Exhibit 4.7
CREDIT AGREEMENT
Dated as of February 4, 0000
xxxxxxx
XXXXXXX XXXXXXXXXXXX XXXXXX LIMITED
as Borrower
and
LASALLE BUSINESS CREDIT, a division of
ABN AMRO BANK N.V., CANADA BRANCH
as Lender
TABLE OF CONTENTS
1. DEFINITIONS AND INTERPRETATION............................................................................. 4
(a) General Definitions..................................................................................... 4
(b) Accounting Terms and Definitions; Interpretation........................................................ 13
2. LOANS...................................................................................................... 14
(a) Revolving and Term Loan................................................................................. 14
(b) Margin and Other Requirements: Revolving Loans.......................................................... 14
(c) Margin and Other Requirements: Term Loan................................................................ 15
(d) Loan Accounts........................................................................................... 15
3. REPAYMENT OF TERM LOANS.................................................................................... 15
(a) Term Loan Facility...................................................................................... 15
(b) Mandatory Prepayments of the Term Loan.................................................................. 16
(c) VOLUNTARY PREPAYMENTS................................................................................... 16
4. INTEREST, FEES AND CHARGES................................................................................. 16
(a) Rates of Interest....................................................................................... 16
(b) Other LIBOR Provisions.................................................................................. 17
(c) Other BA Equivalent Provisions.......................................................................... 19
(d) Computation of Interest and Fees........................................................................ 20
(e) Maximum Interest........................................................................................ 20
(f) Unused Line Fee......................................................................................... 20
(g) Examination and Appraisal Fees.......................................................................... 21
(h) Capital Adequacy Charge................................................................................. 21
5. LOAN ADMINISTRATION........................................................................................ 21
(a) Loan Requests........................................................................................... 21
(b) Disbursement............................................................................................ 22
6. SECURITY................................................................................................... 22
7. COLLECTIONS................................................................................................ 23
(a) Blocked Accounts and Lock Boxes......................................................................... 23
(b) Rights of LaSalle....................................................................................... 24
(c) Application of Collections.............................................................................. 24
(d) Dealings by LaSalle..................................................................................... 25
(e) Receipts by Borrower.................................................................................... 25
8. SCHEDULES AND REPORTS...................................................................................... 25
(a) Activity Reports........................................................................................ 25
(b) Borrowing Base Certificate.............................................................................. 25
(c) Inventory Reports....................................................................................... 26
(d) Financial Reports....................................................................................... 26
(e) Authorized Officer...................................................................................... 27
9. TERMINATION................................................................................................ 27
(a) Survival of Security Interests, Liens, etc.............................................................. 27
(b) Prepayment.............................................................................................. 27
10. REPRESENTATIONS AND WARRANTIES.......................................................................... 28
2.
11. COVENANTS............................................................................................... 33
12. CONDITIONS PRECEDENT.................................................................................... 40
(a) Closing Deliveries...................................................................................... 40
(b) Post Closing Deliveries................................................................................. 42
13. DEFAULT................................................................................................. 42
14. REMEDIES UPON AN EVENT OF DEFAULT....................................................................... 44
15. INDEMNIFICATION......................................................................................... 46
(a) General Indemnity....................................................................................... 46
(b) Environmental Indemnity................................................................................. 47
16. MISCELLANEOUS........................................................................................... 47
(a) Notices................................................................................................. 47
(b) Choice of Governing Law and Construction................................................................ 48
(c) Forum Selection and Service Of Process.................................................................. 48
(d) Modification and Benefit of Agreement................................................................... 48
(e) Headings of Subdivisions................................................................................ 48
(f) Power of Attorney....................................................................................... 49
(g) Waiver of Jury Trial, Other Waivers, Confidentiality.................................................... 49
(h) Timing of Payments...................................................................................... 49
(i) Canadian Currency....................................................................................... 49
(j) Judgment Currency....................................................................................... 50
(k) Severability............................................................................................ 50
(l) Conflicts............................................................................................... 50
(m) Counterparts............................................................................................ 51
SCHEDULES AND EXHIBITS
Schedule A Authorized Officers
Schedule B Business and Collateral Locations
Schedule C Permitted Liens
Schedule 10(c) Borrower Furniture, Fixtures and Equipment
Schedule 10(i) Actions and Proceedings
Schedule 10(q) Indebtedness
Schedule 10(s) Affiliates, Joint Ventures and Partnerships
Schedule 10(w) Intellectual Property
Schedule 10(z) Environmental Matters
Schedule 12(a)(iii) Closing Documents List
Exhibit 2(d)(ii) Form of Revolving Promissory Note
Exhibit 2(d)(ii)A Form of Term Note
Exhibit 5(a) Form of Notice of Borrowing
Exhibit 8(a) Form of Collateral Loan Report
Exhibit 8(b) Form of Borrowing Base Certificate
Exhibit 8(b)(ii) Form of Statutory Payables Report
Exhibit 8(d) Form of Financial Reporting Certificate
3.
Exhibit 12(a)(ix) Form of Closing Certificate
CREDIT AGREEMENT dated as of February 4, 0000 xxxxxxx XXXXXXX
XXXXXXXXXXXX XXXXXX LIMITED, a corporation duly incorporated under the laws of
the province of Ontario (the "BORROWER") and LASALLE BUSINESS CREDIT, a division
of ABN AMRO BANK N.V., CANADA BRANCH, a Canadian branch of a Netherlands bank
(such bank herein referred to as "LASALLE"), with its head office at Maritime
Life Tower, 15th Floor, 00 Xxxxxxxxxx Xxxxxx Xxxx, Xxxxxxx (Xxxxxxx), X0X 0X0.
RECITALS
WHEREAS, the Borrower desires that LaSalle extend certain
loans, advances and other financial accommodations to the Borrower in order to
refinance existing indebtedness and to provide for working capital and the
parties wish to provide for the terms and conditions upon which such loans,
advances and other financial accommodations shall be made;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants hereinafter contained and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
the Borrower, the parties hereto agree as follows:
1. DEFINITIONS AND INTERPRETATION
(a) General Definitions.
The following terms have the following meanings when used
herein:
"ACCOUNT", "CHATTEL PAPER", "DOCUMENT OF TITLE", "EQUIPMENT",
"INTANGIBLE", "GOODS", "INSTRUMENT", and "INVENTORY" shall have the respective
meanings assigned to such terms without initial capitals, as of the date of this
Agreement, in the Ontario Personal Property Security Act ("PPSA").
"ACCOUNT DEBTOR" shall mean in respect of any Account the
debtor obligated to make payment thereof.
"AGGREGATE COMMITMENT" shall mean the sum of four million U.S.
Dollars (US $4,000,000) or the Canadian Dollar Equivalent Amount thereof plus
the outstanding principal balance of the Term Loan on the date hereof.
"AGREEMENT" shall mean this Credit Agreement as it may be
amended, supplemented, extended or restated from time to time.
"AUTHORIZED OFFICER" shall mean in respect of the Borrower
each person whose name appears on SCHEDULE A hereto.
"BA" shall mean a xxxx of exchange in Canadian Dollars made by
the Borrower and accepted by LaSalle at the Borrower's request.
5.
"BA EQUIVALENT LOAN" shall mean a Loan bearing interest at the
applicable BA Equivalent Rate.
"BA EQUIVALENT RATE" means at any time in respect of any
dollar amount and any term of a BA Equivalent Loan, the rate of interest per
annum, as determined by LaSalle in its sole discretion, which reflects the cost
to LaSalle of obtaining funds at such time (whether or not any funds are
actually obtained) in such dollar amount for a term substantially the same as
such term.
"BA PERIOD" shall have the meaning ascribed thereto in
SUBSECTION 4(c)(ii).
"BLOCKED ACCOUNT" shall have the meaning ascribed thereto in
SUBSECTION 7(a) hereof.
"BORROWING" shall mean a borrowing or advance of credit
hereunder consisting of any loans made to the Borrower on the same day by
LaSalle.
"BORROWING BASE" shall mean at any time the lesser of the
amounts then calculated as specified in SUBSECTIONS 2(b)(i) AND (ii) hereof.
"BORROWING BASE CERTIFICATE" shall have the meaning ascribed
thereto in SUBSECTION 8(b) hereof and shall be in substantially the form of
EXHIBIT 8(b) hereto.
"BUSINESS DAY" shall mean any day other than a Saturday,
Sunday, or (i) with respect to all matters, determinations, fundings and
payments in connection with LIBO Rate Loans, any day on which banks in London,
England or Toronto, Ontario are authorized or required to be closed for
business, and (ii) with respect to all other matters any other day as banks in
Toronto, Ontario are authorized or required to be closed for business.
"CANADIAN DOLLARS" or "CDN. $" shall mean the lawful currency
of Canada.
"CANADIAN DOLLAR EQUIVALENT AMOUNT" shall mean, on any given
date, the amount of Canadian Dollars which could be purchased with the relevant
amount of a currency at the then applicable Spot Rate at 11:00 a.m. Toronto time
on such date (and if such date is not a Business Day, on the preceding Business
Day) for the purchase of Canadian Dollars with such currency.
"CAPITAL ADEQUACY CHARGE" shall have the meaning ascribed
thereto in SUBSECTION 4(h).
"CAPITAL ADEQUACY DEMAND" shall have the meaning ascribed
thereto in SUBSECTION 4(h).
"CAPITAL EXPENDITURES" shall mean, with respect to any period,
the aggregate of all expenditures (whether paid in cash or accrued as
liabilities and including expenditures for capitalized lease obligations) by the
Borrower during such period that are required by GAAP to be included in or
reflected by the property, plant or equipment or similar fixed asset accounts
(or in intangible accounts subject to amortization) in the balance sheet of the
Borrower.
6.
"CLOSING CERTIFICATE" shall have the meaning ascribed thereto
in SUBSECTION 12(a)(ix) and shall be in substantially the form of EXHIBIT
12(a)(ix) hereto.
"CLOSING DATE" shall mean the date upon which the initial
Revolving Loan is made.
"COLLATERAL" shall mean all of the undertaking, property and
assets, present and future, real and personal, of the Borrower, including that
specifically described in SECTION 6 hereof and all other undertaking, property
and assets of any other Loan Party or any other Person now or hereafter pledged
to LaSalle to secure, either directly or indirectly, repayment of any of the
Liabilities.
"CONTAMINANT" shall mean all Hazardous Materials and all those
substances which are regulated by or form the basis of liability under
Environmental Laws or any other material or substance which constitutes a
material health, safety or environmental hazard to any person or property.
"DEFAULT" shall mean any event, condition or default which
with the giving of notice, the lapse of time or both would be an Event of
Default.
"ELIGIBLE EQUIPMENT" shall mean machinery and Equipment of the
Borrower which is acceptable to LaSalle in its sole discretion. Without limiting
LaSalle's discretion, LaSalle shall, in general, consider Equipment to be
Eligible Equipment if it meets, and so long as it continues to meet, all of the
following requirements:
(i) it is owned by the Borrower and the Borrower has the
right to subject it to a security interest in favour
of LaSalle;
(ii) it is located on the premises listed on SCHEDULE B
and is not in transit (except as consented by in
writing by LaSalle);
(iii) it is not subject to any prior assignment, claim,
lien, security interest or encumbrance whatsoever,
other than Permitted Liens, and is subject to a valid
first ranking security interest in favour of LaSalle
which is properly perfected in the province in which
such Equipment is located;
(iv) LaSalle has determined in accordance with LaSalle's
customary business practices that it is not
unacceptable due to immateriality, obsolescence, age,
type, category, condition or quality; for greater
certainty, damaged or defective Equipment shall not
be acceptable as Eligible Equipment; and
(v) it is not Equipment (A) with respect to which any of
the representations and warranties contained in this
Agreement or any Security Agreement are untrue or (B)
which violates any of the covenants of the Borrower
contained in this Agreement or any Security
Agreement.
"ELIGIBLE INVENTORY" shall mean Inventory of the Borrower
which is acceptable to LaSalle in its sole discretion. Without limiting
LaSalle's discretion, LaSalle shall, in general,
7.
consider Inventory to be Eligible Inventory if it meets, and so long as it
continues to meet, all of the following requirements:
(i) it is finished goods or raw material inventory owned
by the Borrower and the Borrower has the right to
subject it to a security interest in favour of
LaSalle;
(ii) it is located on the premises listed on SCHEDULE B
hereto or such other premises from time to time
accepted in writing by LaSalle;
(iii) it is not subject to any prior assignment, claim,
lien, security interest or encumbrance whatsoever,
other than Permitted Liens, has not given rise to an
Account and is subject to a valid first ranking
security interest in favour of LaSalle which is
properly perfected in the province where such
Inventory is located;
(iv) it is not work in process, stores, parts, samples,
display or slow moving Inventory, and is held for
sale or furnishing under contracts of service; it is
(except as LaSalle may otherwise consent in writing)
unspoiled and free from deficiencies which would, in
LaSalle's sole determination, affect its market
value;
(v) it is not in transit (except as consented to in
writing by LaSalle), or stored with a bailee,
consignee, warehouseman, processor or similar party
or located on any leased premises unless LaSalle has
given its prior written approval and the Borrower has
caused any such bailee, consignee, warehouseman,
processor, similar party or lessor to issue and
deliver to LaSalle, in form and substance acceptable
to LaSalle in its absolute discretion, such financing
statements, warehouse receipts, waivers and other
documents as LaSalle shall require;
(vi) LaSalle has determined that it is not unacceptable
due to obsolescence, age, type, category, quantity,
expiry or other factors; for greater certainty any
packaging materials and any used or old, returned,
damaged or defective or spoiled Inventory, Inventory
unfit for intended usage or not readily saleable, and
Inventory held or placed on consignment shall not be
acceptable as Eligible Inventory; and
(vii) it is not Inventory (A) with respect to which any of
the representations and warranties contained in this
Agreement or any Security Agreement are untrue or (B)
which violates any of the covenants of the Borrower
contained in this Agreement or any Security Agreement
or (C) with a demonstration unit.
"ENVIRONMENTAL CLAIMS" shall mean any written notice of
violation, claim, deficiency, demand, abatement or other order or prosecution by
any governmental authority or any person for personal injury (including
sickness, disease or death), tangible or intangible property damage, damage to
the environment, nuisance, pollution, contamination or other
8.
adverse effects on the environment, or for fines, penalties, convictions or deed
or use restrictions, resulting from or based upon (i) the existence, or the
continuation of the existence, of a Release (including, without limitation,
sudden or non-sudden, accidental or non-accidental Releases), of, or exposure
to, any Contaminant at, in, by or from any of the properties of the Borrower or
any Loan Party, (ii) the environmental aspects of the transportation, storage,
treatment or disposal of Contaminants in connection with the operation of any of
the properties of the Borrower or any Loan Party or (iii) the violation, or
alleged violation by Borrower or any Loan Party, of any statutes, ordinances,
orders, rules, regulations, permits or licenses of or from any Governmental
Authority, agency or court relating to environmental matters connected with any
of the properties of the Borrower or any Loan Party, under any applicable
Environmental Laws.
"ENVIRONMENTAL LAWS" includes, without limitation, the
Environmental Protection Act (Ontario), the Canadian Environmental Protection
Act, the Canadian Transportation of Dangerous Goods Act, the Ontario Water
Resources Act, the Dangerous Goods Transportation Act (Ontario), the
Occupational Health and Safety Act (Ontario), the Fisheries Act (Canada) and the
Gasoline Handling Code and Gasoline Handling Act (Ontario) and regulations
thereunder, and laws and regulations respecting pesticides, fisheries regulation
and water resource management, as all of the aforesaid laws and regulations have
been and hereafter may be amended or supplemented, and any related or analogous
present or future federal, provincial or local, statutes, rules having the force
of law, regulations, ordinances, licenses, permits and interpretations having
the force of law, orders of regulatory and administrative bodies and guidelines.
"EVENT OF DEFAULT" shall have the meaning ascribed thereto in
SECTION 13 hereof.
"EXCESS AVAILABILITY" shall mean, as of any date of
determination by LaSalle, the excess, if any, of (i) the Borrowing Base over
(ii) the aggregate of the outstanding Revolving Loans as of the close of
business on such date. For purposes of calculating Excess Availability and the
amount of the Borrowing Base relating thereto, LaSalle may, in the exercise of
its sole discretion, and without prejudice to its ability to establish other
reserves as set out in this Agreement, establish a reserve in an aggregate
amount based on the Borrower's outstanding debt which is not current (in
accordance with its terms of payment as verified by LaSalle) or which is past
due as of such date of determination, to the extent thereof, and a reserve in an
aggregate amount based on outstanding cheques issued by the Borrower, to the
extent thereof.
