EXHIBIT 10.17(a)
CREDIT AGREEMENT
dated as of May 13, 1998
BETWEEN
THE TORONTO-DOMINION BANK
(herein called the "Bank")
AND
LASIRIS INC.
(herein called the "Borrower")
TABLE OF CONTENTS
1. DEFINITIONS...........................................................................................................1
1.1 DEFINITIONS.......................................................................................................1
1.2 INTERPRETATION....................................................................................................1
2. CREDIT COMMITMENT.....................................................................................................2
2.1 CREDIT COMMITMENT.................................................................................................2
2.2 USE OF LOAN.......................................................................................................2
3. CONDITIONS PRECEDENT..................................................................................................2
3.1 CONDITIONS PRECEDENT TO INITIAL UTILIZATION.......................................................................2
3.1.1 Documents....................................................................................................2
3.1.2 Legality of Transactions.....................................................................................3
3.1.3 Representations and Warranties...............................................................................3
3.1.4 Performance..................................................................................................3
3.1.5 Certified Copies of Charter Documents........................................................................3
3.1.6 Proof of Corporate Action....................................................................................4
3.1.7 Incumbency Certificate.......................................................................................4
3.1.8 Proceedings and Documents....................................................................................4
3.1.9 Good Standing................................................................................................4
3.1.10 Legal Opinions..............................................................................................4
3.1.11 Financial Condition.........................................................................................5
3.1.12 Security Documents..........................................................................................5
3.1.13 Acquisition Documents.......................................................................................5
3.1.14 Fees........................................................................................................5
3.2 CONDITIONS PRECEDENT TO ALL UTILIZATIONS..........................................................................6
4. REPAYMENT.............................................................................................................6
4.1 OPERATING LINE OF CREDIT..........................................................................................6
4.2 DEMAND ACQUISITION LOAN...........................................................................................7
4.3 BREAKAGE COSTS....................................................................................................7
5. INTEREST..............................................................................................................7
5.1 PRIME RATE LOAN...................................................................................................7
6. PRIME RATE LOAN.......................................................................................................8
6.1 AMOUNT OF PRIME RATE LOAN.........................................................................................8
7. BANKERS' ACCEPTANCES..................................................................................................8
7.1 ISSUE OF BANKERS' ACCEPTANCES.....................................................................................8
7.2 REPAYMENT OF BANKERS' ACCEPTANCES.................................................................................9
7.3 TIMING OF MATURITIES..............................................................................................9
7.4 STAMPING FEE......................................................................................................9
7.5 ALTERNATE BASIS OF BORROWING.....................................................................................10
7.6 WAIVER OF CLAIM..................................................................................................10
7.7 PRE-SIGNED DRAFT FORMS...........................................................................................10
7.8 EXECUTION OF BANKERS' ACCEPTANCES................................................................................10
8. LETTERS OF CREDIT....................................................................................................11
8.1 LETTERS OF CREDIT................................................................................................11
8.2 ISSUANCE.........................................................................................................11
8.3 DOCUMENTATION....................................................................................................11
8.4 FEES.............................................................................................................11
8.5 DISCHARGE OF OBLIGATIONS.........................................................................................11
8.6 DEMAND...........................................................................................................12
9. AVAILABLE COMMITMENT CANCELLATIONS...................................................................................12
9.1 CANCELLATIONS BY BORROWER........................................................................................12
9.2 CANCELLATIONS BY BANK............................................................................................12
9.3 PAYMENTS AFTER CANCELLATION......................................................................................12
10. CHANGES IN CIRCUMSTANCES............................................................................................13
10.1 INCREASED COSTS.................................................................................................13
10.2 ILLEGALITY......................................................................................................14
11. LOAN ACCOUNTS AND PLACE OF PAYMENT..................................................................................14
12. REPRESENTATIONS AND WARRANTIES......................................................................................15
12.1 ORGANIZATION AND GOOD STANDING..................................................................................15
12.2 CORPORATE AUTHORITY.............................................................................................15
12.3 VALIDITY OF LOAN DOCUMENTS......................................................................................16
12.4 NO LITIGATION...................................................................................................16
12.5 ACCURACY OF FINANCIAL INFORMATION...............................................................................16
12.6 COMPLIANCE......................................................................................................17
12.7 MATERIAL CONTRACTS..............................................................................................17
12.8 TITLE TO ASSETS.................................................................................................17
12.9 HAZARDOUS MATERIAL..............................................................................................18
12.10 TAXES AND ASSESSMENTS..........................................................................................18
12.11 YEAR 2000 COMPLIANCE...........................................................................................19
13. COVENANTS...........................................................................................................19
13.1 EXISTENCE AND GOOD STANDING.....................................................................................19
13.2 XXXXXXX & YALE FINANCIAL STATEMENTS AND INFORMATION.............................................................19
13.3 BORROWER FINANCIAL STATEMENTS AND INFORMATION...................................................................20
13.4 FINANCIAL COVENANTS.............................................................................................21
13.5 LIMITATION ON INDEBTEDNESS......................................................................................21
13.6 LIMITATION ON LIENS.............................................................................................22
13.7 LIMITATION ON CONSOLIDATIONS AND MERGERS........................................................................22
13.8 LIMITATION ON ACQUISITIONS......................................................................................23
13.9 LIMITATION ON DISPOSITIONS OF ASSETS............................................................................23
13.10 DIVIDENDS, CHANGE OF OWNERSHIP.................................................................................23
13.11 XXXXXXX & YALE CREDIT AGREEMENT, EMPLOYMENT CONTRACTS..........................................................23
13.12 LITIGATION.....................................................................................................23
13.13 EVENT OF DEFAULT...............................................................................................23
13.14 COMPLIANCE.....................................................................................................24
13.15 NOTICE OF ENVIRONMENTAL MATTERS................................................................................24
13.16 OTHER DOCUMENTS/INFORMATION....................................................................................24
13.17 OTHER AGREEMENTS...............................................................................................24
13.18 BOOKS AND RECORDS..............................................................................................24
13.19 INSURANCE......................................................................................................25
13.20 TAXES..........................................................................................................25
13.21 SUBORDINATION..................................................................................................25
14. EVENTS OF DEFAULT...................................................................................................25
14.1 PAYMENT.........................................................................................................25
14.2 TERMINATION OF BUSINESS, INSOLVENCY.............................................................................26
14.3 DEFAULT IN OTHER INDEBTEDNESS...................................................................................26
14.4 DEFAULT UNDER XXXXXXX & YALE CREDIT AGREEMENT...................................................................26
14.5 TERMINATION OF GUARANTEE........................................................................................26
14.6 MISREPRESENTATIONS OR MATERIAL ADVERSE CHANGES..................................................................26
14.7 CHANGE OF CONTROL...............................................................................................27
14.8 TERMINATION OF CREDIT FACILITIES................................................................................27
14.9 DEFAULT IN OTHER COVENANTS......................................................................................27
15. REMEDIES............................................................................................................27
16. WAIVERS.............................................................................................................28
17. CUMULATIVE REMEDIES.................................................................................................28
18. NOTICES.............................................................................................................28
19. ENTIRETY AND AMENDMENTS.............................................................................................29
20. PARTIES BOUND.......................................................................................................29
21. INTERPRETATION......................................................................................................29
22. MISCELLANEOUS.......................................................................................................29
22.1 EXPENSES........................................................................................................29
22.2 INDEMNIFICATION.................................................................................................30
22.3 COMPENSATION....................................................................................................30
22.4 COUNTERPARTS....................................................................................................30
22.5 PARTIAL INVALIDITY..............................................................................................30
23. LANGUAGE............................................................................................................30
1. DEFINITIONS
1.1 DEFINITIONS
Unless it is otherwise apparent from or inconsistent with the context,
all words and expressions in this Agreement or in any other of the Loan
Documents, or any certificate, report or other document made or delivered
pursuant to this Agreement (unless otherwise defined therein) which employ first
capitals have the meaning ascribed thereto in Appendix I.
1.2 INTERPRETATION
For all purposes of this Agreement and the other Loan Documents, except
as otherwise expressly provided herein or therein or unless the context
otherwise requires:
(i) references to any person defined in this Agreement refer to
such person and its successor in title and assigns or (as
the case may be) his successors, assigns, heirs, executors,
administrators and other legal representatives;
(ii) references to any agreement, instrument or document defined
in this Agreement refer to such document as originally
executed, or if subsequently varied, extended, renewed,
modified, amended, restated or supplemented from time to
time, as so varied, extended, renewed, modified, amended,
restated or supplemented and in effect at the relevant time
of reference thereto; words importing the singular only
shall include the plural and vice versa, and words importing
the masculine gender shall include the feminine gender and
vice versa;
(iii) accounting and financial terms not otherwise defined in this
Agreement or any of the other Loan Documents have the
meanings assigned to them in accordance with US GAAP or
Canadian GAAP, as the case may be, on a basis consistent
with the Financial Statements;
(iv) as used herein, unless otherwise specifically stated to the
contrary, references to US GAAP shall be applicable to
Xxxxxxx & Yale and references to Canadian GAAP shall be
applicable to the other members of the Borrower Affiliated
Group;
(v) all financial statements and other financial information
provided by any member
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of the Borrower Affiliated Group, other than Xxxxxxx & Yale,
to the Bank shall be provided with reference to Canadian
Dollars; and
(vi) the captions and headings of the various sections and
subsections are provided for convenience only and shall not
be construed to modify the meaning of such sections or
subsections.
2. CREDIT COMMITMENT
2.1 CREDIT COMMITMENT
Subject to the conditions hereinafter contained and so long as no
Default exists or Event of Default has occurred hereunder and is continuing, the
Bank may, at its sole discretion, make available to the Borrower (i) a credit
facility up to a maximum amount of one million dollars ($1,000,000) in lawful
currency of Canada (the "Operating Line of Credit") which the Borrower may
utilize, repay and reutilize from time to time in accordance with the provisions
hereof or as otherwise permitted by the Bank, provided that the aggregate
principal amount of all utilizations outstanding under the Operating Line of
Credit at any particular time does not exceed the Operating Available Commitment
at that time, and (ii) a credit facility up to a maximum amount of one million
dollars ($1,000,000) in lawful currency of Canada (the "Demand Acquisition
Loan") which the Borrower may utilize, by way of one single draw on or before
May 31, 1998, and repay in accordance with the provisions hereof or as otherwise
permitted by the Bank.
2.2 USE OF LOAN
All proceeds from the Operating Line of Credit, other than an amount of
up to $400,000 which may also be used in the same manner as the Demand
Acquisition Loan, shall only be used for general working capital purposes of the
Borrower. Notwithstanding anything to the contrary contained in any of the Loan
Documents, the Borrower shall not, subject to the previous sentence, use,
directly or indirectly, any of the proceeds of the Operating Line of Credit by
way of loan, advance or investment to or in any other member of the Borrower
Affiliated Group. All proceeds from the Demand Acquisition Loan shall only be
used to finance part of the purchase by any member of the Borrower Affiliated
Group, other than the Borrower, of the shares of the Borrower.
3. CONDITIONS PRECEDENT
3.1 CONDITIONS PRECEDENT TO INITIAL UTILIZATION
The Bank may, at its sole discretion, provide the initial utilization
under any of the Credit Facilities after the fulfillment of each of the
following conditions precedent:
3.1.1 DOCUMENTS
(a) Each of (A) the Loan Documents, and (B) any
other agreements, documents or standard
forms in respect of, INTER ALIA, overdraft
privileges, business credit services,
operation of accounts, letters of
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credit and bankers' acceptances as the Bank
may reasonably require (collectively, the
"Ancillary Documents"), shall have been duly
and properly authorized, executed and
delivered by the respective parties thereto
and shall be in full force and effect on and
as of the Closing Date.
