EXHIBIT 10(a)
CREDIT AGREEMENT
Made as of February 18, 1997
Between
XXXXXXXXXX ELECTRONICS ACQUISITION CORP.
as Borrower
and
FIRST CHICAGO NBD BANK, CANADA
as Lender
TABLE OF CONTENTS
SECTION 1 - INTERPRETATION . . . . . . . . . . . . . . . . Page 1
1.1 Certain Defined Terms . . . . . . . . . . . . . . Page 1
1.2 Headings and Table of Contents. . . . . . . . . .Page 11
1.3 References. . . . . . . . . . . . . . . . . . . .Page 11
1.4 Number and Gender . . . . . . . . . . . . . . . .Page 11
1.5 Time of Day . . . . . . . . . . . . . . . . . . .Page 12
1.6 Governing Law . . . . . . . . . . . . . . . . . .Page 12
1.7 Entire Agreement. . . . . . . . . . . . . . . . .Page 12
1.8 Conflict. . . . . . . . . . . . . . . . . . . . .Page 12
1.9 Severability. . . . . . . . . . . . . . . . . . .Page 12
1.10 Currency. . . . . . . . . . . . . . . . . . . . .Page 12
1.11 Time. . . . . . . . . . . . . . . . . . . . . . .Page 12
1.12 GAAP. . . . . . . . . . . . . . . . . . . . . . .Page 12
1.13 Schedules . . . . . . . . . . . . . . . . . . . .Page 12
SECTION 2 - REPRESENTATIONS AND WARRANTIES . . . . . . . .Page 13
2.1 Representations and Warranties. . . . . . . . . .Page 13
2.2 Deemed Repetition . . . . . . . . . . . . . . . .Page 15
SECTION 3 - CREDIT FACILITIES. . . . . . . . . . . . . . .Page 15
3.1 Revolving Credit Facility . . . . . . . . . . . .Page 15
3.2 Term Credit Facility. . . . . . . . . . . . . . .Page 15
SECTION 4 - PROVISIONS APPLICABLE TO BORROWINGS. . . . . .Page 16
4.1 Notice of Borrowing . . . . . . . . . . . . . . .Page 16
4.2 Prime and US Prime Loans. . . . . . . . . . . . .Page 16
4.3 Cost of Funds Loans . . . . . . . . . . . . . . .Page 16
4.4 Libor Loans . . . . . . . . . . . . . . . . . . .Page 17
4.5 Substitute Basis of Borrowing . . . . . . . . . .Page 17
4.6 Bankers' Acceptances. . . . . . . . . . . . . . .Page 18
4.7 Letters of Credit . . . . . . . . . . . . . . . .Page 19
4.8 Conversion Option . . . . . . . . . . . . . . . .Page 20
4.9 Reliance on Oral Instructions . . . . . . . . . .Page 21
4.10 Evidence of Indebtedness. . . . . . . . . . . . .Page 21
SECTION 5 - INTEREST, FEES AND EXPENSES. . . . . . . . . .Page 21
5.1 Payment of Interest on Prime Loans. . . . . . . .Page 21
5.2 Payment of Interest on Cost of Funds Loans. . . .Page 22
5.3 Payment of Interest on US Prime Rate Loans. . . .Page 22
5.4 Letters of Credit Fee . . . . . . . . . . . . . .Page 22
5.5 Payment of Interest on Libor Loans. . . . . . . .Page 23
5.6 Interest on Overdue Amounts . . . . . . . . . . .Page 23
5.7 Interest Act. . . . . . . . . . . . . . . . . . .Page 23
5.8 Arrangement Fee . . . . . . . . . . . . . . . . .Page 23
5.9 Administration Fee. . . . . . . . . . . . . . . .Page 23
5.10 Commitment Fee. . . . . . . . . . . . . . . . . .Page 23
5.11 Limit on Rate of Interest . . . . . . . . . . . .Page 24
5.12 Change in Circumstances . . . . . . . . . . . . .Page 24
5.13 Payment of Portion. . . . . . . . . . . . . . . .Page 25
5.14 Illegality. . . . . . . . . . . . . . . . . . . .Page 26
5.15 Indemnity . . . . . . . . . . . . . . . . . . . .Page 26
5.16 Payment of Stamping Fee . . . . . . . . . . . . .Page 27
SECTION 6 - PAYMENTS AND REDUCTIONS OF COMMITMENTS . . . .Page 27
6.1 Payments Generally. . . . . . . . . . . . . . . .Page 27
6.2 No Set-Off. . . . . . . . . . . . . . . . . . . .Page 27
6.3 Application of Payments Before Exercise of RightsPage 27
6.4 Application of Payments After Exercise of Xxxxxx.Xxxx 28
6.5 Reduction of Commitment . . . . . . . . . . . . .Page 28
SECTION 7 - COVENANTS. . . . . . . . . . . . . . . . . . .Page 29
7.1 Covenants of the Borrower . . . . . . . . . . . .Page 29
7.2 Accounting, Financial Statements and Other InformationPage 31
SECTION 8 - ENVIRONMENTAL MATTERS. . . . . . . . . . . . .Page 31
8.1 Representations and Warranties. . . . . . . . . .Page 31
8.2 Covenants . . . . . . . . . . . . . . . . . . . .Page 32
8.3 Indemnity . . . . . . . . . . . . . . . . . . . .Page 32
8.4 Scope of Indemnity. . . . . . . . . . . . . . . .Page 33
8.5 Interest. . . . . . . . . . . . . . . . . . . . .Page 34
SECTION 9 - DEFAULT AND ENFORCEMENT. . . . . . . . . . . .Page 34
9.1 Events of Default . . . . . . . . . . . . . . . .Page 34
9.2 Rights upon Default . . . . . . . . . . . . . . .Page 36
9.3 Waiver of Default . . . . . . . . . . . . . . . .Page 36
SECTION 10 - REMEDIES. . . . . . . . . . . . . . . . . . .Page 36
10.1 Remedies Cumulative . . . . . . . . . . . . . . .Page 36
10.2 Remedies Not Limited. . . . . . . . . . . . . . .Page 37
10.3 Set-Off, etc. . . . . . . . . . . . . . . . . . .Page 37
10.4 Lender May Perform Covenants. . . . . . . . . . .Page 37
SECTION 11 - MISCELLANEOUS . . . . . . . . . . . . . . . .Page 37
11.1 Amendments and Waivers. . . . . . . . . . . . . .Page 37
11.2 Notice. . . . . . . . . . . . . . . . . . . . . .Page 38
11.3 Judgment Currency . . . . . . . . . . . . . . . .Page 38
11.4 Further Assurances. . . . . . . . . . . . . . . .Page 38
11.5 Reimbursement of Expenses . . . . . . . . . . . .Page 38
11.6 Survival. . . . . . . . . . . . . . . . . . . . .Page 39
11.7 Attornment. . . . . . . . . . . . . . . . . . . .Page 39
11.8 Successors and Assigns. . . . . . . . . . . . . .Page 39
11.9 Counterparts. . . . . . . . . . . . . . . . . . .Page 40
CREDIT AGREEMENT
This Agreement is made as of February 18, 0000
X X X X X X X:
XXXXXXXXXX ELECTRONICS ACQUISITION CORP.
as Borrower
and
FIRST CHICAGO NBD BANK, CANADA
as Lender
WHEREAS:
A. The Borrower has requested and the Lender has agreed to provide a
revolving credit facility for an amount of up to but not exceeding
CAD6,100,000 or the Equivalent Amount in US Dollars and a term loan credit
facility for an amount up to but not exceeding CAD2,050,000
NOW THEREFORE, for value received the parties agree as follows:
SECTION 1 - INTERPRETATION
1.1 Certain Defined Terms. The terms defined herein shall have, for all
purposes of this Agreement, the following meanings unless the context
expressly or by necessary implication otherwise requires:
"Acceptance Date" means a Business Day on which a Borrowing is to be
made by way of Bankers' Acceptances.
"Acceptance Fee" means, with respect to a Bankers' Acceptance accepted
by the Lender under this Agreement, a fee payable in Canadian Dollars by
the Borrower to the Lender calculated on the face amount of the Bankers'
Acceptance at the rate of 1.25% per annum, on the basis of the number of
days in the Contract Period and a year of 365 days or 366 days as applicable.
"Accounts" means the accounts and records established by the Lender to
record the Borrower's liability to the Lender in respect of the Borrowings
made available to the Borrower.
"Additional Compensation" has the meaning ascribed to it in Section 5.11(c).
"Administration Fee" has the meaning ascribed to in Section 5.8.
"Affected Borrowing" has the meaning ascribed to it in Section 5.12.
"Affiliate" has the meaning established in the Canada Business
Corporations Act in effect on the date hereof.
"Agreement" means this agreement, including the Schedules, as the same
may be amended, varied, supplemented, restated, renewed or replaced at any
time and from time to time.
"Applicable Law" means, in respect of any Person, property, transaction
or event, all present or future applicable laws, statutes, regulations,
treaties, orders, judgments and decrees and all applicable official
directives, rules, guidelines, orders and policies of any governmental
bodies having authority over any of the foregoing.
"Arrangement Fee" has the meaning ascribed to in Section 5.7.
"Associate" has the meaning established in the Canada Business
Corporations Act in effect on the date hereof.
"Auditors" means Ernst & Young Inc. or such other major Canadian
accountancy firm appointed by the Guarantor.
"Available Asset Value" means the consolidated book value of the
Borrower's assets determined in accordance with GAAP less the amount of all
Indebtedness, other than Subordinate Claims, secured by Liens against such
assets.
"BA Rate" means, on any day, the annual rate of interest which is the
rate determined as being the rate of First Chicago NBD Bank applicable to
Canadian Dollar bankers' acceptances.
"Bankers' Acceptance" means a xxxx of exchange substantially in the form
of Schedule 1 (or such other form as may be acceptable to the Lender)
denominated in Canadian Dollars, drawn by the Borrower and accepted by the
Lender.
"Banking Day" means a Business Day on which dealings in US Dollar
deposits by and between banks in the London interbank market may be conducted.
"Borrower" means Xxxxxxxxxx Electronics Acquisition Corp.
"Borrower's Account" means:
(1) for all payments in Canadian Dollars, the following account
maintained by the Borrower with the Lender at the Branch of
Account to which payments and transfers are to be effected:
First Chicago NBD Bank, Canada, transit #0012-270, account
#100431-001,
or such other account as the Borrower and the Lender may agree in
writing, and
(2) for all payments in US Dollars, the following account
maintained by the Borrower with the Lender at the Branch
of Account to which payments and transfers are to be
effected:
First Chicago NBD Bank, Canada, transit #0012-270, account
#100431-010,
or such other account as the Borrower and the Lender may agree in
writing.
"Borrowings" means an extension of credit hereunder by the Lender to the
Borrower by way of advances of Loans, Letters of Credit Advances, and by the
acceptance of Bankers' Acceptances.
"Branch of Account" means, with respect to the Lender, its branch at BCE
Place, 000 Xxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxx, X0X 0X0 or such other
branch in Canada as the Lender and Borrower may agree in writing.
"Burtek" means Burtek Systems Inc.
"Business Day" means a day on which the Lender is open for money market
dealings in Xxxxxxx, Xxxxxxx, but excludes Saturday, Sunday and any other
day which is a statutory holiday in Toronto, Ontario and with respect to a
Libor Loan, such a day is a Business Day only if it is also a Banking Day.
"Canadian Dollars" and the symbols "CAD" and "$" each means lawful money
of Canada.
"Closing Date" means February 18, 1997 or such other date as the
Borrower and the Lender may agree.
"Commercial Letter of Credit" means a commercial letter of credit issued
by the Lender to a beneficiary at the request of and for the account of the
Borrower.
"Commitment" means CAD8,150,000 or the Equivalent Amount in US Dollars,
to the extent not cancelled, reduced or terminated hereunder.
"Commitment Fee" has the meaning ascribed to in Section 5.9.
"Contaminant" means any pollutants, hazardous materials or contaminants,
dangerous, toxic or hazardous substances, waste of any description
whatsoever except non-hazardous waste of the kind generated by the Borrower
in the normal course of its operations, including any of the foregoing as
defined in any Environmental Law.