"FINANCIAL REPORTING CERTIFICATE" shall mean a certificate in
substantially the form of EXHIBIT 9(d) hereto.
"GAAP" shall mean at any time generally accepted accounting
principles and policies as in effect at such time in Canada.
"GOVERNMENTAL AUTHORITY" shall mean any nation or government,
any state, province or other political subdivision thereof, any central bank (or
similar monetary or regulatory authority) thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, be any of the
foregoing.
9.
"GUARANTOR" shall mean Delphax Technologies, Inc., a Minnesota
corporation.
"HAZARDOUS MATERIALS" shall mean any pollutant, contaminant,
chemical, or industrial or hazardous, toxic or dangerous goods, waste, substance
or material, defined or regulated as such in (or for purposes of) any
Environmental Laws and any other toxic, reactive, or flammable chemicals,
including (without limitation) any friable asbestos, any petroleum (including
crude oil or any fraction), any radioactive substance and any polychlorinated
biphenyls; provided, that in the event that any Environmental Law is amended so
as to broaden the meaning of any term defined thereby, such broader meaning
shall apply subsequent to the effective date of such amendment; and provided
further that, without limitation, to the extent that the applicable laws of any
province establish a meaning for "waste", "hazardous material," "hazardous
substance," "hazardous waste," "solid waste" or "toxic substance" which is
broader than that specified in any federal Environmental Laws, such broader
meaning shall apply in the relevant province.
"INDEMNIFIED PARTY" shall have the meaning ascribed thereto in
SECTION 15 hereof.
"LIABILITIES" shall mean any and all present and future
obligations, liabilities and indebtedness of the Borrower to LaSalle or to any
parent, affiliate or subsidiary of LaSalle of any and every kind and nature,
howsoever created, arising or evidenced and howsoever owned, held or acquired,
whether now or hereafter existing, whether now due or to become due, whether
primary, secondary, direct, indirect, absolute, contingent or otherwise
(including, without limitation, obligations of performance), whether several,
joint or joint and several, and whether arising or existing under written or
oral agreement or by operation of law.
"LIBO INTEREST PERIOD" shall have the meaning ascribed thereto
in SECTION 4(a) hereof.
"LIBO RATE" shall mean , with respect to any LIBO Rate Loan
for any LIBO Interest Period, a rate per annum equal to (a) the offered rate for
deposits in United States Dollars for a period equal to such LIBO Interest
Period as it appears on Telerate page 3750 as of 11:00 a.m. (London time) two
(2) Business Days prior to the first day of such LIBO Interest Period. "Telerate
page 3750" means the display designated as "Page 3750" on the Telerate Service
(or such other page as may replace page 3750 of that service or such other
service as may be nominated by the British Bankers' Association as the vendor
for the purpose of displaying British Bankers' Association interest settlement
rates for United States Dollar deposits) divided by (b) a number equal to 1.0
minus the maximum reserve percentages (expressed as a decimal fraction)
including, without limitation, basic supplemental, marginal and emergency
reserves under any regulations of the Board of Governors of the Federal Reserve
System or other governmental authority having jurisdiction with respect thereto,
as now and from time to time in effect, for Eurocurrency funding (currently
referred to as "Eurocurrency Liabilities" in Regulation D of such Board) which
are required to be maintained by LaSalle Business Credit, LLC by the Board of
Governors of the Federal Reserve System. The LIBO Rate shall be adjusted
automatically on and as of the effective date of any change in such reserve
percentage.
10.
"LIBO RATE LOANS" shall mean the Loans bearing interest with
reference to the LIBO Rate.
"LOAN" or "LOANS" shall mean any and all Revolving Loans and
the Term Loan made by LaSalle pursuant to SECTION 2 hereof and all other loans,
advances and financial accommodations made by LaSalle to or on behalf of the
Borrower hereunder.
"LOAN PARTY" shall mean each Person who is or shall become
primarily or secondarily liable for any of the Liabilities, including without
limitation the Guarantor.
"LOCK BOX" shall have the meaning ascribed thereto in
SUBSECTION 7(a) hereof.
"MATERIAL ADVERSE EFFECT" shall mean with respect to any
Person, and with respect to any event, act, condition or occurrence of whatever
nature (including, without limitation, a labour union strike or lockout and any
adverse determination in any litigation, arbitration or governmental
investigation or proceeding), whether singly or in conjunction with any other
event or events, act or acts, condition or conditions, occurrence or
occurrences, whether or not related, a material adverse change in, or a material
adverse effect upon, any of the business, property, assets, operations,
condition (financial or otherwise) or prospects of such Person.
"MATURITY DATE" shall mean January 30, 2007.
"MISSISSAUGA PROPERTIES" shall mean the properties municipally
known as 0000 Xxxxxxxxx Xxxxxxxxx, Xxxxxxxxxxx, Xxxxxxx and 0000 Xxxxxx Xxxx,
Xxxxxxxxxxx, Xxxxxxx.
"NET ORDERLY LIQUIDATION VALUE" means the net value of
unencumbered (except to LaSalle) Eligible Equipment based on definitions and
assumptions acceptable to LaSalle in its sole discretion and confirmed in an
appraisal report by an accredited appraiser satisfactory to LaSalle in its sole
discretion.
"NOTE" shall mean the Revolving Note or the Term Note.
"NOTICE OF BORROWING" shall have the meaning ascribed thereto
in SUBSECTION 5(a).
"OTHER AGREEMENTS" shall mean all agreements, instruments and
documents including, without limitation, guarantees, mortgages, hypothecs, trust
deeds, pledges, powers of attorney, consents, assignments, contracts, notices,
security agreements, leases, financing statements and all other writings
heretofore, now or from time to time hereafter executed by or on behalf of the
Borrower or any other Person (including any Loan Party) and delivered to LaSalle
or to any parent, affiliate or subsidiary of LaSalle in connection with the
Liabilities or the transactions contemplated hereby as each of the same may be
amended, restated, modified or supplemented from time to time.
"PERMITTED LIENS" shall mean (i) statutory liens of landlords,
carriers, warehousemen, mechanics, materialmen or suppliers incurred in the
ordinary course of business and securing amounts not yet due or declared to be
due by the claimant thereunder, (ii) liens or
11.
security interests in favour of LaSalle or the U.S. Lender, (iii) zoning
restrictions and easements, rights of way, licenses, covenants and other
restrictions affecting the use of real property that do not individually or in
the aggregate have a material adverse effect on the ability of the owner or user
thereof to use such real property for its intended purpose in connection with
its business, (iv) liens and prior claims securing the payment of taxes or other
governmental charges not yet delinquent or being contested in good faith and by
appropriate proceedings, (v) liens securing a purchase money obligation or liens
incurred or deposits made in the ordinary course of business in connection with
capitalized leases for purchase of, and in each case applying only to, Equipment
permitted as Capital Expenditures under SUBSECTION 11(o), the documents relating
to such liens to be in form and substance acceptable to LaSalle, (vi) deposits
to secure performance of bids, trade contracts, leases and statutory obligations
(to the extent not excepted elsewhere herein); (vii) liens set forth on SCHEDULE
C or specifically permitted by LaSalle in its sole discretion and in writing
from time to time; (viii) any lien arising out of the refinancing, extension,
renewal or refunding of any indebtedness secured by a lien permitted by any of
the foregoing SECTIONS (i) THROUGH (vii) inclusive; provided, that (A) such
indebtedness is not secured by any additional assets, and (B) the amount of such
indebtedness is not increased, (ix) pledges or deposits in connection with
worker's compensation, unemployment insurance and other social security
legislation, (x) rights of setoff, banker's lien and other similar rights
arising solely by operation of law, and (xi) liens subordinated to the liens and
security interests described in (ii) above by agreements satisfactory in form
and substance to LaSalle in its absolute discretion.
"PERSON" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, institution, entity, party or foreign or local government (whether
federal, provincial, county, city, municipal or otherwise), including, without
limitation, any instrumentality, division, agency, body or department thereof.
"PRIME RATE" shall mean the floating annual rate of interest
established from time to time by LaSalle as the reference rate for determining
interest rates on commercial loans made in Canada in the lawful currency of
Canada and designated as its prime rate; provided that under no circumstances
shall the Prime Rate be less than the market bid rate determined by LaSalle as
the average of bid rates for 30 day Canadian dollar bankers' acceptances that
appear on the Reuters Screen CDOR Page at 10:00 a.m. (Toronto time) on the
applicable day plus one and one half percent (1.5%) per annum. The Prime Rate is
not intended to be the lowest or most favourable rate of LaSalle in effect at
any time. It shall vary from time to time as determined by LaSalle.
"PRIME RATE LOAN" shall mean a Loan in the lawful currency of
Canada that bears interest based on the Prime Rate. "PRIME RATE REVOLVING LOAN"
shall mean a Revolving Loan that is a Prime Rate Loan and "PRIME RATE TERM LOAN"
shall mean a Term Loan that is a Prime Rate Loan.
"RELEASE" shall mean any releasing, spilling, leaking,
seepage, pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, disposing or dumping, in each case as defined in Environmental Laws,
and shall include any threatened Release, as defined in Environmental Laws;
provided, that in the event that any Environmental Law is amended so as
12.
to broaden the meaning of any term defined thereby, such broader meaning shall
apply subsequent to the effective date of such amendment.
"REGULATORY CHANGE" shall have the meaning ascribed thereto in
SUBSECTION 4(b)(iii).
"REVOLVING CREDIT COMMITMENT" shall mean Four Million U.S.
Dollars (U.S. $4,000,000) or the Canadian Dollar Equivalent Amount thereof.
"REVOLVING LOANS" shall have the meaning ascribed thereto in
SUBSECTION 2(a) hereof.
"REVOLVING NOTE" shall mean the revolving promissory note
executed by the Borrower in favour of LaSalle pursuant to SUBSECTION 2(d)(ii) in
substantially the form of EXHIBIT 2(d)(ii) hereto.
"SECURITY" shall have the meaning ascribed thereto in SECTION
6 hereof.
"SECURITY AGREEMENT" shall mean any security agreement
executed by the Borrower or any other Loan Party from time to time regarding the
pledge and grant of mortgages, charges, assignments, hypothecs, pledges and
security interests to LaSalle of Collateral.
"SPOT RATE" shall mean in respect of a currency, the rate
determined by LaSalle by reference to applicable currency markets to be the spot
rate for the purchase by LaSalle of such currency with another currency through
its main Toronto branch at approximately 11:00 a.m. (Toronto time) on the date
as of which the foreign exchange computation is made; provided that if at the
time of any such determination, no such spot rate can be reasonably quoted,
LaSalle may use any method as it deems applicable to determine such rate
hereunder, and such determination shall be conclusive absent manifest error.
"STATUTORY PAYABLES REPORT" shall have the meaning ascribed
thereto in SUBSECTION 8(b)(ii).
"TANGIBLE NET WORTH" shall have the meaning ascribed thereto
in the U.S. Loan and Security Agreement.
"TAX" shall mean, in relation to any LIBO Rate Loan and the
applicable LIBO Rate, any tax, levy, impost, duty, deduction, withholding or
charges of whatever nature required to be paid by LaSalle and/or to be withheld
or deducted from any payment otherwise required hereby to be made by the
Borrower to LaSalle; provided, that the term "Tax" shall not include any taxes
imposed upon the net income of LaSalle.
"TERM LOAN FACILITY" shall have the meaning ascribed thereto
in SUBSECTION 2(c).
"TERM LOAN" shall have the meaning ascribed thereto in
SUBSECTION 2(a) hereof.
13.
"TERM NOTE" shall mean the term promissory note executed by
the Borrower in favour of LaSalle pursuant to SUBSECTION 2(d)(ii) in
substantially the form of EXHIBIT 2(d)(ii)A hereto.
"TYPE" shall mean, with respect to any Loan, whether such Loan
is a Prime Rate Loan, LIBO Rate Loan, BA Equivalent Loan or a U.S. Base Rate
Loan.
"UNITED STATES" or "U.S." shall mean the United States of
America.
"UNITED STATES DOLLARS" or "U.S. DOLLARS" shall mean the
lawful currency of the United States.
"U.S. BASE RATE" shall mean the floating annual rate of
interest established from time to time by LaSalle as the reference rate for
determining interest rates on commercial loans made in Canada in U.S. Dollars
and designated as its U.S. Base Rate. The U.S. Base Rate is not intended to be
the lowest or most favourable rate of LaSalle in effect at any time. It shall
vary from time to time as determined by LaSalle.
"U.S. BASE RATE LOAN" shall mean a Revolving Loan or a Term
Loan in U.S. Dollars that bears interest based on the U.S. Base Rate.
"U.S. LENDER" shall mean LaSalle Business Credit, LLC.
"U.S. LOAN AND SECURITY AGREEMENT" shall mean that certain
loan and security agreement dated February 4, 2004 between the U.S. Lender and
the Guarantor, as the same may be amended, restated, supplemented or otherwise
modified from time to time.
(b) Accounting Terms and Definitions; Interpretation.
Unless otherwise defined or specified herein, all defined
terms in SUBSECTION 1(a) as used in this Agreement shall have the meanings set
out in such subsection, and all accounting terms used in this Agreement shall be
construed in accordance with GAAP, applied on a basis consistent in all material
respects with the financial statements delivered by the Borrower to LaSalle on
or before the Closing Date. The financial statements required to be delivered
hereunder from and after the Closing Date, and all financial records, shall be
maintained in accordance with GAAP. If GAAP shall change from the basis used in
preparing the audited financial statements delivered to LaSalle by the Borrower
on or before the Closing Date, the certificates required to be delivered
pursuant to SUBSECTION 8(d) demonstrating compliance with the covenants
contained herein shall include, upon the request of LaSalle, calculations
setting forth the adjustments necessary to demonstrate how the Borrower is in
compliance with the financial covenants based upon GAAP as in effect on the
Closing Date. References herein to sections and subsections hereof shall include
such sections and subsections as amended or modified. Nothing in this Agreement
or in any Other Agreement providing for Permitted Liens or otherwise permitting
the existence or granting of any lien, charge, security interest or other
encumbrance (each an "ENCUMBRANCE") shall or shall be deemed to grant any
subordination or postponement in favour of the holder of any Encumbrance, the
priority of all such Encumbrances to be determined by other applicable law.
14.
2. LOANS
Subject to the terms and conditions of this Agreement and the
Other Agreements, absent the existence of a Default:
(a) Revolving and Term Loan.
LaSalle shall make such revolving loans and advances as part
of the revolving facilities hereunder (the "REVOLVING LOANS") in whatever Type,
and a term loan and advance under the Term Loan Facility (the "TERM LOAN") to or
for the account of the Borrower as the Borrower shall from time to time request,
in accordance with the terms hereof. Subject to the provisions hereof requiring
earlier repayment, all Revolving Loans and the Term Loan shall be repaid in full
upon the earlier to occur of (i) the end of the term of this Agreement and (ii)
their acceleration pursuant to SECTION 14 of this Agreement. If at any time the
outstanding aggregate principal balance of the Revolving Loans and the Term Loan
made to the Borrower exceeds any limit expressed herein (whether or not such
excess results from any change in exchange rates between U.S. Dollars and
Canadian Dollars), the Borrower shall immediately, and without the necessity of
a demand by LaSalle, pay to LaSalle (or cause to be paid to LaSalle) such amount
as may be necessary to eliminate such excess, and LaSalle shall apply any such
payment to it against the outstanding principal balance of the Revolving Loans
and the Term Loan as it may determine in its sole discretion. In particular, if
at any time the outstanding principal balance of the Loans, expressed as the
Canadian Dollar Equivalent Amount thereof, exceeds the Aggregate Commitment or
the amount of Revolving Loans, expressed as the Canadian Dollar Equivalent
Amount thereof, exceeds the amount of the Borrowing Base, the Borrower shall
immediately pay to LaSalle such amount as may be necessary to eliminate such
excess, and LaSalle shall apply such payment in such order as LaSalle shall
determine in its sole discretion. The Borrower hereby authorizes LaSalle to
charge any of the Borrower's accounts to make any payments, whether of
principal, interest or otherwise, required by this Agreement.
(b) Margin and Other Requirements: Revolving Loans.
LaSalle shall make Revolving Loans to the Borrower in U.S.
