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INVESTMENT AGREEMENT
by and among
HIGH RIVER LIMITED PARTNERSHIP,
as Purchaser,
XXXXXX SERVICES CORPORATION,
as Company
and
CERTAIN SUBSIDIARIES OF XXXXXX SERVICES CORPORATION
as Subsidiaries
Dated as of July 29, 2003
Table of Contents
RECITALS..........................................................................................................1
ARTICLE I INVESTMENT..............................................................................................2
Section 1.1 Investment.........................................................................................2
Section 1.2 Xxxxxxx Money Deposit..............................................................................2
Section 1.3 Commitment Fee.....................................................................................2
Section 1.4 Distribution of Shares to PIK/Term Creditors; Participation Rights.................................2
Section 1.5 Closing............................................................................................3
Section 1.6 Closing Deliveries.................................................................................3
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND ITS SUBSIDIARIES.....................................4
Section 2.1 Organization and Good Standing; Capitalization; Subsidiaries.......................................5
Section 2.2 Authorization and Effect of Agreement..............................................................6
Section 2.3 No Conflicts.......................................................................................6
Section 2.4 No Third Party Options.............................................................................7
Section 2.5 Consents...........................................................................................7
Section 2.6 Permits; Compliance with Law.......................................................................7
Section 2.7 Litigation.........................................................................................8
Section 2.8 Condition and Sufficiency of Assets................................................................8
Section 2.9 No Casualty........................................................................................8
Section 2.10 Insurance.......................................................................................9
Section 2.11 Environmental Matters...........................................................................9
Section 2.12 Taxes..........................................................................................10
Section 2.13 Labor Matters..................................................................................13
Section 2.14 Employee Matters...............................................................................14
Section 2.15 ERISA Compliance; Absence of Changes in Benefit Plans..........................................15
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Section 2.16 Intellectual Property..........................................................................21
Section 2.17 Real Property..................................................................................21
Section 2.18 Disclosure.....................................................................................23
Section 2.19 No Violation of Law............................................................................23
Section 2.20 Material Agreements............................................................................23
Section 2.21 Bank Accounts..................................................................................24
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PURCHASER..........................................................24
Section 3.1 Organization......................................................................................24
Section 3.2 Authorization and Effect of Agreement.............................................................24
Section 3.3 No Conflicts......................................................................................25
Section 3.4 Litigation........................................................................................25
Section 3.5 Investment Intent.................................................................................25
ARTICLE IV COVENANTS.............................................................................................26
Section 4.1 Access............................................................................................26
Section 4.2 Conduct of Business...............................................................................27
Section 4.3 No Inconsistent Action............................................................................29
Section 4.4 Filings...........................................................................................29
Section 4.5 All Reasonable Efforts............................................................................29
Section 4.6 Further Assurances................................................................................30
Section 4.7 Publicity.........................................................................................30
Section 4.8 Collective Bargaining Agreements..................................................................30
Section 4.9 Bankruptcy Reorganization Process.................................................................31
Section 4.10 Accepted or Rejected Contracts.................................................................36
Section 4.11 Specific Enforcement of Covenants..............................................................36
Section 4.12 No Solicitation................................................................................37
Section 4.13 Confidentiality................................................................................38
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Section 4.14 Canadian Restructuring.........................................................................39
Section 4.15 Performance Escrow Agreement...................................................................39
Section 4.16 Icahn DIP Facility.............................................................................39
Section 4.17 Transfer of Owned Real Estate..................................................................39
ARTICLE V CONDITIONS TO CLOSING..................................................................................40
Section 5.1 Conditions Precedent to Obligations of the Purchaser..............................................40
Section 5.2 Conditions Precedent to Obligations of the Company................................................42
ARTICLE VI FURTHER AGREEMENTS AND TERMINATION....................................................................43
Section 6.1 Termination Payment...............................................................................43
Section 6.2 Bankruptcy Termination Payment....................................................................44
Section 6.3 Termination.......................................................................................44
Section 6.4 Procedure and Effect of Termination...............................................................46
ARTICLE VII MISCELLANEOUS PROVISIONS.............................................................................47
Section 7.1 Notices...........................................................................................47
Section 7.2 Actions by the Company and its Subsidiaries.......................................................48
Section 7.3 Expenses..........................................................................................49
Section 7.4 Successors and Assigns............................................................................49
Section 7.5 Waiver............................................................................................49
Section 7.6 Entire Agreement; Disclosure Schedules............................................................49
Section 7.7 Amendments, Supplements, Etc......................................................................49
Section 7.8 No Rights of Third Parties........................................................................50
Section 7.9 Applicable Law....................................................................................50
Section 7.10 Execution in Counterparts.........................................................................50
Section 7.11 Titles and Headings...............................................................................50
Section 7.12 Invalid Provisions................................................................................50
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Section 7.13 Brokers........................................................................................50
Section 7.14 Exculpation....................................................................................51
Section 7.15 Principles of Interpretation...................................................................51
ARTICLE VIII DEFINITIONS.........................................................................................51
Section 8.1 Definitions.......................................................................................51
Section 8.2 Knowledge.........................................................................................64
Exhibits
Exhibit A Terms of Restructuring
Exhibit A-1 Terms Of Exit Loan Facility
Exhibit A-2 Competing Plan Requirements
Exhibit B-1 Timetable for Restructuring
Exhibit B-2 Timetable for Collective Bargaining Agreement Negotiations
Exhibit C-1 Bidding Procedures Order
Exhibit C-2 Icahn DIP Approval Order
Exhibit D Canadian Subsidiaries
Exhibit E Disclosure Schedule Responsibility Timetable
Exhibit F Form of Performance Escrow Agreement
Exhibit G Canadian Restructuring
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INVESTMENT AGREEMENT
This INVESTMENT AGREEMENT (this "Agreement") is made and entered into as of
July 29, 2003, by and among High River Limited Partnership, a Delaware limited
partnership ("Purchaser"), Xxxxxx Services Corporation, a Delaware corporation
(the "Company"), and the Subsidiaries of the Company (as defined herein). The
parties hereto shall be referred to collectively as the "Parties" and
individually, each as a "Party"). Capitalized terms used herein (and in the
Exhibits hereto) without definition shall have the meanings ascribed to such
terms in Article VIII hereof.
RECITALS
WHEREAS, the Company and its U.S. Subsidiaries (collectively, the "U.S.
Debtors") are debtors and debtors in possession under Chapter 11 of Title 11 of
the United States Code, 11 U.S.C. Sections 101-1330 (as amended, the "Bankruptcy
Code"), having each commenced voluntary cases (the case number for the Company
is 03-37718-H2-11) (together with all legal proceedings instituted in a United
States Bankruptcy Court in connection with the Restructuring (as defined below)
or otherwise involving the Company as debtor, the "U.S. Bankruptcy Case") on or
after June 2, 2003 (the "Petition Date") in the United States Bankruptcy Court
for the Southern District of Texas (the "U.S. Bankruptcy Court");
WHEREAS, subject to the terms and conditions hereof, the Company and its
Subsidiaries have agreed to file (i) a plan of reorganization supported and
approved by Purchaser with the U.S. Bankruptcy Court for the U.S. Debtors to
implement the transactions contemplated by this Agreement including the
Restructuring as described herein (the "U.S. Plan"), and (ii) to take such
action and to cause the U.S. Debtors' direct and indirect subsidiaries in
Canada, which subsidiaries are listed on Exhibit D (the "Canadian
Subsidiaries"), to take such action in the Canadian Court or otherwise that are
consistent with the U.S. Plan to implement the transactions contemplated by this
Agreement including the Canadian Restructuring as described herein (the
"Canadian Proceeding") and, together with the U.S. Plan, the "Bankruptcy Plan");
WHEREAS, the Company and its Subsidiaries desire to consummate and have
approved, subject to confirmation of the U.S. Plan by the U.S. Bankruptcy Court
and, if applicable, sanctioning of the Canadian Proceeding by the Canadian
Court, the transactions contemplated by this Agreement, including the investment
by Purchaser in the reorganized Company in connection with and upon giving
effect to the Restructuring as described herein ("Reorganized PSC"), and
consummation of the Bankruptcy Plan;
WHEREAS, in connection with the Bankruptcy Plan, Purchaser desires to make
a significant investment in Reorganized PSC and to consummate the transactions
contemplated by this Agreement, upon the terms and conditions provided for
herein; and
WHEREAS, subject to the terms and conditions hereof, the U.S. Debtors have
agreed to seek entry of an order of the U.S. Bankruptcy Court confirming the
U.S. Plan pursuant to Section 1129 of the Bankruptcy Code, and the Company and
its Subsidiaries have agreed, if applicable, to cause the Canadian Subsidiaries,
and the Canadian Subsidiaries have agreed to seek entry of such order(s) of the
Canadian Court as may be required to sanction the Canadian Proceeding.
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NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements set forth in this
Agreement and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereto hereby agree as
follows:
ARTICLE I
INVESTMENT
Section 1.1 Investment. Subject to the participation rights of the
Qualified PIK/Term Creditors as contemplated by the Terms of Restructuring
attached hereto as Exhibit A (such terms and such description are collectively
referred to herein as the "Restructuring"), on the terms and subject to the
conditions hereinafter set forth, at the Closing (a) Reorganized PSC will issue
and sell to Purchaser, and Purchaser will purchase from Reorganized PSC, shares
of Common Stock representing 20% of the issued and outstanding shares of Common
Stock (the "Purchase Shares") in consideration of $10,000,000 (the "Purchase
Shares Purchase Price"), and (b) Purchaser will make available to Reorganized
PSC the $160,000,000 exit loan as further described in Exhibit A-1 (the "Exit
Loan Facility") (such purchase of the Purchase Shares and the making of the Exit
Loan Facility to be referred to herein, collectively, as the "Investment"). The
Qualified PIK/Term Creditors, including Purchaser and its Affiliates in their
capacity as PIK/Term Creditors, that elect to participate in the Investment
shall be referred to herein as the "Investors".
Section 1.2 Xxxxxxx Money Deposit. Upon execution of this Agreement,
Purchaser will deliver to the Escrow Agent the Performance Escrow Agreement
attached hereto as Exhibit F (the "Performance Escrow Agreement") executed by
Purchaser, together with the $6.0 million xxxxxxx money deposit contemplated
thereby, which deposit will be held in escrow to secure the obligations of
Purchaser hereunder in accordance with the provisions of the Performance Escrow
Agreement.
Section 1.3 Commitment Fee. In consideration of Purchaser's commitment to
make the Exit Loan Facility, at the Closing, Reorganized PSC will issue and
deliver to Purchaser, as the exclusive fee for the Exit Loan Facility, shares of
Common Stock representing 5.0% of the issued and outstanding shares of Common
Stock (such shares to be referred to as the "Exit Loan Commitment Shares").
Section 1.4 Distribution of Shares to PIK/Term Creditors; Participation
Rights. Pursuant to the Bankruptcy Plan, and as set forth in Exhibit A, the
balance of the issued and outstanding shares of Common Stock (exclusive of
shares of Common Stock, if any, issued pursuant to the Reorganized PSC
Management Incentive Plan) will be issued to the
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PIK/Term Creditors, including Purchaser and its Affiliates in their
capacity as PIK/Term Creditors, that elect to participate in such distribution
in exchange for their PIK/Term Claims (the "PIK/Term Shares"). In addition, as
contemplated by Exhibit A, and as shall be set forth in further detail in the
U.S. Plan, each Qualified PIK/Term Creditor, whether or not it has elected to
participate in the distribution of the PIK/Term Shares, will have the right to
participate in the Investment.
Section 1.5 Closing. The consummation of the Investment contemplated hereby
(the "Closing") shall take place at the offices of Xxxxxxxxxxxx Xxxx & Xxxxxxxxx
LLP, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, XX 00000 subject to the satisfaction
or waiver of the conditions set forth in Sections 5.1 and 5.2, as soon as
practicable after the confirmation of the U.S. Plan by the U.S. Bankruptcy Court
and sanctioning, if applicable, of the Canadian Proceeding by the Canadian
Court, and in any event not later than the Outside Closing Date, or at such
other time and place and on such other date as Purchaser and PSC for itself and
on behalf of all of the other Sellers shall agree (the "Closing Date").
Section 1.6 Closing Deliveries.
(a) At the Closing, Purchaser and each other Investor will deliver, or
execute and deliver as applicable, to the Company:
(i) the Exit Loan Facility Agreements to which such Investor is a party;
(ii) the Purchase Shares Purchase Price by wire transfer of immediately
available funds to the account designated by the Company at least two business
days prior to the Closing Date; and
(iii) the initial advances and the initial letters of credit contemplated
by the Exit Loan Facility and the Restructuring.
The Purchase Shares Purchase Price and the initial advances to be made
under the Exit Loan Facility may be paid in part from the release to the Company
of the Purchaser's xxxxxxx money deposit (together with earnings thereon) made
pursuant to Section 1.2 hereof.
(b) At the Closing, the Company, and to the extent applicable, its
Subsidiaries, will deliver, or execute and deliver as applicable, to Purchaser
and the other Investors:
(i) the Exit Loan Facility Agreements;
(ii) the Registration Rights Agreement;
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(iii) one or more certificates representing the Investors' allocable
portion of the Purchase Shares free and clear of any Liens;
(iv) the officers' certificates referenced in Section 5.1(c);
(v) such other documentation as Purchaser may reasonably request evidencing
that all conditions to the Closing contained in Section 5.1 hereof have been
satisfied or waived, including without limitation the exclusion of any Excluded
Assets from the assets of Reorganized PSC;
(vi) certified copies of the U.S. Bankruptcy Court Confirmation Order, to
the extent required, the comparable order of the Canadian Court, and any other
relevant orders of the U.S. Bankruptcy Court or the Canadian Court in connection
with the Restructuring;
(vii) all other documents, certificates, instruments or writings reasonably
requested by Purchaser in connection herewith (together with the documents
referred to above and the notes issuable pursuant to the Restructuring as
described in Exhibit A, the "Ancillary Documents").
(c) At the Closing, the Company will deliver to Purchaser one or more
certificates representing the Exit Loan Commitment Shares free and clear of any
Liens.
(d) At the Closing, the Company and its Subsidiaries will repay all amounts
due under the Icahn DIP Facility and the Icahn DIP Approval Order from the
proceeds of the Exit Loan Facility or such other sources as the Company may
determine.
(e) At the Closing, the Company and its Subsidiaries shall make such other
distributions to their creditors as are contemplated by the Bankruptcy Plan and
the terms and conditions set forth on Exhibit A.
(f) Certificates for shares of capital stock to be delivered by the Company
hereunder shall be made to the applicable Investor or the nominee or designee as
such Investor shall specify to the Company prior to the Closing.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND ITS SUBSIDIARIES
The Company and its Subsidiaries hereby, jointly and severally, make the
following representations and warranties to Purchaser, each of which shall be
true, complete and correct as of the date hereof (or, if such representation or
warranty is contemplated to be modified by a Schedule, as of the date of
delivery of such Schedule with respect thereto), and as of the time immediately
preceding and immediately following the Closing (it being understood that unless
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the context otherwise requires, as of and immediately following the
Closing, all representations as to the Company and its Subsidiaries shall apply
to Reorganized PSC and its Subsidiaries), in each case, except to the extent the
context otherwise expressly requires and except to the extent that any such
representation or warranty expressly relates to a specific date or time, in
which case it shall be true and correct as of such date or time; provided,
however, that each of the representations and warranties of the Company set
forth in this Article II shall be unaffected by any investigation heretofore or
hereafter made by or on behalf of Purchaser; and further provided, however, that
the representations and warranties of the Company set forth in this Article II
are made and given subject to the disclosures in the disclosure schedule
attached hereto and made a part of this Agreement (the "Disclosure Schedule").
Each of the disclosures in the Disclosure Schedule shall be arranged in a
section(s) corresponding to the numbered and lettered section(s) contained in
this Article II to which it relates, and shall be considered a representation
and warranty as if made hereunder.
References to any particular "Schedule" or "Schedules" shall mean the
Disclosure Schedule. Any Schedule not delivered as of the date hereof shall be
completed by the Company on or by the dates set forth on Exhibit E and, upon
acceptance by the non-preparing Party (as contemplated by Section 6.3(c)(iv)),
shall be made a part of this Agreement as if such Schedule were originally
attached hereto as of the date hereof (unless the context requires otherwise).
Section 2.1 Organization and Good Standing; Capitalization; Subsidiaries.
(a) The Company is a corporation duly organized, validly existing and in
good standing under the laws of Delaware, has the requisite power and authority
to carry on its business as it is now being conducted, and is qualified to do
business in every jurisdiction where the failure to be so qualified reasonably
could be expected to have a Material Adverse Effect.
(b) Other than as described on Schedule 2.1(b), each Subsidiary is
wholly-owned, directly or indirectly, by the Company, and each Subsidiary is
duly organized, validly existing and (other than inactive Subsidiaries listed on
Schedule 2.1(b) which do not own any material or significant assets) in good
standing under the laws of the jurisdiction of its organization, has the
requisite power and authority to carry on its business as it is now being
conducted, and is qualified to do business in every jurisdiction where the
failure to be so qualified reasonably could be expected to have a Material
Adverse Effect.
(c) Set forth on Schedule 2.1(c) is a complete and accurate description of
the authorized Capital Stock of the Company, by class or series, and a
description of the number of shares of each such class or series that are issued
and outstanding. Other than options that may have been granted under various
incentive plans that, if exercised in full, would not exceed 5% of the Company's
outstanding common stock in the aggregate, or as otherwise described on Schedule
2.1(c), there are no subscriptions, options, warrants, or calls relating to any
shares of the Capital Stock of the Company, including any right of conversion or
exchange under any outstanding security or other instrument. Other than as
described on Schedule 2.1(c), the Company is not subject to any obligation
(contingent
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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.
(d) Set forth on Schedule 2.1(d), is a complete and accurate list of all of
the Subsidiaries, showing: (i) the governing jurisdiction of their incorporation
or formation, as the case may be; (ii) the jurisdictions in which they are
qualified to conduct business; (iii) the number of shares of each class or
series of common or preferred Capital Stock or other equity interest authorized
for each of the Subsidiaries; and (iv) the number and the percentage of the
outstanding shares of each such class or series, or other equity interests, as
the case may be, owned directly by the Company or any other of its Subsidiaries
and naming such other Subsidiaries, and there are no subscriptions, options,
warrants, or calls relating to any shares of the Capital Stock or other equity
interest of any Subsidiary, including any right of conversion or exchange under
any outstanding security or other instrument.
Section 2.2 Authorization and Effect of Agreement. Subject to the approval
of the U.S. Bankruptcy Court, and with respect to the Canadian Subsidiaries, if
applicable, the Canadian Court, the Company, and to the extent applicable each
Subsidiary, has the requisite corporate power and authority to execute and to
deliver this Agreement and the Ancillary Documents to which it is or will be a
party and to perform its obligations hereunder and under any such Ancillary
Documents. The execution and delivery by the Company, and to the extent
applicable each Subsidiary, of this Agreement and the Ancillary Documents to
which it is or will be a party, the performance of its obligations hereunder and
thereunder and the consummation by it of the transactions contemplated hereby
and thereby have been (or will be at the time of execution thereof) duly
authorized by all necessary corporate action on the part of the Company (or if
applicable, such Subsidiary), and no other corporate action on the part of the
Company or such Subsidiary is necessary to authorize the execution and delivery
of this Agreement, the Ancillary Documents or the consummation of the
transactions contemplated hereby or thereby. Subject to the approval of the U.S.
Bankruptcy Court, and with respect to the Canadian Subsidiaries, if applicable,
the Canadian Court, this Agreement has been duly and validly executed and
delivered by the Company and its Subsidiaries and constitutes a valid and
binding obligation of the Company and its Subsidiaries, enforceable against the
Company and its Subsidiaries in accordance with its terms, subject (a) to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally,
including, without limitation, for purposes of the representations and
warranties being made as of the Closing Date, the discretion of the Bankruptcy
Courts for so long as the Bankruptcy Courts retain jurisdiction over the
applicable Bankruptcy Cases, and (b) as to enforceability, to general principles
of equity, including principles of commercial reasonableness, good faith and
fair dealing (regardless of whether enforcement is sought in a proceeding at law
or in equity). Each of the Ancillary Documents, when executed and delivered by
the Company or any of its Subsidiaries, shall constitute a valid and binding
agreement of the Company or such Subsidiary, enforceable against the Company or
such Subsidiary in accordance with its terms, subject (i) to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws
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affecting creditors' rights and remedies generally, including, without
limitation, the discretion of the Bankruptcy Courts for so long as the
Bankruptcy Courts retain jurisdiction over the applicable Bankruptcy Cases, and
(ii) as to enforceability, to general principles of equity, including principles
of commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
Section 2.3 No Conflicts. Subject to confirmation and/or sanctioning of the
Bankruptcy Plans, and except as may be provided to the contrary in any document,
instrument or other agreement as set forth on Schedule 2.3, neither the
execution and delivery by the Company, or to the extent applicable any
Subsidiary, of this Agreement and any Ancillary Documents to which it will be a
party, nor the consummation of the transactions contemplated hereby or thereby,
does or will (a) conflict with, or result in any violation of, or constitute a
default under, or give rise to the creation of a Lien upon any of the Company's
or any Subsidiaries' assets or Capital Stock or to a right of termination,
cancellation or acceleration of any obligation or to a loss of a benefit under
(i) any provision of the certificate of incorporation or bylaws of the Company
or any Subsidiary (or any other charter documents of a Subsidiary), (ii) except
for Consents required to accept or reject Material Executory Contracts as
described on Schedule 2.5 hereto, any of the terms, conditions or provisions of
any Material Executory Contracts, including, without limitation, any Collective
Bargaining Agreements, by which the Company or any of its Subsidiaries is bound,
or (iii) any Law applicable to or binding on the Company or any of its
Subsidiaries of its respective assets, (b) affect the ability of Purchaser and
each other Investor to own the Purchase Shares, the PIK/Term Shares or the Exit
Loan Commitment Shares, as applicable (collectively, the "Shares"), (c) create
any Lien on or any right of any third party with respect to the Shares or with
respect to any of the assets or properties owned or used by the Company, or (d)
accelerate or trigger any right or obligation of any party under any Accepted
Contract.
Section 2.4 No Third Party Options. Except as contemplated by this
Agreement and any Ancillary Documents to which the Company or any Subsidiary is
or will be a party, and except as set forth in Section 2.1(c) or Schedule 2.4,
there are no existing agreements, options, rights of first refusal or
commitments granting to any Person the right to acquire any of the Company's, or
any of its Subsidiaries, Capital Stock or any of the Company's, or any of its
Subsidiaries', right, title or interest in or to any of their respective
properties or assets (whether real, personal, tangible or intangible), other
than the sale of assets in the ordinary course of business.
Section 2.5 Consents. Other than in connection with the commencement of the
Bankruptcy Cases, and the requisite approvals of the Bankruptcy Courts, the
execution and delivery by the Company, and to the extent applicable each
Subsidiary, of this Agreement and any Ancillary Documents to which they are or
will be a party, the performance by the Company or any of its Subsidiaries of
the transactions contemplated by this Agreement, or such Ancillary Documents and
the consummation by the Company and the Subsidiaries of the transactions
contemplated hereby and
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thereby (including without limitation the continuing conduct of the
business of the Company and its Subsidiaries, as currently conducted, by
Reorganized PSC and its Subsidiaries following the Closing), does not and will
not, require any Consent, including, without limitation, any Consents under any
Collective Bargaining Agreements or other Material Executory Contracts, except
(i) as disclosed on Schedule 2.5, and (ii) for compliance with the XXX Xxx, xxx
Xxxxxxxxxx Xxxxxx Xxx (Xxxxxx), the Competition Act (Canada), applicable
securities Laws and applicable requirements of any stock exchanges. The parties
acknowledge and agree that Schedule 2.5 is not an admission that any consent to
assignment or any contractual clause forbidding assignment that is listed or
cross referenced on Schedule 2.5 is enforceable under or is overridden by
Section 365 of the Bankruptcy Code or any other applicable law.
