CREDIT AGREEMENT
among
SLM INTERNATIONAL, INC.
and
SPORT MASKA INC.
(as Borrowers)
and
CAISSE DE DEPOT ET PLACEMENT DU QUEBEC
(as Agent)
and
CAISSE DE DEPOT ET PLACEMENT DU QUEBEC
(as Lender)
November 19 , 1998
CREDIT AGREEMENT entered into on the 19th of November, 1998
AMONG SLM INTERNATIONAL, INC., a corporation incorporated under the
laws of Delaware and SPORT MASKA INC., a corporation incorporated
under the laws of New Brunswick (individually a "Borrower" and
collectively the "Borrowers");
AND CAISSE DE DEPOT ET PLACEMENT DU QUEBEC, a corporation
incorporated under the laws of Quebec, acting as agent for the
Lenders (in such capacity, the "Agent");
AND CAISSE DE DEPOT ET PLACEMENT DU QUEBEC, a corporation
incorporated under the laws of Quebec, acting as a Lender
("Caisse").
WHEREAS the Borrowers have requested the Lenders to make available to the
Borrowers a credit facility of $135,800,000;
WHEREAS the Lenders have agreed to make such credit facility available to
the Borrowers subject to the terms and conditions of this Agreement.
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
1. INTERPRETATION
1.1 Definitions
In this Agreement and the Schedules, as well as in all notices pursuant to
this Agreement, unless the context otherwise requires,
1.1.1 "Acceptance" means, either a depository xxxx, as defined in
the Depository Bills and Notes Act (Canada) or a xxxx of
exchange, as defined in the Bills of Exchange Act (Canada)
drawn by a Borrower on a Lender and accepted by such Lender;
1.1.2 "Affiliate" has the meaning ascribed to such term in the
Canada Business Corporations Act, as amended;
1.1.3 "Agent" means Caisse de depot et placement du Quebec and any
successor agent appointed pursuant to Section 15.14;
-2-
1.1.4 "Agent's Branch of Account" means the office of the Agent
located at the address opposite its name on the signature
pages hereto or the banking branch as may be designated by
the Agent from time to time by notice to the Borrowers;
1.1.5 "Agreement" or "Credit Agreement" means this credit
agreement and the schedules attached hereto, as the same may
be amended or supplemented from time to time;
1.1.6 "Agreement and Plan of Reorganization" means the agreement
dated as of October 6, 1998 among SLM, Sport Maska Inc., SLM
Acquisition Corp., and Sports Holdings Corp. providing for
the purchase by Sport Maska Inc. of the shares of Tropsport
Acquisitions Inc. and the reorganization by way of merger of
Sports Holdings Corp. and SLM Acquisition Corp.;
1.1.7 "BA Loan" means a Borrowing in Dollars with respect to which
interest is calculated on the basis of the BA Loan Rate;
1.1.8 "BA Loan Rate" means, for each BA Loan, an interest rate per
annum equal to the average discount rate of bankers'
acceptances in Dollars having periods identical to the
period of such BA Loan as quoted on Reuters Service page
CDOR as of approximately 10:00 a.m. (Montreal time) on the
date such BA Loan is made;
1.1.9 "Borrowers" means SLM International, Inc. and Sport Maska
Inc. and "Borrower" means either of them;
1.1.10 "Borrowings" means the Loans and the Acceptances which are
made available to the Borrowers pursuant to this Agreement
and includes any conversion or renewal thereof in accordance
with the terms of this Agreement;
1.1.11 "Business Day" means a day on which banks are open for
normal business over the counter in the City of Montreal,
Province of Quebec, excluding Saturday and Sunday and any
other day which is a statutory holiday in such city;
1.1.12 "Caisse" means Caisse de depot et placement du Quebec;
-3-
1.1.13 "Canadian Operating Credit" means the credit agreement
entered into on November 19, 1998 among Sport Maska Inc. and
Tropsport Acquisitions Inc., as borrowers, General Electric
Capital Canada Inc., as agent and the lenders and credit
parties referred to therein;
1.1.14 "Capital Expenditures" means, with respect to any Person,
all expenditures (by the expenditure of cash or the
incurrence of Indebtedness) by such Person for any fixed
assets or improvements or for replacements, substitutions or
additions thereto, that have a useful life of more than one
year and that are required to be capitalized under GAAP,
less any amount of proceeds from any disposition of assets
or from property insurance to the extent that such amount is
used to make any such expenditure;
1.1.15 "Commitment" means, with respect to each Lender, its
obligation to make Borrowings available to the Borrowers in
an aggregate principal amount in Dollars not exceeding its
Lender's Proportion of the Total Commitment;
1.1.16 "Credit" means the facility provided by the Lenders to the
Borrowers pursuant to Section 2.1;
1.1.17 "Default" means any event or circumstance which constitutes
an Event of Default or which, upon lapse of time or the
giving of a notice or both, would constitute an Event of
Default;
1.1.18 "Discount" means, with respect to any Acceptance, the amount
equal to the face value of the Acceptance, multiplied by the
Discount Rate and by the actual number of days in the period
of such Acceptance and divided by 365;
1.1.19 "Discount Rate" means, with respect to any Acceptance being
issued hereunder on any date, the average discount rate of
bankers' acceptances in Dollars having periods identical to
the period of such Acceptance as quoted on Reuters Service
page CDOR as of approximately 10:00 a.m. Montreal time on
such day;
1.1.20 "Dollar" and the symbol "$" mean lawful money of Canada;
1.1.21 "Dollar Loan" means a loan denominated in Dollars and
bearing interest at the Prime Rate, plus the margin provided
for in this Agreement;
-4-
1.1.22 "EBITDA" means for any fiscal period of SLM:
(a) the consolidated net income (or net loss) of SLM and its
Subsidiaries for such period, computed and calculated in
accordance with GAAP without giving effect to any
extraordinary or unusual gains or losses, any gains or
losses from the sale or disposition of assets other than in
the ordinary course of business, or any extraordinary,
unusual or non-recurring expenses or charges, including,
without limitation, restructuring charges and Transaction
Expenses; plus (or minus),
(b) to the extent that any of the items referred to in any of
clauses (i) through (iii) below were deducted (or added) in
calculating such net income:
i) consolidated interest expense (including, without
limitation, amortization or charges of deferred
financing fees, premiums or interest rate protection
agreements and original issue discounts (including,
without limitation, discounts or Acceptances), letter
of credit fees, the portion of any capital lease
payments which are allocated to interest expense and
interest paid in kind) of SLM and its Subsidiaries for
such period;
ii) income, capital or large corporation tax expense or
benefit of SLM and its Subsidiaries for such period;
iii) the consolidated amount of all depreciation and
amortization and all non-cash charges of SLM and its
Subsidiaries for such period, plus;
(c) all fixed and all calculable dividend payments on preferred
stock;
1.1.23 "ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations
promulgated and rulings issued thereunder;
1.1.24 "ERISA Event" means (a) (i) the occurrence of a reportable
event, within the meaning of Section 4043(c) of ERISA, with
respect to any Plan unless the 30-day notice requirement
with respect to such event has been waived by the PBGC or
(ii) the requirements of Section 4043 (b) of ERISA apply
- 5 -
with respect to a contributing sponsor, as defined in
Section 4001 (a) (13) of ERISA, of a Plan, and an event
described in paragraph (9), (10), (11) or (13) of Section
4043 (c) of ERISA is reasonably expected to occur with
respect to such Plan within the following 30 days; (b) the
application for a minimum funding waiver with respect to a
Plan; (c) the provision by the administrator of any Plan of
a notice of intent to terminate such Plan, pursuant to
Section 4041 (a) (2) of ERISA (including any such notice
with respect to a plan amendment referred to in Section 4041
(e) of ERISA); (d) the cessation of operations at a facility
of any Borrower or any Material Subsidiary in the
circumstances described in Section 4062 (e) of ERISA; (e)
the withdrawal by any Borrower or any Material Subsidiary
from a Multiple Employer Plan during a plan year for which
it was a substantial employer, as defined in Section 4001
(a) (2) of ERISA; (f) the conditions for imposition of a
lien under Section 302 (f) of ERISA shall have been met with
respect to any Plan; (g) the adoption of an amendment to a
Plan requiring the provision of security to such Plan
pursuant to Section 307 of ERISA; or (h) the institution by
the PBGC of proceedings to terminate a Plan pursuant to
Section 4042 of ERISA, or the occurrence of any event or
condition described in Section 4042 of ERISA that
constitutes grounds for the termination of, or the
appointment of a trustee to administer, such Plan, which in
any such case could reasonably be expected to have a
Material Adverse Effect;
1.1.25 "Event of Default" means any of the events or circumstances
set out in Section 13.1;
1.1.26 "GAAP" means generally accepted accounting principles in the
United States of America;
1.1.27 "Grace Period" shall have the meaning assigned to such term
in Section 2.9;
1.1.28 "Guarantee" means, with respect to any Person, without
duplication, any obligation, contingent or otherwise (other
than an endorsement for collection or deposit in the
ordinary course of business or a guarantee of the
obligations of a Subsidiary of such Person in respect of
trade payables incurred in the ordinary course of business
or resulting from banking cash management systems) directly
or indirectly guaranteeing the payment or other performance
of any indebtedness or obligation of any other Person
- 6 -
or protecting a creditor of such Person from a loss
resulting from the failure by such Person to pay or perform
such indebtedness or obligation;
1.1.29 "Indebtedness" means, with respect to any Person, without
duplication: (i) indebtedness for monies borrowed or raised,
or for the purchase price of property, goods or services
more than 90 days past due (but excluding such past due
payables being diligently contested in good faith or the
non-payment of which is being tolerated and for so long as
such tolerance lasts), and including obligations under
agreements relating to the issuance of letters of credit or
acceptance financing, (ii) obligations as lessee under
leases which shall have been or should be recorded as
capital leases in accordance with GAAP, and (iii)
obligations under Guarantees by such Person in respect of,
and obligations (contingent or otherwise) with respect to
(i) and (ii) above; for greater certainty, Indebtedness
shall not include trade debt incurred in the ordinary course
of business (except to the extent included in (i) above) or
monies borrowed or raised to the extent of the amount of any
letter of credit or guarantee of any other Person which
secures the repayment of such monies and which is included
in (i) above;
1.1.30 "Intercreditor Agreement" means, the agreement dated the
date hereof and made among the Agent, General Electric
Capital Canada Inc., General Electric Capital Corporation,
the Borrowers and the other parties named herein;
1.1.31 "Interest Coverage Ratio" means, at any date of
determination, the ratio of (a) EBITDA minus capital
expenditures of SLM and its Subsidiaries to (b) net cash
interest expense of SLM and its Subsidiaries during the four
consecutive fiscal quarters most recently ended for which
financial statements are required to be delivered to the
Agent;
1.1.32 "Lenders" means Caisse, and the other lenders which become
parties hereto by way of an assignment made pursuant to
Section 17, in each case together with their successors and
permitted assigns, and "Lender" means any of them;
1.1.33 "Lender's Proportion" means, with respect to each Lender,
its proportion of the Total Commitment as set out opposite
its name in Schedule "A", as may be adjusted from time to
time as a result of a reduction made pursuant to this
Agreement or an assignment made pursuant to Section 17.1;
- 7 -
1.1.34 "Loans" means the aggregate of the Dollar Loans and the BA
Loans;
1.1.35 "Majority Lenders" means any group of Lenders whose
Commitments amount in the aggregate to at least 60% of the
Total Commitments;
1.1.36 "Material Adverse Effect" shall mean a material adverse
effect on the business, assets, property or condition
(financial or otherwise, including without limitation any
material adverse effect by virtue of any environmental
liability or occurrence, or the receipt from any
governmental authority of any notice, compliant or order to
that effect) of (a) SLM and its Subsidiaries taken as a
whole, (b) Sport Maska Inc., (c) Tropsport Acquisitions
Inc., (d) SHC Hockey Inc., (e)KHF Sports Oy (or its
successor), or (f) Jofa AB (or its successor) or on the
ability of the Borrowers to perform their obligations
hereunder;
1.1.37 "Material Subsidiaries" means the following corporations:
Maska U.S., Inc., Sports Holdings Corp., Tropsport
Acquisitions Inc., SLM Trademark Acquisition Corp., SLM
Trademark Acquisition Canada Corporation, SHC Hockey Inc.,
KHF Sports Oy, WAP Holdings Inc., Jofa Holding AB, Jofa AB,
KHF Sports Oy, and any other Subsidiary of the Borrower
having assets or gross annual income (on a four quarter
basis) in excess of $1,000,000, provided, however, that any
Subsidiary which ceases to possess such assets or have such
gross annual income shall nonetheless remain a Material
Subsidiary;
1.1.38 "Maturity Date" shall mean the second anniversary of this
Agreement or such later date to which the Maturity Date has
been extended pursuant to the terms of Section 2.9;
1.1.39 "Multiple Employer Plan" means a Plan which is a
"multiemployer plan" as defined in Section 4001(a)(3) of
ERISA;
1.1.40 "PBGC" shall mean the Pension Benefit Guarantee Corporation
established under ERISA, or any successor thereto;
1.1.41 "Permitted Encumbrances" means:
(i) deficiencies or defects in title, liens, mortgages,
hypothecs, charges, priorities, charges and encumbrances,
whether arising by law or by contract, existing on the date
of this Agreement or
- 8 -
created, discovered or arising subsequently and which do not
result (except as otherwise permitted under this Agreement)
from a voluntary act or the consent of SLM or of a
Subsidiary,
(ii) PMO's,
(iii) pledges or deposits made in the ordinary course of business