Dollars by way of U.S. Base Rate Loans and/or LIBO Rate Loans and/or in Canadian
Dollars by way of BA Equivalent Loans and/or Prime Rate Loans. The Canadian
Dollar Equivalent Amount of all such Revolving Loans outstanding at any time
shall not exceed the lesser of the following:
(i) the sum of the following amounts at such time
expressed as the Canadian Dollar Equivalent Amount
thereof:
A. an amount in LaSalle's discretion up to
eighty-five percent (85%) of the value of
Eligible Inventory, calculated on the basis
of the net recovery value as determined by
an appraiser acceptable to LaSalle; minus
B. such reserve amount(s) as LaSalle elects to
establish from time to time in the exercise
of its sole discretion including, without
limitation, reserves for potential
preferential creditor items
15.
(including, without limitation, if needed in
LaSalle's sole discretion, amounts in
respect of suppliers' repossession rights
pursuant to the Bankruptcy and Insolvency
Act (Canada) or similar suppliers' rights in
Quebec pursuant to the Quebec Civil Code,
and amounts in respect of payments that may
become owing to landlords that have not
entered into an agreement with LaSalle
satisfactory to LaSalle); and
(ii) the Revolving Credit Commitment.
(c) Margin and Other Requirements: Term Loan.
LaSalle shall make a Term Loan to the Borrower as set out
below in U.S. Dollars by way of U.S. Base Rate Loan and/or LIBO Rate Loan. The
amount of such Term Loan outstanding at any time shall not exceed the following
amounts at such time under a facility (the "TERM LOAN FACILITY") of the lesser
of (x) One Million Forty-Two Thousand U.S. Dollars (U.S.$ 1,042,000) and (y) an
amount in LaSalle's discretion up to eighty percent (80%) of the Net Orderly
Liquidation Value of Eligible Equipment.
There shall be only one advance under the Term Loan Facility,
which shall be fully advanced on the Closing Date and there shall be no right to
further Term Loans thereafter under such facility. Notwithstanding the
foregoing, the Borrower may draw a Term Loan that is a LIBO Rate Loan to replace
a Term Loan that is a U.S. Base Rate Loan and draw a Term Loan that is a U.S.
Base Rate Loan to replace a Term Loan that is a LIBO Rate Loan.
(d) Loan Accounts.
(i) The accounts or records maintained by LaSalle shall
be conclusive evidence, absent manifest error, of the
amount of the Loans made by LaSalle to the Borrower,
and the interest and payments thereon. Any failure so
to record or any error in doing so shall not,
however, limit or otherwise affect the obligation of
the Borrower hereunder to pay any amount owing with
respect to the Loans.
(ii) The Borrower shall execute and deliver to LaSalle a
Note in respect of Revolving Loans and in respect of
Loans made or to be made under the Term Loan
Facility.
3. REPAYMENT OF TERM LOANS.
(a) Term Loan Facility.
The Borrower shall on the first day of each month, commencing
on the first day of March, 2004, pay to LaSalle a principal repayment of the
Term Loan under the Term Loan Facility in the amount of Fourteen Thousand Four
Hundred Seventy Three U.S. Dollars. (US $14,473).
16.
(b) Mandatory Prepayments of the Term Loan.
(i) Sale of Assets. Upon receipt of the proceeds of the
sale or other disposition of any Equipment or real
property of the Borrower which is subject to a
mortgage in favour of LaSalle, or if any of the
Equipment or real property subject to such mortgage
is damaged, destroyed or taken by a condemnation in
whole or in part, the proceeds thereof shall be paid
by the Borrower to the LaSalle as a mandatory
prepayment of the Term Loan, such payment to be
applied against the remaining installments of
principal of the Term Loan in the inverse order of
their maturities until repaid in full, and then
against the other Liabilities, in each case as
determined by LaSalle, in its sole discretion.
(c) VOLUNTARY PREPAYMENTS.
Subject to SUBSECTIONS 4(c)(iii), (e) AND 9(b), upon payment
to LaSalle of a prepayment fee equal to the amount of any prepayment multiplied
by the percentage in SUBSECTION 9(b) that would apply if this Agreement were
then terminated, the Borrower may prepay the Term Loan at any time, so long as
the amount of such prepayment is equal to or greater than $500,000.
4. INTEREST, FEES AND CHARGES
(a) Rates of Interest.
Interest accrued on all Loans shall be due and be paid by the
Borrower on the earliest of: (i) the last day of each month (for such month)
and, in the case of LIBO Rate Loans and BA Equivalent Loans the last day of the
applicable LIBO Interest Period or BA Period, computed through the immediately
preceding day; (ii) the date of acceleration following the occurrence of an
Event of Default in consequence of which LaSalle elects to accelerate their
maturity and payment; or (iii) termination of this Agreement pursuant to SECTION
9 hereof. Interest shall accrue on the principal amount of the Revolving Loans
made to the Borrower outstanding at the end of each day at a fluctuating rate
per annum equal to one and three quarters percent (1.75%) above the Prime Rate
in the case of Prime Rate Loans, three and one quarter percent (3.25%) above the
BA Equivalent Rate on the first day of the applicable BA Period in the case of
BA Equivalent Loans which rate shall apply during such BA Period, one quarter of
one percent (0.25%) above the U.S. Base Rate in the case of U.S. Base Rate Loans
and three and one quarter percent (3.25%) above the LIBO Rate for the applicable
LIBO Interest Period in the case of LIBO Rate Loans. "LIBO INTEREST PERIOD"
shall mean any continuous period of thirty (30), sixty (60), ninety (90) or one
hundred eighty (180) days, as selected from time to time by the Borrower by
irrevocable notice (in writing, by telecopy, telex, telegram, electronic mail or
cable) given to LaSalle not less than three (3) Business Days prior to the first
day of each respective LIBO Interest Period; provided that: (A) each such period
occurring after such initial period shall commence on the day on which the
immediately preceding period expires; (B) the final LIBO Interest Period shall
be such that its expiration occurs on or before the end of the Maturity Date;
and (C) if for any reason the Borrower shall fail to timely select a period,
then such Loans shall continue as, or revert to, U.S. Base Rate Loans.
17.
Interest shall accrue on the principal amount of the Term Loan
made to the Borrower outstanding at the end of each day at a fluctuating rate
per annum equal to one half of one percent (0.50%) above U.S. Base Rate in the
case of U.S. Base Rate Loans and three and one half percent (3.50%) in excess of
the LIBO Rate for the applicable LIBO Interest Period in the case of LIBO Rate
Loans.
The rate of interest payable on Prime Rate or U.S. Base Rate
Loans shall increase or decrease by an amount equal to any increase or decrease
in the Prime Rate or U.S. Base Rate, effective as of the opening of business on
the day that any such change in the Prime Rate or U.S. Base Rate occurs. Upon
and following the occurrence of an Event of Default, and during the continuation
thereof, the principal amount of all Loans shall bear interest payable on demand
at a rate per annum equal to the rate of interest then in effect under this
SUBSECTION 4(a) plus two percent (2%) per annum.
(b) Other LIBOR Provisions.
(i) Subject to the provisions of this Agreement, the
Borrower shall have the option (A) as of any date, to
convert all or any part of the U.S. Base Rate Loans
to, or request that new Revolving Loans denominated
in U.S. Dollars be made as, LIBO Rate Loans of
various LIBO Interest Periods, (B) as of the last day
of any LIBO Interest Period, to continue all or any
portion of the relevant LIBO Rate Loans as LIBO Rate
Loans; (C) as of the last day of any LIBO Interest
Period, to convert all or any portion of the LIBO
Rate Loans to U.S. Base Rate Loans; and (D) at any
time, to request new Revolving Loans as U.S. Base
Rate Loans; provided, that Loans may not be continued
as or converted to LIBO Rate Loans if the
continuation or conversion thereof would violate the
provisions of SUBSECTIONS 4(b)(ii) or 4(b)(iii) of
this Agreement of if an Event of Default has
occurred.
(ii) LaSalle's determination of the LIBO Rate as provided
above shall be conclusive, absent manifest error.
Furthermore, if LaSalle determines, in good faith
(which determination shall be conclusive, absent
manifest error), prior to the commencement of any
LIBO Interest Period that (A) U.S. Dollar deposits of
sufficient amount and maturity for funding the Loans
are not available to LaSalle in the London Interbank
Eurodollar market in the ordinary course of business,
or (B) by reason of circumstances affecting the
London Interbank Eurodollar market, adequate and fair
means do not exist for ascertaining the rate of
interest to be applicable to the Loans requested by
the Borrower to be LIBO Rate Loans or the Loans
bearing interest at the rates set forth in SUBSECTION
4(a) of this Agreement shall not represent the
effective pricing to LaSalle for U.S. Dollar deposits
of a comparable amount for the relevant period (such
as for example, but not limited to, official reserve
requirements required by any Governmental Authority
to the extent not given effect in determining the
rate), LaSalle shall promptly notify the Borrower and
(1) all existing LIBO Rate Loans shall convert to
U.S. Base Rate Loans upon the end of
18.
the applicable LIBO Interest Period, and (2) no
additional LIBO Rate Loans shall be made until such
circumstances are cured.
(iii) If, after the date hereof, the introduction of, or
any change in any applicable law, treaty, rule,
regulation or guideline or in the interpretation or
administration thereof by any Governmental Authority
or any central bank or other fiscal, monetary or
other authority having jurisdiction over LaSalle or
its lending offices (a "REGULATORY CHANGE"), shall,
in the opinion of counsel to LaSalle, make it
unlawful for LaSalle to make or maintain LIBO Rate
Loans, then LaSalle shall promptly notify the
Borrower and (A) the LIBO Rate Loans shall
immediately convert to U.S. Base Rate Loans on the
last Business Day of the then existing LIBO Interest
Period or on such earlier date as required by law and
(B) no additional LIBO Rate Loans shall be made until
such circumstance is cured.
(iv) If, for any reason, a LIBO Rate Loan is paid prior to
the last Business Day of any LIBO Interest Period or
if a LIBO Rate Loan does not occur on a date
specified by the Borrower in its request (other than
as a result of a default by LaSalle), the Borrower
agrees to indemnify LaSalle against any loss
(including any loss on redeployment of the deposits
or other funds acquired by LaSalle to fund or
maintain such LIBO Rate Loan) cost or expense
incurred by LaSalle as a result of such prepayment.
(v) If any Regulatory Change (whether or not having the
force of law) shall (A) impose, modify or deem
applicable any assessment, reserve, special deposit
or similar requirement against assets held by, or
deposits in or for the account of or loans by, or any
other acquisition of funds or disbursements by,
LaSalle; (B) subject LaSalle or the LIBO Rate Loans
to any Tax or change the basis of taxation of
payments to LaSalle of principal or interest due from
the Borrower to LaSalle hereunder (other than a
change in the taxation of the overall net income of
LaSalle); or (C) impose on LaSalle any other
condition regarding the LIBO Rate Loans or LaSalle's
funding thereof, and LaSalle shall determine (which
determination shall be conclusive, absent any
manifest error) that the result of the foregoing is
to increase the cost to LaSalle of making or
maintaining the LIBO Rate Loans or to reduce the
amount of principal or interest received by LaSalle
hereunder, then the Borrower shall pay to LaSalle, on
demand, such additional amounts as LaSalle shall,
from time to time, determine are sufficient to
compensate and indemnify LaSalle from such increased
cost or reduced amount.
(vi) LaSalle shall receive payments of amounts of
principal of and interest with respect to the LIBO
Rate Loans free and clear of, and without deduction
for, any Taxes. If (A) LaSalle shall be subject to
any Tax in respect of any LIBO Rate Loan or any part
thereof or, (B) the Borrower shall be required to
withhold or deduct any Tax from any such amount, the
19.
LIBO Rate applicable to such LIBO Rate Loans shall be
adjusted by LaSalle to reflect all additional costs
incurred by LaSalle in connection with the payment by
LaSalle or the withholding by the Borrower of such
Tax and the Borrower shall provide LaSalle with a
statement detailing the amount of any such Tax
actually paid by the Borrower. Determination by
LaSalle of the amount of such costs shall be
conclusive, absent manifest error. If, after any such
adjustment, any part of any Tax paid by LaSalle is
subsequently recovered by LaSalle, LaSalle shall
reimburse the Borrower to the extent of the amount so
recovered. A certificate of an officer of LaSalle
setting forth the amount of such recovery and the
basis therefore shall be conclusive, absent manifest
error.
(vii) Each request for LIBO Rate Loans shall be in an
amount less than One Million U.S. Dollars (U.S.
$1,000,000), and in integral multiples of, One
Hundred Thousand U.S. Dollars (U.S. $100,000).
(viii) Unless otherwise specified by the Borrower, all Loans
in U.S. Dollars shall be U.S. Base Rate Loans.
(ix) No more than five LIBO Interest Periods may be in
effect with respect to outstanding LIBO Rate Loans at
any one time.
(c) Other BA Equivalent Provisions.
(i) Subject to the provisions of this Agreement, the
Borrower shall have the option (A) as of any date, to
convert all or any part of the Prime Rate Loans to,
or request that new Revolving Loans denominated in
Canadian Dollars be made as, BA Equivalent Loans of
various BA Periods; (B) as of the last day of any BA
Period, to continue all or any portion of the
relevant BA Equivalent Loans as BA Equivalent Loans ;
(C) as of the last day of any BA Period to convert
all or any portion of the BA Equivalent Loans to
Prime Rate Loans. Any BA Equivalent Loan not repaid
in full on the end of the applicable BA Period or its
acceleration pursuant to SECTION 14 of this Agreement
shall be deemed to be a Prime Rate Loan and shall be
subject to the provisions of this Agreement
applicable to Prime Rate Loans.
(ii) LaSalle shall not be obliged to advance or convert to
any BA Equivalent Loan during the continuance of any
Default of Event of Default or if such Loan: (A)
matures on a day which is not a Business Day; (B)
matures subsequent to the Maturity Date; (C) has a
term of less than thirty (30) days or more than
ninety (90) days (each such term a "BA PERIOD"); or
(D) is less than One Million Canadian Dollars (Cdn.
$1,000,000), or an integral multiple of One Hundred
Thousand Canadian Dollars (Cdn. $100,000) in excess
thereof.
20.
(iii) Subject to the provisions of this Agreement requiring
earlier repayment, no prepayment of any BA Equivalent
Loan shall be made prior to the maturity date of such
BA Equivalent Loan.
(iv) If, for any reason, a BA Equivalent Loan is paid
prior to the last Business Day of any BA Period or if
a BA Equivalent Loan does not occur on a date
specified by the Borrower in its request (other than
as a result of a default by LaSalle), the Borrower
agrees to indemnify LaSalle against any loss
(including any loss on redeployment of the deposits
or other funds acquired by LaSalle to fund or
maintain such BA Equivalent Loan) cost or expense
incurred by LaSalle as a result of such prepayment.
(v) Unless otherwise specified by the Borrower, all Loans
in Canadian Dollars shall be Prime Rate Loans.
(d) Computation of Interest and Fees.
Interest hereunder shall be determined daily, and calculated
monthly not in advance and (in the case of LIBO Rate Loans) at the end of any
applicable LIBO Interest Period, both before and after default and judgment. In
the case of U.S. Base Rate Loans and LIBO Rate Loans, interest shall be computed
on the actual number of days elapsed over a year consisting of three hundred and
sixty (360) days. In the case of Prime Rate Loans or BA Equivalent Loans,
interest shall be computed on the actual number of days elapsed over a year
consisting of three hundred and sixty-five (365) days. For the purpose of the
Interest Act (Canada) only, the yearly rate of interest to which any rate for a
period less than a year is equivalent is such rate, divided by the number of
days in such period, and multiplied by the actual number of days in the year.
Notwithstanding any other provision hereof, all determinations and calculations
of interest rates and amounts hereunder by LaSalle shall be conclusive absent
(in the case of any calculation of an amount based on a particular rate)
manifest mathematical error in calculating such amount. For the purpose of
computing interest hereunder, all items of payment received by LaSalle shall be
deemed applied by LaSalle on account of the related Loan (subject to final
payment of such items) upon receipt by LaSalle of good funds in LaSalle's
account located in Toronto, Ontario.
(e) Maximum Interest.
It is the intent of the parties that the rate of interest and
the other charges under this Agreement shall be lawful; therefore, if for any
reason the interest or other charges payable under this Agreement are found by a
court of competent jurisdiction, in a final determination, to exceed the limit
which LaSalle may lawfully charge, then the obligation to pay interest and other
charges shall automatically be reduced to such limit and, if any amount in
excess of such limit shall have been paid, then such amount shall be refunded to
the payor thereof.
