CREDIT AGREEMENT dated as of MAY 19, 2006 among ZELLSTOFF CELGAR LIMITED PARTNERSHIP as Borrower and THE LENDERS FROM TIME TO TIME PARTIES HERETO as Lenders and CIT BUSINESS CREDIT CANADA INC. as Agent
dated
as
of
MAY 19,
2006
among
ZELLSTOFF
CELGAR LIMITED PARTNERSHIP
as
Borrower
and
THE
LENDERS FROM TIME TO TIME PARTIES HERETO
as
Lenders
and
CIT
BUSINESS CREDIT CANADA INC.
as
Agent
TABLE
OF CONTENTS
1.1 Defined
Terms.............................................................................................................................................................................................................................1
1.2 Classification
of
Loans and
Borrowings...............................................................................................................................................................................28
1.3 Terms
Generally........................................................................................................................................................................................................................28
1.4 Accounting
Terms;
GAAP......................................................................................................................................................................................................29
1.5 Time............................................................................................................................................................................................................................................29
1.6 Permitted
Liens.........................................................................................................................................................................................................................29
ARTICLE
2 THE
CREDITS...........................................................................................................................................................................................................................29
2.1 Commitments............................................................................................................................................................................................................................29
2.2 Loans
and
Borrowings............................................................................................................................................................................................................29
2.3 Requests
for
Borrowings........................................................................................................................................................................................................30
2.4 Funding
of
Borrowings...........................................................................................................................................................................................................32
2.5 Interest.......................................................................................................................................................................................................................................33
2.6 Termination
and Reduction of
Commitments.......................................................................................................................................................................34
2.7 Repayment
of
Loans................................................................................................................................................................................................................35
2.8 Evidence
of
Debt......................................................................................................................................................................................................................35
2.9 Prepayments.............................................................................................................................................................................................................................36
2.10 Fees..........................................................................................................................................................................................................................................37
2.11 B/A
Equivalent
Loans...........................................................................................................................................................................................................39
2.12 Increased
Costs;
Illegality....................................................................................................................................................................................................40
2.13 Break
Funding
Payments......................................................................................................................................................................................................41
2.14 Taxes........................................................................................................................................................................................................................................41
2.15 Payments
Generally; Pro Rata Treatment; Sharing of
Set-offs.......................................................................................................................................43
2.16 Currency
Indemnity..............................................................................................................................................................................................................44
2.17 Collection
of
Accounts........................................................................................................................................................................................................45
2.18 Letters
of
Credit....................................................................................................................................................................................................................46
2.19 F/X
Contracts.......................................................................................................................................................................................................................48
ARTICLE
3 REPRESENTATIONS
AND
WARRANTIES.....................................................................................................................................................................49
3.1 Organization;
Powers............................................................................................................................................................................................................49
3.2 Authorization;
Enforceability..............................................................................................................................................................................................49
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TABLE
OF CONTENTS
(continued)
3.3 Governmental
Approvals; No
Conflicts.............................................................................................................................................................................50
3.4 Financial
Condition; No Material Adverse
Effect.........................................................................................................................................................................................................................................50
3.5 Litigation.................................................................................................................................................................................................................................50
3.6 Compliance
with Applicable Laws and
Agreements.............................................................................................................................................................................................................................51
3.7 Ownership..............................................................................................................................................................................................................................51
3.8 Taxes.......................................................................................................................................................................................................................................51
3.9 Titles
to
Real
Property..........................................................................................................................................................................................................51
3.10 Titles
to
Personal
Property................................................................................................................................................................................................51
3.11 Pension
Plans......................................................................................................................................................................................................................51
3.12 Disclosure............................................................................................................................................................................................................................52
3.13 Defaults................................................................................................................................................................................................................................52
3.14 Casualties;
Taking of
Properties......................................................................................................................................................................................52
3.15 Subsidiaries.........................................................................................................................................................................................................................52
3.16 Insurance.............................................................................................................................................................................................................................53
3.17 Solvency..............................................................................................................................................................................................................................53
3.18 Material
Contracts.............................................................................................................................................................................................................53
3.19 Environmental
Matters......................................................................................................................................................................................................53
3.20 Employee
Matters..............................................................................................................................................................................................................54
3.21 Fiscal
Year...........................................................................................................................................................................................................................55
3.22 Intellectual
Property
Rights.............................................................................................................................................................................................55
3.23 Residency
of Borrower for Tax
Purposes......................................................................................................................................................................56
3.24 Distributions.......................................................................................................................................................................................................................56
3.25 Debt.....................................................................................................................................................................................................................................56
3.26 Workers’
Compensation...................................................................................................................................................................................................56
3.27 Bank
Accounts..................................................................................................................................................................................................................56
3.28 Real
Property and
Leases................................................................................................................................................................................................56
3.29 Further
Real Property
Matters........................................................................................................................................................................................56
3.30 Jurisdictions
of Credit
Parties.........................................................................................................................................................................................57
ARTICLE
4 CONDITIONS......................................................................................................................................................................................................................57
4.1 Effective
