Exhibit 10.8
THIS AGREEMENT is made as of the 7th day of February, 2000
BETWEEN: Yak Communications Canada Inc., a corporation incorporated under the
laws of Ontario (hereinafter called the "Client")and S.L.F. SALES LINKED FINANCE
LTD., a corporation incorporated under the laws of Ontario (hereinafter called
"SLF")
RECITALS:
WHEREAS Client desires to obtain financing by selling and assigning to SLF
acceptable accounts receivable;
NOW THEREFORE THIS AGREEMENT WITNESSETH that, in consideration of the mutual
covenants contained herein and for other good and valuable consideration (the
receipt and sufficiency of which are hereby acknowledged by each party), the
parties hereby agree as follows:
1. DEFINITIONS
Capitalized terms, whenever used in this Agreement or in any Addendum referred
to herein or attached hereto and not otherwise defined herein or therein, shall
have the meanings ascribed thereto in Addendum no. l.
2. OFFERS
2.1 Client may from time to time, at its option, offer to sell, transfer and
assign Approved Accounts to SLF, [strike out the word "Approved" and
initial the change if there are no minimum criteria for Accounts that are
offered to SLF]
2.2 The performance by SLF of its obligations under this Agreement is, in
addition to any other terms and conditions contained in this Agreement,
subject to satisfaction of the following term and condition which is
included herein for the sole benefit of SLF and which may be waived in
whole or in part by SLF in its sole and absolute discretion:
SLF shall have received the following in form and substance satisfactory to
it:
(a) copies of the charter documents, by-laws, shareholders agreement, if
any, and resolution of the board of directors of Client authorizing
the transactions herein contemplated certified to be true and complete
by an officer of Client;
(b) a certificate of incumbency of Client, together with specimen
signatures of the signatories of Client;
(c) certificates of good standing issued by appropriate government
officials of the jurisdiction of incorporation of Client; and
(d) such other certificates and documentation as SLF may request in a form
satisfactory to SLF or SLF's legal counsel.
2.3 Each offer to sell Accounts to Client shall be in writing substantially in
the form set out in the attached SCHEDULE OF ACCOUNTS (see Schedule "A")
and shall be accompanied by the documents listed in Addendum no. 2(insert
reference to Addendum no. 2 or 3).
2.4 Each offer to sell Accounts shall be subject to the terms and conditions of
this Agreement and shall remain open for SLF's acceptance in writing for a
period of five Business Days or such further period of time as SLF may
agree in writing. Once an offer has been made, it shall be irrevocable by
Client until SLF either accepts or declines to accept it in accordance with
section 3.1. If SLF does not accept or decline to accept an offer within
the period of time referred to above, SLF shall be deemed to have declined
to accept the offer.
3. ACCEPTANCE AND ASSIGNMENT
3.1 In relation to any Account offered to SLF by Client, acceptance shall be
constituted by SLF's dispatching a confirmation to Client by facsimile,
mail or courier in the form set out in the attached SCHEDULE OF ACCOUNTS
(see Schedule "A") confirming SLF's agreement to purchase such Account,
accompanied by a cheque payable to Client as hereinafter calculated as the
Purchase Price. If requested in writing by Client, SLF may pay the Purchase
Price for any Accounts purchased by it by wire transfer to Client's account
with the bank indicated on the attached Schedule "B".
3.2 Upon SLF's acceptance of any Accounts offered to it by Client, such
Accounts are hereby transferred and assigned to SLF, together with all
rights under or in relation to the contracts to which the Accounts relate,
including all liens or other rights in any Goods, materials or products
that are to be supplied, all Instruments, Chattel Paper, Documents of
Title, Securities, deeds, documents, writings, papers, books of account,
other books, electronic and magnetic records and other records evidencing,
recording or appertaining to the Instruments, Chattel Paper or Documents of
Title, guarantees and security interests taken or held by Client to secure
the performance of any or all of the obligations of the Account Debtor, and
including all Proceeds thereof, and Client's right to rescind or terminate
those contracts or to accept a return
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of any Goods or other materials supplied under the contracts (collectively,
the "Corresponding Rights"), and Client shall execute such other assignment
documents to confirm same in a form provided by SLF. By the said assignment
Client shall have transferred to SLF all of its right, title and interest
in and to the Accounts and the Corresponding Rights purchased by SLF.
3.3 SLF is not obligated to buy any Account from Client and shall have no
liability to Client or any Account Debtor as a result of its failure or
refusal to purchase an Account.
3.4 Client hereby irrevocably appoints SLF as its attorney to execute
(including the power to execute under Client's seal) and deliver in
Client's name all instruments, Chattel Paper, Documents of Title, deeds or
other documents that SLF may consider necessary or advisable in order to
convey and perfect SLF's title in any Account purchased by it and/or in any
Corresponding Rights and security in respect thereof, and may supply any
endorsement to any cheque or other Instrument relating to an Account in
order to obtain payment therefor, and the power of attorney granted hereby
shall be deemed to be coupled with an interest.
3.5 If, for any reason whatsoever, the transfer and assignment referred to in
section 3.2 is not fully and properly effected, until such time as an
effective formal assignment of each Account and all Corresponding Rights
purchased by SLF is made, Client shall be deemed to hold every Account and
the Corresponding Rights relating to such Account in trust for SLF.
4. PRICING AND PAYMENT
4.1 The purchase price for each Account purchased by SLF (the "Purchase Price")
shall be equal to the outstanding amount remaining to be paid on the
Invoice rendered in respect of that Account, net of taxes, penalties,
duties, delivery charges or any other similar charges or amounts (the
"Gross Face Value") less the discount set out in Schedule "B".
4.2 In determining the Gross Face Value of an Account, the outstanding amount
remaining to be paid on the Invoice shall be reduced by an amount equal to
all discounts available to the Account Debtor by virtue of such Account
Debtor paying the Account in full prior to the latest date on which such
Account Debtor is entitled to pay such Account before it falls into
arrears.
4.3 If SLF receives any payment in respect of an Account which exceeds the
monthly or periodic instalment payment on an Account (the excess portion
being referred to hereinafter as a
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"Periodic Overpayment") or which exceeds the Gross Face Value for that
Account (the excess portion being referred to hereinafter as a "Matured
Debt Overpayment"), and provided such Account did not fall into arrears at
any time, SLF shall, subject to the rights of SLF and the Account Debtor to
such excess amounts, refund the Overpayment to Client. All Periodic
Overpayments and Matured Debt Overpayments shall be placed by SLF in any
SLF account, including, but not restricted to, a reserve account. All such
amounts held by SLF may be applied by SLF against charge-backs or any other
Indebtedness and obligations of Client to SLF known or anticipated and,
subject to section 4.4, no such amount held by SLF shall be paid to Client
until any and all of such Indebtedness and obligations are fully paid
and/or satisfied.
4.4 Provided Client has not failed to pay any outstanding Indebtedness of
Client to SLF which is then due and owing and subject to any application of
any Periodic Overpayment and/or Matured Debt Overpayment by SLF against
charge-backs or any other obligations of Client to SLF known or
anticipated, SLF shall pay to Client the Periodic Overpayment and/or
Matured Debt Overpayment for each Account after SLF has received full
payment in respect of such Account. Such payments shall be made within the
first three Business Days of the month immediately following payment in
full of the Account, unless otherwise agreed to in writing by SLF.
Notwithstanding the foregoing, if, in SLF's sole and absolute opinion,
there is an adverse change in the financial condition of Client or the
Account Debtor in respect of which the Periodic Overpayment and/or Matured
Debt Overpayment was made, or Client's or such Account Debtor's ability to
pay any amounts owing, or to become owing in the future, to SLF has been
impaired, worsened or diminished or threatens to do so (a "Credit
Impairment"), SLF shall not be obligated to pay to Client any amount
constituting a Periodic Overpayment or a Matured Debt Overpayment until it
is satisfied that the Credit Impairment no longer exists.
4.5 The outstanding amount of Accounts purchased by SLF from Client and not yet
paid for by its Account Debtors shall not exceed at any time the amount
referred to in Schedule "B" as the "Purchase Limit".
4.6 SLF shall be entitled to deduct from the Purchase Price for the Accounts
purchased by it as listed on each SCHEDULE OF ACCOUNTS (see Schedule "A")
its standard wire transfer fee for all wire transfers and same-day or
overnight courier service charges if Client requests that payment be
delivered to it in such manner.
