EXHIBIT 10(dd)
CARSEN GROUP INC.
as Borrower
and
NATIONAL BANK OF CANADA
as Lender
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AMENDED AND RESTATED LOAN AGREEMENT
AUGUST 1, 2003
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STIKEMAN ELLIOTT LLP
TABLE OF CONTENTS
ARTICLE 1
INTERPRETATION
Section 1.1 Defined Terms............................................................................1
Section 1.2 Gender and Number.......................................................................21
Section 1.3 Headings, etc...........................................................................21
Section 1.4 Currency................................................................................21
Section 1.5 Certain Phrases, etc....................................................................21
Section 1.6 Accounting Terms........................................................................21
Section 1.7 Calculations with respect to Permitted Acquisitions.....................................21
Section 1.8 Incorporation of Schedules..............................................................22
Section 1.9 Conflict................................................................................22
Section 1.10 Certificates............................................................................22
ARTICLE 2
LOAN FACILITY
Section 2.1 Availability............................................................................22
Section 2.2 Commitments and Facility Limits.........................................................22
Section 2.3 Use of Proceeds.........................................................................23
Section 2.4 Mandatory Repayments and Reductions of Commitments......................................23
Section 2.5 Mandatory Prepayment Where Borrowing Base Deficiency....................................23
Section 2.6 Optional Prepayments and Reductions of Commitments......................................24
Section 2.7 Changes to Applicable Margins...........................................................25
Section 2.8 Fees....................................................................................25
Section 2.9 Payments under this Agreement...........................................................26
Section 2.10 Application of Payments and Prepayments.................................................26
Section 2.11 Computations of Interest and Fees.......................................................27
ARTICLE 3
ADVANCES
Section 3.1 Advances................................................................................28
Section 3.2 Procedure for Borrowing.................................................................28
Section 3.3 Conversions and Elections Regarding Advances............................................28
Section 3.4 Circumstances Requiring Prime Rate Pricing..............................................29
Section 3.5 Interest on Advances....................................................................31
ARTICLE 4
BANKERS' ACCEPTANCES
Section 4.1 Acceptances and Drafts..................................................................31
Section 4.2 Form of Drafts..........................................................................32
(i)
Section 4.3 Procedure for Drawing...................................................................32
Section 4.4 Presigned Draft Forms...................................................................32
Section 4.5 Payment, Conversion or Renewal of BA Instruments........................................33
Section 4.6 Circumstances Making Bankers' Acceptances Unavailable...................................34
ARTICLE 5
DOCUMENTARY CREDITS
Section 5.1 Documentary Credits.....................................................................34
Section 5.2 Reimbursements of Amounts Drawn.........................................................34
Section 5.3 Fees....................................................................................34
Section 5.4 Documentary Credits Outstanding Upon Default............................................35
ARTICLE 6
FOREIGN EXCHANGE CONTRACTS
Section 6.1 Foreign Exchange Hedging Contracts......................................................35
Section 6.2 Notice of Hedging Arrangements..........................................................35
Section 6.3 Indemnification.........................................................................36
Section 6.4 Obligations Absolute....................................................................36
Section 6.5 Deemed Advances.........................................................................36
Section 6.6 Repayments..............................................................................37
ARTICLE 7
CONDITIONS OF LENDING
Section 7.1 Restatement.............................................................................38
Section 7.2 Conditions Precedent to Accommodations and Conversions..................................40
Section 7.3 No Waiver...............................................................................41
ARTICLE 8
REPRESENTATIONS AND WARRANTIES
Section 8.1 Representations and Warranties..........................................................41
Section 8.2 Survival of Representations and Warranties..............................................48
ARTICLE 9
COVENANTS OF THE BORROWER
Section 9.1 Affirmative Covenants...................................................................48
Section 9.2 Negative Covenants......................................................................53
Section 9.3 Financial Covenants.....................................................................58
Section 9.4 Security Covenants......................................................................59
(ii)
ARTICLE 10
EVENTS OF DEFAULT
Section 10.1 Events of Default.......................................................................60
Section 10.2 Remedies Upon Default...................................................................63
ARTICLE 11
MISCELLANEOUS
Section 11.1 Review of Agreement.....................................................................63
Section 11.2 Amendments, etc.........................................................................63
Section 11.3 Waiver..................................................................................63
Section 11.4 Evidence of Debt and Accommodation Notices..............................................64
Section 11.5 Notices, etc............................................................................64
Section 11.6 Costs, Expenses and Indemnity...........................................................65
Section 11.7 Taxes and Other Taxes...................................................................67
Section 11.8 Successors and Assigns..................................................................69
Section 11.9 Right of Set-off........................................................................69
Section 11.10 Judgment Currency.......................................................................70
Section 11.11 Interest on Amounts.....................................................................70
Section 11.12 Governing Law...........................................................................71
Section 11.13 Counterparts............................................................................71
Section 11.14 Facsimile Signatures....................................................................71
Section 11.15 Consent to Jurisdiction.................................................................71
ADDENDA
SCHEDULE "A" BORROWING BASE CERTIFICATE
SCHEDULE "B" FORM OF COMPLIANCE CERTIFICATE
APPENDIX 2(a)
APPENDIX 2(b)
APPENDIX 2(c)
APPENDIX 3(a)
SCHEDULE 3.2(1) FORM OF BORROWING NOTICE
SCHEDULE 3.3(3) FORM OF ELECTION NOTICE
SCHEDULE 4.1(2) NOTICE PERIODS AND AMOUNTS
SCHEDULE 4.3(1) FORM OF DRAWING NOTICE
SCHEDULE 6.2(1) FORM OF HEDGING ARRANGEMENT NOTICE
SCHEDULE 7.1(d)(iii) LOAN DOCUMENTS
SCHEDULE 8.1(a) PROPERTIES
SCHEDULE 8.1(n) ENVIRONMENTAL MATTERS
SCHEDULE 8.1(p) CORPORATE STRUCTURE
SCHEDULE 8.1(x)(i) LOCATION OF ASSETS AND BUSINESS
SCHEDULE 8.1(x)(ii) MATERIAL AUTHORIZATIONS
(iii)
SCHEDULE 8.1(x)(iii) INTELLECTUAL PROPERTY
SCHEDULE 8.1(x)(iv) LITIGATION
SCHEDULE 8.1(x)(v) PENSION PLANS
SCHEDULE 8.1(x)(vi) MATERIAL AGREEMENTS
SCHEDULE 9.2(a) PERMITTED DEBT
SCHEDULE 9.2(b) PERMITTED LIENS
SCHEDULE 9.2(i) EMPLOYEE LOANS
(iv)
AMENDED AND RESTATED
LOAN AGREEMENT
Amended and Restated
Loan Agreement dated August 1, 2003, between Carsen
Group Inc. as Borrower and National Bank of Canada as Lender.
RECITALS:
(a) The Borrower and the Lender are party to a
loan agreement dated
September 7, 2001, pursuant to which the Lender made an operating
facility available to the Borrower.
(b) The Borrower is desirous of acquiring Biolab Equipment Ltd., Biolab
Equipment Canada Ltd. and Biolab Equipment Quebec Ltd. and has
requested that the Lender (i) consent to such acquisition and (ii)
increase the Operating Commitment to fund a portion of the purchase
price of the Biolab Acquisition.
(c) The Lender has agreed to consent to the Biolab Acquisition and the
increase to the Operating Commitment on the terms and conditions set
out herein.
(d) The parties wish to amend and restate in its entirety the Existing
Loan Agreement.
In consideration of the foregoing and other good and valuable consideration
(the receipt and adequacy of which are hereby acknowledged), the parties agree
as follows:
ARTICLE 1
INTERPRETATION
SECTION 1.1 DEFINED TERMS.
As used in this Agreement, the following terms have the following meanings:
"ACCOMMODATION" means (i) an Advance made by the Lender on the occasion of
any Borrowing, (ii) the creation and purchase of Bankers' Acceptances or
the purchase of completed Drafts by the Lender on the occasion of any
Drawing, (iii) the issue of a Documentary Credit by the Lender on the
occasion of any Issue and (iv) the provision of any Foreign Exchange
Hedging Arrangement by the Lender (each of which is a "TYPE" of
Accommodation).
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"ACCOMMODATION NOTICE" means a Borrowing Notice, a Drawing Notice, an Issue
Notice, an Election Notice or a Notice of Foreign Exchange Hedging
Arrangement, as the case may be.
"ACCOMMODATIONS OUTSTANDING" means an amount equal to the sum of (i) the
aggregate principal amount of all outstanding Advances made by the Lender,
(ii) the aggregate Face Amount of all outstanding Bankers' Acceptances and
completed Drafts which the Lender has purchased, and (iii) the aggregate
Face Amount of all Documentary Credits for which the Lender is contingently
liable. In determining Accommodations Outstanding, the foregoing amounts
shall be expressed in Canadian dollars and each relevant U.S. Dollar amount
shall be converted, for purposes of such calculation, into its Equivalent
Cdn. $ Amount, as of the relevant day.
"ADVANCES" means any advances made by the Lender under Article 3 and
"ADVANCE" means any one of such advances. Advances are denominated in
Canadian Dollars (a "CANADIAN DOLLAR ADVANCE") or in U.S. Dollars (a "U.S.
DOLLAR ADVANCE"). A Canadian Dollar Advance is designated a "CANADIAN PRIME
RATE ADVANCE" and a U.S. Dollar Advance may be designated a "EURODOLLAR
RATE ADVANCE" or a "BASE RATE (CANADA) ADVANCE". Canadian Prime Rate
Advances and Base Rate (Canada) Advances are referred to, collectively, as
"FLOATING RATE ADVANCES". Each of a Eurodollar Rate Advance, a Canadian
Prime Rate Advance and a Base Rate (Canada) Advance is a "TYPE" of Advance.
"AFFILIATE" has the meaning specified in the BUSINESS CORPORATIONS ACT
(
Ontario) on the date of this Agreement.
"AGREEMENT" means this amended and restated
loan agreement and all
schedules and instruments in amendment or confirmation of it; and the
expressions "ARTICLE" and "SECTION" followed by a number mean and refer to
the specified Article or Section of this Agreement.
"ANNUAL BUSINESS PLAN" means, in respect of the Borrower or Cantel, as the
case may be, for any Fiscal Year, (i) quarterly detailed pro-forma
consolidated balance sheets, statements of earnings and statements of cash
flows of the Borrower and the Restricted Subsidiaries, or Cantel, as the
case may be, prepared in accordance with GAAP, as approved by the board of
directors of the Borrower or Cantel, as the case may be, and (ii) a capital
expenditure program setting forth Capital Expenditures proposed to be made
in the Fiscal Year.
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"APPLICABLE MARGIN" means, at any time and from time to time, a percentage
per annum determined by reference to the table set forth below and on the
basis of Cantel's Consolidated Debt to EBITDA at such time:
APPLICABLE MARGIN FOR ACCOMMODATIONS
CANADIAN EURODOLLAR BASE RATE DRAWING
RATIO OF CANTEL'S CONSOLIDATED PRIME RATE RATE (CANADA) PRICE
DEBT TO EBITDA MARGIN MARGIN MARGIN MARGIN
Greater than 2.0 to 1.0 1.375% 3.00% 1.625% 3.00%
Greater than 1.75 to 1.0 but less than or 1.125% 2.75% 1.375% 2.75%
equal to 2.0 to 1.0
Greater than 1.50 to 1.0 but less than or 0.875% 2.50% 1.125% 2.50%
equal to 1.75 to 1.0
Greater than 1.00 to 1.00 but less than 0.625% 2.25% 0.875% 2.25%
or equal to 1.5 to 1.0
Equal to or less than 1.0 to 1.0 0.125% 1.75% 0.375% 1.75%
The ratio of Cantel's Consolidated Debt to EBITDA shall be determined three
Business Days after the date on which the Lender receives financial
statements for each Fiscal Quarter of the Borrower pursuant to Section
9.1(b) and a Compliance Certificate. If the Borrower has not submitted to
the Lender the Compliance Certificate as and when required under Section
9.1(b) as the case may be, the Applicable Margin shall be, irrespective of
the actual ratio of Cantel's Consolidated Debt to EBITDA, the highest rate
set forth above for the applicable Type of Advance and for so long as such
information has not been received by the Lender. The Applicable Margin
shall be adjusted, if applicable, as of the first day of the month
following the date of receipt of the Compliance Certificate, or the
determination described in the preceding sentence, in the manner provided
in Section 2.7.
"ASSIGNEE" has the meaning specified in Section 11.8(3).
"BANKERS' ACCEPTANCE" means either (i) a xxxx of exchange within the
meaning of the BILLS OF EXCHANGE ACT (Canada) or (ii) a depository note
within the meaning of the DBNA, in each case issued by a Borrower and
denominated in Canadian Dollars, which are accepted and purchased by the
Lender at the request of a Borrower pursuant to Article 4.
"BA INSTRUMENTS" means, collectively, Bankers' Acceptances and Drafts, and,
in the singular, any one of them.
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"BASE RATE (CANADA)" means, at any time, the rate of interest per annum
equal to the greater of (i) the rate which the principal office of the
National Bank of Canada in Toronto,
Ontario announces from time to time as
the reference rate of interest for loans in U.S. Dollars to Canadian
borrowers, and (ii) the Federal Funds Rate plus 0.50 of 1%, adjusted
automatically with each change in such rates all without the necessity of
any notice to the Borrower or any other Person.
"BENEFICIARY" means, in respect of any Documentary Credit, the beneficiary
named in the Documentary Credit.
"BIOLAB ACQUISITION" means the acquisition by the Borrower or a subsidiary
of the Borrower of all of the shares in the capital of the Biolab Group of
Companies.
"BIOLAB GROUP OF COMPANIES" means Biolab Equipment Ltd., Biolab Equipment
Canada Ltd. and Biolab Equipment Quebec Ltd.
"BORROWER" means, at any time, Carsen Group Inc. and its successors and
permitted assigns.
"BORROWER'S ACCOUNTS" means the Borrower's Canadian Dollar and U.S. Dollar
accounts maintained by the Lender at its principal office, the particulars
of which shall have been notified by the Lender to the Borrower, and a
reference to a "BORROWER'S CANADIAN DOLLAR ACCOUNT" and "BORROWER'S U.S.
DOLLAR ACCOUNT" means a reference to either one of them, as the context so
requires.
"BORROWING" means a borrowing consisting of one or more Advances.
"BORROWING BASE" means, subject to the next following sentence, at any
time, the sum of (i) 85% of Eligible Accounts Receivable of the Borrower
and each Designated Restricted Subsidiary, plus (ii) 50% of the aggregate
value (computed at the lower of cost (in accordance with the Borrower's
past practices) and current market value) of Eligible Inventory of the
Borrower and each Designated Restricted Subsidiary, less (iii) Priority
Accounts Payable, at such time. The contribution to the Borrowing Base of a
Designated Restricted Subsidiary which is incorporated or created under the
laws of the United States of America will be the lesser of (i) its
Borrowing Base as calculated pursuant to the foregoing sentence, and (ii)
the sum of (y) the outstanding principal amount of all loans by the
Borrower to the Designated Restricted Subsidiary at the time of calculation
which have been made with the proceeds of Accommodations from the Lender,
and (z) the
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tangible net worth of the Designated Restricted Subsidiary at the time of
calculation.
"BORROWING BASE CERTIFICATE" means a certificate of the Borrower,
substantially in the form of Schedule ERROR! REFERENCE SOURCE NOT FOUND.,
mathematically computing the Borrowing Base and signed on behalf of the
Borrower by its chief financial officer or any other officer acceptable to
the Lender.
"BORROWING NOTICE" has the meaning specified in Section 3.2.
"BUSINESS" means the business of the Borrower consisting of the marketing,
distribution and servicing of medical equipment (including flexible and
rigid endoscopes and infection prevention and control products), precision
instruments (including microscopes and high performance image analysis
hardware and software) and industrial equipment.
"BUSINESS DAY" means any day of the year, other than a Saturday, Sunday or
other day on which banks are required or authorized to close in Toronto,
Ontario and, where used in the context of (i) a Eurodollar Rate Advance,
also a day on which banks are not required or authorized to close in New
York City and dealings are carried on in the London interbank market, and
(ii) a Base Rate (Canada) Advance, also a day on which banks are not
required or authorized to close in New York City.
"CANADIAN DOLLARS", and "CDN.$" each means lawful money of Canada.
"CANADIAN PRIME RATE" means, at any time, the greater of (i) the per annum
rate of interest quoted, published and commonly known as the "PRIME RATE"
of the Lender which the Lender establishes at its main office in Toronto,
Ontario as the reference rate of interest in order to determine interest
rates for loans in Canadian Dollars to Canadian borrowers, adjusted
automatically with each quoted or published change in such rate, all
without the necessity of any notice to the Borrower or any other Person,
and (ii) the sum of (y) the average of the rates per annum for Canadian
Dollar bankers' acceptances having a term of 30 days that appears on the
Reuters Screen CDOR Page as of 10:00 a.m. (Toronto time) on the date of
determination, as reported by the Lender (and if such screen is not
available, any successor or similar service as may be selected by the
Lender), and (z) 0.75%.
"CANTEL" means
Cantel Medical Corp.
"CANTEL ACKNOWLEDGEMENT" means, collectively, the letters from Cantel to
the Lender dated September 7, 2001 and [AUGUST 1, 2003] acknowledging the
6
Borrower's obligation to make certain deliveries in connection with
financial matters relating to Cantel pursuant to this Agreement.
"CANTEL'S CONSOLIDATED DEBT TO EBITDA" means, at any time, the ratio
determined by reference to and in the manner provided for in the Parent
Facility of Consolidated Debt (as defined in the Parent Facility) to EBITDA
(as defined in the Parent Facility).
"CAPITAL EXPENDITURES" means expenditures by a Person made for the
purchase, lease or acquisition of assets (other than current assets)
required to be capitalized and related to plant, property, equipment,
intellectual property and other long term capitalized assets in accordance
with GAAP.
"CASH EQUIVALENTS" has the meaning specified in Section 9.2(i).
"CASHFLOW" means, for any period, Net Income increased, to the extent
deducted in calculating Net Income, by the sum of (i) Interest Charges,
(ii) all deferred expenses of the Borrower and its Restricted Subsidiaries,
(iii) Depreciation Expense, (iv) any other non-cash expenses and (v)
unusual or non-recurring non-cash charges which require an accrual of, or a
reserve for, cash charges for any future period and decreased by (vi) all
cash payments during such period relating to non-cash charges of the type
described in (i) through (v) above which were added back in any prior
period, (vii) dividends, (viii) inter-company advances made by the Borrower
to Cantel and (ix) Capital Expenditures which are not funded from
incurrence of Debt, all as determined on a consolidated basis in accordance
with GAAP.
"CHANGE OF CONTROL" means Cantel ceases to own 100% of the outstanding
share capital of the Borrower.
"COLLATERAL" means any and all property and assets in respect of which the
Lender has or will have a Lien pursuant to a Security Document.
"COMMITMENT" means, at any time, in respect of (i) the Operating Facility,
the Operating Commitment; and (ii) the Foreign Exchange Hedging Facility,
the Foreign Exchange Commitment.
"COMPLIANCE CERTIFICATE" means a certificate of the Borrower substantially
in the form of Schedule ERROR! REFERENCE SOURCE NOT FOUND. signed on its
behalf by its chief financial officer or any other officer acceptable to
the Lender.
"CURRENT ASSETS" means, at any time, all current assets of the Borrower and
its Restricted Subsidiaries, excluding any intercompany advances, the
current portion of deferred costs, or any other assets of doubtful or
intangible nature, determined on a consolidated basis as of such time in
accordance with GAAP.