(b) Executed original counterparts of each of
the Loan Documents, and copies of each of
the Ancillary Documents, as executed and
delivered by the respective parties thereto,
shall have been furnished to the Bank.
(c) The Financial Statements and a certified
true copy of the Xxxxxxx & Yale Credit
Agreement shall have been furnished to the
Bank.
3.1.2 LEGALITY OF TRANSACTIONS
No change in applicable law or regulation shall have occurred
as a consequence of which it shall have become and continue to be
unlawful (i) for the Bank to perform any of its agreements or
obligations under this Agreement, or (ii) for any member of the
Borrower Affiliated Group to perform any of its agreements or
obligations under any of the Loan Documents to which it is a party on
the Closing Date.
3.1.3 REPRESENTATIONS AND WARRANTIES
Each of the representations and warranties made by or on
behalf of each member of the Borrower Affiliated Group to the Bank in
any of the Loan Documents shall be true and correct when made, shall,
for all purposes of this Agreement, be deemed to be repeated on and as
of the date of the initial utilization under any of the Credit
Facilities, and shall be true and correct on and as of such date.
3.1.4 PERFORMANCE
Each member of the Borrower Affiliated Group shall have duly
and properly performed, complied with and observed each of its
covenants, agreements and obligations contained in the Loan Documents
to which it is a party or by which it is bound which are required to be
performed on the Closing Date. No event shall have occurred on or prior
to the Closing Date and be continuing on such Closing Date, and no
condition shall exist on such Closing Date, which constitutes a Default
or an Event of Default.
3.1.5 CERTIFIED COPIES OF CHARTER DOCUMENTS
The Bank shall have received from each member of the Borrower
Affiliated Group a copy, certified by a duly authorized officer of such
member of the Borrower Affiliated Group to be true and complete on the
Closing Date, of (i) its charter or other incorporation documents, as
in effect on such date of certification, certified by Industry Canada,
the New Brunswick Corporate Affairs Branch, INSPECTEUR GENERAL DES
INSTITUTIONS FINANCIERES (Quebec) or the Secretary of State, as
applicable, of its jurisdiction of incorporation or
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formation, and (ii) its borrowing by-laws as in effect on such date.
3.1.6 PROOF OF CORPORATE ACTION
The Bank shall have received from each member of the Borrower
Affiliated Group a copy, certified by a duly authorized officer of such
member of the Borrower Affiliated Group to be true and complete on the
Closing Date, of records of all corporate action taken by each member
of the Borrower Affiliated Group to authorize (i) its execution and
delivery of the Loan Documents to which it is or is to become a party,
(ii) its performance of all of its agreements and obligations under
each of such documents, and (iii) any borrowings and other transactions
contemplated by the Loan Documents.
3.1.7 INCUMBENCY CERTIFICATE
The Bank shall have received from each member of the Borrower
Affiliated Group an incumbency certificate, dated the Closing Date and
signed by a duly authorized officer of such member of the Borrower
Affiliated Group, and giving the name and bearing a specimen signature
of each individual who shall be authorized: (i) to sign, in the name
and on behalf of such member of the Borrower Affiliated Group, each of
the Loan Documents to which it is or is to become a party; (ii) to make
application for utilizations under the Credit Facilities or
continuation or conversion thereof; and (iii) to give notices to take
other action on its behalf under the Loan Documents.
3.1.8 PROCEEDINGS AND DOCUMENTS
All corporate, governmental and other proceedings in
connection with the transactions contemplated by the Loan Documents and
all instruments and documents incidental thereto, shall be in form and
substance reasonably satisfactory to the Bank and the Bank shall have
received all such counterpart originals or certified or other copies of
all such instruments and documents as the Bank shall have reasonably
requested.
3.1.9 GOOD STANDING
The Bank shall have received a certificate as to the legal
existence and good standing of each member of the Borrower Affiliated
Group, other than Xxxxxxx & Yale, from Industry Canada, the New
Brunswick Corporate Affairs Branch and the appropriate authority in the
Province of Quebec, as the case may be. The Bank shall have received a
long-form certificate of the Secretary of State of Massachussetts to
Xxxxxxx & Yale's legal existence. The Bank shall also have received
certificates of qualification to do business from each jurisdiction in
which the Borrower is required to be qualified.
3.1.10 LEGAL OPINIONS
The Bank shall have received a written legal opinion addressed
to, INTER ALIA, the Bank, dated the Closing Date, from (i) Xxxxxxxxxx
Xxxxxxxx Xxxxx Xxxxxx, Quebec counsel to the Borrower Affiliated Group,
and (ii) Xxxxxxx, Procter & Xxxx LLP, Massachussetts counsel to Xxxxxxx
& Yale; the whole in form and substance satisfactory to the Bank.
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3.1.11 FINANCIAL CONDITION
The Bank shall be satisfied that the Financial Statements
fairly present the business and financial condition of Xxxxxxx & Yale
as at the close of business on the date thereof and the results of
operations for the periods then ended, and that there has been no
material adverse change in the assets, business or financial condition
of any member of the Borrower Affiliated Group since the most recent
financial statements referred to therein.
3.1.12 SECURITY DOCUMENTS
The Bank shall be satisfied that each of the Security
Documents has been duly registered at all registers where necessary to
render the rights of the Bank thereunder enforceable as against third
parties and to grant to the Bank a first ranking position on the rights
and property subject thereto.
3.1.13 ACQUISITION DOCUMENTS
The Bank shall have received the following documents which
shall be in a form and substance satisfactory to the Bank,
(a) a copy of the Share Purchase Agreement (the
"Purchase Agreement") between any member or
combination of members of the Borrower
Affiliated Group, other than the Borrower,
and the present shareholders of the Borrower
confirming acquisition of 100% of the common
shares of the Borrower by any such member or
combination of members of the Borrower
Affiliated Group, for $7,700,000; and
(b) employment contracts between the Borrower
and Xx. Xxxxx Xxxxxxxxxx and Xx. Xxx Many
confirming employment of these two
individuals by the Borrower up to December
31, 2000 (collectively, the "Employment
Contracts").
3.1.14 FEES
The Borrower has paid to the Bank the arrangement fee of
$10,000 payable in connection with the Loan Documents and the Borrower
has paid all legal fees, incurred by the Bank in connection with the
preparation, negotiation and registration of the Loan Documents.
3.2 CONDITIONS PRECEDENT TO ALL UTILIZATIONS
The Bank may, at its sole discretion, provide each utilization under
the Operating Line of Credit and the sole utilization under the Demand
Acquisition Loan, or continue or convert any of the Credit Facilities after
fulfillment of the following conditions:
5
(a) timely receipt by the Bank of a Notice of
Borrowing, Renewal or Conversion;
(b) the representations and warranties contained
in Section 12 shall be true and accurate in
all material respects on and as of the date
of such Notice of Borrowing, Renewal or
Conversion and on the effective date of the
providing, continuation or conversion of the
utilizations under the Credit Facilities or
any part thereof as though made at and as of
each such date (except to the extent that
such representations and warranties
expressly relate to an earlier date), and no
Default shall exist and no Event of Default
shall have occurred and be continuing, or
would result from such utilization;
(c) the resolutions referred to in Section 3.1.6
shall remain in full force and effect; and
(d) no change shall have occurred in any law or
regulation or interpretation thereof that,
in the opinion of counsel for the Bank,
would make it illegal or against the policy
of any governmental agency or authority for
the Bank to provide any utilization of any
of the Credit Facilities hereunder, and, in
the event that there is any change in law,
regulation or interpretation thereof that
requires a withholding tax to be paid in
connection with this Agreement and any of
the Credit Facilities made hereunder, the
Borrower has acknowledged that such change
has occurred and has agreed that the
provisions contained in Section 10 shall be
in effect.
The providing of any utilization under any of the Credit Facilities and
the continuation or conversion of any such utilization under any of the Credit
Facilities shall be deemed to be, on the date of such utilization, continuation
or conversion under the Credit Facilities, a representation and warranty by each
member of the Borrower Affiliated Group, as to the accuracy in all material
respects of the representations and warranties referred to in subsection 3.2(b).
4. REPAYMENT
4.1 OPERATING LINE OF CREDIT
Notwithstanding anything to the contrary set out herein, the Borrower
shall repay on demand the outstanding unpaid balance of the Operating Line of
Credit and all accrued and unpaid interest thereon.
4.2 DEMAND ACQUISITION LOAN
The aggregate credit available from the Bank as a Demand Acquisition
Loan shall reduce in accordance with the following schedule and the Borrower
shall, on a timely basis, make all
6
required repayments on account of the Demand Acquisition Loan such that the
unpaid balance thereof never exceeds the amount set out in the table below (the
"Demand Acquisition Available Commitment") applicable to each period as set
forth below. Notwithstanding anything to the contrary set out herein, the
Borrower shall repay on demand the unpaid balance of the Demand Acquisition Loan
and all required and unpaid interest thereon.
REDUCTION OF DEMAND ACQUISITION AVAILABLE COMMITMENT
AMOUNT OF DEMAND ACQUISITION AVAILABLE COMMITMENT EFFECTIVE DATE
$1,000,000 on or after May 13, 1998
0 May 13, 2002
Without diminishing the right of the Bank to require payment of the unpaid
balance of the Demand Acquisition Loan and all accrued and unpaid interest
thereon on demand, the Borrower shall, on the first Business Day of each month,
pay to the Bank an amount equal to the lesser of (i) the unpaid balance of the
Demand Acquisition Loan, and (ii) $20,833.33, as a payment of the unpaid
principal amount owing under the Demand Acquisition Loan.
4.3 BREAKAGE COSTS
In the event that the Bank demands repayment of the unpaid balance
any of the Credit Facilities, the Borrower shall pay to the Bank the nominal
amount of any outstanding Bankers' Acceptances and, should the Bank incur
breakage costs in connection with an early termination of any outstanding
portion of any of the Credit Facilities, such costs will be added to the
indebtedness of the Borrower to the Bank hereunder and shall be payable on
demand.
5. INTEREST
5.1 PRIME RATE LOAN
Subject to the last paragraph of Section 7.1, the unpaid balance of the
Prime Rate Loan from time to time shall bear interest in respect of each day,
both before and after maturity or default, at a rate per annum which shall be at
all times equal to the Prime Rate of the Bank plus the Applicable Margin from
time to time in effect, such rate to be automatically adjusted without notice to
the Borrower effective immediately upon every change by the Bank of its Prime
Rate. Such interest shall be calculated daily and shall be payable monthly in
arrears by the Borrower in Canadian Dollars on the last Business Day of each
month of the calendar year, with interest on overdue interest accruing daily at
the same rate until fully paid.
6. PRIME RATE LOAN
6.1 AMOUNT OF PRIME RATE LOAN
The Demand Acquisition Loan is only available by way of one draw on or
before May 31, 1998. Each utilization under the Operating Line of Credit by way
of a Prime Rate Loan shall be in the principal amount of at least $10,000.
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7. BANKERS' ACCEPTANCES
7.1 ISSUE OF BANKERS' ACCEPTANCES
The Borrower may from time to time, at its option, utilize any of the
Credit Facilities or, subject to the terms hereof, part thereof by issuing
Bankers' Acceptances denominated in Canadian Dollars, provided that each such
utilization is in an aggregate principal amount of at least $500,000 and, over
that amount, in increments of $100,000. Such utilization may be by way of
conversion of the Prime Rate Loan or part thereof. Bankers' Acceptances issued
by the Borrower hereunder shall be for a term determined at the sole discretion
of the Bank but, in any event, of not less than 30 days and not more than 365
days, shall be prepared on the Bank's own forms supplied to the Borrower for
such purpose together with such other documents as the Bank may require and
shall be preceded by a verbal notice of the Borrower to the Bank setting out:
(a) the intended date of issue;
(b) the requested maturity date of the issue;
(c) the amount of each denomination and the
aggregate face amount thereof; and
(d) where the Bankers' Acceptances have been
pre-negotiated by the Borrower to a person
other than the Bank, the name and address of
such person who will accept delivery against
payment and the amount of such payment.