5. REPRESENTATIONS AND WARRANTIES OF CLIENT
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5.1 As an inducement for SLF to enter into this Agreement, and with full
knowledge that the truth and accuracy of the representations and warranties
in this Agreement are being relied upon by SLF in purchasing Accounts
hereunder, Client represents and warrants that:
(a) Client is a corporation validly existing in good standing under the
laws of the jurisdiction of its incorporation with adequate corporate
power to enter into and perform its obligations under this Agreement
and applicable schedules and addenda;
(b) this Agreement and applicable schedules and addenda executed by Client
have been duly authorized, executed and delivered by Client and
constitute valid, legal and binding agreements, enforceable in
accordance with their terms;
(c) to Client's knowledge, no approval, consent or withholding of
objection is required from any governmental authority with respect to
the entering into and performance by Client of this Agreement and any
applicable schedules and addenda to be executed by Client, or if any
such approval is required, it has been obtained;
(d) the entering into and performance of this Agreement and any applicable
schedules and addenda does not violate any judgment, order, law or
regulation applicable to Client or any provision of Client's Articles
of Incorporation or By-laws or result in any breach of, or constitute
a default under, or result in the creation of any lien, charge,
security interest or other encumbrance, except Permitted Encumbrances,
upon any of Client's assets or on the Accounts pursuant to any
indenture, mortgage, deed of trust, bank loan or credit agreement or
other instrument to which Client is a party or by which Client or
Client's assets may be bound;
(e) Client is duly qualified to carry on business in the Province/State of
Ontario and all other jurisdiction(s) where it carries on business.
Client is properly licensed and authorized to operate the business of
under the trade name(s) of Yak Communications Canada Inc. and Client's
trade name(s) has been properly filed and published as required by
applicable law. Client has fulfilled all local, provincial or federal
requirements of law in properly registering itself to do business at
all addresses where its business is located;
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(f) no event of default (as set out in section 12.1) has occurred;
(g) Client has made timely payment and/or local deposits of required
taxes, including employee income tax withholdings, to Revenue Canada
as well as to any other federal, provincial and/or local tax authority
as they become due;
(h) all financial records, statements, books or other documents shown to
SLF by Client at any time, either before or after the signing of this
Agreement, are true, complete and accurate and represent the true
financial condition of Client; and
(i) with respect to Account Debtors and Accounts:
(i) Client is, at the time of purchase by SLF, the sole legal and
beneficial owner of, and has undisputed title to, the Accounts
and all Corresponding Rights purchased by SLF free and clear of
all liens, charges, encumbrances and adverse claims;
(ii) each Account offered to SLF and purchased by SLIT is an
Approved Account, [strike out (ii) and initial the change if
there are to be no minimum criteria for Accounts that are
offered to SLF]
(iii) to the best of Client's information and knowledge, each Account
Debtor is solvent within the meaning of the Bankruptcy and
Insolvency Act (Canada);
(iv) Client has not received any notice, either verbal or written,
of a Credit Problem concerning any of its Account Debtors which
Credit Problem has not previously been disclosed in writing to
SLF;
(v) each Account Debtor is indebted to Client for the amounts set
out in each Schedule "A" submitted to SLF from time-to-time;
(vi) each Invoice, Purchase Order or other contract or instrument
provided to SLF as evidencing the agreement between Client and
its Account Debtor in respect of any Account sets forth and
constitutes the entire agreement between Client and the Account
Debtor with respect to the subject matter thereof, there being
no
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other written or oral understandings or representations;
(vii) at the time of purchase by SLF there has been no prepayment of
payments or other monies payable under any Account except as
expressly disclosed in writing to SLF;
(viii) all covenants, conditions and obligations of Client and each
Account Debtor under each Account offered to SLF, including,
without limitation, all conditions precedent to the obligation
of the Account Debtor to make the payments, have been performed
and fulfilled by Client;
(ix) as of the date of each offer, the Account Debtor has performed
and fulfilled all covenants, conditions and obligations in
respect of each Account and the Account Debtor has agreed to
continue to perform and fulfill such covenants, conditions and
obligations and has further agreed that its obligation to make
all payments in respect of the Account shall be absolute and
unconditional under all circumstances and shall not be affected
by any right of set-off, counterclaim or defense the Account
Debtor may have against Client, SLF or any other Person for any
reason whatsoever;
(x) each Invoice, Purchase Order or other contract or instrument
provided to SLF as evidencing the agreement between Client and
its Account Debtor in respect of any Account is in full force
and effect and has not been amended, changed or modified and
shall not be amended, changed or modified without the prior
written consent of SLF;
(xi) the Goods referenced in each Invoice, Purchase Order or other
contract or instrument provided to SLF as evidencing the
agreement between Client and its Account Debtor in respect of
any Account have been duly delivered to the Account Debtor at
the location specified in such Invoice, Purchase Order or other
contract or instrument and the Account Debtor has duly
inspected such Goods, found the same to be in good order, in
full accordance with all of its specifications and
requirements, and has
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accepted such Goods for all purposes of its agreement with
Client;
(xii) the Goods referenced in each Invoice, Purchase Order or other
contract or instrument provided to SLF as evidencing the
agreement between Client and its Account Debtor in respect of
any Account are presently located at the address indicated on
Schedule" B";
(xiii) the Account Debtor has agreed that neither the Invoice,
Purchase Order or other contract or instrument provided to SLF
as evidencing the agreement between Client and its Account
Debtor in respect of any Account nor the assignment by Client
of its rights under such Invoice, Purchase Order or other
contract or instrument to SLF shall make SLF liable to perform
or fulfill any covenants, conditions or obligations of Client
under such Invoice, Purchase Order or other contract or
instrument, all of which shall remain the responsibility of
Client, and that the Account Debtor's sole remedy for breach of
such covenants, conditions or obligations shall be against
Client;
(xiv) each Account Debtor has agreed not to assert against SLF any
claim, set-off, counterclaim or defense the Account Debtor has,
or may have, against Client, SLF or any other Person for any
reason whatsoever;
(xv) each Account offered for sale to SLF is an accurate and
undisputed statement of indebtedness by Account Debtor to
Client as a result of a bona fide and absolute sale of Goods to
its Account Debtor (which Goods were delivered and accepted by
its Account Debtor) or performance of service by Client to an
Account Debtor, and such Goods were not provided to its Account
Debtor on consignment, or on an approval or hold basis, or by
way of guaranteed contract or subject to any other contingency
and is for a certain sum which is due and payable in 30 days or
less, or within such time as is agreed to, in writing by SLF
and Client;
(xvi) Client does not own, control or exercise dominion over, in any
way whatsoever, the
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business of any Account Debtor in respect of which an Account
is offered for sale by Client to SLF; and
(xvii) Client has not transferred, assigned, pledged or granted a
security interest in its Accounts or other personal property to
any other party which Client has not fully disclosed in writing
to SLF prior to the date of execution of this Agreement.
