or
otherwise and whether arising from the conversion of any amount denominated in
one currency into any other currency for the purpose of making or filing a
claim, obtaining an order or judgment, enforcing an order or judgment or
otherwise, shall constitute a discharge of the Borrower's and the Subsidiary
Guarantors' obligation under such Loan Document up to the US Dollar Equivalent.
If the US Dollar Equivalent which the Administrative Agent or such Lender is
able to purchase in the normal course of its business within one Business Day
after receipt by it of such payment is less than the amount in Dollars
originally due to it under such Loan Document, the Borrower and the Subsidiary
Guarantors shall indemnify and save the Administrative Agent and the Lenders, as
the case may be, harmless from and against any loss or damage arising as a
result of such deficiency. This indemnity shall constitute an obligation
separate and independent from any other obligation contained in any
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<PAGE> 109
Loan Document, shall give rise to a separate and independent cause of action,
shall apply irrespective of any indulgence granted by the Administrative Agent
or any Lender from time to time, shall continue in full force and effect
notwithstanding any judgment or order for a liquidated sum in respect of an
amount due under any Loan Document or under any judgment or order and shall not
merge in any order of foreclosure made in respect of any security interest given
to or for the benefit of the Administrative Agent and the Lenders.
10.17 Right of Setoff. (a) In addition to any rights now or hereafter
granted under applicable law or otherwise, and not by way of limitation of any
such rights and subject to the terms and provisions of the Collateral Agency and
Intercreditor Agreement, upon the occurrence and during the continuance of an
Event of Default, each Lender is hereby authorized at any time or from time to
time, without presentment, demand, protest or other notice of any kind to the
Borrower or Obligor or to any other Person, any such notice being hereby
expressly waived, to set off and to appropriate and apply any and all deposits
(general or special) and any other Indebtedness at any time held or owing by
such Lender (including, without limitation, by branches and agencies of such
Lender) to or for the credit or the account of the Borrower or Obligor but in
any event excluding assets held in trust for any such Person against and on
account of the Obligations and liabilities of the Borrower or Obligor to such
Lender under this Agreement or under any of the other Collateral Documents,
including, without limitation, all interests in Obligations purchased by such
Lender pursuant to Section 10.06(b), and all other claims of any nature or
description arising out of or connected with this Agreement or any other
Collateral Document, irrespective of whether or not such Lender shall have made
any demand hereunder and although said Obligations, liabilities or claims, or
any of them, shall be contingent or unmatured.
(b) Notwithstanding anything to the contrary contained herein, at any time
that the Loans or any other Obligation shall be secured by Real Property located
in California, no Lender, nor the Administrative Agent shall exercise a right of
setoff, Lien or Counterclaim or take any court or administrative action or
institute any proceeding to enforce any provision of this agreement or any note
unless it is taken with the consent of the Required Lenders or, to the extent
required by Section 12.11 of this Agreement, all of the Lenders, or approved in
writing by the Administrative Agent, if such setoff or action or proceeding
would or might (pursuant to California Code of Civil Procedure or Sections 580a,
580b, 580d and 726 of the California Code of Civil Procedure or Section 2924 of
the California Civil Code, if applicable, or otherwise) affect or impair the
validity, priority, or enforceability of the Liens granted to the Collateral
Agent pursuant to the Collateral Documents or the enforceability of the Notes
and other obligations hereunder, and any attempted exercise by any Lender or the
Administrative Agent of any such right without obtaining such consent of the
Required Lenders or the Administrative Agent shall be null and void. This
Section 10.17 shall be solely for the benefit of each of the Lenders and the
Administrative Agent hereunder.
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<PAGE> 110
IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
officers to execute and deliver this Agreement as of the date first above
written.
PHILIP SERVICES CORPORATION
By:_______________________________
Title:
CANADIAN IMPERIAL BANK OF COMMERCE
As Administrative Agent and Individually
By:_______________________________
Title:
<PAGE> 111
ABN AMRO Bank
By:_______________________________
Title:
By:_______________________________
Title:
<PAGE> 112
AMERICAN REAL ESTATE HOLDINGS L.P.
By:_______________________________
Title:
<PAGE> 113
AMROC Investments
By:_______________________________
Title:
<PAGE> 114
THE BANK OF EAST ASIA (CANADA)
By:_______________________________
Title:
<PAGE> 115
BEAR, STEARNS & CO. INC.
By:_______________________________
Title:
<PAGE> 116
CHASE BANK OF TEXAS, N.A.
By:_______________________________
Title:
<PAGE> 117
THE CHASE MANHATTAN BANK
By:_______________________________
Title:
<PAGE> 118
THE CHASE MANHATTAN BANK OF CANADA
By:_______________________________
Title:
<PAGE> 119
CITIBANK, N.A.
By:_______________________________
Title:
<PAGE> 120
CLARICA LIFE INSURANCE COMPANY
(f/k/a Mutual Life Assurance Company
of Canada)
By:_______________________________
Title:
<PAGE> 121
COMERICA BANK
By:_______________________________
Title:
<PAGE> 122
CREDIT SUISSE FIRST BOSTON CANADA
By:_______________________________
Title:
<PAGE> 123
DAI-ICHI KANGYO BANK (CANADA)
By:_______________________________
Title:
<PAGE> 124
DAI-ICHI KANGYO BANK, LTD.,
New York Branch
By:_______________________________
Title:
<PAGE> 125
DEUTSCHE BANK AG
By:_______________________________
Title:
<PAGE> 126
DEUTSCHE BANK CANADA
By:_______________________________
Title:
<PAGE> 127
EATON VANCE MANAGEMENT
By:_______________________________
Title:
<PAGE> 128
FERNWOOD ASSOCIATES L.P.
By:_______________________________
Title:
<PAGE> 129
FOOTHILL CAPITAL CORPORATION
By:_______________________________
Title:
<PAGE> 130
GOLDMAN SACHS CREDIT PARTNERS L.P.
By:_______________________________
Title:
<PAGE> 131
GOLDMAN SACHS CANADA CREDIT PARTNERS CO.
By:_______________________________
Title:
<PAGE> 132
HIGH RIVER LIMITED PARTNERSHIP
By:_______________________________
Title:
<PAGE> 133
KEY BANK, N.A.
By:_______________________________
Title:
<PAGE> 134
MADELEINE LLC.
By:_______________________________
Title:
<PAGE> 135
MELLON BANK OF CANADA
by Mellon Bank, N.A.
By:_______________________________
Title:
<PAGE> 136
MUTUAL SHARES FUND, A SERIES OF
FRANKLIN MUTUAL SERIES FUND, INC.
By:_______________________________
Title:
<PAGE> 137
NATIONSBANK, N.A.
By:_______________________________
Title:
<PAGE> 138
PARIBAS
By:_______________________________
Title:
By:_______________________________
Title:
<PAGE> 139
ROYAL BANK OF SCOTLAND PLC
By:_______________________________
Title:
<PAGE> 140
SAKURA BANK LIMITED
By:_______________________________
Title:
<PAGE> 141
SOCIETE GENERALE (CANADA)
By:_______________________________
Title:
<PAGE> 142
TORONTO DOMINION (NEW YORK), INC.
By:_______________________________
Title:
<PAGE> 143
WACHOVIA BANK, N.A.
By:_______________________________
Title:
<PAGE> 1
Exhibit 99.2
=============================================================================
LOAN AGREEMENT
BY AND AMONG
PHILIP SERVICES CORPORATION
AND
EACH OF ITS SUBSIDIARIES THAT ARE SIGNATORIES HERETO
AS THE BORROWERS,
AND
THE LENDERS THAT ARE SIGNATORIES HERETO
AS THE LENDERS,
AND
FOOTHILL CAPITAL CORPORATION
as the Arranger and Administrative Agent,
Dated as of March 31, 2000
=============================================================================
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<C> <S> <C>
1. DEFINITIONS AND CONSTRUCTION ....................................... 1
1.1 Definitions ............................................... 1
1.2 Accounting Terms .......................................... 33
1.3 Code ...................................................... 34
1.4 Construction .............................................. 34
1.5 Schedules and Exhibits .................................... 34
2. LOAN AND TERMS OF PAYMENT .......................................... 34
2.1 Tranche A Advances ........................................ 34
2.2 Letters of Credit ......................................... 35
2.3 Tranche B Advances ........................................ 39
2.4 Borrowing Procedures and Settlements ...................... 40
2.5 Payments .................................................. 47
2.6 Overadvances .............................................. 52
2.7 Interest and Letter of Credit Fees: Rates, Payments, and
Calculations............................................... 52
2.8 Cash Management ........................................... 54
2.9 Crediting Payments ........................................ 55
2.10 Designated Account ........................................ 56
2.11 Maintenance of Loan Account; Statements of Obligations..... 56
2.12 Fees ...................................................... 57
2.13 LIBOR Option .............................................. 58
2.14 Capital Requirements ...................................... 61
2.15 Joint and Several Liability of the Borrowers .............. 62
2.16 Registered Notes .......................................... 64
2.17 Securitization ............................................ 65
3. CONDITIONS; TERM OF AGREEMENT....................................... 65
3.1 Conditions Precedent to the Initial Extension of Credit.... 65
3.2 [Intentionally Omitted] ................................... 70
3.3 Conditions Precedent to all Extensions of Credit........... 70
3.4 Term ...................................................... 70
3.5 Effect of Termination ..................................... 71
3.6 Early Termination by Borrowers ............................ 71
4. SECURITY INTERESTS.................................................. 72
4.1 Delivery of Additional Documentation Required ............. 72
4.2 Power of Attorney ......................................... 72
4.3 Right to Inspect .......................................... 73
4.4 Control Agreements ........................................ 73
</TABLE>
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<TABLE>
<C> <S> <C>
4.5 Collateral Agent to Hold Quebec Irrevocable Power of
Attorney................................................... 73
5. REPRESENTATIONS AND WARRANTIES...................................... 74
5.1 No Encumbrances ........................................... 74
5.2 Eligible Accounts ......................................... 74
5.3 Rights Agreement .......................................... 75
5.4 Equipment ................................................. 75
5.5 Location of Inventory and Equipment ....................... 76
5.6 Inventory Records ......................................... 76
5.7 Location of Chief Executive Office; FEIN .................. 76
5.8 Due Organization and Qualification; Subsidiaries........... 76
5.9 Due Authorization; No Conflict ............................ 77
5.10 Litigation ................................................ 78
5.11 No Material Adverse Change ................................ 78
5.12 Fraudulent Transfer ....................................... 78
5.13 Employee Benefits ......................................... 78
5.14 Environmental Condition ................................... 79
5.15 Brokerage Fees - Obligors ................................. 79
5.16 Intellectual Property ..................................... 80
5.17 Leases .................................................... 80
5.18 DDAs ...................................................... 80
5.19 Owned Real Property and Material Leases ................... 80
5.20 Complete Disclosure ....................................... 80
5.21 Indebtedness .............................................. 80
5.22 Project Accounts .......................................... 81
5.23 Directors' Compensation ................................... 81
6. AFFIRMATIVE COVENANTS............................................... 81
6.1 Accounting System ......................................... 81
6.2 Collateral Reporting ...................................... 81
6.3 Financial Statements, Reports, Certificates ............... 83
6.4 Tax Returns ............................................... 85
6.5 [intentionally omitted] ................................... 85
6.6 Certificates of Title .................................... 85
6.7 Maintenance of Equipment .................................. 85
6.8 Taxes ..................................................... 85
6.9 Insurance ................................................. 86
6.10 [Intentionally Omitted] ................................... 87
6.11 Location of Inventory and Equipment ....................... 87
6.12 Compliance with Laws ...................................... 88
6.13 Employee Benefits ......................................... 88
</TABLE>
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<TABLE>
<C> <S> <C>
6.14 Leases .................................................... 89
6.15 Brokerage Commissions ..................................... 89
6.16 Projections ............................................... 89
6.17 Corporate Existence, etc .................................. 89
6.18 Disclosure Updates ........................................ 89
6.19 Publication of Notice of the Effective Date of the Plan
of Reorganization.......................................... 90
6.20 Project Accounts .......................................... 90
6.21 Existing Letters of Credit ................................ 90
6.22 Omitted Good Standing Certificates ........................ 90
7. NEGATIVE COVENANTS.................................................. 90
7.1 Indebtedness .............................................. 91
7.2 Liens ..................................................... 92
7.3 Restrictions on Fundamental Changes ....................... 92
7.4 Disposal of Assets ........................................ 93
7.5 Change Name ............................................... 93
7.6 Guarantee ................................................. 93
7.7 Nature of Business ........................................ 94
7.8 Prepayments and Amendments ................................ 94
7.9 [Intentionally Omitted] ................................... 95
7.10 Consignments .............................................. 95
7.11 Distributions ............................................. 95
7.12 Accounting Methods ........................................ 95
7.13 Investments ............................................... 95
7.14 Transactions with Affiliates .............................. 95
7.15 Suspension ................................................ 96
7.16 Directors' Compensation ................................... 96
7.17 Use of Proceeds ........................................... 96
7.18 Change in Location of Chief Executive Office;
Inventory and Equipment with Bailees....................... 96
7.19 Financial Covenants. Fail to maintain:..................... 97
7.20 Capital Expenditures ...................................... 98
7.21 Securities Accounts ....................................... 98
7.22 ERISA Concerns ............................................ 98
8. EVENTS OF DEFAULT................................................... 99
9. THE LENDER GROUP'S RIGHTS AND REMEDIES.............................. 102
9.1 Rights and Remedies ....................................... 102
9.2 Remedies Cumulative ....................................... 103
</TABLE>
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<TABLE>
<C> <S> <C>
10. TAXES AND EXPENSES.................................................. 103
11. WAIVERS; INDEMNIFICATION............................................ 103
11.1 Demand; Protest; etc .................................... 103
11.2 The Lender Group's Liability for Collateral ............. 103
11.3 Indemnification ......................................... 104
12. NOTICES............................................................. 104
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.......................... 105
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.......................... 106
14.1 Assignments and Participations ............................ 106
14.2 Successors ................................................ 110
15. AMENDMENTS; WAIVERS................................................. 110
15.1 Amendments and Waivers .................................... 110
15.2 No Waivers; Cumulative Remedies ........................... 112
16. AGENT; THE LENDER GROUP............................................. 112
16.1 Appointment and Authorization of Agent .................... 112
16.2 Delegation of Duties ...................................... 113
16.3 Liability of Agent ........................................ 113
16.4 Reliance by Agent ......................................... 114
16.5 Notice of Default or Event of Default ..................... 114
16.6 Credit Decision ........................................... 115
16.7 Costs and Expenses; Indemnification ....................... 115
16.8 Agent in Individual Capacity .............................. 116
16.9 Successor Agent ........................................... 116
16.10 Lender in Individual Capacity ............................. 117
16.11 Withholding Taxes ......................................... 117
16.12 Collateral Matters ........................................ 119
16.13 Restrictions on Actions by Lenders; Sharing of Payments.... 120
16.14 Agency for Perfection ..................................... 121
16.15 Payments by Agent to the Lenders .......................... 121
16.16 Concerning the Collateral and Related Loan Documents....... 121
16.17 Field Audits and Examination Reports; Confidentiality;
Disclaimers by Lenders; Other Reports and Information...... 122
16.18 Several Obligations; No Liability ......................... 123
</TABLE>
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<TABLE>
<C> <S> <C>
17. GENERAL PROVISIONS.................................................. 123
17.1 Effectiveness .......................................... 123
17.2 Section Headings ....................................... 124
17.3 Interpretation ......................................... 124
17.4 Severability of Provisions ............................. 124
17.5 Amendments in Writing .................................. 124
17.6 Counterparts; Telefacsimile Execution .................. 124
17.7 Revival and Reinstatement of Obligations ............... 124
17.8 Integration ............................................ 125
17.9 Parent as Agent for Borrowers .......................... 125
17.10 Brokerage Fees - Lender Group .......................... 126
</TABLE>
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Exhibits and Schedules
<TABLE>
<S> <C>
Exhibit A-1 Form of Assignment and Acceptance
Exhibit B-1 Form of Bonding Lien Intercreditor Agreement
Exhibit B-2 Form of Borrowing Base Certificate
Exhibit C-1 Canadian Confirmation Order
Exhibit C-2 Canadian Vesting Order
Exhibit C-3 Form of Compliance Certificate
Exhibit C-4 Confirmation Order
Exhibit L-1 Form of LIBOR Notice
Exhibit RA-1 Rights Agreement
Schedule C-1 Commitments
Schedule E-1 Existing Letters of Credit
Schedule P-1 Permitted Dispositions
Schedule P-2 Permitted Investments
Schedule P-3 Permitted Liens
Schedule P-4 Pre-Closing Merger Subsidiaries
Schedule P-5 Pre-Closing Restructuring Transactions
Schedule RPC-1 Real Property Collateral
Schedule 2.8(a) Lockbox Account Banks
Schedule 2.8(b) Collection Account Banks
Schedule 5.7 Chief Executive Office; FEIN
Schedule 5.8 Capitalization
Schedule 5.10 Litigation
Schedule 5.11 Pro Forma Closing Date Balance Sheet
Schedule 5.13 ERISA
Schedule 5.14(a) Violations of Environmental Laws
Schedule 5.14(b) Designations of Disposal Sites
Schedule 5.14(c) Notices of Environmental Liens
Schedule 5.14(d) Environmental Citations
Schedule 5.16 Intellectual Property
Schedule 5.18 Demand Deposit Accounts
Schedule 5.19 Owned Real Property and Material Leases
Schedule 5.22 Project Accounts
Schedule 5.23 Directors' Compensation
Schedule 6.11 Locations of Inventory and Equipment
Schedule 7.1(a) Permitted Indebtedness
Schedule 7.1(b) Permitted Purchase Money Indebtedness
Schedule 7.6 Guaranties
Schedule 7.14 Affiliate Transactions
</TABLE>
-VI-
<PAGE> 8
LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Agreement"), is entered into as of March 31,
2000, by and among, on the one hand, the lenders identified on the signature
pages hereof (such lenders, together with their respective successors and
assigns, are referred to hereinafter each individually as a "Lender" and
collectively as the "Lenders"), FOOTHILL CAPITAL CORPORATION, a California
corporation, as the arranger and administrative agent for the Lenders (in such
capacity, together with its successors, if any, "Agent"), and, on the other
hand, PHILIP SERVICES CORPORATION, a Delaware corporation ("Parent") and each of
Parent's Subsidiaries identified on the signature pages hereof (such
Subsidiaries, together with Parent, are referred to hereinafter each
individually as a "Borrower" and individually and collectively, jointly and
severally, as the "Borrowers").
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS.
As used in this Agreement, the following terms shall have the following
definitions:
"Account Debtor" means any Person who is or who may become obligated under,
with respect to, or on account of, an Account, a General Intangible, an item of
Investment Property, or Negotiable Collateral.
"Accounts" means all of the Obligors' "accounts" (as that term is defined
in the Code), and any and all credit insurance, guaranties, or security
therefor.
"Acquisition" means any purchase or other acquisition by a Borrower of the
assets of any other Person, other than the purchase of Inventory or Equipment in
the ordinary course of business.
"Administrative Borrower" has the meaning set forth in Section 17.9.
"Advance" means a Tranche A Advance or a Tranche B Advance, as the context
requires.
"Affiliate" means, as applied to any Person, any other Person who, directly
or indirectly, controls, is controlled by, or is under common control with, such
Person. For purposes of this definition, "control" means the possession,
directly or indirectly, of the power to direct the management and policies of a
Person, whether through the ownership of Stock, by contract, or otherwise;
provided, however, that, in any event: (a) any Person which owns directly or
indirectly ten percent (10%) or more of the securities
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having ordinary voting power for the election of directors or other members of
the governing body of a Person or ten percent (10%) or more of the partnership
or other ownership interests of a Person (other than as a limited partner of
such Person) shall be deemed to control such Person; (b) each director or
officer of a Person shall be deemed to be an Affiliate of such Person; and (c)
each partnership or joint venture in which a Person is a partner or joint
venturer shall be deemed to be an Affiliate of such Person.
"Agent" means Foothill in its capacity as arranger and administrative agent
for the Lenders hereunder, and any successor thereto.
"Agent's Account" shall mean an account at a bank designated by Agent from
time to time as the account into which Borrowers shall make all payments to
Agent for the benefit of the Lender Group and into which the Lender Group shall
make all payments to Agent under this Agreement and the other Loan Documents.
Initially, until Agent notifies Borrower and the Lender Group to the contrary,
the Agent's Account shall be that certain deposit account bearing account number
323-266193 and maintained by Agent with The Chase Manhattan Bank, N.A., 4 New
York Plaza, 15th Floor, New York, New York 10004, ABA #021-000-021.
"Agent Advances" has the meaning set forth in Section 2.4(e)(i).
"Agent-Related Persons" means Agent together with its Affiliates, officers,
directors, employees, and agents.
"Agreement" has the meaning set forth in the preamble hereto.
"Applicable Base Rate Margin" means the following:
<TABLE>
<CAPTION>
Type of Advance Applicable Base
Rate Margin
--------------- ----------------
<S> <C>
Tranche A Advance 1.0 percentage point
Tranche B Advance 3.0 percentage points
</TABLE>
"Applicable Prepayment Premium" means, as of any date of determination, an
amount equal to (a) during the period of time from and after the date of the
execution and delivery of this Agreement and up to but not including the date
that is the first anniversary of
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the Closing Date, 0.75% times the sum of (i) the Dollar amount of Tranche A
Advances outstanding on the last day of the month immediately preceding the date
of determination, and (ii) the Dollar amount undrawn under Letters of Credit
outstanding on the last day of the month immediately preceding the date of
determination, (b) during the period of time from and after the date that is the
first anniversary of the Closing Date up to but not including the date that is
eighteen months after the Closing Date, 0.375% times the sum of (i) the Dollar
amount of Tranche A Advances outstanding on the last day of the month
immediately preceding the date of determination, and (ii) the Dollar amount
undrawn under Letters of Credit outstanding on the last day of the month
immediately preceding the date of determination, and (c) thereafter, zero.
"Assignee" has the meaning set forth in Section 14.1(c).
"Assignment and Acceptance" means an Assignment and Acceptance in the form
of Exhibit A-1 attached hereto.
"Authorized Person" means any officer or other employee of Administrative
Borrower.
"Bankruptcy Cases" means Parent's Chapter 11 Case No. 99-02385(MFW), and
each of the other jointly administered Chapter 11 cases of the other Borrowers,
each of which was filed in the Bankruptcy Court on June 25, 1999.
"Bankruptcy Code" means the United States Bankruptcy Code, as amended, and
any successor statute.
"Bankruptcy Court" means the United States Bankruptcy Court for the
District of Delaware.
"Base LIBOR Rate" means the average per annum rate, determined by Agent
(rounded upwards, if necessary, to the next 1/100%) at which Dollar deposits are
offered to Wells Fargo in the London interbank market on or about 11:00 a.m.
(California time) 2 Business Days prior to the commencement of the applicable
Interest Period, for a term and in amounts comparable to the Interest Period and
amount of the LIBOR Rate Advance requested by Administrative Borrowers in
accordance with this Agreement.
"Base Rate" means, as of any date of determination, the rate of interest
announced within Wells Fargo at its principal office in San Francisco as its
"prime rate", with the understanding that the "prime rate" is one of Wells
Fargo's base rates (not necessarily the lowest of such rates) and serves as the
basis upon which effective rates of interest are calculated for those loans
making reference thereto and is evidenced by the recording thereof after its
announcement in such internal publication or publications as Wells Fargo may
designate.
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"Base Rate Advance" means each portion of an Advance bearing interest at a
rate determined by reference to the Base Rate.
"Benefit Plan" means a "defined benefit plan" (as defined in Section 3(35)
of ERISA) that is subject to Title IV of ERISA and for which any Borrower or
ERISA Affiliate of such Borrower is an "employer" (as defined in Section 3(5) of
ERISA).
"Board of Directors" means the Board of Directors of any Person or any
committee thereof duly authorized to act on behalf of the Board of Directors.
"Bonding Lien Intercreditor Agreement" means that certain Intercreditor
Agreement by and among Collateral Agent and the agent for bonding creditors of
the Obligors, substantially in the form of Exhibit B-1 attached hereto or
otherwise in form and substance reasonably satisfactory to Agent.
"Books" means all of each Obligor's books and records (including all of its
records indicating, summarizing, or evidencing its assets (including the
Collateral) or liabilities, all of its information relating to its business
operations or financial condition, and all of its computer programs, disks,
files, printouts, runs, or other computer prepared information).
"Borrower" and "Borrowers" have the respective meanings set forth in the
preamble to this Agreement.
"Borrowing" means a borrowing hereunder consisting of Advances made on the
same day by the Lenders, or Agent on behalf thereof, or by Swing Lender in the
case of a Swing Loan, or by Agent in the case of an Agent Advance, in each case,
to Administrative Borrower.
"Borrowing Base" means, as of any date of determination, the result of:
(v) the lesser of
(1) the result of
(A) 80% of Eligible Domestic Accounts, plus
(B) the lesser of (I) 80% of Eligible Canadian Accounts
and (II) $35,000,000, plus
(C) the lesser of (I) 50% of Eligible Unbilled Accounts,
and (II) $30,000,000, minus
(D) the amount, if any, of the Dilution Reserve,
and
(2) an amount equal to the Obligors' Collections with respect to
Accounts for the immediately preceding 60 day period,
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minus
(w) the aggregate amount of reserves, if any, established by Agent
pursuant to Section 2.1(b) or Section 10,
minus
(x) the aggregate amount of unapplied deposits received with respect
to Eligible Accounts from Account Debtors.
"Borrowing Base Certificate" means a certificate in the form of Exhibit
B-2.
"Business Day" means any day that is not a Saturday, Sunday, or other day
on which commercial banks in New York, New York are authorized or required to
close, except that, if a determination of a Business Day shall relate to a LIBOR
Rate Advance, the term "Business Day" also shall exclude any day on which banks
are closed for dealings in Dollar deposits in the London interbank market.
"Canadian Bank" has the meaning set forth in Section 2.2(a).
"Canadian Bankruptcy Court" means the Ontario Superior Court of Justice.
"Canadian Confirmation Order" means, collectively, the orders of the
Canadian Bankruptcy Court pursuant to which the Canadian Transactions were
sanctioned and approved dated November 26, 1999, and March 8, 2000, copies of
which are attached hereto as Exhibit C-1.
"Canadian Debtors" means PSC and those of its Subsidiaries that commenced
proceedings in the Canadian Bankruptcy Court under the Companies' Creditors
Arrangement Act (Canada).
"Canadian Dollar Letters of Credit" has the meaning set forth in Section
2.2(a).
"Canadian Guarantors" means (a) PSI, (b) PAS, (c) Nortru, Ltd., an Ontario
corporation, (d) Allies Staffing Ltd., an Ontario corporation, (e) ServTech
Canada Inc., an Ontario corporation, (f) Philip Investment Corp., an Ontario
corporation, (g) Recyclage d'Aluminium Quebec Inc., a Canadian corporation, and
(h) ST Delta Canada, Inc., an Ontario corporation.
"Canadian Guaranty" means that certain Guaranty executed and delivered by
the Canadian Guarantors in favor of Agent, for the benefit of the Lenders, in
form and substance (including being governed by the laws of Ontario)
satisfactory to Agent.
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"Canadian Security Agreement" means that certain Security Agreement
executed and delivered by the Canadian Guarantors in favor of Collateral Agent,
in form and substance (including being governed by the laws of Ontario)
satisfactory to Agent.
"Canadian Security Documents" means the Canadian Security Agreement, the
Hypothec, and such other instruments, agreements, and documents governed by the
laws of Canada or any political subdivision thereof, as Agent or its Canadian
counsel reasonably may require to secure the whole or any part of the
Obligations as guaranteed by the Canadian Guarantors.
"Canadian Transactions" means the series of transactions pursuant to which
certain assets of the Canadian Debtors are transferred as going concerns to PSI,
PAS, and PSII.
"Canadian Vesting Order" means the order of the Canadian Bankruptcy Court
made on January 7, 2000, pursuant to which title to the assets to be transferred
pursuant to the Canadian Transactions is to be vested in Guarantors free and
clear of certain Liens or other claims, a copy of which is attached hereto as
Exhibit C-2.
"Capital Lease" means a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.
"Capital Stock" of any Person means any and all shares, interests,
participations, or other equivalents (however designated) of, or rights,
warrants, or options to purchase, corporate stock or any other equity interest
(however designated) of or in such Person.
"Capitalized Lease Obligation" means any Indebtedness represented by
obligations under a Capital Lease.
"Cash Equivalents" means and refers to: (a) marketable direct obligations
issued or unconditionally guaranteed by the United States Government or the
government of Canada or issued by any agency or instrumentality of either of
them and backed by the full faith and credit of the United States or the
government of Canada, in each case maturing within one (1) year from the date of
acquisition thereof; (b) marketable direct obligations issued by any state of
the United States of America or any province of Canada or any political
subdivision of any such state or province or any public instrumentality thereof
maturing within one (1) year from the date of acquisition thereof and, at the
time of acquisition, having the highest rating obtainable from either S&P or
Moody's or an equivalent rating from Canadian Bond Rating Service Inc. or
Dominion Bond Rating Service Limited; (c) commercial paper maturing no more than
one (1) year from the date of acquisition thereof and, at the time of
acquisition, having a rating of A-2 or P-2, or better, from S&P or Moody's or an
equivalent rating from Canadian Bond Rating Service Inc. or Dominion Bond Rating
Service Limited; (d) certificates of deposit or bankers'
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acceptances maturing within one (1) year from the date of acquisition thereof
either (i) issued by any bank organized under the laws of the United States of
America or any state thereof or the District of Columbia or under the laws of
the government of Canada, or any province thereof, which bank has a rating of A
or A2, or better, from S&P or Moody's or an equivalent rating from Canadian Bond
Rating Service Inc. or Dominion Bond Rating Service Limited, or (ii)
certificates of deposit less than or equal to $100,000 in the aggregate issued
by any other bank insured by the Federal Deposit Insurance Corporation.
"Cash Flow Available for Debt Service" has the meaning set forth in Section
8 of the Junior Secured Debt Credit Agreement as in effect on the Closing Date.
"Cash Interest Expense" means, with respect to any period of determination,
the consolidated interest expense of a Person accrued during such period as
determined in accordance with GAAP plus, without duplication, the Letter of
Credit fees accrued hereunder during such period, but excluding, to the extent
included, without duplication, (a) non-cash Interest Expense, (b) Exit Facility
Fees, and (c) any other amounts (such as the amortization of debt discount) that
would be classified as Depreciation Expenses.
"Chief Executive Office" shall mean where a Person is deemed located
pursuant to Section 9-103(3) of the Code.
"Closing Date" means the date of the making of the initial Advance (or
other extension of credit) hereunder.
"Code" means the New York Uniform Commercial Code, as amended from time to
time.
"Collateral" means all of the Personal Property Collateral and the Real
Property Collateral.
"Collateral Agency and Intercreditor Agreement" means that certain
Collateral Agency and Intercreditor Agreement by and among Foothill, Collateral
Agent, Agent, Junior Secured Debt Agent, Parent, and the Subsidiaries of Parent
identified on the signature pages thereto, in form and substance satisfactory to
Agent.
"Collateral Agent" means Foothill in its various capacities as collateral
agents under the Collateral Agency and Intercreditor Agreement, and any
successor thereto.
"Collateral Agent's Liens" shall mean (a) the Liens granted by Obligors to
Collateral Agent pursuant to the Security Agreement, the Stock Pledge Agreement,
the Copyright Security Agreement, the Rolling Stock Security Agreement, the
Patent Security Agreement, and the Trademark Security Agreement, (b) the Liens
granted by Guarantors
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to Collateral Agent pursuant to the Canadian Security Agreement and the
Guarantor Security Agreement, and (c) the Liens granted by the Obligors to
Collateral Agent pursuant to the Mortgages.
"Collection Account" has the meaning set forth in Section 2.8(b).
"Collection Account Bank" has the meaning set forth in Section 2.8(b).
"Collections" means all cash, checks, notes, instruments, and other items
of payment (including insurance proceeds, proceeds of cash sales, rental
proceeds, and tax refunds) of the Obligors.
"Combined Availability" means, as of any date of determination, the
aggregate amount of Tranche A Advances, Letters of Credit, and Tranche B
Advances that Borrowers are then entitled to obtain hereunder (after giving
effect to all then outstanding Obligations and all sublimits and reserves
applicable hereunder), minus the aggregate amount, if any, of all trade payables
of the Obligors aged materially in excess of the Obligors' historical levels
with respect thereto and all book overdrafts materially in excess of the
Obligors' historical practices with respect thereto, in each case as determined
by Agent in its Permitted Discretion, plus, at Agent's option, Obligors' cash on
hand and Cash Equivalents.
"Commitment" means, with respect to each Lender, its Tranche A Commitment,
its Tranche B Commitment, or its Total Commitment, as the context requires, and
with respect to all Lenders, their Tranche A Commitments, their Tranche B
Commitments, or their Total Commitments, as the context requires, in each case
as such Dollar amounts are set forth beside such Lender's name under the
applicable heading on Schedule C-1 attached hereto or on the signature page of
the Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 14.1.
"Compliance Certificate" means a certificate substantially in the form of
Exhibit C-3 delivered by the chief financial officer of Borrower to Agent.
"Confirmation Order" means, collectively, the orders of the Bankruptcy
Court dated November 3, 1999, November 30, 1999, and March 20, 2000, pursuant to
which the Plan of Reorganization was confirmed, copies of which are attached
hereto as Exhibit C-4.
"Control Agreement" means a control agreement, in form and substance
reasonably satisfactory to Agent, between Borrowers, Collateral Agent, and the
applicable securities intermediary with respect to the applicable Securities
Account and related Investment Property.
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"Copyright Security Agreement" means a Copyright Security Agreement
executed and delivered by each Obligor and Collateral Agent, the form and
substance of which is satisfactory to Agent.
"Daily Balance" means, with respect to each day during the term of this
Agreement, the amount of an Obligation owed at the end of such day.
"DDA" means any checking or other demand deposit account maintained by
Borrowers.
"Default" means an event, condition, or default that, with the giving of
notice, the passage of time, or both, would be an Event of Default.
"Defaulting Lender" means any Lender that fails to make any Advance that it
is required to make hereunder on any Funding Date and that has not cured such
failure by making such Advance within 1 Business Day after written demand upon
it by Agent to do so.
"Defaulting Lender Rate" means the Base Rate for the first 3 days from and
after the date the relevant payment is due and, thereafter, at that interest
rate equal to the interest rate then applicable to (a) with respect to any such
payment in respect of Tranche A Advances or Letters of Credit, the Tranche A
Advances, and (b) with respect to any other payment, the Tranche B Advances.
"Demand Notes" means those certain demand notes of even date herewith
executed and delivered by certain Canadian Guarantors in favor of the Collateral
Agents acting for the Lenders having Tranche A Commitments and for the Lenders
having Tranche B Commitments.
"Depreciation Expense" means, with respect to any period of determination,
the consolidated depreciation, amortization, and other similar reductions to
income of a Person for such period as determined in accordance with GAAP.
"Designated Account" means account number 1851-040855 of Administrative
Borrower maintained with the Designated Account Bank, or such other deposit
account of Borrower (located within the United States) that has been designated
as such, in writing, by Administrative Borrower to Agent.
"Designated Account Bank" means Comerica Bank, whose office is located at
500 Woodward Avenue, Detroit, Michigan and whose ABA number is 072000096.
"Dilution" means, as of any date of determination, a percentage, based upon
the experience of the Obligors, taken as a whole, for the immediately preceding
90 days, that is the result of dividing the Dollar amount of (a) bad debt
write-downs, discounts, credits, or other dilutive items with respect to the
Accounts during such 90 day period, by
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(b) the Obligors' Collections with respect to Accounts during such 90 day period
(excluding extraordinary items) plus the Dollar amount of clause (a).
"Dilution Reserve" means, as of any date of determination, an amount
sufficient to reduce the advance rate against Eligible Accounts by one
percentage point for each percentage point by which Dilution is in excess of 5
percent.
"DIP Agent" means Bankers Trust Company, as agent for the lenders under the
DIP Credit Agreement.
"DIP Credit Agreement" means that certain Credit Agreement dated as of June
28, 1999 by and among PSC, Parent, Bankers Trust Company, as agent, Canadian
Imperial Bank of Commerce and Bankers Trust Company, as co-arrangers and the
various Persons parties to such agreement as lenders, as amended, supplemented,
or otherwise modified from time to time.
"Disbursement Letter" means an instructional letter executed and delivered
by Administrative Borrower to Agent regarding the extensions of credit to be
made on the Closing Date, the form and substance of which shall be reasonably
satisfactory to Agent.
"Dollars" or "$" means United States dollars.
"EBITDA" means, with respect to any fiscal period, the consolidated net
earnings (or loss) of Parent before Interest Expense, income taxes, and
Depreciation Expense for such period, as determined in accordance with GAAP and
excluding, to the extent included, without duplication (a) net of applicable
taxes, any loss or gain arising from the closure of businesses or locations, (b)
net of applicable taxes, any loss arising from the write-down of long term
assets, (c) professional fees and other restructuring costs (including retention
payments) incurred in connection with the Bankruptcy Cases and the proceedings
before the Canadian Bankruptcy Court and the closing of the transactions
contemplated by this Agreement, and (d) Exit Facility Fees.
"Eligible Account" means an Eligible Domestic Account, an Eligible Canadian
Account, or an Eligible Unbilled Account, as the context requires.
"Eligible Canadian Account" means any Account of one of the Canadian
Guarantors as to which each of the following is applicable: (a) such Account
does not qualify as an Eligible Domestic Account solely because of one or more
of the following reasons: (x) such Account is an Account of a Canadian Guarantor
rather than of a Borrower; (y) such Account is payable in Canadian dollars
rather than in Dollars; or (z) the Account Debtor with respect to such Account
maintains its chief executive office in Canada rather than in the United States
or is organized under the laws of Canada or a political subdivision thereof
rather than under the laws of the United States or any State
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thereof; and (b) Collateral Agent has perfected security interests in such
Account prior to any other security interest therein.
"Eligible Domestic Accounts" means those Accounts created by one of the
Borrowers in the ordinary course of its business, that arise out of its sale of
goods or rendition of services, that comply, in all material respects, with each
and all of the representations and warranties respecting Accounts made by
Borrowers under the Loan Documents, and that are not excluded as ineligible by
virtue of one or more of the criteria set forth below. Eligible Domestic
Accounts shall not include the following:
(a) Accounts that the Account Debtor has failed to pay within 90 days of
the original invoice date or Accounts with selling terms of more than 60 days,
(b) Accounts owed by an Account Debtor (or its Subsidiaries) where 50% or
more of all Accounts owed by that Account Debtor (or its Subsidiaries) are
deemed ineligible under clause (a) above,
(c) Accounts with respect to which the Account Debtor is an employee,
Affiliate, or agent of any Borrower,
(d) Accounts arising in a transaction wherein goods were placed on
consignment or were sold pursuant to a guaranteed sale, a sale or return, a sale
on approval, a bill and hold, or pursuant to any other agreement providing for
repurchase or return (other than pursuant to warranties made in the ordinary
course of business),
(e) Accounts that are not payable in Dollars,
(f) Accounts with respect to which the Account Debtor either (i) does not
maintain its chief executive office in the United States, (ii) is not organized
under the laws of the United States or any State thereof, or (iii) is the
government of any foreign country or sovereign state, or of any state, province,
municipality, or other political subdivision thereof, or of any department,
agency, public corporation, or other instrumentality thereof, unless the Account
is supported by an irrevocable letter of credit in form and substance reasonably
satisfactory to the Agent, issued by a financial institution reasonably
satisfactory to the Agent, and that has been duly pledged to the Collateral
Agent (together with sufficient documentation to permit direct draws by the
Collateral Agent),
(g) Accounts with respect to which the Account Debtor is either (i) the
United States or any department, agency, or instrumentality of the United States
(exclusive, however, of Accounts with respect to which the Borrower has
complied, to the reasonable satisfaction of Agent, with the Assignment of Claims
Act, 31 USC ss. 3727), (ii) any State of the United States (exclusive, however,
of (y) Accounts owed by any State that does not have a statutory counterpart to
the Assignment of Claims Act or (z) Accounts owed by any State that does have a
statutory counterpart to the Assignment of Claims Act as to which the applicable
Obligor has complied to the Agent's satisfaction), or (iii) a
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Canadian Governmental Authority except to the extent the Account is assignable
without consent or all necessary consents have been obtained,
(h) Accounts with respect to which the Account Debtor is a creditor of any
Obligor, has (unless the Account Debtor has provided to the Agent an enforceable
"non- offset" letter in form and substance reasonably satisfactory to the Agent)
or has asserted a right of setoff, has disputed its liability, or has made any
claim with respect to its obligation to pay the Account, to the extent of such
claim, right of offset, assertion, or dispute,
(i) Accounts with respect to an Account Debtor whose total obligations
owing to the Obligors exceed 10% of all Eligible Accounts, to the extent of the
obligations owing by such Account Debtor in excess of such percentage,
(j) Accounts with respect to which the Account Debtor is subject to an
Insolvency Proceeding, is not Solvent, or goes out of business,
(l) Accounts, the collection of which, Agent, in its reasonable credit
judgment, believes to be doubtful by reason of the Account Debtor's financial
condition,
(m) Accounts arising with respect to a contract or project as to which the
obligations of the applicable Obligor are the subject of a payment, performance,
or other surety bond,
(n) Accounts with respect to which (i) the goods giving rise to such
Account have not been shipped and billed to the Account Debtor, or (ii) the
services giving rise to such Account have not been fully performed; and
(o) Accounts that otherwise are not in compliance with any other criteria
for eligibility established from time to time by Agent in its Permitted
Discretion (Agent shall endeavor in good faith promptly to provide notice to
Administrative Borrower of any change in criteria for eligibility established
pursuant to this clause (o)).
"Eligible Transferee" means (a) a commercial bank organized under the laws
of the United States, or any state thereof, and having total assets in excess of
$250,000,000, (b) a commercial bank organized under the laws of any other
country which is a member of the Organization for Economic Cooperation and
Development or a political subdivision of any such country and which has total
assets in excess of $250,000,000, provided that such bank is acting through a
branch or agency located in the United States, (c) a finance company, insurance
company, or other financial institution or fund that is engaged in making,
purchasing, or otherwise investing in commercial loans in the ordinary course of
its business and having (together with its Affiliates) total assets in excess of
$250,000,000, (d) any Affiliate (other than individuals) of a pre-existing
Lender, (e) so long as no Event of Default has occurred and is continuing, any
other Person approved by Agent and Borrowers (such approval by Borrowers not to
be unreasonably withheld,
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conditioned or delayed), and (f) during the continuation of an Event of Default,
any other Person approved by Agent.
"Eligible Unbilled Account" means, as of any date of determination, an
Account of an Obligor that (a) is capable of being billed by such Obligor to its
customer in accordance with such Obligor's usual billing methods for Accounts,
but that has not yet been billed and invoiced to such customer, (b) does not
relate to services rendered or goods sold that were received by the applicable
Account Debtor more than 30 days prior to the date of determination, and (c) in
all other respects would qualify as an Eligible Domestic Account or Eligible
Canadian Account, as applicable, but for the fact that it has not yet been
billed and invoiced to such Obligor's customer. Eligible Unbilled Accounts shall
be net of contra accounts. If an Account that, immediately prior to being billed
and invoiced, was an Eligible Unbilled Account, then is billed and invoiced, it
thereupon shall cease to be an Eligible Unbilled Account and it shall become an
Eligible Domestic Account or Eligible Canadian Account, as applicable, if it
then meets the criteria applicable thereto.
"Environmental Law" means any applicable federal, state, provincial,
foreign or local statute, law, rule, regulation, ordinance, code, binding and
enforceable guideline, binding and enforceable written policy or rule of common
law now or hereafter in effect and in each case as amended, or any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, to the extent binding on the Obligors,
relating to the environment, employee health and safety or Hazardous Materials,
including CERCLA; RCRA; the Federal Water Pollution Control Act, 33 USC ss.1251
et seq; the Toxic Substances Control Act, 15 USC, ss. 2601 et seq; the Clean Air
Act, 42 USC ss.7401 et seq.; the Safe Drinking Water Act, 42 USC. ss.3803 et
seq.; the Oil Pollution Act of 1990, 33 USC. ss. 2701 et seq.; the Emergency
Planning and the Community Right-to-Know Act of 1986, 42 USC. ss. 11001 et seq.;
the Hazardous Material Transportation Act, 49 USC ss. 1801 et seq.; and the
Occupational Safety and Health Act, 29 USC. ss.651 et seq. (to the extent it
regulates occupational exposure to Hazardous Materials); any state and local or
foreign counterparts or equivalents, in each case as amended from time to time;
and any similar statute, law, rule, regulation, ordinance, code, binding and
enforceable guideline, binding and enforceable written policy or rule of common
law now or hereafter in effect in Canada and in each case as amended, or any
judicial or administrative interpretation thereof, including any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment to the extent binding on the Obligors.
"Equipment" means all of the Obligors' present and hereafter acquired
machinery, machine tools, motors, equipment, furniture, furnishings, fixtures,
vehicles (including motor vehicles and trailers), tools, parts, goods (other
than consumer goods, farm products, or Inventory), wherever located, including
all attachments, accessories, accessions, replacements, substitutions,
additions, and improvements to any of the foregoing.
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"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute thereto.
"ERISA Affiliate" means (a) any corporation whose employees are treated as
employed by the same employer as the employees of a Borrower under IRC Section
414(b), (b) any trade or business whose employees are treated as employed by the
same employer as the employees of a Borrower under IRC Section 414(c), (c)
solely for purposes of Section 302 of ERISA and Section 412 of the IRC, any
organization that is a member of an affiliated service group of which a Borrower
is a member under IRC Section 414(m), or (d) solely for purposes of Section 302
of ERISA and Section 412 of the IRC, any party that is a party to an arrangement
with a Borrower and whose employees are aggregated with the employees of a
Borrower under IRC Section 414(o).
"ERISA Event" means (a) a Reportable Event with respect to any Benefit Plan
or Multiemployer Plan, (b) the withdrawal of any Borrower or any of its ERISA
Affiliates from a Benefit Plan during a plan year in which it was a "substantial
employer" (as defined in Section 4001(a)(2) of ERISA), (c) the providing of
notice of intent to terminate a Benefit Plan in a distress termination (as
described in Section 4041(c) of ERISA), (d) the institution by the PBGC of
proceedings to terminate a Benefit Plan or Multiemployer Plan, (e) any event or
condition (i) that provides a basis under Section 4042(a)(1), (2), or (3) of
ERISA for the termination of, or the appointment of a trustee to administer, any
Benefit Plan or Multiemployer Plan, or (ii) that may result in termination of a
Multiemployer Plan pursuant to Section 4041A of ERISA, (f) the partial or
complete withdrawal within the meaning of Sections 4203 and 4205 of ERISA, of
any Borrower, any of their ERISA Affiliates from a Multiemployer Plan, or (g)
providing any security to any Plan under Section 401(a)(29) of the IRC by any
Borrower or any of its ERISA Affiliates or (h) the termination, reorganization
or insolvency of any Multiemployer Plan to which any Borrower or any of its
ERISA Affiliates is required to contribute.
"Event of Default" has the meaning set forth in Section 8.
"Excepted Collections" means the proceeds from the sale, exchange or other
disposition of assets from one Obligor to another Obligor or permitted under
clauses (f), (g), (h) or (i) of the definition of "Permitted Dispositions"
(inclusive, however, of Accounts, General Intangibles, or Negotiable Collateral
sold in connection with the sale of the business out of which they arose),
provided however, that in each case such proceeds shall become Excepted
Collections only to the extent that Administrative Borrower demonstrates to
Agent's satisfaction (in Agent's Permitted Discretion) within thirty calendar
days of receipt by Administrative Borrower of Agent's statement reflecting
receipt of such proceeds, that such proceeds qualify as Excepted Collections.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
any successor statute.
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"Existing Letters of Credit" means those letters of credit listed on
Schedule E-1.
"Exit Facility Fees" means, as of any date of determination, (a) for any
fiscal period ended on or before the date that is the first anniversary of the
Closing Date, fees paid or payable to Agent and/or Lenders on or prior to the
Closing Date relative to the execution and delivery of this Agreement and,
without duplication, fees paid or payable pursuant to Sections 2.12(b), (c), and
(d) hereof during such period, and (b) for any fiscal period ended after the
date that is the date of the first anniversary of the Closing Date, fees paid or
payable pursuant to Sections 2.12(b), (c), and (d) hereof during such period.
"Fee Split Letters" means, collectively, (a) that certain letter agreement,
dated as of the date hereof, between Agent and Ableco Finance LLC and Madeleine
LLC, (b) that certain letter agreement, dated as of the date hereof, between
Agent and Foothill Partners III, L.P., (c) that certain letter agreement, dated
as of the date hereof, between Agent and Foothill Income Trust, L.P., and (d)
that certain letter agreement, dated as of the date hereof, between Agent and
Arnos Corporation. The parties hereto acknowledge and agree that the Borrowers
are not parties to, and are not entitled to review, the Fee Split Letters and
consequently no provision of any Fee Split Letter may alter or otherwise affect
the obligations of the Borrowers hereunder or under any other Loan Document.
"FEIN" means Federal Employer Identification Number.
"Foothill" means Foothill Capital Corporation, a California corporation.
"Funding Date" means the date on which a Borrowing occurs.
"Funding Losses" has the meaning set forth in Section 2.13(b)(ii).
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States, consistently applied.
"General Intangibles" means all of the Obligors' general intangibles and
other personal property (including contract rights, rights to payment, rights
arising under common law, statutes, or regulations, choses or things in action,
goodwill, patents, trade names, trademarks, servicemarks, copyrights,
blueprints, drawings, purchase orders, customer lists, monies due or recoverable
from pension funds, route lists, rights to payment and other rights under any
royalty or licensing agreements, infringement claims, computer programs,
information contained on computer disks or tapes, literature, reports, catalogs,
money, deposit accounts, insurance premium rebates, tax refunds, and tax refund
claims), other than goods, Accounts, Investment Property, and Negotiable
Collateral.
"Governing Documents" means, with respect to any Person, the certificate or
articles of incorporation, by-laws, or other organizational documents of such
Person.
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"Governmental Authority" shall mean any federal, state, local, or other
governmental or administrative body, instrumentality, department, or agency or
any court, tribunal, administrative hearing body, arbitration panel, commission,
or other similar dispute-resolving panel or body.
"Guarantors" means any or all of the Canadian Guarantors or the Non-
Canadian Guarantors, as the context requires.
"Guarantor Security Agreement" means that certain Security Agreement
executed and delivered by the Guarantors in favor of Collateral Agent, in form
and substance (including being governed by the laws of New York) satisfactory to
Agent.
"Guaranty" means that certain General Continuing Guaranty executed and
delivered by the Guarantors in favor of Agent and each of the Lenders, in form
and substance (including being governed by the laws of New York) satisfactory to
Agent.
"Hazardous Materials" means (a) substances that are defined or listed in,
or otherwise classified pursuant to, any applicable laws or regulations as
"hazardous substances," "hazardous materials," "hazardous wastes," "toxic
substances," or any other formulation intended to define, list, or classify
substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP
toxicity", (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.
"Hypothec" means the security document made by certain of the Canadian
Guarantors in favor of Collateral Agent, in form and substance (including being
governed by the laws of Quebec) satisfactory to Agent.
"Indebtedness" means, as to any Person and without duplication, (a) all
obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes, or other similar instruments and
all reimbursement or other obligations of such Person in respect of letters of
credit, bankers acceptances, interest rate swaps, or other financial products,
(c) all obligations of such Person under Capital Leases, (d) all obligations or
liabilities of the types described in clauses (a) through (c) above of others
secured by a Lien on any property or asset of such Person, irrespective of
whether such obligation or liability is assumed, and (e) any obligation of such
Person guaranteeing or intended to guarantee (whether guaranteed, endorsed,
co-made, discounted, or sold with recourse to such Person) any obligation or
liability of the types described in clauses (a) through (c) above of any other
Person; provided, however, that
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Indebtedness shall not include trade payables and accrued expenses, in each case
arising in the ordinary course of business or any reimbursement obligations of
such Person under any performance bond issued for the account of such Person.
"Indemnified Liabilities" has the meaning set forth in Section 11.3.
"Indemnified Person" has the meaning set forth in Section 11.3.
"Insolvency Proceeding" means any proceeding commenced by or against any
Person under any provision of the Bankruptcy Code or under any other bankruptcy
or insolvency law, assignments for the benefit of creditors, formal or informal
moratoria, compositions, extensions generally with creditors, or proceedings
seeking reorganization, arrangement, or other similar relief.
"Interest Coverage Ratio" means, with respect to any period of
determination, the ratio of (i) EBITDA, to (ii) Cash Interest Expense and Exit
Facility Fees for such period, all as determined in accordance with GAAP minus
any Cash Interest Expense paid with respect to the exercise of a change of
control put under the Junior Unsecured Debt Documents.
"Interest Expense" means, with respect to any period of determination, the
consolidated interest expense of a Person incurred during such period as
determined in accordance with GAAP plus, without duplication, the Letter of
Credit fees accrued hereunder during such period, but excluding, to the extent
included, without duplication, (a) Exit Facility Fees, and (b) any other amounts
(such as the amortization of debt discount) that would be classified as
Depreciation Expenses.
"Interest Period" means, with respect to each LIBOR Rate Advance, a period
commencing on the date of the making of such LIBOR Rate Advance and ending 1, 2,
or 3 months thereafter; provided, however, that (a) if any Interest Period would
end on a day that is not a Business Day, such Interest Period shall be extended
(subject to clauses (c)-(e) below) to the next succeeding Business Day, (b)
interest shall accrue from and including the first day of each Interest Period
to, but excluding, the day on which any Interest Period expires, (c) any
Interest Period that would end on a day that is not a Business Day shall be
extended to the next succeeding Business Day unless such Business Day falls in
another calendar month, in which case such Interest Period shall end on the next
preceding Business Day, (d) with respect to an Interest Period that begins on
the last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period), the Interest Period shall end on the last Business Day of the calendar
month that is 1, 2, or 3 months after the date on which the Interest Period
began, as applicable, and (e) Borrower may not elect an Interest Period which
will end after the Maturity Date.
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"Inventory" means all of the Obligors' inventory, including goods held for
sale or lease or to be furnished under a contract of service and all of
Obligors' raw materials, work in process, finished goods, and all materials used
or consumed in the Obligors' business, wherever located.
"Investment" means, with respect to any Person, any investment by such
Person in any other Person in the form of loans, guarantees, advances, or
capital contributions (excluding (a) commission, travel, and similar advances to
officers and employees of such Person made in the ordinary course of business,
and (b) bona fide accounts receivable arising from the sale of goods or services
in the ordinary course of business consistent with past practice), purchases or
other acquisitions for consideration of Indebtedness or Stock, and any other
items that are or would be classified as investments on a balance sheet prepared
in accordance with GAAP.
"Investment Property" means all of the Obligors' "investment property", as
that term is defined in the Code.
"Issuing Lender" means Foothill or any other Lender that, at the request of
Administrative Borrower and with the consent of Agent agrees, in such Lender's
sole discretion, to become an Issuing Lender for the purpose of issuing L/Cs or
L/C Undertakings pursuant to Section 2.2.
"IRC" means the Internal Revenue Code of 1986, as amended, and any
successor statute.
"Junior Debt" means the Indebtedness evidenced by the Junior Debt
Documents.
"Junior Debt Documents" means the Junior Secured Debt Documents and the
Junior Unsecured Debt Documents.
"Junior Secured Debt" means the Indebtedness evidenced by the Junior
Secured Debt Documents.
"Junior Secured Debt Agent" means Canadian Imperial Bank of Commerce as
agent for the lenders under the Junior Secured Debt Credit Agreement.
"Junior Secured Debt Credit Agreement" means that certain Term Loan Credit
Agreement dated as of the Closing Date by and among Parent, Junior Secured Debt
Agent, and the various Persons parties to such agreement as lenders, in form and
substance satisfactory to Agent.
"Junior Secured Debt Documents" means the Junior Secured Debt Credit
Agreement and the notes and other documents and agreements entered into in
connection with the issuance of the Indebtedness thereunder.
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"Junior Unsecured Debt" means the Indebtedness evidenced by the Junior
Unsecured Debt Documents.
"Junior Unsecured Debt Documents" means the PIK Unsecured Debt Indenture,
the Unsecured Convertible Debt Indenture, and, in each case, the notes and other
documents and agreements entered into in connection with the issuance of the
Indebtedness thereunder.
"L/C" has the meaning set forth in Section 2.2(a).
"L/C Disbursement" means a payment made by the Issuing Lender pursuant to a
Letter of Credit.
"L/C Undertaking" has the meaning set forth in Section 2.2(a).
"Lender" and "Lenders" have the respective meanings set forth in the
preamble to this Agreement and shall include any other Person made a party to
this Agreement in accordance with the provisions of Section 14.1 hereof.
"Lender Group" means, individually and collectively, each of the Lenders
and Agent.
"Lender Group Expenses" means all (a) costs or expenses (including taxes,
and insurance premiums) required to be paid by an Obligor under any of the Loan
Documents that are paid or incurred by the Lender Group, (b) fees or charges
paid or incurred by the Lender Group in connection with the Lender Group's
transactions with Obligors, including, fees or charges for photocopying,
notarization, couriers and messengers, telecommunication, public record searches
(including tax lien, litigation, and UCC searches and including searches with
the patent and trademark office, the copyright office, or the department of
motor vehicles), filing, recording, publication, appraisal (including Collateral
appraisals in accordance with the provisions of this Agreement), and real estate
title policies and endorsements, (c) costs and expenses incurred by Agent in the
disbursement of funds to Borrowers (by wire transfer or otherwise), (d) charges
paid or incurred by Agent resulting from the dishonor of checks, (e) reasonable
costs and expenses paid or incurred by the Lender Group to correct any default
or enforce any provision of the Loan Documents, or in gaining possession of,
maintaining, handling, preserving, storing, shipping, selling, preparing for
sale, or advertising to sell the Collateral, or any portion thereof,
irrespective of whether a sale is consummated, (f) reasonable costs and expenses
paid or incurred by the Lender Group in examining the Books, (g) reasonable
costs and expenses of third party claims or any other suit paid or incurred by
the Lender Group in enforcing or defending the Loan Documents or in connection
with the transactions contemplated by the Loan Documents or the Lender Group's
relationship with any Obligor, and (h) the Lender Group's reasonable fees and
expenses (including attorneys fees) incurred in advising, structuring, drafting,
reviewing, administering, amending,
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terminating, enforcing (including attorneys fees and expenses incurred in
connection with a "workout," a "restructuring," or an Insolvency Proceeding
concerning any Obligor), defending, or concerning the Loan Documents,
irrespective of whether suit is brought.
"Lender-Related Person" means, with respect to any Lender, such Lender,
together with such Lender's Affiliates, and the officers, directors, employees,
and agents of such Lender.
"Letter of Credit" means an L/C or an L/C Undertaking, as the context
requires.
"Letter of Credit Usage" means, as of any date of determination, the sum of
(a) the aggregate undrawn Dollar amount of all outstanding Letters of Credit,
plus (b) a reserve amount established by Agent from time to time in Agent's
Permitted Discretion in connection with possible currency exchange rate
fluctuations with respect to L/C Undertakings issued in respect of Underlying
Letters of Credit issued in currencies other than Dollars.
"LIBOR Deadline" has the meaning set forth in Section 2.13(b)(i).
"LIBOR Notice" means a written notice in the form of Exhibit L-1 attached
hereto.
"LIBOR Rate" means, for each Interest Period for each LIBOR Rate Advance,
the rate per annum determined by Agent (rounded upwards, if necessary, to the
next 1/100%) by dividing (a) the Base LIBOR Rate for such Interest Period, by
(b) 100% minus the Reserve Percentage. The LIBOR Rate shall be adjusted on and
as of the effective day of any change in the Reserve Percentage.
"LIBOR Rate Advance" means each portion of a Tranche A Advance bearing
interest at a rate determined by reference to the LIBOR Rate.
"LIBOR Rate Margin" means 3.0 percentage points.
"Lien" means any interest in property securing an obligation owed to, or a
claim by, any Person other than the owner of the property, whether such interest
shall be based on the common law, statute, or contract, whether such interest
shall be recorded or perfected, and whether such interest shall be contingent
upon the occurrence of some future event or events or the existence of some
future circumstance or circumstances, including the lien or security interest
arising from a mortgage, deed of trust, encumbrance, pledge, hypothecation,
assignment, deposit arrangement, security agreement, conditional sale or trust
receipt, or from a lease, consignment, or bailment for security purposes and
also including reservations, exceptions, encroachments, easements,
rights-of-way,
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covenants, conditions, restrictions, leases, and other title exceptions and
encumbrances affecting Real Property.
"Loan Account" has the meaning set forth in Section 2.11.
"Loan Documents" means this Agreement, the Canadian Guaranty, the Canadian
Security Agreement, any Control Agreement, the Copyright Security Agreement, the
Disbursement Letter, the Guaranty, the Guarantor Security Agreement, the
Hypothec, the Letters of Credit, the blocked account agreements referenced in
Section 2.8(c), the Mortgages, the Patent Security Agreement, the Security
Agreement, the Stock Pledge Agreement, the Suretyship Agreement, the Trademark
Security Agreement, and any other agreement entered into, now or in the future,
by any Borrower and the Lender Group in connection with this Agreement.
"Lockboxes" has the meaning set forth in Section 2.8(a).
"Lockbox Accounts" has the meaning set forth in Section 2.8(a).
"Lockbox Account Banks" has the meaning set forth in Section 2.8(a).
"Material Adverse Change" means (a) a material adverse change in the
business, prospects, operations, results of operations, assets, liabilities or
condition (financial or otherwise) of the Obligors (taken as a whole), (b) the
material impairment of the ability of the Obligors (taken as a whole) to perform
their obligations under the Loan Documents or of the Lender Group's ability to
enforce the Obligations or realize upon a material portion of the Collateral, or
(c) a material impairment of the priority of the Collateral Agent's Liens with
respect to a material portion of the Collateral as a result of an action or
failure to act on the part of any Obligor.
"Maturity Date" has the meaning set forth in Section 3.4.
"Maximum Facility Amount" means $175,000,000.
"Maximum Tranche A Amount" means $100,000,000.
"Maximum Tranche B Amount" means $75,000,000.
"Mortgage" means, individually and collectively, one or more mortgages,
deeds of trust, or deeds to secure debt, executed and delivered by an Obligor in
favor of Collateral Agent, the form and substance of which shall be satisfactory
to Agent, that encumber Real Property Collateral and the related improvements
thereto.
"Multiemployer Plan" means a "multiemployer plan" (as defined in Section
4001(a)(3) of ERISA) to which any Borrower or any ERISA Affiliate is obligated
to contribute.
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"Negotiable Collateral" means all of Obligors' letters of credit, notes,
drafts, instruments, certificated securities, documents, and chattel paper.
"Non-Canadian Guarantors" means Arc Dust Processing (Barbados) Limited, a
Barbados corporation, and Philip International Development Inc., a Barbados
corporation.
"Obligations" means all loans, Advances, debts, principal, interest
(including any interest that, but for the provisions of the Bankruptcy Code,
would have accrued), contingent reimbursement obligations with respect to
Letters of Credit, premiums, liabilities (including all amounts charged to
Borrowers' Loan Account pursuant hereto), obligations, fees, charges, costs, or
Lender Group Expenses (including any fees or expenses that, but for the
provisions of the Bankruptcy Code, would have accrued), guaranties, covenants,
and duties owing by Obligors to the Lender Group of any kind and description
pursuant to or evidenced by the Loan Documents, irrespective of whether for the
payment of money, whether direct or indirect, absolute or contingent, due or to
become due, now existing or hereafter arising, and including all interest not
paid when due and all Lender Group Expenses that Obligors are required to pay or
reimburse by the Loan Documents, by law, or otherwise.
"Obligors" means, individually and collectively, Borrowers and the
Guarantors, and "Obligor" means any one of them.
"Originating Lender" has the meaning set forth in Section 14.1(g).
"Overadvance" has the meaning set forth in Section 2.6.
"Parent" has the meaning ascribed thereto in the preamble to this
Agreement.
"Participant" has the meaning set forth in Section 14.1(g).
"PAS" means Philip Analytical Services Inc., an Ontario corporation.
"Patent Security Agreement" means a Patent Security Agreement executed and
delivered by each Borrower and Collateral Agent, the form and substance of which
is satisfactory to Agent.
"Pay-Off Letter" means a letter, in form and substance reasonably
satisfactory to Agent, from DIP Agent to Agent respecting the amount necessary
to repay in full all of the obligations of the Obligors owing under the DIP
Credit Agreement and obtain a release of all of the Liens existing in favor of
DIP Agent in and to the assets of the Obligors.
"PBGC" means the Pension Benefit Guaranty Corporation, as defined in Title
IV of ERISA, or any successor thereto.
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"Permitted Acquisition" means an Acquisition by an Obligor of all or
substantially all of the assets of another Person (exclusive of any Stock issued
or owned by such Person) so long as (a) no Default or Event of Default shall
have occurred and be continuing or would result from the consummation of the
proposed Acquisition, (b) the assets being acquired are useful in the business
of the Obligors as such business exists on the Closing Date, (c) Borrowers have
complied with their obligations under Section 4.1 hereof and under the Security
Agreement in connection therewith, and (d) the total cash consideration paid in
respect of such Acquisition and all other Permitted Acquisitions made during the
period specified in clause (i), (ii) or (iii) below, as the case may be, does
not exceed (i) $2,000,000 during the period of time from and after the execution
and delivery of this Agreement up to the first anniversary of the Closing Date,
(ii) $2,000,000 during the period of time from and after the first anniversary
of the Closing Date up to the second anniversary of the Closing Date, or (iii)
$1,000,000 during the period of time from and after the second anniversary of
the Closing Date up to the Maturity Date.
"Permitted Discretion", with respect to any determination by a member of
the Lender Group, means a determination made in good faith and in the exercise
of reasonable (from the perspective of a secured asset-based lender) business
judgment.
"Permitted Dispositions" means (a) sales, exchanges, trade-ins, or other
dispositions of Equipment that is substantially worn, damaged, or obsolete in
the ordinary course of Obligors' business, (b) sales of Inventory to Persons
(including another Obligor) who are buyers in the ordinary course of the selling
Obligor's business, (c) the use or transfer of money or Cash Equivalents by
Obligors (i) to pay taxes, trade payables and other ordinary operating expenses
in the ordinary course of business, (ii) to make Capital Expenditures to the
extent permitted hereby, (iii) to pay Capitalized Lease Obligations to the
extent permitted hereby, (iv) to repay Indebtedness in connection with the
refinancing of Indebtedness to the extent permitted hereby, (v) to repay
Indebtedness in connection with any sale of assets to the extent permitted by
Section 7.8(c)(iv), (vi) to make Permitted Investments, or (vii) in any other
manner that is not prohibited by the terms of this Agreement or the other Loan
Documents, (d) the licensing or sub-licensing by any Obligor, on a non-exclusive
basis, of patents, trademarks, copyrights, and other intellectual property
rights in the ordinary course of such Obligor's business, (e) discounts so long
as no Default or Event of Default has occurred and is continuing, without
recourse and in the ordinary course of business, of overdue Accounts arising in
the ordinary course of business, but only in connection with the compromise or
collection thereof consistent with customary industry practice (and not as part
of any bulk sale or financing of receivables), (f) transfers of condemned
property to the respective Governmental Authority that has condemned same
(whether by deed in lieu of condemnation or otherwise), and transfers of
properties that have been subject to a casualty to the respective insurer of
such property as part of an insurance settlement, so long as the proceeds
thereof are applied in accordance with the provisions of the Collateral Agency
and Intercreditor Agreement and the provisions hereof, (g) transfers or leases
of assets by Parent to any wholly-owned
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Borrower, by any Obligor to Parent, or by any Obligor to any wholly-owned
Obligor, (h) so long as no Default or Event of Default has occurred and is
continuing, any disposition described on Schedule P-1, and (i) so long as no
Default or Event of Default has occurred and is continuing or would result
therefrom, any other sale, exchange, or other disposition of assets (exclusive
of Accounts, General Intangibles, or Negotiable Collateral, other than in
connection with the sale of the business out of which they arose) in an amount
not in excess of (1) $5,000,000 in any transaction or series of related
transactions, and (2) $25,000,000 in any twelve month period (the value of the
assets under clause (1) and (2) shall be determined on the basis of the fair
market value of such assets as mutually agreed upon by Administrative Borrower
and Agent in good faith and based upon the facts and circumstances as of the
date of the consummation of the applicable transaction).
"Permitted Investments" means (a) investments in cash and Cash Equivalents,
(b) so long as no Default or Event of Default has occurred and is continuing or
would result therefrom, (i) contributions to, and investments in, joint ventures
to the extent specified on Schedule P-2, (ii) investments resulting from
performance under one or more of the guaranties described on Schedule 7.6, (iii)
equity investments by any Borrower in any other Borrower, (iv) equity
investments by any Canadian Guarantor in any other Canadian Guarantor, and (v)
equity investments by any Canadian Guarantor in any Borrower, (c) so long as no
Default or Event of Default has occurred and is continuing or would result
therefrom, discretionary Investments in Subsidiaries of Parent that are not
Obligors not in excess of: (i) during the period of time from and after the
Closing Date up to but not including the first anniversary of the Closing Date,
the result of (y) $5,000,000 minus (z) the aggregate amount of guaranties that
were made during such period and that are outstanding during such period
pursuant to Section 7.6(b), (ii) during the period of time from and after the
first anniversary of the Closing Date up to but not including the second
anniversary of the Closing Date, the result of (y) $5,000,000 minus (z) the
aggregate amount of guaranties that were made during such period and that are
outstanding during such period pursuant to Section 7.6(b), and (iii) during the
period of time from and after the second anniversary of the Closing Date up to
but not including the Maturity Date, the result of (y) $2,500,000 minus (z) the
aggregate amount of guaranties that were made during such period and that are
outstanding during such period pursuant to Section 7.6(b), (d) investments in
commercial paper rated at least A-1 or P-1 maturing within one year after the
date of acquisition thereof, (e) money market accounts maintained at a
commercial bank headquartered in the United States or Canada having combined
capital and surplus of no less than $500,000,000 or at any other financial
institution reasonably satisfactory to Agent, (f) investments in negotiable
instruments for collection, (g) advances made in connection with purchases of
goods or services in the ordinary course of business, and (h) investments
resulting from the making of loans or advances permitted by Section 7.1(h).
"Permitted Liens" means (a) Liens held by Collateral Agent pursuant to the
Security Documents and subject to the terms and conditions of the
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Collateral Agency and Intercreditor Agreement, (b) Liens for unpaid taxes that
either (i) are not yet delinquent or (ii) do not constitute an Event of Default
hereunder and are the subject of Permitted Protests or Liens for unpaid taxes
filed against a landlord or owner of a real property in which an Obligor owns
only a leasehold estate, (c) Liens set forth on Schedule P-3, (d) the interests
of lessors under operating leases, (e) Purchase Money Liens or the interests of
lessors under Capital Leases to the extent that such Liens or interests secure
Permitted Purchase Money Indebtedness and so long as the Lien attaches only to
the asset purchased or acquired and the proceeds thereof, (f) Liens arising by
operation of law in favor of warehousemen, landlords, carriers, mechanics,
materialmen, laborers, or suppliers, incurred in the ordinary course of business
of the Obligors and not in connection with the borrowing of money, and which
Liens either (i) are for sums not yet delinquent, (ii) are the subject of
Permitted Protests, or (iii) which in the aggregate do not detract from the
value of the subject property or assets or materially impair the use thereof in
the operation of the business of the Obligors, (g) Liens arising from deposits
made in connection with obtaining worker's compensation or other unemployment
insurance, (h) Liens or deposits to secure performance of bids, tenders, or
leases incurred in the ordinary course of business of the Obligors and not in
connection with the borrowing of money, (i) Liens granted as security for surety
or appeal bonds in connection with obtaining such bonds in the ordinary course
of business of the Obligors, (j) Liens resulting from any judgment or award that
is not an Event of Default hereunder, (k) with respect to any Real Property,
easements, rights of way, restrictions (including zoning restrictions),
encroachments, protrusions, municipal agreements, and other similar charges and
minor title deficiencies, in each case whether now or hereafter in existence,
not securing Indebtedness and not materially interfering with the conduct of the
business of the Obligors conducted at such Real Property, (l) rights of tenants,
subtenants, franchisees, or other parties in possession (other than a debtor in
possession, trustee in bankruptcy or receiver of Obligors) of Real Property, or
options or rights of first refusal respecting Real Property, whether pursuant to
leases, subleases, franchise agreements, other occupancy agreements, or
otherwise, if such rights were vested on the Closing Date or created thereafter
in the ordinary course of business in transactions permitted under this
Agreement, (m) any interest or title of a lessor, sublessor, licensee or
licensor under any lease or license agreement permitted by this Agreement, (n)
Liens in favor of a banking institution arising as a matter of law or pursuant
to the banking institution's standard form agreements regulating the DDAs, (o)
Liens in favor of customs and revenue authorities arising as a matter of law to
secure the payment of customs duties in connection with the importation of
goods, (p) deposits made to secure statutory obligations in the form of excise
taxes, (q) Liens arising from precautionary UCC financing statement filings
regarding operating leases or consignment arrangements entered into by any
Obligor in transactions permitted under this Agreement, (r) Liens given to a
public utility or any municipality or governmental or other public authority
when required by such utility or other authority in connection with the
operation of the business or the ownership of the assets of the Obligors, (s)
reservations, limits and conditions in the original grant from the Crown, (t)
undetermined or inchoate Liens arising under the Construction Lien Act (Ontario)
and
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which Liens either (i) are for sums not yet delinquent, (ii) are the subject of
Permitted Protests, or (iii) which in the aggregate do not detract from the
value of the subject property or assets or materially impair the use thereof in
the operation of the business of the Obligors; and (t) Liens not otherwise
permitted by the foregoing clauses (a) through (t) to the extent attaching to
tangible properties and assets with an aggregate fair market value (to be
mutually agreed upon by Administrative Borrower and Agent in good faith and
based upon the facts and circumstances as of the date of determination) not in
excess of, and securing liabilities otherwise permitted hereunder not in excess
of, $500,000 in the aggregate.
"Permitted Protest" means the right of Obligors to protest any Lien (other
than any such Lien that secures the Obligations), tax (other than taxes that are
the subject of a United States federal tax lien), or rental payment, provided
that (a) if and to the extent required by GAAP, a reserve with respect to such
obligation is established on the Books in such amount as is required under GAAP,
(b) any such protest is instituted and diligently prosecuted by the applicable
Obligor in good faith, and (c) Agent is satisfied that, while any such protest
is pending, there will be no impairment of the enforceability, validity, or
priority of any of the Collateral Agent's Liens.
"Permitted Purchase Money Indebtedness" has the meaning set forth in
Section 7.1(c) hereof.
"Permitted Transactions" means, so long as the Borrowers give Agent and
Lenders not less than 60 days prior written notice and, prior to the
consummation thereof, comply with their obligations under Section 4.1 hereof and
under the Security Agreement in connection therewith, any (a) merger,
consolidation, reorganization, or recapitalization, or reclassifications of
Stock, between (i) any wholly-owned Guarantors, (ii) any wholly- owned Borrowers
(exclusive of Parent), (iii) any wholly-owned Guarantor and any wholly- owned
Borrower, so long as the wholly-owned Borrower is the surviving entity in such
transaction, (iv) any wholly-owned Guarantor and Parent, so long as Parent is
the surviving entity in such transaction, and (v) any wholly-owned Borrower
(other than Parent) and Parent, so long as Parent is the surviving entity in
such transaction, (b) liquidation, winding up, or dissolution by any Borrower
(other than Parent) or Guarantor, so long as the properties and assets resulting
from such transactions are vested in or transferred to Parent or a wholly-owned
Borrower or, in the case of a transaction undertaken by a Guarantor, to a
wholly-owned Guarantor or a wholly-owned Borrower, (c) sale, assignment, lease,
transfer, or other disposition of, in one transaction or a series of
transactions, all or any substantial part of any Borrower's (other than
Parent's) or Guarantor's property or assets, so long as the relevant properties
or assets that are the subject of such sale, assignment, lease, transfer, or
other disposition are sold, assigned, leased, transferred, or otherwise disposed
of to Parent or to a wholly-owned Borrower, or, in the case of a transaction
undertaken by a Guarantor, to a wholly-owned Guarantor or a wholly-owned
Borrower.
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"Person" means natural persons, corporations, limited liability companies,
limited partnerships, general partnerships, limited liability partnerships,
joint ventures, trusts, land trusts, business trusts, or other organizations,
irrespective of whether they are legal entities, and governments and agencies
and political subdivisions thereof.
"Personal Property Collateral" means all of the Obligors' personal property
and fixtures, and the proceeds thereof.
"PIK Unsecured Debt Trustee" means Wilmington Trust Company, as agent for
the holders of the Indebtedness issued under the PIK Unsecured Debt Indenture.
"PIK Unsecured Debt Indenture" means that certain Indenture dated as of the
Closing Date by and among Parent and the PIK Unsecured Debt Trustee, in form and
substance satisfactory to Agent.
"Plan" means any written or oral employee benefit plan, fund, program,
arrangement or contract maintained or contributed to or required to be
contributed to by a Borrower or with respect to which it may incur liability.
"Plan of Reorganization" means the First Amended Joint Plan of
Reorganization of Philip Services (Delaware), Inc., et al., as modified,
confirmed by the Bankruptcy Court in the Bankruptcy Case pursuant to the
Confirmation Order.
"Pre-Closing Merger Subsidiaries" means each of the Subsidiaries of Parent
identified on Schedule P-4.
"Pre-Closing Restructuring Transactions" means the series of transactions
described on Schedule P-5 pursuant to which each of the Pre-Closing Merger
Subsidiaries are merged, directly or indirectly, with and into one of the
Borrowers or such Pre-Closing Merger Subsidiary was dissolved or liquidated.
"Prepetition Lien Subordination and Intercreditor Agreement" means that
certain Subordination and Intercreditor Agreement by and among Collateral Agent
and the agent for certain prepetition creditors of certain of the Guarantors, in
form and substance satisfactory to Agent.
"Project Accounts" means those bank accounts set forth on Schedule 5.22 (as
amended from time to time in accordance with Section 6.20) established by a
Borrower pursuant to a binding contractual obligation with a third Person in
connection with the administration of the cash management system established
pursuant to the agreement between such Borrower and third Person.
"Projections" means Parent's forecasted (a) balance sheets, (b) statements
of earnings, and (c) cash flow statements, all prepared on a consistent basis
with Parent's historical financial statements that have been prepared in
accordance with GAAP, together
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with appropriate supporting details and a statement of underlying assumptions.
The foregoing notwithstanding, it is the express understanding of the parties
hereto that the Projections themselves are not prepared in accordance with GAAP.
"Pro Rata Share" means:
(a) with respect to a Lender's obligation to make Tranche A Advances and
receive payments of principal, interest, fees, costs, and expenses with respect
thereto, the percentage obtained by dividing (i) such Lender's Tranche A
Commitment, by (ii) the aggregate Tranche A Commitments of all Lenders;
(b) with respect to a Lender's obligation to participate in Letters of
Credit, to reimburse the Issuing Lender, and to receive payments of fees, costs,
and expenses with respect thereto, the percentage obtained by dividing (i) such
Lender's Tranche A Commitment, by (ii) the aggregate Tranche A Commitments of
all Lenders;
(c) with respect to a Lender's obligation to make Tranche B Advances and
receive payments of principal, interest, interest, fees, costs, and expenses
with respect thereto, the percentage obtained by dividing (i) such Lender's
Tranche B Commitment, by (ii) the aggregate Tranche B Commitments of all
Lenders; and
(d) with respect to all other matters (including the indemnification
obligations arising under Section 16.7), the percentage obtained by dividing (i)
such Lender's Total Commitments, by (ii) the aggregate Total Commitments of all
Lenders.
"PSC" means Philip Services Corp., an Ontario corporation.
"PSI" means Philip Services Inc., an Ontario corporation.
"PSII" means Philip Services (International), Inc., a Delaware corporation.
"Purchase Money Indebtedness" means Indebtedness (other than the
Obligations, but including Capitalized Lease Obligations), incurred at the time
of, or within 60 days after, the acquisition of any fixed assets for the purpose
of financing all or any part of the acquisition cost thereof.
"Purchase Money Lien" means a Lien upon fixed assets that secures Purchase
Money Indebtedness, but only if such Lien shall at all times be confined solely
to the fixed assets the purchase price of which was financed through the
incurrence of the Purchase Money Indebtedness secured by such Lien.
"Rating Agencies" has the meaning set forth in Section 2.17.
"Real Property" means any estates or interests in real property now owned
or hereafter acquired by an Obligor, and the improvements related thereto.
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"Real Property Collateral" means the parcel or parcels of Real Property
identified on Schedule RPC-1, and any Real Property hereafter acquired in fee by
an Obligor.
"Record" means information that is inscribed on a tangible medium or which
is stored in an electronic or other medium and is retrievable in perceivable
form.
"Registered Loan" has the meaning specified therefor in Section 2.16.
"Registered Note" has the meaning specified therefor in Section 2.16.
"Reportable Event" means any of the events described in Section 4043(c) of
ERISA or the regulations thereunder other than a Reportable Event as to which
the provision of 30 days notice to the PBGC is waived under applicable
regulations.
"Required Availability" means Combined Availability and unrestricted cash
and Cash Equivalents in an amount of not less than $40,000,000.
"Required Lenders" means, at any time, Lenders whose Pro Rata Shares
aggregate 66-2/3% of the Total Commitments, or if the Total Commitments have
been terminated irrevocably, 66-2/3% of the Obligations then outstanding.
"Reserve Percentage" means, on any day, that percentage prescribed by the
Board of Governors of the Federal Reserve System (or any successor Governmental
Authority) for determining the reserve requirements (including any basic,
supplemental, marginal, or emergency reserves) that is in effect on such date
with respect to deposits of Dollars in a non-United States or an international
banking office of a bank used to fund a LIBOR Rate Advance.
"Retiree Health Plan" means an "employee welfare benefit plan" within the
meaning of Section 3(1) of ERISA that provides benefits to individuals after
termination of their employment, other than as required by Section 601 of ERISA.
"Rights Agreement" means that certain Rights Agreement, a copy of which is
attached hereto as Exhibit RA-1.
"Risk Participation Liability" means, as to each Letter of Credit, all
reimbursement obligations of Borrowers to the issuer of an L/C or to the issuer
of a letter of credit with respect to the transaction for which an L/C
Undertaking was executed and delivered (to the extent such reimbursement
obligations are subject to such L/C Undertaking), consisting of (a) the amount
available to be drawn or which may become available to be drawn under the Letter
of Credit, (b) all amounts that have been paid and made available by the issuing
bank to the extent not reimbursed by Borrowers, whether by the making of an
Advance or otherwise, and (c) all accrued and unpaid interest, fees, and
expenses payable with respect thereto.
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"Rolling Stock Security Agreement" means a Rolling Stock Security Agreement
in favor of Collateral Agent encumbering U.S. railcars owned by Obligors, in
form and substance satisfactory to Agent.
"SEC" means the United States Securities and Exchange Commission and any
successor thereto.
"Securities Account" means a "securities account" as that term is defined
in Section 8-501 of the Code.
"Securitization" has the meaning set forth in Section 2.17.
"Securitization Parties" has the meaning set forth in Section 2.17.
"Security Agreement" means a Security Agreement executed and delivered by
each Borrower and Collateral Agent, the form and substance of which is
satisfactory to Agent.
"Security Documents" means the Security Agreement, the Stock Pledge
Agreement, the Trademark Security Agreement, the Patent Security Agreement, the
Copyright Security Agreement, the Rolling Stock Security Agreement, the
Mortgages, the Canadian Security Documents, and such other instruments,
agreements, and documents as Agent reasonably may require to secure the whole or
any part of the Obligations.
"Settlement" has the meaning set forth in Section 2.4(f)(i).
"Settlement Date" has the meaning set forth in Section 2.4(f)(i).
"Solvent" means, with respect to any Person on a particular date, that such
Person is not insolvent (as such term is defined in the Uniform Fraudulent
Transfer Act).
"Stipulation and Order" means the Stipulation and Order entered on January
13, 2000, clarifying that any dispute or claim arising under or related to this
Agreement or the other Loan Documents arising after the Effective Date of the
Plan of Reorganization will not be submitted to or heard by the Bankruptcy
Court.
"Stock" means all shares, options, warrants, interests, participations, or
other equivalents (regardless of how designated) of or in a Person, whether
voting or nonvoting, including common stock, preferred stock, or any other
"equity security" (as such term is defined in Rule 3a11-1 of the General Rules
and Regulations promulgated by the SEC under the Exchange Act).
"Stock Pledge Agreement" means a Stock Pledge Agreement executed and
delivered by each Obligor and Collateral Agent with respect to the pledge of
certain Stock
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and certain notes owned by the Obligors, the form and substance of which is
satisfactory to Agent.
"Subsidiary" of a Person means a corporation, partnership, limited
liability company, or other entity in which that Person directly or indirectly
owns or controls the shares of Stock having ordinary voting power to elect a
majority of the board of directors (or appoint other comparable managers) of
such corporation, partnership, limited liability company, or other entity.
"Suretyship Agreement" means a Suretyship Agreement executed and delivered
by each Borrower, the form and substance of which is satisfactory to Agent.
"Swing Lender" means any Lender appointed by Agent in writing, and which
appointment has been accepted by such Lender in writing, as the "Swing Lender".
"Swing Loan" has the meaning set forth in Section 2.4(d)(i).
"Total Commitment" means, with respect to each Lender, its Total
Commitment, and, with respect to all Lenders, their Total Commitments, in each
case as such Dollar amounts are set forth beside such Lender's name under the
applicable heading on Schedule C-1 attached hereto or on the signature page of
the Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 14.1.
"Trademark Security Agreement" means a Trademark Security Agreement
executed and delivered by each Borrower and Collateral Agent, the form and
substance of which is satisfactory to Agent.
"Tranche A Advances" has the meaning set forth in Section 2.1.
"Tranche A Advance Usage" means, as of any date of determination, the then
extant amount of outstanding Tranche A Advances.
"Tranche A Advance Availability" means, as of any date of determination
(and after giving effect to any requested Letter of Credit or Tranche A
Advance), the lowest of (i) the Maximum Tranche A Amount less the sum of (A) the
then extant Letter of Credit Usage plus (B) the then extant amount of
outstanding Tranche A Advances, (ii) the Borrowing Base less the sum of (A) the
then extant Letter of Credit Usage, plus (B) the then extant amount of
outstanding Tranche A Advances, or (iii) $50,000,000 minus the then extant
amount of outstanding Tranche A Advances.
"Tranche A Commitment" means, with respect to each Lender, its Tranche A
Commitment, and, with respect to all Lenders, their Tranche A Commitments, in
each case as such Dollar amounts are set forth beside such Lender's name under
the applicable heading on Schedule C-1 attached hereto or on the signature page
of the Assignment and
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Acceptance pursuant to which such Lender became a Lender hereunder in accordance
with the provisions of Section 14.1.
"Tranche A Facility" means the credit facility provided for under Sections
2.1 and 2.2 hereof.
"Tranche A Usage" means, as of any date of determination, the sum of (a)
the then extant amount of outstanding Tranche A Advances, plus (b) the then
extant amount of the Letter of Credit Usage.
"Tranche B Advances" has the meaning set forth in Section 2.3.
"Tranche B Availability" means, as of any date of determination (and after
giving effect to any requested Tranche B Advance), the lesser of (i) the Maximum
Tranche B Amount less the then extant amount of outstanding Tranche B Advances,
or (ii) the Borrowing Base less the then extant amount of Tranche A Usage and
Tranche B Usage.
"Tranche B Commitment" means, with respect to each Lender, its Tranche B
Commitment, and, with respect to all Lenders, their Tranche B Commitments, in
each case as such Dollar amounts are set forth beside such Lender's name under
the applicable heading on Schedule C-1 attached hereto or on the signature page
of the Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 14.1.
"Tranche B Facility" means the credit facility provided for under Section
2.3 hereof.
"Tranche B Obligations" means Obligations in respect of the Tranche B
Facility (including any fee, cost, or expense under the Loan Documents that is
specifically identified to the Tranche B Facility).
"Tranche B Usage" means, as of any date of determination, the then extant
amount of outstanding Tranche B Advances.
"Underlying Issuer" means a third Person which is the beneficiary of an L/C
Undertaking and which has issued a letter of credit at the request of the
Issuing Lender for the benefit of Borrower.
"Underlying Letter of Credit" means a letter of credit that has been issued
by an Underlying Issuer.
"UK Metals Operations" means the metal recycling and mill services business
of the UK Entities.
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"UK Entities" means Philip Services (Europe) Limited, Allied Metals
Limited, B.M. Metals (Recycling) Ltd., Bath Reclamation (Avonmouth) Co. Limited,
Blackbushe Limited, Blackbushe Metals (Western) Limited, Elliott Metal Company
Limited, Southern Hauliers Limited, T.C. Fraser (Metals) Limited, E. Pearse
(Holdings) Limited, E. Pearse & Co. Limited, C. Philipp and Sons (Bristol)
Limited, Mayer Pearse Limited, Widsite Limited, Philip Metals (Europe) Limited.
"Unsecured Convertible Debt Trustee" means Wilmington Trust Company, as
trustee for the holders of the Indebtedness issued under the Unsecured
Convertible Debt Indenture.
"Unsecured Convertible Debt Indenture" means that certain Indenture dated
as of the Closing Date by and among Parent and the Unsecured Convertible Debt
Trustee, in form and substance satisfactory to Agent.
"Voidable Transfer" has the meaning set forth in Section 17.7.
"Voting Stock" means, with respect to any Person, Capital Stock of any
class or classes if the holders of such Capital Stock are ordinarily, in the
absence of contingencies, entitled to vote for the election of the directors (or
other persons performing similar functions) of such Person even if the right to
so vote has been suspended by the happening of such a contingency.
"Wells Fargo" means Wells Fargo Bank, National Association, a national
banking association.
1.2 ACCOUNTING TERMS.
All accounting terms not specifically defined herein shall be construed in
accordance with GAAP. When used herein, the term "financial statements" shall
include the notes and schedules thereto. Whenever the term "Borrowers" or the
term "Parent" is used in respect of a financial covenant or a related
definition, it shall be understood to mean Parent on a consolidated basis unless
the context clearly requires otherwise. In the event that any "Accounting
Change" (as defined below) shall occur and such change results in a change in
the method of calculation of financial covenants, standards, or terms in this
Agreement, then Borrowers, Agent, and the Lenders agree to enter into
negotiations in order to amend such provisions of this Agreement so as to
equitably reflect such Accounting Change with the intended result that the
criteria for evaluating Borrowers' financial condition shall be the same after
such Accounting Change as if such Accounting Change had not been made. Until
such time as such an amendment shall have been executed and delivered by
Borrowers and the Agent (acting upon the instructions of the Required Lenders),
all financial covenants, standards, and terms in this Agreement shall continue
to be calculated or construed as if such Accounting Change had not occurred.
"Accounting Change" refers to any change in accounting principles, or in the
application or interpretation thereof by Borrowers' independent certified public
accountants, required, or determined by such accountants to be
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required, by any rule, regulations, pronouncement or opinion by the Financial
Accounting Standards Board of the American Institute of Certified Public
Accountants, or, if applicable, the Securities and Exchange Commission, or, in
each case, any successor to such entities.
1.3 CODE.
Any terms used in this Agreement that are defined in the Code shall be
construed and defined as set forth in the Code unless otherwise defined herein.
1.4 CONSTRUCTION.
Unless the context of this Agreement or any other Loan Document clearly
requires otherwise, references to the plural include the singular, references to
the singular include the plural, the term "including" is not limiting, and the
term "or" has, except where otherwise indicated, the inclusive meaning
represented by the phrase "and/or." The words "hereof," "herein," "hereby,"
"hereunder," and similar terms in this Agreement or any other Loan Document
refer to this Agreement or such other Loan Document, as the case may be, as a
whole and not to any particular provision of this Agreement or such other Loan
Document, as the case may be. Section, subsection, clause, schedule, and exhibit
references herein are to this Agreement unless otherwise specified. Any
reference in this Agreement or in the Loan Documents to any agreement,
instrument, or document shall include all alterations, amendments, changes,
extensions, modifications, renewals, replacements, substitutions, joinders, and
supplements thereto and thereof, as applicable (subject to any restrictions on
such alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements set forth herein). Any
reference herein to any Person shall be construed to include such Person's
successors and assigns. Any requirement of a writing contained herein or in the
other Loan Documents shall be satisfied by the transmission of a Record and any
Record transmitted shall constitute a representation and warranty as to the
accuracy and completeness of the information contained therein.
1.5 SCHEDULES AND EXHIBITS.
All of the schedules and exhibits attached to this Agreement shall be
deemed incorporated herein by reference.
2. LOAN AND TERMS OF PAYMENT.
2.1 TRANCHE A ADVANCES.
(a) Subject to the terms and conditions of this Agreement, and during
the term of this Agreement, each Lender with a Tranche A Commitment agrees to
make advances ("Tranche A Advances") to Borrowers in an amount at any one time
outstanding not to exceed such Lender's Pro Rata Share of an amount equal to the
lowest of (i) the Maximum Tranche A Amount less the then extant Letter of Credit
Usage, (ii) the Borrowing Base less the then extant Letter of Credit Usage, or
(iii) $50,000,000.
