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EXHIBIT 10.1
FORBEARANCE AGREEMENT
THIS AGREEMENT made the 11th day of August, 1997.
BETWEEN:
LAURENTIAN BANK OF CANADA
HEREINAFTER CALLED THE SECURED PARTY OR THE BANK
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STRIKER PAPER CANADA, INC.
HEREINAFTER CALLED THE CUSTOMER
WHEREAS the Customer is indebted to the Secured Party in the amounts
acknowledged below;
AND WHEREAS the Secured Party has demanded payment and delivered a Notice of
Intention pursuant to the Bankruptcy and Insolvency Act;
AND WHEREAS the Secured Party has agreed with the Customer to forbear in the
enforcement of its demands and in the realization of its security in accordance
with the conditions & understandings herein contained;
NOW THEREFORE in consideration of the mutual acknowledgements covenants and
agreements herein contained, the parties do agree as follows;
THE DEBT
1. The Customer acknowledges and agrees that it owed the sum of
$1,722.646.48, as of July 15, 1997, made up as follows;
(I) STRIKER PAPER CANADA, INC.
TERM LOAN 1:
Balance owing as at July 15, 1997 is:
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Principal: $400,000.04
Interest to July 15, 1997 $ 8,406.33
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Total Owing ..............$408,406.37
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(per diem interest rate $ )
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(ii) STRIKER PAPER CANADA, INC.
TERM LOAN 2:
Balance owing as at July 15, 1997 IS:
Principal: $799,999.96
Interest to July 15, 1997 $ 12,149.12
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Total owing ..................$812,149.08
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(per diem interest rate $116.58)
(iii) Striker Canada, Inc.
LINE OF CREDIT:
Balance owing as at July 15, 1997 is:
Principal: $500,606.48
Interest to July 15, 1997 $ 1,484.55
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Total Owing...................$ 50,091.03
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(per diem INTEREST RATE $100.32)
2. The Customer acknowledges that costs and interest continue to accrue at
the respective per diem rates and interest rates indicated for each of
the said Loans, and in accordance with the Customers loan and banking
arrangements with the Secured Party.
3. The Customer agrees to pay the Secured Party's legal fees and
disbursements associated with this Forbearance Agreement and all matters
arising therefrom including any default hereunder, on a solicitor and
client basis. The Customer also agrees to pay the Secured Party's
consulting fees to date and in the future. All of these shall be added
to and become part of the Debt, and shall be secured by the Security.
4. All of the liabilities, obligations and indebtedness referred to herein
or created by this agreement, and any obligations arising after the date
of this agreement, (including but not limited to interest), are
sometimes collectively referred to herein as the "Debt" or
"Indebtedness".
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THE SECURITY
5. The Secured Party's Security, sometimes collectively referred to herein
as the "Security" includes, without limitation;
i. General Security Agreement given by Striker Paper Canada,
Inc., in favour of Laurentian Bank of Canada, being duly registered
under the provisions of the Personal Property Security Act on June 21,
1995 as number 950621 0854 1295 0294, which was assigned to Laurentian
Bank of Canada on April 11, 1996, by Financing Change Statement
registered under the provisions of the Personal Property Security Act as
number 960411 0000 0000 0000.
ii. Specific Security Agreement given by Striker Paper Canada,
Inc., in favour of Laurentian Bank of Canada, being duly registered
under the provisions of the Personal Property Security Act on June 21,
1995 as number 950621 0852 1295 0293, which was assigned to Laurentian
Bank of Canada on April 11, 1996, by Financing Change Statement
registered under the provisions of the Personal Property Security Act
as number 960411 1536 0043 1438.
iii. Debenture given by Striker Paper Canada, Inc., in favour of
Laurentian Bank of Canada, being duly registered in the Land Registry
Office for the Registry Division of Niagara South (No. 59) as
instrument number 691946 and registered under the provisions of the
Personal Property Security Act on June 21, 1995 as number 95O621 0857
1295 0295, which was assigned to Laurentian Bank of Canada on April
11, 1996, by Financing Change Statement registered under the
provisions of the Personal Property Security Act as number 960411 1536
0043 1440.
iv. Guarantee from Striker industries, Inc., dated July 13, 1995.
v. Hypothecation of Specific Securities from Striker industries,
Inc., dated July 13, 1995.
vi. Hypothecation OF Specific Securities from Striker Paper Canada,
Inc., dated July 13, 1995.
vii. Guarantee from Ontario Development Corporation, dated August 17,
1995.
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viii. Any other security for the Debt now held or hereafter taken by
the Secured Party.
STATUS, INCLUDING INCIDENCES OF DEFAULT
6. Demand for payment of the Loans from the Customer were made by the
Secured Party in writing dated on July 15, 1997, the receipt of which is
hereby acknowledged by the Customer.
7 . Notice of Intention to Enforce Security pursuant to s. 244(1) of the
Bankruptcy and Insolvency Act dated July 25, 1997, was sent by the
Secured Party, the receipt of which is hereby acknowledged by the
Customer.
8. All of the Indebtedness referred to in the demands remain outstanding
and unsatisfied.
ACKNOWLEDGEMENTS AND AGREEMENTS
9. The Customer acknowledges and agrees, and THE Bank concurs with the
Customer;
(a) that all of the Security and an Offer to Finance, dated May
16, 1995 (accepted by the Company on May 23, 1995) is valid and
subsisting and binding in accordance with the terms contained
therein;
(b) that the within recitals are true and correct;
10. The Customer agrees to do the following, (on an ongoing basis where
appropriate to the context);
(a) to pay the sum of $124,000.00 by August 11, 1997, to be
applied on account of arrears of payments on the Loans,
(b) to pay the sum of $176,000.00 by August 29, 1997 as a
prepayment of the regular monthly payments, up to the payments
due on February 1, 1998.
