1
EXHIBIT 10.32
EDC LOAN NO. 880-CAN-RD04
DATED AS OF
XXXXXX METAL PRODUCTS CO.
AND
EXPORT DEVELOPMENT CORPORATION
LOAN AGREEMENT
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EDC LOAN NO. 880-CAN-RD04
DATED AS OF
XXXXXX METAL PRODUCTS CO.
AND
EXPORT DEVELOPMENT CORPORATION
LOAN AGREEMENT
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TABLE OF CONTENTS
Page
PARTIES ................................................ 1
RECITALS ............................................... 1
ARTICLE I .............................................. 1
DEFINITIONS ............................................ 1
Section 1.01 -Definitions ........................... 1
Section 1.02 - Rules of Interpretation .............. 4
ARTICLE II ............................................. 5
REPRESENTATIONS AND WARRANTIES ......................... 5
Section 2.01 - Representations and Warranties ....... 5
ARTICLE III ............................................ 8
LOAN ................................................... 8
Section 3.01 - Loan ................................. 8
Section 3.02 - Currency and Manner of Advances ...... 8
Section 3.03 - Disclaimer ........................... 9
ARTICLE IV ............................................. 9
REPAYMENT OF PRINCIPAL, PAYMENT OF INTEREST ............ 9
AND OTHER CHARGES ...................................... 9
Section 4.01 - Principal and Interest ............... 9
Section 4.02 - Additional Cost and Illegality ....... 11
Section 4.03 - Place and Manner of Payment .......... 12
Section 4.04 - Costs and Expenses ................... 12
Section 4.05 - Application of Payments .............. 12
Section 4.06 - Indemnities .......................... 13
Section 4.07 - Voluntary Prepayment ................. 13
ARTICLE V .............................................. 14
LOAN ACCOUNTS .......................................... 14
Section 5.01 - Loan Accounts ........................ 14
ARTICLE VI ............................................. 14
SECURITY ............................................... 14
Section 6.01 - Security Agreement ................... 14
Section 6.02 - Security Effective ................... 14
ARTICLE VII ............................................ 15
PREDISBURSEMENT CONDITIONS ............................. 15
Section 7.01 - Advances ............................. 15
Section 7.02 - Further Conditions Precedent ......... 16
Section 7.03 - Waiver of Predisbursement Conditions.. 16
ARTICLE VIII ........................................... 16
COVENANTS OF BORROWER .................................. 16
Section 8.01 - Covenants of Borrower ................ 16
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ARTICLE IX ..................................................... 19
DEFAULT ........................................................ 19
Section 9.01 - Events of Default ............................ 19
Section 9.02 - Suspension of Advances ....................... 21
Section 9.03 - Termination of Installments and Acceleration.. 21
Section 9.04 - Remedies Cumulative .......................... 22
ARTICLE X ...................................................... 22
CANADIAN BENEFIT ............................................... 22
Section 10.01 - Canadian Benefit ............................ 22
ARTICLE XI ..................................................... 22
NOTICE ......................................................... 22
Section 11.01 - Notice ...................................... 22
ARTICLE)GI ..................................................... 23
PROPER LAW ..................................................... 23
Section 12.01 - Proper Law .................................. 23
ARTICLE XIII ................................................... 24
SEVERABILITY OF PROVISIONS ..................................... 24
Section 13.01 - Severability of Provisions .................. 24
ARTICLE XIV .................................................... 24
SUCCESSORS AND ASSIGNS ......................................... 24
Section 14.01 - Successors and Assigns ...................... 24
ARTICLE XV ..................................................... 24
COUNTERPARTS ................................................... 24
Section 15.01 - Counterparts ................................ 24
ARTICLE XVI .................................................... 24
FURTHER ASSURANCES ............................................. 24
Section 16.01 - Further Assurances .......................... 24
ARTICLE XVII ................................................... 25
ENTIRE AGREEMENT ............................................... 25
Section 17.01 - Entire Agreement ............................ 25
SCHEDULE "A" FORM OF SECURITY AGREEMENT
SCHEDULE "B" DESCRIPTION OF TOOLS
SCHEDULE "C" DRAWDOWN REQUEST
SCHEDULE "D-1" FORM OF SUBORDINATION AGREEMENT
SCHEDULE "D-2" FORM OF SUBORDINATION AGREEMENT
SCHEDULE "E" SECURITY INTERESTS ON COLLATERAL
SCHEDULE "F" LOCATION OF COLLATERAL
SCHEDULE "G" FORM OF OPINION OF BORROWER'S COUNSEL
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EDC LOAN NO. 880-CAN-RD04
THIS LOAN AGREEMENT dated as of is made
BETWEEN
XXXXXX METAL PRODUCTS CO.,
a corporation incorporated pursuant to the laws
of Nova Scotia and having its chief executive office
at 000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxx, Xxxxxxxx
(the "BORROWER")
AND
EXPORT DEVELOPMENT CORPORATION,
a corporation established by an Act of the
Parliament of Canada, having its head office
at Xxxxxx, Xxxxxxx, Xxxxxx
("EDC")
WHEREAS EDC, at the request of the BORROWER, is prepared to establish this loan
facility, on the terms and subject to the conditions of this Agreement in order
to finance the purchase price and EDC approved manufacturing costs of the HONDA
MINIVAN TOOLS;
AND WHEREAS pursuant to the terms of the HONDA TOOL QUOTE the BORROWER will sell
the HONDA MINIVAN TOOLS and HONDA MINIVAN PARTS to the BUYER;
NOW THEREFORE EDC and the BORROWER agree that:
ARTICLE I
DEFINITIONS
SECTION 1.01 - DEFINITIONS
In this Agreement, unless the context otherwise requires:
"ADVANCE" means an amount loaned to the BORROWER by EDC under Article III
hereof;
"BANK" means the Bank of Montreal, having its head office at Montreal, Canada;
"BUSINESS DAY" means any day on which banks are open for business in Toronto,
Canada and any place where a payment is required to be made under this
Agreement;
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"BUYER" means Honda of Canada Manufacturin- Inc., a corporation incorporated
under the laws of Ontario and having its head office at Alliston, Ontario;
"BUYER CONFIRMATION" means the approvals by the BUYER, in a form satisfactory to
EDC, of each of the HONDA MINIVAN TOOLS to which an ADVANCE relates;
"CANADIAN DOLLARS" and "CAD" each means the currency of Canada;
"COLLATERAL" has the meaning ascribed to it in the SECURITY AGREEMENT;
"DRAWDOWN REQUEST" means the request from the BORROWER to EDC for an ADVANCE in
the form of Schedule "C";
"ENVIRONMENTAL LAWS" means any and all requirements under or prescribed by any
applicable federal, provincial, or municipal laws, rules, regulations,
ordinances, guidelines, judgments, orders, decrees, permits, concessions,
grants, franchises, licenses, agreements or other government restrictions
relating in any way to the environment or the release of any substance into the
environment;
"EVENT OF DEFAULT" means any of the events or circumstances described in Section
9.01;
"FIRST REPAYMENT DATE" means the earlier of: (a) 1st day of the first month
after the month in which the first ADVANCE occurs; or (b) the 30th day after
the HONDA LAUNCH DATE; or, if any such date is not a BUSINESS DAY, the next
BUSINESS DAY;
"GAAP" means generally accepted accounting principles in Canada, as recommended
in the Handbook of the Canadian Institute of Chartered Accountants, or any
successor provision;
"HONDA LAUNCH DATE" means July 31, 1998, or such other date that the parties may
agree upon in writing;
"HONDA MINIVAN PARTS" means the automotive parts manufactured from the HONDA
MINIVAN TOOLS by the BORROWER for the BUYER pursuant to the HONDA TOOL QUOTE in
connection with the 1999 Honda Minivan Program and the 1999, 2000 and 2001 model
year Honda Minivans;
"HONDA MINIVAN TOOLS" means the tools listed in Schedule "B" to be supplied by
the BORROWER to the BUYER pursuant to a HONDA TOOL QUOTE for the manufacture of
HONDA MINIVAN PARTS in connection with the 1999 Honda Minivan Program and the
1999, 2000 and 2001 model year Honda Minivans. Schedule "B" will be amended from
time to time to reflect the tools to be built by tooler subcontractors whose
Applications For Initial Financing EDC has approved as contemplated under the
Credit Facility Agreement between the BORROWER and EDC (EDC Loan No. CAN-TF00)
and any tools which the BORROWER will be manufacturing, the costs of which EDC
has agreed to reimburse the BORROWER according to the terms hereof);
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"HONDA TOOL QUOTE" means each and every Honda Tool Quote issued by the BUYER to
the BORROWER detailing the monthly tooling payment (to include the start month,
frequency of payment and principal and interest associated with the HONDA
MINIVAN TOOLS), and the terms of purchase by the BUYER of the HONDA MINIVAN
TOOLS and HONDA MINIVAN PARTS;
"INTEREST PAYMENT DATE" means the 1st day of each month in each year or, if any
such date is not a BUSINESS DAY, the next BUSINESS DAY;
"INTEREST PERIOD" means:
(a) (i) for each ADVANCE the period commencing on and including
the date on which that ADVANCE is made and ending on and
including the date preceding the next INTEREST PAYMENT DATE; and
(ii) for any amount in default hereunder, the period commencing on
and including the date of default and ending, on and
including the date preceding the next INTEREST PAYMENT; and
(b) thereafter the period commencing on and including an INTEREST PAYMENT
DATE and ending on and including the date preceding the next INTEREST
PAYMENT DATE;
"LIENS" means any mortgage, leasehold mortgage, deed of trust, pledge,
hypothecation, assignment, deposit arrangement, lien, charge, claim, security
interest, easement, encumbrance, privilege, preference, priority or other
security agreement or preferential arrangement of any kind or nature whatsoever
securing the obligation of any person (including, without limitation, any title
retention agreement, execution, seizure, attachment, garnishment or other
similar encumbrance, any financing lease having substantially the same economic
effect as any of the foregoing, the filing of, or agreement to give, any
financing statement perfecting a security interest under applicable law of
any jurisdiction and any designation of loss payees or beneficiaries other than
the owner of the insured property or any similar arrangement under any insurance
policy);
"POTENTIAL DEFAULT" means any event or circumstance that, with notice or lapse
of time or both, would constitute an EVENT OF DEFAULT;
"RECEIVABLES" has the meaning ascribed to it in the SECURITY AGREEMENT;
"SECURITY AGREEMENT" means the security agreement whereby the BORROVYTER. grants
a security interest to EDC over the COLLATERAL in the form of Schedule "A";
"SHAREHOLDER'S EQUITY" means, at any time, for the BORROWER the difference
between (a) total assets; and (b) total liabilities determined in accordance
with generally accepted accounting principles including the amount owed under
this Agreement less the amount of all loans subordinated at that time
according to a Shareholder's Postponement Agreement dated
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"SUBORDINATION AGREEMENTS" means the subordination agreements in the form of
Schedule "D-1" or Schedule "D-2", as the case may be;
"TAXES" means all present or future taxes including, without limitation, income
taxes, sales or value-added taxes, levies, stamp duties, duties, fees,
royalties, deductions and withholdings imposed, levied, collected, withheld or
assessed as of the date hereof or at any time in the future by a government or
governmental body of or within Canada or any other jurisdiction whatsoever
having power to tax together with any fines, penalties and interest thereon;
"TELERATE PAGE 3105" means the display designated as Telerate page 3105 on the
service provided by Dow Xxxxx Telerate (or such other display as may replace it
on that service for the purpose of displaying Government of Canada 3 year
Benchmark Bonds); and
"TOOLING AGREEMENT" means the Tooling Agreement between the BUYER and the
BORROWER governing the amortization of the HONDA MINIVAN TOOLS.