The verbal notice hereinabove referred to shall be given by the
Borrower to the Bank three Business Days prior to the intended date of issue of
any Bankers' Acceptances and shall be confirmed by a Notice of Borrowing,
Renewal or Conversion not later than on presentation by the Borrower to the Bank
for acceptance of the Bankers' Acceptances.
Upon the issue of each Bankers' Acceptance as a result of the renewal
of outstanding Bankers' Acceptances, the Borrower shall, concurrently with such
renewal, pay in advance out of its own funds to the Bank an amount equal to the
Discount applicable to such issue, to be applied against the principal of the
Bankers' Acceptance being so renewed, plus the applicable stamping fee set out
in Section 7.4.
If the Borrower chooses to renew a Bankers' Acceptance, the Borrower
shall cause the term of the new Bankers' Acceptances to commence on and include
the date of maturity of the relative Bankers' Acceptances being renewed. If the
Borrower fails to notify the Bank of its intention to renew a Bankers'
Acceptance at the latest by 10:00 a.m. three Business Days preceding the date of
maturity of such Bankers' Acceptance, the Borrower shall be deemed to have
notified the Bank of its intention to convert such Bankers' Acceptance into a
Prime Rate Loan. If the Borrower does not give the Bank three Business Days
prior notice of its intention to renew a Bankers' Acceptance, interest on the
amount of the Prime Rate Loan resulting from the maturity of such Bankers'
Acceptance shall be calculated daily and be payable on the date of the next
interest payment in respect of such Prime Rate Loan at an annual rate equal to
115% of the applicable Prime Rate and
8
Applicable Margin for each day of the three-day period immediately following
such maturity; thereafter, the rate of interest shall be calculated and payable
in accordance with Section 5.1.
7.2 REPAYMENT OF BANKERS' ACCEPTANCES
Bankers' Acceptances issued by the Borrower hereunder shall be made
payable at the branch of the Bank set forth in Appendix I hereof. If in respect
of maturing Bankers' Acceptances, the Borrower fails to give the Bank a timely
notice of renewal as provided in Section 7.1, such Bankers' Acceptances so
maturing shall be paid by the Bank and, subject to the last paragraph of Section
7.1, the amount thereof shall be added to the Prime Rate Loan bearing interest
in accordance with Section 5.1.
Notwithstanding the foregoing, the repayment on any day of maturing
Bankers' Acceptances from floating rate funds borrowed from the Bank hereunder
or otherwise is subject to the Bank's then applicable floating interest rate
being equal to or greater than the sum of the Bank's discount rate for 30-day
Bankers' Acceptances plus the aggregate of the Acceptance Rate of the Bank in
effect on such day and the Applicable Margin; failing which such repayment may
be subject to the Bank's prior consent which will not be unreasonably withheld.
7.3 TIMING OF MATURITIES
Subject to the terms hereof, no Bankers' Acceptance may be prepaid by
the Borrower prior to the scheduled maturity thereof, and in issuing Bankers'
Acceptances hereunder, the Borrower shall time the maturity thereof such that
the Demand Acquisition Loan never exceeds the Demand Acquisition Available
Commitment from time to time and the Operating Line of Credit never exceeds the
Operating Available Commitment from time to time.
7.4 STAMPING FEE
Bankers' Acceptances issued by the Borrower hereunder and accepted by
the Bank shall be subject to a stamping fee payable by the Borrower to the Bank
on the day of acceptance thereof, calculated on the basis of the actual number
of days for which such Bankers' Acceptances are issued, at an annual rate equal
to the Acceptance Rate of the Bank then in effect plus the Applicable Margin.
7.5 ALTERNATE BASIS OF BORROWING
If at any time during the term of this Agreement, the Bank determines
in good faith (which determination shall be final, conclusive and binding upon
all members of the Borrower Affiliated Group) that by reason of circumstances or
changes affecting the market for Bankers' Acceptances:
(i) it is no longer possible to establish the Acceptance Rate in
respect of Bankers' Acceptances, or
(ii) the market for Bankers' Acceptances no longer exists, is too
weak for its normal use by the Bank or is not capable in the
normal course of business to absorb Bankers' Acceptances
accepted by the Bank,
then, the Bank shall immediately notify the Borrower of its determination in
writing. For so long as
9
the circumstances referred to in paragraphs (i) or (ii) of this Section shall
continue, the Bank shall not be obligated to make any further utilizations under
any of the Credit Facilities available by way of Bankers' Acceptances and
thereafter, until notice to the contrary is given to the Borrower by the Bank,
the Bank shall only be obligated to make other forms of utilizations under the
Credit Facilities available to the Borrower hereunder.
7.6 WAIVER OF CLAIM
The Borrower shall have no right to set up as against the Bank any
defense or right of action, of indemnification or of set-off or compensation or
any similar claim of any nature whatsoever which the Borrower may have had at
any time or may have in the future with respect to any holder of one or more
Bankers' Acceptances issued pursuant hereto.
7.7 PRE-SIGNED DRAFT FORMS
To enable the Bank to make utilizations available by way of Bankers'
Acceptances in the manner specified in this Section 7, the Borrower shall, in
accordance with the request of the Bank, either (i) provide a power of attorney
to complete, sign, endorse and issue Bankers' Acceptances, in such form as the
Bank may require; or (ii) supply the Bank with such number of drafts as the Bank
may reasonably request, duly endorsed and executed on behalf of the Borrower.
The Bank will, upon request by the Borrower, promptly advise the Borrower of the
number and designations, if any, of the uncompleted drafts then held by it.
7.8 EXECUTION OF BANKERS' ACCEPTANCES
Subject to Section 7.7, drafts of the Borrower to be accepted as
Bankers' Acceptances hereunder shall be signed by a duly authorized officer or
duly authorized officers of the Borrower. Notwithstanding that any person whose
signature appears on any Bankers' Acceptance as one of such officers may no
longer be an authorized signatory for the Borrower at the date of issuance of a
Bankers' Acceptance, such signature shall nevertheless be valid and sufficient
for all purposes as if such authority had remained in force at the time of such
issuance and any such Bankers' Acceptance so signed shall be binding on the
Borrower. The Bank shall not be responsible or liable for its failure to accept
a Bankers' Acceptance as required hereunder if the cause of such failure is, in
whole or in part, due to the failure of the Borrower to provide duly executed
and endorsed drafts to the Bank on a timely basis nor shall the Bank be liable
for any damage, loss or other claim arising by reason of any loss or improper
use of any such instrument except a loss or improper use arising by reasons of
the gross or intentional fault of the Bank or its employees.
8. LETTERS OF CREDIT
8.1 LETTERS OF CREDIT
The Borrower may utilize a portion of the Operating Line of Credit by
way of Letters of Credit, subject to the terms and conditions of this Agreement,
upon the Borrower making a request to the Bank.
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8.2 ISSUANCE
Upon request by the Borrower and subject to the provisions of this
Agreement, the Bank shall issue from time to time such Letters of Credit as the
Borrower shall request. For purposes of calculating such utilization of the
Operating Line of Credit, the nominal face amount of each Letter of Credit shall
be used. The terms of each Letter of Credit shall be for a term determined
between the parties but, in any event, shall not exceed one year from the date
of issuance thereof.
8.3 DOCUMENTATION
Any request for a utilization under the Operating Line of Credit by way
of Letters of Credit shall be accompanied by the Bank's usual documentation
relating to the issuance and administration of letters of credit, duly executed
by the Borrower.
8.4 FEES
Upon issuance of a Letter of Credit, the Borrower shall pay to the Bank
a fee calculated in accordance with the standard practice of the Bank at a rate
per annum equal to the rate as advised by the Bank to the Borrower at the time
of issuance of the Letter of Credit calculated on the face amount of such Letter
of Credit, payable with other standard fees applicable at the time of issuance.
8.5 DISCHARGE OF OBLIGATIONS
The Borrower agrees to reimburse the Bank in immediately available
funds the amount paid or to be paid by the Bank or its agent or any party on its
behalf on any Letter of Credit issued on behalf of the Borrower which is
presented for payment. The Borrower agrees that while any Letter of Credit is
outstanding, the Borrower will take whatever steps are necessary to ensure that
it is entitled to obtain a utilization pursuant to the provisions hereof in an
amount at least equal to the principal amount of such Letter of Credit.
8.6 DEMAND
If any Letter of Credit is outstanding on the date of demand of
repayment of the Operating Line of Credit hereunder, the Borrower shall
forthwith upon such occurrence pay to the Bank an amount (the "deposit amount")
equal to the principal amount of such Letter of Credit, such deposit amount to
be held by the Bank in a daily interest bearing account for application against
the indebtedness owing by the Borrower to the Bank in respect of any draw on
such Letter of Credit. In the event that the Bank is not called upon to make
full payment on such Letter of Credit prior to the expiry date therefor, the
deposit amount and all interest accrued thereon, or such part thereof as has not
been paid out, shall be applied first to any other amounts payable pursuant to
the Letter of Credit and then to any other amount owing by the Borrower to the
Bank under the Loan Documents. Any amount and accrued interest remaining shall
be returned to the Borrower within 30 days of the expiry of the Letter of
Credit.
11
9. AVAILABLE COMMITMENT CANCELLATIONS
9.1 CANCELLATIONS BY BORROWER
The Borrower shall have the option at any time and from time to time,
subject to giving the Bank two Business Days irrevocable prior written notice to
that effect, to cancel all or part of the Operating Available Commitment
hereunder, thus permanently reducing the Operating Available Commitment by an
equal amount effective as and from the day that such cancellation takes effect.
No such cancellation can be made for less than Can. $100,000 or whole multiples
thereof except where the entire balance of the Available Commitment is
cancelled.
9.2 CANCELLATIONS BY BANK
Notwithstanding anything to the contrary set out herein, the Bank may
cancel forthwith upon notice to the Borrower all or part of the Operating
Available Commitment upon the terms and for the amounts determined at the sole
discretion of the Bank.
9.3 PAYMENTS AFTER CANCELLATION
Where on the effective date of a cancellation of all or any part of the
Operating Available Commitment, the unpaid balance of the Operating Line of
Credit is greater than the Operating Available Commitment as reduced pursuant to
the provisions hereof, the Borrower shall pay the difference to the Bank first
by paying down the Prime Rate Loan and, to the extent necessary, by reimbursing
outstanding Bankers' Acceptances on a timely basis in accordance with the
scheduled maturity thereof.