Section 2.6 Permits; Compliance with Law. To the Company's knowledge,
Schedule 2.6 sets forth a true, correct and complete list of all Permits. The
Company and each Subsidiary possess all Permits materially necessary for the
operation of their current businesses. All material Permits issued to the
Company and each of its Subsidiaries are in full force and effect. Except as set
forth in Schedule 2.6, to the Company's knowledge, no outstanding violations are
or have been recorded in respect of any of the Permits. To the Company's
knowledge, the conduct of the Company's and each Subsidiaries' business complies
in all material respects with all Laws and the requirements and conditions of
all Permits, including without limitation all applicable operating certificates
and authorities, and all other rules, regulations, directives and policies of
all Governmental Authorities having jurisdiction over the business conducted by
the Company and its Subsidiaries. No proceeding is pending or, to the Company's
knowledge, threatened to revoke, withdraw or limit any such Permit, and to the
Company's knowledge, there is no fact, error or admission relevant to any Permit
that would cause the violation of or permit revocation, withdrawal or limitation
or result in the threatened violation of or revocation, withdrawal or limitation
of any such Permit. Except as set forth on Schedule 2.5, after the Closing, each
material Permit will continue in full force and effect and accrue to the benefit
of Reorganized PSC or its applicable Subsidiary without any Consent,
confirmation or modification required by or from any Governmental Authority.
Section 2.7 Litigation. Except as set forth on Schedule 2.7, there is no
claim, action, suit, investigation or proceeding ("Litigation") pending or, to
the Company's knowledge, threatened before any court, arbitrator or other
Governmental Authority that (a) seeks to restrain, materially modify, prevent,
or materially delay the consummation of the transactions contemplated by this
Agreement and the Ancillary Documents, or that (b) questions the validity of
this Agreement or any of the Ancillary Documents, or any action taken or to be
taken by the Company or any Subsidiary in connection with this Agreement or any
of the Ancillary Documents. Other than the Bankruptcy Cases, there is no
Litigation (i) relating to the ownership or operation by the Company or any of
its Subsidiaries of any material portion of the Company's or any of its
Subsidiaries' business or assets, or (ii) otherwise affecting the Capital Stock
of the Company or any of its Subsidiaries pending, or, to the Company's
knowledge, threatened against the Company or any of its
8
Subsidiaries or any of their respective business or assets. Other than
pursuant to the Bankruptcy Cases, there are no judgments, orders or decrees of
any Governmental Authority binding on the Company or any of its Subsidiaries
that relate to the ownership or operation of the business of the Company or any
of its Subsidiaries or that otherwise affect its or their Capital Stock.
Section 2.8 Condition and Sufficiency of Assets. The Facilities and other
assets and property owned or used by the Company and its Subsidiaries and which
will be owned or used by Reorganized PSC and its Subsidiaries upon Closing,
taken as a whole, are sufficient for the continued conduct by the Company and
its Subsidiaries of the business of the Company and its Subsidiaries as
currently conducted.
Section 2.9 No Casualty. Except as set forth on Schedule 2.9, to the
Company's knowledge, none of the assets of the Company or any Subsidiary has
been affected by any fire, explosion, accident, drought, storm, hail,
earthquake, embargo, act of God or of the public enemy or other casualty
(whether or not covered by insurance) that could reasonably be expected to have
a Material Adverse Effect.
Section 2.10 Insurance. The Company and each of its Subsidiaries have in
place insurance policies with respect to the assets and businesses of the
Company that are listed on Schedule 2.10. Except as set forth on Schedule 2.10,
all such policies are in full force and effect. The Company has made available
to Purchaser a description of such policies and any applicable self-insurance
programs.
Section 2.11 Environmental Matters.
(a) Except as set forth on Schedule 2.11(a), to the Company's knowledge,
the conduct and operation of the business of the Company and each of its
Subsidiaries are in material compliance with all applicable Environmental Laws.
Except as set forth on Schedule 2.11(a), neither the Company nor any of its
Subsidiaries has received any written communication from any Person that alleges
that the Company or any of its Subsidiaries is not in such compliance, the
subject matter of which written communication has not been resolved in a manner
that has or could be reasonably expected to give rise to an Environmental Claim.
To the Company's knowledge, Schedule 2.11(a) sets forth a true, correct and
complete list of all charges, directions, instructions, orders, decrees or other
agreements relating to the Company and its Subsidiaries, or any of their
properties, issued pursuant to or entered into under any Environmental Law that
has or could be reasonably expected to give rise to an Environmental Claim.
(b) Except as set forth on Schedule 2.11(b), to the Company's knowledge,
there is no Environmental Claim relating to the conduct or operation of the
Company or any of its Subsidiaries pending or threatened against the Company or
any of its Subsidiaries, or against any Person whose liability for such
Environmental Claim the
9
Company or any of its Subsidiaries has retained or assumed either
contractually or by operation of law.
(c) Except as set forth on Schedule 2.11(c), to the Company's knowledge,
neither the Company nor any of its Subsidiaries has received any written
allegation or other information, the subject matter of which allegation or
information has not been resolved in a manner that has or could be reasonably
expected to give rise to an Environmental Claim, that past or present actions,
activities, circumstances, conditions, events or incidents, including, without
limitation, the release, emission, spill, discharge, or disposal of any Material
of Environmental Concern, relating to the conduct or operation of the business
of the Company or any of its Subsidiaries could reasonably be expected to give
rise to an Environmental Claim relating to the Company or any of its
Subsidiaries, against the Company or any of their Subsidiaries, or against any
Person whose liability for such Environmental Claim the Company or any of its
Subsidiaries has retained or assumed either contractually or by operation of
law.
(d) Without in any way limiting the generality of the foregoing, to the
Company's knowledge, (i) known onsite and off-site locations where the Company
or any of its Subsidiaries or any other occupant has stored, disposed or
arranged for the disposal of Materials of Environmental Concern are identified
on Schedule 2.11(d), (ii) all underground storage tanks, and the capacity and
contents of such tanks, located on the Real Estate are identified on Schedule
2.11(d), (iii) except as set forth on Schedule 2.11(d), there is no damaged and
friable asbestos or lead based paint coatings in poor condition, or urea
formaldehyde foam insulation contained in or forming part of any building,
building component, structure or office space with respect to any of the Real
Estate and (iv) except as set forth on Schedule 2.11(d), no polychlorinated
biphenyls (PCB's) are used at any of the Real Estate in violation of
Environmental Laws.
(e) For purposes of this Agreement, the following terms shall have the
following meanings with respect to the business of the Company and its
Subsidiaries:
(i) "Environmental Claim" means any written notice by any Governmental
Authority or Person alleging potential liability (including, without limitation,
potential liability for investigatory costs, management costs, cleanup costs,
governmental response costs, natural resources damages, property damages,
personal injuries or penalties) (A) which could have a material and adverse
effect on the conduct or operation of the business of the Company or any of its
Subsidiaries or the consummation of the transactions contemplated hereby or, and
(B) arising out of, based on or resulting from (x) the presence, emission,
spill, discharge, deposit or release into the environment, of any Material of
Environmental Concern at any location, whether or not owned by the Company or
any of its Subsidiaries or (y) any material violation, or alleged violation, of
any Environmental Law.
(ii) "Environmental Laws" means all Laws applicable to the conduct and
operation of the business of the Company or any of its Subsidiaries relating to
10
pollution, contamination or protection of human health or safety or the
environment (including, without limitation, ambient air, surface water, ground
water, land surface or subsurface strata), including, without limitation, laws
and regulations relating to actual or threatened emissions, spills, discharges,
depositions or releases of Materials of Environmental Concern, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Materials of Environmental Concern, arising
from or relating to the conduct and operation of the business of the Company or
any of its Subsidiaries.
(iii) "Materials of Environmental Concern" means dangerous goods,
hazardous, toxic, prohibited or regulated substances, materials or wastes,
pollutants, contaminants, special waste or hazardous waste as defined in any
Environmental Laws, except, however, such materials shall not include incidental
and de minimis uses of materials or substances in the ordinary course of
business in material compliance with Environmental Laws.
Section 2.12 Taxes.
(a) All Tax Returns that are required to be filed on or before the Closing
Date by the Company or any of its U.S. Subsidiaries have been or will be duly
filed on a timely basis, and all Tax Returns of the Canadian Subsidiaries have
been filed, or for those Tax Returns that are not yet due, will be timely filed,
taking into account any valid extension of time in which to file such Tax
Returns, and all such Tax Returns were or will be true, correct and complete in
all material respects. All Taxes, including all installments on account of Taxes
for the current year, due with respect to any taxable period or partial taxable
period of the Company or any of its U.S. Subsidiaries ending on or before the
Closing Date have been or will be timely paid, collected or withheld, and such
Taxes with respect to the Canadian Subsidiaries have been paid or, for Taxes not
yet due and payable, will be timely paid (whether or not shown or required to be
shown on any Tax Return). Except as set forth on Schedule 2.12 (a), neither the
Company nor any of its Subsidiaries has executed or filed with the Internal
Revenue Service or any other taxing authority any agreement or other arrangement
or executed any waiver (i) extending the period for filing any Tax Return,
election, designation or similar filing related to Taxes, or (ii) extending the
period to pay or remit any Taxes or amounts on account of Taxes.
(b) Except as set forth in Schedule 2.12(b), no unresolved claim for
assessment or collection of Taxes has been asserted against the Company or any
of its Subsidiaries. Neither the Company nor any of its Subsidiaries is a party
to any pending action, proceeding or investigation by any Governmental Authority
for the assessment or collection of Taxes, nor does the Company have knowledge
of any such threatened action, proceeding or investigation.
(c) Except as set forth in Schedule 2.12(c), no waivers of statutes of
limitation or reassessment periods in respect of any Tax Returns have been given
or requested by
11
the Company or any of its Subsidiaries, nor has the Company or any of its
Subsidiaries agreed to any extension of time with respect to a Tax assessment,
reassessment or deficiency. Except as set forth in Schedule 2.12(c), no claim
has been made at any time during the ten-year period ending on the date hereof
by a Governmental Authority in a jurisdiction where the Company or any of its
Subsidiaries does not currently file Tax Returns that it is or may be subject to
taxation by that jurisdiction, nor is the Company aware that any such assertion
of jurisdiction is threatened. Except as set forth in Schedule 2.12(c), no Liens
have been imposed upon or asserted against any of the Company's or any of its
Subsidiaries' assets as a result of or in connection with any failure, or
alleged failure, to pay any Tax.
(d) Except as set forth in Schedule 2.12(d), the Company and its
Subsidiaries have withheld and paid all Taxes required to be withheld by them in
connection with any amounts paid, credited or deemed to be paid, owing or
credited by it to any Person, including any employees, creditors, independent
contractors, non-resident Person or other third parties, other than Taxes which
are not material in the aggregate.
(e) Since the consummation of the Company's prior bankruptcy in April 2000,
and to the knowledge of the Company prior to that date, neither the Company nor
any of its Subsidiaries has been a member of an affiliated group filing
consolidated U.S. federal income tax returns (other than a group the common
parent of which was the Company) or has any liability for the taxes of any
person under Treasury Regulation Section 1.1502-6 (or any similar provision of
state, local or foreign law), as a transferee or successor, by contract or
otherwise.
(f) Since the consummation of the Company's prior bankruptcy in April 2000,
and to the knowledge of the Company prior to that date, none of the Company's or
its Subsidiaries' assets are (i) "tax-exempt use property" within the meaning of
Section 168(h) of the Code, (ii) "tax-exempt bond-financed property" within the
meaning of Section 168(g) of the Code, (iii) "limited use property" within the
meaning of Revenue Procedure 76-30 and (iv) except for assets held by
Subsidiaries that are not U.S. Subsidiaries, subject to Section 168(g)(1)(A) of
the Code.
(g) Schedule 2.12(g) sets forth, as of December 31, 2002, (i) the aggregate
U.S. federal income tax basis of each category of assets of the Company; (ii)
the aggregate U.S. federal income tax basis of each category of assets of the
U.S. Subsidiaries; (iii) the Net Operating Loss ("NOL") and excess interest
deduction carryforwards, under Section 163(j) of the Code, of the Company; (iv)
the aggregate NOL carryforward of the U.S. Subsidiaries; and (v) the aggregate
income tax basis of the assets of the Canadian Subsidiaries. Except as set forth
on Schedule 2.12(g), the NOL carryforwards of the Company and the U.S.
subsidiaries are not subject to restriction under Section 382 of the Code (or
any similar provision of state or local law) or subject to a separate return
limitation. Schedule 2.12(g) sets forth, to the Company's knowledge and based on
information available to the Company as determined in good faith, the percentage
of debt owned by each PIK/Term Creditor as of May 31, 2003 that should
12
qualify under Section 382(l)(5)(E)(i) of the Code), but the Company makes
no representation to Purchaser as to such percentage of PIK/Term Debt held by
Purchaser and its Affiliates that qualifies under Section 382(l)(5)(E)(i).
(h) With respect to Canadian tax matters, except as set forth on Schedule
2.12 (h):
(i) Except pursuant to this Agreement, none of Sections 78, 80, 80.01,
80.02, 80.03 or 80.04 of the Income Tax Act (Canada), or any equivalent
provision of the Tax legislation of any province or any other jurisdiction, have
applied or will apply to the Company or any of its Subsidiaries at any time up
to and including the Closing Date.
(ii) None of the Company or any of its Subsidiaries has acquired property
from a non-arm's length Person, within the meaning of the Income Tax Act
(Canada), for consideration, the value of which is less than the fair market
value of the property acquired in circumstances which could subject it to a
liability under Section 160 of the Income Tax Act (Canada).
(iii) For all material transactions between the Company or any of its
Subsidiaries and any non-resident Person with whom the Company or any of its
Subsidiaries was not dealing at arm's length during a taxation year commencing
after 1998 and ending on or before the Closing Date, each of the Company and its
Subsidiaries has made or obtained records or documents that meet the
requirements of paragraphs 247(4)(a) to (c) of the Income Tax Act (Canada).
(iv) The only reserves under the Income Tax Act (Canada) or any equivalent
provincial or territorial statute to be claimed by the Company or any of its
Subsidiaries for the taxation year ended immediately prior to the acquisition of
control by the Purchaser are disclosed in Schedule 2.12(h).
(v) Except pursuant to this Agreement, no Person or group of related
Persons (as defined in the Income Tax Act (Canada) has ever acquired or had the
right to acquire control of the Company or any of its Subsidiaries.
(vi) Schedule 2.12(h) sets forth, as of December 31, 2002 for Xxxxxx
Services Inc. and as of March 31, 2003 for Xxxxxx Analytical Services, Inc.,
complete and accurate information relating to (A) the cost and adjusted cost
base (and V-Day value, if applicable) of the nondepreciable assets of the
Canadian Subsidiaries; (B) the undepreciated capital cost of each class of
depreciable assets of the Canadian Subsidiaries; (C) the cumulative eligible
capital balances of the Canadian Subsidiaries; (D) the paid-up capital of each
class of shares of the Canadian Subsidiaries; and (E) the non-capital losses
available for carry over and the net capital losses of the Canadian
subsidiaries.
Section 2.13 Labor Matters.
(a) Schedule 2.13(a) identifies all collective bargaining agreements
(including any side letter, supplemental agreement or memorandum of
understanding that would materially alter a collective bargaining agreement)
covering employees of the Company or any of its Subsidiaries (collectively, the
"Collective Bargaining Agreements"). The Company made available to Purchaser
copies of all such Collective Bargaining Agreements. The Company has informed
Purchaser of all material communications and current written proposals of the
Company or any of its Subsidiaries, or any union in all ongoing negotiations
with representatives of any unions representing any organized employee groups
and all material matters on which any tentative agreements have been reached in
the course of such negotiations.
(b) The Company has made available to Purchaser a true, correct and
complete list of all the employees (including inactive employees and employees
on leave) and independent contractors of the Company and each of its
Subsidiaries who are members of an organized labor unit or union covered by any
of the Collective Bargaining Agreements, their current respective positions or
job classifications and their current respective wage scales or salaries, as the
case may be.
(c) Except as set forth in Schedule 2.13(c):
(i) There are no material lawsuits, administrative claims or charges, legal
or administrative proceedings pending or, to the knowledge of the Company,
expressly threatened, between the Company or any of its Subsidiaries, and any of
their respective employees or organized labor units or Unions, which have or are
reasonably likely to have a Material Adverse Effect;
(ii) Neither the Company nor any of its Subsidiaries has breached or
otherwise failed to comply in any material respect with any provision of any
Collective Bargaining Agreement or other labor union contract (or with respect
to Canadian employees, employment agreement) applicable to persons employed by
the Company or any of its Subsidiaries (because of the transactions contemplated
by this Agreement or otherwise), and there are no material grievances
outstanding against the Company or any of its Subsidiaries under any such
agreement or contract;
(iii) To the knowledge of the Company, there is no union organizing
activity, petition or application pending before the National Mediation Board or
other labor relations boards or tribunals seeking certification or any change in
certification of a labor representative or union with respect to any craft or
class of employees of the Company or any of its Subsidiaries;
(iv) There is no strike, slowdown, work stoppage, labor action or lockout,
or, to the knowledge of the Company, express threat thereof, by or with respect
to any employees of the Company or any of its Subsidiaries, other than a strike,
slowdown, work stoppage or lockout in response to any modification
13
demands under Section 1113(e) of the Bankruptcy Code directed by Purchaser
as set forth in Section 4.8(a); and
(v) Neither the Company nor any of its Subsidiaries has received any
written notice of any, and to the Company's knowledge, there is no unfair labor
practice or analogous complaint, application or claim against the Company or any
of its Subsidiaries pending before the National Mediation Board or any similar
board or agency or before any court of competent jurisdiction or any other
forum.
Section 2.14 Employee Matters. The Company has made available to Purchaser
a true, correct and complete list of all the unrepresented, non-unionized
employees (including inactive employees and employees on leave) and independent
contractors of the Company or its Subsidiaries employed on June 30, 2003, their
now or then current respective (i) positions or job classifications, (ii) wage
scales or salaries, as the case may be, (iii) annual target bonus and/or annual
target sales commissions, (iv) target long-term incentive payments, (v) accrued
vacation, (vi) accrued sick days, (vii) entitlements to severance or notice
under employment agreements apart from those minimum entitlements mandated by
Law, and (viii) service date or any adjusted service date reflecting service
credit for prior employment. With respect to the foregoing clauses (ii) through
(vii), disclosure may be in the form of either a written description or copies
of any applicable plan, policy or program with regard to employees subject to
company-wide policies; provided, however, that disclosure shall be on an
individual basis with regard to all exceptions from such company-wide policies
or from any other individual arrangements. Schedule 2.14 identifies those
employees who, as of the date hereof, are on leave of absence, short- or
long-term disability leave, parental or maternity leave, or who are otherwise
not actively employed and the date on which each such employee is expected to
return to active employment, if known. The Company and each of its Subsidiaries
are in compliance in all material respects with all applicable laws respecting
employment and employment practices, discrimination, terms and conditions of
employment and wages and hours, and are not engaged in any unfair labor
practice.
Section 2.15 ERISA Compliance; Absence of Changes in Benefit Plans.
(a) Schedule 2.15(a) contains a true and complete list of each "Employee
Pension Benefit Plan" (as defined in Section 3(2) of ERISA), "Employee Welfare
Benefit Plan" (as defined in Section 3(1) of ERISA), stock option, stock
purchase, deferred compensation plan or arrangement, severance arrangement or
plan and any and all other material, employee fringe benefit, plans or
arrangements maintained, whether written or unwritten, contributed to or
required to be maintained or contributed to by the Company or any of its
Subsidiaries for the benefit of any present or former employees of the Company
or any of its Subsidiaries, or their beneficiaries which are subject to the Laws
of the United States, excluding "multi-employer plans" within the meaning of
Section 3(37) of ERISA (all of the foregoing herein defined as "Benefit Plans"
and each, a "Benefit Plan"). The Company has made available to Purchaser true
and complete copies (or, in the case of any unwritten Benefit Plans, a written
description thereof) of each of the following documents: (i) each Benefit Plan
and all amendments thereto, and the
14
latest written interpretation and description thereof that has been
distributed to the plan participants; (ii) all funding arrangements with respect
to the Benefit Plans; and (iii) each employee or employment agreement. Except as
set forth in Schedule 2.15(a), since December 31, 2002, there has not been any
adoption or amendment, or agreement to adopt or amend, in any material respect
by the Company or any of its Subsidiaries of any Benefit Plan, nor has there
been any material change in any actuarial or other assumptions used to calculate
funding obligations with respect to any material Benefit Plan, or any change in
the manner in which such contributions are determined that, individually or in
the aggregate, could result in a material increase in the Company's or any of
its Subsidiaries' Liabilities thereunder.
(b) To the knowledge of the Company, with respect to the Benefit Plans, no
event has occurred and there exists no condition or set of circumstances nor has
the Company or any of its Subsidiaries been notified of any event in connection
with which the Company or any of its Subsidiaries would reasonably be expected
to be subject to any Liability under ERISA or the Code that would reasonably be
expected to result in, individually or in the aggregate, a Material Adverse
Effect.
(c) To the knowledge of the Company, each Benefit Plan has been
administered substantially in accordance with its terms, and all the Benefit
Plans have been operated in all material respects and are in material compliance
with the applicable provisions of ERISA, the Code and all other applicable Laws.
Except as set forth on Schedule 2.15(c), the IRS has issued a favorable
determination letter or an opinion letter with respect to the qualification of
each Benefit Plan that constitutes an "employee pension benefit plan" as defined
in ERISA that is intended to be qualified under Section 401(a) of the Code, and,
to the knowledge of the Company, the IRS has not notified the Company that it
has taken any action to revoke any such letter and no facts or circumstances
exist which could reasonably be expected to cause such revocation.
(d) To the knowledge of the Company, neither the Company nor any of its
ERISA Affiliates has incurred, nor, as a result of the consummation of the
transactions contemplated hereby, will Reorganized PSC or any of its ERISA
Affiliates have incurred, any material unsatisfied Liability under Title IV of
ERISA in connection with any Benefit Plan and, to the knowledge of the Company,
no condition exists that presents a material risk to the Company or any ERISA
Affiliate of incurring any such Liability. To the Company's knowledge, no
Benefit Plan has incurred an "accumulated funding deficiency" within the meaning
of Section 302 of ERISA or Section 412 of the Code, whether or not waived.
Except as set forth on Schedule 2.15(d) or as would not reasonably be expected
to result in a material Liability to the Company or any of its Subsidiaries with
respect to each Benefit Plan that is subject to Title IV or Part 3 of Title I of
ERISA or Section 412 of the Code, to the knowledge of the Company (i) no
reportable event (within the meaning of Section 4043(c) of ERISA) has occurred
or is expected to occur; (ii) there is no "unfunded benefit liability" (within
the meaning of Section 4001(a)(18) of ERISA); (iii) the Company and its ERISA
Affiliates have made when due any and all "required installments" within the
meaning of Section 412(m) of
15
the Code and Section 302(e) of ERISA; (iv) neither the Company nor any of
its ERISA Affiliates is required to provide security under Section 401(a)(29) of
the Code; (v) all premiums (and interest charges and penalties for late payment,
if applicable) have been paid when due to the Pension Benefit Guaranty
Corporation ("PBGC"); and (vi) no filing has been made by the Company or any of
its ERISA Affiliates, with the PBGC and neither the Company nor any of its
Subsidiaries have received any notice that any proceeding has been commenced by
the PBGC to terminate any such Benefit Plan and no condition exists which could
reasonably be expected to constitute grounds for the termination of any such
Benefit Plan by the PBGC.