in connection with bids, tenders, performance bonds, surety,
appeal or custom bonds, contracts (other than to raise money
or for the repayment of money borrowed) or leases or to
secure statutory obligations,
(iv) liens or priorities arising by operation of law and which
have not become enforceable or relate to obligations not due
or delinquent or are being contested diligently and in good
faith,
(v) minor encumbrances, including, without limitation,
easements, rights of way, servitudes or other similar rights
in land granted to or reserved by other Persons, or zoning
or other restrictions as to the use of real or immoveable
properties, which encumbrances do not, in the aggregate,
materially affect the value of the said properties or
materially impair their use in the operation of the business
of the Borrower or of its Subsidiaries,
(vi) liens, mortgages, hypothecs, charges, priorities and
encumbrances, ranking junior to the Security, whether by
express subordination or by operation of law, incurred,
created or assumed by the Borrower or a Subsidiary and
relating to the leasing of any property, movable or
immovable,
(vii) the right reserved to or vested in any municipality or
governmental or other public authority by the terms of any
lease, license, franchise, grant or permit or by any
statutory provision, to terminate any such lease, license,
franchise, grant or permit, or to require annual or other
periodic payments as a condition of the continuance thereof,
(viii) security given by SLM or a Subsidiary in the ordinary
course of its business to a public utility or any
municipality or governmental or
- 9 -
other public authority when required by such utility or
municipality or other authority in connection with its
operations,
(ix) the reservations, limitations, provisos and conditions, if
any, expressed in any original grants from the Crown,
(x) the Security,
(xi) security granted by the Borrowers and their Affiliates named
in the Intercreditor Agreement to secure the indebtedness
and other obligations under the Canadian Operating Credit or
the US Operating Credit and the guarantees thereof, but, as
to the principal amount so secured or guaranteed, only to
the extent contemplated by Section 2.14 of the Intercreditor
Agreement, and any renewal thereof, provided that the
principal amount secured by any such renewal does not exceed
the unpaid principal amount of the indebtedness which was
secured by such security or guarantees immediately before
its renewal;
(xii) carriers', wharehousemen's, suppliers' or other similar
possessory liens arising in the ordinary course of business
that are unregistered and secure amounts that are not yet
due and payable;
(xiii) any attachment or judgment lien not constituting an Event
of Default under Section 13.1.11 and which has not become
enforceable or is being contested diligently and in good
faith;
provided that, at the time when any Permitted Encumbrance is created
or granted, the maximum aggregate amount of the indebtedness or
obligations secured by Permitted Encumbrances (exclusive of the
pledges and deposits referred to in paragraph (iii), the liens or
priorities referred to in paragraph (iv), PMO's, the Security, the
security referred to in paragraph (xi), and liens or priorities
arising by operation of law and which have not become enforceable or
relate to obligations not due or delinquent or are being contested
diligently and in good faith) shall not exceed US $5,000,000;
1.1.42 "Person" means and includes an individual, a partnership, a
corporation, a joint stock company, a trust, an
unincorporated association, a joint venture or other entity
or a government or any agency or political subdivision
thereof;
- 10 -
1.1.43 "Plan" means any "employee benefit plan" as defined in
Section 3(3) of ERISA covered by Title IV of ERISA;
1.1.44 "PMO's" means Purchase Money Obligations;
1.1.45 "Prime Rate" means, on any day, the rate of interest per
annum that is equal to the greater of:
(i) the rate of interest publicly announced by Royal Bank of
Canada from time to time as being its reference rate then in
effect for determining interest rates for commercial loans
in Dollars made by it in Canada; and
(ii) the annual rate of interest equal to the average of the "BA
1 month" rates applicable to bankers' acceptances in Dollars
displayed and identified as such on the "Reuters Screen CDOR
Page" (as defined in the International Swap and Derivatives
Association, Inc. definitions, as modified and amended from
time to time) (the "CDOR Rate") as at approximately 10:00
a.m. on such day, or if such day is not a Business Day then
on the immediately preceding Business Day, plus 1.0% per
annum; provided that if such rates do not appear on the
Reuters Screen CDOR Page as contemplated, then the CDOR Rate
on any day shall be calculated as the arithmetic average of
the 30-day discount rates applicable to bankers' acceptances
in Dollars quoted by three major Canadian Schedule 1
chartered banks chosen by the Agent as of approximately
10:00 a.m. on such day, or if such day is not a Business
Day, then on the immediately preceding Business Day;
1.1.46 "Purchase Money Obligations" means:
(i) any security interest, lien, mortgage, hypothec, charge,
encumbrances (collectively, "Security Interest") created,
incurred or assumed by the Borrower or a Subsidiary for
indebtedness incurred in connection with, or created to
provide the Borrower or a Subsidiary with funds to pay, the
purchase price of any immoveable or moveable property
(including pursuant to a lease which is capitalized in
accordance with GAAP), provided that such Security Interest
is limited to the property so acquired and is
- 11 -
created, incurred or assumed substantially concurrently with
the acquisition of such property, and
(ii) any renewal or extension of any such Security Interest and
any new Security Interest created on the same property in
replacement of any such Security Interest provided that the
principal amount secured by any such renewal, extension or
new Security Interest does not exceed the unpaid principal
amount of the indebtedness which was secured by such
Security Interest immediately before its extension, renewal
or replacement,
up to a maximum aggregate outstanding amount at any time of such
secured debt of US$5,000,000;
1.1.47 "Security" means any and all security and guarantees to be
provided to the Lenders pursuant to Article 12;
1.1.48 "SLM" means SLM International, Inc.;
1.1.49 "Subsidiary" means, with respect to a Person, any
corporation of which at least a majority of the outstanding
shares to which there is attached voting power under
ordinary circumstances to elect a majority of the board of
directors of said corporation, shall at the relevant time be
owned directly or indirectly by such Person, one or more
Subsidiaries of such Person, or any combination thereof; for
greater certainty the Subsidiaries of SLM shall be deemed to
include Sports Holdings Corp. and its Subsidiaries;
1.1.50 "Total Commitment" means, the aggregate amount of the
Credit, as may be adjusted from time to time as a result of
a reduction made pursuant to this Agreement;
1.1.51 "Transaction Expenses" means the expenses listed in Schedule
B to this Agreement;
1.1.52 "US Operating Credit" means the credit agreement entered
into on November 19, 1998 among SHC Hockey, Inc. and Maska
U.S., Inc., as borrowers, General Electric Capital
Corporation, as agent, and the lenders and credit parties
referred to therein;
- 12 -
1.1.53 "Withdrawal Liability" means withdrawal liability as
determined in accordance with Title IV of ERISA.
1.2 Headings and table of contents
The headings and the Table of Contents are inserted for convenience of
reference only and shall not affect the construction or interpretation of this
Agreement.
1.3 Accounting terms
Unless otherwise provided, (i) accounting terms and expressions used
herein shall have the meaning assigned to them under GAAP in effect from time to
time, provided that all calculations shall be made according to the same
principles utilized in the preparation of the financial statements referred to
in Section 8.12, and (ii) compliance with covenants shall be determined on a
consolidated basis.
1.4 Conversion to or from US Dollars
Where a Dollar amount has to be converted or expressed in US
dollars, or where its US dollar equivalent has to be determined (or vice-versa),
the calculation is made at the relevant date at the Bank of Canada rate as
displayed and identified as such on the Reuters Screen BOFC Page for US dollars
against Dollars (or vice-versa) at or around noon on such date.
1.5 Time
Except where otherwise indicated in this Agreement, any reference to a
time shall mean local time in the City of Montreal, Province of Quebec.
1.6 Governing law
This Agreement shall be governed by and construed in accordance with
laws of the Province of Quebec and the laws of Canada applicable therein.
2. THE CREDIT
2.1 Obligation of Lenders and Total Commitment
Relying on each of the representations and warranties set out herein
and subject to the terms and conditions of this Agreement, the Lenders,
individually, and not solidarily (that is to say, not jointly and severally),
agree to make a credit facility (the "Credit") available to the
- 13 -
Borrowers by way of their respective Commitments. The Total Commitment for the
Credit shall be $135,800,000.
2.2 Availability of the credit
The Credit shall not revolve and shall be fully utilized within three
Business Days of the date hereof and shall be repaid in full on the Maturity
Date. Any portion of the Credit not utilized within three Business Days of the
date hereof shall cease to be available.
2.3 Commitments of each Lender
The Credit shall be made available to the Borrowers by each Lender in
the same proportion as the Commitment of each Lender is to the Total Commitment.
2.4 Utilizations proportional to Commitments
Any utilization of the Credit shall be made through the Agent and, to
the extent reasonably possible, utilizations shall be, as to each Lender, in the
same proportion as its Commitment is to the Total Commitment. If it is not
practicable to allocate a Borrowing in such manner, or to allocate a Borrowing
by way of Acceptances so that the aggregate amount of Acceptances required to be
accepted by a Lender is a whole multiple of $100,000, the Agent is authorized by
the Borrowers and the Lenders to make such allocations with respect to such
Borrowings without amendment of the Commitment of each Lender as the Agent, in
its sole discretion, determines to be equitable in the circumstances.
2.5 Borrowings under the Credit
The Borrowers may utilize the Credit (and re-utilize same as provided
herein) pursuant to the following forms of Borrowings or a combination thereof:
2.5.1 Dollar Loans,
2.5.2 BA Loans, and
2.5.3 Acceptances.
2.6 Notices of utilization to the Agent
Prior to each utilization of the Credit by a Borrower, such Borrower
shall give to the Agent a notice of utilization specifying:
- 14 -
2.6.1 the selected form of Borrowing;
2.6.2 the amount of the Borrowing, which shall be in a minimum
amount of $10,000,000;
2.6.3 the date of the Borrowing, which shall be a Business Day;
and
2.6.4 to the extent applicable, the period of the Borrowing, which
shall comply with the provisions of Article 3, in the case
of a Borrowing by way of Acceptances or BA Loans;
and the notice shall be given in writing in the form attached as Schedule "C" by
12:00 (noon) on the second Business Day prior to an issue of Acceptances or a BA
Loan, and the first Business Day prior to a Dollar Loan.
2.7 Conversions and renewals
2.7.1 The Borrower may convert from Loans to Acceptances (and vice
versa) and renew Acceptances, provided a notice of
conversion or renewal is given to the Agent;
2.7.2 Section 2.6 shall apply to a conversion or a renewal;
2.7.3 Notwithstanding Section 2.7.1, Acceptances and BA Loans may
not be converted prior to the maturity of their respective
periods. In addition, unless they converted or renewed, as
the case may be, at the maturity date of their respective
periods, Acceptances and BA Loans shall then become Dollar
Loans.
2.8 Use of proceeds
The proceeds of the utilizations shall be used to finance, directly or
indirectly, the completion of the transactions and the payment of related fees
provided in the Agreement and Plan of Reorganization.
2.9 Extension of Maturity Date
SLM may request (but only once) that the Maturity Date be extended for
a twelve-month period by sending to the Agent an extension request substantially
in the form of Schedule D to this Agreement, together with documentation
evidencing compliance with the financial tests
- 15 -
therein, 60 days prior to the second anniversary of this Agreement. If SLM
satisfies such financial tests and pays to the Agent for distribution to the
Lenders in proportion to their respective Commitments an extension fee of
$1,358,000, 30 days prior to the second anniversary of this Agreement, the
Maturity Date shall be extended as requested. In the event that SLM does not
make such request or that the Maturity Date has been extended to the third
anniversary of this Agreement as provided above, SLM may in addition and at its
option extend the Maturity Date for a period (or additional period, if the
Maturity Date has already been extended to the third anniversary of this
Agreement) of three months (the "Grace Period") by providing the Agent with a
notice of its intent to so extend the Maturity Date and paying an extension fee
of $ 2,701,600, 45 days prior to the Maturity Date.
3. PROVISIONS APPLICABLE TO ACCEPTANCES AND BA LOANS
3.1 Periods and amounts
Acceptances
3.1.1 shall be for periods of one, two, three or six months and
shall mature on a Business Day;
3.1.2 shall be denominated in Dollars, in amounts of $100,000 per
Lender or multiples thereof;
3.1.3 shall be issued in whole multiples of $1,000,000, with a
minimum amount of $5,000,000 per issue;
3.1.4 shall form part of the Borrowings for their face amount
(whether they have been accepted by a Lender or by a
financial institution which is not a Lender);
3.1.5 do not carry any days of grace; and
3.1.6 may be held by the Lenders for their own account or may be
sold to third parties.
3.2 Discount and acceptance fee
3.2.1 The amount that shall be disbursed to a Borrower upon an
issue of Acceptances is the aggregate face amount of the
Acceptances so issued, less the Discount and the acceptance
fee applicable to such Acceptances.