Date.....................................................................................................................................................................................................................57
4.2 Each
Credit
Event...............................................................................................................................................................................................................61
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ARTICLE
5 AFFIRMATIVE
COVENANTS.........................................................................................................................................................................................62
5.1 Financial
Statements and Other
Information...........................................................................................................................................................................................................................62
5.2 Existence;
Conduct of
Business......................................................................................................................................................................................67
5.3 Payment
of
Obligations.....................................................................................................................................................................................................68
5.4 Maintenance
of
Properties................................................................................................................................................................................................68
5.5 Books
and
Records; Inspection
Rights...........................................................................................................................................................................68
5.6 Compliance
with Applicable Laws and Material
Contracts..........................................................................................................................................68
5.7 Use
of
Proceeds and Letters of
Credit..............................................................................................................................................................................68
5.8 Further
Assurances.............................................................................................................................................................................................................68
5.9 Insurance..............................................................................................................................................................................................................................69
5.10 Operation
and
Maintenance of
Property.......................................................................................................................................................................69
5.11 Additional
Subsidiaries; Additional
Liens....................................................................................................................................................................70
5.12 Financial
Covenants..........................................................................................................................................................................................................70
5.13 Parent
Subordinated
Debt................................................................................................................................................................................................71
5.14 Post
Closing
Undertakings...............................................................................................................................................................................................71
ARTICLE
6 NEGATIVE
COVENANTS...................................................................................................................................................................................................71
6.1 Indebtedness.........................................................................................................................................................................................................................71
6.2 Liens.......................................................................................................................................................................................................................................72
6.3 Fundamental
Changes.........................................................................................................................................................................................................72
6.4 Investments,
Loans, Advances, Guarantees and
Acquisitions...................................................................................................................................73
6.5 Swap
Agreements................................................................................................................................................................................................................73
6.6 Restricted
Payments............................................................................................................................................................................................................73
6.7 Transactions
with
Affiliates...............................................................................................................................................................................................74
6.8 Repayment
of
Debt..............................................................................................................................................................................................................75
6.9 Restrictive
Agreements.......................................................................................................................................................................................................75
6.10 Capital
Lease Obligations; Sale/Leaseback
Obligations..............................................................................................................................................75
6.11 Pension
Plan
Compliance..................................................................................................................................................................................................75
6.12 Sale
or
Discount of
Receivables.......................................................................................................................................................................................76
6.13 Unconditional
Purchase
Obligations...............................................................................................................................................................................76
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6.14 Capital
Expenditures...........................................................................................................................................................................................................76
6.15 No
Amendments to Material
Contracts..........................................................................................................................................................................76
ARTICLE
7 EVENTS
OF
DEFAULT........................................................................................................................................................................................................77
7.1 Events
of
Default..................................................................................................................................................................................................................77
ARTICLE
8 THE
AGENT...........................................................................................................................................................................................................................81
8.1 Appointment
of
Agent.........................................................................................................................................................................................................81
8.2 Limitation
of
Duties of
Agent.............................................................................................................................................................................................81
8.3 Lack
of
Reliance on the
Agent............................................................................................................................................................................................81
8.4 Certain
Rights of the
Agent.................................................................................................................................................................................................82
8.5 Reliance
by
Agent.................................................................................................................................................................................................................82
8.6 Indemnification
of
Agent......................................................................................................................................................................................................82
8.7 The
Agent in
its Individual
Capacity..................................................................................................................................................................................82
8.8 May
Treat
Lender as
Owner.................................................................................................................................................................................................83
8.9 Successor
Agent....................................................................................................................................................................................................................83
8.10 No
Independent Legal Action by
Lenders.......................................................................................................................................................................83
8.11 Quebec
Security....................................................................................................................................................................................................................84
ARTICLE
9 MISCELLANEOUS..................................................................................................................................................................................................................85
9.1 Notices......................................................................................................................................................................................................................................85
9.2 Waivers;
Amendments...........................................................................................................................................................................................................86
9.3 Expenses;
Indemnity; Damage
Waiver................................................................................................................................................................................87
9.4 Successors
and
Assigns........................................................................................................................................................................................................89
9.5 Survival.....................................................................................................................................................................................................................................92
9.6 Counterparts;
Integration;
Effectiveness............................................................................................................................................................................92
9.7 Severability...............................................................................................................................................................................................................................93
9.8 Right
of
Set-Off........................................................................................................................................................................................................................93
9.9 Governing
Law; Jurisdiction; Consent to Service of
Process..........................................................................................................................................93
9.10 WAIVER
OF
JURY
TRIAL...................................................................................................................................................................................................94
9.11 Headings..................................................................................................................................................................................................................................94
9.12 Confidentiality........................................................................................................................................................................................................................94
9.13 Press
Releases and Related
Materials................................................................................................................................................................................95
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THIS
CREDIT AGREEMENT
is dated
as of May 19, 2006 and is entered into among Zellstoff Celgar Limited
Partnership, as Borrower, the Lenders from time to time parties hereto, as
Lenders, and CIT Business Credit Canada Inc., as Agent.