SECTION 1.02 - RULES OF INTERPRETATION
In this Agreement unless the context requires otherwise:
(a) the singular will include the plural and vice versa;
(b) references to a "person" will be construed as references to any
individual, firm, company, corporation, unincorporated body of persons
or any state or political subdivision thereof or any government or any
agency thereof;
(c) whenever any person is referred to, such reference will be deemed to
include the permitted assignees and successors of such person, whether
by operation of law, consolidation, merger, sale, amalgamation or
otherwise as applicable;
(d) references to a specified Article, Section or Schedule will be
construed as references to that specified Article or Section of, or
Schedule to, this Agreement;
(e) references to any agreement or other instrument will be deemed to
include such agreement or other instrument as it may from time to time
be modified, amended, supplemented or restated in accordance with its
terms and, where required hereunder, with the consent of EDC;
(f) the terms "hereof", "herein" and "hereunder" will be deemed to refer to
this Agreement; and
(g) the headings of the Articles and Sections are inserted for convenience
only and will not affect the construction or interpretation of this
Agreement.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to EDC as of the date of this Agreement
and, except as otherwise permitted or required hereunder, will be deemed to
represent and warrant as of the date of each ADVANCE (and it shall be a
condition of EDC's obligation to make each ADVANCE and the making of any
ADVANCE shall not constitute a waiver thereof), that:
(a) the BORROWER is a corporation duly incorporated and organized and
validly existing under the laws of the Province of Nova Scotia and duly
qualified in any other jurisdiction where it carries on a material portion
of its business;
(b) the BORROWER has the necessary corporate power and authority to own its
property and assets and to carry on business as it is being carried on;
(c) the Entering into and the performance of the terms of this Agreement and the
SECURITY AGREEMENT and of each document to be delivered by the BORROWER with
respect to:
(i) are within its corporate powers and have been duly authorized by all
necessary corporate action;
(ii) are not in violation of any law, statute or regulation of the
Province of Ontario or of Canada applicable therein; and
(iii) save for the creation of a security interest under the SECURITY
AGREEMENT and those subordinated under the SUBORDINATION
AGREEMENTS, will not result in or require the creation or imposition of
a LIEN upon the COLLATERAL whether created or imposed at law or
pursuant to the terms of any document, agreement or instrument to which
the BORROWER is subject or by which it or any of its properties or
assets are bound;
(d) this Agreement and the SECURITY AGREEMENT have been duly executed and
delivered and each constitutes the direct, legal, valid and binding obligation
of the BORROWER enforceable against the BORROWER in accordance with their
respective terms except as such enforcement may be limited by bankruptcy,
insolvency and other laws of general application affecting creditors' rights
and by rules of equity governing the availability of equitable remedies,
(e) all Registrations, consents, licenses and approvals of any administrative
or governmental agency required in connection with the execution and delivery
by the BORROWER of this Agreement, the SECURITY AGREEMENT and each document
to be delivered by the BORROWER with respect hereto or thereto and for the
performance of the terms hereof
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or thereof and for the validity and enforceability and admissibility in
evidence hereof and thereof, have been effected or obtained and are in
full force and effect;
(f) subject to the rights of the BUYER, the BORROWER is, or with respect to
the COLLATERAL acquired after the date hereof will be, the sole
beneficial owner of the COLLATERAL, free and clear of any LIENS except
for the security interests granted to EDC pursuant to the SECURITY
AGREEMENT and the security interests set out in Schedule "E" which will
be subordinated prior to the date of the first ADVANCE according to the
terms of the SUBORDINATION AGREEMENT set out in Schedule "D-l";
(g) the BORROWER has, or with respect to the COLLATERAL acquired after the
date hereof will have, the right to grant a security interest in the
COLLATERAL in favor of EDC on the terms of the SECURITY AGREEMENT;
(h) the RECEIVABLES which constitute part of the COLLATERAL are enforceable
against the BUYER; and the amount represented by the BORROWER to EDC as
owing, from time to time, by the BUYER will be the correct amount
actually owing by the BUYER; and the BUYER has no defense, set-off,
claim or counterclaim against the BORROWER which can be asserted
against EDC, whether in any proceeding to enforce the SECURITY
AGREEMENT or otherwise;
(i) the location specified in Schedule "F" hereto as to the business
operations and records of the BORROWER is accurate and complete and the
COLLATERAL will be kept at such location or at such other location as
the BORROWER will specify in writing to EDC and, subject to the
provisions of the SECURITY AGREEMENT, none of the COLLATERAL will be
moved therefrom without the prior written consent of EDC;
(j) the BORROWER's full name and chief executive address is as set out on
the first page of this Agreement;
(k) none of the COLLATERAL consists of consumer goods;
(l) the BORROWER is in material compliance with all ENVIRONMENTAL LAWS and
no charge, order or notice has been made or issued under any
ENVIRONMENTAL LAWS against the BORROWER or with respect to any of its
assets which the BORROWER expects will result in a material
environmental claim against the BORROWER; and no material environment
investigations or inquiries are currently being conducted against the
BORROWER; and the BORROWER holds all necessary licenses and permits
required by all ENVIRONMENTAL LAWS for the proper conduct of its
business; and the BORROWER has filed all material reports required
under the ENVIRONMENTAL LAWS; and any contaminant, pollutant, hazardous
waste or dangerous good as defined under ENVIRONMENTAL LAWS stored or
located at any real property on which the business of the BORROWER is
conducted, is stored or located in material compliance with all
ENVIRONMENTAL LAWS;
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(m) the BORROWER has (i) filed or caused to be filed all necessary tax
returns and reports required to be filed to the appropriate government
or governmental body; (ii) paid and discharged all TAXES due and
payable by it; (iii) withheld and collected all TAXES required to be
withheld and collected by it and remitted such TAXES to the
appropriate government or governmental body, and no assessment, appeal
or claim is, as far as the BORROWER is aware, being assessed or
processed with respect to such claims or TAXES except to the extent
that the failure to do any of the foregoing would not be material to
the BORROWER;
(n) the BORROWER has provided to EDC all material information relating to
the financial condition, business and prospects of the BORROWER and,
as at the date thereof, all such information was true, accurate and
complete in all material respects and omitted no material fact
necessary to make such information not misleading;
(o) the audited financial statements of the BORROWER dated as of
December 31, 1996, copies of which have been delivered to EDC,
fairly present in all material respects the financial condition of the
BORROWER and the results of its operations for the period covered; and
such financial statements have been prepared in accordance with GAAP
applied on a consistent basis and between the date of those financial
statements and the date of this Agreement there has been no material
adverse change in the financial condition or in the business or assets
of the BORROWER;
(p) there are no legal proceedings pending or, so far as is known to the
BORROWER, threatened before any court, arbitral tribunal,
administrative or governmental agency or other body having authority
over it which would materially adversely affect the financial
condition or the operations of the BORROWER or its ability to perform
its obligations hereunder, under the SECURITY AGREEMENT or under the
HONDA TOOL QUOTE;
(q) the BORROWER is not in violation of any term of its incorporating
instrument and by-laws or of any agreement, instrument evidencing
indebtedness, mortgage, franchise, license, judgment, decree, order,
statute, rule, law, ordinance or regulation to which it or its
business or assets are subject, except for immaterial violations; the
entering into, performance and compliance with this Agreement, the
SECURITY AGREEMENT and each document to be delivered by the
BORROWER with respect thereto will not result in any such violation
or constitute a default under or be in conflict in any material
respects with any such term; and there is no such term which
materially adversely affects or in the future may (so far as the
BORROWER can now foresee) materially adversely affect the financial
condition or the business or assets of the BORROWER or its ability to
perform its obligations hereunder, under the SECURITY AGREEMENT or
under the HONDA TOOL QUOTE;
(r) there are no disputes between the BORROWER and the BUYER which would
reasonably be expected to adversely affect performance of the
respective obligations of the parties under the HONDA TOOL QUOTE;
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(s) the HONDA TOOL QUOTE, the TOOLING AGREEMENT, the BUYER Authorization
for the Mass Production Tooling for the HONDA TOOLS ("Authorization
for the Mass Production Tooling"), the Tooling Investigation Sheet
(A) for the HONDA TOOLS detailing the cost of each HONDA TOOL
("Tooling Investigation Sheet") and the BUYER Minivan Parts Supply
Contract, copies of which are to be delivered to EDC, will be in full
force and effect and will not have been materially amended without
EDC's knowledge; and
(t) the HONDA MINIVAN TOOLS when title is obtained by the BORROWER will
be properly insured according to the HONDA TOOL QUOTE and the loss
under the insurance policies is payable to EDC in accordance with
EDC's interest in the HONDA MINIVAN TOOLS.
ARTICLE III
LOAN
SECTION 3.01 - LOAN
Subject to the terms and conditions of this Agreement and in reliance on the
foregoing representations and warranties, EDC agrees to lend the BORROWER up to
CAD5,000,000.00 to finance up to 100% of payments on account of the purchase
price and EDC approved manufacturing costs of the HONDA MINIVAN TOOLS less (a)
any amounts received by the BORROWER from the BUYER in respect of such purchase
price; and (b) any financing costs payable by the BUYER as documented in the
HONDA TOOL QUOTE.
SECTION 3.02 - CURRENCY AND MANNER OF ADVANCES
Subject to the terms and conditions of this Agreement, EDC will make to the
BORROWER ADVANCES in the aggregate of no more than CAD5,000,000.00 relating to
HONDA MINIVAN TOOLS under Section 3.01 upon receipt of a DRAWDOWN REQUEST. The
amount of each ADVANCE will be up to the amount of the BORROWER's purchase order
("Purchase Order") relating to the related HONDA MINIVAN TOOL being purchased
from a tooler subcontractor. Such ADVANCES shall be disbursed firstly, directly
to EDC in application of outstanding amounts owed to EDC by such tooler
subcontractor under its loan agreement made with EDC pursuant to the Facility
Agreement between the BORROWER and EDC, (EDC Loan No. CAN-TF00) at the time of
the DRAWDOWN REQUEST. Once the amount owing to EDC by such tooler subcontractor
under its respective loan made pursuant to the Facility Agreement and relating
to the HONDA MINIVAN TOOLS is fully paid, EDC will disburse the remainder to
the tooler subcontractor to the extent owing to it under its invoice relating to
the related Purchase Order. Such application of ADVANCES will represent payment
of amounts owing by the BORROWER to such tooler subcontractor in respect of
tools manufactured by such tooler subcontractor which form part of the HONDA
MINIVAN TOOLS. The balance of the ADVANCE, if any, will be paid to the BORROWER.
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Once the amounts owing to EDC by all tooler subcontractors under the loans made
pursuant to the Facility Agreement and relating to the HONDA MINIVAN TOOLS are
fully paid and EDC disbursing to the tooler subcontractors and XXXXXX as set
out above, EDC will consider making any remaining available ADVANCES to the
BORROWER to reimburse the BORROWER for any EDC approved manufacturing costs
which the BORROWER has incurred in respect of the HONDA MINIVAN TOOLS provided
EDC has approved such DRAWDOWN REQUESTS.
SECTION 3.03 - DISCLAIMER
Notwithstanding that ADVANCES under this Agreement are to be used to finance the
HONDA MINIVAN TOOLS, the BORROWER agrees that EDC is under no obligation to
determine the validity, legality or enforceability of the HONDA TOOL QUOTE. If
part or all of the HONDA TOOL QUOTE or any related document is repudiated or
proves to be void, invalid, illegal or unenforceable, or if there is any dispute
between the BORROWER and the BUYER relating to the HONDA MINIVAN TOOLS or HONDA
MINIVAN PARTS, or between the BORROWER and the BUYER relating to the HONDA TOOL
QUOTE, such event will not in any way affect or impair the rights of EDC against
the BORROWER under this Agreement and the SECURITY AGREEMENT or any related
document executed or issued by the BORROWER, or change in any way the
obligations of the BORROWER to EDC hereunder or under the SECURITY AGREEMENT.
ARTICLE IV
REPAYMENT OF PRINCIPAL, PAYMENT OF INTEREST
AND OTHER CHARGES
SECTION 4.01 - PRINCIPAL AND INTEREST
Subject to the provisions of Section 4.02, the BORROWER will repay to EDC or its
order, the aggregate of all ADVANCES outstanding from time to time and will pay
to EDC interest thereon as follows:
(a) PAYMENT OF PRINCIPAL AND INTEREST
The BORROWER will pay to EDC interest on the amount of the ADVANCES
outstanding from time to time at a fixed rate of the interest equal to
6.397% per annum calculated and payable in each instance in arrears
on each INTEREST PAYMENT DATE commencing on the FIRST REPAYMENT DATE.
Subject to the provisions of this Agreement, the BORROWER will repay
to EDC the aggregate of all ADVANCES in 36 installments on successive
INTEREST PAYMENT DATES commencing on the FIRST REPAYMENT DATE. Each
installment will be equal to the amount of RECEIVABLES the BORROWER is
scheduled to receive under the HONDA TOOL QUOTE and/or under the
TOOLING AGREEMENT. EDC will firstly apply the monthly installment in
payment of outstanding interest due and payable under
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this Section 4.01(a) and secondly to the repayment of the ADVANCES
outstanding from time to time.
Where the amount of the monthly RECEIVABLE scheduled to be received by
the BORROWER is less than the interest due and payable monthly under
this Section 4.01(a), the BORROWER will pay to EDC on the relevant
INTEREST PAYMENT DATE, the amount by which the monthly RECEIVABLE is
less than the interest due and payable monthly under this
Section 4.01(a).
Notwithstanding anything contained herein to the contrary, the
BORROWER shall on the INTEREST PAYMENT DATE on which the last
installment is to be made, pay to EDC an amount necessary to repay in
full the outstanding amount of the ADVANCES and all outstanding
accrued interest.
(b) ADJUSTING PAYMENT OR INSTALLMENT
Notwithstanding anything contained herein to the contrary, in
relation to the ADVANCES, and at any time or times after six months
from the date the first ADVANCE was made, if EDC determines, acting
reasonably, that the aggregate of all anticipated RECEIVABLES payable
under the HONDA TOOL QUOTE will be insufficient to repay the balance
of the amount of the ADVANCES outstanding from time to time and to pay
the anticipated interest to be charged thereon over the balance of the
period ending on 36 months after the FIRST REPAYMENT DATE then EDC
shall have the option either to (i) request from the BORROWER a lump
sum amount equal to the anticipated deficiency which the BORROWER
shall make within ten (10) BUSINESS DAYS of EDC's request specifying
the amount of such deficiency; or (ii) request that on each subsequent
INTEREST PAYMENT DATE the BORROWER make installments of principal in
such an amount as EDC determines in its sole discretion necessary to
repay the outstanding amount of the ADVANCES over the balance of the
period on 36 months after the FIRST REPAYMENT DATE. EDC's
determination of whether the anticipated RECEIVABLES will be
insufficient to pay the anticipated interest and the amount of the
ADVANCES will be based solely on whether the interest rate charged
hereunder will be greater than the interest rate accruing under the
HONDA TOOL QUOTE.
(c) In the event of a payment default under this Agreement, the BORROWER
shall pay on demand default interest on any amount of principal or
interest payable hereunder and on any other amount due and payable
hereunder at the rate determined under Section 4.01(a) increased in
each case by 2.0% from the date of the payment default so long as such
default shall continue, compounded on each INTEREST PAYMENT DATE,
before and after demand and judgment.
(d) Each determination of a rate of interest by EDC will be conclusive
evidence, in the absence of demonstrable error, of such rate of
interest and will promptly be notified to the BORROWER. In each case
interest will be calculated on the basis of the actual number of days
elapsed divided by 365. The actual yearly rates of interest equivalent
to each of the
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rates determined as above and calculated in such manner is such rate
multiplied by the actual number of days in the year divided by 365.
The ADVANCES shall bear interest at the applicable rates during the
relevant INTEREST PERIOD. Interest shall accrue from day to day for
the actual number of days in the relevant INTEREST PERIOD.
(e) Unless EDC otherwise agrees, the DRAWDOWN REQUEST must be received by
EDC at least three (3) BUSINESS DAYS before the date any ADVANCE is
to be made.
SECTION 4.02 - ADDITIONAL COST AND ILLEGALITY
(a) In the event that a law or regulation is enacted or changed or the
interpretation or administration thereof is changed by the
administering governmental authority, or in the event that a judgment
is rendered which:
(1) subjects EDC to any tax with respect to payments to be made by
the BORROWER to EDC hereunder (except for taxes on the overall
net income of EDC);
(ii) imposes or modifies any reserve or similar requirements
against assets held by, or deposits in or for the account of,
or loans by, an office of EDC; or
(iii) imposes on EDC any other condition with respect to this
Agreement;
with the result that the cost to EDC of making or maintaining ADVANCES
is increased or the income receivable by EDC in respect of the
principal indebtedness of the BORROWER to EDC hereunder is reduced,
the BORROWER will pay to EDC on demand that amount which will
compensate EDC for such additional cost or reduction in income. Upon
EDC having determined, promptly whenever possible, that it is entitled
to additional compensation in accordance with the provisions of this
Section 4.02(a), EDC will promptly notify the BORROWER thereof. A
certificate of EDC setting forth the amount of such additional
compensation and the basis therefor will be submitted by EDC to the
BORROWER and will be conclusive evidence of such amount absent
demonstrable error. EDC will have no obligation to make any further
ADVANCE after such event until EDC has received the additional
compensation.
In the event EDC gives the notice provided for in this Section
4.02(a), THE BORROWER will have the right, upon written notice to
that effect (which will be irrevocable and will constitute the
BORROWER's undertaking to prepay accordingly) delivered to EDC at
least thirty (30) days prior to the next INTEREST PAYMENT DATE, to
prepay in full on such INTEREST PAYMENT DATE, the said principal
indebtedness of the BORROWER under Section 4.01 together with accrued
interest thereon, all other sums due hereunder with respect to such
indebtedness and the additional compensation to the date of such
prepayment.