- 16 -
3.2.2 In the case of a conversion into Acceptances or renewal of
Acceptances, the Borrower concerned shall concurrently with
the conversion or renewal pay to the Agent an amount equal
to the aggregate face amount of the Acceptances issued upon
such conversion or renewal; the amount so paid to the Agent
shall be applied on the portion of the Borrowings having
been so converted, or, as the case may be, on the
Acceptances so renewed.
3.2.3 Except for Acceptances renewed or converted under Section
3.2.2, and subject to Section 2.7.3, the Borrower concerned
shall pay to the Agent the face amount of each Acceptance
issued by it on the maturity date thereof.
3.3 Selection of periods
3.3.1 Periods of Acceptances shall be selected in order that no
mandatory repayments to be made under Section 6.1 shall
result in a payment of Acceptances prior to their maturity
dates.
3.3.2 Periods of Acceptances shall be selected so that no more
than 10 different issues of Acceptances shall be outstanding
at the same time.
3.4 Acceptance forms
No notice of utilization, conversion or renewal in respect of
Acceptances shall be effective if a Lender which is a bank notifies the Agent,
on or before the expiry of the notice period referred to in Section 2.6, that
the Borrower concerned has not provided such Lender with the Acceptances to be
then issued by such Lender.
3.5 Authority to complete Acceptances
In accordance with the instructions given from time to time by the
Borrowers to the Agent for onward conveyance to the Lenders, each Lender is
authorized to complete Acceptance forms in the form generally used by such
Lender and to provide its acceptance thereon for the purposes of giving effect
to notices of utilizations by way of Acceptances. Acceptances so completed,
signed, endorsed and negotiated on behalf of a Borrower by any Lender shall bind
such Borrower as fully and effectively as if those acts were performed by an
authorized officer of such Borrower. Any executed Acceptances which are held by
any Lender need only be held in safekeeping with the same degree of care as if
they were that Lender's own property and that Lender was keeping them at the
place at which they are to be held. Neither the Agent nor any Lender nor any of
their respective directors, officers, employees or representatives
- 17 -
shall be liable for any action taken or omitted to be taken by any of them under
this Section 3.5 except for its own negligence or willful misconduct.
3.6 Records respecting Acceptances
Each Lender shall maintain a record with respect to Acceptances
accepted by it hereunder, cancelled at their respective maturities or voided by
it for any reason. Each Lender further agrees to retain the foregoing records in
the manner and for the statutory periods provided in the various provincial or
federal statutes and regulations which apply to such Lender.
3.7 BA Loans
Notwithstanding anything contained in this Agreement or any other
document, if a Lender is not a bank and accordingly is unable to issue
Acceptances pursuant to any notice of utilization, such Lender shall make
available to the Borrower prior to 12:00 (noon) on the applicable borrowing
date, a BA Loan in the principal amount equal to such Lender's Proportion of the
aggregate amount of Borrowings requested from the Lenders by way of Acceptances
pursuant to such notice of utilization. Such BA Loan shall have the same term as
the Acceptances for which it is a substitute and, for greater certainty, shall
permit such Lender to obtain the same effective yield as if such Lender had
accepted and purchased an Acceptance, the Borrower agreeing to pay to such
Lender an amount equal to the applicable acceptance fee and to prepay, on the
date the BA Loan is made, interest on such BA Loan at the rate provided in
Section 5.5, such interest payment to be made by such Lender deducting the
amount of such interest from the principal amount of such BA Loan. The net
amount to be made available by each Lender to the Borrower for a BA Loan shall
be the same as the amount that such Lender would have been required to make
available to the Borrower on such date had such Lender been a Lender that
provided Borrowings through Acceptances.
4. CONDITIONS PRECEDENT TO BORROWINGS
4.1 Conditions precedent to the initial Borrowing
The obligation of the Lenders to make available the initial Borrowing
hereunder is conditional upon the delivery of the following to the Agent, in
form and substance reasonably satisfactory to all Lenders, and in sufficient
copies for distribution to each Lender:
4.1.1 a duly executed copy of this Agreement together with a
promissory note stated to be payable in accordance with and
subject to this Agreement in favour of any Lender which so
requests in the amount of its aggregate Commitment
hereunder;
- 18 -
4.1.2 a certified copy of the constating documents of the
Borrowers and each Material Subsidiary;
4.1.3 a duly certified copy of the resolution or resolutions of
the board of directors of each Borrower relating to the
authority of such Borrower to execute and deliver, and to
perform its obligations under this Agreement and the
instruments, agreements, certificates and papers and other
documents provided for or contemplated herein, and relating
to the manner in which the foregoing documents are to be
executed and delivered and in which such Borrower shall
avail itself of its rights thereunder;
4.1.4 a duly certified copy of the resolution or resolutions of
the board of directors of each Material Subsidiary relating
to the authority of each Material Subsidiary to execute and
deliver the instruments, agreements, certificates and papers
and other documents provided for or contemplated herein, and
the manner in which the foregoing documents are to be
executed and delivered;
4.1.5 a certificate of the secretary of each Borrower setting
forth specimen signatures of the individuals authorized to
sign on its behalf this Agreement and the instruments,
agreements, certificates, papers and other documents
provided for or contemplated herein;
4.1.6 a certificate of the secretary of each Material Subsidiary
setting forth specimen signatures of the individuals
authorized to sign on its behalf the instruments,
agreements, certificates, papers and other documents
provided for or contemplated herein;
4.1.7 a certificate of each Borrower to the effect that the
representations and warranties contained herein are still
true and accurate and that there is no Default or Event of
Default, such certificate to include, in the case of SLM,
calculations showing compliance, on a consolidated basis,
with the financial tests set forth in this Agreement;
4.1.8 evidence that the Security shall have been provided in
respect of all assets intended to be subject thereto at such
time;
4.1.9 a satisfactory report from KPMG with respect to the
business, operations and affairs of SLM and its Subsidiaries
and a report from SLM providing
- 19 -
details of Permitted Encumbrances referred to in paragraphs
(ii) and (viii) of Section 1.1.41;
4.1.10 a copy of the executed Agreement and Plan of Reorganization
and evidence that the transactions contemplated therein have
occurred or shall occur substantially concurrently with the
initial Borrowing;
4.1.11 copies of all regulatory approvals and consents which are
required to be obtained from any governmental authority in
order to complete the transactions contemplated by the
Agreement and Plan of Reorganization;
4.1.12 a copy of the Canadian Operating Credit and the US Operating
Credit;
4.1.13 a certificate of the Chief Financial Officer of SLM that the
consolidated EBITDA of SLM (prior to giving effect to the
transaction contemplated by the Agreement and Plan of
Reorganization) for the month ended September 26, 1998 was
not less than US $2,700,000;
4.1.14 a copy of the consolidated financial results of SLM for the
nine months ended September 26, 1998 and for the month ended
September 26, 1998;
4.1.15 a copy of share certificates of SLM evidencing that Phoenix
Home Life Mutual Insurance Company shall have become a
preferred shareholder of SLM and a certificate of the Chief
Financial Officer of SLM stating that Phoenix Home Life
Mutual Insurance Company has thereby made an equity
investment in SLM of an amount not less than US $12,500,000;
4.1.16 the favourable opinion of counsel to the Borrowers and the
Material Subsidiaries as to corporate status and capacity,
their authority and legal right to enter into and perform
their respective obligations under this Agreement and the
Agreement and Plan of Reorganization, and as to the
validity, binding effect and enforceability of this
Agreement, the Security provided on or prior to the date of
the initial Borrowing and the Agreement and Plan of
Reorganization;
4.1.17 confirmation that no material adverse change has occurred in
the business or financial condition of SLM and its
Subsidiaries, taken as a whole, or Sports Holding Corp. and
its Subsidiaries, taken as a whole, since December 31, 1997;
and
- 20 -
4.1.18 the favourable opinion of counsel to the Lenders as to the
validity, binding effect and enforceability of this
Agreement and of the Security provided on or prior to the
date of the initial Borrowing.
4.2 Conditions precedent to all Borrowings
The Lenders shall not have any obligation to make any Borrowings
available to the Borrowers or to permit the Borrowers to convert existing
Borrowings into, or to renew, Acceptances if:
4.2.1 the Agent shall not have received the timely notice of
utilization (or conversion or renewal) required pursuant to
Section 2.6, or
4.2.2 if a Default shall have occurred and be continuing,
provided that Acceptances and BA Loans may become Dollar Loans pursuant to
Section 2.7.3 even after the occurrence of a Default.
4.3 Waiver of conditions precedent
The terms and conditions of Sections 4.1 and 4.2 are inserted for the
sole benefit of the Lenders and may be waived by the Agent in conformity with
Article 16 in whole or in part, with or without terms or conditions, in respect
of any Borrowings without affecting the rights of the Lenders against the
Borrowers and the Material Subsidiaries and without prejudicing the right of the
Agent to assert such terms and conditions in whole or in part in respect of any
other Borrowing.
4.4 Restatement of representations and warranties
Any request for Borrowings (including through a conversion or a
renewal) and any notice of utilization (or conversion or renewal) shall be
deemed to include a representation and warranty that the representations and
warranties contained herein, other than the representations made in Sections
8.6, 8.12 and the first and last sentences of Section 8.17, are still true and
accurate in all material respects as at the date of the request or notice.
4.5 Early Termination
The obligations of the Lenders to make Borrowings shall terminate if
all of the conditions precedent set forth in Section 4.1 have not been satisfied
prior to December 1, 1998
- 21 -
(or such later date as may be agreed to prior to such date by all Lenders),
except for those, if any, which have been waived with the consent of the Agent
prior to such date pursuant to Section 4.3.
5. FEES AND INTEREST
5.1 Upfront fee
The Borrowers shall pay to the Caisse for its own account an upfront
fee for the amount and payable in such manner as SLM and the Caisse have agreed
prior to the execution of this Agreement.
5.2 Agency fee
The Borrowers shall pay to the Agent, for its own account, an agency
fee in the amount previously agreed to in writing between the Borrowers, the
Caisse and the Agent. Such agency fee shall be paid on the date of execution of
this Agreement and on each anniversary date thereof, provided, that Borrowings
remain outstanding on any such anniversary date.
5.3 Acceptance fees
The Borrowers shall pay concurrently with the issue of each Acceptance
an acceptance fee at the annual rate determined in accordance with Schedule F
calculated on the face amount of such Acceptance and for the number of days
included in the period of same. The applicable acceptance fee for Acceptances
issued during a Grace Period shall be increased by 4%. Such acceptance fees may
be deducted from the proceeds of the issue of any such Acceptance, as provided
in Section 3.2.1.
5.4 Dollar Loans
Any Dollar Loan shall bear interest at an annual rate equal to the
Prime Rate in effect from time to time, plus the applicable margin determined in
accordance with Schedule F. The applicable margin shall be increased by 4% in
respect of any Dollar Loan outstanding during a Grace Period. The interest shall
be payable monthly in arrears on the first Business Day after the end of each
month.
- 22 -
5.5 BA Loans
Any BA Loan shall bear interest at an annual rate equal to the BA Loan
Rate in effect from time to time plus the applicable margin determined in
accordance with Schedule F. The applicable margin shall be increased by 4% in
respect of any BA Loan outstanding during a Grace Period. The interest shall be
calculated on the amount of such BA Loan and for the number of days included in
the period of same. Such interest shall be payable in advance and may be
deducted from the amount of such BA Loan as provided in Section 3.7.
5.6 Calculation of rates
5.6.1 Annual rates are calculated daily on the basis of a 365-day
year.
5.6.2 For the purposes of the Interest Act (Canada), the yearly
rate to which a rate calculated as specified in Section
5.6.1 is equivalent, is equal to the rate so calculated
multiplied by the actual number of days included in that
year and divided by 365 days.
5.7 Interest on arrears
Any amount (other than an amount in principal or interest due under a
Loan) which is not paid when due shall bear interest at the rate (including the
applicable margin) which would be applicable to a Dollar Loan made on the date
on which such payment became due, or, in the case of a payment becoming due
after the Maturity Date, on the Maturity Date. Any amount in principal or
interest payable under a Loan and which is not paid when due shall bear interest
at the annual rate which was applicable to the principal on the date such
payment became due. Interest on arrears is compounded monthly.
6. REPAYMENTS
6.1 Mandatory repayments
The Borrower shall make a repayment in the minimum amount of US
$5,000,000 on the second anniversary of this Agreement, in the event that the
Maturity Date is the third anniversary of the date hereof, pursuant to an
extension in accordance with Section 2.9. The outstanding Borrowings under the
Credit shall also be repaid upon the maturity thereof, as set forth in Section
2.9.
- 23 -
6.2 Optional repayments
6.2.1 The Borrowers may at any time, without penalty and upon
three Business Days' notice, make repayments in principal
additional to the mandatory payments provided in Section
6.1. However,
6.2.1.1 such repayments shall be made in minimum amounts
of $10,000,000 increased by whole multiples of
$1,000,000;
6.2.1.2 a written notice of repayment shall be given to
the Agent prior to any such repayment specifying
the amount of the repayment and the Borrowings to
be repaid; and
6.2.1.3 notwithstanding Section 6.2.1 no such optional
repayment can be made on Acceptances or BA Loans
before the maturity date of their respective
periods unless the Lenders are indemnified in
accordance with Section 18.10.2 concurrently with
the repayment.