"Contract Period" means, with respect to a Bankers' Acceptance, the term
of days of such Bankers' Acceptance as selected by the Borrower in
accordance with Section 4.6(b), commencing on the Drawdown Date or
Conversion Date, as applicable, of such Bankers' Acceptance and expiring on
a Business Day, which term shall not be less than 30 days or more
than 180 days thereafter, in each case subject to availability.
"Conversion Date" means the date of which the Lender has been notified
by the Borrower at the Branch of Account as being the date on which the
Borrower has elected to convert a Borrowing or a portion of a Borrowing
pursuant to Section 4.7.
"Cost of Funds", for any Cost of Funds Interest Period, applicable to a
Cost of Funds Loan, means an annual rate of interest equal to the sum of:
(a) the interest rate estimated by the Lender for such Cost of Funds
Interest Period as the rate which the Lender would have to pay on Canadian
Dollar short term promissory notes issued by the Lender in the amount of the
applicable Cost of Funds Loan for such period (whether or not any such
promissory notes have in fact been issued by the Lender), plus
(b) the cost of any reserves or fees or costs levied in lieu of
reserves, plus
(c) any brokerage or other funding fees normally expected to be
incurred in such Cost of Funds Interest Period by the Lender upon the issue
of such promissory notes.
"Cost of Funds Interest Payment Date" means the last day of each Cost
of Funds Interest Period.
"Cost of Funds Interest Period" means a period of approximately 30, 60,
90 or 180 days determined in accordance with Section 4.3 of this Agreement.
"Cost of Funds Loan" means a loan or advance under this Agreement which is
denominated in Canadian or US Dollars and in respect of which the Borrower is
obliged to pay interest in accordance with Section 5.2.
"Credit Facilities" means collectively, the Revolving Credit Facility and
Term Credit Facility and individually, either one of them.
"Default" means an event or circumstance or omission which constitutes
an Event of Default or which, with the giving of notice or lapse of time, or
both, would constitute an Event of Default.
"Discount Proceeds" means, in respect of a Bankers' Acceptance accepted and
purchased by the Lender under this Agreement, an amount (rounded to the
nearest whole cent, and with one-half of one cent being rounded up)
calculated on the applicable Drawdown Date or Conversion Date by multiplying:
(a) the face amount of such Bankers' Acceptance divided by one hundred; by
(b) the price, where the price is determined by dividing one hundred by
the sum of one plus the product of:
(i) the applicable Discount Rate (expressed as a decimal); and
(ii) a fraction, the numerator of which is the Contract Period for such
Bankers' Acceptance, and the denominator of which is three hundred
sixty-five (365) or three hundred sixty-six (366) as the case
may be;
with the price as so determined being rounded up or down to the fifth decimal
place and 0.000005 rounded up.
"Discount Rate" applicable to a Bankers' Acceptance being issued on any
Drawdown Date or Conversion Date, and purchased by the Lender, means the
percentage discount rate (expressed in two decimal places) of the Lender
which it would, in accordance with its normal practices, at or about
10:00 a.m. (Toronto time) on such Drawdown Date or Conversion Date,
be prepared to purchase Bankers' Acceptances accepted by it and having a
comparable issue and maturity date as the issue and maturity date of such
Bankers' Acceptance.
"Documents" means this Agreement and all certificates and other documents
delivered or to be delivered to the Lender pursuant hereto or thereto and,
when used in relation to any Person, the term "Documents" shall mean and
refer to those Documents executed and delivered by such Person.
"Drawdown Date" means a Business Day on which a Borrowing is to be made
by way of Loan.
"Environmental Activity" means any activity, event or circumstance in
respect of a Contaminant, including, without limitation, its storage, use,
holding, collection, purchase, accumulation, assessment, generation,
manufacture, construction, processing, treatment, stabilization, disposition,
handling or transportation or its Release into the natural environment
including movement through or in the air, soil, subsoil, surface water or
groundwater.
"Environmental Laws" means any and all federal, provincial, municipal
and local statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, grants, licences, agreements or other governmental
restrictions of Canada, its provinces, and of all applicable municipalities
thereof relating to the environment, health and safety, health
protection or any Environmental Activity.
"Equivalent Amount" of one currency means, on any date, the amount of a
second currency into which the first currency may be converted at the spot
rate at which the Lender would, on such date at or about 12:00 noon (Toronto
time), be prepared to sell the same amount of such second currency in
Toronto, and if such date is not a Business Day, on the immediately
preceding Business Day, or at such other rate as may have been agreed by the
Borrower and the Lender.
"Event of Default" means any of the events or circumstances specified in
Section 9.1;
"Financial Assistance" by any Person means:
(a) any loan, guarantee, sale with recourse, endorsement (other than
for collection or deposit in the ordinary course of business) or
other obligation (contingent or other) to pay, purchase, repurchase
or otherwise acquire or become liable upon or in respect of any
Indebtedness of another; and
(b) without limiting the generality of the foregoing, any obligation
(contingent or other) to make a payment on behalf of another for
goods, property of services regardless of the non-delivery or
nonfurnishing thereof, or to make an investment in another, or to
maintain the capital, working capital, solvency or general financial
condition of another (other than for the purchase of Marketable
Securities), or to indemnify another Person against and hold such
Person harmless from damage, loss or liability, all under
circumstances intended to enable another to incur or pay any
Indebtedness or to comply with agreement relating thereto or
otherwise to assure or protect creditors against less in respect
of Indebtedness.
The amount of any Financial Assistance shall be the amount of all
Indebtedness of the obligor to which the Financial Assistance relates,
unless the Financial Assistance is limited to a determinable amount in which
case the amount of such Financial Assistance shall be deemed to be such
determinable amount.
"Fiscal Year" means the fiscal year of the Borrower which currently runs
from June 1 to May 31.
"GAAP" means generally accepted accounting principles in effect from time
to time in Canada applicable to the relevant Person, applied in a consistent
manner from period to period.
"Government Approvals" means, with respect to any Person, all material
licences, permits, consents, authorizations and approvals from any and all
Governmental Authorities required for the conduct of that Person's business
as presently conducted.
"Governmental Authority" means the government of any nation, state,
province, municipality or other political subdivision thereof, and any
entity exercising executive, legislative, regulatory or administrative
functions, and any corporation or other entity owned or controlled in any
manner by any of the foregoing.
"Guarantor" means Xxxxxxxxxx Electronics, Ltd.
"Indebtedness" of a Person means:
(a) any obligation, contingent and other, which should be classified
upon such Person's balance sheet as a liability in accordance with
GAAP,
(b) any obligation secured by any Lien existing on property owned or
acquired by such Person subject to such Lien whether or not the
obligation secured thereby shall have been assumed,
(c) any debt or liability of such Person representing the deferred
acquisition cost of property or assets created or arising under
any conditional sale agreement or other title retention agreement
even though the rights and remedies of the seller under such
agreement in the event of default are limited to repossession or
sale of property or assets covered thereby,
(d) any liabilities under indemnities given in respect of any bankers'
acceptance, letter of credit or letter of guarantee, and
(e) any Financial Assistance by such Person,
and, for greater certainty, does not include equity.
"Interest Determination Date" means, with respect to a Libor Loan, the
date which is 2 Banking Days prior to the first day of the Libor Interest
Period applicable to such Libor Loan.
"Interest Payment Date" means the last Business Day of each month.
"Letter of Credit" means a Commercial Letter of Credit and a Standby
Letter of Credit.
"Letter of Credit Advances" means a Borrowing by way of its issuance of
a Letter of Credit pursuant to this Agreement.
"Letters of Credit Agreement" means the agreement entered into between
the Borrower and the Lender whereby the Lender agrees to issue Letters of
Credit upon the application of the Borrower, including any recitals and
schedules to such agreement, as amended, supplemented or restated from time
to time.
"Libor" means with respect to each Libor Loan the annual rate of interest
for a period approximately equal to the Libor Interest Period applicable to
such Libor Loan displayed on page 3750 of the Telerate service as at
approximately 11:00 a.m. (London time) on the Interest Determination Date;
provided, however, if such rate does not appear on the Telerate screen
page as contemplated, the Libor shall be such other rate or rates as the
parties may agree.
"Libor Interest Date" means the last day of each Libor Interest Period.
"Libor Interest Period" means, with respect to a Libor Loan, the initial
period (subject to availability) of approximately one month (or longer whole
multiples of 30 days to and including 180 days as agreed from time to time)
commencing with the date on which a Libor Loan is made and thereafter each
successive period of 30 days (or longer whole multiples of one month to and
including 180 days as agreed from time to time) commencing on the last day
of the immediately prior Libor Interest Period.
"Libor Loan" means a loan or advance under this Agreement which is
denominated in US Dollars and in respect of which the Borrower is obliged to
pay interest in accordance with Section 5.4
"Lien" means any mortgage, charge, lien, hypothec, trust, encumbrance,
charge, pledge, assignment, security interest, title retention, or any other
security arrangement of whatsoever nature or kind.
"Loan" means a Prime Loan, Cost of Funds Loan, US Prime Rate Loan or Libor
Loan.
"Material Adverse Effect" means, when used with reference to any event or
circumstance and any Person, an event or circumstance which has or may have a
material adverse effect on (1) the business, operations, property or
financial or other condition of that Person, (2) the ability of that Person
to perform and discharge its obligations under this Agreement or any of the
other Documents, or (3) the Lender's ability to enforce its rights
under this Agreement or any of the other Documents.
"Maturity Date" means,
(a) in respect of a Bankers' Acceptance, the final Business Day of the
applicable Contract Period, and
(b) in respect of Cost of Funds Loans, the earlier of (i) November 30,
1998 and (ii) the date the Lender demands payment of the Revolving
Credit Facility.
"Notice of Borrowing" has the meaning ascribed to it in Section 4.1.
"Outstanding Borrowings" means, at any time, the aggregate of all
accrued interest and unpaid fees payable hereunder which at such time are
due and payable, the principal amount of all Loans and the aggregate amount
payable by the Lender to the holder of all outstanding Bankers' Acceptances.
"Permitted Liens" means, with respect to the Borrower or any of its
subsidiaries, any:
(a) Liens in connection with workers compensation, unemployment
insurance or other social security obligations in respect of
obligations which are not yet due or which are being contested in
good faith;
(b) Liens now or hereafter made or incurred in the ordinary course of
business to secure the performance of bids, tenders, contracts
(other than for the borrowing of money), leases, statutory
obligations or surety and performance bonds;
(c) mechanics', worker's, materialmen's or other like Liens, arising in
connection with construction or in the ordinary course of business,
in respect of obligations which are not due or which are being
contested in good faith;
(d) Liens for Taxes not due or being contested in good faith;
(e) Liens in respect of judgments or awards against the Borrower with
respect to which the Borrower at the time shall in good faith be
processing an appeal or proceedings for review and with respect to
which the Borrower shall have secured a stay of execution pending
such appeal or review;
(f) Liens now or hereafter created or assumed by the Borrower on
existing assets as permitted or not prohibited under existing
agreements with lenders or, in connection with the acquisition or
construction subsequent to the date hereof of property, whether real
or personal (other than current assets), purchase money
pledges of or purchase money mortgages or Liens or security
interests created upon such acquired property to the extent it
secures Indebtedness in an amount up to 100% of the lesser of the
cost and fair market value of the property; and extensions,
renewals or replacements thereof upon such property if the amount
of Indebtedness secured thereby is not increased;
(g) minor imperfections of title and encumbrances, if any which are not
substantial in amount, and do not materially detract from the value
of the properties subject thereto or materially impair the
Borrower's ability to carry on its business;
(h) licences or leases of patents, trademarks or trade names made in
the ordinary course of business; and
(i) other existing and future Liens incidental to the conduct of its
business or the ownership of its property and assets.
"Person" means any individual, partnership, limited partnership, joint
venture, syndicate, sole proprietorship, company or corporation with or
without share capital, unincorporated association, trust, trustee, executor,
administrator or other legal personal representative, regulatory body or
agency, government or governmental agency, authority or entity however
designated or constituted.