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(b) Anything to the contrary in this Section 2.1 notwithstanding,
Agent shall have the right to establish reserves in such amounts, and with
respect to such matters, as Agent in its Permitted Discretion shall deem
necessary or appropriate, against the Borrowing Base, including reserves with
respect to (i) sums that Borrowers are required to pay (such as taxes,
assessments, insurance premiums, or, in the case of leased assets, rents or
other amounts payable under such leases) and have failed to pay under any
Section of this Agreement or any other Loan Document, and (ii) amounts owing by
Borrowers to any Person to the extent secured by a Lien (other than any existing
Permitted Lien set forth on Schedule P-3 which is specifically identified
thereon as entitled to have priority over Collateral Agent's Liens) on, or trust
over, any of the Collateral, which Lien or trust, in the Permitted Discretion of
Agent, would be likely to have a priority superior to the Liens of Agent, for
the benefit of the Lender Group (such as landlord liens, ad valorem taxes,
property taxes, or sales taxes where given priority under applicable law) in and
to such item of the Collateral.
(c) The Lenders with Tranche A Commitments shall have no obligation to
make additional Tranche A Advances hereunder to the extent such additional
Tranche A Advances would cause the Tranche A Usage and the Tranche B Usage to
exceed the Maximum Facility Amount.
(d) Anything in the Loan Documents to the contrary notwithstanding,
the proceeds of any Tranche A Advance shall not be used to repay any outstanding
Tranche B Advance unless Tranche A Advance Availability is greater than
$7,500,000 after giving effect to such Tranche A Advance.
(e) Amounts borrowed pursuant to this Section may be repaid and,
subject to the terms and conditions of this Agreement, reborrowed at any time
during the term of this Agreement.
2.2 LETTERS OF CREDIT.
(a) Subject to the terms and conditions of this Agreement, the Issuing
Lender agrees to issue letters of credit for the account of Borrowers (each, an
"L/C") or to purchase participations or execute indemnities or reimbursement
obligations (each such undertaking, an "L/C Undertaking") with respect to
Underlying Letters of Credit issued by an Underlying Issuer (as of the Closing
Date, such Underlying Issuer is to be Norwest Bank Minnesota, N.A.; in the event
that an Underlying Issuer declines to issue further Underlying Letters of
Credit, Issuing Lender agrees to use commercially reasonable efforts to obtain a
replacement Underlying Issuer; it being expressly acknowledged and agreed that
no Underlying Issuer has any obligations hereunder to Borrowers) for the account
of Borrowers. To request the issuance of an L/C or an L/C Undertaking (or the
amendment, renewal, or extension of an outstanding L/C or L/C Undertaking), a
Borrower shall hand deliver or telecopy (or transmit by electronic
communication, if arrangements for doing so have been approved by the Issuing
Lender) to the Issuing Lender and Agent (reasonably in advance of the requested
date of issuance, amendment, renewal, or extension) a notice requesting the
issuance of an L/C or L/C Undertaking, or identifying the L/C or L/C Undertaking
to be
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amended, renewed, or extended, the date of issuance, amendment, renewal, or
extension, the date on which such L/C or L/C Undertaking is to expire, the
amount of such L/C or L/C Undertaking, the name and address of the beneficiary
thereof (or of the Underlying Letter of Credit, as applicable), and such other
information as shall be necessary to prepare, amend, renew, or extend such L/C
or L/C Undertaking. If requested by the Issuing Lender, the applicable Borrower
also shall be an applicant under the application with respect to any Underlying
Letter of Credit that is to be the subject of an L/C Undertaking. The Issuing
Bank shall have no obligation to issue a Letter of Credit if any of the
following would result after giving effect to the requested Letter of Credit:
(i) the Letter of Credit Usage would exceed the Borrowing Base
less the amount of outstanding Tranche A Advances, or
(ii) the Letter of Credit Usage would exceed the Maximum Tranche
A Amount less the then extant amount of outstanding Tranche A Advances.
Borrowers and the Lender Group acknowledge and agree that certain of the
Existing Letters of Credit are to be the subject of Underlying Letters of
Credit. Each Letter of Credit (and corresponding Underlying Letter of Credit)
shall have an expiry date no later than 10 Business Days prior to the Maturity
Date (without regard to any potential renewal term) and all such Letters of
Credit (and corresponding Underlying Letters of Credit) shall be in form and
substance (including the currencies in which they are to be denominated)
acceptable to the Issuing Lender (in the exercise of its Permitted Discretion).
In this regard, Borrowers acknowledge (A) that, at Issuing Lender's request,
certain arrangements have been entered into between the current Underlying
Issuer and a Canadian bank in order to satisfy Borrowers' needs to have certain
of its letters of credit issued in Canadian dollars ("Canadian Dollar Letters of
Credit") by a Canadian bank ("Canadian Bank"), (B) that such arrangements
involve the issuance by the Issuing Lender of an L/C Undertaking to an
Underlying Issuer which, in turn, will issue an Underlying Letter of Credit in
favor of the Canadian Bank, (C) that such arrangements are uncommitted
facilities with terms shorter than the term of this Agreement, (D) and agree
that if such arrangements are terminated, the Issuing Lender's only obligation
with respect to securing Canadian Dollar Letters of Credit is to use its
reasonable commercial efforts to secure one or more Canadian Banks willing to
issue Canadian Dollar Letters of Credit supported by an Underlying Letter of
Credit issued by the Underlying Issuer, (E) and agree that all L/C Disbursements
payable by the Issuing Lender under any Letter of Credit will be payable solely
in Dollars, irrespective of whether the Underlying Letter of Credit or any
letter of credit issued based thereupon (including any Canadian Dollar Letter of
Credit) is payable in a currency other than Dollars, and (F) and agree that the
risk of currency fluctuations between the currency of a particular Underlying
Letter of Credit and the Dollars payable under the applicable Letter of Credit
is solely a risk of Borrowers and that no currency hedging product is being
provided hereunder. If Issuing Lender is obligated to advance funds under a
Letter of Credit, Borrowers immediately shall reimburse such L/C Disbursement to
Issuing Lender by paying to Agent an amount equal to
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such L/C Disbursement not later than 11:00 a.m., California time, on the date
that such L/C Disbursement is made, if Administrative Borrower shall have
received written or telephonic notice of such L/C Disbursement prior to 10:00
a.m., California time, on such date, or, if such notice has not been received by
Administrative Borrower prior to such time on such date, then not later than
11:00 a.m., California time, on (i) the Business Day that Administrative
Borrower receives such notice, if such notice is received prior to 10:00 a.m.,
California time, on the date of receipt, or (ii) the Business Day immediately
following the day that Administrative Borrower receives such notice, if such
notice is not received prior to such time on the day of receipt and, in the
absence of such reimbursement, the L/C Disbursement immediately and
automatically shall be deemed to be a Tranche A Advance hereunder and,
thereafter, shall bear interest at the rate then applicable to Base Rate Tranche
A Advances under Section 2.7. To the extent an L/C Disbursement is deemed to be
a Tranche A Advance hereunder, Borrowers' obligation to reimburse such L/C
Disbursement shall be discharged and replaced by the resulting Tranche A
Advance. Promptly following receipt by Agent of any payment from Borrowers
pursuant to this paragraph, Agent shall distribute such payment to the Issuing
Lender or, to the extent that Lenders have made payments pursuant to Section
2.2(c) to reimburse the Issuing Lender, then to such Lenders and the Issuing
Lender as their interest may appear.
(b) Promptly following receipt of a notice of L/C Disbursement
pursuant to Section 2.2(a), each Lender with a Tranche A Commitment shall fund
its Pro Rata Share of any Tranche A Advance deemed made pursuant to the
foregoing subsection on the same terms and conditions as if Borrowers had
requested such Tranche A Advance and Agent shall promptly pay to Issuing Lender
the amounts so received by it from the Lenders. By the issuance of a Letter of
Credit (or an amendment to a Letter of Credit increasing the amount thereof) and
without any further action on the part of the Issuing Lender or the Lenders with
Tranche A Commitments, the Issuing Lender shall be deemed to have granted to
each Lender with a Tranche A Commitment, and each Lender with a Tranche A
Commitment shall be deemed to have purchased, a participation in each Letter of
Credit, in an amount equal to its Pro Rata Share of the Risk Participation
Liability of such Letter of Credit, and each such Lender agrees to pay to Agent
for the account of the Issuing Lender such Lender's Pro Rata Share of any
payments made by the Issuing Lender under such Letter of Credit. In
consideration and in furtherance of the foregoing, each Lender with a Tranche A
Commitment hereby absolutely and unconditionally agrees to pay to Agent, for the
account of the Issuing Lender, such Lender's Pro Rata Share of each L/C
Disbursement made by the Issuing Lender and not reimbursed by Borrowers on the
date due as provided in paragraph (a) of this Section, or of any reimbursement
payment required to be refunded to the Borrower for any reason. Each Lender with
a Tranche A Commitment acknowledges and agrees that its obligation to deliver to
Agent, for the account of the Issuing Lender, an amount equal to its respective
Pro Rata Share pursuant to this Section 2.2(b) shall be absolute and
unconditional and such remittance shall be made notwithstanding the occurrence
or continuation of an Event of Default or Default or the failure to satisfy any
condition set forth in Section 3 hereof. If any such Lender fails to make
available to Agent the amount of such Lender's Pro Rata Share of any payments
made by the Issuing Lender in respect of such Letter of Credit as provided in
this Section, Agent (for the account of the Issuing Lender)
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shall be entitled to recover such amount on demand from such Lender together
with interest thereon at the Defaulting Lender Rate until paid in full.
(c) Borrowers hereby agree to indemnify, save, defend, and hold the
Lender Group harmless from any loss, cost, expense, or liability, and reasonable
attorneys fees incurred by the Lender Group arising out of or in connection with
any Letter of Credit; provided, however, that Borrowers shall not be obligated
hereunder to indemnify (i) Issuing Lender for any loss, cost, expense, or
liability that is caused by the gross negligence or willful misconduct of the
Issuing Lender or (ii) the member of the Lender Group responsible for any loss,
cost, expense or liability that is caused by such Person's gross negligence or
willful misconduct. Furthermore, the foregoing shall not be construed to excuse
the Issuing Lender or any member of the Lender Group from liability to Borrowers
to the extent of any damages suffered by Borrowers that are caused by the gross
negligence or willful misconduct of the Issuing Lender or any member of the
Lender Group. Borrowers agree to be bound by the Underlying Issuer's regulations
and interpretations of any Underlying Letter of Credit or by Issuing Lender's
interpretations of any L/C issued by Issuing Lender to or for a Borrower's
account, even though this interpretation may be different from Borrowers' own,
and Borrowers understand and agree that the Lender Group shall not be liable for
any error, negligence, or mistake, whether of omission or commission, in
following Borrowers' instructions or those contained in the Letter of Credit or
any modifications, amendments, or supplements thereto. Borrowers understand that
the L/C Undertakings may require Issuing Lender to indemnify the Underlying
Issuer for certain costs or liabilities arising out of claims by Borrowers
against such Underlying Issuer. Borrowers hereby agree to indemnify, save,
defend, and hold the Lender Group harmless with respect to any loss, cost,
expense (including reasonable attorneys fees), or liability incurred by the
Lender Group under any L/C Undertaking as a result of the Lender Group's
indemnification of any Underlying Issuer; provided, however, that Borrowers
shall not be obligated hereunder to indemnify (i) Issuing Lender for any loss,
cost, expense, or liability that is caused by the gross negligence or willful
misconduct of the Issuing Lender or (ii) the member of the Lender Group
responsible for any loss, cost, expense or liability that is caused by such
Person's gross negligence or willful misconduct. Furthermore, the foregoing
shall not be construed to excuse the Issuing Lender or any member of the Lender
Group from liability to Borrowers to the extent of any damages suffered by
Borrowers that are caused by the gross negligence or willful misconduct of the
Issuing Lender or any member of the Lender Group.
(d) Borrower hereby authorizes and directs any Underlying Issuer to
deliver to the Issuing Lender all instruments, documents, and other writings and
property received by such Underlying Issuer pursuant to such Underlying Letter
of Credit and to accept and rely upon the Issuing Lender's instructions with
respect to all matters arising in connection with such Underlying Letter of
Credit and the related application.
(e) Any and all charges, commissions, fees, and costs incurred by the
Issuing Lender relating to the Underlying Letters of Credit or the Canadian
Dollar Letters of Credit shall be considered Lender Group Expenses for purposes
of this Agreement and immediately shall be reimbursable by Borrowers to the
Agent for the account of the Issuing
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Lender; provided, however, that, solely in the case of an Underlying Letter of
Credit that is denominated in Dollars and is not issued to support the existence
or issuance of another letter of credit (including any Underlying Letter of
Credit issued to "backstop" an Existing Letter of Credit or a Canadian Dollar
Letter of Credit), in place of their obligations under this clause (e), on the
date of the issuance of the applicable Letter of Credit, Borrowers shall pay to
Agent for the account of the Issuing Lender an amount equal to one-quarter of
one percent (0.25%) of the original face amount of such Letter of Credit,
irrespective of whether the charges, commissions, fees, and costs are greater or
lesser than such amount.
(f) If by reason of (i) any change in any applicable law, treaty,
rule, or regulation or any change in the interpretation or application thereof
by any Governmental Authority, or (ii) compliance by the Underlying Issuer or
the Lender Group with any direction, request, or requirement (irrespective of
whether having the force of law) of any Governmental Authority or monetary
authority including Regulation D of the Federal Reserve Board as from time to
time in effect (and any successor thereto):
(i) any reserve, deposit, or similar requirement is or shall be
imposed or modified in respect of any Letters of Credit issued hereunder,
or
(ii) there shall be imposed on the Underlying Issuer or the
Lender Group any other condition regarding any Underlying Letter of Credit
or any Letter of Credit issued pursuant hereto;
and the result of the foregoing is to increase, directly or indirectly, the
cost to the Lender Group of issuing, making, guaranteeing, or maintaining
any Letter of Credit or to reduce the amount receivable in respect thereof
by the Lender Group, then, and in any such case, Agent may, at any time
within a reasonable period after the additional cost is incurred or the
amount received is reduced, notify Administrative Borrower, and Borrowers
shall pay on demand such amounts Agent may specify to be necessary to
compensate the Lender Group for such additional cost or reduced receipt,
together with interest on such amount from the date of such demand until
payment in full thereof at the rate then applicable to Base Rate Tranche A
Advances hereunder. The determination by Agent of any amount due pursuant
to this Section, as set forth in a certificate setting forth the
calculation thereof in reasonable detail, shall, in the absence of manifest
or demonstrable error, be final and conclusive and binding on all of the
parties hereto.
2.3 TRANCHE B ADVANCES.
(a) Subject to the terms and conditions of this Agreement, and during
the term of this Agreement, each Lender with a Tranche B Commitment agrees to
make advances ("Tranche B Advances") to Borrowers in an amount at any one time
outstanding not to exceed such Lender's Pro Rata Share of an amount equal to the
lower of (i) the Maximum Tranche B Amount, or (ii) the Borrowing Base less the
Tranche A Usage.
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(b) Anything to the contrary in this Section 2.3 notwithstanding,
Borrowers shall not have the right to require Lenders with Tranche B Commitments
to make Tranche B Advances to Borrowers unless the Tranche A Usage equals the
Maximum Tranche A Amount.
(c) The Lenders with Tranche B Commitments shall have no obligation to
make additional Tranche B Advances hereunder to the extent such additional
Tranche B Advances would cause the Tranche A Usage and the Tranche B Usage to
exceed the Maximum Facility Amount.
(d) Amounts borrowed pursuant to this Section may be repaid and,
subject to the terms and conditions of this Agreement, reborrowed at any time
during the term of this Agreement; provided, however, that, if and so long as
any Tranche A Advances are outstanding, no Tranche B Advance shall be repaid
unless, after giving effect to such repayment, Tranche A Advance Availability is
greater than $7,500,000.
2.4 BORROWING PROCEDURES AND SETTLEMENTS
(a) PROCEDURE FOR BORROWING. Each Borrowing shall be made by an
irrevocable written request by an Authorized Person delivered to Agent (which
notice must be received by Agent no later than 10:00 a.m. (California time) on
(y) the Business Day prior to the date that is the requested Funding Date in the
case of a request for a Tranche A Advance, and (z) the 5th Business Day prior to
the date that is the requested Funding Date in the case of a request for a
Tranche B Advance) specifying (i) the amount of such Borrowing, and (ii) the
requested Funding Date, which shall be a Business Day; provided, however, that
in the case of a request for Swing Loan in an amount of $10,000,000, or less,
such notice will be timely received if it is received by Agent no later than
10:00 a.m. (California time) on the Business Day that is the requested Funding
Date) specifying (i) the amount of such Borrowing, and (ii) the requested
Funding Date, which shall be a Business Day. At Agent's election, in lieu of
delivering the above-described written request, any Authorized Person may give
Agent telephonic notice of such request by the required time, with such
telephonic notice to be confirmed in writing within 24 hours of the giving of
such notice.
(b) AGENT'S ELECTION. Promptly after receipt of a request for a
Borrowing pursuant to Section 2.4(a), Agent shall elect, in its discretion, (i)
to have the terms of Section 2.4(c) apply to such requested Borrowing, or (ii)
in the case of a request for a Tranche A Advance, to request Swing Lender to
make a Swing Loan pursuant to the terms of Section 2.4(d) in the amount of the
requested Borrowing; provided, however, that if Swing Lender declines in its
sole discretion to make a Swing Loan pursuant to Section 2.4(d), Agent shall
elect to have the terms of Section 2.4(c) apply to such requested Borrowing.
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(c) MAKING OF ADVANCES.
(i) In the event that Agent shall elect to have the terms of this
Section 2.4(c) apply to a requested Borrowing as described in Section
2.4(b), then promptly after receipt of a request for a Borrowing pursuant
to Section 2.4(a), Agent shall notify the Lenders, not later than 1:00 p.m.
(California time) on the Business Day immediately preceding the Funding
Date applicable thereto, by telecopy, telephone, or other similar form of
transmission, of the requested Borrowing. Each Lender shall make the amount
of such Lender's Pro Rata Share of the requested Borrowing available to
Agent in immediately available funds, to such account of Agent as Agent may
designate, not later than 10:00 a.m. (California time) on the Funding Date
applicable thereto. After Agent's receipt of the proceeds of such Advances,
upon satisfaction of the applicable conditions precedent set forth in
Section 3 hereof, Agent shall make the proceeds of such Advances available
to Borrowers on the applicable Funding Date by transferring same day funds
equal to the proceeds of such Advances received by Agent to Administrative
Borrower's Designated Account; provided, however, that, subject to the
provisions of Section 2.4(i), Agent shall not request any Lender to make,
and no Lender shall have the obligation to make, any Advance if Agent shall
have received written notice from any Lender, or otherwise has actual
knowledge, that (1) one or more of the applicable conditions precedent set
forth in Section 3 will not be satisfied on the requested Funding Date for
the applicable Borrowing unless such condition has been waived in
accordance with Section 15.1, or (2) the requested Borrowing would exceed
the Tranche A Advance Availability or Tranche B Availability, as
applicable, on such Funding Date.
(ii) Unless Agent receives notice from a Lender on or prior to
the Closing Date or, with respect to any Borrowing after the Closing Date,
at least 1 Business Day prior to the date of such Borrowing, that such
Lender will not make available as and when required hereunder to Agent for
the account of Borrowers the amount of that Lender's Pro Rata Share of the
Borrowing, Agent may assume that each Lender has made or will make such
amount available to Agent in immediately available funds on the Funding
Date and Agent may (but shall not be so required), in reliance upon such
assumption, make available to Borrowers on such date a corresponding
amount. If and to the extent any Lender shall not have made its full amount
available to Agent in immediately available funds and Agent in such
circumstances has made available to Borrowers such amount, that Lender
shall on the Business Day following such Funding Date make such amount
available to Agent, together with interest at the Defaulting Lender Rate
for each day during such period. A notice submitted by Agent to any Lender
with respect to amounts owing under this subsection shall be conclusive,
absent manifest error. If such amount is so made available, such payment to
Agent shall constitute such Lender's Advance on the date of Borrowing for
all
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purposes of this Agreement. If such amount is not made available to Agent
on the Business Day following the Funding Date, Agent will notify
Administrative Borrower of such failure to fund and, upon demand by Agent,
Borrowers shall pay such amount to Agent for Agent's account, together with
interest thereon for each day elapsed since the date of such Borrowing, at
a rate per annum equal to the interest rate applicable at the time to the
Advances composing such Borrowing. The failure of any Lender to make any
Advance on any Funding Date shall not relieve any other Lender of any
obligation hereunder to make an Advance on such Funding Date, but no Lender
shall be responsible for the failure of any other Lender to make the
Advance to be made by such other Lender on any Funding Date.
(iii) Agent shall not be obligated to transfer to, and without
Borrowers' prior written consent shall not, transfer to a Defaulting Lender
any payments made by Borrowers to Agent for the Defaulting Lender's
benefit, and in the absence of such consent Agent shall transfer any such
payments to each other non-Defaulting Lender member of the Lender Group
ratably in accordance with their Commitments (but only to the extent that
such Defaulting Lenders Advance was funded by the other members of the
Lender Group) or, if so directed by Borrowers and if no Default or Event of
Default had occurred and is continuing (and to the extent such Defaulting
Lender's Advance was not funded by the Lender Group), retain same to be
re-advanced to Borrowers as if such Defaulting Lender had made Advances to
Borrowers. Subject to the foregoing, Agent may hold and, in its Permitted
Discretion, re- lend to Borrowers for the account of such Defaulting Lender
the amount of all such payments received and retained by it for the account
of such Defaulting Lender. Solely for the purposes of voting or consenting
to matters with respect to the Loan Documents, such Defaulting Lender shall
be deemed not to be a "Lender" and such Lender's Commitment shall be deemed
to be zero. This section shall remain effective with respect to such Lender
until (x) the Obligations under this Agreement shall have been declared or
shall have become immediately due and payable, (y) the non-Defaulting
Lenders, Agent, and Borrowers shall have waived such Lender's default in
writing, or (z) the Defaulting Lender makes its Pro Rata Share of the
applicable Advance and pays to Agent all amounts owing by Defaulting Lender
in respect thereof. The operation of this Section shall not be construed to
increase or otherwise affect the Commitment of any Lender, to relieve or
excuse the performance by such Defaulting Lender or any other Lender of its
duties and obligations hereunder or to relieve or excuse the performance by
Borrowers of its duties and obligations hereunder to Agent or to Lenders
other than such Defaulting Lender. Any such failure to fund by any
Defaulting Lender shall constitute a material breach by such Defaulting
Lender of this Agreement and shall entitle Borrowers at their option, upon
written notice to Agent, to arrange for a substitute Lender to assume the
Commitment of such Defaulting Lender, such substitute Lender to be
acceptable to Agent. In connection with the
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arrangement of such a substitute Lender, the Defaulting Lender shall have
no right to refuse to be replaced hereunder, and agrees to execute and
deliver a completed form of Assignment and Acceptance Agreement in favor of
the substitute Lender (and agrees that it shall be deemed to have executed
and delivered such document if it fails to do so) subject only to being
repaid its share of the outstanding Obligations (including an assumption of
its Pro Rata Share of the Risk Participation Liability) without any premium
or penalty of any kind whatsoever; provided further, however, that any such
assumption of the Commitment of such Defaulting Lender shall not be deemed
to constitute a waiver of any of the Lender Groups' or Borrowers' rights or
remedies against any such Defaulting Lender's arising out of or in relation
to such failure to fund.
(d) MAKING OF SWING LOANS.
(i) In the event Agent shall elect, with the consent of Swing
Lender, as a Lender, to have the terms of this Section 2.4(d) apply to a
requested Borrowing of a Tranche A Advance as described in Section 2.4(b),
Swing Lender as a Lender shall make such Tranche A Advance in the amount of
such Borrowing (any such Tranche A Advance made solely by Swing Lender as a
Lender pursuant to this Section 2.4(d) being referred to as a "Swing Loan"
and such Tranche A Advances being referred to collectively as "Swing
Loans") available to Borrowers on the Funding Date applicable thereto by
transferring same day funds to Administrative Borrower's Designated
Account. Each Swing Loan is a Tranche A Advance hereunder and shall be
subject to all the terms and conditions applicable to other Tranche A
Advances of the same type hereunder, except that all payments thereon shall
be payable to Swing Lender as a Lender solely for its own account (and for
the account of the holder of any participation interest with respect to
such Tranche A Advance). Subject to the provisions of Section 2.4(i), Agent
shall not request Swing Lender as a Lender to make, and Swing Lender as a
Lender shall not make, any Swing Loan if Agent shall have received written
notice from any Lender, or otherwise has actual knowledge, that (i) one or
more of the applicable conditions precedent set forth in Section 3 will not
be satisfied on the requested Funding Date for the applicable Borrowing
unless such condition has been waived in accordance with Section 15.1, or
(ii) the requested Borrowing would exceed the Tranche A Advance
Availability on such Funding Date. Swing Lender as a Lender shall not
otherwise be required to determine whether the applicable conditions
precedent set forth in Section 3 have been satisfied on the Funding Date
applicable thereto prior to making, in its sole discretion, any Swing Loan.
(ii) The Swing Loans shall be secured by the Collateral Agent's
Liens and shall constitute Tranche A Advances and Obligations
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hereunder, and shall bear interest at the rate applicable from time to time
to Tranche A Advances of the same type as the applicable Advance.
(e) AGENT ADVANCES.
(i) Agent hereby is authorized by Borrowers and the Lenders, from
time to time in Agent's sole discretion, (1) after the occurrence and
during the continuance of a Default or an Event of Default, or (2) at any
time that any of the other applicable conditions precedent set forth in
Section 3 have not been satisfied, to make Advances to Borrowers on behalf
of the Lenders that Agent, in its reasonable business judgment, deems
necessary or desirable (A) to preserve or protect the Collateral, or any
portion thereof, or (B) to enhance the likelihood of repayment of the
Obligations (any of the Advances described in this Section 2.4(e) shall be
deemed to be Tranche A Advances hereunder and shall be referred to as
"Agent Advances"); provided, however, that at no time shall the aggregate
amount of outstanding Agent Advances under this Section 2.4(e) exceed the
result of (1) the lesser of (A) $10,000,000, or (B) 10% of the Borrowing
Base then in effect, minus (2) the amount of optional Overadvances made by
Agent or Swing Lender to Borrowers pursuant to Section 2.4(i). Each Agent
Advance is an Advance hereunder and shall be subject to all the terms and
conditions applicable to other Advances, except that all payments thereon
shall be payable to Agent solely for its own account.
(ii) Agent Advances shall be repayable on demand and secured by
the Collateral Agent's Liens, shall constitute Advances and Obligations
hereunder, and shall bear interest at the rate applicable from time to time
to Base Rate Tranche A Advances.
(f) SETTLEMENT. It is agreed that each Lender's funded portion of the
Advances is intended by the Lenders to equal, at all times, such Lender's Pro
Rata Share of the outstanding Advances. Such agreement notwithstanding, Agent,
Swing Lender, and the other Lenders agree (which agreement shall not be for the
benefit of or enforceable by Borrowers) that in order to facilitate the
administration of this Agreement and the other Loan Documents, settlement among
them as to the Advances, the Swing Loans, and the Agent Advances shall take
place on a periodic basis in accordance with the following provisions:
(i) Agent shall request settlement ("Settlement") with the
Lenders on a weekly basis, or on a more frequent basis if so determined by
Agent, (1) on behalf of Swing Lender, with respect to each outstanding
Swing Loan, (2) for itself, with respect to each Agent Advance, and (3)
with respect to Collections received, as to each by notifying the Lenders
by telecopy, telephone, or other similar form of transmission, of such
requested Settlement, no later than 2:00 p.m. (California time) on the
Business Day immediately prior to the date of such requested Settlement
(the date of such requested
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Settlement being the "Settlement Date"). Such notice of a Settlement Date
shall include a summary statement of the amount of outstanding Advances,
Swing Loans, and Agent Advances for the period since the prior Settlement
Date, the amount of repayments received in such period, and the amounts
allocated to each Lender of the interest, fees, and other charges for such
period. Subject to the terms and conditions contained herein (including
Section 2.4(c)(iii)): (y) if a Lender's balance of the Advances, Swing
Loans, and Agent Advances exceeds such Lender's Pro Rata Share of the
Advances, Swing Loans, and Agent Advances as of a Settlement Date, then
Agent shall by no later than 12:00 p.m. (California time) on the Settlement
Date transfer in immediately available funds to the account of such Lender
as such Lender may designate, an amount such that each such Lender shall,
upon receipt of such amount, have as of the Settlement Date, its Pro Rata
Share of the Advances, Swing Loans, and Agent Advances; and (z) if a
Lender's balance of the Advances, Swing Loans, and Agent Advances is less
than such Lender's Pro Rata Share of the Advances, Swing Loans, and Agent
Advances as of a Settlement Date, such Lender shall no later than 12:00
p.m. (California time) on the Settlement Date transfer in immediately
available funds to such account of Agent as Agent may designate, an amount
such that each such Lender shall, upon transfer of such amount, have as of
the Settlement Date, its Pro Rata Share of the Advances, Swing Loans, and
Agent Advances. Such amounts made available to Agent under clause (z) of
the immediately preceding sentence shall be applied against the amounts of
the applicable Swing Loan or Agent Advance and, together with the portion
of such Swing Loan or Agent Advance representing Swing Lender's Pro Rata
Share thereof, shall constitute Advances of such Lenders. If any such
amount is not made available to Agent by any Lender on the Settlement Date
applicable thereto to the extent required by the terms hereof, Agent shall
be entitled to recover for its account such amount on demand from such
Lender together with interest thereon at the Defaulting Lenders Rate.
(ii) In determining whether a Lender's balance of the Advances,
Swing Loans, and Agent Advances is less than, equal to, or greater than
such Lender's Pro Rata Share of the Advances, Swing Loans, and Agent
Advances as of a Settlement Date, Agent shall, as part of the relevant
Settlement, apply to such balance the portion of payments actually received
in good funds by Agent or Swing Lender with respect to principal, interest,
fees payable by Borrowers and allocable to the Lenders hereunder, and
proceeds of Collateral. To the extent that a net amount is owed to any such
Lender after such application, such net amount shall be distributed by
Agent or Swing Lender to that Lender as part of such next Settlement.
(iii) Between Settlement Dates, Agent, to the extent no Agent
Advances or Swing Loans are outstanding, may pay over to Swing Lender any
payments received by Agent, that in accordance with the terms of this
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Agreement would be applied to the reduction of the Advances, for
application to Swing Lender's Pro Rata Share of the Advances. If, as of any
Settlement Date, Collections received since the then immediately preceding
Settlement Date have been applied to Swing Lender's Pro Rata Share of the
Advances other than to Swing Loans or Agent Advances, as provided for in
the previous sentence, Swing Lender shall pay to Agent for the accounts of
the Lenders, and Agent shall pay to the Lenders, to be applied to the
outstanding Advances of such Lenders, an amount such that each Lender
shall, upon receipt of such amount, have, as of such Settlement Date, its
Pro Rata Share of the Advances. During the period between Settlement Dates,
Swing Lender with respect to Swing Loans, Agent with respect to Agent
Advances, and each Lender with respect to the Advances other than Swing
Loans and Agent Advances, shall be entitled to interest at the applicable
rate or rates payable under this Agreement on the daily amount of funds
employed by Swing Lender, Agent, or the Lenders, as applicable.
(g) NOTATION. Agent shall record on its books the principal amount of
the Advances owing to each Lender, including the Swing Loans owing to Swing
Lender, and Agent Advances owing to Agent, and the interests therein of each
Lender, from time to time. In addition, each Lender is authorized, at such
Lender's option, to note the date and amount of each payment or prepayment of
principal of such Lender's Advances in its books and records, including computer
records, such books and records constituting conclusive evidence, absent
manifest error, of the accuracy of the information contained therein.
(h) LENDERS' FAILURE TO PERFORM. All Advances (other than Swing Loans
and Agent Advances) shall be made by the Lenders simultaneously and in
accordance with their Pro Rata Shares. It is understood that (i) no Lender shall
be responsible for any failure by any other Lender to perform its obligation to
make any Advances hereunder, nor shall any Commitment of any Lender be increased
or decreased as a result of any failure by any other Lender to perform its
obligation to make any Advances hereunder, and (ii) no failure by any Lender to
perform its obligation to make any Advances hereunder shall excuse any other
Lender from its obligation to make any Advances hereunder.
(i) OPTIONAL OVERADVANCES. Any contrary provision of this Agreement
notwithstanding, if the condition for borrowing under Section 3.3(d) cannot be
fulfilled, the Lenders nonetheless hereby authorize Agent or Swing Lender, as
applicable, and Agent or Swing Lender, as applicable, may, but is not obligated
to, knowingly and intentionally continue to make Tranche A Advances (including
Swing Loans) to Borrowers, such failure of condition notwithstanding, so long
as, at the time any such Tranche A Advance is made , (i) the outstanding Tranche
A Usage does not exceed the Borrowing Base by more than the lesser of (A)
$10,000,000, or (B) 10% of the Borrowing Base then in effect, (ii) after giving
effect to any such Overadvance, the then extant amount of Tranche A Advances
does not exceed $50,000,000, and (iii) after giving effect to any such
Overadvance, the aggregate amount of outstanding optional Overadvances made by
Agent or Swing Lender to Borrowers pursuant to this Section 2.4(i) shall not
exceed the result of (1) the lesser of (A)
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$10,000,000, or (B) 10% of the Borrowing Base then in effect, minus (2) the
amount of Agent Advances outstanding under Section 2.4(e). The foregoing
provisions are for the sole and exclusive benefit of Agent, Swing Lender, and
the Lenders and are not intended to benefit Borrowers in any way. The Advances
and Swing Loans, as applicable, that are made pursuant to this Section 2.4(i)
shall be subject to the same terms and conditions as any other Advance or Swing
Loan, as applicable, except that the rate of interest applicable thereto shall
be the rates set forth in Section 2.7(c) hereof without regard to the presence
or absence of a Default or Event of Default.
(i) In the event Agent obtains actual knowledge that the Tranche
A Usage exceeds the amounts permitted by the preceding paragraph,
regardless of the amount of or reason for such excess, Agent shall notify
Lenders as soon as practicable (and prior to making any (or any further)
intentional Overadvances (except for and excluding amounts charged to the
Loan Account for interest, fees, or Lender Group Expenses) unless Agent
determines that prior notice would result in imminent harm to the
Collateral or its value), and the Lenders with Tranche A Commitments
thereupon shall, together with Agent, jointly determine the terms of
arrangements that shall be implemented with Borrowers intended to reduce,
within a reasonable time, the outstanding principal amount of the Tranche A
Advances to Borrowers to an amount permitted by the preceding paragraph. In
the event Agent or any Lender disagrees over the terms of reduction or
repayment of any Overadvance, the terms of reduction or repayment thereof
shall be implemented according to the determination of the Required
Lenders.
(ii) Each Lender with a Tranche A Commitment shall be obligated
to settle with Agent as provided in Section 2.4(f) for the amount of such
Lender's Pro Rata Share of any unintentional Overadvances by Agent reported
to such Lender, any intentional Overadvances made as permitted under this
Section 2.4(i), and any Overadvances resulting from the charging to the
Loan Account of interest, fees, or Lender Group Expenses.
2.5 PAYMENTS.
(a) PAYMENTS BY BORROWERS.
(i) Except as otherwise expressly provided herein, all payments
by Borrowers shall be made to Agent's Account for the account of the Lender
Group and shall be made in immediately available funds, no later than 11:00
a.m. (California time) on the date specified herein. Any payment received
by Agent later than 11:00 a.m. (California time), at the option of Agent,
shall be deemed to have been received on the following Business Day and any
applicable interest or fee shall continue to accrue until such following
Business Day.
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(ii) Whenever any payment is due on a day other than a Business
Day, such payment shall be made on the following Business Day, and such
extension of time shall in such case be included in the computation of
interest or fees, as the case may be.
(iii) Unless Agent receives notice from Administrative Borrower
prior to the date on which any payment is due to the Lenders that Borrowers
will not make such payment in full as and when required, Agent may assume
that Borrowers have made (or will make) such payment in full to Agent on
such date in immediately available funds and Agent may (but shall not be so
required), in reliance upon such assumption, distribute to each Lender on
such due date an amount equal to the amount then due such Lender. If and to
the extent Borrowers do not make such payment in full to Agent on the date
when due, each Lender severally shall repay to Agent on demand such amount
distributed to such Lender, together with interest thereon at the
Defaulting Lender Rate for each day from the date such amount is
distributed to such Lender until the date repaid.
(b) APPORTIONMENT, APPLICATION, AND REVERSAL OF PAYMENTS.
(i) Except as otherwise provided with respect to Defaulting
Lenders and except as otherwise expressly provided in the Loan Documents
(or the Fee Split Letters), aggregate principal and interest payments shall
be apportioned ratably among the Lenders (according to the unpaid principal
balance of the Advances to which such payments relate held by each Lender)
and payments of fees (other than fees designated for an Agent's sole and
separate account) shall, as applicable, be apportioned ratably among the
Lenders. All payments shall be remitted to Agent and all such payments and
all proceeds of Collateral received by Agent shall be applied as follows:
(A) first, to pay any Lender Group Expenses then due to Agent
under the Loan Documents, until paid in full,
(B) second, to pay any Lender Group Expenses then due to the
Lenders under the Loan Documents, on a ratable basis, until paid in full,
(C) third, to pay any fees then due to Agent (for its separate
accounts after giving effect to the Fee Split Letters) under the Loan
Documents until paid in full,
(D) fourth, to pay any fees then due to any or all of the Lenders
(after giving effect to the Fee Split Letters) under the Loan Documents, on
a ratable basis, until paid in full; provided, however, that after the
occurrence and during the continuance of an Event of Default, the priority
of the payment of fees due to Tranche B Lenders, in their capacity as such
(and all Lenders that are directly or indirectly successors or assignees of
Tranche B
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Lenders, in their capacity as such) shall (unless all of the Lenders
with a Tranche A Commitment or Tranche A Facility Obligations elect
otherwise) be deferred to item "fourteenth" below,
(E) fifth, to pay interest due in respect of all Agent Advances,
until paid in full,
(F) sixth, ratably to pay interest due in respect of all Advances
(other than Agent Advances) and Swing Loans until paid in full,
provided, however, that after the occurrence and during the
continuance of an Event of Default, the priority of the payment of
interest due in respect of the Tranche B Advances (unless all of the
Lenders with a Tranche A Commitment or Tranche A Facility Obligations
elect otherwise) be deferred to item "fifteenth" below,
(G) seventh, ratably to pay the principal of all Agent Advances
until paid in full,
(H) eighth, if Tranche A Advance Availability is less than
$7,500,000, to pay the principal of all Swing Loans until Tranche A
Advance Availability is $7,500,000, such payments to be applied,
first, to the outstanding Swing Loans that are Base Rate Advances and,
second, to the outstanding Swing Loans that are LIBOR Rate Advances
(in the order of their maturity),
(I) ninth, if Tranche A Advance Availability is less than
$7,500,000 (after giving effect to item "eighth" above), to pay the
principal of all Tranche A Advances until Tranche A Advance
Availability is $7,500,000, such payments to be applied, first, to the
outstanding Tranche A Advances that are Base Rate Advances and,
second, to the outstanding Tranche A Advances that are LIBOR Rate
Advances (in the order of their maturity),
(J) tenth, ratably to pay the principal of all Tranche B Advances
until paid in full, provided, however, that after the occurrence and
during the continuance of an Event of Default, the priority of the
payment of principal due with respect to Tranche B Advances shall
(unless all of the Lenders with a Tranche A Commitment or Tranche A
Facility Obligations elect otherwise) be deferred to item "sixteenth"
below,
(K) eleventh, to pay the principal of all Swing Loans until paid
in full, such payments to be applied, first, to the outstanding Swing
Loans that are Base Rate Advances and, second, if an Event of Default
has occurred and is continuing, to the outstanding Swing Loans that
are LIBOR Rate Advances (in the order of their maturity),
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(L) twelfth, to pay the principal of all Tranche A Advances until
paid in full, such payments to be applied, first, to outstanding
Tranche A Advances that are Base Rate Advances and, second, if an
Event of Default has occurred and is continuing, to the outstanding
Tranche A Advances that are LIBOR Rate Advances (in the order of their
maturity),
(M) thirteenth, if an Event of Default has occurred and is
continuing, to Agent, to be held by Agent, for the ratable benefit of
Agent and those Lenders having a Tranche A Commitment, as cash
collateral in an amount equal to 105% of the maximum amount of Issuing
Lender's obligations under outstanding Letters of Credit until paid in
full,
(N) fourteenth, to pay any fees then due to Tranche B Lenders in
their capacity as such (and all Lenders that are directly or
indirectly successors or assignees of Tranche B Lenders, in their
capacity as such) under the Loan Documents until paid in full,
(O) fifteenth, to pay interest then due in respect of all Tranche
B Advances until paid in full,
(P) sixteenth, to pay the principal of all Tranche B Advances
until paid in full, and
(Q) seventeenth, to Borrowers to be wired to the Designated
Account or such other Person entitled thereto under applicable law.
(ii) Agent shall promptly distribute to each Lender, pursuant to
the applicable wire instructions received from each Lender in writing,
such funds as it may be entitled to receive, subject to a Settlement
delay as provided in Section 2.4(h).
(iii) In each instance, so long as no Event of Default has
occurred and is continuing, Section 2.5(b) shall not be deemed to
apply to any payment by Borrowers specified by Borrowers to be for the
payment of specific Obligations then due and payable under any
provision of this Agreement.
(iv) For purposes of the foregoing, "paid in full" means payment
of all amounts owing under the Loan Documents according to the terms
thereof, including loan fees, service fees, professional fees,
interest (and specifically including interest accrued after the
commencement of any Insolvency Proceeding), default interest, interest
on interest, and expense reimbursements, whether or not the same would
be or is allowed or disallowed in whole or in part in any Insolvency
Proceeding.
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(v) In the event of a direct conflict between the priority
provisions of this Section 2.5 and other provisions contained in any
other Loan Document, it is the intention of the parties hereto that
both such priority provisions in such documents shall be read together
and construed, to the fullest extent possible, to be in concert with
each other. In the event of any actual, irreconcilable conflict that
cannot be resolved as aforesaid, the terms and provisions of this
Section 2.5 shall control and govern, principal and interest payments
shall be apportioned ratably among the Lenders (according to the
unpaid principal balance of the Obligations to which such payments
relate held by each individual Lender) and payments of fees (other
than fees designated for Agent's sole and separate account) shall, as
applicable, be apportioned ratably among the Lenders having a Pro Rata
Share of the type of credit facility as to which the particular fee is
applicable. In the event that the Collateral Agency and Intercreditor
Agreement provides that proceeds of Collateral are to be applied to
obligations other than the Obligations, then the payment provisions
above shall not control and the provisions of the Collateral Agency
and Intercreditor Agreement shall control.
(c) ASSET DISPOSITION PROCEEDS; REDUCTION OF COMMITMENTS. Promptly upon
receipt by Agent of any proceeds from Collateral Agent, whether on account of
Permitted Dispositions, condemnation proceeds, casualty proceeds, or otherwise,
(i) subject to the last sentence of this subsection, Agent shall apply such
proceeds in accordance with Section 2.5(b) above, (ii) if and to the extent that
the Collateral Agency and Intercreditor Agreement requires that the payment of
proceeds is to be accompanied by a reduction of the Commitments, then such
reduction shall be applied (y) first, to the Tranche A Commitments, such
reduction to be applied ratably amongst each of the Lenders with Tranche A
Commitments, and (z) second, to the Tranche B Commitments, such reduction to be
applied ratably amongst each of the Lenders with Tranche B Commitments, and (ii)
if and to the extent that the Collateral Agency and Intercreditor Agreement
provides that the payment of proceeds is to be accompanied by a reduction of the
Commitments only to the extent elected by the Lenders, then such election shall
be made and such reduction shall be applied (y) first, to the Tranche A
Commitments, to the extent agreed to by Tranche A Lenders whose Pro Rata Shares
aggregate 51% of the Tranche A Commitments, such reduction to be applied ratably
amongst each of the Lenders with Tranche A Commitments, and (z) second, if and
to the extent that the Tranche A Lenders affirmatively decide that less than all
of the available reductions should reduce the Tranche A Commitments, to the
extent agreed to by Tranche B Lenders whose Pro Rata Shares aggregate 51% of the
Tranche B Commitments, to the Tranche B Commitments, such remaining available
reduction to be applied ratably amongst each of the Lenders with Tranche B
Commitments. In each instance when the Tranche A Commitments are reduced, (i)
the amount of the Maximum Tranche A Amount and the Maximum Facility Amount shall
be reduced on a Dollar-for-Dollar basis, and (ii) the amount set forth in
Section 2.1(a)(iii) and the amount set forth in item (iii) of the definition of
Tranche A Advance Availability shall be reduced proportionately with the
reduction of the Tranche A Commitments. In each instance when the Tranche B
Commitments are reduced, the amount of the Maximum Tranche B Amount and the
Maximum Facility Amount shall be
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reduced on a Dollar-for-Dollar basis. In any instance when the Tranche A
Commitments are reduced, if, after giving effect to such reduction, the amount
of the then extant Letter of Credit Usage exceeds the amount of the Tranche A
Commitments, then Agent shall retain from the proceeds remitted to it from the
Collateral Agent an amount equal to 105% of such excess and such amount retained
shall be held by Agent, for the ratable benefit of Agent and those Lenders
having a Tranche A Commitment, as cash collateral until the outstanding Letters
of Credit are paid in full, with any balance being applied in accordance with
Section 2.5(b) above.
2.6 OVERADVANCES.
If, at any time or for any reason, the amount of Obligations owed by
Borrowers to the Lender Group pursuant to Sections 2.1, 2.2, or 2.3 is greater
than either the Dollar or percentage limitations set forth in Sections 2.1, 2.2,
or 2.3, (an "Overadvance"), except with respect to optional Overadvances
provided for in Section 2.4(i), Borrowers immediately shall pay to Agent, in
cash, the amount of such excess, which amount shall be used by Agent to reduce
the Obligations in accordance with the priority set forth in Section 2.5(b). In
addition, each Borrower, jointly and severally, hereby promises to pay the
Obligations (including principal, interest, fees, costs, and expenses) in
Dollars in full to Agent for the account of the Lender Group as and when due and
payable under the terms of this Agreement and the other Loan Documents.
2.7 INTEREST AND LETTER OF CREDIT FEES: RATES, PAYMENTS, AND CALCULATIONS.
(a) INTEREST RATES. Except as provided in clause (c) below, all amounts
that have been charged to the Loan Account (except for undrawn Letters of
Credit) pursuant to the terms hereof shall bear interest on the Daily Balance
thereof as follows (i) if a LIBOR Rate Advance, at a per annum rate equal to the
LIBOR Rate plus the LIBOR Margin, and (ii) otherwise, at a per annum rate equal
to the Base Rate plus the Applicable Base Rate Margin.
(b) LETTER OF CREDIT FEE. Borrowers shall pay Agent (for the ratable
benefit of the Lenders with a Tranche A Commitment based upon their Pro Rata
Share of the Tranche A Commitment), a Letter of Credit fee (in addition to the
charges, commissions, fees, and costs set forth in Section 2.2(e)) which shall
accrue at a rate equal to 2.75% per annum times the average daily aggregate
undrawn amount of all outstanding Letters of Credit during the month preceding
the date such Letter of Credit fee is due and payable in accordance with Section
2.7(d) hereof.
(c) DEFAULT RATE. Upon the occurrence and during the continuation of an
Event of Default, and at the election of any Lender as evidenced by delivery by
such Lender of written notice of such election to Agent, Lenders and
Administrative Borrower, and effective as of the date such notice is received by
Agent or such later date specified in such notice,
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(i) all amounts that have been charged to the Loan Account
(except for undrawn Letters of Credit) pursuant to the terms hereof
shall bear interest on the Daily Balance thereof at a per annum rate
equal to 2 percentage points above the per annum rate otherwise
applicable hereunder, and
(ii) the Letter of Credit fee provided for above shall be
increased to 2 percentage points above the per annum rate otherwise
applicable hereunder.
(d) PAYMENTS. Interest, Letter of Credit fees, and all other fees
payable hereunder shall be due and payable, in arrears, on the first day of each
month during the term hereof (except that interest on LIBOR Advances shall be
due and payable, in arrears, on the last day of the applicable Interest Period).
Each Borrower hereby authorizes Agent, without prior notice to such Borrower, to
charge such interest and fees, all Lender Group Expenses (as and when incurred),
the charges, commissions, fees, and costs provided for in Section 2.12 (as and
when due or incurred), the charges, commissions, fees, and costs provided for in
Section 2.2 (as and when due or incurred), and all other payments due under any
Loan Document to Borrowers' Loan Account, which amounts thereafter shall accrue
interest at the rate then applicable to Tranche A Advances hereunder if Tranche
A Availability is greater than such amounts, but otherwise at the rate then
applicable to Tranche B Advances hereunder. Any interest not paid when due shall
be compounded and shall thereafter accrue interest at the rate then applicable
to Tranche A Advances hereunder if Tranche A Availability is greater than such
interest amount, but otherwise at the rate then applicable to Tranche B Advances
hereunder.
(e) COMPUTATION. All interest and fees chargeable under the Loan
Documents shall be computed on the basis of a 360 day year for the actual number
of days elapsed. In the event the Base Rate is changed from time to time
hereafter, the rates of interest hereunder based upon the Base Rate
automatically and immediately shall be increased or decreased by an amount equal
to such change in the Base Rate.
(f) INTENT TO LIMIT CHARGES TO MAXIMUM LAWFUL RATE. In no event shall
the interest rate or rates payable under this Agreement, plus any other amounts
paid in connection herewith, exceed the highest rate permissible under any law
that a court of competent jurisdiction shall, in a final determination, deem
applicable. Borrowers and the Lender Group, in executing and delivering this
Agreement, intend legally to agree upon the rate or rates of interest and manner
of payment stated within it; provided, however, that, anything contained herein
to the contrary notwithstanding, if said rate or rates of interest or manner of
payment exceeds the maximum allowable under applicable law, then, ipso facto as
of the date of this Agreement, each Borrower is and shall be liable only for the
payment of such maximum as allowed by law, and payment received from Borrower in
excess of such legal maximum, whenever received, shall be applied to reduce the
principal balance of the Obligations to the extent of such excess.
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2.8 CASH MANAGEMENT.
(a) Each Borrower shall (i) establish and maintain one or more lock
boxes (each a "Lockbox") at one or more of the banks set forth on Schedule
2.8(a), and shall request in writing and otherwise take such reasonable steps to
ensure that all of its Account Debtors forward payment directly to such
Lockboxes (such request may be made in the form of a written direction to make
all payments to the applicable Lockbox), and (ii) deposit or cause to be
deposited promptly, and in any event no later than the first Business Day after
the date of receipt thereof, all Collections (whether or not otherwise delivered
to a Lockbox) into a bank account in Agent's name (a "Lockbox Account") at one
of the banks set forth on Schedule 2.8(a) (a "Lockbox Account Bank"). Borrowers
may amend Schedule 2.8(a) to include additional Lockbox Account Banks so long as
each such supplemental Lockbox Account Bank is acceptable to Agent.
(b) Each Guarantor shall (i) deposit or cause to be deposited
promptly, and in any event no later than the first Business Day after the date
of receipt thereof, all cash, checks, drafts and all forms of items of payment
made in respect of any and all Collateral into bank accounts in such Guarantor's
name (each a "Collection Account" and, collectively, the "Collection Accounts")
at one of the banks set forth on Schedule 2.8(b) (each a "Collection Account
Bank" and, collectively, the "Collection Account Banks"). All Collection Account
Banks shall be satisfactory to the Agent. Borrowers may amend Schedule 2.8(b) to
include additional Collection Account Banks so long as each such supplemental
Collection Account Bank is acceptable to Agent.
(c) Each Lockbox Account Bank and all Collection Account Banks shall
establish and maintain tri-party blocked account agreements with the Agent and
the applicable Obligor, in form and substance acceptable to the Agent. Each such
blocked account agreement shall provide, among other things, that (i) all items
of payment deposited in such accounts and proceeds thereof are held by such
banks as agent or bailee-in-possession for Agent, (ii) the bank executing such
agreement has no rights of setoff or recoupment or any other claim against such
account, as the case may be, other than for payment of its service fee and other
charges directly related to the administration of such account and for returned
checks or other items of payment, and (iii)(A) with respect to each bank at
which a Collection Account is located, such bank agrees, from and after the date
it receives a written notice from Agent that an Event of Default has occurred
and is continuing hereunder, immediately to forward by daily sweep all amounts
in each Collection Account to the Agent's Account, and (B) with respect to each
Lockbox Account Bank, such bank agrees immediately to forward by daily sweep all
amounts received in the applicable Lockbox Account to the Agent's Account. No
Borrower shall accumulate or maintain cash in disbursement or payroll accounts
as of any date of determination in excess of checks outstanding against such
accounts as of that date, amounts necessary to meet minimum balance
requirements, and amounts maintained in such accounts in the ordinary course of
such Borrower's business.
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(d) Unless an Event of Default has occurred and is continuing, each
Guarantor may use the funds on deposit in a Collection Account for its working
capital purposes. From and after the occurrence of an Event of Default and at
the election of the Required Lenders, the funds on deposit in the Collection
Accounts of each Guarantor shall be converted into Dollars (at such Guarantor's
sole expense) and wired into the Agent's Account to be applied on account of the
"Guaranteed Obligations" (as that term is defined in the Canadian Guaranty) of
such Guarantor.
(e) So long as no Default or Event of Default has occurred and is
continuing, the Obligors may amend Schedule 2.8(a) or (b) to add or replace a
Collection Account Bank, Lockbox Account Bank, Lockbox or Collection Account or
to replace the Designated Account; provided, however, that (i) such bank shall
be satisfactory to Agent and Agent shall have consented in writing in advance to
the opening of such account or Lockbox with the relevant bank and (ii) prior to
the time of the opening of such account or Lockbox, the applicable Borrower or
the Subsidiaries thereof, as applicable, and such bank shall have executed and
delivered to Agent a tri-party blocked account agreement, in form and substance
reasonably satisfactory to Agent. The Obligors shall close any of their accounts
(and establish replacement accounts in accordance with the foregoing sentence)
promptly and in any event within 30 days of notice from Agent that the
creditworthiness of any bank holding an account is no longer acceptable in
Agent's reasonable judgment, or as promptly as practicable and in any event
within 60 days of notice from Agent that the operating performance, funds
transfer or availability procedures or performance with respect to accounts or
lockboxes of the bank holding such accounts or Agent's liability under any tri-
party blocked account agreement with such bank is no longer acceptable in
Agent's reasonable judgment.
(f) The Lockboxes, Collection Accounts, Designated Account, Lockbox
Accounts and the Concentration Account shall be cash collateral accounts, with
all cash, checks and similar items of payment in such accounts securing payment
of the Advances and all other Obligations, and in which each Obligor and each
Guarantor shall have granted a Lien to Collateral Agent.
2.9 CREDITING PAYMENTS.
The receipt of any payment by Agent (whether from transfers to Agent by the
Lockbox Account Banks, Collection Account Banks or otherwise) shall not be
considered a payment on account unless such Collection item is a wire transfer
of immediately available federal funds made to the Agent's Account or unless and
until such payment item is honored when presented for payment. Should any
payment item not be honored when presented for payment, then Borrowers shall be
deemed not to have made such payment and interest shall be calculated
accordingly. Anything to the contrary contained herein notwithstanding, any
payment item shall be deemed received by Agent only if it is received into the
Agent's Account on a Business Day on or before 11:00 a.m. (California time). If
any Collection item is received into the Agent's Account on or after 11:00 a.m.
(California time) on a Business Day, it shall be deemed to have been received by
Agent as of the opening of business on the
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immediately following Business Day. From and after the Closing Date, Agent shall
be entitled to charge the Obligors for 1/2 of a Business Day of `clearance' or
`float' at the rate applicable to Tranche A Advances set forth in Section
2.7(a)(ii) or Section 2.7(c)(i), as applicable, on all Collections (other than
Excepted Collections) that are received by the Obligors (regardless of whether
forwarded by the Lockbox Banks or Collection Account Banks to Agent). This
across-the-board 1/2 of a Business Day clearance or float charge on all
Collections (other than Excepted Collections) is acknowledged by the parties to
constitute an integral aspect of the pricing of the financing of Borrowers and
shall apply irrespective of whether or not there are any outstanding monetary
Obligations; the effect of such clearance or float charge being the equivalent
of charging 1/2 of a Business Day of interest on such Collections. The parties
further acknowledge and agree that the economic benefit of the foregoing
provisions of this Section 2.9 shall accrue to the sole and exclusive benefit of
Agent.
2.10 DESIGNATED ACCOUNT.
Agent is authorized to make the Advances, and issue the Letters of Credit
under this Agreement based upon telephonic or other instructions received from
anyone purporting to be an Authorized Person, or without instructions if
pursuant to Section 2.7(d). Administrative Borrower agrees to establish and
maintain the Designated Account with the Designated Account Bank for the purpose
of receiving the proceeds of the Advances requested by Borrowers and made by
Agent or the Lenders hereunder. Unless otherwise agreed by Agent and Borrowers,
any Advance, Agent Advance, or Swing Loan requested by Borrowers and made by
Agent or the Lenders hereunder shall be made to the Designated Account.
2.11 MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF OBLIGATIONS.
Agent shall maintain an account on its books in the name of Borrowers (the
"Loan Account") on which Borrowers will be charged with all Advances and Letters
of Credit made or issued by Agent or the Lenders to Borrowers' or for Borrowers'
account, including, Advances made by Agent or the Lenders for the payment of
accrued interest, Lender Group Expenses, and any other payment Obligations of
Borrowers. In accordance with Section 2.9, the Loan Account will be credited
with all payments received by Agent from Borrowers or for Borrowers' account,
including all amounts received in the Agent's Account from any Lockbox Bank or
the Collection Account Banks. Agent shall render statements regarding the Loan
Account to Administrative Borrower, including principal, interest, fees, and
including an itemization of all charges and expenses constituting Lender Group
Expenses owing, and, absent manifest error, such statements shall be
conclusively presumed to be correct and accurate and constitute an account
stated between Borrowers and the Lender Group unless, within 30 days after
receipt thereof by Administrative Borrower, Administrative Borrower shall
deliver to Agent written objection thereto describing the error or errors
contained in any such statements.
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2.12 FEES.
The Borrowers shall pay to Agent the following fees, which fees shall be:
(i) non-refundable when paid (irrespective of whether this Agreement is
terminated thereafter); and (ii) apportioned among the Lenders in accordance
with the terms of the Fee Split Letters (except where expressly stated to the
contrary below):
(a) LOAN ORIGINATION FEE. On the Closing Date, a loan origination fee
of $4,500,000, reduced by any amounts previously paid.
(b) AGENCY FEE. An agency fee equal to $150,000 payable annually in
advance (without any rebate if this Agreement is terminated prior to the end of
the applicable year) on the Closing Date and on each date that is an anniversary
of the Closing Date that occurs prior to the later of (i) the termination of the
Commitments, and (ii) the payment in full in cash of the Obligations.
(c) ANNUAL FEE. An annual fee of $750,000 payable (i) on the date that
is the first anniversary of the Closing Date, and (ii) on the date that is the
second anniversary of the Closing Date; provided, however, that no such fee
shall be payable on a particular date if, prior to such date, the (i) the
Commitments have been terminated, and (ii) the Obligations have been paid in
full.
(d) LOAN SERVICING FEE. A loan servicing fee equal to $20,000 payable
in arrears on the first day of each month after the Closing Date prior to the
date on which (i) the Commitments have been terminated, and (ii) the Obligations
have been paid in full; provided, however that the loan servicing fee for the
period from and after the Closing Date and up to the last day of the month in
which the Closing Date occurs shall be equal to the product of $20,000
multiplied by a fraction the numerator of which is the number of days from and
after the Closing Date and up to and including the last day of the month in
which the Closing Date occurs and the denominator of which is the number of days
in such month.
(e) UNUSED LINE FEE FOR THE TRANCHE A FACILITY. For the Pro Rata
benefit of each Lender with a Tranche A Commitment, on the first day of each
month during the term of this Agreement, an unused line fee in an amount equal
to 0.375% per annum times the result of (a) the Maximum Tranche A Amount, less
(b) the average Daily Balance of the Tranche A Usage during the immediately
preceding month,
(f) UNUSED LINE FEE FOR THE TRANCHE B FACILITY. For the Pro Rata
benefit of each Lender with a Tranche B Commitment, on the first day of each
month during the term of this Agreement, an unused line fee in an amount equal
to 0.75% per annum times the result of (a) the Maximum Tranche B Amount, less
(b) the average Daily Balance of the Tranche B Usage during the immediately
preceding month, and
(g) FINANCIAL EXAMINATION, VALUATION, AND APPRAISAL FEES. For the sole
and separate account of Agent, (i) a separate fee of $750 pay day, per examiner,
plus out-of-pocket expenses for each financial analysis and examination (i.e.,
audits) of Borrowers performed by personnel employed by Agent; provided,
however, that, so long as no Event of Default has occurred and is continuing,
Borrowers shall not be obligated to pay such fees and
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expenses in respect of more than 3 such audits in any year; (ii) a one time
charge of $3,000 plus outofpocket expenses for expenses for the establishment of
electronic collateral reporting systems; and (iii) the actual charges paid or
incurred by Agent if it elects to employ the services of one or more third
Persons to appraise the Collateral, or any portion thereof, or to assess the
Obligors' business valuation; provided, however, that, so long as no Event of
Default has occurred and is continuing, Borrowers shall not be obligated to pay
such charges in respect of more than one Collateral appraisal or business
valuation in any year.
Upon the payment of the foregoing fees by the Borrowers to Agent, Borrowers
shall be discharged from any further obligation to pay such fees.
2.13 LIBOR OPTION.
(a) INTEREST AND INTEREST PAYMENT DATES. In lieu of having interest
charged at the rate based upon the Base Rate, Borrowers shall have the option
(the "LIBOR Option") to have interest on a portion of the Tranche A Advances be
charged at the LIBOR Rate. Interest on LIBOR Rate Advances shall be payable on
the last day of each Interest Period applicable thereto. On the last day of each
applicable Interest Period, unless Borrower has properly exercised the LIBOR
Option with respect thereto, the interest rate applicable to such LIBOR Rate
Advances automatically shall convert to the rate of interest then applicable to
Base Rate Tranche A Advances under Section 2.7 hereof. At any time that an Event
of Default has occurred and is continuing, Agent shall have the right to convert
the interest rate on all outstanding LIBOR Rate Advances to the Base Rate then
applicable to Tranche A Advances under Section 2.7(a)(ii) hereof; provided,
however, that, unless the Obligations have been declared immediately due and
payable pursuant to Section 9 hereof, any outstanding LIBOR Rate Advances shall
continue to bear interest at the rate applicable thereto that is based upon the
LIBOR Rate (subject to the ability of the Required Lenders to apply Section
2.7(c)(i) thereto) until the last day of each such Interest Period, at which
time the interest rate applicable thereto automatically shall convert to the
rate of interest then applicable to Base Rate Advances under Section 2.7 hereof.
(b) LIBOR ELECTION.
(i) Administrative Borrower may, at any time and from time to
time, so long as no Event of Default has occurred and is continuing,
elect to exercise the LIBOR Option by notifying Agent prior to 11:00
a.m. (California time) at least 3 Business Days prior to the
commencement of the proposed Interest Period (the "LIBOR Deadline").
Notice of Administrative Borrower's election of the LIBOR Option for a
permitted portion of the Tranche A Advances and an Interest Period
pursuant to this Section shall be made by delivery to Agent of a LIBOR
Notice received by Agent before the LIBOR Deadline, or by telephonic
notice received by Agent before the LIBOR Deadline (to be confirmed by
delivery to Agent of a LIBOR Notice received by Agent prior to 5:00
p.m. (California time) on the same day. Promptly (but in no event
later than 3:00 p.m. (California time) on the date of receipt thereof)
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upon its receipt of each such LIBOR Notice, Agent shall provide a copy
thereof to each of the Lenders having a Tranche A Commitment.
(ii) Each LIBOR Notice shall be irrevocable and binding on
Borrowers. In connection with each LIBOR Rate Advance, Borrowers shall
indemnify, defend, and hold Agent and the Lenders harmless against any
loss, cost, or expense incurred by Agent or any Lender as a result of
(a) the payment of any principal of any LIBOR Rate Advance other than
on the last day of an Interest Period applicable thereto (including as
a result of an Event of Default), (b) the conversion of any LIBOR Rate
Advance other than on the last day of the Interest Period applicable
thereto, or (c) the failure to borrow, convert, continue or prepay any
LIBOR Rate Advance on the date specified in any LIBOR Notice delivered
pursuant hereto (such losses, costs, and expenses, collectively,
"Funding Losses"). In the case of a LIBOR Rate Advance, Funding Losses
shall, with respect to Agent or any Lender, be deemed to equal the
amount determined by such Agent or such Lender to be the excess, if
any, of (i) the amount of interest that would have accrued on the
principal amount of such LIBOR Rate Advance had such event not
occurred, at the LIBOR Rate that would have been applicable to such
Advance, for the period from the date of such event to the last day of
the then current Interest Period therefor (or, in the case of a
failure to borrow, convert or continue, for the period that would have
been the Interest Period for such Advance), over (ii) the amount of
interest that would accrue on such principal amount for such period at
the interest rate which Agent or such Lender would be offered were it
to be offered, at the commencement of such period, dollar deposits of
a comparable amount and period in the London interbank market. A
certificate of Agent or a Lender setting forth any amount or amounts
that such Agent or such Lender is entitled to receive pursuant to this
Section shall be delivered to the Borrower and shall be conclusive
absent manifest error.
(iii) Borrower shall have not more than 5 Interest Periods in
effect at any given time. Borrower only may exercise the LIBOR Option
for LIBOR Rate Advances of at least $1,000,000 and integral multiples
of $500,000 in excess thereof.
(c) PREPAYMENTS. Borrowers may prepay LIBOR Rate Advances at any time
without premium or penalty; provided, however, that in the event that LIBOR Rate
Advances are prepaid on any date that is not the last day of the Interest Period
applicable thereto, including as a result of any automatic prepayment through
the required application by Agent of proceeds of Collections in accordance with
Section 2.5(b) or for any other reason, including early termination of the term
of this Agreement or acceleration of the Obligations pursuant to the terms
hereof, Borrowers shall indemnify, defend, and hold Agent and the Lenders and
their participants harmless against any and all Funding Losses in accordance
with Section 2.13(b).
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(d) SPECIAL PROVISIONS APPLICABLE TO LIBOR RATE.
(i) If any change in applicable law occurring subsequent to the
commencement of the then applicable Interest Period (a) imposes,
modifies or deems applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of, or
credit extended by, any Lender; or (b) imposes on any Lender or the
London interbank market any other condition affecting this Agreement
or LIBOR Rate Advances made by such Lender (excluding the Reserve
Percentage), and the result of any of the foregoing shall be to
increase the cost to such Lender of making or maintaining any LIBOR
Rate Advance (or of maintaining its obligation to make any such
Advance), then, in any such event, the affected Lender shall give
Administrative Borrower and Agent notice of the imposition of such
increased costs, which notice shall contain a statement setting forth
the basis for determining the amount of such increased costs and
Borrowers will pay to such Lender such additional amount or amounts as
will compensate such Lender for such additional costs incurred or
reduction suffered.
(ii) In the event that a change in market conditions or a change
in law, regulation, treaty, or directive, or in the interpretation or
application thereof, shall at any time after the date hereof, in the
reasonable opinion of any Lender, make it unlawful or impractical for
such Lender to fund or maintain LIBOR Advances or to continue such
funding or maintaining, or to determine or charge interest rates at
the LIBOR Rate, such Lender shall give notice of such changed
circumstances to Agent and Administrative Borrower and Agent shall
immediately transmit the notice to each other Lender and (y) in the
case of any LIBOR Rate Advances that are outstanding, the date
specified in such Lender's notice shall be deemed to be the last day
of the Interest Period of such LIBOR Rate Advances, and interest upon
the LIBOR Advances then outstanding shall thereafter accrue interest
at the rate then applicable to Base Rate Tranche A Advances as
provided in Section 2.7(a)(ii) or Section 2.7(c)(i), as applicable,
and (z) Borrower shall not be entitled to elect the LIBOR Option until
such Lender determines that it would no longer be unlawful or
impractical to do so.
(e) NO REQUIREMENT OF MATCHED FUNDING. Anything to the contrary
contained herein notwithstanding, neither Agent, nor any Lender, nor any
participant is required actually to acquire eurodollar deposits to fund or
otherwise match fund any Advances as to which interest accrues at the LIBOR
Rate. The provisions of this Section shall apply as if each Lender or its
participants had match funded any Advances as to which interest is accruing at
the LIBOR Rate by acquiring eurodollar deposits for each Interest Period in the
amount of the LIBOR Rate Advances.
(f) NOTICE OF INCREASED COSTS. Borrowers shall not be required to
compensate a Lender or the Issuing Lender pursuant to Section 2.13 for any
increased costs
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incurred more than 90 days prior to the date that such Lender or the Issuing
Lender, as the case may be, notifies Administrative Borrower of the change in
law giving rise to such increased costs and of such Lender's or the Issuing
Lender's intention to claim compensation therefor; provided, that, if the change
in law giving rise to such increased costs is retroactive, then the 90-day
period referred to above shall be extended to include the period of retroactive
effect thereof.
2.14 CAPITAL REQUIREMENTS.
(i) REDUCTION OF RETURN ON CAPITAL. If, after the date hereof,
any Lender determines that (i) the adoption of or change in any law,
rule, regulation or guideline regarding capital requirements for banks
or bank holding companies, or any change in the interpretation or
application thereof by any Governmental Authority charged with the
administration thereof, or (ii) compliance by such Lender or its
parent bank holding company with any guideline, request or directive
of any such entity regarding capital adequacy (whether or not having
the force of law), having the effect of reducing the return on such
Lender's or such holding company's capital as a consequence of such
Lender's Commitment to make Advances hereunder or its obligations in
respect of any Letter of Credit to a level below that which such
Lender or such holding company could have achieved but for such
adoption, change or compliance (taking into consideration such
Lender's or such holding company's then existing policies with respect
to capital adequacy and assuming the full utilization of such entity's
capital) by any amount deemed by such Lender to be material, then such
Lender may notify Administrative Borrower and the Agent thereof.
Borrowers agree to pay such Lender on demand the amount of such
reduction of return of capital as and when such reduction is
determined, payable within 90 days after presentation by such Lender
of a statement in the amount and setting forth in reasonable detail
such Lender's calculation thereof and the assumptions upon which such
calculation was based (which statement shall be deemed true and
correct absent manifest error). In determining such amount, such
Lender may use any reasonable averaging and attribution methods.
(ii) NOTICE OF REDUCTIONS. Borrowers shall not be required to
compensate a Lender or the Issuing Lender pursuant to Section 2.14 for
any reductions incurred more than 90 days prior to the date that such
Lender or the Issuing Lender, as the case may be, notifies
Administrative Borrower of the change in law giving rise to such
reductions and of such Lender's or the Issuing Lender's intention to
claim compensation therefor; provided, that, if the change in law
giving rise to such reductions is retroactive, then the 90-day period
referred to above shall be extended to include the period of
retroactive effect thereof.
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2.15 JOINT AND SEVERAL LIABILITY OF THE BORROWERS.
(a) Each of the Borrowers is accepting joint and several liability
hereunder and under the other Loan Documents in consideration of the financial
accommodations to be provided by the Agent and the Lenders under this Agreement,
for the mutual benefit, directly and indirectly, of each of the Borrowers and in
consideration of the undertakings of the other Borrowers to accept joint and
several liability for the Obligations.
(b) Each of the Borrowers, jointly and severally, hereby irrevocably
and unconditionally accepts, not merely as a surety but also as a co-debtor,
joint and several liability with the other Borrowers, with respect to the
payment and performance of all of the Obligations (including, without
limitation, any Obligations arising under this Section 2.15), it being the
intention of the parties hereto that all the Obligations shall be the joint and
several obligations of each Person composing the Borrowers without preferences
or distinction among them.
(c) If and to the extent that any of the Borrowers shall fail to make
any payment with respect to any of the Obligations as and when due or to perform
any of the Obligations in accordance with the terms thereof, then in each such
event the other Persons composing the Borrowers will make such payment with
respect to, or perform, such Obligation.
(d) The Obligations of each Person composing the Borrowers under the
provisions of this Section 2.15 constitute the absolute and unconditional, full
recourse Obligations of each Person composing the Borrowers enforceable against
each such Borrower to the full extent of its properties and assets, irrespective
of the validity, regularity or enforceability of this Agreement or any other
circumstances whatsoever.
(e) Except as otherwise expressly provided in this Agreement, each
Person composing the Borrowers hereby waives notice of acceptance of its joint
and several liability, notice of any Advances or Letters of Credit issued under
or pursuant to this Agreement, notice of the occurrence of any Default, Event of
Default, or of any demand for any payment under this Agreement, notice of any
action at any time taken or omitted by Agent or Lenders under or in respect of
any of the Obligations, any requirement of diligence or to mitigate damages and,
generally, to the extent permitted by applicable law, all demands, notices and
other formalities of every kind in connection with this Agreement (except as
otherwise provided in this Agreement). Each Person composing the Borrowers
hereby assents to, and waives notice of, any extension or postponement of the
time for the payment of any of the Obligations, the acceptance of any payment of
any of the Obligations, the acceptance of any partial payment thereon, any
waiver, consent or other action or acquiescence by Agent or Lenders at any time
or times in respect of any default by any Person composing the Borrowers in the
performance or satisfaction of any term, covenant, condition or provision of
this Agreement, any and all other indulgences whatsoever by Agent or Lenders in
respect of any of the Obligations, and the taking,
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addition, substitution or release, in whole or in part, at any time or times, of
any security for any of the Obligations or the addition, substitution or
release, in whole or in part, of any Person composing the Borrowers. Without
limiting the generality of the foregoing, each of the Borrowers assents to any
other action or delay in acting or failure to act on the part of any Agent or
Lender with respect to the failure by any Person composing the Borrowers to
comply with any of its respective Obligations, including, without limitation,
any failure strictly or diligently to assert any right or to pursue any remedy
or to comply fully with applicable laws or regulations thereunder, which might,
but for the provisions of this Section 2.15 afford grounds for terminating,
discharging or relieving any Person composing the Borrowers, in whole or in
part, from any of its Obligations under this Section 2.15, it being the
intention of each Person composing the Borrowers that, so long as any of the
Obligations hereunder remain unsatisfied, the Obligations of such Person
composing the Borrowers under this Section 2.15 shall not be discharged except
by performance and then only to the extent of such performance. The Obligations
of each Person composing the Borrowers under this Section 2.15 shall not be
diminished or rendered unenforceable by any winding up, reorganization,
arrangement, liquidation, reconstruction or similar proceeding with respect to
any Person composing the Borrowers or any Agent or Lender. The joint and several
liability of the Persons composing the Borrowers hereunder shall continue in
full force and effect notwithstanding any absorption, merger, amalgamation or
any other change whatsoever in the name, constitution or place of formation of
any of the Persons composing the Borrowers or any Agent or Lender.
(f) The provisions of this Section 2.15 are made for the benefit of
the Agent, the Lenders and their respective successors and assigns, and may be
enforced by it or them from time to time against any or all of the Persons
composing the Borrowers as often as occasion therefor may arise and without
requirement on the part of any such Agent, Lender, successor or assign first to
marshal any of its or their claims or to exercise any of its or their rights
against any of the other Persons composing the Borrowers or to exhaust any
remedies available to it or them against any of the other Persons composing the
Borrowers or to resort to any other source or means of obtaining payment of any
of the Obligations hereunder or to elect any other remedy. The provisions of
this Section 2.15 shall remain in effect until all of the Obligations shall have
been paid in full or otherwise fully satisfied. If at any time, any payment, or
any part thereof, made in respect of any of the Obligations, is rescinded or
must otherwise be restored or returned by any Agent or Lender upon the
insolvency, bankruptcy or reorganization of any of the Persons composing the
Borrowers, or otherwise, the provisions of this Section 2.15 will forthwith be
reinstated in effect, as though such payment had not been made.
(g) Each of the Persons composing the Borrowers hereby agrees that it
will not enforce any of its rights of contribution or subrogation against the
other Persons composing the Borrowers with respect to any liability incurred by
it hereunder or under any of the other Loan Documents, any payments made by it
to the Agent or the Lenders with respect to any of the Obligations or any
collateral security therefor until such time as
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all of the Obligations have been paid in full in cash. Any claim which any
Borrower may have against any other Borrower with respect to any payments to any
Agent or Lender hereunder or under any other Loan Documents are hereby expressly
made subordinate and junior in right of payment, without limitation as to any
increases in the Obligations arising hereunder or thereunder, to the prior
payment in full in cash of the Obligations and, in the event of any insolvency,
bankruptcy, receivership, liquidation, reorganization or other similar
proceeding under the laws of any jurisdiction relating to any Borrower, its
debts or its assets, whether voluntary or involuntary, all such Obligations
shall be paid in full in cash before any payment or distribution of any
character, whether in cash, securities or other property, shall be made to any
other Borrower therefor.
(h) Each of the Persons composing the Borrowers hereby agrees that,
after the occurrence and during the continuance of any Default or Event of
Default, the payment of any amounts due with respect to the indebtedness owing
by any Borrower to any other Borrower is hereby subordinated to the prior
payment in full in cash of the Obligations. Each Borrower hereby agrees that
after the occurrence and during the continuance of any Default or Event of
Default, such Borrower will not demand, sue for or otherwise attempt to collect
any indebtedness of any other Borrower owing to such Borrower until the
Obligations shall have been paid in full in cash. If, notwithstanding the
foregoing sentence, such Borrower shall collect, enforce or receive any amounts
in respect of such indebtedness, such amounts shall be collected, enforced and
received by such Borrower as trustee for the Collateral Agent, and the
Collateral Agent shall deliver any such amounts to the Administrative Agent for
application to the Obligations in accordance with Section 2.4(b).
2.16 REGISTERED NOTES.
Administrative Borrower on behalf of each of the Persons comprising the
Borrowers agrees to record each Advance on the Register referred to in Section
14.1. Any Advance recorded on the Register (the "Registered Loan") may not be
evidenced by promissory notes other than Registered Notes. Upon the registration
of any Advance, each Borrower agrees, at the request of any Lender (which
request shall contain information concerning the aggregate amount of the
applicable Advances to be subject to such note and the allocation of such
Advances to such Lender), to execute and deliver to such Lender a promissory
note in registered form to evidence such Registered Loan (i.e. containing
registered note language in form and substance acceptable to such Lender) and
registered as provided in Section 14.1 (a "Registered Note"), payable to the
order of such Lender and otherwise duly completed. Once recorded on the
Register, the Advances evidenced by such Registered Note may not be removed from
the Register so long as it remains outstanding, and a Registered Note may not be
exchanged for a promissory note that is not a Registered Note.
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2.17 SECURITIZATION.
Each Borrower hereby acknowledges that the Lenders and each of their
Affiliates may sell or securitize the Advances (a "Securitization") through the
pledge of the Advances as collateral security for loans to such Lenders or their
Affiliates or through the sale of the Advances or the issuance of direct or
indirect interests in the Advances, which loans to such Lenders or their
Affiliate or direct or indirect interests will be rated by Moody's, Standard &
Poor's or one or more other rating agencies (the "Rating Agencies"). Each
Borrower shall cooperate with such Lenders and their Affiliates to effect the
Securitization including, without limitation, by (a) amending this Agreement and
the other Loan Documents, and executing such additional documents, as reasonably
requested by such Lenders in connection with the Securitization, provided that
(i) any such amendment or additional documentation does not impose material
additional costs on the Borrowers and (ii) any such amendment or additional
documentation does not materially adversely affect the rights, or materially
increase the obligations, of the Borrowers under the Loan Documents or change or
affect in a manner adverse to the Borrowers the financial terms of the Advances,
(b) providing such information as may be reasonably requested by such Lenders in
connection with the rating of the Advances or the Securitization, and (c)
providing in connection with any rating of the Advances or Term Loans a
certificate (i) agreeing to indemnify such Lenders and any of their Affiliates,
any of the Rating Agencies, or any party providing credit support or otherwise
participating in the Securitization (collectively, the "Securitization Parties")
for any losses, claims, damages or liabilities (the "Liabilities") to which such
Lenders, their Affiliates or such Securitization Parties may become subject
insofar as the Liabilities arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in any Loan Document
or in any writing delivered by or on behalf of any Borrowers or its Affiliates
to the Lenders in connection with any Loan Document or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein, or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading and such
indemnity shall survive any transfer by any Lender or its successors or assigns
of the Advances and (ii) agreeing to reimburse such Lenders and any of their
Affiliates for any legal or other expenses reasonably incurred by such Persons
in connection with defending the Liabilities. Lenders shall use reasonable
efforts to minimize any costs, liabilities, or administrative burden on any
Borrower in connection with such Borrower's compliance with this section.
3. CONDITIONS; TERM OF AGREEMENT.
3.1 CONDITIONS PRECEDENT TO THE INITIAL EXTENSION OF CREDIT.
The obligation of the Lender Group (or any member thereof) to make the
initial Advance (or otherwise to extend any credit provided for hereunder), is
subject to the fulfillment, to the reasonable satisfaction of Agent and each of
the Lenders, of each of the conditions precedent set forth below:
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(a) the Closing Date shall occur on or before April 7, 2000;
(b) Agent shall have received all financing statements required by
Agent, duly executed by the Obligors, and Agent shall have received confirmation
of the filing of all (or as many as is acceptable to Agent) of such financing
statements;
(c) Agent shall have received each of the following documents, in form
and substance satisfactory to Agent and each of the Lenders, duly executed, and
each such document shall be in full force and effect:
(i) this Agreement;
(ii) the Security Agreement, together with the U.S. motor
vehicle registrations requested by Agent;
(iii) tri-party blocked account agreements governing the
Collection Accounts and the Lockbox Accounts;
(iv) the Disbursement Letter;
(v) the Stock Pledge Agreement, and, as to each Obligor, all
certificates representing shares of Stock that are pledged under the
Stock Pledge Agreement, together with undated and executed Stock
powers with respect to such Stock endorsed in blank, all promissory
notes that are pledged under the Stock Pledge Agreement, together with
executed endorsements in blank of such promissory notes, and any
appropriate control agreements referenced in the Stock Pledge
Agreement governing the pledge of uncertificated equity interests
owned by Obligors;
(vi) the Trademark Security Agreement;
(vii) the Patent Security Agreement;
(viii) the Copyright Security Agreement;
(ix) the Rolling Stock Security Agreement;
(x) the Canadian Guaranty;
(xi) the Canadian Security Agreement;
(xii) the Guaranty;
(xiii) the Hypothec;
(xiv) the Guarantor Security Agreement;
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(xv) the Suretyship Agreement;
(xvi) the Mortgages;
(xvii) the Fee Split Letters;
(xviii) the Pay-Off Letter, together with UCC termination
statements, mortgage lien releases, U.S. motor vehicle registrations
and lien releases relating to the same, and other documentation
evidencing the termination by DIP Agent of its Liens in and to the
properties and assets of the Obligors;
(d) Agent shall have received a certificate from the Secretary of each
Borrower attesting to the resolutions of such Borrower's Board of Directors
authorizing its execution, delivery, and performance of this Agreement and the
other Loan Documents to which such Borrower is a party and authorizing specific
officers of such Borrower to execute the same;
(e) Agent shall have received copies of each Borrower's Governing
Documents, as amended, modified, or supplemented to the Closing Date, certified
by the Secretary of such Borrower;
(f) Agent shall have received a certificate of status with respect to
each Borrower (other than Oneida Asbestos Removal Inc.), dated within 20
Business Days of the Closing Date or such other date as is acceptable to Agent,
such certificate to be issued by the appropriate officer of the jurisdiction of
organization of such Borrower, which certificate shall indicate that such
Borrower is in good standing in such jurisdiction;
(g) Agent shall have received certificates of status with respect to
each Borrower (other than Oneida Asbestos Removal Inc. and such other Borrowers
as may be agreed to by Agent), each dated within 25 Business Days of the Closing
Date or such other date as is acceptable to Agent, such certificates to be
issued by the appropriate officer of the jurisdiction in which the Chief
Executive Office of such Borrower is located, which certificates shall indicate
that such Borrower is in good standing in such jurisdictions;
(h) Agent shall have received a certificate from the Secretary of each
Guarantor attesting to the resolutions of such Guarantor's Board of Directors
authorizing its execution, delivery, and performance of the Loan Documents to
which such Guarantor is a party and authorizing specific officers of such
Guarantor to execute the same;
(i) Agent shall have received copies of each Guarantor's Governing
Documents, as amended, modified, or supplemented to the Closing Date, certified
by the Secretary of such Guarantor;
(j) Agent shall have received a certificate of status or equivalent
document satisfactory to Agent with respect to each Canadian Guarantor, dated
within 20
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Business Days of the Closing Date or such other date as is acceptable to Agent,
such certificate to be issued by the appropriate officer of the jurisdiction of
organization of such Canadian Guarantor;
(k) Agent shall have received a certificate of insurance, together
with the endorsements thereto, as are required by Section 6.9, the form and
substance of which shall be satisfactory to Agent and its counsel;
(l) Agent shall have received fully executed and delivered originals
of (i) the Collateral Agency and Intercreditor Agreement, (ii) the Prepetition
Lien Subordination and Intercreditor Agreement, and (iii) the Bonding Lien
Intercreditor Agreement, the form and substance of each of which shall be
satisfactory to Agent, the Lenders, and their respective counsel;
(m) Agent shall have received opinions of Obligors' United States and
Canadian counsel in form and substance satisfactory to Agent in its Permitted
Discretion;
(n) Borrowers shall have the Required Availability after giving effect
to the initial extensions of credit;
(o) Agent shall have received copies of the Junior Secured Debt
Documents, as amended, modified, or supplemented to the Closing Date, certified
by the Secretary of Parent, and such agreement and documents shall be
satisfactory in form and substance to Agent;
(p) Agent shall have received copies of the PIK Unsecured Debt
Indenture and the forms of each of the notes and related agreements and
documents, as amended, modified, or supplemented to the Closing Date, certified
by the Secretary of Parent, and such agreement and documents shall be
satisfactory in form and substance to Agent;
(q) Agent shall have received copies of the Unsecured Convertible Debt
Indenture and the forms of each of the notes and related agreements and
documents, as amended, modified, or supplemented to the Closing Date, certified
by the Secretary of Parent, and such agreement and documents shall be
satisfactory in form and substance to Agent;
(r) the Confirmation Order shall have been entered by the Bankruptcy
Court and shall be in full force and effect, shall be final and non-appealable,
and no appeal of the Confirmation Order shall be pending,
(s) the Stipulation and Order shall have been entered by the
Bankruptcy Court and shall be in full force and effect,
(t) the Canadian Confirmation Order and the Canadian Vesting Order
each shall have been entered by the Canadian Bankruptcy Court and shall be in
full force and
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effect, shall be final and non-appealable, and no appeal of either of such
orders shall be pending,
(u) the Plan of Reorganization shall have become effective pursuant to
its terms and the terms and conditions of the Confirmation Order and Agent shall
have received evidence satisfactory to it that each of the conditions to
effectiveness were satisfied;
(v) the Canadian Transactions shall have been fully consummated in
accordance with the terms and conditions of the Canadian Confirmation Order;
(w) the Pre-Closing Restructuring Transactions shall have been fully
consummated;
(x) Agent shall have received evidence satisfactory to it that (i)
Parent has changed its name from "Philip Services (Delaware), Inc." to "Philip
Services Corporation", (ii) "1381648 Ontario Inc." has changed its name to
"Philip Services Inc.", and (iii) "1381649 Ontario Inc." has changed its name to
"Philip Analytical Services Inc.";
(y) Agent shall have received evidence satisfactory to it, including
receipt of recently dated opinions of counsel, augmented with any necessary
certificate of the chief financial officer of Parent, regarding the
impracticality and/or the burdensome effect upon Obligors that would result in
the event that Phencorp Reinsurance Company Inc., a Barbados corporation, and
Phencorp International B.V., a Netherlands corporation, guarantied the
Obligations or from hypothecated their assets to secure the Obligations;
(z) Agent shall have received evidence satisfactory to it that all
Liens in favor of the "Account Intermediaries" (as that term is defined in the
Plan) have been terminated;
(aa) Agent shall have received evidence satisfactory to it, including
an appropriate certificate from the chief financial officer of Parent to the
effect that PSC (Europe) Limited or such other entity that has been approved by
Agent, has received no less than $5 million in capital contributions from Philip
Services Corp. during calendar year 2000;
(bb) Borrowers shall have paid all Lender Group Expenses incurred by
Agent or any other Lender in connection with the transactions evidenced by this
Agreement for which invoices have been rendered prior to the initial Advance or
the initial issuance of a Letter of Credit;
(cc) Agent shall have received evidence satisfactory to it, including
an appropriate certificate from the chief financial officer of Parent to the
effect that the mailing address of 100 King Street West, Suite 2200, Hamilton,
Ontario, is a proper mailing address as of the Closing Date for the following
Borrowers: Luntz Acquisition (Delaware) Corporation; RESI Acquisition (Delaware)
Corporation; Philip/JD Meagher, Inc.; Philip Metals Recovery (USA) Inc.;
ServTech EPC, Inc.; and Philip Metals (USA), Inc. and that
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any mail delivered to such address will be received in the ordinary course of
business by such Borrowers;
(dd) Agent shall have received copies of the policies of insurance,
together with the endorsements thereto, as are required by Section 6.9; and
(ee) all other documents and legal matters in connection with the
transactions contemplated by this Agreement shall have been delivered, executed,
or recorded and shall be in form and substance satisfactory to Agent and its
counsel.
3.2 [INTENTIONALLY OMITTED]
3.3 CONDITIONS PRECEDENT TO ALL EXTENSIONS OF CREDIT.
The obligation of the Lender Group (or any member thereof) to make all
Advances, Swing Loans, or to issue Letters of Credit (and to make any other
extensions of credit provided for hereunder) shall be subject to the following
conditions precedent:
(a) the representations and warranties of the Obligors contained in
this Agreement and the other Loan Documents shall be true and correct in all
material respects on and as of the date of such extension of credit, as though
made on and as of such date (except to the extent that such representations and
warranties relate solely to an earlier date),
(b) no Default or Event of Default shall have occurred and be
continuing on the date of such extension of credit, nor shall either result from
the making thereof,
(c) no injunction, writ, restraining order, or other order of any
nature prohibiting, directly or indirectly, the extending of such credit shall
have been issued and remain in force by any Governmental Authority against
Borrowers, Agent, any Lender, or any of their Affiliates, and
(d) after giving effect to such Advance, Swing Loan, Letter of Credit,
or other extension of credit, Combined Availability is greater than zero.
The foregoing conditions precedent are not conditions to each Lender (i)
participating in or reimbursing Agent for such Lenders' Pro Rata Share of any
drawings under Letters of Credit as provided herein, or (ii) participating in or
reimbursing Swing Lender or the Agent for such Lenders' Pro Rata Share of any
Swing Loan or Agent Advance as provided herein.
3.4 TERM.
This Agreement shall become effective upon the execution and delivery
hereof by Borrowers, Agent and the Lender Group and shall continue in full force
and effect for a term ending on September 30, 2002 (the "Maturity Date"). The
foregoing
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notwithstanding, the Lender Group, upon the election of the Required Lenders,
shall have the right to terminate its obligations under this Agreement
immediately and without notice upon the occurrence and during the continuation
of an Event of Default.
EFFECT OF TERMINATION.
On the date of termination of this Agreement, all Obligations (including
contingent reimbursement obligations of Borrowers with respect to any
outstanding Letters of Credit) immediately shall become due and payable without
notice or demand. No termination of this Agreement, however, shall relieve or
discharge Borrowers of Borrowers' duties, Obligations, or covenants hereunder.
Continuing security interests in the Collateral, for the benefit of the Lender
Group, shall remain in effect until all Obligations have been fully and finally
discharged and the Lender Group's obligations to provide additional credit
hereunder have been terminated. Upon termination of this Agreement and after all
Obligations have been fully and finally discharged and the Lender Group's
obligations to provide additional credit under the Loan Documents have been
terminated irrevocably, Agent will, at Borrowers' sole expense, instruct
Collateral Agent to execute and deliver any lien releases, mortgage releases,
discharges of security interests, and other similar discharge or release
documents (and, if applicable, in recordable form) as are reasonably necessary
to release, as of record, the Liens granted by the Obligors to Collateral Agent
for the benefit of the Lender Group with respect to the Obligations.
EARLY TERMINATION BY BORROWERS.
Borrowers have the option, at any time upon 45 days prior written notice to
Agent, to terminate this Agreement by paying to Agent, for the benefit of the
Lender Group, in cash, the Obligations (including either (i) providing cash
collateral to be held by Agent for the benefit of the Lender Group in an amount
equal to 105% of the maximum amount of the Lender Group's obligations under
outstanding Letters of Credit, or (ii) causing the original Letters of Credit to
be returned to Agent) in full, together with the Applicable Prepayment Premium.
