CREDIT AGREEMENT
Exhibit 6(d)
THIS CREDIT AGREEMENT is made effective as of October 28,
2021
AMONG:
CORTLAND CREDIT LENDING CORPORATION, as
agent for and on behalf of the Lenders (the
“Agent”)
AND:
PHOENIX
CAPITAL GROUP HOLDINGS, LLC (the
“Borrower”)
AND:
THE
ADDITIONAL GUARANTORS PARTY HERETO FROM TIME TO TIME (the
“Guarantors” and
each a “Guarantor”)
RECITAL: The Borrower has requested that the Lenders extend
credit to the Borrower and the Lenders have agreed to provide such
credit to the Borrower on the terms and conditions contained
herein.
NOW THEREFORE in consideration of the covenants and
agreements contained in this Agreement and other good and valuable
consideration (the receipt and sufficiency of which are hereby
acknowledged by each of the parties), the parties covenant and
agree as follows:
ARTICLE
1 -
INTERPRETATION
1.1
Definitions
In this
Agreement, unless there is something in the subject matter or
context inconsistent therewith, the words and terms defined in
Schedule “A” have the respective meanings given to them
therein.
1.2
Construction
In this
Agreement:
(a)
words importing the
singular include the plural and vice-versa and words importing
gender include both genders;
(b)
any reference to a
statute includes a reference to all regulations made pursuant to
such statute, all amendments made to such statute and regulations
in force from time to time and to any statute or regulation which
may be passed and which has the effect of supplementing or
superseding such statute or regulations;
(c)
any reference to an
Article, Section or Schedule is deemed to be refer to the
applicable Article, Section or Schedule contained in or attached to
this Agreement and to no other agreement or document unless
specific reference is made to such other agreement or
document;
(d)
the division of
this Agreement into Articles and Sections and the insertion of
headings is for convenience of reference only and are not to be
taken into account in interpreting this Agreement or any part of
it;
(e)
when a reference is
made to a “party” or “parties”, such
reference shall be to a party or parties to this Agreement unless
otherwise indicated;
(f)
the
term:
(i)
“including”
means “including, without limitation” and the terms
“including” and “include” will not be
construed to limit any general statement which it follows to the
specific or similar items or matters immediately following
it;
(ii)
“may”
describes an act or forbearance which is optional under this
Agreement; and
(iii)
“will”
shall be equivalent in meaning to the word “shall,”
both of which describe an act or forbearance which is mandatory
under this Agreement; and
(g)
unless otherwise
indicated, all references to dollar amounts are references to
United States dollars.
-1-
The
Schedules are as follows:
Schedule
“A”
-
Defined
Terms
Schedule
“B”
-
Form of Notice of
Borrowing
Schedule
“C”
-
Form of Repayment
Notice
Schedule
“D”
-
Form of Compliance
Certificate
Schedule
“E”
-
Business
Locations
Schedule
“F”
-
Collection Accounts
& Deposit Accounts
Schedule
“G”
-
Existing Debt of
the Obligors
Schedule
“H”
-
Subsidiaries
Schedule
“I”
-
Post-Closing
Undertakings
Schedule
“J”
-
Scheduled Payments
of Term Loan
The
Schedules are incorporated into and form an integral part of this
Agreement.
1.4
Accounting
Principles and Practices
(a)
Where the character
or amount of any asset or liability, or item of revenue or expense,
is required to be determined, or any consolidation or other
accounting computation is required to be made for the purpose of
this Agreement or any Credit Document, that determination or
calculation shall, to the extent applicable and except as otherwise
specified in this Agreement or as otherwise agreed in writing by
the parties, be made in accordance with GAAP.
(b)
All calculations
for the purpose of determining compliance with the financial
covenants and financial ratios contained in this Agreement shall be
made on a basis consistent with GAAP in existence as at the date of
this Agreement. In the event of a change in GAAP, the Borrower and
the Agent shall negotiate in good faith to revise (if appropriate)
those ratios and covenants to reflect GAAP as then in effect, in
which case all subsequent calculations made for the purpose of
determining compliance with those ratios and covenants shall be
made on a basis consistent with GAAP in existence as at the date of
those revisions.
-2-
ARTICLE 2
– CREDIT
FACILITIES
(a)
Subject to the
satisfaction of the terms and conditions set out in this Agreement,
the Agent, on behalf of the Lenders, has established for the
Borrower:
(b)
As of the date of
this Agreement, the Total Commitment will be equal to the aggregate
of Initial Revolver Commitment and the Term Commitment, provided,
however, that the Agent may, in its discretion and at the request
of the Borrower, from time to time increase the Total Commitment to
include the Term Commitment, the Initial Revolver Commitment and
additional amounts made available by way of the Accordion
Expansion, if any, provided that (i) at the time of such increase,
(A) the Initial Loan Advance under the Term Facility has been made
and (B) no Acceleration Event has occurred, and (ii) the making of
such increase will not result in an Event of Default.
(c)
In no event shall
the aggregate principal amounts under the Credit Facilities exceed
at any time the Total Commitment.
(a)
The Loan Advance
made under the Term Facility shall only be used to refinance the
Existing Debt; and
(b)
The Loan Advances
made under the Revolving Facility shall be used to finance general
working capital and corporate requirements and to finance certain
acquisitions approved by the Agent in its sole discretion (acting
reasonably); provided that
the Agent shall be deemed to have approved all acquisition(s)
having a principal acquisition cost not exceeding one million
dollars ($1,000,000).
(i)
the Agent will make
a single Loan Advance under the Term Facility available to the
Borrower provided that the aggregate Outstanding Principal
Obligations of all Loan Advances under the Term Facility shall not
exceed, at any given time, the Term Borrowing Limit at such
time1; and
(ii)
the Agent will,
from time to time, upon request of the Borrower made in accordance
with the terms and conditions of this Agreement, make one or more
Loan Advances available to the Borrower under the Revolving
Facility provided that the aggregate Outstanding Principal
Obligations of all Loan Advances under the Revolving Facility does
not exceed, at any given time, the Revolver Borrowing Limit at such
time.
(b)
Each Loan Advance
made under either of the Credit Facilities requires a notice of
borrowing from the Borrower delivered to the Agent, such notice to
be in writing and substantially in the form attached as Schedule
“B” (the “Borrowing Notice”). The Borrower
shall deliver each Borrowing Notice to the Agent at or before noon
(Toronto time) at least two Business Days prior to the date the
Loan Advance is proposed to be made. The Borrowing Notice shall
indicate the amount of the proposed Loan Advance(s) and the date
funds are required.
(c)
Any Loan Advance
made under the Revolving Facility shall be in a minimum amount of
$100,000 or in a greater amount being a multiple of
$100,000.
(d)
Each Borrowing
Notice given to the Agent may not be revoked or withdrawn once
given.
2.4
Revolving
Facility
The
Revolving Facility will be a revolving facility. For greater
certainty, subject to the satisfaction of the terms and conditions
set out in this Agreement, the Borrower will be entitled to obtain
Loan Advances under the Revolving Facility from time to time and
repay all or any portion of such Loan Advances from time to time
without penalty and thereafter to re-borrow Loan Advances under the
Revolving Facility from time to time; provided that the Borrower
acknowledges, covenants and agrees that the Outstanding Principal
Obligations under the Revolving Facility will not at any time
exceed the Revolver Borrowing Limit.
2.5
Term
Facility
The
Borrower acknowledges that the Term Facility is non-revolving, and
that Borrower may only request a single Loan Advance under the Term
Facility. The Borrower may from time to time partially or wholly
repay the outstanding Loan Advance (which repayments will reduce
the Term Borrowing Limit), subject to all of the limitations, terms
and conditions of this Agreement and of any document executed in
connection with or governing this Agreement.
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3.1
Interest
Each
Loan Advance under the Credit Facilities shall bear interest at the
Interest Rate.
Interest accrued on
each Loan Advance shall be due and payable in arrears on each
Interest Payment Date, or on such other date as may be agreed upon
in writing between the Agent and the Borrower.
3.3
Financing
Review Fee
The
Lender confirms receipt of $45,000, which represents the first
installment of the financing review fee. On the Closing Date, the
Borrower shall pay to the Agent the balance outstanding of the
financing review fee in an amount equal $45,000 (the
“FR Fee Second
Installment”), provided that if this Agreement is
executed on or prior to October 29, 2021 such FR Fee Second
Installment shall waived in full.
(a)
On the Closing
Date, the Borrower shall pay to the Agent a commitment fee in an
amount of $180,000 (the “Initial Commitment Fee”),
which commitment fee will be deemed
earned on the date hereof and be payable on the date of this
Agreement.
(b)
The Borrower shall
pay to the Agent an additional commitment fee equal to one (1)
percent of the amount of any increase in the Initial Revolver
Commitment made pursuant to the Accordion Expansion (the
“Additional Commitment
Fee”).
The
Borrower shall pay the Agent on the last business day of each
calendar month commencing in the first month after the Closing
Date, prior to the Termination Date and on the Termination Date, a
fee (the “Utilization
Fee”), calculated on a daily basis as the Unutilized
Portion (and from the date of the
effectiveness of the Accordion Expansion, any increase to the Total
Commitment which is an Unutilized Portion) at the end of
each day in such calendar month, multiplied by the Utilization Fee
Rate, divided by the number of days in such calendar year (on the
basis of a 365-day or 366-day year, as applicable). The Utilization
Fee shall be payable in arrears and shall commence to accrue from
the date hereof and be payable commencing on the Closing Date, and
shall continue to accrue until (but not including) the Termination
Date.
(a)
Each Obligor shall
pay promptly upon receipt of written notice from the Agent all
reasonable costs and expenses in connection with the preparation,
execution and delivery of this Agreement, the other Credit
Documents, and the other instruments, certificates and documents to
be delivered under or in connection with this Agreement or the
other Credit Documents, whether or not a closing has occurred or
any Loan Advance has been made under this Agreement, including the
reasonable fees and out-of-pocket expenses of the Agent’s
legal counsel with respect thereto and with respect to the
preparation, negotiation, execution, delivery, registration,
maintenance, administration, interpretation and enforcement or
protection of its rights under this Agreement, the other Credit
Documents or any other document to be delivered under or in
connection with this Agreement, or to advising the Agent or the
Lenders as to its rights and responsibilities under this Agreement,
the other Credit Documents or any other document to be delivered
under or in connection with this Agreement.
(b)
Each Obligor
further agrees to pay all reasonable out-of-pocket costs and
expenses incurred in connection with the preparation or review of
waivers, consents and amendments requested by any Obligor,
questions of interpretation of this Agreement, the other Credit
Documents or any other document to be delivered under or in
connection with this Agreement, and in connection with the
establishment of the validity and enforceability of this Agreement,
the other Credit Documents or any other document to be delivered
under or in connection with this Agreement and the preservation or
enforcement of rights of the Agent and the Lenders under this
Agreement, the other Credit Documents and other documents to be
delivered under or in connection with this Agreement, including all
reasonable costs and expenses sustained by the Agent and the
Lenders as a result of any failure by the Borrower to perform or
observe any of its obligations under this Agreement and including
the reasonable fees and out-of-pocket expenses of the Agent’s
legal counsel with respect thereto.
(c)
Each Obligor
further agrees to pay all reasonable out-of-pocket fees and
expenses incurred by the Agent or the Lenders in connection the
Credit Facilities and the Credit Documents, including all
appraisals, audit, monitoring and valuation fees, all fees and
expenses associated with field exams, and all travel expenses
related thereto.
(d)
In addition to the
fees and other charges set out in this Agreement, the Borrower
shall pay, on demand, the charges and fees incurred or paid by the
Agent and the Lenders in connection with the preparation and
registration of the Security (whether or not any Loan Advances are
made hereunder) and enforcement or protection or exercise of its
rights thereunder.
-4-
(f)
The Agent
acknowledges receipt of a deposit of $37,500 from the Borrower to
cover the Agent’s out-of-pocket expenses. The Borrower
authorizes and directs the Agent to apply such deposit to the
payment of such out-of-pocket expenses incurred by the Agent. Any
portion of such deposit remaining after its application against
such out-of-pocket expenses on the Closing Date shall be promptly
returned to the Borrower.
(g)
From and after the
Closing Date, the Obligors shall reimburse the Agent within three
(3) Business Days of the Agent providing the Borrower a summary and
evidence of the out-of-pocket expenses incurred for which the
Obligors are responsible pursuant to this Section 3.6.
3.7
General
Rules
(a)
All interest
payments to be made under this Agreement shall be paid without
allowance or deduction for deemed re-investment or otherwise, both
before and after maturity and before and after default and/or
judgment, if any, until payment, and interest shall accrue on
overdue interest, if any, compounded on each Interest Payment
Date.
(b)
Unless otherwise
stated, wherever in this Agreement reference is made to a rate of
interest or rate of annual fees or fees ‘per annum’ or
a similar expression is used, such interest or fees will be
calculated on the basis of a calendar year of 365 days or 366 days,
as the case may be, and using the nominal rate method of
calculation, and will not be calculated using the effective rate
method of calculation or on any other basis that gives effect to
the principle of deemed re-investment of interest.
(c)
For the purposes of
the Interest Act (Canada)
and disclosure thereunder, whenever any interest or fee to be paid
under this Agreement is to be calculated on the basis of a year of
365 or 366 days or any other period of time that is less than a
calendar year, the yearly rate of interest to which the rate
determined pursuant to such calculation is equivalent is the rate
so determined multiplied by the actual number of days in the
calendar year in which the same is to be ascertained and divided by
either 365 or 366 or such other period of time, as the case may
be.
(d)
In calculating
interest or fees payable under this Agreement for any period,
unless otherwise specifically stated, the first day of a period
shall be included and the last day of a period shall be
excluded.
(a)
Each Obligor agrees
and affirms that, if and to the extent that Section 4 of the
Interest Act (Canada) (or
any other provision of such statute or any other statute relating
to disclosure of interest or its calculation under Applicable Law)
applies to the determination or calculation of any annualized
interest rate or other annualized rate expressed in this Agreement
or in any other Credit Document, in each case, such annualized
interest rate or other annualized rate is (i) readily determinable
based on the methodology for calculation of annualized rates set
out in this Article 3 and (ii)
commercially reasonable. The execution of this Agreement by such
Obligor conclusively evidences its unconditional and irrevocable
acceptance of the foregoing, of the applicable annualized interest
rate and of each other annualized rate provided for in, and as
calculated under or pursuant to, this Agreement and each other
Credit Document.
(b)
Each Obligor
further covenants and agrees not to contest, repudiate or otherwise
deny, by means of any proceeding, action, claim, demand, defence or
otherwise, its acceptance of the applicable annualized interest
rate or any other applicable annualized rate hereunder or in any
other Credit Document or to assert that any such applicable
annualized interest rate or other applicable annualized rate is not
commercially reasonable and acceptable to it, or that any of the
same is not readily determinable and appropriately disclosed to it
in accordance with the requirements of the Interest Act (Canada) and otherwise
pursuant to Applicable Law. Each Obligor also agrees that the
provisions of this Section 3.8 are
fully compliant with all subsisting requirements for disclosure of
annualized interest or other annualized rates under the
Interest Act (Canada) and
otherwise under Applicable Law.
(c)
Notwithstanding
anything to the contrary contained in any Credit Document, the
interest paid or agreed to be paid under the Credit Documents shall
not exceed the maximum rate of non-usurious interest permitted by
Applicable Law (the “Maximum
Rate”). If the Agent or any Lender shall receive
interest in an amount that exceeds the Maximum Rate, the excess
interest shall be applied to the principal of the Credit Facilities
or, if it exceeds such unpaid principal, refunded to the Borrower.
In determining whether the interest contracted for, charged, or
received by the Agent or a Lender exceeds the Maximum Rate, such
Person may, to the extent permitted by Applicable Law, (i)
characterize any payment that is not principal as an expense, fee,
or premium rather than interest, (ii) exclude voluntary prepayments
and the effects thereof, and (iii) amortize, prorate, allocate, and
spread in equal or unequal parts the total amount of interest
throughout the contemplated term of the Obligations
hereunder.
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ARTICLE 4
–
CONDITIONS
The
obligation of the Lenders to extend the Initial Loan Advances under
of the under this Agreement is subject to the fulfillment to the
Agent’s satisfaction of all of the following
conditions:
(a)
Documentation. The Agent shall have
received, in form and substance satisfactory to the Agent, each of
the following, duly executed:
(i)
this
Agreement;
(ii)
the Security,
including, for clarity:
(A)
any Collateral
Access Agreements reasonably required by the Agent (and in any
event, a Collateral Access Agreement for the head office of each
Obligor and for the locations of all leased premises where assets
are located);
(B)
a Control Agreement
(without trigger) for each Collection Account; and
(C)
a Control Agreement
(with trigger) for each Deposit Account;
(iii)
certificates of
status or good standing, as applicable, of each Obligor for its
jurisdiction of formation; and
(iv)
a certificate of an
officer of each Obligor with respect to certain factual matters
pertaining to such Obligor and to which certificate is attached,
the certificate and articles of incorporation and by-laws (or
equivalent) of such Obligor, any shareholders agreement of such
Obligor a copy of a resolution of the directors, shareholders,
managers, members or partners of such Obligor, as applicable,
authorizing, among other things, the execution, delivery and
performance of each of the Credit Documents to which it is a party,
and a certificate of incumbency of its officers and
directors.
(b)
Registration of Security. All
registrations, recordings and filings of or with respect to the
Security which in the opinion of counsel to the Agent are necessary
to render effective the Liens intended to be created thereby shall
have been completed, including UCC financing
statements.
(c)
Certificated Equity Interests. If
applicable, the Agent shall have received original certificates for
any Equity Interests issued to any Obligor by its Subsidiaries,
together with duly executed stock transfer powers of attorney with
respect to the Agent in respect of such Equity
Interests.