"Prime Loan" means a loan or advance made under this Agreement which is
denominated in Canadian Dollars and in respect of which the Borrower is
obliged to pay interest in accordance with Section 5.1.
"Prime Rate" means the annual rate of interest in effect from time to
time equal to the greater of (i) the annual rate of interest publicly
announced from time to time by the Lender as being its reference rate then
in effect for determining interest rates on Canadian Dollar denominated
commercial loans made by the Lender in Canada; and (ii) the BA Rate plus
1.00%. Any change in the Prime Rate shall be effective on the date such
change becomes effective generally.
"Release" means, with respect to any Contaminant, the method by which such
Contaminant comes to be in the environment at large and includes, without
limitation, discharging, spraying, injection, abandonment, depositing,
spilling, leaking, seeping, pouring, emission, emptying, throwing, dumping,
placing and exhausting, and when used as a noun has a similar meaning.
"Revolving Commitment" means CAD6,100,000 or the Equivalent Amount in US
Dollars, to the extent not cancelled, reduced or terminated hereunder.
"Revolving Credit Facility" means the revolving credit facility referred
in Section 3.1.
"Revolving Credit Facility Maturity Date" means November 30, 1998 or
such other date as may be agreed upon between the Borrower and the Lender
from time to time.
"Rollover Date", for any Cost of Funds Interest Period, means the last
day thereof, provided that if such day is not a Business Day, the Rollover
Date for such period shall be the next Business Day.
"Standby Letter of Credit" means a standby letter of credit issued by
the Lender to a beneficiary at the request of and for the account of the
Borrower.
"Subsidiary" means a subsidiary of the Borrower as defined in the Canada
Business Corporations Act.
"Subordinate Claims" means, at any time and from time to time, all
claims of any Person in respect of Indebtedness owing by the Borrower which
rank subordinate to the claims of the Lender in respect of the Outstanding
Borrowings and other Indebtedness of the Borrower to the Lender hereunder.
"Tax" includes all present and future taxes, levies, imposts, stamp
taxes, duties, charges to tax, fees, deductions, withholdings and any
restrictions or conditions resulting in a charge to tax and all penalty,
interest and other payments on or in respect thereof.
"Term Commitment" means CAD2,050,000 to the extent not cancelled, reduced or
terminated hereunder.
"Term Credit Facility" means the non-revolving term credit facility
referred in Section 3.2.
"Term Credit Facility Maturity Date" means November 30, 1998 or such
other date as may be agreed upon between the Borrower and the Lender from
time to time.
"US Prime Rate" means, with respect to a US Prime Rate Loan, the annual
rate of interest in effect from time to time equal to the annual rate of
interest publicly announced from time to time by the Lender as being its
reference rate then in effect for determining rates on US Dollar denominated
commercial loans made by the Lender in Canada. Any change in the US
Prime Rate shall be effective on the date such change becomes effective
generally.
"US Prime Rate Loan" means a loan or advance made under this Agreement
which is denominated in US Dollars and in respect of which the Borrower is
obliged to pay interest in accordance with Section 5.3.
"US Dollars" and the symbol "USD" each means the lawful money of the
United States of America.
"Written" or "in writing" includes printing, typewriting, or any
electronic means of communication capable of being legibly reproduced at
the point of reception.
SECTION 1 -
1.1
1.2 Headings and Table of Contents. The insertion of headings and the
provision of a table of contents are for convenience of reference only and
shall not affect the construction or interpretation of this Agreement.
1.3 References. Unless otherwise specified, all references to Sections and
Schedules are to Sections of, and Schedules to this Agreement. The words
"hereto", "herein", "hereof", "hereunder" and similar expressions refer to
this Agreement and not to any particular Section or other provision of this
Agreement.
1.4 Number and Gender. Unless otherwise specified, words importing the
singular include the plural and vice versa and words importing gender
include all genders.
1.5 Time of Day. Unless otherwise specified, any reference to a time of day
means local time in Toronto, Ontario.
1.6 Governing Law. This Agreement shall be governed by and construed and
interpreted in accordance with the laws of the Province of Ontario and of
Canada applicable therein.
1.7 Entire Agreement. This Agreement, including all Schedules and all documents
contemplated hereby, constitutes the entire agreement among the parties with
respect to the subject matter and supersedes all prior negotiations,
undertakings, representations and understandings including, without
limitation, the letter agreement dated November 28, 1996 (the "Proposal
Letter") between the Guarantor and the Lender and correspondence between
the parties dated prior to the date hereof.
1.8 Conflict. If there is a conflict or inconsistency between the provisions
of this Agreement and any other document including, without limitation, the
Documents and the agreements and correspondence between the Lender and the
Borrower referred to in Section 1.7, the provisions of this Agreement shall
prevail.
1.9 Severability. Any provision of this Agreement which is illegal, invalid or
unenforceable in any jurisdiction shall not affect the legality, validity or
enforceability of the remaining provisions and any such illegality,
invalidity or unenforceability in any jurisdiction shall not affect the
legality, validity or enforceability of such provision in any other
jurisdiction.
1.10 Currency. Unless otherwise specified, all amounts are stated in
Canadian Dollars.
1.11 Time. Time shall be of the essence in all provisions of this
Agreement.
1.12 GAAP. Unless otherwise provided, all accounting terms used in this
Agreement shall be interpreted and all financial information prepared in
accordance with GAAP, consistently applied.
1.13 Schedules. The following Schedules are attached to and form part
of this Agreement:
Schedule 1 - Form of Bankers' Acceptance
Schedule 2.1(i) - Litigation
Schedule 4.1 - Notice of Borrowing
Schedule 4.4(b) - Notice of Rollover of Libor Loan
Schedule 4.6(f) - Confirmation
Schedule 4.7 - Notice of Conversion
Schedule 7.1(h) 2 - Form of Promissory Notes
Schedule 7.1(h) 4 - Form of Guaranty
Schedule 7.1(h) 6 - Opinion of legal counsel to the Borrower
Schedule 8.1(d) - Particulars of environmental inquiries
SECTION 2 - REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties. The Borrower, represents and warrants
to the Lender, all of which shall survive the execution and delivery of this
Agreement, as follows:
(a) Existence, Power and Conduct of Business. The Borrower is a corporation
duly organized and validly existing under the laws of Canada, being its
jurisdiction of incorporation, except as disclosed in writing to the Lender,
is up to date in all material filings required under Applicable Laws of
relevance to this transaction and the business conducted by it and the
properties and assets owned or leased by it, has the requisite power and
authority to own and lease its properties and assets and to conduct its
businesses in which it is presently engaged and except in jurisdictions
where failure to register does not materially affect it or its business or
except as disclosed in writing to the Lender, is duly qualified to conduct its
businesses in all jurisdictions where the nature of its assets or its
businesses makes such qualification necessary.
(b) Power and Authority. The execution, delivery and performance by the
Borrower of this Agreement and all other Documents are within its powers,
have been duly authorized by all necessary corporate action and do not
conflict with, result in a breach or violation of, or constitute a material
default under, its constating documents, any unanimous shareholders
agreement, any Applicable Law or any agreement or other document to which
it is a party or by which it is bound and do not result in the creation of
any Lien upon any of its assets.
(c) Execution and Delivery and Binding Effect. Each of this Agreement and
all other Documents has been duly executed and delivered by the Borrower and
constitutes a legal, valid and binding obligation of the Borrower,
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency, moratorium, reorganization or other similar laws affecting
creditors' rights generally, the fact that specific performance and
injunctive relief may be given at the discretion of the courts, and the
equitable or statutory powers of the courts to stay proceedings before them
and to stay the execution of judgments.
(d) No Approvals Required. No further registration, order, permit, filing,
consent, licence, decree or approval of, from or with any Governmental
Authority is necessary or advisable in order to ensure the legality,
validity, binding effect and enforceability of this Agreement or any other
Document as against the Borrower.
(e) Financial Statements. Its most recent annual and quarterly financial
statements, copies of which have been furnished to the Lender, have been
prepared in accordance with GAAP, present fairly its financial position and
the results of its operations as at the date of such financial statements.
(f) Title to Assets and Liens. Except as disclosed in writing to the Lender,
it has good and marketable title to all of its assets and properties free and
clear of any Liens other than Permitted Liens.
(g) No Default. There exists to its knowledge no Event of Default which has
not been waived and no Default of which the Lender has not previously been
notified in writing.
(h) Compliance. The Borrower is in material compliance with its constating
documents, its franchises and licences, and all Applicable Laws including,
without limitation, health, safety and employment standards and labour codes
and, to the best knowledge of the Borrower, with Environmental Laws of all
applicable Governmental Authorities.
(i) Litigation. Except as set out in Schedule 2.1 (i), to Borrower's
knowledge, no material litigation (including, without limitation, derivative
actions), arbitration proceedings, governmental proceedings or
investigations or regulatory proceedings are pending or threatened
against the Borrower (except as previously disclosed by notice to the
Lender), which, if adversely determined, would have a Material Adverse
Effect upon the Borrower, nor does the Borrower know of any basis for any of
the foregoing. In addition, there are no inquiries, formal or informal,
which might give rise to such actions, proceedings or investigations.
(j) Full Disclosure. Neither the financial statements referred to in
Section 2.1(e) nor any other statement furnished by it or on its behalf to
the Lender in connection with the negotiation of this Agreement contain any
untrue statement of a material fact, or omitted a material fact
necessary to make such statements not misleading, and all such statements,
taken as a whole, together with this Agreement, do not contain any untrue
statement of a material fact or omit a material fact necessary to make such
statements not misleading. All expressions of expectation, intention, belief
and opinion were honestly made on reasonable grounds after due and careful
inquiry by it and any other Person who furnished such material. There is no
fact within the knowledge of the Borrower which has not been disclosed to
the Lender in writing which has or which the Borrower could reasonably
expect to have, a Material Adverse Effect.
(k) Tax Returns. The Borrower has filed or caused to be filed all tax
returns which, to its knowledge are required to have been filed, and has
paid all Taxes shown to be due and payable on such returns or on any
assessments made against it and all other Taxes, fees or other
charges imposed on it by any Governmental Authority, other than those the
amount or validity of which is currently being contested in good faith by
appropriate proceedings and with respect to which reserves have been
provided in its books. No Liens for Taxes have been filed and, to
its knowledge, no claims are being asserted with respect to any such Taxes,
fees or other charges.
(l) Material Change. Save as disclosed to the Lender in writing, there has
been no material adverse change in the financial condition of the Borrower
or any material litigation since the date of the most recent audited or
unaudited financial statements (as the case may be) of the Borrower
delivered under this Agreement.
(m) Liabilities. As of the date of the most recent financial statements
delivered to the Lender under this Agreement, the Borrower has no debts,
liabilities or obligations to any Person, whether direct or indirect,
absolute or contingent, matured or not, or other obligations for the payment
of money which, according to GAAP, are material and which are not disclosed
(1) in its most recent financial statements delivered to the Lender under
this Agreement and the notes to those financial statements or (2) in writing
to the Lender.
2.2 Deemed Repetition. The representations and warranties made in Section
2.1 shall continue in effect until payment and performance of all debts,
liabilities and obligations referred to in this Agreement and any Document
and shall be deemed to be repeated on each Drawdown Date, Acceptance Date
and Conversion Date as if made on each such date, in each case subject to
minor changes which do not have a material effect.
SECTION 3 - CREDIT FACILITIES
3.1 Revolving Credit Facility.
(a) Establishment. Subject to this Agreement, the Lender hereby confirms its
establishment in favour of the Borrower of a revolving credit facility in the
principal amount of the Commitment (the "Revolving Credit Facility") available
to the Borrower by way of advances of Loans, Letter of Credit Advances up to
an aggregate amount not to exceed $700,000 and the acceptance of Bankers'
Acceptances.
(b) Revolving Nature of Revolving Credit Facility. Subject to this
Agreement, the Borrower may, from time to time, increase or reduce the
amount of its Borrowings under the Revolving Credit Facility by borrowing,
repaying and reborrowing Prime Loans, Cost of Funds Loans, US Prime Rate
Loans and Libor Loans and by the acceptance of Bankers' Acceptances.