10. CHANGES IN CIRCUMSTANCES
10.1 INCREASED COSTS
If (i) the introduction of or any change in any applicable law,
regulation, treaty or official directive or regulatory requirement now or
hereafter in effect (whether or not having the force of law), or in the
interpretation or application thereof by any court or by any judicial or
governmental authority charged with the interpretation or administration
thereof, (ii) the Bank's compliance with any request from any central bank or
other fiscal, monetary or other authority (whether or not having the force of
law), or (iii) any directive, assessment or reassessment made by any competent
tax authority,
(a) subjects the Bank to any Tax, or changes the
basis of taxation of payments due to the
Bank or increases any existing Tax on
payments of principal, interest or other
amounts payable by any member of the
Borrower Affiliated Group to the Bank under
any of the Loan Documents;
(b) imposes, modifies or deems applicable any
reserve, special deposit,
12
regulatory or similar requirement against
assets held by, or in respect of deposits in
or for the account of, or loans by, or any
other commitment of or other acquisition of
funds for loans by, the Bank, or in respect
of any unutilized portion of the Operating
Available Commitment hereunder; or
(c) imposes on the Bank or modifies any
requirement that capital resources of the
Bank be maintained or allocated in respect
of any of the Credit Facilities or any
unutilized portion of the Operating
Available Commitment hereunder, or imposes
any other Tax or condition with respect to
any of the Loan Documents;
and the result of (a), (b) or (c) is, in the sole determination of the Bank
acting in good faith, to create a liability or increase the cost to the Bank of
maintaining any of the Credit Facilities or other commitments outstanding
hereunder, if any, or to reduce the net income receivable by the Bank or its
effective return on capital in respect of any of the Credit Facilities or other
commitments outstanding hereunder, if any, by an amount which the Bank considers
material in its reasonable discretion, then the Bank shall promptly notify the
relevant member of the Borrower Affiliated Group in writing (which notification
shall be final, conclusive and binding on all members of the Borrower Affiliated
Group) of such determination setting forth the basis thereof and the relevant
member of the Borrower Affiliated Group shall either, at its option:
(d) pay to the Bank, within thirty (30) days
from the date of notification, that amount
which compensates the Bank for such
additional cost or liability, or such
reduction in income or return on capital,
with interest thereon, from the date of
notification until payment in full, at the
Prime Rate plus 2% per annum; or
(e) make with the Bank such other arrangements
as the Bank shall deem satisfactory for the
termination of such facilities or their
conversion into other loans or facilities
available to the Borrower hereunder.
10.2 ILLEGALITY
If the introduction of or any change in any applicable law, regulation,
treaty or official directive or regulatory requirement now or hereafter in
effect (whether or not having the force of law), or the interpretation or
application thereof by any court or by any judicial or governmental authority
charged with the interpretation thereof, makes it unlawful or prohibited for the
Bank (based on the opinion of its counsel) to make, to fund, to maintain or to
perform its obligation under any of the Loan Documents or in respect of any
commitment hereunder, if any, the Bank may, by prior written notice to the
Borrower given with a reasonable time period taking into account all
circumstances, terminate its obligations under this Agreement to make available
any of the Credit Facilities or to maintain such commitment, whereupon the
Borrower shall either, at its option:
(a) pay to the Bank the outstanding amount of
the Credit Facilities or portion thereof
which has been determined to be unlawful or
prohibited, such payment (together with
accrued and unpaid interest
13
thereon) to be made by the Borrower not
later than on the Business Day immediately
preceding the day on which such illegality
or prohibition takes effect; or
(b) make with the Bank such other arrangements
as the Bank shall deem satisfactory for the
termination of such facilities or their
conversion into other loans or facilities
available to the Borrower hereunder and
indemnify the Bank for any out-of-pocket
expenses incurred by the Bank as a result of
such termination or conversion.
11. LOAN ACCOUNTS AND PLACE OF PAYMENT
The utilization of any of the Credit Facilities by the Borrower
hereunder and the repayment thereof pursuant to the provisions hereof shall be
evidenced by accounts of the Borrower opened and maintained on the books of the
Bank, which shall debit the amount of each utilization to the appropriate
account and shall credit each payment made by the Borrower to the Bank on
account thereof, by appropriate entries. In the event of any dispute between any
member of the Borrower Affiliated Group and the Bank, such accounts shall, in
the absence of manifest error, constitute conclusive evidence of the Borrower's
obligations hereunder. The unpaid principal amount of the relevant portion of
the Credit Facilities at any time shall be determined by adding the debit
balance of the Borrower's said accounts with the Bank at such time plus the
aggregate face amount of all Bankers' Acceptances and Letters of Credit then
outstanding.
The Borrower shall make all payments of principal, interest or
otherwise pursuant to this Agreement to the Bank in lawful currency of Canada,
in immediately available funds and before 1:00 p.m. on the day specified for the
payment at the address of the Bank set out in Appendix I hereof, or at any other
place of business of the Bank in Canada or the United States of America of which
the Bank may from time to time notify the Borrower in writing.
12. REPRESENTATIONS AND WARRANTIES
Each member of the Borrower Affiliated Group represents and warrants to
the Bank that:
12.1 ORGANIZATION AND GOOD STANDING
Each member of the Borrower Affiliated Group is a corporation duly
incorporated, organized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation and has all requisite power and authority,
corporate and otherwise, to conduct its business as now conducted, to own its
properties, to borrow money and enter into agreements therefor and to execute
and deliver, and to perform, all of its obligations under the Loan Documents to
which it is a party. The officers of the Borrower Affiliated Group have
exercised due diligence to qualify each member of the Borrower Affiliated Group
as a foreign corporation in the various jurisdictions wherein the nature of the
business they transact or the character of the properties they own therein makes
such qualification necessary. The Borrower is the wholly owned subsidiary of NB
Inc. which is a wholly-owned subsidiary of Xxxxxxx & Yale.
14
12.2 CORPORATE AUTHORITY
(a) The execution, delivery, and performance
by each member of the Borrower Affiliated
Group of the Loan Documents to which it is a
party are within the corporate authority of
such member of the Borrower Affiliated
Group, have been duly authorized by all
necessary corporate proceedings, and do not
and will not (i) require any consent or
approval of any shareholder of any member of
the Borrower Affiliated Group, (ii) violate
any material provision of any law, rule or
regulation, or order, writ, judgment,
injunction, decree, determination or award,
presently in effect, having application to
the Borrower Affiliated Group, or of the
Articles of Incorporation or By-Laws of any
member of the Borrower Affiliated Group, or
(iii) result in any material breach of or
constitute a default under or result in the
creation or imposition of any Encumbrance
upon any material property of the Borrower
Affiliated Group pursuant to the terms of,
any material indenture, loan or credit
agreement, or other agreement, lease or
instrument to which any member of the
Borrower Affiliated Group is a party or by
which any member of the Borrower Affiliated
Group may be bound or to which its property
may be subject; and
(b) no member of the Borrower Affiliated Group
is in default under (i) any law, rule,
regulation, order, writ, judgment,
injunction, decree, determination or award,
which default, either singly or in the
aggregate, would have a Material Adverse
Effect, or (ii) any material indenture,
agreement, lease or instrument, which
default, either singly or in the aggregate,
would have a Material Adverse Effect.
12.3 VALIDITY OF LOAN DOCUMENTS
Each one of the Loan Documents is, and the Ancillary Documents when
executed will be, the legal, valid and binding obligations of each member of the
Borrower Affiliated Group party thereto enforceable against such member of the
Borrower Affiliated Group in accordance with their respective terms except as
the enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or other laws from time to time in effect relating to or
affecting the rights of creditors. No authorization, consent, approval, license,
exemption of or filing or registration with any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, is or will be necessary to the valid execution, delivery or performance
by the applicable member of the Borrower Affiliated Group of the Loan Documents,
except such authorizations and filings as have been obtained prior to the date
hereof.
12.4 NO LITIGATION
Except as disclosed in a letter dated the date of this Agreement to the
Bank (the "Disclosure Letter") attached as Appendix III to this Agreement, and
as otherwise disclosed in writing to the Bank from time to time after the date
hereof, there are no actions, suits or proceedings pending or, to the knowledge
of any member of the Borrower Affiliated Group, threatened against any member
15
of the Borrower Affiliated Group, or any of their respective properties or
assets, before any court or governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, which, if determined adversely
to any member of the Borrower Affiliated Group, would have a Material Adverse
Effect. Except as set forth in the Disclosure Letter attached as Appendix III,
no material patent owned by any member of the Borrower Affiliated Group has been
challenged in any such pending or threatened action, suit or proceeding.
12.5 ACCURACY OF FINANCIAL INFORMATION
The audited consolidated balance sheet of Xxxxxxx & Yale and its
consolidated subsidiaries as at December 31, 1997 and the related statements of
income and of cash flows for the year then ended (collectively, the "Financial
Statements"), all heretofore furnished to the Bank, fairly present the financial
condition and results of operations of Xxxxxxx & Yale and its consolidated
subsidiaries as at the dates and for the periods therein referred to and were
prepared in accordance with US GAAP. The financial statements most recently
delivered pursuant to Section 13.2 or Section 13.3 hereof fairly present the
financial condition and results of Xxxxxxx & Yale and its consolidated
subsidiaries or the Borrower, as the case may be, as at the dates and for the
periods therein referred (subject to year-end audit adjustments and the absence
of footnotes in the case of interim financial statements) and were prepared in
accordance with US GAAP or Canadian GAAP, as the case may be, and, for the
Borrower, are complete and correct in all material respects; and there has been
no Material Adverse Effect since the date of the last delivery of financial
information pursuant to Section 13.2 or 13.3 hereof. Except as set forth in the
Disclosure Letter attached as Appendix III, there are no material liabilities of
Xxxxxxx & Yale or any of the consolidated subsidiaries, fixed or contingent,
which are not reflected in such Financial Statements or in the notes thereto,
other than liabilities incurred in the ordinary course of business since
December 31, 1997, or, of Xxxxxxx & Yale or any of the consolidated subsidiaries
or the Borrower, as the case may be, in such financial statements delivered
pursuant to Section 13.2 or Section 13.3 or the footnotes thereto (if any) other
than in the ordinary course of business since the financial statements most
recently delivered pursuant to Section 13.2 to Section 13.3 hereof. All
financial statements, excluding any forecasts, furnished by any member of the
Borrower Affiliated Group to the Bank in connection with the negotiation and
execution of this Agreement do not, and all financial statements hereafter
furnished by any member of the Borrower Affiliated Group to the Bank pursuant to
this Agreement (excluding reports delivered from time to time pursuant to
Section 13.2 or Section 13.3 hereof) will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
contained therein not misleading in the circumstances in which made.
12.6 COMPLIANCE
To the best of their knowledge, except as described in the Disclosure
Letter attached as Appendix III, each member of the Borrower Affiliated Group
(i) is in compliance in all material respects with all applicable laws and
regulations material to the conduct of its business and operations; and (ii)
possesses all the franchises, permits, licenses and grants of authority
necessary or required in the conduct of its respective business, except for
those franchises, permits, licenses and grants of authority the non-obtainment
of which would not have a Material Adverse Effect, and such franchises, permits,
licenses and grants of authority which each member of the Borrower Affiliated
Group does possess are valid, binding and enforceable and are not subject to any
16
proceedings or claims opposing the issuance, development or use thereof or
contesting the validity thereof, except to the extent that any invalidity,
unenforceability or adverse claim or proceeding, would neither singly nor in the
aggregate, have a Material Adverse Effect.
12.7 MATERIAL CONTRACTS
No member of the Borrower Affiliated Group is in default under any
contracts or agreements material to any member of the Borrower Affiliated Group
or its business. No Default exists and no Event of Default has occurred and is
continuing.
12.8 TITLE TO ASSETS
The Borrower has good and marketable title to all of its material
properties and assets free and clear of any Encumbrances, except the liens and
Encumbrances permitted pursuant to Section 13.6 hereof and those which, either
singly or in the aggregate would not have a Material Adverse Effect, and all
such assets are in good order and repair and covered by insurance with insurance
companies against such hazards and in such amounts as is customary in the
industry.
12.9 HAZARDOUS MATERIAL
(a) The Borrower: (i) has received all material
permits and filed all notifications
necessary to carry on its businesses; (ii)
is in substantial compliance with all
material federal, state, provincial and
local laws and regulations governing the
control, removal, spill, release or
discharge of Hazardous Material.