(d)
Due Diligence. The Agent and each of the
Lenders shall have completed its business, financial, insurance and
legal due diligence with respect to the Obligors, and all material
contracts, agreements and licenses of the Obligors, with results
satisfactory to them.
(e)
Payment of Fees and Expenses. The Agent
shall have received payment in full of all fees and reasonable
expenses required under this Agreement to be paid on or prior to
the date of the Initial Loan Advances (including, for certainty,
those fees incurred on or prior to the date of the Initial Loan
Advances pursuant to Section 3.6).
(f)
Discharges, etc. The Agent shall have
received, in form and substance satisfactory to the
Agent:
(i)
a payout letter and
undertaking to discharge from First International Bank & Trust
in respect of debt incurred by the Borrower;
(ii)
a subordination
agreement, priorities agreement, inter-creditor agreement or
similar arrangements between the Agent and each prior secured
creditor of any Obligor, if required by the Agent in its sole
discretion; and
(iii)
delivery of any
other estoppel letters, releases, discharges, subordinations and
postponements (in registerable form where appropriate) with respect
to any other Existing Debt or any Liens affecting the Collateral,
if required by the Agent in its sole discretion.
(g)
Insurance. The Agent shall have received
(i) a certificate for each business and property insurance policy
maintained by or for the benefit of the Obligors, naming the Agent
as an additional loss payee, and (ii) a certificate for each
commercial general liability insurance policy maintained by or for
the benefit of the Obligors, naming the Agent as an additional
insured, together with copies of all insurance policies referenced
in such certificates.
(h)
Opinion. Legal counsel to each Obligor
shall have delivered a currently-dated letter of opinion, in form
and substance satisfactory to the Agent and its legal counsel in
their sole discretion, with respect to, inter alia, due
authorization, execution, delivery, and enforceability of the
Credit Documents and the creation, validity and perfection of the
Liens constituted by the Security.
(i)
Cash Management; Collection Accounts.
The Agent shall be satisfied with the cash management arrangements
of the Obligors, including the establishment of at least one
Collection Account by each Obligor.
(j)
KYC. The Agent and each of the Lenders
shall have received all documentation and other information in
respect of the Obligors and their respective authorized signing
officers required pursuant to Anti-Terrorism and Corruption Laws,
including guidelines or orders thereunder.
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(k)
Approval of Agent’s Legal Counsel.
All legal matters incidental to the extension of credit by Lenders
shall be satisfactory to the Agent’s legal counsel and the
Agent and the Lenders shall have received such additional evidence,
documents or undertakings as the Agent or the Lenders shall
reasonably request to establish the consummation of the
transactions contemplated hereby and be satisfied as to the taking
of all proceedings in connection herewith in compliance with the
conditions set forth in this Agreement.
(m)
Borrowing Base Certificate. The Agent
shall have received, in form and substance satisfactory to the
Agent, a Borrowing Base Certificate, setting out the Borrowing Base
Amount as of the date of the proposed Initial Loan Advance (in
sufficient detail and with supporting calculations), evidencing
that such Initial Loan Advances requested pursuant to the Borrowing
Notice delivered pursuant to Section 4.1(l) does not
exceed the Overall Borrowing Limit.
(n)
Flow of Funds Memo. The Agent shall have
received in form and substance satisfactory to the Agent a flow of
funds memo setting out the payment and deposit instructions in
respect of the Initial Loan Advances.
(o)
No Default or Event of Default. No
Default or Event of Default has occurred and is continuing on the
date of such requested Loan Advance, or would result from making
such Initial Loan Advance, as confirmed in the Borrowing
Notice.
(p)
No Material Adverse Change. No Material
Adverse Change has occurred since the date of the last financial
statements provided by the Obligors to the Agent.
(q)
Representations and Warranties. The
representations and warranties made pursuant to Section 6.1 continue to be true and correct in all
material respects.
(r)
Borrowing Limit. The making of the
Initial Loan Advances under the Credit Facilities shall not result
in (i) the Outstanding Principal Obligation under the Revolving
Facility exceeding the Revolver Borrowing Limit, (ii) the
Outstanding Principal Obligation under the Term Facility exceeding
the Term Borrowing Limit, and (iii) the combined Outstanding
Principal Obligations under both Credit Facilities exceeding the
Overall Borrowing Limit.
The
obligation of the Lenders to make any subsequent Loan Advance under
the Revolving Facility requested by the Borrower hereunder shall be
subject to the fulfillment to the Agent’s satisfaction of
each of the following conditions:
(a)
Borrowing Notice. The Agent shall have
received, in form and substance satisfactory to the Agent, a
Borrowing Notice not less than one (1) Business Day prior to the
proposed date of the Loan Advance.
(b)
Borrowing Base Certificate. The Agent
shall have received, in form and substance satisfactory to the
Agent, not less than one (1) Business Day prior to the proposed
date of the Loan Advance a Borrowing Base Certificate, setting out
the Borrowing Base Amount as of the date of the proposed Loan
Advance (in sufficient detail and with supporting calculations),
evidencing that the Loan Advance requested pursuant to the
accompanying Borrowing Notice does not exceed either the Revolver
Borrowing Limit or the Overall Borrowing Limit.
(d)
Representations and Warranties. The
representations and warranties made pursuant to Section 6.1 continue to be true and correct in all
material respects as if made on and as of the date of such
requested Loan Advance, as confirmed in the Borrowing Notice or
Compliance Certificate, as applicable.
(e)
No Default or Event of Default. No
Default or Event of Default has occurred and is continuing on the
date of such requested Loan Advance, or would result from making
such Loan Advance, as confirmed in the Borrowing Notice or
Compliance Certificate, as applicable.
(f)
No Material Adverse Change. No Material
Adverse Change has occurred since the date of the last financial
statements provided by the Obligors to the Agent.
(g)
Borrowing Limit. The making of such Loan
Advance under the Credit Facilities shall not result in (i) the
Outstanding Principal Obligation under the Revolving Facility
exceeding the Revolver Borrowing Limit, (ii) the Outstanding
Principal Obligation under the Term Facility exceeding the Term
Borrowing Limit, and (iii) the combined Outstanding Principal
Obligations under both Credit Facilities exceeding the Overall
Borrowing Limit.
(h)
Customer/Supplier Information. The Agent
shall have received, if requested, written permission from each
Obligor permitting the Agent to contact each of such Obligor's
customer and/or suppliers for the purposes of
verification.
4.3
Waiver
The
conditions set forth in Sections 4.1
and 4.2 are inserted for the sole
benefit of the Agent and the Lenders and may be waived by the
Agent, in whole or in part (with or without terms or conditions) in
respect of any Loan Advance, without prejudicing the right of the
Lenders at any time to assert such conditions in respect of any
subsequent Loan Advances, if subsequent Loan Advances become
available hereunder.
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ARTICLE
5 –
FACILITY TERM AND PAYMENTS
(a)
The initial term
of this Agreement will be twelve (12) months (the
“Initial Term”),
which Initial Term may be extended, without any additional
commitment fee, for two (2) additional periods of twelve (12)
months each (each an “Extension Period”) at the request
of the Borrower and with the consent of the Agent no later than 30
days prior to the end of the Maturity Date then in
effect.
(c)
This Agreement
shall terminate and all accrued and unpaid interest, all
Outstanding Principal Obligations and all unpaid fees will be
automatically due and payable under this Agreement, and the
Borrower will pay such amounts to the Agent forthwith upon such
termination, upon the earlier to occur of:
(i)
the Maturity
Date;
(ii)
upon the date on
which any Event of Default occurs and remains uncured prior to the
expiry of any cure period or if any Event of Default is discovered
to have occurred without notification to the Agent;
(iii)
if a Change of
Control or other Liquidity Event which is not consented to by the
Agent;
(iv)
upon the mutual
agreement of the Agent and the Borrower to terminate this
Agreement;
(vi)
termination of this
Agreement by the Borrower in accordance with Section 5.1 (e).
(i)
upon immediate
notice to the Borrower if:
(A)
an Acceleration
Event (other than a Bankruptcy Event) has occurred and is
continuing; or
(B)
the Credit
Facilities shall become, in whole or in part, illegal or in
contravention of any Applicable Law, policy or request of any
Governmental Authority, unless such illegality or contravention
resulted from the negligence of, or an illegal act by the Agent or
a Lender; or
(ii)
upon ninety (90)
days’ notice to the Borrower if a material adverse change in
market conditions negatively affects the liquidity of any
Lender.
(e)
The Borrower shall
have the right to terminate this Agreement without the
Agent’s consent upon thirty (30) days’ notice to the
Agent, subject to the payment to the Agent of:
(i)
the amounts
described below in paragraph (f)(i); and
(ii)
the Early
Termination Fee;
each of
which shall be payable forthwith upon such
termination.
(f)
If this Agreement
is terminated by either party for any reason, then:
(i)
all accrued and
unpaid interest, all Outstanding Principal Obligations and all
unpaid fees will be automatically due and payable under this
Agreement, and the Borrower will pay such amounts to the Agent
forthwith upon such termination; and
(ii)
the Agent will
retain all of its rights and remedies under the Credit Documents,
including such rights and remedies relating to the outstanding
Obligations.
-8-
(g)
If this Agreement
is terminated by the Agent as a result of the occurrence of a
Change of Control or other Liquidity Event which is not consented
to by the Agent, this Agreement shall be terminated and the Early
Termination Fee shall be payable forthwith.
5.2
Repayment
(a)
In accordance with
Section 3.2 hereof, the Borrower shall
pay accrued interest on each Loan Advance in arrears on each
Interest Payment Date, or on such other date as may be agreed upon
in writing between the Agent and the Borrower.
(b)
The Borrower shall
make payments of all Obligations under the Term Facility
(including, for greater certainty, any unpaid Outstanding Principal
Obligations, fees and accrued interest) on dates and in the amounts
set out in Schedule “J” hereto.
(c)
The Borrower shall
repay all Obligations (including, for greater certainty, any unpaid
Outstanding Principal Obligations, fees and accrued interest) on
the Termination Date.
(d)
The Obligors hereby
irrevocably authorize and direct the Agent to apply the proceeds of
any Collateral received by the Agent, including any such proceeds
deposited into the Collection Accounts of the Obligors, to prepay
the outstanding Obligations. Each such prepayment will be applied
in accordance with Section 5.7.
If the
Agent determines that on any day the Outstanding Principal
Obligations exceeds the Overall Borrowing Limit (each such excess,
a “Borrowing Base
Shortfall”), then the Agent shall deliver to the
Borrower a Repayment Notice and the Borrower shall, within three
(3) Business Days following receipt of such notice, repay the Loan
Advances outstanding under the Credit Facilities in an amount equal
to such excess.
5.4
Records
of Payments
The
Borrower hereby authorizes the Agent to record from time to time,
in its records, the date and amount of each Loan Advance made by
it, the unpaid principal balance thereof and all payments received
by the Agent, on behalf of the Lenders, on account of the
Outstanding Principal Obligations, any interest thereon or fees or
otherwise, and such other information as the Agent may reasonably
require. All amounts so recorded shall be conclusive evidence
(absent manifest error) of such Outstanding Principal Obligations,
interest, fees and other amounts owing under any Credit Document.
The failure to record, or any error in recording, any such amount
shall not, however, limit or otherwise affect the obligations of
the Borrower to repay the Outstanding Principal Obligations,
together with all accrued and unpaid interest thereon and all fees
and other amounts owing under any Credit Document.
5.5
Place
of Payments
Each
Payment shall be made to the Agent (for the account of the
Lenders), by electronic funds transfer to the Borrower’s
Collection Account, at or before 3:00 p.m. (Toronto time) on the
day the Payment is due. All amounts owing, whether on account of
principal, interest or otherwise, shall be paid in United States
dollars and shall be made in immediately available funds without
Set-Off or counterclaim. Each Payment made under this Agreement
shall be made for value on the day the Payment is due, provided
that if that day is not a Business Day, the Payment shall be due on
the Business Day next following that day. All interest and other
fees shall continue to accrue until payment of all Obligations in
full has been received by the Agent (for the account of the
Lenders).
5.6
Tax
Indemnity and Withholding Tax Gross-Up
(a)
All payments in respect of the Obligations shall
be made free and clear of and without any deduction or withholding
for or on account of any present or future Taxes or governmental
charges, and all liabilities with respect thereto, imposed by
Canada, the United States of America, any other Governmental
Authority, or any political subdivision or taxing authority thereof
or therein, excluding any Excluded Taxes (all such non-Excluded
Taxes being hereinafter referred to as “Included
Taxes”), except as
required by Applicable Law (as determined in the good faith
discretion of the Agent). If any Included Taxes are imposed and
required by Applicable Law (as determined in the good faith
discretion of the Agent) to be deducted or withheld from any amount
payable to the Agent or the Lenders, then the Obligors shall
(i) increase such payment by an amount (each an
“Additional
Amount”) so that the
Agent or the Lenders, as applicable, will receive a net amount
(after deduction of all Included Taxes) equal to the amount due
hereunder, and (ii) pay such Included Taxes to the appropriate
Governmental Authority in accordance with Applicable Law for the
account of the Agent or the Lenders, as applicable, prior to the
date on which penalties attach thereto or interest accrues thereon;
provided, however, if any such penalties or interest shall become
due, the Obligors shall make prompt payment thereof to the
appropriate Governmental Authority.
(b)
The Obligors will pay to the relevant Governmental
Authority in accordance with Applicable Law any current or future
stamp, court or documentary, intangible, recording, filing or
similar Taxes that arise from any payment made hereunder or under
any Credit Document, or from the execution, delivery, performance,
enforcement or registration of, or otherwise with respect to, this
Agreement or any Credit Document that are or would be applicable to
the Agent and/or any Lender, except any such Taxes that are Other
Connection Taxes imposed with respect to an assignment (other than
an assignment made pursuant to Section 12.19)
(“Other Taxes”).
(c)
The Obligors agree, jointly and severally, to
indemnify the Agent and the Lenders for the full amount of Included
Taxes and Other Taxes attributable to and paid by the Agent and/or
the Lenders and any liability actually incurred (including
penalties, interest and expenses (including reasonable
attorney’s fees and expenses)) arising as a result of any
payment (or amount payable) by or on behalf of the Obligors
hereunder or under any Credit Document, whether or not such
Included Taxes or Other Taxes were correctly or legally asserted by
the relevant Governmental Authority. A certificate as to the amount
of such payment or liability prepared by the Agent or any Lender,
absent manifest error, shall be final conclusive and binding for
all purposes. Such indemnification shall be made within 15 Business
Days after the date the Agent and/or such Lender makes written
demand therefor. The Obligors shall have the right to receive (in
proportion to the amount of their respective indemnification
payments) that portion of any refund of any Taxes and Other Taxes
received by the Agent and/or such Lender for which, as determined
by the Agent and/or such Lender in its reasonable and good faith
discretion, the Obligors have previously paid any Additional Amount
or indemnified the Agent and/or such Lender and which leaves the
Agent and/or such Lender, after the Obligors’ receipt
thereof, in no better or worse financial position than if no such
Taxes or Other Taxes had been imposed or Additional Amounts or
indemnification paid to the Agent and/or such Lender;
provided,
that the Obligors agree, upon the request of the Agent and/or any
Lender, to repay the amount paid over to the Obligors (plus any
penalties, interest or other charges imposed by the relevant
Governmental Authority) to the Agent and/or such Lender in the
event the Agent and/or such Lender is required to repay such refund
to such Governmental Authority. This Subsection shall not be
construed to require the Agent or any Lender to make available its
tax returns (or any other information relating to its taxes that it
deems confidential) to the Borrower or any other Person. The Agent
and/or the applicable Lender shall notify the Borrower in writing
of the receipt by such Person of any written notice from any taxing
authority demanding, or threatening to demand, any Tax
indemnifiable by any Obligor under this Section 5.6(c) within 30
days after receipt of such notice.
-9-
(d)
Any Lender that is
entitled to an exemption from or reduction of withholding tax under
the laws of the jurisdiction in which a Obligor is a resident for
tax purposes, or any treaty to which such jurisdiction is a party,
with respect to payments hereunder shall, at the request of such
Obligor, deliver such properly completed and executed documentation
as will permit payments from such Obligor to make payments
hereunder without withholding or at a reduced rate of withholding.
In addition, any Lender, if reasonably requested by the Borrower or
the Agent, shall deliver such other documentation prescribed by
Applicable Law or reasonably requested by the Borrower or the Agent
as will enable the Borrower or the Agent to determine whether or
not such Lender is subject to backup withholding or information
reporting requirements.