RECITALS
WHEREAS
the Lenders have agreed to provide certain credit facilities to the
Borrower.
NOW
THEREFORE, in consideration of the mutual conditions and agreements set forth
in
this Agreement and for good and valuable consideration, the receipt of which
is
hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Defined
Terms.
As
used
in this Agreement, the following terms have the meanings specified
below:
“Accounts”
means,
in respect of each Credit Party, all of such Credit Party’s now existing and
future: (a) accounts (as defined in the PPSA), and any and all other
receivables (whether or not specifically listed on schedules furnished to the
Agent), including all accounts created by, or arising from, all of such Credit
Party’s sales, leases, loans, rentals of goods or renditions of services to its
customers, including those accounts arising under any of such Credit Party’s
trade names or styles, or through any of such Credit Party’s divisions;
(b) any and all instruments, documents, chattel paper (including electronic
chattel paper) (all as defined in the PPSA); (c) unpaid seller’s or
lessor’s rights (including rescission, replevin, reclamation, repossession and
stoppage in transit) relating to the foregoing or arising therefrom;
(d) rights to any goods represented by any of the foregoing, including
rights to returned, reclaimed or repossessed goods; (e) reserves and credit
balances arising in connection with or pursuant hereto; (f) guarantees,
indemnification rights, supporting obligations, payment intangibles, tax refunds
and letter of credit rights; (g) insurance policies or rights relating to
any of the foregoing; (h) intangibles pertaining to any and all of the
foregoing (including all rights to payment, including those arising in
connection with bank and non-bank credit cards), and including books and records
and any electronic media and software relating thereto; (i) notes, deposits
or property of borrowers or other account debtors securing the obligations
of
any such borrowers or other account debtors to such Credit Party; (j) cash
and non cash proceeds (as defined in the PPSA) of any and all of the foregoing;
and (k) all monies and claims for monies now or hereafter due and payable in
connection with any and all of the foregoing or otherwise.
“Acquisition”
means
any transaction, or any series of related transactions, consummated after the
Effective Date, by which any Credit Party, directly or indirectly, by means
of a
take-over bid, tender offer, amalgamation, merger, purchase of assets or
otherwise (a) acquires any business or all or substantially all of the
assets of any Person engaged in any business, (b) acquires control of
securities of a Person engaged in a business representing more than 50% of
the
ordinary voting power for the election of directors or other governing position
if the business affairs of such Person are managed by a board of directors
or
other governing body,
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(c) acquires
control of more than 50% of the ownership interest in any Person engaged in
any
business that is not managed by a board of directors or other governing body,
or
(d) otherwise acquires Control of a Person engaged in a
business.
“Administrative
Questionnaire”
means
an administrative questionnaire in a form supplied by the Agent.
“Affiliate”
means,
(a) any Person which, directly or indirectly, Controls, is Controlled by or
is under common Control with any other Person; (b) any Person which
beneficially owns or holds, directly or indirectly, 10% or more of any class
of
voting stock or equity interest (including partnership interests) of any other
Person; (c) any Person, 10% or more of any class of the voting stock (or if
such Person is not a corporation, 10% or more of the equity interest, including
partnership interests) of which is beneficially owned or held, directly or
indirectly, by any other Person; or (d) any Person related within the
meaning of the ITA to any such Person and includes any “Affiliate” within the
meaning specified in the Canada
Business Corporations Act
on the
date hereof. The term control (including the terms “controlled by” and “under
common control with”), means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of the
Person in question.
“Agent”
means
CIT Business Credit Canada Inc., in its capacity as Agent for the Lenders
hereunder, or any successor Agent appointed pursuant to
Section 8.9.
“Agreement”
means
this Credit Agreement, as it may be amended, modified, supplemented or restated
from time to time.