(b) Except (i) as set forth in Appendix III
attached hereto, (ii) as to those matters
with respect to which notices were given,
actions have been taken and no further
action is required, or (iii) as otherwise
disclosed in writing to the Bank from time
to time pursuant to Sections 13.12 or 13.15
hereof, the Borrower has not given any
written or oral notice to any agency with
regard to any actual or imminently
threatened removal, spill, release or
discharge of Hazardous Material on
properties owned or leased by the Borrower
or in connection with the conduct of its
business and operations.
(c) Except (i) as set forth in Appendix III
attached hereto, (ii) as to those matters
with respect to which notices were received,
actions have been taken and no further
action is required, or (iii) as otherwise
disclosed in writing to the Bank from time
to time pursuant to Sections 13.12 or 13.15
hereof, the Borrower has not received notice
that it is potentially responsible for costs
of clean-up of any actual or imminently
threatened spill, release or discharge of
Hazardous Material pursuant to any law,
regulation or policy.
17
12.10 TAXES AND ASSESSMENTS
Each member of the Borrower Affiliated Group has filed all required tax
returns or has filed for extensions of time for the filing thereof, and has paid
all applicable federal, state, provincial and local taxes and made all required
remittances to federal, state, provincial or local governments or agencies,
including, without limitation, income taxes, sales taxes, corporate income
taxes, payroll taxes, workers' compensation dues, unemployment insurance
premiums and pension plan remittances, except, in each case, where the failure
to so file or pay would not have a Material Adverse Effect, and other than (i)
taxes not yet due or which may be paid hereafter without penalty, and (ii) taxes
contested in good faith by lawful and appropriate proceedings and with respect
to which adequate reserves therefor have been set aside by the applicable member
of the Borrower Affiliated Group; and no member of the Borrower Affiliated Group
has knowledge of any material deficiency or additional assessment in connection
therewith not provided for in the financial statements required hereunder.
12.11 YEAR 2000 COMPLIANCE
Each member of the Borrower Affiliated Group has taken commercially
reasonable steps intended to ensure that all software and hardware used by it
will be year 2000 compliant no later than April 30, 1999. For purposes of this
Section 12.11, the phrase, "2000 compliant" means, with respect to software and
hardware, that it will be capable of recording, registering and permitting all
transactions to occur with reference to dates before, on or after January 1,
2000, including (i) accepting date input, providing date output and performing
calculations using dates and portions of dates, and (ii) responding to two digit
year-date input in a way that resolves any ambiguity as to the applicable
century in a clear and predetermined manner, taking into account leap years.
13. COVENANTS
So long as this Agreement is in force or any member of the Borrower
Affiliated Group is indebted to the Bank under any of the Loan Documents, all
members of the Borrower Affiliated Group covenant and agree, and Xxxxxxx & Yale
covenants and agrees to cause each other member of the Borrower Affiliated
Group, to do, perform and observe all of the following:
13.1 EXISTENCE AND GOOD STANDING
Each member of the Borrower Affiliated Group will preserve and maintain
(i) its existence as a corporation and its good standing in the jurisdiction of
its incorporation, (ii) its qualification as a foreign corporation and its
authorization to do business in all other jurisdictions wherein the nature of
its respective business or property makes such qualification and/or
authorization necessary, and (iii) the validity of all its material agreements,
rights, franchises, licenses, permits, operations, contracts, certificates of
compliance or grants of authority or other arrangements required in the conduct
of its business, except where the failure to maintain same would not have a
Material Adverse Effect.
18
13.2 XXXXXXX & YALE FINANCIAL STATEMENTS AND INFORMATION
Xxxxxxx & Yale will furnish to the Bank:
(a) as soon as available and in any event within
ninety (90) days after the end of each
fiscal year of Xxxxxxx & Yale, copies of the
consolidated audited annual financial
statements, including a balance sheet,
income statement and a statement of cash
flows, which financial statements shall be
prepared in accordance with US GAAP, all in
reasonable detail and stating in comparative
form the figures as at the end of and for
the previous fiscal year; all certified by
the treasurer, controller or chief financial
officer of Xxxxxxx & Yale as fairly
presenting the financial conditions, results
of operations and transactions in surplus
accounts of Xxxxxxx & Yale as at the date
and for the period therein referred to
(subject to year end audit adjustments); and
(b) as soon as available and in any event within
sixty (60) days after the end of the first,
second and third quarterly accounting
periods of each fiscal year of Xxxxxxx &
Yale, copies of the consolidated quarterly
financial statements, including the balance
sheet, an income statement and a statement
of cash flows, which financial statement
shall be prepared in accordance with US
GAAP, all in reasonable details; all
certified by the treasurer, controller or
chief financial officer of Xxxxxxx & Yale as
fairly presenting the financial conditions,
results of operations and transactions in
surplus accounts of Xxxxxxx & Yale as at the
date and for the period therein referred to.
13.3 BORROWER FINANCIAL STATEMENTS AND INFORMATION
The Borrower will furnish to the Bank:
(a) as soon as available and in any event
within one hundred twenty (120) days after
the end of each fiscal year of the Borrower,
copies of the unaudited annual financial
statements, including a balance sheet, an
income statement and a statement of cash
flows, which financial statements shall be
prepared in accordance with Canadian GAAP,
all in reasonable detail and stating in
comparative form the figures as at the end
of and for the previous fiscal year; all
certified by the treasurer, controller or
chief financial officer of the Borrower as
complete and current in all material
respects, fairly presenting the financial
conditions, results of operations and
transactions in surplus accounts of the
Borrower as at the dates and for the periods
therein referred to (subject to year end
audit adjustments);
(b) a certificate of the chief financial officer
of the Borrower within sixty (60) days after
the end of the first, second and third
quarterly
19
accounting periods in each fiscal year of
Xxxxxxx & Yale and within ninety (90) days
after the end of each fiscal year of Xxxxxxx
& Yale which certificate shall confirm that
the Borrower has complied with all terms and
conditions of this Agreement and that no
Default exists and no Event of Default has
occurred and is continuing or, if such be
not the case, specifying all such Defaults
and Events of Default and the nature
thereof;
(c) as soon as available and in any event within
forty-five (45) days after the end of each
month, copies of the internal financial
statements of the Borrower, including a
balance sheet, an income statement and a
statement of cash flows, which financial
statement shall be prepared in accordance
with Canadian GAAP; and
(d) within twenty (20) days after the end of
each month, an inventory declaration and an
aged listing of accounts receivable and
payable all in a form and substance
acceptable to the Bank; and
(e) within five (5) Business Days of the date
hereof, a balance sheet of the Borrower as
of the date immediately following the sale
of shares by the present shareholders of the
Borrower pursuant to the Purchase Agreement.
13.4 FINANCIAL COVENANTS
The Borrower shall, at all times:
(a) ensure that the aggregate of the outstanding
indebtedness of the Borrower to the Bank
under the Operating Line of Credit and,
without duplication, the face amount of all
Letters of Credit accepted, after providing
20% to cover Letters of Credit available,
does not exceed 80% of the accounts
receivable, with all accounts receivable
denominated in lawful currency of the United
States of America to be converted to
Canadian Dollars at an exchange rate
prevailing at the relevant time, excluding
accounts receivable of more than ninety (90)
days due and all intercompany accounts;
(b) ensure that the aggregate of the outstanding
indebtedness of the Borrower to the Bank
under the Demand Acquisition Loan and the
demand term loan of $83,333.36 referenced in
that certain letter agreement dated April
22, 1998 between the Bank and the Borrower,
as accepted by the Borrower in April, 1998,
does not exceed 50% of the value of
inventory of the Borrower valued at cost;
(c) ensure that the Debt Service Coverage Ratio
is not less than 1.25;
(d) ensure that the Working Capital of the
Borrower is not less than
20
$600,000 following December 31, 1998; and
(e) ensure that the Ratio of Debt to Free Cash
Flow is not more than 2.5 to 1 until
December 31, 1998 and is not more than 2.0
to 1 thereafter.
13.5 LIMITATION ON INDEBTEDNESS
No member of the Borrower Affiliated Group, other than Xxxxxxx & Yale,
will, directly or indirectly, create, assume, incur, suffer to exist or in any
manner be liable in respect of, any indebtedness, including any contingent
obligation under a guarantee, suretyship or indemnity, other than indebtedness
under any of the Loan Documents, any other indebtedness to the Bank or in
respect of a Permitted Encumbrance.
13.6 LIMITATION ON LIENS
No member of the Borrower Affiliated Group, other than Xxxxxxx & Yale,
will nor will they permit any Subsidiary to: (i) create, assume, incur or permit
to exist any mortgage, lien, pledge, charge, deed of trust, assignment, charge,
security or other Encumbrance of any kind (including for all purposes of this
Agreement any conditional sale agreement or any other title retention agreement
or any lease in the nature thereof) in respect of any property or assets of any
character of such member of the Borrower Affiliated Group or any Subsidiary
(whether owned on the date hereof or hereafter acquired) or (ii) give its
consent to the subordination of any then-existing material right or claim of
such member of the Borrower Affiliated Group or any Subsidiary to any right or
claim of any person other than a member of the Borrower Affiliated Group,
provided, however, that the restrictions set forth in this Section shall not
prohibit any Permitted Encumbrance.
No member of the Borrower Affiliated Group, other than Xxxxxxx & Yale,
and none of the Subsidiaries will sign or file in any province, state or other
jurisdiction a financing statement under any PERSONAL PROPERTY SECURITY ACT or
other similar law which names as debtor any member of the Borrower Affiliated
Group or any Subsidiary nor sign any security agreement authorizing any secured
party thereunder to file such security agreement or any such financing
statement, except a financing statement filed or to be filed to perfect or
protect a security which such member of the Borrower Affiliated Group or a
Subsidiary is entitled to create, assume, incur or permit to exist under the
foregoing provisions of this Section 13.6.
13.7 LIMITATION ON CONSOLIDATIONS AND MERGERS
No member of the Borrower Affiliated Group, other than Xxxxxxx & Yale,
will amalgamate, consolidate with or merge into any Person.
13.8 LIMITATION ON ACQUISITIONS
No member of the Borrower Affiliated Group, other than Xxxxxxx & Yale,
will acquire all or substantially all of the assets or business of any Person or
permit any Subsidiary to do so.
21
13.9 LIMITATION ON DISPOSITIONS OF ASSETS
No member of the Borrower Affiliated Group, other than Xxxxxxx & Yale,
will sell, assign, discount any accounts receivable, lease or otherwise dispose
of (whether in one transaction or in a series of transactions), all or
substantially all of its assets (whether now owned or hereafter acquired), to
any Person.
13.10 DIVIDENDS, CHANGE OF OWNERSHIP
No member of the Borrower Affiliated Group, other than Xxxxxxx & Yale,
will declare or pay any dividends, bonuses or capital withdrawals except for
compensation paid to Luc Many or Xxxxx Xxxxxxxxxx, as stipulated in their
respective Employment Contracts. Each member of the Borrower Affiliated Group
will not permit any change of ownership of the capital stock or change of the
capital structure of any other member of the Borrower Affiliated Group, other
than Xxxxxxx & Yale.
13.11 XXXXXXX & YALE CREDIT AGREEMENT, EMPLOYMENT CONTRACTS
Each member of the Borrower Affiliated Group will not waive or modify
any of the terms of, or terminate the Xxxxxxx & Yale Credit Agreement or the
Employment Contracts without the prior written consent of the Bank.
13.12 LITIGATION
Each member of the Borrower Affiliated Group, other than Xxxxxxx &
Yale, will notify the Bank in writing immediately, and furnish copies of details
thereof, of the institution of any material, determined in accordance with
Canadian GAAP, litigation, the commencement of any administrative proceedings or
the assertion or threat of any claim which, if adversely resolved, would have a
Material Adverse Effect.