(i)
Without limiting
the generality of the foregoing:
(A)
upon the reasonable
request of the Borrower, any Lender that is a U.S. Person shall
deliver to the Borrower and the Agent on or about the date on which
such Lender becomes a Lender under this Agreement (and from time to
time thereafter upon the reasonable request of the Borrower or the
Agent), executed copies of IRS Form W-9 certifying that such Lender
is exempt from U.S. federal backup withholding tax;
(B)
upon the reasonable
request of the Borrower, any Foreign Lender shall, to the extent it
is legally entitled to do so, deliver to the Borrower and the Agent
(in such number of copies as shall be requested by the recipient)
on or about the date on which such Foreign Lender becomes a Lender
under this Agreement (and from time to time thereafter upon the
reasonable request of the Borrower or the Agent), whichever of the
following is applicable:
(1)
in the case of a
Foreign Lender claiming the benefits of an income tax treaty to
which the United States is a party (x) with respect to payments of
interest under any Credit Document, executed copies of IRS Form
W-8BEN or IRS Form W-8BEN-E establishing an exemption from, or
reduction of, U.S. federal withholding tax pursuant to the
“interest” article of such tax treaty and (y) with
respect to any other applicable payments under any Credit Document,
IRS Form W-8BEN or IRS Form W-8BEN-E establishing an exemption
from, or reduction of, U.S. federal withholding tax pursuant to the
“business profits” or “other income”
article of such tax treaty;
(2)
executed copies of
IRS Form W-8ECI;
(3)
in the case of a
Foreign Lender claiming the benefits of the exemption for portfolio
interest under Section 881(c) of the Code, (x) a certificate
substantially in the form of Exhibit L-1 to the effect that such
Foreign Lender is not a “bank” within the meaning of
Section 881(c)(3)(A) of the Code, a “10 percent
shareholder” of the Borrower within the meaning of Section
871(h)(3)(B) of the Code, or a “controlled foreign
corporation” related to the Borrower as described in Section
881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”)
and (y) executed copies of IRS Form W-8BEN or IRS Form W 8BEN-E;
or
(4)
to the extent a
Foreign Lender is not the beneficial owner, executed copies of IRS
Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN, IRS
Form W-8BEN-E, a U.S. Tax Compliance Certificate substantially in
the form of Exhibit L-2 or Exhibit L-3, IRS Form W-9, and/or other
certification documents from each beneficial owner, as applicable;
provided that if the Foreign Lender is a partnership and one or
more direct or indirect partners of such Foreign Lender are
claiming the portfolio interest exemption, such Foreign Lender may
provide a U.S. Tax Compliance Certificate substantially in the form
of Exhibit L-4 on behalf of each such direct and indirect
partner;
(C)
upon the reasonable
request of the Borrower, any Foreign Lender shall, to the extent it
is legally entitled to do so, deliver to the Borrower and the Agent
(in such number of copies as shall be requested by the recipient)
on or about the date on which such Foreign Lender becomes a Lender
under this Agreement (and from time to time thereafter upon the
reasonable request of the Borrower or the Agent), executed copies
of any other form prescribed by Applicable Law as a basis for
claiming exemption from or a reduction in U.S. federal withholding
tax, duly completed, together with such supplementary documentation
as may be prescribed by Applicable Law to permit the Borrower or
the Agent to determine the withholding or deduction required to be
made; and
(D)
if a payment made
to a Lender under any Credit Document would be subject to U.S.
federal withholding Tax imposed by FATCA if such Lender were to
fail to comply with the applicable reporting requirements of FATCA
(including those contained in Section 1471(b) or 1472(b) of the
Code, as applicable), such Lender shall deliver to the Borrower and
the Agent at the time or times prescribed by law and at such time
or times reasonably requested by the Borrower or the Agent such
documentation prescribed by Applicable Law (including as prescribed
by Section 1471(b)(3)(C)(i) of the Code) and such additional
documentation reasonably requested by the Borrower or the Agent as
may be necessary for the Borrower and the Agent to comply with
their obligations under FATCA and to determine that such Lender has
complied with such Lender’s obligations under FATCA or to
determine the amount, if any, to deduct and withhold from such
payment. Solely for purposes of this clause (D),
“FATCA” shall include any amendments made to FATCA
after the date of this Agreement.
(e)
If the Agent or any Lender receives any refund or
credit of Taxes that have been indemnified by a Obligor or with
respect to which a Obligor has paid Additional Amounts under this
Section 5.6, the Agent and/or such Lender shall pay to such Obligor
an amount equal to such refund or credit of Taxes and any interest
paid by the Governmental Authority paying such refund or credit.
However, such Obligor shall indemnify the Agent and the Lenders for
any amount required to be repaid and any expense reasonably
incurred if the Governmental Authority subsequently seeks to
recover all or any part of the refund or credit or any of the
interest paid on such amounts.
(f)
If an Obligor in
good faith determines that a reasonable basis exists for contesting
any Taxes for which an Obligor has paid Additional Amounts pursuant
to this Section 5.6, each Lender and the Agent shall cooperate with
such Obligor in contesting such Taxes. Such Obligor shall indemnify
the Agent and each Lender for their reasonable expenses incurred
cooperating in contesting such Taxes.
-10-
(g)
Upon the reasonable
request of the Borrower, Lender and/or the Agent, as applicable,
shall provide new forms (or successor forms) upon the expiration or
obsolescence of any previously delivered forms and promptly notify
the Obligors of any change in circumstances that would modify or
render invalid any claimed exemption from or reduction of Taxes of
which they are aware and take all such reasonable steps as
necessary to avoid any withholding or deduction of Taxes from any
amounts paid by an Obligor hereunder.
(h)
The obligations of
the Obligors under this Section 5.6 shall survive the termination
of this Agreement.
Each
Payment made under this Agreement shall be credited as
follows:
(a)
first, to any
interest or fees hereunder then accrued and remaining
unpaid;
(b)
second, to the
outstanding principal balance owing hereunder;2
(c)
third, to the
payment of any other Obligations; and
(d)
fourth, if any
balance remains, to the Borrower or as the Borrower may
direct.
-11-
ARTICLE
6 – REPRESENTATIONS AND
WARRANTIES
Each
Obligor makes the following representations and warranties to the
Agent and each of the Lenders as of the date hereof and on each day
following the date hereof until the Termination Date, which
representations and warranties shall survive the execution of this
Agreement and shall continue in full force and effect until the
full and final payment, and satisfaction and discharge, of all
Obligations:
(a)
Legal Status. It has been duly formed,
incorporated, amalgamated or continued, as the case may be, and is
validly subsisting under the laws of its jurisdiction of formation,
incorporation, amalgamation or continuance, as the case may be. It
is, and will be at all times at which a Loan Advance is outstanding
hereunder, duly qualified and has all required licenses,
registrations, approvals and qualifications to carry on its
business in each jurisdiction in which the nature of its business
requires such licenses, registrations, approvals and/or
qualifications.
(b)
Locations. Its chief executive office,
head office, principal place of business and jurisdiction of
organization are accurately described in Schedule “E”
attached hereto. Its business and operations, and the locations
thereof (including whether such locations are owned or leased), are
accurately described in Schedule “E” attached hereto.
All of the Collateral is located at the locations described in
Schedule “E” attached hereto.
(c)
Financial Year End. In the case of the
Borrower only, its financial year end is December 31st of each calendar
year.
(d)
Authorization and Validity. It has the
power, capacity and authority to own its property and carry on its
business as currently conducted by it. This Agreement, the Security
and each of the other Credit Documents to which it is a party have
been duly authorized and delivered by it in accordance with
Applicable Law. Upon their execution and delivery in accordance
with the provisions hereof, each of the Credit Documents to which
it is a party will constitute legal, valid and binding obligations
of it, enforceable in accordance with their respective terms
(except, in any case, as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization or similar laws
affecting creditors’ rights generally and by principals of
equity). The Security creates or will create valid and enforceable
first ranking Liens upon the Collateral subject to Permitted Liens
and, subject only to the terms of this Agreement, the Security has
been registered or recorded in all places where registration or
recording is necessary to perfect and protect the Liens created
therein.
(e)
No Violation. The execution, delivery
and performance by it of each of the Credit Documents to which it
is a party and the encumbrances granted pursuant to the Security do
not violate any provision of any Applicable Law, or contravene any
provision of its constating documents, or result in any breach of
or default under any contract, obligation, indenture or other
instrument to which it is a party or by which it may be
bound.
(f)
Consent Respecting Credit Documents. It
has obtained all consents, approvals, authorizations, declarations
and has completed all, registrations, filings, notices and other
actions whatsoever required under Applicable Law to enable it to
execute and deliver each of the Credit Documents to which it is a
party and to consummate the transactions contemplated by the Credit
Documents and to perform its obligations hereunder and thereunder,
and all such consents, approvals, authorizations remain in full
force and effect.
(g)
Taxes. It has duly and timely filed all
tax returns required to be filed by it and has paid or made
adequate provision for the payment of all taxes levied on its
property or income which are showing therein as due and payable,
including interest and penalties, or has accrued such amounts in
its financial statements for the payment of such taxes except for
taxes which are not material in amount or which are not delinquent
or if delinquent are being contested and for which reasonable
reserves under GAAP are maintained, and there is no material
action, suit, proceeding, investigation, audit or claim now
pending, or to its knowledge, threatened by any Governmental
Authority regarding any taxes nor has it agreed to waive or extend
any statute of limitations with respect to the payment or
collection of taxes.
(h)
Judgments, Etc. It is not subject to any
judgment, order, writ, injunction, decree or award, or to any
restriction, rule or regulation (other than customary or ordinary
course restrictions, rules and regulations consistent or similar
with those imposed on other Persons engaged in similar businesses)
which has not been stayed or of which enforcement has not been
suspended which restrains, prohibits or delays the execution and
delivery of the Credit Documents.
(i)
Title to Assets. It is the sole legal
and beneficial owner of, and has good title to, all Collateral
attributed to it, including the right to extract, produce, take and
retain therefrom all Petroleum Substances associated therewith or
related thereto free and clear of all Liens other than Permitted
Liens, Adverse Claims and minor defects of title which,
individually or in the aggregate, do not materially affect its
rights of ownership to such right to extract, produce, take and
retain therefrom all Petroleum Substances, the value thereof or its
right or ability to extract, produce, take and retain therefrom all
Petroleum Substances associated therewith or related thereto, and
it has good right, full power and absolute authority to grant the
Security in the Collateral.
(j)
Compliance with Applicable Law. It is in
compliance in all material respects under all Applicable
Law.
(k)
No Filing or Stamp Taxes. Under the laws
of its Relevant Jurisdiction it is not necessary that the Credit
Documents be registered, filed, recorded, notarized or enrolled
with any court or other authority in that jurisdiction or that any
stamp, registration, notarial or similar Taxes or fees be paid on
or in relation to the Credit Documents or the transactions
contemplated by the Credit Documents except, as applicable,
registration of particulars of the Security Documents and payment
of associated fees and stamp taxes which registrations, filings,
taxes and fees will be made and paid promptly after the date of the
relevant Security Document.
-12-
(l)
No Default or Event of Default. No
Default or Event of Default has occurred which is
continuing.
(m)
Litigation. There are no pending, or to
the best of its knowledge threatened, actions, claims,
investigations, suits or proceedings by or before any governmental
authority, arbitrator, court or administrative agency other than
those disclosed by it to the Agent in writing prior to the date
hereof;
(n)
Correctness of Financial Statements. The
financial statements of the Borrower for the fiscal year ended
December 31, 2020 and all financial statements delivered to the
Agent since said dates, true copies of which have been delivered by
the Borrower to the Agent prior to the date hereof, (i) are
complete and correct in all material respects and present fairly
the financial condition of the Borrower and its Subsidiaries as of
the dates referred to therein, (ii) disclose all liabilities of the
Borrower and its Subsidiaries that are required to be reflected or
reserved against under GAAP, consistently applied, whether
liquidated or unliquidated, fixed or contingent, and (iii) have
been prepared in accordance with GAAP consistently applied. Since
the dates of such financial statements there has been no material
adverse change in the financial condition of the Borrower and its
Subsidiaries, nor has the Borrower or any of its Subsidiaries
mortgaged, pledged, granted a Lien in or otherwise encumbered any
of its assets or properties except in favour of the Agent or as
otherwise permitted by the Agent in writing.
(o)
Disclosure. No Credit Document furnished
to the Agent or any Lender by it for use in connection with the
transactions contemplated hereby contains any untrue statement of a
material fact or omits to state a material fact necessary in order
to make the statements contained herein or therein not misleading
in light of the circumstances in which the same were made. There
are no facts known (or which should upon the reasonable exercise of
diligence be known) to it (other than matters of a general economic
nature) that, individually or in the aggregate, could reasonably be
expected to result in a material adverse change in the financial
condition or business of the Borrower and that have not been
disclosed herein.
(p)
ERISA Compliance. Each Plan is in
compliance in all material respects with the applicable provisions
of ERISA, the Code and other Federal or state laws. Except as could
not reasonably be expected to result in a Material Adverse Change,
each Pension Plan that is intended to be a qualified plan under
Section 401(a) of the Code has received a favorable determination
letter from the Internal Revenue Service to the effect that the
form of such Plan is qualified under Section 401(a) of the Code and
the trust related thereto has been determined by the Internal
Revenue Service to be exempt from federal income tax under Section
501(a) of the Code, or an application for such a letter is
currently being processed by the Internal Revenue Service. To the
best knowledge of the Borrower, nothing has occurred that would
prevent or cause the loss of such tax-qualified status. Other than
routine claims for benefits, there are no pending or, to the best
knowledge of the Borrower, threatened claims, actions or lawsuits,
or action by any Governmental Authority, with respect to any Plan
or Pension Plan that could reasonably be expected to result in a
Material Adverse Change. There has been no prohibited transaction
or violation of the fiduciary responsibility rules with respect to
any Plan or Pension Plan that has resulted or could reasonably be
expected to result in a Material Adverse Change. Except as could
not reasonably be expected to result in a Material Adverse Change,
(i) no ERISA Event has occurred, and neither the Borrower nor any
ERISA Affiliate is aware of any fact, event or circumstance that
could reasonably be expected to constitute or result in an ERISA
Event with respect to any Pension Plan or Multiemployer Plan; (ii)
the Borrower and each ERISA Affiliate has met all applicable
requirements under the Pension Funding Rules in respect of each
Pension Plan or Multiemployer Plan, and no waiver of the minimum
funding standards under the Pension Funding Rules has been applied
for or obtained; (iii) as of the most recent valuation date for any
Pension Plan, the funding target attainment percentage (as defined
in Section 430(d)(2) of the Code) is 60% or higher and neither the
Borrower nor any ERISA Affiliate knows of any facts or
circumstances that could reasonably be expected to cause the
funding target attainment percentage for any such plan to drop
below 60% as of the most recent valuation date; (iv) neither the
Borrower nor any ERISA Affiliate has incurred any liability to the
PBGC other than for the payment of premiums, and there are no
premium payments which have become due that are unpaid; (v) neither
the Borrower nor any ERISA Affiliate has engaged in a transaction
that could be subject to Section 4069 or Section 4212(c) of ERISA;
and (vi) no Pension Plan or Multiemployer Plan has been terminated
by the plan administrator thereof nor by the PBGC, and to the best
knowledge of the Borrower, no event or circumstance has occurred or
exists that could reasonably be expected to cause the PBGC to
institute proceedings under Title IV of ERISA to terminate any
Pension Plan or Multiemployer Plan.
(q)
Bankruptcy Events. No Bankruptcy Event
has been initiated by it or occurred in respect of it, and to its
knowledge, after due inquiry, no Bankruptcy Event has been
threatened against it.
(r)
Anti-Terrorism and Corruption
Laws.
(i)
It has conducted
its businesses in compliance with Anti-Terrorism and Corruption
Laws and has instituted and maintained policies and procedures
reasonably required to achieve compliance with such Anti-Terrorism
and Corruption Laws.
(ii)
It is not, and to
its knowledge, none of its Affiliates or agents acting or
benefiting in any capacity in connection with the credit granted
under this Agreement is any of the following:
(A)
a Person that is
listed in the annex to, or is otherwise the target of the
provisions of, the Executive Order;
(B)
a Person owned or
controlled by, or acting for or on behalf of, any Person that is
listed in the annex to, or is otherwise the target of the
provisions of, the Executive Order;
(C)
a Person that
commits, threatens or conspires to commit or supports
“terrorism” as defined in the Executive Order;
or
(D)
a Blocked
Person.
-13-
(iii)
To its knowledge, it does not and no agent acting
on its behalf in any capacity in connection with the credit granted
under this Agreement (A) conducts any business or engages in
making or receiving any contribution of funds, goods or services to
or for the benefit of any Person described in Section 6.1(aa)(ii)
above, (B) deals in, or otherwise engages in any transaction
relating to, any property or interests in property blocked pursuant
to the Executive Order, or (C) engages in or conspires to
engage in any transaction that evades or avoids, or has the purpose
of evading or avoiding, or attempts to violate, any of the
prohibitions set forth in any Anti-Terrorism and Corruption
Law.
(iv)
Neither
it, nor to its knowledge, any of its directors or officers, or any
employees, agents or its Affiliates, is a Sanctioned
Person.
(v)
Neither
it, nor to its knowledge, any of its directors, officers, agents,
employees, Affiliates or other person acting on behalf of them or
any of their Subsidiaries are aware of or has taken any action,
directly or indirectly, that would result in a violation by such
persons of any applicable anti-bribery law, including but not
limited to FCPA. Furthermore, it and, to its knowledge, its
Affiliates have conducted their businesses in compliance with the
FCPA and similar laws, rules or regulations and, if applicable,
have instituted and maintain policies and procedures designed to
ensure, and which are reasonably expected to continue to ensure,
continued compliance therewith.
(vi)
Neither it, nor to its knowledge, any of its
directors, or officers, or any employees, agents, or Affiliates, is
in violation of any requirement pursuant to the USA Patriot Act, as
amended, PL 107-56 (2001), or its implementing regulations set
forth at 31 CFR 1010 et seq.; or to pursuant to the Bank Secrecy
Act, as amended, 12 USC 1951 et seq., and/or the
Currency and
Foreign Transactions Reporting Act, as amended, 31 USC 5311 et
seq.
(vii)
Neither
it, nor to its knowledge, any of its directors, or officers, or any
employees, agents, or Affiliate, is subject to any ongoing or
threatened investigation, administrative or judicial orders in
connection with its conduct, or activities, pursuant to the laws
and regulations set forth in Section 6.1(r)(vi)
above.
(viii)
Neither it, nor to its knowledge, any of its
directors, or officers, or any employees, agents, or Affiliate, is,
or has taken any action, directly or indirectly, that would result
in a violation or any requirement pursuant to the laws and
regulations set forth in Section 6.1(r)(vi)
above.
(s)
Income Tax Returns. It has no knowledge
of any pending assessments or adjustments of its income tax payable
with respect to any year.
(t)
No Subordination. There is no agreement,
indenture, contract or instrument to which it is a party or by
which it may be bound that requires the subordination in right of
payment of any of its obligations under this Agreement or any other
Credit Document to which it is a party to any of its other
obligations.
(u)
Debt. All Debt, including (i)
indebtedness for borrowed money, (ii) any liability or obligation
required to be characterized as debt in accordance with GAAP, (iii)
any liability or obligation secured by a lien on any property,
assets or undertaking owned or acquired, (iv) any other debt,
liability or obligation of the Obligors, including Permitted
Indebtedness are described on Schedule “G” attached
hereto.