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"CURRENT LIABILITIES" of any Person means (a) Debt of such Person, except
Funded Debt, that by its terms is payable on demand or matures within one
year after the date of determination (excluding any Debt renewable or
extendible, at the option of such Person, to a date more than one year from
such date or arising under a revolving credit or similar agreement that
obligates the lender or lenders to extend credit during a period of more
than one year from such date), (b) all amounts of Funded Debt of such
Person required to be paid or prepaid within one year after such date, and
(c) all other items (including taxes accrued as estimated and excluding
Funded Debt) that in accordance with GAAP would be classified as current
liabilities of such Person.
"DBNA" means the DEPOSITORY BILLS AND NOTES ACT (Canada).
"DEBT" of any Person means (i) all indebtedness of such Person for borrowed
money, including borrowings of commodities, bankers' acceptances, letters
of credit or letters of guarantee, (ii) all indebtedness of such Person for
the deferred purchase price of property or services represented by a note,
bond, debenture or other evidence of Debt, (iii) all indebtedness created
or arising under any conditional sale or other title retention agreement
with respect to property acquired by such Person (even though the rights
and remedies of the seller or lender under such agreement in the event of
default are limited to repossession or sale of such property), (iv) all
current liabilities of such Person represented by a note, bond, debenture
or other instruments evidencing Debt, and (v) all obligations under leases
which have been or should be, in accordance with GAAP, recorded as capital
leases in respect of which such Person is liable as lessee but for greater
certainty, excludes operating leases.
"DEBT SERVICE" means, for any period, the aggregate of (i) all Interest
Charges, and (ii) all regularly scheduled principal, capital lease or other
payments on account of Debt, in each case for such period.
"DEFAULT" means an event which, with the giving of notice or passage of
time, or both, would constitute an Event of Default.
"DEPRECIATION EXPENSE" means, for any period, depreciation, amortization
and other non-cash expenses of the Borrower and its Restricted Subsidiaries
which reduce Net Income for such period, determined on a consolidated basis
in accordance with GAAP.
"DESIGNATED RESTRICTED SUBSIDIARY" has the meaning specified in Section
2.5(2) and includes each of the Biolab Group of Companies.
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"DISTRIBUTION" has the meaning specified in Section 9.2(h).
"DOCUMENTARY CREDIT" means a commercial letter of credit, standby letter of
credit or letter of guarantee (each of which is a "TYPE" of Documentary
Credit) issued or to be issued by the Lender for the account of the
Borrower pursuant to Article 5.
"DOCUMENTARY CREDIT DEPOSIT AMOUNT" has the meaning specified in Section
5.4.
"DRAFT" means, at any time, a xxxx of exchange, within the meaning of the
BILLS OF EXCHANGE ACT (Canada) or a depository note within the meaning of
the DBNA, drawn by the Borrower on the Lender and bearing such
distinguishing letters and numbers as the Lender may determine, but which
at such time has not been completed as the payee or accepted by the Lender.
"DRAWING" means the creation and purchase of Bankers' Acceptances by the
Lender pursuant to Article 4.
"DRAWING DATE" means any Business Day fixed for a Drawing pursuant to
Section 4.3.
"DRAWING NOTICE" has the meaning specified in Section 4.3(1).
"DRAWING PRICE" means, in respect of Bankers' Acceptances or Drafts to be
purchased by the Lender, the difference between (i) the result (rounded to
the nearest whole cent with one-half of one cent being rounded up) obtained
by dividing the aggregate Face Amount of the Bankers' Acceptances or Drafts
by the sum of one plus the product of (x) the Reference Discount Rate
multiplied by (y) a fraction the numerator of which is the number of days
in the term of maturity of the Bankers' Acceptances and the denominator of
which is 365, and (ii) the Applicable Margin.
"EBITDA" means, for any period Net Income increased, to the extent deducted
in calculating Net Income, by the sum of (i) Interest Charges, (ii) all
income taxes of the Borrower and its Restricted Subsidiaries paid or
accrued in accordance with GAAP for such period (other than income taxes
attributable to extraordinary, unusual or nonrecurring gains or losses or
taxes attributable to sales or dispositions outside the normal course of
business), (iii) Depreciation Expense, and (iv) minority interest in
earnings of subsidiaries or any equity loss, and decreased by (v) any
non-cash items increasing Net Income for such period, (vi) all cash
payments during such period relating to non-cash charges which were added
back in determining EBITDA in any prior period, and (vii) unusual or
non-recurring non-cash charges which require an accrual of, or a reserve
for, cash charges for any
9
future period, all as determined on a consolidated basis in accordance with
GAAP.
"ELECTION NOTICE" has the meaning specified in Section 3.3(3).
"ELIGIBLE ACCOUNTS RECEIVABLE" means amounts owing by account debtors to
the Borrower or any Designated Restricted Subsidiary by reason of sales of
inventory, servicing and maintaining products and rental of equipment, in
either case, in the ordinary course of business other than accounts
receivable which are: (i) due or unpaid more than 90 days after their due
date and in no case longer than 120 days from the date of the original
invoice issued by the Borrower with respect to the sale giving rise
thereto; (ii) derived from a sale by the Borrower or such Designated
Restricted Subsidiary not made in the ordinary course of the business or to
a person, firm or corporation which is an Affiliate of the Borrower or any
Designated Restricted Subsidiary; (iii) in dispute to the extent of the
amount in dispute; (iv) subject to any right of set-off by the account
debtor, and that account debtor has not entered into an agreement with the
Lender with respect to set-offs; or the account debtor has disputed
liability, or made any claim with respect to any other receivable due from
such account debtor to the Borrower or such Designated Restricted
Subsidiary, in which case, the receivable shall be ineligible to the extent
of such dispute, claim, and/or set-off; (v) owed by an account debtor who
has filed a petition for bankruptcy or any other petition for relief under
bankruptcy, insolvency, or arrangement legislation, made an assignment for
the benefit of creditors, or against whom any petition or other application
for relief under bankruptcy, insolvency or arrangement legislation has been
filed or who has failed, suspended its business operations, become
insolvent, or suffered a receiver or a trustee in bankruptcy to be
appointed for any of its assets or affairs; (vi) owed by an account debtor
who is resident outside of Canada, unless (x) the sale is on Letter of
Credit or acceptance terms acceptable to the Lender, (y) the receivables
have been guaranteed by Export Development Corporation or otherwise covered
by insurance on terms satisfactory to the Lender; or (z) the Lender, has a
perfected security interest in such accounts receivable where the account
debtor resides; (vii) arising out of a sale which is on a xxxx-and-hold,
sale-and-return, sale-on-approval, consignment, or any other re-purchase or
return basis (excluding the Borrower's policy of accepting the return of
defective products); (viii) one which the Lender believes acting reasonably
may not be paid by reason of the account debtor's financial inability to
pay; (ix) owed by an account debtor who has exceeded a credit limit
determined by the Lender acting reasonably on the basis of the credit
policy and credit information of the Borrower or such Designated Restricted
Subsidiary in respect of such account debtor, at any time or times
hereafter to the extent that such receivable exceeds such
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limit; or (x) not subject to a duly perfected security interest in favour
of the Lender ranking in priority to all other security interests except
Permitted Liens;
"ELIGIBLE INVENTORY" means at any time, the value of all of the Borrower's
Inventory (determined on a consolidated basis, with reference to Designated
Restricted Subsidiaries, if applicable), valued on a first-in first-out
basis in accordance with GAAP at the lower of the Borrower's cost thereof
or the net realizable value thereof, including inventory which has not been
delivered to the Borrower or Designated Restricted Subsidiary, as the case
may be, within the preceding 30 days but in respect of which payment has
been made or the supplier has waived or lost its rights to repossession
under the BANKRUPTCY AND INSOLVENCY ACT (Canada); provided, however, that
none of the following categories of inventory shall be taken into account
in determining Eligible Inventory: (i) any inventory which is not subject
to a duly perfected security interest in favour of the Lender ranking in
priority to all security interests, except Permitted Liens; (ii) any
inventory which is subject to a title retention agreement in favour of the
vendor thereof; (iii) any inventory situated outside of Canada other than
inventory in transit to Canada; (iv) any inventory which the Lender
believes, acting reasonably, may not have material value to the Lender if
the Lender is required to realize thereon pursuant to the Security
Documents; (v) inventory in the possession of sales people or customers for
the purpose of demonstration or on loan to such Person in connection with
the Borrower's standard sale process; (vi) inventory in the possession of
other Persons on a consignment basis; and (vii) any inventory that is work
in process.
"ENVIRONMENTAL LAWS" means all applicable laws, regulations, orders,
judgments, decisions of and agreements with a Governmental Entity and all
other statutory requirements relating to public health or the protection of
the environment and all authorizations, permits, consents, registrations
and approvals issued pursuant to such laws, agreements or statutory
requirements.
"ENVIRONMENTAL LIABILITIES" means all liabilities imposed by, under or
pursuant to Environmental Laws or which relate to the existence of
contaminants on, under or about the Properties and which, in accordance
with GAAP, must be disclosed in the consolidated financial statements of
the Borrower.
"EQUIVALENT CDN. $ AMOUNT" means, on any day with respect to any amount of
U.S. Dollars, the amount of Canadian Dollars which would be required to buy
such amount of U.S. Dollars using the wholesale rate quoted by the
11
Lender in accordance with its normal banking practice at approximately
12:00 noon (Toronto time) on the day.
"EQUIVALENT U.S. $ AMOUNT" means, on any day with respect to any amount of
Canadian Dollars, the amount of U.S. Dollars which would be required to buy
such amount of Canadian Dollars using the wholesale rate quoted by the
Lender in accordance with its normal banking practice at approximately
12:00 noon (Toronto time) on the day.
"EURODOLLAR INTEREST PERIOD" means, for each Eurodollar Rate Advance, a
period which commences (i) in the case of the initial Eurodollar Interest
Period, on the date the Advance is made or converted from another Type of
Accommodation, and (ii) in the case of any subsequent Eurodollar Interest
Period, on the last day of the immediately preceding Eurodollar Interest
Period, and which ends, in either case, on the day selected by the Borrower
in the applicable Borrowing Notice or Election Notice. The duration of each
Eurodollar Interest Period shall be 1, 2, 3, 6 or 12 months (or such
shorter or longer period as may be approved by the Lender), unless the last
day of a Eurodollar Interest Period would otherwise occur on a day other
than a Business Day, in which case the last day of such Eurodollar Interest
Period shall be extended to occur on the next Business Day, or if such
extension would cause the last day of such Eurodollar Interest Period to
occur in the next calendar month, the last day of such Eurodollar Interest
Period shall occur on the preceding Business Day.
"EURODOLLAR RATE" means, for each Eurodollar Interest Period for each
Eurodollar Rate Advance comprising part of the same Borrowing, an interest
rate per annum equal to the average (rounded upward to the nearest whole
multiple of 1/16 of 1% per annum) of the rates per annum which leading
banks in the London interbank markets shall quote and offer to the Lender
for placing deposits with the Lender in U.S. Dollars, at approximately
10:00 a.m. (London time), two Business Days before the first day of such
Eurodollar Interest Period, for a period comparable to the Eurodollar
Interest Period and in an amount approximately equal to the amount of the
Eurodollar Rate Advance.
"EVENT OF DEFAULT" has the meaning specified in Section 10.1.
"EXISTING
LOAN AGREEMENT" means the
loan agreement dated September 7, 2001
between the Borrower and the Lender.
"FACE AMOUNT" means (i) in respect of a BA Instrument, the amount payable
to the holder on its maturity, and (ii) in respect of a Documentary Credit,
the
12
maximum amount which the issuing Person is contingently liable to pay to
the Beneficiary.
"FEDERAL FUNDS RATE" means, for any day, a fluctuating interest rate per
annum equal to the weighted average of the rates on overnight United States
Federal funds transactions with members of the Federal Reserve System
arranged by United States Federal funds brokers, as published for the day
(or, if the day is not a Business Day, for the preceding Business Day) by
the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for the
day on such transactions received by the Lender from three United States
Federal funds brokers of recognized standing selected by it.
"FEES" means the fees payable by the Borrower under this Agreement.
"FINANCIAL ASSISTANCE" has the meaning specified in Section 9.2(i).
"FISCAL QUARTER" means a period of three consecutive months in each Fiscal
Year ending on October 31, January 31, April 30 and July 31, as the case
may be, of such year.
"FISCAL YEAR" means, in relation to the Borrower, its financial year
commencing on August 1 of each calendar year and ending on July 31 of the
immediately following calendar year.
"FOREIGN EXCHANGE COMMITMENT" means an amount not to exceed a Hedging Risk
Exposure of US$2,500,000 or the Equivalent Cdn. $ Amount.
"FOREIGN EXCHANGE HEDGING ARRANGEMENT" means any agreement under which the
Lender provides foreign exchange rate protection in respect of any currency
(other than Canadian Dollars) to the Borrower.
"FOREIGN EXCHANGE HEDGING FACILITY" means the foreign exchange hedging
facility to be made available to the Borrower under this Agreement for the
purpose specified in Section 2.3(2).
"FUNDED DEBT" means, with respect to the Borrower, the Accommodations
Outstanding, and with respect to the Borrower and the Restricted
Subsidiaries, all other Debt of such Persons that by its terms matures more
than one year after the date of determination or matures within one year
from such date but is renewable or extendible, at the option of such
Person, to a date more than one year after such date or arises under a
revolving credit or similar agreement that obligates the lender or lenders
to extend credit during a period of more than one year after such date,
including the current portion of all such Debt.
13
"GAAP" means, at any time, with respect to the Borrower, accounting
principles generally accepted in Canada as recommended in the Handbook of
the Canadian Institute of Chartered Accountants at the relevant time
applied on a consistent basis (except for changes made with the prior
written consent of the Lender and approved by the Borrower's independent
auditors in accordance with promulgations of the Canadian Institute of
Chartered Accountants), and with respect to Cantel, accounting principles
generally accepted in the United States.
"GOODS" means tangible personal property but excluding chattel paper,
documents of title, instruments, money and securities (as these terms are
defined in the PERSONAL PROPERTY SECURITY ACT (
Ontario) from time to time).
"GOVERNMENTAL ENTITY" means any (i) multinational, federal, provincial,
state, municipal, local or other government, governmental or public
department, central bank, court, commission, board, bureau, agency or
instrumentality, domestic or foreign, (ii) any subdivision or authority of
any of the foregoing, or (iii) any quasi-governmental or private body
exercising any regulatory, expropriation or taxing authority under or for
the account of any of the above.
"HEDGING RISK EXPOSURE" means, at any time, the greater of (i) 10% of the
Notional Amount of any Foreign Exchange Hedging Arrangement in respect of
any currency and (ii) any lump sum required to be paid by the Borrower as a
deposit or as collateral pursuant to the terms of any Foreign Exchange
Hedging Agreement.
"INDEMNIFIED PERSON" has the meaning specified in Section 11.6(1).
"INTEREST CHARGES" means, for any period, for the Borrower and its
Restricted Subsidiaries, the sum of (i) the aggregate amount of interest
expense (including imputed interest with respect to capitalized lease
obligations) incurred during such period on a consolidated basis in
accordance with GAAP, (ii) all capitalized interests during such period,
(iii) all deferred charges representing capitalized interest during such
period, (iv) the net amount payable (or less the net amount receivable) by
the Borrower and the Restricted Subsidiaries under any interest rate cap or
collar arrangements or similar arrangements during such period, and (v) the
aggregate of all purchase discounts relating to the sale of accounts
receivable in connection with any asset securitization program, all as
adjusted to reflect the impact of proceeds received from discontinued
operations, but excluding to the extent included in the foregoing all
amortized costs attributable to fees and closing costs paid by the Borrower
to the Lender in connection with the Loan Documents.
14
"INVENTORY" means all inventory now owned or hereafter acquired by the
Borrower or a Restricted Subsidiary, including (i) finished Goods, raw
materials, new and unused production, packaging and shipping supplies, (ii)
work in progress, (iii) all new and unused maintenance items, and (iv) all
other materials and supplies on hand to be used or consumed or which might
be used or consumed in the manufacture, packing, shipping, advertising,
selling, or furnishing of Goods.
"ISSUE" means an issue of a Documentary Credit by the Lender pursuant to
Article 5.
"LEASES" means the leases, subleases, rights to occupy and licences of real
property to which the Borrower or any of the Restricted Subsidiaries are a
party (i) at the date of this Agreement, as listed and described in
Schedule ERROR! REFERENCE SOURCE NOT FOUND., or (ii) after the date of this
Agreement as notified to the Lender pursuant to each Compliance
Certificate, but shall exclude (iii) leases, rights and licences terminated
in accordance with their terms (and not as the result of a default) or
assigned or otherwise disposed of after the date of this Agreement as
permitted by this Agreement.
"LENDER" means National Bank of Canada, its successors and assigns.
"LENDING LIMIT" has the meaning specified in Section 2.2(1).
"LIBOR ADVANCES" means Eurodollar Rate Advances.
"LIEN" means any mortgage, charge, pledge, hypothecation, security
interest, assignment, encumbrance, lien (statutory or otherwise), title
retention agreement or arrangement, restrictive covenant or other
encumbrance of any nature or any other arrangement or condition that in
substance secures payment or performance of an obligation.
"LOAN DOCUMENTS" means this Agreement, the BA Instruments, the Security
Documents, the Cantel Acknowledgement, the Foreign Exchange Hedging
Arrangements entered into between the Borrower and the Lender and all other
documents to be executed and delivered to the Lender by the Borrower and
the Restricted Subsidiaries.
"LOAN FACILITIES" means collectively, the Operating Facility and the
Foreign Exchange Hedging Facility, and, in the singular, either one of
them.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on the business,
operations, results of operations, prospects, assets, liabilities or
financial condition of the Borrower or any of the Restricted Subsidiaries.
15
"MATERIAL AGREEMENTS" means the agreements listed in Schedule ERROR!
REFERENCE SOURCE NOT FOUND. and any agreement, contract or similar
instrument to which the Borrower or any of the Restricted Subsidiaries is a
party or to which any of their property or assets may be subject for which
breach, non-performance, cancellation or failure to renew could reasonably
be expected to have a Material Adverse Effect.
"NET INCOME" means, for any period, the net income (loss) of the Borrower
and its Restricted Subsidiaries determined on a consolidated basis in
accordance with GAAP.
"NOTICE OF FOREIGN EXCHANGE HEDGING ARRANGEMENT" has the meaning specified
in Section 6.2(1).
"NOTIONAL AMOUNT" means the U.S. Dollar amount (or the Equivalent Cdn. $
Amount) under any Foreign Exchange Hedging Arrangement by reference to
which the obligations of the Borrower thereunder are determined.
"OPERATING COMMITMENT" means, at any time, in respect of the Operating
Facility, (i) for the period beginning on the Restatement Date and ending
on the first anniversary of the Restatement Date (the "FIRST ANNIVERSARY"),
up to U.S. $7,000,000;(ii) for the period beginning on the first day
following the First Anniversary and ending on the second anniversary of the
Restatement Date (the "SECOND ANNIVERSARY"), up to U.S.$6,000,000; (iii)
for the period beginning on the first day following the Second Anniversary
and ending on the Repayment Date, up to U.S.$5,000,000; in each case, as
reduced pursuant to Article 2;
"OPERATING FACILITY" means the operating revolving credit facility to be
made available to the Borrower under this Agreement for the purposes
specified in Section 2.3(1).
"ORIGINAL CURRENCY" has the meaning specified in Section 11.10(1).
"OTHER CURRENCY" has the meaning specified in Section 11.10(1).
"OTHER TAXES" has the meaning specified in Section 11.7(2).
"PARENT EVENT OF DEFAULT" means the occurrence of an Event of Default (as
defined in the Parent Facility) pursuant to the Parent Facility.