In the event of such prepayment, the obligation of EDC to make any
further ADVANCES hereunder will, at the option of EDC, thereupon
terminate. The obligations of the
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BORROWER under this Section 4,02(a) will survive the repayment to EDC
of the principal of and interest on the indebtedness of the BORROWER
to EDC hereunder.
(b) If it becomes unlawful in any relevant jurisdiction for EDC to
continue to make or to maintain ADVANCES or for EDC to make or receive
any payment or to perform, exercise or to give effect to any
obligation, right or benefit under this Agreement, the
SECURITY AGREEMENT or any related document, the BORROWER will prepay
to EDC upon request by EDC, forthwith or at the end of such period as
EDC will have permitted, the principal indebtedness of the BORROWER
pursuant to Section 4.01 together with interest accrued thereon up to
the date of actual prepayment and, where applicable, all other sums
due hereunder with respect to such indebtedness. In the event of any
such illegality or prepayment, the obligation of EDC to make any
further ADVANCES hereunder will, at the option of EDC, thereupon
terminate.
SECTION 4.03 - PLACE AND MANNER OF PAYMENT
Amounts payable by the BORROWER to EDC pursuant hereto will be paid in CANADIAN
DOLLARS without set-off or counterclaim not later than 11:00 a.m. (Ottawa
time) on the day such payment is due and in funds for same-day settlement
required to be made hereunder at Bank of Montreal, First Xxxx Xxxxx, Xxxxx
Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxx X0X 0X0 for the credit of EDC, account number
0000-876, or at such other account or financial institution as EDC may, from
time to time, notify the BORROWER.
SECTION 4.04 - COSTS AND EXPENSES
(a) In respect of the preparation, negotiation and execution of this
Agreement and the SECURITY AGREEMENT, the BORROWER will pay to EDC
thirty (30) days from the date of this Agreement, a documentation
cost of CAD3,000.00.
(b) The BORROWER will pay within thirty (30) days of EDC's billing,
therefor, all reasonable out-of-pocket costs and expenses incurred by
EDC (other than the costs referred to in Section 4.04(a)) in
connection with the preparation, negotiation, execution, amendment of,
operation of, preservation of rights under or enforcement of this
Agreement and the SECURITY AGREEMENT including, without limitation,
the costs and expenses of EDC's independent legal counsel and travel
expenses, if any. All documents or information to be furnished to EDC
by the BORROWER will be supplied at the BORROWER's expense.
SECTION 4.05 - APPLICATION OF PAYMENTS
All payments (other than a prepayment pursuant to Section 4.02) made by or for
the account of the BORROWER under this Agreement will be applied first to all
amounts then due and payable other than principal and interest in such order as
EDC may elect, then to interest due and payable, then to principal.
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SECTION 4.06 - INDEMNITIES
The BORROWER will indemnify and hold harmless EDC against any loss (excluding
loss of profit) costs, damage, liability or expense which EDC will certify as
sustained or incurred by EDC as a consequence of:
(a) any default in repayment of principal or payment of interest or any
other amount due hereunder;
(b) any payment or prepayment of principal being made on other than an
INTEREST PAYMENT DATE; or
(c) the occurrence of an EVENT OF DEFAULT;
including, in any such case, but not limited to, any loss, costs, damage,
liability or expenses sustained or incurred by EDC in liquidating or
re-employing deposits or funds from third parties acquired or to be acquired to
make ADVANCES or maintain or continue any amount already advanced or any part
thereof. The obligations of the BORROWER under this Section 4.06 will survive
the repayment to EDC of the principal of and interest on the indebtedness of the
BORROWER to EDC hereunder.
SECTION 4.07 - VOLUNTARY PREPAYMENT
(a) The BORROWER may, when not in default hereunder, prepay the principal
indebtedness of the BORROWER hereunder, in whole or from time to time
in part, provided that:
(i) each partial prepayment will be in an amount not less than the
amount of one installment of principal payable pursuant to
Section 4.01 or a whole multiple thereof;
(ii) any such prepayment will be made only on the FIRST REPAYMENT
DATE and any INTEREST PAYMENT DATE thereafter;
(iii) the BORROWER gives notice to EDC of its intention to make
any such prepayment not less than sixty (60) days prior to
such prepayment, which notice will be irrevocable and will
constitute the BORROWER's undertaking to prepay accordingly;
(iv) the BORROWER pays interest accrued on such principal amount
being prepaid to the date of prepayment as well as all other
amounts due and payable on the date of prepayment in respect
of such principal amount being prepaid;
(v) the BORROWER pays to EDC the amount set out in Section
4.07(b); and
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(vi) amounts prepaid will be applied to installments payable in
inverse order of maturity and will not be re-ADVANCED.
(b) The BORROWER will also pay an amount equal to the present value of the
difference between the remaining scheduled interest payments and a
schedule of reinvestment interest revenues calculated at a rate equal
to the Government of Canada 3 year Benchmark Bonds as quoted on
TELERATE PAGE 3105 seven (7) BUSINESS DAYS before the date of
repayment ("Discount Rate"). In the event that the Discount Rate would
be greater than the face rate of interest hereunder, prepayment would
be permitted on similar notice against receipt of the outstanding
principal plus any accrued interest to the date of prepayment.
ARTICLE V
LOAN ACCOUNTS
SECTION 5.01 - LOAN ACCOUNTS
EDC will maintain loan accounts in the name of the BORROWER in accordance with
normal business practices. The loan accounts of EDC will be conclusive evidence
(in the absence of demonstrable error) of the indebtedness of the BORROWER to
EDC and of the amounts due from time to time by the BORROWER to EDC under this
Agreement.
ARTICLE VI
SECURITY
SECTION 6.01 - SECURITY AGREEMENT
The BORROWER will deliver to EDC an executed copy of the SECURITY AGREEMENT and
the SUBORDINATION AGREEMENTS.
Section 6.02 - Security Effective
The security interests constituted under the SECURITY AGREEMENT will be
effective and the undertakings thereunder in respect thereto will be continuing,
whether the ADVANCES hereby or thereby secured or any part thereof will be
advanced before or after or at the same time as the creation of any such
security interest or before or after or upon the date of execution of this
Agreement.
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ARTICLE VII
PREDISBURSEMENT CONDITIONS
SECTION 7.01 - ADVANCES
EDC will have no obligation to make the first ADVANCE unless each of the
following conditions precedent have been satisfied at the time the ADVANCE is to
be made:
(a) EDC has received an executed copy of the SECURITY AGREEMENT;
(b) EDC has received an executed copy of the SUBORDINATION AGREEMENTS from
each secured creditor who has a security interest in the COLLATERAL, in
form and substance satisfactory to EDC;
(c) EDC has received evidence satisfactory to EDC that the security
interests created by the SECURITY AGREEMENT have been perfected in the
Province of Ontario and represent a first charge on the COLLATERAL;
(d) EDC has received the opinion of counsel for the BORROWER;
(e) EDC has received a certificate of incumbency of the BORROWER
satisfactory to EDC setting out the names and titles of those officers
of the BORROWER authorized to sign any documents required to be
delivered pursuant to this Agreement or the SECURITY AGREEMENT with
specimen signatures of such persons. The BORROWER agrees that EDC may
rely on the authority of any such person until notified in writing to
the contrary (effective only upon actual receipt by EDC), and any
documents related to this Agreement signed by any such person will be
binding upon the BORROWER. For these purposes, a telex or telefax is
deemed signed by a person whose name is typed on it as a signatory of
that telex or telefax;
(f) EDC has received any sums due (to the extent then payable) to EDC
hereunder or under the SECURITY AGREEMENT;
(g) EDC has received evidence of insurance coverage relating to each HONDA
MINIVAN TOOLS with coverage amounts satisfactory to EDC and evidence
satisfactory to EDC that it is a first loss payee; and
(h) EDC has received the Canadian Benefits Form, executed copies of the
HONDA TOOL QUOTE, the TOOLING AGREEMENT, the Authorization for the Mass
Production Tooling, the Tooling Investigation Sheet and the BUYER
Minivan Parts Supply Contract, and all such documents must be in form
and substance satisfactory to EDC.
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Section 7.02 - FURTHER CONDITIONS PRECEDENT
EDC will have no obligation to make ADVANCES unless each of the following
additional conditions precedent have been satisfied at the time any ADVANCE is
to be made:
(a) EDC will have received the DRAWDOWN REQUEST properly completed;
(b) except as permitted or required hereunder, each of the representations
and warranties set forth in Section 2.01 hereof will be true and
correct in all material respects as if made and repeated on the date
of the ADVANCE with reference to the facts then existing;
(c) there will have been no material adverse change in the financial
condition or in the business or assets of the BORROWER since the date
of the most recent financial statements provided to EDC by the
BORROWER;
(d) no EVENT OF DEFAULT or POTENTIAL DEFAULT shall have occurred and be
continuing;
(e) in respect of any ADVANCES which are to reimburse the BORROWER for its
manufacturing costs in respect of the HONDA MINIVAN TOOLS as
contemplated under Section 3.02, EDC will have received satisfactory
evidence to EDC of such costs incurred; and
(f) EDC will have received BUYER CONFIRMATION relating to those HONDA
MINIVAN TOOLS to which the ADVANCE relates.
SECTION 7.03 - WAIVER OF PREDISBURSEMENT CONDITIONS
The conditions in Sections 7.01 and 7.02 are for the benefit of EDC only and
may be waived by EDC in whole or in part, and with or without conditions for
any ADVANCE without affecting such conditions for any other ADVANCE.
ARTICLE VIII
COVENANTS OF BORROWER
SECTION 8.01 - COVENANTS OF BORROWER
The BORROWER covenants and agrees with EDC that, unless compliance has been
waived by EDC, it will so long as its obligations hereunder and under the
SECURITY AGREEMENT remain outstanding:
(a) punctually pay to EDC all principal, interest and any other amounts
owing by it under this Agreement and under the SECURITY AGREEMENT and
on the dates, at the place, in the currency and in the manner
specified herein and therein;
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(b) maintain its corporate existence in good standing and not merge,
amalgamate or effect any reorganization with any person other than an
affiliate of the BORROWER which does not materially adversely affect
the ability of the BORROWER to perform its obligations hereunder and
provided any successor company executes, prior to or contemporaneously
with the consummation of such transaction, such instruments as are
reasonably satisfactory to EDC evidencing the agreement of such
successor company to observe and perform all the covenants and
obligations of the BORROWER hereunder without the prior consent of EDC;
(c) carry on its business in a proper and businesslike manner and maintain
all properties, rights and contracts necessary in the conduct of its
business;
(d) within one hundred and twenty (120) days after the end of each
financial year, deliver to EDC a copy of the BORROWER's audited
financial statements (including a balance sheet and statement of profit
and loss), with a certificate of its independent auditors, who will be
acceptable to EDC, stating that in their opinion, without any material
qualification, the statements fairly present in all material respects
the financial position of the BORROWER and the results of its
operations for the financial year reported on, in accordance with GAAP
consistently applied;
(e) upon EDC's request, deliver a declaration, in form and substance
satisfactory to EDC, from an authorized officer of the BORROWER as to
the amounts paid by the BUYER to the BORROWER, pursuant to the HONDA
TOOL QUOTE and attaching thereto documentary evidence of such amounts
paid;
(f) from time to time deliver to EDC such other financial and operating
reports, statements and other information as EDC may reasonably
request, including, without limitation, information regarding the
amounts owing to the BORROWER by the BUYER relating to the HONDA TOOL
QUOTE or the TOOLING AGREEMENT from time to time and quarterly
financial statements (including a balance sheet and statement of profit
and loss);
(g) promptly notify EDC of any material dispute under the HONDA TOOL QUOTE
or the TOOLING AGREEMENT or of any event which could entitle the BUYER
to set-off or withhold any amounts due under the HONDA TOOL QUOTE or
the TOOLING AGREEMENT;
(h) promptly notify EDC of the occurrence of any event which has or is
likely to materially adversely affect the financial condition or the
business and/or assets of the BORROWER or its ability to perform its
obligations hereunder, the SECURITY AGREEMENT and the HONDA TOOL
QUOTE, as well as of the steps being taken to remedy the same;
(i) notify EDC of the commencement of any legal proceedings, arbitration or
investigation which if adversely determined would likely have a
material adverse effect on the financial condition or the operations of
the BORROWER or its ability to perform its obligations hereunder, under
the SECURITY AGREEMENT or under the HONDA TOOL QUOTE;
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(j) promptly notify EDC of any material loss of or damage to the HONDA
MINIVAN TOOLS;
(k) promptly notify EDC of any change in the name of the BORROWER or the
location of its chief executive office;
(l) keep the HONDA MINIVAN TOOLS insured according to the HONDA TOOL QUOTE
with the loss under the insurance policies payable to EDC in accordance
with EDC's interest in the HONDA MINIVAN TOOLS and to provide EDC on
EDC's request with satisfactory evidence of insurance described in
Section 7.01(g) and promptly notify EDC of any material insurance
claims arising in relation to the HONDA MINIVAN TOOLS, and if required,
direct the insurer to pay all insurance proceeds under such claim to
EDC to be applied to the outstanding, indebtedness of the BORROWER
under this Agreement;
(m) not sell, lease, assign or otherwise dispose of the COLLATERAL other
than as contemplated in the HONDA TOOL QUOTE and the TOOLING AGREEMENT;
(n) promptly notify EDC of the occurrence of any EVENT OF DEFAULT and any
POTENTIAL DEFAULT and of any other event which has or is likely to
materially adversely affect the financial condition or the business
and/or assets of the BORROWER or its ability to perform its obligations
hereunder and the SECURITY AGREEMENT, as well as of the steps being
taken to remedy the same;
(o) comply with the requirements of all laws (including ENVIRONMENTAL
LAWS), statutes, regulations, authorizations, approvals, licenses or
registrations required to own its property and assets, including the
HONDA MINIVAN TOOLS, except to the extent that non-compliance would not
reasonably be expected to have a material adverse effect on the
BORROWER and to carry on its business as presently carried on by it
and to perform its obligations hereunder and under the SECURITY
AGREEMENT;
(p) (i) file or cause to be filed all necessary tax returns and
reports required to be filed with the appropriate government
or governmental body;
(ii) pay and discharge all lawful claims for labor, materials and
supplies, the non-payment of which can result in a lawful LIEN
in the COLLATERAL; and
(iii) pay and discharge all TAXES payable by it, withhold and
collect all TAXES required to be withheld and collected by it
and remit such TAXES to the appropriate government or
governmental body;
all within the required time frames before any penalty attaches-,
(q) maintain and preserve all of the HONDA MINIVAN TOOLS in good repair,
working order and condition, normal wear and tear excepted, and from
time to time, make all needful and proper repairs, renewals,
replacements, additions and improvements thereto,
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and carry on its business in a proper and efficient manner so as to
preserve and protect the HONDA MINIVAN TOOLS and the earning, incomes,
issues and profits thereof,
(r) at any reasonable time and from time to time upon reasonable prior
notice, the BORROWER shall permit EDC or any representatives thereof
(i) to examine and make copies of and abstracts from the records and
books of the BORROWER relating to HONDA MINIVAN TOOLS; and (ii)
verify the existence and state of the HONDA MINIVAN TOOLS in any
manner EDC may consider appropriate, and the BORROWER agrees to
furnish all assistance and information and to perform all such acts
as EDC may reasonably request in connection therewith and for such
purpose to grant to EDC or its agents access to all places where HONDA
MINIVAN TOOLS may be located and to all premises occupied by the
BORROWER to examine and inspect the HONDA MINIVAN TOOLS;
(s) not locate or permit its records and the COLLATERAL to be located at,
any location other than the location set out in Schedule "F";
(t) effective January 1, 1998, maintain at all times SHAREHOLDER'S EQUITY
of not less than CAD5,000,000.00;
(u) keep the COLLATERAL free and clear of all TAXES and LIENS, assessments
and claims except for the creation of the security interest under the
SECURITY AGREEMENT and the security interests subordinated under the
SUBORDINATION AGREEMENTS; and
(v) take all steps and all actions necessary to ensure that it complies at
all times with all its obligations under the HONDA TOOL QUOTE and the
TOOLING AGREEMENT and not cancel or terminate or permit the
cancellation or termination of the HONDA TOOL QUOTE or the TOOLING
AGREEMENT or make or permit the making of any amendments which relate
to the price of, the terms and manner of payment for, the time and
manner of delivery of the HONDA MINIVAN TOOLS or HONDA MINIVAN PARTS.