7. PLACE, MANNER, CURRENCY AND APPLICATION OF PAYMENTS
7.1 Payment to Lenders
Unless otherwise specified, all payments to be made by the Borrowers
hereunder shall be made to the Agent.
7.2 Place
Any payments to be made by the Borrowers to the Agent shall be made
for value on the day such payment is due and at the Agent's Branch of Account.
7.3 Time
If a payment is due on a day which is not a Business Day, this payment
may be made on the following Business Day.
7.4 Currency of payments
Unless otherwise provided herein, all amounts payable under this
Agreement shall be paid in Dollars.
- 24 -
7.5 Payments net of taxes
7.5.1 All payments made by each Borrower will be made without
setoff, counterclaim or other defence. Any payment to the
Agent shall be made free and clear of, and without deduction
or withholding for, any present or future taxes or other
charges of whatever nature now or hereafter imposed by any
taxing authority in any jurisdiction with respect to such
payments (but excluding any tax or other governmental charge
imposed on or measured by the net income or net profits of a
Lender pursuant to the laws of the jurisdiction in which it
is organized or the jurisdiction in which the principal
office or applicable lending office of such Lender is
located) and all interest, penalties or similar liabilities
with respect to such non-excluded taxes or other
governmental charge (collectively referred to herein as
"Taxes"). If any Taxes are so levied or imposed, the
relevant Borrower shall pay the full amount of such Taxes to
the relevant taxing authority in accordance with applicable
law and shall pay to the Agent such additional amounts as
may be necessary so that every payment actually received by
the Agent or relevant Lender will not be less than the
amount which would otherwise have been received in the
absence of such levy or imposition of Taxes. Each Borrower
will furnish to the Agent within 45 days after the date the
payment of any Taxes is due pursuant to applicable law
certified copies of tax receipts, if any, or other evidence
reasonably acceptable to the Agent evidencing such payment
by such Borrower. Each Borrower agrees to indemnify and hold
harmless each Lender, and reimburse such Lender upon its
written request, for the amount of any Taxes so levied or
imposed and paid by such Lender, and for any taxes, levies,
imposts, duties or charges paid by such Lender in respect of
amounts paid to or on behalf of such Lender pursuant to this
Section 7.5.1, other than penalties, additions to tax,
interest and expenses arising as a result of the willful
misconduct or gross negligence of such Lender, within 30
days after the date upon which such Lender makes written
demand therefor supported by a copy of any written
assessment thereof. Notwithstanding the foregoing provisions
of this Section 7.5.1, the Borrower's obligations under this
Section 7.5.1 shall not apply in respect of a Lender to the
extent that such Lender has not complied with the provisions
of Section 7.5.2 to the extent it is legally able to do so.
7.5.2 Each Lender that is not a United States person (as such term
is defined in Section 7701(a)(30) of the Internal Revenue
Code of 1986, as amended)
- 25 -
and that is entitled to an exemption from or reduction of
withholding tax under the law of the United States or under
a treaty to which the United States is a party, with respect
to payments under this Agreement shall, to the extent it is
legally able to do so, on or prior to the date hereof, or in
the case of a Lender that is an assignee or transferee of an
interest under this Agreement pursuant to Section 17.1, on
the date of such assignment or transfer to such Lender, and
from time to time upon request from SLM, deliver to SLM,
accurate, properly completed and properly executed
documentation either prescribed by applicable law or
reasonably requested by SLM (to the extent that such
documentation reasonably requested by SLM will not, in the
reasonable judgment of such Lender, be disadvantageous to
such Lender), if the delivery of such documentation will
permit such payments to be made without withholding or with
withholding at a reduced rate, as the case may beo. SLM
agrees to reimburse each Lender for any expense incurred by
reason of complying with this Section 7.5.2.
7.5.3 If a Borrower pays any additional amount under Section 7.5.1
to a Lender and such Lender determines in its sole
discretion that it has actually received or realized in
connection therewith any refund and, in the case of a Lender
that is not exempt from tax, any reduction of or credit
against its tax liabilities, with respect to the taxable
year in which the additional amount is paid, such Lender
shall pay to the Borrower an amount that such Lender shall,
in its sole discretion, determine is equal to the net
benefit, after tax, which was obtained by the Lender in such
year as a consequence of such refund. Such amount shall be
paid as soon as practicable after receipt or realization by
such Lender of such refund. Nothing in this Section 7.5.3
shall require any Lender to disclose or detail the basis of
its calculation of the amount of any refund or any other
information to any Borrower or any other Person.
7.6 Payments to Agent on behalf of Lenders
Unless otherwise provided herein, all payments to be made to the Agent
shall be for the account of the Lenders and any payment received by the Agent
shall be deemed to have been received by the Lenders.
- 26 -
7.7 Application of payments
7.7.1 All payments made to the Agent prior to a demand for payment
pursuant to Section 13.2 shall be applied in the following
order:
7.7.1.1 to amounts due pursuant to Section 5.2, as and by
way of agency fee;
7.7.1.2 to amounts due pursuant to Section 6.2, as and by
way of upfront fee;
7.7.1.3 to amounts due pursuant to Section 18.6, as and by
way of expenses;
7.7.1.4 to amounts due pursuant to Section 18.10, as and
by way of indemnity;
7.7.1.5 to amounts due pursuant to Section 5.7, as and by
way of default interest;
7.7.1.6 to amounts due pursuant to Sections 3.2.1, 5.3,
5.4 and 5.5, as and by way of interest, acceptance
fees and Discount;
7.7.1.7 to amounts due, as and by way of principal; and
7.7.1.8 in payment of any other amounts then due and
payable by the Borrower hereunder.
7.7.2 After a demand for payment made pursuant to Section 13.2,
all payments made by the Borrowers pursuant to this
Agreement and all sums received or realized on account of
amounts owing hereunder, shall be appropriated and applied
by the Agent towards the obligations of the Borrowers
hereunder as the Agent may decide or the Majority Lenders
may direct, and any such appropriation and application shall
override any appropriations or applications made or
requested by the Borrowers. For greater certainty, any such
decision shall be consistent with the provisions of Article
14.
- 27 -
7.8 Judgment currency
If a judgment is rendered against a Borrower for an amount owed
hereunder and if the judgment is rendered in a currency ("Other Currency") other
than Dollars, the Borrower shall pay, if applicable, at the date of payment of
the judgment, an additional amount equal to the excess of (i) the said amount
owed under this Agreement, expressed into the Other Currency as at the date of
payment of the judgment, over (ii) the amount of the judgment. For the purposes
of obtaining the judgment and making the calculation referred to in (i), the
exchange rate shall be 12:00 noon rate quoted on the Reuters Monitor Screen
(Page BOFC or such other page, as may replace such page for the purposes of
displaying exchanges rates). Any additional amount owed under this Section shall
constitute a cause of action distinct from the cause of action which gave rise
to the judgment, and said judgment shall not constitute res judicata in that
respect.
8. REPRESENTATIONS AND WARRANTIES
The Borrowers represent and warrant to each of the Lenders that, as at
the date hereof:
8.1 Corporate existence
Each of the Borrowers and the Material Subsidiaries is a duly
organized, and validly subsisting corporation, it has filed all annual returns
and financial statements which it is required to file under applicable law and
is duly qualified to do business in the jurisdictions in which the nature of the
business transacted by it or the character of the properties owned or leased by
it requires such qualifications, except to the extent that the failure to be so
organized, subsisting or qualified, or to have made such filings, could not
reasonably be expected to have a Material Adverse Effect.
8.2 Corporate power
Each of the Borrowers and the Material Subsidiaries has the corporate
power and authority to own its assets and to carry on its business as presently
conducted.
8.3 Corporate action
Each of the Borrowers and the Material Subsidiaries has full power and
authority to enter into and perform its obligations provided for under this
Agreement, and this Agreement has been duly authorized by all necessary
corporate action.
- 28 -
8.4 Compliance with laws
Subject to Section 8.5, each of the Borrowers and their Subsidiaries
is not in violation of any law, regulation, or order applicable to it within any
jurisdiction in which it does business, the effect of which could reasonably be
expected to have a Material Adverse Effect.
8.5 Environmental matters
Except as disclosed to the Lenders in writing prior to the execution
of this Agreement and except to the extent that a Material Adverse Effect could
not reasonably be expected to result therefrom.
8.5.1 the assets and business of the Borrowers and their
Subsidiaries continue to be owned, possessed and operated in
compliance with all applicable environmental laws and
regulations;
8.5.2 to the best of the Borrowers' knowledge, there are no
apprehended, pending or threatened complaints, inquiries or
enforcement action with respect to any alleged violation by
the Borrowers and their Subsidiaries of any applicable
environmental law or regulation;
8.5.3 the Borrowers and their Subsidiaries have been issued, and
are in compliance with, all permits, authorizations and
approvals relating to environmental matters and necessary
for their assets, businesses and operations ; and
8.5.4 the Borrowers are not aware of any condition or circumstance
which could give rise to any liability by the Borrowers and
their Subsidiaries under any applicable environmental law or
regulation.
8.6 Accuracy of information
All written information delivered by the Borrowers to the Lenders in
connection with this Agreement is accurate in all material respects and contains
no material misstatement of fact nor does it omit a material fact the omission
of which would make such information misleading in light of the circumstances in
which the statements contained therein were made; the financial forecasts
contained in such information have been prepared on the basis of reasonable
assumptions and procedures and represent a good faith estimate of the results
contained therein, it being recognized by the Lenders that such financial
information as it relates to future events is not to be viewed as facts or an
assurance of performance and that actual results
- 29 -
during the period or periods covered by such financial information may differ
from the forecasted or projected results set forth therein.
8.7 Material adverse change
No material adverse change has occurred in the business and financial
condition of SLM and its Material Subsidiaries since the date of the most recent
annual audited consolidated financial statements of SLM.
8.8 Effect of this Agreement
Neither the execution and delivery of this Agreement nor compliance
with the terms and provisions hereof or with the terms and provisions of the
documents evidencing the Security will:
8.8.1 conflict with, violate, or result in a breach of any of the
terms, conditions or provisions of any law or regulation
applicable to each of the Borrowers and the Material
Subsidiaries, or any order of any court, or administrative
agency or tribunal applicable to it, except to the extent
such conflict, violation, breach or default could not
reasonably be expected to have a Material Adverse Effect, or
8.8.2 conflict with, violate, result in a breach of, or constitute
a default under the articles or by-laws of the Borrowers or
the Material Subsidiaries or of any agreement or instrument
to which the Borrowers or the Material Subsidiaries is a
party or by which they are bound, except to the extent such
conflict, violation, breach or default could not reasonably
be expected to have a Material Adverse Effect.
8.9 Validity of this Agreement
This Agreement constitutes a legal, valid and binding obligation
of the Borrowers.
8.10 Litigation
There is no litigation and there are no legal proceedings pending, or,
to the best of its knowledge, threatened, before any court or administrative
agency or tribunal which could reasonably be expected to have a Material Adverse
Effect.
- 30 -
8.11 Default
No Event of Default has occurred and is continuing.
8.12 Financial statements
The audited consolidated financial statements of SLM and Sports
Holding Corp. for the fiscal year ended December 31, 1997 have been prepared in
accordance with GAAP and present fairly, in all material respects, the
respective financial positions of SLM and Sports Holding Corp. and the results
of their respective operations for the fiscal years reported on.
8.13 Defects of title and liens
There is no deficiency or defect in the title of the Borrowers and the
Material Subsidiaries to any of their principal plants, properties or assets
which would reasonably be expected to have a Material Adverse Effect, and,
except for Permitted Encumbrances, the assets of the Borrowers and their
Subsidiaries are free and clear of any lien, priority, or security.
8.14 Tax returns
Each of the Borrowers and the Material Subsidiaries has filed all
material tax returns which were required to be filed and paid or made provision
for payment of all taxes which are due and payable, except to the extent that
adequate accounting reserves have been established in accordance with GAAP for
the payment of any tax the payment of which is being contested.
8.15 Pensions plans
Any Borrower or any Material Subsidiary that maintains or contributes
to a plan that provides retirement or health benefits for its employees, has
performed any material obligation provided in such plan in accordance with the
terms thereunder and in accordance with any statute, order, rule or regulation
applicable to such plan. In addition:
(i) set forth on Schedule E hereto is a complete and accurate list of all
Plans and Multiple Employer Plans;
(ii) no ERISA Event has occurred or is reasonably expected to occur with
respect to any Plan that has resulted in or is reasonably expected to
result in a Material Adverse Effect;
- 31 -
(iii) Schedule B (Actuarial Information) to the most recent annual report
(Form 5500 Series) for each Plan, copies of which have been filed with
the United States Internal Revenue Service and furnished to the Agent,
is complete and accurate and fairly presents the funding status of
such Plan, and since the date of such Schedule B there has been no
material adverse change in such funding status;
(iv) neither the Borrowers nor any Subsidiary has incurred or is reasonably
expected to incur any Withdrawal Liability to any Multiple Employer
Plan; and
(v) neither the Borrowers nor any Subsidiary has been notified by the
sponsor of a Multiple Employer Plan that such Multiple Employer Plan
is in reorganization or has been terminated, within the meaning of
Title IV of ERISA, and no such Multiple Employer Plan is reasonably
expected to be in reorganization or to be terminated, within the
meaning of Title IV of ERISA.