“Applicable
Law”
means
all federal, provincial, municipal, foreign and international statutes, acts,
codes, ordinances, decrees, treaties, rules, regulations, municipal by-laws,
judicial or arbitral or administrative or ministerial or departmental or
regulatory judgments, orders, decisions, rulings or awards or any provisions
of
the foregoing, including general principles of common and civil law and equity,
and all policies, practices and guidelines of any Governmental Authority binding
on or affecting the Person referred to in the context in which such word is
used
(including, in the case of tax matters, any accepted practice or application
or
official interpretation of any relevant taxation authority).
“Applicable
Percentage”
means
with respect to any Lender, the percentage of the total Commitments represented
by such Lender’s Commitment. If any Commitments have terminated or expired, the
Applicable Percentages in respect of the terminated or expired Commitments
shall
be determined based upon the relevant Commitments most recently in effect
(i.e.,
prior
to their termination or expiry), giving effect to any assignments.
“Assignment
and Transfer”
means
an assignment and transfer entered into by a Lender and an assignee (with the
consent of any party whose consent is required by Section 9.4), and
accepted by the Agent, in the form of Exhibit E or any other form approved
by the Agent.
“Availability
Reserves”
means,
as of any date of determination, such amounts as the Agent may from time to
time
establish and revise in its reasonable business judgment reducing the Borrowing
Base which would otherwise be available to the Borrower under the lending
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formulas provided for herein (a) to reflect criteria, events, conditions, contingencies or risks which, as determined by the Agent in its sole discretion, do or may affect either (i) any component of the Borrowing Base or its value, (ii) the assets, business, operations, industry, financial performance, financial condition of the Borrower, or (iii) the security interests and other rights of the Agent in the Collateral (including the enforceability, perfection and priority thereof), or (b) to reflect the Agent’s customary lending practice or its reasonable belief that any collateral report or financial information furnished by or on behalf of the Borrower to the Agent is or may have been incomplete, inaccurate or misleading, or (c) in respect of any state of facts which the Agent determines constitutes a Default or an Event of Default. Without limiting the foregoing, the Agent, in its reasonable business judgment, may establish and/or increase Availability Reserves in respect of: (a) (i) three months rental payments or similar charges for any of the Borrower’s leased premises or other collateral locations for which the Borrower has not delivered to the Agent a landlord’s waiver or bailee’s letter substantially in the form attached hereto as Exhibits C and D, respectively, plus (ii) three months estimated payments plus any other fees or charges owing by the Borrower to any applicable warehousemen or third party processor (as determined by the Agent in its reasonable business judgement), provided that any of the foregoing amounts shall be adjusted from time to time hereafter upon (x) delivery to the Agent of any such acceptable waiver, (y) the opening or closing of a collateral location and/or (z) any change in the amount of rental, storage or processor payments or similar charges; (b) any reserve established by the Agent on account of statutory claims, deemed trusts, or inventory subject to rights of suppliers under Section 81.1 of the BIA (generally known as the “30-day goods” rule), any amendments to the BIA to the extent such become Applicable Law and which have the effect of implementing any aspect of ▇▇▇▇ C-55 as of the date hereof, or any other Applicable Law; (c) liabilities of any Credit Party under any Blocked Account Agreement, Swap Agreement or other swap, cap, floor, collar, futures contract or option designed to hedge against fluctuations in commodity prices, securities prices or other financial market conditions, (d) employee or employee benefit related liabilities, (e) any other claims which may have priority over the claims of the Agent and the Lenders, including Priority Payables; and (f) such other reserves as the Agent may at any time or times deem necessary in its reasonable business judgment as a result of (x) negative forecasts and/or trends in the Borrower’s business, operations, industry, profits, operations or financial condition or assets or (y) other issues, circumstances or facts that could otherwise negatively impact the Borrower, its business, operations, industry, prospects, profits, operations or financial condition or assets.
“Authorization”
means,
with respect to any Person, any authorization, order, permit, approval, grant,
licence, consent, right, franchise, privilege, certificate, judgment, writ,
injunction, award, determination, direction, decree, by-law, rule or regulation
of any Governmental Authority having jurisdiction over such Person, whether
or
not having the force of Law.
“B/A
Borrowing”
means
a
Borrowing comprised of one or more B/A Equivalent Loans.
“B/A
Equivalent Loan”
means
a
Loan denominated in Canadian dollars made by the Lenders to the Borrower
hereunder pursuant to a drawdown, rollover, conversion of a Loan which bears
interest at a rate based upon the B/A Rate.