(e) Except as set forth on Schedule 2.15(e), no Benefit Plan (i) is subject
to Title IV of ERISA; (ii) is a "multiple employer plan" within the meaning of
Section 413(c) of the Code; or (iii) is or at any time was funded through a
"welfare benefit fund" within the meaning of Section 419(e) of the Code and,
except as set forth on Schedule 2.15(e), no benefits under a Benefit Plan are or
at any time have been provided through a voluntary employees' beneficiary
association within the meaning of Section 501(c)(9) of the Code or a
supplemental unemployment benefit plan within the meaning of Section 501(c)(17)
of the Code. Except as set forth on Schedule 2.15(e), the Company and its
Subsidiaries do not have any obligations to contribute, and are not otherwise
parties, to a "multi-employer" plan within the meaning of Section 3(37) of
ERISA.
(f) Except as set forth on Schedule 2.15(f), no Benefit Plan provides
medical benefits coverage (whether or not insured), with respect to current or
former employees of the Company or any of its Subsidiaries after retirement or
other termination of service (other than coverage mandated by statute).
(g) Except as set forth on Schedule 2.15(g), to the knowledge of the
Company, the consummation of the transactions contemplated by this Agreement and
the Ancillary Documents will not, either alone or in combination with another
event, (i) entitle any current or former employee, agent, independent contractor
or officer of the Company or any of its Subsidiaries to severance pay,
unemployment compensation or any other payment, except as expressly provided in
this Agreement, (ii) accelerate the time of payment or vesting, or increase the
amount of compensation due any such employee, agent, independent contractor or
officer, (iii) constitute a "change in control" causing an increase or
acceleration of benefits under any Benefit Plan, or (iv) result in any payment
or benefit that could reasonably be characterized as an "excess parachute
payment" within the meaning of Section 280G(b)(1) of the Code.
(h) Except as set forth on Schedule 2.15(h), to the knowledge of the
Company, there is no pending (i) complaint, proceeding, or investigation of any
kind in any court or government agency with respect to any Benefit Plans (other
than routine claims for benefits) or (ii) litigation relating to the employment
or termination of employment of any current of former employee of the Company or
any of its Subsidiaries, in each case that could result in any material
Liability.
16
(i) With respect to each Benefit Plan that is subject to the Laws of any
jurisdiction outside of the United States or Canada ("Non-U.S. Plans"), to the
knowledge of the Company (i) such Non-U.S. Plan has been maintained in all
material respects in accordance with all applicable requirements and all
applicable Laws, (ii) if such Non-U.S. Plan is intended to qualify for special
tax treatment, the Non-U.S. Plan meet all requirements for such treatment,
except as would not reasonably be expected to result in a material Liability to
the Company or any of its Subsidiaries, (iii) if such Non-U.S. Plan is intended
to be funded and/or book-reserved, the Non-U.S. Plan is fully funded and/or book
reserved, as appropriate, based upon reasonable actuarial assumptions, except to
the extent that any shortfall in such funding or reserves would not result in
any material Liability to the Company or any of its Subsidiaries, and to the
extent that any shortfall in such funding or reserves would not result in any
material Liability to the Company or any of its Subsidiaries and (iv) no
material Liability exists or could reasonably be expected to be imposed upon the
assets of the Company or any of their Subsidiaries by reason of such Non-U.S.
Plan.
(j) To the knowledge of the Company, neither the Company nor any of its
ERISA Affiliates has engaged in, or has knowledge that a "party in interest" (as
defined in Section 3(14) of ERISA)or a "disqualified person" (as defined in
Section 4975(e) of the Code) has engaged in, a "prohibited transaction," as
defined in Section 4975 of the Code or Section 406 of ERISA, or taken any
actions, or failed to take any actions, which would reasonably be expected to
result in any material Liability to the Company or any of its Subsidiaries, as
the case may be, under ERISA or the Code. No fiduciary has any Liability for
breach of fiduciary duty or any other failure to act or comply in connection
with the administration or investment of the assets of any of the Benefit Plans,
and to the knowledge of the Company, no facts exist which could reasonably be
expected to form the basis for any such Liability.
(k) To the knowledge of the Company, neither the Company nor any of its
ERISA Affiliates has any material Liability under Section 502 of ERISA and no
circumstances exist which could reasonably be expected to result in a material
Liability thereunder.
(l) Canadian Benefit Plans
(i) Schedule 2.15(l)(i) sets forth a complete list of the Canadian Benefit
Plans.
(ii) Current and complete copies of all written Canadian Benefit Plans or,
where oral, written summaries of the terms thereof, have been delivered or made
available to the Purchaser together with current and complete copies of all
material documents relating to the Canadian Benefit Plans, including, as
applicable,
17
(A) all documents establishing, creating or amending any of the Canadian
Benefit Plans;
(B) all trust agreements and funding agreements;
(C) all investment management agreements, subscription and participation
agreements, benefit administration contracts, and any financial administration
contracts;
(D) the most recent financial statements and actuarial reports whether or
not such statements or reports were filed with a Governmental Authority;
(E) all reports, statements (including audited financial statements),
annual information returns or other returns, filings and material correspondence
with any Governmental Authority in the last three years;
(F) all booklets, summaries, manuals and communications of a general nature
distributed or made available to any employees or former employees concerning
any Canadian Benefit Plans; and
(G) a copy of any statement of investment policies and goals or statement
of investment policies and procedures prepared in respect of the Canadian
Pension Plans, whether or not such statement has been filed with the applicable
Governmental Authority.
(iii) Each Canadian Benefit Plan is, and has at all times been,
established, registered (where required), qualified, administered, amended, and
invested, in compliance with (i) the terms of such Canadian Benefit Plan, (ii)
all Laws and (iii) any applicable Collective Bargaining Agreement.
(iv) The Canadian Subsidiaries have complied with all of their obligations
in respect of the Canadian Benefit Plans except where such non-compliance would
not result in any material Liability to any of the Canadian Subsidiaries.
(v) Except as disclosed in Schedule 2.15(l)(v), there have been no
improvements, increases or changes to, or promised improvements, increases or
changes to, the benefits provided under any Canadian Benefit Plan, nor has any
Canadian Subsidiary made any commitment to establish any additional Canadian
Benefit Plans. None of the Canadian Benefit Plans provide for payments, benefit
increases, accelerated vesting, or the acceleration of, or an increase in,
funding obligations that are contingent upon or will be triggered by the
entering into of this Agreement or the completion of the transactions
contemplated herein.
18
(vi) Except as disclosed in Schedule 2.15(l)(vi), all employer or employee
payments, contributions or premiums required to be remitted, paid to or in
respect of each Canadian Benefit Plan have been paid or remitted in a timely
fashion in accordance with its terms and all Laws, and no Taxes, penalties or
fees are owing or exigible under or in relation to any Canadian Benefit Plan.
(vii) Except as disclosed in Schedule 2.15(l)(vii), there is no
investigation by a Governmental Authority, or claim, demand, complaint, action,
suit, or cause of action (other than routine claims for payment of benefits)
pending or, to the knowledge of the Company or Canadian Subsidiaries, threatened
involving any Canadian Benefit Plan or their assets, and no facts exist which
could reasonably be expected to give rise to any such investigation or claim,
demand, complaint, action, suit, or cause of action (other than routine claims
for benefits).
(viii) No event has occurred respecting any registered Canadian Benefit
Plan which could reasonably be expected to result in the revocation of the
registration of such Canadian Benefit Plan (where applicable) or entitle any
Person (without the consent of the Company or any of the Canadian Subsidiaries)
to wind up or terminate any Canadian Benefit Plan, in whole or in part, or which
could otherwise reasonably be expected to adversely affect the tax status of any
such plan.
(ix) There are no unfunded liabilities in respect of any Canadian Pension
Plan including going concern unfunded liabilities, solvency deficiencies, or
wind-up deficiencies.
(x) Except as disclosed in Schedule 2.15(l)(x), no changes have occurred in
respect of any Canadian Benefit Plan since the date of the most recent
financial, accounting, actuarial or other report, as applicable, issued in
connection with any Canadian Benefit Plan, which could reasonably be expected to
adversely affect the relevant report (including rendering it misleading in any
material respect).
(xi) Except as disclosed in Schedule 2.15(l)(x), none of the Company or any
of the Canadian Subsidiaries has ever received, or applied for, any payment of
surplus out of any Canadian Benefit Plan or any payment in respect of the
demutualization of the insurer of any Canadian Benefit Plan.
(xii) Except as disclosed in Schedule 2.15(l)(xii) (A) none of the Canadian
Subsidiaries has taken any contribution or premium holidays under any Canadian
Benefit Plan and, where so disclosed, the relevant Canadian Subsidiary was
entitled under the terms of the Canadian Benefit Plan, applicable Collective
Bargaining Agreements, and under all Laws to take such contribution or premium
holidays; and (B) there have been no withdrawals or transfers of assets from any
Canadian Benefit Plan (other than withdrawals or transfers in the normal course
19
related to the payment of benefits to a Person entitled to benefits under
the plan) and where so disclosed, such withdrawals or transfers of assets were
in accordance with the terms of such Canadian Benefit Plan, applicable
Collective Bargaining Agreements, and all Laws and occurred with the consent of
any applicable Governmental Authority (where required).
(xiii) There are no entities other than the Canadian Subsidiaries
participating in any of the Canadian Benefit Plans. None of the Canadian Benefit
Plans is a union plan (being a plan which is required to be established and
maintained pursuant to a Collective Bargaining Agreement and which is not
maintained or administered by any of the Canadian Subsidiaries).
(xiv) To the knowledge of the Canadian Subsidiaries, all employee data
necessary to administer each Canadian Benefit Plan is in the possession of the
Canadian Subsidiaries and is complete, correct and in a form which is sufficient
for the proper administration of the Canadian Benefit Plan in accordance with
its terms and all Laws.
(xv) Except as disclosed on Schedule 2.15(l)(xv) none of the Canadian
Benefit Plans, other than the Canadian Pension Plans, provide benefits beyond
retirement or other termination of service to employees or former employees of a
Canadian Subsidiary or to the beneficiaries or dependants of such employees, and
where so disclosed liabilities in respect of such benefits (as well as all
liabilities under the Canadian Pension Plans) have been properly and accurately
disclosed on the financial statements of the applicable Canadian Subsidiary in
accordance with Canadian generally accepted accounting principles.
(xvi) None of the Canadian Benefit Plans, or any insurance contract
relating thereto, require or permit a retroactive increase in premiums or
payments or require additional premiums or payments on termination of the
Canadian Benefit Plan, and the level of insurance reserves, if any, under any
insured Canadian Benefit Plan is reasonable and sufficient to provide for all
incurred but unreported claims.
Section 2.16 Intellectual Property. Schedule 2.16 contains an accurate and
complete list of all material Intellectual Property owned or used by the Company
and each of its Subsidiaries. Except as set forth on Schedule 2.16, the Company
and each of its Subsidiaries, as applicable, owns the entire right, title and
interest in and to the Intellectual Property (including, without limitation, the
right to use and license the same). Except as set forth in Schedule 2.16, to the
knowledge of the Company, there are no pending or threatened actions, claims or
proceedings of any nature affecting or relating to the Intellectual Property
owned or used by the Company or any of its Subsidiaries. Schedule 2.16 lists all
notices or claims currently pending or, to the Company's knowledge, threatened
in writing against the Company or any of its Subsidiaries that claim
infringement of any domestic or foreign letters patent, patent applications,
patent licenses, software licenses and
20
know-how licenses, trade names, trademark registrations and applications,
service marks, copyrights, copyright registrations or applications, trade
secrets, technical knowledge, know-how or other confidential proprietary
information. Except as set forth on Schedule 2.16, to the Company's knowledge,
there is no reasonable basis upon which any claim may be asserted against the
Company or any of its Subsidiaries for infringement or misappropriation of any
domestic or foreign letters patent, patents, patent applications, patent
licenses, software licenses, and know-how licenses, trade names, trademark
registrations and applications, trademarks, service marks, copyrights, copyright
registrations or applications, trade secrets, technical knowledge, know-how or
other confidential proprietary information, to the Company's knowledge. To the
Company's knowledge, all letters patent, registrations and certificates issued
by any Governmental Authority relating to any of the Intellectual Property and
all licenses and other agreements pursuant to which the Company or any of its
Subsidiaries uses any of the Intellectual Property are valid and subsisting,
have been properly maintained and neither the Company nor any of its
Subsidiaries, nor to the knowledge of the Company, any other Person, is in
material default or material violation thereunder.
Section 2.17 Real Property.
(a) Except as set forth on Schedule 2.17(a), the Company or a Subsidiary
owns fee simple absolute title to all owned real properties used in the conduct
and operation of its respective business as set forth on Schedule 2.17(a) (the
"Owned Real Estate"), and, to the Company's knowledge, the Company or a
Subsidiary has a valid leasehold interest in all other real properties used in
the conduct and operation of its business as set forth on Schedule 2.17(a) (the
"Leased Real Estate" and together with the Owned Real Estate, the "Real
Estate"). Schedule 2.17(a) contains a true, correct and complete list of all the
Real Estate, including the name of the owner of record of the Owned Real Estate
and the name of the lessee of the Leased Real Estate, an accurate street
address, a brief description of the use of such Real Estate and the lease,
sublease or other agreement for all Leased Real Estate. It is understood that
certain of the Owned Real Estate may be in the name of former subsidiaries of
the Company that no longer exist or may otherwise be in the name of a Person
which is not the Company or a Subsidiary. Purchaser acknowledges and agrees that
so long as any such Owned Real Estate is transferred to the Company or any of
its Subsidiaries prior to the Closing (unless such Owned Real Estate is
otherwise designated as an Excluded Asset, in which case such transfer shall not
be required), the ownership of such Real Estate by a Person other than the
Company or any of its Subsidiaries shall not constitute a breach of the
representations and warranties set forth in this Section 2.17.
(b) To the Company's knowledge, except as set forth on Schedule 2.17(b),
all material components of all improvements included within any Real Estate
(collectively, the "Improvements", which term with respect to Leased Real
Estate, shall specifically exclude any portion of any improvement that is not
leased to the Company or its Subsidiaries), including, without limitation, the
roofs and structural elements thereof and the heating, ventilation, air
conditioning, plumbing, electrical, mechanical, sewer, waste water, storm water,
paving and parking equipment, systems and facilities included therein
21
are adequate to conduct the business of the Company and its Subsidiaries as
currently conducted.
(c) Except as set forth on Schedule 2.17(c), all material Permits required
to have been issued to the Company or any of its Subsidiaries to enable any Real
Estate to be lawfully occupied and used for all of the purposes for which they
are currently occupied and used have been lawfully issued and are in full force
and effect. Except as set forth on Schedule 2.17(c), neither the Company nor any
of its Subsidiaries has received any written notice of any pending, threatened
or contemplated condemnation proceeding affecting any Real Estate or any part
thereof or any proposed termination or impairment of any parking at any such
owned or leased real property or of any sale or other disposition of any such
Real Estate or any part thereof in lieu of condemnation.
(d) Except as set forth on Schedule 2.17(d):
(i) to the Company's knowledge, no Improvement fails to conform in any
material respect with applicable ordinances, regulations, zoning laws and
restrictive covenants nor encroaches upon real property of others, nor is any
such Real Estate encroached upon by structures of others in any case in any
manner that would have or would be reasonably likely to have a Material Adverse
Effect;
(ii) to the Company's knowledge, no charges or violations have been
received by, made or threatened against the Company or any of its Subsidiaries,
against or relating to any such Real Estate or Improvements or any of the
operations conducted at any Real Estate, as a result of any violation or alleged
violation of any applicable ordinances, requirements, regulations, zoning laws
or restrictive covenants or as a result of any encroachment on the property of
others, where the effect of same would have or would be reasonably likely to
have a Material Adverse Effect;
(iii) other than pursuant to applicable laws, rules, regulations or
ordinances, or pursuant to any leases or subleases of Leased Real Estate, or
pursuant to any mortgages, deeds of trust or other security instruments listed
on Schedule 2.17(d) affecting any Real Estate, covenants that run with the land
or provisions in any agreement listed on Schedule 2.17(d), to the Company's
knowledge, there exists no restriction on the use, transfer or mortgaging of any
Real Estate;
(iv) to the Company's knowledge, the Company and each of its Subsidiaries
have adequate permanent rights of ingress to and egress from any such property
used by it for the operations conducted thereon; and
22
(v) to the knowledge of the Company, except as may otherwise be provided in
Schedule 2.17(d), there are no developments specifically related to any of the
Real Estate or interests of the Company or its Subsidiaries therein, or the use
or operation thereof, pending or threatened that might reasonably be expected to
have a Material Adverse Effect.
Section 2.18 Disclosure. (a) No representation or warranty of the Company
or any of its Subsidiaries contained in this Agreement, (b) no statement
contained in any document or other instrument furnished or to be furnished by
the Company or any of its Subsidiaries to Purchaser in connection with the
transactions contemplated hereby, and (c) no statement or other information
contained in any Schedules or Statements of Affairs filed by the Company or any
of its Subsidiaries with the U.S. Bankruptcy Court or similar filings by the
Company or its Canadian Subsidiaries with the Canadian Court, contains or will
contain any untrue statement of a material fact or omits or will omit to state a
material fact necessary to make the representation, warranty or statement so
made not misleading.
Section 2.19 No Violation of Law. Except as set forth on Schedule 2.19,
neither the Company nor any of its Subsidiaries has violated or is in violation
of any Law applicable to it which violation could reasonably be expected to have
a Material Adverse Effect.
Section 2.20 Material Agreements. Schedule 2.20 hereto sets forth all
material agreements and contracts to which the Company or any of its
Subsidiaries is a party or is bound. For purposes of this Section 2.20 a
material agreement shall be an agreement or contract requiring payments by the
Company in excess of $50,000 in any year or lease of any Real Estate, and shall
exclude any agreements or contracts for sales of goods or services by the
Company or any of its Subsidiaries entered in the ordinary course of business.
Schedule 2.20 shall be in such tabular or other form setting forth (a) the name
of the agreement or contract, (b) the parties thereto, (c) the term of the
Agreement, (d) the payment terms thereof, (e) to the knowledge of the Company,
the Prepetition amounts due thereunder, (f) whether such agreement or contract
contains any restriction on the conduct of business by the Company or any of its
Subsidiaries, (g) whether any consent is required with respect to the acceptance
of such agreement or contract in connection with the Restructuring, and (h)
whether the Company recommends acceptance or rejection of the agreement or
contract in connection with the Restructuring.
Section 2.21 Bank Accounts. Schedule 2.21 hereto sets forth a complete and
accurate list of all bank accounts with the respective balances therein
maintained by the Company and each of its Subsidiaries with any bank or other
financial institution (as of a recent date indicated on the Schedule), which
Schedule shall be updated as of a recent date to the Closing.
23
Section 2.22 Signatories. All of the Subsidiaries of the Company, other
than the Excluded Subsidiaries, are signatories to this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby makes the following representations and warranties to the
Company each of which shall be true and correct as of the date hereof and as of
the Closing Date (except to the extent expressly relating to a specific date, in
which event it shall be true and correct as of such date) and shall be
unaffected by any investigation heretofore or hereafter made.
Section 3.1 Organization. Purchaser is a Person duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
the requisite power and authority to own, lease or otherwise hold its properties
and assets and to carry on its business as presently conducted.
Section 3.2 Authorization and Effect of Agreement. Purchaser has the
requisite power and authority to execute and deliver this Agreement and the
Ancillary Documents to which it will be a party and to perform its obligations
hereunder and thereunder. The execution and delivery by Purchaser of this
Agreement and the performance by it of the transactions contemplated hereby and
thereby have been duly authorized by all necessary action on the part of
Purchaser. This Agreement has been duly executed and delivered by Purchaser and
its Subsidiaries and constitutes a valid and binding agreement of Purchaser and
its Subsidiaries, enforceable against Purchaser and its Subsidiaries in
accordance with its terms, subject to applicable bankruptcy, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally
and subject, as to enforceability, to general principles of equity. Each of the
Ancillary Documents to which Purchaser will be a party, when executed and
delivered by Purchaser, will constitute a valid and binding agreement of
Purchaser, enforceable against Purchaser in accordance with its terms, subject
to applicable bankruptcy, reorganization, moratorium, and similar laws affecting
creditors' rights and remedies generally and subject, as to enforceability, to
general principles of equity.
Section 3.3 No Conflicts. The execution and delivery of this Agreement, and
the Ancillary Documents to which Purchaser will be a party, by Purchaser does
not or will not (as applicable), and the performance by Purchaser of the
transactions contemplated by this Agreement and such Ancillary Documents will
not, conflict with, or result in any violation of, or constitute a default under
(a) any provision of the organizational documents of Purchaser, (b) any of the
terms, conditions, or provisions of any material agreement or other material
document by which Purchaser or any of its Affiliates is
24
bound, or (c) any Law or order applicable to or binding on Purchaser.
Except as set forth in Schedule 3.3, and except for the Confirmation Orders and
the expiration of the waiting period under the HSR Act, no Consent is required
to be obtained, made or given in connection with the execution and delivery of
this Agreement by Purchaser or the performance by Purchaser of its obligations
hereunder.
Section 3.4 Litigation. As of the date of this Agreement, there are no
judicial or administrative actions, proceedings or investigations pending
against the Purchaser or any of its Affiliates or, to Purchaser's knowledge,
threatened that question the validity of this Agreement or any action taken or
to be taken by Purchaser in connection with this Agreement.
Section 3.5 Investment Intent. The Purchaser:
(a) meets the definition of an "Accredited Investor";
(b) is acquiring the Purchase Shares and the Exit Loan Commitment Shares
for investment for its own account and without the intention of participating,
directly or indirectly, in a distribution of the Purchase Shares or the Exit
Loan Commitment Shares and not with a view to resale or any distribution of the
Purchase Shares or the Exit Loan Commitment Shares, or any portion thereof;
(c) has (i) sufficient knowledge and experience in financial and business
matters to be capable of evaluating the merits and risks of purchase and
ownership of the Purchase Shares and the Exit Loan Commitment Shares, (ii) is
experienced in making investments that involve a high degree of risk, (iii) is
sophisticated in making investment decisions, and (iv) can bear the economic
risk of an investment in the Purchase Shares and the Exit Loan Commitment
Shares, including the total loss of such investment;
(d) has, to its knowledge, been given full access to information regarding
the Company and has been provided the opportunity to ask questions of the
Company;
(e) acknowledges (i) that an investment in the Purchase Shares and the Exit
Loan Commitment Shares is speculative and the Purchaser may have to continue to
bear the economic risk of the investment in the Purchase Shares and the Exit
Loan Commitment Shares for an indefinite period; (ii) that the Purchase Shares
and the Exit Loan Commitment Shares are being sold to the Purchaser without
registration under any state or federal law requiring the registration of
securities for sale; and that (iii) the transferability of the Purchase Shares
and the Exit Loan Commitment Shares may be restricted by applicable federal and
state securities laws and under the laws of other jurisdictions.
25
(f) represents that its and its Affiliates' holdings in PIK/Term Claims
does not fail to qualify under Section 382(l)(5)(E)(i) solely as a result of the
application of Treasury Regulation Section 1.382-9(d)(4).
ARTICLE IV
COVENANTS
Section 4.1 Access. Prior to the Closing, upon reasonable notice from
Purchaser, and subject to the provisions of any applicable lease or sublease
(whether the Company or any of its Subsidiaries is a lessor/sublessor or
lessee/sublessee), the Company shall afford to the officers, attorneys,
accountants or other authorized representatives of Purchaser reasonable access
during normal business hours to the business, employees, Real Estate, facilities
and books and records of the Company and each of its Subsidiaries relating to
the business then conducted and/or operated or previously conducted and/or
operated by the Company and its Subsidiaries for all or any portion of its
business (including without limitation all Tax Returns and communications with
any Governmental Authority relating to Taxes), so as to afford Purchaser full
opportunity to make such review, examination and investigation of such
businesses as Purchaser determines are reasonably necessary in connection with
the consummation of the transactions contemplated hereby and shall execute such
contracts as may be required to access information held by third parties or
cause an inspection by a Governmental Authority; provided, however, that the
foregoing right of access shall not be exercisable in such a manner as to
interfere unreasonably with the normal operations and business of such Person.