(v)
Collection Accounts and Deposit
Accounts. The location, description and beneficiary of each
Collection Account and Deposit Account is accurately set forth on
Schedule “F”. Each applicable Obligor has instructed
its Account Debtors to make all payments on account of such
Obligor’s accounts receivable to such Obligor’s
Collection Account. Other than the accounts described in Schedule
“F”, such Obligor does not have or maintain any other
bank accounts.
(w)
Other Obligations. It is not in default
on any obligation for borrowed money, any purchase money obligation
or any other material lease, commitment, contract, instrument or
obligation, or liability except for amounts that are being
contested and for which reasonable reserves under GAAP are
maintained.
(x)
Subsidiaries. Other than as set out in
Schedule “H”, no Obligor owns any securities or other
Equity Interests in any Person.
(y)
Solvency. It is, and will, after the
execution and delivery of this Agreement and the other Credit
Documents to which it is a party, be, Solvent.
6.2
Survival
and Repetition of Representations and Warranties
The
representations and warranties set out in Section 6.1 will be deemed to be repeated by each
Obligor as of the last Business Day of each month except to the
extent that on or prior to such date:
(a)
the Borrower has
advised the Agent in writing of a variation in any such
representation or warranty; and
(b)
the Agent has
approved such variation in writing.
-14-
ARTICLE 7
–
COVENANTS
7.1
Affirmative
Covenants
So long
as this Agreement is in effect, and until the Obligations have been
indefeasibly paid in full, and except as otherwise permitted by the
prior written consent of the Agent, each Obligor covenants and
agrees that it will:
(a)
make due and timely
payment of the Obligations required to be paid by it under this
Agreement or any other Credit Document;
(b)
satisfy the terms
and conditions of this Agreement and any other Credit Document to
which it is a party;
(c)
immediately advise
the Agent of the occurrence of any Default or Event of
Default;
(d)
continue to
preserve and maintain its existence;
(e)
file all material
tax returns which are or will be required to be filed by it, pay or
make provision for payment of all material taxes (including
interest and penalties) and Potential Priority Claims, which are or
will become due and payable and provide adequate reserves for the
payment of any tax, the payment of which is being
contested;
(f)
give the Agent no
less than 30 days prior notice of any intended Change of Control or
other Liquidity Event (and unless otherwise expressly waived by the
Agent in writing, the Borrower must repay all Obligations in full
prior to or immediately upon the consummation of such Change of
Control or Liquidity Event);
(g)
comply in all
material respects with all Applicable Laws, including all
Environmental Laws;
(h)
comply with (a) the
Overall Borrowing Limit, and (b) each of the Revolver Borrowing
Limit and the Term Borrowing Limit, at all times;
(i)
will use the Loan
Advances under each Credit Facility solely for the purposes set out
in Section 2.2;
(j)
immediately (and in
any event within no more than five (5) days after receipt of same
by any Obligor) advise the Agent of any material action requests or
material violation notices received concerning it and hold the
Agent harmless from and against any Losses, costs or expenses which
the Agent or the Lenders may suffer or incur for any environment
related liabilities existent now or in the future with respect to
it except to the extent such Losses, costs or expenses have
resulted from the gross negligence, bad faith or willful misconduct
of the Agent and the Lenders;
(k)
immediately (and in
any event within no more than three (3) days after any Obligor
becomes aware) advise the Agent of any unfavourable change in its
financial position which may adversely affect its ability to pay or
perform its obligations in accordance with the terms of the Credit
Documents;
(l)
keep its assets
fully insured against such perils and in such manner as would be
customarily insured by Persons carrying on a similar business or
owning similar assets and, in addition, for any buildings located
in areas prone to flood and/or earthquake, will insure and keep
fully insured such buildings against such perils to the extent such
insurance is available on commercially reasonable terms and would
customarily be obtained;
(m)
at reasonable times
and upon reasonable notice and upon 24 hours’ written or
verbal notice (provided that upon the occurrence of an Event of
Default, the Agent is permitted to do the following at any time and
without notice) permit the Agent or its representatives, from time
to time, (i) to visit and inspect its premises, properties and
assets and examine and obtain copies of its records or other
information, and (ii) to discuss its affairs with its auditors (in
the presence of its representatives as it may designate) (and it
hereby authorizes and directs any such third party to provide to
the Agent or its representatives all such information, records or
documentation reasonably requested by the Agent);
(n)
fully co-operate
with each party conducting each quarterly field exam or due
diligence and each annual appraisal or due diligence on behalf of
the Agent and will reimburse the Agent for all costs associated
with any such field exams and appraisals in accordance with Section
3.6 herein;
(o)
ensure that at all
times the Agent shall have view access rights to each bank account
maintained by the Obligors, including each of their Collection
Accounts and Deposit Accounts;
(p)
if any Obligor
receives any proceeds of items included in the Borrowing Base
Amount or any other Collateral in its Deposit Accounts or any other
bank accounts, within two (2) Business Days of receipt thereof,
transfer such proceeds to a Collection Account;
-15-
(q)
conduct its
business in compliance with applicable Anti-Terrorism and
Corruption Laws and institute and maintain policies and procedures
designed to promote and achieve compliance with such Anti-Terrorism
and Corruption Laws;
(r)
maintain adequate
books and records in accordance with GAAP consistently applied, and
permit any representative of the Agent, at any reasonable time and
upon reasonable notice, to inspect, audit and examine such books
and records, to make copies of the same, and to inspect the
properties of the Obligors;
(s)
preserve and
maintain all licenses, permits, governmental approvals, rights,
privileges and franchises necessary for the conduct of its
business; and maintain in good standing its corporate existence and
comply with the provisions of all documents pursuant to which it is
organized and/or which govern its continued existence and comply in
all material respects with the requirements of all Applicable Law
applicable to it and/or its business;
(t)
upon the
Agent’s request, provide the Agent with such information
relating to any vendor number or similar identification of such
Obligor by its end customers and/or suppliers;
(u)
if a Default or an
Event of Default has occurred and is continuing, at the request of
the Agent set aside the proceeds of any Collateral sold by it and
hold it as trustee for the Agent and such shall remain part of the
Collateral;
(v)
with respect to the
Security:
(i)
defend the right,
title and interest of it and the other Obligors in and to the
Collateral against the claims and demands of all Persons
whomsoever;
(iii)
do, execute and
deliver all such things, documents, security, agreements and
assurances as may from time to time be requested by the Agent or
any Lender, to ensure that the Agent holds at all times valid,
enforceable, perfected first priority Lien from such Obligor for
and on behalf of itself and the Lenders meeting the requirements of
Article 8; and
(iv)
do, observe and
perform all of its obligations in all matters and things necessary
or expedient to be done, observed or performed by virtue of any
Applicable Law for the purpose of creating, perfecting, maintaining
or registering the Security, all of which shall at all times be
duly and properly registered so as to preserve and protect the
interest of the Agent and the Lenders therein;
(v)
promptly following
the acquisition or formation of any other Subsidiary by an Obligor,
including as the result of any Business Combination Transaction,
cause such Subsidiary to do all such things and execute all such
documents as may be reasonably required by the Agent to become a
Guarantor hereunder and to grant in favour of the Agent a first
ranking Lien over all of its assets and personal property (subject
to Permitted Liens), including executing an instrument of
assumption and joinder to this Agreement, a guarantee and a
security agreement, each in a form satisfactory to the
Agent;
(vi)
ensure that all
distributions and other payments between or among the Obligors and
all guarantees of the Obligations made by the Guarantors under any
Credit Documents are made in compliance with Applicable Laws,
including laws or regulations concerning capital maintenance,
financial assistance and any requirement that a Person be Solvent
at the time that such distributions, payments or guarantees are
made;
(vii)
within 60 days
after the date hereof, the Borrower shall have entered into
Commodity Agreements with a notional quantity equal to the average
projected monthly production volume on a bbl/d of oil basis (as
determined based on the proceding rolling five month period) at the
greater of (i) the NYMEX Price (WTI) at or in excess of
U.S.$65.00/bbl and (ii) WTI crude oil spot price less U.S.$10.00,
and the Borrower shall cause such Commodity Agreements;
and
(viii)
comply with each of
the post-closing undertakings, if any, described in Schedule
“I”.
-16-
So long
as this Agreement is in effect, and until the Obligations have been
indefeasibly paid in full, and except as otherwise permitted by the
prior written consent of the Agent, each Obligor covenants and
agrees that it will not:
(a)
except for
Permitted Liens, without the prior written consent of the Agent,
grant, create, assume or suffer to exist any Lien affecting any of
its properties, assets or other rights;
(b)
sell, transfer,
convey, lease or otherwise dispose of any of its assets, properties
or undertaking (excluding obsolete or otherwise superfluous
tangible assets), other than (i) to any third party in the ordinary
course of business and on commercially reasonable terms, or (ii) to
any other Obligor;
(c)
provide any
guarantee, financial assistance or otherwise provide for, on a
direct, indirect or contingent basis, the payment of any monies or
performance of any obligations by any other Person outside of the
ordinary course of business, other than (i) payments to another
Obligor; or (ii) Permitted Payments;
(d)
provide any funds
or other property (subject to dispositions not restricted under
Section 7.2(b)), including by way of loan, investment, contribution
or otherwise to any Person other than (i) another Obligor; or (ii)
Permitted Payments.
(e)
without giving
the Agent fifteen (15) days prior notice in writing and obtaining
the Agent’s consent, merge, amalgamate, sell all or
substantially all of its assets, properties and undertaking or
otherwise enter into any other form of business combination (each a
“Business Combination
Transaction”) with any other Person, including any of
its Affiliates, and it will either: (i) if the Agent consents to
such Business Combination Transaction, cause any such resulting
Person to become a borrower or Guarantor, as applicable, hereunder
and to grant such security and enter into such Credit Documents and
other agreements as the Agent may reasonably require, provided that
if the Borrower is a non-surviving entity of any Business
Combination Transaction, then such action will constitute an Event
of Default unless the surviving entity or purchaser shall assume
the Obligations of the Borrower hereunder and under each other
Credit Document to which the Borrower is a party, in each case on
terms satisfactory to the Agent, and provide the Agent and each of
the Lenders with other information in respect of such surviving
entity or such purchaser, as applicable, and their respective
authorized signing officers, as required pursuant to applicable
Anti-Terrorism and Corruption Laws, including guidelines or orders
thereunder; or (ii) if the Agent does not consent to such Business
Combination Transaction, or the Borrower is a non-surviving entity
and the surviving entity or purchaser does not assume the
Obligations of the Borrower hereunder and under each other Credit
Document to which the Borrower is a party or does not otherwise
comply with the foregoing clause (i), the Borrower shall, on or
prior to the closing of such Business Combination Transaction,
repay all Obligations and this Agreement will be terminated
immediately upon such repayment;
(f)
other than
Permitted Payments, pay any Restricted Payment; provided, however,
that no Permitted Payment (i) will be made during the continuance
of any Event of Default, or (ii) if made would result in the
occurrence of an Event of Default;
(g)
acquire any
material Collateral located in, or move any material Collateral to,
any jurisdiction without first executing and delivering all such
Security and other documentation and completing all registrations,
recordings and filings to grant in favour of the Agent a Lien in
such Collateral and to render effective the Lien granted thereby,
all in form and substance satisfactory to the Agent;
(h)
incur additional
Debt other than Permitted Indebtedness;
(i)
permit (i) any
Subsidiary to carry on business in the ordinary course, or (ii)
permit any Subsidiary to maintain liabilities or assets, in each
case unless the Borrower has caused such Subsidiary to execute and
deliver to the Agent a guarantee and other security in accordance
with this Agreement (together with such legal opinions and other
supporting documents as the Agent reasonably requests), in each
case within three (3) Business Days of such Subsidiary carrying on
business or having any liabilities or assets, as
applicable;
(j)
make, cause or
permit (i) any amendment to, or (ii) the surrender, termination,
non-renewal, or expiry of, any Material Agreement or Material
Permit if the effect of such amendment would be reasonably likely
to result in a Default or Event of Default;
(k)
either (i) amend,
vary or terminate any Control Agreement, and (ii) amend, modify or
otherwise change any banking instructions provided to the financial
institution maintaining any Collection Account, which would result
in the application of any funds from any Account Debtor to an
account other than a Collection Account;
(l)
amend or supplement
in a way that is detrimental to the Agent or any Lender, terminate,
abandon, allow to expire or fail to renew any Material Permit or
permit any other Person to use, become party to or otherwise have
an interest in, any Material Permit, or take any action in
furtherance of, or fail to take any action, which could be
reasonably expected to result in any of the foregoing;
(m)
enter into any
transaction with any Affiliate, other than another Obligor, except
on terms no less favourable than could be obtained in an
arm’s-length transaction; or
(n)
enter into any
swaps, futures, xxxxxx, foreign exchange or commodity transactions
for spot or forward delivery, contracts or other derivative
transactions for investment or speculative purposes (for greater
certainty, the entering into of any such swaps, futures, xxxxxx,
foreign exchange or commodity transactions for spot or forward
delivery, contracts or other transactions for protection against
fluctuation in currency or interest rates or commodity prices is
permitted).
-17-
So long
as this Agreement is in effect, and until the Obligations have been
indefeasibly paid in full, and except as otherwise permitted by the
prior written consent of the Agent, the Borrower covenants and
agrees that it will at all time maintain:
(a)
a Tangible Net
Worth of at least $5,000,000 which will be tested monthly as at the
end of each month;
(b)
an Interest
Coverage Ratio of no less than 3.0:1 as at the end of each month
commencing the first full calendar month following the Closing
Date, for a rolling three month basis; and
(c)
a Debt-to-EBITDA
Ratio of not greater than 3.00:1.00, which will be tested monthly
at the end of each calendar month, commencing the first full
calendar month following the Closing Date.
So long
as this Agreement is in effect, and until the Obligations have been
indefeasibly paid in full, and except as otherwise permitted by the
prior written consent of the Agent, each Obligor covenants and
agrees that it:
(i)
annually, within
120 days after each fiscal year end of the Borrower, a copy of the
audited financial statements of the Obligors for such fiscal
year;
(ii)
quarterly, within
60 days after each calendar quarter end, internal financial
reporting for each Obligor on a consolidated and unconsolidated
basis;
(iii)
monthly:
(A)
within 20 days
after the end of each calendar month:
(1)
internal management
prepared financial statements of the Borrower and each other
Obligor at the end of such calendar month on a consolidated and
unconsolidated basis;
(2)
a trial balance of
the Borrower and each other Obligor as at the end of such calendar
month; and
(3)
a completed and
executed Compliance Certificate;
(B)
within 10 days
after the end of each calendar month, proof of all payments
required to be made on all taxes owing by the Borrower and each
other Obligor;
(C)
within 5 days after
the end of each calendar month:
(1)
a certificate
setting out the details of the Borrowing Base Amount (each a
“Borrowing Base
Certificate”) as at the last day of such calendar
month;
(2)
account statements
generated by the applicable bank for all Collection Accounts and
Deposit Accounts of the Borrower and each other Obligor (if not
available to the Agent through its view access of such Collection
Accounts and Deposit Accounts);
(3)
a cash
reconciliation, to the extent not provided in any Borrowing Base
Certificate, reconciling all purchases, repayments, chargebacks,
write-offs and any other transactions covering such calendar
month;
-18-
(iv)
weekly, on the
Friday of each calendar week, for the period covering the previous
seven (7) days ending on the Thursday of such week:
(A)
a Borrowing Base
Certificate as at the previous day (Thursday); and
(B)
a cash
reconciliation, to the extent not provided in any Borrowing Base
Certificate, reconciling all purchases, repayments, chargebacks,
write-offs and any other transactions covering the prior
week;
(v)
if and as requested
by the Agent from time to time, copies of all original final Debtor
Invoices, supply agreements and other documents relating to any
amounts included in calculating the Borrowing Base Amount or
otherwise relating to the Collateral; and
(vi)
such other
documents and information as the Agent and the Borrower may
mutually agree.
(b)
as requested by the
Agent:
(i)
copies of all
original final purchase orders, invoices, supply agreements and
similar agreements; and
(ii)
copies of the
annual budgets and business plans, including sales plans and
revenue projections, for the Obligors, as available;
(c)
a periodic (but no
more than monthly) business review of the Obligors on such terms
and such basis as may be required by the Agent to determine
compliance with the terms of this Agreement and the other Credit
Documents;
(d)
promptly (but in no
event more than five (5) Business Days after the Borrower receives
knowledge of the occurrence of each such event or matter) give
written notice to the Agent in reasonable detail of:
(i)
each meeting of the
shareholders and/or the board of directors of any Obligor, together
with copies of the minutes thereof and/or any resolutions adopted
at such meeting;
(ii)
the occurrence of
any Default or any Event of Default;
(iii)
any violation of
any Applicable Law which results or could result in a Material
Adverse Change;
(iv)
any litigation
pending or threatened against any Obligor which could reasonably be
expected to result in a Material Adverse Change;
(v)
any Lien or Adverse
Claim, other than Permitted Liens, registered or alleged or
asserted against any Collateral;
(vi)
any change in the
name, the organizational structure or the jurisdiction of
organization of any Obligor, including as a result of any
amalgamation, arrangement, continuance, dissolution or any Business
Combination Transaction involving such Obligor;
(vii)
any Account Debtor
of an Obligor notifying such Obligor that such Account Debtor is
contesting or disputing any Debtor Invoice having an outstanding
amount of $100,000; and
(viii)
the occurrence of
resulting in an Adverse Claim or other dispute with respect to the
title of the Borrower to its assets.