6. COVENANTS OF CLIENT
6.1 In addition to any other covenants made by Client in favour of SLF
hereunder, Client hereby covenants with SLF that so long as any
Indebtedness remains outstanding:
(a) it shall promptly notify SLF of any attachment, seizure or any other
legal process levied upon or against Client and any information with
respect to Account Debtors which indicates a Credit Problem,
including, without restricting the foregoing, any attachment, seizure
or any other legal process levied upon or against any Account Debtor;
(b) it shall immediately upon the sale of any Account to SLF, make proper
entries on its books and records disclosing the absolute sale of said
Account to SLF;
(c) it shall provide to SLF such waivers, subordinations, postponements or
releases from third parties as may be requested by SLF;
(d) it shall continue to make timely payment and/or local deposits of
required taxes, including employee income tax withholdings, to Revenue
Canada as well as to any other federal, provincial and/or local tax
authority as they become due;
(e) it shall furnish, upon request by SLF, satisfactory proof of payment
of any or all taxes required by law to be paid by Client;
(f) it shall maintain such insurance covering Client's business and assets
in amounts satisfactory to SLF and has arranged for SLF to be named as
loss payee and additional named insured on such insurance policies;
(g) it shall require its Account Debtors to maintain such insurance
covering their businesses and assets, including the Goods in respect
of which any Account has become payable to Client or SLF, in amounts
satisfactory to SLF
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and shall require its Account Debtors to arrange for SLF to be named
as loss payee and additional named insured on such insurance policies
if so requested by SLF;
(h) SLF shall, upon 24 hours' notice, at any and all reasonable times
during business hours have the irrevocable right to inspect, copy and
use any and all records, whether in writing or electronically
recorded, pertaining to the Accounts purchased by SLF and as to any
other matters relevant to the obligations and rights of SLF hereunder
and to make copies of all such records and enter into and upon the
lands or premises where records pertaining to the Accounts may be
located for the purpose of inspecting the same, subject to Client's
work schedules and reasonable security procedures;
(i) it shall, at its expense, protect and defend SLF's title to all
Accounts and Corresponding Rights purchased by SLF against all Persons
claiming against or through Client and shall, at all times, keep
Client's assets free and clear from any legal process, pledges,
commercial pledges, privileges, floating or fixed charges, judgments,
distress or any analogous process, statutory liens or trusts, liens or
encumbrances whatsoever (except Permitted Encumbrances, including any
placed thereon by SLF or agreed to in writing by SLF) and shall give
SLF immediate written notice thereof and shall indemnify and hold SLF
harmless from and against any loss caused thereby. Client further
agrees that it shall keep all Accounts and Corresponding Rights
purchased by SLF free and clear of any and all liens, charges, and
encumbrances which may be levied against or imposed upon such Accounts
and Corresponding Rights as a result of the failure of Client for any
reason to perform or observe any of the covenants and agreements
required to be performed or observed by Client hereunder or under any
Addendum referred to herein or attached hereto;
(j) it shall provide written notice to SLF within 10 days of Client
obtaining knowledge from any source, of the filing, recording or
perfection by any means, of a non-consensual lien, claim or
encumbrance against any property of Client;
(k) it shall notify SLF in writing 30 days prior to any change in the
location of Client's place(s) of business or if Client has or intends
to acquire any additional place(s) of business, or prior to any change
in the location of Client's chief executive office and/or the office
or offices where Client's books and records concerning Accounts and
Corresponding Rights are kept;
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(l) it shall maintain its working capital at all times such that the ratio
of current assets to current liabilities of Client shall not be less
than that set out in Schedule "B"; "current assets" and "current
liabilities" as used herein shall mean the current assets and current
liabilities, respectively, as shown on financial statements of Client
prepared in accordance with generally accepted accounting principles
applied on a consistent basis;
(m) the ratio of debt obligations to equity of Client shall at all times
not exceed that set out in Schedule "B"; "debt obligations" as used
herein shall mean the aggregate of all debt incurred, assumed or
guaranteed by Client or upon which Client has otherwise become liable
as shown on the financial statements of Client prepared in accordance
with generally accepted accounting principles applied on a consistent
basis, but excluding obligations in respect of deferred taxes, and
"equity" shall mean at any time the aggregate amount in respect of
amounts paid up on capital of all classes, contributed surplus,
retained earnings and the amount of any shareholder loans in respect
of which the obligations and security have been fully subordinated and
postponed in favour of SLF on terms and conditions acceptable to SLF
in its sole discretion;
(n) at all times the ratio of available cash flow to debt service expense
of Client shall not be less than that set out in Schedule "B";
"available cash flow" for any financial period means earnings for such
period before interest and debt service expense; and "debt service
expense" for any financial period means all amounts paid or payable
during such period in the nature of compensation for Indebtedness and
obligations to any person, including interest and all similar amounts;
plus the current portion of all principal repayments paid or payable;
(o) the tangible net worth of Client, less amounts advanced to
shareholders, directors or officers of Client, shall at all times be
not less than that set out in Schedule "B"; "tangible net worth" as
used herein shall mean the equity of Client (as defined above) less
intangible assets, including the aggregate amount shown in respect of
goodwill, trademarks, trade xxxx rights, tradenames, tradename rights,
copyrights, patents, patent rights, patent licences, organization
expenses, pre-production expenses, licences and franchises,
unamortized debt discount and expense, share issue expense, prepaid
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expenses, and the excess of cost of shares of subsidiaries over net
book value of underlying assets at dates of acquisition;
(p) it shall:
(i) set up and maintain accounting systems and books of account in
accordance with generally accepted accounting principles and
practices and, at any time upon request by SLF, furnish all
such information concerning Clients affairs and business as SLF
may reasonably require;
(ii) as soon as practicable and in any event within 45 days after
the end of each quarter of each fiscal year, deliver to SLF the
interim unaudited financial statements of Client end of each
subsidiary and affiliate of Client, including in each case a
balance sheet, statement of profit and loss and a statement of
changes in financial position, together with comparative
figures for the corresponding period in the previous fiscal
year;
(iii) as soon as practicable and in any event within 120 days after
the end of each fiscal year, deliver to SLF financial
statements in a form satisfactory to SLF prepared by a firm of
chartered accountants acceptable to SLF, which report shall
review Client's annual financial statements and each subsidiary
and affiliate of Client;
(iv) as soon as practicable and in any event within 30 days after
the end of each calendar month, deliver to SLF an aged list by
Account Debtor of Client's and each of Client's subsidiaries'
and affiliates' accounts receivable with a minimum monthly
balance that exceeds the amount set out in Schedule "B"; and
(q) so long as any obligations of Client to SLF remain outstanding and
unless SLF otherwise consents in writing, Client shall not, nor shall
it permit any subsidiary or affiliate of Client to, incur or commit or
agree to incur capital expenditures or acquire or agree to acquire or
lease any asset or property, which, in aggregate, exceed the amount
set out in Schedule "B" per year; and
(r) if an event of default has occurred and a Monitor has been appointed,
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(i) disclose to the Monitor any information which it may have
concerning Client and its subsidiaries and affiliates and its
business affairs;
(ii) provide to the Monitor full access to Client's and its
subsidiaries' and affiliates' business operations, or assets,
books and records during normal working hours and instruct its
bankers, accountants and other advisors and officers of any
such company to release any and all information required; and
(iii) pay for the reasonable fees and disbursements of the Monitor.
6.2 In addition to any other covenants made by Client in favour of SLF
hereunder, Client hereby covenants and agrees with SLF that so long as any
Indebtedness remains outstanding it shall not, without the prior written
consent of SLF:
(a) pledge the credit of SLF, directly or indirectly, to any Person for
any purpose whatsoever;
(b) guarantee, indemnify or provide financial assistance to, directly or
indirectly, any Person for any purpose whatsoever;
(c) under any circumstances or in any manner whatsoever, interfere with
any of SLF's rights under this Agreement;
(d) for the term of this Agreement and for as long as any Indebtedness
whatsoever remains owing by Client to SLF, factor or sell Accounts to
any Person other than SLF;
(e) change or modify the terms of any Invoice, Purchase Order or any other
agreement or contract which gives rise to an Account purchased by SLF
unless SLF first consents to such change in writing;
(f) pledge or grant a security interest to any other party in its
Accounts, Corresponding Rights or property for the term of this
Agreement and for, as long as it is indebted to SLF hereunder; and
(g) sell, lease, transfer or otherwise dispose of all or substantially all
of its property or assets, or consolidate with or merge into or with
any corporation or entity.
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7. SECURITY
7.1 As a further inducement for SLF to enter into this Agreement and as
continuing collateral security for the repayment of any and all
Indebtedness and other obligations and liabilities whatsoever of Client to
SLF, Client shall, and shall cause each of its affiliates and subsidiaries
and the principals and shareholders of the Client and/or of any of its
subsidiaries and/or affiliates to, execute and deliver to SLF such Security
Documents as SLF may at any time or from time to time hereafter request, in
each case within a reasonable time after the request therefor by SLF, and
in each case in form and substance satisfactory to SLF and SLF's counsel.
Client shall, and shall cause each of its affiliates and subsidiaries and
the principals and shareholders of the Client and/or any of its
subsidiaries and/or affiliates to, take such action and execute and deliver
to SLF such agreements, conveyances, deeds and other documents and
instruments as SLF shall request, and register, file or record the same (or
a notice or financing statement in respect thereof) in all offices where
such registration, filing or recording is, in the sole and absolute opinion
of SLF or SLF's counsel, necessary or advisable to constitute, perfect and
maintain its security as a first ranking lien in all jurisdictions
reasonably required by SLF, subject only to Permitted Encumbrances, in each
case within a reasonable time after the request therefor by SLF, and in
each case in form and substance satisfactory to SLF and SLF's counsel.
7.2 Client shall execute such financing or renewal statements, affidavits or
other documents for any registration or filing pursuant to any municipal,
provincial, state or federal laws, orders or regulations necessary or
desirable to protect it or its interest in any assets over which security
has been granted by an Account Debtor to Client, including, without
limitation, registration under the Personal Property Security Act (Ontario)
in the Province of Ontario or under similar legislation in any other
Province of Canada or jurisdiction necessary to perfect and preserve any
security interest created under any agreement between Client and an Account
Debtor.
7.3 Client acknowledges and agrees that SLF shall be entitled to execute such
financing or renewal statements, affidavits or other documents for any
registration or filing pursuant to any municipal, provincial, state or
federal laws, orders or regulations necessary or desirable to protect SLF's
interest in the Accounts and Corresponding Rights purchased by it or in any
assets over which security has been granted to SLF hereunder and under
Security Documents, including, without
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limitation, registration under the Personal Property Security Act (Ontario)
in the Province of Ontario or under similar legislation in any other
Province of Canada or jurisdiction necessary to perfect and preserve any
security interest of SLF created under this Agreement and under Security
Documents. If the signatures of both Client and SLF are required in
connection with the filing or registration of any such security interest,
Client shall fully cooperate with SLF in respect of such filing or
registration.