(c) Repayment. All Outstanding Borrowings under the Revolving Credit
Facility shall be repayable by the Borrower upon the earlier of (i)
Revolving Credit Facility Maturity Date and (ii) demand at any time by the
Lender following the occurrence of an Event of Default.
(d) Purpose. The proceeds of Borrowings under the Revolving Credit Facility
shall be used to acquire shares in the capital stock of Burtek, to refinance
the indebtedness of Burtek, for general corporate purposes and financing day
to day working capital requirements, whether directly or indirectly through
its subsidiary, Burtek.
3.2 Term Credit Facility.
(a) Establishment. Subject to this Agreement, the Lender hereby confirms its
establishment in favour of the Borrower of a term non-revolving credit
facility in the principal amount of the Term Commitment (the "Term Credit
Facility") available to the Borrower by way of a single advance of a Loan.
(b) Non-Revolving Notice of Term Credit Facility. The Borrower is entitled
to a single advance under Term Credit Facility by way of a Prime Loan and
Cost of Funds Loan and by the acceptance of Bankers' Acceptances.
(c) Repayment. All Outstanding Borrowings under the Term Credit Facility
shall be repayable by the Borrower upon the earlier of (i) the Term Credit
Facility Maturity Date; and (ii) demand at any time by the Lender following
the occurrence of an Event of Default; provided that prior to any such
demand, the Borrower shall repay the Outstanding Borrowings under the Term
Credit Facility in 48 equal monthly payments of CAD42,708.33 each on
account of principal commencing March 31, 1997 with the balance due or
accruing on the Term Credit Facility Maturity Date.
(d) Purpose. The proceeds of Borrowings under the Term Credit Facility
shall be used to finance the acquisition of Burtek.
SECTION 4 - PROVISIONS APPLICABLE TO BORROWINGS
4.1 Notice of Borrowing.
Subject to the terms and conditions hereof, the Borrower may borrow by
way of Loans and the acceptance of Bankers' Acceptances upon giving to the
Lender at the Branch of Account:
(1) in the case of Prime Loans and US Prime Rate Loans, irrevocable
telephone notice by 11:00 a.m. one Business Day prior to the
Drawdown Date, and
(2) in the case of Cost of Funds Loans, Libor Loans and Bankers'
Acceptances, irrevocable telephone notice by 11:00 a.m. two
Business Days prior to the Drawdown Date,
in each case followed by written confirmation on the same day substantially
in the form of Schedule 4.1 (a "Notice of Borrowing").
4.2 Prime and US Prime Loans.
Amounts of Borrowing. Each Borrowing by way of a Prime Loan or a US
Prime Loan shall be in increments of CAD or USD25,000.
4.3 Cost of Funds Loans.
(a) Amounts of Borrowing. Each Borrowing by way of a Cost of Funds
Loan shall be in the minimum amount of CAD or USD250,000 and thereafter in
increments of CAD or USD100,000.
(b) Selection of Interest Period. The Borrower may select the Cost of
Funds Interest Period for each Cost of Funds Loan. No Cost of Funds
Interest Period will be less than 30 days or greater than 180 days.
(c) Availability. Cost of Funds Loans will not be available if the
stated maturity or rollover date is after the Maturity Date.
4.4 Libor Loans.
(a) Amounts of Borrowing. Each Borrowing by way of a Libor Loan shall
be in the minimum amount of CAD or USD250,000 and thereafter in increments
of CAD or USD100,000.
(b) Rollover of Libor Loans. With respect to each Libor Loan which is an
outstanding Borrowing, at or before 11:00 a.m. one Business Day before the
applicable Interest Determination Date, the Borrower shall notify the Lender
at the Branch of Account by irrevocable telephone notice followed by written
confirmation on the same day in form and substance substantially as attached
as Schedule 4.4(b) either of (1) the next Libor Interest Period which it has
selected as applicable to the Libor Loan, which new Libor Interest Period
shall commence on and include the last day of the prior Libor Interest
Period, or (2) the intention of the Borrower to repay or convert such Libor
Loan at the end of the relevant Libor Interest Period. If the Borrower
fails to select and to notify the Lender at the Branch of Account of the
Libor Interest Period applicable to the Libor Loan, or its intention to repay or
convert the Borrower shall be deemed to have converted the Libor Loan into a
US Prime Rate Loan as of the last day of the applicable Libor Interest Period.
4.5 Substitute Basis of Borrowing. If at any time during the term of this
Agreement, the Lender determines in good faith (which determination shall be
final, conclusive and binding upon the Borrower) that:
(a) adequate and fair means do not exist for ascertaining the rate of
interest on a Libor Loan,
(b) Libor does not accurately reflect the effective cost to the Lender of
making, funding or maintaining a Libor Loan and the costs to the Lender are
increased or the income receivable by the Lender is reduced in respect of a
Libor Loan,
(c) the making or the continuance of a Libor Loan or a portion of a
Libor Loan by the Lender has become impracticable by reason of circumstances
which materially and adversely affect the London interbank market, or
(d) deposits in US Dollars are not available to the Lender in the
London interbank market in sufficient amounts in the ordinary course of
business for the applicable Libor Interest Period to make, fund or maintain
a Libor Loan during such Libor Interest Period,
then the Lender shall promptly notify the Borrower in writing of such
determination setting forth the basis of such determination and each
outstanding Libor Loan will automatically be converted into a US Prime Rate
Loan on the expiry of its then current Libor Interest Period. The Lender
will not be obligated to make any further Libor Loans available pursuant to
this Agreement, so long as the circumstances referred to in this Section 4.5
continue.
4.6 Bankers' Acceptances.
(a) Amounts of Borrowing. Each Borrowing by way of Bankers'
Acceptances shall be in the minimum amount of CAD1,000,000 and thereafter
in increments of CAD100,000.
(b) Contract Period. No Contract Period with respect to a Bankers'
Acceptances will be less than 30 days or greater than 180 days.
(c) Execution of Bankers' Acceptance. Drafts to be accepted as Bankers'
Acceptances shall be signed by an officer or officers of the Borrower who
are duly authorized by the Borrower to execute the Bankers' Acceptances on
behalf of the Borrower. Notwithstanding that any person whose signature
appears on any Bankers' Acceptance as one of such officers may no longer be
an authorized signatory for the Borrower at the date of issuance of a
Bankers' Acceptance, such signature shall nevertheless be valid and
sufficient for all purposes as if such authority had remained in force at
the time of such issuance and any such Bankers' Acceptance so signed shall
be binding on the Borrower.
(d) Bankers' Acceptances in Blank. To facilitate the acceptance of
Bankers' Acceptances, the Borrower shall, upon execution of this Agreement
and from time to time as required, provide the Lender drafts duly executed
and endorsed in blank by the Borrower. Upon receipt of a Notice of
Borrowing for a Bankers Acceptance or a confirmation as set out in Section
4.6 (f) from the Borrower, the Lender is hereby authorized to issue such
Bankers' Acceptances endorsed in blank in such aggregate face amount as may
be set out in the Notice of Borrowing or confirmation as applicable. The
Lender shall not be responsible or liable for its failure to accept a
Bankers' Acceptance as required hereunder if the cause of such failure is,
in whole or in part, due to the failure of the Borrower to provide duly
executed and endorsed drafts to the Lender on a timely basis nor shall the
Lender be liable for any damage, loss or other claim arising by reason of
any loss or improper use of any such instrument, it being understood and
agreed that the Lender's responsibility is limited in exercising in regard
to the drafts the same degree of care which it gives valuable property of
the Lender at the Lender's office, branch or agency where the drafts are
held. The Lender shall maintain a record with respect to Bankers'
Acceptances (i) received by it from the Borrower in blank hereunder, (ii)
voided by it for any reason, (iii) accepted and purchased by it hereunder,
and (iv) cancelled at their respective maturities. The Lender further
agrees to retain such records in the manner and for the statutory periods
provided in the various provincial or federal statutes and regulations
which apply to the Lender.
(e) Purchase of Bankers' Acceptances. Upon acceptance of a Bankers'
Acceptance of the Borrower by the Lender, the Borrower may offer to sell
Bankers Acceptances to the Lender at the Discount Rate and, if purchased,
the Lender shall credit the Discount Proceeds received to the Borrower's
Account. The Acceptance Fee payable by the Borrower to the Lender in
respect of each Bankers' Acceptance accepted and purchased by the Lender
shall be set off against the Discount Proceeds payable by the Lender under
this Section 4.6(e).
(f) Rollover. With respect to each Borrowing which is outstanding
hereunder by way of Bankers' Acceptances, at or before 11:00 a.m. one
Business Day prior to the expiry of the Contract Period of such Bankers's
Acceptances, the Borrower shall notify the Lender at the Branch of Account
by irrevocable telephone notice followed by written confirmation on the
same day in form and substance substantially as attached as Schedule 4.6(f)
if the Borrower intends to issue Bankers' Acceptances on such Maturity Date
to provide for the payment of such maturing Banker's Acceptances. If the
Borrower fails to give such notice and fails to give notice of proposed
conversion in accordance with Section 4.7, such maturing Bankers'
Acceptances shall be deemed to have converted on their Maturity Date into a
Prime Loan in an amount equal to the face amount of such Bankers' Acceptances.
(g) Rollover not Repayment. A payment of and issue of Bankers' Acceptances
having the same aggregate face amount under Section 4.6(f) shall be deemed not
to constitute a repayment of any Borrowing or a new advance of funds.
(h) Sale of Bankers' Acceptances. The Lender may at any time and from
time to time hold, sell, rediscount or otherwise dispose of any or all
Bankers' Acceptances accepted and purchased by it.
4.7 Letters of Credit.
(a) Letter of Credit Period. Letters of Credit shall have terms of not
greater than 365 days and shall mature on a Business Day.
(b) Refusal to Issue. The Lender may refuse to issue Letters of Credit
on the Borrower's behalf at any time in the Lender's sole discretion.
(c) Letter of Credit Agreement. Each Letter of Credit shall be governed
by the terms and conditions of the Letter of Credit Agreement or other
specific agreement relative to such instruments between the Borrower and the
Lender and each Letter of Credit shall be governed by the terms and
conditions of the applicable Letter of Credit Agreement in the event
of a conflict with this agreement.
(d) Retirement of Letter of Credit. A Letter of Credit may only be
retired on its maturity date (i) unless and to the extent it has been
honoured or (ii) unless the written consent of the beneficiary of such
instrument has been obtained and the original Letter of Credit has
been returned to the Lender.
(e) Charging of Letter of Credit. Each drawing under a Letter of
Credit shall be charged to the Borrower's Accounts.
4.8 Conversion Option.
(a) Notice for and Conditions of Conversion. Subject to this Agreement,
the Borrower may, during the term of this Agreement, effective on any
Business Day, convert, in whole or in part, Outstanding Borrowings into
another basis of Borrowing permitted under the Credit Facilities, upon
giving to the Lender at the Branch of Account prior irrevocable
telephone notice of at least 2 Business Days, followed by written
confirmation on the same day substantially in the form of Schedule 4.8,
provided that:
(i) no Default has occurred and is continuing,
(ii) each conversion to a Borrowing by way of a Prime Loan or a US
Prime Loan shall be for a minimum aggregate amount of CAD or
USD25,000,
(iii) each conversion to a Borrowing by way of Cost of Funds Loan,
Bankers' Acceptance or Libor Loan shall be for a minimum
aggregate amount of CAD1,000,000 or USD1,000,000,
(iv) a conversion to a Borrowing by way of Libor Loans shall only
be made to the extent that the conditions outlined in Section
4.5 shall not exist on the relevant Conversion Date,
(v) each conversion of a Borrowing by way of a Libor Loan may be
converted to another basis of Borrowing only on the last day
of the relevant Libor Interest Period and, provided that, if
less than all of such Libor Loan is converted, then after such
conversion not less than USD1,000,000 (or increments of
USD100,000 in excess thereof) shall remain as a Libor Loan,
(vi) each conversion of a Borrowing by way of a Bankers' Acceptances
may be converted to another basis of Borrowings only on the
last day of the relevant Contract Period and provided that, if
less than all Borrowings by way of Bankers' Acceptances is
converted, then after such conversion not less than
CAD1,000,000 (or increments of CAD100,000 in excess
thereof) shall remain as Borrowings by way of Bankers'
Acceptances, and
(vii) each conversion of a Borrowing by way of a Cost of Funds Loan
may be converted to another basis of Borrowings only on the
last day of the relevant Cost of Funds Interest Period and
provided that, if less than all Borrowings by way of Cost of
Funds Loan is converted, then after such conversion not less
than CAD1,000,000 (or increments of CAD100,000 in excess
thereof) shall remain as Borrowings by way of a Cost of Funds
Loan.