7.5
Anti-Terrorism
and Corruption Laws
(a)
Each Obligor
acknowledges and agrees that:
-19-
(i)
the Agent and the
Lenders are required to act in accordance with Anti-Terrorism and
Corruption Laws, each of the Agent and the Lenders may take any
action which it, in its sole and reasonable discretion, considers
appropriate to take, to comply with Anti-Terrorism and Corruption
Laws, and its internal policies relating to Anti-Terrorism and
Corruption Laws, and such action may include but is not limited to
(A) interception and/or investigation of any payment messages and
other information or communications sent to or by the Obligors via
the network and systems of the Agent and the Lenders, (B)
investigation of any application for product or service, or
drawdown or utilization of financing facility, by the Obligors, (C)
making further enquiries as to whether a name which might refer to
a sanctioned person or entity actually refers to that person or
entity, (D) delaying, blocking or refusing any payment, provision
of any product or service; or drawdown or utilization of any
financing facility, and (E) giving any information about any
transaction or activity to any person authorized under any
Anti-Terrorism and Corruption Law or its internal policy relating
to Anti-Terrorism and Corruption Laws to receive that
information;
(ii)
third parties
(including the government of the United States of America and other
government authorities) may also take action under Anti-Terrorism
and Corruption Laws, which may result in delays, blocking, seizure
or confiscation of payments;
(iii)
the Agent and the
Lenders will not be liable under this Agreement or any other Credit
Document for loss (whether direct or consequential and including,
without limitation, loss of profit or interest) or damage suffered
by any party arising out of any delay or failure by any of the
Agent or the Lenders in processing any payment messages,
information or communications, performing any of its duties or
other obligations in connection with any account, providing any
product or service to any person, or effecting a drawdown or
utilization of any financing facility, in each case caused in whole
or in part by any steps which any of the Agent and the Lenders, in
its sole and reasonable discretion, considers appropriate to take
in accordance with Anti-Terrorism and Corruption Laws or its
internal policies relating to Anti-Terrorism and Corruption Laws,
or the exercise of any of the Agent’s and the Lenders’
rights under this Section, or any action taken by third parties in
accordance with Anti-Terrorism and Corruption Laws;
and
(iv)
in certain
circumstances the action which any of the Agent and the Lenders may
take may prevent or cause a delay in the processing of certain
information, and none of the Agent and the Lenders warrants that
any information on its respective systems relating to any payment
messages or other information or communications which are the
subject of any action taken pursuant to this Section is accurate,
current or up-to-date at the time it is accessed, whilst such
action is being taken.
(b)
Each Obligor agrees
that it will not knowingly permit (i) any of the funds or property
of such Obligor that are used to repay the Obligations to
constitute property of, or be beneficially owned, directly or
indirectly by, Embargoed Person, or (ii) any Embargoed Person to
have any direct or indirect interest of any nature whatsoever in
any Obligor with the result that the investment in such Obligor
(whether directly or indirectly) is prohibited by any Applicable
Law or such Obligor is in violation of any Applicable
Law.
(c)
Each Obligor agrees
that it will not directly or indirectly, use the proceeds of any
Loan Advance hereunder, or use the proceeds thereof to make any
investment in any other Person, (i) to fund any activities or
business of or with any Person, or in any country or territory,
that, at the time of such funding, is, or whose government is, the
subject of Sanctions, in each case to the extent doing so would
violate any applicable Sanctions, or (ii) in any other manner that
would be reasonably likely to result in a violation of Sanctions by
any Person (including any Person participating in the loans or
advances hereunder, whether as underwriter, advisor, investor or
otherwise), and no part of the proceeds of the loans or advances
hereunder will be used, directly or indirectly, for any payments
that would be reasonably likely to constitute a violation of any
applicable anti-bribery law.
-20-
8.1
Form
of Security
As
general and continuing security for the due payment and performance
of the Obligations, the following Security shall be granted to the
Agent (on behalf of itself and the Lenders), each in form
satisfactory to the Agent:
(a)
a security
agreement executed by the Borrower, pursuant to which, among other
things, the Borrower shall grant to the Agent a first-priority Lien
(subject to Permitted Liens) over all present and after-acquired
assets and other personal property of the Borrower;
(b)
a guarantee
executed by each Guarantor party hereto in favour of the Agent in
respect of the Obligations;
(c)
a first priority
charge/mortgage (subject to Permitted Liens) over the mineral
rights and interests owned or held by each Obligor;
(d)
a pledge of all
Equity Interests and other securities issued to any
Obligor;
(e)
a Control Agreement
(with trigger) in respect of each Collection Account of each
Obligor, with the trigger thereunder to be delivered by the Agent
immediately following closing;
(f)
a Control Agreement
(with trigger) in respect of each Deposit Account of each Obligor,
provided that the trigger thereunder shall not be permitted to be
delivered by the Agent unless and until the occurrence of an Event
of Default;
(g)
a limited recourse
guarantee from Lion together with a pledge of all Equity Interests
in the Borrower held by Lion;
(h)
a limited recourse
guarantee from each shareholder of the Borrower together with a
pledge of all Equity Interests in the Borrower held by such
shareholder;
(i)
for any Guarantor
that is not a party to this Agreement on the Closing Date, an
instrument of assumption and joinder executed by such Guarantor,
pursuant to which such Guarantor agrees to become a party to this
Agreement, together with:
(i)
a guarantee
executed by each Guarantor in favour of the Agent in respect of the
Obligations;
(ii)
a security
agreement executed by each Guarantor pursuant to which, among other
things, such Guarantor shall grant to the Agent (i) a
first-priority Lien (subject to Permitted Liens) over all present
and after-acquired assets and other personal property of such
Guarantor, (ii) a Lien over such
Guarantor’s Collection Accounts, and (iii) a pledge of
all Equity Interests and other
securities issued to the Guarantor by the Borrower or any
Person; and
(iii)
a first priority
charge/mortgage (subject to Permitted Liens) over the mineral
rights and interests owned or held by each Guarantor;
(j)
an assignment of
insurance executed by each Obligor (in respect of any insurance
policy maintained by or on behalf of such Obligor (other than third
party liability insurance));
(k)
a Collateral Access
Agreement in respect of any premises where any tangible personal
property of an Obligor: (i) is located and where such premises are
now owned by an Obligor, and (ii) where such premises are owned or
controlled by a third party bailee, carrier or warehouse operator;
and
(l)
such other
security, agreements, documents or instruments that the Agent and
it legal counsel may reasonably require.
-21-
ARTICLE 9
–
DEFAULT
The
occurrence of any of the following events (each an
“Event of
Default”) shall constitute a default under this
Agreement:
(a)
the failure of the
Borrower to pay when due any Outstanding Principal Obligation of
any Loan Advances or any interest, fees or other amounts payable
under this Agreement or any other Credit Document and such failure
continues for five (5) Business Days following written notice from
the Agent, provided that the Borrower shall not be entitled to rely
on such cure more than four times in any rolling 12-month period,
or to rely on two consecutive cures at any time);
(b)
the failure of any
Obligor to observe or perform any covenant or obligation applicable
to it under Sections 7.2 (Negative Covenants), 7.3 (Financial
Covenants) or 7.4 (Reporting Covenants); provided that,
if, in the opinion of the Agent, acting reasonably, such failure is
capable of correction or remedy, then if it is not corrected or
remedied to the satisfaction of the Agent, acting reasonably, for a
period of 5 Business Days after the earlier of (i) the date on
which any Obligor obtains knowledge thereof, and (ii) the date on
which written notice of such failure has been given by the Agent to
the Borrower (and provided that the Obligors shall not be entitled
to rely on such cure (together with any other cure period contained
in this Section 9.1) more than 4 times in any rolling 12-month
period, or to rely on two (2) concurrent cures under this Section
9.1 or two (2) consecutive cures under this Section 9.1(b) at any
time;
(c)
the failure of any
Obligor to observe or perform any other covenant or obligation
applicable to it under this Agreement or any Credit Document;
provided that, if, in the opinion of the Agent, such failure is
capable of correction or remedy, then if it is not corrected or
remedied to the satisfaction of the Agent for a period of ten (10)
days after the earlier of (i) the date on which any Obligor obtains
knowledge thereof, and (ii) the date on which written notice of
such failure has been given by the Agent to the Borrower (and
provided that the Obligors shall not be entitled to rely on such
cure more than four times in any rolling 12-month period, or to
rely on two consecutive cures at any time);
(d)
any representation
or warranty made by any Obligor in this Agreement, any other Credit
Document or in any certificate or other document at any time
delivered hereunder to the Agent or any of the Lenders prove to be
incorrect, false or misleading in any material respect when
furnished or made (other than a misrepresentation which is capable
of being remedied by way of update to a disclosure schedule
provided for herein), which misrepresentation is not cured to the
satisfaction of the Agent within five (5) Business Days after the
earlier of (i) the date on which any Obligor obtains knowledge
thereof, and (ii) the date on which written notice of same has been
given by the Agent to the Borrower (and provided that the Obligors
shall not be entitled to rely on such cure more than four times in
any rolling 12-month period, or to rely on two consecutive cures at
any time);
(e)
if any Obligor
ceases or threatens to cease carrying on its business or if a
petition shall be filed, an order shall be made or an effective
resolution shall be passed for the winding up or liquidation of any
Obligor;
(f)
if a Bankruptcy
Event of any Obligor occurs;
(g)
if a Change of
Control or other Liquidity Event occurs (that has not been approved
by the Agent);
(h)
if any direct or
indirect shareholders of any Obligor who legally or beneficially
owns greater than 5% of the outstanding shares of the Borrower
sells or transfers the shares they legally or beneficially own in
such Obligor (without the prior written consent of the
Agent);
(i)
if a Borrowing Base
Shortfall occurs and is not repaid within ten (10) Business Days of
receipt of any applicable Repayment Notice (and provided that the
Obligors shall not be entitled to rely on such cure more than four
times in any rolling 12-month period, or to rely on two consecutive
cures at any time);
(j)
if any material
license, permit or approval required by any Applicable Law, policy
or any Governmental Authority for the operation by any Obligor of
its business shall be withdrawn, materially altered in a manner
materially detrimental to the business or operations of such
Obligor, or cancelled;
(k)
if any
encumbrancer, or lien holder, or any person acting on their behalf,
shall take possession of a material portion of the
Collateral;
(l)
if any Obligor
permits any sum which has been admitted as due by such Obligor or
is not disputed to be due by it and which forms or is capable of
being made a Lien on any Collateral in priority to the Security to
remain unpaid after proceedings have been taken to enforce such
charge;
(m)
if any Obligor
defaults in the observance or performance of any provision relating
to the indebtedness or liability of such Obligor to any Person
(other than the Agent in respect of the Credit Documents), in an
aggregate principal amount exceeding Threshold Amount, subject to
any cure or grace periods provided for in the documentation
providing for such indebtedness or liability;
(n)
the filing of a
notice of judgment lien against any Obligor; or the recording of
any judgment against any Obligor in any jurisdiction in which such
Obligor has an interest in real property; or the service of a
notice of levy and/or of a writ of attachment or execution, or
other like process, against the assets of any Obligor; or the entry
of a judgment against any Obligor, where the amount of such
judgement is in excess of the Threshold Amount and remains unpaid
and unappealed for a period of sixty (60) days;
-22-
(o)
if any proceeds of
any Collateral are deposited in any bank account or credit union
account other than a Collection Account contrary to the provisions
in this Agreement and such proceeds are not transferred and
deposited into the Collection Account within one (1) Business
Day;
(p)
if any Obligor
denies its obligations under any Credit Document or claims any of
the Credit Documents to be invalid, unenforceable, or of no further
force or effect in whole or in part;
(q)
if any of the
Security shall cease to be a valid and perfected first ranking
priority Lien in the Collateral;
(r)
either (i) an ERISA
Event occurs with respect to a Pension Plan or Multiemployer Plan
which has resulted or could reasonably be expected to result in
liability of any Obligor or ERISA Affiliate under Title IV of ERISA
to the Pension Plan, Multiemployer Plan or the PBGC that either
individually or in the aggregate could reasonably be expected to
result in a Material Adverse Change, or (ii) any Obligor or any
ERISA Affiliate fails to pay when due, after the expiration of any
applicable grace period, any installment payment with respect to
its withdrawal liability under Section 4201 of ERISA under a
Multiemployer Plan and any Obligor becomes subject to liability in
an aggregate amount in excess of the Threshold Amount.
9.2
Remedies
on an Event of Default
Upon the occurrence of any Event of Default: (a)
all indebtedness, liabilities and obligations of the Borrower under
this Agreement and each of the other Credit Documents to which it
is a party, any term hereof or thereof to the contrary
notwithstanding, shall at the Agent’s option and without
notice become immediately due and payable without presentment,
demand, protest or notice of dishonor, all of which are hereby
expressly waived by the Borrower; (b) the obligation, if any, of
the Lenders to extend any further credit under this Agreement or
any of the other Credit Documents shall immediately cease and
terminate; and (c) the Agent and the Lenders shall have all rights,
powers and remedies available under this Agreement and each of the
other Credit Documents, or accorded by law, including the right to
resort to any or all Security for any credit subject hereto and to
exercise any or all of the rights of a beneficiary or secured party
pursuant to all Applicable Law. All rights, powers and remedies of
the Agent and the Lenders may be exercised at any time by the Agent
and the Lenders and from time to time upon the occurrence of an
Event of Default, are cumulative and not exclusive, and shall be in
addition to any other rights, powers or remedies provided by law or
equity.
ARTICLE 10
–
INDEMNITY
10.1
Indemnity
The
Obligors shall, and do hereby, jointly and severally indemnify the
Indemnified Persons against all suits, actions, proceedings,
claims, Losses, expenses (including fees, charges and disbursements
of counsel), damages and liabilities that the Agent or any of the
Lenders may sustain or incur as a consequence of (i) any default by
the Borrower, any other Obligor or any other Person (other than the
Agent and the Lenders) under this Agreement or any other Credit
Document to which the Borrower, such Obligor or such Person is a
party, (ii) any misrepresentation contained in any writing
delivered to the Agent or the Lenders by the Borrower, any other
Obligor or any other Person in connection with this Agreement,
(iii) the use of proceeds of the Credit Facilities, or (iv) any
indemnity obligations of the Agent under or in connection with any
Collateral Access Agreement or Control Agreement, except that no
Indemnified Person shall be indemnified for any of the foregoing
matters to the extent the same resulted from its own gross
negligence or willful misconduct as determined by a court of
competent jurisdiction.
ARTICLE 11
–
CONFIDENTIALITY
Each
Obligor agrees not to file a copy of this Agreement or any other
Credit Document in any manner, or otherwise disclose any
information contained therein, except (a) on a confidential basis
to its officers, directors, employees, accountants, lawyers and
other professional advisors; (b) to any bona fide existing or
prospective investor or purchaser of the Equity Interests of an
Obligor or all or substantially all of the assets of an Obligor, in
each case to the extent permitted hereunder, provided that each
such Person agrees in writing with the Agent to maintain the
confidentiality of such information in accordance with the
provisions of this Section 11.1; and
(c) as may be required pursuant to Applicable Law. If any such
disclosure is required pursuant to Applicable Law, the Borrower
(and any Person required to make such disclosure) will, to the
extent not prohibited by Applicable Law or any binding order of a
court of other applicable Governmental Authority to do so, provide
at least seven (7) days’ (or such lesser period of notice as
Obligor may be permitted by Applicable Law or any binding order of
a court of other applicable Governmental Authority, if any) prior
written notice to the Agent before making such disclosure and
during such period the Agent may advise the Borrower as to which
portions of such Credit Documents shall be redacted in order to
protect the rights of the Agent and the Lenders to maintain the
confidentiality of information which the Agent and the Lenders
believe is confidential and proprietary to them. Each Obligor
agrees to comply (and to cause any other Person described above in
clause (a), (b) or (c) that is required to make such disclosure to
comply) with any such request and the said seven (7) days’
notice provision unless such compliance would contravene Applicable
Law. The terms of this paragraph shall survive the termination of
this Agreement.
-23-
ARTICLE 12
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GENERAL
12.1
Recitals
The
recitals to this Agreement are incorporated as an integral part of
this Agreement.
12.2
Entire
Agreement
This
Agreement, including any Schedules attached to this Agreement
constitutes the entire agreement between the parties pertaining to
the subject matter of this Agreement and supersedes all prior
agreements, understandings, negotiations and discussions, whether
oral or written, of the parties. There are no representations,
warranties or other agreements, whether oral or written, between
the parties in connection with the subject matter of this Agreement
except as specifically set out in this Agreement.
12.3
Amendments
No
amendment, supplement, modification, waiver or termination of this
Agreement is binding on the parties unless it is in writing and
signed by all of the parties.
12.4
Waiver
No
delay, failure or discontinuance of the Agent or any of the Lenders
in exercising any right, power or remedy under any of the Credit
Documents shall affect or operate as a waiver of such right, power
or remedy; nor shall any single or partial exercise of any such
right, power or remedy preclude, waive or otherwise affect any
other or further exercise thereof or the exercise of any other
right, power or remedy. Any waiver, permit, consent or approval of
any kind by the Agent or any Lender of any breach of or default
under any of the Credit Documents must be in writing and shall be
effective only to the extent set forth in such
writing.
12.5
Invalidity
If any
provision of this Agreement or any part of any provision of this
Agreement is held to be invalid, illegal or unenforceable by a
court of competent jurisdiction, such provision or part will not
affect the validity, legality or enforceability of any other
provision of this Agreement or the balance of any provision of this
Agreement absent such part and such invalid, illegal or
unenforceable provision or part is deemed to be severed from this
Agreement and this Agreement will then be construed and enforced as
if such invalid, illegal or unenforceable provision or part had
never been included in this Agreement.
12.6
Time
Time is
of the essence of this Agreement and no extension or variation of
this Agreement operates as a waiver of this provision. When
calculating the period of time within which or following which any
act is to be done or step taken pursuant to this Agreement, the
date which is the reference date in calculating such period is
excluded. If the last day of such period is not a Business Day, the
period in question ends on the next following Business
Day.