ARTICLE IX
DEFAULT
SECTION 9.01 - EVENTS OF DEFAULT
The occurrence of any of the following shall be an EVENT OF DEFAULT by the
BORROWER under this Agreement:
(a) the non-payment when due of any sum payable hereunder or under the
SECURITY AGREEMENT, whether at maturity, by acceleration or otherwise
within five (5) days of the relevant due date;
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(b) if proceedings are started by any person to dissolve, liquidate or
wind-up the BORROWER or to suspend its operations which remain
undischarged for a period of thirty (30) days after commencement of
such proceedings;
(c) if the BORROWER (i) makes an assignment for the benefit of its
creditors; or (ii) petitions or applies to any tribunal for the
appointment of a receiver or trustee for itself or any substantial
part of its assets; or (iii) starts any proceeding relating to itself
under any present or future reorganization, arrangement, adjustment of
debt, dissolution or liquidation law of any jurisdiction; or (iv) in
any way consents to, approves or acquiesces in any bankruptcy,
reorganization or insolvency proceeding started by any other person,
or any proceeding by any other person for the appointment of a
receiver or trustee for the BORROWER or any substantial part of its
assets; or (v) allows any receivership or trusteeship of the BORROWER
to remain undischarged for a period of xxxxx (30) days; or (vi)
becomes or is declared by any competent authority to be bankrupt or
insolvent;
(d) the BORROWER sells or otherwise disposes of all or a substantial
part of its assets by one or more transactions (other than
in connection with a merger, amalgamation or other reorganization
which would not materially adversely affect the financial condition of
the BORROWER or its successor or the ability of the BORROWER or its
successor to perform its obligations hereunder) without the prior
consent of EDC;
(e) if the BORROWER (i) fails to pay any amount due, under any loan,
guarantee or security agreement relating to indebtedness of at least
CAD500,000.00, on the due date or within any applicable grace period;
or (ii) if the BORROWER defaults under any other term of any loan,
guarantee or security agreement relating to indebtedness of at least
CAD500,000.00 to which it is a party, and the result of any such
payment default or covenant default has been the acceleration of such
obligation;
(f) if any court makes any judgment or order, or any law, ordinance, decree
or regulation is enacted, the effect of which is to make this Agreement
or the SECURITY AGREEMENT or any document required to be delivered
thereunder or any material provision hereof or thereof, invalid or
unenforceable, and the BORROWER fails to provide acceptable replacement
documents to EDC evidencing and, where applicable, securing its
indebtedness under this Agreement within five (5) days of such event;
(g) if any representation or warranty made by the BORROWER herein or in any
related document or opinion shall have been incorrect in any material
respect when made or deemed to be made and not remedied, if curable,
within fifteen (15) days of notification by EDC that such
representation and warranty is incorrect;
(h) if any other event or circumstance occurs which, would materially and
adversely affects the ability of the BORROWER to perform its financial
obligations under this Agreement or the SECURITY AGREEMENT;
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(i) if the BORROWER defaults, in the due performance or observance of any
terms of this Agreement or the SECURITY AGREEMENT other than those
specifically dealt with in this Section 9.01, which is not remedied
within fifteen (15) days after notice by EDC to do so;
(j) this Agreement or the SECURITY AGREEMENT is disaffirmed or repudiated
by or on behalf of the BORROWER in whole or in part; or
(k) the failure by the BORROWER to perform any of its material obligations
under the HONDA TOOL QUOTE or the TOOLING AGREEMENT following any
notice or cure period.
SECTION 9.02 - SUSPENSION OF ADVANCES
If at any time, (a) an EVENT OF DEFAULT or POTENTIAL DEFAULT occurs and is
continuing; (b) there is an unresolved commercial dispute under any agreement
between the BORROWER and the BUYER, or (c) in the reasonable judgment of EDC,
there is a material adverse change in the financial or operational status of the
BORROWER where such change would impair the BORROWER's ability to fulfill its
obligations under this Agreement, the SECURITY AGREEMENT or the HONDA TOOL QUOTE
on a timely basis, EDC may, without prejudice to the BORROWER's obligations
hereunder, by notice to the BORROWER, suspend EDC's obligation to make ADVANCES
pursuant to this Agreement, which suspension will continue until EDC notifies
the BORROWER that the suspension is removed.
SECTION 9.03 - TERMINATION OF INSTALLMENTS AND ACCELERATION
If an EVENT OF DEFAULT occurs and is continuing, EDC may by one or more notices
to the BORROWER do one or more of the following:
(a) declare that EDC is under no further obligation to make ADVANCES
pursuant hereto, whereupon such obligation shall cease;
(b) declare that all or part of the indebtedness hereunder be payable on
demand whereupon the same shall immediately become payable on demand;
(c) declare all or part of the indebtedness of the BORROWER under this
Agreement to be immediately due and payable, whereupon the same shall
become immediately due and payable, together with all accrued interest
and any other amounts payable under this Agreement without any further
demand or notice of any kind; and
(d) exercise all other rights or remedies available to it under the
SECURITY AGREEMENT
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SECTION 9.04 - REMEDIES CUMULATIVE
The rights and remedies of EDC under this Agreement are cumulative and are in
addition to, and not in substitution for, any rights or remedies provided by law
or by the SECURITY AGREEMENT. Any single or partial exercise by EDC of any right
under this Agreement and the SECURITY AGREEMENT, or any failure to exercise or
delay in exercising any such rights will not be or be deemed to be a waiver of,
or to prejudice any rights or remedies to which EDC may be entitled for any
EVENT OF DEFAULT or POTENTIAL DEFAULT. Any waiver by EDC of the strict
compliance with any term of this Agreement or the SECURITY AGREEMENT or any
related document will not be deemed to be a waiver of any subsequent default.
SECTION 9.05 - PERFORMANCE OF BORROWER'S COVENANTS
If an EVENT OF DEFAULT has occurred or if the BORROWER is in default under the
SECURITY AGREEMENT, then EDC may, without waiving or releasing the BORROWER from
any of its obligations and without prejudice to any right or remedy of EDC,
observe and perform any covenant in respect of which the BORROWER is in default
and in that connection pay such monies as may be required. Any such monies paid
out by EDC shall be repayable to EDC on demand, with interest at the rate
specified and calculated in the manner described in Section 4.01(c), from the
date of payment by EDC.
ARTICLE X
CANADIAN BENEFIT
SECTION 10.01 - CANADIAN BENEFIT
The BORROWER acknowledges that EDC has entered into this Agreement to finance
goods and services of Canadian manufacture and origin, and that the HONDA
MINIVAN TOOLS shall have the maximum practicable Canadian content which shall
not be less than 75%. It is the responsibility of the BORROWER to satisfy EDC
that EDC's Canadian benefit requirements are being met.
ARTICLE XI
NOTICE
SECTION 11.01 - NOTICE
Every notice, demand, request, consent, waiver or agreement under this
Agreement will be in writing. All such documents will be hand-delivered or sent
by prepaid courier, air mail, telex or telefax to the following addresses:
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for the BORROWER,
XXXXXX METAL PRODUCTS CO.
000 Xxxxxxxx Xxxxx
Xxxxx 000
Xxxx, Xxxxxxxx 00000
Attention: Chief Financial Officer
Telefax: (000) 000-0000
for EDC,
EXPORT DEVELOPMENT CORPORATION
000 X'Xxxxxx Xxxxxx
Xxxxxx, Xxxxxx X0X 0X0
Attention: Loans Operations
Telex: 053-4136 EXCREDCORP XXX
Telefax: (000) 000-0000
or such other address or numbers as to which either party may from time to time
notify the other. Documents sent by mail will be deemed to be received the fifth
Business Day after mailing, those transmitted by telex or telefax the second
Business Day after transmission and those by courier at the time of delivery. In
this Agreement, "in writing" includes printing, typewriting, or any electronic
transmission that can be reproduced as printed text, on paper, at the point of
reception. In this Section 11.01 "Business Day" means a day in the recipient's
jurisdiction when banks are generally open for public business.
ARTICLE XII
PROPER LAW
SECTION 12.01 - PROPER LAW
This Agreement is made under and will be governed by and construed in accordance
with the laws of the Province of Ontario and the laws of Canada applicable
therein.
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ARTICLE XIII
SEVERABILITY OF PROVISIONS
SECTION 13.01 - SEVERABILITY OF PROVISIONS
Any provision of this Agreement that is prohibited or unenforceable in any
jurisdiction will, as to that jurisdiction, be ineffective to the extent of that
prohibition or unenforceability without invalidating the remaining provisions
hereof or affecting the validity or enforceability of that provision in any
other jurisdiction.
ARTICLE XIV
SUCCESSORS AND ASSIGNS
SECTION 14.01 - SUCCESSORS AND ASSIGNS
This Agreement will be binding upon and enure to the benefit of the parties and
their respective successors and permitted assigns. The BORROWER may not assign
or transfer all or any part of its rights or obligations hereunder without the
prior written consent of EDC. The BORROWER acknowledges that EDC may or may be
required to assign its interest in this Agreement and the SECURITY AGREEMENT to
the BUYER at any time.
ARTICLE XV
COUNTERPARTS
SECTION 15.01 - COUNTERPARTS
This Agreement may be executed in any number of counterparts, and all the
counterparts taken together will be deemed to constitute one and the same
instrument and the parties further agree that receipt by telefax of an executed
copy of this Agreement will be deemed to be receipt of an original.
ARTICLE XVI
FURTHER ASSURANCES
SECTION 16.01 - FURTHER ASSURANCES
The BORROWER and EDC hereby agree to do such further acts and things, and to
execute and deliver to the other party such additional consents and instruments,
as may be reasonably required or deemed advisable to carry into effect the
purposes of this Agreement.
29
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ARTICLE XVII
ENTIRE AGREEMENT
SECTION 17.01 - ENTIRE AGREEMENT
Except as expressly contemplated or provided herein, this Agreement, including
without limitation all Schedules, constitutes the whole and entire agreement
between the parties and cancels and supersedes any prior agreements,
undertakings, declarations, representations, written or verbal, relating to the
subject matter hereof. None of the terms hereof will be modified except by
instrument in writing, duly signed by each of the parties.
IN WITNESS WHEREOF the parties hereto have signed and delivered this Agreement.
XXXXXX METAL PRODUCTS CO.
Signature: [SIG]
(Print Name):
EXPORT DEVELOPMENT CORPORATION
Signature:
(Print Name):
Signature:
(Print Name):
00
XXX XXXX XX. 000-XXX-XX00
DATED AS OF
XXXXXX METAL PRODUCTS CO.
AND
EXPORT DEVELOPMENT CORPORATION
FACILITY AGREEMENT
00
XXX XXXX XX. 000-XXX-XX00
DATED AS OF
XXXXXX METAL PRODUCTS CO.