If Borrowers have sent a notice of termination pursuant to the provisions of
this Section, but fail to pay the Obligations in full on the date set forth in
said notice, then Agent, acting upon the instructions of the Required Lenders,
shall have the election, to be made by a notice in writing sent by Agent to
Administrative Borrower within 60 Business Days after the date that Borrowers
had scheduled as the early termination date, either to (a) require Borrowers to
repay the Obligations in full on a date that is 10 days after the date on which
such notice is sent, (b) renew this Agreement for an additional term of 1 year
(provided, however, that if the Maturity Date shall be less than 1 year from the
date that is 60 Business Days after the date that Borrowers had scheduled as the
early termination date, such renewal only shall be upon the consent of all
Lenders), or (c) continue the terms of this Agreement as if no such early
termination notice had been sent. In the event of the termination of this
Agreement at any time prior to the Maturity Date, for any other reason,
including: (i) termination upon the election of the Lender
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Group to terminate after the occurrence of an Event of Default, (ii) foreclosure
and sale of Collateral resulting in repayment of the Obligations in full, (iii)
sale of the Collateral in any Insolvency Proceeding resulting in repayment of
the Obligations in full, or (iv) restructure, reorganization and/or compromise
of the Obligations by the confirmation of a plan of reorganization, plan or
arrangement, or any other plan of compromise, restructure or arrangement in any
Insolvency Proceeding, in view of the impracticability and extreme difficulty of
ascertaining the actual amount of damages to the Lender Group and/or profits
lost by the Lender Group as a result of such early termination, and by mutual
agreement of the parties as to a reasonable estimation and calculation of the
lost profits and/or damages of the Lender Group, Borrowers shall pay the
Applicable Prepayment Premium to the Lender Group measured as of the date of
such termination.
4. SECURITY INTERESTS.
4.1 DELIVERY OF ADDITIONAL DOCUMENTATION REQUIRED.
At any time upon the request of Agent, Borrowers shall execute and deliver
to Agent or Collateral Agent, as applicable, all financing statements, fixture
filings, security agreements, Control Agreements, pledges, assignments,
endorsements of certificates of title, and all other documents that Agent
reasonably may deem necessary, in form and substance reasonably satisfactory to
Agent, to perfect and continue perfected Collateral Agent's Liens in the
Collateral (whether now owned or hereafter arising or acquired), and in order to
fully consummate all of the transactions contemplated hereby and under the other
Loan Documents.
4.2 POWER OF ATTORNEY.
Each Borrower hereby irrevocably makes, constitutes, and appoints Agent
(and any of Agent's officers, employees, or agents designated by Agent) as such
Borrower's true and lawful attorney, with power to (a) if such Borrower refuses
to, or fails timely to execute and deliver any of the documents described in
Section 4.1, sign the name of such Borrower on any of the documents described in
Section 4.1, (b) at any time that an Event of Default has occurred and is
continuing, sign Borrower's name on any drafts against Account Debtors and
notices to Account Debtors, (c) send requests for verification of Accounts, (d)
endorse such Borrower's name on any Collection item that may come into the
Lender Group's possession, (e) at any time that an Event of Default has occurred
and is continuing, notify the post office authorities to change the address for
delivery of such Borrower's mail to an address designated by Agent, to receive
and open all mail addressed to such Borrower, and to retain all mail relating to
the Collateral and forward all other mail to such Borrower, (f) at any time that
an Event of Default has occurred and is continuing, make, settle, and adjust all
claims under such Borrower's policies of insurance and make all determinations
and decisions with respect to such policies of insurance, (g) at any time that
an Event of Default has occurred and is continuing, settle and adjust disputes
and claims respecting the Accounts directly with Account Debtors, for amounts
and upon
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terms that Agent determines to be reasonable, and Agent may cause to be executed
and delivered any documents and releases that Agent determines to be necessary,
and (h) if Borrower has failed to do so within the time specified in Section
6.19 herein, publish notice of the occurrence of the Effective Date of the Plan
of Reorganization in conformity with paragraph 25 of the Confirmation Order. The
appointment of Agent as such Borrower's attorney, and each and every one of its
rights and powers, being coupled with an interest, is irrevocable until all of
the Obligations have been fully and finally repaid and performed and the Lender
Group's obligations to extend credit hereunder are terminated.
4.3 RIGHT TO INSPECT.
Agent and each Lender (through any of their respective officers, employees,
or agents) shall have the right, from time to time hereafter to inspect the
Books and to check, test, and appraise the Collateral in order to verify any
Borrower's financial condition or the amount, quality, value, condition of, or
any other matter relating to, the Collateral.
4.4 CONTROL AGREEMENTS.
Each Borrower agrees that it will not transfer assets out of any Securities
Accounts other than as permitted under Section 7.21 and, if to another
securities intermediary, unless each of such Borrower, Collateral Agent, and the
substitute securities intermediary have entered into a Control Agreement. No
arrangement contemplated hereby or by any Control Agreement in respect of any
Securities Accounts or other investment property shall be modified by a Borrower
without the prior written consent of Agent. Upon the occurrence of and during
the continuation of an Event of Default, Collateral Agent may notify any
securities intermediary to liquidate or transfer the applicable Securities
Account or any related investment property maintained or held thereby and remit
the proceeds thereof to Agent's Account.
4.5 COLLATERAL AGENT TO HOLD QUEBEC IRREVOCABLE POWER OF ATTORNEY.
For greater certainty, and without limiting the powers of the Agent or the
Collateral Agents hereunder or under any of the Loan Documents, each of the
Lenders and each Borrower hereby acknowledges that each of the Collateral Agents
acting for the Lenders having Tranche A Commitments and the Lenders having
Tranche B Commitments shall, for purposes of holding any security granted by the
Canadian Guarantors on the Canadian Guarantors' respective property pursuant to
the laws of the Province of Quebec to secure payment of the Demand Notes, be the
holder of an irrevocable power of attorney (fonde de pouvoir) (within the
meaning of the Civil Code of Quebec) for themselves and all present and future
Lenders and in particular for all present and future holders of such Demand
Notes. Agent and each of the Lenders hereby irrevocably constitutes, to the
extent necessary, each of the Collateral Agents acting for the Lenders having
Tranche A Commitments and the Lenders having Tranche B Commitments as the holder
of an
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irrevocable power of attorney (fonde de pouvoir) (within the meaning of Article
2692 of the Civil Code of Quebec) in order to hold security granted by the
Canadian Guarantors in the Province of Quebec to secure such Demand Notes. Each
permitted assignee of the Lenders shall be deemed to have confirmed and ratified
the constitution of each Collateral Agent as the holder of such irrevocable
power of attorney (fonde de pouvoir) by execution of the relevant assignment of
its interest. Notwithstanding the provisions of Section 32 of the Special
Corporate Powers Act (Quebec), each Collateral Agent may acquire and be the
holder of such Demand Notes. The Borrower on its own behalf and on behalf of the
Canadian Guarantors hereby acknowledges that the Demand Notes issued by each
Canadian Guarantor constitute a title of indebtedness, as such term is used in
Article 2692 of the Civil Code of Quebec.
5. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lender Group to enter into this Agreement, each
Borrower makes the following representations and warranties to the Lender Group
which shall be true, correct, and complete, in all material respects, as of the
date hereof, and shall be true, correct, and complete in all material respects
as of the Closing Date, and at and as of the date of the making of each Advance
(or other extension of credit) made thereafter, as though made on and as of the
date of such Advance (or other extension of credit) (except to the extent that
such representations and warranties relate solely to an earlier date) and such
representations and warranties shall survive the execution and delivery of this
Agreement:
5.1 NO ENCUMBRANCES.
Each Borrower has good and indefeasible title to its Collateral and Real
Property, free and clear of Liens except for Permitted Liens.
5.2 ELIGIBLE ACCOUNTS.
The Eligible Accounts are bona fide existing payment obligations of Account
Debtors created by the sale and delivery of Inventory or the rendition of
services to Obligors' customers in the ordinary course of the Obligors'
business, owed to an Obligor without defenses, disputes, offsets, counterclaims,
or rights of return or cancellation. Any goods giving rise to such Eligible
Accounts have been delivered to the customer, or to the customer's agent for
immediate shipment to the customer, and any services giving rise to such
Eligible Accounts have been fully performed. As to each Eligible Account, such
right to payment is not, unless an exception to any of the following has been
consented to in writing by Agent:
(a) owed by an employee, Affiliate, or agent of any Borrower,
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(b) on account of a transaction wherein goods were placed on
consignment or were sold pursuant to a guaranteed sale, a sale or return, a sale
on approval, a bill and hold, or pursuant to any other agreement providing for
repurchase or return (other than pursuant to warranties made in the ordinary
course of business),
(c) payable in a currency other than Dollars (in the case of Eligible
Domestic Accounts) or Canadian dollars (in the case of Eligible Canadian
Accounts),
(d) owed by an Account Debtor that has (unless the Account Debtor has
provided to the Agent an enforceable "non-offset" letter in form and substance
reasonably satisfactory to the Agent) or has asserted a right of setoff, has
disputed its liability, or has made any claim with respect to its obligation to
honor the Obligor's right to payment (unless such asserted right of setoff,
dispute, or claim has been disclosed in writing to Agent, in which case, such
representation shall only be made to the extent of such Account that is not the
subject of such setoff, dispute, or claim),
(e) owed by an Account Debtor that, to the knowledge of Borrowers, is
subject to any Insolvency Proceeding or is not Solvent and no Obligor has
received notice of an imminent Insolvency Proceeding involving the Account
Debtor or a material impairment of the financial condition of the applicable
Account Debtor,
(f) on account of a transaction as to which the goods, the sale of
which gives rise to such right to payment, have not been delivered to the
Obligor's customer or the services giving rise to such right to payment have not
been fully performed,
(g) a right to receive progress payments or other advance billings
that are due prior to the completion of the performance by the Obligor that is
to give rise to the subject right to payment, and
(h) on account of a transaction that has not been billed to the
customer (in the case of Eligible Accounts other than Eligible Unbilled
Accounts) or is not to be billed to the customer within 30 days of the date of
determination (in the case of Eligible Unbilled Accounts).
5.3 RIGHTS AGREEMENT.
Exhibit RA-1 is a true, correct, and complete copy of the executed Rights
Agreement, and the Rights Agreement has not been amended, supplemented or
modified in any way, and remains in full force and effect.
5.4 EQUIPMENT.
Except for immaterial amounts of idle Equipment, all of the Equipment is
used or held for use in the Obligors' business and is fit for such purposes.
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5.5 LOCATION OF INVENTORY AND EQUIPMENT.
Except for rail cars, other rolling stock, registered motor vehicles,
aircraft, vessels, and immaterial (less than $10,000,000 in market value as
reasonably determined by Collateral Agent) amounts of Inventory and other
Equipment, (i) no Inventory or Equipment is stored with a bailee, warehouseman,
or similar party, and (ii) no Inventory or Equipment is located at any location
other than the locations identified on Schedule 6.11.
5.6 INVENTORY RECORDS.
The Obligors, taken as a whole, keep records that are accurate, in all
material respects, and that itemize and describe the type and quantity of its
Inventory held for sale and its cost therefor.
5.7 LOCATION OF CHIEF EXECUTIVE OFFICE; FEIN.
The chief executive office of each of the Obligors is located at the
address indicated in Schedule 5.7 and each Borrower's FEIN is identified in
Schedule 5.7.
5.8 DUE ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) (a) Each Obligor (except for Oneida Asbestos Removal Inc.) is duly
organized and existing and in good standing under the laws of the jurisdiction
of its organization and qualified to do business in any state where the failure
to be so qualified reasonably could be expected to have a Material Adverse
Change.
(b) Set forth on Schedule 5.8, is a complete and accurate description
of the authorized capital Stock of Parent, by class, and, as of the Closing
Date, a description of the number of shares of each such class that are issued
and outstanding. Other than as described on Schedule 5.8, and other than the
conversion rights applicable under the Junior Debt Documents, there are no
subscriptions, options, warrants, or calls relating to any shares of the capital
Stock of Parent, including any right of conversion or exchange under any
outstanding security or other instrument. Except for any such obligation set
forth in the Junior Debt Documents, Parent is not subject to any obligation
(contingent or otherwise) to repurchase or otherwise acquire or retire any
shares of its capital Stock or any security convertible into or exchangeable for
any of its capital Stock.
(c) Set forth on Schedule 5.8, is a complete and accurate list of
Parent's direct and indirect Subsidiaries, showing: (i) the jurisdiction of
their incorporation; (ii) the number of shares of each class of common and
preferred Stock authorized for each of such Subsidiaries; and (iii) the number
and the percentage of the outstanding shares of each such class owned directly
or indirectly by Parent. All of the outstanding capital Stock of each such
Subsidiary has been validly issued and is fully paid and non-assessable.
(d) Except as set forth on Schedule 5.8, no capital Stock (or any
securities, instruments, warrants, options, purchase rights, conversion or
exchange rights, calls, commitments or claims of any character convertible into
or exercisable for Stock) of
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any direct or indirect Subsidiary of Parent is subject to the issuance of any
security, instrument, warrant, option, purchase right, conversion or exchange
right, call, commitment or claim of any right, title, or interest therein or
thereto.
5.9 DUE AUTHORIZATION; NO CONFLICT.
(a) (a) The execution, delivery, and performance by each Obligor of
the Loan Documents to which it is a party have been duly authorized by all
necessary action on the part of such Obligor.
(b) The execution, delivery, and performance by each Obligor of the
Loan Documents to which it is a party do not and will not (i) violate any
provision of federal, state, or local law or regulation applicable to such
Obligor, the Governing Documents of such Obligor, or any order, judgment, or
decree of any court or other Governmental Authority binding on such Obligor,
(ii) conflict with, result in a breach of, or constitute (with due notice or
lapse of time or both) a default under any material contractual obligation of
such Obligor, except that no Borrower makes the foregoing representation and
warranty as to whether the grant of Collateral Agent's Liens in and to any
Obligor's right, title, and interest in and to any agreement, instrument,
license, permit or other document or General Intangible conflicts with or
constitutes a default under such agreement, instrument, license, permit or other
document or General Intangible if and to the extent such agreement, instrument,
license, permit or other document or General Intangible purports to prohibit the
assignment thereof or grant of a security interest therein, (iii) result in or
require the creation or imposition of any Lien of any nature whatsoever upon any
properties or assets of such Obligor, other than Permitted Liens, or (iv) except
to the extent obtained as of the Closing Date, require any approval of
stockholders or any approval or consent of any Person under any material
contractual obligation of such Obligor.
(c) Other than the filing of financing statements, fixture filings,
Mortgages, filings under the PPSA, and filings necessary to perfect security
interests in aircraft, rail cars, vessels, and certificated motor vehicles, the
execution, delivery, and performance by each Obligor of the Loan Documents to
which such Obligor is a party do not and will not require any registration with,
consent, or approval of, or notice to, or other action with or by, any
Governmental Authority or other Person.
(d) The Loan Documents to which each Obligor is a party, and all other
documents contemplated hereby and thereby, when executed and delivered by such
Obligor will be the legally valid and binding obligations of such Obligor,
enforceable against such Obligor in accordance with their respective terms,
except as enforcement may be limited by equitable principles or by bankruptcy,
insolvency, reorganization, moratorium, or similar laws relating to or limiting
creditors' rights generally.
(e) The Collateral Agent's Liens granted by the Obligors, for the
benefit of the Lender Group, in and to their properties and assets pursuant to
this Agreement and the other Loan Documents are validly created, perfected, and
first priority Liens (in the case of all Obligations other than the Tranche B
Obligations) or second priority Liens (in the
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case of Tranche B Obligations), subject only to Collateral Agent's Liens granted
by the Obligors, for the benefit of the holders of the Junior Secured Debt
(which Liens are to be junior and subordinate to the Collateral Agent's Liens
for the benefit of the Lender Group) and certain Permitted Liens that are
specifically identified on Schedule P-3 as being entitled to have priority over
Collateral Agent's Liens.
5.10 LITIGATION.
Other than those matters disclosed on Schedule 5.10, there are no actions,
suits, or proceedings pending or, to the best knowledge of Borrowers, threatened
against any Obligor, except for (a) matters that are fully covered by insurance
(subject to customary deductibles), and (b) matters arising after the Closing
Date that, if decided adversely to an Obligor, reasonably could not be expected
to result in a Material Adverse Change.
5.11 NO MATERIAL ADVERSE CHANGE.
Attached hereto as Schedule 5.11 is a pro forma balance sheet of Parent and
its Subsidiaries that is dated as of the Closing Date, which was prepared based
upon the most recent balance sheet of Parent and its Subsidiaries available
prior to the Closing Date, which was prepared in accordance with GAAP (except
for the omission of footnotes, and certain reclassifications and interim period
adjustments and accruals (all of which are of a recurring nature and none of
which individually, or in the aggregate, would be material)) and presents fairly
in all material respects the consolidated financial position of Parent and its
Subsidiaries as of the Closing Date. There has not been a Material Adverse
Change with respect to Parent and its Subsidiaries since the Closing Date.
5.12 FRAUDULENT TRANSFER.
(a) The Obligors, taken as a whole, are Solvent.
(b) No transfer of property is being made by an Obligor and no
obligation is being incurred by an Obligor in connection with the transactions
contemplated by this Agreement or the other Loan Documents with the intent to
hinder, delay, or defraud either present or future creditors of such Obligor.
5.13 EMPLOYEE BENEFITS.
None of the Borrowers, any of their Subsidiaries, or any of their ERISA
Affiliates maintains or contributes or is required to contribute to any Benefit
Plan or any Multiemployer Plan, other than those listed on Schedule 5.13 (such
schedule may be amended by Borrowers at any time after the Closing Date only
with the prior written consent of the Agent, which consent may be conditioned
upon the amendment of the Loan Documents to add such further ERISA-related (and
any applicable Canadian law counterparts) provisions as Agent may require in its
Permitted Discretion). As of the
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Closing Date, Borrowers and each ERISA Affiliate have satisfied the minimum
funding standards of ERISA and the IRC with respect to each Benefit Plan to
which it is obligated to contribute. Full payment has been made by the Borrowers
or any of their ERISA Affiliates of all minimum amounts which such entities are
required to contribute under the terms of each Plan and Multiemployer Plan
except where the failure to so comply, taking all instances in the aggregate,
would not reasonably be expected to result in liability in respect of such
minimum amounts in excess of $35,000. No ERISA Event has occurred nor has any
other event occurred that may result in an ERISA Event that reasonably could be
expected to result in a Material Adverse Change. None of the Borrowers or their
Subsidiaries, any ERISA Affiliate, or any fiduciary of any Plan is subject to
any direct or indirect liability with respect to any Plan under any applicable
law, treaty, rule, regulation, or agreement.
5.14 ENVIRONMENTAL CONDITION.
Except as set forth on Schedule 5.14(a), to Borrowers' knowledge, none of
the Obligors' properties or assets has ever been used by an Obligor or by
previous owners or operators in the disposal of, or to produce, store, handle,
treat, release, or transport, any Hazardous Materials, where such production,
storage, handling, treatment, release or transport was in violation of
applicable Environmental Law in a manner that reasonably is likely, individually
or in the aggregate, to result in a Material Adverse Change. Except as set forth
on Schedule 5.14(b), to Borrowers' knowledge, none of the Obligors' properties
or assets has ever been designated or identified in any manner pursuant to any
environmental protection statute as a Hazardous Materials disposal site (where
the effect that reasonably could be expected to result from such designation or
identification reasonably could be expected to result in a Material Adverse
Change), or as a candidate for closure pursuant to any environmental protection
statute. Except as set forth on Schedule 5.14(c), no Obligor has received notice
that a Lien arising under any Environmental Law has attached to any revenues or
to any real or personal property owned or operated by an Obligor. Except as set
forth on Schedule 5.14(d), no Obligor has received a summons, citation, notice,
or directive from the Environmental Protection Agency or any other federal or
state governmental agency concerning any action or omission by such Obligor
resulting in the releasing or disposing of Hazardous Materials into the
environment, other than such summons, citations, notices, or directives that
individually or in the aggregate are not reasonably likely to result in a
Material Adverse Change.
5.15 BROKERAGE FEES - OBLIGORS.
No Obligor has utilized the services of any broker or finder in connection
with Borrowers' obtaining financing from the Lender Group under this Agreement
and no brokerage commission or finders fee is payable to any Person solicited or
engaged by any Obligor in connection herewith.
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5.16 INTELLECTUAL PROPERTY.
The Obligors, taken as a whole, own, or hold adequate licenses or rights to
use, all trademarks, trade names, copyrights, patents, patent rights, and
licenses that are necessary to the conduct of their business, taken as a whole,
as currently conducted. Attached hereto as Schedule 5.16 is a true, correct, and
complete listing of all patents, patent applications, trademarks, trademark
applications, copyrights, and copyright registrations as to which an Obligor is
the owner or is an exclusive licensee.
5.17 LEASES.
The Obligors, taken as a whole, enjoy peaceful and undisturbed possession
under all leases material to the business of the Obligors, taken as a whole, and
to which they are parties or under which they are operating. All of such leases
are valid and subsisting and no material default by the Obligors exists under
any of them.
5.18 DDAs.
Set forth on Schedule 5.18 are all of the Obligors' current DDAs,
including, with respect to each depository (i) the name and address of that
depository; and (ii) the account number(s) of the account(s) maintained with
such depository.
5.19 OWNED REAL PROPERTY AND MATERIAL LEASES.
Schedule 5.19 is a listing of all Real Property that is either (a) owned in
fee by the Obligors, or (b) leased by the Obligors and identified by the
Obligors as being material to the business of the Obligors taken as a whole.
5.20 COMPLETE DISCLOSURE.
All factual information (taken as a whole) furnished by or on behalf of the
Obligors in writing to Agent or any Lender (including all information contained
in the Schedules hereto or in the other Loan Documents) for purposes of or in
connection with this Agreement, the other Loan Documents or any transaction
contemplated herein or therein is, and all other such factual information (taken
as a whole) hereafter furnished by or on behalf of the Obligors in writing to
the Agent or any Lender will be, true and accurate in all material respects on
the date as of which such information is dated or certified and not incomplete
by omitting to state any fact necessary to make such information (taken as a
whole) not misleading in any material respect at such time in light of the
circumstances under which such information was provided.
5.21 INDEBTEDNESS.
Set forth on Schedule 7.1 is a true and complete list of all (a)
Indebtedness of the Obligors outstanding immediately prior to the Closing Date
that is to remain outstanding after the Closing Date, and (b) agreements
existing immediately prior to the Closing Date that are to remain outstanding
after the Closing Date pursuant to which the Obligors are
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entitled to incur Indebtedness, in each case showing the aggregate principal
amount thereof and the name of the Obligor which directly or indirectly is
obligated on account of such Indebtedness.
5.22 PROJECT ACCOUNTS.
Set forth on Schedule 5.22 is a true and complete list of all Project
Accounts.
5.23 DIRECTORS' COMPENSATION.
Set forth on Schedule 5.23 is a description of the annual fee or
per-meeting fees to be paid to directors by each Obligor for the current fiscal
year.
6. AFFIRMATIVE COVENANTS.
Borrowers covenant and agree that, so long as any credit hereunder
shall be available and until full and final payment of the Obligations, each
Obligor (or each Borrower, if the language expressly does not refer to the
Obligors) shall do all of the following:
6.1 ACCOUNTING SYSTEM.
Maintain a system of accounting that enables Parent to produce consolidated
financial statements in accordance with GAAP and maintain records pertaining to
the Collateral that contain information as from time to time reasonably may be
requested by Agent. Obligors, taken as a whole, also shall keep an inventory
reporting system that shows all additions, sales, claims, returns, and
allowances with respect to the Inventory.
6.2 COLLATERAL REPORTING.
Provide Agent (with copies for each Lender to be provided by Agent or
Obligors) with the following documents (or electronic equivalent of such
documents) at the following times in form reasonably satisfactory to Agent (it
being understood that, absent a request by Agent for information with respect to
a particular Obligor, this covenant shall be deemed satisfied to the extent that
the Administrative Borrower provides the following information for the Obligors
taken as a whole):
If the average then,
Combined
Availability for the 5 on a bi-weekly basis (but not later than the Tuesday
day period immediately following the reporting period), a
immediately preceding detailed aging, by total of the Accounts,
the date of together with a detailed calculation of the non-
determination is Eligible Accounts.
greater than or equal
to $40,000,000
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<TABLE>
<S> <C>
If the average then,
Combined on a weekly basis ((but not later than the Tuesday
Availability for the 5 immediately following the reporting period), a
day period detailed aging, by total of the Accounts, together
immediately preceding with a detailed calculation of the non-Eligible
the date of Accounts.
determination is
greater than or equal
to $20,000,000 but
less than $40,000,000
If the average then,
Combined on such frequency as Agent shall require, a detailed
Availability for the 5 aging, by total, of the Accounts together with a
day period detailed calculation of the non-Eligible Accounts.
immediately preceding
the date of
determination is less
than $20,000,000
Monthly (not later (a) a detailed calculation of the Borrowing Base,
than the 15th calendar
day of each month if (b) a detailed aging, by total, of the Accounts,
the average Combined together with a reconciliation to the detailed
Availability for the 5 calculation of the Borrowing Base and a
day period reconciliation to the general ledger,
immediately preceding
the date of
determination is less (c) a summary aging, by vendor, of the Obligors'
than $40,000,000, accounts payable and any book overdraft, and
otherwise, not later
than the 15th Business (d) a calculation of Dilution for the prior month.
Day of each month)
Upon request by (e) a detailed list of the Obligors' customers,
Agent
(f) copies of invoices in connection with the
Accounts, credit memos, remittance advices, deposit
slips, shipping and delivery documents in connection
with the Accounts and, for Inventory and Equipment
acquired by an Obligor, purchase orders and invoices,
(g) Inventory reports specifying the Obligors' cost
and the wholesale market value of their Inventory,
by category, with additional detail showing additions
to and deletions from the Inventory, and
</TABLE>
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<TABLE>
<S> <C>
(h) such other reports as to the Collateral, or the
financial condition of an Obligor as Agent may
request.
</TABLE>
6.3 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES.
Deliver to Agent, with sufficient copies for each Lender the following
documents or their electronic equivalent (it being understood that, absent
request by Agent for information with respect to a particular Obligor, this
covenant shall be deemed satisfied to the extent that the Administrative
Borrower provides the following information for the Obligors taken as a whole):
(a) as soon as available, but in any event within 45 days after the
end of each month during each of Parent's fiscal years,
(i) a company prepared consolidated balance sheet, statement of
earnings, and statement of cash flow covering Parent's and its
Subsidiaries operations during such period,
(ii) a certificate signed by the chief financial officer of
Administrative Borrower on behalf of Administrative Borrower to the
effect that:
(A) the financial statements delivered hereunder have been
prepared in accordance with GAAP (except for the lack of
footnotes and being subject to year-end audit adjustments) and
present fairly in all material respects the financial condition
of Parent and its Subsidiaries,
(B) the representations and warranties of the Obligors contained
in this Agreement and the other Loan Documents are true and
correct in all material respects on and as of the date of such
certificate, as though made on and as of such date (except to the
extent that such representations and warranties relate solely to
an earlier date),
(C) there does not exist any condition or event that constitutes
a Default or Event of Default (or, to the extent of any
non-compliance, describing such non-compliance as to which he or
she may have knowledge and what action the applicable Obligor has
taken, is taking, or proposes to take with respect thereto), and
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(iii) for each month that is the date on which a financial
covenant in Section 7.19 is to be tested, a Compliance Certificate
demonstrating, in reasonable detail, compliance at the end of such
period with the applicable financial covenants contained in Section
7.19, and
(b) as soon as available, but in any event within 120 days after the
end of each of Parent's fiscal years that occurs after the Closing Date,
(i) consolidated financial statements of Parent and its
Subsidiaries for each such fiscal year, audited by
PriceWaterhouseCoopers or other independent certified public
accountants reasonably acceptable to Agent and certified, without any
qualifications, by such accountants to have been prepared in
accordance with GAAP (such audited financial statements to include a
balance sheet, statement of earnings, and statement of cash flow and,
if prepared, such accountants' letter to management),
(ii) a certificate of such accountants addressed to Agent and the
Lenders stating that such accountants do not have knowledge of the
existence of any Default or Event of Default under Section 7.19,
(c) if and when filed by Parent,
(i) 10-Q quarterly reports, Form 10-K annual reports, and Form
8-K current reports,
(ii) any other filings made by Parent with the SEC, and
(iii) any other information that is provided by Parent to its
shareholders generally,
(d) upon the request of Agent,
(i) any other report reasonably requested relating to the
financial condition of Parent or any of the other Obligors.
In addition to the financial statements referred to above, Borrowers agree
to deliver promptly to Agent (with copies for each Lender) copies of management
reports, in the form historically prepared by Parent, that reflect the
operational performance of each of the individual business segments of the
Borrowers taken as a whole. Without limiting the foregoing, Borrowers agree
(unless and until the UK Metals Operations have been sold)
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that each of the financial statements to be delivered hereunder shall be
prepared on a consolidating basis reflecting the financial performance of Parent
and its Subsidiaries (exclusive of the financial performance of the UK Metals
Operations) and reflecting the UK Metals Operations. Borrowers agree that their
independent certified public accountants are authorized to communicate with
Agent and to release to Agent whatever financial information concerning the
Obligors that Agent reasonably may request; provided, however, that, prior to
contacting such independent certified public accountants, Agent shall attempt,
in good faith, to obtain such information from Borrowers.
6.4 TAX RETURNS.
Upon the request of Agent, deliver copies of all federal
income tax returns as soon as the same are available and in any event no later
than 45 days after the same are required to be filed by law (after giving effect
to any applicable duly filed extensions).
6.5 [INTENTIONALLY OMITTED].
6.6 CERTIFICATES OF TITLE.
Upon Agent's request, promptly deliver to Collateral Agent,
properly endorsed, any and all certificates of title to any items of Equipment.
6.7 MAINTENANCE OF EQUIPMENT.
Maintain the Equipment in good operating condition and repair (ordinary
wear and tear excepted), and make all necessary replacements thereto so that the
value and operating efficiency thereof shall at all times be maintained and
preserved, except where Borrowers determine that to do so would not be economic
and where the failure to do so is not reasonably likely to result in a Material
Adverse Change. Other than those items of Equipment that constitute fixtures on
the Closing Date, each Obligor shall use its commercially reasonable efforts to
prevent any item of Equipment from becoming a fixture to real estate (other than
Real Property Collateral) or an accession to other property, and such Equipment
shall at all times remain personal property.
6.8 TAXES.
Cause all assessments and taxes, whether real, personal, or otherwise, due
or payable by, or imposed, levied, or assessed against any Obligor or any of its
property to be paid in full, before delinquency or before the expiration of any
extension period, except to the extent that the validity of such assessment or
tax shall be the subject of a Permitted Protest. The Obligors will make timely
payment or deposit of all tax payments and withholding taxes required of it by
applicable laws, including those laws concerning F.I.C.A., F.U.T.A., state
disability, and local, state, and federal income taxes, and will,
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upon request, furnish Agent with proof satisfactory to Agent indicating that
each Obligor has made such payments or deposits. Upon the request of Agent, each
Obligor shall deliver satisfactory evidence of payment of applicable excise
taxes in each jurisdiction in which (a) such Obligor conducts business or is
required to pay any such excise tax, (b) where such Obligor's failure to pay any
such applicable excise tax would result in a Lien on the properties or assets of
such Obligor, or (c) where such Obligor's failure to pay any such applicable
excise tax would constitute a Material Adverse Change. The foregoing
notwithstanding, Obligors may have at any one time outstanding: (i) an amount of
$500,000 in unpaid and delinquent taxes and assessments (exclusive of those
subject to Permitted Protests); plus (ii) delinquent taxes owing by BEC/Philip
in the approximate amount of $338,000 owing to Jefferson County, Alabama; plus
(iii) provincial sales taxes in arrears in the approximate amount of $305,000 as
identified on that certain document labeled as "Receiver's Reserve Estimate"
(collectively, "Permitted Delinquent Taxes"). Obligors shall use their
commercially reasonable efforts to promptly discharge and pay the Permitted
Delinquent Taxes.
6.9 INSURANCE.
(a) At Obligors' expense, maintain insurance respecting the
Collateral, wherever located, and with respect to Obligors' business, covering
loss or damage by fire, theft, explosion, and all other hazards and risks as
ordinarily are insured against by other Persons engaged in the same or similar
businesses. Obligors also shall maintain business interruption, public
liability, and product liability insurance, as well as insurance against
larceny, embezzlement, and criminal misappropriation All such policies of
insurance shall be in such amounts and with such insurance companies as are
reasonably satisfactory to Agent. Obligors shall deliver copies of all such
policies to Agent with 438 BFU lender's loss payable endorsements or other
reasonably satisfactory lender's loss payable endorsements, naming Collateral
Agent as loss payee or additional insured, as appropriate. Each policy of
insurance or endorsement shall contain a clause requiring the insurer to give
not less than 30 days prior written notice to Agent in the event of cancellation
of the policy for any reason whatsoever. If Obligors fail to provide and pay for
such insurance, Agent may, at its option, but shall not be required to, procure
the same and charge Borrowers' Loan Account therefor.
(b) At Obligors' expense, obtain and maintain (i) insurance of the
type necessary to insure the Collateral and all improvements to the Real
Property for the full replacement cost thereof, against any loss by fire,
lightning, windstorm, hail, explosion, aircraft, smoke damage, vehicle damage,
earthquakes, and other risks from time to time included under "extended
coverage" policies, in such amounts as Agent may require, but in any event in
amounts sufficient to prevent the Obligors from becoming a coinsurer under such
policies, (ii) combined single limit bodily injury insurance against any loss,
liability, or damages per occurrence in an amount not less than that
historically maintained by the Obligors; and (iii) insurance for such other
risks as Agent may require in its Permitted Discretion.
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(c) Obligors shall give Agent prompt notice of any material loss
covered by such insurance. Collateral Agent shall have the exclusive right to
adjust any losses payable under any such insurance policies, without any
liability to Obligors whatsoever in respect of such adjustments; provided,
however, prior to the occurrence and during the continuance of an Event of
Default, Obligors shall have the right to adjust any losses payable under any
such insurance policies involving amounts less than $5,000,000. Any monies to be
received as payment for any loss under any insurance policy mentioned above
(other than liability insurance policies) or as payment of any award or
compensation for condemnation or taking by eminent domain, shall (i) if no Event
of Default has occurred and is continuing and if such proceeds are $5,000,000,
or less, be paid to Administrative Borrower for application solely to the cost
of repairs, replacements, or restorations or to the repayment of the
Obligations, and (ii) in all other cases, be paid to Collateral Agent to be
applied pursuant to the terms of the Collateral Agency and Intercreditor
Agreement. Borrowers agree that if any Borrower receives any payment for any
loss under any insurance policy mentioned above or any payment of any award or
compensation for condemnation or taking by eminent domain and clause (ii) above
applies, such Borrower shall hold such proceeds in trust for, and promptly pay
such proceeds over to, the Collateral Agent having the senior lien under the
Collateral Agency and Intercreditor Agreement. All repairs, replacements, or
restorations shall be effected with reasonable promptness and shall be of a
value at least equal to the value of the items or property destroyed prior to
such damage or destruction.
(d) No Borrower will take out separate insurance concurrent in form or
contributing in the event of loss with that required to be maintained under this
Section 6.9, unless Collateral Agent is included thereon as named insured with
the loss payable to Collateral Agent under a standard 438BFU endorsement or its
equivalent. The applicable Borrower immediately shall notify Agent whenever such
separate insurance is taken out, specifying the insurer thereunder and full
particulars as to the policies evidencing the same, and copies of such policies
immediately shall be provided to Agent.
6.10 [INTENTIONALLY OMITTED].
6.11 LOCATION OF INVENTORY AND EQUIPMENT.
Keep the Inventory and Equipment (other than railcars, other rolling stock,
registered motor vehicles, aircraft, vessels, and immaterial (less than
$10,000,000 in market value as reasonably determined by Collateral Agent)
amounts of Inventory and other Equipment) at no locations other than those
identified on Schedule 6.11; provided, however, that Administrative Borrower may
amend Schedule 6.11 so long as such amendment occurs by written notice to
Collateral Agent not less than 30 days prior to the date on which the Inventory
or Equipment is moved to such new location, so long as, for any Borrower or
Canadian Guarantor, such new location is within the continental United States or
Canada, and so long as, at the time of such written notification, the applicable
Obligor provides any financing statements, fixture filings, or other filings
necessary to perfect and continue perfected the Collateral Agent's Liens on such
assets.
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6.12 COMPLIANCE WITH LAWS.
Comply with the requirements of all applicable laws, rules, regulations,
and orders of any Governmental Authority, including the Fair Labor Standards Act
and the Americans With Disabilities Act, other than laws, rules, regulations,
and orders the non- compliance with which, individually or in the aggregate,
would not result in and reasonably could not be expected to result in a Material
Adverse Change.
6.13 EMPLOYEE BENEFITS.
(a) Cause to be delivered to Agent, each of the following: (i)
promptly, and in any event within 10 Business Days after any Borrower or any of
its ERISA Affiliates knows or has reason to know that an ERISA Event has
occurred that reasonably could be expected to result in a Material Adverse
Change, a written statement of the chief financial officer of such Borrower
describing such ERISA Event and any action that is being taking with respect
thereto by such Borrower, or ERISA Affiliate, and any action taken or threatened
by the IRS, Department of Labor, or PBGC. Each Borrower or such ERISA Affiliate,
as applicable, shall be deemed to know all facts known by the administrator of
any Benefit Plan of which it is the plan sponsor, (ii) promptly, and in any
event within 3 Business Days after the filing thereof with the IRS, a copy of
each funding waiver request filed with respect to any Benefit Plan and all
communications received by a Borrower, any of its Subsidiaries or, to the
knowledge of a Borrower, any ERISA Affiliate with respect to such request, and
(iii) promptly, and in any event within 3 Business Days after receipt by such
Borrower, any of its Subsidiaries or, to the knowledge of such Borrower, any
ERISA Affiliate, of the PBGC's intention to terminate a Benefit Plan or to have
a trustee appointed to administer a Benefit Plan, copies of each such notice.
(b) Cause to be delivered to Agent, upon Agent's request, each of the
following: (i) a copy of each Plan (or, where any such plan is not in writing,
complete description thereof) (and if applicable, related trust agreements or
other funding instruments) and all amendments thereto, all written
interpretations thereof and written descriptions thereof that have been
distributed to employees or former employees of the applicable Borrower or its
ERISA Affiliates; (ii) the most recent determination letter issued by the IRS
with respect to each Benefit Plan and each other Plan intended to be qualified
under Section 401(a) of the IRC; (iii) for the three most recent plan years,
annual reports on Form 5500 Series required to be filed with any governmental
agency for each Benefit Plan; (iv) all actuarial reports prepared for the last
three plan years for each Benefit Plan; (v) a listing of all Multiemployer
Plans, with the aggregate amount of the most recent annual contributions
required to be made by the applicable Borrower or any ERISA Affiliate to each
such plan and copies of the collective bargaining agreements requiring such
contributions; (vi) any information that has been provided to such Borrower or
any ERISA Affiliate regarding withdrawal liability under any Multiemployer Plan;
and (vii) the aggregate amount of the most recent annual payments made to former
employees of the applicable Borrower or its Subsidiaries under any Retiree
Health Plan.
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6.14 LEASES.
Pay when due all rents and other amounts payable under any leases to which
each Obligor is a party or by which an Obligor's properties and assets are
bound, unless such payments are the subject of a Permitted Protest.
6.15 BROKERAGE COMMISSIONS.
Pay any and all brokerage commission or finders fees incurred by Borrowers
in connection with or as a result of Borrowers' obtaining financing from the
Lender Group under this Agreement, if any. Borrowers agree and acknowledge that
payment of all such brokerage commissions or finders fees shall be the sole
responsibility of Borrowers and Borrowers agree to indemnify, defend, and hold
Agent and the Lender Group harmless from and against any claim of any broker or
finder (other than a broker or finder solicited or retained by the Lender Group)
arising out of Borrowers' obtaining financing from the Lender Group under this
Agreement.
6.16 PROJECTIONS.
Not later than 30 days after the end of each fiscal year of Parent,
commencing with fiscal year 2001, deliver to Agent Projections, in form and
substance (including as to scope and underlying assumptions) satisfactory to
Agent, in its Permitted Discretion, for the forthcoming 2 years, year by year,
and for the forthcoming fiscal year, month by month, certified by the chief
financial officer of Parent as being such officer's good faith estimate of the
financial performance of the Obligors projected to be achieved during the period
covered thereby. The foregoing to the contrary notwithstanding, (a) projections
in the form of the projections delivered to Agent prior to the Closing Date
shall be presumed to be in form acceptable to Agent, and (b) Agent may not deem
projections to be unsatisfactory to it solely because it is not satisfied with
the financial condition or prospects of Parent and its Subsidiaries as described
in such projections.
6.17 CORPORATE EXISTENCE, ETC.
Other than as may be affected by the consummation of Permitted
Transactions, at all times preserve and keep in full force and effect each
Obligor's valid corporate existence and good standing and any rights and
franchises material to the Obligors' businesses.
6.18 DISCLOSURE UPDATES.
Promptly and in no event later than 5 Business Days after an officer of
Administrative Borrower obtaining knowledge thereof, (i) notify Agent if any
written information, exhibit, or report furnished to the Lender Group contained
any untrue statement of a material fact or omitted to state any material fact
necessary to make the
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statements contained therein not misleading in light of the circumstances in
which made, and (ii) correct any defect or error that may be discovered therein
or in any Loan Document or in the execution, acknowledgement, filing, or
recordation thereof.
6.19 PUBLICATIONOF NOTICE OF THE EFFECTIVE DATE OF THE PLAN OF
REORGANIZATION.
No later than five Business Days after the Effective Date of the Plan of
Reorganization, publish notice of the occurrence of the Effective Date of the
Plan of Reorganization as required by paragraph 25 of the Confirmation Order.
6.20 PROJECT ACCOUNTS.
Promptly, but in no event later than 5 Business Days after an officer of a
Borrower obtains knowledge thereof, amend Schedule 5.22 to reflect any additions
or substitutions thereto; provided, however, that all such Project Accounts
shall be maintained with a bank satisfactory to Agent.
6.21 EXISTING LETTERS OF CREDIT.
Parent will use its commercially reasonable efforts to negotiate with the
beneficiaries of any Existing Letters of Credit for the replacement of such
Existing Letters of Credit, whether or not such Existing Letters of Credit have
been backstopped by an Underlying Letter of Credit issued under this Agreement.
6.22 OMITTED GOOD STANDING CERTIFICATES.
Parent will use its commercially reasonable efforts to obtain good standing
qualifications and certificates of good standing for Oneida Asbestos Removal
Inc. in its jurisdiction of organization and in the jurisdiction of their Chief
Executive Office. Promptly upon receiving notice that such entities are in good
standing in their jurisdiction of incorporation, but in no event later than ten
Business Days after an officer of such entity or Parent obtains knowledge
thereof, cause Oneida Asbestos Removal Inc. to ratify its execution, delivery
and performance of this Agreement and all other Loan Documents by documentation
acceptable to Agent.
7. NEGATIVE COVENANTS.
Borrowers covenant and agree that, so long as any credit hereunder shall be
available and until full and final payment of the Obligations, no Obligor shall
(or no Borrower shall, if the language expressly does not refer to the Obligors)
do any of the following:
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7.1 INDEBTEDNESS.
Create, incur, assume, permit, guarantee, or otherwise become or remain,
directly or indirectly, liable with respect to any Indebtedness, except:
(a) Indebtedness evidenced by this Agreement and the other Loan
Documents, together with Indebtedness to issuers of letters of credit that are
the subject of L/C Undertakings;
(b) Indebtedness set forth on Schedule 7.1(a);
(c) (i) Purchase Money Indebtedness having a principal amount of
$100,000 or greater per holder of such Indebtedness, which such Indebtedness
exists as of the Closing Date and is described on Schedule 7.1(b), (ii) Purchase
Money Indebtedness having a principal amount less than the amount set forth in
clause (i) above per holder of such Indebtedness, which such Indebtedness exists
as of the Closing Date, and (iii) Purchase Money Indebtedness incurred after the
Closing Date in an aggregate amount outstanding at any one time not to exceed
(y) $18,000,000, minus (z) the amount of Indebtedness outstanding under clauses
(i) and (ii) of this subsection (collectively, "Permitted Purchase Money
Indebtedness");
(d) $350,000,000 in principal amount (plus the amount of (i) unpaid
interest, fees, and costs accrued thereunder, and (ii) accrued interest paid in
kind) of Indebtedness created under the Junior Secured Credit Agreement;
(e) Indebtedness created under the PIK Unsecured Debt Indenture in a
principal amount equal to $48,000,000 (plus the amount of (i) unpaid interest,
fees, and costs accrued thereunder, and (ii) accrued interest paid in kind);
(f) $18,000,000 in principal amount of Indebtedness issued under the
Unsecured Convertible Debt Indenture (plus the amount of accrued and unpaid
interest);
(g) refinancings, renewals, replacements or extensions of Indebtedness
permitted under clauses (b), (c), (d), (e), and (f) of this Section 7.1 (and
continuance, replacement or renewal of any Permitted Liens associated therewith)
so long as: (i) the terms and conditions of such refinancings, renewals,
replacements or extensions do not materially impair the prospects of repayment
of the Obligations by the Obligors, (ii) the net cash proceeds of such
refinancings, replacements renewals, or extensions do not result in an increase
in the aggregate principal amount of the Indebtedness so refinanced, renewed,
replaced or extended, (iii) such refinancings, renewals, replacements or
extensions do not result in a shortening of the average weighted maturity of the
Indebtedness so refinanced, renewed, replaced or extended, (iv) to the extent
that Indebtedness that is refinanced, renewed, replaced or extended was
subordinated in right of payment to the Obligations, then the subordination
terms and conditions of the refinancing, renewal, replacement or extension
Indebtedness must be at least as favorable to the Lender Group as those
applicable to the refinanced, renewed, replaced or extended Indebtedness, and
(v) such refinancing, renewal, replacement or extension shall not obligate any
Obligor which was not previously obligated
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with respect to the Indebtedness that is the subject of such refinancing,
renewal, replacement or extension;
(h) Indebtedness owed (i) by Parent to any Borrower or Guarantor, (ii)
by any wholly-owned Borrower to Parent, (iii) by any wholly-owned Borrower to
any other wholly-owned Borrower, (iv) by any wholly-owned Guarantor to Parent,
or (v) by any wholly-owned Guarantor to any other wholly-owned Guarantor;
(i) Indebtedness necessary to comply with the Obligors' bonding
requirements, as approved from time to time, by the Required Lenders;
(j) guaranties permitted by Section 7.6 hereof; and
(k) Permitted Delinquent Taxes.
7.2 LIENS.
Create, incur, assume, or permit to exist, directly or indirectly, any Lien
on or with respect to any of its property or assets, of any kind, whether now
owned or hereafter acquired, or any income or profits therefrom, except for (i)
Permitted Liens (including Liens that are replacements of Permitted Liens to the
extent that the original Indebtedness is refinanced under Section 7.1(g) and so
long as the replacement Liens only encumber those assets or property that
secured the original Indebtedness) and (ii) Liens securing Permitted Delinquent
Taxes.
7.3 RESTRICTIONS ON FUNDAMENTAL CHANGES.
Except for the consummation of the Canadian Transactions and except for
Permitted Transactions and Permitted Dispositions,
(a) Enter into any merger, consolidation, reorganization, or
recapitalization, or reclassify its Stock.
(b) Liquidate, wind up, or dissolve itself (or suffer any liquidation
or dissolution).
(c) Convey, sell, assign, lease, transfer, or otherwise dispose of, in
one transaction or a series of transactions, all or any substantial part of its
property or assets, provided, that nothing contained in this Agreement shall be
construed to restrict or limit any offering, issuance, or sale by Parent, in one
or more transactions, public or private, of its Stock (including any concomitant
increase in the number of authorized shares of Stock of Parent or in the
authorized share capital of Parent), so long as such offerings, issuances, and
sales are made in compliance with all applicable laws and regulations.
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7.4 DISPOSAL OF ASSETS.
Sell, lease, assign, transfer, or otherwise dispose of any of the Obligors'
properties or assets, other than pursuant to Permitted Dispositions, the
Canadian Transactions and Permitted Transactions.
7.5 CHANGE NAME.
Except for the consummation of the Canadian Transactions, and Permitted
Transactions, and except as required by Section 3.1(y) hereof, change any
Obligor's name, FEIN, corporate structure (within the meaning of Section
9-402(7) of the Code), or identity, or add any new fictitious name, except that
any Obligor may do so upon at least 30 days prior written notice to Collateral
Agent and Agent of such change and so long as, at the time of such written
notification, such Obligor provides any financing statements or fixture filings
necessary to perfect and continue perfected Collateral Agent's Liens in the
Collateral.
7.6 GUARANTEE.
Guarantee or otherwise become in any way liable with respect to the
obligations of any Person other than:
(a) guaranties by one Obligor of the obligations of another Obligor,
(b) so long as no Default or Event of Default has occurred and is
continuing or would result therefrom, guaranties by an Obligor of the
obligations of a Subsidiary of Parent that is not an Obligor in an amount not to
exceed, in the aggregate for all such guaranties made during each of the periods
specified in clauses (i), (ii) or (iii) below, as the case may be, the following
amounts: (i) during the period of time from and after the Closing Date up to but
not including the first anniversary of the Closing Date, the result of (y)
$5,000,000 minus (z) the aggregate amount of Permitted Investments that were
made during such period pursuant to clause (c) of the definition of Permitted
Investment as of the date of determination, (ii) during the period of time from
and after the first anniversary of the Closing Date up to but not including the
second anniversary of the Closing Date, the result of (y) $5,000,000 minus (z)
the aggregate amount of Permitted Investments that were made during such period
pursuant to clause (c) of the definition of Permitted Investment as of the date
of determination, and (iii) during the period of time from and after the second
anniversary of the Closing Date up to and including the Maturity Date, the
result of (y) $2,500,000 minus (z) the aggregate amount of Permitted Investments
that were made during such period pursuant to clause (c) of the definition of
Permitted Investment as of the date of determination,
(c) guaranties existing as of the Closing Date and described on Schedule
7.6 hereto and extensions or renewals of such guaranties, so long as the
principal amount of the obligations guarantied is not increased beyond the
principal amount of the applicable guaranty as of the date of such extension or
renewal, or
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(d) endorsement of instruments or items of payment for deposit to the
account of an Obligor or which are transmitted or turned over to Collateral
Agent.
7.7 NATURE OF BUSINESS.
Make any material change in the principal nature of the Obligors' business,
taken as a whole.
7.8 PREPAYMENTS AND AMENDMENTS.
(a) Except in connection with a refinancing permitted by Section
7.1(g) or as provided in subsection (c) below, and other than with respect to
Indebtedness permitted under Section 7.1(h), prepay, redeem, retire, defease,
purchase, or otherwise acquire any Indebtedness owing to any Person, other than
the Obligations in accordance with this Agreement,
(b) Except in connection with a refinancing permitted by Section
7.1(g), directly or indirectly, amend, modify, alter, increase, or change any of
the terms or conditions of any agreement, instrument, document, indenture, or
other writing evidencing or concerning Indebtedness permitted under Sections
7.1(b), (c), (d), (e), or (f) in any manner that is or reasonably could be
expected to be materially adverse to the Obligors or to the interests of the
Lender Group or that materially impairs the prospects of timely repayment of the
Obligations.
(c) Amend, supplement, or modify any Junior Debt Document or repay the
principal of, or make any other payment in relation to, the Indebtedness
governed by the Junior Debt Documents; provided, so long as no Event of Default
has occurred and is continuing or would result therefrom, the foregoing shall
not prohibit (i) the payment of regularly scheduled payments of interest on the
Indebtedness governed by the Junior Debt Documents (including Deferral Period
Interest as defined in the Junior Unsecured Debt Documents); provided, however,
that the Obligors shall not pay any interest in cash that they have the
contractual right to pay in kind, (ii) the payment of principal or interest on
the Junior Secured Debt in such amounts as may be required by Section 2.03(A)(c)
of the Junior Secured Debt Credit Agreement as in effect on the Closing Date,
provided, however, that the Obligors shall not pay any such amounts in cash that
they have the contractual right to defer or pay in kind, (iii) the repayment of
the Junior Debt, in whole or in part, with the proceeds of any refinancing
thereof (provided that such refinancing Indebtedness complies with the
requirements of Section 7.1(g)), (iv) the prepayment of the Junior Secured Debt
with the proceeds of asset dispositions, if and to the extent provided for under
the terms of the Collateral Agency and Intercreditor Agreement and (v) the
prepayment of the Junior Unsecured Debt in accordance with the terms of the
Junior Unsecured Debt Documents solely with the proceeds of a capital
contribution made by a shareholder of Parent.
(d) Amend, supplement, or modify the Rights Agreement in any material
respect.
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7.9 [INTENTIONALLY OMITTED].
7.10 CONSIGNMENTS.
Consign any Inventory or sell any Inventory on bill and hold, sale or
return, sale on approval, or other conditional terms of sale, or, except in
connection with the businesses of brokering, or entering into tolling agreements
regarding, scrap metal, have possession of any property on consignment to an
Obligor.
7.11 DISTRIBUTIONS.
Other than distributions or declaration and payment of dividends by an
Obligor to Parent or a wholly-owned Obligor, make any distribution or declare or
pay any dividends (in cash or other property, other than Stock) on, or purchase,
acquire, redeem, or retire any of any Obligor's Stock, of any class, whether now
or hereafter outstanding.
7.12 ACCOUNTING METHODS.
Modify or change its method of accounting (other than as may be required to
conform to GAAP). Each Borrower waives the right to assert a confidential
relationship, if any, it may have with any accounting firm or service bureau in
connection with any information requested by Agent pursuant to or in accordance
with this Agreement, and agrees that Agent may contact directly any such
accounting firm or service bureau in order to obtain such information; provided,
however, that, prior to contacting such accounting firm or service bureau, Agent
shall attempt, in good faith, to obtain such information from borrowers.
7.13 INVESTMENTS.
Except for Permitted Investments and Permitted Acquisitions, directly or
indirectly make, acquire, or incur any liabilities (including contingent
obligations) for or in connection with any Investment; provided, however, that,
if Combined Availability is $40,000,000 or less, and the Obligors have Permitted
Investments (other than in the Lockbox Accounts, the Collection Accounts, the
Designated Account (in amounts consistent with its ordinary course of business),
or the Project Accounts) in deposit accounts or securities accounts, in excess
of $10,000,000 in the aggregate for all Obligors in all such accounts at any one
time, then, upon Agent's request, such Obligors shall promptly enter into such
Control Agreements or similar arrangements governing such Permitted Investments,
as Agent shall determine in its Permitted Discretion, to perfect (and further
establish) Collateral Agent's Liens in such Permitted Investments.
7.14 TRANSACTIONS WITH AFFILIATES.
Except as set forth on Schedule 7.14, directly or indirectly enter into or
permit to exist any material transaction with any Affiliate of any Obligor
except for
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transactions between wholly-owned Obligors (other than Obligors that are neither
Borrowers nor Canadian Guarantors) and except for transactions that are in the
ordinary course of such Obligor's business, upon fair and reasonable terms, that
are fully disclosed to Agent, and that are no less favorable to such Obligor
than would be obtained in an arm's length transaction with a non-Affiliate.
7.15 SUSPENSION.
Permit the Obligors, taken as a whole, to suspend or go out of a
substantial portion of its business.
7.16 DIRECTORS' COMPENSATION.
Increase the annual fee or per-meeting fees paid to directors of any
Obligor during any year by more than 15% over the prior year.
7.17 USE OF PROCEEDS.
Use the proceeds of the Advances for any purpose other than (a) on the
Closing Date, (i) to repay in full the outstanding principal, accrued interest,
and accrued fees and expenses owing under the DIP Credit Agreement, and (ii) to
pay transactional fees, costs, and expenses incurred in connection with this
Agreement, the Plan of Reorganization, or the Junior Secured Debt Documents, and
the transactions contemplated thereby, and (b) thereafter, consistent with the
terms and conditions hereof, for its lawful and permitted corporate purposes.
Anything in the Loan Documents to the contrary notwithstanding, the proceeds of
any Tranche A Advance shall not be used to repay any outstanding Tranche B
Advance unless Tranche A Advance Availability is greater than $5,000,000 after
giving effect to such Tranche A Advance.
7.18 CHANGE IN LOCATION OF CHIEF EXECUTIVE OFFICE; INVENTORY AND EQUIPMENT
WITH BAILEES.
Relocate its chief executive office to a new location without providing 30
days prior written notification thereof to Collateral Agent and Agent and so
long as, at the time of such written notification, such Obligor provides any
financing statements or fixture filings necessary to perfect and continue
perfected the Collateral Agent's Liens. Except for immaterial (less than
$10,000,000 in market value as reasonably determined by Collateral Agent)
amounts of Inventory and Equipment that is stored with a bailee, warehouseman,
or similar party in the ordinary course of business, no Inventory or Equipment
shall at any time now or hereafter be stored with a bailee, warehouseman, or
similar party without Collateral Agent's prior written consent.
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7.19 FINANCIAL COVENANTS. Fail to maintain:
(a) EBITDA. EBITDA of Parent and its Subsidiaries (exclusive, however,
of all results of operation (including EBITDA) attributable to the UK Metals
Operations), on a consolidated basis, for the trailing period ended as of the
end of the applicable fiscal quarter set forth below, of at least the amount
corresponding thereto:
<TABLE>
<CAPTION>
Fiscal Quarter Ending Minimum EBITDA
- ----------------------------------------------------------------
for the 3 months ended $4,000,000
March 31, 2000
- ----------------------------------------------------------------
<S> <C>
for the 6 months ended June $10,000,000
30, 2000
- ----------------------------------------------------------------
for the 9 months ended $25,000,000
September 30, 2000
- ----------------------------------------------------------------
for the 12 months ended $45,000,000
December 31, 2000
- ----------------------------------------------------------------
for the 12 months ended $65,000,000
March 31, 2001
- ----------------------------------------------------------------
for the 12 months ended $79,500,000
June 30, 2001
- ----------------------------------------------------------------
for the 12 months ended $89,000,000
September 30, 2001
- ----------------------------------------------------------------
for the 12 months ended $96,000,000
December 31, 2001, and for
the 12 months ended as of
the end of each fiscal quarter
thereafter
</TABLE>
(b) Interest Coverage Ratio. An Interest Coverage Ratio for Parent and
its Subsidiaries (exclusive, however, of all results of operation (including
EBITDA and Cash Interest Expense) attributable to the UK Metals Operations), on
a consolidated basis, for the trailing period ended as of the end of the
applicable fiscal quarter set forth below, of at least the amount corresponding
thereto:
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<TABLE>
<CAPTION>
Minimum Interest Coverage
Fiscal Quarter Ending Ratio
- -------------------------------------------------------------------------
<S> <C>
for the 3 months ended 0.50:1.00
March 31, 2000
- -------------------------------------------------------------------------
for the 6 months ended June 0.65:1.00
30, 2000
- -------------------------------------------------------------------------
for the 9 months ended 1.00:1.00
September 30, 2000
- -------------------------------------------------------------------------
for the 12 months ended 1.40:1.00
December 31, 2000
- -------------------------------------------------------------------------
for the 12 months ended 2.00:1.00
March 31, 2001
- -------------------------------------------------------------------------
for the 12 months ended June 2.40:1.00
30, 2001
- -------------------------------------------------------------------------
for the 12 months ended 2.50:1.00
September 30, 2001
- -------------------------------------------------------------------------
for the 12 months ended 2.50:1.00
December 31, 2001, and for
the 12 months ended as of
the end of each fiscal quarter
thereafter
</TABLE>
7.20 CAPITAL EXPENDITURES.
Make capital expenditures in any fiscal quarter in excess of $30,000,000,
or, in the aggregate, in any fiscal year in excess of $80,000,000 (which amount
shall include all expenditures made in connection with any Permitted
Acquisition).
7.21 SECURITIES ACCOUNTS.
No Obligor shall establish or maintain any Securities Account unless
Collateral Agent shall have received a Control Agreement, duly executed and in
full force and effect, in respect of such Securities Account. Each Obligor
agrees that it will not transfer assets out of any Securities Accounts;
provided, however, that, so long as no Event of Default has occurred and is
continuing or would result therefrom, such Obligor may use such assets to the
extent permitted by this Agreement.
7.22 ERISA CONCERNS.
No Borrower shall directly or indirectly:
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(a) engage, or permit any Subsidiary of any Borrower to engage,
in any prohibited transaction which is reasonably likely to result in a civil
penalty or excise tax described in Sections 406 of ERISA or 4975 of the IRC for
which a statutory or class exemption is not available or a private exemption has
not been previously obtained from the Department of Labor;
(b) permit to exist with respect to any Benefit Plan any
accumulated funding deficiency (as defined in Sections 302 of ERISA and 412 of
the IRC), whether or not waived;
(c) fail, or permit any of its ERISA Affiliates to fail, to pay
timely required contributions or annual installments due with respect to any
waived funding deficiency to any Benefit Plan;
(d) terminate, or permit any of its ERISA Affiliates to
terminate, any Benefit Plan where such event would result in any liability of
such Borrower, any of its Subsidiaries or any ERISA Affiliate under Title IV of
ERISA;
(e) fail, or permit any of its ERISA Affiliates to fail, to make
any required contribution or payment to any Multiemployer Plan;
(f) fail, or permit any of its ERISA Affiliates to fail, to pay
any required installment or any other payment required under Section 412 of the
IRC on or before the due date for such installment or other payment;
(g) amend, or permit any of its ERISA Affiliates to amend, a Plan
resulting in an increase in current liability for the plan year such that either
of Borrower, any Subsidiary of Borrower or any ERISA Affiliate is required to
provide security to such Plan under Section 401(a)(29) of the IRC; or
(h) withdraw, or permit any of its ERISA Affiliates to withdraw,
from any Multiemployer Plan where such withdrawal is reasonably likely to result
in any liability of any such entity under Title IV of ERISA;
which, individually or in the aggregate, results in or reasonably
would be expected to result in a claim against or liability of a Borrower, any
of its Subsidiaries or any ERISA Affiliate in excess of $2,500,000.
8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an event of
default (each, an "Event of Default") under this Agreement:
8.1 If any Obligor fails to pay when due and payable, or when declared due
and payable, any portion of the Obligations (whether of principal, interest
(including any interest which, but for the provisions of the Bankruptcy Code,
would have accrued on such
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amounts), fees and charges due the Lender Group, reimbursement of Lender Group
Expenses, or other amounts constituting Obligations); provided, however, that in
the case of Overadvances that are caused by the charging of interest, fees, or
Lender Group Expenses to the Loan Account, such event shall not constitute an
Event of Default if, within 3 Business Days of Administrative Borrower's receipt
of telephonic or other notice of such Overadvance, Borrowers eliminate such
Overadvance;
8.2 If any Obligor fails or neglects to (a) perform, keep, or observe any
covenant or other provision contained in Sections 6.2, 6.3, 6.6, 6.7, 6.11,
6.12, and 6.14 hereof and such failure or neglect continues for a period of 5
days after the date on which such failure or neglect first occurs, or (b)
perform, keep, or observe any covenant or other provision contained in any
Section of this Agreement (other than a Section that is expressly dealt with
elsewhere in this Section 8) or the other Loan Documents (other than a Section
of such other Loan Documents dealt with elsewhere in this Section 8) and such
failure or neglect is not cured within 15 days after the date on which such
failure or neglect first occurs, or (c) perform, keep, or observe any covenant
or other provision contained in Section 6 (other than a subsection of Section 6
that is dealt with elsewhere in this Section 8), or Section 7 of this Agreement
or any comparable provision contained in any of the other Loan Documents;
8.3 [intentionally omitted];
8.4 If any portion of an Obligor's property or assets with a value greater
than $2,500,000 individually or in the aggregate, is attached, seized, subjected
to a writ or distress warrant, or is levied upon, or comes into the possession
of any third Person and the same is not discharged before the earlier of 30 days
after the date it first arises or 5 days prior to the date on which such
property or asset is subject to forfeiture by such Obligor;
8.5 If an Insolvency Proceeding is commenced by any Obligor;
8.6 If an Insolvency Proceeding is commenced against any Obligor and any of
the following events occur: (a) such Obligor consents to the institution of the
Insolvency Proceeding against it; (b) the petition commencing the Insolvency
Proceeding is not timely controverted; (c) the petition commencing the
Insolvency Proceeding is not dismissed within 45 calendar days of the date of
the filing thereof; provided, however, that, during the pendency of such period,
each member of the Lender Group shall be relieved of its obligation to extend
credit hereunder; (d) an interim trustee is appointed to take possession of all
or a substantial portion of the properties or assets of, or to operate all or
any substantial portion of the business of, such Obligor; or (e) an order for
relief shall have been issued or entered therein;
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8.7 If any one or more of the Obligors is enjoined, restrained, or in any
way prevented by court order from continuing to conduct all or any material part
of the business affairs of the Obligors taken as a whole;
8.8 (a) If a notice of Lien, levy, or assessment is filed of record with
respect to any of Obligor's properties or assets by the United States
Government, or any department, agency, or instrumentality thereof, or if any
taxes or debts owing at any time hereafter to any one or more of such entities
becomes a Lien, whether choate or otherwise, upon any of Obligor's properties or
assets and the same is not paid on the payment date thereof, or (b) if notices
of Lien, levy, or assessment in an aggregate amount in excess of $2,500,000 are
filed of record with respect to any of Obligor's properties or assets by any
state, county, municipal, or governmental agency, or if any taxes or debts owing
at any time hereafter to any one or more of such entities becomes a Lien
exceeding the foregoing aggregate limitation, whether choate or otherwise, upon
any of Obligor's properties or assets and the same is not paid on the payment
date thereof;
8.9 If one or more judgments or other claims involving an aggregate amount
of $2,500,000, or more, in excess of the amount covered by insurance, becomes a
Lien or encumbrance upon any material portion of any Obligor's assets and the
same is not released, discharged, bonded against, or stayed pending appeal
before the earlier of 30 days after the date it first arises or 5 days prior to
the date on which such asset is subject to being forfeited by such Obligor;
8.10 (a) If there is a default in any agreement to which an Obligor is a
party under which Indebtedness of such Obligor involving not less than
$2,500,000 is owing and such default (i) occurs at the final maturity of the
obligations thereunder, or (ii) results in a right of the holder of such
Indebtedness, irrespective of whether exercised, to accelerate the maturity of
such Obligor's obligations thereunder, and such default is not cured or waived
prior to the date that is the earlier of (y) the date that is 15 days after the
date on which such default first occurred, and (z) the date on which such
Obligor's obligations thereunder are accelerated or (iii) results in the
termination of such agreement;
(b) If there is a default by an Obligor with respect to any
performance or payment bond having a face amount of not less than $2,500,000 and
such default (i) occurs at the final maturity of the obligations thereunder, or
(ii) results in a right of the issuer of such performance or payment bond,
irrespective of whether exercised, to accelerate the maturity of such Obligor's
obligations thereunder;
8.11 If any Obligor makes any payment on account of Indebtedness that has
been contractually subordinated in right of payment to the payment of the
Obligations, except to the extent such payment is permitted by the terms hereof
and by the terms of the subordination provisions applicable to such
Indebtedness;
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8.12 If any material misstatement or misrepresentation exists now or
hereafter in any warranty, representation, statement, or report made to the
Lender Group by any Obligor or any officer, employee, agent, or director of any
Obligor in any Record furnished in compliance with this Agreement or any other
Loan Document or otherwise furnished in connection with the transactions
contemplated by this Agreement or any other Loan Document; or
8.13 If the obligation of any Guarantor under its guaranty under any Loan
Document is limited or terminated by operation of law or by such Guarantor
thereunder.
9. THE LENDER GROUP'S RIGHTS AND REMEDIES.
9.1 RIGHTS AND REMEDIES.
Upon the occurrence, and during the continuation, of an Event of
Default, the Required Lenders (at their election but without notice of their
election and without demand) may, except to the extent otherwise expressly
provided or required below, authorize and instruct Agent to do any one or more
of the following on behalf of the Lender Group (and Agent, acting upon the
instructions of the Required Lenders, shall do the same on behalf of the Lender
Group), all of which are authorized by Borrowers:
(a) Declare all Obligations, whether evidenced by this Agreement,
by any of the other Loan Documents, or otherwise, immediately due and payable;
(b) Cease advancing money or extending credit to or for the
benefit of Borrowers under this Agreement, under any of the Loan Documents, or
under any other agreement between Borrowers and the Lender Group;
(c) Terminate this Agreement and any of the other Loan Documents
as to any future liability or obligation of the Lender Group, but without
affecting Collateral Agent's Liens in the Collateral and without affecting the
Obligations;
(d) Without notice to or demand upon any Obligor, make such
payments and do such acts as Agent considers necessary or reasonable to protect
the Collateral Agent's Liens in and to the Collateral;
(e) Hold, as cash collateral, any and all balances and deposits
of Borrowers held by the Lender Group, and any amounts received in the Lockbox
Accounts, to secure the full and final repayment of all of the Obligations;
(f) Exercise any and all other rights and remedies available to
it at law or in equity or pursuant to any other Loan Documents.
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9.2 REMEDIES CUMULATIVE.
The rights and remedies of the Lender Group under this Agreement, the
other Loan Documents, and all other agreements shall be cumulative. The Lender
Group shall have all other rights and remedies not inconsistent herewith as
provided under the Code, by law, or in equity. No exercise by the Lender Group
of one right or remedy shall be deemed an election, and no waiver by the Lender
Group of any Event of Default shall be deemed a continuing waiver. No delay by
the Lender Group shall constitute a waiver, election, or acquiescence by it.
10. TAXES AND EXPENSES.
If any Obligor fails to pay any monies (whether taxes, assessments,
insurance premiums, or, in the case of leased properties or assets, rents or
other amounts payable under such leases) due to third Persons, or fails to make
any deposits or furnish any required proof of payment or deposit, all as
required under the terms of this Agreement, then, Agent, in its discretion and
without prior notice to the Obligors, may do any or all of the following: (a)
make payment of the same or any part thereof; (b) set up such reserves in
Borrowers' Loan Account as Agent deems necessary to protect the Lender Group
from the exposure created by such failure; or (c) obtain and maintain insurance
policies of the type described in Section 6.9 and take any action with respect
to such policies as Agent deems prudent. In connection with the foregoing, Agent
shall endeavor in good faith promptly to provide notice to Administrative
Borrower of any fee, cost, or expense incurred by Agent pursuant to this Section
10. Any such amounts paid by Agent shall constitute Lender Group Expenses. Any
such payments made by Agent shall not constitute an agreement by the Lender
Group to make similar payments in the future or a waiver by the Lender Group of
any Event of Default under this Agreement. Agent need not inquire as to, or
contest the validity of, any such expense, tax, or Lien and the receipt of the
usual official notice for the payment thereof shall be conclusive evidence that
the same was validly due and owing.
11. WAIVERS; INDEMNIFICATION.
11.1 DEMAND; PROTEST; ETC.
Each Borrower waives demand, protest, notice of protest, notice of
default or dishonor, notice of payment and nonpayment, nonpayment at maturity,
release, compromise, settlement, extension, or renewal of accounts, documents,
instruments, chattel paper, and guarantees at any time held by the Lender Group
on which such Borrower may in any way be liable.
11.2 THE LENDER GROUP'S LIABILITY FOR COLLATERAL.
Each Borrower hereby agrees that: (a) so long as Collateral Agent
complies with its obligations, if any, under Section 9-207 of the Code, the
Lender Group shall not in any way or manner be liable or responsible for: (i)
the safekeeping of the
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Collateral; (ii) any loss or damage thereto occurring or arising in any manner
or fashion from any cause; (iii) any diminution in the value thereof; or (iv)
any act or default of any carrier, warehouseman, bailee, forwarding agency, or
other Person; and (b) all risk of loss, damage, or destruction of the Collateral
shall be borne by the Obligors.
11.3 INDEMNIFICATION.
Each Borrower shall pay, indemnify, defend, and hold the Agent-Related
Persons, the Lender-Related Persons with respect to each Lender, each
Participant, and each of their respective officers, directors, employees,
counsel, agents, and attorneys-in- fact (each, an "Indemnified Person") harmless
(to the fullest extent permitted by law) from and against any and all claims,
demands, suits, actions, investigations, proceedings, and damages, and all
reasonable attorneys fees and disbursements and other costs and expenses
actually incurred in connection therewith (as and when they are incurred and
irrespective of whether suit is brought), at any time asserted against, imposed
upon, or incurred by any of them in connection with or as a result of or related
to the execution, delivery, enforcement, performance, and administration of this
Agreement and any other Loan Documents or the transactions contemplated herein
(including the indemnification of the Agent in respect of its indemnification of
the Collateral Agent under the Collateral Agency and Intercreditor Agreement),
and with respect to any investigation, litigation, or proceeding related to this
Agreement, any other Loan Document, or the use of the proceeds of the credit
provided hereunder (irrespective of whether any Indemnified Person is a party
thereto), or any act, omission, event or circumstance in any manner related
thereto (all the foregoing, collectively, the "Indemnified Liabilities"). The
foregoing to the contrary notwithstanding, each such Borrower shall have no
obligation to any Indemnified Person under this Section 11.3 with respect to any
Indemnified Liability that a court of competent jurisdiction finally determines
to have resulted from the gross negligence or willful misconduct of such
Indemnified Person. This provision shall survive the termination of this
Agreement and the repayment of the Obligations. If any Indemnified Person makes
any payment to any other Indemnified Person with respect to an Indemnified
Liability for which Borrowers were required to indemnify the Indemnified Person
receiving such payment, the Indemnified Person making such payment is entitled
to be indemnified and reimbursed by Borrowers with respect thereto.
12. NOTICES.
Unless otherwise provided in this Agreement, all notices or demands by
any party relating to this Agreement or any other Loan Document shall be in
writing and shall be personally delivered or sent by overnight courier,
electronic mail (at such email addresses as the parties may designate to each
other in accordance herewith), or telefacsimile to the Administrative Borrower
or the Agent, as the case may be, at its address set forth below:
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If to Administrative
<TABLE>
<S> <C>
Borrower or
to an Obligor: PHILIP SERVICES CORPORATION
100 King Street West
P.O. Box 2440, LCD#1
Hamilton, Ontario L8N4J6
Attn: Chief Financial Officer
Fax No. 905.521.9452
to Agent: FOOTHILL CAPITAL CORPORATION
11111 Santa Monica Boulevard
Suite 1500
Los Angeles, California 90025-3333
Attn: Business Finance Division Manager
Fax No. 310.478.9788
with copies to: BROBECK, PHLEGER & HARRISON LLP
550 South Hope Street
Los Angeles, California 90071
Attn: John Francis Hilson, Esq.
Fax No. 213.745.3345
</TABLE>
The parties hereto may change the address at which they are to receive
notices hereunder, by notice in writing in the foregoing manner given to all
other parties. All notices or demands sent in accordance with this Section 12
shall be deemed to be received on the earlier of the date of actual receipt or 3
Business Days after the deposit thereof in the mail.
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS
EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH
OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF
AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO
ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL
BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK.
THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND
LITIGATED ONLY IN THE STATE AND
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FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK, PROVIDED,
HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL, OR OTHER
PROPERTY MAY BE BROUGHT, AT THE REQUIRED LENDERS' OPTION, IN THE COURTS OF ANY
JURISDICTION WHERE THE REQUIRED LENDERS ELECT TO BRING SUCH ACTION OR WHERE SUCH
COLLATERAL, OR OTHER PROPERTY MAY BE FOUND. BORROWERS AND THE LENDER GROUP
WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO
ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT
ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 13.
BORROWERS AND THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO
A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF
THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. BORROWERS AND THE LENDER GROUP REPRESENT THAT EACH HAS
REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL
RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A
COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
14.1 ASSIGNMENTS AND PARTICIPATIONS.
(a) Administrative Borrower shall maintain, or cause to be
maintained, a register (the "Register") on which it enters the name of each
Lender as the registered owner of the Advances held by such Lender. A Registered
Loan (and the Registered Note, if any, evidencing the same) may be assigned or
sold in whole or in part only by registration of such assignment or sale on the
Register (and each Registered Note shall expressly so provide). Any assignment
or sale of all or part of such Registered Loan (and the Registered Note, if any,
evidencing the same) may be effected only by registration of such assignment or
sale on the Register, together with the surrender of the Registered Note, if
any, evidencing the same duly endorsed by (or accompanied by a written
instrument of assignment or sale duly executed by) the holder of such Registered
Note, whereupon, at the request of the designated assignee(s) or transferee(s),
one or more new Registered Notes in the same aggregate principal amount shall be
issued to the designated assignee(s) or transferee(s). Prior to the registration
of assignment or sale of any Registered Loan (and the Registered Note, if any
evidencing the same), Borrowers shall treat the Person in whose name such
Advance (and the Registered Note, if any, evidencing the same) is registered as
the owner thereof for the
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purpose of receiving all payments thereon and for all other purposes,
notwithstanding notice to the contrary.
(b) In the event that any Lender sells participations in the
Registered Loan, such Lender shall maintain a register on which it enters the
name of all participants in the Registered Loans held by it (the "Participant
Register"). A Registered Loan (and the Registered Note, if any, evidencing the
same) may be participated in whole or in part only by registration of such
participation on the Participant Register (and each Registered Note shall
expressly so provide). Any participation of such Registered Loan (and the
Registered Note, if any, evidencing the same) may be effected only by the
registration of such participation on the Participant Register.
(c) Any Lender may, with the written consent of Agent and, unless
an Event of Default has occurred and is continuing, the written consent of
Administrative Borrower, assign and delegate to one or more assignees (provided
that no written consent of Agent or Administrative Borrower shall be required in
connection with any assignment and delegation by a Lender to an Eligible
Transferee relative to such Lender's Tranche A Commitment or such Lender's
Obligations (exclusive of Tranche B Obligations)) (each an "Assignee") all, or
any ratable part of all, of the Obligations, the Commitments and the other
rights and obligations of such Lender hereunder and under the other Loan
Documents, in a minimum amount of $5,000,000; provided, however, that Borrowers
and Agent may continue to deal solely and directly with such Lender in
connection with the interest so assigned to an Assignee until (i) written notice
of such assignment, together with payment instructions, addresses and related
information with respect to the Assignee, shall have been given to Borrowers and
Agent by such Lender and the Assignee; (ii) such Lender and its Assignee shall
have delivered to Administrative Borrower and Agent an Assignment and
Acceptance; and (iii) the assignor Lender or Assignee has paid to Agent for
Agent's sole and separate account a processing fee in the amount of $5,000.
Anything contained herein to the contrary notwithstanding, the consent of Agent
shall not be required (if such assignment relates to a Lender's Tranche A
Commitments and Obligations (exclusive of Tranche B Obligations (including any
fee, cost, or expense under the Loan Documents that is specifically identified
to the Tranche B Facility)) or unreasonably withheld (if such assignment relates
to a Lender's Tranche B Commitments or Tranche B Obligations (including any fee,
cost, or expense under the Loan Documents that is specifically identified to the
Tranche B Facility), and payment of any fees shall not be required, if such
assignment is in connection with any merger, consolidation, sale, transfer, or
other disposition of all or any substantial portion of the business or loan
portfolio of such Lender.
(d) From and after the date that Agent notifies the assignor
Lender (with a copy to Administrative Borrower) that it has received an executed
Assignment and Acceptance and payment of the above-referenced processing fee,
(i) the Assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, shall have the rights and obligations of a Lender
under the Loan Documents, and (ii) the assignor Lender shall, to the extent that
rights and obligations hereunder and under the other Loan Documents have been
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assigned by it pursuant to such Assignment and Acceptance, relinquish its rights
(except with respect to Section 11.3 hereof) and be released from its
obligations under this Agreement (and in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement and the other Loan Documents, such Lender
shall cease to be a party hereto and thereto), and such assignment shall effect
a novation between Borrowers and the Assignee.
(e) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the Assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (1) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Loan Document furnished
pursuant hereto; (2) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of the
Obligors or the performance or observance by Borrowers of any of their
obligations under this Agreement or any other Loan Document furnished pursuant
hereto; (3) such Assignee confirms that it has received a copy of this
Agreement, together with such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (4) such Assignee will, independently and without
reliance upon Agent, such assigning Lender or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement; (5) such Assignee appoints and authorizes Agent to take such
action as agent on its behalf and to exercise such powers under this Agreement
as are delegated to Agent, by the terms hereof, together with such powers as are
reasonably incidental thereto; and (6) such Assignee agrees that it will perform
in accordance with their terms all of the obligations which by the terms of this
Agreement are required to be performed by it as a Lender. Agent will prepare on
the last Business Day of each month during which an assignment has become
effective in accordance with this Section 14.1, a new Schedule C-1 giving effect
to all such assignments effected during such month and will promptly provide
Administrative Borrower and the Lenders with copies of the same.
(f) Immediately upon each Assignee's making its processing fee
payment under the Assignment and Acceptance and receipt and acknowledgment by
Agent of such fully executed Assignment and Acceptance, this Agreement shall be
deemed to be amended to the extent, but only to the extent, necessary to reflect
the addition of the Assignee and the resulting adjustment of the Commitments
arising therefrom. The Commitment allocated to each Assignee shall reduce such
Commitments of the assigning Lender pro tanto.
(g) Any Lender may at any time, with the written consent of
Agent, sell to one or more commercial banks, financial institutions, or other
Persons not Affiliates of such Lender (a "Participant") participating interests
in the Obligations, the Commitment, and the other rights and interests of that
Lender (the "Originating Lender") hereunder and under the other Loan Documents
(provided that no written consent of Agent shall be required in
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connection with any sale of any such participating interests by a Lender to an
Eligible Transferee relative to such Lender's Tranche A Commitment or such
Lender's Obligations (exclusive of Tranche B Obligations)); provided, however,
that (i) the Originating Lender shall remain a "Lender" for all purposes of this
Agreement and the other Loan Documents and the Participant receiving the
participating interest in the Obligations, the Commitment and the other rights
and interests of the Originating Lender hereunder shall not constitute a
"Lender" hereunder or under the Loan Documents and the Originating Lender's
obligations under this Agreement shall remain unchanged, (ii) the Originating
Lender shall remain solely responsible for the performance of such obligations,
(iii) Borrowers, Agent, and Agent shall continue to deal solely and directly
with the Originating Lender in connection with the Originating Lender's rights
and obligations under this Agreement and the other Loan Documents, (iv) no
Lender shall transfer or grant any participating interest under which the
Participant has the right to approve any amendment to, or any consent or waiver
with respect to, this Agreement or any other Loan Document, except to the extent
such amendment to, or consent or waiver with respect to this Agreement or of any
other Loan Document would (A) extend the final maturity date of the Obligations
hereunder in which such Participant is participating; (B) reduce the interest
rate applicable to the Obligations hereunder in which such Participant is
participating; (C) release all or a material portion of the Collateral or
guaranties (except to the extent expressly provided herein or in any of the Loan
Documents) supporting the Obligations hereunder in which such Participant is
participating; (D) postpone the payment of, or reduce the amount of, the
interest or fees payable to such Participant through such Lender; or (E) change
the amount or due dates of scheduled principal repayments or prepayments or
premiums; and (v) all amounts payable by Borrowers hereunder shall be determined
as if such Lender had not sold such participation; except that, if amounts
outstanding under this Agreement are due and unpaid, or shall have been declared
or shall have become due and payable upon the occurrence of an Event of Default,
each Participant shall be deemed to have the right of setoff in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Lender under this Agreement. The rights of any Participant only shall be
derivative through the Originating Lender with whom such Participant
participates and no Participant shall have any rights under this Agreement or
the other Loan Documents or any direct rights as to the other Lenders, Agent,
Borrowers, the Collections, the Collateral, or otherwise in respect of the
Obligations. No Participant shall have the right to participate directly in the
making of decisions by the Lenders among themselves.
(h) In connection with any such assignment or participation or
proposed assignment or participation, a Lender may disclose all documents and
information which it now or hereafter may have relating to the Obligors or the
Obligors' business.
(i) Any other provision in this Agreement notwithstanding, any
Lender may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement in favor of any
Federal Reserve Bank in accordance with Regulation A of the Federal Reserve Bank
or U.S. Treasury Regulation 31 CFR ss.203.14, and such Federal Reserve Bank may
enforce such pledge or security interest in any manner
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permitted under applicable law. No such assignment or pledge shall release the
assigning or pledging Lender from its obligations hereunder.
(j) Any other provisions of this Section 14.1 to the contrary
notwithstanding, no transfer or assignment of the interests or obligations of
any Lender or any grant of participations therein shall be permitted if such
transfer, assignment or grant would require any Borrower or Guarantor to file a
registration statement with the SEC or to file any registration statements or
other forms under any state "Blue Sky" laws.
14.2 SUCCESSORS.
This Agreement shall bind and inure to the benefit of the respective
successors and assigns of each of the parties; provided, however, that no
Obligor may assign this Agreement or any rights or duties hereunder without the
prior written consent of Agent and all Lenders and any prohibited assignment
shall be absolutely void ab initio. No consent to assignment by Agent and the
Lenders shall release any Borrower or any other Obligor from its Obligations. A
Lender may assign this Agreement and the other Loan Documents and its rights and
duties hereunder and thereunder pursuant to Section 14.1 hereof and, except as
expressly required pursuant to Section 14.1 hereof, no consent or approval by
any Borrower or any other Obligor is required in connection with any such
assignment.
15. AMENDMENTS; WAIVERS.
15.1 AMENDMENTS AND WAIVERS.
No amendment or waiver of any provision of this Agreement or any other
Loan Document, and no consent with respect to any departure by Borrower
therefrom, shall be effective unless the same shall be in writing and signed by
the Required Lenders (or by Agent at the written request of the Required
Lenders) and Borrower and then any such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given;
provided, however, that Administrative Borrower and Agent can agree to changes
to Schedules RPC-1 (to add Real Property or to subtract Real Property in
connection with Permitted Dispositions) 2.8, 5.7, 5.8, 5.13, 5.16, 5.19 (to add
Real Property or to subtract Real Property in connection with Permitted
Dispositions) 5.22, and 6.11 without the consent of the other Borrowers or the
Lenders; provided further, however, that no such waiver, amendment, or consent
shall, unless in writing and signed by all the Lenders affected thereby and
Administrative Borrower (on behalf of all Borrowers) and acknowledged by Agent,
do any of the following:
(a) increase or extend the Commitment of any Lender;
(b) postpone or delay any date fixed by this Agreement or any
other Loan Document for any payment of principal, interest, fees or other
amounts due to the Lenders (or any of them) hereunder or under any other Loan
Document;
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(c) reduce the principal of, or the rate of interest specified
herein on any Advance, or any fees or other amounts payable hereunder or under
any other Loan Document (except the waiver of additional interest or additional
Letter of Credit fees to thereafter be accrued under Section 2.7(c) in
connection with the waiver by the Required Lenders of the Event of Default
giving rise to the entitlement to such additional interest, but not with respect
to any such additional interest or additional Letter of Credit fees accrued
prior to such waiver);
(d) change the percentage of the Commitments or the percentage of
the Obligations outstanding, as the case may be, that is required for the
Lenders or any of them to take any action hereunder;
(e) amend this Section or any provision of the Agreement
providing for consent or other action by all Lenders;
(f) authorize the release of Collateral other than as permitted
by Section 16.12;
(g) change the definition of "Required Lenders," "Pro Rata
Share," "Collections," "Maximum Facility Amount," "Maximum Tranche A Amount,"
"Maximum Tranche B Amount," "Total Commitment," "Tranche A Advance
Availability," "Tranche A Commitment," "Tranche A Usage," "Tranche B
Availability," "Tranche B Commitment," or "Tranche B Usage";
(h) subordinate any Collateral Agent's Liens held for the benefit
of the Lender Group;
(i) except in connection with a Permitted Disposition involving
the Stock of a Borrower or a Guarantor, release any Borrower or any Guarantor
from any Obligation for the payment of money;
(j) amend any of the provisions of Section 7.8 or Section 16, or
(k) amend the definition of "Borrowing Base," "Eligible
Accounts," "Eligible Domestic Accounts," "Eligible Unbilled Account," "Eligible
Canadian Accounts," "Dilution," or "Dilution Reserve," in each case, in a manner
that increases the amount of credit available hereunder, or
(l) amend (i) Section 2.1(a) or 2.1(c) in a manner that increases
the obligations of the Tranche A Lenders, (ii) Section 2.1(b) in a manner that
impairs the ability of Agent to impose reserves, (iii) Section 2.2(a) in a
manner that increases the obligations of the Tranche A Lenders, (iv) Section
2.3(a), 2.3(b), or 2.3(c) in a manner that increases the obligations of the
Tranche B Lenders, (v) Section 2.4(b), 2.4(e), 2.4(i), or 2.5(b), or (vi) the
last sentence of Section 7.17.
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and, provided further, however, that no amendment, waiver or consent shall,
unless in writing and signed by Agent, affect the rights or duties of Agent
under this Agreement or any other Loan Document. The foregoing notwithstanding,
any amendment, modification, waiver, consent, termination, or release of or with
respect to any provision of this Agreement or any other Loan Document that
relates only to the relationship of the Lender Group among themselves, and that
does not affect the rights or obligations of Borrowers, shall not require
consent by or the agreement of Borrowers.
15.2 NO WAIVERS; CUMULATIVE REMEDIES.
No failure by Agent or any Lender to exercise any right, remedy, or
option under this Agreement, any other Loan Document, or any present or future
supplement hereto or thereto, or in any other agreement between or among
Borrowers and Agent or any Lender, or delay by Agent or any Lender in exercising
the same, will operate as a waiver thereof. No waiver by Agent or any Lender
will be effective unless it is in writing, and then only to the extent
specifically stated. No waiver by Agent or the Lenders on any occasion shall
affect or diminish Agent's and each Lender's rights thereafter to require strict
performance by Borrowers of any provision of this Agreement. Agent's and each
Lender's rights under this Agreement and the other Loan Documents will be
cumulative and not exclusive of any other right or remedy which Agent or any
Lender may have.
16. AGENT; THE LENDER GROUP.
16.1 APPOINTMENT AND AUTHORIZATION OF AGENT.
Each Lender hereby designates and appoints Foothill as its agent under
this Agreement and the other Loan Documents and each Lender hereby irrevocably
authorizes Agent to take such action on its behalf under the provisions of this
Agreement and each other Loan Document and to exercise such powers and perform
such duties as are expressly delegated to Agent by the terms of this Agreement
or any other Loan Document, together with such powers as are reasonably
incidental thereto. Agent agrees to act as such on the express conditions
contained in this Section 16. The provisions of this Section 16 are solely for
the benefit of Agent and the Lenders, and Borrowers shall have no rights as a
third party beneficiary of any of the provisions contained herein; provided,
however, that certain of the provisions of Section 16.11 hereof also shall be
for the benefit of Borrowers. Any provision to the contrary contained elsewhere
in this Agreement or in any other Loan Document notwithstanding, Agent shall not
have any duties or responsibilities, except those expressly set forth herein,
nor shall Agent have or be deemed to have any fiduciary relationship with each
other or any Lender, and no implied covenants, functions, responsibilities,
duties, obligations or liabilities shall be read into this Agreement or any
other Loan Document or otherwise exist against Agent; it being expressly
understood and agreed that the use of the word "Agent" is for convenience only,
that Foothill is merely the representatives of the Lenders, and has only the
contractual duties set forth herein. Except as expressly otherwise provided in
this Agreement, Agent shall have and may use its sole
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discretion with respect to exercising or refraining from exercising any
discretionary rights or taking or refraining from taking any actions which Agent
is expressly entitled to take or assert under or pursuant to this Agreement and
the other Loan Documents. Without limiting the generality of the foregoing, or
of any other provision of the Loan Documents that provides rights or powers to
Agent, Lenders agree that Agent shall have the right to exercise the following
powers as long as this Agreement remains in effect: (a) maintain, in accordance
with its customary business practices, ledgers and records reflecting the status
of the Advances, the Collateral, the Collections, and related matters; (b)
execute or file any and all financing or similar statements or notices,
amendments, renewals, supplements, documents, instruments, proofs of claim,
notices and other written agreements with respect to the Loan Documents; (c)
make Advances, for itself or on behalf of Lenders as provided in the Loan
Documents; (d) exclusively receive, apply, and distribute the Collections as
provided in the Loan Documents; (e) open and maintain such bank accounts and
lock boxes as Agent deems necessary and appropriate in accordance with the Loan
Documents for the foregoing purposes with respect to the Collateral and the
Collections; (f) perform, exercise, and enforce any and all other rights and
remedies of the Lender Group with respect to the Obligors, the Obligations, the
Collateral, the Collections, or otherwise related to any of same as provided in
the Loan Documents; and (g) incur and pay such Lender Group Expenses as Agent
may deem necessary or appropriate for the performance and fulfillment of its
functions and powers pursuant to the Loan Documents.
16.2 DELEGATION OF DUTIES.
Except as otherwise provided in this section, Agent may execute any of
its duties under this Agreement or any other Loan Document by or through agents,
employees or attorneysinfact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. Agent shall not be responsible
for the negligence or misconduct of any agent or attorneyinfact that it selects
as long as such selection was made in compliance with this section and without
gross negligence or willful misconduct.
16.3 LIABILITY OF AGENT.
None of the AgentRelated Persons shall (i) be liable for any action
taken or omitted to be taken by any of them under or in connection with this
Agreement or any other Loan Document or the transactions contemplated hereby
(except for its own gross negligence or willful misconduct), or (ii) be
responsible in any manner to any of the Lenders for any recital, statement,
representation or warranty made by any Obligor or any Subsidiary or Affiliate of
any Obligor, or any officer or director thereof, contained in this Agreement or
in any other Loan Document, or in any certificate, report, statement or other
document referred to or provided for in, or received by Agent under or in
connection with, this Agreement or any other Loan Document, or the validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document, or for any failure of any Obligor or any other party to
any Loan Document to perform its obligations
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hereunder or thereunder. No AgentRelated Person shall be under any obligation to
any Lender to ascertain or to inquire as to the observance or performance of any
of the agreements contained in, or conditions of, this Agreement or any other
Loan Document, or to inspect the Books or properties of the Obligors or the
books or records or properties of any of the Subsidiaries or Affiliates of any
Obligor.