8.16 Year 2000 Compliance
Each of the Borrowers has (i) initiated a review and assessment of all
areas within its and each of its Material Subsidiaries' business and operations
that could be adversely affected by the risk that computer applications used by
such Borrower or any of its Material Subsidiaries may be unable to recognize and
perform properly date-sensitive functions involving certain dates prior to and
any date after December 31, 1999 (the "Year 2000 Problem"), (ii) developed a
plan and timetable for addressing the Year 2000 Problem on a timely basis and
(iii) to date, implemented that plan in accordance with such timetable. Based on
the foregoing, each of the Borrowers believes that all computer applications
that it owns or licenses and that are material to its or any of its Material
Subsidiaries' business and operations are reasonably expected on a timely basis
to be able to perform properly date-sensitive functions for all dates before and
after January 2000 ("Year 2000 Compliant"), except to the extent that a failure
to do so could not reasonably be expected to have a Material Adverse Effect.
8.17 Intellectual Property
Set forth on Schedule G hereto is a complete and accurate list of all
patents, trademarks, industrial designs, integrated circuit topographies, plant
breeder rights, trade names, service marks and copyrights, and all applications
therefor and licenses thereof (collectively, the "Intellectual Property"), of
the Borrowers or their Subsidiaries, showing, as applicable, as of the date
hereof the jurisdiction in which registered, the registration number, the date
of registration and the expiration date. None of such Intellectual Property is
subject to any pending or (to the best of the Borrowers' knowledge) threatened
claim or litigation or any licensing agreement or similar arrangement except as
set forth therein. Each of the Borrowers and its Subsidiaries owns
- 32 -
or is licensed or otherwise has the right to use all of the Intellectual
Property that are reasonably necessary for the operation of its business and, to
the best of the Borrowers' knowledge, none of such Intellectual Property
infringes on or conflicts with any material Intellectual Property of any other
Person in any material respect, and no other Person's property infringes on or
conflicts with any material Intellectual Property of the Borrower and their
Subsidiaries. The Intellectual Property described on Schedule G constitutes all
of the property of such type necessary to the current and reasonably anticipated
future conduct of the business of the Borrowers and its Subsidiaries.
8.18 Assets of Jofa Holding AB
The only asset of Jofa Holding AB consists of shares in the capital
stock of Jofa AB.
9. AFFIRMATIVE COVENANTS
Each of the Borrowers solidarily covenants and agrees that:
9.1 Payment of principal and interest
The Borrowers will duly and punctually pay the principal and interest
(including any interest on amounts in default) on the outstanding Borrowings, as
well as fees and other amounts due hereunder, on the dates, at the places and in
the manner mentioned herein.
9.2 Good standing
Each of the Borrowers and its Subsidiaries will do all things
necessary to preserve and keep in full force and effect its corporate existence
except as expressly permitted by Section 10.4, will file all annual returns and
financial statements as may be required pursuant to applicable law and will
remain duly qualified to do business in the jurisdictions in which the nature of
the business transacted by it or the character of the material properties owned
or leased by it will require such qualifications.
9.3 Conduct of business
Each of the Borrowers and its Material Subsidiaries will carry on and
conduct its business in a prudent manner and will diligently maintain its
property and premises and corporate assets in good condition and use, reasonable
wear and tear excepted, where failure to so maintain would, in any material
respect, affect the conduct or carrying on of its business.
- 33 -
9.4 Payment of taxes
Each of the Borrowers and its Subsidiaries will pay all taxes, levies
and assessments, government fees, dues and other obligations to pay money to the
proper authorities which have been validly levied, assessed or imposed upon it,
or upon its assets or any part thereof, as and when the same become due and
payable, except to the extent and for so long as it shall contest in good faith,
diligently and by appropriate measures its obligation to do so, provided that in
such case, it shall reasonably satisfy the Agent that no such contestation will
involve forfeiture of any material part of the assets of the Borrowers and its
Subsidiaries or could reasonably be expected to have a Material Adverse Effect.
9.5 Insurance
Each of the Borrowers and its Material Subsidiaries will insure and
keep insured its assets which are of an insurable nature, against loss or damage
by fire and against such other hazards, in such amount and in such manner, to
the extent available on commercially reasonable terms, as a prudent
administrator would do in the case of assets similarly situated and of companies
operating generally similar businesses and with reputable insurance companies,
will duly and punctually pay the premiums and other sums of money payable for
that purpose, will provide the Agent with evidence of the renewal of any
insurance policy prior to the expiry of same, and will, at the request of the
Agent, furnish to the Agent certificates of insurance relating to such insurance
carried by it.
9.6 Obligations under contracts
During the term of any lease, operating agreement, license, concession
or other contract or agreement in which the each of the Borrowers or its
Material Subsidiaries have an interest or to which it is a party, each of the
Borrowers and its Material Subsidiaries will faithfully observe, perform and
discharge the covenants, conditions and obligations relating to non-financial
aspects imposed on it thereby, except to the extent that failure to so observe,
perform and discharge, could not reasonably be expected to have a Material
Adverse Effect.
9.7 Transactions with Affiliates
Each of the Borrowers shall conduct, and cause each of its
Subsidiaries to conduct, all transactions with any Subsidiary on terms that are
fair and reasonable and no less favourable to the Borrowers or the Subsidiaries
than would be obtained in a comparable arm's- length transaction with a Person
not a Subsidiary; provided, however, that (i) the Borrowers may make loans and
advances to their officers and employees in an amount not to exceed US $250,000
for any one officer or employee and in the aggregate amount outstanding at any
time of
- 34 -
US $1,000,000, (ii) the Borrowers and its Material Subsidiaries may reimburse
their respective directors and any shareholders of SLM for all out-of-pocket
expenses, including expenses of travel and lodging, incurred by such directors
or shareholders in regard to their participation in the management, business and
affaires of the Borrowers and their Subsidiaries, (iii) SLM, directly or
indirectly through any Subsidiary, may provide indemnification to the directors,
officers and employees of SLM and its Subsidiaries against all costs, charges
and expenses incurred by them by reason of any action taken in their capacity as
such, and (iv) notwithstanding any other provision of this Agreement or the
Security, SLM and Sport Maska Inc. may each transfer (by way of loan or capital
contribution) all or any other portion of the proceeds of the Loans to
Subsidiaries of SLM, and such Subsidiaries may further transfer (by way of loan
or capital contribution) any portion of such proceeds to other Subsidiaries of
SLM, for the purpose of consummating the transactions contemplated by the
Agreement and Plan of Reorganization, including, without limitation, the
intercompany loans referred to in Schedule I attached hereto.
9.8 Books and accounts
Each of the Borrowers and its Subsidiaries will keep and maintain
proper books of account and other accounting records in accordance with the
applicable generally accepted accounting principles.
9.9 Reporting requirements
The Borrowers or SLM, as the case may be, will furnish to the Agent in
a sufficient number of copies for distribution to each of the Lenders:
9.9.1 within 45 days after the end of each fiscal quarter, and
within 30 days after the end of each month (other than a
month during which a fiscal quarter ends) of each fiscal
year of SLM or when made public by SLM, whichever is
earlier, interim unaudited consolidated financial statements
of SLM for such quarter or such month, subject to year-end
audit adjustments, certified by the chief financial officer
of the Borrower;
9.9.2 within 120 days after the end of each fiscal year of SLM or
when made public by SLM, whichever is earlier, annual
audited consolidated financial statements of SLM and
unaudited consolidating financial statements of SLM and each
of its Subsidiaries for such year, prepared in accordance
with GAAP, consistently applied, and accompanied by the
external auditors' report therein;
- 35 -
9.9.3 within 90 days after the end of each fiscal year of SLM, an
annual budget and business plan for SLM's current fiscal
year, presented on a consolidated and consolidating basis;
such annual budget shall include balance sheets, income
statements and cash flow statements for SLM together with
the underlying principal assumptions; and such annual budget
will include proposed capital expenditures and dividends;
9.9.4 from time to time, any other report or information on the
financial condition, the operations and the assets of the
Borrower and its Subsidiaries as may reasonably be required
by the Agent;
9.9.5 within 45 days after the end of each fiscal quarter and
within 120 days of each fiscal year end, a compliance
certificate of the chief financial officer of SLM that he
has reviewed this Agreement, and that he has no knowledge of
any Default or, if he has such knowledge, specifying such
Default, such certificate to be substantially in the form
and substance of Schedule "H";
9.9.6 promptly upon transmission thereof, copies of all
statements, annual information forms, prospectuses, offering
circulars or similar materials filed by it with any stock
exchange, securities commission, or similar entity;
9.9.7 a notice, upon knowledge of the occurrence of any Material
Adverse Effect or upon knowledge of a Subsidiary becoming a
Material Subsidiary;
9.9.8 any other information reasonably requested by the Agent.
9.10 Inspections
The Borrowers and the Material Subsidiaries shall allow Caisse and any
Person designated in writing by Caisse, on reasonable notice and at such
reasonable time or times as will not interfere with the normal operations of the
Borrowers and the Material Subsidiaries, to visit and inspect any of the
properties of the Borrowers and the Material Subsidiaries and to discuss the
affairs, finances and accounts of the Borrowers and the Material Subsidiaries
with its chief financial officer and its auditors, provided that any such
meeting with its auditors is scheduled by such chief financial officer.
- 36 -
9.11 Compliance with laws and regulations
Each of the Borrowers and its Subsidiaries shall own, possess and
operate its assets and business in compliance with applicable laws and
regulations (including environmental laws and regulations), except to the extent
that failure to so comply could not reasonably be expected to have a Material
Adverse Effect.
9.12 Approvals
Each of the Borrowers and its Subsidiaries will obtain, maintain and
renew all permits, authorizations and approvals required under applicable laws
and regulations (including environmental laws and regulations) required for
their operations, businesses and assets, except to the extent that failure to so
obtain, maintain and renew could not reasonably be expected to have a Material
Adverse Effect.
9.13 Representations and warranties
Each of the Borrower and the Material Subsidiaries will do all things
necessary to ensure that all representations and warranties made in Article 8,
other than in Sections 8.6, 8.12 and in the first and last sentences of Section
8.17, shall remain true and accurate during the whole term of this Agreement and
shall promptly notify the Agent of any event or circumstances which would result
in such representations ceasing to be true and accurate in any respect which is
material to a Borrower or any Material Subsidiary and of the steps taken to
remedy same.
9.14 Perfection of Security
Each of the Borrowers and the Material Subsidiaries will do all things
required in order that any Security granted pursuant to Article 12 be constantly
perfected on all property intended to be covered by the Security, as reasonably
requested by the Agent.
9.15 Notification of Default
Each of the Borrowers shall promptly notify the Agent of the
occurrence of any Default known to it and of the steps being taken to remedy the
same.
- 37 -
9.16 Hedging transactions
The Borrowers will not undertake derivative hedging transactions of
any nature except for normal business related and not speculative purposes and
the Borrowers may, as they deem appropriate, hedge against currency and exchange
risks resulting from the Borrowings.
9.17 Pension Plans and ERISA
Any Borrower or any Material Subsidiary that maintains or contributes
to a plan that provides retirement or health benefits for its employees, will
perform any material obligation provided in such plan in accordance with the
terms thereunder and in accordance with any statute, order, rule or regulation
applicable to such plan, and, without limiting the generality of the foregoing,
shall comply with any material obligations to which it may be subject under
ERISA, or any plan governed thereby.
9.18 Board Representation
For so long as the Borrowings have not been repaid in full, the Caisse
shall be entitled to receive notice of and have its representative attend as
observer at all meetings of the board of directors of SLM.
10. NEGATIVE COVENANTS
Each of the Borrowers covenants and agrees that:
10.1 Negative pledge
Each of the Borrowers and its Subsidiaries shall not grant, create,
assume or suffer to exist any security, mortgage, hypothec, charge, security
interest, lien or priority of any kind on their properties, assets or other
rights, other than Permitted Encumbrances.
10.2 Disposition of assets
The Borrowers and their Subsidiaries shall not sell, transfer, lease,
convey or otherwise dispose of any of their property or assets other than (a) to
the Borrowers or Material Subsidiaries in the ordinary course of business, (b)
the sale of inventory to third parties in the ordinary course of business, (c)
the sale, transfer, conveyance or other disposition of property or assets that
are obsolete or no longer used or useful in the Borrower's Material Subsidiary's
business for an aggregate amount not to exceed Cdn$400,000 in any fiscal year,
or (d) other dispositions of assets (other than inventory) in the ordinary
course of business for an aggregate
- 38 -
amount not to exceed US $500,000 in any fiscal year. With respect to any sale,
transfer, conveyance or other disposition permitted pursuant to this Section,
Agent and Lenders agree to release their Liens or such assets or property in
order to permit such sale, transfer, conveyance or disposition to be effected
and shall execute and deliver to such Borrower or Subsidiary, at the Borrower's
or Subsidiary's expense, appropriate releases as reasonably requested.