AND
EXPORT DEVELOPMENT CORPORATION
FACILITY AGREEMENT
32
TABLE OF CONTENTS
Page
----
PARTIES ..........................................................................................................1
RECITALS .........................................................................................................1
ARTICLE I ........................................................................................................2
DEFINITIONS ......................................................................................................2
Section 1.01 - General .......................................................................................2
Section 1.02 - Rules of Interpretation .......................................................................5
Section 1.03 - Invalidity of Provisions ......................................................................6
Section 1.04 - Currency of Account and Currency of Payment ...................................................6
ARTICLE II .......................................................................................................7
REPRESENTATIONS AND WARRANTIES ...................................................................................7
Section 2.01 - Representations and Warranties ................................................................7
ARTICLE III .....................................................................................................10
FINANCING SUPPORT ...............................................................................................10
Section 3.01 - Maximum Amount of Financing, Support .........................................................10
Section 3.02 - Request for Financing Support ................................................................11
Section 3.03 - Increase in Financing Support ................................................................12
ARTICLE IV ......................................................................................................13
CREDIT ENHANCEMENT ..............................................................................................13
Section 4.01 -Indemnity .....................................................................................13
Section 4.02 - Waiver .......................................................................................13
Section 4.03 - No Benefit ...................................................................................14
Section 4.04 - Assignment ...................................................................................14
Section 4.05 - Security .....................................................................................14
ARTICLE V .......................................................................................................15
CANADIAN BENEFIT ................................................................................................15
Section 5.01 - Canadian Benefit .............................................................................15
ARTICLE VI ......................................................................................................15
COVENANTS OF XXXXXX .................' ..........................................................................15
Section 6.01 - Covenants of Xxxxxx ..........................................................................15
ARTICLE VII .....................................................................................................18
CONDITIONS PRECEDENT ............................................................................................18
Section 7.01 - Conditions Precedent to First Loan Agreement .................................................18
ARTICLE VIII ....................................................................................................19
EVENTS OF DEFAULT ...............................................................................................19
Section 8.01 - Events of Default ............................................................................19
Section 8.02 - Remedies .....................................................................................21
Section 8.03 - Remedies Cumulative ..........................................................................21
ARTICLE IX ......................................................................................................21
PAYMENTS ........................................................................................................21
Section 9.01 - Place and Manner of Payment ..................................................................21
33
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ARTICLE X .....................................................................................................22
COSTS AND EXPENSES ............................................................................................22
Section 10.01 - Costs and Expenses .......................................................................22
ARTICLE XI ....................................................................................................23
NOTICE ........................................................................................................23
Section 11.0 1 -Notice ...................................................................................23
ARTICLE XII ...................................................................................................23
PROPER LAW AND JURISDICTION ...................................................................................23
Section 12.01 - Proper Law ...............................................................................23
ARTICLE XIII ..................................................................................................24
SUCCESSORS AND ASSIGNS ........................................................................................24
Section 13.01 - Successors and Assigns ...................................................................24
ARTICLE XIV ...................................................................................................24
MISCELLANEOUS .................................................................................................24
Section 14.01 - Miscellaneous ............................................................................24
Section 14.02 - Counterparts .............................................................................25
SCHEDULE "A" APPLICATION FOR INITIAL FINANCING
SCHEDULE "B" APPLICATION FOR ADDITIONAL FINANCING FOR NEW AND/OR
EXISTING XXXXXX PURCHASE ORDERS
SCHEDULE "C" DRAWDOWN REQUEST
SCHEDULE "D" OPINION OF VELTRI'S COUNSEL
SCHEDULE "E" SHAREHOLDER'S POSTPONEMENT AGREEMENT
SCHEDULE "F" LOAN AGREEMENT
SCHEDULE "G" XXXXXX SECURITY AGREEMENT
34
EDC LOAN NO. 880-CAN-TF00
THIS FACILITY AGREEMENT dated as of is made
BETWEEN
XXXXXX METAL PRODUCTS CO., a corporation incorporated
pursuant to the laws of the Province of Nova Scotia, having
its chief executive office at 000 Xxxxxxxx Xxxxx, Xxxxx 000,
Xxxx, Xxxxxxxx
(hereinafter called "XXXXXX")
AND
EXPORT DEVELOPMENT CORPORATION, a corporation established by
an Act of the Parliament of Canada, having its xxxx xxxxxx xx
Xxxxxx, Xxxxxx (hereinafter called "EDC")
WHEREAS XXXXXX carries on as part of its business the business of designing,
building and selling tools, molds and dies used in the production of parts for
automobiles;
AND WHEREAS the design and building of certain of such tools, molds and dies
are subcontracted to various companies and such subcontractors often require
working capital assistance in the form of progress payments or loans from
XXXXXX;
AND WHEREAS EDC has offered to provide financing support to XXXXXX and certain
of its subcontractors in the form of loans by EDC to such subcontractors;
AND WHEREAS in consideration of EDC providing the aforementioned financing
support and becoming the lender to such subcontractors, XXXXXX has agreed to
provide credit enhancement in respect of such loans to EDC as set forth
herein;
AND WHEREAS XXXXXX and EDC wish to set forth herein the terms and conditions
pursuant to which EDC may provide such financing support.
NOW, THEREFORE, the parties agree as follows:
35
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ARTICLE I
DEFINITIONS
SECTION 1.01 - GENERAL
In this AGREEMENT and the recitals, unless the context otherwise requires:
"ACQUIRED ENTITIES" shall mean Xxxxxx Holdings Ltd., Xxxxxx Stamping Corp. and
North American Precision Tool Ltd., each an Ontario corporation;
"AFFILIATE" shall mean, when used with respect to any person, any other person
which, directly or indirectly, controls or is controlled by or is under common
control with such person. For purposes of this definition, "control" (including
the correlative meanings of the terms "controlled by" and "under common control
with"), with respect to any person, shall mean possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such person, whether through the ownership of voting securities or
by contract or otherwise;
"AFFILIATE LOAN" shall mean an unsecured loan made by VS Holdings Inc., the
majority shareholder of the BORROWER, to the BORROWER not to exceed Seven
Million Five Hundred Thousand US DOLLARS (USD$7,500,000);
"AGREEMENT" means this Facility Agreement together with all Appendices hereto
and all Schedules at any time made hereto, all as amended, supplemented or
restated from time to time hereafter;
"ANNUAL DEBT SERVICE" shall mean, as of the last day of each fiscal quarter, all
amounts required for the four quarters immediately preceding the calculation
thereof for mandatory repayment of principal of and premium on INDEBTEDNESS
(whether by operation of sinking fund or otherwise) and actual cash payments on
the Earn-Out Amounts payable to Xxxxxxx X. X. Xxxxxx made during such period,
for XXXXXX, all determined in accordance with GAAP, provided, however, that for
any calculation thereof occurring on or before December 31, 1997, the amounts
of BORROWER's repayments of principal for the relevant period of calculation
shall be deemed to be CAD1,577,488.00;
"APPLICATION FOR ADDITIONAL FINANCING FOR NEW AND/OR EXISTING XXXXXX PURCHASE
ORDERS" means each request from XXXXXX requesting EDC to approve for financing
under an existing LOAN AGREEMENT (a) a subsequent XXXXXX PURCHASE ORDER in
respect of the relevant BORROWER; or (b) an amended XXXXXX PURCHASE ORDER
previously approved for financing by EDC (whether pursuant to an APPLICATION FOR
ADDITIONAL FINANCING FOR NEW AND/OR EXISTING XXXXXX PURCHASE ORDERS or an
APPLICATION FOR INITIAL FINANCING), which request must be approved by the
relevant BORROWER, substantially in the form of Schedule "B" hereto;
"APPLICATION FOR INITIAL FINANCING" means the request from XXXXXX requesting
EDC to consider (a) entering into a LOAN AGREEMENT to lend monies to a BORROWER
to
36
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finance thereunder the design and build by the BORROWER of the BORROWER GOODS to
be supplied to XXXXXX by the BORROWER under XXXXXX PURCHASE ORDERS; and (b)
approving the first XXXXXX PURCHASE ORDER, substantially in the form of Schedule
"A" hereto;
"BORROWER" means each person which is a borrower who has entered or will enter
into a LOAN AGREEMENT and "BORROWERS" means collectively each and every
BORROWER;
"BORROWER GOODS" means the tools, molds, fixtures and dies to be supplied by a
BORROWER to XXXXXX pursuant to a XXXXXX PURCHASE ORDER;
"BORROWER OBLIGATIONS" means all indebtedness of each BORROWER to EDC
outstanding from time to time under the LOAN AGREEMENTS to which each such
BORROWER is a party, including, without limitation, principal, interest,
expenses and any additional amounts payable in respect thereof;
"BORROWER SECURITY AGREEMENT" means each security agreement between EDC and a
BORROWER delivered in connection with a LOAN AGREEMENT;
"BUDGETED CAPITALIZED INTEREST" means, in respect of any XXXXXX PURCHASE ORDER
and the financing related thereto under a LOAN AGREEMENT, the amount of interest
incorporated in the price associated with such XXXXXX PURCHASE ORDER which
amount is set forth in item (c) of either Annex I to the related APPLICATION FOR
INITIAL FINANCING or Annex I to the related APPLICATION FOR ADDITIONAL FINANCING
FOR NEW AND/OR EXISTING XXXXXX PURCHASE ORDER;
"BUSINESS DAY" means any day except Saturday, Sunday and any other day on which
banks are closed for business in Toronto, Canada;
"BUYER" means Honda of Canada Manufacturing Inc. and any other automotive
original equipment manufacturer or automotive parts manufacturer approved by
EDC;
"BUYER PURCHASE ORDER" means a purchase order or other document satisfactory to
EDC for the purchase of XXXXXX GOODS by a BUYER from XXXXXX, which corresponds
to a XXXXXX PURCHASE ORDER for which a request for financing has been approved
by EDC hereunder, as such BUYER PURCHASE ORDER may be amended from time to time
and "BUYER PURCHASE ORDERS" means collectively each and every BUYER PURCHASE
ORDER;
"CANADIAN DOLLARS" or "CAD" means the lawful currency of Canada;
"DEBT SERVICE CHARGE COVERAGE RATIO" shall mean, as of the date of any
determination thereof, the ratio of VELTRI's EARNINGS AVAILABLE FOR DEBT SERVICE
to its ANNUAL DEBT SERVICE;
37
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"DRAWDOWN REQUEST" means each request from a BORROWER requesting an advance
under the relevant LOAN AGREEMENT in respect of a specific XXXXXX PURCHASE
ORDER, which request must be approved by XXXXXX, substantially in the form of
Schedule "C" hereto;
"EARNINGS AVAILABLE FOR DEBT SERVICE" shall mean, as of the last day of each
fiscal quarter, for the four fiscal quarters preceding any calculation thereof,
EBITDA minus the tax expenses and interest expense on INDEBTEDNESS of XXXXXX
for such period;
"EBITDA" shall mean, as of the last day of any fiscal quarter, for the four
fiscal quarters immediately preceding any calculation thereof, net income
(before extraordinary items) plus the aggregate amounts deducted in determining
net income for such period in respect of taxes based on income, interest expense
and depreciation and amortization, all determined in accordance with GAAP;
"EVENT OF DEFAULT" has the meaning ascribed to it in Section 8.01 hereof;
"GAAP" shall mean, at any time, accounting principles generally accepted in
Canada, as recommended in the Handbook of the Canadian Institute of Chartered
Accountants, or any successor provision;
"INDEBTEDNESS" shall mean, with respect to any person, without duplication, (a)
all indebtedness of such person for borrowed money; (b) the deferred purchase
price of assets or services which in accordance with GAAP would be shown on the
liability side of the balance sheet of such person; (c) the face amount of all
letters of credit issued for the account of such person and, without
duplication, all drafts drawn thereunder; (d) all obligations of any other
person secured by any LIEN on any property owned by such first person, whether
or not such obligations have been assumed by such first person; and (e) all
capitalized lease obligations of such person; (f) all obligations of such person
under interest rate agreements; provided, however, that in the case of XXXXXX
the term INDEBTEDNESS shall not include the AFFILIATE LOAN;
"LEVERAGE RATIO" shall mean, as of any date, the ratio of the VELTRI's
INDEBTEDNESS to EBITDA;
"LIENS" means any mortgage, leasehold mortgage, deed of trust, pledge,
hypothecation, assignment, deposit arrangement, lien, charge, claim, security
interest, easement, encumbrance, privilege, preference, priority or other
security agreement or preferential arrangement of any kind or nature whatsoever
securing the obligation of any person (including, without limitation, any title
retention agreement, execution, seizure, attachment, garnishment or other
similar encumbrance, any financing lease having substantially the same economic
effect as any of the foregoing, the filing of, or agreement to give, any
financing statement perfecting a security interest under applicable law of
any jurisdiction and any designation of loss payees or beneficiaries other than
the owner of the insured property or any similar arrangement under any insurance
policy);
"LOAN AGREEMENT" means a loan agreement between EDC and A BORROWER, and "LOAN
AGREEMENTS" means collectively each and every LOAN AGREEMENT;
38
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"SUBORDINATION AGREEMENT(S)" means the subordination agreements from Xxxxxxx X.
X. Xxxxxx and Comerica Bank in favour of EDC whereby each of them agrees to
subordinate its security interest in the XXXXXX COLLATERAL to EDC's security
interest therein pursuant to the XXXXXX SECURITY AGREEMENT, in form and
substance satisfactory to EDC;
"TAXES" means all present or future taxes (including stamp taxes) of whatever
nature, including but not limited to, levies, imposts, duties, fees, royalties,
deductions and withholdings, together with any fines, penalties or interest
thereon, imposed, levied or assessed by any competent country, jurisdiction,
taxing authority or governmental sub-division thereof or therein; and
"US DOLLARS" or "USD" means the lawful currency of the United States of America;
"XXXXXX COLLATERAL" means the collateral described in the XXXXXX SECURITY
AGREEMENT;
"XXXXXX GOODS" means the tools, molds, fixtures and dies to be supplied by
XXXXXX to a BUYER pursuant to a BUYER PURCHASE ORDER;
"XXXXXX PURCHASE ORDER" means a purchase order or other document satisfactory to
EDC for the purchase of BORROWER GOODS by XXXXXX from a BORROWER, as such XXXXXX
PURCHASE ORDER may be amended from time to time, in respect of which EDC has
approved a request for financing hereunder and "XXXXXX PURCHASE ORDERS" means
collectively each and every XXXXXX PURCHASE ORDER;
"XXXXXX SECURITY AGREEMENT" means the security agreement between EDC and XXXXXX
securing payment and performance by XXXXXX of its obligations pursuant to the
indemnity referred to in Article IV hereof, in the form of Schedule "G".
SECTION 1.02 - RULES OF INTERPRETATION
In this AGREEMENT:
(a) unless the context otherwise requires, the singular shall include the
plural and vice versa;
(b) references to a "person" shall be construed as references to any
individual, firm, company, corporation, unincorporated body of
persons or any state or political subdivision thereof or any
government or any agency thereof;
(c) whenever any person is referred to, such reference shall be deemed to
include the permitted assignees and successors of such person, whether
by operation of law, consolidation, merger, sale, amalgamation or
otherwise;
(d) references to a specified Article or Section shall be construed as
references to that specified article or section of this AGREEMENT;
39
-6-
(e) references to any agreement or other instrument shall be deemed to
include such agreement or other instrument as it may from time to time
be modified, amended, supplemented or restated in accordance with
its terms and, where required hereunder, with the consent of EDC;
(f) the terms "hereof", "herein" and "hereunder" shall be deemed to refer
to this AGREEMENT;
(g) the headings of the Articles and Sections are inserted for convenience
only and shall not affect the construction or interpretation of this
AGREEMENT;
(h) "in writing" or "written" includes printing, typewriting, or any
electronic means of communication capable of being permanently
reproduced in alphanumeric characters at the point of reception and
(i) unless otherwise specified herein, all accounting terms used shall be
interpreted, all accounting determinations required to be made shall be
made, and all financial statements required to be delivered shall be
prepared in accordance with accounting principles generally accepted in
Canada as in effect from time to time.
SECTION 1.03 - INVALIDITY OF PROVISIONS
Each of the provisions contained in this AGREEMENT is distinct and severable and
a declaration of invalidity or unenforceability of any such provision or part
thereof by a court of competent jurisdiction shall not affect the validity or
enforceability of any other provision hereof or the validity or enforceability
of such provision or part in any other competent jurisdiction.
SECTION 1.04 - CURRENCY OF ACCOUNT AND CURRENCY OF PAYMENT
(a) Payments required to be made by XXXXXX pursuant to this AGREEMENT
shall be made in CANADIAN DOLLARS. The obligation of XXXXXX to make
payments in CANADIAN DOLLARS shall not be discharged or satisfied by
any payment or recovery, whether pursuant to judgment or otherwise,
expressed in or converted into any other currency except to the extent
of CANADIAN DOLLARS that is actually received by EDC as a result of
such payment.