7.4 Client hereby waives receipt of, and the right to receive, a copy of any
registered statement or verification statement with respect to statements
filed or registered by SLF under any federal, provincial and/or state
personal property security acts and the Civil Code of Quebec. To the extent
not prohibited by any law applicable to and governing this Agreement,
Client hereby waives the benefit of all provisions of any law, statute or
regulation which would in any manner affect SLF's right and remedies
hereunder.
8. NOTIFICATION
8.1 Client's obligation, if any, to notify any Account Debtor of the
sale/assignment to SLF of any Account owing by such Account Debtor to
Client is set out in addendum no. 7 {insert reference to Addendum no. 6 or
7}.
9. RECOURSE
9.1 SLF's entitlement to claim recourse, if any, against Client is set out in
Addendum no. 9 {insert reference to Addendum no. 8 or 9}.
9.2 By giving written notice to Client with respect to an Account for which SLF
is entitled to claim recourse, specifying the name of the Account Debtor
and the amount remaining owing in respect of the Account, SLF may require
Client to immediately repurchase the Account from SLF and the repurchase
price in respect of that Account shall be the aggregate of the outstanding
balance of the Account plus the interest payable under section 9.3 plus all
costs and expenses of SLF, including legal fees on a solicitor-client
basis, incurred by SLF in connection with such repurchase and any documents
to be prepared or delivered in connection with same.
9.3 SLF shall be entitled to interest at a rate equal to the amount set out in
Schedule "B", such interest to be payable from the day when the Account
went into arrears until the day when payment in full is made by Client.
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9.4 SLF may deduct any amount payable by Client under sections 9.2 and 9.3 from
any amount payable to Client under this Agreement, and where such a
deduction is made, Client shall be deemed to have made a repayment in
respect of the repurchase of the Account.
9.5 Until such time as the repurchase price is paid or deemed to have been paid
by Client, the Account and all rights, title and interest therein and in
all security, Security Documents and Corresponding Rights relating thereto
shall remain vested in SLF.
9.6 Where Client has paid in full the repurchase price with respect to an
Account, then,
(a) any remittance received by SLF thereafter in respect of that Account
shall be paid by SLF to Client; and
(b) upon the request and at the expense of Client, SLF shall do, execute,
acknowledge and deliver, or cause to be done, executed, acknowledged
and delivered, all and every such further acts, deeds, mortgages,
transfers and assurances in law as Client may require in order to
complete or perfect the re-assignment of the Account and all
Corresponding Rights to which it relates or in any security relating
thereto.
10. DISPUTES WITH ACCOUNT DEBTORS
10.1 Client shall promptly notify SLF of any dispute between Client and an
Account Debtor concerning an Account (an "Account Debtor Dispute").
10.2 Client shall promptly issue credit notes for returned Goods as accepted by
Client from any Account Debtor and provide SLF with a copy of any credit
note issued by Client to an Account Debtor as soon as that credit note is
issued. SLF shall continue to have a protected security interest in
returned Goods until SLF has received payment in full of all Indebtedness
relating to an Account in respect of which Goods have been returned. In
addition, Section 10.3 shall apply mutatis mutandis to returned Goods as if
the returned Goods were repossessed Goods.
10.3 At SLF's request and notwithstanding the purchase by SLF of the Accounts
in respect of which there is a dispute, Client shall exercise its rights as
an unpaid vendor including Client's right of repossession, if any, with
respect to any Account purchased by SLF Repossessed merchandise recovered
from Account Debtors in respect to which there are monies due and owing to
SLF pertaining to an Account purchased by SLF
16
from Client shall be held by Client in trust for SLF until such time as SLF
is paid in full with respect to any Indebtedness due and owing to SLF from
Client and, at SLF's request, Client shall use Client's best efforts to
sell such merchandise for SLF. Notwithstanding the repossession and sale of
any Goods by Client in accordance with this section and for greater
clarity, Client is not an employee or agent of SLF; Client and SLF are not
partners or joint venturers with each other, and nothing herein shall be
construed so as to make Client and SLF partners or joint venturers, to make
Client an employee or agent of SLF or to impose any liability as partner,
joint venturer, employer or employee or principal or agent on Client or
SLF, as the case may be.
10.4 Client shall not institute legal or collection proceedings against any
Account Debtor from whom monies are due and owing to SLF with respect to an
Account purchased by SLF without obtaining SLF's prior written consent
thereto.
10.5 SLF may commence legal or collection proceedings in respect of any unpaid
Account upon providing prior notice to Client. In cases of urgency, SLF may
commence such proceedings in its discretion without providing notice to
Client. Upon SLF advising Client of its intention to commence proceedings,
Client may instruct SLF not to proceed accompanied by payment in full to
SLF from Client of the total amount due and owing to Client from such
Account Debtor together with all interest accrued thereon and all costs and
expenses of SLF, including legal fees on a solicitor-client basis, incurred
by SLF in connection with such proceedings and any documents to be prepared
or delivered in connection with same. SLF may take any action it deems
appropriate to collect any Account from any Account Debtor.
10.6 Whether or not, under the terms of this Agreement or any Schedule or
Addendum referred to herein or attached hereto, or as a result of any
breach of any term, condition, representation or warranty contained in
this. Agreement or any Schedule or Addendum referred to herein or attached
hereto, Client is responsible, in whole or in part, with respect to payment
of any Account or any deficiency thereof, SLF, without consultation or
notice to Client, may, but is not obligated to, settle or compromise any
dispute with an Account Debtor. Such settlement or compromise shall not
relieve Client of its responsibility for payment to SLF in full of any
amount owing by it to SLF.
10.7 Where an Account purchased by SLF is, in the sole and absolute opinion of
SLF, an Account for which SLF is entitled to recourse, SLF may charge back
to Client the amount of such Account by giving written notice to that
effect to Client, and
17
sections 10.1 to 10.6 shall apply, with the necessary modifications, to the
repurchase of the Account by Client.
10.8 Mistaken, incorrect and/or erroneous invoicing, submitted by Client to SLF
may, at SLF's discretion, be deemed an Account Debtor Dispute and be
charged-back to Client.
10.9 SLF shall identify in writing all charge-backs when taken and provide to
Client a written statement thereof. Said statement shall be deemed an
"Account Stated" between Client and SLF.
11. POWER OF ATTORNEY
11.1 In order to carry out this Agreement, Client irrevocably appoints SLF or
any Person designated by SLF, its attorney or agent with power to:
(a) notify Account Debtors that Client's Accounts have been assigned to
SLF and that SLF has a security interest therein;
(b) direct Client's Account Debtors to make payment of all Accounts
directly to SLF and forward invoices directly to such Account Debtors;
(c) strike out Client's address on all invoices and other documents
relating to Accounts and Corresponding Rights mailed to Account
Debtors and put SLF's address on such invoices and documents;
(d) receive, open and dispose of all mail addressed to Client at SLF's
address;
(e) endorse the name of Client on any cheques, Instruments, Documents of
Title, Chattel Paper or Security that may come into the possession of
SLF in respect of Accounts purchased by SLF or pursuant to default on
any other documents relating to any of the Accounts, Corresponding
Rights or to Collateral;
(f) register, file or record in all jurisdictions any notice or financing
statement in all offices where such registration, filing or recording
is, in the sole and absolute opinion of SLF or SLF's counsel,
necessary or advisable to constitute, perfect and maintain SLF's
interest in Accounts and/or in any Corresponding Rights;
(g) in Client's name, or otherwise, demand, xxx for, collect and give
releases for any and all monies due or to become due on Accounts;
18
(h) compromise, prosecute or defend any action, claim or proceeding as to
said Accounts; and
(i) do any and all things necessary and proper to carry out the purpose
intended by this Agreement and to protect SLF's interest in the
Accounts, Corresponding Rights and other Collateral.
11.2 The power of attorney granted hereby shall be deemed to be coupled with an
interest.
11.3 SLF shall not be liable or responsible to Client in any way whatsoever for
any claims, costs, losses, damages of any kind, including, but not limited
to, liability for any fundamental breach of this Agreement and regardless
of the form of action, loss or damage suffered by Client as a result of any
actions taken or not taken by SLF pursuant to this Agreement, including any
loss or damage arising by virtue of SLF collecting or attempting to collect
any Accounts from Account Debtors and any special, indirect, incidental or
consequential damages which Client may incur or experience on account of
entering into or relying upon this Agreement.