10.3 Guarantees
The outstanding liabilities (contingent or not) of the Borrower and
its Subsidiaries under Guarantees shall not at any time exceed the aggregate
amount of US$3,000,000 calculated on a consolidated basis, excluding Guarantees
required or contemplated by Article 12 and Guarantees of Indebtedness permitted
by Section 10.6.
10.4 Subsidiaries and amalgamations
Except as provided in the Agreement and Plan of Reorganization, each
of the Borrowers and its Subsidiaries shall not merge or amalgamate with or
liquidate or wind up into any other Person (a "Transaction"), save (a) for
Transactions among wholly-owned Subsidiaries of the Borrowers or between the
Borrowers and any wholly-owned Subsidiaries of the Borrowers, and (b) with the
consent of the Agent, not to be unreasonably withheld, only if at the time
thereof and immediately thereafter no Default or Event of Default shall have
occurred and be continuing, and if there shall not result therefrom any actual
or potential environmental liability, litigation or other contingent liability
having a material adverse effect on the affected Borrower or the affected
Subsidiary or Subsidiaries, and if, immediately prior to any such Transaction,
the Agent is provided with an opinion of legal counsel to SLM in form and
substance satisfactory to the Agent acting reasonably, as to the effect, if any,
of any such Transaction upon the continuing validity and enforceability of the
Agreement and Security upon each of the Borrowers and the parties thereto.If a
Transaction permitted under the foregoing provisions involves a Material
Subsidiary, any Subsidiary issued from such Transaction or into which assets
have been transferred further to such Transaction shall be deemed to be a
Material Subsidiary.
10.5 Fiscal Year
Each of the Borrowers and the Material Subsidiaries shall not change
the date of its fiscal year end without the prior consent of the Agent, not to
be unreasonably withheld.
- 39 -
10.6 Incurrence of Indebtedness
Each of the Borrowers and its Subsidiaries shall not incur, assume, or
suffer to exist any Indebtedness for money borrowed or raised, or guarantee any
such Indebtedness, other than Indebtedness to the Lenders hereunder;
Indebtedness under the Canadian Operating Credit or the U.S. Operating Credit;
Indebtedness under permitted interest rate and currency hedging arrangements;
Indebtedness in the amount of US $ 49,054,012.08 and payable on demand resulting
from an intercompany advance made by SLM to Sports Holdings Corp. with the
proceeds of Borrowings for the purpose of consummating the transactions
contemplated by the Agreement and Plan of Reorganization; Indebtedness in the
form of loans made by Sport Maska Inc. and Maska U.S., Inc. to SLM that are
payable on demand and do not exceed, individually or in the aggregate for all
such loans, in any fiscal year, US $ 900,000 for the purpose of paying all
general and administrative fees, all regulatory fees, the necessary fees and
expenses to maintain SLM's corporate existence, the reasonable costs of its
directors' and officers' insurance and their legal and accounting fees to the
extent such fees relate to legal and accounting services provided directly to it
by entities that are not its Affiliates; Indebtedness in the form of loans made
by Sport Maska Inc. to Maska U.S., Inc. that are payable on demand and the
proceeds of which are used for the purpose of paying trade creditors of Maska
U.S., Inc. in an amount outstanding not to exceed, at any time, C$1,000,000;
Indebtedness in the form of loans made by Sport Maska Inc. and Maska U.S., Inc.
to SLM to the extent required to pay regularly scheduled interest payments and
prepayments of principal on the Borrowings; other existing Indebtedness not
exceeding US $150,000, or as otherwise permitted or contemplated by Permitted
Encumbrances.
11. FINANCIAL COVENANTS OF THE BORROWER
SLM covenants in favour of the Agent and the Lenders that it:
11.1 Capital expenditures
Shall not incur Capital Expenditures in any fiscal year on a
consolidated basis which in the aggregate exceed the following amounts:
Year Amount
---- ------
1998 US $6,800,000
1999 US $4,000,000
2000 US $4,500,000
2001 US $5,000,000
- 40 -
provided, however, that for fiscal year 1999 Capital Expenditures may be
increased by an amount equal to the lesser of (i) US $1,500,000 and (ii) 50% of
the difference between the amount permitted for the 1998 fiscal year and the
amount of Capital Expenditures actually incurred in such fiscal year.
11.2 Dividends
Shall not pay dividends (other than stock dividends) on common shares
or preferred shares or undertake common share repurchase programs.
11.3 Indebtedness to EBITDA
Shall maintain on a consolidated basis, calculated as of the last day
of each fiscal quarter, a ratio of Indebtedness to EBITDA not greater than,
11.3.1 6.30 to 1.00 from Closing until December 30, 1998;
11.3.2 6.00 to 1.00 from December 31, 1998 to December 30, 1999;
11.3.3 5.00 to 1.00 from December 31, 1999 to December 30, 2000;
and
11.3.4 4.00 to 1.00 from and after December 31, 2000.
11.4 Interest Coverage Ratio
Shall maintain on a consolidated basis, calculated on the last day of
each fiscal quarter, an Interest Coverage Ratio of not less than,
11.4.1 0.90 to 1.00 from December 31, 1998 to March 31, 1999;
11.4.2 1.10 to 1.00 from April 1 to December 30, 1999;
11.4.3 1.35 to 1.00 from December 31, 1999 to December 30, 2000;
and
11.4.4 1.70 to 1.00 from and after December 31, 2000;
provided, however, that compliance with the ratio set forth in Section 11.4.1
shall be calculated on a cumulative quarterly basis and not on an annual basis.
11.5 Intercompany Dividends
- 41 -
Shall cause the Material Subsidiaries, from time to time, to pay such
dividends or make such inter-corporate payments, subject to applicable laws, as
to ensure the ability of the Borrowers to service their debt;
11.6 Minimum EBITDA
Shall achieve a minimum EBITDA on a pro forma consolidated basis,
after giving effect to the completion of the transactions contemplated by the
Agreement and Plan of Reorganization (and excluding any unusual revenues and
charges), for the fiscal year ending December 31, 1998, of US $ 22,000,000, or
should such test not be met as of December 31, 1998, obtain from its
shareholders on or before April 30, 1999 new capital contributions of US
$5,000,000 for each US$1,000,000 deficiency.
12. SECURITY
12.1 Granting of Security
Subject to Section 12.6, each of the Borrowers and the Material
Subsidiaries shall (i) provide security on all of their present and future,
tangible and intangible, assets (ii) guarantee the performance of all
obligations and liabilities hereunder (collectively, the "Security"). The
Lenders shall be named loss payees, as their respective interests may appear, on
all insurance policies relating to the assets covered by the Security and such
policies shall include mortgage clauses.
12.2 Purpose of the Security
The Security shall secure the indebtedness and obligations of the
Borrowers under this Agreement and the obligations of the Material Subsidiaries
under their respective guarantees.
12.3 Ranking of the Security
The Security shall be perfected in all jurisdictions where material
property intended to be covered thereby is located and shall be first ranking on
the property covered thereby, subject to Permitted Encumbrances and the terms of
the Intercreditor Agreement.
12.4 Evidence of the Security
The Security, including all agreements and documents evidencing same
(including its perfection) and legal opinions in respect thereof, shall be
satisfactory to all Lenders
- 42 -
at the time such Security is granted. Each Lender hereby appoints the Agent
hereunder as its mandatary to execute on its behalf said agreements and
documents together with all releases and discharges in respect of the Security.
12.5 Time limit to provide the Security
Subject to Section 12.6, those of the requirements of this Article 12
which are not fulfilled prior to the date of the initial Borrowing, shall be
fulfilled before December 31, 1998 in respect of the Borrowers and all Material
Subsidiaries in existence at the date hereof. Security by a future Material
Subsidiary shall be provided 45 days after the date the Person concerned shall
have become a Material Subsidiary.
12.6 Exceptions for KHF and JOFA
12.6.1 Notwithstanding the other provisions of Article 12, KHF
Sports Oy, Jofa Holding AB and Jofa AB shall not be required
to provide (although they may decide to do so) the Security
and legal opinions contemplated in this Article 12. However,
on the first day of each quarter from the quarter beginning
July 1, 1999, each margin and fee rate referred to in
Schedule F shall be increased by 0.5% (except on July 1,
1999, where the rate shall be 1.5%) if such Security and
legal opinions have not been provided prior to the relevant
quarter, unless SLM has previously exercised the option of
Section 12.6.2.
12.6.2 At SLM's option, the Security and legal opinions to be
provided by KHF Sports Oy, Jofa Holding AB and Jofa AB may
be replaced by the following:
(i) a transfer to new Subsidiaries of SLM ("Newcos")
of all the assets and properties (other than
intellectual property and related rights) owned or
possessed by KHF Sports Oy and Jofa AB;
(ii) Jofa Holding AB and Jofa AB shall merge by way of
amalgamation or winding up or other similar
procedure to form a single surviving corporation
("Jofa");
(iii) the implementation of appropriate measures to
ensure that KHF Sports Oy and Jofa shall have no
activity other than the ownership and management
of such intellectual property and
- 43 -
related rights and the holding of the shares of
Newcos and shall maintain liability insurance
reasonably satisfactory to the Lenders with
respect to its activities conducted prior to the
transaction contemplated in Section (i) above;
(iv) a first ranking pledge in favour of the Lenders of
the shares of KHF Sports Oy and Jofa; and
(v) reasonably satisfactory legal opinion and
financial or audit reports with respect to the
foregoing.
13. EVENTS OF DEFAULT
13.1 Events of Default
Each of the following events or circumstance shall constitute an Event
of Default:
13.1.1 if the Borrowers fail to pay when due the whole or any part
of the outstanding Borrowings or of any interest, fee or
other amount payable under this Agreement;
13.1.2 if either Borrower or any Material Subsidiary has
acknowledged its insolvency or has been declared insolvent
or bankrupt or becomes voluntarily subject to any law
relating to bankruptcy, insolvency or relief of debtors;
13.1.3 if all or a substantial portion of the assets of either
Borrower or any Material Subsidiary, are seized in
connection with any judgment and such seizure is not
released or stayed within 30 days or are subject to a taking
of possession by a creditor, or are placed under
sequestration, receivership or guardianship, or if a
liquidator is appointed in respect of any of the Borrower
and the Subsidiaries, unless such proceedings are being
actively and diligently contested in good faith by the
Borrower or such Subsidiary and are dismissed or stayed
within 60 days;
13.1.4 subject to Section 10.4, if any proceedings for the
dissolution, liquidation or winding-up of either Borrower or
any Material Subsidiary or for the suspension of its
operations are commenced, unless such proceedings are being
diligently contested in good faith
- 44 -
by such Borrower or such Material Subsidiary and are
dismissed or stayed within 60 days;
13.1.5 if any proceedings under any law relating to bankruptcy,
insolvency or relief of debtors is commenced against any
Borrower or any Material Subsidiary and is not actively and
diligently contested in good faith and dismissed or stayed
within 60 days;
13.1.6 if any of the representations and warranties made by the
Borrowers in this Agreement or if a document supplied by a
Borrower or a Material Subsidiary in connection with this
Agreement shall prove to have been erroneous or inaccurate
in any material respect concerning any matter material to
the Lenders as at the date made or deemed to be made;
13.1.7 if any Borrower or any Material Subsidiary otherwise fails
to fulfill, in any material respect, any of its obligations
or covenants under this Agreement, or any other agreement
evidencing or related to the Security and if such failure is
not remedied within 25 days of the earlier of (i) the
Borrower's becoming aware of such failure and (ii) notice of
such failure being given to the Borrower by the Agent;
13.1.8 if any Borrower or any Material Subsidiary is in default to
pay amounts when due (after the expiry of any applicable
grace periods) under any Indebtedness (other than amounts
due under this Agreement) owed by it or them and exceeding
US $1,500,000 in the aggregate;
13.1.9 if any Borrower or any Subsidiary fails to perform any
obligation in respect of any Indebtedness (other than
amounts due under this Agreement) owed by it or them and, as
a result of such failure, the payment of amounts exceeding
US $1,500,000 are accelerated;
13.1.10 if WS Acquisition, LLC ("Wellspring") and its Associates,
collectively,(i) no longer hold the largest percentage
interest of the outstanding capital stock of SLM on a fully
diluted basis, (ii) no longer control (either directly or
indirectly) not less than 50% of the number of seats on the
board of directors of SLM (excluding the board seat occupied
by the chief executive officer of SLM), or (iii) if the
chief executive officer of SLM is no longer a member of the
- 45 -
board of directors of SLM, do not control (either directly
or indirectly) a majority of the seats on the board of
directors of SLM. For the purpose of this Section 13.1.10,
an "Associate" of Wellspring means any Person which,
directly or indirectly, is in control of, is controlled by,
or is under common control with, Wellspring. In the
preceding sentence, "control" means the power, directly or
indirectly, either to (a) vote securities having 10% or more
of the ordinary voting power for the election of directors
(or Persons performing similar functions) of a Person or (b)
direct or cause the direction of the management and policies
of such Person, whether by contract or otherwise;
13.1.11 if any judgment or order is rendered against any Borrower or
any Material Subsidiary which requires the payment of monies
in excess of US $2,000,000, net of any proceeds of insurance
policies payable to such Borrower in relation thereto, and
such judgement or order shall remain undischarged or
unsatisfied and either:
(i) an enforcement proceeding shall have been
commenced by a creditor upon such judgment or
order if such judgement or order is final and not
appealable, or
(ii) there shall have been a period of 30 consecutive
days during which a stay of enforcement of such
judgment or order, by reason of pending appeal or
otherwise, was not in effect; and
13.1.12 if there is a material adverse change in the financial
condition, business or operations of a Borrower or a
Material Subsidiary.