16.4 RELIANCE BY AGENT.
Agent shall be entitled to rely, and shall be fully protected in
relying, upon any writing, resolution, notice, consent, certificate, affidavit,
letter, telegram, facsimile, telex or telephone message, statement or other
document or conversation believed by it to be genuine and correct and to have
been signed, sent, or made by the proper Person or Persons, and upon advice and
statements of legal counsel (including counsel to any Obligor or counsel to any
Lender), independent accountants and other experts selected by Agent. Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless Agent shall first receive such
advice or concurrence of the Lenders as it deems appropriate and until such
instructions are received, Agent shall act, or refrain from acting, as it deems
advisable. If Agent so requests, it shall first be indemnified to its reasonable
satisfaction by Lenders against any and all liability and expense that may be
incurred by it by reason of taking or continuing to take any such action. Agent
shall in all cases be fully protected in acting, or in refraining from acting,
under this Agreement or any other Loan Document in accordance with a request or
consent of the Lenders and such request and any action taken or failure to act
pursuant thereto shall be binding upon all of the Lenders.
16.5 NOTICE OF DEFAULT OR EVENT OF DEFAULT.
Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default, except with respect to defaults
in the payment of principal, interest, fees, and expenses required to be paid to
Agent for the account of the Lenders, except with respect to Events of Default
of which Agent has actual knowledge, unless Agent shall have received written
notice from a Lender or Borrowers referring to this Agreement, describing such
Default or Event of Default, and stating that such notice is a "notice of
default." Agent promptly will notify the Lenders of its receipt of any such
notice or of any Event of Default of which Agent has actual knowledge. If any
Lender obtains actual knowledge of any Event of Default, such Lender promptly
shall notify the other Lenders and Agent of such Event of Default. Each Lender
shall be solely responsible for giving any notices to its Participants, if any.
Subject to Section 16.4, Agent shall take such action with respect to such
Default or Event of Default as may be requested by the Required Lenders in
accordance with Section 9; provided, however, that unless and until Agent has
received any such request, Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable.
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16.6 CREDIT DECISION.
Each Lender acknowledges that none of the AgentRelated Persons has
made any representation or warranty to it, and that no act by Agent hereinafter
taken, including any review of the affairs of Borrowers and their Subsidiaries
or Affiliates, shall be deemed to constitute any representation or warranty by
any Agent-Related Person to any Lender. Each Lender represents to Agent that it
has, independently and without reliance upon any Agent-Related Person and based
on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of Borrowers and
any other Person (other than the Lender Group) party to a Loan Document, and all
applicable bank regulatory laws relating to the transactions contemplated
hereby, and made its own decision to enter into this Agreement and to extend
credit to Borrowers. Each Lender also represents that it will, independently and
without reliance upon any Agent-Related Person and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigations as
it deems necessary to inform itself as to the business, prospects, operations,
property, financial and other condition and creditworthiness of Borrowers and
any other Person (other than the Lender Group) party to a Loan Document. Except
for notices, reports and other documents expressly herein required to be
furnished to the Lenders by Agent, Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of Borrowers and any other Person party to a Loan
Document that may come into the possession of any of the AgentRelated Persons.
16.7 COSTS AND EXPENSES; INDEMNIFICATION.
Agent may incur and pay Lender Group Expenses to the extent Agent
reasonably deems necessary or appropriate for the performance and fulfillment of
its functions, powers, and obligations pursuant to the Loan Documents, including
without limiting the generality of the foregoing, court costs, reasonable
attorneys fees and expenses, costs of collection by outside collection agencies
and auctioneer fees and costs of security guards or insurance premiums paid to
maintain the Collateral, any and all charges, commissions, fees, and costs in
connection with the issuance of letters of credit that are the subject of an L/C
Undertaking (including such expenses and fees in excess of the limitations set
forth in Section 2.2(e) hereof), whether or not Borrowers are obligated to
reimburse Agent or Lenders for such expenses pursuant to the Loan Documents or
otherwise. Agent is authorized and directed to deduct and retain sufficient
amounts from Collections to reimburse Agent for such out-of-pocket costs and
expenses prior to the distribution of any amounts to Lenders. In the event Agent
is not reimbursed for such costs and expenses from Collections, each Lender
hereby agrees that it is and shall be
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obligated to pay to or reimburse Agent for the amount of such Lender's Pro Rata
Share thereof. Whether or not the transactions contemplated hereby are
consummated, the Lenders shall indemnify upon demand the AgentRelated Persons
(to the extent not reimbursed by or on behalf of Borrowers and without limiting
the obligation of Borrowers to do so), according to their Pro Rata Shares, from
and against any and all Indemnified Liabilities; provided, however, that no
Lender shall be liable for the payment to any AgentRelated Person of any portion
of such Indemnified Liabilities resulting solely from such Person's gross
negligence or willful misconduct. Without limitation of the foregoing, each
Lender shall reimburse Agent upon demand for such Lender's ratable share of any
costs or outofpocket expenses (including attorneys fees and expenses) incurred
by Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement, any other Loan Document, or
any document contemplated by or referred to herein, to the extent that Agent is
not reimbursed for such expenses by or on behalf of Borrowers. The undertaking
in this section shall survive the payment of all Obligations hereunder and the
resignation or replacement of Agent.
16.8 AGENT IN INDIVIDUAL CAPACITY.
Foothill and its Affiliates may make loans to, issue letters of credit
for the account of, accept deposits from, acquire equity interests in and
generally engage in any kind of banking, trust, financial advisory, underwriting
or other business with Borrowers and their Subsidiaries and Affiliates and any
other Person (other than the Lender Group) party to any Loan Documents as though
Foothill were not Agent hereunder, and, in each case, without notice to or
consent of the Lenders. The Lenders acknowledge that, pursuant to such
activities, Foothill or its Affiliates may receive information regarding
Borrowers or their Affiliates and any other Person (other than the Lender Group)
party to any Loan Documents that is subject to confidentiality obligations in
favor of Borrowers or such other Person and that prohibit the disclosure of such
information to the Lenders, and the Lenders acknowledge that, in such
circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver Agent will use its reasonable efforts to obtain),
Agent shall not be under any obligation to provide such information to them. The
terms "Lender" and "Lenders" include Foothill in its individual capacity.
16.9 SUCCESSOR AGENT.
Agent may resign as Agent upon 45 days notice to the Lenders. If Agent
resigns under this Agreement, the Required Lenders, after consultation with
Administrative Borrower, shall appoint a successor Agent for the Lenders. If no
successor Agent is appointed prior to the effective date of the resignation of
Agent, Agent may appoint, after consulting with the Lenders and Administrative
Borrower, a successor Agent. If Agent has materially breached or failed to
perform any material provision of this Agreement or of
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applicable law, the Required Lenders may agree in writing, after consultation
with Administrative Borrower, to remove and replace Agent with a successor Agent
from among the Lenders. In any such event, upon the acceptance of its
appointment as successor Agent hereunder, such successor Agent shall succeed to
all the rights, powers and duties of the retiring Agent and the term "Agent"
shall mean such successor Agent and the retiring Agent's appointment, powers and
duties as Agent shall be terminated. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Section 16 shall inure to its benefit
as to any actions taken or omitted to be taken by it while it was Agent under
this Agreement. If no successor Agent has accepted appointment as Agent by the
date which is 45 days following a retiring Agent's notice of resignation, the
retiring Agent's resignation shall nevertheless thereupon become effective and
the Lenders shall perform all of the duties of Agent hereunder until such time,
if any, as the Lenders appoint a successor Agent as provided for above.
16.10 LENDER IN INDIVIDUAL CAPACITY.
Any Lender and its respective Affiliates may make loans to, issue
letters of credit for the account of, accept deposits from, acquire equity
interests in and generally engage in any kind of banking, trust, financial
advisory, underwriting or other business with Borrowers and their Subsidiaries
and Affiliates and any other Person (other than the Lender Group) party to any
Loan Documents as though such Lender were not a Lender hereunder without notice
to or consent of the Lenders. The Lenders acknowledge that, pursuant to such
activities, such Lender and its respective Affiliates may receive information
regarding Borrowers or their Affiliates and any other Person (other than the
Lender Group) party to any Loan Documents that is subject to confidentiality
obligations in favor of Borrowers or such other Person and that prohibit the
disclosure of such information to the Lenders, and the Lenders acknowledge that,
in such circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver such Lender will use its reasonable efforts to
obtain), such Lender not shall be under any obligation to provide such
information to them. With respect to the Swing Loans and Agent Advances, Swing
Lender shall have the same rights and powers under this Agreement as any other
Lender and may exercise the same as though it were not the sub-agent of the
Agent.
16.11 WITHHOLDING TAXES.
(a) If any Lender is a "foreign corporation, partnership or trust"
within the meaning of the IRC and such Lender claims exemption from, or a
reduction of, U.S. withholding tax under Sections 1441 or 1442 of the IRC, such
Lender agrees with and in favor of Agent and Borrowers, to deliver to Agent and
Borrowers:
(i) if such Lender claims an exemption from withholding tax
pursuant to its portfolio interest exception, (a) a statement of the
Lender, signed under penalty of perjury, that it is not a (I) a "bank"
as described in Section 881(c)(3)(A) of the IRC, (II) a 10%
shareholder (within the meaning
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of Section 881(c)(3)(B) of the IRC), or (III) a controlled foreign
corporation described in Section 881(c)(3)(C) of the IRC, and (B) a
properly completed IRS Form W-8BEN, before the first payment of any
interest under this Agreement and at any other time reasonably
requested by Agent or Borrowers;
(ii) if such Lender claims an exemption from, or a reduction of,
withholding tax under a United States tax treaty, properly completed
IRS Form W8BEN before the first payment of any interest under this
Agreement and at any other time reasonably requested by Agent or
Borrowers;
(iii) if such Lender claims that interest paid under this
Agreement is exempt from United States withholding tax because it is
effectively connected with a United States trade or business of such
Lender, two properly completed and executed copies of IRS Form W-8ECI
before the first payment of any interest under this Agreement and at
any other time reasonably requested by Agent or Borrowers;
(iv) such other form or forms as may be required under the IRC or
other laws of the United States as a condition to exemption from, or
reduction of, United States withholding tax.
Such Lender agrees promptly to notify Agent and Borrowers of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.
(b) If any Lender claims exemption from, or reduction of, withholding
tax under a United States tax treaty by providing IRS Form W-8BEN and such
Lender sells, assigns, or otherwise transfers all or part of the Obligations of
Borrowers to such Lender, such Lender agrees to notify Agent of the percentage
amount in which it is no longer the beneficial owner of Obligations of Borrowers
to such Lender. To the extent of such percentage amount, Agent will treat such
Lender's IRS Form W-8BEN as no longer valid.
(c) If any Lender is entitled to a reduction in the applicable
withholding tax, Agent may withhold from any interest payment to such Lender an
amount equivalent to the applicable withholding tax after taking into account
such reduction. If the forms or other documentation required by subsection (a)
of this Section are not delivered to Agent, then Agent may withhold from any
interest payment to such Lender not providing such forms or other documentation
an amount equivalent to the applicable withholding tax.
(d) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that Agent did not properly
withhold tax from amounts paid to or for the account of any Lender (because the
appropriate form was not delivered, was not properly executed, or because such
Lender failed to notify Agent of a change in circumstances which rendered the
exemption from, or reduction of, withholding tax ineffective, or for any other
reason) such Lender shall indemnify Agent fully for all amounts paid, directly
or indirectly, by Agent as tax or otherwise, including penalties and interest,
and including any taxes imposed by any jurisdiction on the amounts payable to
Agent under this
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Section, together with all costs and expenses (including attorneys fees and
expenses). The obligation of the Lenders under this subsection shall survive the
payment of all Obligations and the resignation or replacement of Agent.
(e) All payments made by the Borrowers hereunder or under any note
will be made without setoff, counterclaim or other defense, except as required
by applicable law other than for Taxes (as discussed below). All such payments
will be made free and clear of, and without deduction or withholding for, any
present or future taxes, levies, imposts, duties, fees, assessments or other
charges of whatever nature now or hereafter imposed by any jurisdiction (other
than the United States) or by any political subdivision or taxing authority
thereof or therein (other than one of or in the United States) with respect to
such payments (but excluding, any tax imposed by any jurisdiction or by any
political subdivision or taxing authority thereof or therein (i) measured by or
based on the net income or net profits of a Lender or (ii) to the extent that
such tax results from the granting of a participation in, or other transfer of
all or part of, the Obligations of Borrowers, or a change in the circumstances
of the Lender, including without limitation, a change in the residence, place of
incorporation, or principal place of business of the Lender, or a change in the
branch or lending office of the Lender participating in the transactions set
forth herein) and all interest, penalties or similar liabilities with respect
thereto (all such non-excluded taxes, levies, imposts, duties, fees, assessments
or other charges being referred to collectively as "Taxes"). If any Taxes are so
levied or imposed, the Borrowers agree to pay the full amount of such Taxes, and
such additional amounts as may be necessary so that every payment of all amounts
due under this Agreement or under any note, including any amount paid pursuant
to this Section 16.11(e) after withholding or deduction for or on account of any
Taxes, will not be less than the amount provided for herein; provided, however,
that the Borrowers shall not be required to increase any such amounts payable to
the Agent or any Lender (i) that is not organized under the laws of the United
States, if such Person fails to comply with the other requirements of this
Section 16.11, or (ii) if the increase in such amount payable results from the
Agent's or Lender's own willful misconduct or gross negligence. The Borrowers
will furnish to the Administrative Agent as promptly as possible after the date
the payment of any Taxes is due pursuant to applicable law certified copies of
tax receipts evidencing such payment by the Borrowers.
16.12 COLLATERAL MATTERS.
(a) The Lenders hereby irrevocably authorize Agent, at its option and
in its sole discretion, to authorize Collateral Agent to release any Collateral
Agent's Lien on any Collateral (i) upon the termination of the Commitments and
payment and satisfaction in full by Borrowers of all Obligations; (ii)
constituting property being sold or disposed of if a release is required or
desirable in connection therewith and if Administrative Borrower certifies to
Agent that the sale or disposition is permitted under Section 7.4 of this
Agreement (and Agent may rely conclusively on any such certificate, without
further inquiry); (iii) constituting property in which the Obligors owned no
interest at the time the security interest was granted or at any time
thereafter; or (iv) constituting property leased to an Obligor under a lease
that has expired or is terminated in a transaction permitted under this
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Agreement. Except as provided above, Agent will not execute and deliver an
authorization of a release of any Collateral Agent's Lien on any Collateral
without the prior written authorization of (y) if the release is of all or any
substantial portion of the Collateral, all of the Lenders, or (z) otherwise, the
Required Lenders. Upon request by Agent or Borrowers at any time, the Lenders
will confirm in writing Agent's authority to authorize the release any such
Collateral Agent's Liens on particular types or items of Collateral pursuant to
this Section 16.12; provided, however, that (1) Agent shall not be required to
execute any document necessary to evidence such authorization to release on
terms that, in Agent's opinion, would expose Agent to liability or create any
obligation or entail any consequence other than the authorization to release
such Collateral Agent's Lien without recourse, representation, or warranty, and
(2) such authorization or Collateral Agent's release shall not in any manner
discharge, affect, or impair the Obligations or any Collateral Agent's Liens
(other than those expressly being released) upon (or obligations of Borrowers in
respect of) all interests retained by the Obligors, including, the proceeds of
any sale, all of which shall continue to constitute part of the Collateral.
(b) Agent shall have no obligation whatsoever to any of the Lenders to
assure that the Collateral exists or is owned by the Obligors or is cared for,
protected, or insured or has been encumbered, or that the Collateral Agent's
Liens have been properly or sufficiently or lawfully created, perfected,
protected, or enforced or are entitled to any particular priority, or to
exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to Agent pursuant to any of the Loan
Documents, it being understood and agreed that in respect of the Collateral, or
any act, omission or event related thereto, subject to the terms and conditions
contained herein, Agent may act in any manner it may deem appropriate, in its
sole discretion given Agent's own interest in the Collateral in its capacity as
one of the Lenders and that Agent shall have no other duty or liability
whatsoever to any Lender as to any of the foregoing, except as otherwise
provided herein.
16.13 RESTRICTIONS ON ACTIONS BY LENDERS; SHARING OF PAYMENTS.
(a) Each of the Lenders agrees that it shall not, without the express
consent of Agent, and that it shall, to the extent it is lawfully entitled to do
so, upon the request of Agent, set off against the Obligations, any amounts
owing by such Lender to Borrowers or any accounts of Borrowers now or hereafter
maintained with such Lender. Each of the Lenders further agrees that it shall
not, unless specifically requested to do so by Agent, take or cause to be taken
any action, including, the commencement of any legal or equitable proceedings,
to foreclose any Lien on, or otherwise enforce any security interest in, any of
the Collateral the purpose of which is, or could be, to give such Lender any
preference or priority against the other Lenders with respect to the Collateral.
(b) If, at any time or times any Lender shall receive (i) by payment,
foreclosure, setoff or otherwise, any proceeds of Collateral or any payments
with respect to the Obligations arising under, or relating to, this Agreement or
the other Loan Documents, except for any such proceeds or payments received by
such Lender from Agent pursuant to
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the terms of this Agreement, or (ii) payments from Agent in excess of such
Lender's ratable portion of all such distributions by Agent, such Lender
promptly shall (1) turn the same over to Agent, in kind, and with such
endorsements as may be required to negotiate the same to Agent, or in same day
funds, as applicable, for the account of all of the Lenders and for application
to the Obligations in accordance with the applicable provisions of this
Agreement or the relevant Fee Split Letter, as applicable, or (2) purchase,
without recourse or warranty, an undivided interest and participation in the
Obligations owed to the other Lenders so that such excess payment received shall
be applied ratably as among the Lenders in accordance with their Pro Rata
Shares; provided, however, that if all or part of such excess payment received
by the purchasing party is thereafter recovered from it, those purchases of
participations shall be rescinded in whole or in part, as applicable, and the
applicable portion of the purchase price paid therefor shall be returned to such
purchasing party, but without interest except to the extent that such purchasing
party is required to pay interest in connection with the recovery of the excess
payment.
16.4 AGENCY FOR PERFECTION.
Agent and each Lender hereby appoints each other Lender as agent for
the purpose of perfecting the Collateral Agent's Liens in assets which, in
accordance with Article 9 of the UCC can be perfected only by possession. Should
any Lender obtain possession of any such Collateral, such Lender shall notify
Agent thereof, and, promptly upon Agent's request therefor shall deliver such
Collateral to Agent or in accordance with Agent's instructions.
16.5 PAYMENTS BY AGENT TO THE LENDERS.
All payments to be made by Agent to the Lenders shall be made by bank
wire transfer or internal transfer of immediately available funds pursuant to
such wire transfer instructions as each party may designate for itself by
written notice to Agent. Concurrently with each such payment, Agent shall
identify whether such payment (or any portion thereof) represents principal,
premium or interest on Advances or otherwise.
16.16 CONCERNING THE COLLATERAL AND RELATED LOAN DOCUMENTS.
Each member of the Lender Group authorizes and directs Agent to enter
into this Agreement and the other Loan Documents relating to the Collateral, for
the benefit of the Lender Group. Each member of the Lender Group agrees that any
action taken by Agent or all Lenders, as applicable, in accordance with the
terms of this Agreement or the other Loan Documents relating to the Collateral
and the exercise by Agent or all Lenders, as applicable, of their respective
powers set forth therein or herein, together with such other powers that are
reasonably incidental thereto, shall be binding upon all of the Lenders.
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16.17 FIELD AUDITS AND EXAMINATION REPORTS; CONFIDENTIALITY; DISCLAIMERS
BY LENDERS; OTHER REPORTS AND INFORMATION.
By signing this Agreement, each Lender:
(a) is deemed to have requested that Agent furnish such Lender,
promptly after it becomes available, a copy of each field audit or examination
report (each a "Report" and collectively, "Reports") prepared by Agent, and
Agent shall so furnish each Lender with such Reports;
(b) expressly agrees and acknowledges that Agent does not (i)
make any representation or warranty as to the accuracy of any Report, and (ii)
shall not be liable for any information contained in any Report;
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that Agent or other party performing any
audit or examination will inspect only specific information regarding the
Obligors and will rely significantly upon the Books, as well as on
representations of the Obligors' personnel;
(d) agrees to keep all Reports and other material, non-public
information regarding Borrowers and their Subsidiaries and their operations,
assets, and existing and contemplated business plans in a confidential manner;
it being understood and agreed by Borrowers that in any event such Lender may
make disclosures (a) to counsel for and other advisors, accountants, and
auditors to such Lender, (b) reasonably required by any bona fide potential or
actual Assignee, transferee, or Participant in connection with any contemplated
or actual assignment or transfer by such Lender of an interest herein or any
participation interest in such Lender's rights hereunder, (c) of information
that has become public by disclosures made by Persons other than such Lender,
its Affiliates, assignees, transferees, or participants, or (d) as required or
requested by any court, governmental or administrative agency, pursuant to any
subpoena or other legal process, or by any law, statute, regulation, or court
order; provided, however, that, unless prohibited by applicable law, statute,
regulation, or court order, such Lender shall notify Borrowers of any request by
any court, governmental or administrative agency, or pursuant to any subpoena or
other legal process for disclosure of any such non-public material information
concurrent with, or where practicable, prior to the disclosure thereof; and
(e) without limiting the generality of any other indemnification
provision contained in this Agreement, agrees: (i) to hold Agent and any such
other Lender preparing a Report harmless from any action the indemnifying Lender
may take or conclusion the indemnifying Lender may reach or draw from any Report
in connection with any loans or other credit accommodations that the
indemnifying Lender has made or may make to Borrowers, or the indemnifying
Lender's participation in, or the indemnifying Lender's purchase of, a loan or
loans of Borrowers; and (ii) to pay and protect, and indemnify, defend and hold
Agent, and any such other Lender preparing a Report harmless from and against,
the claims, actions, proceedings, damages, costs, expenses and other amounts
(including, attorney costs) incurred by Agent and any such other Lender
preparing a Report as the direct or indirect result of any third parties who
might obtain all or part of any Report through the indemnifying Lender.
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In addition to the foregoing: (x) Any Lender may from time to time request of
Agent in writing that Agent provide to such Lender a copy of any report or
document provided by Borrowers to Agent that has not been contemporaneously
provided by Borrowers to such Lender, and, upon receipt of such request, Agent
shall provide a copy of same to such Lender promptly upon receipt thereof from
Borrowers; (y) To the extent that Agent is entitled, under any provision of the
Loan Documents, to request additional reports or information from Borrowers, any
Lender may, from time to time, reasonably request Agent to exercise such right
as specified in such Lender's notice to Agent, whereupon Agent promptly shall
request of Borrowers the additional reports or information specified by such
Lender, and, upon receipt thereof from Borrowers, Agent promptly shall provide a
copy of same to such Lender; and (z) Any time that Agent renders to Borrowers a
statement regarding the Loan Account, Agent shall send a copy of such statement
to each Lender.
16.18 SEVERAL OBLIGATIONS; NO LIABILITY.
Notwithstanding that certain of the Loan Documents now or hereafter
may have been or will be executed only by or in favor of Agent in its capacity
as such, and not by or in favor of the Lenders, any and all obligations on the
part of Agent (if any) to make any credit available hereunder shall constitute
the several (and not joint) obligations of the respective Lenders on a ratable
basis, according to their respective Commitments, to make an amount of such
credit not to exceed, in principal amount, at any one time outstanding, the
amount of their respective Commitments. Nothing contained herein shall confer
upon any Lender any interest in, or subject any Lender to any liability for, or
in respect of, the business, assets, profits, losses, or liabilities of any
other Lender. Each Lender shall be solely responsible for notifying its
Participants of any matters relating to the Loan Documents to the extent any
such notice may be required, and no Lender shall have any obligation, duty, or
liability to any Participant of any other Lender. Except as provided in Section
16.7, no member of the Lender Group shall have any liability for the acts of any
other member of the Lender Group. No Lender shall be responsible to Borrowers or
any other Person for any failure by any other Lender to fulfill its obligations
to make credit available hereunder, nor to advance for it or on its behalf in
connection with its Commitment, nor to take any other action on its behalf
hereunder or in connection with the financing contemplated herein.
17. GENERAL PROVISIONS.
17.1 EFFECTIVENESS.
This Agreement shall be binding and deemed effective when executed by
Borrowers and each member of the Lender Group whose signature is provided for on
the signature pages hereof. Provided, however, that notwithstanding that this
Agreement is expressed to be dated as of March 31, 2000, it is agreed that this
Agreement shall be delivered on and take effect as and from the Closing Date.
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17.2 SECTION HEADINGS.
Headings and numbers have been set forth herein for convenience only.
Unless the contrary is compelled by the context, everything contained in each
section applies equally to this entire Agreement.
17.3 INTERPRETATION.
Neither this Agreement nor any uncertainty or ambiguity herein shall
be construed or resolved against the Lender Group or Borrowers, whether under
any rule of construction or otherwise. On the contrary, this Agreement has been
reviewed by all parties and shall be construed and interpreted according to the
ordinary meaning of the words used so as to fairly accomplish the purposes and
intentions of all parties hereto.
17.4 SEVERABILITY OF PROVISIONS.
Each provision of this Agreement shall be severable from every other
provision of this Agreement for the purpose of determining the legal
enforceability of any specific provision.
17.5 AMENDMENTS IN WRITING.
This Agreement only can be amended by a writing signed by
Agent, on behalf of the Lenders, and Borrowers.
17.6 COUNTERPARTS; TELEFACSIMILE EXECUTION.
This Agreement may be executed in any number of counterparts and by
different parties on separate counterparts, each of which, when executed and
delivered, shall be deemed to be an original, and all of which, when taken
together, shall constitute but one and the same Agreement. Delivery of an
executed counterpart of this Agreement by telefacsimile shall be equally as
effective as delivery of an original executed counterpart of this Agreement. Any
party delivering an executed counterpart of this Agreement by telefacsimile also
shall deliver an original executed counterpart of this Agreement but the failure
to deliver an original executed counterpart shall not affect the validity,
enforceability, and binding effect of this Agreement. The foregoing shall apply
to each other Loan Document mutatis mutandis.
17.7 REVIVAL AND REINSTATEMENT OF OBLIGATIONS.
If the incurrence or payment of the Obligations by Borrowers or any
Guarantor or the transfer by either or both of such parties to the Lender Group
of any property of either or both of such parties should for any reason
subsequently be declared to be void or voidable under any state or federal law
relating to creditors' rights, including provisions of the Bankruptcy Code
relating to fraudulent conveyances, preferences, and
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other voidable or recoverable payments of money or transfers of property
(collectively, a "Voidable Transfer"), and if the Lender Group is required to
repay or restore, in whole or in part, any such Voidable Transfer, or elects to
do so upon the reasonable advice of its counsel, then, as to any such Voidable
Transfer, or the amount thereof that the Lender Group is required or elects to
repay or restore, and as to all reasonable costs, expenses, and attorneys fees
of the Lender Group related thereto, the liability of Borrowers and the
Guarantors automatically shall be revived, reinstated, and restored and shall
exist as though such Voidable Transfer had never been made.
17.8 INTEGRATION.
This Agreement, together with the other Loan Documents, reflects the
entire understanding of the parties with respect to the transactions
contemplated hereby and shall not be contradicted or qualified by any other
agreement, oral or written, before the date hereof.
17.9 PARENT AS AGENT FOR BORROWERS.
Each Borrower hereby irrevocably appoints Parent as the borrowing
agent and attorney-in-fact for all Borrowers (the "Administrative Borrower")
which appointment shall remain in full force and effect unless and until Agent
shall have received prior written notice signed by each Borrower that such
appointment has been revoked and that another Borrower has been appointed
Administrative Borrower. Each Borrower hereby irrevocably appoints and
authorizes the Administrative Borrower (i) to provide Agent with all notices
with respect to Advances and Letters of Credit obtained for the benefit of any
Borrower and all other notices and instructions under this Agreement and (ii) to
take such action as the Administrative Borrower deems appropriate on its behalf
to obtain Advances and Letters of Credit and to exercise such other powers as
are reasonably incidental thereto to carry out the purposes of this Agreement.
It is understood that the handling of the Loan Account and Collateral of
Borrowers in a combined fashion, as more fully set forth herein, is done solely
as an accommodation to Borrowers in order to utilize the collective borrowing
powers of Borrowers in the most efficient and economical manner and at their
request, and that Lender Group shall not incur liability to any Borrower as a
result hereof. Each Borrower expects to derive benefit, directly or indirectly,
from the handling of the Loan Account and the Collateral in a combined fashion
since the successful operation of each Borrower is dependent on the continued
successful performance of the integrated group. To induce the Lender Group to do
so, and in consideration thereof, each Borrower hereby jointly and severally
agrees to indemnify each member of the Lender Group and hold each member of the
Lender Group harmless against any and all liability, expense, loss or claim of
damage or injury, made against the Lender Group by any Borrower or by any third
party whosoever, arising from or incurred by reason of (a) the handling of the
Loan Account and Collateral of Borrowers as herein provided, (b) the Lender
Group's relying on any instructions of the Administrative Borrower, or (c) any
other action taken by the Lender Group hereunder or under the other Loan
Documents, except that Borrowers will have no liability to the relevant
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<PAGE> 133
Agent-Related Person or Lender-Related Person under this Section 17.9 with
respect to any liability that has been finally determined by a court of
competent jurisdiction to have resulted solely from the gross negligence or
willful misconduct of such Agent-Related Person or Lender-Related Person, as the
case may be.
17.10 BROKERAGE FEES - LENDER GROUP.
No member of the Lender Group has utilized the services of any broker
or finder in connection with the financing provided by the Lender Group under
this Agreement and no brokerage commission or finders fee is payable in
connection herewith.
[Signature pages to follow.]
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<PAGE> 134
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered as of the date first above written.
PHILIP SERVICES CORPORATION,a
Delaware corporation
By:
--------------------------------------
Title:
------------------------------------
By:
--------------------------------------
Title:
------------------------------------
GEORGIA RECOVERY SYSTEMS,
a Georgia partnership
By:
--------------------------------------
Title: Corporate Secretary of Allwaste
Recovery Systems, Inc., general partner
GRS/LAKE CHARLES, LTD.,
a Louisiana limited partnership
By:
--------------------------------------
Title: Corporate Secretary of Allwaste
Recovery Systems, Inc., general partner
S - 1
<PAGE> 135
<TABLE>
<S> <C>
RESI ACQUISITION (DELAWARE) ENVIRONMENTAL MANAGEMENT COMPANY, a
CORPORATION,a Delaware corporation, Florida corporation
21ST CENTURY ENVIRONMENTAL CHEMICAL POLLUTION CONTROL, INC. OF
MANAGEMENT, INC. OF NEVADA,a NEW YORK-A 21ST CENTURY
Nevada corporation ENVIRONMENTAL MANAGEMENT
COMPANY, a New York corporation
21ST CENTURY ENVIRONMENTAL
MANAGEMENT, INC. OF RHODE CHEMICAL RECLAMATION SERVICES, INC.,a
ISLAND,a Rhode Island corporation Texas corporation
ACE/ALLWASTE ENVIRONMENTAL COUSINS WASTE CONTROL
SERVICES OF INDIANA, INC.,an Illinois CORPORATION,an Ohio corporation
corporation
CYANOKEM INC.,a Michigan corporation
ADVANCED ENVIRONMENTAL
SYSTEMS, INC. DEEP CLEAN, INC.,a Michigan corporation
a New York corporation
DELTA MAINTENANCE, INC.,
ALL SAFETY AND SUPPLY, INC.,a Texas a Louisiana corporation
corporation
HARTNEY CORPORATION,a Nevada
ALLWASTE TANK CLEANING, INC.,a corporation
Georgia corporation
INDUSTRIAL SERVICES TECHNOLOGIES,
ALLWASTE RECOVERY SYSTEMS, INC.,a INC.,a Colorado corporation
Georgia corporation
IST HOLDING CORP.,
ALLWORTH, INC.,an Alabama corporation a Colorado corporation
ALRC, INC.,a Delaware corporation JESCO INDUSTRIAL SERVICE, INC.,a
Kentucky corporation
APLC, INC.,a Delaware corporation
LUNTZ ACQUISITION (DELAWARE)
PHILIP SERVICES/BIRMINGHAM, CORPORATION,a Delaware corporation
INC.,an Alabama corporation
LUNTZ CORPORATION,a Delaware
BURLINGTON ENVIRONMENTAL corporation
INC.,a Delaware corporation
NORTHLAND ENVIRONMENTAL, INC.,a
BURLINGTON ENVIRONMENTAL INC.,a Delaware corporation
Washington corporation
NORTRU, INC.,a Michigan corporation
CAPPCO TUBULAR PRODUCTS USA, INC.,a
Georgia corporation ONEIDA ASBESTOS ABATEMENT INC.,
a Delaware corporation
CHEM-FAB, INC.,a Texas corporation
ONEIDA ASBESTOS REMOVAL, INC.,
CHEM-FREIGHT, INC.,an Ohio corporation a New York corporation
CHEMICAL POLLUTION CONTROL, INC. OF PHILIP AUTOMOTIVE, LTD.,a Pennsylvania
FLORIDA-A 21ST CENTURY corporation
</TABLE>
By:
------------------------------------------------------------
Colin Soule Corporate Secretary of the above corporations
S-2
<PAGE> 136
<TABLE>
<S> <C>
PHILIP CHEMI-SOLV, INC., a Texas PHILIP METALS RECOVERY (USA) INC., an
corporation Arizona corporation
PHILIP CORROSION SERVICES, INC., a PHILIP OIL RECYCLING, INC., a North
Nevada corporation Dakota corporation
PHILIP ENVIRONMENTAL SERVICES PHILIP PLANT SERVICES, INC., a Delaware
CORPORATION, a Missouri corporation corporation
PHILIP ENVIRONMENTAL SERVICES, INC., PHILIP RECLAMATION SERVICES, HOUSTON,
a Delaware corporation INC., a Texas corporation
PHILIP ENVIRONMENTAL (WASHINGTON) PHILIP REFRACTORY SERVICES, INC.,
INC., a Washington corporation a Nevada corporation
PHILIP HYDRO-ENGINEERING & PHILIP SCAFFOLD CORPORATION, a
SERVICE, INC., a Texas Colorado corporation
corporation
PHILIP/SECO INDUSTRIES, INC., a
PHILIP INDUSTRIAL SERVICES (USA), INC., Louisiana corporation
a Delaware corporation
PHILIP SERVICES (PENNSYLVANIA), INC., a
PHILIP INDUSTRIAL SERVICES GROUP, INC., Pennsylvania corporation
a Delaware corporation
PHILIP SERVICES/ATLANTA, INC., a
PHILIP INDUSTRIAL SERVICES OF TEXAS, Georgia corporation
INC., a Texas corporation
PHILIP SERVICES CECATUR INC.,
PHILIP/J.D. MEAGHER, INC., a a Delaware corporation
Massachusetts corporation
PHILIP SERVICES CECATUR HOLDINGS LLC,
PHILIP MECHANICAL SERVICES OF a Delaware limited liability company
LOUISIANA, INC., a Louisiana corporation
PHILIP SERVICES HAWAII, LTD., a Hawaii
PHILIP METALS (NEW YORK), INC., a New corporation
York corporation
PHILIP SERVICES (INTERNATIONAL),
PHILIP METALS (USA), INC., an Ohio INC.,
corporation a Delaware corporation
PHILIP METALS, INC., an Ohio PHILIP SERVICES/LOUISIANA, INC., a
corporation Louisiana corporation
PHILIP SERVICES/MISSOURI, INC., a
Delaware corporation
PHILIP SERVICES/MOBILE, INC., an
Alabama corporation
PHILIP SERVICES/NORTH ATLANTIC, INC.,
a Delaware corporation
</TABLE>
By:
------------------------------------------------------------
Colin Soule Corporate Secretary of the above corporations
S-3
<PAGE> 137
<TABLE>
<S> <C>
PHILIP SERVICES/NORTH CENTRAL, INC., corporation
an Iowa corporation
REPUBLIC ENVIRONMENTAL RECYCLING
PHILIP SERVICES/OHIO, INC., an Ohio (NEW JERSEY), INC., a New Jersey
corporation corporation
PHILIP SERVICES/OKLAHOMA, INC., a REPUBLIC ENVIRONMENTAL SYSTEMS
Oklahoma corporation (TRANSPORTATION GROUP), INC., a
Pennsylvania corporation
PHILIP SERVICES PHENCORP
INTERNATIONAL INC., a Delaware REPUBLIC ENVIRONMENTAL SYSTEMS
corporation (TECHNICAL SERVICES GROUP), INC., a
New Jersey corporation
PHILIP SERVICES (PHENCORP) LLC, a
Delaware limited liability company RESOURCE RECOVERY CORPORATION, a
Washington corporation
PHILIP SERVICES/SOUTH CENTRAL, INC.,
a Colorado corporation RHO-CHEM CORPORATION,a California
corporation
PHILIP SERVICES/SOUTHWEST, INC., an
Arizona corporation RMF GLOBAL, INC., an Ohio corporation
PHILIP ST, INC., a Texas corporation RMF INDUSTRIAL CONTRACTING, INC., a
Michigan corporation
PHILIP ST PIPING, INC.,a Texas
corporation SERV-TECH EPC, INC., a Nevada
corporation
PHILIP TECHNICAL SERVICES, INC., a
Texas corporation SERV-TECH INTERNATIONAL SALES,
INC., U.S. Virgin Islands corporation
PHILIP TRANSPORTATION AND
REMEDIATION, INC., a California SERV-TECH SERVICES, INC., a Texas
corporation corporation
PHILIP WEST INDUSTRIAL SERVICES, INC., SOLVENT RECOVERY CORPORATION, a
a California corporation Missouri corporation
PHILIP/WHITING, INC., a Delaware TERMINAL TECHNOLOGIES, INC., a Texas
corporation corporation
PIPING COMPANIES, INC., an Oklahoma THERMALKEM, INC., a Delaware
corporation corporation
PIPING HOLDINGS CORP., TOTAL REFRACTORY SYSTEM, INC., a
an Oklahoma corporation Nevada corporation
PIPING MECHANICAL CORPORATION, a UNITED INDUSTRIAL MATERIALS, INC., a
Colorado corporation Nevada corporation
PSC ENTERPRISES, INC., a Delaware
corporation
REPUBLIC ENVIRONMENTAL SYSTEMS
(PENNSYLVANIA), INC., a Pennsylvania
</TABLE>
By:
------------------------------------------------------------
Colin Soule Corporate Secretary of the above corporations
S-4
<PAGE> 138
FOOTHILL CAPITAL CORPORATION,
a California corporation, as Agent and a
Lender
By:
-------------------------------------
Title:
ABLECO FINANCE LLC,
a Delaware limited liability company,
as a Lender
By:
-------------------------------------
Title:
MADELEINE LLC,
as a Lender
By:
-------------------------------------
Title:
FOOTHILL PARTNERS III, L.P.,
a Delaware limited partnership,
as a Lender
By:
-------------------------------------
Its Managing General Partner
FOOTHILL INCOME TRUST, L.P.,
a Delaware limited partnership,
as a Lender
By: FIT GP, LLC, its general partner
By:
-------------------------------------
Its Managing Member
By:
------------------------------------------------------------
Colin Soule Corporate Secretary of the above corporations
S-5
<PAGE> 139
ARNOS CORPORATION,
a Nevada corporation, as a Lender
By:
-------------------------------------
Title:
S-6
<PAGE> 140
SCHEDULE C-1
COMMITMENTS
<TABLE>
<CAPTION>
LENDER TRANCHE A TRANCHE B TOTAL COMMITMENT
COMMITMENT COMMITMENT
------ ---------- ---------- ----------------
<S> <C> <C> <C>
Foothill Capital $35,000,000 -0- $35,000,000
Corporation
ABLECO FINANCE LLC -0- $12,500,000 $12,500,000
MADELEINE LLC $32,500,000 -0- $32,500,000
FOOTHILL PARTNERS III, $16,250,000 $6,250,000 $22,500,000
L.P.
FOOTHILL INCOME $16,250,000 $6,250,000 $22,500,000
TRUST, L.P.
ARNOS CORPORATION -0- $50,000,000 $50,000,000
------------ ----------- ------------
ALL LENDERS $100,000,000 $75,000,000 $175,000,000
============ =========== ============
</TABLE>
<PAGE> 1
EXHIBIT 99.3
================================================================================
[New Common Stock]
REGISTRATION RIGHTS AGREEMENT
Dated as of March 31, 2000
by and among
PHILIP SERVICES CORPORATION
and
EACH SECURITIES HOLDER REFERRED TO HEREIN
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 1. Definitions 2
1.1. Defined Terms 2
Section 2. Demand Registration Rights of Securities Holders 8
2.1. Demand Registration Rights 8
2.2. Determination 9
2.3. Notices; Minimum Registerable Amounts 9
2.4. Discretion of Securities Holder 10
2.5. Allocation Among Initiating Securities Holders 11
2.6. Piggyback Rights of Securities Holders and the Company 11
2.7. Limitation on Registration Rights 12
Section 3. Company Sale Events 13
3.1. Determination 13
3.2. Notice 13
3.3. Piggyback Rights of Securities Holders 13
3.4. Discretion of the Company 14
Section 4. Black-Out Periods 14
4.1. Black-Out Periods for Securities Holders 14
Section 5. Agreements Concerning Offerings 14
5.1. Obligations of Securities Holders 14
5.2. Obligations of the Company 15
5.3. Agreements Related to Offerings 16
5.4. Certain Expenses 19
5.5. Public Reporting; Rule 144 19
5.6. Limitations on Subsequent Registration Rights 20
5.7. Indemnification and Contribution 20
5.8. Underwritten Offerings 27
5.9. Transfer of Rights Under this Agreement; Transfers of Registerable Common 27
5.10. Termination of Rights 28
Section 6. Sequencing of Public Sale Events 28
6.1. Effective Notice Period 28
</TABLE>
(i)
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
6.2. Restrictive Legend on Certificates 28
Section 7. Representations and Warranties of the Company 29
Section 8. Representations and Warranties of the Securities Holders 33
Section 9. Delivery of Comfort Letter and Legal Opinion 35
Section 10. Miscellaneous 35
10.1. Notices 35
10.2. Amendments and Waivers 35
10.3. Termination 36
10.4. Survival of Representations and Warranties 36
10.5. Headings 36
10.6. Counterparts 36
10.7. GOVERNING LAW 36
10.8. Adjustment of Shares 36
10.9. No Inconsistent Agreements 36
10.10. Severability 37
10.11. ENTIRE AGREEMENT 37
10.12. Listing of New Common Stock 37
10.13. No Required Sale 37
EXHIBITS
Exhibit A - Securities Holders Questionnaire 39
Exhibit B - Supplemental Addendum 45
</TABLE>
(ii)
<PAGE> 4
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of March 31, 2000, by and among
PHILIP SERVICES CORPORATION, a corporation organized under the laws of the State
of Delaware (the "Company"), and each SECURITIES HOLDER (as defined in
subsection 1.1).
-1-
<PAGE> 5
W I T N E S S E T H:
WHEREAS, on June 25, 1999 the Company, formerly known as Philip Services
(Delaware), Inc., filed a voluntary petition for relief under Chapter 11 of
title 11 of the United States Code (as amended, the "Bankruptcy Code") with the
United States Bankruptcy Court for the District of Delaware (the "Bankruptcy
Court"). On November 30, 1999, the Bankruptcy Court entered an Order confirming
the First Amended Joint Plan of Reorganization of Philip Services (Delaware),
Inc. et al., dated as of September 21, 1999 (the "Plan"); and
WHEREAS, the Plan provides that the Company shall enter into a registration
rights agreement with certain of its shareholders.
NOW, THEREFORE, in consideration of the mutual agreements contained herein,
the parties hereto hereby agree as follows:
Section 1. Definitions.
1.1. Defined Terms. (a) As used in this Agreement, the terms defined in the
caption and the recitals shall have the meanings set forth therein, and the
following terms shall have the following meanings:
"affiliate" shall have the meaning ascribed thereto in Rule 12b-2
under the Exchange Act as in effect on the date hereof.
"Agreement" shall mean this Registration Rights Agreement, as amended,
supplemented or otherwise modified from time to time.
"AREP" shall mean American Real Estate Holdings, L.P.
"Canadian Prospectus" shall mean a Preliminary Prospectus or
Prospectus, as applicable, in respect of which a receipt has been issued by
the Canadian Securities Authority in each of the provinces of Canada in
which the document has been filed.
"Canadian Securities Authorities" shall mean the securities regulatory
authorities in each of the provinces of Canada, and "Canadian Securities
Authority" shall mean any one of the Canadian Securities Authorities.
"Canadian Securities Laws" shall mean the securities legislation of
each of the provinces of Canada and the respective regulations thereunder
and the published rules, policy statements, blanket rulings, orders,
notices or national instruments applicable therein.
"Canadian Shelf Procedures" shall mean the procedures contemplated by
National Policy 47 of the Canadian Securities Administrators for the
distribution of securities of
-2-
<PAGE> 6
eligible issuers under the prompt offering qualification system, as the
same may be amended or superseded from time to time.
"Commission" shall mean the United States Securities and Exchange
Commission or any successor thereto.
"Company Private Sale Event" shall mean any sale of New Common Stock
by the Company which sale is not effected pursuant to a Registration
Statement; excluding, however, any sale or related series of sales of New
Common Stock by the Company (a) in connection with the acquisition by the
Company of another company or business or investment by the Company in any
joint venture or (b) pursuant to any "employee benefit plan" within the
meaning of Rule 405 under the Securities Act adopted by the Company or any
other member of the Philip Group.
"Company Public Sale Event" shall mean any sale by the Company of New
Common Stock pursuant to (i) a Registration Statement filed by the Company
(other than a Registration Statement filed by the Company on Form S-4, or
Form S-8 or (ii) a Canadian Prospectus filed by the Company (other than in
respect of shares of New Common Stock issued (a) in connection with an
acquisition by the Company of another company or business or an investment
by the Company in a joint venture or (b) pursuant to an "employee benefit
plan" within the meaning of Rule 405 under the Securities Act adopted by
the Company or any other member of the Philip Group.
"Company Sale Notice" shall mean a Notice of Offering from the Company
to each Security Holder stating that the Company proposes to effect a
Company Public Sale Event or a Company Private Sale Event, as the case may
be.
"Demand Registration" shall mean any Registration and/or Qualification
of Registerable Common pursuant to a Registration Statement filed by the
Company in accordance with the provisions of subsection 2.2.
"Effective Date" shall mean March 31, 2000, being the date on which
the Plan became effective, as provided therein. Notwithstanding that this
Agreement is expressed to be dated as of March 31, 2000, it is agreed that
this Agreement shall be deemed to be delivered on and take effect as of and
from the Closing Date, as defined in the Secured PIK/Term Credit Agreement.
"Effective Notice Period" shall have the meaning assigned to such term
in subsection 6.1.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any successor legislation thereto.
"Exit Facility" shall mean the Exit Facility, dated as of March 31,
2000, among the Company, the Subsidiaries of the Company party thereto,
Foothill Capital
-3-
<PAGE> 7
Corporation, as arranger and administrative agent, and the lenders party
thereto.
"First Phase" shall mean the period of time commencing on the
Effective Date and ending on the date that is the earlier of (a) the date
on which the Company is eligible to use Form S-3 to effect a Registration
of shares of New Common Stock and (b) the fifteen (15) month anniversary of
the Effective Date.
"Form S-3" shall mean such form of registration statement under the
Securities Act as in effect on the date hereof or any successor form
thereto.
"Form S-4" shall mean such form of registration statement under the
Securities Act as in effect on the date hereof or any successor form
thereto.
"Form S-8" shall mean such form of registration statement under the
Securities Act as in effect on the date hereof or any successor form
thereto.
"Governmental Authority" shall mean any nation or government, any
state or other political subdivision thereof or any entity exercising
executive, legislative, judicial, regulatory or administrative functions of
or pertaining to government.
"High River" shall mean High River Limited Partnership.
"Initiating Securities Holders" shall have the meaning assigned to
such term in subsection 2.3(b).
"Material Adverse Change" shall mean, for purposes of subsections
2.4(b) and (c), any material adverse change in, or the occurrence of any
event which would reasonably be expected to have a material adverse effect
on, the business, condition (financial or otherwise) or prospects of the
Philip Group taken as a whole (it being understood that a change in general
political, financial, banking or capital market conditions shall not be a
"Material Adverse Change" unless such change has, or would reasonably be
expected to have, a material adverse effect on the Philip Group as
described above).
"Minimum Registerable Amount" shall mean, on any date of determination
thereof during (a) the First Phase, the number of shares of Registerable
Common representing at least (i) in the case of a Demand Registration other
than a Shelf Registration, 10% of the issued and then outstanding shares of
New Common Stock or (ii) in the case of a Shelf Registration, 15% of the
issued and then outstanding shares of New Common Stock and (b) the Second
Phase, (i) in the case of a Demand Registration other than a Shelf
Registration, 7.5% of the issued and then outstanding shares of New Common
Stock or (ii) in the case of a Shelf Registration, 11.25% of the issued and
then outstanding shares of New Common Stock; provided, that notwithstanding
the foregoing, if a Securities Holder owns less than what would otherwise
be the Minimum Registerable Amount, the Minimum Registerable Amount with
respect to such Securities Holder shall
-4-
<PAGE> 8
be 75% of the aggregate number of shares of Registerable Common owned by
such Securities Holder.
"NASD" shall mean the National Association of Securities Dealers, Inc.
or any successor thereto.
"New Common Stock" shall mean the common stock, par value $0.01 per
share, of the Company authorized pursuant to the Plan to be issued from and
after the Effective Date, and any reclassification thereof, including any
common stock issuable upon conversion of convertible securities issued
pursuant to the Plan.
"Notice of Offering" shall mean a written notice with respect to (a) a
proposed Sale Event pursuant to a Demand Registration, (b) a Company Public
Sale Event or (c) a Company Private Sale Event, in each case setting forth
(i) the expected maximum and minimum number of shares of Registerable
Common or New Common Stock, as the case may be, proposed to be offered and
sold, (ii) the lead managing underwriter, if applicable and known and (iii)
the proposed method of distribution and the expected timing of the
offering, including whether the proposed offering will be registered in the
United States, qualified for distribution in Canada, or both.
"Person" shall mean any individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint
venture, Governmental Authority, limited liability company or other entity
of whatever nature.
"Philip Group" shall mean the Company together with each Subsidiary of
the Company.
"Piggybacking Notice" shall have the meaning assigned to such term in
subsection 2.6(a).
"Piggybacking Securities Holder" shall have the meaning assigned to
such term in subsection 2.6(a).
"Preliminary Prospectus" shall mean (i) each preliminary prospectus
included in a Registration Statement or in any amendment thereto prior to
the date on which such Registration Statement is declared effective under
the Securities Act, including any prospectus filed with the Commission
pursuant to Rule 424(a) under the Securities Act or (ii) each preliminary
prospectus, as the same may be amended prior to the issuance of the final
receipt by the applicable Canadian Securities Authority.
"Prospectus" shall mean each prospectus (i) included in a Registration
Statement at the time it becomes effective (including, without limitation,
a prospectus that discloses information previously omitted from a
prospectus filed as part of an effective Registration Statement in
accordance with Rule 430A), together with any supplement thereto, as filed
with, or transmitted for filing to the Commission pursuant to Rule 424(b)
under the
-5-
<PAGE> 9
Securities Act or (ii) for which a receipt is issued by the Canadian
Securities Authority in each province in which such document is filed
pursuant to any applicable Canadian Securities Laws (and including, without
limitation, the information that is permitted to have been omitted by
National Policy Statement No. 44 of the Canadian Securities Administrators
for the pricing of securities after the final prospectus is receipted, as
the same may be amended or superseded from time to time).
"Public Sale Event" shall mean a Securities Holder Public Sale Event
or a Company Public Sale Event, as the case may be.
"Purchase Agreement" shall mean, in connection with any Sale Event,
any written agreement entered into by any Securities Holder providing for
the sale of Registerable Common and/or the Company providing for the sale
of New Common Stock.
"Qualification" shall mean the qualification of securities pursuant to
a Canadian Prospectus, for which a final receipt has been issued by the
Securities Regulatory Authority in each province in which such document is
filed.
"Registerable Common" shall mean with respect to each Securities
Holder (a) the shares of New Common Stock issued to such Securities Holder
pursuant to the Plan, and (b) any other securities issued as (or issuable
upon the conversion or exercise of any warrant, right or other security
which is issued as) a dividend or other distribution with respect to, or in
exchange for or in replacement of, such shares of Registerable Common;
excluding in all cases, however, any shares of Registerable Common from and
after the transfer thereof pursuant to a Registration Statement, a Canadian
Prospectus or Rule 144.
"Registration" shall mean a registration of securities pursuant to the
Securities Act.
"Registration Statement" shall mean (i) any registration statement
(including the Preliminary Prospectus, the Prospectus, any amendments
(including any post-effective amendments) thereto, any supplements and all
exhibits thereto and any documents incorporated therein by reference
pursuant to the rules and regulations of the Commission or any applicable
Canadian securities laws), filed by the Company in connection with any
Public Sale Event with the Commission or (ii) a Canadian Prospectus filed
with any Canadian Securities Authority any amendments or supplements
thereto and any documents, incorporated by reference therein pursuant to
the rules of the applicable Canadian Securities Authority, which in either
case complies with all applicable requirements of the Securities Act and
the rules and regulations of the Commission thereunder and all applicable
Canadian Securities Laws.
"Responsible Officer" shall mean with respect to any Person, the
president, chief executive officer, chief operating officer, chief
financial officer or treasurer of such Person.
-6-
<PAGE> 10
"Rule 144", shall mean Rule 144 promulgated by the Commission under
the Securities Act, or any successor to such Rule.
"Rule 415" shall mean Rule 415 promulgated by the Commission under the
Securities Act, or any successor to such Rule.
"Rule 424" shall mean Rule 424 promulgated by the Commission under the
Securities Act, or any successor to such Rule.
"Rule 430A" shall mean Rule 430A promulgated by the Commission under
the Securities Act, or any successor to such Rule.
"Sale Event" shall mean any sale by the Company of New Common Stock
pursuant to a Company Private Sale Event or a Company Public Sale Event or
any sale by any Securities Holder of Registerable Common pursuant to any
Registration Statement.
"Second Phase" shall mean the period following the end of the First
Phase and prior to the Termination Date.
"Secured PIK/Term Credit Agreement" shall mean the Secured PIK/Term
Credit Agreement, dated as of March 31, 2000, among the Company, Canadian
Imperial Bank of Commerce as administrative agent, and the various lenders
from time to time party thereto.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any successor legislation thereto.
"Securities Holder" shall mean each entity set forth on the signature
pages of this Agreement under the heading "SECURITIES HOLDERS".
"Securities Holder Public Sale Event" shall mean any sale of
Registerable Common by a Securities Holder pursuant to a Demand
Registration.
"Securities Holder Sale Notice" shall mean a Notice of Offering to the
Company from a Securities Holder requesting the Company to effect a Demand
Registration of Registerable Common (to which such Securities Holder is at
the time entitled pursuant to subsection 2.1) and stating whether such
Securities Holder is requesting that such Demand Registration be a Shelf
Registration and whether such Registerable Common is to be registered for
sale in the United States, Canada or both; provided that if more than one
Notice of Offering is required to aggregate the Minimum Registerable
Amount, the term "Securities Holder Sale Notice" shall refer collectively
to all such Notices of Offering delivered by Securities Holders to the
Company in accordance with subsection 2.3(b).
-7-
<PAGE> 11
"Securities Holder's Questionnaire" shall mean the questionnaire to be
provided by each Securities Holder to the Company in connection with a
Public Sale Event or Company Private Sale Event, substantially in the form
of Exhibit A, as the same from time to time may be amended, supplemented or
otherwise modified.
"Shelf Registration" shall mean any Qualification or Registration of
Registerable Common pursuant to (i) a Registration Statement filed by the
Company in accordance with the provisions of subsection 2.2 and which
provides for the offering of Registerable Common to be made on a continuous
basis pursuant to Rule 415 or (ii) a Prospectus filed by the Company in
accordance with the provisions of Section 2.2 and which provides for the
Offering of Registerable Common to be made on a continuous basis pursuant
to national Policy Statement No. 44 of the Canadian Securities
Administrators.
"Subsidiary" shall mean, as to any Person, a corporation, partnership
or other entity of which shares of stock or other ownership interests
having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a
contingency) to elect the majority of the board of directors or other
managers of such corporation, partnership or other entity are at that time
owned directly or indirectly through one or more intermediaries, or both,
by such Person. Unless otherwise qualified, all references to a
"Subsidiary" or "Subsidiaries" in this Agreement shall refer to a
Subsidiary or Subsidiaries of the Company.
"Supplemental Addendum" shall mean a Supplemental Addendum,
substantially in the form of Exhibit B to this Agreement.
"Termination Date" shall mean, as to each Securities Holder, the date
on which counsel to the Company delivers an opinion in accordance with
subsection 5.10 to such Securities Holder.
(b) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and section, subsection,
schedule and exhibit references are to this Agreement.
Section 2. Demand Registration Rights of Securities Holders.
2.1. Demand Registration Rights. At any time prior to the Termination Date,
each Securities Holder shall have the right, subject to subsections 2.3, 2.4(b)
and (c) and 6.1, to request one (1) Demand Registration on behalf of itself and
its affiliates, and the Company shall be obligated to provide a Demand
Registration in response to each such request; provided that the Company shall
be obligated to provide no more than two (2) such Demand Registrations in the
aggregate during the First Phase; and provided, further, that, during the First
Phase, if the initial Demand Registration is a Shelf Registration, the Company
shall be obligated to provide only such Shelf Registration; and provided,
further, that if the Company delivers a Piggybacking
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Notice after receiving a Securities Holder Sale Notice, each Securities Holder
who delivered such Securities Holder Sale Notice shall not be deemed to have
requested a Demand Registration under this subsection 2.1 for purposes of
calculating the limitations on Demand Registrations set forth in this subsection
2.1; and provided, further, that High River and AREP shall together have the
right to request a total of two (2) Demand Registrations, allocable between them
as they shall determine in their sole discretion.
2.2. Determination. Subject to the terms and conditions hereof, if the
Company shall at any time receive one or more Securities Holder Sale Notices in
accordance with subsection 2.3 representing, in the aggregate, at least the
Minimum Registerable Amount, then the Company shall (a) file a Registration
Statement within 45 days, and in any event, but subject to subsection 5.3(b),
make such filing within 60 days (provided that such time periods shall begin on
the date of the Company's receipt of the Securities Holder Sale Notice which,
together with any earlier delivered Securities Holder Sale Notice, represents
the applicable Minimum Registerable Amount), which Registration Statement shall
cover the maximum number of shares of Registerable Common set forth in such
Securities Holder Sale Notice, and, if applicable, such additional shares of New
Common Stock as permitted under subsection 2.6 and (b) use its best efforts to
facilitate such Demand Registration as provided herein. Notwithstanding the
foregoing, the Company may delay the filing of (but not its obligation to
expeditiously prepare) any Registration Statement relating to a Demand
Registration for a reasonable period of time (not in excess of 90 days) if the
Board of Directors of the Company reasonably determines to delay such filing
and, within ten (10) days of such determination, the Company provides each
Securities Holder that delivered a Securities Holder Sale Notice with a
certificate signed by the Chairman of the Board of Directors of the Company or
the Chief Executive Officer of the Company stating that, in the good faith
judgment of the Board of Directors of the Company, the filing of such
Registration Statement would adversely affect any material business situation,
transaction or negotiation then contemplated by the Company or materially and
adversely affect the Company. The Company shall promptly give notice to each
such Securities Holder of the end of any delay period under this subsection.
Subject to any extension under subsection 4.1(b), the Company shall keep any
Registration Statement effective for a period of (i) in the case of a Demand
Registration other than a Shelf Registration, until the earlier of (x) the three
(3) month anniversary of the date that the Registration Statement with respect
thereto is declared effective by the Commission or a final receipt is issued by
the applicable Canadian Securities Authority, as applicable, and (y) the date on
which all of the Registerable Common covered by such Registration Statement has
been sold and (ii) in the case of a Shelf Registration, until the earlier of (x)
two (2) years following the date the Registration Statement with respect thereto
is declared effective by the Commission or a final receipt is issued by the
applicable Canadian Securities Authority, as applicable, and (y) the date on
which all of the Registerable Common covered by such Registration Statement has
been sold or, in each case, such shorter period if any such Registration is
terminated in accordance with the terms hereof prior to the end of the
applicable period.
2.3. Notices; Minimum Registerable Amounts. (a) Subject to subsection 2.1,
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any Securities Holder may send a Securities Holder Sale Notice to the Company in
respect of a Demand Registration. Simultaneously with the delivery to the
Company of a Securities Holder Sale Notice, the Securities Holder so requesting
a Demand Registration shall deliver to each other Securities Holder a copy of
such Securities Holder Sale Notice and such other information as such Securities
Holder may deem appropriate.
(b) Notwithstanding subsection 2.3(a), no Securities Holder Sale Notice
delivered by a Securities Holder shall be effective to require the Company to
provide a Demand Registration, unless (i) the aggregate number of shares of New
Common Stock represented by such Securities Holder Sale Notice equals or exceeds
the Minimum Registerable Amount or (ii) within twenty (20) days of the delivery
of the first Securities Holder Sale Notice in respect of an aggregate number of
shares of New Common Stock that does not equal or exceed the minimum
Registerable Amount one or more additional Securities Holder Sale Notices are
delivered by Securities Holders then entitled to request a Demand Registration
pursuant to subsection 2.1(a) such that the aggregate number of shares of New
Common Stock represented by all such Securities Holder Sale Notices (including
the Securities Holder Sale Notice which commenced such twenty (20) day period)
is at least equal to the Minimum Registerable Amount. All Securities Holders
delivering Securities Holder Sale Notices in accordance with the immediately
preceding sentence are hereinafter referred to as the "Initiating Securities
Holders". Subject to subsection 2.4, the delivery of any Securities Holder Sale
Notice pursuant to this subsection 2.3(b), shall be deemed a request by each
Initiating Securities Holder under subsection 2.1 for a Demand Registration,
provided that if all Securities Holder Sale Notices so delivered do not
represent at least the Minimum Registerable Amount, then all such Securities
Holder Sale Notices shall be deemed null and void and shall not constitute a
request for Demand Registration under subsection 2.1 by any Initiating
Securities Holder.
(c) Any Securities Holder Sale Notice may be revised from time to time
prior to the earlier of (i) the execution of the Purchase Agreement, if any, for
such offering and (ii) the effectiveness of the Registration Statement for, or
date of final receipt for the Canadian Prospectus relating to, as applicable,
such offering.
(d) The Company shall promptly provide a Securities Holder Questionnaire
(i) in the case of a Demand Registration, to each Securities Holder that
delivers a Securities Holder Sale Notice in accordance with this subsection 2.3
and each Piggybacking Securities Holder and (ii) in the case of a Company Public
Sale Event or Company Private Sale Event, to each Securities Holder that has
indicated its desire pursuant to subsection 3.3 to participate in such Sale
Event.
2.4. Discretion of Securities Holder. (a) In connection with any Securities
Holder Public Sale Event, subject to the provisions of this Agreement, the
Securities Holder requesting a Demand Registration (if such Public Sale Event
was initiated by an individual Securities Holder) or the Initiating Securities
Holders owning a majority of the aggregate number of shares of Registerable
Common that all such Initiating Securities Holders are seeking to include in
such Public Sale Event (if such Public Sale Event was initiated by Initiating
Securities
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Holders), in its or their sole discretion, as the case may be, shall determine
whether (i) to proceed with, withdraw from or terminate such proposed Securities
Holder Public Sale Event, (ii) to enter into one or more Purchase Agreements for
such Securities Holder Public Sale Event and (iii) to take such actions as may
be necessary to close the sale of Registerable Common contemplated by such
offering, including, without limitation, waiving any conditions to closing such
sale which have not been fulfilled.
(b) Subject to subsection 2.4(c), in the event that the Securities Holder
or the Initiating Securities Holders, as the case may be, determine(s) pursuant
to subsection 2.4(a) not to proceed with a Demand Registration of Registerable
Common at any time before (i) the Registration Statement with respect to such
Demand Registration has been declared effective by the Commission or (ii) a
final receipt has been issued by the applicable Canadian Securities Authority
for the Canadian Prospectus, as applicable, and such Securities Holder or
Initiating Securities Holders, as the case may be, reimburse(s) the Company for
all reasonable fees, costs and expenses in connection therewith, then all
Securities Holder Sale Notices delivered in respect of such Demand Registration
shall be deemed null and void and shall not constitute a request for Demand
Registration under subsection 2.1 by any Securities Holder or Initiating
Securities Holders.
(c) If the Securities Holder or the Initiating Securities Holders, as the
case may be, determine(s) pursuant to subsection 2.4(a) not to proceed with a
Demand Registration (i) at any time at the request of the Company or (ii) as a
result of a Material Adverse Change at any time, then, in either such case, such
Securities Holder or Initiating Securities Holders, as the case may be, will not
be required to reimburse the Company for the fees, costs and expenses in
connection with such Demand Registration and all Securities Holder Sale Notices
delivered in respect of such Demand Registration shall be deemed null and void
and shall not constitute a request for Demand Registration under subsection 2.1
by any Securities Holder or Initiating Securities Holders.
2.5. Allocation Among Initiating Securities Holders. In connection with any
Demand Registration requested by Initiating Securities Holders in accordance
with subsection 2.3, if the lead managing underwriter selected by such
Initiating Securities Holders in accordance with subsection 5.8 with respect to
such offering (or, if the offering is not underwritten, if a financial advisor
to such Initiating Securities Holders) determines that marketing factors require
a limitation on the number of shares of Registerable Common to be offered and
sold in such offering, there shall be included in the offering only that number
of shares of Registerable Common that such lead managing underwriter or
financial advisor, as the case may be, reasonably and in good faith believes
will not jeopardize the success of the offering, which shares of Registerable
Common shall be allocated among the Initiating Securities Holders on a pro rata
basis based on the number of shares of Registerable Common each such Initiating
Securities Holder seeks to include in such offering.
2.6. Piggyback Rights of Securities Holders and the Company. (a) In
connection with any Demand Registration that has been requested by a Securities
Holder or Initiating
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<PAGE> 15
Securities Holders, as the case may be, in accordance with subsections 2.1 and
2.3, any other Securities Holder then holding Registerable Common (a
"Piggybacking Securities Holder") and the Company shall be entitled, subject to
subsection 2.6(b), to participate on the same terms and conditions as such
Securities Holder in the Securities Holder Public Sale Event relating thereto
and offer and sell shares of Registerable Common or shares of New Common Stock,
respectively, therein as provided in this subsection 2.6. Any party desiring to
so participate shall give written notice (a "Piggybacking Notice") to the
Securities Holder requesting such Demand Registration and, if such party is not
the Company, to the Company no later than fifteen (15) days following receipt of
a Securities Holder Sale Notice, of the aggregate number of shares of
Registerable Common that such Piggybacking Securities Holder or shares of New
Common Stock that the Company, as the case may be, then desires to offer and
sell in such Securities Holder Public Sale Event.
(b) The extent to which a Piggybacking Securities Holder or the Company may
participate in any Securities Holder Public Sale Event in accordance with
paragraph (a) of this subsection 2.6 shall be limited to that number of shares
of Registerable Common or shares of New Common Stock that will not require a
reduction in the number of shares of Registerable Common of the Initiating
Securities Holders or the Securities Holder requesting such Demand Registration
to be included therein or change in a manner materially adverse to such
Initiating Securities Holders or Securities Holder, as the case may be, the
proposed method of the offering, including, without limitation, the economic
benefits to such Initiating Securities Holders or Securities Holder. If the lead
managing underwriter selected by the Initiating Securities Holders or the
Securities Holder initiating such Securities Holder Public Sale Event (or, if
the offering is not underwritten, a financial advisor to such Initiating
Securities Holders or Securities Holder) determines that marketing factors
require a limitation on the number of shares of Registerable Common or shares of
New Common Stock to be offered and sold in such offering, there shall be
included in the Registration Statement with respect to such offering only that
number of shares of Registerable Common held by such Piggybacking Securities
Holders or shares of New Common Stock to be sold by the Company, if any, that
such lead managing underwriter or financial advisor, as the case may be,
reasonably and in good faith believes will not jeopardize the success of the
offering, which shares shall be allocated first among the Piggybacking
Securities Holders on a pro rata basis based on the number of shares of
Registerable Common each such Securities Holder is seeking to include in such
offering and second to the Company.
2.7. Limitation on Registration Rights. Notwithstanding any other provision
of this Agreement, no Person shall have the right to cause the Company to file a
Canadian Prospectus unless such Person provides evidence reasonably satisfactory
to the Company that a proposed trade in securities by such Person would be a
"distribution" as such term is used under applicable Canadian Securities Laws or
would otherwise require the filing of a Canadian Prospectus with any one or more
of the Canadian Securities Authorities under applicable Canadian Securities Laws
and the issuance of a final receipt therefor from such authorities in order to
permit the proposed trade.
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Section 3. Company Sale Events.
3.1. Determination. (a) Subject to subsection 6.1, the Company may at any
time effect a Company Public Sale Event pursuant to a Registration Statement
filed by the Company, provided that the Company gives each Securities Holder a
Company Sale Notice, no less than thirty (30) days prior to the filing of the
related Registration Statement.
(b) The Company may at any time effect a Company Private Sale Event,
provided that the Company gives each Securities Holder a Company Sale Notice, so
as to be received no less than fifteen (15) days prior to the closing date of
such Company Private Sale Event.
3.2. Notice. The Company Sale Notice shall contain a statement that the
Securities Holders are entitled to participate in such offering and the number
of shares of Registerable Common which represents the best estimate of the lead
managing underwriter (or, if not known or applicable, the Company) that will be
available for sale by the Securities Holders in the proposed offering, if any.
3.3. Piggyback Rights of Securities Holders. (a) If the Company shall have
delivered a Company Sale Notice, Securities Holders shall be entitled to
participate on the same terms and conditions as the Company in the Company
Public Sale Event or the Company Private Sale Event, as the case may be, to
which such Company Sale Notice relates and to offer and sell shares of
Registerable Common therein only to the extent provided in this subsection 3.3.
Each Securities Holder desiring to participate in such offering shall notify the
Company in writing, by delivering a Piggybacking Notice no later than ten (10)
days following receipt of a Company Sale Notice, of the aggregate number of
shares of Registerable Common that such Securities Holder then desires to sell
in the offering.
(b) Each Securities Holder desiring to participate in a Company Public Sale
Event or a Company Private Sale Event may include shares of Registerable Common
in (i) any Registration Statement relating to a Company Public Sale Event or
(ii) in a Company Private Sale Event, in each case to the extent that the
inclusion of such shares shall not reduce the number of shares of New Common
Stock to be offered and sold by the Company to be included therein or change in
a manner materially adverse to the Company the proposed method of the offering,
including, without limitation, the economic benefits to the Company. If the lead
managing underwriter selected by the Company for such offering (or, if the
offering is not underwritten, a financial advisor to the Company) determines
that marketing factors require a limitation on the number of shares of
Registerable Common to be offered and sold in such Company Public Sale Event or
Company Private Sale Event, as the case may be, there shall be included in the
offering only that number of shares of Registerable Common, if any, that such
lead managing underwriter or financial advisor, as the case may be, reasonably
and in good faith believes will not jeopardize the success of the offering,
which shares of Registerable Common shall be allocated among such Securities
Holders on a pro rata basis based on the number of shares of Registerable Common
each such Securities Holder is seeking to include in such Sale Event.
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3.4. Discretion of the Company. In connection with any Company Public Sale
Event or Company Private Sale Event, subject to the provisions of this
Agreement, the Company, in its sole discretion, shall determine whether (a) to
proceed with, withdraw from or terminate such Company Public Sale Event or
Company Private Sale Event, as the case may be, (b) to enter into the Purchase
Agreement for such Company Public Sale Event or Company Private Sale Event, as
the case may be, and (c) to take such actions as may be necessary to close the
sale of New Common Stock contemplated by such offering, including, without
limitation, waiving any conditions to closing such sale which have not been
fulfilled.
Section 4. Black-Out Periods.
4.1. Black-Out Periods for Securities Holders. (a) No Securities Holder
shall offer to sell or sell any shares of Registerable Common pursuant to a
Demand Registration, and the Company shall not be required to supplement or
amend any Registration Statement or otherwise facilitate the sale of
Registerable Common pursuant thereto, during the 90-day period immediately
following the receipt by each Securities Holder of a certificate of an
authorized officer of the Company to the effect that the Board of Directors of
the Company has in good faith and for valid business reasons requested that the
Securities Holders refrain from selling shares of Registerable Common; provided,
however, that the identity of a potential purchaser or purchasers of
Registerable Common from a Securities Holder shall not constitute a valid
business reason. Any period described in this subsection 4.1(a) during which
Securities Holders are not able to sell shares of Registerable Common pursuant
to a Demand Registration is herein referred to as a "black-out" period. The
Company shall notify each Securities Holder of the expiration or earlier
termination of any "black-out" period (the nature and pendency of which need not
be disclosed during such "black-out" period).
(b) The period during which the Company is required pursuant to subsection
2.2 to keep any Demand Registration effective shall be extended by a number of
days equal to the number of days, if any, of any "black-out" period applicable
to Securities Holders pursuant to this subsection 4.1 occurring during such
period, plus a number of days equal to the number of days during such period, if
any, of any period during which the Securities Holders are unable to sell any
shares of Registerable Common pursuant to a Demand Registration as a result of
the happening of any event of the nature described in subsection 5.3(c)(ii),
5.3(c)(iii) or 5.3(c)(v).
Section 5. Agreements Concerning Offerings.
5.1. Obligations of Securities Holders. (a) Each Securities Holder shall,
upon the reasonable request of the Company, advise the Company of the number of
shares of Registerable Common then held or beneficially owned by it.
(b) It shall be a condition precedent to the obligations of the Company to
effect a Registration of any shares of Registerable Common or to include shares
of Registerable Common in a Company Private Sale Event that each Securities
Holder desiring to participate in a Public Sale Event or a Company Private Sale
Event, as the case may be, shall have furnished to
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the Company a completed Securities Holder's Questionnaire and such additional
information regarding itself, the Registerable Common held by it and the
intended method of disposition of such securities as shall be required by law,
the Commission or any applicable Canadian Securities Authority, to effect the
Registration or private sale of their Registerable Common and any other
information relating to such Registration or private sale reasonably requested
by the Company.
5.2. Obligations of the Company. Whenever required under this Agreement to
proceed with a Registration of any Registerable Common, the Company shall,
subject to the terms and conditions of this Agreement, as expeditiously as
reasonably possible:
(a) In accordance with subsection 2.2, prepare and file with the
Commission and/or the applicable Canadian Securities Authority, as
appropriate, a Registration Statement with respect to such Registerable
Common and use its best efforts to cause such Registration Statement to
become effective and/or a final receipt to be issued with respect to the
Canadian Prospectus.
(b) Prepare and file with the Commission and/or the applicable
Canadian Securities Authority, as appropriate, such amendments (including
post-effective amendments) to such Registration Statement, supplements to
the related Prospectus used in connection with such Registration Statement,
and otherwise use its best efforts, to the end that such Registration
Statement reflects the plan of distribution of the securities registered
thereunder that is included in the relevant Notice of Offering, if any, in
respect of a Demand Registration and, subject to subsection 2.2, is
effective until the completion of the distribution contemplated by such
Registration Statement or so long thereafter as a dealer is required by law
to deliver a Prospectus in connection with the offer and sale of the shares
of Registerable Common covered by such Registration Statement .
(c) Notify the Securities Holders selling Registerable Common, at any
time when a Prospectus relating thereto is required to be delivered under
the Securities Act, when the Company becomes aware of the occurrence of any
event, as a result of which the Prospectus included in such Registration
Statement (as then in effect) contains an untrue statement of material fact
or omits to state a material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading,
and use its best efforts to prepare and file promptly, and in any event
within ten (10) days, with the Commission and/or the applicable Canadian
Securities Authority, as appropriate, a supplement or amendment to such
Prospectus so that, as thereafter delivered to purchasers of such
Registerable Common, such Prospectus will not contain an untrue statement
of a material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading.
(d) Provide to any Securities Holder requesting to include
Registerable Common in such Registration Statement and any managing
underwriter participating in
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<PAGE> 19
any distribution thereof, and to any attorney, accountant or other agent
retained by such Securities Holder or managing underwriter, reasonable
access to appropriate officers and directors of the Company to ask
questions and to obtain information reasonably requested by any such Person
in connection with such Registration Statement or any amendment thereto,
provided, however, that (i) in connection with any such access or request,
any such requesting Persons shall cooperate to the extent reasonably
practicable to minimize any disruption to the operation by the Company of
its business and (ii) any records, information or documents shall be kept
confidential by such requesting Persons, unless (x) such records,
information or documents are in the public domain or otherwise publicly
available other than through disclosure by such requesting party or (y)
disclosure of such records, information or documents is required by court
or administrative order or by applicable law (including, without
limitation, the Securities Act).
(e) Furnish to the participating Securities Holders, such number of
copies of a Prospectus, including a Preliminary Prospectus, in conformity
with the requirements of the Securities Act and/or applicable Canadian
Securities Laws, and such other documents as they may reasonably request in
order to facilitate the disposition of Registerable Common owned by them.
(f) Use its best efforts to register and qualify the securities
covered by such Registration Statement under such other securities or "Blue
Sky" laws of such jurisdictions in the United States as shall be reasonably
requested by the Securities Holders, provided that the Company shall not be
required in connection therewith or as a condition thereto to qualify to do
business or to file a general consent to service of process in any such
states or jurisdictions or to make any filing or take any other action
which could subject it to taxation as a result of such filing.
(g) Enter into and perform its obligations under a Purchase Agreement,
if the offering is an underwritten offering, in usual and customary form,
with the managing underwriter of such underwritten offering; provided,
however, that each Securities Holder participating in such Public Sale
Event shall also enter into and perform its obligations under such Purchase
Agreement so long as such obligations are usual and customary obligations
of selling stockholders in a registered public offering.
5.3. Agreements Related to Offerings. Subject to the terms and conditions
hereof, in connection with any Demand Registration:
(a) The Company will cooperate with any underwriters for, and the
Securities Holders of, the shares of Registerable Common proposed to be
sold pursuant to a Registration Statement, and will, unless the parties to
the Purchase Agreement otherwise agree, enter into a Purchase Agreement not
inconsistent with the terms and conditions of this Agreement and containing
such other terms and conditions of a type and form reasonable and customary
for companies of similar size and credit rating (including, but not limited
to, such provisions for delivery of a "comfort letter" and legal opinion as
are
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customary), and take all such other reasonable actions as are necessary or
advisable to permit, expedite and facilitate the disposition of such shares
of Registerable Common in the manner contemplated by such Registration
Statement in each case to the same extent as if all the shares of
Registerable Common then being offered were for the account of the Company.
(b) Neither a Registration Statement nor any amendment or supplement
thereto will be filed by the Company until counsel for the Initiating
Securities Holder or the securities Holder delivering the relevant
effective Securities Holder Sale Notice shall have had a reasonable
opportunity to review the same and each Securities Holder participating in
such Sale Event shall have had a reasonable opportunity to exercise its
rights under subsection 5.2(d) with respect thereto. No amendment to such
Registration Statement naming any Securities Holder as a selling security
holder shall be filed with the Commission and/or the applicable Canadian
Securities Authority, as applicable, until such Securities Holder shall
have had a reasonable opportunity to review such Registration Statement as
originally filed. Neither such Registration Statement nor any related
Prospectus or any amendment or supplement thereto shall be filed by the
Company with the Commission and/or the applicable Canadian Securities
Authority, as applicable, which shall be disapproved (for reasonable cause)
by the managing underwriters named therein or any participating Securities
Holders within a reasonable period after notice thereof.
(c) The Company will use its reasonable efforts to keep the Securities
Holders informed of the Company's best estimate of the earliest date on
which such Registration Statement or any post-effective amendment thereto
will become effective and/or the Canadian Prospectus will be receipted and
will notify each Securities Holder and the managing underwriters
participating in the distribution pursuant to such Registration Statement
promptly (i) when such Registration Statement or any post-effective
amendment to such Registration Statement becomes effective and/or when a
final receipt is issued in respect of such Canadian Prospectus, (ii) of any
request by the Commission and/or the applicable Canadian Securities
Authority, as applicable, for an amendment or any supplement to such
Registration Statement or any related Prospectus, (iii) of the issuance by
the Commission or any Canadian Securities Authority of any stop order
suspending the effectiveness of such Registration Statement or of any order
preventing or suspending the use of any related Prospectus or the
initiation or threat of any proceeding for that purpose, (iv) of the
suspension of the qualification of any shares of New Common Stock included
in such Registration Statement for sale in any jurisdiction or the
initiation or threat of a proceeding for that purpose, (v) of any
determination by the Company that an event has occurred (the nature and
pendency of which need not be disclosed during a "black-out period"
pursuant to subsection 4.1) which makes untrue any statement of a material
fact made in such Registration Statement or any related Prospectus or which
requires the making of a change in such Registration Statement or any
related Prospectus in order that the same will not contain any untrue
statement of a material fact or omit to
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<PAGE> 21
state a material fact required to be stated therein or necessary to make
the statements therein not misleading and otherwise comply with applicable
securities laws and (vi) of the completion of the distribution contemplated
by such Registration Statement if it relates to a Company Sale Event.
(d) In the event of the issuance of any stop order suspending the
effectiveness of such Registration Statement or of any order suspending or
preventing the use of any related Prospectus or suspending the
qualification of any shares of Common Stock included in such Registration
Statement for sale in any jurisdiction, the Company will use its reasonable
best efforts promptly to obtain its withdrawal.
(e) The Company agrees to otherwise use its best efforts to comply
with all applicable rules and regulations of the Commission and any
Canadian Securities Authorities, and make available to its security holders
(within the meaning of Rule 158 under the Securities Act), as soon as
reasonably practicable, but not later than fifteen months after the
effective date of such Registration Statement, an earnings statement
covering the period of at least twelve months beginning with the first full
fiscal quarter after the effective date of such Registration Statement,
which earnings statement shall satisfy the provisions of Section 11(a) of
the Securities Act and Rule 158 promulgated thereunder.
(f) The Company shall, subject to permitted "black-out" periods, upon
the happening of any event of the nature described in subsection
5.3(c)(ii), 5.3(c)(iii) or 5.3(c)(v), as expeditiously as reasonably
possible, prepare a supplement or post-effective amendment to the
applicable Registration Statement or a supplement to the related
Prospectus, any document incorporated therein by reference or file any
other required documents and deliver a copy thereof to each Securities
Holder so that, as thereafter delivered to the purchasers of the
Registerable Common being sold thereunder, such Prospectus will not contain
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading
and shall otherwise comply with all applicable securities laws.
(g) Upon receipt of any notice from the Company of the happening of
any event of the kind described in subsection 5.2(c), each Securities
Holder will immediately discontinue disposition of the Registerable Common
pursuant to the Registration Statement relating to such Registerable Common
until such Securities Holder's receipt of the copies of the supplemented or
amended Prospectus contemplated by subsection 5.2(c), or until such
Securities Holder has been advised in writing by the Company that the use
of the Prospectus may be resumed and has received copies of any additional
or supplemental filings which are incorporated by reference therein. If
reasonably requested by the Company, the Securities Holders will, or will
request the managing underwriter or underwriters, if any, to, deliver to
the Company all copies, other than permanent file copies, of the Prospectus
covering the Registerable Common current at the time of receipt
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<PAGE> 22
of such notice.
5.4. Certain Expenses. Subject to subsection 2.4(b), the Company shall pay
all fees, disbursements and expenses in connection with the performance of its
obligations hereunder, including, without limitation, all registration and
filing fees, printing expenses, auditors' fees, listing fees, registrar and
transfer agents' fees, reasonable fees and disbursements of counsel to the
Securities Holders (provided that the Company need not pay for more than the
U.S. counsel and/or one Canadian counsel for such Securities Holders) and
counsel for the Company, expenses (including reasonable fees and disbursements
of counsel) of complying with applicable securities or "Blue Sky" laws and the
fees of the NASD or other governing body of any securities exchange on which the
New Common Stock is listed in connection with its review of any offering
contemplated in such Registration Statement, but not including underwriting
fees, discounts and commissions.
5.5. Public Reporting; Rule 144. (a) The Company agrees to:
(i) file with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act or the Exchange
Act;
(ii) file with any applicable Canadian Governmental Authorities in a
timely manner all documents required of the Company by such Governmental
Authorities and of any securities exchange on which the securities of the
Company are listed or quoted under any applicable Canadian securities laws;
and
(iii) furnish to any Securities Holder forthwith upon request (A) a
written statement by the Company that it has complied with the current
public information and reporting requirements of Rule 144 or any similar
rule or regulation hereafter adopted by the Commission and the Exchange
Act, (B) a copy of the most recent annual or quarterly report of the
Company and such other reports and documents required to be filed by the
Company pursuant to subsections 5.5(a)(i) or 5.5(a)(ii), and (C) such other
information as is available to the Company without unreasonable cost or
expense and may be reasonably requested in connection with availing any
Securities Holder of any rule or regulation of the Commission which permits
the selling of any such securities without Registration or pursuant to such
rule or regulation.
(b) During any period in which the Company is not subject to Section
13 or 15(d) of the Exchange Act, the Company shall, upon the request of any
Securities Holder, make available to such Securities Holder and any
prospective purchaser of Registerable Common designated by such Securities
Holder the information required by Rule 144(c) in order to permit resales
of the Registerable Common held by such Securities Holder pursuant to Rule
144.
(c) Any Securities Holder selling shares of Registerable Common shall
promptly deliver to the Company a copy of any other documentation required
to be filed by such Securities Holder with any Governmental Authority in
connection with such sale, including, with
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respect to sales under Rule 144, a copy of the completed Form 144 filed by such
Securities Holder with the Commission.
5.6. Limitations on Subsequent Registration Rights. From and after the date
of this Agreement, the Company shall not, without the prior written consent of
Securities Holders owning a majority of the Registerable Common held by
Securities Holders at such time, enter into any agreement (other than this
Agreement) which would allow any holder or prospective holder of New Common
Stock (a) on demand of such holder to cause the Company to effect a Registration
of such securities prior to the second anniversary of the Effective Date, (b) to
include such securities in any Registration Statement filed under subsection 2.2
hereof to the exclusion of shares of Registerable Common that any Securities
Holder desires to include in any such offering or (c) to include such securities
in any Company Public Sale Event or Company Private Sale Event to the exclusion
of shares of Registerable Common that any Securities Holder desires to include
in any such offering.
5.7. Indemnification and Contribution. (a) In connection with a Demand
Registration, provisions substantially in conformity with the following
provisions shall be contained in the related Purchase Agreement unless the
parties to such Purchase Agreement agree otherwise:
(i) The Company shall agree to indemnify and hold harmless each
Securities Holder and each Person, if any, who controls such Securities
Holder within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act against any losses, claims, damages or liabilities,
joint or several, or actions in respect thereof to which such Securities
Holder or controlling Person may become subject under the Securities Act,
or otherwise (collectively, "Losses"), insofar as such Losses arise out of,
or are based upon, any untrue statement or alleged untrue statement of any
material fact contained in such Registration Statement, any related
Preliminary Prospectus or any related Prospectus, or any amendment or
supplement thereto, or arise out of, or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and
will reimburse such Securities Holder or controlling Person for any legal
or other expenses reasonably incurred by them in connection with
investigating or defending any such Loss; provided, however, that the
Company shall not be so liable to the extent that any such Loss arises out
of, or is based upon, an untrue statement or alleged untrue statement of a
material fact or an omission or alleged omission to state a material fact
in said Registration Statement, said Preliminary Prospectus, said
Prospectus or any said amendment or supplement in reliance upon, and in
conformity with, written information furnished to the Company by or on
behalf of a Securities Holder specifically for use therein. Notwithstanding
the foregoing, the Company shall not be liable in any such case to the
extent that any such Loss arises out of, or is based upon, an untrue
statement or alleged untrue statement or omission or alleged omission made
in any Preliminary Prospectus if (A) such Securities Holder failed to send
or deliver a copy of the Prospectus with or prior to the delivery of
written confirmation of the sale of Registerable Common to the Person
asserting such Loss or
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who purchased such Registerable Common which is the subject thereof if, in
either case, such delivery is required by the Securities Act and (B) the
Prospectus would have corrected such untrue statement or omission or
alleged untrue statement or alleged omission; and the Company shall not be
liable in any such case to the extent that any such Loss arises out of, or
is based upon, an untrue statement or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact in
the Prospectus, if such untrue statement or alleged untrue statement,
omission or alleged omission is corrected in an amendment or supplement to
the Prospectus and if, having previously been furnished by or on behalf of
the Company with copies of the Prospectus as so amended or supplemented,
such Securities Holder thereafter fails to deliver such Prospectus as so
amended or supplemented, prior to or concurrently with the sale of
Registerable Common to the Person asserting such Loss or who purchased such
Registerable Common which is the subject thereof if, in either case, such
delivery is required by the Securities Act. This indemnity agreement will
be in addition to any liability which the Company may otherwise have.
(ii) Each Securities Holder severally shall agree to indemnify and
hold harmless the Company, each of its officers and directors who sign the
Registration Statement, each other Securities Holder and each Person, if
any, who controls the Company or such other Securities Holder within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act against any Losses to which the Company, such officers or directors,
such other Securities Holder or such controlling Person may become subject
under the Securities Act, or otherwise, insofar as such Losses arise out
of, or are based upon, any untrue statement or alleged untrue statement of
any material fact contained in such Registration Statement, any related
Preliminary Prospectus or any related Prospectus, or any amendment or
supplement thereto, or arise out of, or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and
will reimburse the Company, such officers or directors, such other
Securities Holder or such controlling Person for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such Loss, in each case to the extent, but only to the
extent, that any such Loss arises out of, or is based upon, an untrue
statement or alleged untrue statement of a material fact or an omission or
alleged omission to state a material fact in said Registration Statement,
said Preliminary Prospectus or said Prospectus, or any said amendment or
supplement in reliance upon, and in conformity with, written information
furnished to the Company by or on behalf of such Securities Holder
specifically for use therein; provided, however, that the liability of each
Securities Holder on account of the foregoing shall be limited to an amount
equal to the net proceeds of the sale of shares of Registerable Common by
such Securities Holder in the offering which gave rise to the liability.
(iii) The Company shall agree to indemnify and hold harmless each
underwriter and each Person, if any, who controls any such underwriter
within the
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meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act against any Losses to which such underwriter or controlling Person may
become subject under the Securities Act, or otherwise, insofar as such
Losses arise out of, or are based upon, any untrue statement or alleged
untrue statement of any material fact contained in such Registration
Statement, any related Preliminary Prospectus or any related Prospectus, or
any amendment or supplement thereto, or arise out of, or are based upon the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading, and will reimburse such underwriter or controlling Person for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such Loss; provided, however, that the
Company shall not be so liable to the extent that any such Loss arises out
of, or is based upon, an untrue statement or alleged untrue statement of a
material fact or an omission or alleged omission to state a material fact
in said Registration Statement, said Preliminary Prospectus or said
Prospectus or any said amendment or supplement in reliance upon, and in
conformity with, written information furnished to the Company by or on
behalf of such underwriter specifically for use therein. Notwithstanding
the foregoing, the Company shall not be liable in any such case to the
extent that any such Loss arises out of, or is based upon, an untrue
statement or alleged untrue statement or omission or alleged omission made
in any Preliminary Prospectus if (A) such underwriter failed to send or
deliver a copy of the Prospectus with or prior to the delivery of written
confirmation of the sale of Registerable Common to the Person asserting
such Loss or who purchased such Registerable Common which is the subject
thereof if, in either case, such delivery is required by the Securities Act
and (B) the Prospectus would have corrected such untrue statement or
omission or alleged untrue statement or alleged omission; and the Company
shall not be liable in any such case to the extent that any such Loss
arises out of, or is based upon, an untrue statement or alleged untrue
statement of a material fact or omission or alleged omission to state a
material fact in the Prospectus, if such untrue statement or alleged untrue
statement, omission or alleged omission is corrected in an amendment or
supplement to the Prospectus and if, having previously been furnished by or
on behalf of the Company with copies of the Prospectus as so amended or
supplemented, such underwriter thereafter negligently fails to deliver such
Prospectus as so amended or supplemented, prior to or concurrently with the
sale of Registerable Common to the Person asserting such Loss or who
purchased such Registerable Common which is the subject thereof if, in
either case, such delivery is required by the Securities Act. This
indemnity agreement will be in addition to any liability which the Company
may otherwise have, provided that the Company shall only be required to
provide the indemnification described in this subsection 5.7(a)(iii) to an
underwriter and each Person, if any, who controls such underwriter if such
underwriter agrees to indemnification provisions substantially in the form
set forth in subsection 5.7(b).