13.13 EVENT OF DEFAULT
Each member of the Borrower Affiliated Group will notify the Bank in
writing immediately of:
(a) the occurrence of any Event of Default or
Default hereunder;
(b) the happening of any event that could have a
Material Adverse Effect; and
(c) any holder of any indebtedness of any member
of the Borrower Affiliated Group giving any
notice or taking or threatening to take any
other action with respect to a default or
event of default or a claimed default or
event of default under any agreement or
instrument
22
governing such indebtedness that could have
a Material Adverse Effect.
13.14 COMPLIANCE
Each member of the Borrower Affiliated Group will comply in all
material respects with all laws and regulations (foreign, local, provincial,
state and federal) material to the conduct of its business. Each member of the
Borrower Affiliated Group will continue to carry on the business currently being
carried on by the Borrower Affiliated Group as at the date hereof.
13.15 NOTICE OF ENVIRONMENTAL MATTERS
The Borrower will notify the Bank in writing promptly of: (a) any
written or oral notice given by the Borrower to any federal, provincial, state
or local agency with regard to any actual or imminently threatened removal,
spill, release or discharge of Hazardous Material on properties owned or leased
by the Borrower or in connection with the conduct of its business and
operations; and (b) any notice received by the Borrower that it is potentially
responsible for costs of clean-up of any actual or imminently threatened spill,
release or discharge of Hazardous Material pursuant to any law or regulation.
13.16 OTHER DOCUMENTS/INFORMATION
Deliver to the Bank any and all other relevant documents, instruments
and information, financial or otherwise, reasonably related to any member of the
Borrower Affiliated Group or any of the Credit Facilities, reasonably requested
by the Bank or its counsel from time to time.
13.17 OTHER AGREEMENTS
The Borrower will notify the Bank in writing not less than ten (10)
Business Days prior to the date any member of the Borrower Affiliated Group
modifies or amends in a material fashion the terms of any agreement respecting
indebtedness.
13.18 BOOKS AND RECORDS
Each member of the Borrower Affiliated Group will keep and maintain
satisfactory and adequate books and records of account in accordance with
Canadian GAAP or US GAAP, as the case may be.
13.19 INSURANCE
Each member of the Borrower Affiliated Group will keep and maintain all
of its property and assets in good order, repair and working condition subject
to ordinary wear and tear, and
23
covered by insurance with reputable and financially sound insurance companies
against such hazards and in such amounts as is customary in the industry.
13.20 TAXES
Each member of the Borrower Affiliated Group will pay and discharge all
taxes, assessments or other governmental charges or levies imposed on it or any
of its property or assets prior to the date on which any penalty for non-payment
or late payment is incurred to the extent such tax, assessment or governmental
charge may result in an Encumbrance on any of the property or assets of any
member of the Borrower Affiliated Group, unless the same are (a) currently being
contested in good faith by appropriate proceedings, diligently prosecuted and
(b) are covered by appropriate reserves maintained in accordance with Canadian
GAAP or US GAAP, as the case may be.
13.21 SUBORDINATION
Without in any way limiting the obligations of any member of the
Borrower Affiliated Group under any of the Loan Documents, all present and
future claims of any member of the Borrower Affiliated Group against any other
member of the Borrower Affiliated Group and all Encumbrances, if any, relating
thereto are hereby fully subordinated and postponed by each member of the
Borrower Affiliated Group to the present and future claims of the Bank against
the relevant member of the Borrower Affiliated Group (including claims, if any,
not arising under any of the Loan Documents), and any moneys received, after a
demand by the Bank for repayment of any of the Credit Facilities or the
occurrence of an Event of Default, by any member of the Borrower Affiliated
Group in respect thereof shall be received for the benefit of and shall be
forthwith paid over to the Bank on demand.
14. EVENTS OF DEFAULT
The occurrence of any one or more of the following events shall
constitute an "Event of Default" under this Agreement:
14.1 PAYMENT
If the Borrower defaults in the payment to the Bank of any principal,
interest, fees, costs or expenses required to be made under any of the Loan
Documents or any other agreement between any member of the Borrower Affiliated
Group and the Bank with or without notice on the part of the Bank.
14.2 TERMINATION OF BUSINESS, INSOLVENCY
If any member of the Borrower Affiliated Group, other than Xxxxxxx &
Yale, loses its corporate or legal existence or ceases to carry on, in the
ordinary course, its business, as carried on at the date hereof, or a
substantial part thereof, or if a resolution is passed or an order made for the
winding-up, liquidation or dissolution of such member of the Borrower Affiliated
Group, or if such member of the Borrower Affiliated Group makes an assignment or
proposal, or files a notice of
24
proposal, for the benefit of its creditors or a petition in bankruptcy is
presented against it, or if such member of the Borrower Affiliated Group
becomes subject to any other insolvency legislation.
14.3 DEFAULT IN OTHER INDEBTEDNESS
If the Borrower defaults under the terms of any other writing or
agreement evidencing indebtedness for borrowed money and the creditor thereof
exercises a right of acceleration and demands the immediate payment by the
Borrower of such indebtedness prior to its scheduled maturity.
14.4 DEFAULT UNDER XXXXXXX & YALE CREDIT AGREEMENT
If an event of default has occurred and is continuing under the Xxxxxxx
& Yale Credit Agreement.
14.5 TERMINATION OF GUARANTEE
If the Bank receives from any present or future guarantor of the
Borrower's indebtedness to the Bank hereunder or otherwise a notice purporting
to terminate or limit such guarantor's liability under its guarantee.
14.6 MISREPRESENTATIONS OR MATERIAL ADVERSE CHANGES
If the Bank at any time discovers that any statement, representation or
warranty herein or in any document delivered to the Bank pursuant to any of the
Loan Documents is false or misleading in any material respect; or if there is
any material adverse event or change in the financial condition or business
operations and activities of any member of the Borrower Affiliated Group, or
their respective subsidiaries or controlling affiliates which, in the aggregate
or on a consolidated basis, constitutes, in the reasonable opinion of the Bank,
a serious and substantial deterioration in the financial condition or prospects
of any member of the Borrower Affiliated Group which impairs or is likely to
impair the ability of any member of the Borrower Affiliated Group to satisfy and
perform, on a timely basis, its liabilities and obligations under any of the
Loan Documents, and such situation has not been remedied, or adequate remedial
action commenced, to the reasonable satisfaction of the Bank within 15 days
after written notice thereof by the Bank to the relevant member of the Borrower
Affiliated Group.
14.7 CHANGE OF CONTROL
If the effective control of any member of the Borrower Affiliated
Group, other than Xxxxxxx & Yale, directly or indirectly passes to persons or
interests other than its present controlling shareholders without the Bank's
prior written consent, which consent shall not be unreasonably withheld.
14.8 TERMINATION OF CREDIT FACILITIES
If in virtue of a right, privilege or option afforded to the Bank by
contract, by law or otherwise, the Bank, by written notice, validly demands
payment of the principal amount outstanding
25
from time to time under any other loan or credit facility which the Bank has
extended or may extend to any member of the Borrower Affiliated Group or their
respective subsidiaries, and such payment is not made within the time allowed or
stipulated in such notice.
14.9 DEFAULT IN OTHER COVENANTS
If any member of the Borrower Affiliated Group defaults in the
observance or performance of any other covenant or condition contained in any of
the Loan Documents and such default has not been remedied, or adequate remedial
action commenced, to the reasonable satisfaction of the Bank within 15 days
after written notice specifying such default has been given to any relevant
member of the Borrower Affiliated Group by the Bank, or if any security now or
hereafter granted by any member of the Borrower Affiliated Group in favour or
for the benefit of the Bank and securing any of the Credit Facilities, becomes
enforceable pursuant to the terms thereof.
15. REMEDIES
Upon the occurrence of any Event of Default hereunder, the Bank may,
without limiting any other rights of the Bank set out in any of the Loan
Documents, forthwith upon notice to the Borrower, terminate any commitment to
lend further sums or grant further credits to the Borrower hereunder or
otherwise, and declare accrued and unpaid interest on the unpaid balance of any
of the Credit Facilities immediately due and payable, whereupon it shall be due
and payable, and the Bank may exercise any and all rights, remedies, powers and
privileges afforded by the laws of the Province of Quebec or of any other
jurisdiction, or by any and all other instruments, documents and agreements
securing the payment and performance of the obligations of the Borrower
hereunder. Should the Bank incur breakage costs in connection with the early
termination (other than in accordance with the terms hereof) of any outstanding
portion of any of the Credit Facilities, such costs will be added to the
indebtedness of the Borrower to the Bank hereunder. Each member of the Borrower
Affiliated Group shall be "en demeure" to fulfill its obligations under the Loan
Documents to which it is a party by the mere lapse of time, or may be put "en
demeure" by any other method provided by law. For greater certainty, each member
of the Borrower Affiliated Group acknowledges that the occurrence of a Default
or an Event of Default is not a necessary precondition for the Bank to demand
the repayment of any of the Credit Facilities and interest thereon in accordance
with Section 4 nor to cancel, in whole or in part, the Operating Available
Commitment in accordance with Section 9.2.
16. WAIVERS
The acceptance by the Bank, after a Default or the occurrence of an
Event of Default, of payment of any sum owing hereunder, or the exercise by the
Bank of any right, recourse or remedy herein or otherwise provided, shall not in
itself constitute a waiver of such default nor preclude the Bank from exercising
any other right, recourse or remedy.
No failure or delay on the part of the Bank in exercising any power or
right under any of the Loan Documents shall operate as a waiver thereof nor
shall any single or partial exercise of any such right or power preclude any
other or further exercise thereof, nor the exercise of any other right or power
hereunder. No modification or waiver of any provision of any of the Loan
Documents shall in any event be effective
26
unless the same shall be in writing and then such waiver shall be effective only
in the specific instance and for the purpose for which given. No notice or
demand on any member of the Borrower Affiliated Group in any case shall, of
itself, entitle any member of the Borrower Affiliated Group to any other or
further notice or demand in similar or further circumstances.
17. CUMULATIVE REMEDIES
The rights and remedies provided to the Bank under any of the Loan
Documents are cumulative and are in addition to and not in substitution for any
other rights and remedies which the Bank may have under the laws of the Province
of Quebec or of any other jurisdiction, and the exercise by the Bank of any
right or remedy arising from a default or breach of any undertaking, covenant or
obligation contained in any of the Loan Documents shall not be deemed to be a
waiver of or to alter, affect or prejudice any other right or remedy to which
the Bank may be lawfully entitled for the same default or breach.
18. NOTICES
Any notice, direction or other document required or permitted to be
given under the provisions hereof shall be in writing and may be given by
delivering, mailing or sending same by telegram, telecopier or other similar
form of communication addressed to the Bank or to the relevant member of the
Borrower Affiliated Group, at its address set forth in Appendix I hereof.
Any notice, direction or document aforesaid, shall if delivered, be
deemed to have been given on the Business Day it was so delivered, if sent by
telegram, telecopier or other similar form of communication, be deemed to have
been given on the Business Day following the day it was so sent, and if mailed,
be deemed to have been given on the third Business Day following the day on
which it was so mailed. Any party may give written notice of a change of address
in the same manner, in which event any such communication shall thereafter be
given to it as above provided at such new address. In the event of interruption,
for any reason, of one or more of the forms of communications listed above, the
parties shall use a form which is not so interrupted with the intent that the
addressee receives timely notice of the communication.
19. ENTIRETY AND AMENDMENTS
This Agreement supersedes all prior commitments, agreements and
understandings, if any, relating to the subject matter hereof, but only to the
extent that they would be incompatible with or contrary to the express
provisions hereof, and this Agreement may be amended only by an instrument in
writing executed jointly by the Borrower and the Bank, and supplemented only by
documents delivered or to be delivered in accordance with the express terms
thereof.