(f) Unused Line Fee.
The Borrower shall pay to LaSalle monthly in arrears on the
first Business Day of each month, an unused line fee equal to three-eighths of
one percent (.375%) per annum on the daily average amount by which the Revolving
Credit Commitment exceeds the outstanding principal balance of the Revolving
Loans, all as defined in this Agreement and all expressed as
21.
the Canadian Dollar Equivalent Amount thereof. The unused line fee shall accrue
from the Closing Date until the last day of the term of this Agreement.
(g) Examination and Appraisal Fees.
In addition to the costs and expenses described in SUBSECTION
11(p) hereof, the Borrower shall pay to LaSalle an examination fee equal to
Seven Hundred and Fifty U.S. Dollars (U.S. $750) per person per day for any
audit, inspection or other activity described in the first sentence of
SUBSECTION 11(c) hereof and conducted or undertaken before or after the date of
this Agreement, plus all out-of-pocket expenses incurred by LaSalle including,
without limitation, travel expenses, payable as incurred.
(h) Capital Adequacy Charge.
If LaSalle shall have determined that the adoption of any law,
rule or regulation regarding capital adequacy, or any change therein or in the
interpretation or application thereof, or compliance by LaSalle with any request
or directive regarding capital adequacy (whether or not having the force of law)
from any central bank or Governmental Authority enacted after the Closing Date,
does or shall have the effect of reducing the rate of return on LaSalle's
capital as a consequence of its obligations hereunder to a level below that
which LaSalle could have achieved but for such adoption, change or compliance
(taking into consideration LaSalle's policies with respect to capital adequacy)
by a material amount, then from time to time, after submission by LaSalle to the
Borrower of a written demand therefor (the "CAPITAL ADEQUACY DEMAND") together
with the certificate described below, the Borrower shall pay to LaSalle such
additional amount or amounts (the "CAPITAL ADEQUACY CHARGE") as will compensate
LaSalle for such reduction in respect of its Loans hereunder. A certificate of
LaSalle claiming entitlement to payment as set forth above shall be conclusive
in the absence of manifest error. Such certificate shall set forth the nature of
the occurrence giving rise to such reduction, the amount of the Capital Adequacy
Charge to be paid to LaSalle, and the method by which such amount was
determined. In determining such amount, LaSalle may use any averaging and
attribution method, applied on a non-discriminatory basis.
5. LOAN ADMINISTRATION
(a) Loan Requests.
A request for a Loan shall be made or shall be deemed to be
made, each in the following manner: (i) the Borrower shall give LaSalle same day
notice, no later than 12:00 noon (Toronto time) on such day, of its intention to
borrow a Prime Rate Loan, BA Equivalent Loan or U.S. Base Rate Loan and at least
three (3) Business Days prior notice of its request of a Revolving Loan as a
LIBO Rate Loan, which notice shall be substantially in the form of EXHIBIT 6(a)
hereto (each a "NOTICE OF BORROWING"), provided, however, that no such request
may be made at a time when there exists a Default or an Event of Default; and
(ii) the coming due of any amount required to be paid under this Agreement or
any Note, whether on account of interest or for any other liability, shall be
deemed irrevocably to be a request for a Prime Rate Loan or U.S. Base Rate Loan
as applicable on the due date thereof in the amount required to pay such
interest or other liability. As an accommodation to the Borrower, LaSalle may
permit telephone requests
22.
for Loans and electronic transmittal of instructions, authorizations, agreements
or reports to LaSalle. Unless the Borrower specifically directs LaSalle in
writing not to accept or act upon telephonic or electronic communications,
LaSalle shall have no liability to the Borrower for any loss or damage suffered
as a result of LaSalle's honouring of any requests, execution of any
instructions, authorizations or agreements or reliance on any reports
communicated to it telephonically or electronically and purporting to have been
sent to LaSalle by the Borrower and LaSalle shall have no duty to verify the
origin of any such communication or the authority of the Person sending it. Each
Notice of Borrowing shall be irrevocable by and binding on the Borrower. The
Borrower, at its option, may choose BA Equivalent Loans, LIBO Rate Loans, Prime
Rate Loans or U.S. Base Rate Loans for Revolving Loans, and LIBO Rate Loans or
U.S. Base Rate Loans for the Term Loan.
(b) Disbursement.
The Borrower hereby irrevocably authorizes LaSalle to disburse
the proceeds of each Loan requested by the Borrower, or deemed to be requested
by the Borrower and to be disbursed or paid by LaSalle, as follows: (i) the
proceeds of each Loan requested under SUBSECTION 5(a)(i) and to be disbursed or
paid by LaSalle, shall be disbursed by LaSalle in Canadian Dollars or U.S.
Dollars as applicable in immediately available funds, in the case of the initial
borrowing, in accordance with the terms of the written disbursement letter from
the Borrower, and in the case of each subsequent borrowing, by wire transfer or
otherwise to such bank account or directly to a supplier as may be agreed upon
by the Borrower and LaSalle from time to time; and (ii) the proceeds of each
Revolving Loan deemed requested under SUBSECTION 5(a)(ii) shall be disbursed by
LaSalle by way of direct payment of the relevant interest or other liability.
6. SECURITY
Security. As security for the payment of all Liabilities and
for the payment or other satisfaction of all other indebtedness and liabilities
of the Borrower, the Borrower agrees to deliver or cause to be delivered to
LaSalle each of the following (collectively, the "SECURITY"):
(a) Debenture in the principal amount of $15,000,000 in favour of
LaSalle by the Borrower charging all present and future property, assets and
undertaking of the Borrower;
(b) Charge/Mortgage of Land in the principal amount of $15,000,000
in favour of LaSalle by the Borrower (with debenture attached) and registered on
title to the Mississauga Properties in respect of the charge of the Borrower's
leasehold interest therein.
(c) Delivery Agreement in favour of LaSalle by the Borrower in
respect of its Debenture;
(d) Security under Section 427 of the Bank Act from the Borrower
in favour of and in the forms provided by LaSalle including, without limitation,
a notice of intention, an agreement to give security, an application for credit
and promise to give security, etc. and a grant of security under section 427;
23.
(e) Guarantee by the Guarantor in favour of LaSalle in respect of
all Liabilities;
(f) General Security Agreement by the Guarantor in favour of
LaSalle;
(g) Assignments of Insurance Monies which may become payable in
respect of the property of each of the Borrower and the Guarantor (as
acknowledged by the insurer) in favour of LaSalle; and
(h) such other security and supporting documents, certificates or
instruments in respect of the Borrower and the Guarantor (including third party
postponement and subordinations, landlord and mortgagee waivers) as may be
required by LaSalle from time to time.
7. COLLECTIONS
(a) Blocked Accounts and Lock Boxes.
Until a notice is received by the Borrower from LaSalle as
provided hereinafter, the Borrower shall collect and enforce all of its
Accounts. At and following such time as LaSalle, in its sole discretion, so
notifies the Borrower, the Borrower shall establish U.S. Dollar and Canadian
Dollar accounts (each a "BLOCKED ACCOUNT") in LaSalle's name with a financial
institution acceptable to LaSalle, into which the Borrower will immediately
deposit all payments received by the Borrower (including all payments made for
Inventory or services sold or rendered by the Borrower), in the identical form
in which such payments were made, whether by cash or cheque. At and following
such time as LaSalle, in its sole discretion, so notifies the Borrower, the
Borrower shall direct all of its Account Debtors to make all payments on the
Accounts directly to a post office box (each a "LOCK BOX") with a financial
institution acceptable to, and in the name and under exclusive control of,
LaSalle. All payments received in the Lock Box shall be deposited in the Blocked
Account. If the Borrower, any affiliate or subsidiary corporation of the
Borrower, or any shareholder, officer, director, employee or agent of the
Borrower or any affiliate or subsidiary corporation, or any other Person acting
for or in concert with the Borrower shall receive any monies, cheques, notes,
drafts or other payments relating to or as proceeds of Accounts or other
Collateral, the Borrower and each such Person shall receive all such items in
trust for, and as the sole and exclusive property of, LaSalle and, immediately
upon receipt thereof, shall remit the same (or cause the same to be remitted) in
kind to the appropriate Blocked Account. Each financial institution with which a
Lock Box and Blocked Account are established shall acknowledge and agree, in a
manner satisfactory to LaSalle, that the amounts on deposit in such Lock Box and
Blocked Account are the sole and exclusive property of LaSalle, that such
financial institution has no right to set off against such Lock Box or Blocked
Account or against any other account maintained by such financial institution
into which the contents of such Blocked Account are transferred, and that such
financial institution shall wire, or otherwise transfer in immediately available
funds in a manner satisfactory to LaSalle, funds deposited in the Blocked
Account on a daily basis as such funds are collected. The Borrower agrees that
all payments made to each Blocked Account established by the Borrower or
otherwise received by LaSalle, whether in respect of the Accounts of the
Borrower or as proceeds of other Collateral of the Borrower or otherwise, will
be applied on account of the Liabilities of the Borrower in accordance with the
terms of this Agreement. The Borrower
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agrees to pay all fees, costs and expenses which the Borrower incurs in
connection with opening and maintaining a Lock Box and Blocked Accounts. All of
such fees, costs and expenses which remain unpaid by the Borrower pursuant to
any Lock Box or Blocked Account agreement with the Borrower, to the extent same
shall have been paid by LaSalle hereunder, shall constitute Revolving Loans
hereunder, shall be payable to LaSalle by the Borrower upon demand, and, until
paid, shall bear interest at the highest rate then applicable to the Revolving
Loans hereunder. All cheques, drafts, instruments and other items of payment or
proceeds of Collateral delivered to LaSalle in kind shall be endorsed by the
Borrower to LaSalle, and, if that endorsement of any such item shall not be made
for any reason, LaSalle is hereby irrevocably authorized to endorse the same on
the Borrower's behalf. For the purpose of this paragraph, the Borrower
irrevocably hereby makes, constitutes and appoints LaSalle (and all Persons
designated by LaSalle for that purpose) as the Borrower's true and lawful
attorney and agent-in-fact (i) to endorse the Borrower's name upon said items of
payment and/or proceeds of Collateral of the Borrower and upon any Chattel
Paper, document, instrument, invoice or similar document or agreement relating
to any Account of the Borrower or goods pertaining thereto; (ii) to take control
in any manner of any item of payment or proceeds thereof; (iii) to have access
to any lock box or postal box into which any of the Borrower's mail is
deposited; and (iv) open and process all mail addressed to the Borrower and
deposited therein; provided, however, that LaSalle shall not exercise any such
powers described in SUBPARAGRAPHS (i), (ii) (except for routine Lock Box
payments/proceeds or through any Blocked Account), (iii) AND (iv) unless and
until an Event of Default has occurred.
(b) Rights of LaSalle.
LaSalle may, at any time after the occurrence of an Event of
Default, and from time to time thereafter, whether before or after notification
to any Account Debtor and whether before or after the maturity of any of the
Liabilities, (i) enforce collection of any of the Borrower's Accounts or
contract rights by suit or otherwise; (ii) exercise all of the Borrower's rights
and remedies with respect to proceedings brought to collect any Accounts; (iii)
surrender, release or exchange all or any part of any Accounts of the Borrower,
or compromise or extend or renew for any period (whether or not longer than the
original period) any indebtedness thereunder; (iv) sell or assign any Account of
the Borrower upon such terms, for such amount and at such time or times as
LaSalle deems advisable; (v) prepare, file and sign the Borrower's name on any
proof of claim in bankruptcy or other similar document against any Account
Debtor indebted on an Account of the Borrower; and (vi) do all other acts and
things which are necessary, in LaSalle's sole discretion, to fulfill the
Borrower's obligations under this Agreement and to allow LaSalle to collect the
Accounts. In addition to any other provision hereof, LaSalle may at any time on
or after the occurrence of an Event of Default, at the Borrower's expense,
notify any parties obligated on any of the Accounts of the Borrower to make
payment directly to LaSalle of any amounts due or to become due thereunder.
(c) Application of Collections.
LaSalle shall, upon receipt by LaSalle at its office in
Toronto, Ontario of cash or other immediately available funds from collections
of items of payment and proceeds of any Collateral, apply the whole or any part
of such collections or proceeds against the Liabilities in such order as LaSalle
shall determine in its sole discretion.
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(d) Dealings by LaSalle.
In its sole credit judgment, without waiving or releasing any
obligation, liability or duty of the Borrower under this Agreement or the Other
Agreements or any Event of Default, at any time or times hereafter, LaSalle may
(but shall not be obligated to) pay, acquire or accept an assignment of any
security interest, lien, encumbrance or claim asserted by any Person in, upon or
against the Collateral. All sums paid by LaSalle in respect thereof and all
costs, fees and expenses (including, without limitation, legal fees and
disbursements (on a solicitor-client basis) for both inside and outside counsel,
all court costs and all other charges relating thereto) incurred by LaSalle
shall constitute Revolving Loans, payable by the Borrower to LaSalle on demand
and, until paid, shall bear interest at the highest rate then applicable to
Revolving Loans hereunder.
(e) Receipts by Borrower.
Immediately upon the Borrower's receipt of any portion of the
Collateral consisting of an agreement, Instrument, Document of Title or Chattel
Paper, the Borrower shall deliver the original thereof to LaSalle together with
an appropriate endorsement or other specific evidence of assignment thereof to
LaSalle (in form and substance acceptable to LaSalle). If an endorsement or
assignment of any such items shall not be made for any reason, LaSalle is hereby
irrevocably authorized, as the Borrower's attorney and agent-in-fact, to endorse
or assign the same on the Borrower's behalf.
8. SCHEDULES AND REPORTS
(a) Activity Reports.
The Borrower shall deliver to LaSalle prior to any Borrowing,
and in any event not less frequently than weekly (subject to more frequent
reporting at the discretion of LaSalle) by telefacsimile at an address and
number advised by LaSalle from time to time, a report, substantially in the form
of EXHIBIT 8(a) hereto, of the Borrower's inventory activity, invoice activity
and details of credit memos and credit notes issued by the Borrower, and a
schedule showing cash receipts, all for the previous week or lesser period which
shall be accompanied by copies of the Borrower's sales journal, cash receipts
journal and credit memo journal for the relevant period.
(b) Borrowing Base Certificate.
Within twenty (20) days after the close of each calendar
month, and at such other times as may be requested by LaSalle from time to time
hereafter, the Borrower shall deliver to LaSalle a certificate for such month,
which shall include calculations of the Borrowing Base (excluding reserves but
including calculations of Eligible Inventory) (a "BORROWING BASE CERTIFICATE"),
and shall also deliver to LaSalle (and electronically to Collateral Services
Inc. in the case of accounts payable and Accounts trial balances) (i) an aged
trial balance of the Borrower's accounts payable as of the end of such month,
together with a listing of any cheques prepared but not sent in respect of any
accounts payable (ii) a report substantially in the form of EXHIBIT 8(b)(ii)
hereto in respect of all statutory payables coming due during such month from
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the Borrower, identifying all such payables by type and amount and indicating
date of payment of each, such payables to include unemployment insurance, Canada
Pension Plan and income tax employee withholdings, goods and services and retail
sales taxes, and all other payables in respect of which any statutory lien or
trust arises (a "STATUTORY PAYABLES REPORT"), and (iii) a trial balance
identifying by age each Account of the Borrower, a reconciliation thereof to the
above Borrowing Base calculations, and copies of the invoices when requested by
LaSalle (with evidence of shipment attached) pertaining to each such Account,
for the month (or other applicable period) immediately preceding. At such times
as may be requested by LaSalle from time to time hereafter, the Borrower shall
deliver to LaSalle; (x) copies of all account statements received in respect of
its chequing and any other accounts held with any financial institution; (y)
such additional schedules, certificates, reports and information with respect to
the Collateral as LaSalle may from time to time require and (z) a collateral
assignment of any or all items of Collateral. LaSalle, through its officers,
employees or agents, shall have the right, at any time and from time to time in
LaSalle's name, in the name of a nominee of LaSalle or in the Borrower's name,
to verify the validity, amount or any other matter relating to any of the
Borrower's Accounts, by mail, telephone, telegraph or otherwise. The Borrower
shall reimburse LaSalle, on demand, for all costs, fees and expenses incurred by
LaSalle in this regard.
(c) Inventory Reports.