(b) Mandatory Conversion. If an Event of Default, or an event or
circumstance which with notice or lapse of time or both would constitute an
Event of Default, has occurred and is continuing, the Borrower shall be
required to convert (i) its Borrowings by way of Libor Loans to Borrowings
by way of US Prime Rate Loans on the applicable Libor Interest Date,
(ii) its Borrowings by way of Bankers' Acceptances to Borrowings by way of
Prime Loans on the applicable Maturity Date of each Bankers' Acceptances and
(iii) its Borrowings by way of Cost of Funds Loans to Borrowings on the last
day of the relevant Cost of Funds Interest Period.
(c) Conversion Not Repayment. The conversion of any Borrowing to
another type of Borrowing in an equal amount, as provided in this Section
4.6, shall not be deemed to constitute a repayment of any Borrowing or a new
advance of funds.
(d) Determination Final. With respect to all matters referred to in
this Section 4.8, the determination by the Lender shall, prima facie, be
final and binding on the Borrower.
4.9 Reliance on Oral Instructions. The Lender shall be entitled to act upon
the oral instructions of any Person who the Lender, acting reasonably,
believes has been identified by the Borrower in written instructions to the
Lender as someone authorized to give oral instructions regarding the
drawdown or issuance of Borrowings, and the Lender shall not be
responsible for any error or omission in such instructions or in the
performance thereof except in the case of negligence or wilful misconduct by
the Lender or its employees. Any such oral instructions so given shall be
immediately confirmed in writing by the Borrower to the Lender.
4.10 Evidence of Indebtedness. The Lender shall open and maintain at
the Branch of Account, accounts and records evidencing the liability of the
Borrower to the Lender with respect to Borrowings and record therein by
appropriate entries all amounts of Indebtedness of the Borrower to the
Lender arising under or in connection with this Agreement and all
payments on account thereof. Such accounts and records will constitute,
prima facie, conclusive evidence of the Indebtedness of the Borrower to the
Lender from time to time, the date each Borrowing was made and the amounts
the Borrower has paid from time to time on account of such Indebtedness.
SECTION 5 - INTEREST, FEES AND EXPENSES
5.1 Payment of Interest on Prime Loans.
Rate. The Borrower shall pay interest on Prime Loans in Canadian Dollars
at a rate per annum equal to the Prime Rate. Each change in the fluctuating
interest rate for a Prime Loan will take place simultaneously with the
corresponding change in the Prime Rate.
Calculation. Interest on Prime Loans shall be payable monthly in arrears
on each Interest Payment Date for the period up to but not including such
Interest Payment Date and shall be calculated on a daily basis on the
principal amount of the Prime Loans remaining unpaid from time to time and
on the basis of the actual number of days elapsed and a year of
365 days or 366 days, as the case may be.
5.2 Payment of Interest on Cost of Funds Loans.
Rate. The Borrower shall pay interest on each Cost of Funds Loan in US
Dollars for the period commencing on and including the first day of the Cost
of Funds Interest Period applicable to such Cost of Funds Loan up to but not
including the Cost of Funds Interest Date, at the rate per annum determined
by the Lender to be equal to the sum of Cost of Funds plus 1.25%. Each such
determination of the rate of interest applicable to a Cost of Funds Interest
Period shall, prima facie, be final, and binding upon the Borrower. Upon
determination of the rate of interest applicable to a Cost of Funds Interest
Period applicable to a Cost of Funds Loan, the Lender shall promptly notify
the Borrower of such rate.
Calculation. Interest on each Cost of Funds Loan shall be payable on
each Cost of Funds Interest Date with respect to such Cost of Funds Loan and
shall be calculated on a daily basis and on the basis of the actual number of
days elapsed and a year of 360 days, provided however, that in the event that
the relevant Cost of Funds Interest Period is greater than 90 days, interest
shall be due and payable not less frequently than every 90 days.
5.3 Payment of Interest on US Prime Rate Loans.
Rate. The Borrower shall pay interest on US Prime Rate Loans in US
Dollars at a rate per annum equal to the US Prime Rate. Each change in the
fluctuating interest rate for a US Prime Rate Loan will take place
simultaneously with the corresponding change in the US Prime Rate.
Calculation. Interest on US Prime Rate Loans shall be payable monthly
in arrears on each Interest Payment Date for the period up to but not
including such Interest Payment Date and shall be calculated on a daily
basis on the principal amount of the US Prime Rate Loans remaining unpaid
from time to time and on the basis of the actual number of days elapsed and
a year of 365 days or 366 days, as the case may be.
5.4 Letters of Credit Fee.
Fees. The Borrower shall pay to the Lender, at the time the Lender
issues (or renews) a Commercial Letter of Credit an issuance fee, at the
Lender's standard rates calculated on the maximum face amount of each such
Commercial Letter of Credit. The Borrower shall pay to the Lender, at the
time the Lender issues (or renews) a Standby Letter of Credit an issuance fee
equal to the greater of (i) CAD$300 and (ii) an annual fee equal to 1.25% of
the maximum face amount of such Standby Letter of Credit. The calculation of
the amount of such annual fees shall be based on the term of such Letter of
Credit (or the term of such renewal) and shall be based on a 365 or 366 day
year, as the case may be.
5.5 Payment of Interest on Libor Loans.
Rate. The Borrower shall pay interest on each Libor Loan in US Dollars
for the period commencing on and including the first day of the Libor
Interest Period applicable to such Libor Loan up to but not including the
Libor Interest Date, at the rate per annum determined by the Lender to be
equal to the sum of Libor plus 1.25%. Each such determination of the rate
of interest applicable to a Libor Interest Period shall, prima facie, be
final, and binding upon the Borrower. Upon determination of the rate of
interest applicable to a Libor Interest Period applicable to a Libor Loan,
the Lender shall promptly notify the Borrower of such rate.
Calculation. Interest on each Libor Loan shall be payable on each Libor
Interest Date with respect to such Libor Loan and shall be calculated on a
daily basis and on the basis of the actual number of days elapsed and a year
of 360 days; provided however, that in the event that a relevant Libor
Interest Period is greater than 90 days, interest shall be due and payable not
less frequently than every 90 days.
5.6 Interest on Overdue Amounts. Upon a default in the payment of principal,
interest or other amounts due under this Agreement, the Borrower shall pay
interest on such overdue amount both before and, where permitted by law,
after judgment at a rate per annum equal to the rate of interest as is
applicable to the relevant Borrowing prior to default (calculated on the
same basis) plus 2.0% for so long as such amount remains overdue. Such
interest shall be payable upon demand made by the Lender and shall be
compounded on each Interest Payment Date, Cost of Funds Interest Date or
Libor Interest Date, as applicable.
5.7 Interest Act. For the purposes of the Interest Act (Canada), where in
this Agreement a rate of interest is to be calculated on the basis of a year
of 360 or 365 days, as applicable (the "first rate"), the yearly rate of
interest to which the first rate is equivalent is the first rate multiplied
by the actual number of days in the year for which such calculation is made
and divided by 360 or 365 (as applicable).
5.8 Arrangement Fee. The Borrower will pay the Lender an arrangement fee (the
"Arrangement Fee") of CAD18,750 payable on the Borrowers' acceptance of the
Proposal Letter, the receipt of which is hereby acknowledged by the Lender.
5.9 Administration Fee. The Borrower will pay the Lender an administration
fee (the "Administration Fee") of CAD400 payable quarterly in arrears for the
daily monitoring and administration of operating draws and pay downs.
5.10 Commitment Fee. The Borrower will pay the Lender a commitment fee (the
"Commitment Fee") equal to 0.125% of the daily unused portion of the Credit
Facilities payable quarterly in arrears.
5.11 Limit on Rate of Interest.
(a) No Payment shall exceed Lawful Rate. Notwithstanding any other term of this
Agreement, the Borrower shall not be obliged to pay any interest or other
amounts under or in connection with this Agreement in excess of the amount
or rate permitted under or consistent with Applicable Laws. In particular
but without limiting the generality of the foregoing, the Borrower shall not
be obliged to pay any interest or other amounts which would result in the
receipt by the Lender of interest on credit advanced at a rate in excess of
the rate permitted under the Criminal Code (Canada). For purposes of this
Section, "interest" and "credit advanced" have the meanings ascribed in the
Criminal Code (Canada), and the "effective annual rate of interest" shall be
calculated in accordance with generally accepted actuarial principles and
practices.
(b) Payment at Highest Lawful Rate. If, as a result of Section 5.10 (a),
the Borrower is not obliged to make a payment which it would otherwise be
required to make, the Borrower shall make such payment to the maximum extent
permitted by or consistent with Applicable Law.
5.12 Change in Circumstances.
(a) Reduction in Rate of Return. If at any time the Lender determines,
acting reasonably, that (1) any change in any Applicable Law or any
interpretation thereof after the date of execution hereof, or (2) compliance
by the Lender with any direction, requirement or request from any regulatory
authority given after the date of execution hereof, whether or not
having the force of law provided that if not having the force of law, the
Lender's decision to comply therewith is reasonable, prudent and in good
faith, has or would have, as a consequence of the Lender's obligation under
this Agreement and taking into consideration the Lender's policies with
respect to capital adequacy, the effect of reducing the rate of return on
the Lender's capital to a level below that which the Lender could have
achieved but for such change or compliance, then from time to time, upon
demand of the Lender, the Borrower shall pay to the Lender such additional
amounts as may be determined by the Lender as will compensate the Lender for
such reduction provided that the Lender is similarly requiring
payment of compensating amounts from other Borrowers whose credit facilities
with the Lender are similarly effected.
(b) Taxes, Reserves, Capital Adequacy, etc. If, after the date of
execution hereof, any introduction of any Applicable Law or any change or
introduction of a change in any Applicable Law (whether or not having the
force of law) provided that if not having the force of law, the Lender's
decision to comply therewith is reasonable, prudent and in good faith or
in the interpretation or application thereof by any court or by any
Governmental Authority, central bank or other authority or entity charged
with the administration thereof or any change in the compliance of the
Lender therewith now or hereafter:
(i) subjects the Lender to, or causes the withdrawal or termination
of a previously granted exemption with respect to, any Tax or
changes the basis of taxation, or increases any existing Tax,
on payments of principal, interest, fees or other amounts
payable by the Borrower to the Lender under this Agreement
(except for taxes on the overall net income of the Lender),
(ii) imposes, modifies or deems applicable any reserve, special
deposit, deposit insurance or similar requirement against
assets held by, or deposits in or for the account of or loans
by or any other acquisition of funds by, an office of the
Lender, or
(iii) imposes on the Lender or expects there to be maintained by the
Lender any capital adequacy or additional capital requirement
in respect of any Borrowing or any other condition with respect
to this Agreement,
and the result of any of the foregoing, in the sole determination of the
Lender acting reasonably, shall be to increase the cost to, or reduce the
amount received or receivable by, the Lender hereunder or its effective rate
of return hereunder in respect of making, maintaining or funding a Borrowing
hereunder, the Lender shall, acting reasonably, determine that amount of
money which shall compensate the Lender for such increase in cost or
reduction in income. The Lender shall make reasonable efforts to limit the
incidence of any Additional Compensation, as defined below.
(c) Payment of Additional Compensation. Upon the Lender having
determined that it is entitled to compensation in accordance with the
provisions of Sections 5.11(a) or 5.11 (b) (herein referred to as
"Additional Compensation"), the Lender shall promptly so notify the
Borrower and shall provide to the Borrower a photocopy of the relevant
Applicable Law or direction, requirement or request, as applicable, and a
certificate of a duly authorized officer of the Lender setting forth the
Additional Compensation and the basis of calculation thereof, which shall be
prima facie evidence of such Additional Compensation. The Borrower shall
pay to the Lender within 30 Business Days of the giving of such notice the
Additional Compensation calculated and accruing from the date of such
notification. The Lender shall be entitled to be paid such Additional
Compensation from time to time to the extent that the provisions of this
Section 5.11 are then applicable notwithstanding that Lender has previously
been paid any Additional Compensation.