(iv) Each Securities Holder severally shall agree to indemnify and
hold harmless each underwriter and each Person, if any, who controls such
underwriter within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act against
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<PAGE> 26
any Losses, joint or several, or actions in respect thereof to which such
underwriter or such controlling Person may become subject under the
Securities Act, or otherwise, insofar as such Losses arise out of, or are
based upon, any untrue statement or alleged untrue statement of any
material fact contained in such Registration Statement, any related
Preliminary Prospectus or any related Prospectus, or any amendment or
supplement thereto, or arise out of, or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and
will reimburse such underwriter or such controlling Person for any legal or
other expenses reasonably incurred by them in connection with investigating
or defending any such Loss, in each case to the extent, but only to the
extent, that any such Loss arises out of, or is based upon, an untrue
statement or alleged untrue statement of a material fact or an omission or
alleged omission to state a material fact in said Registration Statement,
said Preliminary Prospectus or said Prospectus, or any said amendment or
supplement in reliance upon, and in conformity with, written information
furnished to the Company by or on behalf of such Securities Holder
specifically for use therein; provided that the liability of such
Securities Holder on account of the foregoing shall be limited to an amount
equal to the net proceeds of the sale of shares of Registerable Common by
such Securities Holder in the offering which gave rise to the liability.
Notwithstanding the foregoing, such Securities Holder shall not be liable
in any such case to the extent that any such Loss arises out of, or is
based upon, an untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Prospectus if (A) such underwriter
failed to send or deliver a copy of the Prospectus with or prior to the
delivery of written confirmation of the sale of Registerable Common to the
Person asserting such Loss or who purchased such Registerable Common which
is the subject thereof if, in either case, such delivery is required by the
Securities Act and (B) the Prospectus would have corrected such untrue
statement or omission or alleged untrue statement or alleged omission; and
such Securities Holder shall not be liable in any such case to the extent
that any such Loss arises out of, or is based upon, an untrue statement or
alleged untrue statement of a material fact or omission or alleged omission
to state a material fact in the Prospectus, if such untrue statement or
alleged untrue statement, omission or alleged omission is corrected in an
amendment or supplement to the Prospectus and if, having previously been
furnished with copies of the Prospectus as so amended or supplemented, such
underwriter thereafter negligently fails to deliver such Prospectus as so
amended or supplemented, prior to or concurrently with the sale of
Registerable Common to the Person asserting such Loss or who purchased such
Registerable Common which is the subject thereof if, in either case, such
delivery is required by the Securities Act. No Securities Holder shall be
required to provide the indemnification described in this subsection
5.7(a)(iv) to an underwriter or any Person who controls such underwriter if
such underwriter has not agreed to indemnification provisions substantially
in the form set forth in subsection 5.7(b).
(v) Promptly after receipt by an indemnified party pursuant to the
indemnification provisions of such Purchase Agreement of notice of any
claim or the
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commencement of any action, the indemnified party shall, if a claim in
respect thereof is to be made against the indemnifying party pursuant to
such indemnification provisions, notify the indemnifying party in writing
of the claim or the commencement of that action; provided, however, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have to the indemnified party otherwise than
pursuant to the indemnification provisions of such Purchase Agreement
unless the indemnifying party is materially prejudiced by such lack of
notice. If any such claim or action shall be brought against an indemnified
party, and it shall notify the indemnifying party thereof, the indemnifying
party shall be entitled to participate in defense of such claim, and, to
the extent that it wishes, jointly with any other similarly notified
indemnifying party, to assume the defense thereof with counsel reasonably
satisfactory to the indemnified party. After notice from the indemnifying
party to the indemnified party of its election to assume the defense of
such claim or action, (x) the indemnifying party shall not be liable to the
indemnified party pursuant to the indemnification provisions hereof or of
such Purchase Agreement for any legal or other expenses subsequently
incurred by the indemnified party in connection with the defense thereof
other than reasonable costs of investigation, (y) the indemnifying party
shall not be liable for the costs and expenses of or Losses arising out of
any settlement of such claim or action unless such settlement was effected
with the consent of the indemnifying party and (z) the indemnified party
shall be obligated to cooperate with the indemnifying party in the
investigation of such claim or action; provided, however, that the
Securities Holders (together with their respective controlling Persons) and
the underwriters (together with their respective controlling Persons) shall
each as a separate group have the right to employ one separate counsel to
represent such Securities Holders and such underwriters (and their
respective controlling Persons) who may be subject to liability arising out
of any claim in respect of which indemnity may be sought by such Securities
Holders and underwriters against the Company pursuant to the
indemnification provisions of such Purchase Agreement if, in the reasonable
judgment of either Securities Holders' counsel or counsel for the
underwriters, there exists an actual or potential conflict of interest
between such Securities Holders (and its controlling persons) on the one
hand and such underwriters (and their controlling persons) on the other,
and in that event the reasonable fees and expenses of both such separate
counsel shall also be paid by the Company.
(b) As a condition to agreeing in any Purchase Agreement to the
indemnification provisions described in subsection 5.7(a)(iii) and
5.7(a)(iv) in favor of an underwriter participating in the offering covered
by the related Registration Statement and its controlling Persons, the
Company and the Securities Holders participating in an offering pursuant to
such Registration Statement may require that such underwriter agree in the
Purchase Agreement to provisions substantially in the form set forth in
subsection 5.7(a)(v) and to severally indemnify and hold harmless the
Company, each of its officers and directors who sign such Registration
Statement, each Securities Holder participating in such offering and each
Person, if any, who controls the Company or such Securities Holder within
the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act against any Losses to which
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the Company, such officers and directors, such Securities Holder or such
controlling Person may become subject under the Securities Act, or otherwise,
insofar as such Losses arise out of, or are based upon, any untrue statement or
alleged untrue statement of any material fact contained in such Registration
Statement in which such underwriter is named as an underwriter, any related
Preliminary Prospectus or any related Prospectus, or any amendment or supplement
thereto, or arise out of, or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and to reimburse the Company, such
officers and directors, such Securities Holder or such controlling Person for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such Loss in each case to the extent, but only to
the extent, that any such Loss arises out of, or is based upon, an untrue
statement or alleged untrue statement of a material fact or an omission or
alleged omission to state a material fact in said Registration Statement, said
Preliminary Prospectus or said Prospectus or any said amendment or supplement in
reliance upon, and in conformity with, written information furnished to the
Company by or on behalf of such underwriter specifically for use therein.
(c) In order to provide for just and equitable contribution between the
Company and such Securities Holders in circumstances in which the
indemnification provisions described in this subsection 5.7 and contained in any
Purchase Agreement are for any reason insufficient or inadequate to hold the
indemnified party harmless (other than as a result of their nonapplicability in
accordance with their terms), the Company and such Securities Holders shall
contribute to the aggregate Losses (including any investigation, legal and other
expenses reasonably incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claims asserted, but after
deducting any contribution actually received from Persons other than the Company
and such Securities Holders) incurred by the Company and one or more of its
directors or its officers who sign such Registration Statement or such
Securities Holders or any controlling Person of any of them, in such proportion
as is appropriate to reflect their relative degrees of fault in connection with
the actions which resulted in such Losses, as well as any other relevant
equitable considerations. The relative fault of the Company and of such
Securities Holder shall be determined by reference to, among other things,
whether the untrue or allegedly untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or by such Securities Holder and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission; provided, however, that the liability of each such
Securities Holder to make such contribution shall be limited to an amount equal
to the net proceeds of the sale of shares of Registerable Common by such
Securities Holder in the offering which gave rise to the liability. As among
themselves, such Securities Holders agree to contribute to amounts payable by
other such Securities Holders in such manner as shall, to the extent permitted
by law, give effect to the provisions in such Purchase Agreement comparable to
subsection 5.7(a)(ii). The Company and such Securities Holders agree that it
would not be just and equitable if their respective obligations to contribute
pursuant to this subsection 5.7(c) were to be determined by pro rata allocation
(other than as set forth above) of the aggregate Losses by reference to the
proceeds realized by such Securities Holders in a sale pursuant to said
Registration Statement or
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said Prospectus or by any other method of allocation which does not take account
of the considerations set forth in this subsection 5.7(c). No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution under this subsection from any
Person who was not guilty of such fraudulent misrepresentation.
(d) The Company and the Securities Holders participating in an offering
pursuant to a Registration Statement agree that, if the underwriters
participating in a Public Sale Event are agreeable, the Purchase Agreement, if
any, relating to such Registration Statement shall contain provisions to the
effect that in order to provide for just and equitable contribution between such
underwriters on the one hand and the Company and such Securities Holders on the
other hand in circumstances in which the indemnification provisions of such
Purchase Agreement are for any reason insufficient or inadequate to hold the
indemnified party harmless (other than as a result of their non-applicability in
accordance with their terms), the Company and such Securities Holders on the one
hand and such underwriters on the other hand will contribute on the basis herein
set forth to the aggregate Losses (including any investigation, legal and other
expenses incurred in connection with, and any amount paid in settlement of, any
action, suit or proceeding or claims asserted, but after deducting any
contribution actually received from Persons other than the Company and such
Securities Holders and such underwriters), incurred by the Company and one or
more of its directors or its officers who sign such Registration Statement or
such Securities Holders or such underwriters, or any controlling Person of any
of them, in such proportion as is appropriate to reflect their relative degrees
of fault in connection with the actions which resulted in such Losses, as well
as any other relevant equitable considerations. The relative fault of the
Company, of such Securities Holders and of such underwriter shall be determined
by reference to, among other things, whether the untrue or allegedly untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company, by such Securities
Holders or by such underwriter and the parties, relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. Notwithstanding the provisions set forth above, (x) no underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the shares of New Common Stock underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission and (y)
the liability of each such Securities Holder to make such contribution shall be
limited to an amount equal to the net proceeds of the sale of shares of
Registerable Common by such Securities Holder in the offering which gave rise to
the liability. As among themselves, such Securities Holders agree to contribute
to amounts payable by other such Securities Holders in such manner as shall, to
the extent permitted by law, give effect to the provisions in such Purchase
Agreement comparable to subsection 5.7(a)(ii). As between the Company and such
Securities Holders, such parties agree that it would not be just and equitable
if their respective obligations to contribute pursuant to this subsection 5.7(d)
were to be determined by pro rata allocation (other than as set forth above) of
the aggregate Losses by reference to the proceeds realized by such Securities
Holders in a sale pursuant to said
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Registration Statement or said Prospectus or by any other method of allocation
which does not take account of the considerations set forth in this subsection
5.7(d). No Person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution under the
provisions set forth above from any Person who was not guilty of such fraudulent
misrepresentation.
(e) The obligations of the Company and the Securities Holders participating
in any distribution of shares of Registerable Common under the provisions of
this subsection 5.7 and provisions in any Purchase Agreement substantially
similar to subsections 5.7(a), 5.7(b), 5.7(c) or 5.7(d) shall survive the
termination of any or all of the other provisions of this Agreement or such
Purchase Agreement.
5.8. Underwritten Offerings. If at any time any of the Securities Holders
participating in a Demand Registration desire to sell Registerable Common in an
underwritten offering, the investment banker or investment bankers that will
manage the offering will be selected by (a) if such Demand Registration was
initiated by Initiating Securities Holders, the Initiating Securities Holders
owning a majority of the aggregate number of shares of Registerable Common that
all such Initiating Securities Holders are seeking to include in the related
Sale Event and (b) if such Demand Registration was initiated by an individual
Securities Holder, the Securities Holder requesting such Securities Holder
Public Sale Event, provided that in any event, such investment banker or bankers
must be reasonably satisfactory to the Company.
5.9. Transfer of Rights Under this Agreement; Transfers of Registerable
Common. (a) At any time, the rights and obligations of a Securities Holder under
this Agreement may be transferred by a Securities Holder to a transferee of
Registerable Common, provided that, within a reasonable period of time (but in
no event later than 10 days) after such transfer, (i) the transferring
Securities Holder shall have furnished the Company and the other Securities
Holders written notice of the name and address of such transferee and the
Registerable Common with respect to which such rights are being transferred and
(ii) such transferee shall furnish the Company and the Securities Holders (other
than the transferring Securities Holder) a copy of a duly executed Supplemental
Addendum by which such transferee (A) assumes all of the obligations and
liabilities of its transferor hereunder, (B) enjoys all of the rights of its
transferor hereunder and (C) agrees to be bound hereby. Notwithstanding the
foregoing, a Securities Holder's transfer of its rights and obligations under
this Agreement in accordance with the preceding sentence to a transferee of less
than all of the Registerable Common owned by such transferor shall not be
effective to transfer the right to request a Demand Registration pursuant to
subsection 2.1 hereof unless (x) at the time of such transfer the transferor
Securities Holder has not exhausted its right to request such a Demand
Registration and (y) the transfer is of at least 10% of the issued and then
outstanding shares of New Common Stock, provided, that, subject to the Company's
rights under subsection 5.10 of this Agreement, such a transfer of the right to
request a Demand Registration shall not divest the transferor Securities Holder
of its right to request a Demand Registration pursuant to subsection 2.1 hereof.
(b) Except with respect to transfers pursuant to subsection 5.9(a), a
transferee
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of Registerable Common shall neither assume any liabilities or obligations nor
enjoy any rights hereunder and shall not be bound by any of the terms hereof.
5.10. Termination of Rights. The rights granted under this Agreement shall
terminate as to each Securities Holder at such time as such Securities Holder
shall receive, either before or after the Company's receipt of a Securities
Holder Sale Notice or a Piggybacking Notice, an opinion of counsel to the
Company in form reasonably satisfactory to counsel to such Securities Holder
that all of the Registerable Common then held by such Securities Holder can be
sold within a given three (3) month period commencing on the date of such
opinion in a transaction or transactions exempt from the Registration
requirements of the Securities Act.
Section 6. Sequencing of Public Sale Events.
6.1. Effective Notice Period. Subject to the last sentence of this
subsection 6.1, during the term of this Agreement, no priority of right shall
exist between or among Securities Holders or between any Securities Holder, on
the one hand, and the Company, on the other, with respect to providing a Notice
of Offering with respect to, and effecting, a Public Sale Event. Once properly
given, a Securities Holder Sale Notice or a Company Sale Notice regarding a
Company Public Sale Event, as the case may be, shall be effective (and shall
preclude any such Notice of Offering by another party except in accordance with
clause (ii) of Section 2.3(b)) during the period (the "Effective Notice Period")
commencing on the date of such Notice of Offering and ending on the earliest of
(a) withdrawal of such Notice of Offering (notice of which shall be promptly
effected in the same manner as such Notice of Offering), (b) the abandonment of
the Public Sale Event to which such Notice of Offering relates (notice of which
shall be promptly effected in the same manner as such Notice of Offering) and
(c) the later of (i) 150 days after such a Notice of Offering has been given,
provided that the Registration Statement relating to such Notice of Offering has
been declared effective within 90 days of such Notice of Offering, and (ii) 90
days after the closing date of the Public Sale Event to which such Notice of
Offering relates; provided that nothing in this subsection 6.1 shall limit the
Company's right to give a Notice of Offering with respect to, and effect, a
Company Private Sale Event. Upon the termination of an Effective Notice Period,
any Securities Holder so entitled pursuant to subsection 2.1 or the Company can
provide a Notice of Offering, provided that if such Notice of Offering is given
within 12 months after the end of an Effective Notice Period by the party that
gave the immediately preceding Notice of Offering, any other party shall, for
the 45-day period following its receipt of such Notice of Offering, have the
right to preempt such Notice of Offering by itself delivering a Notice of
Offering.
6.2. Restrictive Legend on Certificates. (a) Each Certificate evidencing
shares of New Common Stock distributed pursuant to the Plan to the Securities
Holders shall, subject to paragraph (b) below, be stamped or otherwise imprinted
with a conspicuous legend in the
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following form:
"The securities evidenced by this certificate were issued pursuant to an
exemption from registration under the Securities Act of 1933, as amended
(the "Act"), and may be offered, sold or otherwise transferred only
pursuant to a Registration Statement effective under the Act or an
exemption from the provisions of Section 5 of the Act."
(b) A holder of a certificate evidencing shares of New Common Stock bearing
the legend specified in paragraph (a) shall be entitled to receive from the
Company, whether or not in connection with a sale or proposed sale, a new
certificate or certificates evidencing an identical number of shares (the
transfer expenses for which shall be paid by the Company) but without such
legend at such time as (i) such shares are sold pursuant to a Registration
Statement effective under the Securities Act, (ii) such holder furnishes the
Company with a certificate to the effect that such holder is not an affiliate or
an "underwriter" within the meaning of Section 1145(b) of the Bankruptcy Code
and, upon the request of the Company, an opinion of counsel reasonably
satisfactory to the Company to such effect and to the effect that such shares
may be sold without registration under the Securities Act or (iii) the
registration rights granted in this Agreement otherwise terminate in accordance
with subsection 5.10. The shares of the New Common Stock represented by any such
replacement certificate issued without the legend specified in paragraph (a)
pursuant to the immediately preceding sentence shall cease to be Registerable
Common for all purposes of this Agreement.
Section 7. Representations and Warranties of the Company. In connection
with the Registration Statement in respect of any Demand Registration, the
Company shall, on the date of effectiveness of such Registration Statement or
the date of the final receipt for the Canadian Prospectus (the "effective
date"), certify to each Securities Holder in a certificate of a Responsible
Officer of the Company to the effect that the representations and warranties set
forth below are true and correct at and as of the effective date. In connection
with any other Sale Event in which Securities Holders participate, except as
otherwise may be agreed upon by such participating Securities Holders and the
Company, the Company shall represent and warrant in the Purchase Agreement
relating to such Sale Event to the Securities Holders and any underwriters
participating in such Sale Event as follows (except as otherwise indicated, each
reference in this Section to "the Registration Statement" shall refer to a
Registration Statement in respect of any Demand Registration or other such Sale
Event in which Securities Holders participate, including all information deemed
to be a part thereof, as amended, and each reference to "the Prospectus" shall
refer to the related Prospectus):
(a) (i) When the Registration Statement became (in the case of a
Demand Registration to be filed pursuant to a Shelf Registration) or shall
become effective, the Registration Statement did or will comply as of its
effective date in all material respects with the applicable requirements of
the Securities Act and the rules and regulations thereunder; (ii) when the
Prospectus is filed in accordance with Rule 424(b) and/or in accordance
with applicable Canadian Securities Laws , the Prospectus (and any
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supplements thereto) will comply in all material respects with the
applicable requirements of the Securities Act and/or applicable Canadian
Securities Laws and the rules and regulations thereunder; (iii) the
Registration Statement did not or will not as of its effective date contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading; and (iv) the Prospectus, if not filed pursuant to
Rule 424(b), did not or will not as of the date thereof, and on the date of
any filing pursuant to Rule 424(b), the Prospectus (together with any
supplement thereto) will not, include any untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, and if filed pursuant to Canadian Securities Law will
constitute full, true and plain disclosure of all material facts relating
to the securities offered thereunder; provided, however, that the Company
makes no representations or warranties as to the information contained in
or omitted from the Registration Statement, or the Prospectus (or any
supplement thereto) in reliance upon and in conformity with information
furnished in writing to the Company by or on behalf of any Securities
Holder specifically for use in connection with the preparation of the
Registration Statement or the Prospectus (or any supplement thereto) or any
information furnished in writing to the Company by or on behalf of any
underwriter specifically for use in connection with the preparation of the
Registration Statement or the Prospectus (or any supplement thereto), other
than that the Company has no knowledge of any such untrue statement or
omission in respect of such information.
(b) The public accountants who certified the Company's financial
statements in the Registration Statement are independent certified public
accountants within the meaning of the Securities Act and the applicable
published rules and regulations thereunder, or, to the extent that Canadian
law is deemed to control pursuant to the terms of the Securities Act,
within the meaning of such controlling Canadian law; the historical
consolidated financial statements, together with the related schedules and
notes, forming part of the Registration Statement and the Prospectus comply
in all material respects with the requirements of the Securities Act and/or
applicable Canadian Securities Laws and the rules and regulations
thereunder and have been prepared, and present fairly in all material
respects the consolidated financial condition, results of operations and
changes in financial condition of the Company and its consolidated
Subsidiaries at the respective dates and for the respective periods
indicated, in accordance with generally accepted accounting principles
applied consistently throughout such periods (except as specified therein);
and the historical consolidated financial data set forth in the Prospectus
are derived from the accounting records of the Company and its consolidated
Subsidiaries, and are a fair presentation of the data purported to be
shown; and the pro forma consolidated financial statements (if any),
together with the related notes, forming part of the Registration Statement
and the Prospectus, comply in all material respects with the requirements
of all applicable securities laws, including, without limitation,
Regulation S-X of the Securities Act, to the extent applicable.
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<PAGE> 34
(c) Except as may be set forth in the Prospectus, each member of the
Philip Group has been duly organized and is validly existing as a
corporation, limited or general partnership, limited liability company or
other similar entity in good standing under the laws of the jurisdiction in
which it is organized, with the corporate or other analogous power and
authority to own its properties and conduct its business as described in
the Prospectus, and is duly qualified to do business as a foreign
corporation or other analogous entity and is in good standing under the
laws of each jurisdiction which requires such qualification where the
failure to be so qualified could materially adversely affect the business,
operations, property or financial condition of the Philip Group taken as a
whole.
(d) Except as may be set forth in the Prospectus, all the outstanding
shares of capital stock of each Subsidiary have been duly authorized and
validly issued and are fully paid and nonassessable by the issuer, and all
outstanding shares of capital stock of the Subsidiaries are owned by the
Company either directly or through Subsidiaries free and clear of any
security interests, claims, liens or encumbrances (other than those granted
to secure the obligations of the Philip Group in respect of the Secured
PIK/Term Credit Agreement or the Exit Facility or other secured debt
permitted therein), except in each case where the failure to so own the
capital stock of a Subsidiary could materially adversely affect the
business, operations, property or financial condition of the Philip Group
taken as a whole.
(e) Except as may be set forth in the Prospectus, no member of the
Philip Group is in violation of any term or provision of any charter,
by-law, franchise, license, permit, judgment, decree or order or any
applicable statute, rule or regulation, which violation could be material
to the business, operations, property or financial condition of the Philip
Group taken as a whole.
(f) Except as may be set forth in the Prospectus, no default exists
and no event has occurred which with notice, lapse of time, or both, would
constitute a default, in the due performance and observance of any term,
covenant or condition of any agreement to which the Company or any of the
Subsidiaries is a party or by which it or any of them is bound, which
default could materially adversely affect the business, operations,
property or financial condition of the Philip Group taken as a whole.
(g) Except as may be set forth in the Prospectus, each member of the
Philip Group has all requisite corporate or other analogous power and
authority and has received and is operating in compliance in all material
respects with all governmental or regulatory or other franchises, grants,
authorizations, approvals, licenses, permits, easements, consents,
certificates and orders, necessary to own its properties and conduct
businesses as currently owned and conducted and as proposed to be
conducted, except where the failure to do so could not materially adversely
affect the business, operations, property or financial condition of the
Philip Group, taken as a whole.
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<PAGE> 35
(h) Except as may be described in the Prospectus, since the date of
the most recent financial statements included in the Prospectus, there has
been no material adverse change in the business, operations, property or
financial condition of the Philip Group taken as a whole, whether or not
arising from transactions in the ordinary course of business.
(i) Except as may be described in the Prospectus, no litigation,
investigation or proceeding of or before any arbitrator or Governmental
Authority is pending or, to the best knowledge of the Company, threatened
against any member of the Philip Group or against any of their respective
properties or revenues, existing or future which, if adversely determined,
could have a material adverse effect on the business, property or financial
condition of the Philip Group taken as a whole, or which otherwise is of a
character required to be disclosed in the Prospectus; there is no
franchise, contract or other document of a character required to be
described in the Registration Statement or the Prospectus, or to be filed
as an exhibit thereto, which is not described or filed as required; and the
descriptions of such franchises, contracts and other documents described in
the Prospectus fairly summarize the matters purported to be described
therein.
(j) Except as may be described in the Prospectus, there is no pending
or, to the best knowledge of the Company, threatened action, suit, or
judicial, arbitral, rule-making or other administrative or other proceeding
against the Company which challenges the validity of (i) this Agreement or
(ii) any Purchase Agreement entered into in connection with the offering or
any action taken or to be taken pursuant to or in connection with such
agreements.
(k) The Company's authorized equity capitalization is as set forth in
the Prospectus; the capital stock of the Company conforms in all material
respects to the description thereof contained in the Prospectus; all of the
issued and outstanding shares of capital stock of the Company have been
duly authorized and validly issued and, except as set forth in the
Prospectus, are fully paid and nonassessable.
(l) The Company has all requisite corporate power and authority, has
taken all requisite corporate action, and has received and is in compliance
with all governmental, judicial and other authorizations, approvals and
orders, necessary in connection with the offering, and to carry out the
provisions and conditions of this Agreement and the Purchase Agreement, if
any, related thereto, except for such approvals and conditions that need to
be obtained or satisfied as are set forth in the Prospectus and such
approvals or authorizations as may be required under the Securities Act,
the securities or "Blue Sky" laws of any jurisdiction or the rules of any
securities exchange on which the securities of the Company are listed in
connection with the purchase and distribution of shares of New Common Stock
in the offering. The Purchase Agreement, if any, entered into in connection
with the offering has been duly authorized, executed and delivered by the
Company and is a valid and binding obligation of the Company, enforceable
against the
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<PAGE> 36
Company in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and
by general equitable principles; provided, that no representation is made
as to the validity, binding effect or enforceability of any provision that
purports to provide indemnification of any Person for any Losses resulting
from violation by such person of any applicable securities or "Blue Sky"
laws.
(m) To the best knowledge of the Company, neither the sale of the New
Common Stock to be sold pursuant to the Registration Statement, nor the
execution, delivery or performance by the Company of the Purchase
Agreement, if any, entered into in connection with the offering or the
consummation of any other of the transactions contemplated in such Purchase
Agreement, if any, will conflict with, result in a breach of, or constitute
a default under, the charter or by-laws of the Company or any of the
Subsidiaries or the terms of any material indenture or other material
agreement or instrument to which the Company or any of the Subsidiaries is
a party or by which it or any of them is bound, or any material statute
applicable to the Company or any of the Subsidiaries or any material order,
decree, rule or regulation applicable to the Company or any of the
Subsidiaries of any Governmental Authority.
(n) Except (i) as set forth in the Prospectus and (ii) to the extent
permitted under subsection 5.6, no holders of securities of the Company
have rights to the registration of such securities under any Registration
Statement except the Securities Holders.
For purposes of the foregoing representations and warranties, the Company may
assume that any agreement is the valid and binding obligation of any other
parties to such agreement.
Section 8. Representations and Warranties of the Securities Holders. Each
participating Securities Holder shall, in connection with a Sale Event, if
required by the terms of a Purchase Agreement relating to such Sale Event, for
itself severally and not jointly represent and warrant to (i) in the case of an
underwritten Public Sale Event, the Company, the underwriter or underwriters and
each other Securities Holder participating in such underwritten Public Sale
Event or (ii) in the case of a non-underwritten Sale Event, the Company and the
purchaser or purchasers and each other Securities Holder participating in such
non-underwritten Sale Event, as follows:
(a) Such Securities Holder has all requisite power and authority to
enter into and carry out the terms of this Agreement and such Purchase
Agreement and the other agreements and instruments related to such
agreements to which it is a party.
(b) Each of this Agreement and such Purchase Agreement has been duly
authorized, executed and delivered by or on behalf of such Securities
Holder, and constitutes the valid and binding obligation of such Securities
Holder enforceable against such Securities Holder in accordance with its
terms, except as enforceability may be
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<PAGE> 37
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and
by general equitable principles; provided, that no representation is made
as to the validity, binding effect or enforceability of any provision
purporting to provide indemnification of any person for any Losses
resulting from violation by such person of any applicable securities or
"Blue Sky" laws.
(c) Such Securities Holder, immediately prior to any sale of shares of
Registerable Common pursuant to such Purchase Agreement, will have good and
marketable title to such shares of Registerable Common, free and clear of
all liens, security interests, encumbrances, equities, claims or other
defects in title (other than those created by this Agreement); and, upon
payment therefor, good and marketable title to such shares of Registerable
Common will pass to the purchaser thereof, free and clear of any lien,
security interest, encumbrance, equity, claims or other defect in title.
(d) Such Securities Holder has not taken and will not take, directly
or indirectly, any action designed to constitute or which has constituted
or which might reasonably be expected to cause or result in, under the
Exchange Act or the rules or regulations promulgated thereunder or other
applicable law, stabilization or manipulation of the price of any security
of the Company to facilitate the sale or resale of shares of Registerable
Common.
(e) Written information furnished by or on behalf of such Securities
Holder to the Company expressly for use in the Registration Statement, any
related Preliminary Prospectus, or any related Prospectus or any amendment
or supplement thereto will not contain, in each case as of the date such
information was furnished, any untrue statement of a material fact or omit
to state any material fact required to be stated or necessary to make the
statements in such information not misleading.
(f) To the best knowledge of such Securities Holder, neither the sale
of the Registerable Common to be sold pursuant to the Registration
Statement, nor the execution, delivery or performance by such Securities
Holder of the Purchase Agreement, if any, entered into in connection with
the offering or the consummation of any other of the transactions
contemplated in such Purchase Agreement, if any, will conflict with, result
in a breach of, or constitute a default under, the charter or by-laws of
such Securities Holder or the terms of any material indenture or other
material agreement or instrument to which such Securities Holder is a party
or by which it is bound, or any material statute applicable to such
Securities Holder or any material order, decree, rule or regulation
applicable to such Securities Holder of any Governmental Authority.
(g) Such Securities Holder will deliver to any underwriter a properly
completed and executed United States Treasury Department Form W-8 or Form
W-9 (or other applicable form or statement specified by Treasury Department
regulations in lieu thereof).
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<PAGE> 38
Section 9. Delivery of Comfort Letter and Legal Opinion. On the date that a
Registration Statement relating to a Sale Event in which Securities Holders
participate is declared effective by the Commission or any Canadian Securities
Authority, the Company shall comply with the following:
(a) The Company shall have received, and delivered to each Securities
Holder participating in such Sale Event, a copy of the "comfort" letter or
letters, or updates thereof according to customary practice, of the
independent certified public accountants who have certified the Company's
financial statements included in the Registration Statement covering
substantially the same matters with respect to the Registration Statement
(including the Prospectus) and with respect to events subsequent to the
date of the Company's financial statements as are customarily covered in
accountants' letters delivered to underwriters in underwritten public
offerings of securities. The Company will use its reasonable best efforts
to cause such "comfort" letters to be addressed to such Securities Holders.
(b) Each Securities Holder and any underwriters participating in such
offering shall have received an opinion and any updates thereof of outside
counsel to the Company reasonably satisfactory to such Securities Holders
and underwriters covering substantially the same matters as are customarily
covered in opinions of issuer's counsel delivered to underwriters in
underwritten public offerings of securities, addressed to each of such
Securities Holders and underwriters participating in such offering and
dated the closing date thereof.
Section 10. Miscellaneous.
10.1. Notices. All notices, requests and demands to or upon the respective
parties hereto to be effective shall be in writing (including by facsimile
transmission), and, unless otherwise expressly provided herein, shall be deemed
to have been duly given or made when actually delivered or, in the case of
notice by facsimile transmission, when sent and confirmation of receipt is
received. Notices to the Securities Holders shall be deemed to have been given
or made when sent. All notices shall be addressed as follows or to such other
address as may be hereafter designated in writing by the respective parties
hereto:
The Company: Philip Services Corporation
100 King Street West
Hamilton, Ontario L8N 4J6
CANADA
Telecopier: (905) 523-8036
The Securities Holders: The address of each Securities Holder as set
forth on the signature pages hereof.
10.2. Amendments and Waivers. The Securities Holders of not less than
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<PAGE> 39
66-2/3% of the Registerable Common held or beneficially owned by Securities
Holders at any point in time and the Company may from time to time enter into
written amendments, supplements or modifications to this Agreement for the
purpose of adding any provisions hereto or thereto or changing in any manner the
rights of the Securities Holders or the Company hereunder or thereunder, and the
Securities Holders of not less than 66-2/3% of the Registerable Common held or
beneficially owned by Securities Holders at any point in time may execute a
written instrument waiving, on such terms and conditions as may be specified
therein, any of the requirements of this Agreement which are solely for the
benefit of the Securities Holders and where such waiver does not adversely
affect the interests of the Company; provided, however, that no such waiver and
no such amendment, supplement or modification shall (i) adversely affect the
rights of a Securities Holder under Section 2 hereof or (ii) amend, modify or
waive any provision of Section 5 or this subsection 10.2, in each case without
the written consent of each Securities Holder. Any such waiver and any such
amendment, modification or supplement shall apply equally to each of the
Securities Holders and the Company.
10.3. Termination. This Agreement and the respective obligations and
agreements of the parties hereto, except as otherwise expressly provided herein,
shall terminate on the Termination Date.
10.4. Survival of Representations and Warranties. Except as they may by
their terms relate to an earlier date, all representations and warranties made
hereunder and in any document, certificate or statement delivered pursuant
hereto or in connection herewith shall survive the execution and delivery of
this Agreement and the termination of any or all of the provisions of this
Agreement.
10.5. Headings. The descriptive headings of the several sections and
subsections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
10.6. Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto in separate counterparts, each
of which when so executed and delivered shall be an original, but all of such
counterparts shall together constitute one and the same agreement.
10.7. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
10.8. Adjustment of Shares. Each reference to a number of shares of New
Common Stock in this Agreement shall be adjusted proportionately to reflect any
stock dividend, split or reverse split or the like affected with respect to all
outstanding shares of New Common Stock.
10.9. No Inconsistent Agreements. The Company will not on or after the date
of
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<PAGE> 40
this Agreement enter into any agreement with respect to its securities which is
inconsistent with the rights granted to the Securities Holders in this Agreement
or otherwise conflicts with the provisions hereof.
10.10. Severability. Any provision of this Agreement prohibited or rendered
unenforceable by any applicable law of any jurisdiction shall as to such
jurisdiction be ineffective to the extent of such prohibition or
unenforceability, without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
10.11. ENTIRE AGREEMENT. THIS AGREEMENT CONSTITUTES THE ENTIRE AGREEMENT
AMONG THE PARTIES HERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES HERETO. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES HERETO.
10.12. Listing of New Common Stock. The Company shall use its commercially
reasonable efforts to cause the New Common Stock to be listed or admitted to
trading on the New York Stock Exchange, Inc. and The Toronto Stock Exchange, and
if the New Common Stock cannot be listed on the New York Stock Exchange, Inc.,
then on the NASDAQ National Market.
10.13. No Required Sale. Nothing in this Agreement shall be deemed to
create an independent obligation on the part of any of the Securities Holders to
sell any New Common Stock pursuant to any Registration Statement or otherwise.
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<PAGE> 41
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first written above.
PHILIP SERVICES CORPORATION
By:______________________________________
Name:
Title:
SECURITIES HOLDERS:
AMERICAN REAL ESTATE HOLDINGS, L.P.
By: AMERICAN PROPERTY INVESTORS, INC.,
its General Partner
By:______________________________________
Name:
Title:
Address for notices:
767 Fifth Avenue, 47th Floor
New York, NY 10153
HIGH RIVER LIMITED PARTNERSHIP
By: RIVERDALE LLC, its General Partner
By:______________________________________
Name:
Title:
Address for notices:
767 Fifth Avenue, 47th Floor
New York, NY 10153
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<PAGE> 42
EXHIBIT A
SECURITIES HOLDER'S QUESTIONNAIRE
Please complete and return immediately to Philip Services Corporation at
the following address:
Philip Services Corporation
100 King Street West
Hamilton, Ontario L8N 4J6
CANADA
Attention: Chief Financial Officer
The information requested below is required for purposes of any Public Sale
Event pursuant to the Registration Rights Agreement dated as of March 31, 2000
(the "Agreement") that may be initiated from time to time. If you do not furnish
the Company with the requested information, you will not be entitled to
participate in any such registration. Unless otherwise defined herein,
capitalized terms shall have the meanings ascribed thereto in the Agreement.
Please do not leave any request for information unanswered. If your
response to a request is "no" or "not applicable," please so state. If
additional space is required, please attach additional sheets to the end of this
Questionnaire, clearly identifying the portion hereof to which they relate.
If you have any questions regarding this Questionnaire, please
contact____________________ .
I. Information required for notices.
Institution Name:
Street Address:
Post Office Box:
City/State/Zip:
Fed. Tax ID. No.
(if any):
Telecopier Number:
Contacts (Please include alternative contacts).
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<PAGE> 43
1. Name:
Title:
Function:
Business Telephone:
2. Name:
Title:
Function:
Business Telephone:
II. Information required by the Securities Act of 1933, as amended, and related
regulations.
A. Federal Securities Laws
1. Name and Address. Give your name and address exactly as they should
appear in any Prospectus.
2. Ownership of Registerable Common. State the number of shares of
Registerable Common, if any, owned by you or your affiliates as of the date
hereof.
Shares of Registerable Common:
3. Beneficial Ownership of New Common Stock. Please furnish the following
information, in the tabular form indicated, as to the shares of New Common Stock
beneficially owned (see definition at end of Questionnaire) by you (including
amounts held in your Trust Department in discretionary accounts):
<TABLE>
<CAPTION>
If such ownership is
shared with others,
indicate nature and
Number of Nature of extent of such
Shares(1) Beneficial Ownership(2) shared ownership
--------- ----------------------- ---------------------
<S> <C> <C>
</TABLE>
[FN]
_____________
(1) Include shares which you have the right to acquire through the exercise of
options, warrants or other securities on or before 60 days after the
estimated date of the Prospectus.
(2) Please indicate the extent to which you have sole voting power, shared
voting power, sole investment power and shared investment power with
respect to shares of New Common Stock you beneficially own.
</FN>
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<PAGE> 44
4. Disclaimer of Beneficial Ownership. Please indicate below the number and
description of any shares of New Common Stock with respect to which you disclaim
beneficial ownership and whether such shares are included in the figure(s)
reported above.
5. Five Percent Beneficial Owners. Please give the name and address of any
Person, corporation or other entity, other than the parties to the Agreement,
known to you to own beneficially 5% or more of the outstanding New Common Stock
(i.e., ______ shares or more).
NOTE: For purposes of your response to this question, the term "Person"
includes two or more Persons acting as a partnership, limited
partnership, syndicate, or other group for the purpose of acquiring,
holding or disposing of the Company's securities.
6. Underwriters. Please describe briefly and state the nature of any
relationship or interest that you have or any associate of yours (see definition
at end of Questionnaire) has, in any underwriter of the securities to be
offered. If you are a member or controlling Person of a firm that may be an
underwriter of the securities to be offered, briefly describe your relationship
to, and interest in, such underwriter.
NOTE: The underwriters will be listed in the final amendment to the
Registration Statement, a copy of which will be sent to you at a later
date.
7. Material Relationships. Please list all material relationships that you
now have, or have had since _______________, with the Company or any of its
affiliates, other than your ownership of the New Common Stock or your
participation in the Company's bankruptcy case.
B. NASD Regulations.
8. NASD Membership. State whether you are a "member" of the National
Association of Securities Dealers, Inc. (the "NASD"), a "Person associated with
a member" or an "underwriter or a related Person" with respect to the proposed
offering.
NOTES: (1) The NASD By-Laws define "member" to mean either any broker or
dealer admitted to membership in the NASD.
(2) The NASD By-Laws define "Person associated with a member" to
mean every sole proprietor, partner, officer, director or branch
manager of any member, or any natural Person occupying a similar
status or performing similar functions, or any natural Person engaged
in the investment banking or securities
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<PAGE> 45
business who is directly or indirectly controlling or controlled by
such member, whether or not any such Person is registered or exempt
from Registration with the NASD.
(3) The NASD has interpreted "underwriter or a related Person"
with respect to a proposed offering to include an underwriter,
underwriters' counsel, financial consultants and advisers, finders,
members of the selling or distribution group, and any and all other
Persons "associated with" or "related to" any of such Persons.
9. Purchase by NASD Affiliates. If your answer to the preceding question
was "yes," please furnish the following information, in the tabular form
indicated, as to all purchases and acquisitions (including contracts to purchase
or to acquire) by you, of warrants, options or any other securities of the
Company or any subsidiary thereof, during the preceding 12 months, as well as
all proposed purchases or acquisitions by you which are to be consummated in
whole or in part prior to, at the time of or within six months after the
effectiveness of the Registration Statement.
<TABLE>
<CAPTION>
Purchaser or Seller or Amount and Price or
Prospective Prospective Name of Other
Date Purchaser Seller Securities Consideration
- ---- ------------ ----------- ---------- -------------
<S> <C> <C> <C> <C>
________ ____________ ___________ __________ _____________
________ ____________ ___________ __________ _____________
________ ____________ ___________ __________ _____________
</TABLE>
10. Dealings with Company. Please describe any other dealings within the
preceding 12 months not already described in response to the foregoing questions
between the Company or any subsidiary or controlling shareholder thereof and any
underwriter, related Person of such underwriter, NASD member or Person
associated with such member affiliated with you, as such terms are defined in
the Notes to Question 10.
THE UNDERSIGNED HEREBY REPRESENTS AND WARRANTS TO ANY PERSON WHO MAY BE
LIABLE IN RESPECT OF A REGISTRATION OR OTHER OFFERING PURSUANT TO THE AGREEMENT
THAT THE ANSWERS GIVEN IN THIS QUESTIONNAIRE ARE CORRECTLY STATED TO THE
KNOWLEDGE, INFORMATION AND BELIEF OF THE UNDERSIGNED. THE UNDERSIGNED HEREBY
AGREES TO PROMPTLY NOTIFY THE COMPANY OF ANY CHANGE IN SUCH ANSWERS WHICH MAY
OCCUR DURING THE PERIOD BEGINNING WITH THE DATE BELOW AND ENDING ON THE DATE 90
DAYS AFTER THE EFFECTIVE DATE OF ANY REGISTRATION STATEMENT RELATING TO A
REGISTRATION OR OTHER OFFERING PURSUANT TO THE AGREEMENT. THE UNDERSIGNED HEREBY
AGREES, FOLLOWING NOTICE OF ANY PROPOSED REGISTRATION TO UPDATE AND AMEND THIS
QUESTIONNAIRE IF THERE IS ANY MATERIAL CHANGE IN THE ABOVE INFORMATION AND TO
PROVIDE ANY ADDITIONAL INFORMATION REQUESTED BY THE COMPANY PURSUANT TO THE
AGREEMENT.
Dated: ______________, 20__.
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<PAGE> 46
Holder:
By:
Name:
Title:
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<PAGE> 47
DEFINITIONS
As used in this Questionnaire:
"affiliate" means a Person or organization that directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or is under
common control with, the Company.
An "associated person" means (1) any corporation or organization (other
than the Company or a majority owned subsidiary) of which you are an executive
officer or partner or are, directly or indirectly, the beneficial owner of 10%
or more of any class or equity securities and (2) any trust or other estate in
which you have substantial beneficial interest or to which you serve as trustee
or in a similar fiduciary capacity.
Securities "owned beneficially" by you are securities (whether or not
registered in your name) in which you have or share (directly or indirectly
through any contract, arrangement, understanding, relationship or otherwise) (i)
voting power, which includes the power to vote or direct the voting of the
securities, or (ii) investment power, which includes the power to dispose, or
direct the disposition, of the securities. You are also deemed to be the
beneficial owner of any securities which you have the right to acquire
immediately or within 60 days (a) through the exercise of any option, warrant or
right, (b) through the conversion of a security or (c) pursuant to the power to
revoke, or the automatic termination of, a trust, discretionary account or
similar arrangement.
Thus, securities held in the name of other individuals, in the name of an
estate or trust or pursuant to a pledge agreement where you have either the
power to direct the voting of the securities or the disposition of such
securities should be listed as "owned beneficially" by you. The Commission has
also taken the position that securities held by your spouse, minor children, or
other relatives sharing your home should be shown as "owned beneficially" by you
on the theory that, absent special circumstances you are able to exercise a
controlling influence over the purchase, sale or voting of such securities.
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<PAGE> 48
EXHIBIT B
SUPPLEMENTAL ADDENDUM
The undersigned is a holder of New Common Stock of Philip Services
Corporation. The undersigned hereby agrees as follows:
The undersigned hereby accepts the terms of and becomes a party to (as a
Securities Holder) the Registration Rights Agreement dated as of March 31, 2000
by and among Philip Services Corporation (the "Company") and each Securities
Holder named therein. In connection therewith, the undersigned agrees to (A)
assume all obligations and liabilities thereunder, (B) enjoy all of the rights
thereunder, (C) be bound thereby and (D) perform and comply with the agreements
and commitments on the part of the undersigned, as assignee, set forth in the
Registration Rights Agreement.
As used in this Supplemental Addendum, capitalized terms defined in the
Registration Rights Agreement shall have their respective defined meanings.
Name of
Address: Institution:_____________________
By____________________________
Name:
Title:
Date: _______________, _____
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<PAGE> 1
EXHIBIT 99.4
=============================================================================
[Unsecured PIK Notes]
REGISTRATION RIGHTS AGREEMENT
Dated as of March 31, 2000
by and among
PHILIP SERVICES CORPORATION
and
EACH SECURITIES HOLDER REFERRED TO HEREIN
=============================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
Section 1. Definitions 2
1.1. Defined Terms 2
Section 2. Demand Registration Rights of Securities Holders 7
2.1. Demand Registration Rights 7
2.2. Determination 8
2.3. Notices; Minimum Registerable Amounts 8
2.4. Discretion of Securities Holder 9
2.5. Allocation Among Initiating Securities Holders 10
2.6. Piggyback Rights of Securities Holders 10
2.7. Limitation on Registration Rights 11
Section 3. Black-Out Periods 11
3.1. Black-Out Periods for Securities Holders 11
Section 4. Agreements Concerning Offerings 12
4.1. Obligations of Securities Holders 12
4.2. Obligations of the Company 12
4.3. Agreements Related to Offerings 14
4.4. Certain Expenses. 16
4.5. Public Reporting; Rule 144 16
4.6. Limitations on Subsequent Registration Rights 17
4.7. Indemnification and Contribution 17
4.8. Underwritten Offerings 24
4.9. Transfer of Rights Under this Agreement; Transfers of Registerable Notes 24
4.10. Termination of Rights 25
Section 5. Sequencing of Public Sale Events 25
5.1. Effective Notice Period 25
5.2. Restrictive Legend on Certificates 25
Section 6. Representations and Warranties of the Company 26
Section 7. Representations and Warranties of the Securities Holders 30
Section 8. Delivery of Comfort Letter and Legal Opinion 32
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C> <C>
Section 9. Miscellaneous 32
9.1. Notices 32
9.2. Amendments and Waivers 33
9.3. Termination 33
9.4. Survival of Representations and Warranties 33
9.5. Headings 33
9.6. Counterparts 33
9.7. GOVERNING LAW 34
9.8. No Inconsistent Agreements 34
9.9. Severability 34
9.10. ENTIRE AGREEMENT 34
9.11. No Required Sale 34
EXHIBITS
Exhibit A - Securities Holders Questionnaire 36
Exhibit B - Supplemental Addendum 42
</TABLE>
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<PAGE> 4
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of March 31, 2000, by
and among PHILIP SERVICES CORPORATION, a corporation organized under the laws of
the State of Delaware (the "Company"), and each SECURITIES HOLDER (as defined in
subsection 1.1).
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<PAGE> 5
W I T N E S S E T H:
WHEREAS, on June 25, 1999 the Company, formerly known as Philip
Services (Delaware) Inc., filed a voluntary petition for relief under Chapter 11
of title 11 of the United States Code (as amended, the "Bankruptcy Code") with
the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy
Court"). On November 30, 1999, the Bankruptcy Court entered an Order confirming
the First Amended Joint Plan of Reorganization of Philip Services (Delaware),
Inc. et al., dated as of September 21, 1999 (the "Plan"); and
WHEREAS, the Plan provides that the Company shall enter into a
registration rights agreement with certain of its shareholders.
NOW, THEREFORE, in consideration of the mutual agreements
contained herein, the parties hereto hereby agree as follows:
Section 1. Definitions.
1.1. Defined Terms. (a) As used in this Agreement, the terms
defined in the caption and the recitals shall have the meanings set forth
therein, and the following terms shall have the following meanings:
"affiliate" shall have the meaning ascribed thereto in Rule
12b-2 under the Exchange Act as in effect on the date hereof.
"Agreement" shall mean this Registration Rights Agreement, as
amended, supplemented or otherwise modified from time to time.
"AREP" shall mean American Real Estate Holdings, L.P..
"Canadian Prospectus" shall mean a Preliminary Prospectus or
Prospectus, as applicable, in respect of which a receipt has been
issued by the Canadian Securities Authority in each of the provinces of
Canada in which the document has been filed.
"Canadian Securities Authorities" shall mean the securities
regulatory authorities in each of the provinces of Canada, and
"Canadian Securities Authority" shall mean any one of the Canadian
Securities Authorities.
"Canadian Securities Laws" shall mean the securities
legislation of each of the provinces of Canada and the respective
regulations thereunder and the published rules, policy statements,
blanket rulings, orders, notices or national instruments applicable
therein.
"Canadian Shelf Procedures" shall mean the procedures
contemplated by National Policy 47 of the Canadian Securities
Administrators for the distribution of securities of
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<PAGE> 6
eligible issuers under the prompt offering qualification system, as the
same may be amended or superseded from time to time.
"Commission" shall mean the United States Securities and
Exchange Commission or any successor thereto.
"Demand Registration" shall mean any Registration and/or
Qualification of Registerable Notes pursuant to a Registration
Statement filed by the Company in accordance with the provisions of
subsection 2.2.
"Effective Date" shall mean March 31, 2000, being the date on
which the Plan became effective, as provided therein. Notwithstanding
that this Agreement is expressed to be dated as of March 31, 2000, it
is agreed that this Agreement shall be deemed to be delivered on and
take effect as and from the Closing Date, as that term is defined in
the Secured PIK/Term Credit Agreement.
"Effective Notice Period" shall have the meaning assigned to
such term in subsection 6.1.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, or any successor legislation thereto.
"Exit Facility" shall mean the Exit Facility, dated as of
March 31, 2000, among the Company, the Subsidiaries of the Company
party thereto, Foothill Capital Corporation, as arranger and
administrative agent, and the lenders party thereto.
"First Phase" shall mean the period of time commencing on the
Effective Date and ending on the date that is the earlier of (a) the
date on which the Company is eligible to use Form S-3 to effect a
Registration of Unsecured PIK Notes and (b) the fifteen (15) month
anniversary of the Effective Date.
"Form S-3" shall mean such form of registration statement
under the Securities Act as in effect on the date hereof or any
successor form thereto.
"Form S-4" shall mean such form of registration statement
under the Securities Act as in effect on the date hereof or any
successor form thereto.
"Form S-8" shall mean such form of registration statement
under the Securities Act as in effect on the date hereof or any
successor form thereto.
"Governmental Authority" shall mean any nation or government,
any state or other political subdivision thereof or any entity
exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"High River" shall mean High River Limited Partnership.
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<PAGE> 7
"Initiating Securities Holders" shall have the meaning
assigned to such term in subsection 2.3(b).
"Material Adverse Change" shall mean, for purposes of
subsections 2.4(b) and (c), any material adverse change in, or the
occurrence of any event which would reasonably be expected to have a
material adverse effect on, the business, condition (financial or
otherwise) or prospects of the Philip Group taken as a whole (it being
understood that a change in general political, financial, banking or
capital market conditions shall not be a "Material Adverse Change"
unless such change has, or would reasonably be expected to have, a
material adverse effect on the Philip Group as described above).
"Minimum Registerable Amount" shall mean $1,000 aggregate
principal amount of Unsecured PIK Notes.
"NASD" shall mean the National Association of Securities
Dealers, Inc. or any successor thereto.
"Notice of Offering" shall mean a written notice with respect
to a proposed Securities Holder Public Sale Event pursuant to a Demand
Registration, setting forth (i) the expected maximum and minimum
aggregate principal amount of Registerable Notes proposed to be offered
and sold, (ii) the lead managing underwriter, if applicable and known
and (iii) the proposed method of distribution and the expected timing
of the offering, including whether the proposed offering will be
registered in the United States, qualified for distribution in Canada,
or both.
"Person" shall mean any individual, partnership, corporation,
business trust, joint stock company, trust, unincorporated association,
joint venture, Governmental Authority, limited liability company or
other entity of whatever nature.
"Philip Group" shall mean the Company together with each
Subsidiary of the Company.
"Piggybacking Notice" shall have the meaning assigned to such
term in subsection 2.6(a).
"Piggybacking Securities Holder" shall have the meaning
assigned to such term in subsection 2.6(a).
"Preliminary Prospectus" shall mean (i) each preliminary
prospectus included in a Registration Statement or in any amendment
thereto prior to the date on which such Registration Statement is
declared effective under the Securities Act, including any prospectus
filed with the Commission pursuant to Rule 424(a) under the Securities
Act or (ii) each preliminary prospectus, as the same may be amended
prior to the issuance of the final receipt by the applicable Canadian
Securities Authority.
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<PAGE> 8
"Prospectus" shall mean each prospectus (i) included in a
Registration Statement at the time it becomes effective (including,
without limitation, a prospectus that discloses information previously
omitted from a prospectus filed as part of an effective Registration
Statement in accordance with Rule 430A), together with any supplement
thereto, as filed with, or transmitted for filing to the Commission
pursuant to Rule 424(b) under the Securities Act or (ii) for which a
receipt is issued by the Canadian Securities Authority in each province
in which such document is filed pursuant to any applicable Canadian
Securities Laws (and including, without limitation, the information
that is permitted to have been omitted by National Policy Statement No.
44 of the Canadian Securities Administrators for the pricing of
securities after the final prospectus is receipted, as the same may be
amended or superseded from time to time).
"Purchase Agreement" shall mean, in connection with any Sale
Event, any written agreement entered into by any Securities Holder
providing for the sale of Registerable Notes.
"Qualification" shall mean the qualification of securities
pursuant to a Canadian Prospectus, for which a final receipt has been
issued by the Securities Regulatory Authority in each province in which
such document is filed.
"Registerable Notes" shall mean with respect to each
Securities Holder (a) the Unsecured PIK Notes issued to such Securities
Holder pursuant to the Plan, and (b) any other Unsecured PIK Notes
issued as interest or other distribution with respect to, or in
exchange for or in replacement of, such Registerable Notes; excluding
in all cases, however, any Registerable Notes from and after the
transfer thereof pursuant to a Registration Statement, a Canadian
Prospectus or Rule 144.
"Registration" shall mean a registration of securities
pursuant to the Securities Act.
"Registration Statement" shall mean (i) any registration
statement (including the Preliminary Prospectus, the Prospectus, any
amendments (including any post-effective amendments) thereto, any
supplements and all exhibits thereto and any documents incorporated
therein by reference pursuant to the rules and regulations of the
Commission or any applicable Canadian securities laws), filed by the
Company in connection with any Public Sale Event with the Commission or
(ii) a Canadian Prospectus filed with any Canadian Securities Authority
any amendments or supplements thereto and any documents, incorporated
by reference therein pursuant to the rules of the applicable Canadian
Securities Authority, which in either case complies with all applicable
requirements of the Securities Act and the rules and regulations of the
Commission thereunder and all applicable Canadian Securities Laws.
"Responsible Officer" shall mean with respect to any Person,
the president, chief executive officer, chief operating officer, chief
financial officer or treasurer of such
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<PAGE> 9
Person.
"Rule 144", shall mean Rule 144 promulgated by the Commission
under the Securities Act, or any successor to such Rule.
"Rule 415" shall mean Rule 415 promulgated by the Commission
under the Securities Act, or any successor to such Rule.
"Rule 424" shall mean Rule 424 promulgated by the Commission
under the Securities Act, or any successor to such Rule.
"Rule 430A" shall mean Rule 430A promulgated by the Commission
under the Securities Act, or any successor to such Rule.
"Second Phase" shall mean the period following the end of the
First Phase and prior to the Termination Date.
"Secured PIK/Term Credit Agreement" shall mean the Secured
PIK/Term Credit Agreement, dated as of March 31, 2000, among the
Company, Canadian Imperial Bank of Commerce, as administrative agent,
and the various lenders from time to time party thereto.
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any successor legislation thereto.
"Securities Holder" shall mean each entity set forth on the
signature pages of this Agreement under the heading "SECURITIES
HOLDERS".
"Securities Holder Public Sale Event" shall mean any sale of
Registerable Notes by a Securities Holder pursuant to a Demand
Registration.
"Securities Holder Sale Notice" shall mean a Notice of
Offering to the Company from a Securities Holder requesting the Company
to effect a Demand Registration of Registerable Notes (to which such
Securities Holder is at the time entitled pursuant to subsection 2.1)
and stating whether such Securities Holder is requesting that such
Demand Registration be a Shelf Registration and whether such
Registerable Notes is to be registered for sale in the United States,
Canada or both; provided that if more than one Notice of Offering is
required to aggregate the Minimum Registerable Amount, the term
"Securities Holder Sale Notice" shall refer collectively to all such
Notices of Offering delivered by Securities Holders to the Company in
accordance with subsection 2.3(b).
"Securities Holder's Questionnaire" shall mean the
questionnaire to be provided by each Securities Holder to the Company
in connection with a Securities Holder Public Sale Event, substantially
in the form of Exhibit A, as the same from time to time may be amended,
supplemented or otherwise modified.
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<PAGE> 10
"Shelf Registration" shall mean any Qualification or
Registration of Registerable Notes pursuant to (i) a Registration
Statement filed by the Company in accordance with the provisions of
subsection 2.2 and which provides for the offering of Registerable
Notes to be made on a continuous basis pursuant to Rule 415 or (ii) a
Prospectus filed by the Company in accordance with the provisions of
Section 2.2 and which provides for the Offering of Registerable Notes
to be made on a continuous basis pursuant to national Policy Statement
No. 44 of the Canadian Securities Administrators.
"Subsidiary" shall mean, as to any Person, a corporation,
partnership or other entity of which shares of stock or other ownership
interests having ordinary voting power (other than stock or such other
ownership interests having such power only by reason of the happening
of a contingency) to elect the majority of the board of directors or
other managers of such corporation, partnership or other entity are at
that time owned directly or indirectly through one or more
intermediaries, or both, by such Person. Unless otherwise qualified,
all references to a "Subsidiary" or "Subsidiaries" in this Agreement
shall refer to a Subsidiary or Subsidiaries of the Company.
"Supplemental Addendum" shall mean a Supplemental Addendum,
substantially in the form of Exhibit B to this Agreement.
"Termination Date" shall mean, as to each Securities Holder,
the date on which counsel to the Company delivers an opinion in
accordance with subsection 4.10 to such Securities Holder.
"Unsecured PIK Notes" shall mean the Company's 6% Subordinated
Notes due 2010 issued pursuant to the Plan together with any such notes
issued as interest thereon.
(b) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and section,
subsection, schedule and exhibit references are to this Agreement.
Section 2. Demand Registration Rights of Securities Holders.
2.1. Demand Registration Rights. At any time prior to the
Termination Date, each Securities Holder shall have the right, subject to
subsections 2.3, 2.4(b) and (c) and 5.1, to request one (1) Demand Registration
on behalf of itself and its affiliates, and the Company shall be obligated to
provide a Demand Registration in response to each such request; provided that
the Company shall be obligated to provide no more than two (2) such Demand
Registrations in the aggregate during the First Phase; provided, further, that,
during the First Phase, if the initial Demand Registration is a Shelf
Registration, the Company shall be obligated to provide only such Shelf
Registration; and provided, further, that High River and AREP shall together
have the right to request a total of two (2) Demand Registrations, allocable
between them as they shall determine in their sole discretion.
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<PAGE> 11
2.2. Determination. Subject to the terms and conditions
hereof, if the Company shall at any time receive one or more Securities Holder
Sale Notices in accordance with subsection 2.3 representing, in the aggregate,
at least the Minimum Registerable Amount, then the Company shall (a) file a
Registration Statement within 45 days, and in any event, but subject to
subsection 5.3(b), make such filing within 60 days (provided that such time
periods shall begin on the date of the Company's receipt of the Securities
Holder Sale Notice which, together with any earlier delivered Securities Holder
Sale Notice, represents the applicable Minimum Registerable Amount), which
Registration Statement shall cover the maximum aggregate principal amount of
Registerable Notes set forth in such Securities Holder Sale Notice, and (b) use
its best efforts to facilitate such Demand Registration as provided herein.
Notwithstanding the foregoing, the Company may delay the filing of (but not its
obligation to expeditiously prepare) any Registration Statement relating to a
Demand Registration for a reasonable period of time (not in excess of 90 days)
if the Board of Directors of the Company reasonably determines to delay such
filing and, within ten (10) days of such determination, the Company provides
each Securities Holder that delivered a Securities Holder Sale Notice with a
certificate signed by the Chairman of the Board of Directors of the Company or
the Chief Executive Officer of the Company stating that, in the good faith
judgment of the Board of Directors of the Company, the filing of such
Registration Statement would adversely affect any material business situation,
transaction or negotiation then contemplated by the Company or materially and
adversely affect the Company. The Company shall promptly give notice to each
such Securities Holder of the end of any delay period under this subsection.
Subject to any extension under subsection 3.1(b), the Company shall keep any
Registration Statement effective for a period of (i) in the case of a Demand
Registration other than a Shelf Registration, until the earlier of (x) the three
(3) month anniversary of the date that the Registration Statement with respect
thereto is declared effective by the Commission or a final receipt is issued by
the applicable Canadian Securities Authority, as applicable, and (y) the date on
which all of the Registerable Notes covered by such Registration Statement have
been sold and (ii) in the case of a Shelf Registration, until the earlier of (x)
two (2) years following the date the Registration Statement with respect thereto
is declared effective by the Commission or a final receipt is issued by the
applicable Canadian Securities Authority, as applicable, and (y) the date on
which all of the Registerable Notes covered by such Registration Statement have
been sold or, in each case, such shorter period if any such Registration is
terminated in accordance with the terms hereof prior to the end of the
applicable period.
2.3. Notices; Minimum Registerable Amounts. (a) Subject to
subsection 2.1, any Securities Holder may send a Securities Holder Sale Notice
to the Company in respect of a Demand Registration. Simultaneously with the
delivery to the Company of a Securities Holder Sale Notice, the Securities
Holder so requesting a Demand Registration shall deliver to each other
Securities Holder a copy of such Securities Holder Sale Notice and such other
information as such Securities Holder may deem appropriate.
(b) Notwithstanding subsection 2.3(a), no Securities Holder
Sale Notice delivered by a Securities Holder shall be effective to require the
Company to provide a Demand
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<PAGE> 12
Registration, unless (i) the aggregate principal amount of Unsecured PIK Notes
represented by such Securities Holder Sale Notice equals or exceeds the Minimum
Registerable Amount or (ii) within twenty (20) days of the delivery of the first
Securities Holder Sale Notice in respect of an aggregate principal amount of
Unsecured PIK Notes that does not equal or exceed the minimum Registerable
Amount one or more additional Securities Holder Sale Notices are delivered by
Securities Holders then entitled to request a Demand Registration pursuant to
subsection 2.1(a) such that the aggregate principal amount of Unsecured PIK
Notes represented by all such Securities Holder Sale Notices (including the
Securities Holder Sale Notice which commenced such twenty (20) day period) is at
least equal to the Minimum Registerable Amount. All Securities Holders
delivering Securities Holder Sale Notices in accordance with the immediately
preceding sentence are hereinafter referred to as the "Initiating Securities
Holders". Subject to subsection 2.4, the delivery of any Securities Holder Sale
Notice pursuant to this subsection 2.3(b), shall be deemed a request by each
Initiating Securities Holder under subsection 2.1 for a Demand Registration,
provided that if all Securities Holder Sale Notices so delivered do not
represent at least the Minimum Registerable Amount, then all such Securities
Holder Sale Notices shall be deemed null and void and shall not constitute a
request for Demand Registration under subsection 2.1 by any Initiating
Securities Holder.
(c) Any Securities Holder Sale Notice may be revised from time
to time prior to the earlier of (i) the execution of the Purchase Agreement, if
any, for such offering and (ii) the effectiveness of the Registration Statement
for, or date of final receipt for the Canadian Prospectus relating to, as
applicable, such offering.
(d) The Company shall promptly provide a Securities Holder
Questionnaire in the case of a Demand Registration, to each Securities Holder
that delivers a Securities Holder Sale Notice in accordance with this subsection
2.3 and each Piggybacking Securities Holder.
2.4. Discretion of Securities Holder. (a) In connection with
any Securities Holder Public Sale Event, subject to the provisions of this
Agreement, the Securities Holder requesting a Demand Registration or the
Initiating Securities Holders owning a majority of the aggregate principal
amount of Registerable Notes that all such Initiating Securities Holders are
seeking to include in such Securities Holder Public Sale Event, in its or their
sole discretion, as the case may be, shall determine whether (i) to proceed
with, withdraw from or terminate such proposed Securities Holder Public Sale
Event, (ii) to enter into one or more Purchase Agreements for such Securities
Holder Public Sale Event and (iii) to take such actions as may be necessary to
close the sale of Registerable Notes contemplated by such offering, including,
without limitation, waiving any conditions to closing such sale which have not
been fulfilled.
(b) Subject to subsection 2.4(c), in the event that the
Securities Holder or the Initiating Securities Holders, as the case may be,
determine(s) pursuant to subsection 2.4(a) not to proceed with a Demand
Registration of Registerable Notes at any time before (i) the Registration
Statement with respect to such Demand Registration has been declared effective
by the Commission or (ii) a final receipt has been issued by the applicable
Canadian Securities Authority for the Canadian Prospectus, as applicable, and
such Securities Holder or Initiating
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<PAGE> 13
Securities Holders, as the case may be, reimburse(s) the Company for all
reasonable fees, costs and expenses in connection therewith, then all Securities
Holder Sale Notices delivered in respect of such Demand Registration shall be
deemed null and void and shall not constitute a request for Demand Registration
under subsection 2.1 by any Securities Holder or Initiating Securities Holders.
(c) If the Securities Holder or the Initiating Securities
Holders, as the case may be, determine(s) pursuant to subsection 2.4(a) not to
proceed with a Demand Registration (i) at any time at the request of the Company
or (ii) as a result of a Material Adverse Change at any time, then, in either
such case, such Securities Holder or Initiating Securities Holders, as the case
may be, will not be required to reimburse the Company for the fees, costs and
expenses in connection with such Demand Registration and all Securities Holder
Sale Notices delivered in respect of such Demand Registration shall be deemed
null and void and shall not constitute a request for Demand Registration under
subsection 2.1 by any Securities Holder or Initiating Securities Holders.
2.5. Allocation Among Initiating Securities Holders. In
connection with any Demand Registration requested by Initiating Securities
Holders in accordance with subsection 2.3, if the lead managing underwriter
selected by such Initiating Securities Holders in accordance with subsection 5.8
with respect to such offering (or, if the offering is not underwritten, if a
financial advisor to such Initiating Securities Holders) determines that
marketing factors require a limitation on the aggregate principal amount of
Registerable Notes to be offered and sold in such offering, there shall be
included in the offering only that aggregate principal amount of Registerable
Notes that such lead managing underwriter or financial advisor, as the case may
be, reasonably and in good faith believes will not jeopardize the success of the
offering, which Registerable Notes shall be allocated among the Initiating
Securities Holders on a pro rata basis based on the aggregate principal amount
of Registerable Notes each such Initiating Securities Holder seeks to include in
such offering.
2.6. Piggyback Rights of Securities Holders. (a) In connection
with any Demand Registration that has been requested by a Securities Holder or
Initiating Securities Holders, as the case may be, in accordance with
subsections 2.1 and 2.3, any other Securities Holder then holding Registerable
Notes (a "Piggybacking Securities Holder") shall be entitled, subject to
subsection 2.6(b), to participate on the same terms and conditions as such
Securities Holder in the Securities Holder Public Sale Event relating thereto
and offer and sell Registerable Notes, respectively, therein as provided in this
subsection 2.6. Any party desiring to so participate shall give written notice
(a "Piggybacking Notice") to the Securities Holder requesting such Demand
Registration and to the Company no later than fifteen (15) days following
receipt of a Securities Holder Sale Notice, of the aggregate principal amount of
Registerable Notes that such Piggybacking Securities Holder then desires to
offer and sell in such Securities Holder Public Sale Event.
(b) The extent to which a Piggybacking Securities Holder may
participate in any Securities Holder Public Sale Event in accordance with
paragraph (a) of this subsection 2.6
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<PAGE> 14
shall be limited to that aggregate principal amount of Registerable Notes that
will not require a reduction in the aggregate principal amount of Registerable
Notes of the Initiating Securities Holders or the Securities Holder requesting
such Demand Registration to be included therein or change in a manner materially
adverse to such Initiating Securities Holders or Securities Holder, as the case
may be, the proposed method of the offering, including, without limitation, the
economic benefits to such Initiating Securities Holders or Securities Holder. If
the lead managing underwriter selected by the Initiating Securities Holders or
the Securities Holder initiating such Securities Holder Public Sale Event (or,
if the offering is not underwritten, a financial advisor to such Initiating
Securities Holders or Securities Holder) determines that marketing factors
require a limitation on the aggregate principal amount of Registerable Notes to
be offered and sold in such offering, there shall be included in the
Registration Statement with respect to such offering only that aggregate
principal amount of Registerable Notes held by such Piggybacking Securities
Holders that such lead managing underwriter or financial advisor, as the case
may be, reasonably and in good faith believes will not jeopardize the success of
the offering, which Unsecured PIK Notes shall be allocated among the
Piggybacking Securities Holders on a pro rata basis based on the aggregate
principal amount of Registerable Notes each such Securities Holder is seeking to
include in such offering.
2.7. Limitation on Registration Rights. Notwithstanding any
other provision of this Agreement, no Person shall have the right to cause the
Company to file a Canadian Prospectus unless such Person provides evidence
reasonably satisfactory to the Company that a proposed trade in securities by
such Person would be a "distribution" as such term is used under applicable
Canadian Securities Laws or would otherwise require the filing of a Canadian
Prospectus with any one or more of the Canadian Securities Authorities under
applicable Canadian Securities Laws and the issuance of a final receipt therefor
from such authorities in order to permit the proposed trade.
Section 3. Black-Out Periods.
3.1. Black-Out Periods for Securities Holders. (a) No
Securities Holder shall offer to sell or sell any Registerable Notes pursuant to
a Demand Registration, and the Company shall not be required to supplement or
amend any Registration Statement or otherwise facilitate the sale of
Registerable Notes pursuant thereto, during the 90-day period immediately
following the receipt by each Securities Holder of a certificate of an
authorized officer of the Company to the effect that the Board of Directors of
the Company has in good faith and for valid business reasons requested that the
Securities Holders refrain from selling Registerable Notes; provided, however,
that the identity of a potential purchaser or purchasers of Registerable Notes
from a Securities Holder shall not constitute a valid business reason. Any
period described in this subsection 3.1(a) during which Securities Holders are
not able to sell Registerable Notes pursuant to a Demand Registration is herein
referred to as a "black-out" period. The Company shall notify each Securities
Holder of the expiration or earlier termination of any "black-out" period (the
nature and pendency of which need not be disclosed during such "black-out"
period).
(b) The period during which the Company is required pursuant
to subsection
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<PAGE> 15
2.2 to keep any Demand Registration effective shall be extended by a number of
days equal to the number of days, if any, of any "black-out" period applicable
to Securities Holders pursuant to this subsection 4.1 occurring during such
period, plus a number of days equal to the number of days during such period, if
any, of any period during which the Securities Holders are unable to sell any
Registerable Notes pursuant to a Demand Registration as a result of the
happening of any event of the nature described in subsection 4.3(c)(ii),
4.3(c)(iii) or 4.3(c)(v).
Section 4. Agreements Concerning Offerings.
4.1. Obligations of Securities Holders. (a) Each Securities
Holder shall, upon the reasonable request of the Company, advise the Company of
the aggregate principal amount of Registerable Notes then held or beneficially
owned by it.
(b) It shall be a condition precedent to the obligations of
the Company to effect a Registration of any Registerable Notes that each
Securities Holder desiring to participate in a Securities Holder Public Sale
Event shall have furnished to the Company a completed Securities Holder's
Questionnaire and such additional information regarding itself, the Registerable
Notes held by it and the intended method of disposition of such securities as
shall be required by law, the Commission or any applicable Canadian Securities
Authority, to effect the Registration of their Registerable Notes and any other
information relating to such Registration.
4.2. Obligations of the Company. Whenever required under this
Agreement to proceed with a Registration of any Registerable Notes, the Company
shall, subject to the terms and conditions of this Agreement, as expeditiously
as reasonably possible:
(a) In accordance with subsection 2.2, prepare and file with
the Commission and/or the applicable Canadian Securities Authority, as
appropriate, a Registration Statement with respect to such Registerable
Notes and use its best efforts to cause such Registration Statement to
become effective and/or a final receipt to be issued with respect to
the Canadian Prospectus.
(b) Prepare and file with the Commission and/or the applicable
Canadian Securities Authority, as appropriate, such amendments
(including post-effective amendments) to such Registration Statement,
supplements to the related Prospectus used in connection with such
Registration Statement, and otherwise use its best efforts, to the end
that such Registration Statement reflects the plan of distribution of
the securities registered thereunder that is included in the relevant
Notice of Offering, if any, in respect of a Demand Registration and,
subject to subsection 2.2, is effective until the completion of the
distribution contemplated by such Registration Statement or so long
thereafter as a dealer is required by law to deliver a Prospectus in
connection with the offer and sale of the Registerable Notes covered by
such Registration Statement.
(c) Notify the Securities Holders selling Registerable Notes,
at any time when
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a Prospectus relating thereto is required to be delivered under the
Securities Act, when the Company becomes aware of the occurrence of any
event, as a result of which the Prospectus included in such
Registration Statement (as then in effect) contains an untrue statement
of material fact or omits to state a material fact necessary to make
the statements therein, in light of the circumstances under which they
were made, not misleading, and use its best efforts to prepare and file
promptly, and in any event within ten (10) days, with the Commission
and/or the applicable Canadian Securities Authority, as appropriate, a
supplement or amendment to such Prospectus so that, as thereafter
delivered to purchasers of such Registerable Notes, such Prospectus
will not contain an untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(d) Provide to any Securities Holder requesting to include
Registerable Notes in such Registration Statement and any managing
underwriter participating in any distribution thereof, and to any
attorney, accountant or other agent retained by such Securities Holder
or managing underwriter, reasonable access to appropriate officers and
directors of the Company to ask questions and to obtain information
reasonably requested by any such Person in connection with such
Registration Statement or any amendment thereto, provided, however,
that (i) in connection with any such access or request, any such
requesting Persons shall cooperate to the extent reasonably practicable
to minimize any disruption to the operation by the Company of its
business and (ii) any records, information or documents shall be kept
confidential by such requesting Persons, unless (x) such records,
information or documents are in the public domain or otherwise publicly
available other than through disclosure by such requesting party or (y)
disclosure of such records, information or documents is required by
court or administrative order or by applicable law (including, without
limitation, the Securities Act).
(e) Furnish to the participating Securities Holders, such
number of copies of a Prospectus, including a Preliminary Prospectus,
in conformity with the requirements of the Securities Act and/or
applicable Canadian Securities Laws, and such other documents as they
may reasonably request in order to facilitate the disposition of
Registerable Notes owned by them.
(f) Use its best efforts to register and qualify the
securities covered by such Registration Statement under such other
securities or "Blue Sky" laws of such jurisdictions in the United
States as shall be reasonably requested by the Securities Holders,
provided that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states or
jurisdictions or to make any filing or take any other action which
could subject it to taxation as a result of such filing.
(g) Enter into and perform its obligations under a Purchase
Agreement, if the offering is an underwritten offering, in usual and
customary form, with the managing
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<PAGE> 17
underwriter of such underwritten offering; provided, however, that each
Securities Holder participating in such Securities Holder Public Sale
Event shall also enter into and perform its obligations under such
Purchase Agreement so long as such obligations are usual and customary
obligations of selling stockholders in a registered public offering.
4.3. Agreements Related to Offerings. Subject to the terms
and conditions hereof, in connection with any Demand Registration:
(a) The Company will cooperate with any underwriters for, and
the Securities Holders of, the Registerable Notes proposed to be sold
pursuant to a Registration Statement , and will, unless the parties to
the Purchase Agreement otherwise agree, enter into a Purchase Agreement
not inconsistent with the terms and conditions of this Agreement and
containing such other terms and conditions of a type and form
reasonable and customary for companies of similar size and credit
rating (including, but not limited to, such provisions for delivery of
a "comfort letter" and legal opinion as are customary), and take all
such other reasonable actions as are necessary or advisable to permit,
expedite and facilitate the disposition of such Registerable Notes in
the manner contemplated by such Registration Statement in each case to
the same extent as if all the Registerable Notes then being offered
were for the account of the Company.
(b) Neither a Registration Statement nor any amendment or
supplement thereto will be filed by the Company until counsel for the
Initiating Securities Holder or the securities Holder delivering the
relevant effective Securities Holder Sale Notice shall have had a
reasonable opportunity to review the same and each Securities Holder
participating in such Sale Event shall have had a reasonable
opportunity to exercise its rights under subsection 4.2(d) with respect
thereto. No amendment to such Registration Statement naming any
Securities Holder as a selling security holder shall be filed with the
Commission and/or the applicable Canadian Securities Authority, as
applicable, until such Securities Holder shall have had a reasonable
opportunity to review such Registration Statement as originally filed.
Neither such Registration Statement nor any related Prospectus or any
amendment or supplement thereto shall be filed by the Company with the
Commission and/or the applicable Canadian Securities Authority, as
applicable, which shall be disapproved (for reasonable cause) by the
managing underwriters named therein or any participating Securities
Holders within a reasonable period after notice thereof.
(c) The Company will use its reasonable efforts to keep the
Securities Holders informed of the Company's best estimate of the
earliest date on which such Registration Statement or any
post-effective amendment thereto will become effective and/or the
Canadian Prospectus will be receipted and will notify each Securities
Holder and the managing underwriters participating in the distribution
pursuant to such Registration Statement promptly (i) when such
Registration Statement or any post-effective amendment to such
Registration Statement becomes effective and/or when a final receipt is
issued in respect of such Canadian Prospectus, (ii) of any request by
the Commission
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<PAGE> 18
and/or the applicable Canadian Securities Authority, as applicable, for
an amendment or any supplement to such Registration Statement or any
related Prospectus, (iii) of the issuance by the Commission or any
Canadian Securities Authority of any stop order suspending the
effectiveness of such Registration Statement or of any order preventing
or suspending the use of any related Prospectus or the initiation or
threat of any proceeding for that purpose, (iv) of the suspension of
the qualification of any Unsecured PIK Notes included in such
Registration Statement for sale in any jurisdiction or the initiation
or threat of a proceeding for that purpose, (v) of any determination by
the Company that an event has occurred (the nature and pendency of
which need not be disclosed during a "black-out period" pursuant to
subsection 3.1) which makes untrue any statement of a material fact
made in such Registration Statement or any related Prospectus or which
requires the making of a change in such Registration Statement or any
related Prospectus in order that the same will not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading and otherwise comply with applicable securities laws and
(vi) of the completion of the distribution contemplated by such
Registration Statement if it relates to a Company Sale Event.
(d) In the event of the issuance of any stop order suspending
the effectiveness of such Registration Statement or of any order
suspending or preventing the use of any related Prospectus or
suspending the qualification of any Unsecured PIK Notes included in
such Registration Statement for sale in any jurisdiction, the Company
will use its reasonable best efforts promptly to obtain its withdrawal.
(e) The Company agrees to otherwise use its best efforts to
comply with all applicable rules and regulations of the Commission and
any Canadian Securities Authorities, and make available to its security
holders (within the meaning of Rule 158 under the Securities Act), as
soon as reasonably practicable, but not later than fifteen months after
the effective date of such Registration Statement, an earnings
statement covering the period of at least twelve months beginning with
the first full fiscal quarter after the effective date of such
Registration Statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158
promulgated thereunder.
(f) The Company shall, subject to permitted "black-out"
periods, upon the happening of any event of the nature described in
subsection 4.3(c)(ii), 4.3(c)(iii) or 4.3(c)(v), as expeditiously as
reasonably possible, prepare a supplement or post-effective amendment
to the applicable Registration Statement or a supplement to the related
Prospectus, any document incorporated therein by reference or file any
other required documents and deliver a copy thereof to each Securities
Holder so that, as thereafter delivered to the purchasers of the
Registerable Notes being sold thereunder, such Prospectus will not
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading and shall
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<PAGE> 19
otherwise comply with all applicable securities laws.
(g) Upon receipt of any notice from the Company of the
happening of any event of the kind described in subsection 4.2(c), each
Securities Holder will immediately discontinue disposition of the
Registerable Notes pursuant to the Registration Statement relating to
such Registerable Notes until such Securities Holder's receipt of the
copies of the supplemented or amended Prospectus contemplated by
subsection 4.2(c), or until such Securities Holder has been advised in
writing by the Company that the use of the Prospectus may be resumed
and has received copies of any additional or supplemental filings which
are incorporated by reference therein. If reasonably requested by the
Company, the Securities Holders will, or will request the managing
underwriter or underwriters, if any, to, deliver to the Company all
copies, other than permanent file copies, of the Prospectus covering
the Registerable Notes current at the time of receipt of such notice.
4.4. Certain Expenses. Subject to subsection 2.4(b), the
Company shall pay all fees, disbursements and expenses in connection with the
performance of its obligations hereunder, including, without limitation, all
registration and filing fees, printing expenses, auditors' fees, listing fees,
registrar and transfer agents' fees, reasonable fees and disbursements of
counsel to the Securities Holders (provided that the Company need not pay for
more than the U.S. counsel and/or one Canadian counsel for such Securities
Holders) and counsel for the Company, expenses (including reasonable fees and
disbursements of counsel) of complying with applicable securities or "Blue Sky"
laws and the fees of the NASD or other governing body of any securities exchange
on which the Unsecured PIK Notes is listed in connection with its review of any
offering contemplated in such Registration Statement , but not including
underwriting fees, discounts and commissions.
4.5. Public Reporting; Rule 144. (a) The Company agrees to:
(i) file with the Commission in a timely manner all reports
and other documents required of the Company under the Securities Act or
the Exchange Act;
(ii) file with any applicable Canadian Governmental
Authorities in a timely manner all documents required of the Company by
such Governmental Authorities and of any securities exchange on which
the securities of the Company are listed or quoted under any applicable
Canadian securities laws; and
(iii) furnish to any Securities Holder forthwith upon request
(A) a written statement by the Company that it has complied with the
current public information and reporting requirements of Rule 144 or
any similar rule or regulation hereafter adopted by the Commission and
the Exchange Act, (B) a copy of the most recent annual or quarterly
report of the Company and such other reports and documents required to
be filed by the Company pursuant to subsections 4.5(a)(i) or
4.5(a)(ii), and (C) such other information as is available to the
Company without unreasonable cost or expense and may be reasonably
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<PAGE> 20
requested in connection with availing any Securities Holder of any rule
or regulation of the Commission which permits the selling of any such
securities without Registration or pursuant to such rule or regulation.
(b) During any period in which the Company is not subject to
Section 13 or 15(d) of the Exchange Act, the Company shall, upon the request of
any Securities Holder, make available to such Securities Holder and any
prospective purchaser of Registerable Notes designated by such Securities Holder
the information required by Rule 144(c) in order to permit resales of the
Registerable Notes held by such Securities Holder pursuant to Rule 144.
(c) Any Securities Holder selling Registerable Notes shall
promptly deliver to the Company a copy of any other documentation required to be
filed by such Securities Holder with any Governmental Authority in connection
with such sale, including, with respect to sales under Rule 144, a copy of the
completed Form 144 filed by such Securities Holder with the Commission.
4.6. Limitations on Subsequent Registration Rights. From and
after the date of this Agreement, the Company shall not, without the prior
written consent of Securities Holders owning a majority of the Registerable
Notes held by Securities Holders at such time, enter into any agreement (other
than this Agreement) which would allow any holder or prospective holder of
Unsecured PIK Notes (a) on demand of such holder to cause the Company to effect
a Registration of such securities prior to the second anniversary of the
Effective Date, or (b) to include such securities in any Registration Statement
filed under subsection 2.2 hereof to the exclusion of Registerable Notes that
any Securities Holder desires to include in any such offering.
4.7. Indemnification and Contribution. (a) In connection with
a Demand Registration, provisions substantially in conformity with the following
provisions shall be contained in the related Purchase Agreement unless the
parties to such Purchase Agreement agree otherwise:
(i) The Company shall agree to indemnify and hold harmless
each Securities Holder and each Person, if any, who controls such
Securities Holder within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act against any losses, claims,
damages or liabilities, joint or several, or actions in respect thereof
to which such Securities Holder or controlling Person may become
subject under the Securities Act, or otherwise (collectively,
"Losses"), insofar as such Losses arise out of, or are based upon, any
untrue statement or alleged untrue statement of any material fact
contained in such Registration Statement, any related Preliminary
Prospectus or any related Prospectus, or any amendment or supplement
thereto, or arise out of, or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and will
reimburse such Securities Holder or controlling Person for any legal or
other expenses reasonably incurred by them in connection with
investigating or defending any such Loss; provided, however, that the
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<PAGE> 21
Company shall not be so liable to the extent that any such Loss arises
out of, or is based upon, an untrue statement or alleged untrue
statement of a material fact or an omission or alleged omission to
state a material fact in said Registration Statement, said Preliminary
Prospectus, said Prospectus or any said amendment or supplement in
reliance upon, and in conformity with, written information furnished to
the Company by or on behalf of a Securities Holder specifically for use
therein. Notwithstanding the foregoing, the Company shall not be liable
in any such case to the extent that any such Loss arises out of, or is
based upon, an untrue statement or alleged untrue statement or omission
or alleged omission made in any Preliminary Prospectus if (A) such
Securities Holder failed to send or deliver a copy of the Prospectus
with or prior to the delivery of written confirmation of the sale of
Registerable Notes to the Person asserting such Loss or who purchased
such Registerable Notes which is the subject thereof if, in either
case, such delivery is required by the Securities Act and (B) the
Prospectus would have corrected such untrue statement or omission or
alleged untrue statement or alleged omission; and the Company shall not
be liable in any such case to the extent that any such Loss arises out
of, or is based upon, an untrue statement or alleged untrue statement
of a material fact or omission or alleged omission to state a material
fact in the Prospectus, if such untrue statement or alleged untrue
statement, omission or alleged omission is corrected in an amendment or
supplement to the Prospectus and if, having previously been furnished
by or on behalf of the Company with copies of the Prospectus as so
amended or supplemented, such Securities Holder thereafter fails to
deliver such Prospectus as so amended or supplemented, prior to or
concurrently with the sale of Registerable Notes to the Person
asserting such Loss or who purchased such Registerable Notes which is
the subject thereof if, in either case, such delivery is required by
the Securities Act. This indemnity agreement will be in addition to any
liability which the Company may otherwise have.
(ii) Each Securities Holder severally shall agree to indemnify
and hold harmless the Company, each of its officers and directors who
sign the Registration Statement, each other Securities Holder and each
Person, if any, who controls the Company or such other Securities
Holder within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act against any Losses to which the Company,
such officers or directors, such other Securities Holder or such
controlling Person may become subject under the Securities Act, or
otherwise, insofar as such Losses arise out of, or are based upon, any
untrue statement or alleged untrue statement of any material fact
contained in such Registration Statement, any related Preliminary
Prospectus or any related Prospectus, or any amendment or supplement
thereto, or arise out of, or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and will
reimburse the Company, such officers or directors, such other
Securities Holder or such controlling Person for any legal or other
expenses reasonably incurred by them in connection with investigating
or defending any such Loss, in each case to the extent, but only to the
extent, that any such Loss arises out of, or is based upon, an untrue
statement
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<PAGE> 22
or alleged untrue statement of a material fact or an omission or
alleged omission to state a material fact in said Registration
Statement, said Preliminary Prospectus or said Prospectus, or any said
amendment or supplement in reliance upon, and in conformity with,
written information furnished to the Company by or on behalf of such
Securities Holder specifically for use therein; provided, however, that
the liability of each Securities Holder on account of the foregoing
shall be limited to an amount equal to the net proceeds of the sale of
Registerable Notes by such Securities Holder in the offering which gave
rise to the liability.
(iii) The Company shall agree to indemnify and hold harmless
each underwriter and each Person, if any, who controls any such
underwriter within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act against any Losses to which such
underwriter or controlling Person may become subject under the
Securities Act, or otherwise, insofar as such Losses arise out of, or
are based upon, any untrue statement or alleged untrue statement of any
material fact contained in such Registration Statement, any related
Preliminary Prospectus or any related Prospectus, or any amendment or
supplement thereto, or arise out of, or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and
will reimburse such underwriter or controlling Person for any legal or
other expenses reasonably incurred by them in connection with
investigating or defending any such Loss; provided, however, that the
Company shall not be so liable to the extent that any such Loss arises
out of, or is based upon, an untrue statement or alleged untrue
statement of a material fact or an omission or alleged omission to
state a material fact in said Registration Statement, said Preliminary
Prospectus or said Prospectus or any said amendment or supplement in
reliance upon, and in conformity with, written information furnished to
the Company by or on behalf of such underwriter specifically for use
therein. Notwithstanding the foregoing, the Company shall not be liable
in any such case to the extent that any such Loss arises out of, or is
based upon, an untrue statement or alleged untrue statement or omission
or alleged omission made in any Preliminary Prospectus if (A) such
underwriter failed to send or deliver a copy of the Prospectus with or
prior to the delivery of written confirmation of the sale of
Registerable Notes to the Person asserting such Loss or who purchased
such Registerable Notes which is the subject thereof if, in either
case, such delivery is required by the Securities Act and (B) the
Prospectus would have corrected such untrue statement or omission or
alleged untrue statement or alleged omission; and the Company shall not
be liable in any such case to the extent that any such Loss arises out
of, or is based upon, an untrue statement or alleged untrue statement
of a material fact or omission or alleged omission to state a material
fact in the Prospectus, if such untrue statement or alleged untrue
statement, omission or alleged omission is corrected in an amendment or
supplement to the Prospectus and if, having previously been furnished
by or on behalf of the Company with copies of the Prospectus as so
amended or supplemented, such underwriter thereafter negligently fails
to deliver such Prospectus as so amended or supplemented, prior to or
concurrently with the sale of Registerable Notes to the Person
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<PAGE> 23
asserting such Loss or who purchased such Registerable Notes which is
the subject thereof if, in either case, such delivery is required by
the Securities Act. This indemnity agreement will be in addition to any
liability which the Company may otherwise have, provided that the
Company shall only be required to provide the indemnification described
in this subsection 4.7(a)(iii) to an underwriter and each Person, if
any, who controls such underwriter if such underwriter agrees to
indemnification provisions substantially in the form set forth in
subsection 4.7(b).
(iv) Each Securities Holder severally shall agree to indemnify
and hold harmless each underwriter and each Person, if any, who
controls such underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act against any Losses,
joint or several, or actions in respect thereof to which such
underwriter or such controlling Person may become subject under the
Securities Act, or otherwise, insofar as such Losses arise out of, or
are based upon, any untrue statement or alleged untrue statement of any
material fact contained in such Registration Statement, any related
Preliminary Prospectus or any related Prospectus, or any amendment or
supplement thereto, or arise out of, or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and
will reimburse such underwriter or such controlling Person for any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such Loss, in each case to the extent,
but only to the extent, that any such Loss arises out of, or is based
upon, an untrue statement or alleged untrue statement of a material
fact or an omission or alleged omission to state a material fact in
said Registration Statement, said Preliminary Prospectus or said
Prospectus, or any said amendment or supplement in reliance upon, and
in conformity with, written information furnished to the Company by or
on behalf of such Securities Holder specifically for use therein;
provided that the liability of such Securities Holder on account of the
foregoing shall be limited to an amount equal to the net proceeds of
the sale of Registerable Notes by such Securities Holder in the
offering which gave rise to the liability. Notwithstanding the
foregoing, such Securities Holder shall not be liable in any such case
to the extent that any such Loss arises out of, or is based upon, an
untrue statement or alleged untrue statement or omission or alleged
omission made in any Preliminary Prospectus if (A) such underwriter
failed to send or deliver a copy of the Prospectus with or prior to the
delivery of written confirmation of the sale of Registerable Notes to
the Person asserting such Loss or who purchased such Registerable Notes
which is the subject thereof if, in either case, such delivery is
required by the Securities Act and (B) the Prospectus would have
corrected such untrue statement or omission or alleged untrue statement
or alleged omission; and such Securities Holder shall not be liable in
any such case to the extent that any such Loss arises out of, or is
based upon, an untrue statement or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact
in the Prospectus, if such untrue statement or alleged untrue
statement, omission or alleged omission is corrected in an amendment or
supplement to the Prospectus and if, having previously been furnished
with copies of the Prospectus as so amended or supplemented, such
underwriter thereafter negligently fails to deliver such Prospectus as
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<PAGE> 24
so amended or supplemented, prior to or concurrently with the sale of
Registerable Notes to the Person asserting such Loss or who purchased
such Registerable Notes which is the subject thereof if, in either
case, such delivery is required by the Securities Act. No Securities
Holder shall be required to provide the indemnification described in
this subsection 4.7(a)(iv) to an underwriter or any Person who controls
such underwriter if such underwriter has not agreed to indemnification
provisions substantially in the form set forth in subsection 4.7(b).