Without limiting the generality of the foregoing, the Borrower
shall deliver to LaSalle, at least once a month within twenty (20) days after
the close of each month (or more frequently when requested by LaSalle), a report
with respect to the Borrower's Inventory (including a warehouse month end stock
status report if applicable), including a reconciliation thereof to the above
Borrowing Base calculations, a reconciliation of any perpetual inventory report
to the general ledger and an inventory declaration in form and substance
satisfactory to LaSalle in its absolute discretion. The Borrower shall
immediately notify LaSalle of any event causing loss or depreciation in value of
the Borrower's Inventory.
(d) Financial Reports.
The Borrower agrees to deliver to LaSalle the following
financial information, all of which shall be prepared in accordance with GAAP
consistently applied: (i) no later than twenty (20) days after the end of each
calendar month, copies of internally prepared financial statements of the
Borrower (individually and on a consolidated basis with the Guarantor) on a
monthly and year-to-date basis with a comparison to the prior year and budget
including, without limitation, balance sheets and statements of income, retained
earnings and cash flow certified by the chief financial officer of the Borrower
and accompanied by a Financial Reporting Certificate, (ii) no later than sixty
(60) days before the end of the Borrower's fiscal year, a detailed budget and
statement of cash flow projections for it during the following fiscal year, in
such detail as LaSalle may require, and (iii) no later than ninety (90) days
after the end of the Borrower's fiscal year, annual audited financial statements
of the Borrower (individually and on a consolidated basis with the Guarantor)
certified by independent chartered accountants satisfactory to LaSalle, together
with such accountants' report thereon to management if such is made.
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(e) Authorized Officer.
Unless otherwise provided for herein, all schedules,
certificates, reports and assignments and other items delivered by the Borrower
to LaSalle hereunder shall be executed by an Authorized Officer and shall be in
such form and contain such information as LaSalle shall request. The Borrower
shall deliver from time to time such other schedules and reports pertaining to
the Collateral of the Borrower, and all such other financial information, as
LaSalle may request.
9. TERMINATION
(a) Survival of Security Interests, Liens, etc.
This Agreement shall be in effect from the date hereof until
January 30, 2007 unless the due date of the Liabilities is accelerated pursuant
to SECTION 14 hereof in which event this Agreement shall terminate on the date
thereafter that the Liabilities are paid in full, provided, however, that the
security interests and liens created under this Agreement and the Other
Agreements shall survive such termination until the date upon which full and
final payment and satisfaction in full of the Liabilities shall have occurred.
At such time as the Borrower has repaid all of the Liabilities and this
Agreement has terminated, (i) the Borrower shall deliver to LaSalle a release,
in form and substance satisfactory to LaSalle, of all obligations and
liabilities of LaSalle and its officers, directors, employees, agents, parents,
subsidiaries and affiliates to the Borrower, and if the Borrower is obtaining
new financing from another lender, the Borrower shall deliver such lender's
indemnification of LaSalle, in form and substance satisfactory to LaSalle, for
cheques which LaSalle has credited to the Borrower's account held at LaSalle,
but which subsequently are dishonoured for any reason and (ii) upon the
Borrower's request and upon receipt of the release and indemnification described
in SUBPARAGRAPH (i) above, LaSalle shall deliver to the Borrower a release in
form and substance satisfactory to LaSalle.
(b) Prepayment.
If the Borrower terminates this Agreement or reduces the
amount of the Revolving Credit Commitment at any time before the end of the term
hereof, the Borrower agrees to pay to LaSalle, as a prepayment fee, in addition
to the payment of all other Liabilities owing by the Borrower (in the case of
any such termination), an amount equal to: (i) three percent (3%) of the amount
of the Aggregate Commitment, or of the amount of the applicable reduction in the
Revolving Credit Commitment, if this Agreement is terminated or such reduction
is made (as applicable) during the first year of the term of this Agreement;
(ii) two percent (2%) of the amount of the Aggregate Commitment, or of the
amount of the applicable reduction in the Revolving Credit Commitment, if this
Agreement is terminated or such reduction is made (as applicable) during the
second year of the term of this Agreement; or (iii) one percent (1%) of the
amount of the Aggregate Commitment, or of the amount of the applicable reduction
in the Revolving Credit Commitment, if this Agreement is terminated or such
reduction is made (as applicable) during the third year of the term of this
Agreement or at any time thereafter. The Borrower and LaSalle acknowledge and
agree that, as a direct and proximate result of the termination of this
Agreement under the aforesaid circumstances, or prepayment otherwise, or
reduction as aforesaid, LaSalle will suffer a loss in an amount which is
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difficult to calculate and determine with certainty and, therefore, as a result
of the Borrower's and LaSalle's reasonable endeavour to ascertain and agree in
advance to the amount necessary to compensate LaSalle for said loss, the
Borrower has agreed to pay the aforesaid prepayment and other fees set out
herein.
10. REPRESENTATIONS AND WARRANTIES
The Borrower hereby makes the following representations,
warranties and covenants to LaSalle:
(a) the financial statements delivered or to be delivered by the
Borrower to LaSalle at or prior to the date of this Agreement and at all times
subsequent thereto accurately reflect the financial condition of the Borrower
and each other Loan Party for which such statements are delivered, and since the
date of such financial statements delivered to LaSalle most recently prior to
the date of this Agreement, no event or condition has occurred which has had, or
is reasonably likely to have, a Material Adverse Effect with respect to the
Borrower or any other Loan Party;
(b) the office where the Borrower keeps its books, records and
accounts (or copies thereof) concerning the Collateral, the Borrower's principal
place of business and all other places of business, locations of Collateral and
post office boxes of the Borrower are as set forth in SCHEDULE B hereto; the
Borrower shall promptly (but in no event less than ten (10) days prior thereto)
advise LaSalle in writing of the proposed opening of any new place of business,
the closing of any existing place of business, any change in the location of the
Borrower's books, records and accounts (or copies thereof) or the opening or
closing of any post office box of the Borrower;
(c) SCHEDULE 10(c) contains a complete list of all Equipment of
the Borrower having a purchase price exceeding $5,000 as at the date of this
Agreement; the Collateral, including without limitation the Borrower's Equipment
is, and shall be kept, or, in the case of vehicles, based, only at the addresses
set forth on SCHEDULE B, and at other locations within Ontario of which LaSalle
has been advised by the Borrower in writing;
(d) if any of the Collateral consists of Goods of a type normally
used in more than one province, whether or not actually so used, the Borrower
shall immediately give written notice to LaSalle of any use of any such Goods in
any province other than a province in which the Borrower has previously advised
LaSalle such Goods shall be used, and such Goods shall not, unless LaSalle shall
otherwise consent in writing, be used outside of Ontario;
(e) no security agreement, financing statement or analogous
instrument exists or shall exist with respect to any of the Collateral or any
property or asset of a Loan Party other than any security agreement, financing
statement or analogous instrument evidencing Permitted Liens;
(f) each item of Inventory which the Borrower shall, expressly or
by implication, request LaSalle to classify as Eligible Inventory, respectively,
shall, as of the time when such request is made, conform in all respects to the
requirements of such classification as set forth in the definition of Eligible
Inventory and as otherwise established by LaSalle from time to time, and the
Borrower shall promptly notify LaSalle in writing if any such Eligible Inventory
shall
29.
subsequently become ineligible; no Accounts owing from any party related to or
affiliated with the Borrower, the Guarantor or any of their respective direct or
indirect shareholders, directors, officers or employees is or shall be due and
payable more than thirty (30) days after the stated invoice date thereof;
(g) the Borrower is and shall at all times be the lawful owner of
all Collateral now purportedly owned or hereafter purportedly acquired by the
Borrower, and the Guarantor has good and marketable title to its property
charged as security for its guarantee in favour of LaSalle and is and shall at
all times be the lawful owner of all of its property and assets now purportedly
owned or hereafter purportedly acquired by it, free from all liens, claims,
security interests and encumbrances whatsoever, whether voluntarily or
involuntarily created and whether or not perfected, other than the Permitted
Liens;
(h) the Borrower and each other Loan Party has the right and power
and is duly authorized and empowered to enter into, execute and deliver this
Agreement and the Other Agreements to which it is a party and perform its
obligations hereunder and thereunder as applicable; their execution, delivery
and performance of this Agreement and the Other Agreements does not and shall
not conflict with the provisions of any statute, regulation, ordinance or rule
of law, or any agreement, contract or other document which may now or hereafter
be binding on any of them, and their execution, delivery and performance of this
Agreement and the Other Agreements as applicable shall not result in the
imposition of any lien or other encumbrance upon any of their property under any
existing indenture, mortgage, deed of trust, loan or credit agreement or other
agreement or instrument by which any of them or any of their property may be
bound or affected;
(i) except as otherwise disclosed on SCHEDULE 10(i), there are no
actions or proceedings which are pending or, to the best of the Borrower's
knowledge, threatened against the Borrower or any other Loan Party and the
Borrower shall, and shall cause each other Loan Party to, promptly upon becoming
aware of any such pending or threatened action or proceeding, give written
notice thereof to LaSalle;
(j) the Borrower and each of the other Loan Parties has obtained
all licenses, authorizations, approvals and permits required or desirable in
their respective businesses, and the Borrower is and shall remain in compliance
in all material respects with all applicable federal, provincial, local and
foreign statutes, orders, regulations, rules and ordinances (including, without
limitation, statutes, orders, regulations, rules and ordinances relating to
taxes, employer and employee contributions and similar items, securities,
employee retirement and welfare benefits, employee health and safety or
environmental matters), the failure to comply with which would have a Material
Adverse Effect with respect to the Borrower, and there are no conditions with
respect to such licenses, authorizations, approvals and permits that materially
affect or restrict the transferability of such licenses, authorizations,
approvals and permits;
(k) all written information now, heretofore or hereafter furnished
by the Borrower or any other Loan Party to LaSalle is and shall be true and
correct as of the date with respect to which such information was or is
furnished (except for financial projections, which have been and shall be
prepared in good faith based upon reasonable assumptions);
30.
(l) except as otherwise permitted hereby, the Borrower is not
conducting, permitting or suffering to be conducted, nor shall it conduct,
permit or suffer to be conducted, any activities pursuant to or in connection
with which any of the Collateral is now, or will (while any Liabilities remain
outstanding) be owned by any affiliate corporation;
(m) the Borrower was formed by incorporation under the Ontario
Business Corporations Act on October 21, 2002. The Borrower shall notify LaSalle
in writing within ten (10) days of the change of its name or that of any other
Loan Party or the use of any tradenames or division names not previously
disclosed to LaSalle in writing. The Guarantor is a corporation duly
incorporated and subsisting under the laws of Minnesota;
(n) with respect to the Borrower's Equipment: (i) subject to
Permitted Liens, the Borrower has good and indefeasible and merchantable title
to and ownership of all Equipment; (ii) the Borrower shall keep and maintain the
Equipment in good operating condition and repair and shall make all necessary
replacements thereof and renewals thereto so that the value and operating
efficiency thereof shall at all times be preserved and maintained, ordinary wear
and tear excepted; (iii) the Borrower has not permitted and shall not permit any
such items to become a fixture to real estate or an accession to other personal
property; (iv) from time to time the Borrower may sell obsolete, unused or worn
out Equipment, so long as the proceeds of disposition shall be paid to LaSalle
to be applied to such Loans then outstanding as LaSalle shall determine at its
discretion; and (v) the Borrower, immediately on demand by LaSalle, shall
deliver to LaSalle any and all evidence of ownership of, including, without
limitation, certificates of title and applications of title to, any of the
Equipment;
(o) this Agreement and the Other Agreements to which the Borrower
or another Loan Party is a party are the legal, valid and binding obligations of
the Borrower or such Loan Party as applicable and are enforceable against the
Borrower or such Loan Party as applicable in accordance with their respective
terms, except to the extent that such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting the rights of creditors generally;
(p) the Borrower and each other Loan Party is solvent, is able to
pay its debts as they become due and has capital sufficient to carry on its
business, now owns property having a value both at fair valuation and at present
fair saleable value greater than the amount required to pay its debts, and will
not be rendered insolvent by the execution and delivery of this Agreement or any
of the Other Agreements or by completion of the transactions contemplated
hereunder or thereunder;
(q) the Borrower is not now obligated, whether directly or
indirectly, for any loans (including shareholder loans) or other indebtedness or
liability (contingent or otherwise) other than (i) the Liabilities; (ii)
indebtedness and liabilities disclosed to LaSalle on SCHEDULE 10(q); (iii)
unsecured indebtedness to trade creditors arising in the ordinary course of the
Borrower's business and (iv) unsecured indebtedness arising from the endorsement
of drafts and other instruments for collection, in the ordinary course of the
Borrower's business. The Borrower is not in arrears in payment of any amount to
any supplier of Inventory or any governmental body or agency including, without
limitation, amounts owing or to be remitted with respect to
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employee withholdings for income tax or Canada Pension Plan, goods and services
tax or provincial sales taxes.
(r) the Borrower does not own any margin securities, and none of
the proceeds of the Revolving Loans hereunder shall be used for the purpose of
purchasing or carrying any margin securities or for the purpose of reducing or
retiring any indebtedness which was originally incurred to purchase any margin
securities;
(s) except as otherwise disclosed on SCHEDULE 10(s), the Borrower
has no subsidiary corporation or affiliate corporation or divisions, nor is the
Borrower engaged in any joint venture or partnership with any other Person;
(t) each of the Borrower and each other Loan Party that is a
corporation is duly organized and in good standing in its country, province or
state of organization. The Borrower is subject to a unanimous shareholder
agreement with the Guarantor under which the Guarantor assumes all of the powers
of the Borrower's directors and each other Loan Party, has and shall at all
times have in place a duly constituted board of directors or single director
overseeing its affairs, is not and shall not be at any time subject to a
unanimous shareholder agreement or declaration affecting the powers of such
director or directors, and is duly qualified and in good standing in all
provinces or states where the nature and extent of the business transacted by it
or the ownership of its assets makes such qualification necessary, except for
such other provinces or states in which the failure to so qualify would not have
a Material Adverse Effect with respect to any of them;
(u) except as disclosed in writing and acceptable to LaSalle, none
of the Borrower or any other Loan Party is in default under any material
contract, lease or commitment to which it is a party or by which it is bound,
nor does the Borrower know of any dispute regarding any contract, lease or
commitment which is material to the continued financial success and well-being
of any of them;
(v) there are no controversies pending or threatened between the
Borrower or any other Loan Party and any of its employees or any union
representing any employees, other than employee grievances arising in the
ordinary course of business which are not, in the aggregate, likely to have a
Material Adverse Effect with respect to the Borrower or such Loan Party. The
Borrower and each of the other Loan Parties is in compliance in all material
respects with all state, federal and provincial laws respecting employment and
employment terms, conditions and practices, except where the failure to so
comply would not have a Material Adverse Effect with respect to the Borrower or
such Loan Party;
(w) the Borrower possesses, and shall continue to possess,
adequate licenses, patents, patent applications, copyrights, service marks,
trademarks, trademark applications, tradestyles and tradenames to continue to
conduct its business as heretofore conducted by it, details of all of which are
described on SCHEDULE 10(w);
(x) the Guarantor is the registered and beneficial owner of 100%
of the issued and outstanding shares in the capital of the Borrower, being 1
common share;
32.