"PARENT FACILITY" means, collectively, the credit facilities provided to
Cantel by a syndicate of U.S. banks pursuant to a
loan agreement dated as
of September 7, 2001 among Cantel, the Lenders named therein, Fleet
National Bank, as Administrative Agent and PNC Bank, National Association,
as
16
Documentation Agent, as amended by the first amendment dated as of the date
hereof, as such agreement is further amended, supplemented, restated or
replaced from time to time.
"PAYMENT ACCOUNT" means an account maintained by the Borrower with the
Lender.
"PERMITTED ACQUISITION" means (i) the Biolab Acquisition, and (ii) an
acquisition by the Borrower or any Restricted Subsidiary of (a) the assets
constituting a business, division or product line of any Person engaging in
a business relating to the Business who is not a Related Party, or (b) 100%
of the issued and outstanding shares or ownership interests in the capital
of such Person, and which satisfies the following conditions:
(a) No Default or Event of Default exists at the time of the acquisition
or would exist after giving effect to it;
(b) The total cash and non-cash consideration to be paid in connection
with the acquisition (including assumed liabilities) is not in excess
of U.S. $1,000,000;
(c) The Borrower establishes to the satisfaction of the Lender pro-forma
compliance with the covenants contained in Article 9 after giving
effect to the acquisition;
(d) The acquisition could not reasonably be expected to cause or result in
a Material Adverse Effect or result in or create any material
contingent liabilities which are not in the ordinary course of
business (including contingent environmental, tax or other contingent
obligations).
"PERMITTED LIENS" means:
(a) Liens for taxes, assessments and governmental charges due and being
contested in good faith (and for the payment of which adequate
provision has been made) by appropriate proceedings;
(b) landlord Liens, construction Liens, and mechanics', workers',
repairers' or other like possessory Liens, arising in the ordinary
course of business for amounts the payment of which is either not
delinquent or is being contested in good faith (and for the payment of
which adequate provision has been made) by appropriate proceedings;
(c) Liens arising out of judgments or awards with respect to which at the
time an appeal or proceedings for review is being prosecuted in good
faith (and for the payment of which adequate provision has been
17
made) by appropriate proceedings and with respect to which there shall
have been secured a stay of execution pending such appeal or
proceeding for review;
(d) servitudes, easements, restrictions, rights-of-way and other similar
rights in real or immovable property or any interest therein, provided
the same are not of such nature as to materially adversely affect the
use of the property subject thereto by the Borrower;
(e) Liens for taxes due but for which notice of assessment has not been
given;
(f) Liens granted pursuant to the Loan Documents;
(g) Purchase Money Mortgages provided that the indebtedness secured
pursuant to such Purchase Money Mortgages shall not, in the aggregate,
exceed at any time Cdn. $150,000, and the renewal, extension or
refinancing of any such Purchase Money Mortgages provided that the
indebtedness secured thereby and the security therefor are not
increased thereby in excess of 110%;
(h) Liens granted pursuant to operating leases provided that such
operating leases are permitted pursuant to Section 9.2(m);
(i) leases on property pursuant to arrangements made with any Person
whereby property is sold or transferred to such Person and a lease is
entered into with respect to the property so sold or transferred or
other property substantially the same as such property so sold or
transferred provided that the indebtedness secured thereby shall not,
in the aggregate, exceed Cdn$150,000; and
(j) Liens, the existence of which have been consented to by the Lender and
which Liens are set out in Schedule ERROR! REFERENCE SOURCE NOT FOUND.
and inchoate Liens for amounts not yet due.
"PERSON" means a natural person, partnership, corporation, joint stock
company, trust, unincorporated association, joint venture or other entity
or Governmental Entity, and pronouns have a similarly extended meaning.
"PRIORITY ACCOUNTS PAYABLE" means, at any time, the amount owed by the
Borrower or any of the Restricted Subsidiaries or which they have an
obligation to remit to a Governmental Entity pursuant to any applicable
law, rule or regulation in respect of pension fund obligations,
unemployment insurance, goods and services taxes, sales taxes and other
taxes payable or to be remitted or withheld, workers' compensation and
other like charges and
18
demands, in respect of which any Governmental Entity may claim a security
interest, trust claim or other claim ranking or capable of ranking in
priority to the Security.
"PROPERTIES" means, collectively, the real properties forming the subject
matter of the Leases.
"PURCHASE MONEY MORTGAGE" means any security interest charging property
(other than accounts receivable or Inventory) acquired by the Borrower or a
Restricted Subsidiary, which is granted or assumed by the Borrower or a
Restricted Subsidiary or which arises by operation of law in favour of the
transferor concurrently with and for the purpose of the acquisition or
lease of such property, in each case where (i) in the case of an
acquisition of property, the principal amount secured by the security
interest is not in excess of 100% of the purchase price (after any
post-closing adjustment) of the property acquired, and (ii) in the case of
a lease of property, the amount secured by the security interest is not in
excess of the value of the asset leased, and (iii) such security interest
extends only to the property acquired or leased and its proceeds.
"REFERENCE DISCOUNT RATE" means, in respect of any Bankers' Acceptances or
Drafts to be purchased by the Lender pursuant to Article 4, the arithmetic
average of the discount rates (calculated on an annual basis and rounded to
the nearest one-hundredth of 1%, with five-thousandths of 1% being rounded
up) quoted by the Lender at 9:30 a.m. (Toronto time) as the discount rate
at which the Lender would purchase, on the relevant Drawing Date, its own
Bankers' Acceptances or Drafts having an aggregate Face Amount equal to and
with a term to maturity the same as the Bankers' Acceptances or Drafts to
be acquired by the Lender on the Drawing Date. If the discount rates cannot
be calculated on any Business Day on which they are required to be
calculated the applicable discount rate shall be the CDOR rate in effect on
such day for bankers' acceptances having a term to maturity the same as the
applicable Bankers' Acceptances.
"RELATED PARTY" means in respect of the Borrower or any Restricted
Subsidiary (i) a Person which alone or in combination with others holds a
sufficient number of securities or has contractual rights sufficient to
affect materially the control of the Borrower or Restricted Subsidiary,
(ii) a Person in respect of which a Person referred to in Section (i) alone
or in combination with others holds a sufficient number of securities or
has contractual rights sufficient to affect materially its control, (iii) a
Person in respect of which the Borrower or Restricted Subsidiary alone or
in combination with others holds a sufficient number of securities or has
contractual rights sufficient to affect materially its control, (iv) a
Person who beneficially owns, directly or
19
indirectly, voting securities of the Borrower or Restricted Subsidiary or
who exercises control or direction over voting securities of the Borrower
or Restricted Subsidiary or a combination of both carrying more than 10% of
the voting rights attached to all voting securities of the Borrower or
Restricted Subsidiary for the time being outstanding, (v) a director or
senior officer of the Borrower, Restricted Subsidiary or related party of
the Borrower or Restricted Subsidiary, or (vi) an Affiliate of any of the
foregoing.
"REPAYMENT DATE" means, in respect of the repayment of all Accommodations
made under each of the Operating Facility and the Foreign Exchange Hedging
Facility, September 7, 2006.
"RESTATEMENT DATE" means the date of execution of this Agreement.
"RESTRICTED SUBSIDIARIES" means any subsidiary, including any subsidiary
acquired pursuant to, or incorporated for the purposes of, a Permitted
Acquisition, which may from time to time become a guarantor of the
obligations of the Borrower under this Agreement and the other Loan
Documents provided that it has delivered to the Lender a guarantee and
security over all of its property and assets together with a favourable
opinion of counsel, all in form and substance satisfactory to the Lender.
"SECURITY" means, at any time, the encumbrances in favour of the Lender, in
the assets and properties of the Borrower or the Restricted Subsidiaries
securing their obligations under this Agreement and the other Loan
Documents.
"SECURITY DOCUMENTS" means the agreements described as such in Schedule
ERROR! REFERENCE SOURCE NOT FOUND. and any other security granted to the
Lender as security for the obligations of the Borrower and the Restricted
Subsidiaries under this Agreement and the other Loan Documents.
"SUBSIDIARY" has the meaning specified in the BUSINESS CORPORATIONS ACT
(
Ontario) on the date of this Agreement.
"SUBSIDIARIES" means the subsidiaries of the Borrower including, without
limitation, those identified as such in Schedule ERROR! REFERENCE SOURCE
NOT FOUND..
"TANGIBLE NET WORTH" means, at any time, with respect to the Borrower and
its Restricted Subsidiaries, (i) the total shareholders' equity (including
stated capital or equivalent account in respect of issued and outstanding
shares, retained earnings and contributed surplus, but excluding any
foreign exchange adjustment, treasury shares and any subscribed but
unissued shares) determined as of such time on a consolidated basis in
accordance with
20
GAAP, increased by (ii) deferred taxes, and decreased by (iii) amounts
attributable to that portion of any outstanding shares which, by their
terms (or by the terms of any security into which they are convertible or
for which they are exchangeable), or upon the happening of any event,
mature or are redeemable pursuant to a sinking fund obligation or
otherwise, or are redeemable for cash or debt at the sole option of the
holder on or prior to the Repayment Date, (iv) deferred charges; (v) loans
to officers, directors or shareholders; (vi) intercompany advances; (vii)
goodwill and (viii) any other assets of intangible value.
"TAXES" has the meaning specified in Section 11.7(1).
"TOTAL LIABILITIES" means at any time in respect of the Borrower and its
Restricted Subsidiaries the aggregate of all indebtedness, liabilities and
obligations of the Borrower and its Restricted Subsidiaries on a
consolidated basis which, in accordance with GAAP would be included in
determining total liabilities as shown in the liability section of the
balance sheet of the Borrower and its Restricted Subsidiaries, including,
without limitation, (i) all indebtedness for borrowed money including
borrowings of commodities, bankers' acceptances, letters of credit or
letters of guarantee, (ii) all indebtedness for the deferred purchase price
of property or services other than for goods and services purchased in the
ordinary course of business paid for and in accordance with customary
practice, (iii) indebtedness created or arising under any conditional sale
or other title retention agreement with respect to property acquired by the
Person (even though the rights and remedies of the seller or lender under
such agreement in the event of default are limited to repossession or sale
of such property), (iv) all current liabilities of such Person represented
by a note, bond, debenture or other evidence of debt, (v) all obligations
under leases which have been or should be, in accordance with GAAP,
recorded as capital leases, (vi) the aggregate amount at which any shares
in the capital of the Person which are retractable at the option of the
holder may be retracted provided all conditions precedent for such
retraction have been satisfied, and (vii) the maximum amount of all Total
Liabilities of the kind referred to in (i) to (v) of this definition which
is directly or indirectly guaranteed by the Borrower or a Restricted
Subsidiary or which the Borrower has agreed (contingently or otherwise) to
purchase or otherwise acquire, or in respect of which the Borrower or a
Restricted Subsidiary has otherwise assured a creditor or other Person
against loss (eliminating from such calculation where it is duplicative of
another Person's debt, any guarantee by a Restricted Subsidiary of the
Borrower's or another Restricted Subsidiary's obligations or any guarantee
by the Borrower of the obligation of a Restricted Subsidiary), provided
that there shall be subtracted therefrom (viii) deferred income taxes.
21
"UNRESTRICTED SUBSIDIARIES" has the meaning specified in Section 9.2(k).
"UNUSED OPERATING COMMITMENT" means, as of any date, the Operating
Commitment less the Accommodations Outstanding at such time.
"U.S. DOLLARS" AND "U.S. $" means lawful money of the United States of
America.
"UTILIZATION" has the meaning specified in Section 3.2(2).
SECTION 1.2 GENDER AND NUMBER.
Any reference in the Loan Documents to gender includes all genders and
words importing the singular number only include the plural and vice versa.
SECTION 1.3 HEADINGS, ETC.
The provision of a Table of Contents, the division of this Agreement into
Articles and Sections and the insertion of headings are for convenient reference
only and are not to affect the interpretation of this Agreement.
SECTION 1.4 CURRENCY.
All references in the Loan Documents to dollars, unless otherwise
specifically indicated, are expressed in Canadian currency.
SECTION 1.5 CERTAIN PHRASES, ETC.
In any Loan Document (i) (y) the words "including" and "includes" mean
"including (or includes) without limitation" and (z) the phrase "the aggregate
of", "the total of", "the sum of", or a phrase of similar meaning means "the
aggregate (or total or sum), without duplication, of", and (ii) in the
computation of periods of time from a specified date to a later specified date,
unless otherwise expressly stated, the word "from" means "from and including"
and the words "to" and "until" each mean "to but excluding".
SECTION 1.6 ACCOUNTING TERMS.
All accounting terms not specifically defined in this Agreement shall be
interpreted in accordance with GAAP.
SECTION 1.7 CALCULATIONS WITH RESPECT TO PERMITTED ACQUISITIONS.
If the Borrower or any Restricted Subsidiary has made a Permitted
Acquisition during a period relevant to the determination of EBITDA or Interest
Charges then:
(a) EBITDA and Interest Charges shall be calculated on a consolidated
basis from the date of the Permitted Acquisition; and
22
(b) Any indebtedness of any description incurred or assumed by the
Borrower or any Restricted Subsidiary in connection with the Permitted
Acquisition, or any indebtedness of any Person acquired, shall be
deemed to have been so incurred, assumed or acquired on the date of
the Permitted Acquisition.
SECTION 1.8 INCORPORATION OF SCHEDULES.
The schedules attached to this Agreement shall, for all purposes of this
Agreement, form an integral part of it.
SECTION 1.9 CONFLICT.
The provisions of this Agreement prevail in the event of any conflict or
inconsistency between its provisions and the provisions of any of the other Loan
Documents.
SECTION 1.10 CERTIFICATES.
Any certificate required by the terms of this Agreement or any other Loan
Document to be given by an officer of the Borrower for and on behalf of the
Borrower or any Restricted Subsidiary shall be given without any personal
liability on the part of the officer giving the certificate.
ARTICLE 2
LOAN FACILITY
SECTION 2.1 AVAILABILITY.
The Lender agrees, on the terms and conditions of this Agreement, to make
Accommodations to the Borrower in accordance with the Operating Commitment and
the Foreign Exchange Commitment. Accommodations shall be made available as (i)
Advances pursuant to Article 3, (ii) Bankers' Acceptances pursuant to Article 4,
(iii) Documentary Credits pursuant to Article 5 and (iv) as Foreign Exchange
Hedging Arrangements pursuant to Article 6.
SECTION 2.2 COMMITMENTS AND FACILITY LIMITS.
(1) The Accommodations Outstanding to the Lender under the Operating Facility
shall not at any time exceed the lesser of (i) the Operating Commitment,
and (ii) the Borrowing Base (the "LENDING LIMIT"). The Foreign Exchange
Commitment limit is specified in Section 6.1(2).
(2) The Operating Facility shall revolve and no payment under the Operating
Facility shall reduce the Operating Commitment.
23
(3) A conversion from one Type of Accommodation or Advance to another Type of
Accommodation or Advance shall not constitute a repayment or prepayment.
SECTION 2.3 USE OF PROCEEDS.
(1) The Borrower shall use the proceeds of Accommodations under the Operating
Facility only for its operating requirements and for Permitted
Acquisitions, provided that up to U.S.$7,000,000 of such proceeds may be
used for the Biolab Acquisition.
(2) The Borrower shall use the proceeds of Accommodations under the Foreign
Exchange Hedging Facility for its foreign exchange trading requirements
only.
SECTION 2.4 MANDATORY REPAYMENTS AND REDUCTIONS OF COMMITMENTS.
The Borrower shall repay (subject to Section 10.1) the Accommodations
Outstanding under the Operating Facility, together with all accrued interest and
Fees and all other amounts payable in connection with the Operating Facility on
the Repayment Date. On each reduction of the Commitment, the Borrower will repay
the amount, if any, by which the Accommodations Outstanding under the relevant
Loan Facility exceed the Commitment, as reduced.
SECTION 2.5 MANDATORY PREPAYMENT WHERE BORROWING BASE DEFICIENCY.
(1) If, on any day, the Accommodations Outstanding under the Operating Facility
exceed the Lending Limit (based on the most recently delivered Borrowing
Base Certificate and the Equivalent Cdn. $ Amount of the Accommodations
Outstanding in U.S. Dollars on that day), the Borrower shall on that day
(i) prepay Borrowings, or (ii) pay such amount to the Lender and
irrevocably authorize and direct the Lender to apply such payment to
Eurodollar Rate Advances or as a repayment of the Borrower's reimbursement
obligation in respect of any Drawings or Issues on the next maturity date;
such that the Accommodations Outstanding, after giving effect to the
payment, do not exceed the Lending Limit, and thereafter (iii) deliver,
upon request by the Lender, within two days of such disclosure or knowledge
on a daily basis a Borrowing Base Certificate for the next week and,
thereafter, on a weekly basis for the next month.
(2) The Borrower may, upon receipt of written consent from the Lender,
designate in writing from time to time a Restricted Subsidiary as a
participant in the calculation of the Borrowing Base (a "DESIGNATED
RESTRICTED SUBSIDIARY") with a view to increasing the amount of Eligible
Accounts Receivable and Eligible Inventory supporting the availability of
Accommodations under this Agreement. The Borrower shall cause each
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Designated Restricted Subsidiary to execute and deliver to the Lender in
such form as may be acceptable to the Lender and its counsel, (i) an
unconditional guarantee of the obligations of the Borrower to the Lender,
(ii) Security (subject only to the Permitted Liens listed in Sections (i)
through (vii) of the definition) supporting such guarantee and registered
in those jurisdictions which the Lender and its counsel determine is
appropriate, and (iii) a favourable legal opinion or opinions of counsel to
the Borrower and the Designated Restricted Subsidiary as to the
enforceability of the guarantee and Security and the registration thereof.
(3) Upon receipt of a designation as provided for in Section 2.5(2) and the
granting of the Security and delivery of the documents and opinions
contemplated by Section 2.5(2), the Restricted Subsidiary will become a
Designated Restricted Subsidiary for purposes of this Agreement.
(4) The Borrower shall, from time to time until payment in full of the Loan
Facilities and the termination of this Agreement, within ten days following
the receipt by the Borrower of any payment in excess of $25,000 of proceeds
of any insurance required to be maintained pursuant to Section 9.1(j) on
account of each separate loss, damage or injury to any part of the
Collateral (unless the Borrower shall have insurance on a replacement cost
basis and substantially all of such proceeds or an amount not less than
such proceeds shall have been expended or committed by the Borrower for the
repair or replacement of such property and the Borrower shall have
furnished to the Lender evidence satisfactory to the Lender of such
expenditure or commitment or unless the Lender may otherwise agree with the
Borrower upon the presentation of a replacement plan reasonably
satisfactory to the Lender) apply the proceeds to the Loan Facilities in
the case of business interruption insurance and insurance relating to
Current Assets.
SECTION 2.6 OPTIONAL PREPAYMENTS AND REDUCTIONS OF COMMITMENTS.
If the Borrower has, upon the number of Business Days' notice to the Lender
specified in Schedule ERROR! REFERENCE SOURCE NOT FOUND. delivered a notice to
the Lender stating the proposed date and aggregate principal amount of any
prepayment of Accommodations Outstanding or reduction of the Operating
Commitment, it shall, on that date, pay to the Lender the amount, if any, by
which the Accommodations Outstanding under the Operating Facility exceed the
proposed reduced Operating Commitment. Each partial prepayment or reduction
shall be in an aggregate principal amount of U.S. $50,000 or an integral
multiple of such amount in the case of Accommodations denominated in U.S.
Dollars, and in an aggregate principal amount of the equivalent or in an
integral multiple of such amount in the case of Accommodations denominated in
Canadian Dollars. The Borrower shall prepay (i) a Eurodollar Rate Advance only
on the last day of the
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Eurodollar Interest Period applicable to it, and (ii) the amount of any Drawing
only on the maturity date for the relevant BA Instrument.