20. PARTIES BOUND
This Agreement shall be binding upon and shall inure to the benefit of
each member of the Borrower Affiliated Group and the Bank and their respective
successors and assigns; provided, however, that no member of the Borrower
Affiliated Group may, without the prior written consent of the Bank, assign or
purport to assign, directly or indirectly, any of its rights, duties or
obligations under any of the Loan Documents.
27
The Bank may assign or grant a participation in all or part of its
financial interests herein and in the security held in support hereof from time
to time, to one or more other financial institutions without the prior consent
of any member of the Borrower Affiliated Group. Any assignee shall be entitled
to the full benefit hereof and of the other Loan Documents and other documents
contemplated by this Agreement and shall be subject to the obligations herein to
the same extent as if it were an original party in respect of the rights or
obligations assigned to it and the Bank shall be released and discharged
accordingly and to the same extent.
21. INTERPRETATION
This Agreement shall be interpreted in accordance with and governed by
the laws of the Province of Quebec and the laws of Canada applicable therein.
Each member of the Borrower Affiliated Group hereby irrevocably submits to the
non-exclusive jurisdiction of the courts of the Province of Quebec in respect of
any legal action or proceeding arising out of or relating to any of the Loan
Documents.
22. MISCELLANEOUS
22.1 EXPENSES
The Borrower will pay on demand all fees and expenses of the Bank in
connection with the preparation, waiver, amendment or registration of the Loan
Documents or other documents executed in connection therewith, or the
administration thereof, of the utilizations under any of the Credit Facilities,
and the Borrower will pay on demand all fees and expenses of the Bank in
connection with the default or collection of the utilizations under any of the
Credit Facilities or administration, default, collection in connection with the
Bank's exercise, preservation or enforcement of any of its rights, remedies or
options thereunder or under any of the Loan Documents, including, without
limitation, fees and expenses of outside legal counsel and the allocated costs
of in-house legal counsel, accounting, consulting, brokerage or other similar
professional fees or expenses, and any fees or expenses associated with any
travel or other costs relating to any appraisals or examinations conducted in
connection with any of the Credit Facilities.
22.2 INDEMNIFICATION
The Borrower shall absolutely and unconditionally indemnify and hold
harmless the Bank against any and all claims, demands, suits, actions, causes of
action, damages, losses, settlement payments, obligations, costs, expenses and
all other liabilities whatsoever which shall at any time or times be incurred or
sustained by the Bank or by any of their shareholders, directors, officers,
employees, subsidiaries, affiliates or agents (other than as a result of the
gross or intentional fault of the Bank) on account of, or in relation to, or in
any way in connection with, any of the arrangements or transactions contemplated
by, associated with or ancillary to either the Loan Documents, whether or not
all or any of the transactions contemplated by, associated with or ancillary to
the Loan Documents, are ultimately consummated. The obligation under this
Section shall survive even after the termination of this Agreement if the cause
of action originated prior to such termination.
28
22.3 COMPENSATION
Regardless of the adequacy of any collateral or other means of
obtaining repayment of any of the Credit Facilities, any deposits, balances or
other sums credited by or due from the Bank or any of its branch or affiliate
offices to any member of the Borrower Affiliated Group may, at any time and from
time to time after the occurrence of an Event of Default hereunder or if the
Bank has demanded payment of any of the Credit Facilities, without notice to any
member of the Borrower Affiliated Group or compliance with any other condition
precedent now or hereafter imposed by statute, rule of law, or otherwise (all of
which are hereby expressly waived) be set off, appropriated and applied by the
Bank against any and all obligations of any member of the Borrower Affiliated
Group to the Bank or any of its affiliates in such manner as the head office of
the Bank or any of its branch offices in their sole discretion may determine.
22.4 COUNTERPARTS
This Agreement may be signed in any number of counterparts with the
same effect as if the signatures hereto and thereto were upon the same
instrument.
22.5 PARTIAL INVALIDITY
The invalidity or unenforceability of any one or more phrases, clauses
or sections of this Agreement shall not affect the validity or enforceability of
the remaining portions of it.
23. LANGUAGE
The parties hereto have agreed that this Agreement as well as any
document or instrument relating thereto be drawn up in English only but without
prejudice, however, to any such document or instrument which may from time to
time be drawn up in French only or in both French and English. LES PARTIES AUX
PRESENTES ONT CONVENU QUE LA PRESENTE CONVENTION AINSI QUE TOUS AUTRES ACTES OU
DOCUMENTS S'Y RATTACHANT SOIENT REDIGES EN ANGLAIS SEULEMENT MAIS SANS PREJUDICE
A TOUS TELS ACTES OU DOCUMENTS QUI POURRAIENT A L'OCCASION ETRE REDIGES EN
FRANCAIS SEULEMENT OU A LA FOIS EN ANGLAIS ET EN FRANCAIS.
29
In witness hereof each of the parties hereto has executed this
Agreement by the hand of a duly authorized representative.
LASIRIS INC.
per:/s/ Xxxxx Xxxxxxxxxxx
--------------------------------
Name: Xxxxx Xxxxxxxxxxx
Title: President
THE TORONTO-DOMINION BANK
per:/s/ Xxxxxxx Xxx
--------------------------------
Name: Xxxxxxx Xxx
Title: Manager, Commercial Services
30
INTERVENTION
AND HERETO INTERVENED Xxxxxxx & Yale, Inc., Lasiris Holdings, Inc., 0000-0000
Xxxxxx Inc. and 0000-0000 Xxxxxx Inc. which hereby acknowledge having taken
cognizance of this Agreement, agree to be bound by the terms thereof applicable
to them and hereby acquiesce unconditionally to all present and future movable
hypothecs granted by the Borrower to the Bank and which charge claims of the
Borrower.
XXXXXXX & YALE, INC.
per: /s/ Xxxx X. Xxxxxxxx
-------------------------------
Name: Xxxx X. Xxxxxxxx
Title: President and Secretary
LASIRIS HOLDINGS, INC.
per: /s/ Xxxx X. Xxxxxxxx
-------------------------------
Name: Xxxx X. Xxxxxxxx
Title: President and Secretary
0000-0000 XXXXXX INC.
per: /s/ Xxxx X. Xxxxxxxx
-------------------------------
Name: Xxxx X. Xxxxxxxx
Title: President and Secretary
0000-0000 XXXXXX INC.
per: /s/ Xxxx X. Xxxxxxxx
-------------------------------
Name: Xxxx X. Xxxxxxxx
Title: President and Secretary
31
APPENDIX I
This is Appendix I to that certain Credit Agreement dated as of May 13, 1998
between The Toronto-Dominion Bank (the "Bank"), as lender, and Lasiris Inc. (the
"Borrower"), as borrower.
Address of the Bank for payments and notices:
THE TORONTO-DOMINION BANK
Commercial Banking Centre
0000 Xxxx Xxxxx
Xx. Xxxxxxx, Xxxxxx
X0X 0X0
ATTENTION: Vice President and Manager
Fax: (000) 000-0000
Address of the Borrower for notices:
LASIRIS INC
0000 Xxxxx Xxxxxx
Xx. Xxxxxxx, Xxxxxx
X0X 0X0
ATTENTION: President
Fax: (000) 000-0000
With a copy in all circumstances to Xxxxxxx & Xxxx
Xxxxxxx xx Xxxxxxx & Xxxx, XX Inc., 2620 and 9063 for notices:
XXXXXXX & YALE, INC.
00 Xxxxxxxxx Xxxx
Xxxxx, XX
X.X.X. 00000
ATTENTION: Xxxx X. Xxxxxxxx
Fax: (000) 000-0000
32
DEFINITIONS
"ACCEPTANCE RATE" means the annual percentage rate set from time to time by the
Bank as a reference rate then in effect for determining its stamping fees on
Canadian Dollar Bankers' Acceptances accepted by it.
"AGREEMENT" means this Credit Agreement.
"ANCILLARY DOCUMENTS" has the meaning ascribed thereto in Subsection 3.1.1(a).
"APPLICABLE MARGIN" means the following rate applicable to the following
portions of the Credit Facilities:
OPERATING LINE OF CREDIT DEMAND ACQUISITION LOAN
Prime Rate Loan 1% 2%
Bankers' Acceptances 2.00% 3.00%
"BANK" means The Toronto-Dominion Bank.
"BANKERS' ACCEPTANCE" means a xxxx of exchange denominated in Canadian Dollars,
drawn by the Borrower on the Bank and accepted by the latter.
"BORROWER" means Lasiris Inc.
"BORROWER AFFILIATED GROUP" means collectively the Borrower, NB Inc., 2620, 9063
and Xxxxxxx & Yale.
"BUSINESS DAY" means any day, other than Saturday or Sunday, during which
Canadian chartered banks are open to transact business in the ordinary course in
Montreal.
"CANADIAN GAAP" means generally accepted accounting principles as applied in
Canada, consistently applied.
"CLOSING DATE" means the first date on which the initial utilization under any
of the Credit Facilities is to be provided hereunder.
"CONVENTIONAL SECURITY" means a conventional hypothec, a resolutory right, a
right of redemption, a reservation of ownership, a trust and any security device
or other real right, whether or not capable of registration, granted by
agreement for the purpose of securing the performance of an obligation.
"CREDIT FACILITIES" means, collectively, the Operating Line of Credit and the
Demand Acquisition Loan.
"DEBT" means, without duplication, (i) all obligations for borrowed money or
other extensions of credit whether or not secured or unsecured, absolute or
contingent, including, without limitation, unmatured reimbursement obligations
with respect to letters of credit or guarantees issued for the account of or on
behalf of the Borrower and all obligations representing the deferred purchase
price of property, other than accounts payable arising in the ordinary course of
business, (ii) all obligations
33
evidenced by bonds, notes, debentures or other similar instruments, (iii) all
obligations secured by any Encumbrance owned or acquired by the Borrower,
whether or not the obligations secured thereby shall have been assumed, (iv)
that portion of all obligations arising under capital leases that is required to
be capitalized on the balance sheet of the Borrower, (v) all Guarantees, (vi)
all obligations that are immediately due and payable out of the proceeds of or
production from property now or hereinafter owned or acquired by the Borrower,
and (vii) all derivative securities relating to any of the foregoing.
"DEBT SERVICE COVERAGE RATIO" means the following ratio:
EBITDA + B - C
--------------
D + B + E
where,
B = rental payments for the relevant period on all operating leases.
C = capital expenditures for the relevant period.
D = interest charges for the relevant period.
E = the ratio of (i) principal payments on any Debt during the relevant period
to (ii) one (1) less the applicable corporate tax rate during the relevant
period.
"DEFAULT" means an event or condition that, but for the requirement that time
elapse or notice be given, or both, would constitute an Event of Default.
"DEMAND ACQUISITION AVAILABLE COMMITMENT" has the meaning ascribed thereto in
Section 4.2.
"DEMAND ACQUISITION LOAN" has the meaning ascribed thereto in Section 2.1.
"DISCLOSURE LETTER" has the meaning ascribed thereto in Section 12.4.
"DISCOUNT" with respect to any issue of Bankers' Acceptances with the same
maturity date, means the amount by which the face value of such Bankers'
Acceptances exceeds the Discounted Proceeds of such Bankers' Acceptances.
"DISCOUNT RATE" with respect to an issue of Bankers' Acceptances with the same
maturity date, means the rate determined by the Bank as its discount rate,
calculated on the basis of a year of 365 days, established in accordance with
its normal practices at or about 9:30 a.m. on the date of issue and acceptance
of such Bankers' Acceptances, for bankers' acceptances having a comparable face
value and an identical maturity date to the face value and maturity date of such
issue of Bankers' Acceptances.