(y) except as disclosed in SCHEDULE 10(y) hereto: (i) the
operations and properties of the Borrower and each Loan Party comply with all
applicable Environmental Laws except for any non-compliance which would not have
a Material Adverse Effect with respect to any of them; (ii) the Borrower and
Loan Party and all of their present facilities or operations and properties, as
well as to the knowledge of the Borrower and each Loan Party their past
facilities or operations and properties, are not subject to any judicial
proceeding or administrative proceeding or any outstanding written order or
agreement with any Governmental Authority or private party respecting (a) any
Environmental Law or; (b) any Environmental Claim arising from the Release of a
Contaminant into the environment; (ii) to the best of the knowledge of the
Borrower and each Loan Party, none of their operations or properties is subject
to any federal, provincial or state investigation evaluating whether any
remedial work is needed to respond to a Release of any Contaminant into the
environment in each case which would have a Material Adverse Effect with respect
to any of them; (iv) none of the Borrower or any Loan Party nor any predecessor
of any of the Borrower or any Loan Party has, to the best of the knowledge of
the Borrower and each Loan Party, carried on the past or present facilities or
operations or properties of the Borrower or any of the Loan Parties, any past or
present treatment, storage, or disposal of a Hazardous Material, nor have the
Borrower or any Loan Party or any prior owner or operator on any of the
properties of the Borrower or any Loan Party reported a spill or Release of a
Contaminant into the environment in each case which would have a Material
Adverse Effect with respect to any of them; (v) none of the Borrower or any Loan
Party has been notified that it has any liability in connection with any Release
of any Contaminant into the environment in each case which would have a Material
Adverse Effect with respect to any of them; (vi) none of the operations or
properties, past or present, of the Borrower or any Loan party involve the
generation, transportation, treatment or disposal of Hazardous Materials in
violation of Environmental Laws in each case which would have a Material Adverse
Effect with respect to any of them; (vii) none of the Borrower or any Loan Party
have disposed of any Contaminant by placing it in or on the ground or waters of
any premises owned, leased or used by any of them and to the knowledge of the
Borrower or any Loan Party neither has any lessee, prior owner, prior operator
or occupant or other person in each case which would have a Material Adverse
Effect with respect to the Borrower or any Loan Party; (viii) no underground
storage tanks or surface impoundments are on any properties of the Borrower or
any Loan Party; and (ix) to the best of the knowledge of the Borrower and any
Loan Party, no lien in favour of any Governmental Authority for (A) any
liability under any Environmental Laws, or (B) damages arising from or costs
incurred by such Governmental Authority in response to a Release of a
Contaminant into the environment, has been filed or attached to the property of
the Borrower or any Loan Party;
(z) all employee pension benefit plans are registered under, and in compliance
with, all requirements of law, all payments, reports, returns and filings
required to be made thereunder have been made and there is no obligation on the
part of the Borrower under any such plan that is in arrears. All such plans have
been administered in accordance with their terms and the provisions of
applicable law. There are no unfunded liabilities under any such plans and,
without limiting the generality of the foregoing, there is no going concern
unfunded actuarial liability, past service unfunded actuarial liability or
solvency deficiency.
The Borrower represents, warrants and covenants to LaSalle that all
representations, warranties and covenants of the Borrower and of any other Loan
Party contained in this Agreement or any
33.
of the Other Agreements (whether appearing in SECTIONS 10 OR 11 hereof or
elsewhere) shall be true at the time of the Borrower's execution of this
Agreement, shall survive the execution, delivery and acceptance hereof and
thereof by the parties hereto and thereto and the closing of the transactions
described herein or related hereto, shall remain true until the repayment in
full of all of the Liabilities and termination of this Agreement, and shall be
remade by the Borrower and each such Loan Party at the time each Revolving Loan
is made pursuant to this Agreement.
11. COVENANTS
Until payment or satisfaction in full of all Liabilities and
termination of this Agreement, unless the Borrower obtains LaSalle's prior
written consent waiving or modifying any of the Borrower's covenants hereunder
in any specific instance, the Borrower agrees as follows:
(a) the Borrower shall at all times keep accurate and complete
books, records and accounts with respect to all of the Borrower's business
activities, in accordance with sound accounting practices and GAAP consistently
applied, and shall keep such books, records and accounts, and any copies
thereof, only at the addresses indicated for such purpose on SCHEDULE B;
(b) the Borrower shall promptly advise LaSalle in writing of any
Material Adverse Effect in respect of the Borrower or any other Loan Party or
the occurrence of any Default or Event of Default;
(c) LaSalle, or any Persons designated by it, shall have the
right, at any time (including, without limitation, through audits (including any
audit of the Borrower's Inventory or Equipment) scheduled within forty-five (45)
days after the Closing Date and thereafter quarterly and more frequently during
the continuance of a Default or Event of Default) to call at the Borrower's
places of business or at any warehouse or storage facility where property or
assets of the Borrower are located at any times, and, without hindrance or
delay, to inspect the Collateral and to inspect, check and make extracts from
the Borrower's books, records, journals, orders, receipts, properties and any
correspondence and other data relating to the Borrower's business, the
Collateral or any transactions between the parties hereto, and shall have the
right to make such verification concerning the Borrower's business as LaSalle
may consider reasonable under the circumstances. LaSalle shall also have the
right to have Persons designated by it conduct such appraisals of Collateral as
it shall require from time to time, including without limitation net orderly
liquidation value appraisals of Inventory not less than semi-annually. The
Borrower shall furnish to LaSalle such information relevant to LaSalle's rights
under this Agreement (including without limitation information on sales,
receivables, collections, accounts payable and inventory aging) as LaSalle shall
at any time and from time to time request. The Borrower authorizes LaSalle to
discuss the affairs, finances and business of the Borrower with any officers or
directors of the Borrower or any affiliate corporation and with those employees
of the Borrower with whom LaSalle has determined it to be necessary or desirable
to converse, and to discuss the financial condition of the Borrower with the
Borrower's independent public accountants. Any such discussions shall be without
liability to LaSalle or to such accountants. The Borrower shall pay to or
reimburse LaSalle for all fees, costs, and out-of-pocket expenses incurred by
LaSalle in the exercise of its rights hereunder (in addition to the fees payable
by the
34.
Borrower pursuant to SUBSECTION 4(g) hereof in connection with LaSalle's
examination of Borrower's books and records and Collateral), including without
limitation reimbursing LaSalle on the last day of each month, in arrears, for
the amount of a monitoring fee charged by Collateral Services Inc. (currently
U.S. $65 per month, but subject to change), and all of such costs, fees and
expenses shall constitute Revolving Loans hereunder, shall be payable on demand
and, until paid, shall bear interest at the highest rate then applicable to
Revolving Loans hereunder;
(d) (i) the Borrower shall keep the Collateral properly
housed and shall keep the Collateral insured against
such risks and in such amounts as LaSalle may require
and under policies in such form as shall be
satisfactory to LaSalle. Originals or certified
copies of such policies of insurance have been, or on
the Closing Date, shall be, delivered to LaSalle
together with evidence of payment of all premiums
therefor, and shall contain, inter alia, an
endorsement, in form and substance acceptable to
LaSalle, showing loss under such insurance policies
payable to LaSalle. Such endorsement, the other terms
of the said policies, or an independent instrument
furnished to LaSalle, shall provide that the
insurance company shall give LaSalle at least thirty
(30) days written notice before any such policy of
insurance is materially altered or cancelled and
shall include a standard mortgage clause providing,
inter alia, that no act or omission, whether wilful
or negligent, or default of the Borrower or any other
Person shall affect the right of LaSalle to recover
under such policy of insurance in case of loss or
damage. The Borrower hereby directs all insurers
under such policies of insurance to pay all proceeds
payable thereunder directly to LaSalle. The Borrower
irrevocably, makes, constitutes and appoints LaSalle
(and all officers, employees or agents designated by
LaSalle) as the Borrower's true and lawful attorney
(and agent-in-fact) for the purpose of making,
settling and adjusting claims under such policies of
insurance, endorsing the name of the Borrower on any
cheque, draft, instrument or other item of payment
for the proceeds of such policies of insurance and
making all determinations and decisions with respect
to such policies of insurance; provided, however,
that LaSalle shall exercise such rights only upon and
following the occurrence of an Event of Default;
(ii) the Borrower shall maintain or shall cause to be
maintained, at its expense, such public liability and
third party property damage insurance and business
interruption insurance as is customary for Persons
engaged in businesses similar to that of the Borrower
with such companies and in such amounts, with such
deductibles and under policies in such form as shall
be satisfactory to LaSalle and originals or certified
copies of such policies have been, or on the Closing
Date, shall be, delivered to LaSalle together with
evidence of payment of all premiums therefor; each
such policy shall contain an endorsement showing
LaSalle as additional insured thereunder and
providing that the insurance company shall give
LaSalle at least thirty (30) days written notice
before any such policy shall be materially altered or
cancelled;
35.
(iii) if the Borrower at any time or times hereafter shall
fail to obtain, maintain or cause to be maintained
any of the policies of insurance required above or to
pay any premium in whole or in part relating thereto,
then LaSalle, without waiving or releasing any
obligation or default by the Borrower hereunder, may
(but shall be under no obligation to) obtain and
maintain such policies of insurance and pay such
premiums and take such other actions with respect
thereto as LaSalle deems advisable. All sums
disbursed by LaSalle in connection with any such
actions, including, without limitation, court costs,
expenses, other charges relating thereto and legal
fees and disbursements (on a full indemnity basis),
shall constitute Revolving Loans hereunder and, until
paid, shall bear interest at the highest rate then
applicable to Revolving Loans hereunder;
(e) the Borrower shall not use the Collateral, or any part
thereof, in any unlawful business or for any unlawful purpose or use or maintain
any of the Collateral in any manner that does or could result in material damage
to the environment or a violation of any applicable Environmental Laws, or that
does or could result in an Environmental Claim; the Borrower shall keep the
Collateral in good condition, repair and order, ordinary wear and tear excepted;
the Borrower shall not permit the Collateral, or any part thereof, to be levied
upon under execution, attachment, writs of enforcement, distraint or other legal
process; the Borrower shall not sell, lease, grant a security interest in or
otherwise encumber or dispose of any of the Collateral except as expressly
permitted by this Agreement and the Borrower shall not permit any liens (other
than Permitted Liens) or security interests to attach to the Collateral that
could rank either in priority to, or pari passu to the Security; and the
Borrower shall not secrete or abandon any of the Collateral, or remove or permit
removal of any of the Collateral from any of the locations listed on SCHEDULE B
or in any written notice to LaSalle pursuant to SECTION 10(d) hereof, except for
the removal of Inventory sold in the ordinary course of the Borrower's business
as permitted herein;
(f) all monies and other property obtained by the Borrower from
LaSalle pursuant to this Agreement will be used solely to pay out existing
indebtedness to Xxxxxx Trust and Savings Bank and for ongoing operational
requirements of the Borrower;
(g) the Borrower shall, at the request of LaSalle, indicate on its
records concerning the Collateral a notation, in form satisfactory to LaSalle,
of the security interest of LaSalle, and the Borrower shall not maintain
duplicates or copies of such records at any address other than the Borrower's
principal place of business set forth on the first page of this Agreement;
provided, however, that the Borrower, in the ordinary course of its business,
may furnish copies of such records to its accountants, attorneys and other
agents or advisors as it may determine to be necessary or desirable, in the
exercise of its commercially reasonable judgment;
(h) the Borrower shall file all required tax returns and pay all
of its taxes when due, including, without limitation, taxes imposed by federal,
provincial or municipal agencies, and shall cause any liens for taxes to be
promptly released; provided, that the Borrower shall have the right to contest
the payment of such taxes in good faith by appropriate proceedings so long as
(i) the amount so contested is shown on the Borrower's financial statements,
(ii) the contesting of any such payment does not give rise to a lien for taxes,
(iii) upon the occurrence of an Event of
36.
Default, the Borrower keeps on deposit with LaSalle (such deposit to be held
without interest) an amount of money which, in the sole judgment of LaSalle, is
sufficient to pay such taxes and any interest or penalties that may accrue
thereon, and (iv) if the Borrower fails to prosecute such contest with
diligence, LaSalle may apply the money so deposited in payment of such taxes. If
the Borrower fails to pay any such taxes and in the absence of any such contest
by the Borrower, LaSalle may (but shall be under no obligation to) advance and
pay any sums required to pay any such taxes and/or to secure the release of any
lien therefor, and any sums so advanced by LaSalle shall constitute Revolving
Loans hereunder, shall be payable by the Borrower to LaSalle on demand, and,
until paid, shall bear interest at the highest rate then applicable to Revolving
Loans hereunder;
(i) the Borrower shall not, without the prior written consent of
LaSalle, (i) incur, create, assume or suffer to exist any indebtedness other
than (A) indebtedness arising under this Agreement, (B) unsecured indebtedness
owing in the ordinary course of business to the Borrower's trade suppliers, (C)
indebtedness to the Guarantor up to an aggregate amount not to exceed Ten
Million U.S. Dollars (U.S. $10,000,000) outstanding at any time, so long as (i)
such loan is permitted under all applicable laws; (ii) no Event of Default shall
have occurred prior to the time of, or would occur as a result of such loan;
(iii) if requested by LaSalle, such loan is evidenced by a note which shall be
delivered to Lender to be held as Collateral; and (iv) the proceeds of such loan
are used for working capital purposes or to pay out existing indebtedness to
Xxxxxx Trust and Savings Bank, and (D) any other indebtedness described in
SECTION 10(q)(ii) hereof; or (ii) assume, guarantee or endorse, or otherwise
become liable in connection with, the obligations of any Person, except by
endorsement of instruments for deposit or collection or similar transactions in
the ordinary course of the Borrower's business and except for a guarantee of the
indebtedness, liabilities and obligations of the Guarantor to the U.S. Lender
pursuant to the U.S. Loan and Security Agreement;
(j) the Borrower shall not, without the prior written consent of
LaSalle, enter into any merger, amalgamation or consolidation, or sell, lease or
otherwise dispose of all or substantially all of its assets or create any new
subsidiary or affiliate or issue any shares of, or warrants or other rights to
receive or purchase any shares of, any class of its stock; the Borrower shall
not enter into any transaction outside the ordinary course of the Borrower's
business;
(k) the Borrower shall not make any distribution of funds or
property and, without limitation, the Borrower shall not (i) declare or pay any
bonus, dividend or other distribution (whether in cash or in kind) on, purchase,
redeem or retire any shares of any class of its stock, or make any payment on
account of, or set apart assets for the repurchase, redemption, defeasance or
retirement of, any class of its stock; or (ii) make any optional payment or
prepayment on or redemption (including without limitation by making payments to
a sinking fund or analogous fund) or repurchase of any indebtedness for borrowed
money other than indebtedness pursuant to this Agreement, or (iii) make any
payment on or in respect of any indebtedness, or any interest, fee or other
payment, to any parent, subsidiary, affiliate corporation or other related
Person other than payments on or in respect of indebtedness permitted under
SUBSECTION 11(i) of this Agreement;
(l) the Borrower shall not make any loans to, or investments in,
any Person, whether in cash, securities or other property of any kind, other
than investments that are direct obligations
37.
of Canada or the United States pledged and delivered to LaSalle pursuant to
documentation satisfactory to LaSalle in its absolute discretion, except for
loans to the Guarantor up to an aggregate amount not to exceed Ten Million U.S.
Dollars (U.S. $10,000,000) outstanding at any time, so long as (i) such loan is
permitted under all applicable laws; (ii) no Event of Default shall have
occurred prior to the time of, or would occur as a result of such loan; (iii) if
requested by LaSalle, such loan is evidenced by a note which shall be delivered
to Lender to be held as Collateral; and (iv) such loans shall be made for
working capital purposes;
(m) the Borrower shall not except with the prior written consent
of LaSalle, amend its organizational documents or change its fiscal year;
(n) the Borrower shall not (a) pay any management or consulting
fees to any Persons, except in the ordinary course of business or pay any bonus
to any of its directors, officers or employees except that, the Borrower may pay
bonuses to its directors, officers and employees in accordance with its
Incentive Plan Program as summarized on Schedule 13(k) of the U.S. Loan and
Security Agreement, in any case, so long as (a) no Event of Default is
continuing or would result therefrom and (b) immediately before paying any such
bonuses, the aggregate of Excess Availability (as such term is defined in the
U.S. Loan and Security Agreement) and Excess Availability hereunder is not less
than U.S. $1,000,000 or the Canadian Dollar Equivalent Amount thereof and (c)
immediately after paying any such bonuses, the aggregate of Excess Availability
(as such term is defined in the U.S. Loan and Security Agreement) and Excess
Availability hereunder is not less than U.S. $500,000 and (d) Excess
Availability hereunder shall not be less than Cdn. $500,000 immediately after
paying such bonuses.
(o) the Borrower shall caused to be maintained and kept in full
force and effect each of the financial covenants set forth in the U.S. Loan and
Security Agreement, including without limitation the covenants to:
(i) Tangible Net Worth. Maintain Tangible Net Worth at or
above the level set out in Section 14(a) thereof;
(ii) Debt Service Coverage. Maintain a debt service
coverage ratio in excess of that set out in Section
14(b) thereof; and
(iii) Interest Coverage. Maintain an interest coverage
ratio of not less than that set out in Section 14(c)
thereof.