SECTION 2.7 CHANGES TO APPLICABLE MARGINS.
(1) The changes in the interest rates contemplated in the definitions of
Applicable Margin shall be effective on the first day of the month
following the end of the Fiscal Quarter with respect to which the
Compliance Certificate contemplated under Section 9.1 is required to be
delivered.
(2) Upon the occurrence and during the continuance of a Default or an Event of
Default, each of the Applicable Margins shall revert to the highest rates
provided for in this Agreement.
(3) If the Lender believes, in good faith, that the financial condition of the
Borrower or any Restricted Subsidiary has deteriorated so as to result in
the most recently delivered Compliance Certificate being inaccurate in any
material respect, then, at the request of the Lender, the Borrower shall
promptly appoint a consultant from a nationally recognized accounting firm
acceptable to the Lender at the Borrower's expense. The consultant will be
given the full and complete cooperation of the Borrower including
unrestricted access to the property, assets, documents and books and
records of, or related to, the Borrower's and the Restricted Subsidiaries'
respective businesses. The Lender may, on the basis of the consultant's
report, adjust the Applicable Margins in accordance with the
recommendations set forth in the report.
SECTION 2.8 FEES.
(1) The Borrower shall pay to the Lender a transaction fee in the amount of
U.S. $35,000 on the Restatement Date.
(2) The Borrower shall pay to the Lender standby fees from the Restatement Date
until the Repayment Date, payable monthly in arrears on the last Business
Day of each month, commencing [DATE], and on the Repayment Date on the
average daily Unused Operating Commitment at a rate per annum equal to the
percentage per annum determined by reference to the table set forth below
on the basis of the ratio of Cantel's Consolidated Debt to EBITDA:
CONSOLIDATED DEBT TO EBITDA RATIO STANDBY FEE
Greater than 2.0 to 1.0 0.50%
Greater than 1.75 to 1.0 0.50%
but less than or equal to 2.0 to 1.0
Greater than 1.50 to 1.0 0.40%
26
CONSOLIDATED DEBT TO EBITDA RATIO STANDBY FEE
but less than or equal to 1.75 to 1.0
Greater than 1.00 to 1.0 0.35%
but less than or equal to 1.50 to 1.0
Equal to or Less than 1.0 to 1.0 0.30%
The ratio of Cantel's Consolidated Debt to EBITDA shall be determined and
adjusted in the same manner as it is for purposes of the Applicable Margin.
SECTION 2.9 PAYMENTS UNDER THIS AGREEMENT.
(1) Unless otherwise expressly provided in this Agreement, the Borrower shall
(i) make any payment required to be made by it to the Lender by depositing
the amount of the payment to the relevant Borrower's Account not later than
10:00 a.m. (Toronto time) on the date the payment is due, and (ii) provide
to the Lender, upon the number of Business Days' notice to the Lender
specified in Schedule ERROR! REFERENCE SOURCE NOT FOUND. a notice of
repayment which shall be irrevocable and binding on the Borrower and shall
specify (x) the date of repayment, and (y) the Type and amount of
Accommodation to be repaid. The Borrower shall make each such payment (iii)
in Canadian Dollars, if the Accommodation was originally made in or has
been converted to Canadian Dollars, and (iv) in U.S. Dollars, if the
Accommodation was originally made in or has been converted to U.S. Dollars.
(2) Unless otherwise expressly provided in this Agreement, the Lender shall
make Accommodations and other payments to the Borrower under this Agreement
by crediting the relevant Borrower's Account (or causing the Borrower's
Account to be credited) with the amount of the payment not later than 1:00
p.m. (Toronto time) on the date the payment is to be made.
(3) The Borrower authorizes the Lender, if and to the extent payment owed to
the Lender by the Borrower is not made when due, to charge from time to
time any due amount against any or all of the Borrower's accounts with the
Lender.
SECTION 2.10 APPLICATION OF PAYMENTS AND PREPAYMENTS.
(1) All amounts received by the Lender from or on behalf of the Borrower and
not previously applied pursuant to this Agreement shall be applied by the
Lender as follows: (i) first, in reduction of the Borrower's obligation to
pay any unpaid interest and any Fees which are due and owing, (ii) second,
in reduction of the Borrower's obligation to pay any claims or losses
referred to in Section 11.6, (iii) third, in reduction of the Borrower's
obligation to pay any amounts due and owing on account of any unpaid
principal amount of
27
Advances which is due and owing, (iv) fourth, in reduction of the
Borrower's obligation to pay any other unpaid Accommodations Outstanding
which are due and owing, (v) fifth, in reduction of any other obligation of
the Borrower under this Agreement and the other Loan Documents, and (vi)
sixth, to the Borrower or such other Persons as may lawfully be entitled to
or directed to receive the remainder.
(2) Subject to the next following sentence, whenever any payment hereunder
shall be stated to be due on a day other than a Business Day, such payment
shall be made on the next succeeding Business Day, and such extension of
time shall in such case be included in the computation of interest or Fees,
as the case may be.
SECTION 2.11 COMPUTATIONS OF INTEREST AND FEES.
(1) All computations of interest shall be made by the Lender taking into
account the actual number of days occurring in the period for which such
interest is payable and (i) if based on the Canadian Prime Rate or the Base
Rate (Canada), on the basis of a year of 365 days, or (ii) if based on the
Eurodollar Rate, on the basis of a year of 360 days.
(2) All computations of Fees shall be made by the Lender on the basis of a year
of 365 days taking into account the actual number of days (including the
first day but excluding the last day) occurring in the period for which the
fees are payable.
(3) For purposes of the INTEREST ACT (Canada), (i) whenever any interest or Fee
under this Agreement is calculated using a rate based on a year of 360 days
or 365 days, as the case may be, the rate determined pursuant to such
calculation, when expressed as an annual rate, is equivalent to (x) the
applicable rate based on a year of 360 days or 365 days, as the case may
be, (y) multiplied by the actual number of days in the calendar year in
which the period for which such interest or fee is payable (or compounded)
ends, and (z) divided by 360 or 365, as the case may be, (ii) the principle
of deemed reinvestment of interest does not apply to any interest
calculation under this Agreement, and (iii) the rates of interest
stipulated in this Agreement are intended to be nominal rates and not
effective rates or yields.
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ARTICLE 3
ADVANCES
SECTION 3.1 ADVANCES.
The Lender agrees, on the terms and conditions of this Agreement, to make
Advances to the Borrower under the Operating Facility from time to time on any
Business Day prior to the Repayment Date.
SECTION 3.2 PROCEDURE FOR BORROWING.
(1) Except as provided in Section 3.2(2), each Borrowing shall be made on the
number of days prior notice specified in Schedule ERROR! REFERENCE SOURCE
NOT FOUND., given not later than 11:00 a.m. (Toronto time) by the Borrower
to the Lender. Each notice of a Borrowing (a "BORROWING NOTICE") shall be
in substantially the form of Schedule ERROR! REFERENCE SOURCE NOT FOUND.,
shall be irrevocable and binding on the Borrower and shall specify (i) the
requested date of the Borrowing, (ii) the Type of Advances comprising the
Borrowing, (iii) the aggregate amount of the Borrowing, and (iv) in the
case of a Eurodollar Rate Advance, the initial Eurodollar Interest Period.
Each Canadian Dollar Advance Borrowing shall be in the minimum amount of
Cdn.$50,000 and in integral multiples of the same and each U.S. Dollar
Advance shall be in the minimum amount of U.S.$50,000 and in integral
multiples of the same. Upon fulfilment of the applicable conditions set
forth in Article 6, the Lender will make such funds available to the
Borrower in accordance with Article 2.
(2) Borrowings may be made as Canadian Prime Rate Advances or Base Rate
(Canada) Advances on no advance notice to the Lender by utilizing or
drawing upon (a "UTILIZATION") the Borrower's Canadian Dollar Account (in
the case of Canadian Prime Rate Advances) or the Borrower's U.S. Dollar
Account (in the case of Base Rate (Canada) Advances) up to a maximum
principal amount available such that Accommodations Outstanding do not
exceed the Lending Limit. Each Utilitization of the Borrower's Accounts in
the principal amount utilized shall be deemed to be an Accommodation
Outstanding as at the time such Utilization becomes outstanding.
SECTION 3.3 CONVERSIONS AND ELECTIONS REGARDING ADVANCES.
(1) Each Advance shall initially be the Type of Advance specified in the
applicable Borrowing Notice and shall bear interest at the rate applicable
to that Type of Advance until (i) in the case of a Eurodollar Rate Advance,
the end of the initial Eurodollar Interest Period specified in the
Borrowing Notice, (ii) in the case of a Floating Rate Advance, the date on
which the Advance is repaid in full or is changed to another Type of
Advance pursuant to
29
Section 3.3(2), or (iii) in the case of any Advance, it is converted to
another Type of Accommodation pursuant to Section 3.3(2).
(2) The Borrower may elect to (i) change any Advance to another type of Advance
in accordance with Section 3.3(3) or convert an Advance to another type of
Accommodation upon the number of days notice specified in Schedule ERROR!
REFERENCE SOURCE NOT FOUND. (y) in the case of a Floating Rate Advance as
of any Business Day, and (z) in the case of a Eurodollar Advance, as of the
last day of the Eurodollar Interest Period applicable to the Eurodollar
Rate Advance and in a principal amount equal to its equivalent currency
amount (as determined by the Lender as of the date of the Accommodation
Notice in accordance with the relevant definitions of Equivalent Cdn. $
Amount and Equivalent U.S. $ Amount), or (ii) continue any Eurodollar Rate
Advance for a further Eurodollar Interest Period beginning on the last day
of the then current Eurodollar Interest Period in accordance with Section
3.3(3).
(3) Each election to change from one type of Advance to another type of Advance
or to continue a Eurodollar Rate Advance for a further Eurodollar Interest
Period shall be made on the number of days prior notice specified in
Schedule ERROR! REFERENCE SOURCE NOT FOUND. given, in each case, not later
than 10:30 a.m. (Toronto time) by the Borrower to the Lender. Each such
notice (an "ELECTION NOTICE") shall be given substantially in the form of
Schedule ERROR! REFERENCE SOURCE NOT FOUND. and shall be irrevocable and
binding upon the Borrower. If the Borrower fails to deliver an Election
Notice to the Lender for any Eurodollar Rate Advance as provided in this
Section 3.3, the Eurodollar Rate Advance shall be converted (as of the last
day of the applicable Eurodollar Interest Period) to and be outstanding as
a Base Rate (Canada) Advance. The Borrower shall not select a Eurodollar
Interest Period which conflicts with the definition of Eurodollar Interest
Period in Section 1.1 or, in the opinion of the Lender, with the repayment
schedule in Section 2.4.
SECTION 3.4 CIRCUMSTANCES REQUIRING PRIME RATE PRICING.
If the Lender, acting reasonably, determines, which determination shall be
final, conclusive and binding upon the Borrower, and notifies the Borrower that
(i) by reason of circumstances affecting financial markets generally, deposits
of U.S. Dollars are unavailable to the Lender in Canada, (ii) adequate and fair
means do not exist for ascertaining the applicable interest rate on the basis
provided in the definition of Eurodollar Rate or Base Rate (Canada), as the case
may be, (iii) the making or continuation of any U.S. Dollar Advances has been
made impracticable or unlawful (y) by the occurrence of a contingency (other
than a mere increase in rates payable by the Lender to fund the Advances) which
materially adversely affects the funding of the Operating Facility at any
interest rate computed on the basis of the
30
Eurodollar Rate or the Base Rate (Canada), as the case may be, or (z) by reason
of a change since the date of this Agreement in any applicable law, order,
treaty or official direction, or in the interpretation thereof by any
Governmental Entity affecting the Lender, or financial markets or institutions
generally and which results in the Eurodollar Rate or the Base Rate (Canada), as
the case may be, no longer representing the effective cost to the Lender of
deposits in the market, then:
(a) The right of the Borrower to select any affected Type of Advance shall
be suspended until the circumstances causing the suspension no longer
exist and the Lender so notifies the Borrower;
(b) If any affected Type of Advance is not yet outstanding, any applicable
Accommodation Notice shall be cancelled and the requested Advance
shall not be made;
(c) If a Eurodollar Rate Advance is already outstanding at any time when
the right of the Borrower to select Eurodollar Rate Advances is
suspended, it and all other Eurodollar Rate Advances in the same
Borrowing shall become Base Rate (Canada) Advances on the last day of
the then current Interest Period (or on such earlier date as may be
required to comply with any applicable law, rule, regulation, judgment
or order) or, if the Borrower does not have the right to select Base
Rate (Canada) Advances at such time, the Eurodollar Rate Advance shall
become a Canadian Prime Rate Advance on the last day of the then
current Eurodollar Interest Period applicable to it (or on such
earlier date as may be required to comply with any applicable law,
rule, regulation, judgment or order) in a principal amount equal to
the Equivalent Cdn. $ Amount of the Eurodollar Rate Advance determined
on the date on which the Advance becomes denominated in Canadian
Dollars; and
(d) If any U.S. Dollar Advance is already outstanding at any time when the
right of the Borrower to select U.S. Dollar Advances is suspended, it
and all other U.S. Dollar Advances included in the same Borrowing
shall become Canadian Prime Rate Advances (i) in the case of a
Eurodollar Rate Advance, on the last day of the then current
Eurodollar Interest Period (or on such earlier date as may be required
to comply with any applicable law, rule or regulation), and (ii) in
the case of a Base Rate (Canada) Advance, immediately, in a principal
amount equal, in each case, to the Equivalent Cdn. $ Amount of the
related U.S. Dollar Advance determined on the date on which the
Advance becomes denominated in Canadian Dollars.
31
SECTION 3.5 INTEREST ON ADVANCES.
(1) The Borrower shall pay interest on the unpaid principal amount of each
Advance from the date of the Advance until the principal amount of the
Advance is repaid in full, at the following rates per annum:
(a) If and so long as the Advance is a Canadian Prime Rate Advance, at a
rate per annum equal at all times to the sum of the Canadian Prime
Rate in effect from time to time plus the Applicable Margin;
(b) If and so long as the Advance is a Base Rate (Canada) Advance, at a
rate per annum equal at all times to the Base Rate (Canada) in effect
from time to time plus the Applicable Margin; and
(c) If and so long as the Advance is a Eurodollar Rate Advance, at a rate
per annum equal, at all times during each Eurodollar Interest Period
for such Eurodollar Rate Advance, to the sum of the Eurodollar Rate
for such Eurodollar Interest Period plus the Applicable Margin.
(2) Interest on Canadian Prime Rate Advances and Base Rate (Canada) Advances
shall be calculated daily and payable in arrears (i) on the first Business
Day of each month, and (ii) when the Advance becomes due and payable in
full, is repaid, or is converted to another Type of Advance or
Accommodation. Interest on Eurodollar Rate Advances shall be calculated and
payable (iii) on the ninetieth day, if any, of the Eurodollar Interest
Period, and (iv) on the last day of the Eurodollar Interest Period.
ARTICLE 4
BANKERS' ACCEPTANCES
SECTION 4.1 ACCEPTANCES AND DRAFTS.
(1) The Lender agrees, on the terms and conditions of this Agreement and from
time to time on any Business Day prior to the Repayment Date to create
Bankers' Acceptances by accepting Drafts and to purchase such Bankers'
Acceptances in accordance with Section 4.3(2).
(2) Each Drawing shall be in a minimum Face Amount and in integral multiples of
the amount in Schedule ERROR! REFERENCE SOURCE NOT FOUND. and shall consist
of the creation and purchase of Bankers' Acceptances or the purchase of
Drafts on the same day, in each case for the Drawing Price, effected or
arranged by the Lender in accordance with Section 4.3 and its Operating
Commitment.
32
SECTION 4.2 FORM OF DRAFTS.
Each Draft presented by the Borrower shall (i) be in a minimum amount of
Cdn $500,000 and in multiples of Cdn $100,000 thereafter, (ii) be dated the date
of the Drawing, and (iii) mature and be payable by the Borrower (in common with
all other Drafts presented in connection with such Drawing) on a Business Day
which occurs approximately 30, 60, 90, 120 or 180 days (or such shorter or
longer period as may be approved by the Lender) at the election of the Borrower
after the Drawing Date and on or prior to the Repayment Date and which would
not, in the opinion of the Lender, conflict with the repayment schedule set out
in Section 2.4.
SECTION 4.3 PROCEDURE FOR DRAWING.
(1) Each Drawing shall be made on notice (a "DRAWING NOTICE") given by the
Borrower to the Lender not later than 10:00 a.m. (Toronto time) on the
number of days notice specified in Schedule ERROR! REFERENCE SOURCE NOT
FOUND.. Each Drawing Notice shall be in substantially the form of Schedule
ERROR! REFERENCE SOURCE NOT FOUND., shall be irrevocable and binding on the
Borrower and shall specify (i) the Drawing Date, (ii) the aggregate Face
Amount of Drafts to be accepted and purchased, and (iii) the contract
maturity date for the Drafts.
(2) Not later than 2:00 p.m. (Toronto time) on an applicable Drawing Date, the
Lender shall complete one or more Drafts in accordance with the Drawing
Notice and accept the Drafts and purchase the Bankers' Acceptances so
created for the Drawing Price. Upon fulfilment of the applicable conditions
set forth in ARTICLE 7, the Lender shall make funds available to the
Borrower in accordance with Article 2.
(3) Bankers' Acceptances purchased by the Lender may be held by it for its own
account until the contract maturity date or sold by it at any time prior to
that date in any relevant Canadian market in the Lender's sole discretion.
SECTION 4.4 PRESIGNED DRAFT FORMS.
(1) To enable the Lender to create Bankers' Acceptances in the manner specified
in this Article 4, the Borrower (i) shall supply the Lender with such
number of Drafts as it may reasonably request, duly endorsed and executed
on behalf of the Borrower and (ii) hereby appoints the Lender, as its
attorney by any authorized signatory of the Lender:
(a) To execute, for and on behalf and in the name of the Borrower as
drawer, and to endorse on its behalf, Drafts in a form in accordance
with Section 4.2 and which constitute both bills of exchange for the
purpose of the BILLS OF EXCHANGE ACT (Canada) and depository bills for
the purpose of the DBNA;
33
(b) To complete the amount, date and maturity date of such Bankers'
Acceptances; and
(c) To deposit such Bankers' Acceptances which have been accepted by the
Lender with a clearing house (as defined in the DBNA);
Provided that such acts in each case are to be undertaken by the Lender in
accordance with instructions given to the Lender by the instructing
Borrower as provided in Section 4.3(1).
(2) The Lender will exercise such care in the custody and safekeeping of Drafts
as it would exercise in the custody and safekeeping of similar property
owned by it and will, upon request by the Borrower, promptly advise the
Borrower of the number and designations, if any, of uncompleted Drafts held
by it for the Borrower. The signature of any officer of the Borrower on a
Draft may be mechanically reproduced and BA Instruments bearing facsimile
signature shall be binding upon the Borrower as if they had been manually
signed. Even if the individuals whose manual or facsimile signature appears
on any BA Instrument no longer hold office at the date of signature, at the
date of its acceptance by the Lender or at any time after such date, any BA
Instrument so signed shall be valid and binding upon the Borrower.
SECTION 4.5 PAYMENT, CONVERSION OR RENEWAL OF BA INSTRUMENTS.
(1) Upon the maturity of a BA Instrument, the Borrower may (i) elect to issue a
replacement BA Instrument by giving a Drawing Notice in accordance with
Section 4.3(1), (ii) elect to have all or a portion of the Face Amount of
the BA Instrument converted to an Advance by giving a Borrowing Notice in
accordance with Section 3.2, or (iii) pay, on or before 10:00 a.m. (Toronto
time) on the maturity date for the BA Instrument, an amount in Canadian
Dollars equal to the Face Amount of the BA Instrument (notwithstanding that
the Lender may be the holder of it at maturity). Any such payment shall
satisfy the Borrower's obligations under the BA Instrument to which it
relates and the Lender shall then be solely responsible for the payment of
the BA Instrument.