(b) The obligation as regards currency of payment described in subsection
(a) above shall be enforceable as an alternative or additional cause of
action for the purpose of recovery in such currency of the amount by
which the amount received by EDC falls short of the full amount of
CANADIAN DOLLARS, as the case may be, and such obligation of XXXXXX
shall not be affected by being obtained for any other sums.
40
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ARTICLE II
REPRESENTATIONS AND WARRANTIES
SECTION 2.01 - REPRESENTATIONS AND WARRANTIES
XXXXXX hereby represents and warrants to EDC as of the date hereof and shall be
deemed to represent and warrant on and as of the date of each advance under a
LOAN AGREEMENT, that:
(a) XXXXXX is a corporation duly incorporated and organized and validly
existing under the laws of the Province of Nova Scotia;
(b) XXXXXX has full corporate power and authority to own its property and
assets and to carry on its business as currently conducted;
(c) the entering into and the performance of the terms of this AGREEMENT
and the XXXXXX SECURITY AGREEMENT by XXXXXX:
(i) are within its corporate powers and have been duly authorized by
all necessary corporate action;
(ii) require no action by or in respect of, or filing with; any
governmental body; and
(iii) except for the security interest created pursuant to the XXXXXX
SECURITY AGREEMENT and the security interests subordinated under
the SUBORDINATION AGREEMENTS, will not result in or require the
creation or imposition of a LIEN upon the XXXXXX COLLATERAL
whether created or imposed at law or pursuant to the terms of
any instrument to which XXXXXX is subject or by which it or any
of its properties or assets are bound;
(d) this AGREEMENT and the XXXXXX SECURITY AGREEMENT have been duly
executed and delivered by XXXXXX and constitute the legal, valid and
binding obligation of XXXXXX, enforceable against XXXXXX in accordance
with their respective terms, subject as to enforcement of remedies to
applicable bankruptcy, insolvency, reorganization and similar laws
affecting generally the enforcement of the rights of creditors and
subject to a court's discretionary authority with regard to the
granting of a decree ordering specific performance or other equitable
remedies and further subject to the Currency Act (Canada) precluding a
court in Canada from awarding a judgment for an amount expressed in
currency other than CANADIAN DOLLARS;
(e) XXXXXX is, or with respect to the XXXXXX COLLATERAL acquired after the
date hereof will be, the sole beneficial owner of the XXXXXX COLLATERAL
free and clear of any LIENS except for the security interests
subordinated under the SUBORDINATION AGREEMENTS;
41
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(f) XXXXXX has, or with respect to the XXXXXX COLLATERAL acquired after the
date hereof will have, the right to grant a security interest in the
XXXXXX COLLATERAL in favour of EDC on the terms of the XXXXXX
SECURITY AGREEMENT;
(g) the business operations and records of XXXXXX are located at 00 Xxxx
Xxxxxx, Xxxxxxx, Xxxxxxx and the XXXXXX COLLATERAL will be kept at such
location or at such other location as XXXXXX will specify in writing to
EDC and, subject to the provisions of the XXXXXX SECURITY AGREEMENT,
none of the XXXXXX COLLATERAL will be moved therefrom without the prior
written consent of EDC;
(h) XXXXXX'x full name and chief executive office are as set out on the
first page of this AGREEMENT;
(i) none of the XXXXXX COLLATERAL consists of consumer goods;
(j) there are no disputes between a BORROWER and XXXXXX which would
adversely affect performance of the respective obligations of the
parties under the relevant XXXXXX PURCHASE ORDER and there are no
disputes between a BUYER and XXXXXX which could adversely affect
performance of the respective obligations of the parties under the
relevant BUYER PURCHASE ORDER;
(k) the obligations of XXXXXX under this AGREEMENT, to the extent they are
not secured, rank and will rank at least pari passu with all other
unsecured indebtedness, including unsecured guarantees, of XXXXXX,
save as may be preferred by mandatory provisions of applicable law;
(l) the audited financial statements of XXXXXX as of December 31, 1996 and
the interim financial statements as of June 28, 1997, copies of which
have been delivered to EDC, present fairly, in all material respects,
the financial position of XXXXXX and the results of its operations for
the period covered thereby and such financial statements have been
prepared in accordance with accounting principles generally accepted
in Canada, applied on a consistent basis, and between the date of such
interim financial statements and the date of this AGREEMENT there has
been no material adverse change in the financial condition or in the
business or assets of XXXXXX;
(m) there are no legal proceedings pending or, so far as is known to
XXXXXX, threatened before any court, arbitral tribunal, administrative
agency or governmental or other body having authority over it which
would materially adversely affect the financial condition or the
business or assets of XXXXXX or its ability to perform its obligations
hereunder, under the XXXXXX SECURITY AGREEMENT or under any BUYER
PURCHASE ORDER other than those disclosed in the most recent audited
financial statements of XXXXXX;
(n) XXXXXX is not currently in violation of, and the execution of this
AGREEMENT and the XXXXXX SECURITY AGREEMENT will not place it in
violation of (i) any agreement, instrument, mortgage, franchise or
license to which it is subject; (ii) any judgment, order
42
-9-
or decree of any court or other governmental authority applicable to
it; or (iii) any statute or regulation applicable to it, so as
materially to imperil the ability of XXXXXX to fulfill its obligations
hereunder or under the XXXXXX SECURITY AGREEMENT;
(o) it has received an originally executed copy of the LOAN AGREEMENT and
the BORROWER SECURITY AGREEMENT related thereto and is familiar with
all the terms and provisions thereof;
(p) each APPLICATION FOR INITIAL FINANCING and each APPLICATION FOR
ADDITIONAL FINANCING FOR NEW AND/OR EXISTING XXXXXX PURCHASE ORDERS (as
the case may be) and the DRAWDOWN REQUEST associated with such advance
has been duly executed and delivered by XXXXXX and constitutes a legal,
valid and binding obligation of XXXXXX, enforceable against XXXXXX in
accordance with its respective terms, subject as to enforcement of
remedies to applicable bankruptcy, insolvency, reorganization and
similar laws affecting generally the enforcement of the rights of
creditors and subject to a court's discretionary authority with regard
to the granting of a decree ordering specific performance or other
equitable remedies and further subject to the Currency Act (Canada)
precluding a court in Canada from awarding a judgment for an amount
expressed in currency other than CANADIAN DOLLARS;
(q) so far as XXXXXX is aware (having made reasonable inquiries) there
exists no event of default under the XXXXXX PURCHASE ORDER or the BUYER
PURCHASE ORDER associated with such advance nor has any event occurred
nor does any circumstance exist which, with the giving of notice, lapse
of time or fulfillment of any other condition, would be an event of
default under the XXXXXX PURCHASE ORDER or the BUYER PURCHASE ORDER;
(r) the XXXXXX PURCHASE ORDER and the BUYER PURCHASE ORDER associated with
such advance are in full force and effect and have not been amended,
supplemented, extended or replaced in any material respect or canceled
other than as noted in the APPLICATION FOR ADDITIONAL FINANCING FOR NEW
AND/OR EXISTING XXXXXX PURCHASE ORDERS related to such XXXXXX PURCHASE
ORDER and BUYER PURCHASE ORDER;
(s) all covenants and obligations of any kind whatsoever on VELTRI's part
to be performed under the XXXXXX PURCHASE ORDER and BUYER PURCHASE
ORDER associated with such advance are not in default; and
(t) there has been no pre-payment of any amount or of any kind under the
XXXXXX PURCHASE ORDER except as previously disclosed in writing to EDC
or the BUYER PURCHASE ORDER associated with such advance.
43
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ARTICLE III
FINANCING SUPPORT
SECTION 3.01 - MAXIMUM AMOUNT OF FINANCING SUPPORT
(a) Upon and subject to the terms and conditions set forth in this
AGREEMENT, EDC agrees to provide financing support to XXXXXX and
certain of its subcontractors in respect of XXXXXX PURCHASE ORDERS,
in CANADIAN DOLLARS, provided however, that the maximum aggregate
amount of such financing support, whether advanced or committed,
(including INTEREST ADVANCES as defined in each LOAN AGREEMENT) shall
not exceed CAD5,000,000, on a revolving basis.
(b) In respect of each XXXXXX PURCHASE ORDER, EDC will not finance:
(i) a XXXXXX PURCHASE ORDER which is in a currency other than
CANADIAN DOLLARS;
(ii) a XXXXXX PURCHASE ORDER in an amount less than CAD100,000;
(iii) a XXXXXX PURCHASE ORDER which does not relate to BORROWER GOODS
ultimately to be sold to a BUYER;
(iv) more than the aggregate of (I) 85% of (a) such XXXXXX PURCHASE
ORDER less (b) the BUDGETED CAPITALIZED INTEREST relating to such
XXXXXX PURCHASE ORDER; and (II) the aggregate of all Interest
Advances (as defined in each LOAN AGREEMENT) made under the
relevant LOAN AGREEMENT which Interest Advances will equal the
BUDGETED CAPITALIZED INTEREST.
(c) EDC will not provide financing support to any BORROWER under a LOAN
AGREEMENT in excess of CAD1,000,000 at any one time (whether advanced
or committed, (including INTEREST ADVANCES as defined in each LOAN
AGREEMENT), unless EDC in its sole discretion otherwise agrees in
writing and except for financial support to Superior Tool and Machine
of up to CAD1,500,000.00.
(d) Notwithstanding the provisions of this Section 3.01 or any other
provision of this AGREEMENT, XXXXXX acknowledges and agrees that, (i)
EDC is not obligated in any manner whatsoever to approve any particular
APPLICATION FOR INITIAL FINANCING or APPLICATION FOR ADDITIONAL
FINANCING FOR NEW AND/OR EXISTING XXXXXX PURCHASE ORDERS or to provide
any financing support contemplated by such documents; and (ii) it is in
EDC's sole discretion whether or not to approve any particular
APPLICATION FOR INITIAL FINANCING or APPLICATION FOR ADDITIONAL
FINANCING FOR NEW AND/OR EXISTING XXXXXX PURCHASE ORDERS or provide any
financing support contemplated thereby.
44
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(e) The parties acknowledge that it is a condition precedent to the LOAN
AGREEMENT (and related security) that this AGREEMENT and the XXXXXX
SECURITY AGREEMENT be valid and binding on all parties and that this
AGREEMENT and the XXXXXX SECURITY AGREEMENT apply to the indebtedness
which will be owing to EDC pursuant to such LOAN AGREEMENT.
(f) This AGREEMENT shall terminate on December 31, 1998, EDC will have no
obligation to consider any APPLICATION FOR INITIAL FINANCING or
APPLICATION FOR ADDITIONAL FINANCING FOR NEW AND/OR EXISTING XXXXXX
PURCHASE ORDERS after such date unless otherwise agreed to by EDC. It
is understood that disbursements under XXXXXX PURCHASE ORDERS approved
by EDC prior to such date will, subject to satisfaction or waiver of
the relevant conditions precedent in the relevant LOAN AGREEMENT,
continue to be made after such date and this AGREEMENT (including
without limitation the indemnity referred to in Article IV hereof)
shall apply in connection thereto.
SECTION 3.02 - REQUEST FOR FINANCING SUPPORT
In consideration of the credit enhancement provided herein by XXXXXX and for
other good and valuable consideration, and upon and subject to the terms and
conditions set forth herein, XXXXXX may, from time to time, with the relevant
BORROWER's written consent, provide EDC with a request that EDC consider (a)
entering into a LOAN AGREEMENT to lend monies to a BORROWER to finance the
design and build by the BORROWER of the BORROWER GOODS to be supplied to XXXXXX
by the BORROWER under XXXXXX PURCHASE ORDERS; and (b) approving a specific
corresponding XXXXXX PURCHASE ORDER. VELTRI's request shall be in the form of an
APPLICATION FOR INITIAL FINANCING, shall include any documents required to be
delivered to EDC pursuant to such APPLICATION FOR INITIAL FINANCING and shall be
consented to in writing by the BORROWER. Thereafter, EDC shall, subject to the
terms and conditions of this AGREEMENT, return to XXXXXX the relevant
APPLICATION FOR INITIAL FINANCING indicating thereon whether or not EDC is
prepared to (i) enter into a LOAN AGREEMENT to lend monies to the BORROWER; and
(ii) approve a specific XXXXXX PURCHASE ORDER and, if such is the case, the
amount of financing EDC is prepared to offer such BORROWER for the specific
XXXXXX PURCHASE ORDER. EDC shall also advise the BORROWER whether or not EDC is
prepared to (i) enter into a LOAN AGREEMENT to lend monies to the BORROWER; and
(ii) approve a specific XXXXXX PURCHASE ORDER and, if such is the case, the
amount of financing EDC is prepared to offer such BORROWER for the specific
XXXXXX PURCHASE ORDER.
In the event EDC indicates its willingness to provide financing to the relevant
BORROWER, EDC shall forward to such BORROWER a LOAN AGREEMENT and the related
BORROWER SECURITY AGREEMENT. EDC shall then arrange for the relevant BORROWER to
(a) sign the LOAN AGREEMENT and BORROWER SECURITY AGREEMENT; and (b) forward to
EDC and XXXXXX a fully executed copy of the LOAN AGREEMENT and BORROWER SECURITY
AGREEMENT as well as an opinion from the BORROWER's counsel addressed to EDC and
XXXXXX in form and substance satisfactory to EDC and XXXXXX which opinion shall
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include without limitation an opinion that the BORROWER has the authority to
borrow the maximum amount of available financing set out in the LOAN AGREEMENT,
as amended by future APPLICATION FOR ADDITIONAL FINANCING FOR NEW AND/OR
EXISTING XXXXXX PURCHASE ORDERS and that the LOAN AGREEMENT has been duly
executed. The LOAN AGREEMENT and BORROWER SECURITY AGREEMENT and opinion of the
BORROWER's counsel shall be in the form of Schedule "F hereof.