12.7
Further
Assurances
The
parties shall with reasonable diligence do all things and provide
all such reasonable assurances as may be required to consummate the
transactions contemplated by this Agreement. Each party shall
provide and execute such further documents or instruments as may be
reasonably required by any other party, exercise its influence and
do and perform or cause to be done or performed such further and
other acts as may be reasonably necessary or desirable to effect
the purpose of and to carry out the provisions of this
Agreement.
-24-
Any
notice or other communication required or permitted to be given by
this Agreement must be in writing and will be effectively given
if:
(a)
delivered
personally;
(b)
sent by prepaid
courier service;
(c)
sent by registered
mail;
(d)
sent by fax or
email,
in the
case of notice to:
(i)
the Borrower or any
other Obligor:
0000 X
Xxxxxxxx, Xxx 000
Xxxxxxxxx, XX
00000Xxxxxxxxx: Xxxxxxx Xxxxxx
Email:
XX@xxxxxxxxxxxxxxx.xxx
(ii)
the Agent or any of
the Lenders:
c/o
Cortland Credit Lending Corporation
Royal
Bank Plaza, South Tower
000 Xxx
Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxx
Xxxxxxxx, CEO
Email:
xxxxxxxxx@xxxxxxxxxxxxxx.xx
or at
such other address as the party to whom such notice or other
communication is to be given advises the party giving same in the
manner provided in this Section 12.8.
Any notice or other communication delivered personally or by
prepaid courier service will be deemed to have been given and
received on the day it is so delivered at such address, unless such
day is not a Business Day in which case it will be deemed to have
been given and received on the next following Business Day. Any
notice or other communication sent by registered mail will be
deemed to have been given and received on the third Business Day
following the date of its mailing. Any notice or other
communication sent by fax or email will be deemed to have been
given and received on the day it is sent provided that such day is
a Business Day and it is sent before 5:00 p.m. on such day, failing
which it will be deemed to have been given and received on the
first Business Day after it is sent. Regardless of the foregoing,
if there is a mail stoppage or labour dispute or threatened labour
dispute which has affected or could affect normal mail delivery by
Canada Post, then no notice or other communication may be delivered
by registered mail.
-25-
12.9
Counterparts
and Execution
This
Agreement may be executed in one or more counterparts, each of
which when so executed shall constitute an original and all of
which together shall constitute one and the same
Agreement.
12.10
Electronic
Execution of Certain Documents
The
words “delivery”, “execution,”
“signed,” “signature,” and words of like
import in any Credit Document or any other document to be signed in
connection with this Agreement and the transactions contemplated
hereby shall be deemed to include electronic signatures, the
electronic matching of assignment terms and contract formations on
electronic platforms approved by the Agent, or the keeping of
records in electronic form, each of which shall be of the same
legal effect, validity or enforceability as a manually executed
signature or the use of a paper-based recordkeeping system, as the
case may be, to the extent and as provided for in any Applicable
Law, provided, that notwithstanding anything contained herein to
the contrary the Agent is under no obligation to agree to accept
electronic signature in any form or in any format unless expressly
agreed to by the Agent pursuant to procedures approved by
it.
12.11
Assignability
No
Obligor may assign or transfer its interests or rights hereunder
without the Agent’s prior written consent. The Agent and each
of the Lenders reserves the right to sell, assign, transfer,
negotiate or grant participations in all or any part of, or any
interest in, the Agent’s or such Lender’s rights and
benefits under each of the Credit Documents and, in connection
therewith, the Agent and/or such Lender may disclose,
notwithstanding anything else herein contained, all documents and
information which the Agent and such Lender now has or may
hereafter acquire relating to any credit subject hereto, any
Obligor or such Obligor’s business or any Collateral required
hereunder provided that the legal and out-of-pocket costs of the
Agent and Lenders in respect such assignment shall be to the
account of the Agent and Lenders.3
12.12
No
Adverse Presumption
This
Agreement has been negotiated and approved by the parties and,
notwithstanding any rule or maxim of law or construction to the
contrary, any ambiguity or uncertainty will not be construed
against either of the parties by reason of the authorship of any of
the provisions of this Agreement.
12.13
Binding
Effect
This
Agreement enures to the benefit of and is binding on the parties
and their respective successors and permitted assigns.
12.14
GOVERNING
LAW
THIS
AGREEMENT AND THE OTHER CREDIT DOCUMENTS (EXCEPT, AS TO ANY OTHER
CREDIT DOCUMENT, AS EXPRESSLY SET FORTH THEREIN) AND ANY CLAIMS,
CONTROVERSY, DISPUTE OR CAUSE OF ACTION (WHETHER IN CONTRACT OR
TORT OR OTHERWISE) BASED UPON, ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OTHER CREDIT DOCUMENT (EXCEPT, AS TO ANY OTHER
CREDIT DOCUMENT, AS EXPRESSLY SET FORTH THEREIN) AND THE
TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE PROVINCE OF
ONTARIO AND THE FEDERAL LAWS OF CANADA APPLICABLE
THEREIN.
EACH
OBLIGOR IRREVOCABLY AND UNCONDITIONALLY AGREES THAT IT WILL NOT
COMMENCE ANY ACTION, LITIGATION OR PROCEEDING OF ANY KIND OR
DESCRIPTION, WHETHER IN LAW OR EQUITY, WHETHER IN CONTRACT OR IN
TORT OR OTHERWISE, AGAINST THE AGENT OR ANY RELATED PARTY OF THE
AGENT IN ANY WAY RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT
DOCUMENT OR THE TRANSACTIONS RELATING HERETO OR THERETO, IN ANY
FORUM OTHER THAN THE COURTS OF THE PROVINCE OF ONTARIO SITTING IN
THE CITY OF TORONTO, AND ANY APPELLATE COURT FROM ANY THEREOF,
(EXCEPT, AS TO ANY OTHER CREDIT DOCUMENT, AS EXPRESSLY SET FORTH
THEREIN) AND EACH OF THE PARTIES HERETO IRREVOCABLY AND
UNCONDITIONALLY SUBMITS TO THE JURISDICTION OF SUCH COURTS AND
AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION, LITIGATION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH ONTARIO COURT. EACH
OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH
ACTION, LITIGATION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY
OTHER MANNER PROVIDED BY APPLICABLE LAW. NOTHING IN THIS AGREEMENT
OR IN ANY OTHER CREDIT DOCUMENT SHALL AFFECT ANY RIGHT THAT THE
AGENT MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT AGAINST ANY OBLIGOR
OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.
-26-
12.16
WAIVER
OF VENUE
EACH
OBLIGOR IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
OTHER CREDIT DOCUMENT IN ANY COURT REFERRED TO IN SECTION 12.15. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF
SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.
12.17
SERVICE
OF PROCESS
EACH
PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE
MANNER PROVIDED FOR NOTICES IN SECTION 12.8, TO THE EXTENT PERMITTED BY APPLICABLE
LAW. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY
HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE
LAW.
12.18
WAIVER
OF JURY TRIAL
EACH
PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A)
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER
PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES
HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER
CREDIT DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.
(a)
Each Obligor
acknowledges and agrees that the Agent is acting as administrative
and collateral agent for certain third parties, including any
Affiliate of the Agent, that agrees with the Borrower to be bound
by the terms of this Agreement from time to time (collectively, the
“Lenders” and
each is, individually a “Lender”). Each Obligor
acknowledges and agrees that the Agent shall be entitled to
disclose, on a confidential basis, all information received by it
regarding the Borrower, any Obligor, the Collateral, the Credit
Facility, this Agreement and any other Credit Document to: (i) each
Lender, each prospective Lender, any Person purchasing notes, units
or otherwise providing funding, directly or indirectly, to any
Lender (or any prospective Lender), each prospective assignee or
participant, and the officers, directors, employees, accountants,
lawyers and other professional advisors of the Agent, any Lender,
any prospective Lender and any prospective assignee or participant
(each a “Receiving
Party”) provided that each Receiving Party agrees to
maintain the confidentiality of any such information in respect of
which the Agent has any duty of confidentiality to the Borrower or
any Obligor; (ii) to any rating agencies rating the indebtedness of
a Lender, provided such rating agencies are bound by customary
confidentiality agreements; (iii) to any agent of the Agent or any
Lender to the extent necessary to enforce any rights which the
Agent or such Lender may have to collect any amounts in respect of
the Credit Documents or the Collateral, provided such agent has
agreed in writing to be bound by the provision of this Agreement in
respect of such information; (iv) to the extent required for any
registration or filing required to perfect any of the Agent’s
Liens contemplated any Security or other Credit Document; and (v)
as may be required by Applicable Law. The Agent and the Lenders
confirm that, regardless of the number and identity of the Lenders,
the Obligors will only be required to act in accordance with the
instructions of the Agent, and no Lender will have an independent
cause of action or remedy against the Obligors directly, it being
understood that each Lender has appointed, or will appoint, the
Agent as its sole and exclusive administrative and collateral agent
in connection with the transactions contemplated by this
Agreement.
(b)
The Agent, acting
solely for this purpose as a non-fiduciary agent of the Borrower,
shall maintain at one of its offices a register for the recordation
of the names and addresses of the Lenders and principal amounts and
stated interest of the Credit Facilities owing to each Lender,
pursuant to the terms hereof from time to time (the
“Register”). The entries in the Register shall be
conclusive (absent manifest error) and the Borrower, the Agent and
the Lenders shall treat each Person whose name is recorded in the
Register pursuant to the terms hereof as a Lender for all purposes
of this Agreement. The Register shall be available for inspection
by the Obligors and any Lender, as the case may be, at any
reasonable time and from time to time upon reasonable prior notice.
In establishing and maintaining the Register, the Agent shall serve
as the Borrower’s non-fiduciary agent solely for tax purposes
and solely with respect to the actions described in this Section
12.19.
[signature
pages follow]
3 NTD: confidentiality
in respect of an assignment by the Agent or Lenders is dealt with
by s.12.19.
-27-
IN WITNESS WHEREOF the parties have executed this Credit
Agreement.
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CORTLAND CREDIT LENDING CORPORATION, as Agent |
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By:
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/s/ Xxxx Xxxxxxxx
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Name:
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Xxxx Xxxxxxxx |
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Title:
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CEO |
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By: |
/s/ |
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Name:
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Title:
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S-1
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PHOENIX CAPITAL GROUP HOLDINGS,
LLC., as
Borrower
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By:
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/s/ Xxxxxxx Xxxxxx
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Name:
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Xxxxxxx Xxxxxx |
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Title:
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Manager |
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By:
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/s/
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Name:
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Title:
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I/We have authority to bind the corporation. |
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LION OF JUDAH CAPITAL,
LLC, as
Guarantor
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By:
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/s/ Xxxxxx Xxxxxxx
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Name:
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Xxxxxx Xxxxxxx |
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Title:
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Co-Manager
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By:
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/s/ Xxxxxxxx Xxxxxxx
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Name:
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Xxxxxxxx Xxxxxxx
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Title:
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Co-Manager
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I/We have authority to bind the corporation.
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S-2
SCHEDULE “A”
DEFINED TERMS
As used
in this Agreement and unless otherwise stated herein, the terms set
out below will have the following meanings (such meanings to be
equally applicable to both the singular and plural forms of the
terms defined):
“$”
means United States dollars.
“Acceleration
Events” means, collectively: (a) the occurrence of a
Bankruptcy Event with respect to any Obligor; (b) the date of any
Liquidity Event that is not approved by the Agent; (c) following
the occurrence of any Event of Default that expressly includes a
cure period, the date that such cure period expires without such
Event of Default being cured; and (d) upon the occurrence and
during the continuation of any Event of Default; except, in each
case, as otherwise permitted by the terms of this Agreement or
unless otherwise waived by the Agent, and “Acceleration
Event” means any one of them.
“Accordion
Expansion” means any additional commitments under the
Revolving Facility in excess of the Initial Revolver Commitment,
such additional commitments in aggregate not to exceed $10,000,000
in total.
“Account
Debtor” means any account debtor (as defined in the
UCC) of the Borrower.
“Accounts
Receivable” means all debts, accounts (including all
“accounts” as defined in the UCC), claims, demands,
monies and choses in action which are now or which may at any time
hereafter be due, owing to or accruing due to or owned by the
Borrower, together with all books, records, documents, papers and
electronically recorded data and any other documents or information
of any kind which in any way evidences or relates to any or all of
the said debts, accounts, claims, demands, monies and choses in
action.
“Adverse
Claim” means a lien, security interest, mortgage,
pledge, charge, encumbrance, assignment, hypothec, title retention
agreement, ownership interest, which would constitute a prior
ranking claim to the Collateral, of or through any Person including
any filing or registration made in respect thereof.
“Affiliate”
means, with respect to any Person, any
other Person that directly, or indirectly through one or more
intermediaries, controls, is controlled by or is under common
control with such Person, and includes any Subsidiary.
“Agent”
means Cortland Credit Lending Corporation, a corporation formed
under the laws of the Province of Ontario, in its capacity as agent
for and on behalf of the Lenders, and includes its successors and
assigns.
“Agreement”
means this credit agreement, as same may be amended, revised,
replaced, supplemented or restated from time to time.
“Anti-Terrorism
and Corruption Laws” means any laws, rules and regulations of any
Governmental Authority relating to terrorism, trade sanctions
programs and embargoes, import/export licensing, money laundering,
corruption or bribery, and any regulation, order, or directive
promulgated, issued or enforced pursuant to such laws, rules and
regulations, including the Proceeds of Crime (Money Laundering) and Terrorist Financing
Act (Canada), the Corruption of Foreign Public Officials
Act (Canada), the Bribery
Act (U.K.), the Executive Order, the Uniting and
Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56,
and the Trading with the Enemy Act, 50 U.S.C. App. 1 et seq.,
all as amended, supplemented or
replaced from time to time.
“Applicable
Laws” means, with respect to any Person, all
international, foreign, federal state and local statutes, treaties,
rules, guidelines, regulations, ordinances, codes, administrative
or judicial precedents or authorities, including interpretation or
administration thereof by any Governmental Authority charged with
the enforcement, interpretation or administration thereof, and all
applicable administrative orders, directed duties, requests,
licences, authorization and permits of, and agreements with, any
Governmental Authority applicable to such Person or any of its
properties or assets, and “Applicable Law” means any
one of them.
“Approved
Appraised Value” means the net orderly liquidation
value of the Collateral, such value to be determined by an
appraiser approved and selected by the Agent and such appraisal to
be conducted once at any time in each calendar year.
“Approved
Royalty Assets” means Royalty Assets which meet the
Royalty Eligibility Criteria.
“Bankruptcy
Event” means an Involuntary Bankruptcy Event or a
Voluntary Bankruptcy Event.
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“Blocked
Person” means that is
named as a “specially designated national and blocked
Person” on the most current list published by OFAC at its
official website or any replacement website or other replacement
official publication of such list.
“Borrower”
means Phoenix Capital Holdings Group, LLC, a corporation existing
under the laws of the State of Delaware, and includes its
successors and permitted assigns.
“Borrowing
Base Amount” means the calculations prepared by the
Borrower and reviewed by the Agent from time to time which
calculated the availability under the Credit Facilities using
criteria set out for Approved Royalty Assets, and calculated as
follows, collectively, without duplication:
(a)
the Royalty
Availability; less
(b)
the value of any
Potential Priority Claims; less
(c)
the Dilution
Reserve; less
(d)
any amounts owing
by any Obligor for outstanding any unpaid taxes (including income
taxes, sales taxes, import/export duties, etc.); less
(e)
100% of the value
of any assets that form part of the Collateral that are subject to
an existing Priority Lien, or over which a Priority Lien may be
registered at any point in the future (such as a purchase money
lien).
“Borrowing
Base Certificate” has the meaning given to that term
in Section 7.4(a).
“Borrowing
Base Shortfall” has the meaning given to that term in
Section 5.3.
“Borrowing
Notice” has the meaning given to that term in Section
2.3(b).
“Business
Combination Transaction” has the meaning given to that
term in Section 7.2(e).
“Business
Day” means any day other than a Saturday, a Sunday or
a statutory holiday observed in the Provinces of Ontario or State
of Colorado or any other day on which the principal banks located
in the Province of Ontario or the State of Colorado are not open
for business during normal business hours.
“Change
of Control” means the occurrence of any of the
following: (a) any material Change of Management, (b) Lion of Judah
Capital, LLC ceasing to Control the
Borrower or any Obligor that is a Subsidiary of the
Borrower; (c) the sale, assignment or other transfer of (i)
all or substantially all of the assets of any Obligor, (ii) any
material business of any Obligor, or (iii) a material portion of
the Collateral (in case whether in a single transaction or a series
of transactions); or (d) any transaction or series of transactions
whereby any Person or group of Persons, acting jointly or otherwise
in concert, acquire the right, by contract or otherwise, to direct
the management and activities of the Obligors;
“Change
of Management” means that Xxxxxx Xxxxx, Xxxxxxx Xxxxxx
or Xxxx Xxxx (collectively the “Principals”) shall cease for any reason,
including termination of employment, death or disability, to
substantially perform the functions and services currently being
performed by such individual for the Borrower, and the Borrower
shall fail, for a period of 90 consecutive days following the
earliest date that such individual may be considered disabled or
shall have otherwise ceased to perform his or her functions with
the Borrower as aforesaid, to replace such individual with an
individual or individuals acceptable to the Agent (it being
acknowledged for the avoidance of doubt that if any of the
Principals shall cease to perform their functions with the Borrower
as aforesaid, any permanent replacement therefor (excluding for the
avoidance of doubt any temporary, interim replacement) shall
nevertheless be required to be acceptable to the
Agent.
“Closing
Date” means the date on which the conditions precedent
to the Initial Loan Advance under each Credit Facility have been
satisfied.
“Code”
means the Internal Revenue Code of 1986, as amended (or any
successor statute).
“Collateral”
means all of the present and after-acquired undertaking, property
and assets of each Obligor, and all other property and proceeds
therefrom subject to the Security, whether now or hereafter
existing.