(2) If the Borrower fails to pay any BA Instrument when due or issue a
replacement in the Face Amount of such BA Instrument pursuant to Section
4.5(1), the unpaid amount due and payable shall be converted to a Canadian
Prime Rate Advance made by the Lender under the Operating Facility and
shall bear interest calculated and payable as provided in Article 3. This
conversion shall occur as of the due date and without any necessity for the
Borrower to give a Borrowing Notice.
34
SECTION 4.6 CIRCUMSTANCES MAKING BANKERS' ACCEPTANCES UNAVAILABLE.
(1) If the Lender determines in good faith, which determination shall be final,
conclusive and binding upon the Borrower, and notifies the Borrower that,
by reason of circumstances affecting the money market generally, there is
no market for Bankers' Acceptances, (i) the right of the Borrower to
request a Drawing shall be suspended until the circumstances causing a
suspension no longer exist, and (ii) any Drawing Notice which is
outstanding shall be cancelled and the requested Drawing shall not be made.
(2) The Lender shall promptly notify the Borrower of the suspension of the
Borrower's right to request a Drawing and of the termination of any
suspension.
ARTICLE 5
DOCUMENTARY CREDITS
SECTION 5.1 DOCUMENTARY CREDITS.
The Lender agrees, on the terms and conditions of this Agreement, to issue
Documentary Credits under the Operating Facility only for the account of the
Borrower from time to time on any Business Day prior to the Repayment Date upon
execution of the Lender's prevailing standard form documentation in relation
thereto, including the applicable application and indemnity.
SECTION 5.2 REIMBURSEMENTS OF AMOUNTS DRAWN.
If the Borrower fails to pay to the Lender the amount drawn under any
Documentary Credit, the unpaid amount due and payable shall be converted
automatically as of such date, and without the Borrower having to give any
Borrowing Notice pursuant to Section 3.2, to (i) a Canadian Prime Rate Advance,
in the case of a Documentary Credit denominated in Canadian Dollars, and (ii) a
Base Rate (Canada) Advance, in the case of a Documentary Credit denominated in
U.S. Dollars, in each case under the Operating Facility.
SECTION 5.3 FEES.
(1) The Borrower shall pay to the Lender a Fee in respect of each Documentary
Credit equal to 1.2% per annum of the Face Amount (and if outstanding in
U.S. Dollars, on the the Equivalent Cdn. $ Amount of its Face Amount), in
each case, for the period during which the Documentary Credit is
outstanding. Such Fee shall be calculated on a per annum basis on the basis
of the number of days that such Drawing Credit will be outstanding and
payable on the date of issue of a Documentary Credit in the currency in
which the Documentary Credit is payable and shall be non-refundable.
35
(2) The Borrower shall pay to Lender upon the issuance, amendment or transfer
of each Documentary Credit and each drawing made under it, the Lender's
standard and prevailing documentary and administrative charges for issuing,
amending, transferring or drawing under, as the case may be, Documentary
Credits of similar amount, term and risk.
SECTION 5.4 DOCUMENTARY CREDITS OUTSTANDING UPON DEFAULT.
If any Documentary Credits are outstanding upon the occurrence of an Event
of Default, the Borrower shall immediately pay to the Lender an amount (the
"DOCUMENTARY CREDIT DEPOSIT AMOUNT") equal to the undrawn principal amount of
the Documentary Credits. The Documentary Credit Deposit Amount shall be held by
the Lender in an interest bearing account to be applied on any Drawing by a
Beneficiary. If no Drawing is made in respect of a Documentary Credit prior to
its expiry date, the Documentary Credit Deposit Amount applicable thereto and
any accrued interest thereon, or such part thereof as has not been paid out,
shall be returned to the Borrower promptly following the expiry or cancellation
of the Documentary Credit.
ARTICLE 6
FOREIGN EXCHANGE CONTRACTS
SECTION 6.1 FOREIGN EXCHANGE HEDGING CONTRACTS.
(1) Subject to and on the terms and conditions of this Agreement, the Lender
agrees to provide Foreign Exchange Hedging Arrangements on terms consistent
with its practice from time to time.
(2) The aggregate Notional Amount of all Foreign Exchange Hedging Arrangements
outstanding at any time shall not exceed the Foreign Exchange Commitment.
(3) For the purpose of determining the Lender's Accommodation in connection
with Foreign Exchange Hedging Arrangements entered into by it, until the
Lender is repaid all amounts due and payable to it under the Foreign
Exchange Hedging Arrangement or makes an Advance pursuant to Section 6.5,
the Lender shall be deemed to have made an Accommodation in an amount equal
to the Hedging Risk Exposure in respect of any such Foreign Exchange
Hedging Arrangements entered into by it.
SECTION 6.2 NOTICE OF HEDGING ARRANGEMENTS.
(1) The provision of Foreign Exchange Hedging Arrangements shall be made on
notice given to the Lender not later than 11:00 a.m. on the same day as
issue (or such longer period as may be required by the Lender) which shall
give the Lender notice of the proposed Foreign Exchange Hedging
Arrangements to
36
be entered into by the Borrower. Each such notice (a "NOTICE OF FOREIGN
EXCHANGE HEDGING ARRANGEMENT") shall be given in substantially the form of
Schedule ERROR! REFERENCE SOURCE NOT FOUND., and shall specify therein (i)
the Notional Amount of each Foreign Exchange Hedging Arrangement; and (ii)
the maturity or expiry date of the Foreign Exchange Hedging Arrangement.
(2) The Borrower shall not request the provision of Foreign Exchange Hedging
Arrangements the maturity date of which would be (i) more than 365 days
after their issuance or (ii) subsequent to the Repayment Date.
SECTION 6.3 INDEMNIFICATION.
The Borrower hereby agrees to indemnify and hold harmless the Lender from
and against any and all claims, demands, liabilities, damages, losses, costs,
charges and expenses (including reasonable legal fees and expenses) which the
Lender may incur or be subject to as a consequence of the provision of any
Foreign Exchange Hedging Arrangements, other than for damages suffered or
incurred as a result of the gross negligence or wilful misconduct of the Lender.
SECTION 6.4 OBLIGATIONS ABSOLUTE.
The obligation of the Borrower to reimburse the Lender for amounts payable
under the Foreign Exchange Hedging Arrangements entered into pursuant to this
Article 6 shall be unconditional and irrevocable and shall be paid strictly in
accordance with the terms of this Agreement and the Foreign Exchange Hedging
Arrangement in all circumstances, including, without limitation, (i) any lack of
validity or enforceability of any Foreign Exchange Hedging Arrangement; (ii) the
existence of any claim, set-off, defence or other right which the Borrower may
have at any time against the Lender or any other Person, whether in connection
with this Agreement, the Loan Documents, the transactions contemplated herein
and therein or any unrelated transaction; or (iii) the fact that a Default or
Event of Default shall have occurred and be continuing.
SECTION 6.5 DEEMED ADVANCES.
(1) The Lender shall notify the Borrower on or before the date on which any
Foreign Exchange Hedging Arrangement becomes due and the Borrower shall
deposit in the Payment Account an amount, in same day funds, equal to the
amount due and payable by the Borrower under such Foreign Exchange Hedging
Arrangement.
(2) Unless (i) prior to 11:00 a.m. on the Business Day immediately prior to the
maturity date of any Foreign Exchange Hedging Arrangement the Borrower
notifies the Lender that it intends to reimburse the Lender for the amount
due and payable by the Borrower under such Foreign Exchange Hedging
37
Arrangement and (ii) on such maturity date, the Borrower shall have made
payment to the Lender for the amount due and payable under such Foreign
Exchange Hedging Arrangement in same day funds equal to the amount due and
payable under such Foreign Hedging Exchange Arrangement, then (iii) a
request shall be deemed to have been given by the Borrower to the Lender
requesting the Lender to make a Base Rate (Canada) Advance in respect of
Foreign Exchange Hedging Arrangements on the date on which the amount under
any Foreign Exchange Hedging Arrangement is due and payable by the Borrower
thereunder, in an amount equal to the lesser of the Hedging Risk Exposure
under such Foreign Exchange Hedging Arrangement and the amount due and
payable under such Foreign Exchange Hedging Arrangement, and (iv) on the
date such Foreign Exchange Hedging Arrangement is due and payable the
Lender shall make such Base Rate (Canada) Advance (notwithstanding that the
making of such Advance would cause the Lending Limit to be exceeded) and
the Lender shall apply the proceeds thereof to the reimbursement of the
Lender for the amount due and payable under such Foreign Exchange Hedging
Arrangement.
(3) The Borrower shall, notwithstanding the provisions of Section 6.5(2) and in
addition to its obligations thereunder, pay to the Lender on the maturity
date of any Foreign Exchange Hedging Arrangement all amounts owing to the
Lender in excess of the amount in respect of the Hedging Risk Exposure paid
to the Lender pursuant to Section 6.5(2).
SECTION 6.6 REPAYMENTS.
(1) If the Borrower shall be required to repay the Accommodations Outstanding
pursuant to Article 2, 4, 5 or 10 then the Borrower shall pay to the
Lender, to the extent required pursuant thereto and in the amount provided
therein, an amount equal to the Lender's contingent liability in respect of
(i) any Foreign Exchange Hedging Arrangement outstanding hereunder; and
(ii) any Foreign Exchange Hedging Arrangement which is the subject matter
of any judicial order restricting payment by the Lender under and in
accordance with such Foreign Exchange Hedging Arrangement or extending the
Lender's liability under such Foreign Exchange Hedging Arrangement beyond
the expiration date stated therein. Payment in respect of each such Foreign
Exchange Hedging Arrangement shall be due in U.S. Dollars.
(2) The Lender shall, with respect to any Foreign Exchange Hedging Arrangement,
upon the later of: (a) the date on which any final and non-appealable
order, judgment or other such determination has been rendered or issued
either terminating the applicable judicial order or permanently enjoining
such Lender, from paying under such Foreign Exchange Hedging Arrangement;
and (b) the earlier of (i) the date on which either (x) the original
38
counterpart of such Foreign Exchange Hedging Arrangement is returned to
such Lender for cancellation, or (y) such Lender is released from any
further obligations in respect thereof; and (ii) the expiry (to the extent
permitted by any applicable law) of such Foreign Exchange Hedging
Arrangement, pay to the Borrower an amount equal to the difference between
the amount paid to such Lender pursuant to Section 6.6(1) and the amounts
paid by the Lender under such Foreign Exchange Hedging Arrangement.
ARTICLE 7
CONDITIONS OF LENDING
SECTION 7.1 RESTATEMENT.
The execution of this Agreement is subject to and conditional upon the
following conditions precedent being satisfied to the satisfaction of the
Lender:
(a) No Default or Event of Default has occurred or is continuing or would
arise immediately after giving effect to or as a result of the
execution of this Agreement;
(b) The execution of this Agreement will not violate any applicable law,
order or judgment;
(c) The representations and warranties of the Borrower contained in
ARTICLE 8Article 8 are true and correct;
(d) The Lender has received, in form, substance, scope and dated a date
satisfactory to it and its counsel:
(i) Certified copies of (i) the charter documents and extracts
from the by-laws of the Borrower relating to the execution of
documents, (ii) all resolutions of the board of directors or
shareholders, as the case may be, of the Borrower approving
the borrowing and other matters contemplated by this Agreement
and the other Loan Documents, and (iii) a list of the officers
and directors authorized to sign agreements together with
their specimen signatures;
(ii) A certificate of status, compliance or like certificate with
respect to the Borrower issued by the appropriate Governmental
Entity of the jurisdiction of its incorporation and of each
jurisdiction in which it owns any material assets or carries
on any material business;
39
(iii) The Loan Documents specified in Schedule ERROR! REFERENCE
SOURCE NOT FOUND.;
(iv) An interlender agreement in relation to and with the Lenders
under the Parent Facility;
(v) Evidence of registration of the Security Documents in such
jurisdictions as the Lender may require;
(vi) All discharges, subordination agreements, waivers and
confirmations as may be required to ensure that all
obligations under the Loan Documents are secured by first
priority Liens on the property and assets of the Borrower with
such exceptions as are permitted pursuant to this Agreement or
any of the other Loan Documents;
(vii) Certified copies of the insurance policies required pursuant
to Section 9.1(j) together with certificates of insurance
showing the Lender as loss payee and named insured;
(viii) Favourable opinion of counsel to the Borrower;
(ix) a Borrowing Base Certificate which indicates the Borrowing
Base is an amount that is at least $1,000,000 in excess of the
Accommodations Outstanding under the Operating Facility at
such time after giving effect to the Accommodations under the
Operating Facility contemplated in connection with the Biolab
Acquisition;
(x) Such other certificates and documentation as the Lender may
reasonably request;
(e) The Lender shall have completed, to its satisfaction, a due diligence
review of the Borrower;
(f) The Lender shall have reviewed confirmation that Fleet National Bank
or another financial institution acceptable to the Lender has
committed to providing financing to Cantel for the acquisition of Mar
Cor Medical Services, Inc. in a manner acceptable to the Lender;
(g) The Lender shall have entered into definitive binding agreements
legally sufficient to complete the Biolab Acquisition; each such
agreement shall be satisfactory in form and substance to the Lender;
and all such agreements shall be in full force and effect. Prior to or
contemporaneously with the closing of the transactions contemplated
40
by this Agreement, the Biolab Acquisition shall have closed without
the waiver of any of its conditions precedent which are for the
benefit of the Borrower;
(h) All fees and other amounts then payable under the Loan Documents have
been paid in full;
(i) There has not occurred, developed or come into effect or existence any
event, action, state, condition or major financial occurrence of
national or international consequence or any law, judgment, order,
inquiry or other occurrence of any nature whatsoever which materially
adversely affects, or may materially adversely affect, the financial,
banking (including syndication markets) or capital markets in Canada
or the United States of America; and
(j) All reports to be provided to the Lender under this Agreement,
including those reports referred to in Section 9.1(b), have been
received by the Lender.
SECTION 7.2 CONDITIONS PRECEDENT TO ACCOMMODATIONS AND CONVERSIONS.
(1) The obligation of the Lender to make Accommodations or otherwise give
effect to any Accommodation Notice is subject to fulfilment of the
following conditions at the time of any Accommodation Notice or
Accommodation, as the case may be:
(a) No Default or Event of Default has occurred or is continuing or would
arise immediately after giving effect to or as a result of the
Accommodation or Accommodation Notice;
(b) The Accommodation will not violate any applicable law, judgment or
order; and
(c) The representations and warranties of the Borrower contained in
Article 8 are true and correct on the date of the Accommodation or
Accommodation Notice as if they were made on that date.
(2) Each of the giving of any Accommodation Notice by the Borrower and the
acceptance by the Borrower of any Accommodation (including by way of
utilization of the Borrower's Accounts in the manner contemplated by
Section 3.2(2) hereof) shall be deemed to constitute a representation and
warranty by the Borrower that, on the date of such Accommodation Notice or
Accommodation, as the case may be, and after giving effect to it and to the
application of any proceeds from it, the statements set forth in Section
7.2(1)(a), Section 7.2(1)(b) and Section 7.2(1)(c) are true and correct.
41
SECTION 7.3 NO WAIVER.
The making of an Accommodation or otherwise giving effect to any
Accommodation Notice, without the fulfilment of one or more conditions set forth
in Section 7.1 or Section 7.2, shall not constitute a waiver of any condition
and the Lender reserves the right to require fulfilment of such condition in
connection with any subsequent Accommodation Notice or Accommodation.