(v) Promptly after receipt by an indemnified party pursuant to
the indemnification provisions of such Purchase Agreement of notice of
any claim or the commencement of any action, the indemnified party
shall, if a claim in respect thereof is to be made against the
indemnifying party pursuant to such indemnification provisions, notify
the indemnifying party in writing of the claim or the commencement of
that action; provided, however, that the failure to notify the
indemnifying party shall not relieve it from any liability which it may
have to the indemnified party otherwise than pursuant to the
indemnification provisions of such Purchase Agreement unless the
indemnifying party is materially prejudiced by such lack of notice. If
any such claim or action shall be brought against an indemnified party,
and it shall notify the indemnifying party thereof, the indemnifying
party shall be entitled to participate in defense of such claim, and,
to the extent that it wishes, jointly with any other similarly notified
indemnifying party, to assume the defense thereof with counsel
reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume
the defense of such claim or action, (x) the indemnifying party shall
not be liable to the indemnified party pursuant to the indemnification
provisions hereof or of such Purchase Agreement for any legal or other
expenses subsequently incurred by the indemnified party in connection
with the defense thereof other than reasonable costs of investigation,
(y) the indemnifying party shall not be liable for the costs and
expenses of or Losses arising out of any settlement of such claim or
action unless such settlement was effected with the consent of the
indemnifying party and (z) the indemnified party shall be obligated to
cooperate with the indemnifying party in the investigation of such
claim or action; provided, however, that the Securities Holders
(together with their respective controlling Persons) and the
underwriters (together with their respective controlling Persons) shall
each as a separate group have the right to employ one separate counsel
to represent such Securities Holders and such underwriters (and their
respective controlling Persons) who may be subject to liability arising
out of any claim in respect of which indemnity may be sought by such
Securities Holders and underwriters against the Company pursuant to the
indemnification provisions of such Purchase Agreement if, in the
reasonable judgment of either Securities Holders' counsel or counsel
for the underwriters, there exists an actual or potential conflict of
interest between such Securities Holders (and its controlling persons)
on the one hand and such underwriters (and their controlling persons)
on the other, and in that event the reasonable fees and expenses of
both such separate counsel shall also be paid by the Company.
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(b) As a condition to agreeing in any Purchase Agreement to
the indemnification provisions described in subsection 4.7(a)(iii) and
4.7(a)(iv) in favor of an underwriter participating in the offering covered by
the related Registration Statement and its controlling Persons, the Company and
the Securities Holders participating in an offering pursuant to such
Registration Statement may require that such underwriter agree in the Purchase
Agreement to provisions substantially in the form set forth in subsection
4.7(a)(v) and to severally indemnify and hold harmless the Company, each of its
officers and directors who sign such Registration Statement, each Securities
Holder participating in such offering and each Person, if any, who controls the
Company or such Securities Holder within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act against any Losses to which the
Company, such officers and directors, such Securities Holder or such controlling
Person may become subject under the Securities Act, or otherwise, insofar as
such Losses arise out of, or are based upon, any untrue statement or alleged
untrue statement of any material fact contained in such Registration Statement
in which such underwriter is named as an underwriter, any related Preliminary
Prospectus or any related Prospectus, or any amendment or supplement thereto, or
arise out of, or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and to reimburse the Company, such officers
and directors, such Securities Holder or such controlling Person for any legal
or other expenses reasonably incurred by them in connection with investigating
or defending any such Loss in each case to the extent, but only to the extent,
that any such Loss arises out of, or is based upon, an untrue statement or
alleged untrue statement of a material fact or an omission or alleged omission
to state a material fact in said Registration Statement, said Preliminary
Prospectus or said Prospectus or any said amendment or supplement in reliance
upon, and in conformity with, written information furnished to the Company by or
on behalf of such underwriter specifically for use therein.
(c) In order to provide for just and equitable contribution
between the Company and such Securities Holders in circumstances in which the
indemnification provisions described in this subsection 4.7 and contained in any
Purchase Agreement are for any reason insufficient or inadequate to hold the
indemnified party harmless (other than as a result of their nonapplicability in
accordance with their terms), the Company and such Securities Holders shall
contribute to the aggregate Losses (including any investigation, legal and other
expenses reasonably incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claims asserted, but after
deducting any contribution actually received from Persons other than the Company
and such Securities Holders) incurred by the Company and one or more of its
directors or its officers who sign such Registration Statement or such
Securities Holders or any controlling Person of any of them, in such proportion
as is appropriate to reflect their relative degrees of fault in connection with
the actions which resulted in such Losses, as well as any other relevant
equitable considerations. The relative fault of the Company and of such
Securities Holder shall be determined by reference to, among other things,
whether the untrue or allegedly untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or by such Securities Holder and the parties' relative
intent, knowledge, access to information and opportunity to correct or
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<PAGE> 26
prevent such statement or omission; provided, however, that the liability of
each such Securities Holder to make such contribution shall be limited to an
amount equal to the net proceeds of the sale of Registerable Notes by such
Securities Holder in the offering which gave rise to the liability. As among
themselves, such Securities Holders agree to contribute to amounts payable by
other such Securities Holders in such manner as shall, to the extent permitted
by law, give effect to the provisions in such Purchase Agreement comparable to
subsection 4.7(a)(ii). The Company and such Securities Holders agree that it
would not be just and equitable if their respective obligations to contribute
pursuant to this subsection 4.7(c) were to be determined by pro rata allocation
(other than as set forth above) of the aggregate Losses by reference to the
proceeds realized by such Securities Holders in a sale pursuant to said
Registration Statement or said Prospectus or by any other method of allocation
which does not take account of the considerations set forth in this subsection
4.7(c). No Person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution under
this subsection from any Person who was not guilty of such fraudulent
misrepresentation.
(d) The Company and the Securities Holders participating in an
offering pursuant to a Registration Statement agree that, if the underwriters
participating in a Public Sale Event are agreeable, the Purchase Agreement, if
any, relating to such Registration Statement shall contain provisions to the
effect that in order to provide for just and equitable contribution between such
underwriters on the one hand and the Company and such Securities Holders on the
other hand in circumstances in which the indemnification provisions of such
Purchase Agreement are for any reason insufficient or inadequate to hold the
indemnified party harmless (other than as a result of their non-applicability in
accordance with their terms), the Company and such Securities Holders on the one
hand and such underwriters on the other hand will contribute on the basis herein
set forth to the aggregate Losses (including any investigation, legal and other
expenses incurred in connection with, and any amount paid in settlement of, any
action, suit or proceeding or claims asserted, but after deducting any
contribution actually received from Persons other than the Company and such
Securities Holders and such underwriters), incurred by the Company and one or
more of its directors or its officers who sign such Registration Statement or
such Securities Holders or such underwriters, or any controlling Person of any
of them, in such proportion as is appropriate to reflect their relative degrees
of fault in connection with the actions which resulted in such Losses, as well
as any other relevant equitable considerations. The relative fault of the
Company, of such Securities Holders and of such underwriter shall be determined
by reference to, among other things, whether the untrue or allegedly untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company, by such Securities
Holders or by such underwriter and the parties, relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. Notwithstanding the provisions set forth above, (x) no underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the Unsecured PIK Notes underwritten by it and distributed
to the public were offered to the public exceeds the amount of any damages which
such underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue
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<PAGE> 27
statement or omission or alleged omission and (y) the liability of each such
Securities Holder to make such contribution shall be limited to an amount equal
to the net proceeds of the sale of Registerable Notes by such Securities Holder
in the offering which gave rise to the liability. As among themselves, such
Securities Holders agree to contribute to amounts payable by other such
Securities Holders in such manner as shall, to the extent permitted by law, give
effect to the provisions in such Purchase Agreement comparable to subsection
4.7(a)(ii). As between the Company and such Securities Holders, such parties
agree that it would not be just and equitable if their respective obligations to
contribute pursuant to this subsection 4.7(d) were to be determined by pro rata
allocation (other than as set forth above) of the aggregate Losses by reference
to the proceeds realized by such Securities Holders in a sale pursuant to said
Registration Statement or said Prospectus or by any other method of allocation
which does not take account of the considerations set forth in this subsection
4.7(d). No Person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution under the
provisions set forth above from any Person who was not guilty of such fraudulent
misrepresentation.
(e) The obligations of the Company and the Securities Holders
participating in any distribution of Registerable Notes under the provisions of
this subsection 4.7 and provisions in any Purchase Agreement substantially
similar to subsections 4.7(a), 4.7(b), 4.7(c) or 4.7(d) shall survive the
termination of any or all of the other provisions of this Agreement or such
Purchase Agreement.
4.8. Underwritten Offerings. If at any time any of the
Securities Holders participating in a Demand Registration desire to sell
Registerable Notes in an underwritten offering, the investment banker or
investment bankers that will manage the offering will be selected by (a) if such
Demand Registration was initiated by Initiating Securities Holders, the
Initiating Securities Holders owning a majority of the aggregate principal
amount of Registerable Notes that all such Initiating Securities Holders are
seeking to include in the related Sale Event and (b) if such Demand Registration
was initiated by an individual Securities Holder, the Securities Holder
requesting such Securities Holder Public Sale Event, provided that in any event,
such investment banker or bankers must be reasonably satisfactory to the
Company.
4.9. Transfer of Rights Under this Agreement; Transfers of
Registerable Notes. (a) At any time, the rights and obligations of a Securities
Holder under this Agreement may be transferred by a Securities Holder to a
transferee of Registerable Notes, provided that, within a reasonable period of
time (but in no event later than 10 days) after such transfer, (i) the
transferring Securities Holder shall have furnished the Company and the other
Securities Holders written notice of the name and address of such transferee and
the Registerable Notes with respect to which such rights are being transferred
and (ii) such transferee shall furnish the Company and the Securities Holders
(other than the transferring Securities Holder) a copy of a duly executed
Supplemental Addendum by which such transferee (A) assumes all of the
obligations and liabilities of its transferor hereunder, (B) enjoys all of the
rights of its transferor hereunder and (C) agrees to be bound hereby.
Notwithstanding the foregoing, a Securities Holder's transfer of its rights and
obligations under this Agreement in accordance with the preceding sentence to a
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transferee of less than all of the Registerable Notes owned by such transferor
shall not be effective to transfer the right to request a Demand Registration
pursuant to subsection 2.1 hereof unless (x) at the time of such transfer the
transferor Securities Holder has not exhausted its right to request such a
Demand Registration and (y) the transfer is of at least 50% of the issued and
then outstanding Unsecured PIK Notes , provided, that, subject to the Company's
rights under subsection 4.10 of this Agreement, such a transfer of the right to
request a Demand Registration shall not divest the transferor Securities Holder
of its right to request a Demand Registration pursuant to subsection 2.1 hereof.
(b) Except with respect to transfers pursuant to subsection
4.9(a), a transferee of Registerable Notes shall neither assume any liabilities
or obligations nor enjoy any rights hereunder and shall not be bound by any of
the terms hereof.
4.10. Termination of Rights. The rights granted under this
Agreement shall terminate as to each Securities Holder at such time as such
Securities Holder shall receive, either before or after the Company's receipt of
a Securities Holder Sale Notice or a Piggybacking Notice, an opinion of counsel
to the Company in form reasonably satisfactory to counsel to such Securities
Holder that all of the Registerable Notes then held by such Securities Holder
can be sold within a given three (3) month period commencing on the date of such
opinion in a transaction or transactions exempt from the Registration
requirements of the Securities Act.
Section 5. Sequencing of Public Sale Events.
5.1. Effective Notice Period. Subject to the last sentence of
this subsection 5.1, during the term of this Agreement, no priority of right
shall exist between or among Securities Holders, with respect to providing a
Notice of Offering with respect to, and effecting, a Public Sale Event. Once
properly given, a Securities Holder Sale Notice shall be effective (and shall
preclude any such Notice of Offering by another party except in accordance with
clause (ii) of Section 2.3(b)) during the period (the "Effective Notice Period")
commencing on the date of such Notice of Offering and ending on the earliest of
(a) withdrawal of such Notice of Offering (notice of which shall be promptly
effected in the same manner as such Notice of Offering), (b) the abandonment of
the Securities Holder Public Sale Event to which such Notice of Offering relates
(notice of which shall be promptly effected in the same manner as such Notice of
Offering) and (c) the later of (i) 150 days after such a Notice of Offering has
been given, provided that the Registration Statement relating to such Notice of
Offering has been declared effective within 90 days of such Notice of Offering,
and (ii) 90 days after the closing date of the Public Sale Event to which such
Notice of Offering relates. Upon the termination of an Effective Notice Period,
any Securities Holder so entitled pursuant to subsection 2.1 can provide a
Notice of Offering, provided that if such Notice of Offering is given within 12
months after the end of an Effective Notice Period by the party that gave the
immediately preceding Notice of Offering, any other party shall, for the 45-day
period following its receipt of such Notice of Offering, have the right to
preempt such Notice of Offering by itself delivering a Notice of Offering.
5.2. Restrictive Legend on Certificates. (a) Each Certificate
evidencing
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Unsecured PIK Notes distributed pursuant to the Plan to the Securities Holders
shall, subject to paragraph (b) below, be stamped or otherwise imprinted with a
conspicuous legend in the following form:
"The securities evidenced by this certificate were issued
pursuant to an exemption from registration under the
Securities Act of 1933, as amended (the "Act"), and may be
offered, sold or otherwise transferred only pursuant to a
Registration Statement effective under the Act or an exemption
from the provisions of Section 5 of the Act."
(b) A holder of a certificate evidencing Unsecured PIK Notes
bearing the legend specified in paragraph (a) shall be entitled to receive from
the Company, whether or not in connection with a sale or proposed sale, a new
certificate or certificates evidencing an identical principal amount of
Unsecured PIK Notes (the transfer expenses for which shall be paid by the
Company) but without such legend at such time as (i) such Unsecured PIK Notes
are sold pursuant to a Registration Statement effective under the Securities
Act, (ii) such holder furnishes the Company with a certificate to the effect
that such holder is not an affiliate or an "underwriter" within the meaning of
Section 1145(b) of the Bankruptcy Code and, upon the request of the Company, an
opinion of counsel reasonably satisfactory to the Company to such effect and to
the effect that such Unsecured PIK Notes may be sold without registration under
the Securities Act or (iii) the registration rights granted in this Agreement
otherwise terminate in accordance with subsection 4.10. The Unsecured PIK Notes
represented by any such replacement certificate issued without the legend
specified in paragraph (a) pursuant to the immediately preceding sentence shall
cease to be Registerable Notes for all purposes of this Agreement. In addition,
if any Unsecured PIK Notes are held in global form at the time of such issuance,
such replacement Unsecured PIK Notes shall, upon written request of such holder
or beneficial owner, be issued in global form through the reissuance of the
global certificate representing the Unsecured PIK Notes in a principal amount
increased to reflect the principal amount of such replacement Unsecured PIK
Notes. In such event, such replacement Unsecured PIK Notes shall not be issued
in physical certificated form.
Section 6. Representations and Warranties of the Company.
In connection with the Registration Statement in respect of
any Demand Registration, the Company shall, on the date of effectiveness of such
Registration Statement or the date of the final receipt for the Canadian
Prospectus (the "effective date"), certify to each Securities Holder in a
certificate of a Responsible Officer of the Company to the effect that the
representations and warranties set forth below are true and correct at and as of
the effective date. In connection with any other Sale Event in which Securities
Holders participate, except as otherwise may be agreed upon by such
participating Securities Holders and the Company, the Company shall represent
and warrant in the Purchase Agreement relating to such Securities Holder Public
Sale Event to the Securities Holders and any underwriters participating in such
Securities Holder Public Sale Event as follows (except as otherwise indicated,
each reference in this Section to "the Registration Statement" shall refer to a
Registration Statement in respect of any Demand Registration or other such Sale
Event in which Securities Holders participate, including all information deemed
to be a
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<PAGE> 30
part thereof, as amended, and each reference to "the Prospectus" shall refer to
the related Prospectus):
(a) (i) When the Registration Statement became (in the case of
a Demand Registration to be filed pursuant to a Shelf Registration) or
shall become effective, the Registration Statement did or will comply
as of its effective date in all material respects with the applicable
requirements of the Securities Act and the rules and regulations
thereunder; (ii) when the Prospectus is filed in accordance with Rule
424(b) and/or in accordance with applicable Canadian Securities Laws,
the Prospectus (and any supplements thereto) will comply in all
material respects with the applicable requirements of the Securities
Act and/or applicable Canadian Securities Laws and the rules and
regulations thereunder; (iii) the Registration Statement did not or
will not as of its effective date contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not
misleading; and (iv) the Prospectus, if not filed pursuant to Rule
424(b), did not or will not as of the date thereof, and on the date of
any filing pursuant to Rule 424(b), the Prospectus (together with any
supplement thereto) will not, include any untrue statement of a
material fact or omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading, and if filed pursuant to Canadian
Securities Law will constitute full, true and plain disclosure of all
material facts relating to the securities offered thereunder; provided,
however, that the Company makes no representations or warranties as to
the information contained in or omitted from the Registration
Statement, or the Prospectus (or any supplement thereto) in reliance
upon and in conformity with information furnished in writing to the
Company by or on behalf of any Securities Holder specifically for use
in connection with the preparation of the Registration Statement or the
Prospectus (or any supplement thereto) or any information furnished in
writing to the Company by or on behalf of any underwriter specifically
for use in connection with the preparation of the Registration
Statement or the Prospectus (or any supplement thereto), other than
that the Company has no knowledge of any such untrue statement or
omission in respect of such information.
(b) The public accountants who certified the Company's
financial statements in the Registration Statement are independent
certified public accountants within the meaning of the Securities Act
and the applicable published rules and regulations thereunder, or, to
the extent that Canadian law is deemed to control pursuant to the terms
of the Securities Act, within the meaning of such controlling Canadian
law; the historical consolidated financial statements, together with
the related schedules and notes, forming part of the Registration
Statement and the Prospectus comply in all material respects with the
requirements of the Securities Act and/or applicable Canadian
Securities Laws and the rules and regulations thereunder and have been
prepared, and present fairly in all material respects the consolidated
financial condition, results of operations and changes in financial
condition of the Company and its consolidated Subsidiaries at the
respective
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<PAGE> 31
dates and for the respective periods indicated, in accordance with
generally accepted accounting principles applied consistently
throughout such periods (except as specified therein); and the
historical consolidated financial data set forth in the Prospectus are
derived from the accounting records of the Company and its consolidated
Subsidiaries, and are a fair presentation of the data purported to be
shown; and the pro forma consolidated financial statements (if any),
together with the related notes, forming part of the Registration
Statement and the Prospectus, comply in all material respects with the
requirements of all applicable securities laws, including, without
limitation, Regulation S-X of the Securities Act, to the extent
applicable.
(c) Except as may be set forth in the Prospectus, each member
of the Philip Group has been duly organized and is validly existing as
a corporation, limited or general partnership, limited liability
company or other similar entity in good standing under the laws of the
jurisdiction in which it is organized, with the corporate or other
analogous power and authority to own its properties and conduct its
business as described in the Prospectus, and is duly qualified to do
business as a foreign corporation or other analogous entity and is in
good standing under the laws of each jurisdiction which requires such
qualification where the failure to be so qualified could materially
adversely affect the business, operations, property or financial
condition of the Philip Group taken as a whole.
(d) Except as may be set forth in the Prospectus, all the
outstanding shares of capital stock of each Subsidiary have been duly
authorized and validly issued and are fully paid and nonassessable by
the issuer, and all outstanding shares of capital stock of the
Subsidiaries are owned by the Company either directly or through
Subsidiaries free and clear of any security interests, claims, liens or
encumbrances (other than those granted to secure the obligations of the
Philip Group in respect of the Secured PIK/Term Credit Agreement or the
Exit Facility or other secured debt permitted therein), except in each
case where the failure to so own the capital stock of a Subsidiary
could materially adversely affect the business, operations, property or
financial condition of the Philip Group taken as a whole.
(e) Except as may be set forth in the Prospectus, no member of
the Philip Group is in violation of any term or provision of any
charter, by-law, franchise, license, permit, judgment, decree or order
or any applicable statute, rule or regulation, which violation could be
material to the business, operations, property or financial condition
of the Philip Group taken as a whole.
(f) Except as may be set forth in the Prospectus, no default
exists and no event has occurred which with notice, lapse of time, or
both, would constitute a default, in the due performance and observance
of any term, covenant or condition of any agreement to which the
Company or any of the Subsidiaries is a party or by which it or any of
them is bound, which default could materially adversely affect the
business, operations, property or financial condition of the Philip
Group taken as a whole.
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(g) Except as may be set forth in the Prospectus, each member
of the Philip Group has all requisite corporate or other analogous
power and authority and has received and is operating in compliance in
all material respects with all governmental or regulatory or other
franchises, grants, authorizations, approvals, licenses, permits,
easements, consents, certificates and orders, necessary to own its
properties and conduct businesses as currently owned and conducted and
as proposed to be conducted, except where the failure to do so could
not materially adversely affect the business, operations, property or
financial condition of the Philip Group, taken as a whole.
(h) Except as may be described in the Prospectus, since the
date of the most recent financial statements included in the
Prospectus, there has been no material adverse change in the business,
operations, property or financial condition of the Philip Group taken
as a whole, whether or not arising from transactions in the ordinary
course of business.
(i) Except as may be described in the Prospectus, no
litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the best knowledge of the
Company, threatened against any member of the Philip Group or against
any of their respective properties or revenues, existing or future
which, if adversely determined, could have a material adverse effect on
the business, property or financial condition of the Philip Group taken
as a whole, or which otherwise is of a character required to be
disclosed in the Prospectus; there is no franchise, contract or other
document of a character required to be described in the Registration
Statement or the Prospectus, or to be filed as an exhibit thereto,
which is not described or filed as required; and the descriptions of
such franchises, contracts and other documents described in the
Prospectus fairly summarize the matters purported to be described
therein.
(j) Except as may be described in the Prospectus, there is no
pending or, to the best knowledge of the Company, threatened action,
suit, or judicial, arbitral, rule-making or other administrative or
other proceeding against the Company which challenges the validity of
(i) this Agreement or (ii) any Purchase Agreement entered into in
connection with the offering or any action taken or to be taken
pursuant to or in connection with such agreements.
(k) The Company's authorized equity capitalization is as set
forth in the Prospectus; the capital stock of the Company conforms in
all material respects to the description thereof contained in the
Prospectus; all of the issued and outstanding shares of capital stock
of the Company have been duly authorized and validly issued and, except
as set forth in the Prospectus, are fully paid and nonassessable.
(l) The Company has all requisite corporate power and
authority, has taken all requisite corporate action, and has received
and is in compliance with all governmental, judicial and other
authorizations, approvals and orders, necessary in connection with the
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<PAGE> 33
offering, and to carry out the provisions and conditions of this
Agreement and the Purchase Agreement, if any, related thereto, except
for such approvals and conditions that need to be obtained or satisfied
as are set forth in the Prospectus and such approvals or authorizations
as may be required under the Securities Act, the securities or "Blue
Sky" laws of any jurisdiction or the rules of any securities exchange
on which the securities of the Company are listed in connection with
the purchase and distribution of Unsecured PIK Notes in the offering.
The Purchase Agreement, if any, entered into in connection with the
offering has been duly authorized, executed and delivered by the
Company and is a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles;
provided, that no representation is made as to the validity, binding
effect or enforceability of any provision that purports to provide
indemnification of any Person for any Losses resulting from violation
by such person of any applicable securities or "Blue Sky" laws.
(m) To the best knowledge of the Company, neither the sale of
the Unsecured PIK Notes to be sold pursuant to the Registration
Statement, nor the execution, delivery or performance by the Company of
the Purchase Agreement, if any, entered into in connection with the
offering or the consummation of any other of the transactions
contemplated in such Purchase Agreement, if any, will conflict with,
result in a breach of, or constitute a default under, the charter or
by-laws of the Company or any of the Subsidiaries or the terms of any
material indenture or other material agreement or instrument to which
the Company or any of the Subsidiaries is a party or by which it or any
of them is bound, or any material statute applicable to the Company or
any of the Subsidiaries or any material order, decree, rule or
regulation applicable to the Company or any of the Subsidiaries of any
Governmental Authority.
(n) Except (i) as set forth in the Prospectus and (ii) to the
extent permitted under subsection 5.6, no holders of securities of the
Company have rights to the registration of such securities under any
Registration Statement except the Securities Holders.
For purposes of the foregoing representations and warranties, the Company may
assume that any agreement is the valid and binding obligation of any other
parties to such agreement.
Section 7. Representations and Warranties of the Securities Holders.
Each participating Securities Holder shall, in connection with
a Securities Holder Public Sale Event, if required by the terms of a Purchase
Agreement relating to such Sale Event, for itself severally and not jointly
represent and warrant to (i) in the case of an underwritten Public Sale Event,
the Company, the underwriter or underwriters and each other Securities Holder
participating in such underwritten Public Sale Event or (ii) in the case of a
non-underwritten Sale Event, the Company and the purchaser or purchasers and
each other Securities Holder participating in such non-underwritten Sale Event,
as follows:
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(a) Such Securities Holder has all requisite power and
authority to enter into and carry out the terms of this Agreement and
such Purchase Agreement and the other agreements and instruments
related to such agreements to which it is a party.
(b) Each of this Agreement and such Purchase Agreement has
been duly authorized, executed and delivered by or on behalf of such
Securities Holder, and constitutes the valid and binding obligation of
such Securities Holder enforceable against such Securities Holder in
accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally
and by general equitable principles; provided, that no representation
is made as to the validity, binding effect or enforceability of any
provision purporting to provide indemnification of any person for any
Losses resulting from violation by such person of any applicable
securities or "Blue Sky" laws.
(c) Such Securities Holder, immediately prior to any sale of
Registerable Notes pursuant to such Purchase Agreement, will have good
and marketable title to such Registerable Notes, free and clear of all
liens, security interests, encumbrances, equities, claims or other
defects in title (other than those created by this Agreement); and,
upon payment therefor, good and marketable title to such Registerable
Notes will pass to the purchaser thereof, free and clear of any lien,
security interest, encumbrance, equity, claims or other defect in
title.
(d) Such Securities Holder has not taken and will not take,
directly or indirectly, any action designed to constitute or which has
constituted or which might reasonably be expected to cause or result
in, under the Exchange Act or the rules or regulations promulgated
thereunder or other applicable law, stabilization or manipulation of
the price of any security of the Company to facilitate the sale or
resale of Registerable Notes.
(e) Written information furnished by or on behalf of such
Securities Holder to the Company expressly for use in the Registration
Statement, any related Preliminary Prospectus, or any related
Prospectus or any amendment or supplement thereto will not contain, in
each case as of the date such information was furnished, any untrue
statement of a material fact or omit to state any material fact
required to be stated or necessary to make the statements in such
information not misleading.
(f) To the best knowledge of such Securities Holder, neither
the sale of the Registerable Notes to be sold pursuant to the
Registration Statement, nor the execution, delivery or performance by
such Securities Holder of the Purchase Agreement, if any, entered into
in connection with the offering or the consummation of any other of the
transactions contemplated in such Purchase Agreement, if any, will
conflict with, result in a breach of, or constitute a default under,
the charter or by-laws of such Securities Holder or the terms of any
material indenture or other material agreement or instrument to which
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<PAGE> 35
such Securities Holder is a party or by which it is bound, or any
material statute applicable to such Securities Holder or any material
order, decree, rule or regulation applicable to such Securities Holder
of any Governmental Authority.
(g) Such Securities Holder will deliver to any underwriter a
properly completed and executed United States Treasury Department Form
W-8 or Form W-9 (or other applicable form or statement specified by
Treasury Department regulations in lieu thereof).
Section 8. Delivery of Comfort Letter and Legal Opinion. On
the date that a Registration Statement relating to a Securities Holder Public
Sale Event in which Securities Holders participate is declared effective by the
Commission or any Canadian Securities Authority, the Company shall comply with
the following:
(a) The Company shall have received, and delivered to each
Securities Holder participating in such Securities Holder Public Sale
Event, a copy of the "comfort" letter or letters, or updates thereof
according to customary practice, of the independent certified public
accountants who have certified the Company's financial statements
included in the Registration Statement covering substantially the same
matters with respect to the Registration Statement (including the
Prospectus) and with respect to events subsequent to the date of the
Company's financial statements as are customarily covered in
accountants' letters delivered to underwriters in underwritten public
offerings of securities. The Company will use its reasonable best
efforts to cause such "comfort" letters to be addressed to such
Securities Holders.
(b) Each Securities Holder and any underwriters participating
in such offering shall have received an opinion and any updates thereof
of outside counsel to the Company reasonably satisfactory to such
Securities Holders and underwriters covering substantially the same
matters as are customarily covered in opinions of issuer's counsel
delivered to underwriters in underwritten public offerings of
securities, addressed to each of such Securities Holders and
underwriters participating in such offering and dated the closing date
thereof.
Section 9. Miscellaneous.
9.1. Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
facsimile transmission), and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made when actually delivered or, in the
case of notice by facsimile transmission, when sent and confirmation of receipt
is received. Notices to the Securities Holders shall be deemed to have been
given or made when sent. All notices shall be addressed as follows or to such
other address as may be hereafter designated in writing by the respective
parties hereto:
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<PAGE> 36
The Company: Philip Services Corporation
100 King Street West
Hamilton, Ontario L8N 4J6
CANADA
Telecopier: (905) 523-8036
The Securities Holders: The address of each Securities Holder
as set forth on the signature
pages hereof.
9.2. Amendments and Waivers. The Securities Holders of not
less than 66-2/3% of the Registerable Notes held or beneficially owned by
Securities Holders at any point in time and the Company may from time to time
enter into written amendments, supplements or modifications to this Agreement
for the purpose of adding any provisions hereto or thereto or changing in any
manner the rights of the Securities Holders or the Company hereunder or
thereunder, and the Securities Holders of not less than 66-2/3% of the
Registerable Notes held or beneficially owned by Securities Holders at any point
in time may execute a written instrument waiving, on such terms and conditions
as may be specified therein, any of the requirements of this Agreement which are
solely for the benefit of the Securities Holders and where such waiver does not
adversely affect the interests of the Company; provided, however, that no such
waiver and no such amendment, supplement or modification shall (i) adversely
affect the rights of a Securities Holder under Section 2 hereof or (ii) amend,
modify or waive any provision of Section 4 or this subsection 9.2, in each case
without the written consent of each Securities Holder. Any such waiver and any
such amendment, modification or supplement shall apply equally to each of the
Securities Holders and the Company.
9.3. Termination. This Agreement and the respective
obligations and agreements of the parties hereto, except as otherwise expressly
provided herein, shall terminate on the Termination Date.
9.4. Survival of Representations and Warranties. Except as
they may by their terms relate to an earlier date, all representations and
warranties made hereunder and in any document, certificate or statement
delivered pursuant hereto or in connection herewith shall survive the execution
and delivery of this Agreement and the termination of any or all of the
provisions of this Agreement.
9.5. Headings. The descriptive headings of the several
sections and subsections of this Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the provisions
hereof.
9.6. Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all of such counterparts shall together constitute one and the same
agreement.
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<PAGE> 37
9.7. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
9.8. No Inconsistent Agreements. The Company will not on or
after the date of this Agreement enter into any agreement with respect to its
securities which is inconsistent with the rights granted to the Securities
Holders in this Agreement or otherwise conflicts with the provisions hereof.
9.9. Severability. Any provision of this Agreement prohibited
or rendered unenforceable by any applicable law of any jurisdiction shall as to
such jurisdiction be ineffective to the extent of such prohibition or
unenforceability, without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
9.10. ENTIRE AGREEMENT. THIS AGREEMENT CONSTITUTES THE
ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES
HERETO.
9.11. No Required Sale. Nothing in this Agreement shall be
deemed to create an independent obligation on the part of any of the Securities
Holders to sell any Unsecured PIK Notes pursuant to any Registration Statement
or otherwise.
-34-
<PAGE> 38
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first written above.
PHILIP SERVICES CORPORATION
By:
------------------------------------------
Name:
Title:
SECURITIES HOLDERS:
AMERICAN REAL ESTATE HOLDINGS, L.P.
By: AMERICAN PROPERTY INVESTORS,
INC., its General Partner
By:
------------------------------------------
Name:
Title:
Address for notices:
767 Fifth Avenue, 47th Floor
New York, NY 10153
HIGH RIVER LIMITED PARTNERSHIP
By: RIVERDALE LLC, its General Partner
By:
------------------------------------------
Name:
Title:
Address for notices:
767 Fifth Avenue, 47th Floor
New York, NY 10153
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<PAGE> 39
Exhibit A
SECURITIES HOLDER'S QUESTIONNAIRE
Please complete and return immediately to Philip Services
Corporation at the following address:
Philip Services Corporation
100 King Street West
Hamilton, Ontario L8N 4J6
CANADA
Attention: Chief Financial Officer
The information requested below is required for purposes of
any Public Sale Event pursuant to the Registration Rights Agreement dated as of
March 31, 2000 (the "Agreement") that may be initiated from time to time. If you
do not furnish the Company with the requested information, you will not be
entitled to participate in any such registration. Unless otherwise defined
herein, capitalized terms shall have the meanings ascribed thereto in the
Agreement.
Please do not leave any request for information unanswered. If
your response to a request is "no" or "not applicable," please so state. If
additional space is required, please attach additional sheets to the end of this
Questionnaire, clearly identifying the portion hereof to which they relate.
If you have any questions regarding this Questionnaire,
please contact ________________________________.
I. Information required for notices.
Institution Name:
Street Address:
Post Office Box:
City/State/Zip:
Fed. Tax ID. No.
(if any):
Telecopier Number:
Contacts (Please include alternative contacts).
1. Name:
Title:
Function:
Business Telephone:
-36-
<PAGE> 40
2. Name:
Title:
Function:
Business Telephone:
II. Information required by the Securities Act of 1933, as amended, and
related regulations.
A. Federal Securities Laws
1. Name and Address. Give your name and address
exactly as they should appear in any Prospectus.
2. Ownership of Registerable Notes. State the aggregate
principal amount of Registerable Notes, if any, owned by you or your affiliates
as of the date hereof.
Aggregate Principal Amount of Registerable Notes:
3. Beneficial Ownership of Unsecured PIK Notes . Please
furnish the following information, in the tabular form indicated, as to the
Unsecured PIK Notes beneficially owned (see definition at end of Questionnaire)
by you (including amounts held in your Trust Department in discretionary
accounts):
<TABLE>
<CAPTION>
If such ownership is
shared with others,
indicate nature and
Aggregate Principal Nature of extent of such
Amount(1) Beneficial Ownership(2) shared ownership
<S> <C> <C> <C>
</TABLE>
[FN]
__________________________
(1) Include Unsecured PIK Notes which you have the right to acquire through the
exercise of options, warrants or other securities on or before 60 days after the
estimated date of the Prospectus.
(2) Please indicate the extent to which you have sole voting power, shared
voting power, sole investment power and shared investment power with respect to
shares of Unsecured PIK Notes you beneficially own.
</FN>
-37-
<PAGE> 41
4. Disclaimer of Beneficial Ownership. Please indicate below
the number and description of any Unsecured PIK Notes with respect to which you
disclaim beneficial ownership and whether such Unsecured PIK Notes are included
in the figure(s) reported above.
5. Five Percent Beneficial Owners. Please give the name and
address of any Person, corporation or other entity, other than the parties to
the Agreement, known to you to own beneficially 5% or more of the outstanding
Unsecured PIK Notes (i.e., $______ or more in aggregate principal amount).
NOTE: For purposes of your response to this question, the term "Person"
includes two or more Persons acting as a partnership, limited
partnership, syndicate, or other group for the purpose of
acquiring, holding or disposing of the Company's securities.
6. Underwriters. Please describe briefly and state the nature
of any relationship or interest that you have or any associate of yours (see
definition at end of Questionnaire) has, in any underwriter of the securities to
be offered. If you are a member or controlling Person of a firm that may be an
underwriter of the securities to be offered, briefly describe your relationship
to, and interest in, such underwriter.
NOTE: The underwriters will be listed in the final amendment to the
Registration Statement, a copy of which will be sent to you at a
later date.
7. Material Relationships. Please list all material
relationships that you now have, or have had since _______________, with the
Company or any of its affiliates, other than your ownership of the Unsecured
PIK Notes or your participation in the Company's bankruptcy case.
B. NASD Regulations.
8. NASD Membership. State whether you are a "member" of the
National Association of Securities Dealers, Inc. (the "NASD"), a "Person
associated with a member" or an "underwriter or a related Person" with respect
to the proposed offering.
NOTES: (1) The NASD By-Laws define "member" to mean
either any broker or dealer admitted to membership in the
NASD.
(2) The NASD By-Laws define "Person associated with a
member" to mean every sole proprietor, partner, officer,
director or branch manager of any member, or any natural
Person occupying a similar status or performing similar
functions, or any natural Person engaged in the investment
banking or securities business who is directly or indirectly
controlling or controlled by such member, whether or not any
such Person is registered or exempt from Registration with the
NASD.
-38-
<PAGE> 42
(3) The NASD has interpreted "underwriter or a
related Person" with respect to a proposed offering to include
an underwriter, underwriters' counsel, financial consultants
and advisers, finders, members of the selling or distribution
group, and any and all other Persons "associated with" or
"related to" any of such Persons.
9. Purchase by NASD Affiliates. If your answer to the
preceding question was "yes," please furnish the following information, in the
tabular form indicated, as to all purchases and acquisitions (including
contracts to purchase or to acquire) by you, of warrants, options or any other
securities of the Company or any subsidiary thereof, during the preceding 12
months, as well as all proposed purchases or acquisitions by you which are to be
consummated in whole or in part prior to, at the time of or within six months
after the effectiveness of the Registration Statement.
<TABLE>
<CAPTION>
Purchaser or Seller or Amount and Price or
Prospective Prospective Name of Other
Date Purchaser Seller Securities Consideration
======== ============ ============ ============ ============
<S> <C> <C> <C> <C>
======== ============ ============ ============ ============
======== ============ ============ ============ ============
======== ============ ============ ============ ============
</TABLE>
10. Dealings with Company. Please describe any other dealings
within the preceding 12 months not already described in response to the
foregoing questions between the Company or any subsidiary or controlling
shareholder thereof and any underwriter, related Person of such underwriter,
NASD member or Person associated with such member affiliated with you, as such
terms are defined in the Notes to Question 10.
THE UNDERSIGNED HEREBY REPRESENTS AND WARRANTS TO ANY PERSON
WHO MAY BE LIABLE IN RESPECT OF A REGISTRATION OR OTHER OFFERING PURSUANT TO THE
AGREEMENT THAT THE ANSWERS GIVEN IN THIS QUESTIONNAIRE ARE CORRECTLY STATED TO
THE KNOWLEDGE, INFORMATION AND BELIEF OF THE UNDERSIGNED. THE UNDERSIGNED HEREBY
AGREES TO PROMPTLY NOTIFY THE COMPANY OF ANY CHANGE IN SUCH ANSWERS WHICH MAY
OCCUR DURING THE PERIOD BEGINNING WITH THE DATE BELOW AND ENDING ON THE DATE 90
DAYS AFTER THE EFFECTIVE DATE OF ANY REGISTRATION STATEMENT RELATING TO A
REGISTRATION OR OTHER OFFERING PURSUANT TO THE AGREEMENT. THE UNDERSIGNED HEREBY
AGREES, FOLLOWING NOTICE OF ANY PROPOSED REGISTRATION TO UPDATE AND AMEND THIS
QUESTIONNAIRE IF THERE IS ANY MATERIAL CHANGE IN THE ABOVE INFORMATION AND TO
PROVIDE ANY ADDITIONAL INFORMATION REQUESTED BY THE COMPANY PURSUANT TO THE
AGREEMENT.
Dated: ______________, 20__.
Holder:
By:
-39-
<PAGE> 43
Name:
Title:
-40-
<PAGE> 44
DEFINITIONS
As used in this Questionnaire:
"affiliate" means a Person or organization that directly, or
indirectly through one or more intermediaries, controls, or is controlled by, or
is under common control with, the Company.
An "associated person" means (1) any corporation or
organization (other than the Company or a majority owned subsidiary) of which
you are an executive officer or partner or are, directly or indirectly, the
beneficial owner of 10% or more of any class or equity securities and (2) any
trust or other estate in which you have substantial beneficial interest or to
which you serve as trustee or in a similar fiduciary capacity.
Securities "owned beneficially" by you are securities (whether
or not registered in your name) in which you have or share (directly or
indirectly through any contract, arrangement, understanding, relationship or
otherwise) (i) voting power, which includes the power to vote or direct the
voting of the securities, or (ii) investment power, which includes the power to
dispose, or direct the disposition, of the securities. You are also deemed to be
the beneficial owner of any securities which you have the right to acquire
immediately or within 60 days (a) through the exercise of any option, warrant or
right, (b) through the conversion of a security or (c) pursuant to the power to
revoke, or the automatic termination of, a trust, discretionary account or
similar arrangement.
Thus, securities held in the name of other individuals, in the
name of an estate or trust or pursuant to a pledge agreement where you have
either the power to direct the voting of the securities or the disposition of
such securities should be listed as "owned beneficially" by you. The Commission
has also taken the position that securities held by your spouse, minor children,
or other relatives sharing your home should be shown as "owned beneficially" by
you on the theory that, absent special circumstances you are able to exercise a
controlling influence over the purchase, sale or voting of such securities.
-41-
<PAGE> 45
Exhibit B
SUPPLEMENTAL ADDENDUM
The undersigned is a holder of Unsecured PIK Notes of Philip
Services Corporation. The undersigned hereby agrees as follows:
The undersigned hereby accepts the terms of and becomes a
party to (as a Securities Holder) the Registration Rights Agreement dated as of
March 31, 2000 by and among Philip Services Corporation (the "Company") and each
Securities Holder named therein. In connection therewith, the undersigned agrees
to (A) assume all obligations and liabilities thereunder, (B) enjoy all of the
rights thereunder, (C) be bound thereby and (D) perform and comply with the
agreements and commitments on the part of the undersigned, as assignee, set
forth in the Registration Rights Agreement.
As used in this Supplemental Addendum, capitalized terms
defined in the Registration Rights Agreement shall have their respective
defined meanings.
Name of
Address: Institution:
----------------------------
By
-------------------------------------
Name:
Title:
Date: _______________, _____
-42-
<PAGE> 1
EXHIBIT 99.5
[PIK NOTES COMMON STOCK]
================================================================================
================================================================================
REGISTRATION RIGHTS AGREEMENT
Dated as of March 31, 2000
by and among
PHILIP SERVICES CORPORATION
and
EACH SECURITIES HOLDER REFERRED TO HEREIN
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 1. Definitions 2
1.1. Defined Terms 2
Section 2. Demand Registration Rights of Securities Holders 9
2.1. Demand Registration Rights 9
2.2. Determination 9
2.3. Notices; Minimum Registerable Amounts 10
2.4. Discretion of Securities Holder 11
2.5. Allocation Among Initiating Securities Holders 12
2.6. Piggyback Rights of Securities Holders and the Company 12
2.7. Limitation on Registration Rights 13
Section 3. Company Sale Events 13
3.1. Determination 13
3.2. Notice 13
3.3. Piggyback Rights of Securities Holders 13
3.4. Discretion of the Company 14
Section 4. Black-Out Periods 14
4.1. Black-Out Periods for Securities Holders 14
Section 5. Agreements Concerning Offerings 15
5.1. Obligations of Securities Holders 15
5.2. Obligations of the Company 15
5.3. Agreements Related to Offerings 17
5.4. Certain Expenses 19
5.5. Public Reporting; Rule 144 19
5.6. Limitations on Subsequent Registration Rights 20
5.7. Indemnification and Contribution 20
5.8. Underwritten Offerings 27
5.9. Transfer of Rights Under this Agreement; Transfers of Registerable Common 27
5.10. Termination of Rights 28
Section 6. Sequencing of Public Sale Events 28
6.1. Effective Notice Period 28
</TABLE>
-i-
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
6.2. Restrictive Legend on Certificates 29
Section 7. Representations and Warranties of the Company 29
Section 8. Representations and Warranties of the Securities Holders 34
Section 9. Delivery of Comfort Letter and Legal Opinion 35
Section 10. Miscellaneous 36
10.1. Notices 36
10.2. Amendments and Waivers 36
10.3. Termination 36
10.4. Survival of Representations and Warranties 36
10.5. Headings 36
10.6. Counterparts 37
10.7. GOVERNING LAW 37
10.8. Adjustment of Shares 37
10.9. No Inconsistent Agreements 37
10.10. Severability 37
10.11. ENTIRE AGREEMENT 37
10.12. Listing of PIK Notes Common Stock 37
10.13. No Required Sale 37
EXHIBITS
Exhibit A - Securities Holders Questionnaire 39
Exhibit B - Supplemental Addendum 45
</TABLE>
-ii-
<PAGE> 4
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of March 31, 2000, by and among
PHILIP SERVICES CORPORATION, a corporation organized under the laws of the State
of Delaware (the "Company"), and each SECURITIES HOLDER (as defined in
subsection 1.1).
-1-
<PAGE> 5
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, on June 25, 1999 the Company, formerly known as Philip Services
(Delaware) Inc., filed a voluntary petition for relief under Chapter 11 of title
11 of the United States Code (as amended, the "Bankruptcy Code") with the United
States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court").
On November 30, 1999, the Bankruptcy Court entered an Order confirming the First
Amended Joint Plan of Reorganization of Philip Services (Delaware), Inc. et al.,
dated as of September 21, 1999 (the "Plan"); and
WHEREAS, the Plan provides that the Company shall enter into a registration
rights agreement with certain of its shareholders.
NOW, THEREFORE, in consideration of the mutual agreements contained herein,
the parties hereto hereby agree as follows:
Section 1. Definitions.
1.1. Defined Terms. (a) As used in this Agreement, the terms defined in the
caption and the recitals shall have the meanings set forth therein, and the
following terms shall have the following meanings:
"affiliate" shall have the meaning ascribed thereto in Rule 12b-2
under the Exchange Act as in effect on the date hereof.
"Agreement" shall mean this Registration Rights Agreement, as amended,
supplemented or otherwise modified from time to time.
"AREP" shall mean American Real Estate Holdings, L.P.
"Canadian Prospectus" shall mean a Preliminary Prospectus or
Prospectus, as applicable, in respect of which a receipt has been issued by
the Canadian Securities Authority in each of the provinces of Canada in
which the document has been filed.
"Canadian Securities Authorities" shall mean the securities regulatory
authorities in each of the provinces of Canada, and "Canadian Securities
Authority" shall mean any one of the Canadian Securities Authorities.
"Canadian Securities Laws" shall mean the securities legislation of
each of the provinces of Canada and the respective regulations thereunder
and the published rules, policy statements, blanket rulings, orders,
notices or national instruments applicable therein.
-2-
<PAGE> 6
"Canadian Shelf Procedures" shall mean the procedures contemplated by
National Policy 47 of the Canadian Securities Administrators for the
distribution of securities of eligible issuers under the prompt offering
qualification system, as the same may be amended or superseded from time to
time.
"Commission" shall mean the United States Securities and Exchange
Commission or any successor thereto.
"Company Private Sale Event" shall mean any sale of New Common Stock
or PIK Notes Common Stock by the Company which sale is not effected
pursuant to a Registration Statement; excluding, however, any sale or
related series of sales of New Common Stock or PIK Notes Common Stock by
the Company (a) in connection with the acquisition by the Company of
another company or business or investment by the Company in any joint
venture or (b) pursuant to any "employee benefit plan" within the meaning
of Rule 405 under the Securities Act adopted by the Company or any other
member of the Philip Group.
"Company Public Sale Event" shall mean any sale by the Company of New
Common Stock or PIK Notes Common Stock pursuant to (i) a Registration
Statement filed by the Company (other than a Registration Statement filed
by the Company on Form S-4 or Form S-8) or (ii) a Canadian Prospectus filed
by the Company (other than in respect of shares of New Common Stock or PIK
Notes Common Stock issued (a) in connection with an acquisition by the
Company of another company or business or an investment by the Company in a
joint venture or (b) pursuant to an "employee benefit plan" within the
meaning of Rule 405 under the Securities Act adopted by the Company or any
other member of the Philip Group.
"Company Sale Notice" shall mean a Notice of Offering from the Company
to each Security Holder stating that the Company proposes to effect a
Company Public Sale Event or a Company Private Sale Event, as the case may
be.
"Demand Registration" shall mean any Registration and/or Qualification
of Registerable Common pursuant to a Registration Statement filed by the
Company in accordance with the provisions of subsection 2.2.
"Effective Date" shall mean March 31, 2000, being the date on which
the Plan became effective, as provided therein. Notwithstanding that this
Agreement is expressed to be dated as of March 31, 2000, it is agreed that
this Agreement shall be deemed to be delivered on and take effect as and
from the Closing Date, as defined in the Secured PIK/Term Credit Agreement.
"Effective Notice Period" shall have the meaning assigned to such term
in subsection 6.1.
-3-
<PAGE> 7
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any successor legislation thereto.
"Exit Facility" shall mean the Exit Facility, dated as of March 31,
2000, among the Company, the Subsidiaries of the Company party thereto,
Foothill Capital Corporation, as arranger and administrative agent, and the
lenders party thereto.
"First Phase" shall mean the period of time commencing on the
Effective Date and ending on the date that is the earlier of (a) the date
on which the Company is eligible to use Form S-3 or F-3 to effect a
Registration of shares of PIK Notes Common Stock and (b) the fifteen (15)
month anniversary of the Effective Date.
"Form S-3" shall mean such form of registration statement under the
Securities Act as in effect on the date hereof or any successor form
thereto.
"Form S-4" shall mean such form of registration statement under the
Securities Act as in effect on the date hereof or any successor form
thereto.
"Form S-8" shall mean such form of registration statement under the
Securities Act as in effect on the date hereof or any successor form
thereto.
"Governmental Authority" shall mean any nation or government, any
state or other political subdivision thereof or any entity exercising
executive, legislative, judicial, regulatory or administrative functions of
or pertaining to government.
"High River" shall mean High River Limited Partnership.
"Initiating Securities Holders" shall have the meaning assigned to
such term in subsection 2.3(b).
"Material Adverse Change" shall mean, for purposes of subsections
2.4(b) and (c), any material adverse change in, or the occurrence of any
event which would reasonably be expected to have a material adverse effect
on, the business, condition (financial or otherwise) or prospects of the
Philip Group taken as a whole (it being understood that a change in general
political, financial, banking or capital market conditions shall not be a
"Material Adverse Change" unless such change has, or would reasonably be
expected to have, a material adverse effect on the Philip Group as
described above).
"Minimum Registerable Amount" shall mean, on any date of determination
thereof during (a) the First Phase, the number of shares of Registerable
Common representing at least (i) in the case of a Demand Registration other
than a Shelf Registration, 10% of the issued and then outstanding shares of
PIK Notes Common Stock or (ii) in the case of a Shelf Registration, 15% of
the issued and then outstanding shares of PIK Notes Common Stock and (b)
the Second Phase, (i) in the case of a Demand
-4-
<PAGE> 8
Registration other than a Shelf Registration, 7.5% of the issued and then
outstanding shares of PIK Notes Common Stock or (ii) in the case of a Shelf
Registration, 11.25% of the issued and then outstanding shares of PIK Notes
Common Stock; provided, that notwithstanding the foregoing, if a Securities
Holder owns less than what would otherwise be the Minimum Registerable
Amount, the Minimum Registerable Amount with respect to such Securities
Holder shall be 75% of the aggregate number of shares of Registerable
Common owned by such Securities Holder.
"NASD" shall mean the National Association of Securities Dealers, Inc.
or any successor thereto.
"New Common Stock" shall mean the common stock, par value $0.01 per
share, of the Company authorized pursuant to the Plan to be issued from and
after the Effective Date, and any reclassification thereof, including any
common stock issuable upon conversion of convertible securities issued
pursuant to the Plan.
"Notice of Offering" shall mean a written notice with respect to (a) a
proposed Sale Event pursuant to a Demand Registration, (b) a Company Public
Sale Event or (c) a Company Private Sale Event, in each case setting forth
(i) the expected maximum and minimum number of shares of Registerable
Common, New Common Stock or PIK Notes Common Stock, as the case may be,
proposed to be offered and sold, (ii) the lead managing underwriter, if
applicable and known and (iii) the proposed method of distribution and the
expected timing of the offering, including whether the proposed offering
will be registered in the United States, qualified for distribution in
Canada, or both.
"Person" shall mean any individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint
venture, Governmental Authority, limited liability company or other entity
of whatever nature.
"Philip Group" shall mean the Company together with each Subsidiary of
the Company.
"Piggybacking Notice" shall have the meaning assigned to such term in
subsection 2.6(a).
"Piggybacking Securities Holder" shall have the meaning assigned to
such term in subsection 2.6(a).
"PIK Notes" shall mean the "PIK Notes" issued pursuant to the Plan as
a tranche of indebtedness of the Company under the Secured PIK/Term Credit
Agreement.
"PIK Notes Common Stock" shall mean the common stock, no par value, of
the Company authorized pursuant to the Plan to be issued from and after the
Effective Date upon conversion of interests in the PIK Notes, and any
reclassification thereof.
-5-
<PAGE> 9
"Preliminary Prospectus" shall mean (i) each preliminary prospectus
included in a Registration Statement or in any amendment thereto prior to
the date on which such Registration Statement is declared effective under
the Securities Act, including any prospectus filed with the Commission
pursuant to Rule 424(a) under the Securities Act or (ii) each preliminary
prospectus, as the same may be amended prior to the issuance of the final
receipt by the applicable Canadian Securities Authority.
"Prospectus" shall mean each prospectus (i) included in a Registration
Statement at the time it becomes effective (including, without limitation,
a prospectus that discloses information previously omitted from a
prospectus filed as part of an effective Registration Statement in
accordance with Rule 430A), together with any supplement thereto, as filed
with, or transmitted for filing to the Commission pursuant to Rule 424(b)
under the Securities Act or (ii) for which a receipt is issued by the
Canadian Securities Authority in each province in which such document is
filed pursuant to any applicable Canadian Securities Laws (and including,
without limitation, the information that is permitted to have been omitted
by National Policy Statement No. 44 of the Canadian Securities
Administrators for the pricing of securities after the final prospectus is
receipted, as the same may be amended or superseded from time to time).
"Public Sale Event" shall mean a Securities Holder Public Sale Event
or a Company Public Sale Event, as the case may be.
"Purchase Agreement" shall mean, in connection with any Sale Event,
any written agreement entered into by any Securities Holder providing for
the sale of Registerable Common and/or the Company providing for the sale
of New Common Stock or PIK Notes Common Stock.
"Qualification" shall mean the qualification of securities pursuant to
a Canadian Prospectus, for which a final receipt has been issued by the
Securities Regulatory Authority in each province in which such document is
filed.
"Registerable Common" shall mean with respect to each Securities
Holder (a) the shares of PIK Notes Common Stock issued upon the conversion
of such Securities Holder's interest in the PIK Notes, and (b) any other
securities issued as (or issuable upon the conversion or exercise of any
warrant, right or other security which is issued as) a dividend or other
distribution with respect to, or in exchange for or in replacement of, such
shares of Registerable Common; excluding in all cases, however, any shares
of Registerable Common from and after the transfer thereof pursuant to a
Registration Statement, a Canadian Prospectus or Rule 144.
"Registration" shall mean a registration of securities pursuant to the
Securities Act.
"Registration Statement" shall mean (i) any registration statement
(including the
-6-
<PAGE> 10
Preliminary Prospectus, the Prospectus, any amendments (including any
post-effective amendments) thereto, any supplements and all exhibits
thereto and any documents incorporated therein by reference pursuant to the
rules and regulations of the Commission or any applicable Canadian
securities laws), filed by the Company in connection with any Public Sale
Event with the Commission or (ii) a Canadian Prospectus filed with any
Canadian Securities Authority any amendments or supplements thereto and any
documents, incorporated by reference therein pursuant to the rules of the
applicable Canadian Securities Authority, which in either case complies
with all applicable requirements of the Securities Act and the rules and
regulations of the Commission thereunder and all applicable Canadian
Securities Laws.
"Responsible Officer" shall mean with respect to any Person, the
president, chief executive officer, chief operating officer, chief
financial officer or treasurer of such Person.
"Rule 144", shall mean Rule 144 promulgated by the Commission under
the Securities Act, or any successor to such Rule.
"Rule 415" shall mean Rule 415 promulgated by the Commission under the
Securities Act, or any successor to such Rule.
"Rule 424" shall mean Rule 424 promulgated by the Commission under the
Securities Act, or any successor to such Rule.
"Rule 430A" shall mean Rule 430A promulgated by the Commission under
the Securities Act, or any successor to such Rule.
"Sale Event" shall mean any sale by the Company of New Common Stock or
PIK Notes Common Stock pursuant to a Company Private Sale Event or a
Company Public Sale Event or any sale by any Securities Holder of
Registerable Common pursuant to any Registration Statement.
"Second Phase" shall mean the period following the end of the First
Phase and prior to the Termination Date.
"Secured PIK/Term Credit Agreement" shall mean the Secured PIK/Term
Credit Agreement, dated as of March 31, 2000, among the Company, Canadian
Imperial Bank of Commerce, as administrative agent, and the various lenders
from time to time party thereto.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any successor legislation thereto.
"Securities Holder" shall mean each entity set forth on the signature
pages of this Agreement under the heading "SECURITIES HOLDERS".
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"Securities Holder Public Sale Event" shall mean any sale of
Registerable Common by a Securities Holder pursuant to a Demand
Registration.
"Securities Holder Sale Notice" shall mean a Notice of Offering to the
Company from a Securities Holder requesting the Company to effect a Demand
Registration of Registerable Common (to which such Securities Holder is at
the time entitled pursuant to subsection 2.1) and stating whether such
Securities Holder is requesting that such Demand Registration be a Shelf
Registration and whether such Registerable Common is to be registered for
sale in the United States, Canada or both; provided that if more than one
Notice of Offering is required to aggregate the Minimum Registerable
Amount, the term "Securities Holder Sale Notice" shall refer collectively
to all such Notices of Offering delivered by Securities Holders to the
Company in accordance with subsection 2.3(b).
"Securities Holder's Questionnaire" shall mean the questionnaire to be
provided by each Securities Holder to the Company in connection with a
Public Sale Event or Company Private Sale Event, substantially in the form
of Exhibit A, as the same from time to time may be amended, supplemented or
otherwise modified.
"Shelf Registration" shall mean any Qualification or Registration of
Registerable Common and, if applicable, New Common Stock, pursuant to (i) a
Registration Statement filed by the Company in accordance with the
provisions of subsection 2.2 and which provides for the offering of
Registerable Common to be made on a continuous basis pursuant to Rule 415
or (ii) a Prospectus filed by the Company in accordance with the provisions
of Section 2.2 and which provides for the Offering of Registerable Common
to be made on a continuous basis pursuant to national Policy Statement No.
44 of the Canadian Securities Administrators.
"Subsidiary" shall mean, as to any Person, a corporation, partnership
or other entity of which shares of stock or other ownership interests
having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a
contingency) to elect the majority of the board of directors or other
managers of such corporation, partnership or other entity are at that time
owned directly or indirectly through one or more intermediaries, or both,
by such Person. Unless otherwise qualified, all references to a
"Subsidiary" or "Subsidiaries" in this Agreement shall refer to a
Subsidiary or Subsidiaries of the Company.
"Supplemental Addendum" shall mean a Supplemental Addendum,
substantially in the form of Exhibit B to this Agreement.
"Termination Date" shall mean, as to each Securities Holder, the date
on which counsel to the Company delivers an opinion in accordance with
subsection 5.10 to such Securities Holder.
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(b) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and section, subsection,
schedule and exhibit references are to this Agreement.
Section 2. Demand Registration Rights of Securities Holders.
2.1. Demand Registration Rights. At any time prior to the Termination Date,
each Securities Holder shall have the right, subject to subsections 2.3, 2.4(b)
and (c) and 6.1, to request one (1) Demand Registration on behalf of itself and
its affiliates, and the Company shall be obligated to provide a Demand
Registration in response to each such request; provided that the Company shall
be obligated to provide no more than two (2) such Demand Registrations in the
aggregate during the First Phase; and provided, further, that, during the First
Phase, if the initial Demand Registration is a Shelf Registration, the Company
shall be obligated to provide only such Shelf Registration; and provided,
further, that if the Company delivers a Piggybacking Notice after receiving a
Securities Holder Sale Notice, each Securities Holder who delivered such
Securities Holder Sale Notice shall not be deemed to have requested a Demand
Registration under this subsection 2.1 for purposes of calculating the
limitations on Demand Registrations set forth in this subsection 2.1; and
provided, further, that High River and AREP shall together have the right to
request a total of two (2) Demand Registrations, allocable between them as they
shall determine in their sole discretion.
2.2. Determination. Subject to the terms and conditions hereof, if the
Company shall at any time receive one or more Securities Holder Sale Notices in
accordance with subsection 2.3 representing, in the aggregate, at least the
Minimum Registerable Amount, then the Company shall (a) file a Registration
Statement within 45 days, and in any event, but subject to subsection 5.3(b),
make such filing within 60 days (provided that such time periods shall begin on
the date of the Company's receipt of the Securities Holder Sale Notice which,
together with any earlier delivered Securities Holder Sale Notice, represents
the applicable Minimum Registerable Amount), which Registration Statement shall
cover the maximum number of shares of Registerable Common and, if applicable,
New Common Stock, set forth in such Securities Holder Sale Notice, and, if
applicable, such additional shares of New Common Stock or PIK Notes Common Stock
as permitted under subsection 2.6 and (b) use its best efforts to facilitate
such Demand Registration as provided herein. Notwithstanding the foregoing, the
Company may delay the filing of (but not its obligation to expeditiously
prepare) any Registration Statement relating to a Demand Registration for a
reasonable period of time (not in excess of 90 days) if the Board of Directors
of the Company reasonably determines to delay such filing and, within ten (10)
days of such determination, the Company provides each Securities Holder that
delivered a Securities Holder Sale Notice with a certificate signed by the
Chairman of the Board of Directors of the Company or the Chief Executive Officer
of the Company stating that, in the good faith judgment of the Board of
Directors of the Company, the filing of such Registration Statement would
adversely affect any material business situation, transaction or negotiation
then contemplated by the Company or materially and adversely affect the Company.
The Company shall promptly give notice to each such Securities Holder of the end
of any delay period under
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this subsection. Subject to any extension under subsection 4.1(b), the Company
shall keep any Registration Statement effective for a period of (i) in the case
of a Demand Registration other than a Shelf Registration, until the earlier of
(x) the three (3) month anniversary of the date that the Registration Statement
with respect thereto is declared effective by the Commission or a final receipt
is issued by the applicable Canadian Securities Authority, as applicable, and
(y) the date on which all of the Registerable Common covered by such
Registration Statement has been sold and (ii) in the case of a Shelf
Registration, until the earlier of (x) two (2) years following the date the
Registration Statement with respect thereto is declared effective by the
Commission or a final receipt is issued by the applicable Canadian Securities
Authority, as applicable, and (y) the date on which all of the Registerable
Common covered by such Registration Statement has been sold or, in each case,
such shorter period if any such Registration is terminated in accordance with
the terms hereof prior to the end of the applicable period.
2.3. Notices; Minimum Registerable Amounts. (a) Subject to subsection 2.1,
any Securities Holder may send a Securities Holder Sale Notice to the Company in
respect of a Demand Registration. Simultaneously with the delivery to the
Company of a Securities Holder Sale Notice, the Securities Holder so requesting
a Demand Registration shall deliver to each other Securities Holder a copy of
such Securities Holder Sale Notice and such other information as such Securities
Holder may deem appropriate.
(b) Notwithstanding subsection 2.3(a), no Securities Holder Sale Notice
delivered by a Securities Holder shall be effective to require the Company to
provide a Demand Registration, unless (i) the aggregate number of shares of PIK
Notes Common Stock represented by such Securities Holder Sale Notice equals or
exceeds the Minimum Registerable Amount or (ii) within twenty (20) days of the
delivery of the first Securities Holder Sale Notice in respect of an aggregate
number of shares of PIK Notes Common Stock that does not equal or exceed the
minimum Registerable Amount one or more additional Securities Holder Sale
Notices are delivered by Securities Holders then entitled to request a Demand
Registration pursuant to subsection 2.1(a) such that the aggregate number of
shares of PIK Notes Common Stock represented by all such Securities Holder Sale
Notices (including the Securities Holder Sale Notice which commenced such twenty
(20) day period) is at least equal to the Minimum Registerable Amount. All
Securities Holders delivering Securities Holder Sale Notices in accordance with
the immediately preceding sentence are hereinafter referred to as the
"Initiating Securities Holders". Subject to subsection 2.4, the delivery of any
Securities Holder Sale Notice pursuant to this subsection 2.3(b), shall be
deemed a request by each Initiating Securities Holder under subsection 2.1 for a
Demand Registration, provided that if all Securities Holder Sale Notices so
delivered do not represent at least the Minimum Registerable Amount, then all
such Securities Holder Sale Notices shall be deemed null and void and shall not
constitute a request for Demand Registration under subsection 2.1 by any
Initiating Securities Holder.
(c) Any Securities Holder Sale Notice may be revised from time to time
prior to the earlier of (i) the execution of the Purchase Agreement, if any, for
such offering and (ii) the effectiveness of the Registration Statement for, or
date of final receipt for the Canadian Prospectus relating to, as applicable,
such offering.
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(d) The Company shall promptly provide a Securities Holder Questionnaire
(i) in the case of a Demand Registration, to each Securities Holder that
delivers a Securities Holder Sale Notice in accordance with this subsection 2.3
and each Piggybacking Securities Holder and (ii) in the case of a Company Public
Sale Event or Company Private Sale Event, to each Securities Holder that has
indicated its desire pursuant to subsection 3.3 to participate in such Sale
Event.
(e) A Securities Holder may include shares of New Common Stock that do not
constitute PIK Notes Common Stock in a Securities Holder Sale Notice; provided,
that for the avoidance of doubt, such shares shall not be counted in calculating
the Minimum Registerable Amount under subsection 2.3(b); and provided, further,
that no such New Common Stock that has theretofore been transferred pursuant to
a Registration Statement, Canadian Prospectus or Rule 144 may be so included.
2.4. Discretion of Securities Holder. (a) In connection with any Securities
Holder Public Sale Event, subject to the provisions of this Agreement, the
Securities Holder requesting a Demand Registration (if such Public Sale Event
was initiated by an individual Securities Holder) or the Initiating Securities
Holders owning a majority of the aggregate number of shares of Registerable
Common that all such Initiating Securities Holders are seeking to include in
such Public Sale Event (if such Public Sale Event was initiated by Initiating
Securities Holders), in its or their sole discretion, as the case may be, shall
determine whether (i) to proceed with, withdraw from or terminate such proposed
Securities Holder Public Sale Event, (ii) to enter into one or more Purchase
Agreements for such Securities Holder Public Sale Event and (iii) to take such
actions as may be necessary to close the sale of Registerable Common
contemplated by such offering, including, without limitation, waiving any
conditions to closing such sale which have not been fulfilled.
(b) Subject to subsection 2.4(c), in the event that the Securities Holder
or the Initiating Securities Holders, as the case may be, determine(s) pursuant
to subsection 2.4(a) not to proceed with a Demand Registration of Registerable
Common at any time before (i) the Registration Statement with respect to such
Demand Registration has been declared effective by the Commission or (ii) a
final receipt has been issued by the applicable Canadian Securities Authority
for the Canadian Prospectus, as applicable, and such Securities Holder or
Initiating Securities Holders, as the case may be, reimburse(s) the Company for
all reasonable fees, costs and expenses in connection therewith, then all
Securities Holder Sale Notices delivered in respect of such Demand Registration
shall be deemed null and void and shall not constitute a request for Demand
Registration under subsection 2.1 by any Securities Holder or Initiating
Securities Holders.
(c) If the Securities Holder or the Initiating Securities Holders, as the
case may be, determine(s) pursuant to subsection 2.4(a) not to proceed with a
Demand Registration (i) at any time at the request of the Company or (ii) as a
result of a Material Adverse Change at any time, then, in either such case, such
Securities Holder or Initiating Securities Holders, as the case may be, will not
be required to reimburse the Company for the fees, costs and expenses in
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connection with such Demand Registration and all Securities Holder Sale Notices
delivered in respect of such Demand Registration shall be deemed null and void
and shall not constitute a request for Demand Registration under subsection 2.1
by any Securities Holder or Initiating Securities Holders.
2.5. Allocation Among Initiating Securities Holders. In connection with any
Demand Registration requested by Initiating Securities Holders in accordance
with subsection 2.3, if the lead managing underwriter selected by such
Initiating Securities Holders in accordance with subsection 5.8 with respect to
such offering (or, if the offering is not underwritten, if a financial advisor
to such Initiating Securities Holders) determines that marketing factors require
a limitation on the number of shares of Registerable Common to be offered and
sold in such offering, there shall be included in the offering only that number
of shares of Registerable Common that such lead managing underwriter or
financial advisor, as the case may be, reasonably and in good faith believes
will not jeopardize the success of the offering, which shares of Registerable
Common shall be allocated among the Initiating Securities Holders on a pro rata
basis based on the number of shares of Registerable Common each such Initiating
Securities Holder seeks to include in such offering.
2.6. Piggyback Rights of Securities Holders and the Company. (a) In
connection with any Demand Registration that has been requested by a Securities
Holder or Initiating Securities Holders, as the case may be, in accordance with
subsections 2.1 and 2.3, any other Securities Holder then holding Registerable
Common (a "Piggybacking Securities Holder") and the Company shall be entitled,
subject to subsection 2.6(b), to participate on the same terms and conditions as
such Securities Holder in the Securities Holder Public Sale Event relating
thereto and offer and sell shares of Registerable Common or shares of New Common
Stock or PIK Notes Common Stock, respectively, therein as provided in this
subsection 2.6. Any party desiring to so participate shall give written notice
(a "Piggybacking Notice") to the Securities Holder requesting such Demand
Registration and, if such party is not the Company, to the Company no later than
fifteen (15) days following receipt of a Securities Holder Sale Notice, of the
aggregate number of shares of Registerable Common that such Piggybacking
Securities Holder or shares of New Common Stock or PIK Notes Common Stock that
the Company, as the case may be, then desires to offer and sell in such
Securities Holder Public Sale Event.
(b) The extent to which a Piggybacking Securities Holder or the Company may
participate in any Securities Holder Public Sale Event in accordance with
paragraph (a) of this subsection 2.6 shall be limited to that number of shares
of Registerable Common or shares of New Common Stock or PIK Notes Common Stock
that will not require a reduction in the number of shares of Registerable Common
of the Initiating Securities Holders or the Securities Holder requesting such
Demand Registration to be included therein or change in a manner materially
adverse to such Initiating Securities Holders or Securities Holder, as the case
may be, the proposed method of the offering, including, without limitation, the
economic benefits to such Initiating Securities Holders or Securities Holder. If
the lead managing underwriter selected by the Initiating Securities Holders or
the Securities Holder initiating such Securities Holder Public Sale Event (or,
if the offering is not underwritten, a financial advisor to such Initiating
Securities
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Holders or Securities Holder) determines that marketing factors
require a limitation on the number of shares of Registerable Common or shares of
New Common Stock or PIK Notes Common Stock to be offered and sold in such
offering, there shall be included in the Registration Statement with respect to
such offering only that number of shares of Registerable Common held by such
Piggybacking Securities Holders or shares of New Common Stock or PIK Notes
Common Stock to be sold by the Company, if any, that such lead managing
underwriter or financial advisor, as the case may be, reasonably and in good
faith believes will not jeopardize the success of the offering, which shares
shall be allocated first among the Piggybacking Securities Holders on a pro rata
basis based on the number of shares of Registerable Common each such Securities
Holder is seeking to include in such offering and second to the Company.
2.7. Limitation on Registration Rights. Notwithstanding any other provision
of this Agreement, no Person shall have the right to cause the Company to file a
Canadian Prospectus unless such Person provides evidence reasonably satisfactory
to the Company that a proposed trade in securities by such Person would be a
"distribution" as such term is used under applicable Canadian Securities Laws or
would otherwise require the filing of a Canadian Prospectus with any one or more
of the Canadian Securities Authorities under applicable Canadian Securities Laws
and the issuance of a final receipt therefor from such authorities in order to
permit the proposed trade.
Section 3. Company Sale Events.
3.1. Determination. (a) Subject to subsection 6.1, the Company may at any
time effect a Company Public Sale Event pursuant to a Registration Statement
filed by the Company, provided that the Company gives each Securities Holder a
Company Sale Notice, no less than thirty (30) days prior to the filing of the
related Registration Statement.
(b) The Company may at any time effect a Company Private Sale Event,
provided that the Company gives each Securities Holder a Company Sale Notice, so
as to be received no less than fifteen (15) days prior to the closing date of
such Company Private Sale Event.
3.2. Notice. The Company Sale Notice shall contain a statement that the
Securities Holders are entitled to participate in such offering and the number
of shares of Registerable Common which represents the best estimate of the lead
managing underwriter (or, if not known or applicable, the Company) that will be
available for sale by the Securities Holders in the proposed offering, if any.
3.3. Piggyback Rights of Securities Holders. (a) If the Company shall have
delivered a Company Sale Notice, Securities Holders shall be entitled to
participate on the same terms and conditions as the Company in the Company
Public Sale Event or the Company Private Sale Event, as the case may be, to
which such Company Sale Notice relates and to offer and sell shares of
Registerable Common therein only to the extent provided in this subsection 3.3.
Each Securities Holder desiring to participate in such offering shall notify the
Company in writing, by
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delivering a Piggybacking Notice no later than ten (10) days following receipt
of a Company Sale Notice, of the aggregate number of shares of Registerable
Common that such Securities Holder then desires to sell in the offering.
(b) Each Securities Holder desiring to participate in a Company Public Sale
Event or a Company Private Sale Event may include shares of Registerable Common
in (i) any Registration Statement relating to a Company Public Sale Event or
(ii) in a Company Private Sale Event, in each case to the extent that the
inclusion of such shares shall not reduce the number of shares of New Common
Stock or PIK Notes Common Stock to be offered and sold by the Company to be
included therein or change in a manner materially adverse to the Company the
proposed method of the offering, including, without limitation, the economic
benefits to the Company. If the lead managing underwriter selected by the
Company for such offering (or, if the offering is not underwritten, a financial
advisor to the Company) determines that marketing factors require a limitation
on the number of shares of Registerable Common to be offered and sold in such
Company Public Sale Event or Company Private Sale Event, as the case may be,
there shall be included in the offering only that number of shares of
Registerable Common, if any, that such lead managing underwriter or financial
advisor, as the case may be, reasonably and in good faith believes will not
jeopardize the success of the offering, which shares of Registerable Common
shall be allocated among such Securities Holders on a pro rata basis based on
the number of shares of Registerable Common each such Securities Holder is
seeking to include in such Sale Event.
3.4. Discretion of the Company. In connection with any Company Public Sale
Event or Company Private Sale Event, subject to the provisions of this
Agreement, the Company, in its sole discretion, shall determine whether (a) to
proceed with, withdraw from or terminate such Company Public Sale Event or
Company Private Sale Event, as the case may be, (b) to enter into the Purchase
Agreement for such Company Public Sale Event or Company Private Sale Event, as
the case may be, and (c) to take such actions as may be necessary to close the
sale of New Common Stock or PIK Notes Common Stock contemplated by such
offering, including, without limitation, waiving any conditions to closing such
sale which have not been fulfilled.
Section 4. Black-Out Periods.
4.1. Black-Out Periods for Securities Holders. (a) No Securities Holder
shall offer to sell or sell any shares of Registerable Common pursuant to a
Demand Registration, and the Company shall not be required to supplement or
amend any Registration Statement or otherwise facilitate the sale of
Registerable Common pursuant thereto, during the 90-day period immediately
following the receipt by each Securities Holder of a certificate of an
authorized officer of the Company to the effect that the Board of Directors of
the Company has in good faith and for valid business reasons requested that the
Securities Holders refrain from selling shares of Registerable Common; provided,
however, that the identity of a potential purchaser or purchasers of
Registerable Common from a Securities Holder shall not constitute a valid
business reason. Any period described in this subsection 4.1(a) during which
Securities Holders are not able to sell shares of Registerable Common pursuant
to a Demand Registration is herein referred to as a
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"black-out" period. The Company shall notify each Securities Holder of the
expiration or earlier termination of any "black-out" period (the nature and
pendency of which need not be disclosed during such "black-out" period).
(b) The period during which the Company is required pursuant to subsection
2.2 to keep any Demand Registration effective shall be extended by a number of
days equal to the number of days, if any, of any "black-out" period applicable
to Securities Holders pursuant to this subsection 4.1 occurring during such
period, plus a number of days equal to the number of days during such period, if
any, of any period during which the Securities Holders are unable to sell any
shares of Registerable Common pursuant to a Demand Registration as a result of
the happening of any event of the nature described in subsection 5.3(c)(ii),
5.3(c)(iii) or 5.3(c)(v).
Section 5. Agreements Concerning Offerings.
5.1. Obligations of Securities Holders. (a) Each Securities Holder shall,
upon the reasonable request of the Company, advise the Company of the number of
shares of Registerable Common then held or beneficially owned by it.
(b) It shall be a condition precedent to the obligations of the Company to
effect a Registration of any shares of Registerable Common or to include shares
of Registerable Common in a Company Private Sale Event that each Securities
Holder desiring to participate in a Public Sale Event or a Company Private Sale
Event, as the case may be, shall have furnished to the Company a completed
Securities Holder's Questionnaire and such additional information regarding
itself, the Registerable Common held by it and the intended method of
disposition of such securities as shall be required by law, the Commission or
any applicable Canadian Securities Authority, to effect the Registration or
private sale of their Registerable Common and any other information relating to
such Registration or private sale reasonably requested by the Company.
5.2. Obligations of the Company. Whenever required under this Agreement to
proceed with a Registration of any Registerable Common, the Company shall,
subject to the terms and conditions of this Agreement, as expeditiously as
reasonably possible:
(a) In accordance with subsection 2.2, prepare and file with the
Commission and/or the applicable Canadian Securities Authority, as
appropriate, a Registration Statement with respect to such Registerable
Common and use its best efforts to cause such Registration Statement to
become effective and/or a final receipt to be issued with respect to the
Canadian Prospectus.
(b) Prepare and file with the Commission and/or the applicable
Canadian Securities Authority, as appropriate, such amendments (including
post-effective amendments) to such Registration Statement, supplements to
the related Prospectus used in connection with such Registration Statement,
and otherwise use its best efforts, to the end that such Registration
Statement reflects the plan of distribution of the securities
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registered thereunder that is included in the relevant Notice of Offering,
if any, in respect of a Demand Registration and, subject to subsection 2.2,
is effective until the completion of the distribution contemplated by such
Registration Statement or so long thereafter as a dealer is required by law
to deliver a Prospectus in connection with the offer and sale of the shares
of Registerable Common covered by such Registration Statement .
(c) Notify the Securities Holders selling Registerable Common, at any
time when a Prospectus relating thereto is required to be delivered under
the Securities Act, when the Company becomes aware of the occurrence of any
event, as a result of which the Prospectus included in such Registration
Statement (as then in effect) contains an untrue statement of material fact
or omits to state a material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading,
and use its best efforts to prepare and file promptly, and in any event
within ten (10) days, with the Commission and/or the applicable Canadian
Securities Authority, as appropriate, a supplement or amendment to such
Prospectus so that, as thereafter delivered to purchasers of such
Registerable Common, such Prospectus will not contain an untrue statement
of a material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading.
(d) Provide to any Securities Holder requesting to include
Registerable Common in such Registration Statement and any managing
underwriter participating in any distribution thereof, and to any attorney,
accountant or other agent retained by such Securities Holder or managing
underwriter, reasonable access to appropriate officers and directors of the
Company to ask questions and to obtain information reasonably requested by
any such Person in connection with such Registration Statement or any
amendment thereto, provided, however, that (i) in connection with any such
access or request, any such requesting Persons shall cooperate to the
extent reasonably practicable to minimize any disruption to the operation
by the Company of its business and (ii) any records, information or
documents shall be kept confidential by such requesting Persons, unless (x)
such records, information or documents are in the public domain or
otherwise publicly available other than through disclosure by such
requesting party or (y) disclosure of such records, information or
documents is required by court or administrative order or by applicable law
(including, without limitation, the Securities Act).
(e) Furnish to the participating Securities Holders, such number of
copies of a Prospectus, including a Preliminary Prospectus, in conformity
with the requirements of the Securities Act and/or applicable Canadian
Securities Laws, and such other documents as they may reasonably request in
order to facilitate the disposition of Registerable Common owned by them.
(f) Use its best efforts to register and qualify the securities
covered by such Registration Statement under such other securities or "Blue
Sky" laws of such jurisdictions in the United States as shall be reasonably
requested by the Securities
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Holders, provided that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states or jurisdictions
or to make any filing or take any other action which could subject it to
taxation as a result of such filing.
(g) Enter into and perform its obligations under a Purchase Agreement,
if the offering is an underwritten offering, in usual and customary form,
with the managing underwriter of such underwritten offering; provided,
however, that each Securities Holder participating in such Public Sale
Event shall also enter into and perform its obligations under such Purchase
Agreement so long as such obligations are usual and customary obligations
of selling stockholders in a registered public offering.
5.3. Agreements Related to Offerings. Subject to the terms and conditions
hereof, in connection with any Demand Registration:
(a) The Company will cooperate with any underwriters for, and the
Securities Holders of, the shares of Registerable Common proposed to be
sold pursuant to a Registration Statement , and will, unless the parties to
the Purchase Agreement otherwise agree, enter into a Purchase Agreement not
inconsistent with the terms and conditions of this Agreement and containing
such other terms and conditions of a type and form reasonable and customary
for companies of similar size and credit rating (including, but not limited
to, such provisions for delivery of a "comfort letter" and legal opinion as
are customary), and take all such other reasonable actions as are necessary
or advisable to permit, expedite and facilitate the disposition of such
shares of Registerable Common in the manner contemplated by such
Registration Statement in each case to the same extent as if all the shares
of Registerable Common then being offered were for the account of the
Company.
(b) Neither a Registration Statement nor any amendment or supplement
thereto will be filed by the Company until counsel for the Initiating
Securities Holder or the securities Holder delivering the relevant
effective Securities Holder Sale Notice shall have had a reasonable
opportunity to review the same and each Securities Holder participating in
such Sale Event shall have had a reasonable opportunity to exercise its
rights under subsection 5.2(d) with respect thereto. No amendment to such
Registration Statement naming any Securities Holder as a selling security
holder shall be filed with the Commission and/or the applicable Canadian
Securities Authority, as applicable, until such Securities Holder shall
have had a reasonable opportunity to review such Registration Statement as
originally filed. Neither such Registration Statement nor any related
Prospectus or any amendment or supplement thereto shall be filed by the
Company with the Commission and/or the applicable Canadian Securities
Authority, as applicable, which shall be disapproved (for reasonable cause)
by the managing underwriters named therein or any participating Securities
Holders within a reasonable period after notice thereof.
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(c) The Company will use its reasonable efforts to keep the Securities
Holders informed of the Company's best estimate of the earliest date on
which such Registration Statement or any post-effective amendment thereto
will become effective and/or the Canadian Prospectus will be receipted and
will notify each Securities Holder and the managing underwriters
participating in the distribution pursuant to such Registration Statement
promptly (i) when such Registration Statement or any post-effective
amendment to such Registration Statement becomes effective and/or when a
final receipt is issued in respect of such Canadian Prospectus, (ii) of any
request by the Commission and/or the applicable Canadian Securities
Authority, as applicable, for an amendment or any supplement to such
Registration Statement or any related Prospectus, (iii) of the issuance by
the Commission or any Canadian Securities Authority of any stop order
suspending the effectiveness of such Registration Statement or of any order
preventing or suspending the use of any related Prospectus or the
initiation or threat of any proceeding for that purpose, (iv) of the
suspension of the qualification of any shares of New Common Stock or PIK
Notes Common Stock included in such Registration Statement for sale in any
jurisdiction or the initiation or threat of a proceeding for that purpose,
(v) of any determination by the Company that an event has occurred (the
nature and pendency of which need not be disclosed during a "black-out
period" pursuant to subsection 4.1) which makes untrue any statement of a
material fact made in such Registration Statement or any related Prospectus
or which requires the making of a change in such Registration Statement or
any related Prospectus in order that the same will not contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading and otherwise comply with applicable securities laws and (vi) of
the completion of the distribution contemplated by such Registration
Statement if it relates to a Company Sale Event.
(d) In the event of the issuance of any stop order suspending the
effectiveness of such Registration Statement or of any order suspending or
preventing the use of any related Prospectus or suspending the
qualification of any shares of Common Stock included in such Registration
Statement for sale in any jurisdiction, the Company will use its reasonable
best efforts promptly to obtain its withdrawal.
(e) The Company agrees to otherwise use its best efforts to comply
with all applicable rules and regulations of the Commission and any
Canadian Securities Authorities, and make available to its security holders
(within the meaning of Rule 158 under the Securities Act), as soon as
reasonably practicable, but not later than fifteen months after the
effective date of such Registration Statement, an earnings statement
covering the period of at least twelve months beginning with the first full
fiscal quarter after the effective date of such Registration Statement,
which earnings statement shall satisfy the provisions of Section 11(a) of
the Securities Act and Rule 158 promulgated thereunder.
(f) The Company shall, subject to permitted "black-out" periods, upon
the happening of any event of the nature described in subsection
5.3(c)(ii), 5.3(c)(iii) or
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<PAGE> 22
5.3(c)(v), as expeditiously as reasonably possible, prepare a supplement or
post-effective amendment to the applicable Registration Statement or a
supplement to the related Prospectus, any document incorporated therein by
reference or file any other required documents and deliver a copy thereof
to each Securities Holder so that, as thereafter delivered to the
purchasers of the Registerable Common being sold thereunder, such
Prospectus will not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading and shall otherwise comply with all applicable
securities laws.
(g) Upon receipt of any notice from the Company of the happening of
any event of the kind described in subsection 5.2(c), each Securities
Holder will immediately discontinue disposition of the Registerable Common
pursuant to the Registration Statement relating to such Registerable Common
until such Securities Holder's receipt of the copies of the supplemented or
amended Prospectus contemplated by subsection 5.2(c), or until such
Securities Holder has been advised in writing by the Company that the use
of the Prospectus may be resumed and has received copies of any additional
or supplemental filings which are incorporated by reference therein. If
reasonably requested by the Company, the Securities Holders will, or will
request the managing underwriter or underwriters, if any, to, deliver to
the Company all copies, other than permanent file copies, of the Prospectus
covering the Registerable Common current at the time of receipt of such
notice.
5.4. Certain Expenses. Subject to subsection 2.4(b), the Company shall pay
all fees, disbursements and expenses in connection with the performance of its
obligations hereunder, including, without limitation, all registration and
filing fees, printing expenses, auditors' fees, listing fees, registrar and
transfer agents' fees, reasonable fees and disbursements of counsel to the
Securities Holders (provided that the Company need not pay for more than the
U.S. counsel and/or one Canadian counsel for such Securities Holders) and
counsel for the Company, expenses (including reasonable fees and disbursements
of counsel) of complying with applicable securities or "Blue Sky" laws and the
fees of the NASD or other governing body of any securities exchange on which the
New Common Stock or PIK Notes Common Stock is listed in connection with its
review of any offering contemplated in such Registration Statement , but not
including underwriting fees, discounts and commissions.
5.5. Public Reporting; Rule 144. (a) The Company agrees to:
(i) file with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act or the Exchange
Act;
(ii) file with any applicable Canadian Governmental Authorities in a
timely manner all documents required of the Company by such Governmental
Authorities and of any securities exchange on which the securities of the
Company are listed or quoted under any applicable Canadian securities laws;
and
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<PAGE> 23
(iii) furnish to any Securities Holder forthwith upon request (A) a
written statement by the Company that it has complied with the current
public information and reporting requirements of Rule 144 or any similar
rule or regulation hereafter adopted by the Commission and the Exchange
Act, (B) a copy of the most recent annual or quarterly report of the
Company and such other reports and documents required to be filed by the
Company pursuant to subsections 5.5(a)(i) or 5.5(a)(ii), and (C) such other
information as is available to the Company without unreasonable cost or
expense and may be reasonably requested in connection with availing any
Securities Holder of any rule or regulation of the Commission which permits
the selling of any such securities without Registration or pursuant to such
rule or regulation.
(b) During any period in which the Company is not subject to Section 13 or
15(d) of the Exchange Act, the Company shall, upon the request of any Securities
Holder, make available to such Securities Holder and any prospective purchaser
of Registerable Common designated by such Securities Holder the information
required by Rule 144(c) in order to permit resales of the Registerable Common
held by such Securities Holder pursuant to Rule 144.
(c) Any Securities Holder selling shares of Registerable Common shall
promptly deliver to the Company a copy of any other documentation required to be
filed by such Securities Holder with any Governmental Authority in connection
with such sale, including, with respect to sales under Rule 144, a copy of the
completed Form 144 filed by such Securities Holder with the Commission.
5.6. Limitations on Subsequent Registration Rights. From and after the date
of this Agreement, the Company shall not, without the prior written consent of
Securities Holders owning a majority of the Registerable Common held by
Securities Holders at such time, enter into any agreement (other than this
Agreement) which would allow any holder or prospective holder of PIK Notes
Common Stock (a) on demand of such holder to cause the Company to effect a
Registration of such securities prior to the second anniversary of the Effective
Date, (b) to include such securities in any Registration Statement filed under
subsection 2.2 hereof to the exclusion of shares of Registerable Common that any
Securities Holder desires to include in any such offering or (c) to include such
securities in any Company Public Sale Event or Company Private Sale Event to the
exclusion of shares of Registerable Common that any Securities Holder desires to
include in any such offering.
5.7. Indemnification and Contribution. (a) In connection with a Demand
Registration, provisions substantially in conformity with the following
provisions shall be contained in the related Purchase Agreement unless the
parties to such Purchase Agreement agree otherwise:
(i) The Company shall agree to indemnify and hold harmless each
Securities Holder and each Person, if any, who controls such Securities
Holder within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act against any losses, claims, damages or liabilities,
joint or several, or actions in respect thereof to which such
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<PAGE> 24
Securities Holder or controlling Person may become subject under the
Securities Act, or otherwise (collectively, "Losses"), insofar as such
Losses arise out of, or are based upon, any untrue statement or alleged
untrue statement of any material fact contained in such Registration
Statement, any related Preliminary Prospectus or any related Prospectus, or
any amendment or supplement thereto, or arise out of, or are based upon the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading, and will reimburse such Securities Holder or controlling Person
for any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such Loss; provided, however, that the
Company shall not be so liable to the extent that any such Loss arises out
of, or is based upon, an untrue statement or alleged untrue statement of a
material fact or an omission or alleged omission to state a material fact
in said Registration Statement, said Preliminary Prospectus, said
Prospectus or any said amendment or supplement in reliance upon, and in
conformity with, written information furnished to the Company by or on
behalf of a Securities Holder specifically for use therein. Notwithstanding
the foregoing, the Company shall not be liable in any such case to the
extent that any such Loss arises out of, or is based upon, an untrue
statement or alleged untrue statement or omission or alleged omission made
in any Preliminary Prospectus if (A) such Securities Holder failed to send
or deliver a copy of the Prospectus with or prior to the delivery of
written confirmation of the sale of Registerable Common to the Person
asserting such Loss or who purchased such Registerable Common which is the
subject thereof if, in either case, such delivery is required by the
Securities Act and (B) the Prospectus would have corrected such untrue
statement or omission or alleged untrue statement or alleged omission; and
the Company shall not be liable in any such case to the extent that any
such Loss arises out of, or is based upon, an untrue statement or alleged
untrue statement of a material fact or omission or alleged omission to
state a material fact in the Prospectus, if such untrue statement or
alleged untrue statement, omission or alleged omission is corrected in an
amendment or supplement to the Prospectus and if, having previously been
furnished by or on behalf of the Company with copies of the Prospectus as
so amended or supplemented, such Securities Holder thereafter fails to
deliver such Prospectus as so amended or supplemented, prior to or
concurrently with the sale of Registerable Common to the Person asserting
such Loss or who purchased such Registerable Common which is the subject
thereof if, in either case, such delivery is required by the Securities
Act. This indemnity agreement will be in addition to any liability which
the Company may otherwise have.
(ii) Each Securities Holder severally shall agree to indemnify and
hold harmless the Company, each of its officers and directors who sign the
Registration Statement, each other Securities Holder and each Person, if
any, who controls the Company or such other Securities Holder within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act against any Losses to which the Company, such officers or directors,
such other Securities Holder or such controlling Person may become subject
under the Securities Act, or otherwise, insofar as such Losses
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<PAGE> 25
arise out of, or are based upon, any untrue statement or alleged untrue
statement of any material fact contained in such Registration Statement,
any related Preliminary Prospectus or any related Prospectus, or any
amendment or supplement thereto, or arise out of, or are based upon the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading, and will reimburse the Company, such officers or directors,
such other Securities Holder or such controlling Person for any legal or
other expenses reasonably incurred by them in connection with investigating
or defending any such Loss, in each case to the extent, but only to the
extent, that any such Loss arises out of, or is based upon, an untrue
statement or alleged untrue statement of a material fact or an omission or
alleged omission to state a material fact in said Registration Statement,
said Preliminary Prospectus or said Prospectus, or any said amendment or
supplement in reliance upon, and in conformity with, written information
furnished to the Company by or on behalf of such Securities Holder
specifically for use therein; provided, however, that the liability of each
Securities Holder on account of the foregoing shall be limited to an amount
equal to the net proceeds of the sale of shares of Registerable Common by
such Securities Holder in the offering which gave rise to the liability.
(iii) The Company shall agree to indemnify and hold harmless each
underwriter and each Person, if any, who controls any such underwriter
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act against any Losses to which such underwriter or controlling
Person may become subject under the Securities Act, or otherwise, insofar
as such Losses arise out of, or are based upon, any untrue statement or
alleged untrue statement of any material fact contained in such
Registration Statement, any related Preliminary Prospectus or any related
Prospectus, or any amendment or supplement thereto, or arise out of, or are
based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse such underwriter or controlling
Person for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such Loss; provided,
however, that the Company shall not be so liable to the extent that any
such Loss arises out of, or is based upon, an untrue statement or alleged
untrue statement of a material fact or an omission or alleged omission to
state a material fact in said Registration Statement, said Preliminary
Prospectus or said Prospectus or any said amendment or supplement in
reliance upon, and in conformity with, written information furnished to the
Company by or on behalf of such underwriter specifically for use therein.