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“Collateral
Access Agreement” means an agreement between the Agent
and the owner of each location where tangible elements of the
Collateral are held, located or stored, which provides the Agent
with rights of access to such Collateral.
“Collection
Accounts” means, collectively, each of the accounts
established by the Obligors described in Schedule “F”
attached hereto, in each case over which the Agent shall, both
prior to and following the occurrence of an Acceleration Event,
have dominion and control, pursuant and subject to the terms of a
Control Agreement.
“Commitment
Fee” means, (i) prior to
the Accordion Expansion, the Initial Commitment Fee, and (ii) after
the Accordion Expansion, if any, the aggregate of the Initial
Commitment Fee and the Additional Commitment
Fee.
"Commodity
Agreements" means any agreement for the making or taking of
delivery of any commodity (including Petroleum Substances and
electricity), any commodity swap agreement, floor, cap or collar
agreement or commodity future, forward, derivative or option
transaction or other similar agreement or arrangement, or any
combination thereof, entered into by the Borrower or any Subsidiary
where the subject matter of the same is any commodity or the price,
value or amount payable thereunder is dependent or based upon the
price of any commodity or fluctuations in the price of any
commodity, but shall not include any agreement for the making or
taking of physical delivery of any commodity (including Petroleum
Substances and electricity) in the ordinary course of business or
the physical purchase or sale of any commodity (including Petroleum
Substances and electricity) by the Borrower or a Subsidiary entered
into in the ordinary course of business unless either (a) such
agreement is with a bank, investment bank, securities dealer,
insurance company, trust company, pension fund, institutional
investor or any other financial institution or any Affiliate of any
of the foregoing, but excluding any physical sales made to any such
person where the sale is made on a floating price based on current
market prices and where the sale is not entered into for the
purposes described in (b) of this definition, or (b) such agreement
is entered into for hedging purposes or otherwise for the purpose
of eliminating or reducing the financial risk or exposure of the
Borrower or a Subsidiary thereof to fluctuations in the prices of
commodities (including Petroleum Substances and electricity) (and,
for certainty, any such agreement referred to in (a) or (b) of this
definition shall constitute a “Commodity Agreement” for
all purposes hereof).
“Compliance
Certificate” has the meaning given to that term in
Section 4.2(c).
“Contaminant”
includes any pollutant, dangerous substance, liquid waste,
industrial waste, hazardous material, hazardous substance or
contaminant including any of the foregoing as defined in any
Environmental Law.
“Control”
means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a
Person, whether through the ability to exercise voting power, by
contract or otherwise, and “Controlling” and
“Controlled” have meanings correlative
thereto.
“Control
Agreement” means, (a) with respect to each Collection
Account, an agreement among the Agent, the applicable Obligor and
the applicable deposit bank or credit union, pursuant to which the
Agent will be granted exclusive control over such Collection
Account and the cash deposited therein as of the Closing Date
(i.e., a blocked account agreement without trigger or non-springing
deposit account control agreement), and (b) with respect to each
Deposit Account, an agreement among the Agent, the applicable
Obligor and the applicable deposit bank or credit union, pursuant
to which the Agent will be granted the right to exercise exclusive
control over such Deposit Account following the occurrence of an
Acceleration Event that is continuing (i.e., a blocked account
agreement with trigger or a springing deposit account control
agreement).
“Credit
Documents” means, collectively: (a) this Agreement,
(b) the Security and each other document, agreement, instrument and
certificate delivered to the Agent or any Lender by the Obligors or
any other Person on the Closing Date; and (c) all present and
future security, agreements, documents, certificates and
instruments delivered by the Obligors or any other Person to the
Agent or any Lender pursuant to, or in respect of the agreements
and documents referred to in clause (b); in each case as the same
may from time to time be supplemented, amended, restated or amended
and restated, and “Credit
Document” shall mean any one of the Credit
Documents.
“Credit
Facilities” has the meaning given to that term in
Section 2.1.
“Debt”
means, with respect to any Person, (a) indebtedness for borrowed
money, (b) obligations or liabilities, contingent, unmatured or
otherwise (including under any indemnities), incurred other than in
the ordinary course of business, (c) any obligation secured by a
lien on any property, assets or undertaking owned or acquired, and
(d) any other debt or liability of such Person, excluding
obligations or liabilities incurred in the ordinary course of
business.
“Debt
Securities” means, with respect to any Person, any and
all bond, certificate of deposit, debenture or other or other
instrument evidencing Debt of such Person owing to the holder of
same.
“Debt-to-EBITDA
Ratio” means the ratio of (a) the daily average
outstanding principal balance under the Credit Facilities for the
past three calendar months divided by (b) the reported EBITDA of
the Borrower on a consolidated basis over the same period
multiplied by four.
“Debtor
Invoice” mean any invoice issued by the Borrower to an
Account Debtor from time to time, copies of which shall be provided
to the Agent if and when requested by the Agent or otherwise in
accordance with this Agreement.
“Default”
means any condition, event or act which with the giving of notice
or the passage of time or both would constitute an Event of
Default.
“Deferred
Debt” means all
unsecured amounts owing by the Borrower in respect of its
acquisition(s) of Royalty Assets, the amount of which as of the
date hereof is set out in Schedule “G”.
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“Deposit
Accounts” means, collectively, each account
established by an Obligor, other than the Collection Accounts, in
each case over which the Agent shall, following the occurrence of
an Acceleration Event, have dominion and control, pursuant and
subject to the terms of a Control Agreement.
“Dilution
Reserve” means a reserve, in an amount determined by
the Agent in its sole discretion, relating to the dilution of any
Accounts Receivable due to, among other things, bad debt
write-offs, trade discounts, returned goods, invoicing errors and
other adjustments.
“Early
Termination Fee” means an amount equal to 2.5% of the
Total Commitment if one or both of the Credit Facilities are
terminated within twelve (12) months immediately following the
Closing Date.
“EBITDA”
means, for any test period, net income from continuing operations
plus, to the extent deducted in determining net income, Interest
Expense, amounts deducted in respect of the provision for income
taxes, amounts deducted in respect of non cash items, including
depreciation, amortization, any non-cash impairment charges and any
other non-cash charges income taxes, for such period, and, to the
extent applicable, all transaction costs in respect to closing of
this Agreement and the delivery of the Credit
Documents.
“Embargoed
Person” means any Person subject to sanctions or trade
restrictions under United States law that is identified on (i) the
“List of Specially Designated Nationals” and
“Blocked Persons” maintained by OFAC and/or on any
other similar list maintained by OFAC pursuant to any authorizing
statute including, but not limited to, the International Emergency
Economic Powers Act, 50 U.S.C. §§ 1701 et seq., The
Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any
Executive Order or Applicable Law promulgated thereunder, or (ii)
the Executive Order, any related enabling legislation or any other
similar Executive Orders.
“Environmental
Activity” means any activity, event or circumstance in
respect of a Contaminant, including its storage, use, holding,
collection, purchase, accumulation, assessment, generation,
manufacture, construction, processing, treatment, stabilization,
disposition, handling or transportation, or its Release into the
natural environment, including movement through or in the air,
soil, surface water or groundwater.
“Environmental
Laws” means all applicable laws relating to the
environment or occupational health and safety, or any Environmental
Activity.
“Equity
Interests” means, with respect to any Person, any and
all shares, units, partnership interests, participations, rights
in, or other equivalents (however designated and whether voting and
non-voting) of, such Person’s capital, whether outstanding on
the Closing Date or issued thereafter, including any interest in a
joint venture, partnership, limited partnership or other similar
Person and any beneficial interest in a trust, and any and all
rights, securities, warrants, debt securities, options or other
rights exchangeable for or convertible into any of the
foregoing.
“Equity
Securities” means, with respect to any Person, any and
all shares, interests, participations, rights in, or other
equivalents (however designated and whether voting and non-voting)
of, such Person’s capital, whether outstanding on the Closing
Date or issued thereafter, including any interest in a partnership,
limited partnership or other similar Person and any beneficial
interest in a trust, and any and all rights, warrants, Debt, Debt
Securities, options or other rights exchangeable for or convertible
into any of the foregoing.
“ERISA”
means the Employee Retirement Income Security Act of 1974, as
amended (or any successor statute).
“ERISA
Affiliate” means any trade or business (whether or not
incorporated) under common control with the Borrower within the
meaning of Section 414(b) or (c) of the Code (and Sections 414(m)
and (o) of the Code for purposes of provisions relating to Section
412 of the Code).
“ERISA
Event” means (a) a Reportable Event with respect to a
Pension Plan; (b) the withdrawal of any Obligor or any ERISA
Affiliate from a Pension Plan subject to Section 4063 of ERISA
during a plan year in which such entity was a “substantial
employer” as defined in Section 4001(a)(2) of ERISA or a
cessation of operations that is treated as such a withdrawal under
Section 4062(e) of ERISA; (c) a complete or partial withdrawal,
within the meaning of Title IV of ERISA, by any Obligor or any
ERISA Affiliate from a Multiemployer Plan or receipt by any Obligor
or any ERISA Affiliate of notification that a Multiemployer Plan is
in reorganization, within the meaning of Title IV of ERISA; (d) the
filing of a notice of intent to terminate or the treatment of a
Pension Plan or Multiemployer Plan amendment as a termination under
Section 4041 or 4041A of ERISA; (e) the institution by the PBGC of
proceedings to terminate a Pension Plan or Multiemployer Plan; (f)
any event or condition which constitutes grounds under Section 4042
of ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan or, to the best knowledge of any
Obligor, any Multiemployer Plan; (g) the determination that any
Pension Plan or Multiemployer Plan is considered an at-risk plan or
a plan in endangered or critical status within the meaning of
Sections 430, 431 and 432 of the Code or Sections 303, 304 and 305
of ERISA; or (h) the imposition of any liability under Title IV of
ERISA, other than for PBGC premiums due but not delinquent under
Section 4007 of ERISA or contributions due but not delinquent under
the Pension Funding Rules, upon the Borrower or any ERISA
Affiliate.
“Event
of Default” has the meaning given to that term in
Section 9.1.
“Excluded
Taxes” means, with
respect to the Agent, any Lender or any other recipient of any
payment to be made by or on account of any obligation of a Obligor
hereunder or in connection herewith, (i) taxes imposed on or
measured by its net income or capital (however denominated),
franchise taxes imposed on it (in lieu of net income taxes) and
branch profits taxes imposed on it, in each case, (a) by the
jurisdiction (or any political subdivision thereof) under the laws
of which such recipient is organized or in which its principal
office is located or, in the case of any Lender, in which its
applicable lending office is located or in which it has a permanent
establishment or branch (as those phrases are defined in the
relevant jurisdictions) or (b) that are Other Connection Taxes,
(ii) in the case of a Lender, taxes imposed on amounts
payable to or for the account of such Lender with respect to an
applicable interest in the Credit Facility or a Loan Advance
pursuant to a law in effect on the date on which (a) such
Lender acquires such interest in the Credit Facility or Loan
Advance (other than pursuant to an assignment request by Borrower
under Section 12.11) or (b) such Lender changes its lending
office, except in each case to the extent that, pursuant to
Section 12.19, amounts with respect to such Taxes were payable
either to such Lender's assignor immediately before such Lender
became a party hereto or to such Lender immediately before it
changed its lending office, (iii) Taxes attributable to the
Agent’s, any Lender’s or any other recipient’s
failure to comply with Section 12.19, and (iv) withholding taxes imposed under
FATCA.
“Executive
Order” means Executive
Order No. 13224 on Terrorist Financing, effective September 24,
2001, as amended from time to time.
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“Existing
Debt” means the indebtedness of the Obligors set out
in Schedule “G”.
“Extension
Period” has the meaning given to that term in Section
5.1(a).
“Facility
Term” has the meaning given to that term in Section
5.1(b).
“FATCA”
means: (a) Sections 1471 to 1474 of
the Code, as of the date of
this Agreement (or any amended or successor version that is
substantively comparable and not materially more onerous to comply
with), or any associated regulations or other official guidance;
(b) any treaty, law, regulation or other official guidance enacted
in any other jurisdiction, or relating to an intergovernmental
agreement between the United States and any other jurisdiction,
which (in either case) facilitates the implementation of paragraph
(a) above; or (c) any agreement pursuant to the implementation of
paragraphs (a) or (b) above with the United States Internal Revenue
Service, the government of United States of America or any
Governmental Authority in any other
jurisdiction.
“FCPA”
means the U.S. Foreign Corrupt Practices
Act of 1977 (the “FCPA”), as amended from time to
time.
“Foreign
Lender” means any Lender
that is not a U.S. Person.
“Funded
Debt” means, at any time for the fiscal period then
ended, all obligations for borrowed money which bears interest or
to which interest is imputed plus, without duplication, all
obligations for the deferred payment of the purchase of property,
all capital lease obligations and all indebtedness secured by
purchase money security interests, but excluding Postponed
Debt.
“GAAP”,
when used in respect of accounting terms or accounting
determinations relating to a Person, means generally accepted
accounting principles in effect from time to time in Canada,
including, to the extent the same are adopted by such Person, the
International Financial Reporting Standards.
“Governmental
Authority” means the government of Canada or the
United States or any other nation or any political subdivision
thereof, whether state, provincial or local, and any agency,
authority, instrumentality, regulatory body (including any
self-regulatory body), court, central bank or other entity
exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to
government.
“Guarantors”
means, collectively, each future Affiliate or subsidiary of any
Obligor that becomes a guarantor of the Obligations in accordance
with the terms of this Agreement, excluding any limited recourse
guarantor, and each of them is a
“Guarantor”.
“Included
Taxes” has the meaning
given to that term in Section 5.6(a).
“Indemnified
Person” means the Agent, each Lender, their respective
Affiliates, agents, representatives, attorneys, and any receiver or
receiver and manager appointed by the Agent, and the respective
officers, directors and employees of each of the foregoing
persons.
“Initial
Revolver Commitment” means $13,000,000.
“Initial
Commitment Fee” has the meaning given to that term in
Section 3.4.
“Initial
Loan Advance” means the first Loan Advance made
pursuant to Section 2.3(a) on the
Closing Date.
“Initial
Term” has the meaning given to that term in Section
5.1(a).
“Interest
Coverage Ratio” means, for any test period, the ratio
of (a) EBITDA for such period, and (b) the total of Interest
Expense in respect of Funded Debt (and any interest payments on
Postponed Debt otherwise permitted by the Agent) for such
period.
“Interest
Expense” means, for any fiscal period, the aggregate
cost of advances of credit outstanding during that period including
interest charges, capitalized interest, the interest component of
capital leases, fees payable in respect of letters of credit and
letters of guarantee and discounts incurred and fees payable in
respect of bankers’ acceptances.
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“Interest
Expense” means, for any fiscal period, the aggregate
cost of advances of credit outstanding during that period including
interest charges, capitalized interest, the interest component of
capital leases, fees payable in respect of letters of credit and
letters of guarantee and discounts incurred and fees payable in
respect of bankers’ acceptances.
“Interest
Payment Date” means, with respect to each Loan
Advance, the last day of each calendar month.
“Interest
Rate” means a rate per annum equal to the greater of
(a) 10.50% and, (b) the TD Bank US Prime Rate, plus
7.25%.
“Involuntary
Bankruptcy Event” means, without the consent or
acquiescence of the applicable Person, the entering of an
application for an order for relief or approving a petition or
court order for relief or reorganization or any other petition or
order seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution, monitoring or other similar
relief under any present or future bankruptcy, insolvency or
similar process under Applicable Law, or the filing of any such
petition or order against such Person or, without the consent or
acquiescence of such Person, the entering of an order appointing a
trustee, monitor, custodian, inspector, receiver or liquidator of
such Person or of all or any substantial part of the undertaking or
property of such Person; unless (i) such Person is diligently
defending such proceeding in good faith and on reasonable grounds
as determined by the Agent, and (ii) such proceeding does not in
the opinion of the Agent materially adversely affect the ability of
such Person to carry on its business and to perform and satisfy all
of its obligations herein.
“Lender”
and “Lenders”
have the meanings given to those terms in Section 12.19.
“Lien”
means any security interest, mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or
otherwise), charge against or interest in property or other
priority or preferential arrangement of any kind or nature
whatsoever, in each case to secure payment of a debt or performance
of an obligation, including any conditional sale or any sale with
recourse.
“Lion”
means Lion of Judah Capital, LLC, a corporation existing under the
laws of the State of Delaware, and includes its successors and
permitted assigns.
“Liquidity
Event” means (a) any public offering of Equity
Interests by an Obligor or the Person who Controls such Obligor,
(b) any Change of Control, or (c) any transaction or series of
transactions resulting in the assignment, sale, transfer or other
disposition of any material business or a material portion of the
Collateral of the Obligors, taken together.
“Loan
Advance” and “Loan Advances” have the meanings
given to those terms in Section 2.3.
“Loss”
means any loss whatsoever, whether direct or indirect, including
expenses, costs, damages, judgments, penalties, awards,
assessments, fines and any and all fees, disbursements and expenses
of counsel, experts and consultants.
“Material
Adverse Change” means any event, circumstance or
change that could be expected to result, individually or in the
aggregate, in a material adverse effect, in any respect, on (a) the
legality, validity or enforceability of any of the Credit Documents
or any of the Liens provided for thereunder, (b) the right or
ability of an Obligor to perform any of its obligations under any
of the Credit Documents, in each case to which it is a party, or to
consummate the transactions contemplated under any of the Credit
Documents, (c) the financial condition, assets or business of the
Obligors, taken as a whole, (d) any Material Agreement or Material
Permit, (e) an Obligor’s ability to retain, utilize, exploit
or comply with its obligations under any Material Agreement or
Material Permit, or (f) the rights or remedies of the Agent under
any of the Credit Documents, provided that any change in the
financial condition of an Obligor as of the date of the Agreement
caused by or related to the COVID-19 global pandemic will not
constitute a Material Adverse Change.