Further, the Borrower shall not, during any fiscal year, make Capital
Expenditures which together with the Capital Expenditures (as such term is
defined in the U.S. Loan and Security Agreement) of the Guarantor exceed the
Canadian Dollar Equivalent Amount of an aggregate amount:
(a) in its fiscal year ending September 30, 2004, One Million
Seven Hundred Thousand U.S. Dollars (U.S. $1,700,000); and
(b) in each of its fiscal years thereafter (on a
non-cumulative basis), Two Million U.S. Dollars (U.S.
$2,000,000);
38.
(p) the Borrower shall reimburse LaSalle for all costs and
expenses (including, without limitation, legal fees and disbursements (on a full
indemnity basis) for both in-house and outside counsel), relating to it and
incurred by LaSalle in connection with the documentation and consummation of
this transaction and any other transactions between the Borrower and LaSalle
including, without limitation, personal property security and other public
record searches, lien filings, express mail or similar express or messenger
delivery, appraisal costs, surveys, title insurance and environmental audit or
review costs, and in seeking to collect, protect or enforce any rights in or to
the Collateral or incurred by LaSalle in seeking to collect any Liabilities and
to administer and enforce any of LaSalle's rights under this Agreement. The
Borrower shall also pay all normal service charges with respect to accounts
maintained by LaSalle for the benefit of the Borrower. All such costs, expenses
and charges shall constitute Revolving Loans hereunder, shall be payable to
LaSalle on demand and, until paid, shall bear interest at the highest rate then
applicable to Revolving Loans hereunder;
(q) the Borrower shall maintain all banking relationships with a
financial institution acceptable to LaSalle in its discretion;
(r) the Borrower shall not make any material change in the
operation of the business of the Borrower and shall purchase Inventory only from
parties at arms-length to the Borrower, its officers and directors and its
direct or indirect shareholders;
(s) the Borrower shall conduct its business and occupy its
premises and shall cause each Loan Party to conduct their respective businesses
and occupy their respective premises in full compliance with all Environmental
Laws applicable to them, including, without limitation, those relating to the
Borrower's or any Loan Party's generation, handling, use, storage, and disposal
of Hazardous Materials; the Borrower shall take and shall cause each Loan Party
to take prompt and appropriate action to respond to any non-compliance or
alleged non-compliance with any Environmental Laws and shall regularly report to
LaSalle on such non-compliance or alleged non-compliance and the Borrower's
response. Without limiting the generality of the foregoing, whenever the
Borrower gives the notice to LaSalle contemplated by SUBSECTION 11(t) the
Borrower shall at LaSalle's request and at the Borrower's expense:
(i) cause an independent environmental engineer
acceptable to LaSalle to conduct such tests of the
site where the Borrower's or such Loan Party's
non-compliance or alleged non-compliance with
Environmental Laws has occurred and prepare and
deliver to LaSalle a report addressed to LaSalle and
on which LaSalle may rely without qualifications
setting forth the results of such tests, a proposed
plan for responding to any environmental problems
described therein, and an estimate of the costs
thereof; and
(ii) provide to LaSalle a supplemental report of such
engineer whenever the scope of the environmental
problems, or the Borrower's response thereto or the
estimated costs thereof shall change. Such reports
shall also be addressed to LaSalle and shall, as
requested by LaSalle, set out the results of such
engineers' review of, inter alia:
39.
A. the internal policies and procedures of the
Borrower or such Loan Party relating to
environmental regulatory compliance to
ensure that all appropriate steps are being
taken by or on behalf of the Borrower or
such Loan Party to comply with all
applicable requirements of Environmental
Laws;
B. progress of compliance deficiencies;
C. all other environmental audit reports which
the Borrower or any Loan Party, or any
predecessor thereof has commissioned in the
normal conduct of its business; and
D. all environmental reports which have been
commissioned by or made available to the
Borrower or any Loan Party in connection
with new acquisitions, and the engineers'
report and recommendations on results of
tests performed or samples taken by it
during the course of its review,
irregularities or steps which may be taken
to ensure continued compliance, as well as
such other matters as the Borrower and/or
LaSalle may request from time to time;
(t) the Borrower shall provide written notice to LaSalle no later
than five (5) days after the happening of any of the following:
(i) the receipt of a notice of non-compliance, violation
or contravention from any Governmental Authority with
respect to the activities carried on by the Borrower
or any other Loan Party or as to any other matter
whatsoever;
(ii) there has been a spill or other Release of Hazardous
Materials upon, under or about or affecting any of
the properties owned, operated, leased or occupied by
the Borrower or any other Loan Party in amounts that
are required to be reported under Environmental Laws,
or Hazardous Materials at levels or in amounts that
are required to be reported, remedied or responded to
under Environmental Laws are detected on or in the
soil or groundwater;
(iii) the Borrower or any other Loan Party is or may be
liable for any costs of cleaning up or otherwise
remedying a Release of Hazardous Materials;
(iv) any part of the properties owned, operated, managed,
possessed, leased or occupied by the Borrower or any
other Loan Party or of which the Borrower or any
other Loan Party otherwise have charge, management or
control, are subject to a lien, charge, mortgage or
other type of encumbrance under, or may be subject to
any order, direction or other administrative
proceeding under, any Environmental Laws; or
40.
(v) the Borrower or any other Loan Party undertakes any
remedial work with respect to any Hazardous
Materials; and
(u) Within thirty (30) days of the date hereof, the Borrower shall
enter into interest rate hedging arrangements with respect to the Liabilities
with LaSalle, an affiliate of LaSalle, or such other party as may be approved by
LaSalle in writing, in each case acceptable to LaSalle in its sole discretion.
12. CONDITIONS PRECEDENT
(a) Closing Deliveries.
The obligation of LaSalle to fund the initial Loans is subject
to the satisfaction or waiver on or before the Closing Date of the following
conditions precedent:
(i) Completion by LaSalle to its sole satisfaction of its
review of the management prepared interim financial
statements (including individual and consolidated
balance sheets, cash flow statements and profit and
loss statements) as at December 31, 2003 with respect
to the Borrower, and any other information and
material requested by LaSalle to ensure that, among
other things, no changes have occurred that would
result in an amendment to any of the financial
forecasts and other information provided by the
Borrower to LaSalle.
(ii) No material adverse change in LaSalle's understanding
of the facts and information presented to it by the
Borrower or others on the Borrower's behalf has
occurred and no material litigation or claims (in the
sole judgment of LaSalle) with respect to any aspect
of Borrower's or any other Loan Party's business or
assets shall have occurred.
(iii) LaSalle shall have received, in form and substance
satisfactory to it in its absolute discretion, each
of the security documents, agreements, opinions,
reports, approvals, consents, certificates and other
documents set forth on the closing document list
attached hereto as 12(a)(iii), including without
limitation evidence of all registrations as required
and confirmation of its first priority lien, charge
and security interest in the Collateral (subject only
to Permitted Liens).
(iv) Since November 30, 2003, no event shall have occurred
which has had or could be expected to have a Material
Adverse Effect with respect to the Borrower or the
Guarantor, as determined by LaSalle in its sole
discretion.
(v) LaSalle shall have received payment in full of all
fees and expenses payable to it by the Borrower,
including, without limitation, legal fees and
expenses incurred by LaSalle in connection with this
Agreement and the consummation of the transactions
contemplated hereby, on or before the Closing Date.
41.
(vi) LaSalle shall have determined that immediately after
giving effect to (A) the making of the initial
Revolving Loans requested to be made on the Closing
Date, and (B) the payment or reimbursement by the
Borrower of LaSalle for all closing costs and
expenses incurred in connection with the transactions
contemplated hereby, on a pro forma basis Excess
Availability hereunder shall not be less than Five
Hundred Thousand U.S. Dollars (U.S. $500,000).
(vii) LaSalle shall have received evidence of repayment of
all of the Borrower's and the Guarantor's
indebtedness owing to creditors other than the
Borrower's indebtedness to unsecured trade creditors
incurred in the normal course of business and on
normal payment terms and other than indebtedness to
those creditors which LaSalle has agreed may continue
as creditors of the Borrower or the Guarantor after
the Closing Date (which creditors include those
holding Permitted Liens).
(viii) No request of the Minister of National Revenue for
payment pursuant to Section 224(1.1), or any
successor section, of the Income Tax Act (Canada)
shall have been received by LaSalle in respect of
Borrower.
(ix) LaSalle shall have received a Borrowing Base
Certificate as at February 3, 2004 together with a
certificate from an Authorized Officer of the
Borrower (the "CLOSING CERTIFICATE") pursuant to
which such Authorized Officer shall certify that: (A)
in calculating the Excess Availability described in
clause (vi) above, the Borrower's outstanding debt
was (and is) current and not past due in any respect;
(B) all representations and warranties contained
herein are true and correct; (C) no Default or Event
of Default has occurred and is continuing; and (D) no
event has occurred and is continuing that would have
a Material Adverse Effect with respect to the
Borrower or the Guarantor.
(x) The Borrower and any other Loan Party shall have or
cause to be executed and delivered to LaSalle all
documents which LaSalle determines in its absolute
discretion are necessary to consummate the
transactions contemplated hereby.
(xi) Completion of tax, lien, judgment and other searches
and investigations with respect to the Collateral and
all security provided by the Borrower and any other
Loan Party, with results satisfactory to LaSalle, and
completion of a review to its satisfaction of the
management, creditworthiness, financial position,
systems and procedures of the Borrower.
(xii) LaSalle shall have received, reviewed and determined
as satisfactory all appraisals, all third party
documentation (including landlord and mortgagee
waivers and debt and security subordinations and
postponements it may require) and all contracts
entered or to be entered
42.
into by or binding on the Borrower or any other Loan
Party (including all supply, service, purchase and
rental contracts and all collective agreements with
employees or their union) as it may consider material
in its absolute discretion.
(xiii) Completion of final pre-closing collateral
roll-forward, ineligibles and Borrowing Base
calculations to the satisfaction of LaSalle.
(xiv) LaSalle shall have confirmed that the U.S. Lender's
loan documents with the Guarantor have been
consummated and that the Guarantor is entitled to
receive the proceeds of the initial loans thereunder.
(xv) Without limiting the generality of SUBSECTION
12(a)(iii), LaSalle shall have received a legal
opinion from the Borrower's counsel, in form and
substance satisfactory to LaSalle and its counsel,
opining with respect to, but not limited to, the
Borrower's and each Loan Party's incorporation and
subsistence, the Borrower's and each Loan Party's
corporate power and capacity to enter into this
Agreement and the Other Agreements, the Borrower's
and each Loan Party's due authorization, execution
and delivery and performance of this Agreement and
the Other Agreements, and the enforceability of this
Agreement and the Other Agreements against the
Borrower and each Loan Party, as applicable.
(b) Post Closing Deliveries.
After the Closing Date, the obligation of LaSalle to make any
requested Loan is subject to the satisfaction of the conditions precedent set
forth in SUBSECTIONS 12(a)(ii), (iii), (iv), (viii), (x) AND (xii) above and
also as set forth below. Each such request shall constitute a representation and
warranty that such conditions are satisfied:
(i) All representations and warranties contained in this
Agreement and the Other Agreements shall be true and
correct on and as of the date of such request, as if
then made, other than representations and warranties
that relate solely to an earlier date; and
(ii) No Default or Event of Default shall have occurred,
or would result from the making of the requested
Revolving Loan, which has not been waived in writing
by LaSalle.
13. DEFAULT
The occurrence of any one or more of the following events
shall constitute an "EVENT OF DEFAULT" hereunder:
(a) the failure of the Borrower or any other Loan Party to pay
when due, declared due, or demanded by LaSalle in accordance with the terms
hereof or thereof, any of the Liabilities;
43.
(b) the failure of the Borrower or any other Loan Party to
perform, keep or observe any of the covenants, conditions, promises, agreements
or obligations (other than as described in SUBSECTION 13(a) above) of the
Borrower or such Loan Party under this Agreement or any of the Other Agreements;
provided that any such failure by the Borrower under SUBSECTIONS
11(a),(f),(g),(h),(p),(q),(s) AND (u) of this Agreement shall not constitute and
Event of Default until the fifth (5th) day following the occurrence thereof;
(c) the making or furnishing by the Borrower or any other Loan
Party or any director, officer, employee or other representative thereof to
LaSalle of any representation, warranty, certificate, schedule, report or other
communication within or in connection with this Agreement or the Other
Agreements or in connection with any other agreement between the Borrower or
such Loan Party and LaSalle, which is untrue or misleading in any respect, or
the failure of the Borrower or any other Loan Party to perform, keep or observe
any of the covenants, conditions, promises, or agreements of the Borrower or
such Loan Party under any other agreement with any Person if such failure, in
the opinion of LaSalle, has or is likely to have a Material Adverse Effect with
respect to the Borrower or any other Loan Party;
(d) the creation (whether voluntary or involuntary) of, or any
attempt to create, any lien or other encumbrance upon any of the Collateral or
any property or assets of the Borrower or any other Loan Party, other than the
Permitted Liens, or the making or any attempt to make any levy, seizure or
attachment thereof or (except as permitted hereby) sale, lease or furnishing
under a contract of service of, any of the Collateral or any property or asset
of the Borrower or any other Loan Party, or the loss, theft, damage or
destruction of all or a substantial portion of the property and assets of the
Borrower or a Loan Party;
(e) the making of an assignment or proposal in bankruptcy by the
Borrower or any other Loan Party or the filing by the Borrower or any other Loan
Party of notice of its intention to make a proposal in bankruptcy or the
commencement of any proceedings in bankruptcy by or against the Borrower or any
other Loan Party for the liquidation or reorganization of the Borrower or any
other Loan Party or alleging that the Borrower or such Loan Party is insolvent
or unable to pay its debts as they mature or for the readjustment or arrangement
of the Borrower's or any other Loan Party's debts, whether under the Bankruptcy
and Insolvency Act (Canada), the Companies' Creditors Arrangement Act (Canada)
or the United States Bankruptcy Code or under any other law, whether state,
provincial or federal, now or hereafter existing for the relief of debtors, or
the commencement of any analogous statutory or non-statutory proceedings
involving the Borrower or any other Loan Party; provided, however, that if such
commencement of proceedings against the Borrower or such Loan Party is
involuntary, such action shall not constitute an Event of Default unless such
proceedings are not forthwith contested in good faith by the Borrower or such
Loan Party and dismissed within fifteen (15) days after the commencement of such
proceedings;
(f) the appointment of a receiver or trustee for the Borrower or
any other Loan Party, for any of the Collateral or for any substantial part of
the Borrower's or any other Loan Party's assets or the institution of any
proceedings for the dissolution or winding up, or the full or partial
liquidation, or (without the consent of LaSalle) the merger, amalgamation or
consolidation, of the Borrower or any other Loan Party which is a corporation or
a partnership; provided, however, that if such appointment or commencement of
proceedings against the Borrower or
44.
such Loan Party is involuntary, such action shall not constitute an Event of
Default unless such appointment or proceeding has resulted in a seizure or
possession of any of the Borrower's or any other Loan Party's property or assets
by such receiver or trustee, or is not forthwith contested in good faith by the
Borrower or such Loan Party and revoked or dismissed within fifteen (15) days
after the commencement of such proceedings;
(g) the entry of any judgment or the issuance or registration of
any writ of enforcement or order against the Borrower or any other Loan Party
which, or the Canadian Dollar Equivalent Amount of which, is in excess of Fifty
Thousand Canadian Dollars (Cdn. $50,000) and which remains unsatisfied or
undischarged and in effect for five (5) days after such entry without a stay of
enforcement or execution;
(h) the occurrence of a default or an event of default under, or
the revocation or termination of, any agreement, instrument or document executed
and delivered by any Person to LaSalle pursuant to which such Person has
guaranteed to LaSalle the payment of all or any of the Liabilities or has
granted LaSalle a security interest in or lien upon some or all of such Person's
real and/or personal property to secure directly or indirectly the payment of
all or any of the Liabilities;
(i) the occurrence of a default or an event of default, which
continues after the passage of any cure period, under any other agreement or
instrument evidencing indebtedness for borrowed money in excess of Fifty
Thousand Canadian Dollars (Cdn. $50,000) executed or delivered by the Borrower
or any other Loan Party or pursuant to which agreement or instrument the
Borrower or any other Loan Party or its properties is or may be bound;
(j) the occurrence of any event or condition (including without
limitation any change in the operations or business of the Borrower or any other
Loan Party which has or is likely to have a Material Adverse Effect in respect
of the Borrower or any other Loan Party, or any change in ownership of, or
pledge, transfer, assignment or disposition of, or grant of security in, any
shares of, the Borrower, all as determined by LaSalle in its sole discretion; or
(k) if the Guarantor shall fail to perform, keep or observe any of
the covenants, conditions, promises, agreements or other obligations of the
Guarantor to the U.S. Lender under any agreements now or hereafter existing
between the Guarantor and U.S. Lender including the U.S. Loan and Security
Agreement or in the event of the termination of the U.S. Loan and Security
Agreement.