ARTICLE 8
REPRESENTATIONS AND WARRANTIES
SECTION 8.1 REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants to the Lender, acknowledging and
confirming that the Lender is relying on such representations and warranties
without independent inquiry in entering into this Agreement and providing
Accommodations that:
(a) INCORPORATION AND QUALIFICATION. The Borrower is a corporation duly
incorporated, organized and validly existing under the laws of
Ontario. Each of the Restricted Subsidiaries is a corporation duly
incorporated, organized and validly existing under the laws of its
jurisdiction of incorporation. Each of the Borrower and the Restricted
Subsidiaries is qualified, licensed or registered to carry on business
under the laws applicable to it in all jurisdictions in which such
qualification, licensing or registration is necessary or where failure
to be so qualified would have a Material Adverse Effect;
(b) CORPORATE POWER. Each of the Borrower and the Restricted Subsidiaries
has all requisite corporate power and authority to (i) own, lease and
operate its properties and assets and to carry on its business as now
being conducted by it, and (ii) enter into and perform its obligations
under the Loan Documents to which it is a party;
(c) CONFLICT WITH OTHER INSTRUMENTS. The execution and delivery by the
Borrower and each Restricted Subsidiary and the performance by each of
them of their respective obligations under, and compliance with the
terms, conditions and provisions of, the Loan Documents to which they
are a party will not (i) conflict with or result in a breach of any of
the terms or conditions of (t) its constating documents or by-laws,
(u) any applicable law, rule or regulation having the force of law,
(v) any contractual restriction binding on or affecting it in any
material way or its properties, or (w) any judgment, injunction,
determination or award which is binding on it, or (ii) result in,
require or permit (x) the imposition of any encumbrance in, on or with
respect to any of
42
its assets or property (except in favour of the Lender), (y) the
acceleration of the maturity of any Debt binding on or affecting the
Borrower or any Restricted Subsidiary in principal amount in excess of
$50,000, or (z) any third party to terminate or acquire rights under
any lease or any other contract or agreement of a material nature;
(d) CORPORATE ACTION, GOVERNMENTAL APPROVALS, ETC. The execution and
delivery of each of the Loan Documents by the Borrower and each
Restricted Subsidiary and the performance by the Borrower and each
Restricted Subsidiary of their respective obligations under the Loan
Documents have been duly authorized by all necessary corporate action
including, without limitation, the obtaining of all necessary
shareholder consents. No authorization, consent, approval,
registration, qualification, designation, declaration or filing with
any Governmental Entity or other Person, is or was necessary in
connection with the execution, delivery and performance of obligations
under the Loan Documents except as are in full force and effect,
unamended, at the date of this Agreement;
(e) EXECUTION AND BINDING OBLIGATION. This Agreement and the other Loan
Documents have been duly executed and delivered by the Borrower and
each Restricted Subsidiary which is a party thereto and constitute
legal, valid and binding obligations of the Borrower and each such
Restricted Subsidiary enforceable against them in accordance with
their respective terms, subject only to any limitation under
applicable laws relating to (i) bankruptcy, insolvency, arrangement or
creditors' rights generally, and (ii) the discretion that a court may
exercise in the granting of equitable remedies;
(f) AUTHORIZATIONS, ETC. The Borrower and each of the Restricted
Subsidiaries possess all material authorizations, licenses, permits,
consents, registrations and approvals of Governmental Entities
necessary to properly conduct their respective businesses;
(g) OWNERSHIP AND USE OF PROPERTY. Except for Permitted Liens, each of the
Borrower and the Restricted Subsidiaries owns its properties and
assets with good and marketable title thereto, free and clear of all
Liens. The Borrower and each Restricted Subsidiary owns, leases or has
the lawful right to use all of the assets necessary for the conduct of
their respective businesses at full operating capacity;
(h) PROPERTIES. Neither Borrower nor any Restricted Subsidiary owns any
real property and neither is bound under any agreement to own or lease
any real property in connection with its business except for the
43
Properties. Each lease in respect of the Properties, as it applies to
the Borrower or any Restricted Subsidiary is in good standing in all
material respects (except as disclosed in writing to the Lender) and
all amounts owing thereunder have been paid by the Borrower. Each
Lease, allows (at minimum) the assignment thereof by the lessee with
the consent of the landlord, which consent may not be unreasonably
withheld;
(i) TRADEMARKS, PATENTS, ETC. The Borrower and each of the Restricted
Subsidiaries possesses all the trademarks, trade names, copyrights,
patents and licences necessary for the conduct of their respective
businesses. To the best knowledge of the Borrower, neither it nor any
of the Restricted Subsidiaries is infringing or is alleged to be
infringing on the rights of any Person with respect to any patent,
trademark, trade name, copyright (or any application or registration
in respect thereof), licence, discovery, improvement, process,
formula, know-how, data, plan, specification, drawing or the like and
the Borrower does not know of any facts which might result in the
assertion against the Borrower or a Restricted Subsidiary of a claim
for such infringement;
(j) USE OF LANDS. The uses to which the Properties have been put are not
in material breach of any federal, provincial or local laws or any
statutes, by-laws, ordinances, regulations, covenants, restrictions or
official plans;
(k) WORK ORDERS. There are no outstanding work orders requiring, in
aggregate, expenditures exceeding Cdn. $100,000 relating to the
Properties from or required by any police or fire department,
sanitation, health, environmental or factory authorities or from any
other federal, provincial or municipal authority, nor are any matters
relating to the Properties under discussion with any such departments
or authorities relating to work orders;
(l) EXPROPRIATION. As at the date hereof, no part of the Properties or the
buildings located thereon has been taken or expropriated by any
federal, provincial, municipal or other competent authority nor has
any notice or proceeding in respect thereof been given or commenced
nor is the Borrower or any Restricted Subsidiary aware of any intent
or proposal to give any such notice or commence any such proceedings;
(m) NO DEFAULT. Neither the Borrower nor any of its Restricted
Subsidiaries has amended its constating documents or by-laws except
for such amendments notified to and approved by the Lender and
44
none of them is in violation of its constating documents, its by-laws
or any shareholders' agreement applicable to it;
(n) ENVIRONMENTAL COMPLIANCE. To the best of the knowledge of the Borrower
and its Restricted Subsidiaries, as tenants, except as set out in
Schedule ERROR! REFERENCE SOURCE NOT FOUND.:
(i) None of the Properties or other property or assets under the
charge, management or control of the Borrower or any of the
Restricted Subsidiaries (i) has ever been used by any Person
as a waste disposal site or a landfill, or (ii) has ever had
any asbestos, asbestos-containing materials, PCBs, radioactive
substances or aboveground or underground storage systems,
active or abandoned, located on, at or under it at the date of
this Agreement;
(ii) To the best knowledge of the Borrower, no properties adjacent
to any of the Properties are contaminated;
(iii) No contaminants are, or have been, stored or located on, at or
under any of the Properties;
(iv) Neither the Borrower nor any of its Restricted Subsidiaries
has transported, removed or disposed of any waste to a
location outside of Canada as at the date of this Agreement;
(v) No order, approval, direction or other notice from a
Governmental Entity relating to the environment has been
threatened against, is pending or has been issued with respect
to any of the Properties or the operations of the business
being conducted at any of the Properties; and
(vi) Neither the Borrower nor any of its Restricted Subsidiaries is
aware of any pending or threatened action, suit or
proceedings, relating to any actual or alleged environmental
violation from or at the subject property;
(o) MATERIAL AGREEMENTS, ETC. Neither the Borrower nor any Restricted
Subsidiary is in default in any material respect and no event has
occurred which, with the giving of notice, lapse of time or both,
would constitute a default in any material respect under, any material
agreement, indenture, mortgage, deed of trust, agreement or other
instrument to which it is a party or by which it or any of its
property may be bound. There is no dispute regarding any Material
Agreement;
45
(p) SUBSIDIARIES. Except as set forth in Schedule ERROR! REFERENCE SOURCE
NOT FOUND. in respect of Restricted Subsidiaries incorporated or
acquired after the date of this Agreement:
(i) The Borrower does not own or hold any shares of, or any other
interest in, any Person;
(ii) The Borrower is a wholly-owned subsidiary of Cantel;
None of the Borrower or any of the Restricted Subsidiaries is an
unlimited liability company;
(q) NO MATERIAL ADVERSE AGREEMENTS. Neither the Borrower nor any of the
Restricted Subsidiaries is a party to any agreement or instrument or
subject to any restriction (including any restriction set forth in its
constating documents, by-laws or any shareholders' agreement
applicable to it) which has or in the future may have a Material
Adverse Effect;
(r) NO LITIGATION. There are no actions, suits or proceedings pending,
taken or to the Borrower's knowledge, threatened, before or by any
Governmental Entity or by or against any elected or appointed public
official or private person in Canada or elsewhere, and, to the
knowledge of the Borrower, no Law which affects the Borrower or any of
its Restricted Subsidiaries has been enacted, promulgated or applied
which (i) challenges, or to the knowledge of the Borrower, has been
proposed which may challenge, the validity or propriety of the
transactions contemplated under the Loan Documents or the documents,
instruments and agreements executed or delivered in connection
therewith or related thereto, or (ii) could be reasonably anticipated
to have a Material Adverse Effect;
(s) COMPLIANCE WITH LAWS. Each of the Properties have been used, and the
Borrower and each of the Restricted Subsidiaries are, in compliance
with all applicable laws, judgments and orders and rulings, guidelines
and decisions having force of law other than to the extent it would
not have a Material Adverse Effect;
(t) TAX LIABILITY. The Borrower and each of the Restricted Subsidiaries
have filed all tax and information returns which are required to be
filed. The Borrower and each of the Restricted Subsidiaries have paid
all taxes, interest and penalties, if any, which have become due
pursuant to such returns or pursuant to any assessment received by any
of them other than those in respect of which liability based on such
46
returns is being contested in good faith and by appropriate
proceedings where adequate reserves have been established in
accordance with GAAP. Adequate provision for payment has been made for
taxes not yet due. There are no tax disputes existing or pending
involving the Borrower, any of the Restricted Subsidiaries or the
Business which could reasonably be expected to have a Material Adverse
Effect;
(u) AUTHORIZED AND ISSUED CAPITAL AND CORPORATE STRUCTURE. No person has
any agreement, option, right or privilege, whether pre-emptive or
contractual, capable of becoming an agreement or option for the
purchase of any securities in the capital of the Borrower or any
Restricted Subsidiary. The authorized and issued capital of the
Borrower and each Restricted Subsidiary and the registered and
beneficial holders of all the issued and outstanding shares in the
capital of the Borrower are as set forth in Schedule ERROR! REFERENCE
SOURCE NOT FOUND.;
(v) CAPITALIZATION. Each of the Borrower and each Restricted Subsidiary
has capital sufficient to carry on its business and transactions and
all business and transactions in which it is about to engage, is
solvent and able to pay its debts as they mature and owns property
having a value, both at fair valuation and at present fair realizable
value, greater than the amount required to pay its debts;
(w) FINANCIAL STATEMENTS. The audited financial statements of the Borrower
for the Fiscal Year ended July 31, 2002, copies of which have been
furnished to the Lender, fairly present the consolidated financial
position of the Borrower at such date and the consolidated results of
the operations and changes in cash flows of the Borrower for such
period, all in accordance with GAAP. Since July 31, 2002, there has
been no change in the financial position or operations of the Borrower
which could have a Material Adverse Effect;
(x) SCHEDULE DISCLOSURE. At the date of this Agreement:
(i) Schedule ERROR! REFERENCE SOURCE NOT FOUND. is a list of all
jurisdictions (or registration districts within such
jurisdictions) in which the Borrower and each of its
Restricted Subsidiaries (i) have their respective chief
executive office, head office, registered office and chief
place of business, (ii) carry on business, (iii) have any
account debtors, or (iv) store any tangible personal property
(except for goods in transit in the ordinary course of
business);
47
(ii) Schedule ERROR! REFERENCE SOURCE NOT FOUND. is a list of all
authorizations, permits, consents, registrations and approvals
which are material to the Borrower or any Restricted
Subsidiary;
(iii) Schedule ERROR! REFERENCE SOURCE NOT FOUND. is a list of all
trademarks, tradenames, copyrights and patents (and the
registration particulars thereof) which are material to the
Borrower or any Restricted Subsidiary;
(iv) Schedule ERROR! REFERENCE SOURCE NOT FOUND. is a list of all
actions, suits, arbitrations or proceedings pending, taken or
to the Borrower's knowledge, threatened, before or by any
Governmental Entity or other Person affecting the Borrower or
any Restricted Subsidiary involving claims which individually
or in the aggregate exceed Cdn.$100,000;
(v) Schedule ERROR! REFERENCE SOURCE NOT FOUND. contains a list of
all pension plans of the Borrower and the Restricted
Subsidiaries;
(vi) Schedule ERROR! REFERENCE SOURCE NOT FOUND. contains a list of
all agreements, contracts or similar instruments to which the
Borrower or any of the Restricted Subsidiaries is a party or
to which any of their assets could be subject, for which
breach, non-performance, cancellation or failure to renew
could reasonably be expected to have a Material Adverse
Effect;
(y) DISCLOSURE. All (i) forecasts and projections supplied to the Lender
were prepared in good faith, adequately disclosed all relevant
assumptions and are reasonable, and (ii) other written information
supplied to the Lender is true and accurate in all material respects.
There is no fact known to the Borrower which could reasonably be
expected to have a Material Adverse Effect and which has not been
fully disclosed to the Lender;
(z) PENSION PLANS. All contributions required under applicable law have
been made in respect of all pension plans of the Borrower and each of
the Restricted Subsidiaries and each such pension plan is fully funded
on an ongoing and termination basis;
(aa) BOOKS AND RECORDS. All books and records of the Borrower and the
Restricted Subsidiaries have been fully, properly and accurately kept
and completed and there are no material inaccuracies or discrepancies
48
of any kind contained or reflected therein. The Borrower's and its
Restricted Subsidiaries' books and records and other data and
information are available to the Borrower in the ordinary course of
its business; and
(bb) LABOUR MATTERS. Neither the Borrower nor any Restricted Subsidiary is
a party to any collective bargaining agreement.
SECTION 8.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
The representations and warranties herein set forth or contained in any
certificates or documents delivered to the Lender pursuant hereto shall not
merge in or be prejudiced by and shall survive all Accommodations hereunder and
shall continue in full force and effect so long as any amounts are owing by the
Borrower to the Lender hereunder or under any of the Loan Documents. In case an
inaccuracy with respect to any of the representations and warranties herein set
forth becomes known to the Borrower or any Restricted Subsidiary or both of
them, the Borrower shall or shall cause the Restricted Subsidiary to immediately
give notice of the same to the Lender, and the Borrower shall or shall cause the
Restricted Subsidiary, within five Business Days from the date of giving such
notice to the Lender, to use its best efforts to cure said inaccuracy (to the
extent curable) to the satisfaction of the Lender.
ARTICLE 9
COVENANTS OF THE BORROWER
SECTION 9.1 AFFIRMATIVE COVENANTS.
So long as any amount owing under this Agreement remains unpaid or the
Lender has any obligation under this Agreement, and unless consent is given in
accordance with Section 11.2, the Borrower shall:
(a) FINANCIAL REPORTING. Deliver to the Lender (i) within 60 days of the
commencement of each Fiscal Year, the Borrower's Annual Business Plan
for the Fiscal Year, together with the detailed budget for the Fiscal
Year providing supplementary detailed schedules and information
supplementary to and consistent with the Annual Business Plan, (ii) as
soon as practicable and in any event within 45 days after the end of
each of the first three Fiscal Quarters in each Fiscal Year, and
within 60 days after the end of the fourth Fiscal Quarter, a
consolidated balance sheet of the Borrower as of the end of the Fiscal
Quarter, (y) consolidating balance sheets of the Borrower and each of
the Restricted Subsidiaries, and (z) the related consolidated and
consolidating statements of earnings and cashflows for the Fiscal
Quarter (and year-to-date); in each case (except for the statement of
49
cashflows) setting forth in comparative form the figures for the
corresponding Fiscal Quarter and corresponding portion of the previous
Fiscal Year, (iii) as soon as practicable and in any event within 105
days after the end of each Fiscal Year, a copy of the audited
financial statements of the Borrower for the Fiscal Year prepared on a
consolidated basis and reported on by the Borrower's independent
auditors and (iv) together with each delivery of financial statements,
a Compliance Certificate;
(b) CANTEL. Deliver to the Lender (i) within 60 days of the commencement
of each Fiscal Year, Cantel's Annual Business Plan for the Fiscal
Year, together with the detailed budget for the Fiscal Year providing
supplementary detailed schedules and information supplementary to and
consistent with the Annual Business Plan, (ii) as soon as practicable
and in any event within 45 days after the end of each of the first
three Fiscal Quarters in each Fiscal Year, and within 60 days after
the end of the fourth Fiscal Quarter, a consolidated balance sheet of
Cantel as of the end of the Fiscal Quarter, and the related
consolidated statements of earnings and cashflows for the Fiscal
Quarter and for the period commencing at the end of the previous
Fiscal Year and ending with the end of the Fiscal Quarter; (iii) as
soon as practicable and in any event within 105 days after the end of
each Fiscal Year, a copy of the audited financial statements of Cantel
for the Fiscal Year prepared on a consolidated basis and reported on
by Cantel's independent auditors together with unaudited consolidating
financial statements and (iv) together with each delivery of financial
statements, a copy of the compliance certificate delivered pursuant to
the Parent Facility;
(c) ACCOUNTS RECEIVABLE AND INVENTORY REPORTING. Deliver to the Lender as
soon as available, and in any event within 30 days of the end of each
month in respect of the preceding month, (i) a detailed statement of
accounts receivable and an aging of the accounts receivable reconciled
to the general ledger of the Borrower and the Restricted Subsidiaries
and such other details, including classification by nature, customer
location and currency as Lender may reasonably require, (ii) a summary
detailed statement of Inventory reconciled to the general ledger of
the Borrower and the Restricted Subsidiaries classified by species
thereof or on any other basis the Lender may reasonably require, (iii)
a detailed statement of Priority Accounts Payable and (iv) a Borrowing
Base Certificate, calculated as of the date of such certificate;
(d) ENVIRONMENTAL REPORTING. Promptly, and in any event within 10 days,
deliver to the Lender a detailed statement describing any of the
50
following occurrences (i) any order or judgment of any Governmental
Entity requiring the Borrower or any of the Restricted Subsidiaries to
incur Environmental Liabilities (w) in excess of Cdn.$50,000 in any
one instance, (x) together with all other expenditures incurred in
respect of Environmental Liabilities in any Fiscal Year, in excess of
Cdn.$100,000 in the aggregate, (ii) any state of affairs on any of the
Properties which could result in the incurrence of Environmental
Liabilities in excess of Cdn.$50,000 in any one instance, or together
with all other expenditures incurred in respect of Environmental
Liabilities in any Fiscal Year, in excess of Cdn.$100,000 in the
aggregate, and (iii) the action taken or proposed to be taken in
connection with such occurrences;
(e) ADDITIONAL REPORTING REQUIREMENTS. Deliver to the Lender:
(i) as soon as available, and in any event within 30 days after
the end of each calendar month a detailed statement of the
accounts payable of the Borrower and each Restricted
Subsidiary as the Lender may reasonably require;
(ii) promptly upon becoming aware thereof, notice of all actions,
suits and proceedings before any court or governmental
department, commission, board, bureau, agency or
instrumentality, domestic or foreign, or any other event,
materially adversely affecting the Borrower;
(iii) promptly upon becoming aware thereof, notice of any event that
may have a Material Adverse Effect;
(iv) within two Business Days of becoming aware thereof of any
default, or event, condition or occurrence which with notice
or lapse of time, or both, would constitute a default under
any agreement for Debt of the Borrower and under which the
Borrower or a Restricted Subsidiary owes at least
Cdn.$100,000;
(v) promptly notify the Lender of any changes to the corporate
structure and shareholdings as contemplated herein with
respect to the Borrower from that set forth in Schedule 8.1(s)
hereto;
(vi) as soon as practicable, and in any event within five days
after the occurrence of each Default or Event of Default, a
statement of the chief financial officer of the Borrower or
any other officer acceptable to the Lender setting forth the
details of the Default
51
or Event of Default and the action which the Borrower
proposes to take or has taken;
(vii) from time to time upon request of the Lender, evidence of the
maintenance of all insurance required to be maintained
pursuant to this Agreement, including originals or copies as
the Lender may request of policies, certificates of insurance,
riders, endorsements and proof of premium payments;
(viii) promptly upon their issuance, copies of all notices, reports,
press releases, circulars, offering documents and other
documents filed with, or delivered to, any stock exchange or
the
Ontario Securities Commission or a similar Governmental
Entity in any other jurisdiction; and
(ix) such other information respecting the condition or operations,
financial or otherwise, of the Business or the Borrower or any
Restricted Subsidiary as the Lender may from time to time
reasonably request;
(f) USE OF PROCEEDS. Use the proceeds made available to it under the Loan
Facilities only for the purposes specified in Section 2.3 hereof;
(g) BANK ACCOUNTS. Maintain bank accounts with the Lender into which all
receipts of the Borrower shall be deposited;
(h) PAYMENT OF OBLIGATIONS TO LENDER. Duly and punctually pay to the
Lender all amounts payable by it hereunder when due;
(i) PAYMENT OF TAXES, ETC. Pay and discharge and cause each of its
Restricted Subsidiaries to pay and discharge, before the same shall
become delinquent, (i) all taxes, assessments and governmental charges
or levies imposed upon it, a Restricted Subsidiary or upon its income,
sales, capital or profit or such of a Restricted Subsidiary over any
other property belonging to it or a Restricted Subsidiary, and (ii)
all claims which if unpaid, might by law become a Lien upon the
assets, except any such tax, assessment, charge or claim which is
being contested in good faith and by proper proceedings and for which
adequate provision for payment has been made in accordance with GAAP
or which are Permitted Liens;
(j) MAINTENANCE OF INSURANCE. Maintain insurance with responsible and
reputable insurance companies or associations in such amounts and
covering such risks as is usually carried by companies engaged in
similar businesses and owning similar properties in the same general
52
areas in which the Borrower operates, such policies to show the Lender
as a loss payee thereof under a mortgage clause in a form approved by
the Insurance Bureau of Canada and promptly furnish or cause to be
furnished to the Lender, evidence of the maintenance of all such
insurance satisfactory to the Lender;
(k) PRESERVATION OF CORPORATE EXISTENCE, ETC. Preserve and maintain its
and cause its Restricted Subsidiaries to preserve and maintain their
corporate existence and rights (charter and statutory);
(l) COMPLIANCE WITH LAWS, ETC. Comply and cause each of its Restricted
Subsidiaries to comply, in all material respects, with all applicable
laws, (including Environmental Laws) regulations, orders, decisions
and awards and duly observe all valid requirements of Governmental
Entities, and all statutes and regulations or which relate to
Environmental Laws;
(m) VISITATION RIGHTS. At any reasonable time or times, on reasonable
advance notice, (i) permit the Lender and its representatives access
to the premises of the Borrower and its Restricted Subsidiaries and
permit the Lender to discuss the affairs, finances and accounts of the
Borrower with the officer appointed as (or performing the functions
of) the chief financial officer of the Borrower or any person
performing a similar function, and permit such representative to
discuss the affairs, finances and accounts of the Borrower and its
Restricted Subsidiaries with the Lender, and (ii) arrange for the
chief financial officer of Cantel to discuss the affairs, finances and
accounts of Cantel with the Lender;
(n) KEEPING OF BOOKS. Keep and cause each of its Restricted Subsidiaries
to keep proper books of record and account, in which full and correct
entries shall be made of all financial transactions, assets and
business of the Borrower and its Restricted Subsidiaries in accordance
with GAAP;
(o) MAINTENANCE OF PROPERTIES, ETC. Maintain and preserve and cause each
of its Restricted Subsidiaries to maintain and preserve all of its
material properties in all material respects in good repair, working
order and condition (reasonable wear and tear excepted) and, from time
to time, make and cause each of its Restricted Subsidiaries to make
all needful and proper repairs, renewals, replacements, additions and
improvements thereto, so that the business carried on may be properly
and advantageously conducted at all times in accordance with prudent
business management;
53
(p) CURE DEFECTS. Promptly cure or cause to be cured any defects in the
execution and delivery of any of the Loan Documents or any of the
other agreements, instruments or documents contemplated thereby or
executed pursuant thereto or any defects in the validity or
enforceability of any of the Security and at the Borrower's expense,
execute and deliver or cause to be executed and delivered, all such
agreements, instruments and other documents as the Lender may consider
necessary or desirable for the foregoing purposes and make all
necessary filings and recordings for the foregoing purposes;
(q) TRADES PAYABLES. Make payments to creditors only in the ordinary
course of business and in accordance with the customary practice of
the Borrower with respect to the aging of such accounts payable prior
to payment;
(r) CREDIT POLICY AND ACCOUNTS RECEIVABLE. Maintain, at all times, written
credit policies consistent with good business practices, adhere to
such policies and collect, and cause each of its Restricted
Subsidiaries to collect, accounts receivable in the ordinary course of
business;
(s) AUDITORS. Appoint as its auditors a firm of national standing; and
(t) FURTHER ASSURANCES. At its cost and expense, upon request of the
Lender, execute and deliver or cause to be executed and delivered to
the Lender such further instruments and do and cause to be done such
further acts as may be necessary or proper in the reasonable opinion
of the Lender to carry out more effectually the provisions and
purposes of the Loan Documents.