"DISCOUNTED PROCEEDS" means, in respect of any Bankers' Acceptance to be
accepted by the Bank on any day, an amount (rounded to the nearest whole cent,
and with one-half of one cent being
34
rounded up) calculated on such day by multiplying:
the face amount of such Bankers' Acceptance; by
the price, where the price is determined by dividing one by the sum of
one plus the product
of:
the Discount Rate (expressed as a decimal); and
a fraction, the numerator of which is the number of days
remaining in the term of such Bankers' Acceptance and the
denominator of which is 365;
with the price as so determined being rounded up or down to the fifth decimal
place and .000005 being rounded up.
"DOLLARS" or "CAN. $" or "$" or "CANADIAN DOLLARS" means lawful currency of
Canada.
"EBITDA" means, for any period, an amount equal to net income plus the following
to the extent deducted in computing such net income: (i) interest charges for
such period, (ii) taxes on income for such period, (iii) depreciation for such
period, and (iv) amortization for such period.
"EMPLOYMENT CONTRACTS" has the meaning ascribed thereto in Section 3.1.12(c).
"ENCUMBRANCE" means a legal cause of preference, a dismemberment of the right of
ownership, a special mode of ownership, a restriction on the right to dispose
and a Conventional Security.
"EVENT OF DEFAULT" means any event described or referred to in Section 14.
"FINANCIAL STATEMENTS" has the meaning ascribed thereto in Section 12.5.
"GUARANTEES" means all guarantees, endorsements or other contingent or surety
obligations with respect to obligations of others whether or not reflected on
the balance sheet of the Borrower, including any obligation to furnish funds,
directly or indirectly (whether by virtue of partnership arrangements, by
agreement to keep-well or otherwise), through the purchase of goods, supplies or
services, or by way of stock purchase, capital contribution, advance or loan, or
to enter into a contract for any of the foregoing, for the purpose of payment of
obligations of any other Person.
"HAZARDOUS MATERIAL" means: (a) any 'pollutant' or 'contaminant' as defined in
the ENVIRONMENT QUALITY ACT (Quebec), and (b) any 'toxic substance' as defined
in the CANADIAN ENVIRONMENTAL PROTECTION ACT.
"LETTER OF CREDIT" means a letter of credit or a bank guarantee issued by the
Bank in favour of any person with respect to the liability of the Borrower to
pay Canadian Dollars.
"LOAN DOCUMENTS" means collectively, this Agreement, the Security Documents and
the Ancillary Documents together with all agreements and other instruments
contemplated thereby and all schedules, exhibits and annexes thereto, as any of
the same may from time to time be amended and
35
in effect.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on the business,
financial condition or assets of any member of the Borrower Affiliated Group or
on the ability of any member of the Borrower Affiliated Group to fulfill any of
the obligations under any of the Loan Documents.
"NB INC." means Lasiris Holdings, Inc.
"9063" means 0000-0000 Xxxxxx Inc.
"NOTICE OF BORROWING, RENEWAL OR CONVERSION" means a notice of borrowing,
renewal or conversion by the Borrower to the Bank substantially in the form of
Appendix II.
"OPERATING AVAILABLE COMMITMENT" means, at any time, the aggregate credit
available from the Bank in accordance with the terms of the Agreement under the
Operating Line of Credit (to the extent, not cancelled or terminated by the Bank
pursuant to the provisions hereof), less any cancellations made by the Borrower
from time to time pursuant to Section 9.1.
"OPERATING LINE OF CREDIT" has the meaning ascribed thereto in Section 2.1.
"PERSON" or "person" means an individual, a company, a limited liability
company, an unlimited liability company, a corporation, an association, a
partnership, a joint venture, an unincorporated trade or business enterprise, a
trust, an estate, or a government (national, regional or local) or an agency,
instrumentality or official thereof.
"PERMITTED ENCUMBRANCE" means (i) purchase money mortgages, liens or security
interests on any property hereafter acquired or the assumption of any mortgage,
lien or security interest on property existing at the time of such acquisition,
or a mortgage, lien or security interest incurred in connection with any
conditional sale or other title retention agreement or finance lease and the
purchase or lease of capital assets; (ii) the legal hypothec registered at the
REGISTER OF PERSONAL AND MOVABLE REAL RIGHTS under number 00-0000000-0000,
provided a cession of rank is executed in favour of the Bank effective no later
than the date hereof; and (iii) any conventional movable hypothec in favour of
the landlord of the premises located at 0000 Xxxxx, Xx. Xxxxxxx, Xxxxxx,
provided that such hypothec only charges corporeal movable property situated on
such premises.
"PRIME RATE" means the annual rate of interest set from time to time by the Bank
and reported by the Bank to the Bank of Canada as the reference rate then in
effect for determining interest rates on Canadian Dollar commercial demand loans
made by it to customers of varying degrees of credit worthiness in Canada.
"PRIME RATE LOAN" means any portion of the Operating Line of Credit or the
Demand Acquisition Loan at any particular time which is denominated in Canadian
Dollars and on which interest is payable in accordance with Section 5.1.
"RATIO OF DEBT TO FREE CASH FLOW" means the following ratio:
36
Debt
----------------------
EBITDA + B + C + D - E
B = rental payments for the relevant period on all operating leases.
C = interest charges for the relevant period.
D = non-cash items for the relevant period.
E = capital expenditures for the relevant period in respect of the maintenance
of assets of the Borrower.
"SECURITY DOCUMENTS" means, collectively, that certain movable hypothec for
$2,750,00 executed by the Borrower in favour of the Bank on the date hereof, all
documents relating to Security under Section 427 of the BANK ACT (Canada), the
TD Greenplan Insurance on the life of Luc Many in the amount of $604,461, the TD
Greenplan Insurance on the life of Xxxxx Xxxxxxxxxx in the amount of $604,461,
the Xxxxxxx & Yale Guarantee, fire insurance on inventory and equipment of the
Borrower, all bonds and indemnities, that certain movable hypothec on specific
security executed by the Borrower in favour of the Bank on December 15, 1997 and
all other present and future security documents that may be granted by any
member of the Borrower Affiliated Group to the Bank.
"XXXXXXX & YALE" means Xxxxxxx & Yale, Inc.
"XXXXXXX & YALE CREDIT AGREEMENT" means that certain Credit Agreement dated as
of March 6, 1995 between Xxxxxxx & Yale and Shawmut Bank, N.A. (now known as
Fleet National Bank), as amended from time to time.
"XXXXXXX & YALE GUARANTEE" means the Guarantee and Postponement of Claim dated
as of the date hereof and executed and delivered by Xxxxxxx & Yale in respect of
obligations of the other members of the Borrower Affiliated Group to the Bank.
"SUBSIDIARY" means any Person of which 50% or more of the ordinary voting stock
for the election of the majority of the members of the board of directors or
other governing body of such Person is held or controlled by any member of the
Borrower Affiliated Group, other than Xxxxxxx & Yale, or a Subsidiary of any
such member of the Borrower Affiliated Group; or any other Person or
organization the management of which is directly or indirectly controlled by any
such member of the Borrower Affiliated Group or a Subsidiary of any such member
of the Borrower Affiliated Group through the exercise of voting stock or
otherwise; or any joint venture, whether incorporated or not, in which any such
member of the Borrower Affiliated Group or any Subsidiary of any such member of
the Borrower Affiliated Group has a 50% ownership interest.
"TAX" means any and all taxes (other than taxes on the overall net income of
the Bank), levies, imposts, stamp taxes, duties, charges, fees, deductions,
withholdings and any restrictions or conditions resulting in a cost or charge
imposed, levied, collected, withheld or assessed on any
37
payments made by any member of the Borrower Affiliated Group to the Bank
pursuant to any of the Loan Documents, and all penalty, interest and other
payments on or in respect thereof, whether such Tax is in effect as of the date
of this Agreement or at any time in the future.
"2620" means 0000-0000 Xxxxxx Inc.
"US GAAP" means generally accepted accounting principles as applied in the
United States of America, consistently applied.
"WORKING CAPITAL" means the current assets less (i) loans to any shareholders
and related parties, and (ii) current liabilities.
00
XXXXXXXX XX
XXXXXX XX XXXXXXXXX, XXXXXXX XX CONVERSION
[Date]
THE TORONTO-DOMINION BANK
Commercial Banking Centre
0000 Xxxx Xxxxx
Xx. Xxxxxxx, Xxxxxx
X0X 0X0
ATTENTION: -
Dear Sirs:
We refer to the Credit Agreement (as amended and in force as of the
date hereof, the "Credit Agreement") dated as of May 13, 1998 among Lasiris
Inc., as borrower, and The Toronto-Dominion Bank. The words and expressions
defined in the Credit Agreement shall have the same meaning when used herein as
that assigned thereto in the Credit Agreement.
We hereby irrevocably give notice of [confirm] the following:
1. THE MATURING UTILIZATION UNDER THE CREDIT FACILITIES IS:
(i) Operating Line of Credit
FORM
-------------------------------------------------------------------
-----------------------------------------------------------------------
(Bankers' Acceptances, Letters of Credit)
(ii) Demand Acquisition Loan
FORM
-------------------------------------------------------------------
-----------------------------------------------------------------------
(Bankers' Acceptances)
2. THE BUSINESS DAY OF THE PROPOSED BORROWING, RENEWAL OR CONVERSION IS:
(i) Operating Line of Credit
-----------------------------------------------------------------------
-----------------------------------------------------------------------
1
(ii) Demand Acquisition Loan
-----------------------------------------------------------------------
-----------------------------------------------------------------------
3. PROPOSED BORROWING, RENEWAL OR CONVERSION:
(a) BORROWING
(i) Operating Line of Credit
FORM
-------------------------------------------------------------------
-----------------------------------------------------------------------
(Prime Rate Loan, Bankers' Acceptance, Letters of Credit)
AMOUNT
-----------------------------------------------------------------
-----------------------------------------------------------------------
(ii) Demand Acquisition Loan
FORM
-------------------------------------------------------------------
-----------------------------------------------------------------------
(Prime Rate Loan, Bankers' Acceptances)
AMOUNT
-----------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
(b) CONVERSION Operating Line of Credit (c) RENEWAL Operating Line of
Credit
CONVERSION Demand Acquisition Loan RENEWAL Demand Acquisition Loan
(i) Operating Line of Credit
FORM
-------------------------------------------------------------------
-----------------------------------------------------------------------
(Prime Rate Loan, Bankers' Acceptance)
AMOUNT
-----------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
(ii) Demand Acquisition Loan
FORM
-------------------------------------------------------------------
-----------------------------------------------------------------------
2
(Prime Rate Loan, Bankers' Acceptance)
AMOUNT
-----------------------------------------------------------------
-----------------------------------------------------------------------
4. REQUESTED INTEREST PERIOD/TERM:
BANKERS'ACCEPTANCES
----------------------------------------------------
-----------------------------------------------------------------------
BANKERS'
ACCEPTANCES
------------------------------------------------------------
5. DETAILS OF LETTERS OF CREDIT:
(Name and address of beneficiary, expiry, principal terms and
conditions)
-----------------------------------------------------------------------
-----------------------------------------------------------------------
The representations and warranties contained or referred to in the
Credit Agreement are true and accurate in all material respects on and as of the
effective date of any utilization under the credit facilities contemplated in
this Notice (except to the extent that such representations and warranties
expressly relate to an earlier date). We confirm that no Event of Default has
occurred and is continuing and that no other event has occurred and is
continuing and no circumstances exist which, with the giving of notice, lapse of
time or both, would constitute an Event of Default.
Yours truly,
LASIRIS INC.
By: ________________________________
Name:
Title:
3
APPENDIX III
DISCLOSURE LETTER
[SEE ATTACHED]
4