14. REMEDIES UPON AN EVENT OF DEFAULT
(a) Upon the occurrence of a Default or Event of Default, LaSalle
shall have no further obligation to make or extend any Loan hereunder or to
grant any other financial accommodation to the Borrower.
(b) Upon the occurrence of an Event of Default described in
SUBSECTION 13(e) hereof, all of the Liabilities shall immediately and
automatically become due and payable, without notice of any kind, and upon the
occurrence of any other Event of Default, any or all of the Liabilities may, at
the option of LaSalle, and without demand, notice or legal process of any kind,
be
45.
declared, and immediately shall become, due and payable. Upon either
occurrence, LaSalle may, in addition to any other right or remedy which it may
have at law or in equity, proceed to realize its security hereunder and to
enforce its rights by:
(i) entry;
(ii) the appointment by instrument in writing of a
receiver or receivers of the Collateral or any part
thereof (which receiver or receivers may be any
person or persons, whether an officer or officers or
employee or employees of LaSalle or not and LaSalle
may remove any receiver or receivers so appointed and
appoint another or others in his or their stead);
(iii) proceedings in any court of competent jurisdiction
for the appointment of a receiver or receivers or for
sale of the Collateral or any part thereof; or
(iv) any other action, suit, remedy or proceeding
authorized or permitted hereby or by law or by
equity.
In addition, LaSalle may file such proofs of claim and other
documents as may be necessary or advisable in order to have its claim lodged in
any bankruptcy, winding-up or other judicial proceedings.
(c) Any receiver or receivers so appointed shall have power to:
(i) take possession of and to use the Collateral of any
part thereof;
(ii) carry on the business of the Borrower or any other
Loan Party (including, but not limited to, the taking
or defending of any actions or legal proceedings, and
the doing or refraining from doing all other things
as to the receiver may seem necessary or desirable in
connection with the business, operations and affairs
of the Borrower or any other Loan Party);
(iii) borrow money required for the maintenance,
preservation or protection of the Collateral or any
part thereof or the carrying on of the business of
the Borrower or any other Loan Party;
(iv) further charge the Collateral in priority to the
security interests of this Agreement as security for
money so borrowed; and
(v) sell, lease or otherwise dispose of the whole or any
part of the Collateral on such terms and conditions
and in such manner as the receiver shall determine.
LaSalle shall not be responsible for any actions or errors of
omission by the receiver or receivers in exercising any such powers.
In addition, LaSalle may enter upon, use, occupy and possess
the Collateral or any part thereof, free from all encumbrances, liens and
charges, except for Permitted Liens, without
46.
hindrance, interruption or denial of the same by the Borrower or any other Loan
Party or by any other person or persons save only a landlord pursuant to its
rights of reversion under any lease of real property on expiry of its term, and
may lease or sell the whole or any part or parts of the Collateral. Any sale
hereunder may be made by public auction, by public tender or by private
contract, with or without notice and with or without advertising and without any
other formality (except as required by law), all of which are hereby waived by
the Borrower. Such sale shall be on such terms and conditions as to credit or
otherwise and as to upset or reserve bid or price as to LaSalle in its sole
discretion may seem advantageous. Such sale may take place whether or not
LaSalle has taken possession of the Collateral.
No remedy for the realization of the security interests
granted pursuant hereto or pursuant to any security held by LaSalle or for the
enforcement of the rights of LaSalle shall be exclusive of or dependent on any
other such remedy, but any one or more of such remedies may from time to time be
exercised independently or in combination. The term "receiver" as used in this
Agreement includes a receiver and manager.
At LaSalle's request, the Borrower shall, at the Borrower's
expense, assemble the Collateral and make it available to LaSalle at one or more
places to be designated by LaSalle. The Borrower recognizes that if the Borrower
fails to perform, observe or discharge any of its Liabilities under this
Agreement or the Other Agreements, no remedy at law will provide adequate relief
to LaSalle, and the Borrower agrees that LaSalle shall be entitled to temporary
and permanent injunctive relief in any such case without the necessity of
proving actual damages. Any notification of intended disposition of any of the
Collateral required by law will be deemed reasonably and properly given if given
at least fifteen (15) calendar days before such disposition. Any proceeds of any
disposition by LaSalle of any of the Collateral may be applied by LaSalle to the
payment of expenses and any borrowings in connection with the Collateral and its
realization including, without limitation, legal fees and disbursements (on a
solicitor-client basis) of both in-house and outside counsel and any balance of
such proceeds may be applied by LaSalle toward the payment of such of the
Liabilities, and in such order of application, as LaSalle may from time to time
elect or re-elect.
15. INDEMNIFICATION
(a) General Indemnity.
The Borrower agrees to defend (with counsel satisfactory to
LaSalle), protect, indemnify and hold harmless LaSalle, each affiliate or
subsidiary of LaSalle, and each of their respective officers, directors,
employees, attorneys and agents (each an "INDEMNIFIED PARTY") from and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, costs, expenses and disbursements of any kind or
nature (including, without limitation, the disbursements and the fees (on a full
indemnity basis) of internal and external counsel for each Indemnified Party in
connection with any investigative, administrative or judicial proceeding,
whether or not the Indemnified Party shall be designated a party thereto), which
may be imposed on, incurred by, or asserted against, any Indemnified Party
(whether direct, indirect or consequential and whether based on any federal,
state or local laws or regulations including, without limitation, securities,
environmental and commercial laws and regulations, under common law or in
equity, or based on contract or otherwise) in any manner
47.
relating to or arising out of this Agreement or any Other Agreement, or any act,
event or transaction related or attendant to any of the foregoing, the making
and the management of the Loans or the use or intended use of the proceeds of
the Loans. To the extent that the undertaking to indemnify set forth in the
preceding sentence may be unenforceable because it is violative of any law or
public policy, the Borrower shall satisfy such undertaking to the maximum extent
permitted by applicable law. Any liability, obligation, loss, damage, penalty,
cost or expense covered by this indemnity shall be paid to each Indemnified
Party on demand, and, failing prompt payment, shall, together with interest
thereon at the highest rate then applicable to Revolving Loans hereunder from
the date incurred by each Indemnified Party until paid by the Borrower, be added
to the Liabilities of the Borrower and be secured by the Collateral. The
provisions of this SECTION 15 shall survive the satisfaction and payment of the
other Liabilities and the termination of this Agreement.
(b) Environmental Indemnity.
Without limiting the generality of SUBSECTION 15(a), the
Borrower shall at all times indemnify and hold harmless the Indemnified Parties
from and against any and all liabilities and costs suffered or incurred by such
Indemnified Parties including, without limitation, any and all orders,
directions, suits, actions, proceedings, claims, settlements, damages, losses,
liabilities, costs and expenses (including, without limitation, legal fees and
disbursements on a solicitor-client basis, litigation costs and any costs of
settlement), with respect to: (i) any actual or threatened Release of Hazardous
Materials or the presence of any Hazardous Materials affecting any of the
properties of the Borrower or any other Loan Party, whether or not the same
originates or emanates from any such properties or any contiguous property,
including any loss of value of any such properties as a result of any of the
foregoing; (ii) any costs of remedial, preventative or similar action which may
be imposed by any Governmental Authority on the Borrower or any other Loan
Party, including without limitation, any prosecution initiated or threatened
with respect to non-compliance with Environmental Laws, (iii) any costs of
remedial, preventative or similar action incurred by any Governmental Authority
or any costs incurred by any other person or damages from injury to, destruction
of, or loss of natural resources, including costs of assessing such injury,
destruction or loss incurred pursuant to any Environmental Laws; (iv) liability
for personal injury or property damage arising under any statutory, common law,
tort, breach of statutory duty, riparian rights, strict liability or any other
doctrine or theory, including, without limitation, damages assessed for the
maintenance of a public or private nuisance, trespass or for the carrying on an
abnormally dangerous activity at or near any of the properties of the Borrower
or any other Loan Party; (v) any environmental liabilities and costs affecting
any of the properties of the Borrower or any other Loan Party within the
jurisdiction of any Governmental Authority; and/or (vi) any other environmental
liabilities and costs.
16. MISCELLANEOUS
(a) Notices.
All written notices and other written communications with
respect to this Agreement or any of the Other Agreements shall be sent by
ordinary or registered mail, by telecopy or delivered in person, and in the case
of LaSalle shall be sent to it at Maritime Life
48.
Tower, 15th Floor, P.O. Box 114, 00 Xxxxxxxxxx Xxxxxx Xxxx, Xxxxxxx, Xxxxxxx X0X
0X0 Attention: Vice President, Asset Based Lending, (if by telecopy to telecopy
number 416-367-7943) and in the case of the Borrower or any other Loan Party
shall be sent to or in care of the Borrower at 0000 Xxxxxxxxx Xxxxxxxxx,
Xxxxxxxxxxx , Xxxxxxx, X0X 0X0, Attention: President (if by telecopy to telecopy
no. (000) 000-0000). The notice or other communication so sent shall be deemed
to be received on the day of personal delivery or telecopy, or if mailed, three
days following the date of such mailing.
(b) Choice of Governing Law and Construction.
Except as expressly set forth therein, this Agreement and the
Other Agreements shall be governed and controlled by the laws of the Province of
Ontario and the laws of Canada applicable therein as to interpretation,
enforcement, validity, construction, effect, and in all other respects,
including, without limitation, the legality of the interest rate and other
charges, but excluding perfection of the security interests in the Collateral,
which shall be governed and controlled by the laws of the relevant jurisdiction.
(c) Forum Selection and Service Of Process.
To induce LaSalle to accept this Agreement, the Borrower, for
itself and the other Loan Parties, irrevocably: (i) agrees that, subject to
LaSalle's sole and absolute election, all actions or proceedings in any way,
manner or respect, arising out of or from or related to this Agreement, the
Other Agreements or the Collateral shall be litigated in courts having situs
within the city of Toronto, Province of Ontario; (ii) consents and submits to
the jurisdiction of any local, provincial or federal courts located within said
city and province; and (iii) hereby waives any right it may have to transfer or
change the venue of any litigation brought by LaSalle in accordance with this
paragraph.
(d) Modification and Benefit of Agreement
This Agreement shall be binding upon the Borrower, the other
Loan Parties and LaSalle and their respective successors and assigns and shall
enure to the benefit of the Borrower and LaSalle and their respective successors
and assigns. This Agreement and the Other Agreements may not be modified,
altered or amended except by an agreement in writing signed by the Borrower
and/or the other Loan Parties as applicable and LaSalle. The Borrower may not
sell, assign or transfer this Agreement, or the Other Agreements or any portion
thereof including, without limitation, any right, title, interest, remedies,
powers or duties thereunder. The Borrower, for itself and the other Loan
Parties, hereby consents to LaSalle's sale, assignment, transfer or other
disposition, at any time and from time to time hereafter, of this Agreement, or
the Other Agreements, or of any portion thereof, or participation therein
including, without limitation, LaSalle's right, title, interest, remedies,
powers and/or duties thereunder. The Borrower agrees that it shall execute and
deliver such documents as LaSalle may request in connection with any such sale,
assignment, transfer or other disposition.
(e) Headings of Subdivisions.
The headings of subdivisions in this Agreement are for
convenience of reference only, and shall not govern the interpretation of any of
the provisions of this Agreement.
49.
(f) Power of Attorney.
The Borrower, for itself and the other Loan Parties,
acknowledges and agrees that its appointment of LaSalle as its attorney and
agent-in-fact for the purposes specified in this Agreement is an appointment
coupled with an interest and shall be irrevocable until all of the Liabilities
are paid in full and this Agreement is terminated.
(g) Waiver of Jury Trial, Other Waivers, Confidentiality.
LaSalle and the Borrower (for itself and the other Loan
Parties) hereby waive all rights to trial by jury in any action or proceeding
which pertains directly or indirectly to this Agreement, any of the Other
Agreements, the Liabilities, the Collateral or any alleged tortious conduct or
which, in any way, directly or indirectly, arises out of or relates to the
relationship between the Borrower and LaSalle. In no event shall LaSalle be
liable for lost profits or other special or consequential damages. The Borrower
(for itself and the other Loan Parties) hereby waives all rights to notice and
hearing of any kind prior to the exercise by LaSalle of its rights to repossess
the Collateral without judicial process or to replevy, attach or levy upon such
Collateral without prior notice or hearing, and hereby waives demand,
presentment, protest and notice of non-payment, and further waives the benefit
of all valuation, appraisal and exemption laws. LaSalle's failure, at any time
or times hereafter, to require strict performance of any provision of this
Agreement or any of the Other Agreements shall not waive, affect or diminish any
right of LaSalle thereafter to demand strict compliance and performance
therewith. Any suspension or waiver by LaSalle of an Event of Default under this
Agreement or any default under any of the Other Agreements shall not suspend,
waive or affect any other Event of Default under this Agreement or any other
default under any of the Other Agreements, whether the same is prior or
subsequent thereto and whether of the same or of a different kind or character.
No delay on the part of LaSalle in the exercise of any right or remedy under
this Agreement or any Other Agreement shall preclude other or further exercise
thereof or the exercise of any right or remedy. None of the undertakings,
agreements, warranties, covenants and representations contained in this
Agreement or any of the Other Agreements and no Event of Default under this
Agreement or default under any of the Other Agreements shall be deemed to have
been suspended or waived by LaSalle unless such suspension or waiver is in
writing, signed by two duly authorized officers of LaSalle and directed to the
Borrower specifying such suspension or waiver.
(h) Timing of Payments.
Any payment required to be made by the Borrower to LaSalle
hereunder or under any security shall be made in the currency in respect of
which the obligation requiring such payment arose. Any payment received by
LaSalle after 3:00 p.m. (Toronto time) on a Business Day, or on any day that is
not a Business Day, shall be credited to the account of the Borrower as
applicable on the next following Business Day.
(i) Canadian Currency.
All dollar amounts specified herein are in Canadian Dollars
unless otherwise indicated.
50.
(j) Judgment Currency.
If in the recovery by LaSalle of any amount owing hereunder or
under any of the Other Agreements in any currency, judgment can only be obtained
in another currency and because of changes in the exchange rate of such
currencies between the date of judgment and payment in full of the amount of
such judgment, the amount of recovery under the judgment differs from the full
amount owing hereunder, the Borrower shall pay any such shortfall to LaSalle;
such shortfall can be claimed by LaSalle against the Borrower as an alternative
or additional cause of action and any surplus received by LaSalle will be repaid
to the Borrower.
(k) Severability.
In the event any provision of this Agreement is for any reason
held by a court of competent jurisdiction to be invalid, illegal or
unenforceable, such invalidity, illegality or unenforceability shall not affect
any other provision hereof, and this Agreement shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein.
(l) Conflicts.
In the event there occurs any conflict or inconsistency
between any provision of this Agreement and any provision of the Other
Agreements, the provision of this Agreement shall govern.
51.
(m) Counterparts.
This Agreement and any amendments, waivers, consents,
acknowledgements or supplements may be executed in number of counterparts and by
different parties hereto in separate counterparts, each of which, when so
executed and delivered, shall be deemed an original, but all of which
counterparts together shall constitute but one agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date set out on the first page hereof.
DELPHAX TECHNOLOGIES
CANADA LIMITED
By: /s/ Xxxxxx X. Xxxxxxxxx
-----------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: CFO and Secretary
ABN AMRO BANK N.V., CANADA BRANCH
By: /s/ Xxxxx Xxxxxx
----------------
Name: Xxxxx Xxxxxx
Title: Senior Vice President
By: /s/ Xxxxx Xxxx
---------------
Name: Xxxxx Xxxx
Title: V.P. Asset Based Lending
52.
TO: ABN AMRO BANK N.V., CANADA BRANCH
The undersigned hereby acknowledges and consents to the
provisions of the foregoing credit agreement, confirms any covenant,
representation or warranty in any way relating to it and confirms the continuing
nature thereof, and covenants and agrees to abide by all covenants and
agreements of the Borrower to cause any action or thing to be done by it and all
covenants and agreements otherwise relating to it.
DELPHAX TECHNOLOGIES INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
-----------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Vice President, Chief Financial
Officer and Secretary