SECTION 9.2 NEGATIVE COVENANTS.
So long as any amount owing under the
Loan Agreement remains unpaid or the
Lender has any obligation under this Agreement and, unless consent is given in
accordance with Section 11.2, the Borrower shall not:
(a) DEBT. Create, incur, assume or suffer to exist or permit any of the
Restricted Subsidiaries to create, incur, assume or suffer to exist
any Debt other than (i) Debt to the Lender under this Agreement, (ii)
Debt incurred in respect of Purchase Money Mortgages up to an
aggregate outstanding amount, at any time, of U.S.$150,000 (or the
equivalent amount in any other currency), (iii) Debt described in
Schedule ERROR! REFERENCE SOURCE NOT FOUND. or any refinancing,
replacement or renewal of such Debt not exceeding (y) in principal
amount, the amount outstanding on the date of the refinancing, renewal
or replacement by more than 110%, and (z) in interest rate, a market
54
competitive rate on the date of the refinancing, renewal or
replacement, and otherwise on terms and conditions no more restrictive
than the terms and conditions of the Debt to be refinanced, renewed or
replaced, (iv) Debt of any Restricted Subsidiary to the Borrower or
any other Restricted Subsidiary which shall not, in any event, exceed
the limitations set forth in Section 9.2(i), (v) Debt of a Restricted
Subsidiary that is subordinated to the Debt owing to the Lender
pursuant to this Agreement, such subordination to be on terms
satisfactory to the Lender prior to its incurrance or assumption, and
(vi) additional unsecured Debt not otherwise permitted pursuant to
Section (i) to (v) above;
(b) LIENS. Create, incur, assume or suffer to exist, or permit any of the
Restricted Subsidiaries to create, incur, assume or suffer to exist,
any Lien on any of their respective properties or assets other than
(i) Permitted Liens, and (ii) Purchase Money Mortgages;
(c) MERGERS, ETC. Enter into, or permit any of the Restricted Subsidiaries
to enter into, any reorganization, consolidation, amalgamation,
arrangement, winding-up, merger or other similar transaction;
(d) DISPOSAL OF ASSETS GENERALLY. Sell, exchange, lease, release or
abandon or otherwise dispose of, or permit any of the Restricted
Subsidiaries to sell, exchange, lease, release or abandon or otherwise
dispose of, any assets or properties (other than shares) to any Person
other than (i) bona fide sales, exchanges, leases, abandonments or
other dispositions in the ordinary course of business for the purpose
of carrying on the Business or its business, as the case may be, and
at fair market value, (ii) property or assets (other than shares)
which have no material economic value in the Business or business or
are obsolete, and (iii) dispositions pursuant to a transaction
permitted in Section 9.2(e);
(e) TRANSACTIONS WITH RELATED PARTIES. Except as otherwise permitted in
Section 9.2(c), Section 9.2(h), and Section 9.2(i), directly or
indirectly, enter into or allow any Restricted Subsidiary to enter
into, any agreement with, make any financial accommodation for, or
otherwise enter into any transaction with, a Related Party except in
the ordinary course of, and pursuant to the reasonable requirements
of, business and at prices and on terms not less favourable to the
Borrower or the Restricted Subsidiary, as the case may be, than could
be obtained in a comparable arm's length transaction with another
Person;
55
(f) CHANGE IN BUSINESS. Make any material change in the nature of the
Business or permit any of the Restricted Subsidiaries to make any
material change in the nature of its business;
(g) SHARE CAPITAL. (i) Issue or permit any of its Restricted Subsidiaries
to issue shares, or any options, warrants or securities convertible
into shares, except to the Borrower, Cantel, or another Restricted
Subsidiary, provided in each case, the shares, option, warrants or
securities issued by the Restricted Subsidiaries have been pledged to
the Lender pursuant to the Security Documents, or (ii) permit any
transaction which result in a Change of Control of the Borrower or any
Restricted Subsidiary;
(h) DISTRIBUTIONS. Declare, make or pay or permit any Restricted
Subsidiary to declare, make or pay any Distributions, except (provided
that no Default or Event of Default has occurred and is continuing or
could result therefrom) that (i) any subsidiary of the Borrower may
declare and pay dividends to the Borrower or any Restricted
Subsidiary; (ii) the Borrower may make Distributions to Cantel; and
(iii) the Borrower may make payments on account of management fees up
to a maximum amount of U.S.$750,000 in any Fiscal Year;
For purposes of this Section 9.2(h), "DISTRIBUTION" means with respect
to any Person the amount of (i) any dividend or other distribution on
issued shares of the Person or any of its subsidiaries, (ii) the
purchase, redemption or retirement amount of any issued shares,
warrants or any other options or rights to acquire shares of the
Person or any of its subsidiaries redeemed or purchased by the Person
or any its subsidiaries, or (iii) any payments whether as consulting
fees, management fees or otherwise to any Related Party of the Person
or any of its subsidiaries.
(i) FINANCIAL ASSISTANCE. Give or permit any of the Restricted
Subsidiaries to give, any Financial Assistance to any Person, except
for (i) inter-company loans made by the Borrower to Cantel, (ii)
Financial Assistance by the Borrower to a Restricted Subsidiary, by a
Restricted Subsidiary to the Borrower or by a Restricted Subsidiary to
another Restricted Subsidiary not exceeding $100,000 in the aggregate,
provided that if it is an inter-company loan where the lender is a
Restricted Subsidiary located in the United States, the inter-company
loan is evidenced by a promissory note and security satisfactory to
the Lender which have been assigned to the Lender as Security, (iii)
investments in Cash Equivalents, (iv) Financial Assistance which
constitutes a Permitted Acquisition, (v) Financial Assistance
permitted
56
under Section 9.2(h), (vi) financial accommodations made for employees
(including any loans outstanding at the date hereof and listed on
Schedule ERROR! REFERENCE SOURCE NOT FOUND.) not in excess of $200,000
in the aggregate, and (vii) such other Financial Assistance as the
Lender may approve in writing in the exercise of its sole discretion;
For the purposes of this Section 9.2(i), "FINANCIAL ASSISTANCE" means
any advances, loans or other extensions of credit, guarantees,
indemnities or other contingent liabilities or capital contributions
(other than prepaid expenses in the ordinary course of business) to
(by means of transfers of property, money or assets), or any purchase
of any shares, stocks, bonds, notes, debentures or other securities
of, any Person or the acquisition of all or substantially all the
assets of, any Person or of a business carried on by, or a division
of, any Person. In determining the aggregate amount of Financial
Assistance outstanding at any particular time, (i) take the amount of
any Investment represented by a guarantee or similar contingent
obligation at not less than the principal amount of the obligations
guaranteed and outstanding, (ii) deduct in respect of any Financial
Assistance any amount received by the Borrower or a Restricted
Subsidiary as return of capital (but only by repurchase, redemption,
retirement, repayment, liquidating dividend or liquidating
distribution), (iii) do not deduct in respect of any Financial
Assistance any amounts received as earnings on such Financial
Assistance, whether as dividends, interest or otherwise, and (iv) do
not deduct from the aggregate amount of Financial Assistance any
decrease in its market value;
For purposes of this Section 9.2(i), "CASH EQUIVALENTS" means any of
the following, so long as the same are maintained in accounts in which
the Lender has a perfected security interest: (i) securities issued,
guaranteed or insured by the government of Canada or any province, or
the United States of America or any state, and having terms to
maturity of not more than one year, and (ii) certificates of deposit
having maturities of not more than one year issued or guaranteed by a
Canadian chartered bank and rated R-1 low (or the then equivalent
grade) or better by Dominion Bond Rating Service;
(j) LEASE-BACKS. Enter into or permit any of its Restricted Subsidiaries
to enter into any arrangements, directly or indirectly, with any
Person, whereby the Borrower or such Restricted Subsidiary, as the
case may be, shall sell or transfer any property, whether now owned or
hereafter acquired, used or useful in the Business, in connection with
the rental or lease of the property so sold or transferred or of other
property for
57
substantially the same purpose or purposes as the property so sold or
transferred unless such arrangement constitutes a Permitted Lien;
(k) SUBSIDIARIES AND PARTNERSHIPS.
(i) Incorporate or acquire any subsidiaries or commence to carry
on the Business, otherwise than through the Borrower or become
a partner or participant in any partnership or joint venture
except for Unrestricted Subsidiaries or Permitted Acquisitions
where, in such latter case, the subsidiary (i) is a
wholly-owned subsidiary incorporated as a limited liability
company under the laws of Canada or one of its provinces or
territories, and (ii) has executed and delivered to the Lender
an unconditional and unlimited guarantee of all obligations of
the Borrower under this Agreement and the other Loan Documents
together with first-ranking Security over all of its property
and assets and accompanied by opinions satisfactory to the
Lender; and
(ii) Permit any Unrestricted Subsidiary to (i) carry on an active
business, (ii) have assets or revenues in excess of $50,000,
(iii) have any liabilities in excess of $50,000, or (iv) have
any Debt which cross-defaults or cross-accelerates to any Debt
of the Borrower or any of the Restricted Subsidiaries;
For purposes of this Section 9.2(k), "UNRESTRICTED SUBSIDIARIES" means
all Subsidiaries other than the Restricted Subsidiaries.
(l) CAPITAL EXPENDITURES. Make or commit to make, or permit any of its
Restricted Subsidiaries to make or commit to make, in the Fiscal Year
ending July 31, 2004, any Capital Expenditures or Permitted
Acquisitions (to the extent such acquisition would not otherwise be
included as a Capital Expenditure) exceeding, collectively with the
cash and non-cash consideration to be paid in connection with a
Permitted Acquisition, U.S. $1,000,000, exclusive of the Biolab
Acquisition, and thereafter, in such amount as the Lender advises on
an annual basis;
(m) OPERATING LEASES. Enter into any operating leases requiring payment on
an annual basis in excess of Cdn. $500,000;
(n) COMPROMISE OF ACCOUNTS. Compromise or adjust or permit any of the
Restricted Subsidiaries to compromise or adjust any of its accounts
receivable (or extend the time for payment thereof) or grant any
58
discounts, allowances or credits, in each case other than in the
normal course of business;
(o) INVOICES. Redate any invoice or sale or provision of service or make
sales or provide services on extended dating beyond that customary in
the Business or the business of the Restricted Subsidiaries;
(p) FISCAL YEAR. Change its Fiscal Year;
(q) AMENDMENTS. Allow any amendments to any Material Agreement if such
amendments could reasonably be expected to have a Material Adverse
Effect;
(r) PAYMENTS IN ORDINARY COURSE OF BUSINESS, ETC. Make, or permit any
Restricted Subsidiary to make, any payments outside the ordinary
course of business, make any prepayments of professional fees or place
any funds in excess of $100,000 on trust with third parties;
(s) CONTAMINANTS, ETC. Permit any asbestos, asbestos-containing materials,
PCBs, radioactive substances or other contaminants which could be the
subject of a clean-up order to be located on, at or under any of the
Properties. Permit any underground storage vessels to be located or
installed at any of the Properties; and
(t) MANAGEMENT FEES. Pay any annual management fees exceeding, in the
aggregate, U.S.$750,000.
SECTION 9.3 FINANCIAL COVENANTS.
So long as any amount owing under this Agreement remains unpaid or the
Lender has any obligation under this Agreement, and unless consent is given in
accordance with Section 11.2, the Borrower shall:
(a) TOTAL LIABILITY TO TANGIBLE NET WORTH RATIO. Maintain, at all times, a
ratio of Total Liabilities to Tangible Net Worth of not more than (i)
prior July 31, 2004, 1.50:1 (ii) and as of July 31, 2004 and
thereafter, 1.25:1.
(b) MAINTENANCE OF DEBT SERVICE RATIO. Maintain, at all times, a ratio,
calculated at the end of each Fiscal Quarter for the four Fiscal
Quarters then ended of Cashflow to Debt Service of not less than 3:1;
and
(c) MAINTENANCE OF CURRENT RATIO. Maintain, at all times, a ratio of
Current Assets to Current Liabilities of not less than 2:1.
59
SECTION 9.4 SECURITY COVENANTS.
So long as any amount owing under this Agreement remains unpaid or the
Lender has any obligation under this Agreement, and unless consent is given in
accordance with Section 11.2, the Borrower shall:
(a) STATUS OF ACCOUNTS COLLATERAL. With respect to the Collateral (i)
maintain books and records pertaining to the Collateral in such
detail, form and scope as the Lender reasonably requires, (ii) within
two Business Days upon learning thereof, report to the Lender in
respect of any reclamation, return or repossession of inventory (other
than such inventory as is resorted and redelivered) in excess of
Cdn.$100,000 for any single reclamation, return or repossession of
inventory or in excess of Cdn.$500,000 for all such reclamations,
returns or repossessions taken together in any Fiscal Year, or claims
or disputes in any Fiscal Year in the aggregate in excess of
Cdn.$500,000 asserted by customers or other obligors, any loss or
destruction of, or substantial damage to, any of the Collateral and
any other matters affecting the value, enforceability or
collectability of any of the Collateral, (iii) if any amount payable
under or in connection with any account in excess of Cdn. $25,000 is
evidenced by a promissory note or other instrument, immediately
pledge, endorse, assign and deliver to the Lender the promissory note
or instrument, as additional Collateral, (iv) notify the Lender in
writing of any agreement under which any terms of sale or service
(written or oral) which are materially different from normal operating
procedures may have been or will be granted, and (v) conduct a
physical count of the Inventory at such intervals as the Lender may
reasonably request and promptly supply the Lender with a copy of such
counts accompanied by a report of the value (based on the lower of
cost (on a first in, first out basis) or market value) of such
inventory;
(b) BUSINESS OUTSIDE CERTAIN JURISDICTIONS. At least 30 days prior to any
of the following changes becoming effective, notify the Lender in
writing of (i) any proposed change in the locations of (w) any place
of business of the Borrower or any Restricted Subsidiary, (x) the
chief executive office or head office of the Borrower or any
Restricted Subsidiary, (z) any place where tangible property of the
Borrower or any Restricted Subsidiary is stored, and (ii) any proposed
change in the name of the Borrower or any Restricted Subsidiary; and
(c) PERFECTION AND PROTECTION OF SECURITY INTEREST. Perform, execute and
deliver and cause its Restricted Subsidiaries to perform, execute and
deliver all acts, agreements and other documents as may be requested
60
by the Lender at any time to register, file signify, publish, perfect,
maintain, protect, and enforce the Security including, without
limitation, (i) executing, recording and filing of the Loan Documents
and financing or continuation statements in connection therewith, in
form and substance satisfactory to the Lender, (ii) delivering to the
Lender the originals of all instruments, documents and chattel paper
and all other Collateral of which the Lender determines it should have
physical possession in order to perfect and protect the Security, duly
endorsed or assigned to the Lender, (iii) delivering to the Lender
warehouse receipts covering any portion of the Collateral located in
warehouses and for which warehouse receipts are listed, (iv) placing
notations on its books of account to disclose the Security Interest,
(v) delivering to the Lender all letters of credit on which the
Borrower or any Restricted Subsidiary is named beneficiary, and (vi)
taking such other steps as are deemed necessary by the Lender to
maintain the Security.
ARTICLE 10
EVENTS OF DEFAULT
SECTION 10.1 EVENTS OF DEFAULT.
If any of the following events (each an "EVENT OF DEFAULT") occurs and is
continuing:
(a) The Borrower fails to pay any amount of the Accommodations
Outstanding, interest or Fees when such amount becomes due and
payable;
(b) Any statement, representation or warranty or certification made or
deemed to be made by the Borrower or a Restricted Subsidiary or any of
their respective directors or officers in any Loan Document shall
prove to have been incorrect in any material respect when made or
deemed to be made; and, if the circumstances giving rise to the
incorrect representation or warranty are capable of modification or
rectification (such that, thereafter the representation or warranty
would be correct), the representation or warranty remains uncorrected
for a period of five days;
(c) The Borrower fails to perform, observe or comply with any of the
covenants contained in Section 9.2 or Section 9.3;
61
(d) The Borrower fails to perform, observe or comply with any of the
covenants contained in Section 9.1 or in any other Loan Document and
such failure remains unremedied for five days;
(e) A Restricted Subsidiary or Cantel fails to perform or observe any
term, covenant or agreement contained in any Loan Document to which it
is a party and such failure remains unremedied for five days;
(f) There is a Parent Event of Default;
(g) The Borrower or any of its Restricted Subsidiaries fails to pay the
principal of, or premium or interest on, any of its Debt (excluding
Debt under this Agreement) which is outstanding in an aggregate
principal amount exceeding Cdn.$50,000 (or the equivalent amount in
any other currency) when such amount becomes due and payable (whether
by scheduled maturity, required prepayment, acceleration, demand or
otherwise) and such failure continues after the applicable grace
period, if any, specified in the agreement or instrument relating to
the Debt; or any other event occurs or condition exists and continues
after the applicable grace period, if any, specified in any agreement
or instrument relating to any such Debt, if its effect is to
accelerate, or permit the acceleration of the Debt; or any such Debt
shall be declared to be due and payable prior to its stated maturity;
(h) The Borrower or any Restricted Subsidiary fails to perform or observe
any term, covenant or agreement contained in any Material Agreement on
its part to be performed or observed where such failure could
reasonably be expected to have a Material Adverse Effect; or any
Material Agreement is terminated or revoked or permitted to lapse
(other than in accordance with its terms and not as a result of
default); or any party to any Material Agreement delivers a notice of
termination or revocation (other than in accordance with its terms and
not as a result of default) in respect of the Material Agreement;
(i) Any judgment or order for the payment of money in excess of Cdn.