Purchaser shall be permitted to make extracts from or to make copies of such
books and records as may be reasonably necessary in connection therewith. Prior
to the Closing, the Company shall, and shall cause each of its Subsidiaries to,
and each of its Subsidiaries shall, promptly furnish Purchaser with access to
such maintenance records, operating data and other information relating to the
business then owned and/or operated by the Company and each of its Subsidiaries
as Purchaser may reasonably request. The Company shall promptly deliver to
Purchaser such copies of all pleadings, motions, notices, statements, schedules,
applications, reports and other papers filed by the Company or any of its
Subsidiaries, or by any Person in connection with or related to the Company's
and its Subsidiaries' businesses, and after the consummation of the
Restructuring, in each case in the Bankruptcy Cases. The Company shall promptly
provide to Purchaser all documents and materials relating to the Restructuring,
the proposed transfer of the Shares, the Accepted Contracts or any portion
thereof, and otherwise cooperate with Purchaser, to the extent reasonably
necessary in connection with Purchaser's preparation for or participation in any
part of the Bankruptcy Cases in which Purchaser's participation is necessary,
required or reasonably appropriate. The Company shall promptly deliver to
Purchaser all pleadings, motions, notices, statements, schedules, applications,
reports and other papers filed in any other judicial or administrative
proceeding as Purchaser may reasonably request. In addition, the Company shall,
and shall cause each of its Subsidiaries to consult with Purchaser with respect
to any press release or public statement outside the Bankruptcy Court
concerning, in whole or in part, the
26
transactions contemplated by this Agreement. Without limiting the
generality of this Section 4.1, if requested by Purchaser, the Company, upon
reasonable notice, shall provide access to the Real Estate to Purchaser and its
representatives and agents for purposes of conducting unintrusive environmental
assessments, including Phase I analyses or further analyses if Purchaser deems
such analyses are warranted as a result of a Phase I analysis or otherwise. To
the extent that any applicable lease or sublease (whether the Company or any of
its Subsidiaries is a lessor/sublessor or lessee/sublessee) restricts the
ability of the Company's or any of its Subsidiaries to grant access to any
property, the Company and its Subsidiaries shall use all reasonable best efforts
to provide for such access as Purchaser may reasonably request hereunder. For
the avoidance of doubt, the Company shall not be required to provide Purchaser
access to information regarding bids or expressions of interest received by the
Company, before the Bid Deadline Date.
Section 4.2 Conduct of Business. Except as expressly contemplated by this
Agreement (including, without limitation, the commencement and prosecution of
the Bankruptcy Cases) or as otherwise consented to by Purchaser in writing,
during the period from the date of this Agreement and continuing until the
Closing, the Company shall, and shall cause each of its Subsidiaries to, in
respect of the business then owned and/or operated by the Company or each such
Subsidiary, as the case may be:
(a) (i) use reasonable efforts to conduct its business in the usual,
regular and ordinary course as presently conducted and consistent with past
practice, (ii) keep its assets intact, and (iii) maintain its assets in at least
as good a condition as their current condition (reasonable wear and tear
excepted);
(b) not take or omit to take any action as a result of which any
representation or warranty of the Company made in Article II would be rendered
untrue or incorrect if such representation or warranty were made immediately
following the taking or failure to take such action;
(c) not mortgage, pledge, sell or dispose of any its assets, and not waive,
release, grant, transfer or permit to lapse any rights of material value, other
than sales of assets and services in the ordinary course as presently conducted
and consistent with past practice, or sales of Excluded Assets;
(d) not incur any Indebtedness other than in the ordinary course of its
business;
(e) not assign, modify, cancel, otherwise impair or permit to lapse any
Accepted Contract;
(f) perform in all material respects its post-petition obligations under
any Accepted Contract to the extent arising after the commencement date of the
Bankruptcy Cases;
27
(g) comply in all material respects with all applicable Laws that relate to
or affect its assets and business or such Person's ownership and/or use or
operation thereof, including but not limited to the timely, complete and correct
filing of all reports and maintenance of all records required by any
Governmental Authority to be filed or maintained;
(h) except to the extent necessary to comply with applicable Laws, not
adopt or amend any bonus, profit-sharing, compensation, severance, termination,
stock option, pension, retirement, deferred compensation, employment or employee
benefit plan, agreement, trust, plan, fund or other arrangement for the benefit
and welfare of any director, officer or employee, or increase in any manner the
compensation or fringe benefits of any director, officer or employee or pay any
benefit not required by any existing plan or arrangement (including, without
limitation, the removal of existing restrictions in any benefit plans or
agreements);
(i) except with Purchaser's approval or as specifically required by Section
4.8 or Section 4.10, not enter into any new or amended contract, agreement, side
letter or memorandum of understanding with any unions representing employees of
the Company or any of its Subsidiaries which would reasonably be likely to have
a Material Adverse Effect;
(j) continue to use and operate all assets and all aspects of its business
used and operated by the Company or any of its Subsidiaries as of the date
hereof in a manner consistent with prior practice and in accordance with all
applicable Laws, and not enter into any contract nor otherwise act, nor suffer
or permit any other Person to act, to restrict, interfere with or prevent the
use or operation of such assets or business;
(k) notify Purchaser in writing of any incidents or accidents occurring on
or after the date hereof involving any property owned or operated by the Company
or any of its Subsidiaries that resulted or could reasonably be expected to
result in damages or losses to any portion of the business of the Company or any
of its Subsidiaries, as the case may be, in excess of $50,000;
(l) notify Purchaser in writing of the commencement of any material
litigation against the Company or any of its Subsidiaries, as the case may be,
or of the existence of any adverse business conditions arising on or after the
date hereof threatening the continued, normal business operations of the Company
or any of its Subsidiaries, as the case may be, or of any agreement, consent or
order of any Governmental Authority involving the Company or any of its
Subsidiaries, as the case may be;
(m) notify Purchaser of any litigation, arbitration or administrative
proceeding pending or, to their knowledge, threatened against the Company or any
of its Subsidiaries that challenges or would materially affect the transactions
contemplated hereby; and
28
(n) provide prompt written notice to Purchaser (i) of any change in any of
the information contained in the representations and warranties made by the
Company in Article II hereof or any exhibits or schedules referred to herein or
attached hereto, including without limitation any Disclosure Schedules (with
respect to representations and warranties qualified or limited by materiality or
Material Adverse Effect), or (ii) of any material change in (with respect to
representations and warranties not so qualified or limited), and shall promptly
furnish any information that Purchaser may reasonably request in relation to
such change; provided, however, that such notice shall not operate to cure any
breach of the representations and warranties made by the Company in Article II
or any exhibits or schedules referred to herein or attached hereto, including
without limitation any Disclosure Schedules.
Section 4.3 No Inconsistent Action. The Company shall not, and shall cause
each of its Subsidiaries not to, take any action that is materially inconsistent
with the Company's obligations under this Agreement.
Section 4.4 Filings. As promptly as practicable after the execution of this
Agreement, each Party shall use its reasonable best efforts to obtain, and to
cooperate with the other Party in obtaining, or to the extent applicable causing
its Subsidiaries to obtain, all authorizations, Consents, orders and
confirmations of any Governmental Authority that may be or become necessary in
connection with the consummation of the transactions contemplated by this
Agreement, and to take all reasonable actions to avoid the entry of any order or
decree by any Governmental Authority prohibiting the consummation of the
transactions contemplated hereby, including without limitation, the
notifications required to be filed by it under the HSR Act, Investment Canada
Act and the Canadian Competition Act, and shall furnish to the other all such
information in its possession as may be necessary for the completion of the
notifications to be filed by the other; provided that, in complying with this
Section 4.4, neither Purchaser nor any of its Affiliates shall be required to
(i) divest any assets or discontinue or modify any of its operations or (ii)
accept or become subject to any condition or requirement unacceptable to
Purchaser in its sole discretion. No Party shall withdraw any such filing or
submission prior to the termination of this Agreement without the written
consent of the other Party.
Section 4.5 All Reasonable Efforts. Prior to the Closing, each of the
Parties shall use reasonable efforts with due diligence and in good faith to (i)
satisfy promptly all conditions required hereby to be satisfied by such Party in
order to expedite the consummation of the transactions contemplated hereby; (ii)
take, or cause to be taken, all action, and to do, or cause to be done as
promptly as practicable, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement, including, without
limitation, the prompt preparation by the Company of all pleadings, motions,
notices, statements, schedules, applications, reports and other papers
reasonably necessary to commence and consummate the Bankruptcy Case in Canada.
29
Section 4.6 Further Assurances. From time to time from and after the date
of this Agreement, including, without limitation, following the Closing,
Purchaser, the Company and its Subsidiaries shall execute, acknowledge and
deliver such additional documents or instruments and take such other action as
Purchaser or the Company, as the case may be, may reasonably request to more
effectively accomplish the transactions contemplated by this Agreement and the
Bankruptcy Plan, as reasonably determined by such Party in good faith and with
the acknowledgement and agreement that the execution and delivery of certain
documents and instruments may not be able to be accomplished prior to the
confirmation of the U.S. Plan by the U.S. Bankruptcy Court, or, if applicable,
the Canadian Proceeding by the Canadian Court.
Section 4.7 Publicity. The Parties hereto shall consult with each other and
shall mutually agree (the agreement of each Party not to be unreasonably
withheld or delayed) upon the content and timing of any press release or other
public statements with respect to the transactions contemplated by this
Agreement and shall not issue any such press release or make any such public
statement prior to such consultation and agreement, except as may be required by
applicable law or in connection with the Bankruptcy Cases or by obligations
pursuant to any listing agreement with any securities exchange or any stock
exchange regulations as advised by counsel; provided, however, that to the
extent reasonably possible, each Party shall give prior notice to the other
Party of the content and timing of any such press release or other public
statement required by applicable law or in connection with the Bankruptcy Cases
or by obligations pursuant to any listing agreement with any securities exchange
or any stock exchange regulations.
Section 4.8 Collective Bargaining Agreements.
(a) The Company shall, and shall cause each of its Subsidiaries, and each
of its Subsidiaries shall provide Purchaser with notification and description of
all material written proposals of the Company or any of its Subsidiaries or any
union with representatives of any union representing any organized employee
groups and of all matters, other than matters arising in the ordinary course of
business, related to any Collective Bargaining Agreements, including without
limitation, any expressed threats of strikes, slowdowns, work stoppages, labor
actions or lock-outs in response to any modification demands under Section
1113(e) of the Bankruptcy Code or otherwise. The Company shall, and shall cause
each of its Subsidiaries, and each of its Subsidiaries shall, as directed by the
Purchaser in Purchaser's sole discretion, (i) enter into negotiations with any
union representing any organized employee group to modify the terms, conditions,
wages, benefits or work rules of any Collective Bargaining Agreement, (ii) file
one or more motions to implement interim changes to the Collective Bargaining
Agreements under Bankruptcy Code Section 1113(e), (iii) file one or more motions
to reject those Collective Bargaining Agreements designated by Purchaser in
accordance with Bankruptcy Code Section 1113(c), (iv) reject those single
employer pension plans designated by Purchaser in accordance with Section 4.10
of this Agreement, and (v) otherwise take such action as may be reasonably
requested by
30
Purchaser to effect the intent of this Section 4.8. The Company and its
Subsidiaries shall use their reasonable best efforts, in accordance with the
time tables set forth on Exhibits B-1 and B-2, to obtain such modifications,
interim changes, rejections as contemplated in clauses (i) though (v) above. The
Company and its Subsidiaries shall allow Purchaser to observe any negotiations
initiated pursuant to this Section 4.8(a).
(b) The Company and each of its Subsidiaries shall, as required by ERISA,
the Code, Bankruptcy Code or other Laws, provide timely (i) all legally required
notices or other disclosure to employees and their beneficiaries, parties in
interest, any union, collective bargaining unit or other organized employee
group and government agencies, including but not limited to the Department of
Labor, Pension Benefit Guaranty Corporation or Internal Revenue Service; and
(ii) file all forms, reports, submissions or other instruments with the
Department of Labor, Pension Benefit Guaranty Corporation, Internal Revenue
Service or any other federal or state agency or department required as a result
of the actions contemplated by Section 4.8(a). Without limiting the foregoing,
the Company and each of its Subsidiaries shall provide timely notice of the bar
date(s) fixing the last day to file proofs of claims against the Debtors as
established per order of the Bankruptcy Courts, to all holders of claims, as
defined in Bankruptcy Code Section 101(5), claimants, parties in interest,
parties having filed notice of appearance in the Bankruptcy proceedings
hereunder, including, without limitation, to the extent applicable, employees
and their beneficiaries, any union, collective bargaining unit or other
organized employee group, the Department of Labor, Pension Benefit Guaranty
Corporation, Environmental Protections Agency, Department of Justice, Internal
Revenue Service, and comparable, state, local and Canadian (federal, provincial
and local) Governmental Authorities.
(c) The Company shall (i) use reasonable efforts to obtain from each of the
multiemployer plans (as defined in ERISA Section 3(37)) that is subject to Title
IV of ERISA and in which the Company or its Subsidiaries participate, or for
which they could be subject to withdrawal liability that is not subject to
discharge in accordance with the Bankruptcy Code, and provide to Purchaser an
estimate of the potential total withdrawal liability payable by the Company and
its ERISA Affiliates (the "Multiemployer Withdrawal Liability") assuming a
complete withdrawal of the Company and its ERISA Affiliates from each such
multiemployer plan or (ii) at the election of Purchaser in its sole discretion,
authorize Purchaser or Purchaser's representative to obtain such information
from each of the multiemployer plans so as to permit Purchaser or Purchaser's
representative to calculate the amount of such Multiemployer Withdrawal
Liability.
Section 4.9 Bankruptcy Reorganization Process.
(a) The Company shall, and shall cause the other U.S. Debtors to, and each
of the U.S. Debtors shall, in accordance with the timetable for the
Restructuring set forth in Exhibit B-1 attached hereto, file a motion or motions
with the U.S. Bankruptcy Court seeking entry of an order in the form attached
hereto as Exhibit C-1 (with such changes
31
thereto as Purchaser shall approve or request in its sole discretion, the
"Bidding Procedures Order") and an order in the form attached hereto as Exhibit
C-2 (with such changes thereto as Purchaser shall approve or request in its sole
discretion, the "Icahn DIP Approval Order"). The Bidding Procedures Order, inter
alia, shall (i) approve this Agreement, subject to higher and better offers as
provided herein, (ii) approve the Termination Amount, the Bankruptcy Termination
Amount and the reimbursement of Purchaser's Expenses as set forth herein,
providing that, in the event the obligation of the Company and the U.S. Debtors
to pay Purchaser either the Termination Amount or the Bankruptcy Termination
Amount, or the Purchaser's Expenses, arises, such obligation (A) shall
constitute a super-priority administrative expense under sections 503(b) and
507(a)(1) of the Bankruptcy Code (subject to the Carveout), (B) shall be secured
by a pari passu lien priority with the Icahn DIP Facility (except to the extent
paid out of funds provided to the Company or any of its Subsidiaries by a
Competing Bidder, through an escrow deposit or otherwise, or paid from the Icahn
DIP Facility (including, without limitation, as may have been reserved
thereunder) in which case the Purchaser shall have an immediate right to receipt
thereof ahead of all other parties and shall have or shall be deemed to have a
Lien therein with priority over any and all other Liens whatsoever) and (C)
shall be payable in accordance with the provisions of Section 6.1 or Section 6.2
without further order of the U.S. Bankruptcy Court, and (iii) establish
procedures and deadlines for the submission of Competing Offers consistent with
the terms of this Agreement, including, without limitation, that (A) a Competing
Offer shall not be considered to be a higher and better offer unless it is a
Superior Proposal, (B) Purchaser shall be entitled at its option to make a
revised offer following such Competing Offer and (C) Purchaser shall be entitled
to a credit bid in the amount of the Bankruptcy Termination Amount and/or the
amount of any senior secured debt owed by the Company to Purchaser or any of its
Affiliates under the Senior Loan Agreement towards any revised offer Purchaser
may make following such Competing Offer. The Company agrees to make promptly any
filings, to take all actions and to use its reasonable best efforts to obtain
timely entry of the Bidding Procedures Order and any and all other approvals and
orders necessary or appropriate for the consummation of the transactions
contemplated hereby.
(b) The Company shall, in accordance with the timetable set forth in
Exhibit B-1, prepare and file with the U.S. Bankruptcy Court and/or the Canadian
Court, as applicable: (i) a Disclosure Statement with respect to the Bankruptcy
Plan meeting the requirements of Bankruptcy Code Section 1125(b) (the
"Disclosure Statement"); (ii) a motion to approve the Disclosure Statement; and
(iii) the Bankruptcy Plan; and as soon as practicable thereafter, such similar
filings as may be required by the Canadian Court (items (i) through (iii)
collectively, the "Confirmation Motions"). The Bankruptcy Plan, any and all
exhibits and attachments to the Bankruptcy Plan, the Disclosure Statement, and
the other Confirmation Motions and the orders approving the same (including the
Confirmation Orders) shall be acceptable in form and substance to the Purchaser,
in its sole discretion, and shall not be filed until consented to by the
Purchaser. Prior to Closing, the Confirmation Motions, the Investment by the
Investors and the other transactions contemplated by this Agreement, including
the Restructuring, shall have
32
been approved by order of the U.S. Bankruptcy Court (the "U.S. Confirmation
Order"), and, if applicable, by order of the Canadian Court (the "Sanction
Order" and, together with the U.S. Confirmation Order, the "Confirmation
Orders") (each with such changes thereto as Purchaser shall approve or request
in its sole discretion), and the Confirmation Orders shall have become Final
Orders.
(c) Without limiting the foregoing, Purchaser and the Company agree to use
their reasonable best efforts to cause the Bankruptcy Courts to enter
Confirmation Orders, as applicable and relevant, in each respective jurisdiction
(U.S. and Canada) that contain, among other provisions requested by Purchaser,
in its sole discretion, the following provisions (it being understood that
certain of such provisions may be contained in either the findings of fact or
conclusions of law to be made by the Bankruptcy Courts as part of the
Confirmation Orders): (i) the Restructuring of the Company shall occur in
accordance with the terms set forth on Exhibit A; (ii) except as otherwise
contemplated by this Agreement, on and after the Closing Date, all Persons shall
be permanently enjoined from commencing or continuing in any manner, any
Litigation on account or in respect of any of the pre-petition Liabilities or
other Liabilities satisfied pursuant to the Bankruptcy Plan; such injunctive
relief shall be in addition to the relief afforded under Section 1141(d) of the
Bankruptcy Code; (iii) on the Closing Date, except as otherwise specifically
approved by Purchaser in its sole discretion and included in the Bankruptcy
Plan, the assets and business of Reorganized PSC and its Subsidiaries shall be
free and clear of all Liens, other than Post-Closing Permitted Liens, and all
pre-petition liabilities; (iv) except as otherwise expressly provided in the
Icahn DIP Facility, all amounts to be paid to Purchaser or its Affiliates, if
any, pursuant to this Agreement constitute super-priority administrative
expenses under sections 503(b) and 507(a)(1) of the Bankruptcy Code (subject to
the Carveout) and are immediately payable if and when the obligations of the
Company or any of its Subsidiaries arise under this Agreement, which obligations
shall be secured by a lien on all of the U.S. Debtors' property and shall be
secured by a pari passu lien priority with the Icahn DIP Facility (except to the
extent paid out of funds provided to the Company or any of its Subsidiaries by a
Competing Bidder, through an escrow deposit or otherwise, or paid from the Icahn
DIP Facility (including, without limitation, as may have been reserved
thereunder) in which case the Purchaser shall have an immediate right to receipt
thereof ahead of all other parties and shall have or shall be deemed to have a
Lien therein with priority over any and all other Liens whatsoever) and shall be
payable in accordance with the provisions of Section 6.1 or Section 6.2 without
further order of the U.S. Bankruptcy Court; provided, however, that the Company
shall have the right to contest the validity and amount of such asserted claims
(other than the Termination Amount or the Bankruptcy Termination Amount); (v)
all Persons are enjoined from taking any action against Purchaser or Purchaser's
Affiliates (as they existed immediately prior to the Closing) or the Company to
recover any claim which such Person has solely against the Company or any of the
Company's Affiliates (as they existed immediately following the Closing); (vi)
the respective Bankruptcy Courts retain exclusive jurisdiction through the
effective date of the Bankruptcy Plan (or later as may be provided in the
Bankruptcy Plans) to interpret, construe and enforce the provisions of this
Agreement, the Bidding Procedures Order, the
33
Icahn DIP Approval Order and the Confirmation Orders in all respects;
provided, however, that in the event the Bankruptcy Courts abstain from
exercising or decline to exercise jurisdiction with respect to any matter
provided for in the Bankruptcy Plans or this clause (vi) or is without
jurisdiction, such abstention, refusal or lack of jurisdiction shall have no
effect upon and shall not control, prohibit or limit the exercise of
jurisdiction of any other court having competent jurisdiction with respect to
any such matter; (vii) the provisions of the Confirmation Orders are
nonseverable and mutually dependent; (viii) provides for the retention of
jurisdiction by the respective Bankruptcy Courts to resolve any and all disputes
that may arise under this Agreement as between the Company and Purchaser, and
further to hear and determine any and all disputes between the Company and/or
Purchaser, as the case may be, and any non-Company party to, among other things,
any Accepted Contracts, concerning inter alia, the assumption thereof by
Reorganized PSC under this Agreement; (ix) pursuant to Section 1146(c) of the
Bankruptcy Code, provides for the exemption of the transactions contemplated
herein from certain taxes, provides for the waiver of so-called "bulk-sale" laws
in all necessary jurisdictions, and provides that the transactions contemplated
herein are deemed to be under or in contemplation of a plan to be confirmed
under section 1129 of the Bankruptcy Code; (x) Purchaser and its Affiliates,
directors, shareholders, partners, representatives, employees, attorneys, and
agents are released (and have corresponding injunctive relief) from any and all
claims, demands, liabilities causes of action and obligations, of every type, in
any way relating to or in connection with the Company and its Subsidiaries,
their business, the Bankruptcy Cases, such release and injunctive relief to be
in form and substance (including without limitation scope) acceptable to
Purchaser as determined in Purchaser's good faith discretion; (xi) post-petition
directors, representatives, employees, attorneys and agents of the Company and
its Subsidiaries are exculpated from any claims, except for those claims that
relate to the gross negligence or intentional misconduct of any such parties,
that (A) arise post-petition, (B) relate to the period beginning on the Petition
Date and ending on the Closing Date, and (C) are in connection with the
Bankruptcy Cases; (xii) the issuance of Common Stock under the Bankruptcy Plan
is exempt from registration under the Securities Act, and (xiii) except to the
extent expressly agreed to in writing by Purchaser, to the extent of any
conflict between the Bankruptcy Plan and this Agreement (including the Exhibits
hereto), the terms of this Agreement shall control.