12. DEFAULT
12.1 Any one or more of the following shall constitute an event of default
hereunder:
(a) Client shall become insolvent or commit an act of bankruptcy or make
an assignment or bulk sale of its assets;
(b) Client shall admit in writing or verbally its inability to pay its
debts as they become due;
(c) any proceedings are taken with respect to a compromise or arrangement
with any one or more of Client's creditors, or to have Client declared
bankrupt or wound up, or to have a receiver or receiver and manager
appointed with respect to Client or any of Client's assets;
(d) receipt by Client of a notice of intention under section 244 of the
Bankruptcy and Insolvency Act (Canada);
(e) Client terminates, discontinues or suspends the operation of its
business;
(f) any Person takes possession of any property of Client by way of or in
contemplation of enforcement of security, or a distress or execution
or similar process is levied or enforced against any property of
Client;
19
(g) any change in the legal or beneficial ownership or control of Client
occurs without SLF's prior written consent;
(h) any representation or warranty made by Client herein or in any
document, financial statement or certificate furnished or to be
furnished by Client in connection herewith shall prove to be
incorrect;
(i) in SLF's sole and absolute opinion, there is a material adverse change
in Client's financial condition or Client's ability to pay any amounts
owing to SLF has been impaired, worsened or diminished or threatens to
do so;
(j) Client fails to pay any Indebtedness to SLF when due; or
(k) Client breaches any term, provision, covenant, warranty or
representation under this Agreement, or any representation, warranty,
report or other statement made by or on behalf of Client contained in
this Agreement, including, but not limited to, financial statements,
schedules, Schedules of Accounts, required forms or other statements
furnished by Client or in any other agreements, contracts between
Client and SLF or obligation of Client to SLF shall be false,
erroneous or misleading in any respect.
12.2 In the event of any default, SLF may do any one or more of the following
without notice or demand to Client except as expressly required under this
Agreement:
(a) declare any and all Indebtedness immediately due and payable in full;
(b) deem all outstanding Accounts to be the subject of Account Debtor
Disputes and exercise its rights of recourse in connection with such
Accounts;
(c) notify any Account Debtors, take possession of Collateral and collect
any Accounts, all without judicial process;
(d) require Client to assemble the Collateral and all deeds, documents,
writings, papers, books of account, other books, electronic and
magnetic records and other records evidencing, recording or
appertaining to Accounts and Corresponding Rights and make them
available to SLF at a place designated by SLF;
(e) take control in any manner of any reclaimed, rejected, returned,
replevied, stopped in transit or redeposited Goods relating to any
Account;
20
(f) enter the premises of Client and take possession of the Collateral and
of the records pertaining to the Accounts, Corresponding Rights and
any other Collateral;
(g) exercise all or any of the rights and remedies of a secured party
under the Personal Property Security Act (Ontario) or as a creditor
under any other applicable law or at equity;
(h) grant extensions, compromise claims and settle Accounts for less than
face value, without prior notice to Client;
(i) use, in connection with any assembly or disposition of the Collateral,
any trademark, trade name, trade style, copy-right, patent right or
technical process used or utilized by Client;
(j) return any surplus realized to Client after deducting the reasonable
expenses, and attorneys fees incurred by SLF in resolving said
default;
(k) hold Client liable for any deficiency;
(l) appoint by instrument in writing, or institute proceedings in any
court of competent jurisdiction for the appointment of, any Person
(including SLF) or Persons to be a receiver or receiver and manager (a
"Receiver") of all or any part of the Collateral. SLF may remove or
replace the Receiver from time to time, and appoint another Person or
Persons in its stead or make application to a court of competent
jurisdiction to do so. Subject to the provisions of the instrument or
court order appointing the Receiver, the Receiver so appointed or
replaced shall have, possess and may exercise all or any part of the
rights, powers and remedies of SLF (whether conferred upon SLF by this
Agreement or otherwise). For greater certainty, where SLF is referred
to in this Agreement, the term shall, where the context permits,
include the Receiver so appointed or replaced and the officers,
employees, servants or agents of SLF and the Receiver;
(m) request, by instrument in writing, that Client appoint, or institute
proceedings in any court of competent jurisdiction for the appointment
of, any Person (including SLF) or Persons to monitor the activities of
Client generally and to verify compliance by Client of its obligations
hereunder (a "Monitor");
21
(n) charge interest on any Indebtedness outstanding at the highest rate
permissible by law, which interest shall become part of and added to
the Indebtedness; and
(o) exercise any rights and remedies available to it in respect of
Accounts and/or Corresponding Rights under all Security Documents
referred to in section 7.1.
12.3 All rights, remedies and powers granted to SLF herein and/or in any
Addendum referred to herein or attached hereto are cumulative and may be
exercised concurrently or separately from time to time with such other
rights as SLF may have. These rights afforded SLF shall be in addition to
any rights OR remedies provided for elsewhere in this Agreement or
available in law or equity and may be exercised from time to time as to
all or any part of the pledged Collateral as SLF in its discretion may
determine.
12.4 In the event of any default, SLF shall not be required or be under any
obligation to xxxxxxxx any assets in favour of Client or any guarantor or
any other party.
13. INDEMNITY
13.1 Client shall indemnify and hold SLF harmless from any and all liability,
obligations, claims, losses, damages, actions and suits, costs and
expenses in any way relating to or resulting from this Agreement or any
Addendum referred to herein or attached hereto, including, without
limitation, counsel fees, costs of suit and interest which SLF may incur
due to the failure of Client to perform any of its obligations under this
Agreements or under any Addendum referred to herein or attached hereto
and including, without limitation, the failure of Client to pay
withholding taxes due and payable to any taxing authority. If Client
fails to perform any of its obligations, SLF may, but shall not be
obligated to, perform any of those obligations, and Client shall pay to
SLF, immediately upon written demand, an amount equal to the expense
incurred by SLF in performing those obligations.
13.2 Client shall indemnify and hold SLF harmless against any claim whatsoever
by an Account Debtor against SLF or arising from SLF collecting or
attempting to collect any monies in respect of any Account.
14. TERMINATION
14.1 This Agreement shall continue in full force and effect until terminated
by 30 {delete two of the three options and initial the change} days prior
written notice by either party.
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14.2 Notwithstanding termination of this Agreement, Client shall continue to
be available to SLF for the full and prompt payment of Accounts purchased
by SLF hereunder which are then outstanding and unpaid, disputed or
undisputed, and in respect of which, under the terms hereof, Client is
liable to SLF, as well as for any other Indebtedness due to SLF from
Client. SLF shall continue to have a security interest in the Collateral
of Client, including any security interest granted under any Security
Document, until all such Indebtedness of Client to SLF is paid in full.
15. GENERAL
15.1 Client and SLF hereby acknowledge and agree that all schedules and
addenda attached hereto or referenced herein shall be read with and be
deemed to be part of this Agreement as if they were contained in one
agreement.
15.2 All provisions in this Agreement, or in any Schedule or Addendum referred
to herein or attached hereto, to "Goods" shall be read mutatis mutandis
so as to include any "services" provided by Client to Account Debtors.
15.3 If any of Client's shareholders, directors or officers have any interest,
directly or indirectly, in any of Client's Account Debtors, Client shall
notify Client in advance of such interest prior to its purchasing an
Account with respect to such Account Debtor.
15.4 All notices and other communications which may be given to any party
pursuant to this Agreement shall be given or made in writing and shall be
served personally or by telecopier or mailed by prepaid and registered
mail (return receipt requested) addressed to such party at its usual
business address or to such other address or in care of such other
Persons as any party may from time to time advise the other by notice in
writing. The date of receipt of any such notice or communication shall be
deemed to be the date of delivery thereof if served personally or, if
served by telecopier, the date of transmission thereof or, if mailed as
aforesaid, the date next following the first Business Day next following
the date of posting. In the event of interruption of one or more of the
forms of communication listed above for any reason, the parties shall use
a form of communication which is not so interrupted with the intent that
the form of communication used will give the addressee timely notice of
the communication.
15.5 Any amounts owing by Client to SLF hereunder shall be payable to SLF
without the necessity of demand.
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15.6 SLF shall be at liberty to appropriate any payment made to, or monies
received by, SLF from Client, including any monies in any reserve
account, to any portion of the amounts due or to become due under this
Agreement or in respect of any Account, and from time to time to revoke
or alter any such appropriation, all as SLF may from time to time in its
sole discretion determine.