(d) Bank for International Settlements Capital Rules. For greater
certainty, the term "Applicable Law" for the purposes of this Section 5.11
includes any law relating in any way to international convergence of capital
measurement and capital standards developed by the Lender for International
Settlements.
5.13 Payment of Portion. Notwithstanding any other term or condition of
this Agreement, if the Lender gives the notice provided for in Section 5.11
with respect to any Borrowing (an "Affected Borrowing"), the Borrower may at
its option, upon 10 Business Days notice to that effect given to the Lender
(which notice shall be irrevocable) unless such prepayment causes an
Event of Default hereunder, prepay in full without penalty such Affected
Borrowing outstanding together with accrued and unpaid interest on the
principal amount so prepaid up to the date of such prepayment and pay such
Additional Compensation as may be applicable to the date of such payment and
all costs, losses and expenses incurred by the Lender by reason of the
liquidation or re-employment of deposits or other funds or for any other
reason whatsoever resulting from the repayment of such Affected Borrowing or
any part thereof. Upon its receipt of such prepayment, the Lender shall
refund a proportionate share of the Arrangement Fee.
5.14 Illegality. If any Applicable Law, or any change therein or in the
interpretation or application thereof by any court or by any Governmental
Authority or central bank or comparable agency or any other entity charged
with the interpretation or administration thereof or compliance by the Lender
with any request or direction (whether or not having the force of
law provided that if not having the force of law, the Lender's decision to
comply therewith is reasonable, prudent and in good faith) of any such
Governmental Authority, central bank or comparable agency or entity, now or
hereafter makes it unlawful or impossible for the Lender to make, fund or
maintain a Borrowing or to perform its obligations under this Agreement, the
Lender may, by written notice thereof to the Borrower terminate its
obligations to make further advances under this Agreement, and the Borrower,
if required by the Lender, shall repay forthwith (or at the end of such
longer period as the Lender at its discretion has agreed) the principal
amount of such Borrowing together with accrued interest (without penalty or
bonus), along with such Additional Compensation as may be applicable to the
date of such payment and all costs, losses and expenses incurred by the
Lender by reason of the liquidation or re-deployment of deposits or other
funds or for any other reason whatsoever resulting from the repayment of
such Borrowing or any part thereof. If any such change shall only affect a
portion of the Lender's obligations under this Agreement which is, in the
opinion of the Lender acting reasonably, severable from the remainder of
this Agreement so that the remainder of this Agreement may be continued in
full force and effect without otherwise affecting any of the obligations of
the Lender or the Borrower hereunder, the Lender shall, after allowing the
Borrower the option to convert its Loan, only declare its obligations under
that portion so terminated.
5.15 Indemnity.
(a) General. The Borrower shall indemnify the Lender against all losses,
reasonable expenses and liabilities which the Lender may sustain or incur as
a consequence of (1) any Default by the Borrower under this Agreement, (2)
any material misrepresentation by the Borrower contained in any writing
delivered to the Lender in connection with this Agreement, or (3) any
material failure by the Borrower to comply with any Applicable Law.
(b) Libor Loans. For greater certainty, but without limitation, if the
Borrower repays, prepays or cancels a Libor Loan on a day other than a Libor
Interest Date falling on the last day of a Libor Interest Period, the
Borrower shall indemnify the Lender for any loss or expense suffered or
incurred by the Lender including, without limitation, any loss or expenses
which the Lender incurs by reason of the liquidation or re-deployment of
deposits or other funds acquired by the Lender to maintain the Libor Loan
and any interest or other charges payable to lenders of funds borrowed by
the Lender in order to maintain the Libor Loan together with any other
charges, costs or expenses incurred by such Lender relative thereto.
(c) Telephone Instructions. The Borrower shall indemnify the Lender for
any loss or expense suffered or incurred by the Lender as a consequence of
the Lender acting in accordance with prudent banking standards upon
instructions given or agreements made over the telephone or by electronic
transmission of any type with Persons who the Lender, acting reasonably,
believes to have been acting on the Borrower's behalf and who have been
identified in writing by the Borrower as Persons authorized to give such
instructions, provided this indemnity shall not apply to losses or expenses
incurred or suffered by the Lender as a result of its own gross negligence
or wilful misconduct.
(d) Certificate. A certificate of the Lender setting out the basis for the
determination of the amount necessary to indemnify the Lender pursuant to
this Section 5.14 shall be, prima facie, conclusive evidence of the
correctness of such determination.
5.16 Payment of Stamping Fee.
The stamping fee applicable to Bankers' Acceptances is to be paid at the
time of issuance, with the face value due at maturity.
SECTION 6 - PAYMENTS AND REDUCTIONS OF COMMITMENTS
6.1 Payments Generally. Each payment to the Lender under this Agreement
shall be paid in the currency in which the relevant Borrowing is outstanding
and all other amounts owing hereunder shall be paid in Canadian Dollars
except as otherwise herein required or contemplated. Each such payment
shall be made for value at or before 1:00 p.m. on the day such payment is
due, provided that, if any such day is not a Business Day, such payment shall
be deemed for all purposes of this Agreement to be due on the Business Day
next following such day (and any such extension shall be taken into account
for purposes of the computation of interest and fees payable under this
Agreement).
6.2 No Set-Off. All payments to be made by the Borrower shall be made without
set-off or counterclaim and without any deduction of any kind.
6.3 Application of Payments Before Exercise of Rights. All payments made
by or on behalf of the Borrower under this Agreement before the exercise by
the Lender of any rights arising under Section 9.2 shall be applied in each
instance in the following order:
(a) firstly, in payment of any amounts due and payable as and by way of
recoverable expenses hereunder;
(b) secondly, in payment of any fees, interest, or default interest
then due and payable on or in respect of the Borrowings;
(c) thirdly, in repayment of any principal amounts outstanding on
account of the Borrowings; and
(d) fourthly, in payment of any other amounts then due and payable by the
Borrower hereunder.
6.4 Application of Payments After Exercise of Rights. All payments made by
or on behalf of the Borrower under this Agreement after the exercise by the
Lender of any rights arising under Section 9.2 shall be applied in each
instance in the following order, unless the Lender otherwise determines in
its sole and absolute discretion:
(a) firstly, in payment of the reasonable costs and expenses of any
realization, including the out-of-pocket expenses of the Lender and
the reasonable fees and out-of-pocket expenses of counsel employed
in connection therewith, and to the payment of all reasonable funds
made available by the Lender for the account of the Borrower in
connection with such realization and the payment of all
reasonable out-of-pocket costs and expenses incurred by the Lender in
connection with the administration and enforcement of this Agreement
or the other Documents, to the extent that such funds, costs and
expenses shall not have been reimbursed to the Lender;
(b) secondly, in payment of any unpaid fees payable hereunder to and
including the date of such application;
(c) thirdly, in payment of principal and then to the payment of any other
Indebtedness (other than on account of interest) outstanding under this
Agreement and under any other agreement applicable to the Outstanding
Borrowings, and then to the payment of accrued and unpaid interest
thereunder to and including the date of such application; and
(d) fourthly, in payment of the balance, if any, of such proceeds to the
Borrower or such other person or persons who may be entitled at law
to such proceeds or, in each case, their respective successors or
assigns, or as a court of competent jurisdiction may otherwise direct.
6.5 Reduction of Commitment. The Borrower may reduce or cancel the amount of
the Commitment at any time upon not less than five Business Days prior
irrevocable written notice to the Lender without bonus or penalty; provided
that on or prior to the effective date of such reduction or cancellation all
Outstanding Borrowings in excess of the Commitment, as reduced or cancelled,
together with interest accrued thereon and fees outstanding in respect
thereof is paid in full.
SECTION 7 - COVENANTS
7.1 Covenants of the Borrower. While any amount owing hereunder remains
unpaid or the Lender has any obligations hereunder, the Borrower covenants
with the Lender, that it will:
(a) Corporate Existence and Franchises. except as otherwise expressly
permitted in this Agreement, maintain in full force and effect its separate
existence and all rights, licenses, leases and franchises reasonably
necessary to the conduct of its business.
(b) Books, Records and Inspections. maintain complete and accurate
books and records, permit the Lender to have reasonable access to the
Borrower's books and records, and permit the Lender to inspect the
Borrower's properties and operations at reasonable times.
(c) Insurance. maintain insurance to such extent and against such
hazards and liabilities as may be required by law and as is commonly
maintained by companies similarly situated or as the Lender may reasonably
request from time to time.
(d) Taxes and Liabilities. promptly pay when due all taxes, duties,
assessments and other liabilities, except such taxes, duties, assessments
and other liabilities as the Borrower is diligently contesting in good faith
and by appropriate proceedings or which the failure to pay would not have a
Material Adverse Effect; provided that the Borrower has provided for and is
maintaining adequate reserves with respect thereto in accordance with GAAP.
(e) Liens. not create or permit to exist any Lien with respect to any of
the properties or assets of the Borrower or any Subsidiary, whether nor owned
or hereafter acquired, including, without limitation, accounts or inventory
now owned or hereafter acquired, except the following Liens (a) Permitted
Liens; (b) Liens which arise in the ordinary course of business for sums not
due or sums which the Borrower is contesting in good faith and by appropriate
proceedings and with respect to which the Borrower has provided for and is
maintaining adequate reserves in accordance with GAAP, but which do not
involve any deposits or advances or borrowed money or the deferred purchase
price of property or services; and (c) any other Lien in respect of which
the Lender has provided its prior written consent.
(f) Other Agreements. not enter into any agreement which would have a
Material Adverse Effect on the Borrower containing any provision which would
be violated or breached by the performance of its obligations hereunder or
under any instrument or document delivered or to be delivered by it hereunder
or in connection herewith or which would violate or breach any
provision hereof or of any such instrument or document.
(g) Compliance with Applicable Laws. comply with the requirements of all
Applicable Laws, rules, regulations, and orders of all Governmental Authorities
(Federal, state, provincial, local or foreign, and including, without
limitation, environmental laws, rules, regulations and orders), except for
failures to comply with such statutes, rules and regulations which in the
aggregate would not materially and adversely affect the Borrower's business,
credit, operations, financial condition or prospects, except where the
Borrower is contesting an alleged breach in good faith and by proper
proceedings and for which the Borrower is maintaining adequate reserves in
accordance with GAAP.
(h) Delivery of Documents. on or before the Closing Date (except as
otherwise noted), the Borrower shall execute, or cause to be executed, and
delivered to the Lender, in form and substance satisfactory to it acting
reasonably, the following:
1. a certificate of an officer on behalf of the Borrower dated as of
the Closing Date certifying:
(i) the names and specimen signatures of the Persons authorized to
sign the Documents to be executed and delivered by the Borrower;
(ii) that the constating documents and by-laws of the Borrower attached
thereto are complete and correct copies, have not been amended,
modified or supplemented except as described in the Certificate
and are in full force and effect, except that, to the extent
that the Borrower has provided the Lender within the previous
8 months with a copy of its constating documents or by-laws,
instead of providing a new copy it may provide the Lender with
a certificate of one of its officers to the effect that such
documents are complete and correct copies of the originals
thereof which originals have not been amended, modified or
supplemented and are in full force and effect;
(iii) that attached thereto is the resolution of the Borrower and
all other authorizations necessary to authorize the execution
and delivery and performance of the Documents executed and
delivered by it;
2. promissory note(s) given by the Borrower in favour of the Lender
evidencing the Outstanding Borrowings substantially in the form set
out in Schedule 7.1(h) 2.
3. Letter of Credit Agreement given by the Borrower in favour of the
Bank with respect to the issuance of Letters of Credit.