(d) The Company shall not, and shall not permit any Subsidiary to, without
the prior consent of Purchaser, which may be withheld in its sole discretion,
seek or consent to the conversion of the Bankruptcy Case to a case under Chapter
7 of the Bankruptcy Code or the appointment of a trustee or examiner with
managerial powers under Bankruptcy Code Section 1104 or any Canadian bankruptcy,
insolvency legislation or similar laws, or, except as otherwise expressly
contemplated by this Agreement and the Bidding Procedures Order (including with
respect to the Company's acceptance of a Superior Proposal in accordance with
the Bidding Procedures Order and this Agreement), do any of the following:
34
(i) consent to any relief from the automatic stay under Section 362 of the
Bankruptcy Code or any similar stay provided for in respect of the Canadian
Restructuring, that would reasonably be likely to result in, individually or in
the aggregate, a Material Adverse Effect;
(ii) file any plan of reorganization other than the Bankruptcy Plan, file
any material amendment to the Bankruptcy Plan, consent to the reduction of the
exclusivity period under Bankruptcy Code Section 1121 for the filing of a plan
of reorganization or fail timely to file motions seeking to obtain orders of the
U.S. Bankruptcy Court extending the exclusivity period;
(iii) sell or abandon, or file any motion to sell or abandon, any material
Assets, other than sales to customers in the ordinary course of business;
(iv) authorize, or commit or agree to take, any of the foregoing actions
except as excepted herein.
(e) Prior to entry of the Confirmation Orders, the Company and Purchaser
shall, and the Company shall cause each of its Subsidiaries to, and its
Subsidiaries shall, accurately inform the Bankruptcy Courts of all material
facts of which they are aware relating to this Agreement and the transactions
contemplated hereby. (f) If the Bidding Procedures Order, the Icahn DIP Approval
Order or the Confirmation Orders, or any other orders of the Bankruptcy Courts
relating to this Agreement shall be appealed by any Person (or a petition for
certiorari or motion for rehearing or reargument shall be filed with respect
thereto), the Company agrees to, and shall cause its Subsidiaries to, and its
Subsidiaries shall, take all steps as may be reasonable and appropriate to
defend against such appeal, petition or motion, and the Purchaser agrees to
cooperate in such efforts, and each Party hereto agrees to use its reasonable
best efforts to obtain an expedited resolution of such appeal; provided,
however, that nothing herein shall preclude the Parties hereto from consummating
the transactions contemplated herein if the Confirmation Orders shall have been
entered and have not been stayed and Purchaser, in its sole discretion, waives
in writing the requirement that the Confirmation Orders be Final Orders.
(g) The Company shall, and shall cause its Subsidiaries to, and its
Subsidiaries shall consult with the Purchaser prior to taking any material
action with respect to the Bankruptcy Cases, and shall cooperate with Purchaser
and its representatives in connection with the Bidding Procedures Order, the
Icahn DIP Approval Order and the Confirmation Orders, and the bankruptcy
proceedings in connection therewith. Such cooperation shall include, but not be
limited to, consulting with Purchaser at Purchaser's reasonable request
concerning the status of such proceedings and providing Purchaser with copies of
requested pleadings, notices, proposed orders and other documents relating to
such proceedings as soon as reasonably practicable prior to any submission
thereof to the Bankruptcy Court. The Company further covenants and agrees that
the terms of any plan submitted by the Company to the Bankruptcy Courts for
35
confirmation shall not conflict with, supersede, abrogate, nullify, modify
or restrict the terms of this Agreement and the rights of Purchaser hereunder,
or in any way prevent or interfere with the consummation or performance of the
transactions contemplated by this Agreement including, without limitation, any
transaction that is contemplated by or approved pursuant to the Bidding
Procedures Order, the Icahn DIP Approval Order and the Confirmation Orders. The
Purchaser shall provide the Company with all information concerning the
Purchaser required to be included in the Disclosure Statement.
Section 4.10 Accepted or Rejected Contracts.
(a) The Company shall list, on the date hereof and/or in accordance with
the timetable set forth in Exhibit E, as applicable, on Schedule 4.10, a true,
correct and complete list of all executory contracts that are material to the
operation of the business of the Company or any of its Subsidiaries (the
"Material Executory Contracts"). For each Material Executory Contract listed
from time to time thereon, the Company shall timely indicate to Purchaser
whether or not, in connection with the Bankruptcy Cases, the Company or any of
its Subsidiaries, as the case may be, desires to accept or reject such Material
Executory Contract. The Purchaser, in its sole discretion, shall direct the
Company to cause each such Material Executory Contract to be either accepted or
rejected, and the Company shall, and it shall cause its Subsidiaries to, accept
or reject each such Material Executory Contract in accordance with the
Purchaser's direction effective as of the Closing, unless the Company and/or its
Subsidiaries elect in their discretion to seek an earlier effective date (any
Material Executory Contracts so accepted hereby are referred to herein as the
"Accepted Contracts" and any Material Executory Contracts so rejected hereby are
referred to herein as the "Rejected Contracts"). Notwithstanding anything to the
contrary in the foregoing, neither the Company nor any of its Subsidiaries shall
accept any executory contract (whether or not a Material Executory Contract)
without the consent of Purchaser, in its sole discretion. For all purposes of
this Agreement the term "rejection" of a contract shall include, without
limitation, with respect to the Canadian Subsidiaries and/or the Canadian
Proceeding, the disclaimer, termination or breach of such contract.
(b) Any motions filed with, and the proposed orders submitted to, the
Bankruptcy Courts seeking authorization to, or any proceedings undertaken to,
accept or reject any one or more of the Material Executory Contracts shall be
satisfactory in form and substance to the Purchaser in its sole discretion. The
Purchaser's written consent shall be required prior to the Company compromising
or commencing Litigation with respect to any Material Executory Contract, or any
material payments required to be made under the Bankruptcy Code in connection
therewith.
Section 4.11 Specific Enforcement of Covenants. The Company acknowledges
that irreparable damage may occur in the event that any of the covenants and
agreements of the Company or any of its Subsidiaries set forth in this Article
IV or in any other part of this Agreement were not timely performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that Purchaser shall be
36
entitled to an injunction or injunctions to prevent or cure any breach of
Section 4.12 or any material breach of such other covenants and agreements of
the Company (to the extent not qualified by materiality) or any breach of such
other covenants and agreements (to the extent qualified by materiality), and its
Subsidiaries and to enforce specifically the terms and provisions thereof, this
being in addition to any other remedy to which it may be entitled at law or in
equity, it being understood that, after commencement of the Bankruptcy Cases,
the Bankruptcy Courts shall have exclusive jurisdiction over such matters;
provided, however, that in the event the Bankruptcy Courts abstains from
exercising or declines to exercise jurisdiction with respect to any matter
provided for in this sentence or is without jurisdiction, such abstention,
refusal or lack of jurisdiction shall have no effect upon and shall not control,
prohibit or limit the exercise of jurisdiction of any other court having
competent jurisdiction with respect to any such matter.
Section 4.12 No Solicitation.
(a) Upon the earlier to occur of the approval of this Agreement or the
Icahn DIP Facility, the U.S. Debtors agree to withdraw their motion to sell
assets of the U.S. Debtors under Section 363 of the U.S. Bankruptcy Code, and
further agree not to refile any such motion except as permitted by the Icahn DIP
Facility and not to file any similar motion with respect to the Canadian
Subsidiaries in the Canadian Court except as permitted by this Agreement and the
Icahn DIP Facility. Nothing in this Section 4.12(a) shall preclude the Company
from soliciting or proposing Competing Offers prior to the Determination Date,
as may otherwise be permitted hereunder.
(b) Prior to the Determination Date the Company shall not take any efforts
in connection with developing a competing plan of reorganization or soliciting a
Superior Proposal, except in accordance with the terms of this Agreement,
including, without limitation, Section 4.9, Exhibit A-2, and the Bidding
Procedures Order.
(c) After the Determination Date, the Company shall advise Purchaser of any
request for information with respect to any Acquisition Proposal or of any
Acquisition Proposal, or any inquiry, proposal, discussions or negotiation with
respect to any Acquisition Proposal, the terms and conditions of such request,
Acquisition Proposal, inquiry, proposal, discussion or negotiation and the
Company shall, within one (1) calendar day of the receipt thereof, promptly
provide to Purchaser copies of any written materials received by the Company or
any of its Subsidiaries in connection with any of the foregoing, and the
identity of the Person making any such Acquisition Proposal or such request,
inquiry or proposal or with whom any discussions or negotiations are taking
place. The Company shall keep Purchaser fully informed of the status and
material details (including amendments or proposed amendments) of any such
request or Acquisition Proposal and keep Purchaser fully informed as to the
material details of any information requested of or provided by the Company and
as to the details of all discussions or negotiations with respect to any such
request, Acquisition Proposal, inquiry or proposal, and shall provide to
Purchaser within one (1) calendar day of receipt thereof all written materials
received by the Company with respect thereto. The Company shall promptly provide
to Purchaser any non-public information concerning the Company provided to
37
any other Person in connection with any Acquisition Proposal, which was not
previously provided to Purchaser.
(d) Notwithstanding anything herein to the contrary, if, on the
Determination Date, the Company and the other U.S. Debtors select this Agreement
from among any or all Competing Offers, then beginning on the Determination
Date, and until the earlier of (i) the Closing Date or (ii) termination of this
Agreement in accordance with its terms, the Company shall not, without the prior
written consent of the Purchaser, and shall not permit any of its Subsidiaries,
nor any of its or their officers, directors, shareholders, employees, investment
bankers, attorneys, or any other representative to, and none of them shall,
without the prior written consent of the Purchaser, directly or indirectly, (A)
solicit, engage in discussions or negotiate with any Person (whether or not such
discussions or negotiations are initiated by the Company), or take any other
action intended or designed to facilitate the efforts of any Person, other than
Purchaser or its Affiliates, relating to an Acquisition Proposal, (B) provide
information with respect to the Company to any Person, other than Purchaser or
its Affiliates, relating to a possible Acquisition Proposal by any Person, other
than Purchaser or its Affiliates, (C) enter into an agreement with any Person,
other than Purchaser or its Affiliates, providing for a possible Acquisition
Proposal, or (D) make or authorize any statement, recommendation or solicitation
in support of any possible Acquisition Proposal by any Person, other than by
Purchaser or its Affiliates.
Section 4.13 Confidentiality. Each Party hereto acknowledges that the other
Party has legitimate and continuing proprietary interests in the protection of
its confidential information and that the Parties have invested substantial sums
and will continue to invest substantial sums to develop, maintain and protect
such confidential information. Prior to and after the Closing, each Party agrees
not to disclose, furnish or make accessible to anyone or use for its own benefit
(other than as contemplated hereby) any trade secrets or other confidential or
proprietary information of another party relating to the Company, Purchaser
and/or their respective businesses or the other parties including, but not
limited to, information obtained by or revealed to such Party during any
investigations, negotiations or review relating to this Agreement and any other
document contemplated hereby or thereby or any past or future actions taken in
connection with, pursuant to, in accordance with, or under this Agreement,
including without limitation any business plans, marketing plans, financial
information, strategies, systems, programs, methods and computer programs;
provided, however, that such protected information shall not include (i)
information required to be disclosed by law, legal or judicial process
(including a court order, subpoena or order of a Governmental Authority) or the
rules of any stock exchange, (ii) information that is or becomes available to
the disclosing Party on a non- confidential basis from a source other than the
other Party and not obtained in violation of this Agreement and (iii)
information known to the public or otherwise in the public domain without
violation of this Section 4.13; provided, further, that this Section 4.13 shall
not in any way limit the disclosure of information by the Company (a) in
connection with the commencement and prosecution of the Bankruptcy Cases or (b)
regarding the Company (i) to other bidders or potential bidders that are
currently or become parties to
38
confidentiality agreements with the Company or (ii) following the
termination of this Agreement. Except as required by law, the schedules annexed
hereto shall not be disclosed to the public without the prior consent of the
Company. Notwithstanding the foregoing, any Party (and each employee,
representative or other agent of such party) may disclose to any and all
Persons, without limitation of any kind, the tax treatment and tax structure (in
each case, within the meaning of Treasury Regulation Section 1.6011-4) of the
Transaction and all materials of any kind (including opinions or other tax
analyses) that are provided to such Party relating to such tax treatment and tax
structure; provided that, with respect to any document or similar item that
contains information concerning the tax treatment or tax structure of the
Transaction as well as other information, this authorization shall only apply to
such portions of the document or similar item that relate to the tax treatment
or tax structure of the Transaction.
Section 4.14 Canadian Restructuring. The Company shall, and shall cause the
Canadian Subsidiaries to, and the Canadian Subsidiaries shall, effect a
restructuring of the Canadian Subsidiaries on terms substantially similar to the
Restructuring of the Company and its Subsidiaries contemplated hereby, as more
fully described in Exhibit G.
Section 4.15 Performance Escrow Agreement. Purchaser's $6.0 million xxxxxxx
money deposit made with the Escrow Agent pursuant to Section 1.2 hereof
(exclusive of any interest or other earnings thereon, the "Escrow Deposit")
shall be distributed as directed by Purchaser or as otherwise provided for in
the Performance Escrow Agreement; provided, however that the Company may object
to any distribution of the Escrow Deposit if, and only if, (a) Purchaser is
requesting release of the Escrow Deposit to a person other than the Company
prior to the earlier to occur of (i) termination of this Agreement, (ii) the
date Company shall become obligated to pay Purchaser or any of its Affiliates
the Termination Amount, the Bankruptcy Termination Amount or Purchaser Expenses,
(iii) December 31, 2003 or (iv) the Closing, or (b) Purchaser has materially
breached its obligations to consummate the transactions contemplated by this
Agreement in a manner for which the Company would be entitled to damages
pursuant to Section 6.4 hereof. Any objection by the Company must specify the
reason for the objection, cross referencing the appropriate provision (and/or
sub-provisions hereof) and detail the amount of distributions for which the
objection is being made. The Company shall not object to any withdrawal of funds
except as expressly provided herein, and if the Company so improperly objects,
the Company shall promptly file a notice of withdrawal of its objection to the
Escrow Agent in accordance with the terms of the Performance Escrow Agreement.
Section 4.16 Icahn DIP Facility. The Company and its Subsidiaries shall
comply with their representations, warranties and agreements contained in any
and all instruments, agreements and other documents entered into in connection
with the Icahn DIP Facility.
39
Section 4.17 Transfer of Owned Real Estate. Prior to the Closing, the
Company and its Subsidiaries shall cause the transfer of all the Owned Real
Estate to them (to the extent not so owned of record by them as of the date
hereof) as contemplated by Section 2.17.
Section 4.18 U.S. Debtors. The Company and each of its Subsidiaries shall
ensure that all of the Company's U.S. Subsidiaries are U.S. Debtors (i.e.
debtors and debtors in possession under Chapter 11 of Title 11 of the United
States Code) under the U.S. Bankruptcy Case.
ARTICLE V
CONDITIONS TO CLOSING
Section 5.1 Conditions Precedent to Obligations of the Purchaser. The
obligations of Purchaser under this Agreement to consummate the transactions
contemplated hereby to be consummated at the Closing shall be subject to the
satisfaction, at or prior to the Closing, of all of the following conditions,
any one or more of which may be waived in writing at the option of Purchaser in
its sole discretion:
(a) All representations and warranties of the Company and its Subsidiaries
in this Agreement or in any exhibit, schedule or document delivered pursuant
hereto shall be true, complete and correct in all respects (with respect to
representations and warranties qualified or limited by materiality or Material
Adverse Effect) or in all material respects (with respect to representations and
warranties not so qualified or limited), in each case when made and on and as of
the Closing Date as if made on and as of the Closing Date, other than any such
representations or warranties that expressly speak only as of an earlier date,
which shall be true, complete and correct in all respects (with respect to
representations and warranties qualified or limited by materiality or Material
Adverse Effect) or in all material respects (with respect to representations and
warranties not so qualified or limited), as of such earlier date.
(b) All of the terms, covenants and conditions to be complied with and
performed by the Company or its Subsidiaries on or prior to the Closing Date
shall have been complied with or performed in all material respects.
(c) Purchaser shall have received a certificate or certificates, dated as
of the Closing Date, executed on behalf of the Company, by an authorized
executive officer thereof, certifying in such detail as Purchaser may reasonably
request that the conditions specified in this Section 5.1 have been fulfilled.
40
(d) The waiting period under the HSR Act, Investment Canada Act, the
Canadian Competition Act or any other applicable competition, merger, control,
antitrust Law or similar Law shall have expired or terminated, and any other
Governmental Authorities whose consent is required for consummation of the
transactions contemplated hereby (including without limitation the applicable
regulatory body of Canada or any province or other territorial unit thereof)
shall have issued all Consents required for the transactions contemplated
hereby, and no condition or requirement unacceptable to Purchaser in its sole
discretion shall be imposed on or required of Purchaser or any of its Affiliates
as a result of or as a condition to any of the foregoing.
(e) All material Consents described on Schedule 2.5 shall have been
obtained without any material limitation, restriction or condition not otherwise
applicable to the Company or its Subsidiaries being imposed on Reorganized PSC
or its Subsidiaries, to the extent the need for such consent is not overridden
by Section 365 of the Bankruptcy Code or other applicable law.
(f) No action, suit or proceeding (including, without limitation, any
proceeding over which the U.S. Bankruptcy Court has jurisdiction under 28 U.S.C.
(S) 157(b) and (c)) shall be pending or overtly threatened by or before any
Governmental Authority or pending or overtly threatened by any other party to
enjoin, restrain, prohibit or obtain substantial damages or significant
equitable relief in respect of or related to any of the transactions
contemplated by this Agreement, or that would be reasonably likely to prevent or
make illegal the consummation of any transactions contemplated by this Agreement
or that, if adversely determined, could be materially adverse to Reorganized PSC
or any of its Subsidiaries or the Investment, and any such actions, suits or
proceedings that have theretofore been brought and determined shall have become
Final Orders.
(g) There shall not be in effect any Law of any Governmental Authority of
competent jurisdiction restraining, enjoining or otherwise preventing
consummation of the transactions contemplated by this Agreement or the
Bankruptcy Plan.
(h) There shall not be in effect any strike, slowdown, work stoppage, labor
action or lockout relating to the Company or any of its Subsidiaries.
(i) No loss or modification of or limitation on any Accepted Contract,
which results in a loss to the Company or any of its Subsidiaries in excess of
$65,000,000 in the aggregate, shall have occurred since the date hereof without
the written consent of Purchaser in its sole discretion, including without
limitation any forfeiture, expiration without renewal, termination or other loss
thereof.
(j) The Bidding Procedures Order and the Icahn DIP Approval Order shall
have each become a Final Order, the Confirmation Orders shall have been entered
in form and substance reasonably satisfactory to Purchaser, and shall have
become a Final Order, and any other orders of the Bankruptcy Courts with respect
to this Agreement and
41
the transactions contemplated hereby shall be in form and substance
reasonably satisfactory to Purchaser.
(k) The assets of Reorganized PCS and its Subsidiaries shall not include
any Excluded Assets, and all Phase I environmental assessments and additional
unintrusive due diligence on Real Estate conducted by or on behalf of Purchaser
shall have been completed with results reasonably satisfactory to Purchaser in
its sole discretion that no material expenditures, other than as may be agreed
to by the Purchaser in its sole discretion, shall be required to remediate or
otherwise cure any actual or potential Environmental Claim. Provided that
Purchaser receives the disclosure Schedules timely from the Company and its
Subsidiaries, as contemplated by Exhibit E, and is able to obtain the access
that it may reasonably request to complete its environmental surveys and due
diligence, including without limitation as contemplated by Section 4.1, on or
before August 15, 2003, Purchaser will provide the Company on such date with a
schedule of assets that it desires to include as Excluded Assets (the "Excluded
Asset Schedule"), together with a schedule of the maximum amount of material
expenditures that Purchaser shall deem material for purposes of this Section
5.1(k) (the "Environmental Liability Schedule"). Except to the extent otherwise
agreed to by Purchaser in the Excluded Asset Schedule, if the Company and its
Subsidiaries are not permitted to abandon any property listed in the Excluded
Asset Schedule, after using all reasonable efforts to do so, Purchaser shall
have the right either to terminate this Agreement, or to remove the subject
property from the Excluded Asset Schedule such that it shall no longer be deemed
to be an Excluded Asset; provided, however, that nothing herein shall be deemed
to modify the maximum amount of expenditures set forth in the Environmental
Liability Schedule without the written consent of Purchaser, in its sole
discretion.
(l) No event, events or circumstance shall have occurred since the date of
the initial Schedules delivered pursuant to Exhibit E which, independently or
together with any other event, events or circumstance that have occurred or are
reasonably likely to occur, have or are reasonably likely to have a Material
Adverse Effect.
(m) The issuance of the Shares under the Bankruptcy Plan shall be exempt
from registration under the Securities Act of 1933, as amended.
(n) The Company shall have executed and delivered the documents required to
be executed and delivered by it pursuant to Section 1.6 hereof.
(o) The Company shall have, and shall have caused each of the other U.S.
Debtors, and each of the U.S. Debtors shall have, obtained (i) the modifications
of the terms, conditions, wages, benefits or work rules of any Collective
Bargaining Agreement, or (ii) the rejection of the Collective Bargaining
Agreements, in each case as directed by Purchaser in accordance with Section
4.8(a) hereof, in form and substance satisfactory to Purchaser in its sole
discretion.
42
(p) The Company shall have provided Purchaser with evidence reasonably
satisfactory to Purchaser that the total aggregate amount of Multiemployer
Withdrawal Liability, (the calculation of which, for each multiemployer plan,
shall be made as of each plan's last plan year end), shall not exceed the
Maximum Permitted Multiemployer Withdrawal Liability Amount as of the Effective
Date, and the Company and its Subsidiaries shall have rejected all single
employer pension plans as contemplated by Section 4.8 and Section 4.10.
(q) The transactions underlying the Canadian Restructuring shall have been
completed substantially on the terms contemplated hereby, including without
limitation, as set forth in Exhibit G, such that the effective date of the
Canadian Restructuring may be scheduled to be contemporaneous with the effective
date of the U.S. Plan.
(r) The aggregate amount of all Exit Costs shall not exceed the Exit Cost
Threshold.
Section 5.2 Conditions Precedent to Obligations of the Company. The
obligations of the Company under this Agreement to consummate the transactions
contemplated hereby to be consummated at the Closing shall be subject to the
satisfaction, at or prior to the Closing, of all the following conditions, any
one or more of which may be waived in writing at the option of the Company:
(a) The waiting period under the HSR Act or any other applicable
competition, merger, control, antitrust Law or similar Law shall have expired or
terminated, and any other Governmental Authorities whose consent is required for
consummation of the transactions contemplated hereby (including without
limitation the applicable regulatory body of Canada or any province or other
territorial unit thereof) shall have issued all Confirmations required for the
transactions contemplated hereby.
(b) There shall not be in effect any Law of any Governmental Authority of
competent jurisdiction restraining, enjoining or otherwise preventing
consummation of the transactions contemplated by this Agreement or the
Bankruptcy Plan.
(c) The Confirmation Orders shall have been entered and become Final
Orders.
(d) Purchaser shall have (i) executed and delivered the agreements to be
executed and delivered by it pursuant to Section 1.6 hereof, (ii) delivered the
Purchase Shares Purchase Price to be paid by it and (iii) made available to
Reorganized PSC the Exit Loan Facility in accordance with its terms, all as
contemplated by Section 1.6 hereof.
43
ARTICLE VI
FURTHER AGREEMENTS AND TERMINATION
Section 6.1 Termination Payment.
(a) In the event this Agreement is terminated pursuant to Section
6.3(c)(iii) (in a case in which the Company or any of its Subsidiaries is in
material default or material breach of this Agreement, or where a representation
or warranty made as of the date hereof, or as of the date of delivery of any
schedule with respect thereto, is shown to have been inaccurate as of such date,
subject to the other terms and conditions of Section 6.3(c)(iii) regarding such
inaccuracy, and subject further, in the case of a breach of a representation or
warranty (but not a covenant or agreement), such breach was either intentional
or arose from the Company's or any of its Subsidiaries' recklessness), or
Section 6.3(c)(vii) of this Agreement, then in any such case the Company and its
Subsidiaries shall be jointly and severally obligated to pay Purchaser, in cash,
the sum of $5,000,000 plus an amount (not to exceed $1,000,000) on account of
the Purchaser Expenses.