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4
-
“B/A
Rate”
means,
for any day and relative to a BA Equivalent Loan having any specified term,
the
simple average of the annual rates applicable to a Canadian Dollar bankers’
acceptances displayed and identified as such on the display referred to as
the
“CDOR Page” (or any display substituted therefore) of Reuter Monitor Money Rates
Service as at approximately 10:00 a.m. (Toronto time) on such day (or, if
such day is not a Business Day, as of 10:00 a.m. on the immediate preceding
Business Day), provided that if such rates do not appear on the CDOR Page at
such time on such date, the rate for such date will be the annual discount
rate
(rounded upward to the nearest whole basis point) as of 10:00 a.m. on such
day at which CIBC is then offering to purchase Canadian Dollar bankers’
acceptances accepted by it having such specified term (or a term as closely
as
possible comparable to such specified term).
“Base
Rate”
means,
on any day, the annual rate of interest equal to the annual rate of interest
announced from time to time by CIBC and in effect as its base rate at its
principal office in Toronto, Ontario on such day for determining interest rates
on U.S. Dollar-denominated commercial loans made in Canada. The Base Rate is
a
rate set by CIBC based upon various factors including CIBC’s cost and desired
return, general economic conditions and other factors, and is used as a
reference point for pricing some loans; however, CIBC may price loans at, above
or below such announced rate.
“Base
Rate Borrowing”
means
a
Borrowing comprised of one or more Base Rate Loans.
“Base
Rate Loan”
means
a
Loan denominated in U.S. Dollars made by the Lenders to the Borrower hereunder
pursuant to a drawdown, rollover or conversion of a Loan on which interest
is
payable upon the Base Rate.
“BIA”
means
the Bankruptcy
and Insolvency Act
(Canada).
“Blocked
Account Agreement”
has
the
meaning set out in Section 2.17(c).
“Blocked
Accounts”
has
the
meaning set out in Section 2.17(c).
“Blue
Goose Project”
means
the Borrower’s ongoing strategic capital expenditure program at its Castlegar
pulp mill designed to reduce operating costs, increase production capacity
and
enhance operating efficiency and reliability, consisting, inter
alia,
of the
addition of a pre-bleach washer and EOP stage washer and the expansion of a
pulp
machine dryer.
“Borrower”
means
Zellstoff Celgar Limited Partnership, a British Columbia limited partnership,
its successors and permitted assigns.
“Borrowing”
means
any availment of the Credit, which includes a Loan and the issuance of a Letter
of Credit Guarantee in accordance with Section 2.18 and the issuance of an
F/X Guarantee in accordance with Section 2.19, and a Borrowing includes a
rollover or conversion of any outstanding Loan and the provision of any Loan
as
required for the Agent to honour any obligations pursuant to any Letter of
Credit Guarantee or F/X Guarantee.
“Borrowing
Base”
means,
at any time, an amount (which may not be less than zero) equal to the sum,
without duplication, of (i) 85% of the aggregate amount of all Eligible
- 5 -
Accounts (other than Insured Accounts) and 90% of the aggregate amount of all Eligible Accounts which are Insured Accounts, plus (ii) the lesser of (a) 65% of all Eligible Inventory (valued at the lower of cost (on a first in, first out basis and excluding any component of cost representing intercompany profit in the case of Inventory acquired from an Affiliate) or market basis in accordance with GAAP) and (b) 85% of the appraised net orderly liquidation value of all Eligible Inventory, minus (iii) an amount equal to all Priority Payables, and minus (iv) an amount equal to all other Availability Reserves.
“Borrowing
Base Report”
means
the report of the Borrower concerning the amount of the Borrowing Base, to
be
delivered pursuant to Section 5.1, substantially in the form attached as
Exhibit A.
“Borrowing
Request”
means
a
request by the Borrower for a Borrowing substantially in the form of
Exhibit B.
“Business
Day”
means
any day that is not (i) a Saturday, Sunday or other day on which commercial
banks in Toronto, Ontario are authorized or required by Applicable Law to remain
closed, or (ii) in the case of any U.S. Dollar-denominated Borrowing, any
other day on which commercial banks in New York, New York are authorized or
required by Applicable Law to remain closed, or (iii) in the case of any
LIBO Rate Loan any other day on which commercial banks in London, England are
authorized or required by Applicable Law to remain closed.
“Canadian
Dollars”
and
“Cdn.$”
refer
to lawful money of Canada.
“Canadian
$ Equivalent”
means,
on any day, the amount of Canadian Dollars that the Agent could purchase, in
accordance with its normal practice, with a specified amount of U.S. Dollars
based on the spot rate at which Canadian Dollars are offered at the start of
such day by CIBC in Toronto, Ontario.
“Canadian
Prime Borrowing”
means
a
Borrowing comprised of one or more Canadian Prime Loans.