(c) to co-operate fully with anyone engaged by the Secured Party
to inspect its assets and property and/or to provide
valuations and/or appraisals of the properties;
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(d) not to sell, mortgage or otherwise dispose of any substantial
asset by any single transaction or series of without notifying
and obtaining approval from the Secured Party.
(e) to make all of the payments to the City Of Thorold on account
of property taxes, in accordance with a Memorandum of
Agreement dated May 16, 1997, and to forthwith provide
evidence to the Secured Party after each of the payments.
11. Default by the Customer in this agreement is defined as;
(a) any breach by the Customer of any Of the terms of this
agreement, or
(b) breach of the terms, or default, of any of the Security, or
(c) any act of bankruptcy, within the meaning of the Bankruptcy
and Insolvency Act, or
(d) entry of a final judgment against the Customer by any other
creditor or claimant for an amount exceeding $25,000.00, or a
number of such judgments exceeding in the aggregate
$100,000.00 (provided also that the Customer covenant and
agree to notify the Bank forthwith should they be served with
any legal process indicating commencement of proceedings), or
(e) the commencement of any sale proceedings or realizations on
account of the Customer default in any mortgage or security
affecting the lands or assets covered by the Security.
12. The Customer warrants, and the Bank concurs with Customer, that it is
aware of only the following breaches of the security and its loan and
banking agreements with the Bank, save and except as follows;
(a) non-payment of scheduled loan installments,
(b) non receipt of financial statements
(c) non-payment OF taxes,
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(d) failing to maintain Working Capital, Current Ratio, Tangible
Net Worth, Interest Coverage and Cash Flow as required by the
Offer to Finance from the Bank dated May 16, 1995.
13. The Secured Party agrees to forbear until September 1, 2000 from
taking any further action to enforce its demands or the Security, on
condition that the Customer;
(a) resumes regular monthly payments on the loan accounts from and
after March 1, 1998.
(b) is not in default as defined in this Agreement, the Security
or the Offer to Finance, due to an event occurring subsequent
to the date hereof,
(c) provides current unaudited monthly financial statements by
September 15, 1997 and thereafter continues to provide current
financial statements and financial information as required by
its present agreements and arrangements with the Bank or as
may be required by the Bank form time to time,
(d) honours all of the other conditions and requirements of its
arrangements with the Bank, to be performed subsequent to the
date hereof, excepting only those which have been specifically
waived by this agreement and excepting the breaches mentioned
in paragraph #12(d), with respect to which the Bank by this
agreement waives strict compliance.
14. The Customer agrees that if it is default, then the Secured Party may
immediately proceed to enforce the Security and exercise any other
remedies the Secured Party may have by agreement or in law.
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15. The Customer further covenant and agree that:
(a) upon written request from the Secured Party, to provide all
such documentation and information as may be reasonably
necessary to permit the secured Party to evaluate the
Customers position or to enforce this Forbearance Agreement
and the Security;
(b) to execute all such further documentation as may be necessary
to evidence and give effect to the terms of this Forbearance
Agreement.
16. The customer acknowledges and agrees that this Forbearance Agreement
and the terms and provisions contained herein, shall in no way affect
any of the Customer's continuing obligations to the Secured Party
which may have arisen from any other loans not specifically referred
to herein.
17. This Agreement shall enure to the benefit of and be binding upon the
heirs, executors, administrators, committees, curators, successors,
assigns, receivers, trustees in bankruptcy, liquidators and any other
legal representatives of the parties hereto. Any reference to a
person herein shall include their heirs, executors and administrators.
18. The parties hereto agree that the execution and delivery of the within
Agreement and delivery of all notices and communications hereunder,
may be made by facsimile machine, addressed to the parties hereto at
the address specified herein.
19. Words importing the singular number only include the plural and vice
versa and words importing gender shall include all genders and words
importing person including individuals, partnerships, corporations,
trusts, unincorporated associations, joint ventures, government
agencies and other entities.
20. If any provision of this Agreement or portion thereof, or the
application thereof to any person or circumstances shall, to any
extent, be invalid or unenforceable, the remainder of this Agreement
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or the application of such provision or portion thereof to any other
persons or circumstances shall not be affected thereby and each
provision OF this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
21. This Forbearance Agreement constitutes the entire agreement between
the parties relating to the Bank's forbearance and contains all of the
representations, undertakings and agreements of the respective
parties. There are no other verbal representations, undertakings or
agreements regarding the forbearance except as contained herein. No
modification or alteration of the Agreement shall be binding unless
executed in writing by the parties hereto.
22. Ontario Development Corporation has joined in this agreement to
evidence its consent to the arrangements and to acknowledge that this
Forbearance Agreement will not affect its guarantee of the Customer's
Debt to the Bank, nor otherwise affect its commitments to any of the
Parties.
23. This Agreement shall be governed by and construed in accordance with
the laws of the Province of Ontario.
IN WITNESS WHEREOF the parties hereto have duly executed and delivered
this Agreement on the day and year first above written.
SIGNED, SEALED AND DELIVERED ) Striker Canada, Inc.
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in the presence of ) per:_________________________
)
)
) Striker Industries, Inc.
)
)
) per:_________________________
)
) I HAVE AUTHORITY TO BIND THE CORPORATION.
)
) Laurentian Bank of Canada
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) Per:__________________________
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)
) Per:__________________________
)
)
)
) Ontario Development Corporation
)
)
)
) Per:___________________________