SECTION 3.03 - INCREASE IN FINANCING SUPPORT
In consideration of the credit enhancement provided herein by XXXXXX and for
other good and valuable consideration, and upon and subject to the terms
and conditions set forth herein, XXXXXX may, from time to time, with the
relevant BORROWER's written consent, provide EDC with a request that EDC
consider increasing the maximum amount of financing available under an existing
LOAN AGREEMENT to (a) cover amendments to XXXXXX PURCHASE ORDERS which already
are the subject of financing under the LOAN AGREEMENT; or (b) subsequent XXXXXX
PURCHASER ORDERS to the relevant BORROWER. VELTRI's request shall be in the form
of an APPLICATION FOR ADDITIONAL FINANCING FOR NEW AND/OR EXISTING XXXXXX
PURCHASE ORDERS, shall include any documents reasonably required to be delivered
to EDC pursuant to such APPLICATION FOR ADDITIONAL FINANCING FOR NEW AND/OR
EXISTING XXXXXX PURCHASE ORDERS and shall be consented to in writing by the
BORROWER. Thereafter, EDC shall, subject to the terms and conditions of this
AGREEMENT, return to XXXXXX the APPLICATION FOR ADDITIONAL FINANCING FOR NEW
AND/OR EXISTING XXXXXX PURCHASE ORDERS indicating thereon whether or not EDC is
prepared to permit the maximum amount of financing under the relevant LOAN
AGREEMENT to be increased to cover (i) amendments to XXXXXX PURCHASE ORDERS
which already are the subject of financing under the LOAN AGREEMENT; or (ii)
additional XXXXXX PURCHASER ORDERS to the relevant BORROWER and, if such is the
case, the additional amount of financing EDC is prepared to offer. EDC shall
also advise the BORROWER whether or not EDC is prepared to permit the maximum
amount of financing under the relevant LOAN AGREEMENT to be increased and, if
such is the case, the additional amount of financing EDC is prepared to offer.
In the event EDC indicates its willingness to increase the maximum dollar
amount of financing available under the relevant LOAN AGREEMENT, EDC
shall forward to the BORROWER any documents EDC considers necessary to ensure
that the LOAN AGREEMENT reflects the increase in financing and to ensure that
the security related to the LOAN AGREEMENT covers the subsequent XXXXXX
PURCHASE ORDERS or the amended XXXXXX PURCHASE ORDERS and BORROWER GOODS
supplied thereunder including without limitation a certificate of an officer of
the BORROWER certifying that the resolution authorizing the BORROWER to
borrow the maximum amount of available financing set out in the LOAN AGREEMENT,
as amended by APPLICATION FOR ADDITIONAL FINANCING FOR NEW AND/OR EXISTING
XXXXXX PURCHASE ORDERS, has not been amended or repealed. EDC shall then arrange
for the relevant BORROWER to (a) sign the said documents; and (b) forward to EDC
and XXXXXX a fully executed copy of those documents.
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ARTICLE IV
CREDIT ENHANCEMENT
SECTION 4.01 - INDEMNITY
(a) XXXXXX hereby unconditionally and irrevocably agrees, as primary
obligor, to indemnify on demand EDC against any monetary loss suffered
by it as a result of any BORROWER OBLIGATIONS, whether at maturity, on
acceleration or otherwise, not being paid on time, on the date and
otherwise in the manner specified in the LOAN AGREEMENTS or as a result
of any BORROWER OBLIGATION being or becoming void, voidable or
unenforceable for any reason (whether or not now existing and whether
or not now known or becoming known to the BORROWERS or EDC), the amount
of that loss being the amount expressed to be payable by the BORROWERS
in the LOAN AGREEMENTS and unpaid. XXXXXX agrees that its obligations
under this Section 4.01(a) shall not be discharged, released or
otherwise terminated except by payment in full to EDC of the amount of
the said loss. Notwithstanding anything contained herein to the
contrary, EDC may, in its discretion, make multiple demands under this
AGREEMENT and such demands may be for all or any part of the BORROWER
OBLIGATIONS then due and unpaid.
(b) XXXXXX further agrees to pay interest on the BORROWER OBLIGATIONS (to
the extent that such interest is not paid by the relevant BORROWER)
from the date upon which EDC has demanded payment of the BORROWER
OBLIGATIONS pursuant to Section 4.01(a) hereof (or from the date the
BORROWER ceases to be legally liable to pay interest under the relevant
LOAN AGREEMENT by reason of provisions or enactments relating to
bankruptcy, insolvency, liquidation or otherwise, if applicable) until
the unpaid BORROWER OBLIGATIONS have been paid in full, such interest
to be payable before and after judgment at such rate equal to the rate
of interest payable under the relevant LOAN AGREEMENT in respect of
such BORROWER OBLIGATIONS.
SECTION 4.02 - WAIVER
(a) XXXXXX hereby waives any requirement that EDC, in the event of default
by any of the BORROWERS under the relevant LOAN AGREEMENTS, make demand
upon or seek to enforce remedies against any such BORROWER before
demanding payment under, or seeking to enforce the provisions of this
indemnity, and EDC shall not be bound to exhaust its recourse against
any such BORROWER or any other person or the securities it may hold in
respect of the BORROWER OBLIGATIONS or to value such securities before
demanding or being entitled to payment from XXXXXX.
(b) Except for its rights under Section 4.04, XXXXXX hereby expressly
waives the benefit of all privileges and defences which now or may
hereafter be available to sureties including the benefits of discussion
and division, and hereby waives diligence, presentment, demand, protest
and notice of every kind.
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SECTION 4.03 - NO BENEFIT
(a) Until all sums owing to EDC by a BORROWER under the relevant LOAN
AGREEMENTS have been paid in full, XXXXXX shall not with respect to
any payment made by XXXXXX hereunder:
(i) be entitled and shall not claim to rank as a creditor in the
bankruptcy or liquidation of the relevant BORROWER in competition
with EDC;
(ii) receive, claim or have the benefit of any payment or distribution
from or on account of the relevant BORROWER or claim the benefit
of any security or monies held by or for the account of EDC
except for the benefit of EDC and EDC shall be entitled to apply
such security and monies as it sees fit.
(b) Any settlement or discharge between EDC and XXXXXX shall be conditional
upon no security or payment to EDC by the relevant BORROWER or any
other person on behalf of the BORROWER being avoided or set aside or
ordered to be refunded or reduced by virtue of any provision or
enactment relating to bankruptcy, insolvency or liquidation for the
time being in force and EDC shall be entitled to recover from XXXXXX
the value which EDC has placed upon such security or the amount of any
such payment as if such settlement or discharge had not occurred
limited to the amount owing to EDC by the BORROWER.
SECTION 4.04 - ASSIGNMENT
Upon payment in full by XXXXXX to EDC of the indemnity referred to in this
Article IV with respect to a BORROWER, EDC shall assign to XXXXXX, or as it
may direct, all of EDC's rights, title and interests in and to any or all
related LOAN AGREEMENTS and related security in respect of which an indemnity
payment is fully made to EDC pursuant to this Article IV. EDC covenants to,
perfect all security interests granted by a BORROWER to EDC under a BORROWER's
security agreement in EDC's favour and not release or subordinate or permit the
expiry of any such security interest (unless in the case of an expired
registration, such registration may be renewed or reperfected so as to maintain
EDC's priority position that existed prior to the expiry of such registration).
Nevertheless EDC is not required to ensure that any security interest which it
perfects confers on EDC any priority over any other security interest.
SECTION 4.05 - SECURITY
As security for the payment and performance of its obligations under the
indemnity referred to in this Article IV, XXXXXX agrees to deliver to EDC the
XXXXXX SECURITY AGREEMENT in accordance with the terms hereof.
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ARTICLE V
CANADIAN BENEFIT
SECTION 5.01 - CANADIAN BENEFIT
The parties acknowledge that EDC has entered into this AGREEMENT to finance
goods and services of Canadian manufacture and origin and that no less than
75% of work related to the manufacture of the BORROWER GOODS supplied under all
approved XXXXXX PURCHASE ORDERS shall give rise to an aggregate Canadian
benefit. In any case where the aggregate amount of proposed financing in
respect of a XXXXXX PURCHASE ORDER exceeds CAD5,000,000, EDC's internal
Industrial Advisory Service shall confirm whether or not such XXXXXX PURCHASE
ORDER meets the Canadian benefit test. EDC may conduct a review, not less than
annually, of the aggregate Canadian benefit under approved XXXXXX PURCHASE
ORDERS. In the event that the Canadian benefit is found by EDC to be less than
75%, EDC shall so notify XXXXXX and XXXXXX shall not, after such notice, submit
XXXXXX PURCHASE ORDERS for approval with a Canadian benefit less than 75% and
if the aggregate Canadian benefit remains less than 75% ninety (90) days
following such notice, EDC shall not be obligated to approve any further XXXXXX
PURCHASE ORDERS. Notwithstanding the foregoing, EDC may not suspend or
terminate advances related to XXXXXX PURCHASE ORDERS previously approved under
the associated APPLICATION FOR INITIAL FINANCING.
ARTICLE VI
COVENANTS OF XXXXXX
SECTION 6.01 - COVENANTS OF XXXXXX
XXXXXX covenants and agrees with EDC that, unless compliance has been waived by
EDC, it will:
(a) perform and observe all the provisions of this AGREEMENT and the
XXXXXX SECURITY AGREEMENT;
(b) maintain its corporate existence in good standing subject to the right
to merge, amalgamate or effect any reorganization which does not
result in any deterioration of the position of or detriment to any of
its creditors, and provided that any successor company executes, prior
to or contemporaneously with the consummation of such transaction, such
instruments as are satisfactory to EDC evidencing the agreement of
such successor company to observe and perform all the covenants and
obligations of XXXXXX hereunder and under the XXXXXX SECURITY
AGREEMENT;
(c) carry on its business in a proper, efficient and businesslike manner
and maintain all rights, contracts, powers, privileges, leases, lands
and franchises, permits and authorizations necessary in the conduct
of its business or operations;
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(d) within one hundred and twenty (120) days after the end of each
financial year:(i) cause to be prepared as at the end of such financial
year a balance sheet, statement of profit and loss and such other
statements as XXXXXX is required by law to prepare and will forthwith
deliver to EDC a signed copy of each of such statements, together with
a certificate of its independent auditors, setting forth that in their
opinion without any material qualification the statements present
fairly in all material respects the financial position of XXXXXX and
the results of its operations for the financial year reported on, in
accordance with accounting principles generally accepted in Canada
applied on a basis consistent with that of the preceding year; (ii)
prepare and deliver to EDC a report setting out the calculation of
each of the ratios referred to in Sections 6.01(k), (l), (m) and (o);
and (iii) prepare and deliver to EDC a certificate of an officer of
XXXXXX certifying that XXXXXX is not in default under any loans,
guarantees or security agreements to which it is a party or if in
default specifying the nature of such default;
(e) within forty-five (45) days after the end of each of the first three
quarters of each financial year deliver to EDC: (i) its quarterly
financial reports for such fiscal quarter; (ii) the income statement of
XXXXXX; (iii) a report setting out the calculation of each of the
ratios referred to in Sections 6.01(k), (l), (m) and (o); and (iv) a
certificate of an officer of XXXXXX certifying that XXXXXX is not in
default under any loans, guarantees or security agreements to which it
is a party or if in default specifying the nature of such default;
(f) from time to time deliver to EDC such other financial and operating
reports and statements as EDC may reasonably request;
(g) keep its assets and business insured in the manner and to the extent
customary for companies engaged in businesses of a similar character;
(h) ensure that at all times its obligations hereunder to the extent they
are unsecured rank at least pari passu with all of its other unsecured
indebtedness, including unsecured guarantees, save as may be preferred
by mandatory provisions of applicable law;
(i) not take or suffer to be taken any unreasonable action whereby the
interests of EDC hereunder or under any of the LOAN AGREEMENTS,
BORROWER SECURITY AGREEMENTS, or the XXXXXX SECURITY AGREEMENT may be
jeopardized;
(j) promptly notify EDC upon becoming aware of the occurrence of any event
of default or of any event or circumstance which, after notice or lapse
of time or both, would constitute an event of default under any of the
XXXXXX PURCHASE ORDERS or the BUYER PURCHASE ORDERS, and of any other
matter which might materially adversely affect the financial condition
or the business or assets of any of the BORROWERS or of XXXXXX, or the
ability of any of the BORROWERS or XXXXXX to perform their respective
obligations under the LOAN AGREEMENTS, the BORROWER SECURITY
AGREEMENTS, the XXXXXX PURCHASE ORDERS, the BUYER PURCHASE ORDERS, the
XXXXXX SECURITY AGREEMENT or hereunder, as the case may be, as well as
of the steps being taken to remedy the same;
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(k) maintain at all times a current assets: current liabilities ratio of
not less than 1.00:1.00, which ratio is as at the date hereof not less
that 1.00:1.00; for the purposes of this covenant "current liabilities"
means current liabilities including the current portion of all
revolving bank lines of credit less all amounts subordinated at the
relevant time pursuant to the shareholder's postponement agreement
dated ;
(l) maintain at all times a DEBT SERVICE COVERAGE RATIO of not less than
1.25 to 1.0;
(m) maintain at all times a LEVERAGE RATIO of not more than 4.25 to 1.0;
(n) maintain from May 15, 1998, and at all times thereafter a shareholders'
equity of no less than CAD5,000,000; for the purposes of this covenant
"shareholders' equity" means common stock plus retained earnings as
noted on the most recent financial statements;
(o) no XXXXXX PURCHASE ORDER shall be canceled or terminated, or any
material amendments made to the terms and manner of payment or to the
time and manner of delivery of the goods thereunder, or any amendments
made which might effect an unreasonable decrease in the purchase
price of the BORROWER GOODS, in each case without the prior written
consent of EDC. In addition, no change shall be made to any of the
XXXXXX PURCHASE ORDERS which materially relates to or affects EDC's
Canadian benefit requirements without the prior written consent of EDC;
(p) promptly notify EDC of any dispute under any XXXXXX PURCHASE ORDER or
BUYER PURCHASE ORDER or of any event which could entitle XXXXXX to
set-off or withhold any amounts due under any XXXXXX PURCHASE ORDER or
the BUYER to set-off or withhold any amounts due under any BUYER
PURCHASE ORDER;
(q) promptly notify EDC of any change in the name of XXXXXX or the location
of its chief executive office;
(r) in respect of the XXXXXX COLLATERAL:
(i) carry on it's business in a proper and efficient manner so as to
preserve and protect the XXXXXX COLLATERAL and the earnings,
incomes, issues and profits thereof;
(ii) at any reasonable time and from time to time, upon reasonable
prior notice, permit EDC or any representative thereof to verify
the existence and state of the XXXXXX COLLATERAL in any manner
EDC may consider appropriate; and XXXXXX agrees to furnish all
assistance and information and to perform all such acts as EDC
may reasonably request in connection therewith and for such
purpose to grant to EDC or its representative access to all
places where the XXXXXX COLLATERAL may be located and to all
premises occupied by XXXXXX to examine and inspect the XXXXXX
COLLATERAL;
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(iii) not locate or permit its records and the XXXXXX COLLATERAL to be
located at any location other than 00 Xxxx Xxxxxx, Xxxxxxx,
Xxxxxxx;
(iv) not sell, lease, assign or otherwise dispose of the XXXXXX
COLLATERAL other than as contemplated in the relevant BUYER
PURCHASE ORDER;
(v) keep the XXXXXX COLLATERAL free and clear of all LIENS other than
the security interests subordinated under the SUBORDINATION
AGREEMENTS;
(vi) promptly notify EDC of any material loss of or material damage to
the XXXXXX COLLATERAL; and
(vii) take all steps and all actions as may be reasonably required or
deemed advisable by EDC to perfect or more fully evidence EDC's
rights and interest in the XXXXXX COLLATERAL over which a
security interest has been granted by XXXXXX to EDC under the
XXXXXX SECURITY AGREEMENT.