“Canadian
Prime Loan”
means
a
Loan denominated in Canadian Dollars made by the Lenders to the Borrower
hereunder pursuant to a drawdown, rollover or conversion of a Loan which bears
interest at a rate based upon the Canadian Prime Rate.
“Canadian
Prime Rate”
means,
the rate of interest publicly announced from time to time by CIBC as its
reference rate of interest for loans made in Canadian Dollars to Canadian
customers and designated as its “prime” rate. It is a rate set by CIBC based
upon various factors including CIBC’s costs and desired return, general economic
conditions and other factors and is used as a reference point for pricing some
loans. However, CIBC may price loans at, above or below such announced
rate.
“Canadian
Resident Lender”
means,
in respect of a particular Loan, (i) a Lender which holds such Loan and
which is resident in Canada for the purposes of the ITA, and (ii) a Lender
which is an “authorized foreign bank”, as defined in section 2 of the
Bank
Act
(Canada)
and in
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6 -
section 248(1)
of the ITA, and which holds the Loan as part of its “Canadian banking business”,
as defined in subsection 248(1) of the ITA.
“Capital
Expenditures”
means
all payments due or accruing due (whether or not paid) during a Fiscal Year
in
respect of the cost (including expenditures on materials, contract labour and
direct labour, but excluding expenditures properly chargeable to repairs and
maintenance in accordance with GAAP) of any fixed asset or improvement, or
replacement, substitution, or addition thereto, which have a useful life of
more
than one (1) year, including, without limitation, those arising in connection
with the direct or indirect acquisition of such assets by way of increased
product or service charges or offset items or in connection with Capital
Leases.
“Capital
Expenditure Plan”
means
the annual plan in respect of Capital Expenditures for the Borrower and each
Restricted Subsidiary for a Fiscal Year of the Borrower. Each such plan shall
be
in comparative and consistent form to preceding Fiscal Years and Capital
Expenditure Plans previously submitted to the Lenders and shall be comprised
of
(i) an itemized listing of Capital Expenditures made in the immediately
preceding Fiscal Year, and (ii) proposed Capital Expenditures for such
Fiscal Year. This program shall be reviewed by the Lenders and such other
consultants as the Lenders may elect, such review being satisfactory to the
Lenders.
“Capital
Lease Obligations”
of
any
Person means the obligations of such Person to pay rent or other amounts under
any lease of (or other arrangement conveying the right to use) real or personal
property, or a combination thereof, which obligations are required to be
classified and accounted for as capital leases on a balance sheet of such Person
under GAAP, and the amount of such obligations shall be the capitalized amount
thereof determined in accordance with GAAP.
“CDOR
Rate”
means,
on any day and for any period, an annual rate of interest equal to the average
rate applicable to Canadian Dollar bankers’ acceptances for the applicable
period appearing on the “Reuters Screen CDOR Page” (as defined in the
International Swaps and Derivatives Association, Inc. 2000 definitions, as
modified and amended from time to time), rounded to the nearest
1/100th
of 1%
(with .005% being rounded up), at approximately 10:00 a.m., Toronto time,
on such day, or if such day is not a Business Day, then on the immediately
preceding Business Day, provided
that if
such rate does not appear on the Reuters Screen CDOR Page on such day as
contemplated, then the CDOR Rate on such day shall be calculated as the rate
for
such period applicable to Canadian Dollar bankers’ acceptances quoted by CIBC as
of 10:00 a.m., Toronto
time, on such day or, if such day is not a Business Day, then on the immediately
preceding Business Day.
“Change
in Law”
means
(i) the adoption of any new Applicable Law after the date of this
Agreement, (ii) any change in any existing Applicable Law or in the
interpretation or application thereof by any Governmental Authority after the
date of this Agreement, or (iii) compliance by any Lender (or, for purposes
of Section 2.12(b), by any lending office of such Lender or by such
Lender’s holding company, if any) with any request, guideline or directive
(whether or not having the force of law, but in the case of a request, guideline
or directive not having the force of law, being a request, guideline or
directive with which persons customarily comply) of any Governmental Authority
made or issued after the date of this Agreement.
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“CIBC”
means
Canadian Imperial Bank of Commerce and its successors.
“Collateral”
means
the property described in and subject to the Liens, privileges, priorities
and
security interests purported to be created by any Security
Document.
“Commitment”
means,
with respect to each Lender, the commitment(s) of such Lender to make Loans
hereunder as such commitment may be reduced from time to time pursuant to
Sections 2.6 and/or 2.9, and as such commitments may be reduced or
increased from time to time pursuant to assignments by or to such Lender
pursuant to Section 9.4. The initial amount(s) of each Lender’s
Commitment(s) are set forth on Schedule A, or in the Assignment and
Transfer pursuant to which such Lender shall have assumed its Commitment(s),
as
applicable. The initial aggregate amount of the Commitments is
Cdn.$40,000,000.