15.7 Each party hereto shall from time to time execute, draw, endorse and
deliver all such instruments and documents and do all such acts and
things as the other party hereto may reasonably deem necessary or
desirable for the purposes of carrying into effect any or all of the
provisions of this Agreement or any documents delivered hereunder or of
securing the fulfilment of all the obligations of one party to the other
party hereunder.
15.8 No failure or delay on the part of either party in exercising any power
or right hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right or power preclude any other
or further exercise thereof or the exercise of any other right or power
hereunder. No modification or waiver of any provision of this Agreement
nor consent to any departure by any party therefrom shall in any event be
effective unless the same shall be in writing and then such waiver or
consent shall be effective only in the specific instance and for the
given purpose. No notice to any party in any case shall entitle the other
party to any other or further notice in similar or other circumstances.
15.9 Any provisions of this Agreement or any documents delivered hereunder
prohibited by law shall be ineffective to the extent of such prohibition
without invalidating the remaining terms and provisions hereof.
15.10 This Agreement and the schedules and addenda attached hereto shall
constitute the entire agreement between the parties hereto with respect
to the matters described herein and shall supersede all prior,
agreements, arrangements, undertakings, understandings, collateral
agreements and representations, whether oral or written, relative to such
matters. This Agreement shall not be amended except by an amending
agreement in writing signed by the parties hereto.
15.11 The undersigned hereby confirm their express wish that this Agreement and
any documents related hereto be drawn up in English only and declare
themselves to be satisfied therewith, without prejudice to any documents
which may, from time to time, be drawn up in French only or in both
French and English. Les soussignes confirment leur
24
volonte expresse de voir la presente convention et tous les documents s'y
rattachant rediges en anglais seulement et s'en declarent satisfaits, le
tout, cependant, sous reserve de tout document qui pourrait a l'occasion
etre redige en francais seulement ou a la fois en francais on en anglais.
15.12 Words importing the singular number only shall include the plural and
vice versa. Words importing the use of any gender shall include all
genders. Where used herein, the word "or" is disjunctive but not
necessarily exclusive.
15.13 All section headings in this agreement are for convenience only and do
not form part of this Agreement.
15.14 This Agreement shall enure to and be binding upon the parties hereto,
their successors, permitted assigns, trustees and legal representatives.
15.15 SLF may assign its interest in this Agreement to any Person without the
prior written consent of Client. Client may not assign its interest in
this Agreement to any Person without the prior written consent of SLF.
15.16 Except as is prohibited by law, SLF shall be entitled to charge Client
for all costs and expenses incurred by SLF in connection with this
Agreement, including, without limitation, the costs of obtaining credit
reports on Client or its Account Debtors, attorneys fees (on a
solicitor-client basis) and costs incurred by SLF in the negotiation,
preparation and execution of this Agreement and any documents related
thereto and in the prosecution or enforcement of any of SLF rights,
claims or causes of action which arise out of, relate to or pertain to
this Agreement and the Indebtedness, including all attorney's fees,
interest and other costs and expenses incurred in connection with any
bankruptcy or insolvency proceeding involving Client. Such costs and
expenses and attorney's fees incurred shall be paid on demand by Client.
15.17 Except where otherwise expressly provided, all amounts in this Agreement
and/or in any Addendum attached or referred to herein are stated and
shall be paid in Canadian currency.
15.18 Client acknowledges receipt of a true copy of this Agreement.
15.19 This Agreement becomes effective when it executed in the places indicated
below by authorized representatives of Client and SLF.
25
15.20 This agreement shall be deemed to be a contract made under the laws of
the Province of Ontario and for all purposes, including matters of
construction, validity, performance and enforceability be governed by the
laws of such Province, and the courts of such Province shall have
exclusive jurisdiction over all matters arising in connection herewith.
Client hereby consents to the exclusive jurisdiction of the courts
located within the Province of Ontario and hereby unconditionally waives
its right to a jury trial in any suit or proceeding arising under or
relating to this Agreement.
15.21 CLIENT ACKNOWLEDGES AND CONFIRMS THAT IT HAS REVIEWED THE CONTENTS OF
THIS AGREEMENT AND ALL ADDENDA ATTACHED OR REFERRED TO HEREIN, THAT IT
HAS HAD AN OPPORTUNITY TO SEEK THE ADVICE OF LEGAL AND OTHER COUNSEL OR
TO EXECUTING THIS AGREEMENT AND THAT IT HAS AVAILED ITSELF OF SUCH
OPPORTUNITY AND OBTAINED WHATEVER ADVICE NECESSARY TO ENSURE THAT IT
FULLY UNDERSTANDS AND APPRECIATES ITS RIGHTS AND OBLIGATIONS HEREUNDER.
EXECUTED AND ACCEPTED this 7th day of February, 2000.
/s/ S.L.F. SALES LINKED FINANCE LTD.
By:
{insert Client's full corporate name}
/s/ Yak Communications Canada Inc.
By:
26
ADDENDUM NO. 1
(SECTION 1 OF THEE AGREEMENT)
DEFINITIONS
This addendum, as referenced in the agreement dated February 7, 2000 between Yak
Communications Canada Inc. and Sales Linked Finance Ltd. (the "Agreement"),
shall be read with and be deemed to be part of the Agreement as if this addendum
and the Agreement were contained in one agreement.
Capitalized terms, whenever used in the Agreement, shall have the following
meanings:
"Accessions" means goods that are installed in or affixed to other goods;
"Account" means any right to payment for Goods sold or leased and delivered, or
for service(s) rendered;
"Account Debtor" means a person who is obligated to pay an Account or who is
obligated to pay on Chattel Paper or on an Instrument constituting Collateral;
"Account Debtor Dispute" means a claim by Account Debtor against Client of any
kind whatsoever that reduces the amount collectible from Account Debtor by SLF.
An Account Debtor Dispute may arise from any kind of disagreement between
Account Debtor and Client whatsoever, whether valid or invalid, and may arise at
any time, both before or after the signing of this Agreement or the purchase of
the Account by SLF;
"Account Debtor Default" has the meaning ascribed thereto in Addendum no. 7;
"Agreement", "this Agreement", "herein", "hereof", "hereunder" or other like
words means the Agreement together with the schedules and addenda attached
thereto and any other agreement supplementary or ancillary thereto;
"Approved Account" means an Account which meets all of the criteria listed in
Addendum no. 10;
"Business Day" means a day other than a Saturday, Sunday or any other day on
which banks are authorized or obligated to close under the laws of Canada or the
laws of the Province of Ontario;
"Collateral" means all the assets and undertaking of the Client and in all
Chattel Paper, Documents of Title (whether or not negotiable), Goods,
Instruments, Intangibles, Money and Securities now owned or hereafter owned or
acquired by or on behalf of the
27
Client (including such as may be returned to or repossessed by the Client) or in
respect of which the Client now has or subsequently acquires an interest or of
which the Client may hereafter become possessed or to which the Client may
hereafter become entitled and in all Proceeds and renewals thereof, accretions
thereto and substitutions therefor and in all real property of the Client
including, without limitation, the following:
(a) all inventory of whatever kind and wherever situated now owned or hereafter
acquired or reacquired by the Client including, without limitation, all
Goods, merchandise, raw materials, Goods in process and finished Goods held
for sale, lease or resale or furnished or to be furnished under contracts
for service or used or consumed in the Client's business (collectively, the
"Inventory");
(b) all equipment of whatever kind and wherever situated now owned or hereafter
acquired by the Client including, without limitation, all tools, machinery,
apparatus, furniture, plant, fixtures and vehicles of whatsoever kind and
all purchase warranties, manufacturer's claims, drawings, specifications,
plans and manuals relating thereto (collectively, the "Equipment");
(c) all Accounts, debts, dues, claims, choses in action and demands of every
kind howsoever arising or secured and whether or not earned by performance,
including letters of credit and advices of credit, that are now due, owing
or accruing or growing due to or owned by or that may hereafter become due,
owing or accruing or growing due to or owned by the Client, and also all
Securities, security interests, guarantees, mortgages, bills, notes,
instruments, writings and other documents that are now held or owned or
that may hereafter be taken, held or owned by or on behalf of the Client in
respect of such Accounts, debts, dues, claims, choses in action and demands
or any part thereof (collectively, the "Rights to Payment");
(d) all deeds, documents, writings, papers, books of account, other books,
electronic and magnetic records and other records evidencing, recording or
appertaining to the Rights to Payment, Chattel Paper or Documents of Title;
(e) all contractual and other rights, claims under policies of insurance,
causes of action, franchises, licences, goodwill, inventions, patents,
patent rights, designer rights, trademarks, trade names, copyrights,
processes, formulae, industrial designs, trade secrets, know-how and other
industrial and intellectual property rights, whether registered or
unregistered and whether under licence or otherwise; and
28
(f) all property described in any schedule or addendum now or hereafter annexed
hereto;