13.2 Remedies
If an Event of Default occurrs and is continuing, the Agent may, and
if required by the Majority Lenders, shall:
13.2.1 terminate the Total Commitments and the right of the
Borrowers to make utilizations, conversions and renewals;
13.2.2 declare all indebtedness of the Borrowers hereunder to be
immediately payable and demand immediate payment of the
whole or part of same; and
- 46 -
13.2.3 exercise all of the rights and remedies of the Lenders,
including realization on the Security.
13.3 Notice of default
The Borrowers shall be in default hereunder by the mere lapse of time
without the requirement of any notice or delay other than as expressly provided
herein.
14. SHARING AND EQUALITY AMONG LENDERS
14.1 Distribution among Lenders
Any payment received by the Agent to be applied to indebtedness of the
Borrowers hereunder, including any amount received through the exercise of a
right of set-off by any Lender and the realization of the Security, shall be
distributed among the Lenders proportionate to their pro rata share of the
indebtedness to which such payment is to be applied. Such distribution shall be
made forthwith but no later than two Business Days after receipt of such payment
by the Agent.
14.2 Equality among the Lenders
All rights of the Lenders hereunder or under the Security shall rank
pari passu, pro rata to their respective share of the indebtedness of the
Borrowers to the Lenders hereunder.
14.3 Other security
No Lender shall obtain any additional security for the payment of the
indebtedness of the Borrowers hereunder, unless such security forms part of the
Security.
14.4 Direct payment to a Lender
If a Lender receives otherwise than through the Agent a payment which
must be applied to the indebtedness of the Borrowers hereunder (including any
payment received through the exercise of a right of set-off or the realization
of the Security), such Lender shall remit to the Agent the payment so received,
in order that such payment be applied by the Agent to the indebtedness of the
Borrowers hereunder in accordance with the provisions of this Agreement.
- 47 -
14.5 Adjustments among Lenders
If, at any time after the Agent has made a demand for payment pursuant
to Section 13.2, the ratio of the aggregate indebtedness of the Borrowers to any
Lender under the Credit to the aggregate indebtedness of the Borrowers to the
Lenders is not equal to its Lender's Proportion, all Lenders shall make payments
among themselves as may be necessary or appropriate in order that the amounts
due to each Lender shall be proportional to their respective Lender's
Proportion.
15. THE AGENT AND THE LENDERS
15.1 Appointment of the Agent
Each Lender irrevocably appoints the Agent to exercise on its behalf
such rights and powers as are delegated to the Agent by the terms of this
Agreement and as are reasonably incidental thereto. Whenever acting in such
capacity, the Agent shall represent and bind all Lenders as herein provided. No
Lender shall exercise individually any of the rights and powers delegated to the
Agent hereunder.
15.2 Action by Agent
Except as expressly required by this Agreement, the Agent shall not be
required to take or refrain from taking any action which it is empowered to take
under this Agreement or the Security documents, unless the Agent has been
required by the Majority Lenders to take or refrain from taking any such action.
Notwithstanding the foregoing, the Agent shall in no event be required to take
or refrain from taking any action which it would be required to take or refrain
from taking by the Majority Lenders if in its judgment, such action or omission
is contrary hereto or to applicable law or exposes it to personal liability in
circumstances in which it determines that indemnity under Section 15.9 may not
be available or adequate.
15.3 Liability of the Agent
The Agent shall not be liable for any action taken or omitted to be
taken by it in the absence of gross negligence or wilful misconduct, provided it
has acted in accordance with the provisions of this Agreement. In addition, but
without limiting the generality of the foregoing, the Agent:
15.3.1 shall not be liable for any action it takes or omits to take
in good faith in accordance with the advice of legal
counsel, experts or professional advisors;
- 48 -
15.3.2 shall incur no liability by acting upon any communication or
document believed by it to be genuine and to have been
signed, sent or given by the proper Person or Persons;
15.3.3 shall have no duty to investigate whether a Default has
occurred or is continuing;
15.3.4 shall have no duty to examine or comment on the validity,
genuineness, sufficiency or accuracy of any document or
information supplied by the Borrowers or the Material
Subsidiaries to the Lenders through the Agent.
15.4 Notices by Agent to Lenders
Whenever a notice of utilization, conversion or renewal is given by a
Borrower to the Agent, the Agent shall promptly provide the Lenders with the
details of the Borrowing which is the subject matter of the notice, in order
that the Lenders may make available to the Borrower concerned, through the
Agent, or as the case may be, may fund, their respective proportions of such
Borrowing.
15.5 Manner of disbursement
15.5.1 Any amount to be disbursed by a Lender pursuant to a
Borrowing under the Credit shall be made available to the
Agent by such Lender at the Agent's Branch of Account, by
2:00 p.m. on the date the Borrowing is to be effected.
15.5.2 Any amount so received by the Agent shall be made available
to the Borrower concerned at places to be agreed to from
time to time between the Borrowers and the Agent.
15.6 Non-Contribution of a Lender
Unless previously notified in writing by a Lender no less than two
Business Day before a Borrowing is to be effected that such Lender does not
intend to make available to the Agent its proportion of such Borrowing, the
Agent may assume that such Lender will be making its proportion of such
Borrowing available to the Agent on such date and the Agent may, in reliance
upon such assumption, make available to the Borrower concerned an amount
corresponding to such Lender's proportion of the Borrowing. If such Lender fails
to make its proportion of the relevant Borrowing available to the Agent on the
relevant date, the Agent shall be entitled to recover on demand the amount of
such Lender's proportion of the Borrowing, from
- 49 -
such Lender or, failing recovery from such Lender, from the Borrower concerned
on one day's notice. Interest shall accrue on such amount during the period
prior to such recovery at a rate per annum equal to the rate applicable to a
Dollar Loan and shall be paid to the Agent for its own account.
15.7 Notices of Default
The Agent shall be entitled to assume that no Default has occurred and
is continuing, unless the Agent has been notified by the Borrowers or any of the
Material Subsidiaries of any such Default, or has been notified by a Lender that
such Lender considers that a Default has occurred and is continuing. In such a
case, the Agent shall promptly notify the Lenders of the Default, but the Agent
shall incur no liability for its failure to do so if such Default has been
remedied.
15.8 Liability of Lenders
No Lender (including the Agent) shall have any liability whatsoever:
15.8.1 as a consequence of the failure of any other Lender to
perform its obligations under this Agreement;
15.8.2 as a consequence of the failure of any Borrower or any
Material Subsidiary to perform its obligations under this
Agreement or any of the Security documents;
15.8.3 for the accuracy or completeness of any information,
representations or warranties contained herein or made in
connection herewith or provided pursuant to this Agreement,
or for the legality, validity, enforceability, sufficiency
or value of this Agreement, the Security documents or any
other document or instrument contemplated thereby.
15.9 Indemnification
Each Lender shall indemnify the Agent in the proportion its Commitment
bears to the Total Commitment, to the extent not reimbursed by the Borrowers or
the Material Subsidiaries, from and against all liabilities, losses, expenses,
claims or disbursements of any kind or nature whatsoever which may be incurred
or imposed on them, relating to or arising out of this Agreement, the Security
or any action taken or omitted to be taken by the Agent, except for any portion
of such liabilities, losses, expenses, claims or disbursements resulting from
its negligence or wilful misconduct.
- 50 -
15.10 Credit decision
Each Lender acknowledges that it has been and will continue to be
solely responsible for making its own independent appraisal and investigation of
the financial condition, credit-worthiness, affairs and viability of the
Borrowers and the Material Subsidiaries and that it has not relied on the Agent
or any other Lender in the making of its decision to enter into this Agreement.
15.11 Legal proceedings and enforcement measures
Any legal proceedings and enforcement measures on behalf of all
Lenders shall be taken by the Agent, and upon the request of the Agent, all
Lenders shall join the Agent in such proceedings or enforcement measures.
15.12 Sharing of information
The Borrowers authorize the Agent and the Lenders to share with each
other and with prospective assignees of and participants in the Borrowings, any
information held by them regarding each of the Borrowers and its Subsidiaries or
relating to this Agreement, provided however that any information held by the
Lenders subject to a confidentiality agreement shall only be shared on the
condition that the recipient thereof agrees to be bound by such confidentiality
agreement.
15.13 No association among Lenders
Nothing contained in this Agreement and no action taken pursuant to it
shall, or shall be deemed to, constitute the Lenders a partnership, association,
joint venture or other similar entity.
15.14 Successor Agent
Subject to the appointment and acceptance of a successor agent as
provided in Section 1 and this Section 15.14, the Agent may resign at any time
by giving written notice thereof to the Lenders and SLM. Upon any such
resignation, the Majority Lenders shall have the right to appoint a successor
agent with the approval of SLM (such approval not to be unreasonably withheld).
Any successor agent appointed under this Section 15.14 shall be a financial
institution which has an office in Montreal, Province of Quebec. If no successor
agent shall have been appointed by the Majority Lenders within 90 days after the
retiring agent's giving of notice of resignation, then the retiring agent may,
on behalf of the Lenders and with the
- 51 -
approval of SLM (such approval not to be unreasonably withheld), appoint a
successor agent. Upon the appointment as Agent of a successor agent, such
successor agent shall thereupon succeed to and become vested with all the
rights, powers, obligations and duties of the retiring agent and shall be deemed
for the purposes of this Agreement to be the Agent and the retiring agent shall
be discharged from its duties and obligations under this Agreement. After any
retiring agent's resignation hereunder as the Agent, the provisions of this
Agreement shall continue in effect for its benefit, for the benefit of the
Lenders and for the benefit of SLM in respect of any actions taken or omitted to
be taken by the retiring agent while it was acting as the Agent.
15.15 Option of Lenders to replace a Lender
In the event that any Lender does not consent to any amendment or
waiver requiring the unanimous consent of the Lenders, the consenting Lenders
shall have the option, but not the obligation, to purchase the dissenting
Lender's interest in this Agreement. If the consenting Lenders do not exercise
such option for the total amount of such interest, the dissenting Lender shall
have the option of locating a new Lender to assume the dissenting Lender's
interest in this Agreement, such new lender to be acceptable to the Borrowers
and the Agent acting reasonably. The Borrowers shall reimburse the Agent for any
cost or expense incurred in respect of such assignment or proposed assignment.
16. WAIVERS AND AMENDMENTS
16.1 Amendments and waivers with the approval of the Majority Lenders
Subject to the other Sections of this Article 16, the provisions of
this Agreement or of any of the Security documents may only be amended or waived
by an instrument in writing signed by the Agent, with the approval of the
Majority Lenders.
16.2 Amendments by unanimous approval
The provisions of this Agreement relating to any of the following
matters may only be amended by an instrument in writing signed by the Agent,
with the prior consent of all the Lenders:
16.2.1 Any lengthening or shortening of the term of this credit
facility;
16.2.2 Any change in the amount of any principal amount payable
hereunder or in the time within which principal must be
repaid;
- 52 -
16.2.3 Any change in the interest rates, fees and Discounts payable
hereunder and in the manner in which they are calculated or
in the time within which they must be paid;
16.2.4 Any subordination of the Security or of any amount payable
hereunder;
16.2.5 Any modification, amendment or release of the Security;
16.2.6 Any change in the conditions precedent provided in Section
4.2, in Articles 13, 14, or 16, in the definition of
Majority Lenders, or in any matter requiring the approval or
consent of all Lenders.
16.3 Amendments with the approval of the Agent
No amendment to the provisions of this Agreement respecting the
duties, obligations and liabilities of the Agent shall be made without the
approval of the Agent.
16.4 Binding effects upon Lenders
Any extension, indulgence, amendment or waiver granted or made in
accordance with the provisions of this Article 16 shall be binding upon all the
Lenders.
16.5 Failure to act
No waiver and no failure or delay in the exercise of any right or
remedy shall preclude the further exercise of any of the rights and remedies of
the Agent and the Lenders hereunder. In addition no such failure or delay shall
be construed as a waiver of any of the provisions of this Agreement or the
Security documents.