Notwithstanding the foregoing, the Company shall not be liable in any such
case to the extent that any such Loss arises out of, or is based upon, an
untrue statement or alleged untrue statement or omission or alleged
omission made in any Preliminary Prospectus if (A) such underwriter failed
to send or deliver a copy of the Prospectus with or prior to the delivery
of written confirmation of the sale of Registerable Common to the Person
asserting such Loss or who purchased such Registerable Common which is the
subject thereof if, in either case, such delivery is required by the
Securities Act and (B) the Prospectus would have corrected such untrue
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<PAGE> 26
statement or omission or alleged untrue statement or alleged omission; and
the Company shall not be liable in any such case to the extent that any
such Loss arises out of, or is based upon, an untrue statement or alleged
untrue statement of a material fact or omission or alleged omission to
state a material fact in the Prospectus, if such untrue statement or
alleged untrue statement, omission or alleged omission is corrected in an
amendment or supplement to the Prospectus and if, having previously been
furnished by or on behalf of the Company with copies of the Prospectus as
so amended or supplemented, such underwriter thereafter negligently fails
to deliver such Prospectus as so amended or supplemented, prior to or
concurrently with the sale of Registerable Common to the Person asserting
such Loss or who purchased such Registerable Common which is the subject
thereof if, in either case, such delivery is required by the Securities
Act. This indemnity agreement will be in addition to any liability which
the Company may otherwise have, provided that the Company shall only be
required to provide the indemnification described in this subsection
5.7(a)(iii) to an underwriter and each Person, if any, who controls such
underwriter if such underwriter agrees to indemnification provisions
substantially in the form set forth in subsection 5.7(b).
(iv) Each Securities Holder severally shall agree to indemnify and
hold harmless each underwriter and each Person, if any, who controls such
underwriter within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act against any Losses, joint or several, or
actions in respect thereof to which such underwriter or such controlling
Person may become subject under the Securities Act, or otherwise, insofar
as such Losses arise out of, or are based upon, any untrue statement or
alleged untrue statement of any material fact contained in such
Registration Statement, any related Preliminary Prospectus or any related
Prospectus, or any amendment or supplement thereto, or arise out of, or are
based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse such underwriter or such
controlling Person for any legal or other expenses reasonably incurred by
them in connection with investigating or defending any such Loss, in each
case to the extent, but only to the extent, that any such Loss arises out
of, or is based upon, an untrue statement or alleged untrue statement of a
material fact or an omission or alleged omission to state a material fact
in said Registration Statement, said Preliminary Prospectus or said
Prospectus, or any said amendment or supplement in reliance upon, and in
conformity with, written information furnished to the Company by or on
behalf of such Securities Holder specifically for use therein; provided
that the liability of such Securities Holder on account of the foregoing
shall be limited to an amount equal to the net proceeds of the sale of
shares of Registerable Common by such Securities Holder in the offering
which gave rise to the liability. Notwithstanding the foregoing, such
Securities Holder shall not be liable in any such case to the extent that
any such Loss arises out of, or is based upon, an untrue statement or
alleged untrue statement or omission or alleged omission made in any
Preliminary Prospectus if (A) such underwriter failed to send or deliver a
copy of the Prospectus with or prior to the delivery of written
confirmation of the sale of Registerable
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<PAGE> 27
Common to the Person asserting such Loss or who purchased such Registerable
Common which is the subject thereof if, in either case, such delivery is
required by the Securities Act and (B) the Prospectus would have corrected
such untrue statement or omission or alleged untrue statement or alleged
omission; and such Securities Holder shall not be liable in any such case
to the extent that any such Loss arises out of, or is based upon, an untrue
statement or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact in the Prospectus, if such untrue
statement or alleged untrue statement, omission or alleged omission is
corrected in an amendment or supplement to the Prospectus and if, having
previously been furnished with copies of the Prospectus as so amended or
supplemented, such underwriter thereafter negligently fails to deliver such
Prospectus as so amended or supplemented, prior to or concurrently with the
sale of Registerable Common to the Person asserting such Loss or who
purchased such Registerable Common which is the subject thereof if, in
either case, such delivery is required by the Securities Act. No Securities
Holder shall be required to provide the indemnification described in this
subsection 5.7(a)(iv) to an underwriter or any Person who controls such
underwriter if such underwriter has not agreed to indemnification
provisions substantially in the form set forth in subsection 5.7(b).
(v) Promptly after receipt by an indemnified party pursuant to the
indemnification provisions of such Purchase Agreement of notice of any
claim or the commencement of any action, the indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party
pursuant to such indemnification provisions, notify the indemnifying party
in writing of the claim or the commencement of that action; provided,
however, that the failure to notify the indemnifying party shall not
relieve it from any liability which it may have to the indemnified party
otherwise than pursuant to the indemnification provisions of such Purchase
Agreement unless the indemnifying party is materially prejudiced by such
lack of notice. If any such claim or action shall be brought against an
indemnified party, and it shall notify the indemnifying party thereof, the
indemnifying party shall be entitled to participate in defense of such
claim, and, to the extent that it wishes, jointly with any other similarly
notified indemnifying party, to assume the defense thereof with counsel
reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, (x) the indemnifying party shall not be
liable to the indemnified party pursuant to the indemnification provisions
hereof or of such Purchase Agreement for any legal or other expenses
subsequently incurred by the indemnified party in connection with the
defense thereof other than reasonable costs of investigation, (y) the
indemnifying party shall not be liable for the costs and expenses of or
Losses arising out of any settlement of such claim or action unless such
settlement was effected with the consent of the indemnifying party and (z)
the indemnified party shall be obligated to cooperate with the indemnifying
party in the investigation of such claim or action; provided, however, that
the Securities Holders (together with their respective controlling Persons)
and the underwriters (together with their respective controlling Persons)
shall each as a separate group have the right to employ one separate
counsel to
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<PAGE> 28
represent such Securities Holders and such underwriters (and their
respective controlling Persons) who may be subject to liability arising out
of any claim in respect of which indemnity may be sought by such Securities
Holders and underwriters against the Company pursuant to the
indemnification provisions of such Purchase Agreement if, in the reasonable
judgment of either Securities Holders' counsel or counsel for the
underwriters, there exists an actual or potential conflict of interest
between such Securities Holders (and its controlling persons) on the one
hand and such underwriters (and their controlling persons) on the other,
and in that event the reasonable fees and expenses of both such separate
counsel shall also be paid by the Company.
(b) As a condition to agreeing in any Purchase Agreement to the
indemnification provisions described in subsection 5.7(a)(iii) and 5.7(a)(iv) in
favor of an underwriter participating in the offering covered by the related
Registration Statement and its controlling Persons, the Company and the
Securities Holders participating in an offering pursuant to such Registration
Statement may require that such underwriter agree in the Purchase Agreement to
provisions substantially in the form set forth in subsection 5.7(a)(v) and to
severally indemnify and hold harmless the Company, each of its officers and
directors who sign such Registration Statement, each Securities Holder
participating in such offering and each Person, if any, who controls the Company
or such Securities Holder within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act against any Losses to which the Company, such
officers and directors, such Securities Holder or such controlling Person may
become subject under the Securities Act, or otherwise, insofar as such Losses
arise out of, or are based upon, any untrue statement or alleged untrue
statement of any material fact contained in such Registration Statement in which
such underwriter is named as an underwriter, any related Preliminary Prospectus
or any related Prospectus, or any amendment or supplement thereto, or arise out
of, or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and to reimburse the Company, such officers and
directors, such Securities Holder or such controlling Person for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such Loss in each case to the extent, but only to the extent, that
any such Loss arises out of, or is based upon, an untrue statement or alleged
untrue statement of a material fact or an omission or alleged omission to state
a material fact in said Registration Statement, said Preliminary Prospectus or
said Prospectus or any said amendment or supplement in reliance upon, and in
conformity with, written information furnished to the Company by or on behalf of
such underwriter specifically for use therein.
(c) In order to provide for just and equitable contribution between the
Company and such Securities Holders in circumstances in which the
indemnification provisions described in this subsection 5.7 and contained in any
Purchase Agreement are for any reason insufficient or inadequate to hold the
indemnified party harmless (other than as a result of their nonapplicability in
accordance with their terms), the Company and such Securities Holders shall
contribute to the aggregate Losses (including any investigation, legal and other
expenses reasonably incurred in connection with, and any amount paid in
settlement of, any action, suit or
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<PAGE> 29
proceeding or any claims asserted, but after deducting any contribution actually
received from Persons other than the Company and such Securities Holders)
incurred by the Company and one or more of its directors or its officers who
sign such Registration Statement or such Securities Holders or any controlling
Person of any of them, in such proportion as is appropriate to reflect their
relative degrees of fault in connection with the actions which resulted in such
Losses, as well as any other relevant equitable considerations. The relative
fault of the Company and of such Securities Holder shall be determined by
reference to, among other things, whether the untrue or allegedly untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company or by such
Securities Holder and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission;
provided, however, that the liability of each such Securities Holder to make
such contribution shall be limited to an amount equal to the net proceeds of the
sale of shares of Registerable Common by such Securities Holder in the offering
which gave rise to the liability. As among themselves, such Securities Holders
agree to contribute to amounts payable by other such Securities Holders in such
manner as shall, to the extent permitted by law, give effect to the provisions
in such Purchase Agreement comparable to subsection 5.7(a)(ii). The Company and
such Securities Holders agree that it would not be just and equitable if their
respective obligations to contribute pursuant to this subsection 5.7(c) were to
be determined by pro rata allocation (other than as set forth above) of the
aggregate Losses by reference to the proceeds realized by such Securities
Holders in a sale pursuant to said Registration Statement or said Prospectus or
by any other method of allocation which does not take account of the
considerations set forth in this subsection 5.7(c). No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution under this subsection from any
Person who was not guilty of such fraudulent misrepresentation.
(d) The Company and the Securities Holders participating in an offering
pursuant to a Registration Statement agree that, if the underwriters
participating in a Public Sale Event are agreeable, the Purchase Agreement, if
any, relating to such Registration Statement shall contain provisions to the
effect that in order to provide for just and equitable contribution between such
underwriters on the one hand and the Company and such Securities Holders on the
other hand in circumstances in which the indemnification provisions of such
Purchase Agreement are for any reason insufficient or inadequate to hold the
indemnified party harmless (other than as a result of their non-applicability in
accordance with their terms), the Company and such Securities Holders on the one
hand and such underwriters on the other hand will contribute on the basis herein
set forth to the aggregate Losses (including any investigation, legal and other
expenses incurred in connection with, and any amount paid in settlement of, any
action, suit or proceeding or claims asserted, but after deducting any
contribution actually received from Persons other than the Company and such
Securities Holders and such underwriters), incurred by the Company and one or
more of its directors or its officers who sign such Registration Statement or
such Securities Holders or such underwriters, or any controlling Person of any
of them, in such proportion as is appropriate to reflect their relative degrees
of fault in connection with the actions which resulted in such Losses, as well
as any other relevant
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<PAGE> 30
equitable considerations. The relative fault of the Company, of such Securities
Holders and of such underwriter shall be determined by reference to, among other
things, whether the untrue or allegedly untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to information
supplied by the Company, by such Securities Holders or by such underwriter and
the parties, relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. Notwithstanding the provisions
set forth above, (x) no underwriter shall be required to contribute any amount
in excess of the amount by which the total price at which the shares of New
Common Stock and PIK Notes Common Stock underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages which
such underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission and (y) the liability
of each such Securities Holder to make such contribution shall be limited to an
amount equal to the net proceeds of the sale of shares of Registerable Common by
such Securities Holder in the offering which gave rise to the liability. As
among themselves, such Securities Holders agree to contribute to amounts payable
by other such Securities Holders in such manner as shall, to the extent
permitted by law, give effect to the provisions in such Purchase Agreement
comparable to subsection 5.7(a)(ii). As between the Company and such Securities
Holders, such parties agree that it would not be just and equitable if their
respective obligations to contribute pursuant to this subsection 5.7(d) were to
be determined by pro rata allocation (other than as set forth above) of the
aggregate Losses by reference to the proceeds realized by such Securities
Holders in a sale pursuant to said Registration Statement or said Prospectus or
by any other method of allocation which does not take account of the
considerations set forth in this subsection 5.7(d). No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution under the provisions set forth
above from any Person who was not guilty of such fraudulent misrepresentation.
(e) The obligations of the Company and the Securities Holders participating
in any distribution of shares of Registerable Common under the provisions of
this subsection 5.7 and provisions in any Purchase Agreement substantially
similar to subsections 5.7(a), 5.7(b), 5.7(c) or 5.7(d) shall survive the
termination of any or all of the other provisions of this Agreement or such
Purchase Agreement.
5.8. Underwritten Offerings. If at any time any of the Securities Holders
participating in a Demand Registration desire to sell Registerable Common in an
underwritten offering, the investment banker or investment bankers that will
manage the offering will be selected by (a) if such Demand Registration was
initiated by Initiating Securities Holders, the Initiating Securities Holders
owning a majority of the aggregate number of shares of Registerable Common that
all such Initiating Securities Holders are seeking to include in the related
Sale Event and (b) if such Demand Registration was initiated by an individual
Securities Holder, the Securities Holder requesting such Securities Holder
Public Sale Event, provided that in any event, such investment banker or bankers
must be reasonably satisfactory to the Company.
5.9. Transfer of Rights Under this Agreement; Transfers of Registerable
Common. (a) At any time, the rights and obligations of a Securities Holder under
this
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<PAGE> 31
Agreement may be transferred by a Securities Holder to a transferee of
Registerable Common, provided that, within a reasonable period of time (but in
no event later than 10 days) after such transfer, (i) the transferring
Securities Holder shall have furnished the Company and the other Securities
Holders written notice of the name and address of such transferee and the
Registerable Common with respect to which such rights are being transferred and
(ii) such transferee shall furnish the Company and the Securities Holders (other
than the transferring Securities Holder) a copy of a duly executed Supplemental
Addendum by which such transferee (A) assumes all of the obligations and
liabilities of its transferor hereunder, (B) enjoys all of the rights of its
transferor hereunder and (C) agrees to be bound hereby. Notwithstanding the
foregoing, a Securities Holder's transfer of its rights and obligations under
this Agreement in accordance with the preceding sentence to a transferee of less
than all of the Registerable Common owned by such transferor shall not be
effective to transfer the right to request a Demand Registration pursuant to
subsection 2.1 hereof unless (x) at the time of such transfer the transferor
Securities Holder has not exhausted its right to request such a Demand
Registration and (y) the transfer is of at least 10% of the issued and then
outstanding shares of PIK Notes Common Stock, provided, that, subject to the
Company's rights under subsection 5.10 of this Agreement, such a transfer of the
right to request a Demand Registration shall not divest the transferor
Securities Holder of its right to request a Demand Registration pursuant to
subsection 2.1 hereof.
(b) Except with respect to transfers pursuant to subsection 5.9(a), a
transferee of Registerable Common shall neither assume any liabilities or
obligations nor enjoy any rights hereunder and shall not be bound by any of the
terms hereof.
5.10. Termination of Rights. The rights granted under this Agreement shall
terminate as to each Securities Holder at such time as such Securities Holder
shall receive, either before or after the Company's receipt of a Securities
Holder Sale Notice or a Piggybacking Notice, an opinion of counsel to the
Company in form reasonably satisfactory to counsel to such Securities Holder
that all of the Registerable Common then held by such Securities Holder can be
sold within a given three (3) month period commencing on the date of such
opinion in a transaction or transactions exempt from the Registration
requirements of the Securities Act.
Section 6. Sequencing of Public Sale Events.
6.1. Effective Notice Period. Subject to the last sentence of this
subsection 6.1, during the term of this Agreement, no priority of right shall
exist between or among Securities Holders or between any Securities Holder, on
the one hand, and the Company, on the other, with respect to providing a Notice
of Offering with respect to, and effecting, a Public Sale Event. Once properly
given, a Securities Holder Sale Notice or a Company Sale Notice regarding a
Company Public Sale Event, as the case may be, shall be effective (and shall
preclude any such Notice of Offering by another party except in accordance with
clause (ii) of Section 2.3(b)) during the period (the "Effective Notice Period")
commencing on the date of such Notice of Offering and ending on the earliest of
(a) withdrawal of such Notice of Offering (notice of which shall be promptly
effected in the same manner as such Notice of Offering), (b) the abandonment of
the Public Sale Event to which such Notice of Offering relates (notice of which
shall be
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<PAGE> 32
promptly effected in the same manner as such Notice of Offering) and (c) the
later of (i) 150 days after such a Notice of Offering has been given, provided
that the Registration Statement relating to such Notice of Offering has been
declared effective within 90 days of such Notice of Offering, and (ii) 90 days
after the closing date of the Public Sale Event to which such Notice of Offering
relates; provided that nothing in this subsection 6.1 shall limit the Company's
right to give a Notice of Offering with respect to, and effect, a Company
Private Sale Event. Upon the termination of an Effective Notice Period, any
Securities Holder so entitled pursuant to subsection 2.1 or the Company can
provide a Notice of Offering, provided that if such Notice of Offering is given
within 12 months after the end of an Effective Notice Period by the party that
gave the immediately preceding Notice of Offering, any other party shall, for
the 45-day period following its receipt of such Notice of Offering, have the
right to preempt such Notice of Offering by itself delivering a Notice of
Offering.
6.2. Restrictive Legend on Certificates. (a) Each Certificate evidencing
shares of PIK Notes Common Stock distributed to the Securities Holders shall,
subject to paragraph (b) below, be stamped or otherwise imprinted with a
conspicuous legend in the following form:
"The securities evidenced by this certificate were issued pursuant to an
exemption from registration under the Securities Act of 1933, as amended
(the "Act"), and may be offered, sold or otherwise transferred only
pursuant to a Registration Statement effective under the Act or an
exemption from the provisions of Section 5 of the Act."
(b) A holder of a certificate evidencing shares of PIK Notes Common Stock
bearing the legend specified in paragraph (a) shall be entitled to receive from
the Company, whether or not in connection with a sale or proposed sale, a new
certificate or certificates evidencing an identical number of shares (the
transfer expenses for which shall be paid by the Company) but without such
legend at such time as (i) such shares are sold pursuant to a Registration
Statement effective under the Securities Act, (ii) such holder furnishes the
Company with a certificate to the effect that such holder is not an affiliate or
an "underwriter" within the meaning of Section 1145(b) of the Bankruptcy Code
and, upon the request of the Company, an opinion of counsel reasonably
satisfactory to the Company to such effect and to the effect that such shares
may be sold without registration under the Securities Act or (iii) the
registration rights granted in this Agreement otherwise terminate in accordance
with subsection 5.10. The shares of the PIK Notes Common Stock represented by
any such replacement certificate issued without the legend specified in
paragraph (a) pursuant to the immediately preceding sentence shall cease to be
Registerable Common for all purposes of this Agreement.
Section 7. Representations and Warranties of the Company. In connection
with the Registration Statement in respect of any Demand Registration, the
Company shall, on the date of effectiveness of such Registration Statement or
the date of the final receipt for the Canadian Prospectus (the "effective
date"), certify to each Securities Holder in a certificate of a Responsible
Officer of the Company to the effect that the representations and warranties set
forth below are true and correct at and as of the effective date. In connection
with any other Sale
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<PAGE> 33
Event in which Securities Holders participate, except as
otherwise may be agreed upon by such participating Securities Holders and the
Company, the Company shall represent and warrant in the Purchase Agreement
relating to such Sale Event to the Securities Holders and any underwriters
participating in such Sale Event as follows (except as otherwise indicated, each
reference in this Section to "the Registration Statement" shall refer to a
Registration Statement in respect of any Demand Registration or other such Sale
Event in which Securities Holders participate, including all information deemed
to be a part thereof, as amended, and each reference to "the Prospectus" shall
refer to the related Prospectus):
(a) (i) When the Registration Statement became (in the case of a
Demand Registration to be filed pursuant to a Shelf Registration) or shall
become effective, the Registration Statement did or will comply as of its
effective date in all material respects with the applicable requirements of
the Securities Act and the rules and regulations thereunder; (ii) when the
Prospectus is filed in accordance with Rule 424(b) and/or in accordance
with applicable Canadian Securities Laws , the Prospectus (and any
supplements thereto) will comply in all material respects with the
applicable requirements of the Securities Act and/or applicable Canadian
Securities Laws and the rules and regulations thereunder; (iii) the
Registration Statement did not or will not as of its effective date contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading; and (iv) the Prospectus, if not filed pursuant to
Rule 424(b), did not or will not as of the date thereof, and on the date of
any filing pursuant to Rule 424(b), the Prospectus (together with any
supplement thereto) will not, include any untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, and if filed pursuant to Canadian Securities Law will
constitute full, true and plain disclosure of all material facts relating
to the securities offered thereunder; provided, however, that the Company
makes no representations or warranties as to the information contained in
or omitted from the Registration Statement, or the Prospectus (or any
supplement thereto) in reliance upon and in conformity with information
furnished in writing to the Company by or on behalf of any Securities
Holder specifically for use in connection with the preparation of the
Registration Statement or the Prospectus (or any supplement thereto) or any
information furnished in writing to the Company by or on behalf of any
underwriter specifically for use in connection with the preparation of the
Registration Statement or the Prospectus (or any supplement thereto), other
than that the Company has no knowledge of any such untrue statement or
omission in respect of such information.
(b) The public accountants who certified the Company's financial
statements in the Registration Statement are independent certified public
accountants within the meaning of the Securities Act and the applicable
published rules and regulations thereunder, or, to the extent that Canadian
law is deemed to control pursuant to the terms of the Securities Act,
within the meaning of such controlling Canadian law; the historical
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<PAGE> 34
consolidated financial statements, together with the related schedules and
notes, forming part of the Registration Statement and the Prospectus comply
in all material respects with the requirements of the Securities Act and/or
applicable Canadian Securities Laws and the rules and regulations
thereunder and have been prepared, and present fairly in all material
respects the consolidated financial condition, results of operations and
changes in financial condition of the Company and its consolidated
Subsidiaries at the respective dates and for the respective periods
indicated, in accordance with generally accepted accounting principles
applied consistently throughout such periods (except as specified therein);
and the historical consolidated financial data set forth in the Prospectus
are derived from the accounting records of the Company and its consolidated
Subsidiaries, and are a fair presentation of the data purported to be
shown; and the pro forma consolidated financial statements (if any),
together with the related notes, forming part of the Registration Statement
and the Prospectus, comply in all material respects with the requirements
of all applicable securities laws, including, without limitation,
Regulation S-X of the Securities Act, to the extent applicable.
(c) Except as may be set forth in the Prospectus, each member of the
Philip Group has been duly organized and is validly existing as a
corporation, limited or general partnership, limited liability company or
other similar entity in good standing under the laws of the jurisdiction in
which it is organized, with the corporate or other analogous power and
authority to own its properties and conduct its business as described in
the Prospectus, and is duly qualified to do business as a foreign
corporation or other analogous entity and is in good standing under the
laws of each jurisdiction which requires such qualification where the
failure to be so qualified could materially adversely affect the business,
operations, property or financial condition of the Philip Group taken as a
whole.
(d) Except as may be set forth in the Prospectus, all the outstanding
shares of capital stock of each Subsidiary have been duly authorized and
validly issued and are fully paid and nonassessable by the issuer, and all
outstanding shares of capital stock of the Subsidiaries are owned by the
Company either directly or through Subsidiaries free and clear of any
security interests, claims, liens or encumbrances (other than those granted
to secure the obligations of the Philip Group in respect of the Secured
PIK/Term Credit Agreement or the Exit Facility or other secured debt as
permitted therein), except in each case where the failure to so own the
capital stock of a Subsidiary could materially adversely affect the
business, operations, property or financial condition of the Philip Group
taken as a whole.
(e) Except as may be set forth in the Prospectus, no member of the
Philip Group is in violation of any term or provision of any charter,
by-law, franchise, license, permit, judgment, decree or order or any
applicable statute, rule or regulation, which violation could be material
to the business, operations, property or financial condition of the Philip
Group taken as a whole.
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<PAGE> 35
(f) Except as may be set forth in the Prospectus, no default exists
and no event has occurred which with notice, lapse of time, or both, would
constitute a default, in the due performance and observance of any term,
covenant or condition of any agreement to which the Company or any of the
Subsidiaries is a party or by which it or any of them is bound, which
default could materially adversely affect the business, operations,
property or financial condition of the Philip Group taken as a whole.
(g) Except as may be set forth in the Prospectus, each member of the
Philip Group has all requisite corporate or other analogous power and
authority and has received and is operating in compliance in all material
respects with all governmental or regulatory or other franchises, grants,
authorizations, approvals, licenses, permits, easements, consents,
certificates and orders, necessary to own its properties and conduct
businesses as currently owned and conducted and as proposed to be
conducted, except where the failure to do so could not materially adversely
affect the business, operations, property or financial condition of the
Philip Group, taken as a whole.
(h) Except as may be described in the Prospectus, since the date of
the most recent financial statements included in the Prospectus, there has
been no material adverse change in the business, operations, property or
financial condition of the Philip Group taken as a whole, whether or not
arising from transactions in the ordinary course of business.
(i) Except as may be described in the Prospectus, no litigation,
investigation or proceeding of or before any arbitrator or Governmental
Authority is pending or, to the best knowledge of the Company, threatened
against any member of the Philip Group or against any of their respective
properties or revenues, existing or future which, if adversely determined,
could have a material adverse effect on the business, property or financial
condition of the Philip Group taken as a whole, or which otherwise is of a
character required to be disclosed in the Prospectus; there is no
franchise, contract or other document of a character required to be
described in the Registration Statement or the Prospectus, or to be filed
as an exhibit thereto, which is not described or filed as required; and the
descriptions of such franchises, contracts and other documents described in
the Prospectus fairly summarize the matters purported to be described
therein.
(j) Except as may be described in the Prospectus, there is no pending
or, to the best knowledge of the Company, threatened action, suit, or
judicial, arbitral, rule-making or other administrative or other proceeding
against the Company which challenges the validity of (i) this Agreement or
(ii) any Purchase Agreement entered into in connection with the offering or
any action taken or to be taken pursuant to or in connection with such
agreements.
(k) The Company's authorized equity capitalization is as set forth in
the Prospectus; the capital stock of the Company conforms in all material
respects to the
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<PAGE> 36
description thereof contained in the Prospectus; all of the issued and
outstanding shares of capital stock of the Company have been duly
authorized and validly issued and, except as set forth in the Prospectus,
are fully paid and nonassessable.
(l) The Company has all requisite corporate power and authority, has
taken all requisite corporate action, and has received and is in compliance
with all governmental, judicial and other authorizations, approvals and
orders, necessary in connection with the offering, and to carry out the
provisions and conditions of this Agreement and the Purchase Agreement, if
any, related thereto, except for such approvals and conditions that need to
be obtained or satisfied as are set forth in the Prospectus and such
approvals or authorizations as may be required under the Securities Act,
the securities or "Blue Sky" laws of any jurisdiction or the rules of any
securities exchange on which the securities of the Company are listed in
connection with the purchase and distribution of shares of New Common Stock
and PIK Notes Common Stock in the offering. The Purchase Agreement, if any,
entered into in connection with the offering has been duly authorized,
executed and delivered by the Company and is a valid and binding obligation
of the Company, enforceable against the Company in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general equitable
principles; provided, that no representation is made as to the validity,
binding effect or enforceability of any provision that purports to provide
indemnification of any Person for any Losses resulting from violation by
such person of any applicable securities or "Blue Sky" laws.
(m) To the best knowledge of the Company, neither the sale of the New
Common Stock and PIK Notes Common Stock to be sold pursuant to the
Registration Statement, nor the execution, delivery or performance by the
Company of the Purchase Agreement, if any, entered into in connection with
the offering or the consummation of any other of the transactions
contemplated in such Purchase Agreement, if any, will conflict with, result
in a breach of, or constitute a default under, the charter or by-laws of
the Company or any of the Subsidiaries or the terms of any material
indenture or other material agreement or instrument to which the Company or
any of the Subsidiaries is a party or by which it or any of them is bound,
or any material statute applicable to the Company or any of the
Subsidiaries or any material order, decree, rule or regulation applicable
to the Company or any of the Subsidiaries of any Governmental Authority.
(n) Except (i) as set forth in the Prospectus and (ii) to the extent
permitted under subsection 5.6, no holders of securities of the Company
have rights to the registration of such securities under any Registration
Statement except the Securities Holders.
For purposes of the foregoing representations and warranties, the Company may
assume that any agreement is the valid and binding obligation of any other
parties to such agreement.
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<PAGE> 37
Section 8. Representations and Warranties of the Securities Holders. Each
participating Securities Holder shall, in connection with a Sale Event, if
required by the terms of a Purchase Agreement relating to such Sale Event, for
itself severally and not jointly represent and warrant to (i) in the case of an
underwritten Public Sale Event, the Company, the underwriter or underwriters and
each other Securities Holder participating in such underwritten Public Sale
Event or (ii) in the case of a non-underwritten Sale Event, the Company and the
purchaser or purchasers and each other Securities Holder participating in such
non-underwritten Sale Event, as follows:
(a) Such Securities Holder has all requisite power and authority to
enter into and carry out the terms of this Agreement and such Purchase
Agreement and the other agreements and instruments related to such
agreements to which it is a party.
(b) Each of this Agreement and such Purchase Agreement has been duly
authorized, executed and delivered by or on behalf of such Securities
Holder, and constitutes the valid and binding obligation of such Securities
Holder enforceable against such Securities Holder in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general equitable
principles; provided, that no representation is made as to the validity,
binding effect or enforceability of any provision purporting to provide
indemnification of any person for any Losses resulting from violation by
such person of any applicable securities or "Blue Sky" laws.
(c) Such Securities Holder, immediately prior to any sale of shares of
Registerable Common pursuant to such Purchase Agreement, will have good and
marketable title to such shares of Registerable Common, free and clear of
all liens, security interests, encumbrances, equities, claims or other
defects in title (other than those created by this Agreement); and, upon
payment therefor, good and marketable title to such shares of Registerable
Common will pass to the purchaser thereof, free and clear of any lien,
security interest, encumbrance, equity, claims or other defect in title.
(d) Such Securities Holder has not taken and will not take, directly
or indirectly, any action designed to constitute or which has constituted
or which might reasonably be expected to cause or result in, under the
Exchange Act or the rules or regulations promulgated thereunder or other
applicable law, stabilization or manipulation of the price of any security
of the Company to facilitate the sale or resale of shares of Registerable
Common.
(e) Written information furnished by or on behalf of such Securities
Holder to the Company expressly for use in the Registration Statement, any
related Preliminary Prospectus, or any related Prospectus or any amendment
or supplement thereto will not contain, in each case as of the date such
information was furnished, any untrue statement of a material fact or omit
to state any material fact required to be stated or necessary to
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<PAGE> 38
make the statements in such information not misleading.
(f) To the best knowledge of such Securities Holder, neither the sale
of the Registerable Common to be sold pursuant to the Registration
Statement, nor the execution, delivery or performance by such Securities
Holder of the Purchase Agreement, if any, entered into in connection with
the offering or the consummation of any other of the transactions
contemplated in such Purchase Agreement, if any, will conflict with, result
in a breach of, or constitute a default under, the charter or by-laws of
such Securities Holder or the terms of any material indenture or other
material agreement or instrument to which such Securities Holder is a party
or by which it is bound, or any material statute applicable to such
Securities Holder or any material order, decree, rule or regulation
applicable to such Securities Holder of any Governmental Authority.
(g) Such Securities Holder will deliver to any underwriter a properly
completed and executed United States Treasury Department Form W-8 or Form
W-9 (or other applicable form or statement specified by Treasury Department
regulations in lieu thereof).
Section 9. Delivery of Comfort Letter and Legal Opinion. On the date that a
Registration Statement relating to a Sale Event in which Securities Holders
participate is declared effective by the Commission or any Canadian Securities
Authority, the Company shall comply with the following:
(a) The Company shall have received, and delivered to each Securities
Holder participating in such Sale Event, a copy of the "comfort" letter or
letters, or updates thereof according to customary practice, of the
independent certified public accountants who have certified the Company's
financial statements included in the Registration Statement covering
substantially the same matters with respect to the Registration Statement
(including the Prospectus) and with respect to events subsequent to the
date of the Company's financial statements as are customarily covered in
accountants' letters delivered to underwriters in underwritten public
offerings of securities. The Company will use its reasonable best efforts
to cause such "comfort" letters to be addressed to such Securities Holders.
(b) Each Securities Holder and any underwriters participating in such
offering shall have received an opinion and any updates thereof of outside
counsel to the Company reasonably satisfactory to such Securities Holders
and underwriters covering substantially the same matters as are customarily
covered in opinions of issuer's counsel delivered to underwriters in
underwritten public offerings of securities, addressed to each of such
Securities Holders and underwriters participating in such offering and
dated the closing date thereof.
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<PAGE> 39
Section 10. Miscellaneous.
10.1. Notices. All notices, requests and demands to or upon the respective
parties hereto to be effective shall be in writing (including by facsimile
transmission), and, unless otherwise expressly provided herein, shall be deemed
to have been duly given or made when actually delivered or, in the case of
notice by facsimile transmission, when sent and confirmation of receipt is
received. Notices to the Securities Holders shall be deemed to have been given
or made when sent. All notices shall be addressed as follows or to such other
address as may be hereafter designated in writing by the respective parties
hereto:
The Company: Philip Services Corporation
100 King Street West
Hamilton, Ontario L8N 4J6
CANADA
Telecopier: (905) 523-8036
The Securities Holders: The address of each Securities Holder
as set forth on the signature
pages hereof.
10.2. Amendments and Waivers. The Securities Holders of not less than
66-2/3% of the Registerable Common held or beneficially owned by Securities
Holders at any point in time and the Company may from time to time enter into
written amendments, supplements or modifications to this Agreement for the
purpose of adding any provisions hereto or thereto or changing in any manner the
rights of the Securities Holders or the Company hereunder or thereunder, and the
Securities Holders of not less than 66-2/3% of the Registerable Common held or
beneficially owned by Securities Holders at any point in time may execute a
written instrument waiving, on such terms and conditions as may be specified
therein, any of the requirements of this Agreement which are solely for the
benefit of the Securities Holders and where such waiver does not adversely
affect the interests of the Company; provided, however, that no such waiver and
no such amendment, supplement or modification shall (i) adversely affect the
rights of a Securities Holder under Section 2 hereof or (ii) amend, modify or
waive any provision of Section 5 or this subsection 10.2, in each case without
the written consent of each Securities Holder. Any such waiver and any such
amendment, modification or supplement shall apply equally to each of the
Securities Holders and the Company.
10.3. Termination. This Agreement and the respective obligations and
agreements of the parties hereto, except as otherwise expressly provided herein,
shall terminate on the Termination Date.
10.4. Survival of Representations and Warranties. Except as they may by
their terms relate to an earlier date, all representations and warranties made
hereunder and in any document, certificate or statement delivered pursuant
hereto or in connection herewith shall survive the execution and delivery of
this Agreement and the termination of any or all of the provisions of this
Agreement.
10.5. Headings. The descriptive headings of the several sections and
subsections
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<PAGE> 40
of this Agreement are inserted for convenience only and shall not control or
affect the meaning or construction of any of the provisions hereof.
10.6. Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto in separate counterparts, each
of which when so executed and delivered shall be an original, but all of such
counterparts shall together constitute one and the same agreement.
10.7. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
10.8. Adjustment of Shares. Each reference to a number of shares of PIK
Notes Common Stock in this Agreement shall be adjusted proportionately to
reflect any stock dividend, split or reverse split or the like affected with
respect to all outstanding shares of PIK Notes Common Stock.
10.9. No Inconsistent Agreements. The Company will not on or after the date
of this Agreement enter into any agreement with respect to its securities which
is inconsistent with the rights granted to the Securities Holders in this
Agreement or otherwise conflicts with the provisions hereof.
10.10. Severability. Any provision of this Agreement prohibited or rendered
unenforceable by any applicable law of any jurisdiction shall as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability, without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
10.11. ENTIRE AGREEMENT. THIS AGREEMENT CONSTITUTES THE ENTIRE AGREEMENT
AMONG THE PARTIES HERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES HERETO. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES HERETO.
10.12. Listing of PIK Notes Common Stock. The Company shall use its
commercially reasonable efforts to cause the PIK Notes Common Stock to be listed
or admitted to trading on the same exchange or national trading market on which
the New Common Stock is then listed, and if the New Common Stock is not so
listed, then on the New York Stock Exchange, Inc. and The Toronto Stock
Exchange, and if the PIK Notes Common Stock cannot be listed on the New York
Stock Exchange, Inc., then on the NASDAQ National Market.
10.13. No Required Sale. Nothing in this Agreement shall be deemed to
create an independent obligation on the part of any of the Securities Holders to
sell any New Common Stock or PIK Notes Common Stock pursuant to any Registration
Statement or otherwise.
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<PAGE> 41
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first written above.
PHILIP SERVICES CORPORATION
By:__________________________________________
Name:
Title:
SECURITIES HOLDERS:
AMERICAN REAL ESTATE HOLDINGS, L.P.
By: AMERICAN PROPERTY INVESTORS, INC.,
its General Partner
By:_____________________________________
Name:
Title:
Address for notices:
767 Fifth Avenue, 47th Floor
New York, NY 10153
HIGH RIVER LIMITED PARTNERSHIP
By: RIVERDALE LLC, its General Partner
By:_____________________________________
Name:
Title:
Address for notices:
767 Fifth Avenue, 47th Floor
New York, NY 10153
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<PAGE> 42
Exhibit A
SECURITIES HOLDER'S QUESTIONNAIRE
Please complete and return immediately to Philip Services Corporation at
the following address:
Philip Services Corporation
100 King Street West
Hamilton, Ontario L8N 4J6
CANADA
Attention: Chief Financial Officer
The information requested below is required for purposes of any Public Sale
Event pursuant to the Registration Rights Agreement dated as of March 31, 2000
(the "Agreement") that may be initiated from time to time. If you do not furnish
the Company with the requested information, you will not be entitled to
participate in any such registration. Unless otherwise defined herein,
capitalized terms shall have the meanings ascribed thereto in the Agreement.
Please do not leave any request for information unanswered. If your
response to a request is "no" or "not applicable," please so state. If
additional space is required, please attach additional sheets to the end of this
Questionnaire, clearly identifying the portion hereof to which they relate.
If you have any questions regarding this Questionnaire, please contact
______________________.
I. Information required for notices.
Institution Name:
Street Address:
Post Office Box:
City/State/Zip:
Fed. Tax ID. No.
(if any):
Telecopier Number:
Contacts (Please include alternative contacts).
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<PAGE> 43
1. Name:
Title:
Function:
Business Telephone:
2. Name:
Title:
Function:
Business Telephone:
II. Information required by the Securities Act of 1933, as amended, and
related regulations.
A. Federal Securities Laws
1. Name and Address. Give your name and address exactly as they should
appear in any Prospectus.
2. Ownership of Registerable Common. State the number of shares of
Registerable Common, if any, owned by you or your affiliates as of the date
hereof.
Shares of Registerable Common:
3. Beneficial Ownership of New Common Stock and PIK Notes Common
Stock. Please furnish the following information, in the tabular form
indicated, as to the shares of New Common Stock and PIK Notes Common Stock
beneficially owned (see definition at end of Questionnaire) by you
(including amounts held in your Trust Department in discretionary
accounts):
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<PAGE> 44
<TABLE>
<CAPTION>
If such ownership is
shared with others,
indicate nature and
Number of Nature of extent of such
Shares1 Beneficial Ownership2 shared ownership
------ -------------------- ----------------
<S> <C> <C>
</TABLE>
4. Disclaimer of Beneficial Ownership. Please indicate below the number and
description of any shares of New Common Stock or PIK Notes Common Stock with
respect to which you disclaim beneficial ownership and whether such shares are
included in the figure(s) reported above.
5. Five Percent Beneficial Owners. Please give the name and address of any
Person, corporation or other entity, other than the parties to the Agreement,
known to you to own beneficially 5% or more of the outstanding New Common Stock
and PIK Notes Common Stock (i.e., ______ shares or more).
NOTE: For purposes of your response to this question, the term "Person" includes
two or more Persons acting as a partnership, limited partnership,
syndicate, or other group for the purpose of acquiring, holding or
disposing of the Company's securities.
6. Underwriters. Please describe briefly and state the nature of any
relationship or interest that you have or any associate of yours (see definition
at end of Questionnaire) has, in any underwriter of the securities to be
offered. If you are a member or controlling Person of a firm that may be an
underwriter of the securities to be offered, briefly describe your relationship
to, and interest in, such underwriter.
NOTE: The underwriters will be listed in the final amendment to the Registration
Statement, a copy of which will be sent to you at a later date.
7. Material Relationships. Please list all material relationships that you
now have, or have had since _______________, with the Company or any of its
affiliates, other than your ownership of the New Common Stock or PIK Notes
Common Stock or your participation in the Company's bankruptcy case.
- ------------------------
1 Include shares which you have the right to acquire through the exercise of
options, warrants or other securities on or before 60 days after the estimated
date of the Prospectus.
2 Please indicate the extent to which you have sole voting power, shared voting
power, sole investment power and shared investment power with respect to shares
of PIK Common Stock and New Common Stock you beneficially own.
-41-
<PAGE> 45
B. NASD Regulations.
8. NASD Membership. State whether you are a "member" of the National
Association of Securities Dealers, Inc. (the "NASD"), a "Person associated with
a member" or an "underwriter or a related Person" with respect to the proposed
offering.
NOTES: (1) The NASD By-Laws define "member" to mean either any
broker or dealer admitted to membership in the NASD.
(2) The NASD By-Laws define "Person associated with a member" to
mean every sole proprietor, partner, officer, director or branch
manager of any member, or any natural Person occupying a similar
status or performing similar functions, or any natural Person engaged
in the investment banking or securities business who is directly or
indirectly controlling or controlled by such member, whether or not
any such Person is registered or exempt from Registration with the
NASD.
(3) The NASD has interpreted "underwriter or a related Person"
with respect to a proposed offering to include an underwriter,
underwriters' counsel, financial consultants and advisers, finders,
members of the selling or distribution group, and any and all other
Persons "associated with" or "related to" any of such Persons.
9. Purchase by NASD Affiliates. If your answer to the preceding
question was "yes," please furnish the following information, in the tabular
form indicated, as to all purchases and acquisitions (including contracts to
purchase or to acquire) by you, of warrants, options or any other securities of
the Company or any subsidiary thereof, during the preceding 12 months, as well
as all proposed purchases or acquisitions by you which are to be consummated in
whole or in part prior to, at the time of or within six months after the
effectiveness of the Registration Statement.
<TABLE>
<CAPTION>
Purchaser or Seller or Amount and Price or
Prospective Prospective Name of Other
Date Purchaser Seller Securities Consideration
- ---- ------------ ----------- ---------- -------------
<S> <C> <C> <C> <C>
________________ ________________ ________________ ________________ ________________
________________ ________________ ________________ ________________ ________________
________________ ________________ ________________ ________________ ________________
</TABLE>
10. Dealings with Company. Please describe any other dealings within
the preceding 12 months not already described in response to the foregoing
questions between the Company or any subsidiary or controlling shareholder
thereof and any underwriter, related Person of such underwriter, NASD member or
Person associated with such member affiliated with you, as such terms are
defined in the Notes to Question 10.
-42-
<PAGE> 46
THE UNDERSIGNED HEREBY REPRESENTS AND WARRANTS TO ANY PERSON WHO MAY BE
LIABLE IN RESPECT OF A REGISTRATION OR OTHER OFFERING PURSUANT TO THE AGREEMENT
THAT THE ANSWERS GIVEN IN THIS QUESTIONNAIRE ARE CORRECTLY STATED TO THE
KNOWLEDGE, INFORMATION AND BELIEF OF THE UNDERSIGNED. THE UNDERSIGNED HEREBY
AGREES TO PROMPTLY NOTIFY THE COMPANY OF ANY CHANGE IN SUCH ANSWERS WHICH MAY
OCCUR DURING THE PERIOD BEGINNING WITH THE DATE BELOW AND ENDING ON THE DATE 90
DAYS AFTER THE EFFECTIVE DATE OF ANY REGISTRATION STATEMENT RELATING TO A
REGISTRATION OR OTHER OFFERING PURSUANT TO THE AGREEMENT. THE UNDERSIGNED HEREBY
AGREES, FOLLOWING NOTICE OF ANY PROPOSED REGISTRATION TO UPDATE AND AMEND THIS
QUESTIONNAIRE IF THERE IS ANY MATERIAL CHANGE IN THE ABOVE INFORMATION AND TO
PROVIDE ANY ADDITIONAL INFORMATION REQUESTED BY THE COMPANY PURSUANT TO THE
AGREEMENT.
Dated: ______________, 20__.
Holder:
By:
Name:
Title:
-43-
<PAGE> 47
DEFINITIONS
As used in this Questionnaire:
"affiliate" means a Person or organization that directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or is under
common control with, the Company.
An "associated person" means (1) any corporation or organization (other
than the Company or a majority owned subsidiary) of which you are an executive
officer or partner or are, directly or indirectly, the beneficial owner of 10%
or more of any class or equity securities and (2) any trust or other estate in
which you have substantial beneficial interest or to which you serve as trustee
or in a similar fiduciary capacity.
Securities "owned beneficially" by you are securities (whether or not
registered in your name) in which you have or share (directly or indirectly
through any contract, arrangement, understanding, relationship or otherwise) (i)
voting power, which includes the power to vote or direct the voting of the
securities, or (ii) investment power, which includes the power to dispose, or
direct the disposition, of the securities. You are also deemed to be the
beneficial owner of any securities which you have the right to acquire
immediately or within 60 days (a) through the exercise of any option, warrant or
right, (b) through the conversion of a security or (c) pursuant to the power to
revoke, or the automatic termination of, a trust, discretionary account or
similar arrangement.
Thus, securities held in the name of other individuals, in the name of an
estate or trust or pursuant to a pledge agreement where you have either the
power to direct the voting of the securities or the disposition of such
securities should be listed as "owned beneficially" by you. The Commission has
also taken the position that securities held by your spouse, minor children, or
other relatives sharing your home should be shown as "owned beneficially" by you
on the theory that, absent special circumstances you are able to exercise a
controlling influence over the purchase, sale or voting of such securities.
-44-
<PAGE> 48
EXHIBIT B
SUPPLEMENTAL ADDENDUM
The undersigned is a holder of PIK Notes Common Stock of Philip Services
Corporation. The undersigned hereby agrees as follows:
The undersigned hereby accepts the terms of and becomes a party to (as a
Securities Holder) the Registration Rights Agreement dated as of March 31, 2000
by and among Philip Services Corporation (the "Company") and each Securities
Holder named therein. In connection therewith, the undersigned agrees to (A)
assume all obligations and liabilities thereunder, (B) enjoy all of the rights
thereunder, (C) be bound thereby and (D) perform and comply with the agreements
and commitments on the part of the undersigned, as assignee, set forth in the
Registration Rights Agreement.
As used in this Supplemental Addendum, capitalized terms defined in the
Registration Rights Agreement shall have their respective defined meanings.
Name of
Address: Institution:_____________________
By_______________________________
Name:
Title:
Date: _______________, _____
-45-
<PAGE> 1
EXHIBIT 99.6
PHILIP SERVICES CORPORATION
and
American Securities Transfer & Trust, Inc.,
as Rights Agent
------------
Rights Agreement
Dated as of March 31, 2000
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 1. Certain Definitions 2
Section 2. Appointment of Rights Agent 6
Section 3. Issue of Rights Certificates 6
Section 4. Form of Rights Certificates 8
Section 5. Countersignature and Registration 9
Section 6. Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates 9
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights 10
Section 8. Cancellation and Destruction of Rights Certificates 12
Section 9. Reservation and Availability of Capital Stock; Registration of Securities 12
Section 10. Capital Stock Record Date 14
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights 14
Section 12. Certificate of Adjusted Purchase Price or Number of Shares 24
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power 24
Section 14. Fractional Rights and Fractional Shares 27
Section 15. Rights of Action 28
Section 16. Agreement of Rights Holders 28
</TABLE>
(i)
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 17. Rights Certificate Holder Not Deemed a Stockholder 29
Section 18. Concerning the Rights Agent 29
Section 19. Merger or Consolidation or Change of Name of Rights Agent 30
Section 20. Duties of Rights Agent 30
Section 21. Change of Rights Agent 32
Section 22. Issuance of New Rights Certificates 33
Section 23. Redemption and Termination 34
Section 24. Notice of Certain Events 34
Section 25. Notices 35
Section 26. Supplements and Amendments 36
Section 27. Successors 36
Section 28. Determinations and Actions by the Board of Directors, etc 36
Section 29. Benefits of this Agreement 36
Section 30. Severability 37
Section 31. Governing Law 37
Section 32. Counterparts 37
Section 33. Descriptive Headings 37
Section 34. Effective Date 37
Exhibit A - Form of Certificate of Designations, Preferences and Rights of
Series A Junior Participating Preferred Stock 39
</TABLE>
(ii)
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Exhibit B - Form of Rights Certificate 48
Exhibit C - Form of Summary of Rights 56
</TABLE>
(iii)
<PAGE> 5
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of March 31, 2000 (the "Agreement"), between
Philip Services Corporation, a Delaware corporation (the "Company"), and
American Securities Transfer & Trust, Inc. (the "Rights Agent").
-1-
<PAGE> 6
W I T N E S S E T H:
WHEREAS, on March 31, 2000 (the "Rights Dividend Declaration Date"), the
Board of Directors of the Company authorized and declared a dividend
distribution of one Right for each share of Common Stock, (as hereinafter
defined) outstanding at the Close of Business on March 31, 2000 (the "Record
Date"), and has authorized the issuance of one Right (as such number may be
hereinafter adjusted pursuant to the provisions of Section 11(p) hereof) for
each share of Common Stock of the Company issued or delivered (whether
originally issued or delivered from treasury) between the Record Date and the
earlier to occur of the Distribution Date and the Final Expiration Date (as such
terms are hereinafter defined) and as otherwise provided herein, each Right
initially representing the right to purchase one one-hundred-thousandth of a
share of Preferred Stock (as hereinafter defined) upon the terms and subject to
the conditions hereinafter set forth (individually a "Right" and collectively
the "Rights");
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is hereinafter
defined) who or which, together with all Affiliates (as such term is hereinafter
defined) and Associates (as such term is hereinafter defined) of such Person,
shall be the Beneficial Owner (as such term is hereinafter defined) of 20% or
more of the shares of Common Stock then outstanding, but shall not include (i)
the Company, (ii) any Subsidiary of the Company, (iii) any employee benefit plan
or employee stock plan of the Company or of any Subsidiary of the Company (iv)
any dividend reinvestment plan of the Company, (v) any Person or entity
organized, appointed or established by the Company for or pursuant to the terms
of any such plan or (vi) any Exempt Person. Notwithstanding the foregoing, no
Person shall become an "Acquiring Person" as the result of an acquisition of
Common Stock by the Company which, by reducing the number of shares outstanding,
increases the proportionate number of shares beneficially owned by such Person
to 20% or more of the Common Stock of the Company then outstanding; provided,
however, that if a Person shall become the Beneficial Owner of 20% or more of
the Common Stock of the Company then outstanding by reason of such an
acquisition and shall, after such acquisition, become the Beneficial Owner of
any additional shares of Common Stock (other than by means of any stock dividend
or stock split), then such Person shall be deemed to be an "Acquiring Person".
-2-
<PAGE> 7
(b) "Affiliate" and "Associate" shall have the respective meanings ascribed
to such terms in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as in effect
on the date of this Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of, and shall be deemed
to beneficially own, any securities:
(i) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right or obligation to acquire
(whether such right is exercisable immediately or only after the passage of
time) pursuant to any agreement, arrangement or understanding (whether or
not in writing) or upon the exercise of conversion rights, exchange rights,
rights warrants or options, or otherwise; provided, however, that a person
shall not be deemed the "Beneficial Owner" of, or to "beneficially own,"
(A) securities tendered pursuant to a tender or exchange offer made by such
Person or any of such Person's Affiliates or Associates until such tendered
securities are accepted for purchase or exchange, or (B) at any time prior
to the occurrence of a Triggering Event, securities issuable upon exercise
of the Rights or (C) from and after the occurrence of a Triggering Event,
securities issuable upon exercise of Rights which were acquired by such
Person or any of such Person's Affiliates or Associates prior to the
Distribution Date or pursuant to Section 3(a) or Section 22 hereof (the
"Original Rights") or pursuant to Section 11(i) hereof in connection with
an adjustment made with respect to any Original Rights;
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose of or
has "beneficial ownership" of (as determined pursuant to Rule 13d-3 of the
General Rules and Regulations under the Exchange Act and any successor
provision thereof), including pursuant to any agreement, arrangement or
understanding, whether or not in writing; provided, however, that a Person
shall not be deemed the "Beneficial Owner" of, or to "beneficially own,"
any security under this subparagraph (ii) as a result of an agreement,
arrangement or understanding to vote such security if such agreement,
arrangement or understanding: (A) arises solely from a revocable proxy
given in response to a public proxy or consent solicitation made pursuant
to, and in accordance with, the applicable provisions of the General Rules
and Regulations under the Exchange Act, and (B) is not also then reportable
by such Person on Schedule 13D under the Exchange Act (or any comparable or
successor report); or
(iii) which are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate thereof) with which such Person
(or any of such Person's Affiliates or Associates) has any agreement,
arrangement or understanding (whether or not in writing), but excluding
customary agreements with and between underwriters and selling group
members with respect to a bona fide public offering of securities until the
expiration of forty days after the date of such acquisition, for the
purpose of acquiring, holding, voting (except pursuant to a revocable proxy
as described in the proviso to
-3-
<PAGE> 8
subparagraph (ii) of this paragraph (c)) or disposing of any voting
securities of the Company.
(d) "Business Day" shall mean any day other than a Saturday, Sunday or a
day on which banking institutions in the States of New York or Delaware are
authorized or obligated by law or executive order to close.
(e) "Close of Business" on any given date shall mean 5:00 P.M., New York
time, on such date; provided, however, that if such date is not a Business Day
it shall mean 5:00 P.M., New York time, on the next succeeding Business Day.
(f) "Common Stock" shall mean the common stock, $0.01 par value of the
Company, except that "Common Stock" when used with reference to any Person other
than the Company shall mean the capital shares of such Person with the greatest
voting power, or the equity securities or other equity interest having power to
control or direct the management, of such Person.
(g) "Company" shall have the meaning set forth in the preamble.
(h) "Competing Tender Offer" shall mean an all cash tender offer that is
(i) commenced during the period beginning after the commencement of a Qualified
Tender Offer and ending prior to the expiration of such Qualified Tender Offer
(ii) made to any and all record holders of Common Stock and (iii) in compliance
with the rules and regulations of the Exchange Act.
(i) "Distribution Date" shall have the meaning set forth in Section 3(a)
hereof.
(j) "Exempt Person" shall mean (i) any Person who is a Beneficial Owner of
20% or more of the Company's Common Stock on the date of this Agreement after
giving effect to all distributions under the Plan (provided, that if such Person
shall become, together with such Person's Affiliates and Associates, the
Beneficial Owner of any additional shares of Common Stock (other than pursuant
to (1) a stock dividend or stock split or (2) an acquisition set forth in items
(ii) and (iii) of this definition) and immediately after becoming, together with
such Person's Affiliates and Associates, the Beneficial Owner of such additional
shares of Common Stock, shall be the Beneficial Owner of 20% or more of the
Common Stock, then outstanding, then such Person shall be deemed an Acquiring
Person), (ii) any Person who becomes the Beneficial Owner of the Company's
Common Stock pursuant to a Qualified Tender Offer or a Competing Tender Offer,
(iii) any Person who becomes the Beneficial Owner of 20% or more of the
Company's Common Stock pursuant to a distribution by the Company of the Common
Stock to such Person for cash consideration, provided, that (A) the Common Stock
has been designated as a national market system security on an interdealer
quotation system by the National Association of Securities Dealers, Inc., (B) a
liquid market for the Common Stock exists at the time that the transaction is
agreed to, (C) neither the Company, nor, to the knowledge of the Company, such
Person has knowledge of any material fact concerning the issuer or the Common
Stock that has
-4-
<PAGE> 9
not been generally disclosed to the public and (D) the disclosure document for
such transaction includes a description of the effect of the distribution on the
direct or indirect voting interest of the related party; and (iii) any Person
who would otherwise be an Acquiring Person, whom the Board of the Directors of
the Company determines in good faith has become such inadvertently (including,
without limitation, because (A) such Person was unaware that such Person
Beneficially Owned a percentage of Common Stock that would otherwise cause such
Person to be an Acquiring Person or (B) such Person was aware of the extent of
such Person's Beneficial Ownership but had no actual knowledge of the
consequences of such Beneficial Ownership under this Agreement), and if such
Person, either prior to or as promptly as practicable after being advised of
such determination, divests himself or itself of Beneficial Ownership of a
sufficient number of shares of Common Stock so that such Person would no longer
be an Acquiring Person, in which case such Person shall not be deemed to be or
to have become an Acquiring Person for any purposes of this Agreement.
(k) "Expiration Date" shall have the meaning set forth in Section 7(a)
hereof.
(l) "Final Expiration Date" shall have the meaning set forth in Section
7(a) hereof.
(m) "Person" shall mean any individual, firm, corporation, limited
liability company, partnership or other entity.
(n) "Plan" shall mean the First Amended Joint Plan of Reorganization of
Philip Services (Delaware), Inc. et al., dated as of September 21, 1999.
(o) "Preferred Stock" shall mean shares of Series A Junior Participating
Preferred Stock, $.01 par value, of the Company having the rights and
preferences set forth in the form of Certificate of Designations attached to
this Agreement as Exhibit A.
(p) "Preferred Stock Fraction" shall mean one one hundred-thousandth of a
share of Preferred Stock.
(q) "Purchase Price" shall have the meaning set forth in Section 4(a)
hereof.
(r) "Qualified Tender Offer" shall mean an all cash tender offer that is
(i) made to any and all record holders of Common Stock, (ii) held open for a
period of not less than forty-five (45) days from the date such tender offer is
first published or sent to such holders of Common Stock and (iii) in compliance
with the rules and regulations of the Exchange Act.
(s) "Record Date" shall have the meaning set forth in the Whereas clause.
(t) "Right" shall have the meaning set forth in the Whereas clause.
(u) "Rights Agent" shall have the meaning set forth in the preamble.
-5-
<PAGE> 10
(v) "Rights Certificate" shall have the meaning set forth in Section 3(a)
hereof.
(w) "Section 11(a)(ii) Event" shall mean the event described in Section
11(a)(ii) hereof.
(x) "Section 13 Event" shall mean any event described in clause (x), (y) or
(z) of Section 13(a) hereof.
(y) "Stock Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) under the Exchange Act) by
the Company or an Acquiring Person, that an Acquiring Person has become such.
(z) "Subsidiary" shall mean, with reference to any Person, any corporation
or other entity of which securities or other ownership interests having ordinary
voting power, in the absence of contingencies, sufficient to elect at least a
majority of the directors or other persons performing similar functions for such
corporation or entity is beneficially owned, directly or indirectly, by such
Person, or which is otherwise controlled by such Person.
(aa) "Triggering Event" shall mean any Section 11(a)(ii) Event or any
Section 13 Event.
Unless otherwise specified, where reference is made in this Agreement to
sections of, and the General Rules and Regulations under, the Exchange Act, such
reference shall mean such sections and rules as amended from time to time and
any successor provisions thereto.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3 hereof, shall prior to the Distribution Date also
be the holders of the Common Stock) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The Company may
from time to time appoint such Co-Rights Agents as it may deem necessary or
desirable.
Section 3. Issue of Rights Certificates. (a) Until Close of Business on the
earlier of (i) the tenth day after the Stock Acquisition Date (or, if the tenth
day after the Stock Acquisition Date occurs before the Record Date, the Close of
Business on the Record Date) or (ii) the Close of Business on the tenth Business
Day (or such later date as may be determined by the Company's Board of Directors
prior to such time as any Person becomes an Acquiring Person) after the date
that a tender or exchange offer (other than a Qualified Tender Offer or
Competing Tender Offer) by any Person (other than the Company, any Subsidiary of
the Company, any employee benefit plan or employee stock plan of the Company or
of any Subsidiary of the Company, or any Person or entity organized, appointed
or established by the Company for or pursuant to the terms of any such plan) is
first published or sent or given within
-6-
<PAGE> 11
the meaning of Rule 14d-2(a) of the General Rules and Regulations under the
Exchange Act, if upon consummation thereof, such Person would be the Beneficial
Owner of 20% or more of the shares of Common Stock then outstanding (the earlier
of (i) and (ii) being herein referred to as the "Distribution Date"), (x) the
Rights will be evidenced (subject to the provisions of paragraph (b) of this
Section 3) by the certificates for the Common Stock registered in the names of
the holders of the Common Stock (which certificates for Common Stock shall be
deemed also to be certificates for Rights) and not by separate certificates, and
(y) the Rights will be transferable only in connection with the transfer of the
underlying shares of Common Stock (including a transfer to the Company). As soon
as practicable after the Distribution Date, the Rights Agent will send by
first-class, postage prepaid mail, to each record holder of the Common Stock as
of the Close of Business on the Distribution Date, at the address of such holder
shown on the records of the Company, one or more Rights Certificates, in
substantially the form of Exhibit B hereto (individually a "Rights Certificate"
and collectively the "Rights Certificates"), evidencing one Right for each share
of Common Stock so held, subject to adjustment as provided herein. In the event
that an adjustment in the number of Rights per share of Common Stock has been
made pursuant to Section 11(p) hereof, at the time of distribution of the Rights
Certificates, the Company shall make the necessary and appropriate rounding
adjustments (in accordance with Section 14(a) hereof) so that Rights
Certificates representing only whole numbers of Rights are distributed and cash
is paid in lieu of any fractional Rights. As of and after the Distribution Date,
the Rights will be evidenced solely by Rights Certificates.
(b) As promptly as practicable following the Record Date, the Company will
send a copy of a Summary of Rights to Purchase Preferred Stock in substantially
the form attached hereto as Exhibit C (the "Summary of Rights"), by first-class,
postage prepaid mail, to each record holder of Common Stock as of the Close of
Business on the Record Date, at the address of such holder shown on the records
of the Company. With respect to certificates for the Common Stock outstanding on
or after the Record Date, until the Distribution Date, the Rights will be
evidenced by such certificates for the Common Stock with or without a copy of
the Summary of Rights attached thereto and the registered holders of the Common
Stock shall also be the registered holders of the associated Rights. Until the
earlier of the Distribution Date or the Expiration Date, the transfer of any
certificates representing shares of Common Stock with or without a copy of the
Summary of Rights attached thereto in respect of which Rights have been issued
shall also constitute the transfer of the Rights associated with such Common
Stock.
(c) Rights shall be issued in respect of all shares of Common Stock which
are issued after the Record Date but prior to the earlier of the Distribution
Date or the Expiration Date. Certificates issued after the Record Date, but
prior to the earlier of the Distribution Date or the Expiration Date, shall also
be deemed to be Certificates for Rights and shall bear the following legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in the Rights Agreement between Philip Services
Corporation and American Securities Transfer & Trust, Inc. (as it may be
amended, modified or supplemented from time to time, the "Rights
Agreement"), the terms of which are hereby incorporated herein
-7-
<PAGE> 12
by reference and a copy of which is on file at the principal offices of
Philip Services Corporation. Under certain circumstances, as set forth in
the Rights Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this certificate. The
Rights will expire on the Close of Business on March 31, 2010 unless
redeemed prior thereto. Philip Services Corporation will mail to the holder
of this certificate a copy of the Rights Agreement, as in effect on the
date of mailing, without charge promptly after receipt of a written request
therefor. Under certain circumstances set forth in the Rights Agreement,
Rights issued to, or held by, any person who is, was or becomes an
Acquiring Person or any Affiliate or Associate thereof (as such terms are
defined in the Rights Agreement), whether currently held by or on behalf of
such person or by any subsequent holder, may become null and void.
With respect to such certificates containing the foregoing legend, until the
earlier of (i) the Distribution Date or (ii) the Expiration Date, the Rights
associated with the Common Stock represented by such certificates shall be
evidenced by such certificates alone and registered holders of Common Stock
shall also be the registered holders of the associated Rights, and the transfer
of any of such Certificates shall also constitute the transfer of the Rights
associated with the Common Stock represented by such Certificates.
Section 4. Form of Rights Certificates. (a) The Rights Certificates (and
the forms of election to purchase and of assignment to be printed on the reverse
thereof) shall each be substantially in the form set forth in Exhibit B hereto
and may have such marks of identification or designation and such legends,
summaries or endorsements printed thereon as the Company may deem appropriate
and as are not inconsistent with the provisions of this Agreement, or as may be
required to comply with any applicable law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange on which
the Rights may from time to time be listed, or to conform to usage. Subject to
the provisions of Section 11 and Section 22 hereof, the Rights Certificates,
whenever distributed, shall be dated as of the Record Date (or, in the case of
Rights issued with respect to Common Stock issued by the Company after the
Record Date, as of the date of issuance of such Common Stock), shall note the
date of issuance and on their face shall entitle the holders thereof to purchase
such number of Preferred Stock Fractions as shall be set forth therein at the
price set forth therein (such exercise price per Preferred Stock Fraction, the
"Purchase Price"), but the amount and type of securities purchasable upon the
exercise of each Right and the Purchase Price thereof shall be subject to
adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a) or Section 22
hereof that represents Rights beneficially owned by: (i) an Acquiring Person or
any Associate or Affiliate of an Acquiring Person, (ii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such, or (iii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom such
-8-
<PAGE> 13
Acquiring Person has any continuing plan, agreement, arrangement or
understanding regarding the transferred Rights or (B) a transfer which the Board
of Directors of the Company has determined is part of a plan, agreement,
arrangement or understanding which has as a primary purpose or effect the
avoidance of Section 7(e) hereof, and any Rights Certificate issued pursuant to
Section 6 or Section 11 hereof upon transfer, exchange, replacement or
adjustment of any other Rights Certificate referred to in this sentence, shall
contain (to the extent feasible) the following legend:
The Rights represented by this Rights Certificate are or were beneficially
owned by a Person who was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person (as such terms are defined in the Rights
Agreement). Accordingly, this Rights Certificate and the Rights represented
hereby may become null and void in the circumstances specified in Section
7(e) of the Rights Agreement.
The provisions of Section 7(e) of this Agreement shall be operative whether or
not the foregoing legend is contained on any such Rights Certificates.
Section 5. Countersignature and Registration. (a) The Rights Certificates
shall be executed on behalf of the Company by its Chairman of the Board, its
President or its Secretary, either manually or by facsimile signature, and shall
have affixed thereto the Company's seal or a facsimile thereof. The Rights
Certificates shall be countersigned manually or by facsimile signature by the
Rights Agent, and shall not be valid for any purpose unless so countersigned. In
case any officer of the Company who shall have signed any of the Rights
Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Rights Certificates, nevertheless, may be countersigned by the Rights Agent
and issued and delivered by the Company with the same force and effect as though
the person who signed such Rights Certificates had not ceased to be such officer
of the Company; and any Rights Certificate may be signed on behalf of the
Company by any person who, at the actual date of the execution of such Rights
Certificate, shall be a proper officer of the Company to sign such Rights
Certificate, although at the date of the execution of this Rights Agreement any
such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or cause to
be kept, at its principal office or offices designated as the appropriate place
for such purpose, books for registration and transfer of the Rights Certificates
issued hereunder. Such books shall show the names and addresses of the
respective holders of the Rights Certificates, the certificate number of each of
the Rights Certificates, the number of Rights evidenced on its face by each of
the Rights Certificates and the date of each of the Rights Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates. (a)
Subject to the provisions of Section 4(b), Section 7(e) and Section 14 hereof,
at any time after the Close of Business on the Distribution Date, and at or
prior to the Close of Business on the Expiration Date, any Rights Certificate or
Certificates may be transferred, split up, combined or exchanged for another
Rights
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<PAGE> 14
Certificate or certificates, entitling the registered holder to purchase (or
receive) a like number of Preferred Stock Fractions (or, following a Triggering
Event, Common Stock, other securities, cash or other assets, as the case may be)
as the Rights Certificate, or Certificates surrendered then entitled such holder
or holders in the case of a transfer to purchase. Any registered holder desiring
to transfer, split up, combine or exchange any Rights Certificate or
Certificates shall make such request in writing delivered to the Rights Agent,
and shall surrender the Rights Certificate or Certificates to be transferred,
split up, combined or exchanged at the principal office or offices of the Rights
Agent designated for such purpose. Neither the Rights Agent nor the Company
shall be obligated to take any action whatsoever with respect to the transfer of
any such surrendered Rights Certificate until the registered holder shall have
completed and signed the certificate contained in the form of assignment set
forth on the reverse side of each such Rights Certificate and shall have
provided such additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates thereof as the Company
shall reasonably request. Thereupon the Rights Agent shall, subject to Section
4(b), Section 7(e) and Section 14 hereof, countersign and deliver to the Person
entitled thereto a Rights Certificate or Rights Certificates, as the case may
be, as so requested. The Company may require payment from the holder of the
Right of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or exchange of
Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Rights
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and reimbursement to the Company and
the Rights Agent of all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Rights Certificate if
mutilated, the Company will execute and deliver a new Rights Certificate of like
tenor to the Rights Agent for countersignature and delivery to the registered
owner in lieu of the Rights Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
(a) Subject to Section 7(e) hereof, the registered holder of any Rights
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein including, without limitation, the restrictions on
exercisability set forth in Section 9(c), Section 11(a)(iii) and Section 23(a)
hereof) in whole or in part at any time after the Distribution Date upon
surrender of the Rights Certificate, with the form of election to purchase set
forth on the reverse side thereof and the certificate contained therein duly
executed, to the Rights Agent at the principal office or offices of the Rights
Agent designated for such purpose, together with payment of the aggregate
Purchase Price (except as provided in Section 11(q)) with respect to the
surrendered Rights for the total number of the Preferred Stock Fractions (or
Common Stock, other securities or property, as the case may be) as to which such
surrendered Rights are exercisable, at or prior to the earlier of (i) the Close
of Business on March 31, 2010 (the "Final Expiration Date") or (ii) the time at
which the Rights are redeemed as provided in Section 23 hereof (the earlier of
(i) or (ii) being herein referred to as the "Expiration Date").
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<PAGE> 15
(b) The Purchase Price for each Preferred Stock Fraction pursuant to the
exercise of a Right shall initially be $______, and shall be subject to
adjustment from time to time as provided in Section 11 and Section 13(a) hereof
and shall be payable in accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing exercisable Rights,
with the form of election to purchase set forth on the reverse side thereof and
the certificate contained therein duly executed, accompanied by payment (except
as provided in Section 11(q)), with respect to each Right so exercised, of the
Purchase Price per Preferred Stock Fraction (or Common Stock, other securities
or property, as the case may be) to be purchased as set forth below and an
amount equal to any applicable transfer tax, the Rights Agent shall, subject to
Section 20(k) and Section 14(b) hereof, thereupon promptly (i) (A) requisition
from any transfer agent of the shares of Preferred Stock (or make available, if
the Rights Agent is the transfer agent for the shares of Preferred Stock)
certificates for the total number of Preferred Stock Fractions to be purchased
and the Company hereby irrevocably authorizes its transfer agent to comply with
all such requests subject to applicable law, or (B) if the Company shall have
elected to deposit the total number of shares of Preferred Stock issuable upon
exercise of the Rights hereunder with a depositary agent, requisition from the
depositary agent depositary receipts representing such number of Preferred Stock
Fractions as are to be purchased (in which case certificates for the shares of
Preferred Stock represented by such receipts shall be deposited by the transfer
agent with the depositary agent) and the Company will direct the depositary
agent to comply with such request, (ii) requisition from the Company the amount
of cash, if any, to be paid in lieu of fractional shares in accordance with
Section 14 hereof, (iii) after receipt of such certificates or depositary
receipts, cause the same to be delivered to or upon the order of the registered
holder of such Rights Certificate, registered in such name or names as may be
designated by such holder and (iv) after receipt thereof, deliver such cash, if
any, to or upon the order of the registered holder of such Rights Certificate.
The payment of the Purchase Price (as such amount may be reduced pursuant to
Section 11(a)(iii) hereof) shall be made (x) in cash or by certified bank check
or money order payable to the order of the Company, or (y) by delivery of a
certificate or certificates (with appropriate stock powers executed in blank
attached thereto) evidencing a number of shares of Common Stock equal to the
then Purchase Price divided by the current market price (as determined pursuant
to Section 11(d) hereof) per share of Common Stock on the date of such exercise.
In the event that the Company is obligated to issue other securities (including
Common Stock) of the Company, pay cash and/or distribute other property pursuant
to Section 11(a) hereof, the Company will make all arrangements necessary so
that such other securities, cash and/or other property are available for
distribution by the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Rights Certificate shall exercise
less than all the Rights evidenced thereby, a new Rights Certificate evidencing
Rights equivalent to the Rights remaining unexercised shall be issued by the
Rights Agent and delivered to, or upon the order of, the registered holder of
such Rights Certificate, registered in such name or names as may be designated
by such holder, subject to the provisions of Section 14 hereof.
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<PAGE> 16
(e) Notwithstanding anything in this Agreement to the contrary, from and
after the first occurrence of a Section 11(a)(ii) Event, any Rights beneficially
owned by (i) an Acquiring Person or any Associate or Affiliate of an Acquiring
Person, (ii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee after the Acquiring Person becomes such or
(iii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee prior to or concurrently with the Acquiring
Person becoming such and receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person to holders of
equity interests in such Acquiring Person or to any Person with whom the
Acquiring Person has any continuing plan, agreement, arrangement or
understanding regarding the transferred Rights or (B) a transfer which the Board
of Directors of the Company has determined is part of a plan, agreement,
arrangement or understanding which has as a primary purpose or effect the
avoidance of this Section 7(e), shall become null and void without any further
action and no holder of such Rights shall have any rights whatsoever with
respect to such Rights, whether under any provision of this Agreement or
otherwise. The Company shall use all reasonable efforts to insure that the
provisions of this Section 7(e) and Section 4(b) hereof are complied with, but
shall have no liability to any holder of Rights Certificates or other Person as
a result of its failure to make any determinations with respect to an Acquiring
Person or its Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary, neither the
Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder upon the occurrence of any purported exercise as
set forth in this Section 7 unless such registered holder shall have (i)
completed and signed the certificate contained in the form of election to
purchase set forth on the reverse side of the Rights Certificate surrendered for
such exercise and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Rights Certificates. All Rights
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Rights Certificate purchased or acquired by the Company,
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
canceled Rights Certificates to the Company, or shall, at the written request of
the Company, destroy such canceled Rights Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Capital Stock; Registration of
Securities. (a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued shares of
Preferred Stock (and following the occurrence of a Triggering Event, out of its
authorized and unissued shares of Common Stock
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<PAGE> 17
and/or other securities or out of its authorized and issued shares held in
treasury) the number of shares of Preferred Stock (and following the occurrence
of a Triggering Event, Common Stock and/or other securities) that, except as
provided in this Agreement including Section 11(a)(iii) hereof, will be
sufficient to permit the exercise in full of all outstanding Rights.
(b) So long as the shares of Preferred Stock (and following the occurrence
of a Triggering Event, Common Stock and/or other securities) issuable and
deliverable upon the exercise of the Rights may be listed on any national
securities exchange, the Company shall use its best efforts to cause, from and
after such time as the Rights become exercisable (and the Company reasonably
anticipates that a Right may be exercised), all shares (or other securities)
reserved for such issuance to be listed on such exchange upon official notice of
issuance upon such exercise.
(c) The Company shall use its best efforts to (i) file, as soon as
practicable following the earliest date after the first occurrence of a Section
11(a)(ii) Event on which the consideration to be delivered by the Company upon
exercise of the Rights has been determined pursuant to this Agreement (including
in accordance with Section 11(a)(iii) hereof), or as soon as is required by law
or regulation following the Distribution Date, as the case may be, a
registration statement or statements under the Securities Act of 1933 (the
"Securities Act"), with respect to the shares of Common Stock or other
securities purchasable upon exercise of the Rights on an appropriate form or
forms, (ii) cause such registration statement or statements to become effective
as soon as practicable after such filing and (iii) cause such registration
statement or statements to remain effective (with a prospectus at all times
meeting the requirements of the Securities Act) until the earlier of (A) the
date as of which the Rights are no longer exercisable for such securities, and
(B) the date of the expiration of the Rights. The Company will also take such
action as may be appropriate under, or to ensure compliance with, the securities
or blue sky laws of the various states in connection with the exercisability of
the Rights. The Company may temporarily suspend, for a period of time not to
exceed ninety (90) days after the date set forth in clause (i) of the first
sentence of this Section 9(c), the exercisability of the Rights in order to
prepare and file such registration statement and permit it to become effective.
Upon any such suspension, the Company shall issue a public announcement stating
that the exercisability of the Rights has been temporarily suspended, as well as
a public announcement at such time as the suspension is no longer in effect.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction if the requisite qualification in
such jurisdiction shall not have been obtained or the exercise thereof would be
in violation of applicable law.
(d) The Company covenants and agrees that it will take all such action as
may be necessary to ensure that all Preferred Stock Fractions (and following the
occurrence of a Triggering Event, Common Stock and/or other securities)
delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such shares (subject to payment of the Purchase Price), be duly
and validly authorized and issued and fully paid and nonassessable.
(e) The Company further covenants and agrees that it will pay when due and
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<PAGE> 18
payable any and all federal and state transfer taxes and charges which may be
payable in respect of the issuance or delivery of the Rights Certificates and of
any certificates for a number of Preferred Stock Fractions (or Common Stock
and/or other securities, as the case may be) upon the exercise of Rights. The
Company shall not, however, be required to pay any transfer tax which may be
payable in respect of any transfer or delivery of Rights Certificates to a
person other than, or the issuance or delivery of a number of Preferred Stock
Fractions (or Common Stock and/or other securities, as the case may be) in
respect of a name other than that of, the registered holder of the Rights
Certificates evidencing Rights surrendered for exercise or to issue or deliver
any certificates for a number of Preferred Stock Fractions (or Common Stock
and/or other securities, as the case may be) in a name other than that of the
registered holder upon the exercise of any Rights until such tax shall have been
paid (any such tax being payable by the holder of such Rights Certificates at
the time of surrender) or until it has been established to the Company's
satisfaction that no such tax is due.
Section 10. Capital Stock Record Date. Each person in whose name any
certificate for a number of Preferred Stock Fractions (or Common Stock and/or
other securities, as the case may be) is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of such
Preferred Stock Fractions (or Common Stock and/or other securities, as the case
may be) represented thereby on, and such certificate shall be dated, the date
upon which the Rights Certificate evidencing such Rights was duly surrendered
and payment of the Purchase Price (and all applicable transfer taxes) was made;
provided, however, that if the date of such surrender and payment is a date upon
which the Preferred Stock Fraction (or Common Stock and/or other securities, as
the case may be) transfer books of the Company are closed, such Person shall be
deemed to have become the record holder of such shares (fractional or otherwise)
on, and such certificate shall be dated, the next succeeding Business Day on
which the Preferred Stock Fraction (or Common Stock and/or other securities, as
the case may be) transfer books of the Company are open. Prior to the exercise
of the Rights evidenced thereby, the holder of a Rights Certificate shall not be
entitled to any rights of a stockholder of the Company with respect to shares
(fractional or otherwise) for which the Rights shall be exercisable, including,
without limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be entitled to
receive any notice of any proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights. The Purchase Price, the number and kind of shares covered by
each Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the date of
this Agreement (A) declare a dividend on the Preferred Stock payable in
shares of Preferred Stock or other capital stock, (B) subdivide the
outstanding Preferred Stock, (C) combine the outstanding Preferred Stock
into a smaller number of shares, or (D) issue any share of its capital
stock in a reclassification of the Preferred Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the
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<PAGE> 19
continuing or surviving corporation), except as otherwise provided in
Section 11(a)(ii) and Section 7(e) hereof, the Purchase Price in effect at
the time of the record date for such dividend or of the effective date of
such subdivision, combination or reclassification, and the number and kind
of shares of Preferred Stock or capital stock, as the case may be, issuable
on such date, shall be proportionately adjusted so that the holder of any
Right exercised after such time shall be entitled to receive, upon payment
of the Purchase Price then in effect, the aggregate number and kind of
shares of Preferred Stock or capital stock, as the case may be, which, if
such Right had been exercised immediately prior to such date and at a time
when the Preferred Stock (or other capital stock, as the case may be)
transfer books of the Company were open, he would have owned upon such
exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification. If an event occurs which
would require an adjustment under both this Section 11(a)(i) and Section
11(a)(ii) hereof, the adjustment provided for in this Section 11(a)(i)
shall be in addition to, and shall be made prior to any adjustment required
pursuant to Section 11(a)(ii) hereof.
(ii) In the event any Person alone or together with its Affiliates and
Associates, shall, at any time after the date hereof, become an Acquiring
Person, unless the event causing such threshold to be crossed is a
transaction set forth in Section 13(a) hereof, or is an acquisition of
Common Stock pursuant to a tender offer or exchange offer for all
outstanding shares of Common Stock at a price and on terms determined by at
least a majority of the members of the Board of Directors who are not
officers of the Company and who are not representatives, nominees,
Affiliates or Associates of an Acquiring Person, after receiving advice
from one or more investment banking firms, to be (a) at a price which is
fair to stockholders (taking into account all factors which such members of
the Board deem relevant including, without limitation, the long-term
prospects and value of the Company and the prices which could reasonably be
achieved if the Company or its assets were sold on an orderly basis
designed to realize maximum value) and (b) otherwise in the best interests
of (1) the Company and its stockholders (including the possibility that
these interests may best be served by the continued independence of the
Company), (2) the Company's employees, suppliers, creditors, customers and
(3) the community in which the Company operates, then, promptly following
the first occurrence of the event described in Section 11(a)(ii) hereof,
proper provision shall be made so that each holder of a Right (except as
provided in Section 11(a)(iii), and in Section 7(e) hereof) shall
thereafter have the right to receive, upon exercise thereof at the then
current Purchase Price in accordance with the terms of this Agreement, in
lieu of a number of Preferred Stock Fractions, such number of shares of
Common Stock of the Company as shall equal the result obtained by (x)
multiplying the then current Purchase Price by the then number of Preferred
Stock Fractions for which a Right was exercisable by such holder
immediately prior to the first occurrence of a Section 11(a)(ii) Event, and
(y) dividing that product (such product, following such first occurrence,
shall thereafter be referred to as the Purchase Price for each Right and
for all purposes of this Agreement) by 50% of the current market price
(determined pursuant to
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<PAGE> 20
Section 11(d) hereof) per share of Common Stock on the date of such first
occurrence (such number of shares of Common Stock is herein called the
"Adjustment Shares").
(iii) In the event that the number of shares of Common Stock which are
authorized but not outstanding or reserved for issuance for purposes other
than upon exercise of the Rights is not sufficient, or there shall not have
been received regulatory approvals necessary, in each case to permit the
exercise in full of the Rights in accordance with the foregoing
subparagraph (ii) of this Section 11(a), the Company shall: (A) determine
the excess of (1) the value of the Adjustment Shares issuable upon the
exercise of a Right (the "Current Value") over (2) the Purchase Price (such
excess, the "Spread"), and (B) with respect to each Right, make adequate
provision to substitute for the Adjustment Shares, upon payment of the
applicable Purchase Price, (1) cash, (2) a reduction in the Purchase Price,
(3) Common Stock or other equity securities of the Company (including,
without limitation, preferred shares, or Preferred Stock Fractions), which
the Board of Directors of the Company has deemed to have the same value as
shares of Common Stock (such shares, "common stock equivalents")), (4) debt
securities of the Company, (5) other assets or (6) any combination of the
foregoing, having an aggregate value equal to the Current Value, where such
aggregate value has been determined by the Board of Directors of the
Company based upon the advice of a nationally recognized investment banking
firm selected by the Board of Directors of the Company; provided, however,
if the Company shall not have made adequate provision to deliver value
pursuant to clause (B) above within thirty (30) days following the first
occurrence of (x) a Section 11(a)(ii) Event or (y) the date on which the
Company's right of redemption pursuant to Section 23(a) expires (the later
of (x) and (y) being referred to herein as the "Section 11(a)(ii) Trigger
Date"), then the Company shall be obligated to deliver, upon the surrender
for exercise of a Right and without requiring payment of the Purchase
Price, Common Stock (to the extent available) and then, if necessary, cash,
which shares and/or cash have an aggregate value equal to the Spread. If
the Board of Directors of the Company shall determine in good faith that it
is likely that sufficient additional shares of Common Stock could be
authorized for issuance upon exercise in full of the Rights, the thirty
(30) day period set forth above may be extended by resolution of the Board
of Directors of the Company to the extent necessary, but not more than
ninety (90) days following the first occurrence of a Section 11(a)(ii)
Trigger Date, in order that the Company may seek stockholder approval for
the authorization of such additional shares (such period, as it may be
extended, the "Substitution Period"). To the extent that the Company
determines that some action need be taken pursuant to the first and/or
second sentences of this Section 11(a)(iii), the Company (x) shall provide
subject to Section 7(e) hereof, that such action shall apply uniformly to
all outstanding Rights and (y) may suspend the exercisability of the Rights
until the expiration of the Substitution Period in order to seek any
authorization of additional shares, to take any action to obtain any
required regulatory approval and/or to decide the appropriate form of
distribution to be made pursuant to such first sentence and to determine
the value thereof. In the event of any such suspension, the Company shall
issue a public announcement stating that the
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<PAGE> 21
exercisability of the Rights has been temporarily suspended, as well as a
public announcement at such time as the suspension is no longer in effect.
For purposes of this Section 11(a)(iii), the value of the Common Stock
shall be the current market price (as determined pursuant to Section 11(d)
hereof) per share of Common Stock on the Section 11(a)(ii) Trigger Date and
the value of any common stock equivalents shall be deemed to have the same
value as the Common Stock on such date.
(iv) If the rules of the national securities exchange, registered as
such pursuant to Section 6 of the Exchange Act, or of the national
securities association, registered as such pursuant to Section 15A of the
Exchange Act, on which the shares of Common Stock are principally traded
would prohibit such exchange or association from listing or continuing to
list, or from authorizing for or continuing quotation and/or transaction
reporting through an inter-dealer quotation system, the shares of Common
Stock or other equity securities of the Company if the Rights were to be
exercised for shares of Common Stock in accordance with subparagraph (ii)
of this Section 11(a) because such issuance would nullify, restrict or
disparately reduce the per share voting rights of holders of shares of
Common Stock or for any other reason, the Company shall: (A) determine the
Spread and (B) with respect to each Right, make adequate provision to
substitute for the Adjustment Shares, upon payment of the applicable
Purchase Price, (1) cash, (2) equity securities of the Company, including,
without limitation, "common stock equivalents," other than securities which
would have the effect of nullifying, restricting or disparately reducing
the per share voting rights of holders of shares of Common Stock or
otherwise cause the prohibition described above, (3) debt securities of the
Company, (4) other assets, or (5) any combination of the foregoing, having
an aggregate value equal to the Current Value, where such aggregate value
has been determined by the Board of Directors of the Company based upon the
advice of a nationally recognized investment banking firm selected by the
Board of Directors of the Company; provided, however, if the Company shall
not have made adequate provision to deliver value pursuant to clause (B)
above within thirty (30) days following the Section 11(a)(ii) Trigger Date,
then the Company shall be obligated to deliver, upon the surrender for
exercise of a Right and without requiring payment of the Purchase Price,
cash having an aggregate value equal to the Spread. To the extent that the
Company determines that an action needs to be taken pursuant to the first
sentence of this Section 11(a)(iv), the Company (x) shall provide, subject
to Section 7(e), that such action shall apply uniformly to all outstanding
Rights and (y) may suspend the exercisability of the Rights, but not longer
than ninety (90) days after the Section 11(a)(ii) Trigger Date, in order to
decide the appropriate form of distribution to be made pursuant to such
first sentence and to determine the value thereof. In the event of any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a
public announcement at such time as the suspension is no longer in effect.
For purposes of this Section 11(a)(iv), the value of the Common Stock shall
be the current market price (as determined pursuant to Section 11(d)
hereof) per share of Common Stock on the Section 11(a)(ii) Trigger Date and
the value of any "common stock equivalent" shall be
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<PAGE> 22
deemed to have the same value as the Common Stock on such date.
(b) In case the Company shall fix a record date for the issuance of
rights (other than the Rights), options or warrants to all holders of
Preferred Stock entitling them to subscribe for or purchase (for a period
expiring within forty-five (45) calendar days after such record date)
Preferred Stock, (or shares having the same rights, privileges and
preferences as the Preferred Stock ("equivalent Preferred Stock")) or
securities convertible into Preferred Stock or equivalent Preferred Stock
at a price per share of Preferred Stock or equivalent Preferred Stock (or
having a conversion price per share, if a security convertible into
Preferred Stock or equivalent Preferred Stock) less than the current market
price (as determined pursuant to Section 11(d) hereof) per share of
Preferred Stock on such record date, the Purchase Price to be in effect
after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the number of shares of Preferred Stock
outstanding on such record date, plus the number of shares of Preferred
Stock which the aggregate offering price of the total number of shares of
Preferred Stock and/or equivalent Preferred Stock so to be offered (and/or
the aggregate initial conversion price of the convertible securities so to
be offered) would purchase at such current market price and the denominator
of which shall be the number of shares of Preferred Stock outstanding on
such record date, plus the number of additional shares of Preferred Stock
and/or equivalent Preferred Stock to be offered for subscription or
purchase (or onto which the convertible securities to be offered are
initially convertible). In case such subscription price may be paid by
delivery of consideration part or all of which may be in a form other than
cash, the value of such consideration shall be as determined in good faith
by the Board of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent and shall be binding
on the Rights Agent and the holders of the Rights. Preferred Stock owned by
or held for the account of the Company shall not be deemed outstanding for
the purpose of any such computation. Such adjustment shall be made
successively whenever such a record date is fixed; and in the event that
such rights or warrants are not so issued, the Purchase Price shall be
adjusted to be the Purchase Price which would then be in effect if such
record date had not been fixed.
(c) In case the Company shall fix a record date for a distribution to
all holders of Preferred Stock (including any such distribution made in
connection with a consolidation or merger in which the Company is the
continuing corporation) of evidences of indebtedness, cash (other than a
regular quarterly cash dividend paid out of the earnings or retained
earnings of the Company), assets (other than a dividend payable in
Preferred Stock, but including any dividend payable in capital stock other
than Preferred Stock) or subscription rights or warrants (excluding those
referred to in Section 11(b) hereof), the Purchase Price to be in effect
after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the current market price (as determined
pursuant
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to Section 11(d) hereof) per share of Preferred Stock on such record date,
less the fair market value (as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent) of the portion of the cash, assets
or evidences of indebtedness to be distributed or of such subscription
rights or warrants applicable to a share of Preferred Stock and the
denominator of which shall be such current market price (as determined
pursuant to Section 11(d) hereof) per share of Preferred Stock. Such
adjustments shall be made successively whenever such a record date is
fixed, and in the event that such distribution is not made, the Purchase
Price shall be adjusted to be the Purchase Price which would have been in
effect if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, other than
computations made pursuant to Section 11(a)(iii) hereof, the "current
market price" per share of Common Stock on any date shall be deemed to be
the average of the daily closing price per share of Common Stock for the
thirty (30) consecutive Trading Days (as such term is hereinafter defined)
immediately prior to such date, and for purposes of computations made
pursuant to Section 11(a)(iii) hereof, the current market price per share
of Common Stock on any date shall be deemed to be the average of the daily
closing price per share of Common Stock for the ten (10) consecutive
Trading Days immediately following such date; provided, however, that in
the event that the then current market price per share of Common Stock is
determined during a period following the announcement by the issuer of such
Common Stock of (i) any dividend or distribution on such Common Stock
payable in such shares of Common Stock or securities convertible into
shares of Common Stock (other than the Rights), (ii) any subdivision,
combination or reclassification of such shares of Common Stock, and prior
to the expiration of the requisite thirty (30) Trading Day or ten (10)
Trading Day period, as set forth above, after the exdividend date for such
dividend or distribution, or the record date for such subdivision,
combination or reclassification, then, in each such case, the current
market price shall be properly adjusted to take into account ex-dividend
trading. The closing price for each day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the average
of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange or, if the shares of Common Stock are not listed or admitted to
trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed
on the principal national securities exchange on which the shares of Common
Stock are listed or admitted to trading or, if the shares of Common Stock
are not listed or admitted to trading on any national securities exchange,
the last quoted sale price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by the
National Association of Securities Dealers, Inc. Automated Quotation System
("NASDAQ") or such other system then in use, or, if on any such date the
shares of Common Stock are not quoted by any such organization, the average
of the closing bid and asked prices as furnished by a
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professional market maker making a market in the Common Stock selected by
the Board of Directors of the Company. If on any such date no market maker
is making a market in the Common Stock, the fair value of such shares on
such date as determined in good faith by the Board of Directors of the
Company shall be used and shall be conclusive for all purposes. The term
"Trading Day" shall mean a day on which the principal national securities
exchange on which the shares of Common Stock are listed or admitted to
trading is open for the transaction of business or, if the shares of Common
Stock are not listed or admitted to trading on any national securities
exchange, a Business Day. If the Common Stock is not publicly held or not
so listed or traded, current market price per share shall mean the fair
value per share as determined in good faith by the Board of Directors of
the Company, whose determination shall be described in a statement filed
with the Rights Agent and shall be conclusive for all purposes.