4. unlimited guarantee and postponement of claim given by the Guarantor
in favour of the Lender with respect to the indebtedness of the
Borrower to the Lender substantially in the form set out in
Schedule 7.1(h) 4;
5. acknowledgements by the Guarantor and the domestic senior lenders
of the Guarantor that the said guarantee shall be held by the Lender
on a pari passu basis;
6. opinions of legal counsel to the Borrower and the Guarantor, addressed
to the Lender substantially in the form set out in Schedule 7.1(h) 6;
and
7. such other documents related to the foregoing as the Lender may
reasonably request.
7.2 Accounting, Financial Statements and Other Information.
General. The Borrower shall maintain a system of accounting established and
administered in accordance with GAAP consistently applied and shall set
aside on its books all proper reserves.
Reports. The Borrower shall provide to the Lender each of the following:
(a) Audit Report. on or before the 90th day after each of the Guarantor's
fiscal years, a copy of an annual audit report of the Guarantor
prepared in conformity with GAAP, duly certified by its Auditors,
together with a certificate from such Auditors containing a
computation of, and showing compliance with, each of the
financial ratios and restrictions contained in this Agreement.
(b) Interim Reports. on or before the 45th day after the end of each
of the Borrower's fiscal quarters, a copy of unaudited financial
statements of the Borrower prepared in a manner consistent with the
financial statements referred to above, signed by a senior financial
officer of the Borrower and consisting of, at least, balance sheets
as at the close of such month and statements of earnings for such
quarter and for the period from the beginning of such fiscal quarter
to the close of such quarter.
(c) Notice of Default and Litigation. forthwith upon learning of the
occurrence of any of the following written notice thereof which
describes the same and the steps being taken by the Borrower with
respect thereto: (i) the occurrence of an Event of Default or
Default, (ii) the institution of, or any adverse determination in,
any litigation, arbitration proceedings or governmental proceeding
in which any injunctive relief is sought or in which money damages
in excess of $1,000,000.00 are sought.
(d) Other Information. such other information concerning the Borrower
as the Lender may reasonably request from time to time.
SECTION 8 - ENVIRONMENTAL MATTERS
8.1 Representations and Warranties. The Borrower represents and warrants to
the Lender, all of which shall survive the execution and delivery of this
Agreement, as follows:
(a) Compliance. Subject to Section 8.1(d) below, to the best knowledge
of the Borrower, the property, assets, activities and operations of the
Borrower and those of any prior owner, lessee, licensee or other occupant
thereof comply in all material respects with all Environmental Laws and with
any authorization, permit, grant, licence, consent, right, privilege,
registration, filing, commitment, order, approval, judgment, direction,
ordinance or decree issued or granted by law or by any Governmental
Authority and are not subject to any judicial, governmental, regulatory or
other investigations, proceedings, inquiries or notices; save and except to
the extent disclosed in writing to the Lender and in respect of which, to the
extent possible, adequate remedial action has been undertaken. To the best
knowledge of the Borrower, none of the Borrower, and any present or prior
owner, lessee, licensee or occupant or any Person having the charge,
management or control of any of their respective properties has filed any
notice or report under any Environmental Law with any Governmental Authority.
(b) Presence of Contaminant. Subject to Section 8.1 (d) below, to the
best knowledge of the Borrower, there neither is nor has been, any
Environmental Activity at, upon, under, over, within or with respect to
their properties with the exception of the handling, use or storage in
accordance with Environmental Laws, of electrical and/or hydraulic
equipment that may contain PCBs or related substances, which equipment is of
a kind normally used in premises similar to the properties of the Borrower.
(c) Liability. Subject to Section 8.1 (d) below, to the best knowledge
of the Borrower, none of the Borrower and any present or prior owner, lessee,
licensee or occupant of any of their respective properties has been, nor is
it, involved in any operations at, or with respect to their properties which
could lead to the imposition of liability on the Borrower or Person who has
or will have the charge, management or control of any such property or the
creation of a Lien thereon under any Environmental Law; save and except to
the extent disclosed in writing to the Lender and in respect of which to the
extent possible adequate remedial action has been undertaken.
(d) Inquiry. The representations and warranties provided in Sections
8.1(a)(b) and (c) are given after limited inquiry by the Borrower, the
details of which are provided in Schedule 8.1(d).
8.2 Covenants. While any amount owing hereunder remains unpaid or the
Lender has any obligations hereunder, the Borrower covenants with the Lender
as follows:
(a) Compliance. It shall comply in all material respects with the
requirements of any Environmental Law.
(b) Notification. It shall notify the Lender within 10 days of
becoming aware of any Release or within 15 days of any other discovery of
any Contaminant at, upon, under, over, within or with respect to any of its
property or any contiguous real or immovable property. It shall promptly
thereafter forward to the Lender copies of all orders, notices,
permits, applications or other communications and reports in connection with
any Environmental Law affecting or relating to any of its property or its
operations and activities.
8.3 Indemnity. The Borrower shall at all times indemnify and hold harmless
the Lender from and against any and all claims, suits, actions, debts,
damages, costs, losses, obligations, judgments, charges, and expenses, of
any nature whatsoever (in this Section 8.3, a "Claim") suffered or incurred
by the Lender, whether upon realization of any security, or as a lender to
the Borrower, or as successor to or assignee of any right or interest of the
Borrower or as a result of any order, investigation or action by any
Governmental Authority relating to the Borrower, or the business or property
of the Borrower as privileged or hypothecary creditor or mortgagee in
possession of property or as successor or successor-in-interest as a result
of any taking of possession of all or any property or by foreclosure deed or
deed in lieu of foreclosure or by any other means relating to the Borrower,
under or on account of any breach of Environmental Law (except as a result
of the negligence or wilful misconduct of the Lender), or the assertion of
any Lien thereunder, with respect to:
(a) the Release of a Contaminant, the threat of the Release of any
Contaminant, or the presence of any Contaminant affecting any of
their respective properties,
(b) the Release of a Contaminant owned by, or under the charge,
management or control of, the Borrower,
(c) any costs incurred by any Governmental Authority or any other Person
or damages from injury to, destruction of, or loss of natural
resources in relation to, any such property or personal property
located thereon, including reasonable costs of assessing such
injury, destruction or loss incurred pursuant to any
Environmental Laws,
(d) liability for personal injury or property damage arising by reason
of any civil law offences or quasi-offences or under any statutory
or common law tort or similar theory, including, without limitation,
damages assessed for the maintenance of a public or private nuisance
or for the carrying on of a dangerous activity at, or with respect
to its property, and/or
(e) any other environmental matter affecting any property or the
operations and activities of the Borrower within the jurisdiction
of any federal, provincial, municipal or local environmental agency.
8.4 Scope of Indemnity. The Borrower acknowledges that the Lender has
agreed to make the Credit Facilities available in reliance upon the
representations, warranties, and covenants in this Section 8.4. For this
reason, it is the intention of the Borrower and the Lender that the
provisions of this Section 8 shall supersede any other provisions in this
Agreement or in any Document which in any way limit the liability of the
Borrower and that the Borrower shall be liable for any obligations arising
under this Section 8 even if the amount of the liability incurred exceeds
the amount outstanding under this Agreement. The obligations arising under
this Article are absolute and unconditional and shall not be affected by any
act, omission or circumstance whatsoever, except in respect of negligence or
wilful misconduct by the Lender. The obligations of the Borrower arising
under this Section 8 shall survive the repayment of the Borrowings and shall
survive the transfer of any or all right, title and interest in and to any
property to any party, whether or not affiliated with the Borrower.
8.5 Interest. If the Lender incurs any obligations, costs or expenses
under this Section 8 or in respect of any Environmental Activity covered by
this Section 8, the Borrower shall pay the same to the Lender immediately on
demand, and if such payment is not received within 10 days, such amount will
be treated as a Prime Loan and the Borrower will pay interest thereon on
demand, but otherwise calculated as set out in Section 5.1.
SECTION 9 - DEFAULT AND ENFORCEMENT
9.1 Events of Default. Upon the occurrence of any one or more of the
following events the Lender may, by written notice to the Borrower, declare
an Event of Default:
(a) Non-payment of Principal. The Borrower fails to make when due, whether
by acceleration or otherwise, any payment of principal required to be made
by the Borrower hereunder and such default continues for more than one (1)
Business Day.
(b) Non-payment of Interest, Fees and Other Amounts. The Borrower fails to
make when due, whether by acceleration or otherwise, any payment of interest,
fees or any other payment hereunder not referred to in Section 9.1(a) and
such failure continues for 5 Days of such due date.
(c) Covenants. The Borrower fails to perform or observe to any material
extent any other term, condition, covenant or undertaking contained in any
Document. Except as regards breaches of covenants contained in Sections
7.1(a) and 7.2(a) in respect of which the Lender may immediately declare an
Event of Default, the Borrower shall have 30 days after the occurrence of
such event to remedy such failure. Only if the Borrower does not remedy such
failure within that time shall the Lender become entitled to declare an
Event of Default on the basis of such failure.
(d) Nonpayment of Other Indebtedness. The Borrower or the Guarantor
defaults in the payment when due (subject to any applicable grace period),
whether by acceleration or otherwise, of any other Indebtedness in the
principal amount in excess of $500,000 of, or guaranteed by, the
Borrower or the Guarantor or defaults in the performance or observance of
any obligation or condition with respect to any such other Indebtedness if
the effect of such default is to accelerate the maturity of any such
Indebtedness or to permit the holder or holders thereof, or any trustee or
agent for such holders, to cause such Indebtedness to become due and payable
prior to its expressed maturity, and continuation thereof after the Lender
gives notice to the Borrower or the Guarantor that such default is an Event
of Default.
(e) Representation and Warranties. Any material representation, warranty
or statement which is made by the Borrower in any Document or which is
contained in any certificate, written statement or written notice provided
under or in connection with any Document is untrue or incorrect in any
material adverse respect when made and such default continues for
30 days.
(f) Execution. A distress or execution or any similar process is levied
or enforced against any material property or assets of the Borrower or any
of its Subsidiaries with an aggregate fair market value in excess of an
amount equal to 3% of the Borrower's shareholders equity.
(g) Invalidity and Contestation. This Agreement or any of the other
Documents shall at any time after execution and delivery and for any reason
(other than in accordance with its terms) cease to be in full force and
effect or shall be declared to be null and void, or the legality, validity,
binding nature or enforceability of this Agreement or any other Document or
any term or provision thereof shall be contested by the Borrower or any
other party thereto, or the Borrower or any other such party shall deny
that it has any or further liabilities or obligations thereunder.
(h) Government Approval. Any material Government Approval required to
enable the Borrower or any of its Subsidiaries to conduct its business
substantially as presently conducted or to perform its obligations under
any Document is not obtained or is withdrawn or ceases to be in full force
and effect and such required Government Approval cannot be acquired or
reinstated within 60 days of the date on which the Borrower or such
Subsidiary knew or ought to have known such Government Approval was
required or withdrawn or, if capable of acquisition or reinstatement
within such 60-day period, the Borrower or such Subsidiary has
not proceeded diligently to obtain or reinstate such Government Approval
within such 60-day period.
(i) Voluntary Proceedings. The commencement by or acquiescence of the
Borrower or any of its Subsidiaries of or to proceedings for substantive
relief with respect to the Borrower or a Subsidiary in any bankruptcy,
insolvency, debt restructuring, reorganization, readjustment
of debt, dissolution, liquidation or other similar proceedings (including,
without limitation, proceedings under the Bankruptcy and Insolvency Act
(Canada), the Winding-up Act (Canada), the Companies' Creditors Arrangement
Act (Canada), or similar legislation in the United States of America, the
corporation statute under which any of them is organized or other similar
legislation) including, without limitation, the filing of a proposal or plan
of arrangement or a notice of intention to file same, or proceedings for the
appointment of a trustee, interim receiver, receiver, receiver and manager,
custodian, liquidator, provisional liquidator, administrator, sequestrator
or other like official with respect to the Borrower or any of its
Subsidiaries or all or any material part of their respective assets, or any
similar relief; where such proceeding would result in a Material Adverse
Effect on the Borrower or any of its Subsidiaries.