17. ASSIGNMENTS
17.1 Assignments
17.1.1 Each Lender may assign, in whole or in part, its rights and
obligations in respect of the Credit to any other financial
institution with the prior written consent of the Agent
(which consent shall not be unreasonably withheld), provided
that, when no Event of Default has occurred and is
continuing, (i) no such assignment (other than an assignment
by Caisse as Lender) shall have the effect of increasing the
Borrowers' cost of Borrowings hereunder without the prior
consent of SLM and (ii) if Caisse as Lender wishes to
- 53 -
make any such assignment, Caisse shall use its best efforts
in order that the assignment shall not have the effect of
increasing the Borrowers' cost of Borrowings hereunder. For
greater certainty, the expression "Borrowers' cost of
Borrowings" shall incude the cost to the Borrowers of making
additional payments as contemplated in Section 7.5.
17.1.2 No such assignment may be made if the aggregate amount of
the assigning Lender's Commitment following such assignment,
or the portion thereof which is assigned, is not at least
$10,000,000 and in integral multiples of $1,000,000.
17.1.3 Any financial institution becoming an assignee of the whole
or part of the rights of a Lender and of its obligations
towards the Borrowers in accordance with Section 17.1.1
shall become a Lender hereunder and this Agreement and the
Commitment of the assignor shall be amended automatically.
17.1.4 A Lender which, in accordance with Section 17.1.1, assigns
all or any part of its rights or obligations hereunder shall
pay to the Agent on demand an assignment fee of $2,500 and
all expenses, including but not limited to legal fees,
incurred by the Agent in connection with such transfer. If
as a result of such transfer, the Agent incurs any increased
costs or additional expenses in connection with the
performance of its duties hereunder, the assignee shall upon
demand from time to time pay to the Agent such amount as
shall compensate the Agent for any such reasonable increased
costs or additional expenses (and the certificate of the
Agent specifying the amount of such compensation shall be
conclusive in the absence of manifest error).
17.1.5 For the purposes of this Article 17, Caisse, a pension fund
and organizations performing similar functions shall be
deemed to be financial institutions to the extent that such
entities are authorized to make loans or purchase
participations of the nature contemplated in this Section 17
in the ordinary course of business.
- 54 -
18. MISCELLANEOUS
18.1 Books and accounts
The Agent shall keep books and accounts evidencing the indebtedness of
the Borrowers under the Credit and the transactions made in respect thereof
pursuant to this Agreement. Such books and accounts shall, in the absence of
manifest error, be deemed to represent accurately that indebtedness and those
transactions. The Borrowers acknowledge that the actual recording of the amount
of any Borrowing or repayment thereof under this Agreement, and interest, fees,
and other amounts due in connection with this Agreement, in the accounts of the
Borrowers maintained by the Agent shall constitute prima facie evidence of the
Borrowers' indebtedness and liability from time to time under this Agreement;
provided that the obligation of the Borrowers to pay or repay any indebtedness
and liability in accordance with this Agreement shall not be affected by the
failure of the Agent to make such recording.
18.2 Determination
In the absence of manifest error, any determination of fact (other
than the determination of Material Adverse Effect) made by the Agent in
accordance with this Agreement shall be final and binding upon the Borrowers,
the Material Subsidiaries and the Lenders.
18.3 Notes
The Borrowings may, but need not be, evidenced by notes or other
instruments of indebtedness that the Borrowers undertake to execute upon request
from the Agent. Payment of those notes and instruments may only be demanded in
accordance with the provisions of this Agreement.
18.4 Oral notices or instructions
If any Borrower or any of its agents or employees makes an oral
request or gives an oral notice to the Agent, the Agent shall be entitled to
rely upon such oral instructions. The Agent shall not incur any liability to the
Borrowers or the Material Subsidiaries or to the Lenders in acting upon oral
instructions which the Agent believes in good faith to have been given by a
Person authorized by a Borrower to give such instructions or to effect any
applicable transaction. In the event of a discrepancy between oral instructions
and any written confirmation in respect thereof, or in the absence of receiving
confirmation, the oral instructions as understood by the Agent shall be deemed
to be the controlling instructions.
- 55 -
18.5 Unassignability by Borrower
No Borrower may assign its rights or the amounts to be received by it
under this Agreement.
18.6 Expenses
The Borrowers shall pay the reasonable out-of-pocket expenses incurred
by Caisse or the Agent in connection with the preparation, negotiation,
execution, and administration of this Agreement and the Security, due diligence
investigations, environmental audits or other studies made in connection with or
pursuant to this Agreement, the syndication and pre-approved public announcement
of the credit facility provided hereunder and the exercise of the rights and
remedies of Caisse or the Agent and the Lenders under this Agreement and the
Security, including fees and expenses of legal counsel, professional advisors
and experts of the Agent or Caisse.
18.7 Compensation
Subject to their respective obligations under Section 14.4, each
Lender is authorized (but not obligated) at any time or from time to time after
the occurrence of an Event of Default which is continuing, without notice to the
Borrowers or to the Material Subsidiaries to compensate and to apply any and all
deposits held for or in the name of any of the Borrowers or of any Material
Subsidiaries and any indebtedness at any time owing or payable by such Lender to
or for the credit of or the account of any of the Borrowers or of any Material
Subsidiaries against and on account of the obligations of the Borrowers or the
Material Subsidiaries payable to such Lender under this Agreement, irrespective
of currency and of whether or not such Lender has made any demand under this
Agreement and whether or not these obligations of the Borrowers have matured.
The provisions of this Section 18.7 shall not restrict such rights as the
Lenders may be entitled to without relying upon the provisions of this Section
18.7.
18.8 Irrevocability of notices of utilization, conversion, renewal or
repayment
A Borrower may not cancel a notice of utilization, conversion, renewal
or repayment and shall indemnify the Lenders through the Agent for any damage
resulting from its failure to act in accordance with such a notice.
- 56 -
18.9 Irregular notice of utilization, conversion, renewal or repayment
The Agent may consider of no effect any notice of utilization,
conversion, renewal or repayment if such notice or the proposed utilization,
conversion or renewal is not in compliance with the provisions of this
Agreement.
18.10 Indemnification
18.10.1 If any future law, regulation, administrative decision or
guideline or decision of any Court increases the cost for
any Lender of its Commitments or the cost for any Lender of,
or reduces the income receivable by any Lender from, the
Borrowings (including, without limitation, by reason of the
imposition of reserves, taxes or requirements as to the
capital adequacy of such Lender but excluding any costs
incurred as a result of tax increases of general
application), such Lender may send to the Borrowers a
statement indicating the amount of such additional cost or
reduction of income and its method of calculation; in the
absence of manifest error, this statement shall be
conclusive evidence of the amount of such additional cost or
reduction of income and the Borrowers shall pay forthwith
this amount to such Lender. Each Lender agrees that, as
promptly as practicable after it becomes aware of any
circumstances referred to above which would result in any
such increased cost or reduction in income, the affected
Lender shall, to the extent not inconsistent with such
Lender's internal policies of general application, use
reasonable commercial efforts to minimize such costs or
reductions.
18.10.2 The Borrowers shall pay to any Lender the amount of any and
all losses suffered by the latter and resulting from
Acceptances having been converted or repaid before the
maturity dates of their respective periods, whatever the
cause for such conversion or repayment may be. The affected
Lender may send to the Borrowers a statement indicating the
amount of any such loss suffered by it and its method of
calculation; in the absence of manifest error, this
statement shall be conclusive evidence of the amount of such
loss and the Borrowers shall pay forthwith this amount to
the affected Lender.
18.10.3 Each of the Borrowers and the Material Subsidiaries permits
the Agent, acting reasonably, to conduct inspections and
appraisals of all or any of its records, business and assets
at any time and from time to time, upon one (1) Business
Days' prior notice, to verify compliance with applicable
environmental laws and, if the Agent
- 57 -
has a reasonable basis to believe that there may be a
violation of environmental law by any Borrower or Material
Subsidiary which could reasonably be expected to have a
Material Adverse Effect, the Agent may also appoint experts
or consultants to make any inspection or appraisal and
prepare reports on same. Any costs and expenses incurred by
the Agent as a result of the foregoing shall be reimbursed
by the Borrowers on demand. If the Agent is required to
expend any funds in compliance with applicable environmental
laws, regulations, administrative or court order in respect
thereof or in connection with any recourse for damages, the
Borrowers shall indemnify the Agent in respect of such
expenditures.
18.10.4 The Borrowers shall, to the extent permitted by applicable
laws, indemnify the Lenders and the Agent, and their
respective directors, officers, employees, and agents and
shall hold each of them harmless from and against any and
all losses, liabilities damages, costs, penalties, fines,
expenses and claims (including reasonable legal fees and
costs) which at any time or from time to time may be paid or
incurred by, or asserted against, any of them for, with
respect to or as a direct or indirect result of (i) any
environmental activity by the Borrowers or any of their
Subsidiaries or (ii) any failure on the part of the
Borrowers or any of their Subsidiaries to comply with any
environmental laws, and (iii) any misrepresentation, breach
of warranty or breach of covenant on the part of the
Borrowers or any of their Subsidiaries with respect to
environmental matters.
18.10.5 The Borrowers shall indemnify the Lenders and the Agent and
their respective directors, officers, employees and agents
and hold each of them harmless from and against all losses,
costs, expenses (including reasonable fees, charges and
disbursements of counsel) and liabilities including those
arising from any litigation or other proceedings relating to
or arising out of the transactions contemplated by this
Agreement, provided that no Person indemnified under this
Section 18.10.5 shall be indemnified for its own negligence
or wilful misconduct.
- 58 -
18.11 Liability of Borrowers
18.11.1 Each Borrower shall be solidarily (that is, jointly and
severally) liable for the aggregate amount of Borrowings and
for all the obligations and liabilities of the Borrowers
hereunder. Each Borrower hereby renounces to the benefits of
division and discussion. The liability of a Borrower
hereunder shall not be released, reduced or affected by
reason of any waiver or extension granted by the Lenders
without the consent of such Borrower or by reason of any
release of or stay of proceedings against the other Borrower
pursuant to any law or by reason of any circumstance which
might constitute a defence available to a guarantor.
18.11.2 Each of the Borrowers irrevocably appoints the other to act
as its attorney for the purposes of exercising the rights
and performing the obligations of the Borrowers hereunder
and the Borrowers shall be bound by all things done and
documents executed by any Borrower.
18.12 Previous agreements
This Agreement supersedes any previous agreement in connection with
the credit facility provided for herein.
18.13 Language
This Agreement has been drawn up in English at the express request of
the parties. Cette convention a ete redigee en anglais a la demande expresse des
parties.
18.14 Severability
If any provision of this Agreement is determined to be void, voidable,
illegal or unenforceable, in whole or in part, all other provisions of this
Agreement shall nevertheless remain in full force and effect, and all provisions
hereof are hereby declared and shall be deemed, unless otherwise expressly
provided, to be separate, severable and distinct.
- 59 -
19. NOTICES
19.1 Sending of notices
Any demand, notice or other communication (hereinafter referred to as
a "Communication") to be given to a party in connection with this Agreement
shall be given in writing and shall be given by personal delivery, by registered
mail or by transmittal by facsimile addressed to the recipient at the address
indicated opposite its name on the signature pages hereto, or at such other
address as may be notified by such party to the others pursuant to this Section
19.1.
19.2 Receipt of notices
Any Communication given by personal delivery shall be conclusively
deemed to have been given on the day of actual delivery thereof and, if given by
registered mail, on the fifth Business Day following the mailing thereof and, if
given by facsimile on the day of transmittal thereof if given during normal
business hours of the recipient or on the next Business Day if given after
normal business hours on any day. If the party giving any Communication knows or
ought to know of any difficulties with the postal system or facsimile
transmission system which might affect the delivery of mail or facsimile
transmission, any such Communication shall be given by personal delivery or by
other methods of communication not affected by the said difficulties.
20. COUNTERPARTS
This Agreement may be executed in any number or counterparts, each of
which shall be deemed to be an original and all of which taken together shall be
deemed to constitute one and the same instrument, and it shall not be necessary
in making proof of this Agreement to produce or account for more than one such
counterpart.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be duly
executed as of the date and year first above written.
- 60 -
CAISSE DE DEPOT ET DE PLACEMENT DU
QUEBEC
0000 XxXxxx Xxxxxxx Xxxxxx By:____________________________
Xxxxxxxx, Xxxxxx
X0X 0X0 Name:__________________________
Attention: Xxxxx Xxxxxxx Title: ________________________
Telecopier No.:(000) 000-0000
Telephone No.: (000) 000-0000
By:____________________________
Name:__________________________
Title: ________________________
000 Xxxxxxx Xxxx SLM INTERNATIONAL, INC.
X.X. Xxx 0000
Xxxxxxxxx, Xxxxxxx By:____________________________
05495, U.S.A.
Name:__________________________
Attention: President
Telecopier No.:(000) 000-0000 Title: ________________________
Telephone No.: (000) 000-0000
0000 Xx Xxxxxxxxxxx Xxxx. Xxxx XXXXX XXXXX INC.
Xxxxx 000
Xxxxxxxxx, Xxxxxx Xx:____________________________
X0X 0X0
Name:__________________________
Attention: President
Telecopier No.:(000) 000-0000 Title: ________________________
Telephone No.: (000) 000-0000