(b) In the event that this Agreement is terminated pursuant to Section
6.3(a),Section 6.3(b)(ii), Section 6.3(c)(iii) (not otherwise provided for in
Section 6.1(a)), Section 6.3(c)(iv), Section 6.3(c)(v), Section 6.3(c)(vi) or
Section 6.3(c)(x) of this Agreement, then in any such case the Company and its
Subsidiaries shall be jointly severally obligated to pay Purchaser, in cash, an
amount (not to exceed $1,000,000) on account of the Purchaser Expenses.
(c) Any amount payable pursuant to this Section 6.1 shall referred to as
the "Termination Amount". The Termination Amount shall be paid within one
Business Day after Purchaser provides Company notice of a termination with
respect to which such payment is to be made.
Section 6.2 Bankruptcy Termination Payment.
(a) In the event this Agreement is terminated pursuant to Section
6.3(b)(i), Section 6.3(c)(ii), Section 6.3(c)(viii) or Section 6.3(c)(ix) of
this Agreement, the Company and its Subsidiaries shall be jointly and severally
obligated to pay to Purchaser, in cash, the sum of $5,000,000 plus an amount
(not to exceed $1,000,000) on account of the Purchaser Expenses. Any amount
payable pursuant to this Section 6.2 shall be referred to as the "Bankruptcy
Termination Amount." The Bankruptcy Termination Amount shall be payable no later
than one Business Day after a Party is provided with notice of such termination.
44
Section 6.3 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing:
(a) by mutual consent of each of the Company and Purchaser;
(b) by either of the Company or Purchaser (provided that such Party is not
then in material breach of any provision of this Agreement):
(i) if the Board of Directors of the Company authorizes the Company,
subject to complying with the terms of this Agreement and the Bidding Procedures
Order, to enter into a binding written agreement concerning a transaction that
constitutes a Superior Proposal and the Company notifies Purchaser in writing
that it intends to enter into such an agreement; provided, that no termination
under this Section 6.3(b)(i) shall be effective as to the Company's and its
Subsidiaries' obligations, and Purchaser's rights, hereunder (but shall be
effective immediately as to Purchaser's obligations hereunder, unless Purchaser
otherwise elects) until the Bankruptcy Termination Amount shall have been paid
to Purchaser; or
(ii) if a Governmental Authority shall have issued an order, decree or
ruling or taken any other action (which order, decree or ruling the Parties
hereto shall use their reasonable best efforts to lift), in each case
permanently restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement and such order, decree, ruling or other action
shall have become final and nonappealable.
(c) by Purchaser (provided that Purchaser is not then in material breach of
any provision of this Agreement):
(i) [intentionally omitted];
(ii) if the Confirmation Orders have not been entered by the Bankruptcy
Courts on or before November 3, 2003, have not become Final Orders on or before
the Outside Closing Date and, as of the time of such termination of this
Agreement, the Confirmation Orders have not been entered by the Bankruptcy Court
or become Final Orders, as applicable, or if the Company otherwise has failed to
adhere to any deadline in the timetable for the Restructuring set forth on
Exhibit B-1, and the subject action continues to be unfulfilled; or
(iii) if a material default or material breach shall be made by the Company
or any of its Subsidiaries with respect to the due and timely performance of any
of their respective covenants or agreements contained herein (other than with
respect to the covenant regarding non-solicitation contained
45
Section 4.12 hereof), or if their respective representations or warranties
contained in the Agreement shall have become inaccurate (without giving effect
to any materiality or Material Adverse Effect qualifications or exceptions
contained therein) and such inaccuracy has had or would be reasonably likely to
have a Material Adverse Effect, if such default, breach or inaccuracy has not
been cured or waived within five Business Days after written notice to the
Company specifying, in reasonable detail, such claimed default, breach or
inaccuracy and demanding its cure or satisfaction;
(iv) if Purchaser is not satisfied in its sole discretion, with the results
of its review of the initial completed Schedules provided to it after the
execution of this Agreement upon notice to the Company specifying its
dissatisfaction; provided however that Purchaser's failure to object to any
Schedule so completed and provided by the later of (i) August 15, 2003, or (ii)
ten days after the delivery of such Schedule shall be deemed to constitute its
acceptance of such Schedule; and provided further that the Company shall have a
period of five Business Days to address any dissatisfaction of the Purchaser,
and, if applicable, to modify such Schedule.
(v) if there shall continue to exist an Event of Default under the Icahn
DIP Facility, after the expiration of the applicable grace periods set forth in
the Icahn DIP Facility;
(vi) if an event or events or circumstance shall have occurred since the
date of this Agreement which, independently or together with any other event,
events or circumstance that have occurred or are reasonably likely to occur,
have or are reasonably likely to have, in the sole judgment of Purchaser, a
Material Adverse Effect;
(vii) if there is a breach of the covenant regarding non-solicitation
contained in Section 4.12 hereof;
(viii) upon the conversion of the U.S. Bankruptcy Case to a case under
chapter 7 of the Bankruptcy Code, or any similar commencement of liquidation
proceedings relating to the Company, or upon the commencement of any similar
actions or proceedings in or by the Canadian Court or otherwise with respect to
the Canadian Subsidiaries, other than as contemplated herein, including without
limitation, Exhibit G hereto; or
(ix) upon the approval of the U.S. Bankruptcy Court of any action commenced
by any other Person to liquidate the Company or any of its Subsidiaries or any
of their respective assets or for the appointment of a trustee or examiner with
managerial powers, other than at the request of Purchaser or any of its
Affiliates, under Bankruptcy Code Section 1104 and such trustee or examiner
46
takes any action to interfere or impair the plan process, or if any similar
event occurs in the Canadian Court.
(x) if any event , circumstance, condition, fact, effect or other matter
has occurred or exists which would or would be reasonably likely to, give rise
to the failure of any of the conditions to the obligations of Purchaser set
forth in Section 5.1 and cannot be cured within five Business Days after the
giving of notice to the Company.
(d) By the Company (provided that the Company is not then in material
breach of any provision of this Agreement or otherwise in breach of this
Agreement in a manner that would give rise to Purchaser's termination right) if
a material default or material breach shall be made by Purchaser with respect to
the performance of any of its covenants or agreements contained herein, or if
Purchaser's representations or warranties contained in the agreement shall have
been false or inaccurate in any material respect when made, and such default,
breach or inaccuracy has had or would be reasonably likely to have a Material
Adverse Effect, and such default, breach or inaccuracy has not been cured or
waived within five Business Days after written notice to Purchaser specifying,
in reasonable detail, such claimed default, breach or inaccuracy and demanding
its cure or satisfaction.
Section 6.4 Procedure and Effect of Termination. The obligations of the
Company and its Subsidiaries, and the rights of Purchaser under this Agreement
shall in no event terminate (but shall be effective immediately as to
Purchaser's obligations hereunder, unless Purchaser otherwise elects) unless and
until any and all amounts payable to Purchaser or its Affiliates pursuant to
Section 6.1 or Section 6.2 hereof (without duplication, such that in no event
shall the aggregate amounts owed Purchaser, if any, pursuant to this Article VI
exceed $6.0 million), in connection with such proposed termination shall have
been indefeasibly paid in full in cash to Purchaser. In the event of termination
and abandonment of the transactions contemplated hereby pursuant to Section 6.3,
written notice thereof shall forthwith be given to the other Party to this
Agreement and this Agreement shall terminate (subject to the provisions of this
Section 6.4) and the transactions contemplated hereby shall be abandoned,
without further action by any of the Parties hereto. If this Agreement is
terminated as provided herein:
(a) upon request therefor, each Party shall redeliver all documents, work
papers and other material of any other party relating to the transactions
contemplated hereby, whether obtained before or after the execution hereof, to
the party furnishing the same; and
(b) no Party hereto shall have any liability or further obligation to any
other Party to this Agreement resulting from such termination except (i) that
the provisions of Section 4.13, Section 6.1, Section 6.2, this Section 6.4,
Section 7.3, Section 7.14, and
47
Exhibit A-2 to this Agreement shall survive such termination and remain in
full force and effect and (ii) no Party waives any claim or right against a
breaching party to the extent that such termination results from the breach by a
Party hereto of any of its representations, warranties, covenants or agreements
set forth in this Agreement; provided, however, that in the event Purchaser is
entitled to receive the Termination Amount or the Bankruptcy Termination Amount,
the right of Purchaser to receive such amount shall constitute Purchaser's sole
remedy for damages(and such amount shall constitute liquidated damages in
respect of) any breach by the Company or any of its Subsidiaries of any of their
respective representations, warranties, covenants or agreements set forth in
this Agreement.
ARTICLE VII
MISCELLANEOUS PROVISIONS
Section 7.1 Notices. All notices and other communications required or
permitted hereunder shall be in writing and, unless otherwise provided in this
Agreement, will be deemed to have been duly given when delivered in person or
when dispatched by electronic facsimile transfer (confirmed in writing by mail
simultaneously dispatched) or one business day after having been dispatched by a
nationally recognized overnight courier service to the appropriate Party at the
address specified below:
(a) If to the Company, to:
0000 Xxx Xxxxxx, Xxxxx, 0000
Xxxxxxx, Xxxxx, 00000 XXX
Tel.: (000) 000-0000
Facsimile:
Attention: President and General Counsel
with copies to:
Xxxxxxxxxxxx Xxxx & Xxxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Tel.:
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx, Esq. and Xxxxxx Xxxxxx, Esq.
48
(b) If to Purchaser, to:
Icahn Associates Corp.
and affiliated companies
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Tel.: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx Xxxxx, Xxxx Xxxxxxx, Esq.,
Xxxxxxx Xxxxxxx, Esq.
with copies to:
Xxxxx Xxxxxxx Xxxxxxx Israels LLP
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Tel.: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
or to such other address or addresses as any such Party may from time to
time designate as to itself by like notice. All deliverables, notices or any
other communications delivered by Purchaser to the Company pursuant to this
Agreement shall be deemed to have been so delivered to all of the Company.
Section 7.2 Actions by the Company and its Subsidiaries. Unless otherwise
expressly provided for in this Agreement, the obligations of the Company and its
Subsidiaries hereunder are joint and several. Where any provision of this
Agreement indicates that the Company shall take any specified action (or refrain
from taking any specified action) or requires the Company to take any specified
action (or to refrain from taking any specified action), then, regardless of
whether this Agreement specifically provides that the Company shall do so, the
Company shall cause its Subsidiaries to take such action (or to refrain from
taking such action, as applicable) and such Subsidiaries hereby agree to do so.
The Company shall, in addition to any such Subsidiaries, be responsible for the
failure of any such Subsidiaries to take any such action (or to refrain from
taking any such action, as applicable). Without limiting the foregoing, the
Company shall be jointly and severally liable with each of its Subsidiaries with
respect to any representation, warranty, covenant or agreement of such
Subsidiary set forth herein and each Subsidiary shall be jointly and severally
liable with respect to any representation, warranty, covenant or agreement of
the Company or any other Subsidiary hereunder.
49
Section 7.3 Expenses. Except as otherwise expressly provided herein,
including without limitation Article VI hereof, each Party hereto shall pay any
expenses incurred by it incident to this Agreement and in preparing to
consummate and consummating the transactions provided for herein.
Section 7.4 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the Parties hereto and their respective successors
(including, without limitation, any trustee, receiver, receiver-manager, interim
receiver or similar officer appointed for the Company or any of the Company's
Subsidiaries) and permitted assigns, but shall not be assignable or delegable
(i) by the Company or any of its Subsidiaries without the prior written consent
of Purchaser or by court order, (ii) by Purchaser without the prior written
consent of the Company or by court order; provided, however, that upon notice to
the Company, Purchaser may assign or delegate any or all of its rights or
obligations under this Agreement to any Affiliate of Purchaser.
Section 7.5 Waiver. Any term or condition of this Agreement may be waived
at any time by the Party that is entitled to the benefit thereof, but no such
waiver shall be effective unless set forth in a written instrument duly executed
by or on behalf of the Party waiving such term or condition. No waiver by any
Party of any term or condition of this Agreement, in any one or more instances,
shall be deemed to be or construed as a waiver of the same or any other term or
condition of this Agreement on any future occasion. All remedies, either under
this Agreement or by Law or otherwise afforded, will be cumulative and not
alternative.
Section 7.6 Entire Agreement; Disclosure Schedules. This Agreement, which
includes the schedules and exhibits hereto, supercedes any other agreement,
whether written or oral, that may have been made or entered into by any Party
relating to the matters contemplated hereby and constitutes the entire agreement
by and among the Parties hereto. To the extent that any provisions of this
Agreement are inconsistent or conflict with the terms of the Bidding Procedures
Order, the terms of this Agreement shall control.
Section 7.7 Amendments, Supplements, Etc. This Agreement may be amended or
supplemented at any time by additional written agreements as may mutually be
determined by Purchaser and the Company to be necessary, desirable or expedient
to further the purposes of this Agreement or to clarify the intention of the
Parties.
50
Section 7.8 No Rights of Third Parties. Nothing expressed or implied in
this Agreement is intended or shall be construed to confer upon or give any
Person other than the Parties hereto any rights or remedies under or by reason
of this Agreement or any transaction contemplated hereby.
Section 7.9 Applicable Law. This Agreement and the legal relations among
the Parties hereto shall be governed by and construed in accordance with the
rules and substantive Laws of the State of New York, without regard to conflicts
of law provisions thereof.
Section 7.10 Execution in Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same agreement. Any counterpart may
be executed by facsimile signature and such facsimile signature shall be deemed
an original.
Section 7.11 Titles and Headings. Titles and headings to Sections herein
are inserted for convenience of reference only, and are not intended to be a
part of or to affect the meaning or interpretation of this Agreement.
Section 7.12 Invalid Provisions. If any provision of this Agreement (other
than Section 5.1 or Article VI of this Agreement or any part or provision
thereof) is held to be illegal, invalid, or unenforceable under any present or
future Law, and if the rights or obligations under this Agreement of the Company
on the one hand and Purchaser on the other hand will not be materially and
adversely affected thereby, (a) such provision shall be fully severable; (b)
this Agreement shall be construed and enforced as if such illegal, invalid, or
unenforceable provision had never comprised a part hereof; (c) the remaining
provisions of this Agreement shall remain in full force and effect and shall not
be affected by the illegal, invalid, or unenforceable provision or by its
severance from this Agreement; and (d) in lieu of such illegal, invalid, or
unenforceable provision, there shall be added automatically as a part of this
Agreement a legal, valid, and enforceable provision as similar in terms to such
illegal, invalid, or unenforceable provision as may be possible.
Section 7.13 Brokers. The Company and its Subsidiaries hereby, jointly and
severally, agree to indemnify and hold harmless Purchaser against any liability,
claim, loss, damage or expense incurred by the Company or any of its
Subsidiaries relating to any fees or commissions owed to any broker, finder or
financial advisor as a result of actions taken by the Company or any of its
Subsidiaries. Purchaser hereby agrees to indemnify and hold harmless the Company
against any
50
liability, claim, loss, damage or expense incurred by Purchaser relating to
any fees or commissions owed to any broker, finder or financial advisor as a
result of actions taken by Purchaser.
Section 7.14 Exculpation. Subject to Section 6.4(b) hereof, the Company and
its Subsidiaries hereby release, discharge, and acquit Purchaser and its
respective Affiliates, officers, directors, agents, attorneys, predecessors in
interest, and successors and assigns of and from any and all claims, demands,
liabilities, responsibilities, disputes, remedies, causes of action,
indebtedness, and obligations, of every type, for any action heretofore or
hereafter taken or omitted to be taken by any of them in any way relating to or
in connection with this Agreement, and the transactions contemplated hereby.
Section 7.15 Principles of Interpretation. Whenever used in this Agreement,
except as otherwise expressly provided or unless the context otherwise requires,
any noun or pronoun shall be deemed to include the plural as well as the
singular and to cover all genders. Unless otherwise specified, the terms
"hereof," "herein," "hereby" and similar terms refer to this Agreement as a
whole (including the exhibits and schedules hereto), the term "after the
Restructuring" and similar terms mean through the Closing, the term "including"
and similar terms mean including without limitation, and references herein to
Articles or Sections refer to Articles or Sections of this Agreement. This
Agreement is the product of negotiations among the parties hereto represented by
counsel and any rules of construction relating to interpretation against the
drafter of an agreement shall not apply to this Agreement and are expressly
waived.
ARTICLE VIII
DEFINITIONS
Section 8.1 Definitions. As used in this Agreement, unless the context
otherwise requires, capitalized terms used in this Agreement shall have the
meanings set forth below.
"Agreement" shall have the meaning ascribed to such term in the Preamble to
this Agreement.
"Accepted Contracts" shall have the meaning ascribed to such term in
Section 4.10(a) of this Agreement.
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"Accredited Investor" shall have the meaning ascribed thereto in Regulation
D under the Securities Act of 1933, as amended.
"Acquisition Proposal" means any proposal or offer, including without
limitation a Company Plan, but not a proposal or offer by Purchaser or any of
its Affiliates, for (a) any merger, consolidation, share exchange, business
combination or other similar transaction with the Company or any of its
Subsidiaries, (b) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition of 10% or more of the assets and liabilities of the Company and its
Subsidiaries taken as a whole in a single transaction or series of transactions
(whether related or unrelated), (c) any tender offer or exchange offer for 20%
or more of the outstanding shares of the Company's common stock or any class of
the Company's debt securities or the filing of a registration statement under
the Securities Act of 1933, as amended, in connection therewith, (d) the
acquisition of beneficial ownership or a right to acquire beneficial ownership
of, or the formation of any "group" (as defined under Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended) which beneficially owns or has the
right to acquire beneficial ownership of 20% or more of the then outstanding
shares of any class of the Company's common stock or any class of the Company's
debt securities or any class of any of the Company's Subsidiaries' common stock
or any class of any of the Company's Subsidiaries' debt securities, or (e) any
public announcement of a proposal, plan or intention to do any of the foregoing
or any agreement to engage in any of the foregoing.
"Affiliate" shall mean with respect to any Person, any other person who,
directly or indirectly, controls, is controlled by, or is under common control
with that Person.
"Agreement" shall have the meaning ascribed to such term in the Preamble to
this Agreement.
"Alternative Offer" shall have the meaning set forth in Exhibit A-2.
"APA" shall have the meaning ascribed to such term in Section (a)(i) of
Exhibit G.
"Ancillary Documents" shall have the meaning ascribed to such term in
Section 1.6(b) of this Agreement.
"Bankruptcy Cases" shall mean the U.S. Bankruptcy Case and the Canadian
Restructuring, collectively.
"Bankruptcy Code" shall have the meaning ascribed to such term in the
Recitals of this Agreement.
"Bankruptcy Courts" shall mean the U.S. Bankruptcy Court and the Canadian
Court, collectively.
"Bankruptcy Plan" shall have the meaning ascribed to such term in the
Recitals to this Agreement.
52
"Bankruptcy Termination Amount" shall have the meaning ascribed to such
term in Section 6.2(a) of this Agreement.
"Benefit Plan" and "Benefit Plans" shall have the meanings ascribed to such
terms in Section 2.15(a) of this Agreement.
"Bid Deadline Date" shall mean August 29, 2003, or such other date as
mutually agreed to by the Company and Purchaser.
"Bidding Procedures Order" shall have the meaning ascribed to such term in
Section 4.9(a) of this Agreement.
"Business Day" shall mean a day other than a Saturday, Sunday or other day
on which commercial banks in New York City, New York are authorized or required
by Law to close.
"Canadian Assets" shall have the meaning ascribed to such term in Section
(a)(i) of Exhibit G.
"Canadian Assets Purchase Price" shall mean the purchase price for the
Canadian Assets.
"Canadian Benefit Plans" means plans, arrangements, agreements, programs,
policies, practices or undertakings, whether oral or written, funded or
unfunded, registered or unregistered to which any of the Canadian Subsidiaries
is a party or by which any of the Canadian Subsidiaries is bound or under which
any of the Canadian Subsidiaries has any liability or contingent liability,
relating to:
(a) Canadian Pension Plans;
(b) plans in the nature of insurance plans, providing for employment
benefits relating to disability or wage or benefits continuation during periods
of absence from work (including, short term disability, long term disability,
and maternity and parental leave), and any and all employment benefits relating
to hospitalization, healthcare, medical or dental treatments or expenses, life
insurance, accidental death and dismemberment insurance, death or survivor's
benefits and supplementary employment insurance, in each case regardless of
whether or not such benefits are insured or self-insured; or
(c) plans in the nature of compensation plans, which means all employment
benefits relating to bonuses, incentive pay or compensation, performance
compensation, deferred compensation, profit sharing or deferred profit sharing,
share purchase, share option, stock appreciation, phantom stock, vacation or
vacation pay, sick
53
pay, severance or termination pay, employee loans or separation from
service benefits, or any other type of arrangement providing for compensation or
benefits additional to base pay or salary;
with respect to any employees or former employees or directors or officers
of a Canadian Subsidiary (or any spouses, dependants, survivors or beneficiaries
of any such employees or former employees), excluding Canadian Statutory Plans.
"Canadian Court" shall have the meaning ascribed to such term in Exhibit G
to this Agreement.
"Canadian Pension Plans" means all plans providing benefits relating to
retirement or retirement savings including pension plans, or supplemental
pensions, "registered retirement savings plans" (as defined in the Income Tax
Act (Canada)), "registered pension plans" (as defined in the Income Tax Act
(Canada)) and "retirement compensation arrangements" (as defined in the Income
Tax Act (Canada)).
"Canadian Proceeding" shall have the meaning ascribed to such term in the
Recitals to this Agreement.
"Canadian Receiver" shall have the meaning ascribed to such term in Section
(a)(i) of Exhibit G.
"Canadian Restructuring" shall mean the restructuring described in Exhibit
G.
"Canadian Statutory Plans" means statutory benefit plans which any of the
Canadian Subsidiaries are required to comply with, including the Canada and
Quebec Pension Plans and plans administered pursuant to applicable Canadian
(provincial or federal) health tax, workers' compensation and unemployment
insurance legislation.
"Canadian Subsidiaries" shall have the meaning ascribed to such term in the
Recitals to this Agreement.
"Canadian Transfer" shall have the meaning ascribed to such term in Section
(a)(i) of Exhibit G.
"Capital Lease" shall mean a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.
"Capital Stock" of any Person shall 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.
"Carveout" shall have the meaning set forth in the U.S. Bankruptcy Court's
Order approving the Icahn DIP Facility.
54
"CCAA" shall mean the Companies' Creditors Arrangement Act (Canada).
"CCAA Proceeding" shall have the meaning ascribed to such term in Section
(a)(ii) of Exhibit G.
"Closing" shall have the meaning ascribed to such term in Section 1.5 of
this Agreement.
"Closing Date" shall have the meaning ascribed to such term in Section 1.5
of this Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and all
regulations promulgated thereunder.
"Collective Bargaining Agreements" shall have the meaning ascribed to such
term in Section 2.13(a) of this Agreement.
"Common Stock" shall mean the newly-issued shares of common stock of
Reorganized PSC.
"Company" shall have the meaning ascribed to such term in the Preamble to
this Agreement.
"Company Plan" shall mean an offer made by the Company in the form of a
competing plan of reorganization, other than the Bankruptcy Plan, provided,
however, that in order to qualify as a Company Plan, (i) such offer must
aggregate the highest and best bids the Company shall have received for
individual business units of the Company and its Subsidiaries, (ii) such covered
business units must collectively represent virtually all of the business and
assets of the Company and its Subsidiaries, other than the Excluded Assets and
(iii) and such offer must otherwise satisfy the requirements of a Superior
Proposal at the time when made, including, without limitation, the provisions of
Section 4.9(a), Exhibit A-2 and the Bidding Procedures Order.