“Consolidated
Net Income”
means,
for any period, the net income on a consolidated basis of the Borrower and
its
consolidated Subsidiaries; provided,
however, that Consolidated Net Income shall not include or take into
account:
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(i)
|
any
net income (or loss) of any Unrestricted Subsidiary, except that
(subject
to the exclusions contained in clauses (iii) and (iv) below),
the Borrower’s equity in the net income of any such Person for such period
shall be included in such Consolidated Net Income up to the aggregate
amount of cash actually distributed by such Person during such period
to
the Borrower or a Restricted Subsidiary as a dividend or other
distribution (subject, in the case of a dividend or other distribution
paid to a Restricted Subsidiary, to the limitations contained in
clause (ii) below);
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|
(ii)
|
any
net income of any Restricted Subsidiary which is subject to restrictions,
directly or indirectly, on the payment of dividends or the making
of
distributions, directly or indirectly, to the Borrower, except that
(A) subject to the exclusion contained in clauses (iii) and
(iv) below,
the Borrower’s equity in the net income of any such Restricted Subsidiary
for such period shall be included in such Consolidated Net Income
up to
the aggregate amount of cash that could have been distributed by
such
Restricted Subsidiary consistent with such restriction during such
period
to the Borrower or another Restricted Subsidiary as a dividend or
other
distribution (subject, in the case of a dividend or other distribution
paid to another Restricted Subsidiary, to the limitation contained
in this
clause), and (B) the Borrower’s equity in a net loss of any such
Restricted Subsidiary for such period shall be included in determining
such Consolidated Net Income;
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(iii)
|
any
gain (or loss) realized upon the sale or other disposition of any
assets
of the Borrower or any Subsidiary (including pursuant to any
sale-and-leaseback arrangement) which is not sold or otherwise disposed
of
in the ordinary course of business and any gain (or loss) realized
upon
the sale or other disposition of any capital stock of any
Person;
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(iv)
|
extraordinary
or nonrecurring gains or non-cash losses;
and
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8
-
(v) the
effect of a change in GAAP.
“Contract
Period”
means
the term of any B/A Equivalent Loan selected by the Borrower in accordance
with
Section 2.3(a)(iv) commencing on the date of such B/A Equivalent Loan and
expiring on a Business Day which shall be either one month, two months, or
three
months thereafter (or such other terms as may be requested by the Borrower
and
approved unanimously by the Lenders); provided
that
(i) subject to subparagraph (ii) below, each such period shall be
subject to such extensions or reductions as may be determined by the Agent
to
ensure that each Contract Period will expire on a Business Day, and (ii) no
Contract Period shall extend beyond the Maturity Date.
“Control”
means,
in respect of a particular Person, the possession, directly or indirectly,
of
the power to direct or cause the direction of the management or policies of
such
Person, whether through the ability to exercise voting power, by contract or
otherwise. “Controlling”
and
“Controlled”
have
meanings correlative thereto.
“Cover”
means
the aggregate amount of Letter of Credit Exposure or F/X Exposure at such time
and such amount shall be paid by the Borrower to the Agent and retained by
the
Agent in a collateral account maintained by the Agent at its Payment Office
and
collaterally assigned to the Agent as security until such time as the applicable
Letters of Credit or F/X Contracts shall have expired or matured and
Reimbursement Obligations, if any, with respect thereto shall have been fully
satisfied; provided that if any such Reimbursement Obligations are not satisfied
when due hereunder, the Agent may apply any or all amounts in such collateral
account in satisfaction of any or all such Reimbursement
Obligations.
“Credit
Party”
means
the Borrower, the General Partner, each Restricted Subsidiary and any other
Person which is a party to a Loan Document (other than the Agent and the
Lenders).
“Credit”
means
the maximum Cdn.$40,000,0000 revolving credit facility established pursuant
to
the Commitments of the Lenders.
“DBRS”
shall
mean Dominion Bond Rating Service Limited, or its successor.
“Default”
means
any event or condition which constitutes an Event of Default or which, upon
notice, lapse of time or both, would, unless cured or waived, become an Event
of
Default.
“Disclosed
Matters”
means
the actions, suits and proceedings and the environmental matters disclosed
in
Schedule B.