(j) Involuntary Proceedings. If a petition or any other proceeding or
case shall be filed, instituted or commenced with respect to the Borrower
or any of its Subsidiaries under any bankruptcy, insolvency, debt
restructuring, reorganization, incorporation, readjustment of debt,
dissolution, liquidation, winding-up or similar law, now or hereafter in
effect, seeking the bankruptcy, liquidation, reorganization, dissolution,
winding-up, composition or readjustment of debts of the Borrower or any of
its Subsidiaries, the appointment of a trustee, interim receiver, receiver,
receiver and manager, custodian, liquidator, provisional liquidator,
administrator, sequestrator or other like official for the Borrower or any
of its Subsidiaries or all or any material part of their respective assets,
or any similar relief; where such proceeding would result in a Material
Adverse Effect on the Borrower or any of its Subsidiaries.
(k) Receiver. Any Person including, without limitation, a receiver,
receiver and manager, or other similar official whether appointed privately
or judicially, is appointed for the Borrower or any of its Subsidiaries or
takes possession of the properties or assets of the Borrower or any of its
Subsidiaries with an aggregate fair market value in excess of an amount
equal to 3% of the Borrower's shareholders equity.
(l) Act of Bankruptcy. The Borrower or any of it Subsidiaries is unable
to pay debts generally as such debts become due, is adjudged or declared to
be bankrupt or commits an act of bankruptcy.
9.2 Rights upon Default. Upon the occurrence of an Event of Default, the
Lender may, on written notice to the Borrower, declare that the entire
principal amount of the Outstanding Borrowings, all unpaid accrued interest
and all fees and other amounts required to be paid by the Borrower hereunder
are immediately due and payable without the necessity of presentment
for payment, notice of non-payment and of protest (all of which are hereby
expressly waived to the fullest extent permitted by Applicable Law) and
proceed to exercise any and all rights and remedies hereunder and under any
other Document. From and after the issuance of any declaration referred to
in this Section 9.2, the Lender shall not be required to honour any
cheque or other instrument presented to it regardless of the date of issue
or presentation. Immediately upon receipt of such declaration, the Borrower
shall pay to the Lender all amounts referred to therein.
9.3 Waiver of Default. No express or implied waiver by the Lender of any
Event of Default shall in any way be or be construed to be a waiver of any
future or subsequent Event of Default. To the extent permitted by Applicable
Law, the Borrower hereby waives any rights now or hereafter conferred by
statute or otherwise which may limit or modify any of the Lender's rights or
remedies under this Agreement. The Borrower acknowledges and agrees
that the exercise by the Lender of any rights under any Document without
having declared an acceleration shall not in any way alter, affect or
prejudice the right of the Lender to make a declaration pursuant to the
provisions of Section 9.2 at any time and, without limiting the
foregoing, shall not be construed as or deemed to constitute a waiver of any
rights under Section 9.3.
SECTION 10 - REMEDIES
10.1 Remedies Cumulative. For greater certainty, the rights and remedies of
the Lender under this Agreement are cumulative and are in addition to and
not in substitution for any rights or remedies provided by law. Any single
or partial exercise by the Lender, of any right or remedy for a default or
breach of any term, covenant, condition or agreement herein contained shall
not be deemed to be a waiver of or to alter, affect or prejudice any other
right or remedy or other rights or remedies to which the Lender may be
lawfully entitled for the same default or breach, and any waiver by the
Lender of the strict observance, performance or compliance with any term,
covenant, condition or agreement herein contained, and any indulgence
granted thereby, shall be deemed not to be a waiver of any subsequent
default.
10.2 Remedies Not Limited. The Lender may, to the extent permitted by
Applicable Law, bring suit at law, in equity or otherwise for any available
relief or purpose including but not limited to (a) the specific performance
of any covenant or agreement contained in this Agreement or in any other
Document, (b) an injunction against a violation of any of the terms
of this Agreement or any other Document, (c) in aid of the exercise of any
power granted by this Agreement or any other Document or by law, or (d) the
recovery of any judgment for any and all amounts due in respect of the
Borrowings or amounts otherwise due hereunder or under any Document.
10.3 Set-Off, etc. Upon and after the declaration of any Event of Default
pursuant to Section 9.2, the Lender and each of its branches and offices are
hereby authorized by the Borrower, at any time and from time to time, without
notice, (a) to set off and apply any and all amounts owing by the Lender or
any such branch or office to the Borrower (whether payable in Canadian
Dollars or any other currency, whether matured or unmatured, and in the
case of deposits, whether general or special, time or demand and however
evidenced) against and on account of the obligations and liabilities of the
Borrower due to the Lender under this Agreement or any other agreement
delivered under or in connection with this Agreement including, without
limitation, the Documents, (whether such obligations or liabilities are
payable in Canadian Dollars or any other currency, and whether such
obligations or liabilities are unmatured or contingent), (b) to hold any
such amounts owing by the Lender as collateral to secure the obligations
and liabilities of the Borrower under this Agreement to the extent such
amounts may be required to satisfy any contingent or unmatured obligations
or liabilities of the Borrower to the Lender hereunder, and (c) to return as
unpaid for insufficient funds any and all cheques and other items drawn
against any deposits so held as the Lender in its sole discretion
may elect.
10.4 Lender May Perform Covenants. If the Borrower shall fail to perform
any of its obligations under any covenant contained in this Agreement or
any other Document, the Lender may (but has no obligation to), upon notice
to the Borrower, if the Lender, acting reasonably, believes it necessary to
do so to protect or preserve its rights and remedies hereunder perform any
such covenant capable of being performed by it and, if any such
covenant requires the payment or expenditure of money, it may make such
payment or expenditure with its own funds. All amounts so paid by the
Lender hereunder shall be repaid by the Borrower on demand therefor, and
shall bear interest at the rate applicable to a Prime Loan from and
including the date paid by the Lender hereunder to but excluding the date
such amounts are irrevocably repaid in full by the Borrower.
SECTION 11 - MISCELLANEOUS
11.1 Amendments and Waivers. No amendment or waiver of any provision of this
Agreement or consent to any departure by the Borrower from any provision of
this Agreement will in any event be effective unless it is in writing and
then the amendment, modification, waiver or consent will be effective only
in the specific instance, for the specific purpose and for the specific
length of time for which it is given by the Lender.
11.2 Notice. Any notice, request or other communication to be given under
this Agreement, except as otherwise specifically stated, shall be in writing
and shall be either delivered personally or sent by telecopier or by prepaid
mail to the mailing address, or telecopier number applicable, of a party
stated beside the name of the party at the foot of this Agreement and to
the attention of the Person or to such other mailing or telecopier number as
the party may notify to the other from time to time under this provision.
Any such notice, request or other communication if delivered or mailed,
shall be deemed to have been given when received and, if telecopied before
4:30 p.m. on a Business Day, shall be deemed to have been received on
that day, and if telecopied after 4:30 p.m. on a Business Day, shall be
deemed to have been received on the Business Day next following the date of
transmission.
11.3 Judgment Currency. If for the purposes of obtaining judgment in any
court in any jurisdiction with respect to this Agreement, it becomes
necessary to convert into the currency of such jurisdiction (herein called
the "Judgment Currency") any amount due hereunder in the currency in which
such amount is payable in accordance with this Agreement (the"Agreed
Currency"), then conversion shall be made at the rate of exchange prevailing
on the Business Day before the day on which judgment is given. For this
purpose, "rate of exchange" means the spot rate at which the Lender would,
on the relevant date at or about 12:00 noon (Toronto time), be prepared to
purchase the Judgment Currency with the amount applicable in the
Agreed Currency in Xxxxxxx, Xxxxxxx. In the event that there is a change
in the rate of exchange prevailing between the Business Day before the day
on which the judgment is given and the date of payment of the amount due,
the Borrower will, on the date of payment, pay such additional amounts (if
any) or be entitled to receive reimbursement of such amount, if any, as may
be necessary to ensure that the amount paid on such date is the amount in the
Judgment Currency which when converted at the rate of exchange prevailing on
the date of payment is the amount then due under this Agreement in the
Agreed Currency. Any additional amount due from the Borrower under this
Section 11.3 will be due as a separate debt and shall not be affected by
judgment being obtained for any other sums due under or in respect of this
Agreement.
11.4 Further Assurances. The Borrower shall from time to time promptly upon
the reasonable request of the Lender take such action, and execute and
deliver such further documents, as may be reasonably necessary or
appropriate to fully give effect to the provisions and intent of this
Agreement.
11.5 Reimbursement of Expenses. The Borrower shall, on demand, pay to the
Lender all of the reasonable legal fees of the Lender, out-of-pocket
documentation costs and other out-of-pocket expenses, all reasonably incurred:
(a) in the negotiation, preparation and execution of this Agreement and
the other Documents; and
(b) in connection with the administration of this Agreement.
In addition, the Borrower shall pay all reasonable legal fees, and other
out-of-pocket expenses reasonably incurred by the Lender in connection with
the determination or preservation of any rights, or the enforcement of or
legal advice in respect of rights or responsibilities, of the Lender under
this Agreement or the other Documents.
11.6 Survival. Without prejudice to the survival or termination of any
other agreement of the Borrower under this Agreement, the obligations of the
Borrower under Sections 5.14, 8.3 and 11.8 shall survive the repayment of
all the Borrowings.
11.7 Attornment. Each of the parties irrevocably attorns to the
non-exclusive jurisdiction of the courts of Ontario.
11.8 Successors and Assigns.
(a) Enurement. This Agreement shall be binding upon and enure to the
benefit of the Borrower, the Lender and their respective successors and
assigns, except that the Borrower may not assign or transfer all or any
part of its rights and obligations under this Agreement without the Lender's
prior written consent.
(b) Amalgamation. The Lender consents to the amalgamation of the
Borrower with Burtek provided that the Lender receives, in form and
substance satisfactory to it, acknowledgements and confirmations from the
Guarantor and the amalgamated party as to the continued validity, effect
and applicability of the Documents.
(c) Assignment By Lender. The Lender may at any time assign all or
any part of its rights or obligations hereunder to another Person with the
Borrower's prior written consent, which consent not to be unreasonably
withheld. The Lender will only assign the Documents to a Person to the
extent the Lender's rights and obligations hereunder have been assigned to
that Person; provided that any such assignment shall be to a financial
institution which is a Canadian resident and the Borrower shall not be
liable for, or obligated to pay any increased costs, fees, interest or
other amounts as a result of any assignment.
(d) Sub-Participations. The Lender may grant one or more
sub-participations in its rights and obligations hereunder to another bank
or financial institution with the Borrower's prior written consent, which
consent not to be unreasonably withheld; provided that following any such
sub-participation, the Borrower shall not be liable for, or obligated to pay
any increased costs, fees, interest or other amounts as a result of any such
sub-participation and the Borrower shall be entitled to continue to deal
with Lender notwithstanding the sub-participation.
(e) Disclosure to Assignee or Sub-Participant. The Lender may
disclose to an assignee or sub-participant or proposed assignee or
sub-participant information in the possession of the Lender relating to the
Borrower or its Subsidiaries and furnished to it in connection herewith,
provided that the Lender shall require such assignee, sub-participant,
proposed assignee or proposed sub-participant to enter into an agreement in
form satisfactory to the Borrower acting reasonably whereby it agrees to
maintain such information confidential.
11.9 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original and all of which shall
constitute one and the same agreement.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the
day and year first above written.
THE BORROWER: XXXXXXXXXX ELECTRONICS
ACQUISITION CORP.
Address: 00X000 Xxxxxxxxx Xx. By: /s/ Xxxxxx X. Xxxxxxxxxx
Xx Xxx, Xxxxxxxx 00000 Name: Xxxxxx X. Xxxxxxxxxx
U.S.A. Title: President
Fax: (000) 000-0000 By: /s/ Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Phone: (000) 000-0000 Title: Secretary
THE LENDER: FIRST CHICAGO NBD BANK,
CANADA
Address: First Chicago NBD Bank, Canada By: /s/ X.X. Xxxxx
000 Xxx Xxxxxx, Xxxxx 0000 Name: X. X. Xxxxx
Toronto, Ontario Title: V.P.
X0X 0X0
By: /s/ X. X. Xxxxxxx
Name: X. X. Xxxxxxx
Title: A. V. P.
Fax: (000) 000-0000
Phone: (000) 000-0000