"Competing Bidder" and "Competing Bidders" shall mean the proponent or
proponents of a Competing Offer, including without limitation any parties making
bids that are aggregated in a Company Plan or combined in a Superior Proposal.
"Competing Offer" shall be (a) an offer in the form of a competing plan of
reorganization by a party other than Purchaser or its Affiliates covering all of
the assets of the Company and its Subsidiaries, other than the Excluded Assets,
as contemplated by the Restructuring, and may include a Company Plan or (b) a
combination of the highest and best offers received by the Company for purchases
of individual business units of the Company and its Subsidiaries pursuant to
Bankruptcy Code Section 363, which offers need not be aggregated
55
in a Company Plan (but rather shall be consummated through Bankruptcy Code
Section 363 sales), provided that such covered business units collectively
represent virtually all of the business and assets of the Company and is
Subsidiaries.
"Confirmation Motions" shall have the meaning ascribed to such term in
Section 4.9(b) of this Agreement.
"Confirmation Orders" shall have the meaning ascribed to such term in
Section 4.9(b) of this Agreement.
"Consent" shall mean any consent, confirmation or authorization of, notice
to, or designation, registration, declaration or filing with, any Person.
"Credit Agreement" shall mean that Credit Agreement, dated March 31, 2000,
among the Company, Canadian Imperial Bank of Commerce, as Administrative Agent,
and various lenders from time to time parties thereto.
"Determination Date" shall mean the date, to be determined in accordance
with the Bidding Procedures Order, after the submission of all Competing Offers
and counter-offers and the expiration of the period to submit the same, upon
which the U.S. Debtors select a plan of reorganization, which date shall not be
later than September 5, 2003.
"Disclosure Schedule" shall have the meaning ascribed to such term in the
first introductory paragraph to Article II.
"Disclosure Statement" shall have the meaning ascribed to such term in
Section 4.9(b) of this Agreement.
"Employee Welfare Benefit Plan" shall have the meaning ascribed to such
term in Section 2.15(a) of this Agreement.
"Environmental Claim" shall have the meaning ascribed to such term in
Section 2.11(e) of this Agreement.
"Environmental Laws" shall have the meaning ascribed to such term in
Section 2.11(e) of this Agreement.
"Environmental Liability Schedule" shall have the meaning ascribed to such
term in Section 5.1(k) of this Agreement.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
56
"ERISA Affiliate" shall mean any entity (whether or not incorporated) other
than the Company that, together with the Company is a member of (i) a controlled
group of corporations within the meaning of Section 414(b) of the Code; (ii) a
group of trades or businesses under common control within the meaning of Section
414(c) of the Code; or (iii) an affiliated service group within the meaning of
Section 414(m) of the Code.
"Escrow Agent" shall mean Fleet National Bank, a national banking
association created and existing under the laws of the United State of America.
"Event of Default" as it relates to the Icahn Dip Facility shall have the
meaning set forth in the loan agreement for the Icahn Dip Facility.
"Excluded Assets" shall mean the capital stock and assets of the Excluded
Subsidiaries and any other assets, if any, to be excluded from the assets of
Reorganized PSC and its Subsidiaries as contemplated by the Restructuring.
"Excluded Asset Schedule" shall have the meaning ascribed to such term in
Section 5.1(k) of this Agreement.
"Excluded Subsidiaries" shall mean RMF Industrial Contracting, Inc., Total
Refractory Systems, Inc. and Delta Maintenance, Inc.; provided, however that no
assets or business of the Company or any of its other subsidiaries shall have
been or be transferred to any such Excluded Subsidiaries on or after December
31, 2002. There shall be no Excluded Subsidiaries other than those set forth
above, except as permitted or designated by Purchaser, in its sole discretion.
"Exit Costs" means as of the Effective Date the aggregate of all (i)
Administrative Claims, cure costs for all Accepted Contracts, and Priority Tax
Claims (including, without limitation, any of the foregoing which may relate to
the Canadian Restructuring) and (ii) other costs incurred in connection with the
Restructuring (including without limitation any and all Tax liabilities with
respect thereto, but shall exclude Taxes resulting from application of Section
956 of the Code); provided however, that (A) trade payables (other than
professional fees incurred in connection with the Bankruptcy Plan or the
Restructuring), (B) payroll (other than retention payments) and (C) accrued
insurance expenses, shall each be excluded from both clauses (i) and (ii) above
to the extent such costs are incurred in the ordinary course of business and are
not yet due and payable.
"Exit Cost Threshold" shall mean the lesser of (a) $40 million less all
amounts of principal, interest and other costs then outstanding under the Icahn
DIP facility or (b) $25 million (in which case the Exit Cost Threshold shall
mean $15 million as to Exit Costs incurred in connection with the U.S. Plan and
$10 million as to Exit Costs incurred in connection with the Canadian
Restructuring).
57
"Exit Loan Facility" shall have the meaning ascribed to such term in
Section 1.1 to this Agreement.
"Exit Loan Facility Agreements" shall mean the Agreement or Agreements,
dated as of the Closing Date, pursuant to which the Purchaser and the other
Investors extend the Exit Loan Facility to Reorganized PSC and its Subsidiaries.
"Exit Loan Commitment Shares" shall have the meaning ascribed to such term
in Section 1.3 to this Agreement.
"Facilities" shall mean any real property, leaseholds or other interests
currently or formerly owned or operated by the Company or any of its
Subsidiaries and any buildings, plants, structures or equipment (including motor
vehicles) currently or formerly owned or operated by the Company or any of its
Subsidiaries.
"Final Order" shall mean an order or judgment the operation or effect of
which is not stayed, and as to which order or judgment (or any revision,
modification or amendment thereof), the time to appeal or seek review or
rehearing has expired, and as to which no appeal or petition for review or
motion for rehearing or reargument has been taken or been made and is pending
for argument.
"Foreign Subsidiaries" shall mean all of the Subsidiaries of the Company
that are domiciled outside of the United States.
"GAAP" shall mean generally accepted accounting principles as in effect
from time to time in the United States, consistently applied.
"Governmental Authority" shall mean any supernational, national, federal,
state, local or foreign government or any subdivision, agency, instrumentality,
authority, department, commission, board or bureau thereof or any federal,
state, local or foreign court, tribunal or arbitrator (including, without
limitation, the Bankruptcy Courts).
"HSR Act" shall mean Xxxx-Xxxxx-Xxxxxx Act of 1976, as amended.
"Icahn DIP Facility" shall mean the Debtor-In-Possession line of credit
financing facility, as it may be amended from time to time, provided to the
Company by an Affiliate of Xxxx Xxxxx in connection with the Restructuring
contemplated hereby.
"Icahn DIP Approval Order" shall have the meaning set forth in Section
4.9(a).
"Identified Superior Proposal" shall have the meaning set forth in Exhibit
A-2.
"Improvements" shall have the meaning ascribed to such term in Section
2.17(b) of this Agreement.
58
"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.
"Intellectual Property" shall mean (i) all inventions (whether patentable
or not patentable and whether or not reduced to practice), all improvements
thereto, and all patents, patent applications, and patent disclosures, together
with all reissuances, divisions, continuations, continuations-in-part,
revisions, renewals, extensions, and reexaminations thereof, (ii) all registered
and unregistered trademarks, service marks, trade dress, logos, trade names, and
corporate names, together with all translations, adaptations, derivations, and
combinations thereof and including all goodwill associated therewith, and all
applications, registrations and renewals in connection therewith, (iii) all
works of authorship, including, without limitation, all copyrightable works, all
copyrights, and all applications, registrations and renewals in connection
therewith, and all moral rights, (iv) all databases, data compilations and data
collections, (v) all trade secrets and confidential information (including,
without limitation, ideas, research and development, know-how, processes,
methods, techniques, technical data, designs, drawings, specifications, customer
and supplier lists, pricing and cost information, and business, technical and
marketing plans and proposals), (vi) all domain names, web addresses and
websites, (vii) all computer software, source code and object code, whether
embodied in software, firmware or otherwise (including related data and
documentation), (viii) all other intellectual property and proprietary rights,
and (ix) all copies and tangible embodiments of all of the foregoing (i) through
(ix) in any form or medium.
"Investment" shall have the meaning ascribed to such term in Section 1.1 to
this Agreement.
"Investors" shall have the meaning ascribed to such term in Section 1.1 to
this Agreement.
"Laws" shall mean all federal, state, provincial, territorial, local or
foreign laws, including common law, orders, writs, injunctions, decrees, codes,
guidelines, policies, ordinances, awards, stipulations, judgments, directions,
requirements, statutes, judicial or administrative doctrines, rules or
regulations enacted, promulgated, issued or entered by a Governmental Authority,
including without limitation, the Bankruptcy Code, the Code and any
Environmental Laws.
59
"Leased Real Estate" shall have the meaning ascribed to such term in
Section 2.17(a) of this Agreement.
"Liabilities" shall mean any and all direct and indirect liabilities, debts
and obligations of every kind, nature and description, whether accrued,
absolute, contingent, unliquidated or otherwise, whether known or unknown,
whether due or to become due and regardless of when asserted.
"Liens" shall mean all title defects or objections, mortgages, liens,
claims, charges, pledges, or other encumbrances of any nature whatsoever,
including without limitation licenses, leases, chattel or other mortgages,
collateral security arrangements, hypothecs, hypothecations, trusts, deemed
trusts, pledges, title imperfections, defect or objection liens, security
interests, conditional and installment sales agreements, easements,
encroachments or restrictions, of any kind and other title or interest retention
arrangements, reservations or limitations of any nature.
"Litigation" shall have the meaning ascribed to such term in Section 2.7 of
this Agreement.
"Material Adverse Effect" shall mean (a) a material adverse effect on (x)
the business, results of operations, condition (financial or otherwise) or
prospects of the business operated by the Company and its Subsidiaries taken as
a whole or (y) the Shares, or (b) a material adverse effect on (x) the
transactions contemplated by this Agreement, (y) the legality, validity or
enforceability of this Agreement and the agreements and instruments to be
entered into in connection herewith, or the realization of the rights and
remedies thereunder, or (z) the ability of the Company to perform its
obligations under this Agreement; provided, however that with respect to Section
6.3(d), "Material Adverse Effect" shall mean a material adverse effect on (x)
the transactions contemplated by this Agreement, (y) the legality, validity or
enforceability of this Agreement and the agreements and instruments to be
entered into in connection herewith, or the realization of the rights and
remedies thereunder, or (z) the ability of Purchaser to perform its obligations
under this Agreement.
"Material Executory Contracts" shall have the meaning ascribed to such term
in Section 4.10(a) of this Agreement.
"Materials of Environmental Concern" shall have the meaning ascribed to
such term in Section 2.11(e) of this Agreement.
"Maximum Permitted Multiemployer Withdrawal Liability Amount" shall mean
$10,000,000; provided, however, that such amount shall exclude Multiemployer
Withdrawal Liability (i) for work performed by employees in the building and
construction industry under a multiemployer plan that primarily covers employees
in the building and construction industry; (ii) for which any multiemployer plan
has adopted the building and construction industry exception as set forth in
ERISA Section 4203(b); (iii) that relate solely to plans for which Excluded
Subsidiaries currently are the sole participating Subsidiaries, but only to the
extent that withdrawal liability of the Company and its Subsidiaries for such
plans will be fully discharged
60
pursuant to the Bankruptcy Plan, or (iv) any withdrawal liability which has
been triggered as a result of a withdrawal prior to the Closing and will be
fully discharged pursuant to the Bankruptcy Plan.
"Maximum Purchaser Expenses" shall mean $1,000,000.
"Multiemployer Withdrawal Liability" shall have the meaning ascribed to
such term in Section 4.8(c) of this Agreement.
"New Canadian Subsidiaries" shall have the meaning ascribed to such term in
Section (a)(i) of Exhibit G.
"NOL" shall have the meaning ascribed to such term in Section 2.12(g) of
this Agreement.
"Non-U.S. Plans" shall have the meaning ascribed to such term in Section
2.15(i) of this Agreement.
"Outside Closing Date" shall mean November 15, 2003, provided that
Purchaser may, by written notice to the Company, extend the Outside Closing Date
to such later date as Purchaser in its sole discretion may determine but in all
events within 30 days after satisfaction or waiver of all conditions set forth
in Section 7.1 and Section 7.2.
"Owned Real Estate" shall have the meaning ascribed to such term in Section
2.17(a) of this Agreement.
"Party " and "Parties" shall have the meanings ascribed to such terms in
the Preamble to this Agreement.
"Payment Date" shall have the meaning set forth in Exhibit A-2.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Performance Escrow Agreement" shall have the meaning ascribed to such term
in Section 1.2 of this Agreement.
"Permits" shall mean all permits, licenses, confirmations, franchises,
notices and authorizations issued by any Governmental Authority that relate to
or otherwise are used or are necessary in connection with the Company's business
or any of its Subsidiaries' businesses.
"Person" shall mean any individual, general partnership, limited
partnership, limited liability company, joint venture, corporation, trust,
unincorporated organization, Governmental Authority or other entity.
61
"Petition Date" shall have the meaning ascribed to such term in the
Recitals to this Agreement.
"PIK Notes" shall have the meaning ascribed to such term in Exhibit A to
this Agreement.
"PIK/Term Claims" shall mean all claims of the PIK/Term Creditors arising
under or in connection with the Credit Agreement, whether secured or unsecured.
"PIK/Term Creditors" shall mean the lenders party to the Credit Agreement
as of the Closing Date.
"PIK/Term Shares" shall have the meaning ascribed to such term in Section
1.4 to this Agreement.
"Post-Closing Permitted Liens" shall mean any Liens permitted pursuant to
the Confirmation Orders.
"Purchase Price" shall have the meaning ascribed to such term in Section
1.1 of this Agreement.
"Purchase Shares" shall have the meaning ascribed to such term in Section
1.1 of this Agreement.
"Purchase Shares Purchase Price" shall have the meaning ascribed to such
term in Section 1.1 of this Agreement.
"Purchaser" shall have the meaning ascribed to such term in the Preamble to
this Agreement.
"Purchaser Expenses" shall mean Purchaser's reasonable out of pocket
expenses (including but not limited to reasonable financial advisor's account's
or attorney's fees and expenses and filing fees, including without limitation
those paid in connection with filings under the HSR Act) incurred in connection
with the negotiation and/or performance of this Agreement and its due diligence
investigation of the Company in connection with this Agreement; provided,
however, that Purchaser Expenses reimbursable under this Agreement shall in no
case exceed in aggregate amount the Maximum Purchaser Expenses.
"Qualified PIK/Term Creditors" shall mean those PIK/Term Creditors that are
Accredited Investors.
"Real Estate" shall have the meaning ascribed to such term in Section
2.17(a) of this Agreement.
62
"Registration Rights Agreement" shall mean the registration rights
agreement in form and substance reasonably satisfactory to the Purchaser
regarding the registration of the Common Stock under the Securities Act.
"Rejected Contracts" shall have the ascribed to such term in Section
4.10(a) of this Agreement.
"Reorganized PSC" shall have the meaning ascribed to such term in the
Recitals to this Agreement.
"Reorganized PSC Management Incentive Plan" shall mean a management stock
incentive plan adopted by Reorganized PSC as of the Closing Date in a form
acceptable to the Purchaser in its reasonable discretion, which shall provide
for grants of options and other stock-based awards to qualified employees,
directors and consultants of Reorganized PSC and its Subsidiaries pursuant to
which up to seven percent (7%) of the Common Stock is reserved.
"Restructuring" shall have the meaning ascribed to such term in Section 1.1
of this Agreement.
"Sale Process" shall have the meaning ascribed to such term in Exhibit G to
this Agreement.
"Sanction Order" shall have the meaning ascribed to such term in Section
4.9(b) of this Agreement.
"Schedule" and "Schedules" shall have the meanings ascribed to such terms
in the second introductory paragraph to Article II.
"Senior Lenders" shall mean the lenders party to the Senior Loan Agreement
as of the Closing Date.
"Senior Loan Agreement" shall mean that certain Loan Agreement dated as of
March 31, 2000, as amended, by and among the Company, its Subsidiaries
signatories thereto, Foothill Capital Corporation, as Administrative Agent, and
certain lenders from time to time party thereto.
"Shares" shall mean the Purchase Shares, the PIK/Term Shares and the Exit
Loan Commitment Shares, collectively.
"Subsidiary" shall mean, with respect to a specified Person, any other
Person of which at least 50% of the outstanding shares, limited liability
company interests or other equity interests having ordinary voting power for the
election of directors or comparable governing body of such Person are owned,
directly or indirectly, by such specified Person. Notwithstanding anything to
the contrary in the foregoing, the term "Subsidiary", as it relates to the
Company or any of its Subsidiaries, shall not include the Excluded Subsidiaries.
63
"Superior Proposal" shall mean a Competing Offer or combination of
Competing Offers that satisfies the competing plan requirements as set forth in
Exhibit A-2 and the Bidding Procedures Order, and, if in the form of a plan or
reorganization, provides for compliance with the Timetable for Restructuring as
set forth in Exhibit B-1, which the Board of Directors of the Company has
determined in good faith, if accepted, is reasonably likely to be consummated
taking into account all legal, financial, regulatory and other aspects of the
proposal and the person making the proposal, and that the Board of Directors of
the Company believes in good faith, after consultation with an outside financial
advisor would, if consummated, result in a transaction more favorable from a
financial point of view than the transaction proposed by this Agreement.
"Tax" and "Taxes" shall mean all federal, state, local, foreign or
provincial income, payroll, employee withholding, unemployment insurance, social
security, sales, goods and services, harmonized sales, use, service, service
use, leasing, leasing use, excise, franchise, gross receipts, value added,
alternative or add-on minimum, estimated, occupation, real and personal
property, stamp, transfer, workers' compensation, severance, windfall profits,
withholding, environmental (including taxes under Section 59A of the Code), all
surtax or other tax of the same or of a similar nature, including any interest,
penalty, or addition thereto, whether disputed or not.
"Tax Return" shall mean any return, declaration, report, claim for refund,
or information return, statement or other document (whether in tangible,
electronic or other form)relating to Taxes or any amendment thereto, and
including any schedule or attachment thereto.
"Termination Amount" shall have the meaning ascribed to such term in
Section 6.1(c) of this Agreement.
"Transaction" means all of the factual elements relevant to the expected
tax treatment of any investment, entity, plan or arrangement contemplated
pursuant to this Agreement, and includes any series of steps carried out as part
of a plan.
"U.S. Bankruptcy Case" shall have the meaning ascribed to such term in the
Recitals to this Agreement.
"U.S. Bankruptcy Court" shall have the meaning ascribed to such term in the
Recitals of this Agreement.
"U.S. Plan" shall have the meaning ascribed to such term in the Recitals to
this Agreement.
"U.S. Confirmation Order" shall have the meaning ascribed to such term in
Section 4.9(b) of this Agreement.
64
"U.S. Debtors" shall have the meaning ascribed to such term in the Recitals
to this Agreement.
"U.S. Subsidiaries" shall mean all of the Subsidiaries of the Company or,
after the consummation of the Restructuring, all of the Subsidiaries of
Reorganized PSC, that are domiciled in the United States.
Section 8.2 Knowledge. For the purposes of this Agreement, unless expressly
provided otherwise, any reference to "knowledge of the Company" or "knowledge of
the Company or any of its Subsidiaries" or "knowledge of any Subsidiary" or any
similar expression shall be deemed to mean and include "knowledge of any and all
of the Company and its Subsidiaries in each case after making a reasonable
inquiry."
[SIGNATURE PAGE FOLLOWS]
65
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the day and year first above written.
HIGH RIVER LIMITED PARTNERSHIP
By:
Name:
Title:
XXXXXX SERVICES CORPORATION, a Delaware
corporation, debtor-in-possession
By:
Xxxxxxx X. Xxxxxxx,
Senior Vice President and CFO
XXXXXX METALS (NEW YORK), INC.,
a New York corporation, debtor-in-possession
PSC METALS, INC.,
an Ohio corporation, debtor-in-possession
By:
Xxxxxxx X. Xxxxxxx
Vice President and Treasurer
Of each of the foregoing companies
CAPPCO TUBULAR PRODUCTS USA, INC., a Georgia
corporation, debtor-in-possession
By:
Xxxxxxx X. Xxxxxxx
Vice President
66
21st CENTURY ENVIRONMENTAL MANAGEMENT, INC. OF
NEVADA, a Nevada corporation, debtor-in-possession
21st CENTURY ENVIRONMENTAL MANAGEMENT, INC. OF
RHODE ISLAND, a Rhode Island corporation,
debtor-in-possession
ALLWASTE TANK CLEANING, INC., a Georgia
corporation, debtor-in-possession
ALLWORTH, INC., an Alabama corporation,
debtor-in-possession
BURLINGTON ENVIRONMENTAL INC., a Washington
corporation, debtor-in-possession
CHEM-FREIGHT, INC., an Ohio corporation,
debtor-in-possession
CHEMICAL RECLAMATION SERVICES, INC., a Texas
corporation, debtor-in-possession
CHEMICAL POLLUTION CONTROL, INC. OF FLORIDA - A
21st CENTURY ENVIRONMENTAL MANAGEMENT COMPANY, a
Florida corporation, debtor-in-possession
CHEMICAL POLLUTION CONTROL, INC. OF NEW YORK - A
21st CENTURY ENVIRONMENTAL MANAGEMENT COMPANY, a
New York corporation, debtor-in-possession
COUSINS WASTE CONTROL CORPORATION, an Ohio
corporation, debtor-in-possession
CYANOKEM INC., an Ohio corporation,
debtor-in-possession
67
LUNTZ ACQUISITION (DELAWARE) CORPORATION, a
Michigan corporation, debtor-in-possession
By:
Xxxxx X. Xxxxxxx
President of each of the foregoing companies
NORTHLAND ENVIRONMENTAL, INC., a Delaware
corporation, debtor-in-possession
NORTRU, INC., a Michigan corporation,
debtor-in-possession
XXXXXX ENVIRONMENTAL SERVICES CORPORATION, a
Missouri corporation, debtor-in-possession
XXXXXX TRANSPORTATION AND REMEDIATION, INC., a
California corporation, debtor-in-possession
XXXXXX RECLAMATION SERVICES, HOUSTON, INC., a
Texas corporation, debtor-in-possession
PSC ENVIRONMENTAL SERVICES, INC., a Delaware
corporation, debtor-in-possession
PSC INDUSTRIAL OUTSOURCING, INC., a Delaware
corporation, debtor-in-possession
PSC INDUSTRIAL SERVICES, INC., a Delaware
corporation, debtor-in-possession
REPUBLIC ENVIRONMENTAL RECYCLING (NEW JERSEY),
INC., a Delaware corporation, debtor-in-possession
REPUBLIC ENVIRONMENTAL SYSTEMS (PENNSYLVANIA),
INC., a Pennsylvania corporation,
debtor-in-possession
68
REPUBLIC ENVIRONMENTAL SYSTEMS (TRANSPORTATION
GROUP), INC., a Pennsylvania corporation,
debtor-in-possession
RESOURCE RECOVERY CORPORATION, a Washington
corporation, debtor-in-possession
RHO-CHEM CORPORATION, a California corporation,
debtor-in-possession
By:
Xxxxx X. Xxxxxxx
President of each of the foregoing companies
REPUBLIC ENVIRONMENTAL SYSTEMS (TECHNICAL SERVICES
GROUP), INC., a New Jersey corporation,
debtor-in-possession
SOLVENT RECOVERY CORPORATION, a Missouri
corporation, debtor-in-possession
THERMALKEM, INC., a Delaware corporation,
debtor-in-possession
By:
Xxxxx X. Xxxxxxx
President of each of the foregoing companies
D&L, INC., a Pennsylvania corporation,
debtor-in-possession
By:
Name:
Title:
69
ACE/ALLWASTE ENVIRONMENTAL SERVICES OF INDIANA,
INC., an Illinois corporation,
debtor-in-possession
INTERNATIONAL CATALYST, INC., a Nevada corporation,
debtor-in-possession
JESCO INDUSTRIAL SERVICE, INC., a Kentucky
corporation, debtor-in-possession
XXXXXX SERVICES/NORTH CENTRAL, INC., an Iowa
corporation, debtor-in-possession
PSC RECOVERY SYSTEMS, INC., a Georgia corporation,
debtor-in-possession
RMF GLOBAL, INC., an Ohio corporation,
debtor-in-possession
SERV-TECH EPC, INC., a Nevada corporation,
debtor-in-possession
By:
Xxxxxxx X. Xxxx
Vice President
of each of the foregoing companies
SERV-TECH EPC SUBSIDIARY, INC., a Louisiana
corporation, debtor-in-possession
By:
Name:
Title:
70
XXXXXX SERVICES INC., an Ontario corporation
By:
Name:
Title:
XXXXXX ANALYTICAL SERVICES INC., an Ontario
corporation
By:
Name:
Title:
XXXXXX INVESTMENT CORP., an Ontario corporation
By:
Name:
Title:
71
NORTRU, LTD.,
an Ontario corporation
By:
Name:
Title:
ALLIES STAFFING LTD., an Ontario corporation
By:
Name:
Title:
ARC DUST PROCESSING (BARBADOS) LIMITED,
a Barbados corporation
By:
Name:
Title:
XXXXXX INTERNATIONAL DEVELOPMENT INC., a Barbados
corporation
By:
Name:
Title:
72
EXHIBIT A
TERMS OF RESTRUCTURING
The Restructuring, which shall be in form and substance reasonably
satisfactory to the Purchaser, in its sole discretion, shall include the
following terms:
1. The Company will continue as Reorganized PSC and unless the Parties
otherwise agree or as otherwise provided below, each of the Company's U.S.