"Chattel Paper" means one or more than one writing that evidences both a
monetary obligation and a security interest in or a lease of specific Goods;
"Corresponding Rights" has the meaning ascribed thereto in section 3.2 of the
Agreement;
"Credit Impairment" has the meaning ascribed thereto in section 4.4 of the
Agreement and Addendum no. 4;
"Credit Problem" means, in the sole and absolute opinion of SLF, Account Debtor
is unable to pay its debts because of its bankruptcy insolvency or bona fide
inability to pay and, for greater clarity, does not include a situation in which
an Account Debtor is able but unwilling to pay;
"Documents of Title" means any writing that purports to be issued by or
addressed to a bailee and purports to cover such Goods in the baileeis
possession as are identified or fungible portions of an identified mass, and
that in the ordinary course of business is treated as establishing that the
Person in possession of it is entitled to receive, hold and dispose of the
document and the Goods it covers;
"Goods" means tangible personal property other than Chattel Paper, Documents of
Title, Instruments, Money and Securities, and includes fixtures, growing crops,
the unborn young of animals, timber to be cut, and minerals and hydrocarbons to
be extracted and, for the purposes of the Agreement, shall include all parts,
accessories, attachments, special tools, additions and Accessions thereto;
"Equipment" has the meaning ascribed thereto in the definition of "Collateral";
"Gross Face Value" has the meaning ascribed thereto in sections 4.1 and 4.2 of
the Agreement;
"Indebtedness" means any and all obligations, indebtedness and liability of the
Client to SLF (including interest thereon), present or future, direct or
indirect, absolute or contingent, matured or not, extended or renewed,
wheresoever and howsoever incurred, whether otherwise secured or not and whether
incurred by or arising from agreement or dealings between the Client and an
Account Debtor or from any agreement or dealings with any third party by which
the Client may be or become in any manner whatsoever a creditor of an Account
Debtor and any ultimate unpaid balance thereof and whether the same is from time
to time reduced and thereafter increased or entirely extinguished and thereafter
incurred again and whether the Client is bound alone or with
29
another or others and whether as principal or surety and including, without
limiting the foregoing, all principal, interest, charges, costs, expenses and
fees (including attorneys' fees on a solicitor-client basis) owing by Client
under the Agreement;
"Instruments" means,
(a) a xxxx, note or cheque within the meaning of the Bills of Exchange Act
(Canada) or any other writing that evidences a right to the payment of
money and is of a type that in the ordinary course of business is
transferred by delivery with any necessary endorsement or assignment, or
(b) a letter of credit, and an advice of credit if the letter or advice states
that it must be surrendered upon claiming payment there under,
but does not include a writing that constitutes part of Chattel Paper, a
Document of Title or a Security;
"Intangibles" means all personal property, including chosen-in-action, that is
not Goods, Chattel Paper, Documents of Title, Instruments, Money or Securities;
"Inventory" has the meaning ascribed thereto in the definition of "Collateral";
"Invoice" has the meaning ascribed thereto in Addendum no. 2 or 3, as
applicable;
"Matured Debt Overpayment" has the meaning ascribed thereto in section 4.3 of
the Agreement;
"Money" means a medium of exchange authorized or adopted by the Parliament of
Canada as part of the currency of Canada or by a foreign government as part of
its currency;
"Monitor" has the meaning ascribed thereto in section 12.2(m) of the Agreement;
"Permitted Encumbrances" means:
(a) liens for taxes, assessments or governmental charges incurred in the
ordinary course of business that are not yet due and payable or the
validity of which is being actively and diligently contested in good faith
by Client or in respect of which Client has established on its books
reserves considered by it and its auditors to be adequate therefor;
(b) construction, mechanicsi, carriersi, warehousemenis and materialmenis liens
and liens in respect of vacation pay, workersi compensation, unemployment
insurance or similar
30
statutory obligations, provided the obligations secured by such liens are
not yet due and payable and, in the case of construction liens, which have
not yet been filed or for which Client has not received written notice of a
lien;
(c) deposits to secure public or statutory obligations or in connection with
any matter giving rise to a lien described in (b) above;
(d) any liens, security interests, encumbrances or other charges in favour of
SLF;
(e) any liens, security interests, encumbrances or other charges ranking
subordinate to the security interests of SLF;
(f) Purchase Money Security Interests;
(g) any lien, other than a construction lien, payment of which has been
provided for by deposit with a bank of an amount in cash or the obtaining
of a surety bond or letter of credit satisfactory to SLF, sufficient in
either case to pay or discharge such lien or upon other terms satisfactory
to SLF; and
(h) any other lien which SLF approves in writing as a Permitted Encumbrance;
"Person" includes an individual, corporation, partnership, trust, unincorporated
association or any government, Crown corporation or governmental agency or
authority, or any combination of the above;
"Purchase Money Security Interests" means,
(a) a security interest taken or reserved in collateral to secure payment of
all or part of its price, or
(b) a security interest taken by a person who gives value for the purpose of
enabling the debtor to acquire rights in or to collateral to the extent
that the value is applied to acquire the rights,
but does not include a transaction of sale by and lease back to the seller,
"PPSA" means the Personal Property Security Act (Ontario) and all regulations
made pursuant thereto;
"Proceeds" means identifiable or traceable personal property in any form derived
directly or indirectly from any dealing with collateral or the proceeds
therefrom, and includes any payment representing indemnity or compensation for
loss of or damage to the collateral or proceeds therefrom and shall, by way of
example,
include trade-ins, equipment, cash, bank accounts, notes, Chattel Paper, Goods,
contract rights, Accounts and any other personal property or obligation received
when such collateral or the proceeds thereof is sold, exchanged, collected or
otherwise disposed of;
"Purchase Orders" has the meaning ascribed thereto in Addendum no. 2 or 3, as
applicable;
"Purchase Price" has the meaning ascribed thereto in section 4.1 of the
Agreement;
"Receiver" has the meaning ascribed thereto in section 12.2(1) of the Agreement;
"Reserve" has the meaning ascribed thereto in Addendum no. 4; and
"Securities" means documents that are,
(a) issued in bearer, order or registered form;
(b) of a type commonly dealt in upon securities exchanges or markets or
commonly recognized in any area in which it is issued or dealt in as a
medium for investment;
(c) one of a class or series or by its terms is divisible into a class or
series of documents; and
(d) evidence of a share, participation or other, interest in property or in an
enterprise or is evidence of an obligation of the issuer,
and includes an uncertificated security within the meaning of Part VI
(Investment Securities) of the Business Corporations Act (Ontario); and
"Security Documents" means, collectively, any agreements, instruments and
documents delivered from time to time (both before and after the date of the
Agreement) to SLF by Client and/or any of its subsidiaries and/or affiliates, or
by the principals or shareholders of the Client and/or any of its subsidiaries
or affiliates, for the purpose of establishing, perfecting, preserving or
protecting the interest of SLF in the Accounts and Corresponding Rights
purchased by SLF and in respect of all amounts outstanding under the Agreement
and/or under any Addendum referred to therein or attached thereto or any other
Indebtedness, including, without limitation, guarantees, debentures, general
security agreements, general assignments of receivables and share pledge
agreements.
EXECUTED AND ACCEPTED this 7th day of August, 2000.
/s/ S.L.F. SALES LINKED FINANCE LTD.
By:_____________________________
insert Client's full corporate name
/s/ Yak Communications Canada Inc.
By:_____________________________
ADDENDUM NO. 3
(SECTION 2.3 OF THE AGREEMENT)
NON-NOTIFICATION (For use when "notification" is not to be provided to Client's
customer)
This addendum, as referenced in the agreement dated February 7, 2000 between Yak
Communications Canada Inc. and Sales Linked Finance Ltd. (the "Agreement"),
shall be read with and be deemed to be part of the Agreement as if this addendum
and the Agreement were contained in one agreement.
Capitalized words used herein and not otherwise defined herein shall have the
meanings ascribed thereto in the Agreement or in Addendum no. 1.
Each offer to sell Accounts to Client shall be accompanied by:
(a) evidence of insurance in accordance with sections 6.1 (f) and 6.1(g);
(b) the original purchase orders in respect of the Accounts (the "Purchase
Orders") as delivered by Client's Account Debtor;
(c) the original invoice relating to each Account and Purchase Order (an
"Invoice");
(d) Client's copies of financing statements or other registrations effected in
connection with Corresponding Rights;
(e) any Document of Title, Instruments of payment, Security, guarantees or
other relevant documentation being, comprising or evidencing Accounts and
Corresponding Rights;
(f) a copy of any outstanding credit memorandum issued to an Account Debtor;
(g) the xxxx of lading for each shipment, with acceptance of delivery noted
thereon, which gives rise to each Account;
(h) particulars of any credit arrangement granted to the Account Debtor,
together with copies of credit agency, bank and trade reports; and
(i) such other certificates and documentation as SLF may request in a form
satisfactory to SLF or SLF's legal counsel.