ARTICLE VII
CONDITIONS PRECEDENT
SECTION 7.01 - CONDITIONS PRECEDENT TO FIRST LOAN AGREEMENT
EDC shall have no obligation to enter into any LOAN AGREEMENT hereunder until
EDC has received:
(a) an executed copy of the XXXXXX SECURITY AGREEMENT;
(b) evidence satisfactory to EDC that EDC's first priority security
interests in the XXXXXX COLLATERAL granted pursuant to the XXXXXX
SECURITY AGREEMENT has been duly perfected and/or registered in such
filing offices as EDC may deem necessary or appropriate;
(c) an executed copy of both SUBORDINATION AGREEMENTS;
(d) the following corporate documents of XXXXXX relating to the matters
contemplated hereby: Articles of Incorporation, resolutions, specimen
signatures and certificates of authorization, as requested by EDC;
(e) the opinion of counsel for XXXXXX in the form of Schedule "D";
(f) payment of all fees required pursuant hereto;
(g) an executed copy of the shareholder's postponement agreement in the
form of Schedule "E";
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(h) such other information or documentation as EDC may reasonably require.
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.01 - EVENTS OF DEFAULT
The occurrence of any of the following events shall be a default by XXXXXX
under this AGREEMENT (each an "EVENT OF DEFAULT"):
(a) XXXXXX shall fail to pay or remit within three (3) BUSINESS DAYS of the
due date thereof any amount owing to EDC hereunder;
(b) any representation or warranty made or deemed to have been made by
XXXXXX hereunder or in connection with this AGREEMENT or any other
information or report supplied by XXXXXX to EDC hereunder or in
connection herewith shall prove to have been false, incorrect or
misleading in any material respect when made or deemed made;
(c) XXXXXX fails to observe or perform any other term, covenant or
agreement herein on its part to be observed or performed and, if such
failure is capable of being remedied, any such failure shall remain
unremedied for thirty (30) days after written notice thereof shall have
been given by EDC to XXXXXX;
(d) an encumbrancer takes possession of, or a receiver or similar officer
is appointed over the whole or a substantial part of the assets, rights
or revenues of XXXXXX or a distress, execution, sequestration or other
process is levied or enforced upon or sued out against a substantial
part of the assets, rights or revenues of XXXXXX and is not
discharged, dismissed or stayed within thirty (30) days;
(e) a court or other authority of competent jurisdiction issues any
judgment or order, or similar instrument, for bankruptcy,
liquidation, winding-up or dissolution or for the appointment of a
receiver, trustee, liquidator, or like official of all or a substantial
portion of VELTRI's assets, and such order remains in effect for a
period of forty-five (45) days without being vacated, discharged,
stayed or dismissed;
(f) proceedings are started by any person to dissolve, liquidate or wind-up
XXXXXX or to suspend its operations and which remain undischarged
thirty (30) days after commencement;
(g) XXXXXX (i) makes an assignment for the benefit of its creditors; or
(ii) petitions or applies to any tribunal for the appointment of a
receiver or trustee for itself or any substantial part of its assets;
or (iii) starts any proceeding relating to itself under any present or
future reorganization, arrangement, adjustment of debt, dissolution or
liquidation law of any jurisdiction; or (iv) in any way consents to,
approves or acquiesces in any bankruptcy,
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reorganization or insolvency proceeding started by any other
person, or any proceeding by any other person for the appointment of
a receiver or trustee for XXXXXX or any substantial part of its
assets; or (v) allows any receivership or trusteeship to remain
undischarged for a period of thirty (30) days; or (vi) becomes or is
declared by any competent authority to be bankrupt or insolvent;
(h) XXXXXX (i) fails to pay any amount due in excess of CAD500,000 under
any one or more loans, guarantees or security agreements to which it is
a party on the due date or within any originally applicable grace
period whether on maturity, by acceleration or otherwise; or (ii)
defaults under any other term of any loan, guarantee or security
agreement to which it is a party (for which the debt associated
therewith is in excess of CAD500,000) which has caused the holder or
holders of such loan, guarantee or security to declare the
indebtedness thereunder to be due and payable; or
(i) XXXXXX disposes of all or a substantial portion of its assets, whether
by one or a series of transactions, related or not, other than:
(i) for the purposes of and followed by a reconstruction, merger or
amalgamation whilst able to pay its debts as they fall due in
which the obligations of XXXXXX to EDC are assumed by the
successor entity in such merger, reconstruction or amalgamation;
(ii) for fair market value on arm's length terms; or
(iii) in the ordinary course of business;
without the prior written consent of EDC;
(j) if any event or circumstance occurs which would materially and
adversely affect VELTRI's ability to perform all or any of its
obligations hereunder or under the XXXXXX SECURITY AGREEMENT;
(k) if XXXXXX defaults in the due performance or observance of any term of
any BUYER PURCHASE ORDER or XXXXXX PURCHASE ORDER after lapse of any
applicable grace period;
(l) if title to the XXXXXX GOODS granted as security pursuant to the term
of the XXXXXX SECURITY AGREEMENT is transferred to the BUYER or any
other person prior to all amounts owing by XXXXXX hereunder having
been fully repaid;
(m) if XXXXXX creates or permits to exist or continue any LIENS over the
XXXXXX COLLATERAL as security for the obligations of XXXXXX or any
other person except for the security interests subordinated under the
SUBORDINATION AGREEMENTS; or
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(n) if XXXXXX fails within a reasonable time after notice to take all steps
and all actions as may be reasonably required or deemed advisable by
EDC to perfect or more fully evidence EDC's rights and interest in the
XXXXXX COLLATERAL over which a security interest has been granted by
XXXXXX to EDC under the XXXXXX SECURITY AGREEMENT.
SECTION 8.02 - REMEDIES
If an EVENT OF DEFAULT occurs and is continuing, EDC may, in addition to any
other rights or remedies available to it under this AGREEMENT, any document
contemplated hereby or at law, do one or more of the following: (a) exercise all
other rights and remedies available to it under the XXXXXX SECURITY AGREEMENT
or at law; (b) by way of one or more notices to XXXXXX declare that EDC will not
approve any APPLICATION FOR INITIAL FINANCING or APPLICATION FOR ADDITIONAL
FINANCING FOR NEW AND/OR EXISTING XXXXXX PURCHASE ORDERS; or (c) assign to
XXXXXX all of EDC's rights, title and interests in any or all LOAN AGREEMENTS
and related security and XXXXXX agrees, in consideration for such assignment
immediately to pay to EDC an amount equal to the aggregate of all indebtedness
of the BORROWERS outstanding to EDC under such LOAN AGREEMENTS (including,
without limitation, all principal, interest and other amounts) as of the date of
such assignment, it being understood that such assignment shall only occur on
payment in full by XXXXXX.
SECTION 8.03 - REMEDIES CUMULATIVE
It is expressly agreed by XXXXXX that the rights and remedies of EDC under this
AGREEMENT are cumulative and are in addition to, and not in substitution for,
any rights or remedies provided by law; and any single or partial exercise by
EDC of any right or remedy for default or breach of any term of this AGREEMENT
shall not, and any failure to exercise or delay in exercising any such rights or
remedies shall not, be or be deemed to be a waiver of or to alter, affect or
prejudice any other right or remedy or other rights or remedies to which EDC
may be lawfully entitled for the same default or breach; and any waiver by EDC
of the strict observance or performance of or compliance with any term of this
AGREEMENT shall not be deemed to be a waiver of any subsequent default or
breach.
ARTICLE IX
PAYMENTS
SECTION 9.01 - PLACE AND MANNER OF PAYMENT
XXXXXX agrees to make any payment required of it hereunder forthwith without
set-off or counterclaim at Bank of Montreal, First Bank Tower, First Xxxxxxxx
Xxxxx, Xxxxxxx, Xxxxxxx, X0X lAl, for the credit of EDC, account number 000-876
or at such other account or place as EDC may, from time to time, notify XXXXXX
in writing. XXXXXX agrees to instruct its bank to provide a copy of its payment
instructions (including its transfer reference number), showing how funds are
being transferred, by telex to EDC at number 053-4136 or by telefax at number
(000) 000-0000.
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ARTICLE X
COSTS AND EXPENSES
SECTION 10.01 - COSTS AND EXPENSES
(a) XXXXXX will pay, on the earlier of (i) thirty (30) days of EDC's
billing therefor; and (ii) the date of the first LOAN AGREEMENT
hereunder, a documentation fee of CAD5,000.
(b) All documents or information to be furnished to EDC by XXXXXX shall be
supplied at VELTRI's expense. XXXXXX hereby agrees to pay, on demand,
all costs and expenses incurred by EDC subsequent to the execution of
this AGREEMENT in connection with the transaction contemplated hereby
including, without limitation, in connection with the amendment or
operation of, or preservation of rights under or enforcement of this
AGREEMENT and the other documents contemplated hereby.
(c) As a stand-by fee, XXXXXX will pay, in CANADIAN DOLLARS to EDC 1/8 of
1% of the remainder (the "REMAINDER") of the amount then available for
financing hereunder pursuant to Section 3.01(a) less (i) the
aggregate amount advanced and remaining unpaid pursuant to
APPLICATIONS FOR INITIAL FINANCING and APPLICATION FOR ADDITIONAL
FINANCING FOR NEW AND/OR EXISTING XXXXXX PURCHASE ORDERS and (ii) the
aggregate amount committed for financing pursuant to outstanding
APPLICATIONS FOR INITIAL FINANCING and APPLICATION FOR ADDITIONAL
FINANCING FOR NEW AND/OR EXISTING XXXXXX PURCHASE ORDERS and not yet
advanced, computed from and including the date of this AGREEMENT, up to
and including the date this AGREEMENT is terminated and all financing
approved (prior to such termination) under APPLICATIONS FOR INITIAL
FINANCING and APPLICATION FOR ADDITIONAL FINANCING FOR NEW AND/OR
EXISTING XXXXXX PURCHASE ORDERS has been fully advanced. The stand-by
fee is due and payable and calculated quarterly in arrears on June 1,
September 1, December 1 and March 1 of each year during the existence
of this AGREEMENT and until this AGREEMENT has been terminated on
December 31, 1998, unless otherwise extended by EDC. The stand-by
fee is calculated on the basis of the actual number of days elapsed
divided by 365. Notwithstanding the foregoing, for administrative
efficiency, XXXXXX will pay the stand-by fee based on the REMAINDER as
at thirty (30) days prior to the relevant June 1, September 1, December
1 or March 1 and adjustments for any underpayment or overpayment, as
the case may be, will be made on the next following June 1, September
1, December 1, or March 1.
(d) EDC acknowledges receipt of a set up fee of CAD5,000.
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ARTICLE XI
NOTICE
SECTION 11.01 - NOTICE
Every notice, demand, request, consent, approval, waiver or agreement to be
given or made hereunder shall, save as otherwise herein specifically provided,
be in writing and shall be delivered by hand or sent by prepaid air mail or
telefax, and shall be deemed to have been given and received, if delivered by
hand, upon delivery, if sent by mail, the fifth day (excluding Saturdays and
Sundays) following the date of mailing, and, if sent by telefax, the second day
(excluding Saturdays and Sundays) following the date of transmission. The
mailing address and telefax numbers of XXXXXX and EDC for such purposes shall
respectively be:
for XXXXXX,
XXXXXX METAL PRODUCTS CO.
000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxx, Xxxxxxxx 00000
Attention: Chief Financial Officer
Telefax: (000) 000-0000
for EDC,
EXPORT DEVELOPMENT CORPORATION
000 X'Xxxxxx Xxxxxx
Xxxxxx, Xxxxxx X0X 0X0
Attention: Loans Operations
Telefax: (000) 000-0000
or such other mailing or telefax number as to which XXXXXX or EDC may, for
itself, from time to time notify the other as aforesaid.
ARTICLE XII
PROPER LAW AND JURISDICTION
SECTION 12.01 - PROPER LAW
This AGREEMENT shall be deemed to be made under and shall be governed by and
construed in accordance with the laws of the Province of Ontario and the federal
laws of Canada applicable in such Province.
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ARTICLE XIII
SUCCESSORS AND ASSIGNS
SECTION 13.01 - SUCCESSORS AND ASSIGNS
This AGREEMENT shall be binding upon XXXXXX and its successors and assigns, and
the benefit hereof shall extend to EDC and its successors and assigns. XXXXXX
may not assign or transfer all or any part of its rights or obligations
hereunder. EDC may assign or transfer all or part of its rights and obligations
hereunder. EDC may also obtain at any time the participation of a person to
guarantee the obligations of XXXXXX hereunder or to lend all or part of the loan
facility amount set out in Section 3.01(a) hereof.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.01 - MISCELLANEOUS
(a) XXXXXX shall give further assurances and do, execute and perform all
such acts, deeds, documents and things as may be required to give EDC
the full benefit and effect of, or intended by, this AGREEMENT.
(b) No term, condition or provision hereof or any right hereunder, or in
respect thereof, shall be deemed to have been waived by the benefited
party, except by express written waiver signed by such party, all such
waivers to extend only to the particular circumstances therein
specified. No agreement or undertaking purporting to amend or modify
this AGREEMENT or any of its terms, conditions or provisions or any
rights or liabilities hereunder shall be effective or binding unless
in writing and signed by EDC and XXXXXX.
(e) No action or omission on the part of EDC in exercising or failing to
exercise its rights hereunder or in connection with or arising from the
BORROWER OBLIGATIONS or any part thereof shall make EDC liable to
XXXXXX for any loss thereby occasioned to XXXXXX other than by virtue
of EDC's breach of covenant under Section 4.04.
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SECTION 14.02 - COUNTERPARTS
This AGREEMENT may be executed in any number of counterparts, each of which
shall be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument.
IN WITNESS WHEREOF the parties hereto have signed and delivered this AGREEMENT,
this day of , 1997.
XXXXXX METAL PRODUCTS CO.
Signature: Xxxxx X. Xxxxxxxx, V.P.
(Print Name:) Xxxxx X. Xxxxxxxx
EXPORT DEVELOPMENT CORPORATION
Signature:
(Print Name:)
Signature:
(Print Name:)