Subsidiaries will continue as Subsidiaries of Reorganized PSC.
2. The assets and business of the Company's Canadian Subsidiaries will be
reorganized pursuant to the Canadian Restructuring as more fully described in
Exhibit G to this Agreement.
3. Any and all assets, properties and other assets (whether, real or
personal, tangible or intangible) of the Company and any of its Subsidiaries
which the Purchaser identifies as Excluded Assets, shall be excluded from the
assets of Reorganized PSC and its Subsidiaries, including without limitation by
way of abandonment, as further contemplated by Section 5.1(k) of the Agreement,
sale(s) approved by Purchaser in its sole discretion, and/or by way of utilizing
one or more plans of reorganization to effect such exclusion, if necessary or
desirable in Purchaser's sole discretion, such that, notwithstanding the
method(s) employed, upon consummation of the Restructuring contemplated hereby,
the excluded assets and any liabilities associated therewith shall be excluded
from the assets and liabilities of Reorganized PSC and its Subsidiaries.
4. As of the Closing, there shall be no capital stock or rights to acquire
capital stock outstanding other than the Shares and such awards, if any, that
may be granted under the Reorganized PSC Management Incentive Plan.
5. The Company, its Subsidiaries and Purchaser intend (and will take action
consistent with such intent) that the Restructuring, assuming an ownership
change of the Company, qualifies under Section 382(l)(5) of the Code.
6. If the Purchaser, pursuant to Section 4.14 hereof, elects to cause the
Canadian Transfer to occur, the Canadian Assets Purchase Price shall be
allocated from and funded by a portion of the Investment and distributed,
together with any other distributions by the Company and its Subsidiaries,
consistent with the table set forth below.
7. The following classes of creditors of the U.S. Debtors shall receive the
following treatment:
73
---------------------------------------------------------- -------------------------------------------------------------------
CLASS TREATMENT
---------------------------------------------------------- -------------------------------------------------------------------
Administrative Claims and Priority Tax Claims are not Administrative and Priority Tax Claims paid in full. Priority
classified Tax Claims paid over 6 years from date of assessment.
---------------------------------------------------------
Debtors are working-up estimate of cure costs and
related items
---------------------------------------------------------- -------------------------------------------------------------------
---------------------------------------------------------- -------------------------------------------------------------------
1. Senior Secured (Agent: Foothill) Paid in full on Effective Date, except for $3,000,000 senior
may have separate classes for Tranches A and B secured 1 yr. term loan, straight-line amortization, with a
cash-pay interest rate, and a PIK rate, and Reorganized PSC can
prepay with PIK interest discount.
---------------------------------------------------------- -------------------------------------------------------------------
---------------------------------------------------------- -------------------------------------------------------------------
2. DIP Paid in full on Effective Date.
---------------------------------------------------------- -------------------------------------------------------------------
---------------------------------------------------------- -------------------------------------------------------------------
3. PIK/Term As more fully described below, (a) PIK/Term Creditors may elect
(junior secured) to either: (i) receive their pro rata allocation of the PIK/Term
Shares or (ii) receive a pro-rata allocation of $30,000,000
non-transferable subordinated junior secured PIK note(s) and (b)
Qualified PIK/Term Creditors shall have the additional right to
participate in the Investment.
---------------------------------------------------------- -------------------------------------------------------------------
---------------------------------------------------------- -------------------------------------------------------------------
PIK/Term Shares The PIK/Term Shares, consisting of 75% of the shares of Fully
Diluted Common Stock outstanding at the Closing, shall be
allocated pro rata among the PIK/Term Claims which an electing
PIK/Tem Creditor designates to participate in the PIK/Term Share
distribution, based upon the proportion of the principal amount
of the PIK/Term Claims designated by each such electing PIK/Term
Claimholder to the total principal amounts of the PIK/Term Claims
designated by all such electing PIK/Term Claimholders.
---------------------------------------------------------- -------------------------------------------------------------------
74
---------------------------------------------------------- -------------------------------------------------------------------
PIK Note Each PIK/Term Creditor that does not elect to participate in the
PIK/Term Share distribution shall receive a pro-rata share of
$30 million non-transferable fully subordinated junior secured 7
yr., interest rate equal to applicable mid-term federal rate, PIK
note(s) (the "PIK Notes") as set forth below in proportion to the
principal amount of the PIK/Term Claims held by each such
nonelecting PIK/Term Claimholder to the total principal amounts
of the PIK/Term Claims held by all PIK/Term Claimholders. Any
PIK/Term Claims that are not designated to participate in the
PIK/Term Share distribution by an electing PIK/Term Creditor
shall be treated as held by a nonelecting PIK/Term Creditor.
The participation by a nonelecting PIK/Term Creditor shall be
determined by multiplying $30 million by the quotient equal to
the Prepetition principal amount of the PIK/Term Claim held by
such nonelecting PIK/Term Claimholder divided by the total amount
of principal due under all PIK/Term Claims, such that if the
holders of only 10% of the PIK Term Claims elect to receive the
PIK Notes, only $3.0 million of such notes will be issued.
---------------------------------------------------------- -------------------------------------------------------------------
75
---------------------------------------------------------- -------------------------------------------------------------------
Participation Right Prior to the Closing, each Qualified PIK/Term Creditor will have
the right to participate in up to its pro-rata share of the
Investment (which consists of $10 million for the purchase of 20%
of the outstanding capital stock of the Company and an Exit Loan
facility of $160 million). The maximum participation by a PIK
Term Creditor shall be determined by dividing the principal
amount of the PIK/Term Claim held by such Person by the total
amount of principal due under all PIK/Term Claims. A PIK/Term
Creditor's participation in the Purchase Shares and the Exit Loan
must be made in a proportionate basis, such that a person
acquiring $1 million (or 10%) of the Purchase Shares must
participate in $16 million (or 10%) of the Exit Loan.
The Purchaser may require PIK Term Creditors electing to
participate in the Investment to provide cash collateral, up to
their committed amount, to secure their obligation to participate
in the Exit Loan.
Purchaser and its Affiliates that hold PIK/Term Claims will have
the right and obligation to purchase any Purchase Shares not
purchased by the other PIK/Term Creditors.
---------------------------------------------------------- -------------------------------------------------------------------
---------------------------------------------------------- -------------------------------------------------------------------
4. Subordinated Debt $ 0
---------------------------------------------------------- -------------------------------------------------------------------
---------------------------------------------------------- -------------------------------------------------------------------
5. General Unsecured (Trade) Claims $1,500,000, if class accepts Plan, from Icahn entity's dividend
on Senior Secured claim in exchange for general release of Icahn
and affiliates
---------------------------------------------------------- -------------------------------------------------------------------
---------------------------------------------------------- -------------------------------------------------------------------
6. Equity $ 0
---------------------------------------------------------- -------------------------------------------------------------------
76
8. The Purchaser reserves the right, in its sole discretion, with the
consent of the Company, which will not be unreasonably withheld or delayed, to
amend or otherwise modify the terms and/or structure of the Restructuring as
described herein in order to facilitate finalizing and effecting the Bankruptcy
Plan and obtaining the Confirmation Orders, provided, however, that (i) any such
modification shall not result in a reduction in the amount of Purchaser's
committed Investment, and (ii) any such modification shall not result in an
increase of the aggregate consideration to be received by Purchaser in
connection with its Investment, as contemplated by Article I of this Agreement.
77
EXHIBIT A-1
TERMS OF EXIT LOAN FACILITY
The Exit Loan Facility will be in the principal amount of $160 million and
be secured by all the assets of Reorganized PSC and its Subsidiaries.
Letter of Credit portion of exit loan: 1.75% interest.
Non-LOC portion of exit loan: 7 year term, with an interest rate equal to
the applicable federal rate (currently 3.1%).
The Exit Loan Facility will contain such other terms and conditions,
including representations, warranties and covenants, as are reasonably
acceptable to Purchaser.
78
EXHIBIT A-2
COMPETING PLAN REQUIREMENTS
For the purposes of this Agreement, in order for a Competing Offer to be
considered a Superior Proposal, such Competing Offer must satisfy all of the
following conditions in addition to such other conditions as may be set forth in
the Bidding Procedures Order or elsewhere in this Agreement:
(a) The Company shall provide the Purchaser with all information relating
to the terms and conditions of a Competing Offer for which the Company has
received a $6.0 million xxxxxxx money deposit as contemplated below, including
without limitation all documents representing such offer provided to the Company
or any of its Subsidiaries or their respective representatives or advisors.
(b) Upon the determination that a Competing Offer or combination of
Competing Offers would be a Superior Proposal (the "Identified Superior
Proposal") to the Restructuring contemplated hereby (or any revised offer made
by Purchaser), the Company shall promptly notify Purchaser of such
determination, provide Purchaser with the reasons why the Identified Superior
Proposal would be considered to be a Superior Proposal (including, without
limitation, the value of the Restructuring as contemplated hereby, the value of
the Identified Superior Proposal, the minimum value as to which the
Restructuring must be increased to be a higher and better offer than the
Identified Superior Proposal pursuant to the Bidding Procedures and/or any other
modifications (and the value placed on each such modification) that could be
made to the Restructuring contemplated hereby to make the Restructuring a higher
and better offer than the Identified Superior Proposal, and provide Purchaser
the opportunity to provide a revised offer that would be a higher and better
offer as so described, to the Identified Superior Proposal. Purchaser shall
thereafter have three Business Days to submit a higher and better offer to the
Identified Superior Proposal. If Purchaser notifies the Company that it shall
not submit a revised offer or does not otherwise submit a higher and better
offer to the Identified Superior Proposal within the three Business Day period,
notwithstanding anything in this Agreement to the contrary, (i) Purchaser may
terminate this Agreement (which termination shall be deemed to be a termination
pursuant to Section 6.3(b)(i)), whether or not the Identified Superior Proposal
is ultimately approved by the U.S. Bankruptcy Court, (ii) the Company shall be
obligated to accept the Identified Superior Proposal and the Company and the
Competing Bidders shall be obligated to use all reasonable efforts to seek
approval of such Identified Superior Proposal by the U.S. Bankruptcy Court in
accordance with the time table set forth herein and the Bidding Procedures Order
(and failure of the Competing Bidders to comply with their obligation to so seek
approval shall result in a forfeiture of their $6.0 million deposit (see
below)), and (iii) upon such U.S. Bankruptcy Court approval of the Identified
Superior Proposal the Company shall be obligated to pay the Bankruptcy
Termination Amount or Termination Amount (as applicable, but not both) as
provided below. If (i) the Company does not thereafter immediately accept the
Identified Superior Proposal or (ii) the Company defaults on its obligation to
pay the Bankruptcy
79
Termination Amount or Termination Amount, as applicable, in each case time
being of the essence the Company shall proceed to commence a liquidation of its
assets under Section 363 of the Bankruptcy Code as provided in the Icahn DIP
Facility. In any circumstance where the Company seeks to select a Competing
Offer, other than the Identified Superior Proposal (an "Alternative Offer"), the
Purchaser shall again have the right to revive or revise its offer to propose a
higher and better offer to the Alternative Offer in accordance with the
procedures set forth above, regardless of whether Purchaser has given notice of
termination of this Agreement.
(c) [intentionally omitted]
(d) Notwithstanding anything to the contrary in this Agreement or the
Bidding Procedures Order, and notwithstanding any other claims or lien rights or
priorities whatsoever, no Identified Superior Proposal may be accepted by the
Company, and no such acceptance shall be valid, unless (i) the Company has
sufficient resources to pay the Bankruptcy Termination Amount or the Termination
Amount (as applicable) within one Business Day of Bankruptcy Court approval of
the Competing Offer (the "Payment Date"), (ii) the order approving the
Identified Superior Proposal requires the Company to so pay such amount, and
(iii) the Company so pays such amount on the Payment Date, time being of the
essence.
(e) On or before the Bid Deadline Date, the Competing Bidder shall execute
and deliver an escrow agreement with the Escrow Agent, in substantially the same
form as the Performance Escrow Agreement, and deposit the $6,000,000 xxxxxxx
money deposit with the Escrow Agent to secure its obligations as a Competing
Bidder in accordance with the provisions thereunder. If a Competing Bid is in
the form of an offer to purchase under Section 363 of the Bankruptcy Code, the
Bidding Procedures Order shall require the Competing Bidder to make an
additional good faith deposit upon the selection of the Competing Offer, such
that the total deposit of such a Section 363 Competing Bidder is no less than
10% of the total purchase price offered by the Competing Bidder.
(f) The Company's acceptance of a Competing Offer shall be conditional upon
the payments to Purchaser under the preceding paragraphs being made timely
hereunder, time being of the essence, and that failure of the Competing Bidder
or the Company to pay any such amounts on a timely basis shall result in the
disqualification of such Competing Offer but shall not relieve such Competing
Bidders from any liability to the Company with respect to its Competing Offer.
(g) [intentionally omitted]
(h) The Competing Offer shall provide for the payoff of the Senior Lenders
in full and in cash on the Effective Date of the competing plan.
(i) A Competing Offer to be a Superior Proposal shall satisfy an initial
minimum initial competing bid increment of $1,000,000, and $500,000 for any
subsequent bid increments.
80
(j) The Competing Offer must provide for a Timetable for Restructuring that
meets the requirements set forth in Exhibit B-1.
(k) The Competing Offer must otherwise satisfy the definition of Competing
Offer and Superior Proposal as provided in this Agreement.
81
EXHIBIT B-1
TIMETABLE FOR RESTRUCTURING
U.S. Bankruptcy Case (2003):
July 3: File Motion to Approve Icahn DIP Facility
July 14: File Motion to Approve Plan Proponent Investment Agreement
and Bidding Procedures
July 28: Hearing/Confirmation and Entry of Icahn DIP Facility,
Investment Agreement and Bidding Procedures Order(s)
July 31: Schedules completed for U.S. Debtors
August 3: Schedules completed for all Subsidiaries
August 18: File Motion for Confirmation of Disclosure Statement
August 29: Deadline for competing bids
Sept. 3: Auction if any other bids submitted
Sept. 5: U.S. Debtors to select bid
Sept. 8: Hearing to approve bid selection
Sept. 18: File amended Disclosure Statement and Plan
Sept. 22: Hearing re: Disclosure Statement/Confirmation/Mailing-Voting
Sept. 23: Bar date for all Prepetition claims
Nov. 3: Hearing and entry of Confirmation Order
Nov. 15: Effective Date and Closing Date
Canadian Bankruptcy Case (2003):
To be scheduled to comply with the time periods set forth for the U.S.
Bankruptcy Case, with an effective date not later than November 15, 2003.
82
Collective Bargaining Agreement Negotiation:
As provided in Exhibit B-2, which is hereby incorporated by reference to
this Exhibit B-1 as if fully set forth herein.
Extensions:
The Purchaser, in its sole discretion, may extend any of the scheduled
dates set forth above to a later date, by providing written notice thereof to
the Company.
83
EXHIBIT B-2
TIMETABLE FOR
COLLECTIVE BARGAINING AGREEMENT NEGOTIATIONS
--------------------------- ------------------------------------------------------------------------------------------
DEADLINE OBLIGATION
--------------------------- ------------------------------------------------------------------------------------------
--------------------------- ------------------------------------------------------------------------------------------
August 1, 2003 Provide an itemization for each Collective Bargaining Agreement with a
break-out detailing the Company or Subsidiary that is party to the contract,
the union name and local number, expiration date, name of any multi-employer
pension fund or other pension fund to which the Company or its Subsidiary is
obligated to make contributions to, the pension fund address and the name and
contact information for the appropriate representative of said pension fund to
provide information with respect to multi-employer withdrawal liability,
year-to-date pension fund contribution history and the number of hourly
employees governed by the Collective Bargaining Agreement.
--------------------------- ------------------------------------------------------------------------------------------
--------------------------- ------------------------------------------------------------------------------------------
August 1, 2003 Provide copies of each Collective Bargaining Agreements and side letters or
amendments thereto.
--------------------------- ------------------------------------------------------------------------------------------
--------------------------- ------------------------------------------------------------------------------------------
August 1, 2003 Consult with Purchaser and its legal counsel to discuss specific Collective
Bargaining Agreement terms and conditions and provide a detailed summary of
all material communications with the various unions or other organized
employee groups to date.
--------------------------- ------------------------------------------------------------------------------------------
--------------------------- ------------------------------------------------------------------------------------------
August 6, 2003 Deliver to each union a letter with the proposed modifications to the
respective Collective Bargaining Agreement in accordance with the provisions
of Section 4.8(a) herein.
--------------------------- ------------------------------------------------------------------------------------------
--------------------------- ------------------------------------------------------------------------------------------
August 18, 2003 File motions to reject those Collective Bargaining Agreements designated by
Purchaser.
--------------------------- ------------------------------------------------------------------------------------------
EXTENSIONS:
The Purchaser, in its sole discretion, may extend any of the scheduled
dates set forth above to a later date, by providing written notice thereof to
the Company.
84
EXHIBIT C-1
BIDDING PROCEDURES ORDER
[As Approved by the U.S. Bankruptcy Court]
85
EXHIBIT C-2
ICAHN DIP APPROVAL ORDER
[As Approved by the U.S. Bankruptcy Court]
86
EXHIBIT D
CANADIAN SUBSIDIARIES
[To be provided by Company]
87
EXHIBIT E
DISCLOSURE SCHEDULE RESPONSIBILITY TIMETABLE
Except as otherwise expressly agreed to by Purchaser, all Schedules
relating to the Company's U.S. Subsidiaries will be delivered to Purchaser no
later than July 31, 2003 and (c) all Schedules relating to the Company's
Canadian Subsidiaries will be delivered by August 3, 2003, it being understood
that a Schedule will not be deemed to be complete until all information required
for the Company and all Subsidiaries (U.S. and Canadian) have been delivered.
88
Exhibit F - Page 1
EXHIBIT F
FORM OF PERFORMANCE ESCROW AGREEMENT
89
EXHIBIT G
CANADIAN RESTRUCTURING
(a) The Purchaser and Company shall consult with each other as to the most
effective means of completing a Canadian restructuring on terms consistent with
the U.S. Restructuring (as more fully described on this Exhibit G, the "Canadian
Restructuring"). Such Canadian Restructuring may include one or more of the
following actions described in paragraph (a)(i) or paragraph (a)(ii) below, or
such other actions as the Company and the Purchaser shall agree:
(i) The Canadian Subsidiaries, or such other appropriate party, shall apply
to and obtain from the Ontario Superior Court of Justice (Commercial List) in
Toronto (the "Canadian Court") an order appointing a receiver or interim
receiver (the "Canadian Receiver") over all of the business, rights, property,
assets and undertaking of the Canadian Subsidiaries (the "Canadian Assets"),
which order shall (A) in form and substance be acceptable to Purchaser in
Purchaser's sole discretion and (B) require the Canadian Receiver to take such
steps as are required to: (x) conduct a sale process (the "Sale Process") and
enter into an agreement of purchase and sale (the "APA") with one or more newly
created Canadian corporations that are direct or indirect wholly-owned
Subsidiaries of the Company (collectively, the "New Canadian Subsidiaries") to
transfer the Canadian Assets to the New Canadian Subsidiaries (the "Canadian
Transfer"); and (y) obtain one or more Canadian Court Final Order(s) approving
the Sale Process and the APA, and vesting title in the Canadian Assets in the
New Canadian Subsidiaries free and clear of all Liens and pre-filing
indebtedness; or
(ii) The Company shall, and shall cause the Canadian Subsidiaries to, and
the Canadian Subsidiaries shall, file a proceeding under the CCAA (the "CCAA
Proceeding"), which CCAA Proceeding shall (A) be on terms acceptable to the
Purchaser in its sole discretion and (B) obtain a result similar to the Canadian
Transfer, except that, upon consummation of such CCAA Proceeding, all title in
and to the Canadian Assets shall remain vested in the Canadian Subsidiaries,
free and clear of all Liens other than Post-Closing Permitted Liens, assuming
that all distributions are made to the Senior Lenders as contemplated by the
Restructuring as set forth in Exhibit A.
(b) If the Purchaser elects to cause the Canadian Transfer to occur:
(i) the Parties shall cooperate prior to consummation of the Canadian
Transfer to determine the portion of the Investment that shall be allocated to
the Canadian Assets Purchase Price, which portion shall be deemed to be shared
pro rata by each of the Investors; and
90
(ii) An order shall be obtained that all or substantially all of the
Canadian Assets Purchase Price shall be distributed on Closing to the Senior
Lenders in their capacity as senior secured creditors of the Canadian
Subsidiaries, which order shall be approved by the Canadian Court and otherwise
become a Final Order prior to consummation of the Investment.
(iii) The Company will undertake to distribute the portion of the
Investment allocated to the Canadian Asset Purchase Price in the amounts and in
the manner consistent with the Restructuring as approved by the Purchaser from
time to time, in the Purchaser's sole discretion.
(c) All steps in the Canadian Restructuring, including the APA and all
other agreements, instruments, orders, processes and the timing thereof shall be
subject to the prior approval of the Purchaser, and shall be in form and
substance acceptable to the Purchaser in the Purchaser's sole discretion. The
Company shall, and shall cause the Canadian Subsidiaries to, and the Canadian
Subsidiaries shall, cooperate with the Purchaser in implementing the Canadian
Restructuring in a manner acceptable to the Purchaser, in its sole discretion.
The Parties agree to work together to achieve an effective date of the Canadian
Restructuring that is contemporaneous with the effective date of the U.S. Plan.
(d) The Purchaser reserves the right, in its sole discretion, with the
consent of the Company, which will not be unreasonably withheld or delayed, to
amend or otherwise modify the terms and/or structure of the Canadian
Restructuring as described herein in order to facilitate finalizing and
effecting the Bankruptcy Plan and obtaining the Confirmation Orders, provided,
however, that (i) any such modification shall not result in a reduction in the
amount of Purchaser's committed Investment, and (ii) any such modification shall
not result in an increase of the aggregate consideration to be received by
Purchaser in connection with its Investment, as contemplated by Article I of
this Agreement.
91