(IF ANY OF THE ITEMS LISTED ABOVE DO NOT APPLY, PLEASE STRIKE OUT THAT ITEM AND
PLACE YOUR INITIALS IN THE MARGIN.)
EXECUTED AND ACCEPTED this 7th day of August, 2000.
/s/ S.L.F. SALES LINKED FINANCE LTD.
By:_____________________________
insert Client's full corporate name
/s/ Yak Communications Canada Inc.
By:_____________________________
ADDENDUM NO. 5
(OPTIONAL)
REBATES (For use when "rebates" are offered to a Client)
This addendum, as referenced in the agreement dated February 7, 2000 between Yak
Communications Canada Inc. and Sales Linked Finance Ltd. (the "Agreement"),
shall be read with and be deemed to be part of the Agreement as if this addendum
and the Agreement were contained in one agreement.
Capitalized words used herein and not otherwise defined herein shall have the
meanings ascribed thereto in the Agreement or in Addendum no. 1.
As an inducement to Client to sell to SLF only Accounts in respect of which
prompt payments can be expected directly from Account Debtors, SLF shall pay to
Client a rebate in respect of each Account purchased by it calculated as a
percentage of the amount by which such Account had been discounted. Such rebates
shall result in the net discounts listed on Schedule "A" attached hereto and
shall be paid to Client only if the Account has been paid in full and all
payments in respect of the Account have been made to SLF on the dates they first
became due and owing; any rebate owing to Client may be retained by SLF at SLF's
sole and absolute discretion as further security for payment of any and all
obligations and Indebtedness owing by Client to SLF and may be applied against
such other obligations and Indebtedness as it sees fit.
EXECUTED AND ACCEPTED this 7th day of February, 2002.
/s/ S.L.F. SALES LINKED FINANCE LTD.
By:_____________________________
insert Client's full corporate name
/s/ Yak Communications Canada Inc.
By:_____________________________
SCHEDULE "A" TO ADDENDUM NO. 5
-------------------------------------------------------------------------------
Days Out % Charged
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
1-30 0.06 % per day
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31-60 0.07 % per day
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-------------------------------------------------------------------------------
61-90 0.10 % per day
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90 + FULL RECOURSE
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ADDENDUM NO. 7
(SECTION 8.1 OF THE AGREEMENT)
NON-NOTIFICATION (For use when "notification" is not to be provided to Client's
customer)
This addendum, as referenced in the agreement dated February 7, 2000 between Yak
Communications Canada Inc. and Sales Linked Finance Ltd. (the "Agreement"),
shall be read with and be deemed to be part of the Agreement as if this addendum
and the Agreement were contained in one agreement.
Capitalized words used herein and not otherwise defined herein shall have the
meanings ascribed thereto in the Agreement or in Addendum no. 1.
NOTIFICATION
1. Client agrees that it shall not be obligated to notify any Account Debtor
of the sale/assignment to SLF of any Account owing by such Account Debtor
to Client, and SLF agrees that it shall likewise refrain from notifying
each such Account Debtor, unless such Account Debtor fails to make a
payment in respect of an Account on the date that such payment becomes due
and owing (an "Account Debtor Default") or upon the occurrence of an event
of default as described in section 12 of the Agreement. In the event of an
Account Debtor Default or the occurrence of an event of default as
described in section 12 of the Agreement, SLF shall be entitled to advise
any or all Account Debtors that all future payments in respect of Accounts
purchased by SLF are to be made only to SLF directly.
2. Unless an Account Debtor Default or an event of default as described in
section 12 of the Agreement has occurred and SLF has exercised its right to
notify an Account Debtor of the sale/assignment to SLF of the Account owing
by such Account Debtor to Client, each Account purchased by SLF shall be
administered and collected by Client in trust for SLF.
3. SLF may, at any time after an Account Debtor Default or an event of default
as described in section 12 of the Agreement, designate itself or any other
Person as the administrator or collector to succeed the Client as
administrator and collector in respect of any Account(s) purchased by SLF.
4. For as long as Client is obligated to administer and collect Accounts in
trust for SLF, Client shall remit to SLF all monies received by it in
respect of Accounts purchased by SLF, no later than the three Business Days
following receipt of such monies by the Client, whether or not the Client
has collected such payments from its Account Debtors.
5. As amounts become due in respect of Accounts purchased by SLF the Client
shall receive and hold all such amounts in trust for SLF and they shall be
held by Client in a segregated account, separate and apart from the
property of Client, until such amounts are remitted to SLF in accordance
with section 4.
6. Subject at all times to section 10 of the Agreement, the Client, in its
capacity as administrator and collector of Accounts on behalf of SLF,
shall, unless SLF directs otherwise, take or cause to be taken all such
actions as may be reasonably necessary or advisable from time to time to
collect the Accounts purchased by SLF, including, without limitation,
billing such Accounts monthly in advance, the repossession and sale of the
goods delivered in respect of any Account to Client's Account Debtor in
accordance with (i) the terms of the relevant contract between the Client
and its Account Debtor, (ii) the Client's credit and collection policy in
existence on the date that SLF purchased the Account from the Client, or as
amended with the consent of SLF; and (iii) applicable law; provided,
however, that the Client shall obtain the prior consent of SLF before
commencing any legal action to enforce against any Account Debtor of Client
in respect of Accounts purchased by SLF.
7. Client shall promptly notify SLF of any information with respect to Account
Debtors which indicates a collection or Credit Problem, including, without
restricting the foregoing, any attachment, seizure or any other legal
process levied upon or against any of Client's Account Debtors;
8. The Client shall, as soon as practicable following demand by SLF, deliver
to SLF, or such Person as SLF may direct, copies of all records in its
possession relating in any way to Accounts and Corresponding Rights
purchased by SLF.
9. To the extent the records referred to in section 8 consist in whole or in
part of computer programs which are leased by the Client, the Client shall,
upon the demand of SLF, use its best efforts to arrange for the license or
sublicense of such programs to SLF to the extent permitted by the terms of
such licence for the sole use of SLF or its agent in facilitating the
collection of the applicable Accounts.
10. The Client shall, as agent for SLF to the extent permitted by law, collect
and remit directly to the appropriate taxing authority all sales, social
services, goods and services and similar or other taxes paid by an Account
Debtor to the Client relating to Accounts and prepare and file all returns
and reports required in respect thereof.
11. The Client shall xxxx the records relating to Accounts purchased by SLF in
an appropriate manner to clearly designate them to be the property of SLF.
12. The Client shall not be paid any fee by SLF or any other Person in respect
of its duties as administrative and collection agent for Accounts purchased
by SLF.
EXECUTED AND ACCEPTED this 7th day of February, 2000.
/s/ S.L.F. SALES LINKED FINANCE LTD.
By:_____________________________
insert Client's full corporate name
/s/ Yak Communications Canada Inc.
By:_____________________________
ADDENDUM NO. 9
(SECTION 9.1 OF THE AGREEMENT)
RECOURSE FACTORING (For use in a "recourse factoring agreement")
This addendum, as referenced in the agreement dated February 7, 2000 between Yak
Communications Canada Inc. and Sales Linked Finance Ltd. (the "Agreement"),
shall be read with and be deemed to be part of the Agreement as if this addendum
and the Agreement were contained in one agreement.
Capitalized words used herein and not otherwise defined herein shall have the
meanings ascribed thereto in the Agreement or in Addendum no. 1.
RECOURSE
SLF shall have recourse against Client when an Account is not paid by an Account
Debtor for any reason whatsoever, including, without limitation, in the
following instances:
(a) Account Debtor shall become insolvent or commit an act of bankruptcy or
make an assignment or bulk sale of its assets;
(b) Account Debtor shall admit in writing or verbally its inability to pay its
debts as they become due;
(c) Client has breached any warranties, representations, covenants or promises
in the Agreement with regard to the unpaid Account or otherwise;
(d) Client and Account Debtor are involved in a dispute of any kind, regardless
of its merits or validity; or
(e) Account Debtor asserts a claim, counterclaim, right of set-off or cross-
claim of any kind whatsoever against Client or SLF.
EXECUTED AND ACCEPTED this 7th day of February, 2000.
/s/ S.L.F. SALES LINKED FINANCE LTD.
By:_____________________________
insert Client's full corporate name
/s/ Yak Communications Canada Inc.
By:_____________________________