$100,000 (or the equivalent amount in any other currency) is rendered
against the Borrower or any of its Restricted Subsidiaries and either
(i) enforcement proceedings have been commenced by a creditor upon the
judgment or order, or (ii) there is any period of 30 consecutive days
during which a stay of enforcement of the judgment or order, by reason
of a pending appeal or otherwise, is not in effect;
(j) The Accommodations Outstanding exceed the Lending Limit as disclosed
in any Borrowing Base Certificate delivered on a weekly
62
basis pursuant to Section 2.5(1) or if such Borrowing Base Certificate
is not delivered within two days of the due date specified therefor in
Section 9.1(c); or
(k) There is a Change of Control;
(l) The Borrower or any of its Restricted Subsidiaries (i) becomes
insolvent or generally not able to pay its debts as they become due,
(ii) admits in writing its inability to pay its debts generally or
makes a general assignment for the benefit of creditors, (iii)
institutes or has instituted against it any proceeding seeking (x) to
adjudicate it a bankrupt or insolvent, (y) liquidation, winding-up,
reorganization, arrangement, adjustment, protection, relief or
composition of it or its debts under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors including any plan of
compromise or arrangement or other corporate proceeding involving or
affecting its creditors, or (z) the entry of an order for relief or
the appointment of a receiver, trustee or other similar official for
it or for any substantial part of its properties and assets, and in
the case of any such proceeding instituted against it (but not
instituted by it), either the proceeding remains undismissed or
unstayed for a period of 30 days, or any of the actions sought in such
proceeding (including the entry of an order for relief against it or
the appointment of a receiver, trustee, custodian or other similar
official for it or for any substantial part of its properties and
assets) occurs, or (iv) takes any corporate action to authorize any of
the above actions;
(m) The Lender shall determine in good faith, but otherwise in its sole
opinion, that there has occurred an event or development likely to
have a Material Adverse Effect which relates to the ability of the
Borrower to perform its obligations under the Loan Documents or that
materially adversely affects the Collateral; or
(n) The audited consolidated financial statements of the Borrower
are qualified in any material respect by the Borrower's independent
auditors;
then the obligation of the Lender to make further Accommodations shall
immediately terminate and the Lender may declare the Accommodations Outstanding,
all accrued interest and Fees and all other amounts payable under this Agreement
to be immediately due and payable, without presentment, demand, protest or
further notice of any kind, all of which are expressly waived by the Borrower.
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SECTION 10.2 REMEDIES UPON DEFAULT.
(1) Upon a declaration that the Accommodations Outstanding are immediately due
and payable pursuant to Section 10.1, the Lender may commence such legal
action or proceedings as it, in its sole discretion, deems expedient,
including, the commencement of enforcement proceedings under the Loan
Documents all without any additional notice, presentation, demand, protest,
notice of dishonour, entering into of possession of any property or assets,
or any other action or notice, all of which are expressly waived by the
Borrower.
(2) The rights and remedies of the Lender under the Loan Documents are
cumulative and are in addition to, and not in substitution for, any other
rights or remedies. Nothing contained in the Loan Documents with respect to
the indebtedness or liability of the Borrower to the Lender, nor any act or
omission of the Lender with respect to the Loan Documents or the Security
shall in any way prejudice or affect the rights, remedies and powers of the
Lender under the Loan Documents and the Security.
ARTICLE 11
MISCELLANEOUS
SECTION 11.1 REVIEW OF AGREEMENT.
The Lender and the Borrower agree to review the terms of this Agreement and
the Loan Facilities provided hereunder by October 31, 2003 and at least annually
thereafter.
SECTION 11.2 AMENDMENTS, ETC.
No amendment or waiver of any provision of any of the Loan Documents, nor
consent to any departure by the Borrower or any other Person from such
provisions, is effective unless in writing and approved by the Lender. Any
amendment, waiver or consent is effective only in the specific instance and for
the specific purpose for which it was given.
SECTION 11.3 WAIVER.
(1) No failure on the part of the Lender to exercise, and no delay in
exercising, any right under any of the Loan Documents shall operate as a
waiver of such right; nor shall any single or partial exercise of any right
under any of the Loan Documents preclude any other or further exercise of
such right or the exercise of any other right.
(2) Except as otherwise expressly provided in this Agreement, the covenants,
representations and warranties shall not merge on and shall survive the
initial Accommodation and, notwithstanding such initial Accommodation or
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any investigation made by or on behalf of any party, shall continue in full
force and effect. The closing of this transaction shall not prejudice any
right of one party against any other party in respect of anything done or
omitted under this Agreement or in respect of any right to damages or other
remedies.
SECTION 11.4 EVIDENCE OF DEBT AND ACCOMMODATION NOTICES.
(1) The indebtedness of the Borrower resulting from Accommodations under the
Loan Facilities shall be evidenced by the records of the Lender which shall
constitute prima facie evidence of such indebtedness.
(2) Prior to the receipt of any Accommodation Notice, the Lender may act on the
basis of a notice by telephone (containing the same information as would be
contained in the Accommodation Notice) believed by it to be from an
authorized person representing the Borrower. In the event of a conflict
between the Lender's record of any Accommodation and the Accommodation
Notice, the Lender's record shall prevail, absent manifest error.
SECTION 11.5 NOTICES, ETC.
Any notice, direction or other communication to be given under this
Agreement shall, except as otherwise permitted, be in writing and given by
delivering it or sending it by facsimile or other similar form of recorded
communication addressed:
(a) to the Borrower at:
000 Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Vice-President Finance
Telephone: 000-000-0000
Telecopier: 000-000-0000
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with a copy to:
Cantel Medical Corp.
000 Xxxxx Xxxx
0xx Xxxxx
Xxxxxx Xxxxx, Xxx Xxxxxx
00000 U.S.A.
Attention: Vice-President and Controller
Telephone: 000-000-0000
Telecopier: 000-000-0000
(b) to the Lender at:
0000 Xxxxxxx #0 Xxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Senior Manager Commercial Banking
Telephone: 000-000-0000
Telecopier: 000-000-0000
Any such communication shall be deemed to have been validly and effectively
given if (i) personally delivered, on the date of such delivery if such date is
a Business Day and such delivery was made prior to 4:00 p.m. (Toronto time),
otherwise on the next Business Day, (ii) transmitted by facsimile or similar
means of recorded communication on the Business Day following the date of
transmission. Any party may change its address for service from time to time by
notice given in accordance with the foregoing and any subsequent notice shall be
sent to the party at its changed address.
SECTION 11.6 COSTS, EXPENSES AND INDEMNITY.
(1) The Borrower shall, whether or not the transactions contemplated in this
Agreement are completed, indemnify and hold the Lender (the "INDEMNIFIED
PERSON") harmless from, and shall pay to such Indemnified Person on demand
any amounts required to compensate the Indemnified Person for, any claim or
loss suffered by, imposed on, or asserted against, the Indemnified Person
as a result of, connected with or arising out of (i) the preparation,
execution and delivery of, preservation of rights under, interpretation of,
maintenance of, perfection of, enforcement of, or refinancing,
renegotiation or restructuring of, the Loan Documents and any related
amendment, waiver or consent, (ii) any advice of counsel as to the
66
rights and duties of the Lender with respect to the administration of the
Loan Facilities, the Loan Documents or any transaction contemplated under
the Loan Documents, (iii) a default (whether or not constituting a Default
or an Event of Default) by the Borrower, (iv) any proceedings brought
against the Indemnified Person due to its entering into of any of the Loan
Documents and performing its obligations under the Loan Documents except to
the extent caused by the gross negligence or wilful misconduct of the
Indemnified Person, and (v) the presence of contaminants at, on or under,
or the discharge or likely discharge of contaminants from, any of the
Properties or any of the properties now or previously used by the Borrower,
any of the Restricted Subsidiaries, or the breach of or non-compliance with
any Environmental Law by any mortgagor, owner or lessee of such properties.
The Borrower authorizes the Lender to debit the Borrower's Accounts for any
and all of the costs and expenses referred to in paragraphs (i) and (ii)
and for all on-site inspections by the Lender or its representatives.
(2) If, with respect to the Lender, (i) any change in any law, rule,
regulation, judgment or order of general application, or any change in the
interpretation or application of such law, rule, regulation, judgment or
order, occurring or becoming effective after this date, or (ii) compliance
by the Lender with any direction, request or requirement (whether or not
having the force of law) of any Governmental Entity made or becoming
effective after the date, has the effect of causing any loss to the Lender
or reducing the Lender's rate of return by (w) increasing the cost to the
Lender of performing its obligations under this Agreement or in respect of
any Accommodations Outstanding (including the costs of maintaining any
capital, reserve or special deposit requirements but other than a reduction
resulting from a higher rate or from a change in the calculation of income
or capital tax relating to the Lender's income or capital in general), (x)
requiring the Lender to maintain or allocate any capital or additional
capital or affecting its allocation of capital in respect of its
obligations under this Agreement or in respect of any Accommodations
Outstanding, (y) reducing any amount payable to the Lender under this
Agreement or in respect of any Accommodations Outstanding by any material
amount, (z) causing the Lender to make any payment or to forego any return
on, or calculated by reference to, any amount received or receivable by the
Lender under this Agreement or in respect of any Accommodations
Outstanding, then the Lender may give notice to the Borrower specifying the
nature of the event giving rise to the loss and the Borrower may either
(iii) on demand, pay such amounts as the Lender specifies is necessary to
compensate it for any such loss, or (iv) provided no loss has yet been
suffered by the Lender or the Borrower has paid the compensating amount to
the Lender, repay the Accommodations Outstanding and terminate the Lender's
Commitments. A certificate as to the
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amount of any such loss submitted in good faith by the Lender to the
Borrower shall be conclusive and binding for all purposes, absent manifest
error.
(3) The Borrower shall pay to the Lender on demand any amounts required to
compensate the Lender for any loss suffered or incurred by it as a result
of (i) any payment being made in respect of a BA Instrument, Documentary
Credit or Advance, other than on the maturity or expiration or on the last
day of an Eurodollar Interest Period applicable to it, (ii) the failure of
the Borrower to give any notice in the manner and at the times required by
this Agreement, (iii) the failure of the Borrower to effect an
Accommodation in the manner and at the time specified in any Accommodation
Notice, or (iv) the failure of the Borrower to make a payment or a
mandatory repayment in the manner and at the time specified in this
Agreement. A certificate as to the amount of any loss submitted in good
faith by the Lender to the Borrower shall be conclusive and binding for all
purposes, absent manifest error.
(4) The provisions of this Section 11.6 shall survive the termination of this
Agreement and the repayment of all Accommodations Outstanding. The Borrower
acknowledges that neither its obligation to indemnify nor any actual
indemnification by it of the Lender or any other Indemnified Person in
respect of such Person's losses for the legal fees and expenses shall in
any way affect the confidentiality or privilege relating to any information
communicated by such Person to its counsel.
SECTION 11.7 TAXES AND OTHER TAXES.
(1) All payments to the Lender by the Borrower under any of the Loan Documents
shall be made free and clear of and without deduction or withholding for
any and all taxes, levies, imposts, deductions, charges or withholdings and
all related liabilities (all such taxes, levies, imposts, deductions,
charges, withholdings and liabilities being referred to as "TAXES") imposed
by Canada or the United States of America (or any political subdivision or
taxing authority of it), unless such Taxes are required by applicable law
to be deducted or withheld. If the Borrower shall be required by applicable
law to deduct or withhold any such Taxes from or in respect of any amount
payable under any of the Loan Documents except, as provided in the next
sentence, (i) the amount payable shall be increased (and for greater
certainty, in the case of interest, the amount of interest shall be
increased) as may be necessary so that after making all required deductions
or withholdings (including deductions or withholdings applicable to any
additional amounts paid under this Section 11.7(1), the Lender receives an
amount equal to the amount they would have received if no such deduction or
withholding had been made, (ii) the Borrower shall make such deductions
68
or withholdings, and (iii) the Borrower shall immediately pay the full
amount deducted or withheld to the relevant Governmental Entity in
accordance with applicable law.
(2) The Borrower agrees to immediately pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges, financial
institutions duties, debits taxes or similar levies (all such taxes,
charges, duties and levies being referred to as "OTHER TAXES") which arise
from any payment made by the Borrower under any of the Loan Documents or
from the execution, delivery or registration of, or otherwise with respect
to, any of the Loan Documents.
(3) The Borrower shall indemnify the Lender for the full amount of Taxes or
Other Taxes (including, without limitation, any Taxes or Other Taxes
imposed by any jurisdiction on amounts payable by the Borrower under this
Section 11.7 paid by the Lender and any liability (including penalties,
interest and expenses) arising from or with respect to such Taxes or Other
Taxes, whether or not they were correctly or legally asserted, excluding
taxes imposed on the Lender's net income, capital taxes or receipts and
franchise taxes. The Borrower will not be required to indemnify the Lender
for any Taxes or Other Taxes imposed by reason of the Lender being
connected with Canada otherwise than merely by lending money to the
Borrower pursuant to this Agreement. Payment under this indemnification
shall be made within 30 days from the date the Lender make written demand
for it. A certificate as to the amount of such Taxes or Other Taxes
submitted to the Borrower by the Lender shall be conclusive evidence,
absent manifest error, of the amount due from the Borrower to Lender.
(4) The Borrower shall furnish, at the request of the Lender, the original or a
certified copy of a receipt evidencing payment of Taxes or Other Taxes made
by the Borrower within 30 days after the date of any payment of Taxes or
Other Taxes.
(5) If the Lender is, in its sole opinion, entitled to claim a refund or able
to apply for or otherwise take advantage of any tax credit, tax deduction
or similar benefit by reason of any withholding or deduction made by the
Borrower in respect of a payment made by it under this Agreement, which
payment shall have been increased pursuant to Section 11.7(1), then the
Lender will use reasonable effort to obtain the refund, credit, deduction
or benefit and upon credit or receipt of it will pay to the Borrower, the
amount (if any) not exceeding the increased amount paid by the Borrower, as
equals the net after-tax value to the Lender of that part of the refund,
credit, deduction or benefit as it considers is allocatable to such
withholding or deduction having regard to all of its dealings giving rise
to similar credits, deductions or benefits in
69
relation to the same tax period and to the cost of obtaining the same.
Nothing contained in this Section 11.7(5) shall interfere with the right of
the Lender to arrange its tax affairs in whatever manner it deems fit and
in particular, the Lender shall be under no obligation to claim relief from
its corporate profits or similar tax liability in respect of any deduction
or withholding in priority to any other relief, claims, credits or
deductions available to it and the Lender shall not be obligated to
disclose to the Borrower any information regarding its tax affairs, tax
computations or otherwise.
(6) The provisions of this Section 11.7 shall survive the termination of the
Agreement and the repayment of all Accommodations Outstanding.
SECTION 11.8 SUCCESSORS AND ASSIGNS.
(1) This Agreement shall become effective when executed by the Borrower and the
Lender and after that time shall be binding upon and enure to the benefit
of the Borrower and the Lender and their respective successors and
permitted assigns.
(2) The Borrower shall not have the right to assign its rights or obligations
under this Agreement or any interest in this Agreement without the prior
consent of the Lender, which consent may be arbitrarily withheld.
(3) At any time prior to the occurrence of an Event of Default, the Lender may
with the prior written consent of the Borrower (which consent, in the case
of the Borrower, is not to be unreasonably withheld), assign all or any
part of its interest in the Loan Facilities to one or more Persons (each an
"ASSIGNEE") provided that such assignment is not made to a Person the
identity of which would have the effect of imposing additional obligations
upon the Borrower as a result of the application of Section 11.7 hereof. At
any time after the occurrence of an Event of Default, the Lender may assign
all or any part of its interest in the Loan Facilities to an Assignee
without any requirement for notice to or consent of the Borrower or any
other Person. In the case of an assignment, the Assignee shall have the
same rights and benefits and be subject to the same limitations under the
Loan Documents as it would have if it was a Lender.
SECTION 11.9 RIGHT OF SET-OFF.
Following the occurrence, and during the continuance of an Event of
Default, the Lender is authorized at any time and from time to time, to the
fullest extent permitted by law (including general principles of common-law), to
set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time owing
by it to or for the credit or the account of the Borrower against any and all of
the obligations of the Borrower under
70
any of the Loan Documents. If an obligation is unascertained, the Lender may, in
good faith, estimate the obligation and exercise its right of set-off in respect
of the estimate, subject to providing the Borrower with an accounting when the
obligation is finally determined. The Lender shall promptly notify the Borrower
after any set-off and application is made by it, provided that the failure to
give notice shall not affect the validity of the set-off and application. The
rights of the Lender under this Section 11.9 are in addition to any other rights
and remedies (including all other rights of set-off) which the Lender may have.
SECTION 11.10 JUDGMENT CURRENCY.
(1) If, for the purposes of obtaining judgment in any court, it is necessary to
convert a sum due to the Lender in any currency (the "ORIGINAL CURRENCY")
into another currency (the "OTHER CURRENCY"), the parties agree, to the
fullest extent that they may effectively do so, that the rate of exchange
used shall be that at which, in accordance with normal banking procedures,
the Lender could purchase the Original Currency with the Other Currency on
the Business Day preceding the day on which final judgment is given or, if
permitted by applicable law, on the day on which the judgment is paid or
satisfied.
(2) The obligations of the Borrower in respect of any sum due in the Original
Currency from it to the Lender under any of the Loan Documents shall,
notwithstanding any judgment in any Other Currency, be discharged only to
the extent that on the Business Day following receipt by the Lender of any
sum adjudged to be so due in the Other Currency, the Lender may, in
accordance with normal banking procedures, purchase the Original Currency
with such Other Currency. If the amount of the Original Currency so
purchased is less than the sum originally due to the Lender in the Original
Currency, the Borrower agrees, as a separate obligation and notwithstanding
the judgment, to indemnify the Lender, against any loss, and, if the amount
of the Original Currency so purchased exceeds the sum originally due to the
Lender in the Original Currency, the Lender shall remit such excess to the
Borrower.
SECTION 11.11 INTEREST ON AMOUNTS.
Except as may be expressly provided otherwise in this Agreement, all
amounts owed by the Borrower to the Lender which are not paid when due (whether
at stated maturity, on demand, by acceleration or otherwise) shall bear interest
(both before and after default and judgment), from the date on which such amount
is due until such amount is paid in full, payable on demand, at a rate per annum
equal at all times to (i) in the case of an amount payable in U.S. Dollars, the
sum of the Base Rate (Canada) in effect from time to time, the Applicable Margin
71
and 2%, and (ii) in the case of an amount payable in Canadian Dollars, the sum
of the Canadian Prime Rate in effect from time to time, the Applicable Margin
and 2%.
SECTION 11.12 GOVERNING LAW.
This Agreement shall be governed by and interpreted and enforced in
accordance with the laws of the Province of
Ontario and the federal laws of
Canada applicable therein.
SECTION 11.13 COUNTERPARTS.
This Agreement may be executed in any number of counterparts and all of
such counterparts taken together shall be deemed to constitute one and the same
instrument.
SECTION 11.14 FACSIMILE SIGNATURES.
This Agreement may be executed by facsimile signature, in which case the
party executing by facsimile shall forward an original counterpart thereof to
the other party but failure to so deliver shall not invalidate this Agreement.
SECTION 11.15 CONSENT TO JURISDICTION.
The Borrower hereby irrevocably submits to the jurisdiction of any
Ontario
court sitting in Toronto in any action or proceeding arising out of or relating
to the Loan Documents and hereby irrevocably agrees that all claims in respect
of any such action or proceeding may be heard and determined in such Ontario
court. The Borrower and each Restricted Subsidiary hereby irrevocably waive, to
the fullest extent they may effectively do so, the defense of an inconvenient
forum to the maintenance of such action or proceeding. The Borrower and each
Restricted Subsidiary agree that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Nothing in this
Section 11.15 shall affect the right of the Lender to bring any action or
proceeding against the Borrower or each Restricted Subsidiary or their property
in the courts of other jurisdictions.
IN WITNESS WHEREOF the parties have executed this Agreement.
CARSEN GROUP INC.
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------
Authorized Signing Officer
NATIONAL BANK OF CANADA
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------------
Authorized Signing Officer
By: /s/ Xxx Xxxxxxxx
-----------------------------------
Authorized Signing Officer