(ii) For the purpose of any computation hereunder, the "current market
price" per share of Preferred Stock shall be determined in the same manner
as set forth above for the Common Stock in Section 11(d)(i) (other than the
last sentence thereof). If the current market price per share of Preferred
Stock cannot be determined in the manner provided above or if the Preferred
Stock is not publicly held or listed or traded in a manner described in
Section 11(d)(i), the "current market price" per share of Preferred Stock
shall be conclusively deemed to be an amount equal to 100,000 (as such
number may be appropriately adjusted for such events as stock splits, stock
dividends and recapitalizations with respect to the Common Stock occurring
after the date of this Agreement) multiplied by the current market price
per share of Common Stock. If neither the Common Stock nor the Preferred
Stock is publicly held or so listed or traded, "current market price" per
share of Preferred Stock shall mean the fair value per share as determined
in good faith by the Board of Directors of the Company, whose determination
shall be described in a statement filed with the Rights Agent and shall be
conclusive for all purposes. For all purposes of this Agreement, the
"current market price" of a Preferred Stock Fraction shall be equal to the
"current market price" of one share of Preferred Stock divided by 100,000.
(e) Anything herein to the contrary notwithstanding, no adjustment in
the Purchase Price shall be required unless such adjustment would require
an increase or decrease of at least one percent (1%) to the Purchase Price;
provided, however, that any adjustments which by reason of this Section
11(e) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section
11 shall be made to the nearest cent or to the nearest one ten-thousandth
of a share of Common Stock or other share or one one-billionth of a share
of Preferred Stock, as the case may be. Notwithstanding the first sentence
of this Section 11(e), any adjustment required by this Section 11 shall be
made no later than the earlier of (i) three (3) years from the date of the
transaction which mandates such adjustment or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a) or
Section
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13(a) hereof, the holder of any Right thereafter exercised shall become
entitled to receive any capital shares other than Preferred Stock,
thereafter the number of such other shares receivable upon exercise of any
Right and the Purchase Price thereof shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable
to the provisions with respect to the Preferred Stock contained in Sections
11(a), (b), (c), (e), (g), (h), (i), (j), (k), (m) and (q) hereof, and the
provisions of Sections 7, 9, 10, 13 and 14 hereof with respect to the
Preferred Stock shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of Preferred Stock
Fractions (or other consideration, as the case may be) purchasable from
time to time hereunder upon exercise of the Rights, all subject to further
adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided
in Section 11(i), upon each adjustment of the Purchase Price as a result of
the calculations made in Sections 11(b) and (c), each Right outstanding
immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number
of Preferred Stock Fractions (calculated to the nearest one ten-thousandth)
obtained by (i) multiplying (x) the number of Preferred Stock Fractions
covered by a Right immediately prior to this adjustment, by (y) the
Purchase Price in effect immediately prior to such adjustment of the
Purchase Price and (ii) dividing the product so obtained by the Purchase
Price in effect immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of
the Purchase Price to adjust the number of Rights, in substitution for any
adjustment in the number of Preferred Stock Fractions purchasable upon the
exercise of a Right. Each of the Rights outstanding after the adjustment in
the number of Rights shall be exercisable for the number of Preferred Stock
Fractions for which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment of the
number of Rights shall become that number of Rights (calculated to the
nearest one ten-thousandth) obtained by dividing the Purchase Price in
effect immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the Purchase
Price. The Company shall make a public announcement of its election to
adjust the number of Rights, indicating the record date for the adjustment,
and, if known at the time, the amount of the adjustment to be made. This
record date may be the date on which the Purchase Price is adjusted or any
day thereafter, but, if the Rights Certificates have been issued, shall be
at least ten (10) days later than the date of the public announcement. If
Rights Certificates have been issued, upon each adjustment of the number of
Rights pursuant to this Section 11(i), the Company shall, as promptly as
practicable, cause to be distributed to holders of record of Rights
Certificates on such record date Rights Certificates evidencing, subject to
Section 14 hereof, the additional
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Rights to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be distributed
to such holders of record in substitution and replacement for the Rights
Certificates held by such holders prior to the date of adjustment, and upon
surrender thereof, if required by the Company, new Rights Certificates
evidencing all the Rights to which such holders shall be entitled after
such adjustment. Rights Certificates so to be distributed shall be issued,
executed and countersigned in the manner provided for herein (and may bear,
at the option of the Company, the adjusted Purchase Price) and shall be
registered in the names of the holders of record of Rights Certificates on
the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of Preferred Stock Fractions issuable upon the exercise of the
Rights, the Rights Certificates theretofore and thereafter issued may
continue to express the Purchase Price per Preferred Stock Fraction and the
number of Preferred Stock Fractions which were expressed in the initial
Rights Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below the then stated value, if any, of the number of
Preferred Stock Fractions issuable upon exercise of the Rights, the Company
shall take any corporate action which may, in the opinion of its counsel,
be necessary in order that the Company may validly and legally issue fully
paid and nonassessable Preferred Stock Fractions at such adjusted Purchase
Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for
a specified event, the Company may elect to defer, until the occurrence of
such event, the issuance to the holder of any Right exercised after such
record date the number of Preferred Stock Fractions and other capital
shares or securities of the Company, if any, issuable upon such exercise
over and above the number of Preferred Stock Fractions and other capital
shares and securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment;
provided, however, that the Company shall deliver to such holder a due bill
or other appropriate instrument evidencing such holder's right to receive
such additional shares (fractional or otherwise) of Common Stock and other
capital shares or securities upon the occurrence of the event requiring
such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Board of Directors shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that in their good faith judgment the
Board of Directors of the Company shall determine to be advisable in order
that any (i) consolidation or subdivision of the Preferred Stock, (ii)
issuance wholly for cash of shares of Preferred Stock at less than the
current market price, (iii) issuance wholly for cash of shares of Preferred
Stock or securities which by their terms are convertible into or
exchangeable for shares of Preferred Stock, (iv) stock dividends or (v)
issuance of rights, options or warrants referred to in this Section 11,
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hereafter made by the Company to holder of its Preferred Stock shall not be
taxable to such stockholders.
(n) The Company covenants and agrees that it shall not, at any time
after the Distribution Date, (i) consolidate with any other Person (other
than a Subsidiary of the Company in a transaction which complies with
Section 11(o) hereof), (ii) merge with or into any other Person (other than
a Subsidiary of the Company in a transaction which complies with Section
11(o) hereof) or (iii) sell or transfer (or permit any Subsidiary to sell
or transfer), in one transaction or a series of related transactions,
assets or earning power aggregating more than 50% of the assets or earning
power of the Company and its Subsidiaries (taken as a whole) to, any other
Person or Persons (other than the Company and/or any of its Subsidiaries in
one or more transactions each of which complies with Section 11(o) hereof),
if (x) at the time of or immediately after such consolidation, merger or
sale there are any rights, warrants or other instruments or securities
outstanding or agreements in effect which would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights or
(y) prior to, simultaneously with or immediately after such consolidation,
merger or sale, the shareholders of the Person who constitutes, or would
constitute, the "Principal Party" for purposes of Section 13(a) hereof
shall have received a distribution of Rights previously owned by such
Person or any of its Affiliates and Associates.
(o) The Company covenants and agrees that, after the Distribution
Date, it will not, except as permitted by Section 23 or Section 26 hereof,
take (or permit any Subsidiary to take) any action if at the time such
action is taken it is reasonably foreseeable that such action will diminish
substantially or otherwise eliminate the benefits intended to be afforded
by the Rights.
(p) Anything in this Agreement to the contrary notwithstanding, in the
event that the Company shall at any time after the date of this Agreement
and prior to the Distribution Date (i) declare a dividend on the
outstanding shares of Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding shares of Common Stock or (iii) combine the
outstanding shares of Common Stock into a smaller number of shares, the
number of Rights associated with each share of Common Stock then
outstanding, or issued or delivered thereafter but prior to the
Distribution Date, shall be proportionately adjusted so that the number of
Rights thereafter associated with each share of Common Stock following any
such event shall equal the result obtained by multiplying the number of
Rights associated with each share of Common Stock immediately prior to such
event by a fraction the numerator which shall be the total number of shares
of Common Stock outstanding immediately prior to the occurrence of the
event and the denominator of which shall be the total number of shares of
Common Stock outstanding immediately following the occurrence of such
event.
(q) In the event that the Rights become exercisable following a
Section 11(a)(ii) Event, the Company by action of a majority of the Board
of Directors, at its
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option, may provide that each Right, subject to section 7(e), shall be
exchanged for one share of Common Stock (or cash or other securities or
assets to be substituted for the Adjustment Shares pursuant to subsection
11(a)(iii)) appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof, in
consideration of the surrender to the Company of the Rights so exercised
and without other payment of the Purchase Price. Upon the Company's
election to provide for such exchange, all Rights shall be terminated and
the only right thereafter of a holder of such Rights shall be to receive
the above described securities. Notwithstanding the foregoing, the Board of
Directors shall not be empowered to effect such exchange at any time after
any Person (other than the Company, any wholly owned Subsidiary of the
Company, any employee benefit plan of the Company or any such Subsidiary,
or any entity holding shares of Common Stock for or pursuant to the terms
of any such plan), together with all Affiliates and Associates of such
Person, becomes the Beneficial Owner of 50% or more of the shares of Common
Stock then outstanding.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 or Section 13 hereof,
the Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent, and with each transfer agent for the
Preferred Stock and the Common Stock, a copy of such certificate and (c) mail a
brief summary thereof to each holder of a Rights Certificate (or, if prior to
the Distribution Date, to each holder of a certificate representing shares of
Common Stock) in accordance with Section 25 hereof. The Rights Agent shall be
fully protected in relying on any such certificate and on any adjustment therein
contained.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power. (a) In the event that, following the Stock Acquisition Date, directly or
indirectly, (x) the Company shall consolidate with, or merge with and into, any
other Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof), and the Company shall not be the continuing
or surviving corporation of such consolidation or merger, (y) any Person (other
than a Subsidiary of the Company in a transaction which complies with Section
11(o) hereof) shall consolidate with, or merge with or into, the Company, and
the Company shall be the continuing or surviving corporation of such
consolidation or merger and, in connection with such consolidation or merger,
all or part of the outstanding shares of Common Stock shall be changed into or
exchanged for stock or other securities of any other Person or cash or any other
property, or (z) the Company shall sell or otherwise transfer (or one or more of
its Subsidiaries shall sell or otherwise transfer), in one transaction or a
series of related transactions, all or substantially all the assets or all or
substantially all the earning power of the Company and its Subsidiaries (taken
as a whole) to any Person or Persons (other than the Company or any Subsidiary
of the Company in one or more transactions each of which complies with Section
11(o) hereof), then, and in each such case and except as set forth in Section
13(d) hereof, proper provision shall be made so that:
(i) each holder of a Right, except as provided in Section 7(e) hereof,
shall
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<PAGE> 29
thereafter have the right to receive, upon the exercise thereof at the then
current Purchase Price in accordance with the terms of this Agreement, such
number of validly authorized and issued, fully paid, nonassessable and
freely tradeable shares of Common Stock of the Principal Party (as such
term is hereinafter defined), not subject to any liens, encumbrances,
rights of first refusal or other adverse claims, as shall be equal to the
result obtained by (1) multiplying the then current Purchase Price by the
number of Preferred Stock Fractions for which a Right is exercisable by
such holder immediately prior to the first occurrence of a Section 13 Event
(or, if a Section 11(a)(ii) Event has occurred prior to the Section 13
Event, multiplying the Purchase Price in effect immediately prior to the
first occurrence of such Section 11(a)(ii) Event by the number of Preferred
Stock Fractions for which a Right was exercisable immediately prior to such
first occurrence) and dividing that product (such product, following the
first occurrence of a Section 13 Event, shall be referred to as the
"Purchase Price" for each Right and for all purposes of this Agreement) by
(2) 50% of the current market price (determined pursuant to Section
11(d)(i) hereof with respect to the Common Stock) per share of Common Stock
of such Principal Party on the date of consummation of such Section 13
Event;
(ii) such Principal Party shall thereafter be liable for, and shall
assume, by virtue of such Section 13 Event, all the obligations and duties
of the Company pursuant to this Agreement;
(iii) the term "Company" shall thereafter be deemed to refer to such
Principal Party, it being specifically intended that the provisions of
Section 11 hereof shall apply only to such Principal Party following the
first occurrence of a Section 13 Event;
(iv) such Principal Party shall take such steps (including, but not
limited to, the reservation of a sufficient number of shares of its Common
Stock) in connection with the consummation of any such transaction as may
be necessary to insure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to its Common Stock
thereafter deliverable upon the exercise of the Rights; and
(v) the provisions of Section 11(a)(ii) hereof shall be of no effect
following the first occurrence of any Section 13 Event.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in clause (x) or (y) of
the first sentence of Section 13(a), the Person that is the issuer of any
securities into which shares of Common Stock of the Company are converted
in such merger or consolidation, and if no securities are so issued, the
Person that is the other party to such merger or consolidation; and
(ii)) in the case of any transaction described in clause (z) of the
first sentence of Section 13(a), the Person that is the party receiving the
greatest portion of the assets or
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earning power transferred pursuant to such transaction or transactions;
provided, however, that in any such case, (1) if the Common Stock of such Person
is not at such time and has not been continuously over the preceding twelve (12)
month period registered under Section 12 of the Exchange Act, and such Person is
a direct or indirect Subsidiary of another Person the Common Stock of which is
and has been so registered, "Principal Party" shall refer to such other Person;
(2) in case such Person is a Subsidiary, directly or indirectly, of more than
one Person, the Common Stock of two or more of which are and have been so
registered, "Principal Party" shall refer to whichever of such Persons is the
issuer of the Common Stock having the greatest aggregate market value; and (3)
in case such Person is owned, directly or indirectly, by a joint venture formed
by two or more Persons that are not owned, directly or indirectly, by the same
Person, the rules set forth in (1) and (2) above shall apply to each of the
chains of ownership having an interest in such joint venture as if such party
were a "Subsidiary" of both or all of such joint ventures and the Principal
Parties in each such chain shall bear the obligations set forth in this Section
13 in the same ratio as their direct or indirect interests in such Person bear
to the total of such interests.
(c) The Company shall not consummate any such consolidation, merger, sale
or transfer unless the Principal Party shall have a sufficient number of
authorized shares of Common Stock which have not been issued or reserved for
issuance to permit the exercise in full of the Rights in accordance with this
Section 13 and unless prior thereto the Company and such Principal Party shall
have executed and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in paragraphs (a) and (b) of this Section 13
and further providing that, as soon as practicable after the date of any
consolidation, merger or sale of assets mentioned in paragraph (a) of this
Section 13, the Principal Party at its own expense will:
(i) prepare and file a registration statement under the Securities
Act, with respect to the Rights and the securities purchasable upon
exercise of the Rights on an appropriate form, and will use its best
efforts to cause such registration statement to (A) become effective as
soon as practicable after such filing and (B) remain effective (with a
prospectus at all times meeting the requirements of the Securities Act)
until the Expiration Date;
(ii) use its best efforts to qualify or register the Rights and the
securities purchasable upon exercise of the Rights under the Blue Sky laws
of such jurisdictions as may be necessary or appropriate; and
(iii) deliver to holders of the Rights historical financial statements
for the Principal Party and each of its Affiliates which comply in all
respects with the requirements for registration on Form 10 under the
Exchange Act.
The provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers. In the event that a Section 13 Event
shall occur at any time after the occurrence of a Section 11(a)(ii) Event, the
Rights which have not theretofore been exercised
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<PAGE> 31
shall thereafter become exercisable in the manner described in Section 13(a).
(d) Notwithstanding anything in this Agreement to the contrary, Section 13
shall not be applicable to a transaction described in subparagraphs (x) and (y)
of Section 13(a) if (i) such transaction is consummated with a Person or Persons
who acquired shares of Common Stock pursuant to a Qualified Tender Offer,
Competing Tender Offer or a tender offer or exchange offer for all outstanding
shares of Common Stock that complies with the provisions of Section 11(a)(ii)
hereof (or a wholly-owned Subsidiary of any such Person or Persons), (ii) the
price per Common Share offered in such transaction is not less than the price
per share of Common Stock paid to all holders of Common Stock whose shares were
purchased pursuant to such tender offer or exchange and (iii) the form of
consideration being offered to the remaining holders of Common Stock pursuant to
such transaction is the same as the form of consideration paid pursuant to such
Qualified Tender Offer, Competing Tender Offer or tender offer or exchange
offer. Upon consummation of any such transaction contemplated by this Section
13(d), all Rights hereunder shall expire.
Section 14. Fractional Rights and Fractional Shares. (a) The Company shall
not be required to issue fractions of Rights, except prior to the Distribution
Date as provided in Section 11(p) hereof, or to distribute Rights Certificates
which evidence fractional Rights. In lieu of such fractional Rights, there shall
be paid to the registered holders of the Rights Certificates with regard to
which such fractional Rights would otherwise be issuable, an amount in cash
equal to the same fraction of the current market value of a whole Right. For
purposes of this Section 14(a), the current market value of a whole Right shall
be the closing price of the Rights for the Trading Day immediately prior to the
date on which such fractional Rights would have been otherwise issuable. The
closing price of the Rights for any day shall be the last sale price, regular
way, or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the Rights
are not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with respect
to securities listed on the principal national securities exchange on which the
Rights are listed or admitted to trading, or if the Rights are not listed or
admitted to trading on any national securities exchange, the last quoted price
or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ or such other system then in use
or, if on any such date the Rights are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Rights selected by the Board of Directors of
the Company. If on any such date no such market maker is making a market in the
Rights the fair value of the Rights on such date as determined in good faith by
the Board of Directors of the Company shall be used and shall be conclusive for
all purposes.
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than integral multiples of Preferred Stock Fractions)
upon exercise of the Rights or to distribute certificates which evidence
fractional shares of Preferred Stock (other than integral multiples of Preferred
Stock Fractions). In lieu of fractional shares of Preferred Stock that are
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<PAGE> 32
not Preferred Stock Fractions or integral multiples thereof, the Company may pay
to the registered holders of Rights Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of the
current market value of a share of Preferred Stock. For purposes of this Section
14(b), the current market value of one share of Preferred Stock shall be the
closing price of a share of Preferred Stock (as determined pursuant to Section
11(d)(ii) hereof) for the Trading Day immediately prior to the date of such
exercise.
(c) Following the occurrence of a Triggering Event, the Company shall not
be required to issue fractions of shares of Common Stock upon exercise of the
Rights or to distribute certificates which evidence fractional shares of Common
Stock. In lieu of fractional shares of Common Stock, the Company may pay to the
registered holders of Rights Certificates at the time such Rights are exercised
as herein provided an amount in cash equal to the same fraction of the current
market value of one share of Common Stock. For purposes of this Section 14(c),
the current market value of one share of Common Stock shall be the closing price
of a share of Common Stock (as determined pursuant to Section 11(d)(i) hereof)
for the Trading Day immediately prior to the date of such exercise.
(d) The holder of a Right by the acceptance of the Rights expressly waives
his right to receive any fractional Rights or any fractional shares upon
exercise of a Right, except as permitted by this Section 14.
Section 15. Rights of Action. All rights of action in respect of this
Agreement, except those rights of action vested in the Rights Agent pursuant to
Sections 18 through 20 inclusive, are vested in the respective registered
holders of the Rights Certificates (and, prior to the Distribution Date, the
registered holders of the Common Stock); and any registered holder of any Rights
Certificate (or, prior to the Distribution Date, of the Common Stock), without
the consent of the Rights Agent or of the holder of any other Rights Certificate
(or, prior to the Distribution Date, of the Common Stock), may, in his own
behalf and for his own benefit, enforce, and may institute and maintain any
suit, action or proceeding against the Company to enforce, or otherwise act in
respect of, his right to exercise the Rights evidenced by such Rights
Certificate in the manner provided in such Rights Certificate and in this
Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Agreement and
shall be entitled to specific performance of the obligations hereunder and
injunctive relief against actual or threatened violations of the obligations
hereunder of any Person subject to this Agreement. Holders of Rights shall be
entitled to recover the reasonable costs and expenses, including attorneys'
fees, incurred by them in any action to enforce the provisions of this
Agreement.
Section 16. Agreement of Rights Holders. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent and
with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable only in
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connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered
at the principal office or offices of the Rights Agent designated for such
purposes, duly endorsed or accompanied by a proper instrument of transfer
and with the appropriate forms and certificates fully executed;
(c) subject to Section 6(a) and Section 7(f) hereof, the Company and
the Rights Agent may deem and treat the person in whose name a Rights
Certificate (or, prior to the Distribution Date, the associated Common
Stock certificate) is registered as the absolute owner thereof and of the
Rights evidenced thereby (notwithstanding any notations of ownership or
writing on the Rights Certificates or the associated Common Stock
certificate made by anyone other than the Company or the Rights Agent) for
all purposes whatsoever, and neither the Company nor the Rights Agent
shall, subject to the last sentence of Section 7(e) hereof, be required to
be affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any
holder of a Right or other Person as a result of its inability to perform
any of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative
agency or commission, or any statute, rule, regulation or executive order
promulgated or enacted by any governmental authority, prohibiting or
otherwise restraining performance of such obligation; provided, however,
the Company must use its best efforts to have any such order, decree or
ruling lifted or otherwise overturned as soon as possible.
Section 17. Rights Certificate Holder Not Deemed a Stockholder. No holder,
as such, of any Rights Certificate shall be entitled to vote, receive dividends
or be deemed for any purpose the holder of the number of Preferred Stock
Fractions or any other securities of the Company which may at any time be
issuable on the exercise of the Rights represented thereby, nor shall anything
contained herein or in any Rights Certificate be construed to confer upon the
holder of any Rights Certificate, as such, any of the rights of a stockholder of
the Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting stockholders (except as provided in Section 24 hereof), or to
receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Rights Certificate shall have been exercised in
accordance with the provisions hereof.
Section 18. Concerning the Rights Agent. (a) The Company agrees to pay to
the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and
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disbursements and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, or expense, incurred without
negligence, bad faith or willful misconduct on the part of the Rights Agent, for
anything done or omitted by the Rights Agent in connection with the acceptance
and administration of this Agreement, including the costs and expenses of
defending against any claim of liability in the premises.
(b) The Rights Agent shall be protected and shall incur no liability for or
in respect of any action taken, suffered or omitted by it in connection with its
administration of this Agreement in reliance upon any Rights Certificate or
certificate for Common Stock or for other securities of the Company, instrument
of assignment or transfer, power of attorney, endorsement, affidavit, letter,
notice, direction, consent, certificate, statement, or other paper or document
believed by it to be genuine and to be signed, executed and, where necessary,
verified or acknowledged, by the proper Person or Persons.
Section 19. Merger or Consolidation or Change of Name of Rights Agent. (a)
Any Person into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any Person resulting from any
merger or consolidation to which the Rights Agent or any successor Rights Agent
shall be a party or any Person succeeding to the corporate trust or stock
transfer business of the Rights Agent or any successor Rights Agent, shall be
the successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties hereto;
provided, however, that such Person would be eligible for appointment as a
successor Rights Agent under the provisions of Section 21 hereof. In case at the
time such successor Rights Agent shall succeed to the agency created by this
Agreement, any of the Rights Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the countersignature of a
predecessor Rights Agent and deliver such Rights Certificates so countersigned;
and in case at that time any of the Rights Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Rights
Certificates either in the name of the predecessor or in the name of the
successor Rights Agent; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed and
at such time any of the Rights Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Rights Certificates so countersigned; and in case at that time
any of the Rights Certificates shall not have been countersigned, the Rights
Agent may countersign such Rights Certificates either in its prior name or in
its changed name; and in all such cases such Rights Certificates shall have the
full force provided in the Rights Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the duties
and obligations imposed by this Agreement upon the following terms and
conditions, by all of which
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the Company and the holders of Rights Certificates, by their acceptance thereof,
shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person and
the determination of current market prices) be proved or established by the
Company prior to taking or suffering any action hereunder, such fact or
matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a
certificate signed by the Chairman of the Board, the President, any Vice
President, the Treasurer or the Secretary of the Company and delivered to
the Rights Agent; and such certificate shall be full authorization to the
Rights Agent for any action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the
Rights Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates), but all such statements and
recitals are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof
(except the due execution and delivery hereof by the Rights Agent) or in
respect of the validity or execution of any Rights Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by
the Company of any covenant or condition contained in this Agreement or in
any Rights Certificate; nor shall it be responsible for any adjustment
required under the provisions of Section 11 or Section 13 hereof or
responsible for the manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any such
adjustment (except with respect to the exercise of Rights evidenced by
Rights Certificates after actual notice of any such adjustment); nor shall
it by any act hereunder be deemed to make any representation or warranty as
to the authorization or reservation of any Common Stock or Preferred Stock
to be issued pursuant to this Agreement or any Rights Certificate or as to
whether any Common Stock or Preferred Stock will, when so issued, be
validly authorized and issued, fully paid and nonassessable.
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(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably
be required by the Rights Agent for the carrying out or performing by the
Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from
any of the Chairman of the Board, the President, any Vice President, the
Treasurer and the Secretary of the Company, and to apply to such officers
for advice or instructions in connection with its duties, and it shall not
be liable for any action taken or suffered to be taken by it in good faith
in accordance with instructions of any such officer.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or
lend money to the Company or otherwise act as fully and freely as though it
were not Rights Agent under this Agreement. Nothing herein shall preclude
the Rights Agent from acting in any other capacity for the Company or for
any other Person.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or
by or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of
any such attorneys or agents or for any loss to the Company resulting from
any such act, default, neglect or misconduct; provided, however, reasonable
care was exercised in the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder or in the exercise of its
rights if there shall be reasonable grounds for believing that repayment of
such funds or adequate indemnification against such risk or liability is
not reasonably assured to it.
(k) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate contained in the
form of assignment or the form of election to purchase set forth on the
reverse thereof, as the case may be, has either not been completed or
indicates an affirmative response to clause 1 and/or 2 thereof, the Rights
Agent shall not take any further action with respect to such requested
exercise of transfer without first consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon thirty (30) days' notice in writing mailed to the Company, and to each
transfer agent of the Common Stock and
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Preferred Stock, by registered or certified mail, and to the holders of the
Rights Certificates by first-class mail. The Company may remove the Rights Agent
or any successor Rights Agent upon thirty (30) days' notice in writing, mailed
to the Rights Agent or successor Rights Agent, as the case may be, and to each
transfer agent of the Common Stock and Preferred Stock, by registered or
certified mail, and to the holders of the Rights Certificates by first-class
mail. If the Rights Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the Rights Agent.
If the Company shall fail to make such appointment within a period of thirty
(30) days after giving notice of such removal or after it has been notified in
writing of such resignation or incapacity by the resigning or incapacitated
Rights Agent or by any registered holder of a Rights Certificate (who shall,
with such notice, submit his Rights Certificate for inspection by the Company),
then any registered holder of any Rights Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be (a)
a legal entity organized, doing business and in good standing under the laws of
the United States or of the States of New York or Delaware (or of any other
state of the United States so long as such legal entity is authorized to do
business in the State of New York or Delaware), having a principal office in the
State of New York or Delaware, which is authorized under such laws to exercise
corporate trust or stock transfer powers and is subject to supervision or
examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least
$100,000,000 or (b) an affiliate of any such legal entity described in clause
(a) above. After appointment, the successor Rights Agent shall be vested with
the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Stock and Preferred Stock, and mail a notice thereof in writing to
the registered holders of the Rights Certificates or, prior to the Distribution
Date, the registered holders of shares of Common Stock. Failure to give any
notice provided for in this Section 21, however, or any defect therein, shall
not affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Rights Certificates. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Rights Certificates evidencing Rights in such form as
may be approved by its Board of Directors to reflect any adjustment or change in
the Purchase Price and the number or kind or class of shares or other securities
or property purchasable under the Rights Certificates made in accordance with
the provisions of this Agreement. In addition, in connection with the issuance
or sale of Common Stock following the Distribution Date and prior to the
Expiration Date, the Company (a) shall, with respect to Common Stock so issued
or sold pursuant to the exercise of stock options or under any employee plan or
arrangement, or upon the exercise, conversion or exchange of securities
hereinafter issued by the Company, and (b) may, in any other case, if
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deemed necessary or appropriate by the Board of Directors of the Company, issue
Rights Certificates representing the appropriate number of Rights in connection
with such issuance or sale; provided, however, that (i) no such Rights
Certificate shall be issued if, and to the extent that, the Company shall be
advised by counsel that such issuance would create a significant risk of
material adverse tax consequences to the Company or the Person to whom such
Rights Certificate would be issued, and (ii) no such Rights Certificate shall be
issued if, and to the extent that, appropriate adjustment shall otherwise have
been made in lieu of the issuance thereof.
Section 23. Redemption and Termination. (a) The Board of Directors of the
Company may, at its option, at any time prior to the earlier of (i) the date on
which a Section 11(a)(ii) Event occurs or (ii) the Final Expiration Date, redeem
all but not less than all the then outstanding Rights at a redemption price of
$.001 per Right, as such amount shall be appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the date
hereof (such redemption price being hereinafter referred to as the "Redemption
Price"); and the Company may, at its option, pay the Redemption Price either in
cash or securities or both having a current market price, as of a date
determined by the Board of Directors, of $.001.
(b) Immediately upon the action of the Board of Directors of the Company
ordering the redemption of the Rights, evidence of which shall have been filed
with the Rights Agent and without any further action and without any notice, the
right to exercise the Rights will terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price for each Right so
held. Promptly after the action of the Board of Directors ordering the
redemption of the Rights, the Company shall give notice of such redemption to
the Rights Agent and the holders of the then outstanding Rights by mailing such
notice to all such holders at each holder's last address as it appears upon the
registry books of the Rights Agent or, prior to the Distribution Date, on the
registry books of the Transfer Agent for the Common Stock. Any notice which is
mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of redemption will state the method
by which the payment of the Redemption Price will be made.
Section 24. Notice of Certain Events. (a) In case the Company shall
propose, at any time after the Distribution Date, (i) to pay any dividend
payable in shares of any class of capital stock to the holders of Preferred
Stock or to make any other distribution to the holders of Preferred Stock (other
than a regular quarterly cash dividend paid out of earnings or retained earnings
of the Company), or (ii) to offer to the holders of Preferred Stock rights or
warrants to subscribe for or to purchase any additional shares of Preferred
Stock or shares of stock of any class or any other securities, rights or
options, or (iii) to effect any reclassification of its Preferred Stock (other
than a reclassification involving only the subdivision of outstanding shares of
Preferred Stock), or (iv) to effect any consolidation or merger into or with any
other Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof) or to effect any sale or other transfer (or
to permit one or more of its Subsidiaries to effect any sale or other transfer),
in one transaction or series of related transactions, of more than 50%
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of the assets or earning power of the Company and its Subsidiaries (taken as a
whole) to any other Person (other than the Company and/or any of its
Subsidiaries in one or more transactions each of which complies with Section
11(o) hereof), or (v) to effect the liquidation, dissolution or winding up of
the Company, then, in each such case, the Company shall give to each holder of a
Rights Certificate, to the extent feasible, and in accordance with Section 25
hereof, a notice of such proposed action, which shall specify the record date
for the purposes of such share dividend, distribution of rights or warrants, or
the date on which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place and the date of
participation therein by the holders of Preferred Stock, if any such date is to
be fixed, and such notice shall be so given in the case of any action covered by
clause (i) or (ii) above at least twenty (20) days prior to the record date for
determining holders of the Preferred Stock for purposes of such action, and in
the case of any such other action, at least twenty (20) days prior to the date
of the taking of such proposed action or the date of participation therein by
the holders of the Preferred Stock, whichever shall be the earlier.
(b) Upon the occurrence of a Section 11(a)(ii) Event, (i) the Company shall
as soon as practicable thereafter give to each holder of a Rights Certificate,
to the extent feasible, in accordance with Section 25 hereof, a notice of the
occurrence of such event and the consequences of the event to holders of Rights
under Section 11(a)(ii) hereof and (ii) all references in the preceding
paragraph to Preferred Stock shall be deemed thereafter to refer to Common Stock
and/or, if appropriate, other securities.
Section 25. Notices. Notices or demands authorized by this Agreement to be
given or made by the Rights Agent or by the holder of any Rights Certificate to
or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
Philip Services Corporation
100 King Street, West
P.O. Box 2440, LCD #1
Hamilton, Ontario L8N 4J6
Attention: Executive Vice President and
General Counsel
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Company) as follows:
American Securities Transfer & Trust, Inc.
P.O. Box 1596
Denver, CO 80201
Notices or demands authorized by this Agreement to be given or made by the
Company or the
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Rights Agent to the holder of any Rights Certificate (or if prior to the
Distribution Date, to the holder of certificates representing Common Stock)
shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed to such holder at the address of such holder as shown on the
registry books of the Company.
Section 26. Supplements and Amendments. From and after the date hereof and
subject to the next to last sentence of this Section 26, the Company and the
Rights Agent shall, if the Company so directs, supplement or amend this
Agreement without the approval of any holders of Rights Certificates in order
(i) to cure any ambiguity or (ii) to correct or supplement any provision
contained herein which may be defective or inconsistent with any other
provisions herein. Upon the delivery of a certificate from an appropriate
officer of the Company which states that the proposed supplement or amendment is
in compliance with the terms of this Section 26, the Rights Agent shall execute
such supplement or amendment. Except as set forth in the immediately preceding
sentence, this Agreement may not be amended or supplemented, in any manner,
without the approval of the holders of at least two-thirds of the issued and
outstanding shares of Common Stock entitled to vote at a meeting of shareholders
for the election of directors, including any amendment which changes the
Redemption Price, the Final Expiration Date, the Purchase Price, or the number
of Preferred Stock Fractions for which a Right is exercisable. Prior to the
Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Common Stock.
Section 27. Successors. All the covenants and provisions of this Agreement
by or for the benefit of the Company or the Rights Agent shall bind and inure to
the benefit of their respective successors and assigns hereunder.
Section 28. Determinations and Actions by the Board of Directors, etc. For
all purposes of this Agreement, any calculation of the number of shares of
Common Stock outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding Common Stock of which
any Person is the Beneficial Owner, shall be made in accordance with the last
sentence of Rule 13d(1)(i) of the General Rules and Regulations under the
Exchange Act as in effect as of the date hereof. The Board of Directors of the
Company shall have the exclusive power and authority to administer this
Agreement and to exercise all rights and powers specifically granted to the
Board or the Company, or as may be necessary or advisable in the administration
of this Agreement, including, without limitation, the right and power to (i)
interpret the provisions of this Agreement, and (ii) make all determinations
deemed necessary or advisable for the administration of this Agreement
(including a determination to redeem or not redeem the Rights or to amend the
Agreement). All such actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below, all omissions with respect to the
foregoing) which are done or made by the Board in good faith, shall (x) be
final, conclusive and binding on the Company, the Rights Agent, the holders of
the Rights and all other parties, and (y) not subject the Board of Directors to
any liability to the holders of the Rights.
Section 29. Benefits of this Agreement. Nothing in this Agreement shall be
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construed to give to any Person other than the Company, the Rights Agent and the
registered holders of the Rights Certificates (and, prior to the Distribution
Date, registered holders of the Common Stock) any legal or equitable right,
remedy or claim under this Agreement; but this Agreement shall be for the sole
and exclusive benefit of the Company, the Rights Agent and the registered
holders of the Rights Certificates (and, prior to the Distribution Date,
registered holders of the Common Stock).
Section 30. Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board of
Directors of the Company determines in its good faith judgment that severing the
invalid language from this Agreement would adversely affect the purpose or
effect of this Agreement, the right of redemption set forth in Section 23 hereof
shall be reinstated and shall not expire until the Close of Business on the
tenth day following the date of such determination by the Board of Directors.
Section 31. Governing Law. This Agreement, each Right and each Rights
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the state of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts made
and to be performed entirely within such State.
Section 32. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
Section 33. Descriptive Headings. Descriptive headings of the several
sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof
Section 34. Effective Date Notwithstanding that this Agreement is expressed
to be dated as of March 31, 2000, it is agreed that this Agreement shall be
deemed to be delivered on and take effect as and from the Closing Date, as
defined in that certain Secured PIK/Term Credit Agreement among the Company,
Canadian Imperial Bank of Commerce, as administrative agent and the lenders
party thereto.
* * *
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
PHILIP SERVICES CORPORATION
By
Title:
AMERICAN SECURITIES TRANSFER & TRUST, INC.
By
Title:
By
Title:
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Exhibit A
FORM OF CERTIFICATE OF DESIGNATIONS,
PREFERENCES AND RIGHTS OF SERIES A
JUNIOR PARTICIPATING PREFERRED STOCK
OF
PHILIP SERVICES CORPORATION
Pursuant to Section 151 of the Delaware General Corporation Law
We, ___________, President, and __________, Secretary, of Philip Services
Corporation, a corporation organized and existing under the General Corporation
Law of the State of Delaware, in accordance with the provisions of Section 151
thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by the
Amended and Restated Certificate of Incorporation of the said Corporation, the
said Board of Directors on March 31, 2000 adopted the following resolutions
creating a series of Preferred Stock designated as Series A Junior Participating
Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board of Directors
of this Corporation in accordance with the provisions of Section 5 of the
Amended and Restated Certificate of Incorporation, a series of Preferred Stock
of the Corporation be and it hereby is created and that the designation and
amount thereof and the voting powers, preferences and relative, participating,
optional, and other special rights of the shares of such series, and the
qualifications, limitations or restrictions thereof are as follows:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series A Junior Participating Preferred Stock" and the number of
shares constituting such series shall initially be four hundred and fifty (450),
$.01 par value, such number of shares to be subject to increase or decrease by
action of the Board of Directors as evidenced by a certificate of designations.
Section 2. Dividends and Distributions. (A) Subject to the prior and
superior rights of the holders of any shares of any series of Preferred Stock
ranking prior and superior to the shares of Series A Junior Participating
Preferred Stock with respect to dividends, the holders of shares of Series A
Junior Participating Preferred Stock shall be entitled to receive, when, as and
if declared by the Board of Directors out of funds legally available for the
purpose, quarterly dividends payable in cash on the last day of March, June,
September and December in each year (each such date being referred to herein as
a "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction of a
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share of Series A Junior Participating Preferred Stock, in an amount per share
(rounded to the nearest cent) equal to the greater of (a) $10.00 or (b) subject
to the provision for adjustment hereinafter set forth, 100,000 times the
aggregate per share amount of all cash dividends, and 100,000 times the
aggregate per share amount (payable in kind) of all non-cash dividends or other
distributions other than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock, $0.01 par value, of the Corporation
(the "Common Stock") since the immediately preceding Quarterly Dividend Payment
Date, or, with respect to the first Quarterly Dividend payment Date, since the
first issuance of any share or fraction of a share of Series A Junior
Participating Preferred Stock. In the event the Corporation shall at any time
after March 31, 2000 (the "Rights Declaration Date") (i) declare any dividend on
Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding
Common Stock, or (iii) combine the outstanding Common Stock into a smaller
number of shares, then in each such case the amount to which holders of shares
of Series A Junior Participating Preferred Stock were entitled immediately prior
to such event under clause (b) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the Series
A Junior Participating Preferred Stock as provided in paragraph (A) above
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided that, in the
event no dividend or distribution shall have been declared on the Common Stock
during the period between any quarterly Dividend Payment Date and the next
subsequent quarterly Dividend Payment Date, a dividend of $10.00 per share on
the Series A Junior Participating Preferred Stock shall nevertheless be payable
on such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding shares
of Series A Junior Participating Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares of Series A Junior
Participating Preferred Stock, unless the date of issue of such share is prior
to the record date for the first Quarterly Dividend Payment Date, in which case
dividends on such shares shall begin to accrue from the date of issue of such
shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a
date after the record date for the determination of holders of shares of Series
A Junior Participating Preferred Stock entitled to receive a Quarterly Dividend
and before such Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends
paid on the shares of Series A Junior Participating Preferred Stock in an amount
less than the total amount of such dividends at the time accrued and payable on
such shares shall be allocated pro rata on a share-by-share basis among all such
shares at the time outstanding. The Board of Directors may fix a record date for
the determination of holders of shares of Series A Junior Participating
Preferred Stock entitled to receive payment of a dividend or distribution
declared thereon, which record date shall be no more than 30 days prior to the
date fixed for the
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payment thereof.
Section 3. Voting Rights. The holders of shares of Series A Junior
Participating Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each share of Series A Junior Participating Preferred Stock shall entitle
the holder thereof to 100,000 votes on all matters submitted to a vote of
the stockholders of the Corporation. In the event the Corporation shall at
any time after the Rights Declaration Date (i) declare any dividend on
Common Stock payable in shares of Common stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common Stock
into a smaller number of shares, then in each such case the number of votes
per share to which holders of shares of Series A Junior Participating
Preferred Stock were entitled immediately prior to such event shall be
adjusted by multiplying such number by a fraction the numerator of which is
the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
(B) Except as otherwise provided herein, in any other Certificate of
Designations creating a series of Preferred Stock or any similar stock or
by law, the holders of shares of Series A Junior Participating Preferred
Stock and the holders of shares of Common Stock shall vote together as one
class on all matters submitted to a vote of stockholders of the
Corporation.
(C) (i) If at any time dividends on any Series A Junior Participating
Preferred Stock shall be in arrears in an amount equal to six (6) quarterly
dividends thereon, the occurrence of such contingency shall mark the
beginning of a period (herein called a "default period") which shall extend
until such time when all accrued and unpaid dividends for all previous
quarterly dividend periods and for the current quarterly dividend period on
all shares of Series A Junior Participating Preferred Stock then
outstanding shall have been declared and paid or set apart for payment.
During each default period, all holders of Preferred Stock (including
holders of the Series A Junior Participating Preferred Stock) with
dividends in arrears in an amount equal to (6) quarterly dividends thereon,
voting as a class, irrespective of series, shall have the right to elect
two (2) Directors.
(ii) During any default period, such voting right of the holders of
Series A Junior Participating Preferred Stock may be exercised initially at
a special meeting called pursuant to subparagraph (iii) of this Section
3(C) or at any annual meeting of stockholders, and thereafter at annual
meetings of stockholders, provided that neither such voting right nor the
right of the holders of any other series of Preferred Stock, if any, to
increase, in certain cases, the authorized number of Directors shall be
exercised unless the holders of ten percent in number of shares of
Preferred Stock outstanding shall be present in person or by proxy. The
absence of a quorum of the holders of Common Stock shall not affect the
exercise by the holders of Preferred Stock of such voting right. At any
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meeting at which the holders of Preferred Stock shall exercise such voting
right initially during an existing default period, they shall have the
right, voting as a class, to fill such vacancies, if any, in the Board of
Directors as may then exist up to two (2) Directors or, if such right is
exercised at an annual meeting, to elect two (2) Directors. If the number
which may be so elected at any special meeting does not amount to the
required number, the holders of the Preferred Stock shall have the right to
make such increase in the number of Directors as shall be necessary to
permit the election by them of the required number. After the holders of
the Preferred Stock shall have exercised their right to elect Directors in
any default period and during the continuance of such period, the number of
Directors shall not be increased or decreased except by vote of the holders
of Preferred Stock as herein provided or pursuant to the rights of any
equity securities ranking senior to or pari passu with the Series A Junior
Participating Preferred Stock.
(iii) Unless the holders of Preferred Stock shall, during an existing
default period, have previously exercised their right to elect Directors,
the Board of Directors may order, or any stockholder or stockholders owning
in the aggregate not less than ten percent (10%) of the total number of
shares of Preferred Stock outstanding, irrespective of series, may request,
the calling of a special meeting of the holders of Preferred Stock, which
meeting shall thereupon be called by the Chairman of the Board, the
President or the Secretary of the Corporation. Notice of such meeting and
of any annual meeting at which holders of Preferred Stock are entitled to
vote pursuant to this paragraph (C)(iii) shall be given to each holder of
record of Preferred Stock by mailing a copy of such notice to him at his
last address as the same appears on the books of the Corporation. Such
meeting shall be called for a time not earlier than 10 days and not later
than 60 days after such order or request, such meeting may be called on
similar notice by any stockholder or stockholders owning in the aggregate
not less than ten percent (10%) of the total number of shares of Preferred
Stock outstanding. Notwithstanding the provisions of this paragraph
(C)(iii), no such special meeting shall be called during the period within
60 days immediately preceding the date fixed for the next annual meeting of
the stockholders.
(iv) In any default period, the holders of Common Stock, and other
classes of stock of the Corporation if applicable, shall continue to be
entitled to elect the whole number of Directors until the holders of
Preferred Stock shall have exercised their right to elect two (2) Directors
voting as a class, after the exercise of which right (x) the Directors so
elected by the holders of Preferred Stock shall continue in office until
their successors shall have been elected by such holders or until the
expiration of the default period, and (y) any vacancy in the Board of
Directors may (except as provided in paragraph (C)(ii) of this Section 3)
be filled by vote of a majority of the remaining Directors theretofore
elected by the holders of the class of stock which elected the Director
whose office shall have become vacant. References in this paragraph (C) to
Directors elected by the holders of a particular class of stock shall
include Directors elected by such Directors to fill vacancies as provided
in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period, (x) the right
of the
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holders of Preferred Stock as a class to elect Directors shall cease, (y)
the term of any Directors elected by the holders of Preferred Stock as a
class shall terminate, and (z) the number of Directors shall be such number
as may be provided for in the Amended and Restated Certificate of
Incorporation or by-laws irrespective of any increase made pursuant to the
provisions of paragraph (C)(ii) of this Section 3 (such number being
subject, however, to change thereafter in any manner provided by law or in
the Amended and Restated Certificate of Incorporation or by-laws). Any
vacancies in the Board of Directors effected by the provisions of clauses
(y) and (z) in the preceding sentence may be filled by a majority of the
remaining Directors.
(D) Except as set forth herein, holders of Series A Junior
Participating Preferred Stock shall have no special voting rights and their
consent shall not be required (except to the extent they are entitled to
vote with holders of Common Stock as set forth herein) for taking any
corporate action.
Section 4. Certain Restrictions. (A) Whenever quarterly dividends or other
dividends or distributions payable on the Series A Junior Participating
Preferred Stock as provided in Section 2 are in arrears, thereafter and until
all accrued and unpaid dividends and distributions, whether or not declared, on
shares of Series A Junior Participating Preferred Stock outstanding shall have
been paid in full, the Corporation shall not:
(i) declare or pay dividends on, make any other distributions on, or
redeem or purchase or otherwise acquire for consideration any shares of
stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Junior Participating Preferred
Stock;
(ii) declare or pay dividends on or make any other distributions on
any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Junior
Participating Preferred Stock, except dividends paid ratably on the Series
A Junior Participating Preferred Stock and all such parity stock on which
dividends are payable or in arrears in proportion to the total amounts to
which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration shares
of any stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Junior
Participating Preferred Stock, provided that the Corporation may at any
time redeem, purchase or otherwise acquire shares of any such parity stock
in exchange for shares of any stock of the Corporation ranking junior
(either as to dividends or upon dissolution, liquidation or winding up) to
the Series A Junior Participating Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any shares of
Series A Junior Participating Preferred Stock, or any shares of stock
ranking on a parity with the Series A Junior Participating Preferred Stock,
except in accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all holders
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of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative
rights and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable treatment among
the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Junior Participating
Preferred Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition thereof.
All such shares upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
to be created by resolution or resolutions of the Board of Directors, subject to
the conditions and restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up. (A) Upon any liquidation
(voluntary or otherwise), dissolution or winding up of the Corporation, no
distribution shall be made to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the
Series A Junior Participating Preferred Stock unless, prior thereto, the holders
of shares of Series A Junior Participating Preferred Stock shall have received
$100,000 per share, plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such payment (the
"Series A Liquidation Preference"). Following the payment of the full amount of
the Series A Liquidation Preference, no additional distributions shall be made
to the holders of shares of Series A Junior Participating Preferred Stock
unless, prior thereto, the holders of shares of Common Stock shall have received
an amount per share (the "Common Adjustment") equal to the quotient obtained by
dividing (i) the Series A Liquidation Preference by (ii) 100,000 (as
appropriately adjusted as set forth in subparagraph C below to reflect such
events as stock splits, stock dividends and recapitalizations with respect to
the Common Stock) (such number in clause (ii), the "Adjustment Number").
Following the payment of the full amount of the Series A Liquidation Preference
and the Common Adjustment in respect of all outstanding shares of Series A
Junior Participating Preferred Stock and Common Stock, respectively, holders of
Series A Junior Participating Preferred Stock and holders of shares of Common
Stock shall receive their ratable and proportionate share of the remaining
assets to be distributed in the ratio of the Adjustment Number to 1 with respect
to such Preferred Stock and Common Stock, on a per share basis, respectively.
(B) In the event, however, that there are not sufficient assets available
to permit payment in full of the Series A Liquidation Preference and the
liquidation preferences of all other series of preferred stock, if any, which
rank on a parity with the Series A Junior Participating Preferred Stock, then
such remaining assets shall be distributed ratably to the holders of such parity
shares in proportion to their respective liquidation preferences. In the event,
however, that there are not sufficient assets available to permit payment in
full of the
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Common Adjustment, then such remaining assets shall be distributed ratably to
the holders of Common Stock.
(C) In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the Adjustment Number in effect immediately prior to such event shall be
adjusted by multiplying such Adjustment Number by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Corporation shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
Series A Junior Participating Preferred Stock shall at the same time be
similarly exchanged or changed in an amount per share (subject to the provision
for adjustment hereinafter set forth) equal to 100,000 times the aggregate
amount of stock, securities, cash and/or any other property (payable in kind),
as the case may be, into which or for which each share of Common Stock is
changed or exchanged. In the event the Corporation shall at any time after the
Rights Declaration Date (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii)
combine the outstanding Common Stock into a smaller number of shares, then in
each such case the amount set forth in the preceding sentence with respect to
the exchange or change of shares of Series A Junior Participating Preferred
Stock shall be adjusted by multiplying such amount by a fraction the numerator
of which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series A Junior Participating
Preferred Stock shall not be redeemable.
Section 9. Ranking. The Series A Junior Participating Preferred Stock shall
rank junior to all other series of the Corporation's Preferred Stock as to the
payment of dividends and the distribution of assets, unless the terms of any
such series shall provide otherwise.
Section 10. Amendment. The Amended and Restated Certificate of
Incorporation of the Corporation shall not be further amended in any manner
which would materially alter or change the powers, preferences or special rights
of the Series A Junior Participating Preferred Stock so as to affect them
adversely without the affirmative vote of the holders of two-thirds (2/3) or
more of the outstanding shares of Series A Junior Participating Preferred Stock,
voting separately as a class.
Section 11. Fractional Shares. Series A Junior Participating Preferred
Stock may be issued in fractions of a share which shall entitle the holder, in
proportion to such holder's
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fractional shares, to exercise voting rights, receive dividends, participate in
distributions and to have the benefit of all other rights of holders of Series A
Junior Participating Preferred Stock.
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IN WITNESS WHEREOF, we have executed and subscribed this Certificate and do
affirm the foregoing as true under the penalties of perjury this 31st day of
March, 2000.
Name:
Title: President
Attest:
Name: Secretary
Title:
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Exhibit B
[FORM OF RIGHTS CERTIFICATE]
Certificate No. R- __________ Rights
NOT EXERCISABLE AFTER THE EXPIRATION DATE (AS SUCH TERM IS DEFINED IN THE RIGHTS
AGREEMENT REFERRED TO BELOW). THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE
OPTION OF THE COMPANY, AT $.001 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH
RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS
CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN
ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE
AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES
SPECIFIED IN SECTION 7(e) OF THE RIGHTS AGREEMENT.]1
_________________
1 The portion of the legend in brackets shall be inserted only if applicable
and shall replace the preceding sentence.
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Rights Certificate
PHILIP SERVICES CORPORATION
This certifies that __________________, or registered assigns, is the
registered holder of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement, dated as of March 31, 2000 (as it may be amended, modified
or supplemented from time to time, the "Rights Agreement"), between Philip
Services Corporation, a Delaware corporation (the "Company"), and American
Securities Transfer & Trust, Inc. (the "Rights Agent"), to purchase from the
Company at any time prior to 5:00 P.M. (New York time) on the Expiration Date
(as defined in the Rights Agreement), which shall not be later than March 31,
2010 at the office or offices of the Rights Agent designated for such purpose,
or its successors as Rights Agent, one one hundred-thousandth of a share of the
Company's Series A Junior Participating Preferred Stock, $.01 par value (the
"Preferred Stock"), at a purchase price of $____ (the "Purchase Price") per one
one hundred-thousandth of a Preferred Stock (such fraction, a "Preferred Stock
Fraction"), upon presentation and surrender of this Rights Certificate with the
Form of Election to Purchase set forth on the reverse hereof and the Certificate
contained therein duly executed. Except as otherwise provided in Section 11(q)
of the Rights Agreement, the Purchase Price shall be paid at the election of the
holder in cash or by certified bank check or money order payable to the order of
the Company. The number of Rights evidenced by this Rights Certificate and the
number of Preferred Stock Fractions which may be purchased upon exercise thereof
and the Purchase Price per Preferred Stock Fraction, set forth above, are the
number of Rights, number of one Preferred Stock Fractions and Purchase Price as
of _____________, 20__,(2)
___________________
(2) Insert the Distribution Date.
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based on the Preferred Stock as constituted at such date.
Except as otherwise provided in the Rights Agreement, upon the occurrence
of a Section 11(a)(ii) Event (as such term is defined in the Rights Agreement),
if the Rights evidenced by this Rights Certificate are beneficially owned by (i)
an Acquiring Person or any Affiliate or Associate of an Acquiring Person (as
such terms are defined in the Rights Agreement), (ii) a transferee of any such
Acquiring Person, Associate or Affiliate, or (iii) under certain circumstances
specified in the Rights Agreement, a transferee of a person who, concurrently
with or after such transfer, became an Acquiring Person, or an Affiliate or
Associate of an Acquiring Person, such Rights shall become null and void and no
holder hereof shall have any rights with respect to such Rights from and after
the occurrence of such Section 11(a)(ii) Event.
As provided in the Rights Agreement, the Purchase Price and the number and
kind of Preferred Stock or other securities, which may be purchased upon the
exercise of the Rights evidenced by this Rights Certificate are subject to
modification and adjustment upon the happening of certain events, including
Triggering Events (as such term is defined in the Rights Agreement).
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holder of the Rights Certificate, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the office of the Rights Agent as
set forth in the Rights Agreement and are also available upon written request to
the Rights Agent.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the principal office or offices of the Rights Agent designated for
such purpose, may be exchanged for another Rights Certificate or Rights
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of Preferred Stock Fractions as the Rights
evidenced by the Rights Certificate or Rights Certificates surrendered shall
have entitled such holder to purchase. If this Rights Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender hereof
another Rights Certificate or Rights Certificates for the number of whole Rights
not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate may be redeemed by the Board of Directors of the Company at its
option at a redemption price of $.001 per Right at any time prior to the earlier
of (i) the date on which a Section 11(a)(ii) Event occurs and (ii) the Final
Expiration Date.
No fractional shares of Preferred Stock will be issued upon the exercise of
any Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one hundred-thousandth of a share of Preferred Stock, which
may, at the election of the Company, be
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evidenced by depositary receipts), but in lieu thereof a cash payment will be
made, as provided in the Rights Agreement.
No holder of this Rights Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of the shares of Preferred
Stock or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
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WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal.
Dated as of __________, 2000
Attest: PHILIP SERVICES CORPORATION
By By
Name: Name:
Title: Title:
[RIGHTS AGENT]
By
Name:
Title:
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<PAGE> 57
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder
desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED _________________________ hereby sells, assigns and
transfers unto _______________________________________________________________
(Please print name and address of transferee) this Rights Certificate, together
with all right, title and interest therein, and does hereby irrevocably
constitute and appoint ____________________ Attorney, to transfer the within
Rights Certificate on the books of the within-named Company with full power of
substitution.
Dated: __________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
Certificate
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Rights Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person
or an Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate
from any Person who is, was or subsequently became an Acquiring Person or
an Affiliate or Associate of an Acquiring Person.
Dated: __________________
Signature
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<PAGE> 58
NOTICE
The signatures to the foregoing Assignment and Certificate must correspond
to the name as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change whatsoever.
FORM OF ELECTION TO PURCHASE
(To be executed if the registered holder desires to
exercise Rights represented by the Rights Certificate.)
To: PHILIP SERVICES CORPORATION
The undersigned hereby irrevocably elects to exercise ______ Rights
represented by this Rights Certificate to purchase the shares of Preferred Stock
issuable upon the exercise of the Rights (or such other securities of the
Company or of any other person which may be issuable upon the exercise of the
Rights) and requests that certificates for such shares be issued in the name of
and delivered to:
(Please print name and address)
Please insert social security or other
identifying number:
If such number of Rights shall not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:
(Please print name and address)
Please insert social security or other
identifying number:
Dated: __________________
Signature
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Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are
not being exercised by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of an Acquiring Person (as such terms
are defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate
from any Person who is, was or subsequently became an Acquiring Person or
an Affiliate or Associate of an Acquiring Person.
Dated: __________________
Signature
Signature Guaranteed:
NOTICE
The signatures to the foregoing Election to Purchase and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Form of Assignment or
the Form of Election to Purchase, as the case may be, is not completed, the
Company and the Rights Agent will deem the beneficial owner of the Rights
evidenced by this Right Certificate to be an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Agreement) and such Assignment or Election
to Purchase will not be honored.
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Exhibit C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
On March 31, 2000, the Board of Directors of Philip Services Corporation, a
Delaware corporation (the "Company"), declared a dividend distribution of one
Right for each outstanding share of common stock, $0.01 par value (the "Common
Stock") of the Company, to stockholders of record at the close of business on
March 31, 2000 (the "Record Date"). Each Right entitles the record holder to
purchase from the Company one one-hundred-thousandth of a share ("Preferred
Stock Fraction") of the Company's Series A Junior Participating Preferred Stock,
$.01 par value (the "Preferred Stock") at a price of $___ (the "Purchase
Price"), subject to adjustment in certain circumstances. Except as otherwise
provided in the Rights Agreement, the Purchase Price may be paid, at the
election of the registered holder, in cash or by certified bank check or money
order payable to the order of the Company. The description and terms of the
Rights are set forth in a Rights Agreement, dated as of March 31, 2000 (as it
may be amended, modified or supplemented from time to time, the "Rights
Agreement"), between the Company and American Securities Transfer & Trust, Inc.,
as Rights Agent.
Initially, the Rights will be attached to the certificates representing
outstanding shares of Common Stock, and no Rights Certificates will be
distributed. The Rights will separate from the Common Stock and a "Distribution
Date" will occur upon the earlier of (i) the close of business on the tenth day
after the date (the "Stock Acquisition Date") of a public announcement that a
person or group of affiliated or associated persons (an "Acquiring Person") has
acquired, or obtained the right to acquire, beneficial ownership of 20% or more
of the outstanding shares of Common Stock, or (ii) the close of business on the
tenth Business Day (or such later date as may be determined by the Company's
Board of Directors prior to such time as any person becomes an Acquiring Person)
after the commencement of a tender offer or exchange offer (other than a
Qualified Tender Offer or Competing Tender Offer (as such terms are defined in
the Rights Agreement)) if, upon consummation thereof, the person or group making
such offer would be the beneficial owner of 20% or more of the outstanding
shares of Common Stock. Until the Distribution Date, (i) the Rights will be
evidenced by the Common Stock certificates and will be transferred with and only
with such Common Stock certificates, (ii) new Common Stock certificates issued
after the Record Date will contain a notation incorporating the Rights Agreement
by reference and (iii) the surrender for transfer of any certificates for Common
Stock outstanding will also constitute the transfer of the Rights associated
with the Common Stock represented by such certificate. As soon as practicable
following the Distribution Date, Rights Certificates will be mailed to holders
of record of the Common Stock as of the close of business on the Distribution
Date and, thereafter, such separate Rights Certificates alone will evidence the
Rights. Except in certain limited circumstances, only shares of Common Stock
issued prior to the Distribution Date will be issued with Rights.
The Rights are not exercisable until the Distribution Date and will expire
at the
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close of business on March 31, 2010 unless earlier redeemed by the Company as
described below.
Except in the circumstances described below, after the Distribution Date
each Right will be exercisable into a Preferred Stock Fraction. Each Preferred
Stock Fraction carries voting and dividend rights that are intended to produce
the equivalent of one share of Common Stock. The voting and dividend rights of
the Preferred Stock are subject to adjustment in the event of dividends,
subdivisions and combinations with respect to the Common Stock of the Company.
In lieu of issuing certificates for fractions of shares of Preferred Stock
(other than fractions which are integral multiples of Preferred Stock
Fractions), the Company may pay cash in accordance with the Rights Agreement.
In the event that, at any time following the Distribution Date, a Person
becomes an Acquiring Person (other than pursuant to an offer for all outstanding
shares of Common Stock at a price and on terms which the majority of the
independent Directors determine to be fair to, and otherwise in the best
interests of, stockholders), the Rights Agreement provides that proper provision
shall be made so that each holder of a Right will thereafter have the right to
receive, upon the exercise thereof, Common Stock (or, in certain circumstances,
cash, property or other securities of the Company) having a value equal to two
(2) times the exercise price of the Right. In lieu of requiring payment of the
Purchase Price upon exercise of the Rights following any such event, the Company
may provide that each Right be exchanged for one share of Common Stock (or cash,
property or other securities, as the case may be). The only right of a holder of
Rights following the Company's election to provide for such exchange shall be to
receive the above described securities. Notwithstanding any of the foregoing,
following the occurrence of any of the events set forth in this paragraph, any
Rights that are, or (under certain circumstances specified in the Rights
Agreement) were, beneficially owned by an Acquiring Person shall immediately
become null and void.
For example, at an exercise price of $17 per Right, each Right not owned by
an Acquiring Person (or by certain related parties) following an event set forth
in the preceding paragraph would entitle its holder to purchase $34 worth of
Common Stock (or other consideration, as noted above) for $17. Assuming that the
Common Stock had a per share value of $8.50 at such time, the holder of each
valid Right would be entitled to purchase four shares of Common Stock for $17.
Alternatively, the Company could permit the holder to surrender each Right in
exchange for two shares of Common Stock (with a value of $8.50 each) without the
payment of any consideration other than the surrender of the Right.
In the event that, at any time following the Stock Acquisition Date, (i)
the Company engages in a merger or consolidation in which the Company is not the
surviving corporation, (ii) the Company engages in a merger or consolidation
with another person in which the Company is the surviving corporation, but in
which all or part of its Common Stock is changed or exchanged, or (iii) 50% or
more of the Company's assets or earning power is sold or transferred (except
with respect to clauses (i) and (ii), a merger or consolidation (a) which
follows an offer described in the second preceding paragraph and (b) in which
the amount and form of consideration is the same as was paid in such offer), the
Rights Agreement provides that
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proper provision shall be made so that each holder of a Right (except Rights
which previously have been voided as set forth above) shall thereafter have the
right to receive, upon the exercise thereof, common stock of the acquiring
company having a value equal to two (2) times the exercise price of the Right.
The events set forth in this paragraph and in the second preceding paragraph are
referred to as the "Triggering Events."
The Purchase Price payable, and the number of Preferred Stock Fractions or
other securities or property issuable, upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on the Preferred Stock or other capital stock, or a subdivision,
combination or reclassification of the Preferred Stock, (ii) upon the grant to
holders of the Preferred Stock of certain rights or warrants to subscribe for
Preferred Stock or securities convertible into Preferred Stock at less than the
current market price of the Preferred Stock, or (iii) upon the distribution to
holders of the Preferred Stock of evidences of indebtedness or assets (excluding
regular quarterly cash dividends or dividends payable in Preferred Stock) or of
subscription rights or warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional shares of Preferred Stock (other than
fractions which are integral multiples of Preferred Stock Fractions) will be
issued upon exercise of the Rights and, in lieu thereof, a cash payment will be
made based on the market price of the Preferred Stock on the last trading date
prior to the date of exercise.
At any time prior to the earlier of (i) the date on which a Section
11(a)(ii) Event occurs and (ii) the Final Expiration Date, the Board of
Directors of the Company may redeem the Rights in whole, but not in part, at a
price of $.001 per Right, payable in cash or securities or both (the "Redemption
Price"). Immediately upon the action of the Board of Directors of the Company
ordering redemption of the Rights, the Rights will terminate and the only right
of the holders of Rights will be to receive the Redemption Price.
Issuance of shares of Common Stock upon exercise of Rights is subject to
regulatory approval. Until a Right is exercised, the holder thereof, as such,
will have no rights as a stockholder of the Company, including, without
limitation, the right to vote or to receive dividends. While the distribution of
the Rights will not be taxable to stockholders or to the Company, stockholders
may, depending upon the circumstances, recognize taxable income in the event
that the Rights become exercisable for Common Stock (or other consideration) of
the Company or for common stock of the acquiring company as set forth above.
The Company and the Rights Agent shall, if the Company so directs,
supplement or amend this Agreement without the approval of any holders of Rights
Certificates in order (i) to cure any ambiguity or (ii) to correct or supplement
any provision contained herein which may be defective or inconsistent with any
other provisions herein. Upon the delivery of a certificate from an appropriate
officer of the Company which states that the proposed supplement or amendment is
in compliance with the terms of Section 26 of the Rights Agreement, the Rights
Agent shall execute such supplement or amendment. Except as set forth in the
immediately
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preceding sentence, this Agreement may not be amended or supplemented, in any
manner, without the approval of the holders of at least two-thirds of the issued
and outstanding shares of Common Stock entitled to vote at a meeting of
shareholders for the election of directors, including any amendment which
changes the Redemption Price, the Final Expiration Date, the Purchase Price, or
the number of Preferred Stock Fractions for which a Right is exercisable. Prior
to the Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Common Stock.
by the Board of Directors of the Company prior to the Distribution Date.
Thereafter, the provisions, other than certain provisions relating to the
principal economic terms of the Rights, of the Rights Agreement may be amended
by the Board in order: to cure any ambiguity, defect or inconsistency; to
shorten or lengthen any time period under the Rights Agreement; or in any other
respect that will not adversely affect the interests of holders of Rights
(excluding the interests of any Acquiring Person); provided that no amendment to
adjust the time period governing redemption shall be made at such time as the
Rights are not redeemable.
A copy of the Rights Agreement will be filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement of the Company on
Form 8-A. A copy of the Rights Agreement is available free of charge from the
Company upon written request therefor. This summary description of the Rights
does not purport to be complete and is qualified in its entirety by reference to
the Rights Agreement, which is incorporated herein by reference.
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Exhibit 99.7
PHILIP SERVICES CORPORATION
STOCK OPTION PLAN
<PAGE> 2
ARTICLE I
GENERAL PROVISIONS
SECTION 1. PURPOSES OF THE PLAN
The purposes of the Plan are to align the interests of the employees,
consultants and directors of Philip Services Corporation, a Delaware
corporation (the "Company"), who are eligible to receive grants under the Plan
(the "Participants", as defined below), with those of the stockholders of the
Company; to assist the Company in attracting, motivating and retaining the best
available employees, consultants, and directors by facilitating their
acquisition of an equity interest (or an increased equity interest) in the
Company; to reinforce corporate, organizational and business-development goals;
and to reward the performance of individual employees, consultants and directors
in fulfilling their personal responsibilities for long-range achievements.
SECTION 2. DEFINED TERMS
The definitions of capitalized terms used in the Plan are provided in the
last Section of Article III hereof.
SECTION 3. ADMINISTRATION OF THE PLAN
(a) The Plan shall be administrated by the Committee. The Committee shall
have the authority, in its sole discretion, subject to the consents or
approvals, if any, required by the rules of any stock exchange on which the
securities of the Company are then listed or trade and subject to and not
inconsistent with the express provisions of the Plan, to administer the Plan and
to exercise all the powers and authority either specifically granted to it under
the Plan or necessary or advisable in connection with the administration of the
Plan, including, without limitation, the authority to grant Options; to
determine the persons to whom and the time or times at which Options shall be
granted; to determine the type and number of Options to be granted, the number
of shares of Stock which may be subject to an Option and the terms and
conditions of any Option; to determine whether, to what extent, and under what
circumstances an Option may be settled, cancelled, forfeited, exchanged,
surrendered or accelerated; to prescribe, amend and rescind rules and
regulations relating to the Plan; and to make all other determinations deemed
necessary or
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advisable for the administration of the Plan, consistent with the terms and
provisions of the Plan. Any determination, interpretation, construction or other
action made or taken pursuant to the provisions of the Plan by or on behalf of
the Committee shall be final, binding and conclusive for all purposes and upon
all persons, including without limitation, the Company, the Company's
shareholders and Participants and their respective successors in interest.
Notwithstanding the foregoing provisions of this Section 3(a), all powers,
authority and duties given the Committee by any provision of this Plan,
including the power to establish procedures to be followed by the Committee, but
excepting any matters required by applicable law or rule to be determined solely
by the Committee, may be exercised by the Board in its sole discretion.
(b) No member of the Committee shall be personally liable by reason of any
contract or other instrument executed by such member, or on such member's
behalf, in such member's capacity as a member of the Committee nor for any
mistake of judgment made in good faith, and the Company shall indemnify and hold
harmless each member of the Committee, and each other officer, employee or
director of the Company to whom any duty or power relating to the administration
or interpretation of the Plan has been delegated, against any cost or expense
(including counsel fees) or liability (including any sum paid in settlement of a
claim with the approval of the Committee) arising out of any act or omission in
connection with the Plan unless arising out of such person's own fraud or bad
faith.
ARTICLE II
STOCK OPTIONS
SECTION 1. GRANT OF STOCK OPTIONS
The Committee, in its sole discretion, may make grants of Options to
Participants at such time or times as it determines, subject to the terms and
conditions set forth in the Plan and on such other terms and conditions
(determined by the Commit tee) as are not inconsistent with the purposes and
provisions of the Plan and are set forth in the related Grant Document. Each
Option so granted shall be evidenced by a Grant Document, in such form as the
Committee shall from time to time approve. The terms and conditions set forth in
the Grant Documents need not be the same in each case and may be changed from
time to time. Each Option shall be clearly identified in the applicable Grant
Document as either an Incentive Stock Option or a Nonqualified Stock Option.
Incentive Stock Options shall be granted
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<PAGE> 4
only to employees of the Company or its Subsidiaries. The Grant Document for any
Incentive Stock Option shall state the limitations on exercise imposed by
Section 422 of the Code (and related provisions) with which the optionee must
comply in order to have Section 421(a) of the Code apply to the optionee's
acquisition of shares of Stock pursuant to the exercise of such Option.
SECTION 2. TERM AND CONDITIONS OF STOCK OPTIONS
All Options granted under the Plan shall be subject to the following terms
and conditions and to such additional terms and conditions (not in conflict with
the Plan's provisions) as the Committee may, in its discretion, determine to
incorporate in the Grant Document, including, without limitation, making
exercise of an Option subject to the execution of a covenant of noncompetition
which may extend beyond the optionee's Employment by the Company or its
Subsidiaries:
(a) Number of Shares. Each Grant Document shall state the number of shares
of Stock which are covered by the related Option. The number and kind of shares
shall be subject to adjustment as provided in Section 2 of Article III hereof.
(b) Exercise Price. Each Grant Document shall state the exercise price per
share of Stock with respect to the related Option, which exercise price shall be
determined by the Committee in its discretion, but shall not be less than the
Fair Market Value of the Stock on the date the Option is granted and, if the
Stock shall then be listed and posted for trading on The Toronto Stock Exchange,
shall not be less than the closing price of the shares of Stock on the trading
day immediately preceding the day on which the Option is granted (or, if no such
shares were traded on such day, the simple average of the daily high and low
board lot trading prices of such shares on The Toronto Stock Exchange for each
trading day falling not more than five (5) trading days prior to the date on
which the Option is granted. The immediately preceding sentence to the contrary
notwithstanding, in no event shall the exercise price of an Option per share of
Stock be less than the greater of the Reorganized Equity Value and US$5.00 per
share of Stock. The exercise price shall be subject to adjustment as provided in
Section 2 of Article III hereof.
(c) Option Term. An Option shall expire and all rights thereunder shall end
at the expiration of a period (not exceeding ten years) after its date of grant,
such period being determined by the Committee at the time of grant and set forth
in the respective Grant Document (the "Option Term").
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<PAGE> 5
(d) Exercise of Option. Each Option shall become exercisable in accordance
with the schedule set forth in the respective Grant Document (but, except as
provided in Section 2(e)(i) of this Article III, in no event more rapidly than a
4-year straight-line vesting following grant of the Option (i.e., at an annual
rate of 25 percent of the total shares covered by the Option per year beginning
with the first anniversary of the date of grant)) and thereafter remain
exercisable during the respective Option Term, subject to the provisions of
Section 2(e) of this Article II.
(e) Termination of Employment and Change of Control.
(i) Subject to any action taken by the Committee pursuant to the last
sentence of this Section 2(e)(i), but notwithstanding any other provision
of the Plan to the contrary, immediately prior to any Change of Control of
the Company, all Options which are then outstanding hereunder shall
automatically become fully exercisable; provided, however, that, in the
event that the Change of Control of the Company is the result of an Insider
acquiring beneficial ownership of, or control or discretion over, directly
or indirectly, Voting Securities of the Company such that such Insider owns
or controls more than fifty percent (50%) of the Voting Securities of the
Company (an "Insider Change of Control"), the then outstanding Options will
become fully exercisable only if and when such Insider becomes the owner
of, or exercises control or discretion over, sixty-five percent (65%) or
more of the Voting Securities of the Company; provided further, however,
that if, following an Insider Change of Control, the Company or a
Subsidiary terminates an optionee's Employment without "just cause" (as
determined in good faith by the Committee) and not under circumstances
described in Section 2(e)(ii) of this Article II, all outstanding Options
then held by such optionee shall become exercisable and all such Options
shall terminate at the earlier of sixty (60) days following such
termination of Employment or expiration of the applicable Option Term. The
phrase "immediately prior to" in the immediately preceding sentence shall
mean sufficiently in advance of the Change of Control to permit the
optionee to take all steps reasonably necessary to exercise the Option
fully and to deal with the shares of Stock acquired pursuant to such
exercise so that those shares may be treated in the same manner in
connection with the Change of Control as the shares of Stock of other
shareholders, provided, however, that if, and to the extent that, an Option
automatically becomes exercisable in anticipation of a Change of Control
which does not occur, such accelerated exercisability shall be null and
void ab initio. In its discretion, and on such terms and conditions as it
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<PAGE> 6
deems appropriate, the Committee may provide, either by the terms of the
Grant Document applicable to any Option or by resolution adopted prior to
the occurrence of a Change in Control, that any outstanding Option shall be
converted into a right to receive cash on or promptly following the closing
date or expiration date of the transaction resulting in the Change in
Control in an amount equal to the highest value of the consideration to be
received in connection with such transaction for one share of Stock, or, if
higher, the highest Fair Market Value of the Stock during the thirty (30)
consecutive business days immediately prior to the closing date or
expiration date of such transaction, less the per share exercise price of
such Option, multiplied by the number of shares of Stock subject to such
Option.
(ii) If, before all the Options granted to an optionee and outstanding
hereunder have become exercisable, an optionee's Employment terminates
due to (1) "permanent and total disability", as defined in Section 22(e)(3)
of the Code or (2) the optionee's death, then, unless the Committee shall
have provided otherwise at the time of grant, such optionee's Options, to
the extent exercisable on the date of such termination, may be exercised
for a period of six months thereafter, but not after expiration of the
applicable Option Term, and any outstanding Options granted to such
optionee which are not exercisable at the time of such termination shall be
immediately canceled. If the optionee's termination of Employment is due to
the optionee's death, the executor, administrator or personal
representative of the optionee's estate, will be entitled, commencing on
the optionee's date of death, to exercise all of the optionee's outstanding
Options during the period following the optionee's death described in the
immediately preceding sentence.
(iii) If an optionee ceases to be Employed and Section 2(e)(ii) of
this Article II does not apply to such termination, any outstanding Options
granted to the optionee which are not exercisable at the time of such
termination shall be immediately canceled and, the optionee will be
permitted to exercise any Options which are exercisable immediately prior
to the date on which the Optionee ceases to be Employed by the Company only
during the 60 calendar days following such date, but not after expiration
of the applicable Option Term.
(f) Payment for Shares. The purchase price of any Option shall be paid to
the Company (i) in cash, (ii) subject to compliance with applicable laws, rules
and
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<PAGE> 7
regulations and with limitations established by the Committee, in shares of
Stock (none of which shares may be subject to any claim, lien, security
interest, community property right or other right of spouses or present or
former family members, pledge, option, voting agreement or other restriction or
encumbrance of any nature) already owned by the optionee for at least six months
which have a total Fair Market Value less than or equal to the purchase price,
(iii) if authorized by the Committee at the time of grant, by a broker-assisted
"cashless exercise" procedure approved by the Committee, or (iv) by a
combination of the foregoing methods.
(g) Limitations on Incentive Stock Options.
(i) To the extent that the aggregate Fair Market Value of Stock of the
Company with respect to which Incentive Stock Options are exercisable for
the first time by an optionee during any calendar year under the Plan and
any other option plan of the Company (or any Subsidiary) shall exceed
$100,000, such Options shall be treated as Nonqualified Options. Such Fair
Market Value shall be determined as of the date on which each such
Incentive Stock Option is granted.
(ii) No Incentive Stock Option shall be granted to an individual if,
at the time of the proposed grant, such individual owns (or is attributed
to own by virtue of the Code) stock possessing more than ten percent of the
total combined voting power of all classes of stock of the Company or any
Subsidiary unless (i) the exercise price per share of such Incentive Stock
Option is at least 110% of the Fair Market Value of a share of Stock at the
time such Incentive Stock Option is granted and (ii) such Incentive Stock
Option is not exercisable after the expiration of five years from the date
such Incentive Stock Option is granted.
ARTICLE III
MISCELLANEOUS PROVISIONS
SECTION 1. LIMITATIONS ON SHARES SUBJECT TO PLAN OR TO STOCK OPTIONS
(a) The maximum number of shares of Stock authorized and reserved for
issuance pursuant to the Plan to Participants other than non-employee directors
shall be 840,000. An additional 200,000 shares of Stock shall be authorized and
reserved
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for issuance pursuant to the Plan to Participants who are non-employee
directors. All such shares of Stock shall be subject to equitable adjustment as
provided in Section 2 of Article III hereof. Such shares may, in whole or in
part, be authorized but unissued shares or shares that shall have been or may be
reacquired by the Company in the open market, in private transactions or
otherwise. If any shares subject to an Option are forfeited, cancelled,
exchanged or surrendered or if an Option otherwise terminates or expires without
a distribution of shares to the optionee, the shares of Stock with respect to
such Option shall, to the extent of any such forfeiture, cancellation,
exchange, surrender, termination or expiration, again be available to be subject
to Options under the Plan.
(b) No individual may be granted Options in any calendar year which cover
more than 200,000 shares of Stock.
(c) No Option shall be granted under the Plan if such Option together with
all previously established or proposed share compensation arrangements of the
Company could result, at any time in
(i) the number of shares of Stock reserved for issuance pursuant to
stock options granted to insiders (which for purposes of Section 1 of this
Article shall be as defined in section 627 of The Toronto Stock Exchange's
Company Manual) exceeding 10% of the number of shares of Stock outstanding
on a non-diluted basis immediately prior to the time of such grant exclud-
ing shares of Stock issued pursuant to share compensation arrangements over
the preceding one-year period;
(ii) the issuance to insiders within a one-year period of a number of
shares of Stock exceeding 10% of the number of shares of Stock outstanding
immediately prior to the time of issuance excluding shares of Stock issued
pursuant to share compensation arrangements over the preceding one-year
period; or
(iii) the issuance to any one insider within a one-year period of a
number of shares of Stock exceeding 5% of the shares of the Stock outstand-
ing on a non-diluted basis immediately prior to the time of issuance
excluding shares of Stock issued pursuant to share compensation
arrangements over the preceding one-year period.
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<PAGE> 9
SECTION 2. EQUITABLE ADJUSTMENT
Notwithstanding any other provision of the Plan, in the event of a
reorganization, recapitalization, stock split, reverse split, stock dividend,
distribution of assets other than pursuant to a normal cash dividend,
combination of shares, merger, consolidation, split-up, split-off, spin-off,
share exchange or any similar change in the corporate structure or shares of the
Company, the Committee shall make such adjustments as it deems are appropriate
(such determination to be conclusive) to reflect such event (and to prevent the
dilution or enlargement of rights under the outstanding Options) for all
purposes of the Plan, including, without limitation, in respect of the
following:
(a) the number and kind of shares of the Company (or other securities)
referenced in Section 1(a) of this Article with respect to the maximum
number of shares upon which Options may be granted under the Plan,
(b) the number and kind of shares of the Company (or other securities)
referenced in Section 1(b) of this Article with respect to the maximum
number of shares upon which Options may be granted to any individual in any
calendar year, and
(c) the number and kind of shares of the Company (or other securities)
covered by, and the exercise price per share applicable to, outstanding
Options granted under the Plan (any such adjustments with respect to
Incentive Stock Options being made in accordance with Section 424(h) of the
Code).
SECTION 3. COMPLIANCE WITH LEGAL REQUIREMENTS
The Plan and the granting and exercising of Options, and the other
obligations of the Company under the Plan and any Grant Document or related
agreement shall be subject to all applicable United States Federal and state
laws, rules and regulations, to the laws of non-U.S. jurisdictions, to the
extent applicable, and to such approvals by any regulatory or governmental
agency (including, without limitation, The Toronto Stock Exchange) as may be
required. The Company, in its discretion, may postpone the issuance or delivery
of Stock under any Option as the Company may consider appropriate and may
require any Participant to make such representations and furnish such
information as it may consider appropriate in connection with the issuance or
delivery of Stock in compliance with applicable
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laws, rules and regulations. All certificates for shares of Stock delivered
under the Plan shall be subject to such stock-transfer orders and other
restrictions as the Committee may deem advisable under the rules, regulations,
and other requirements of the Securities and Exchange Commission, any stock
exchange upon which the Stock is then listed, and any applicable U.S. Federal or
state securities law and, if applicable, the securities laws of non-U.S.
jurisdictions, and the Committee may cause a legend or legends to be placed on
any such certificates to make appropriate reference to such restrictions.
SECTION 4. NO GUARANTY OF EMPLOYMENT
The grant of an Option under the Plan shall not confer upon a recipient any
right to continue in the employ of (or to continue rendering services to) the
Company or its Subsidiaries nor shall it interfere with or restrict in any way
the right of the Company or its Subsidiaries to discharge an employee (or
terminate the services of a consultant) at any time for any reason, with or
without cause.
SECTION 5. RELATION TO BENEFIT PLANS
Options will not be considered as compensation for the purpose of any other
benefit or compensation plans maintained by the Company or its Subsidiaries.
SECTION 6. ASSIGNMENT OR TRANSFER
No Option shall be assignable or transferable by an optionee otherwise than
by will or the laws of descent and distribution. Options may be exercised during
the lifetime of an optionee only by such optionee or the optionee's guardian or
legal representative.
SECTION 7. RIGHTS AS SHAREHOLDER
A Participant who becomes an optionee under the Plan shall have no rights
of a holder of Stock by virtue of an award of an Option, unless and until
certificates for shares of Stock are issued to the optionee pursuant to the
Plan.
SECTION 8. WITHHOLDING TAXES
Where an optionee or other person is entitled to receive shares of Stock
pursuant to the exercise of an Option, the Company shall have the right to
require the
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optionee or such other person to pay to the Company the amount of any taxes
which the Company may be required to withhold before delivery to such optionee
or other person of a certificate or certificates representing such shares of
Stock. Unless prohibited by the Committee or by applicable laws, rules or
regulations, an optionee may satisfy any such withholding tax obligation by any
of the following methods, or by a combination of such methods: (i) tendering a
cash payment; (ii) delivering to the Company previously acquired shares of Stock
(none of which shares may be subject to any claim, lien, security interest,
community property right or other right of spouses or present or former family
members, pledge, option, voting agreement or other restriction or encumbrance of
any nature) owned by the optionee for at least six months which have an
aggregate Fair Market Value, determined as of the date the withholding tax
obligation arises, less than or equal to the amount of the total withholding tax
obligation; or (iii) authorizing the Company to withhold from the shares of
Stock otherwise issuable to such optionee one or more of such shares having an
aggregate Fair Market Value, determined as of the date the withholding tax
obligation arises, less than or equal to the amount of the total withholding tax
obligation; provided, however, that the number of shares so withheld shall not
have an aggregate Fair Market Value in excess of the minimum federal and state
withholding obligation with respect to such optionee.
SECTION 9. AMENDMENT AND TERMINATION OF THE PLAN
The Board may at any time and from time to time alter, amend, modify or
suspend the Plan or the Grant Document for any Option outstanding under the
Plan; provided, however, that, except pursuant to Section 2 of this Article III,
no such amendment of the Plan shall be made without first obtaining approval of
more than fifty percent (50%) of the shares of Stock held by the stockholders of
the Company who are physically present at the relevant meeting of the
stockholders; and provided, further, that, except pursuant to Section 2 of this
Article III, no amendment shall affect adversely any of the rights of any
optionee, without such optionee's consent, under any Option theretofore granted
under the Plan.
The Board may at any time terminate the Plan; provided, that, following
such Plan termination, any unexercised Option shall continue to be exercisable
in accordance with its terms and the terms of the Plan in effect immediately
prior to such termination. The power to grant Options under the Plan shall
automatically terminate on March 31, 2010.
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<PAGE> 12
SECTION 10. RIGHTS OF PARTICIPANTS AND OPTIONEES
No Participant shall have any claim to be granted any Option under the
Plan, and there is no obligation for uniformity of treatment for Participants.
Except as provided specifically herein, an optionee shall have no rights as a
stockholder with respect to any shares of stock covered by any Option until the
date of the issuance of a Stock certificate to such optionee for such shares.
SECTION 11. UNFUNDED STATUS OF STOCK OPTIONS
The Plan is intended to constitute an "unfunded" plan for incentive compen-
sation. With respect to any payments not yet made to an optionee pursuant to an
Option, nothing contained in the Plan or any Option shall give any such optionee
any rights that are greater than those of a general creditor of the Company.
SECTION 12. NO FRACTIONAL SHARES
No fractional shares of Stock shall be issued or delivered pursuant to any
Option granted under the Plan. The Committee shall determine whether cash, other
Options or other property shall be issued or paid in lieu of such fractional
shares or whether such fractional shares or any rights thereto shall be
forfeited or otherwise eliminated.
SECTION 13. GOVERNING LAW
The Plan and all determinations made and actions taken pursuant hereto
shall be governed by the laws of the State of Delaware without giving effect to
the conflict of laws principles thereof.
SECTION 14. EFFECTIVE DATE
The Plan has been approved by the Board and the Company's stockholders as
of March 31, 2000.
SECTION 15. DEFINITIONS
As used herein, the following terms shall have the following meanings:
(a) "Board" means the Board of Directors of the Company.
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(b) "Change of Control" means any of the following provided the same occurs
after the conclusion of the Insolvency Proceedings and for greater certainty,
nothing that occurs during or as a part of the Insolvency Proceedings shall
constitute a Change of Control nor shall a Change of Control include any
resultant Change of Control because of any future bankruptcy filing or similar
reorganization:
(i) any person (as defined in the Exchange Act), directly or indirectly,
becomes the beneficial owner (as defined in Rule 13d-3 under the
Exchange Act) or has the right to exercise control or direction over
Voting Securities (as defined below) of the Company carrying in excess
of 40 percent of the votes attached to all Voting Securities of the
Company then outstanding (provided, however, that if such person is an
Insider (as defined below), such percentage shall be 50 percent);
(ii) the individuals who, immediately after the conclusion of the Insolvency
Proceedings, constitute the Board together with those who first become
directors subsequent to such date and whose election to the Board was
approved by a vote of at least a majority of the directors then still in
office who were either directors as of such date hereof or whose
recommendation, election or nomination for election was previously so
approved (other than any directors whose initial election was the result
of a proxy contest or a threatened proxy contest), cease for any reason
to constitute a majority of the members of the Board;
(iii) (a) approval by the shareholders of the Company of any business
combination having the effect that the existing shareholders of the
Company do not own or control at least 75% of the Voting Securities of
the resulting entity in approximately the same proportion as they owned
such securities of the Company immediately prior to the business
combination; or (b)(1) approval by the shareholders of the Company of a
liquidation or dissolution of the Company or (2) approval by the
shareholders of the Company of a sale of all or substantially all of
the assets of the Company and, in the case of either (1) or (2), the
existing shareholders of the Company do not own or control at least 75%
of the Voting Securities of the acquiring or resulting entity in
approximately the same proportion as they owned the Voting Securities of
the Company immediately prior to any such transaction.
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<PAGE> 14
(c) "Code" means the Internal Revenue Code of 1986, as amended from time to
time.
(d) "Committee" means such committee as the Board may designate to
administer the Plan.
(e) "Company" means Philip Services Corporation, a Delaware corporation,
its successors and assigns.
(f) "Exchange Act" means the Securities and Exchange Act of 1934, as
amended from time to time.
(g) "Employment" (and variants thereof, including "Employed") means
continuous employment with (or continuous rendering of services to) the Company
or its Subsidiaries; provided, however, that an absence on leave which has the
approval of the Company or any Subsidiary thereof shall not be considered an
interruption of Employment for any purpose of the Plan.
(h) "Fair Market Value" of a share of Stock means:
(i) If the Stock is admitted to quotation on the National Association of
Securities Dealers Automated Quotation ("NASDAQ") System and has been
designated as a NASDAQ National Market ("NNM") security,
(A) the average of the reported highest and lowest sale prices per share
of such Stock as reported on NASDAQ on the relevant date; or
(B) in the absence of reported sales on that date, the average of the
reported highest and lowest sales prices per share on the last
previous day for which there was a reported sale; or
(ii) If the Stock is admitted to quotation on NASDAQ as a NASDAQ SmallCap
Market security (and has not been designated as a NNM security), the
average of the highest bid and lowest asked prices per share of Stock on
the relevant date; or
(iii) If the preceding clauses (i) and (ii) do not apply, but the Stock is
admitted to trading on one or more national securities exchanges,
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<PAGE> 15
(A) the average of the reported highest and lowest sale prices per share
of such Stock as reported on the reporting system selected by the
Committee on the relevant date; or
(B) in the absence of reported sales on that date, the average of the
reported highest and lowest sales prices per share on the last
previous day for which there was a reported sale; or
(iv) If the preceding clauses (i), (ii) and (iii) do not apply, the Fair
Market Value determined by the Committee, using such criteria as it shall
determine, in good faith and in its sole discretion, to be appropriate for
such valuation.
(i) "Grant Document" means the written document evidencing the grant of an
Option and providing information regarding certain terms and conditions of the
Option; in the sole discretion of the Committee, a Grant Document may be a
unilateral instrument of the Company or a bilateral agreement between the
Company and the respective optionee receiving the grant.
(j) "Insider" means a "person", as defined in the Exchange Act, that
beneficially owns or exercises control or discretion over, directly or
indirectly, more than twenty percent (20%) of the Voting Securities of the
Company at the time of the conclusion of the Insolvency Proceedings.
(k) "Insolvency Proceedings" means the proceedings commenced on June 25,
1999: (i) by Philip Services Corp. and certain of its affiliates and
subsidiaries in the United States under Chapter 11 of the United States
Bankruptcy Code, 11 U.S.C. ss.ss.103-1330 in the United States Bankruptcy Court
for the District of Delaware; and (ii) by Philip Services Corp. and certain of
its subsidiaries and affiliates in Canada under the applicable provisions of the
Companies' Creditors Arrangement Act (Canada) with the Ontario Superior Court of
Justice.
(l) "Incentive Stock Option" means any Option designated as, and qualified
as, an "incentive stock option" within the meaning of Section 422 of the Code,
or any successor provision.
(m) "Nonqualified Stock Option" means any Option that is not an Incentive
Stock Option.
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<PAGE> 16
(n) "Option" means an option to purchase Stock granted under the terms and
conditions set forth in the Plan and in the applicable Grant Document.
(o) "Option Term" has the meaning given in Section 2(c) of Article II
hereof.
(p) "Participant" means an employee, consultant or director of the Company
or its Subsidiaries who, in the opinion of the Committee, is in a position to
contribute significantly to long-term profit and growth objectives and is
therefore eligible to receive a grant under the Plan, if the Committee decides,
in its discretion, to make such a grant.
(q) "Plan" means this Stock Option Plan, including any amendments hereof
and rules and regulations hereunder.
(r) "SEC" means the Securities and Exchange Commission.
(s) "Reorganized Equity Value" means the value to the equity of the Company
as determined pursuant to the enterprise valuation prepared in connection with
the First Amended Joint Plan of Reorganization dated as of September 21, 1999.
(t) "Stock" means the common stock of Philip Services Corporation, a
Delaware corporation, having a par value of $0.01 per share, or, in the event
that the outstanding Stock is hereafter changed into, or exchanged for,
different stock or securities, such other stock or securities.
(u) "Subsidiary" shall mean any corporation in an unbroken chain of
corporations beginning with the Company if, at the time of granting of an
Option, each of the corporations (other than the last corporation in the
unbroken chain) owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in the chain.
(v) "Voting Securities" of any corporation means any securities of such
corporation ordinarily carrying the right to vote in respect of election of
directors of such corporation provided that if any such securities shall at any
time carry the right to cast more than one vote in respect of the election of
the directors, such securities shall, when and so long as they carry such right,
be considered for the purposes of
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<PAGE> 17
this Agreement to constitute such number of the securities as is equal to the
number of votes in respect of the election of directors as may be cast by the
holder.
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