“Material
Agreement” means any contract or agreement of an
Obligor, the loss, termination or non-renewal of which would
reasonably be expected to result in a Material Adverse Change, as
determined by the Agent, acting reasonably.
“Material
Permit” means any authorization, approval, consent,
exemption, license, grant, permit, franchise, right, privilege or
no-action letter from any Governmental Authority having
jurisdiction with respect to any specified Person, property,
transaction or event, or with respect to any of such Person's
property or business and affairs (including any zoning approval,
development permit or building permit), the failure of which to be
obtained or held would prohibit or reasonably be expected to
materially and adversely affect the ability of any Obligors, taken
as a whole, to conduct any material part of their business as
presently conducted and planned to be conducted.
“Maturity
Date” has the meaning given to that term in Section
5.1(b).
“Maximum
Rate” has the meaning given to that term in Section
3.8(b).
“Multiemployer
Plan” means any employee benefit plan of the type
described in Section 4001(a)(3) of ERISA, to which any Obligor or
any ERISA Affiliate makes or is obligated to make contributions, or
during the preceding five plan years, has made or been obligated to
make contributions.
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“Multiple
Employer Plan” means a Plan which has two or more
contributing sponsors (including any Obligor or any ERISA
Affiliate) at least two of whom are not under common control, as
such a plan is described in Section 4064 of ERISA.
“Obligations”
means, at any given time, all advances to, and debts, liabilities,
obligations, covenants and duties of, the Borrower arising under
any Credit Document or otherwise with respect to any outstanding
principal balance under the Credit Facility, whether direct or
indirect (including those acquired by assumption), absolute or
contingent, due or to become due, matured or unmatured, in any
currency, now existing or hereafter arising, including all
indemnity obligations to the Agent and/or the Lenders, and
including any accrued and unpaid interest thereon and all future
interest that accrues thereon after, and including interest and
fees that accrue after the commencement by or against the Borrower
or any Affiliate thereof of any proceeding under any debtor relief
laws naming such Person as the debtor in such proceeding,
regardless of whether such interest and fees are allowed or
allowable claims in such proceeding. Without limiting the
foregoing, the Obligations include (i) the obligation to pay
principal, interest, charges, expenses, fees, indemnities and other
amounts payable by the Borrower under any Credit Document and (ii)
the obligation of the Borrower to reimburse any amount in respect
of any of the foregoing that the Agent or any Lender, in each case
in its sole discretion, may elect to pay or advance on behalf of
the Borrower.
“Obligors”
means, collectively, the Borrower and each Guarantor, and each of
them is an “Obligor”.
“OFAC”
means the U.S. Treasury Department
Office of Foreign Assets Control.
“Other Connection
Taxes” means, with
respect to any Lender, Taxes imposed as a result of a present or
former connection between such Lender and the jurisdiction imposing
such Tax (other than connections arising from such Lender having
executed, delivered, become a party to, performed its obligations
under, received payments under, received or perfected a security
interest under, engaged in any other transaction pursuant to or
enforced any Credit Document, or sold or assigned an interest in
any Loan Advance or Credit Document).
“Other Taxes” has the meaning given to that term in
Section 5.6(b).
“Outstanding
Principal Obligations” means at any time the sum of
the aggregate principal amount of all Loan Advances outstanding and
unpaid at such time.
“Overall
Borrowing Limit” means any at given time the lesser of
(a) the Total Commitment, and (b) the Borrowing Base
Amount.
“Payment”
means any repayment of Outstanding Principal Obligations or any
payment of accrued and unpaid interest made or required to be made
in accordance with the terms of this Agreement, including any
prepayment or any mandatory repayment, as applicable.
“PBGC”
means the Pension Benefit Guaranty Corporation.
“Pension
Act” means the Pension Protection Act of
2006.
“Pension
Funding Rules” means the rules of the Code and ERISA
regarding minimum required contributions (including any installment
payment thereof) to Pension Plans and Multiemployer Plans and set
forth in, with respect to plan years ending prior to the effective
date of the Pension Act, Section 412 of the Code and Section 302 of
ERISA, each as in effect prior to the Pension Act and, thereafter,
Section 412, 430, 431, 432 and 436 of the Code and Sections 302,
303, 304 and 305 of ERISA.
“Pension
Plan” means any employee pension benefit plan
(including a Multiple Employer Plan), other than a Multiemployer
Plan, that is maintained or is contributed to by the Borrower and
any ERISA Affiliate and is either covered by Title IV of ERISA or
is subject to the minimum funding standards under Section 412 of
the Code.
“Permitted
Indebtedness” means (a) intercompany indebtedness
owing by any Obligor to any other Obligor as may be approved by the
Agent from time to time, (b) Postponed Debt, (c) Unsecured Debt,
and (d) such other indebtedness as may be approved by the Agent
from time to time.
“Permitted
Liens” means, collectively, (a) Liens granted in
favour of the Agent pursuant to the Credit Documents, (b)
Subordinated Liens, (c) Supplier Liens as approved by the Agent,
(d) Liens granted in favour of a lessor of vehicles, goods or
equipment provided that such Liens attach only to such leased
vehicles, goods or equipment and the proceeds thereof and do not
attach to any other Collateral, (e) Liens in connection with,
without limiting the foregoing, workers’ compensation,
employment and unemployment insurance, old age pension,
employers’ health tax, vacation pay or other social security
or statutory obligations, (f) Liens for taxes, fees, assessments
and governmental charges not delinquent, not due or being contested
in good faith, to the extent that payments therefor shall not at
the time be required to be made in accordance with the provisions
of Section 7.1(e), (g) Liens of carriers, warehousemen, mechanics
and materialmen, and other like Liens, for sums not due or to the
extent that payment therefor shall not at the time be required to
be made in accordance with the provisions of Section 7.1(e), (h)
minor imperfections in title on the real property that do not
materially detract from the value of the real property and do not
materially impair the Borrower’s ability to carry on its
business or the Borrower’s rights and remedies under the
Credit Documents, (i) building restrictions, easements,
encumbrances, rights-of-way, servitudes, utility easements or other
charges against real property or other similar rights in land
(including rights-of-way and servitudes for railways, sewers,
drains, gas and oil pipelines, gas and water mains, electric light
and power and telephone or telegraph or cable television conduits,
poles, wires and cables) granted to or reserved by other persons
which in the aggregate do not materially impair the usefulness, are
of a nature generally existing with respect to properties of a
similar character, subject to the restrictions, easements,
rights-of-way, servitudes or other similar rights in land granted
to or reserved and, in each case, do not materially impair the
Borrower’s ability to carry on its business or the
Borrower’s rights and remedies under the Credit Documents,
(j) the rights reserved to or vested by the terms of any lease,
licence, franchise, grant or permit held by the Borrower or by any
statutory provision, to terminate any such lease, licence,
franchise, grant or permit, or to require annual or periodic
payments as a condition to the continuance thereof, (k) deposits of
money, performance bonds or guarantees to secure the performance of
bids, trade contracts, government contracts, statutory obligations,
surety and appeal bonds, performance bonds and other obligations of
a like nature, and (l) liens consisting of purchase money security
interests in capital equipment.
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“Permitted
Payments” means, collectively,
(a)
regularly scheduled (i.e. non-accelerated) payments of interest on
Unsecured Debt,
(b)
regularly scheduled (i.e., non-accelerated) payments of principal
on Unsecured Debt, including any such payments due on the maturity
of such Unsecured Debt, provided that, with respect to Unsecured
Debt that is not Deferred Debt, within sixty (60 ) days of such
payment, the Borrower shall raise replacement Unsecured Debt in an
amount such that the aggregate principal amount of Unsecured Debt
is no less than the lesser of (i) $7,700,000 and (ii) an amount
equal to 40% of the then Outstanding Principal Obligations
hereunder, and
(c)
regularly scheduled (i.e., non-accelerated) payments of principal
and interest on Postponed Debt, including any such payments due on
the maturity of such Postponed Debt.
“Person”
means an individual, a corporation, a limited partnership, a
general partnership, a trust, a joint stock company, a joint
venture, an association, a syndicate, a bank, a credit union, a
trust company, a Governmental Authority and any other legal or
business entity.
"Petroleum
Substances" means any one or more of crude oil, oil sands,
crude bitumen, synthetic crude oil, petroleum, natural gas, natural
gas liquids, related hydrocarbons and any and all other substances,
whether liquid, solid or gaseous, whether hydrocarbons or not,
produced or producible in association with any of the foregoing,
including hydrogen sulphide and sulphur.
“Plan”
means any employee benefit plan within the meaning of Section 3(3)
of ERISA (including a Pension Plan), maintained for employees of
any Obligor or any such Plan to which any Obligor is required to
contribute on behalf of any of its employees.
“Postponed
Debt” means indebtedness that is fully postponed (with
respect to payment) and subordinated (with respect to any Liens and
enforcement), both as to principal and interest to the Obligations
hereunder, on terms satisfactory to the Agent.
“Potential
Priority Claims” means all amounts owing or required
to be paid, where the failure to pay any such amount could give
rise to a claim pursuant to any law, statute, regulation or
otherwise, which ranks or is capable of ranking in priority to the
Security or otherwise in priority to any claim by the Agent for
repayment of any amounts owing under this Agreement or any other
Credit Document and includes any amount due and payable at such
time by an Obligor that is secured by a Lien (whether xxxxxx or
inchoate) or a statutory right in favour of a Governmental
Authority, that encumbers any Collateral and that ranks, or is
capable of ranking prior to or pari passu with any Lien on such
Collateral granted in favour of the Agent, including amounts due
deducted or withheld, as applicable, and not yet paid, contributed
or remitted, as applicable, by any Obligor in respect of vacation
pay, termination and severance pay, realty, municipal or similar
taxes, or pursuant to any legislation relating to workers’
compensation, employment insurance, income tax, any pension plan or
any similar legislation.
“Priority
Lien” means any Lien that is not a Subordinated
Lien.
“Register”
has the meaning given to that term in Section 12.19.
“Release”
includes discharge, spray, inject, inoculate, abandon, deposit,
spill, leak, seep, pour, emit, empty, throw, dump, place and
exhaust, and when used as a noun has a similar
meaning.
“Relevant
Jurisdiction” means, in relation to each
Obligor:
(i)
the jurisdiction
under whose laws that Obligor is formed and existing;
(ii)
any jurisdiction
where any asset subject to or intended to be subject to the
Agent’s Liens to be created by it is situated;
(iii)
any jurisdiction
where it conducts its business; and
(iv)
the jurisdiction
whose laws govern the perfection of any of the Security Documents
entered into by it.
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“Repayment
Notice” means a written notice by the Agent to the
Borrower, substantially in the form attached as Schedule
“C”, requiring repayment of all or a portion of the
Obligation.
“Reportable
Event” means any of the events set forth in Section
4043(c) of ERISA, other than events for which the 30 day notice
period has been waived.
“Restricted
Payment” means, collectively, (a) any dividend or
other distribution made by any Obligor to any holder of any Equity
Interest of such Obligor, other than another Obligor, and (b) any
interest, principal or other amount paid in respect of any
Postponed Debt made by any Obligor.
“Revolver
Borrowing Limit” means at any given time, the lesser
of (a) the Revolver Commitment and (b) the Borrowing Base
Amount.
“Revolver
Commitment” means, the aggregate of the Initial
Revolver Commitment together with any Accordion
Expansion.
“Revolving
Facility” has the meaning given to that term in
Section 2.1(a)(ii).
“Royalty
Asset” means certain
mineral rights defined pursuant to the Obligors balance sheet as
(i) mineral interests and (ii) lease rights held in respect of such
mineral rights, collectively owned by the Obligors over the lands
which have an oil/gas royalty stream associated with such
lands.
“Royalty
Availability” means
50% of the net present value “NPV” of all future cash
flows discounted by a factor equal to the Interest Rate then in
effect not to include any value ascribed to (i) permitted xxxxx
“Permits” and, (ii) proven undeveloped reserves
“PUDs”.
“Royalty
Eligibility Criteria” means the criteria set by the
Agent from time to time in connection with determining whether a
Royalty Asset is an Approved Royalty Asset.4
“Sanctioned
Person” means an individual or entity that is, or is
50% or more owned (individually or in the aggregate, directly or
indirectly) or controlled by Persons that are, (i) the subject of
any Sanctions, or (ii) located, organized or resident in a country
or territory that is, or whose government is, the subject of
Sanctions (to the extent being so located, organized or resident
violates any applicable Sanctions).
“Sanctions”
means any sanctions administered or enforced by the US Department
of the Treasury’s Office of Foreign Assets Control, the US
Department of State, the United Nations Security Council, the
European Union, Her Majesty’s Treasury or the Hong Kong
Monetary Authority.
“Schedules”
means the schedules attached to this Agreement and which are more
particularly described in Section 1.3.
“Security”
means all security held from time to time by or on behalf of the
Agent or the Lenders, securing or intended to secure directly or
indirectly repayment of the Obligations and includes all security
described in Article 8.
“Set-Off”
means any legal or equitable Set-Off, off-set, rescission,
counterclaim, reduction, deduction or defense under Applicable
Law.
“Solvent”
means when used with respect to a Person, means that (i) such
Person is not for any reason unable to meet its obligations as they
generally become due, (ii) such Person has not ceased paying its
current obligations in the ordinary course of business as they
generally become due and (iii) the aggregate property of such
Person is, at a fair valuation, sufficient, or, if disposed of at a
fairly conducted sale under legal process, would be sufficient, to
enable payment of all its obligations, due and accruing
due.
“Subordinated
Lien” means any Lien for which the holder thereof has
agreed, pursuant to a subordination agreement in form satisfactory
to the Agent, that such Lien shall at all times be subordinated and
postponed in favour of the Liens granted in favour of the
Agent.
“Subsidiary”
means a business entity which is Controlled by another business
entity (as used herein, “business entity” includes a
corporation, company, partnership, limited partnership, trust or
joint venture).
“Supplier
Lien” means any Lien granted in favour of a supplier
or distributor of tangible goods to any Obligor, provided that such
Lien attaches only to such tangible goods supplied or distributed
and the proceeds thereof and do not attach to any other
Collateral.
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“Tangible
Net Worth” means, as it relates to the Obligors on a
consolidated basis, the value in dollars which remains after
subtracting the following from the estimated fair market value of
the Obligors’ total assets at any point in time:
(a)
the book value of
all liabilities of the Obligors except liabilities which are
expressly subordinated to the Agent;
(b)
the value of
prepaid expenses of the Obligors;
(c)
the book value of
all of the Obligors’ goodwill and other intangible
assets;
(d)
the book value of
all of the Obligors’ uncollectable receivables and obsolete
inventory;
(e)
the book value of
all of the Obligors’ loans receivable from any related
parties or Affiliates; and
(f)
the market value of
all public equity securities, warrants and other substantially
similar securities held by the Obligors.
“Taxes”
means all present or future taxes, levies, imposts, duties,
deductions, withholdings (including backup withholding), value
added taxes, or any other goods and services, use or sales taxes,
assessments, fees or other charges in the nature of a tax imposed
by any Governmental Authority, including any interest, additions to
tax or penalties applicable thereto.
“TD
Bank US Prime Rate” means the floating annual rate of
interest established from time to time by the Toronto-Dominion Bank
as the reference rate it will use to determine rates of interest
payable to the Toronto-Dominion Bank by commercial borrowers in
U.S. dollar loans and designated by it as its “prime
rate”.
“Term
Borrowing Limit” means, the lesser of (a) the Term
Commitment, and (b) the Borrowing Base Amount.
“Term
Commitment” means $5,000,000.
“Term
Facility” has the meaning given to that term in
Section 2.1(a)(i).
“Termination
Date” means the earlier to occur of (a) the Maturity
Date, and (b) the date on which this Agreement is terminated by the
Agent and/or the Borrower in accordance with the terms of this
Agreement.
“Threshold
Amount” means $250,000.
“Total
Commitment” means (i)
prior to any increase of the Initial Revolver Commitment by the
Accordion Expansion, $18,000,000, and (ii) following any increase
of the Initial Revolver Commitment by the Accordion Expansion, the
aggregate of the Term Commitment, the Initial Revolver Commitment
and the Accordion Expansion.
“UCC”
means the Uniform Commercial Code, as in effect from time to time,
in the State of New York; provided, however, if the laws of any
other jurisdiction are required to be applied in connection with
matters of perfection, priority or enforcement of the Agent’s
Liens in, on or to any Collateral, the term “UCC” shall mean the Uniform
Commercial Code as enacted and in effect in such other jurisdiction
solely with respect to such matters of perfection, priority or
enforcement of Agent’s Liens in, on or to such
Collateral.
“Unutilized
Portion” means, at the relevant time, the Revolver
Borrowing Limit less the Outstanding Principal Obligations under
the Revolving Facility.
“Unsecured
Debt” means all unsecured debt of the Borrower from
time to time, including the unsecured debt set out in Schedule
“G”.
“Utilization
Fee” has the meaning given to the term in Section
3.5.
“Utilization
Fee Rate” means 2.4% per annum.
“VAT”
means any consumption, sales or value added tax relating to the
provision of any goods or services, including the Goods and
Services Tax (GST).
“Voluntary
Bankruptcy Event” means (a) an admission in writing by
a Person of its inability to pay its debts generally or a general
assignment by such Person for the benefit of creditors, (b) the
filing of any assignment, petition or consent thereto or answer by
such Person seeking to adjudicate itself as bankrupt or insolvent,
or seeking for itself any liquidation, winding-up, reorganization,
arrangement, adjustment, protection, relief or composition of such
Person or its debts under any present or future bankruptcy,
insolvency or similar Applicable Law, or seeking, consenting to or
acquiescing in the entry of an order for relief in any case under
any such Applicable Law, or the appointment of or taking possession
by a trustee, monitor, custodian, inspector, receiver or liquidator
of such Person or for any substantial part of such Person’s
property, or (c) corporate or other action taken by such Person to
authorize any of the actions set forth above.
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