“Early
Termination Fee”
means
the fee due and payable by the Borrower to the Agent on behalf of the Lenders
in
the event of termination of this Agreement or reduction of the Commitment on
a
date prior to the Maturity Date by the Borrower or, upon the occurrence of
an
Event of Default, by the Agent, as determined by multiplying
(a) $40,000,000, in the case of termination of this Agreement or the
Commitment; or (b) the amount by which the Commitment is reduced, in the
case of the reduction of the Commitment, by (i) 2.00% if the Commitment is
cancelled or reduced at any time on or prior to one year following the Effective
Date, (ii) 1.00% if the Commitment is cancelled or reduced at any time
following the first anniversary of the
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9
-
Effective
Date but on or prior to two years following the Effective Date, and
(iii) 0.50% if the Commitment is cancelled or reduced at any time following
the second anniversary of the Effective Date.
“EBITDA”
means,
for the Credit Parties on a consolidated basis and for any period, without
duplication, an amount equal to the Consolidated Net
Income for such period less any non-cash income included in Consolidated Net
Income, plus to the extent deducted from Consolidated Net Income, Interest
Expense, depreciation, depletion and impairment, amortization expense and income
tax expenses. For greater certainty, EBITDA for any period shall be determined
after the payment of all management and employee bonuses and non-arm’s length
consulting fees for
such
period.
“Effective
Date”
means
the date on which all of the conditions specified in Section 4.1 are
satisfied or waived in accordance with Section 9.2, as confirmed in a
written notice from the Agent to the Borrower.
“Eligible
Account”
means,
at any time, the invoice amount (which shall be the Canadian $ Equivalent at
such time of any amount denominated in U.S.$) owing on each Account of a Credit
Party (net of any credit balance, returns, trade discounts, unapplied cash,
unbilled amounts or retention or finance charges) which meet such standards
of
eligibility as the Agent shall establish from time to time in its reasonable
discretion; provided
that, in
any event, no Account shall be deemed an Eligible Account unless each of the
following statements is accurate and complete (and by including such Account
in
any computation of the applicable Borrowing Base, the Borrower shall be deemed
to represent and warrant to the Agent, each Issuing Bank and the Lenders the
accuracy and completeness of such statements and the compliance of each such
Account with each such other eligibility standard established by the
Agent):
(1) Such
Account is a binding and valid obligation of the obligor thereon and is in
full
force and effect;
(2) Such
Account is evidenced by an invoice and is payable in either Canadian Dollars
or
U.S. Dollars;
(3) Such
Account is genuine as appearing on its face or as represented in the books
and
records of the Borrower and the applicable Credit Party;
(4) Such
Account is free from claims regarding rescission, cancellation or avoidance,
whether by operation of Applicable Law or otherwise;
(5) Payment
of such Account is less than 90 days past the original invoice date thereof
and
less than 60 days past the original due date thereof;
(6) Such
Account is net of concessions, offset, deduction, contras, returns, chargebacks
or understandings with the obligor thereon that in any way could reasonably
be
expected to adversely affect the payment of, or the amount of, such
Account;
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10
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(7) The
Agent
on behalf of the Lenders, has a first-priority perfected Lien covering such
Account and such Account is, and at all times will be, free and clear of all
other Liens;
(8) The
obligor on such Account is not an Affiliate or a director, officer or employee
of any Credit Party;
(9) Such
Account arose in the ordinary course of business of the Credit Party out of
the
sale of goods or services by the Credit Party;
(10) Such
Account is not payable by an obligor in respect of which 50% or more (by amount)
of the total aggregate Accounts owed to the Credit Party by such obligor or
any
of its Affiliates are more than 90 days past the original invoice date thereof
or more than 60 days past the original due date thereof;
(11) All
consents, licenses, approvals or authorizations of, or registrations or
declarations with, any Governmental Authority required to be obtained, effected
or given in connection with the execution, delivery and performance of such
Account by each party obligated thereunder, or in connection with the
enforcement and collection thereof by the Agent, have been duly obtained,
effected or given and are in full force and effect;
(12) The
obligor on such Account is not an individual, and is not the subject of any
bankruptcy or insolvency proceeding, does not have a trustee or receiver
appointed for all or a substantial part of its property, has not made an
assignment for the benefit of creditors, admitted its inability to pay its
debts
as they mature, suspended its business or initiated negotiations regarding
a
compromise of its debt with its creditors, and the Agent, in its reasonable
discretion, is otherwise satisfied with the credit standing of such
obligor;
(13) The
chief
executive office of the obligor of such Account is located in the United States
of America or Canada and the obligor of such Account is organized and existing
under the laws of the United States of America or a state thereof or the federal
laws of Canada, a province or territory thereof, or if the obligor is not so
organized and existing, such Account is covered under letters of credit or
export/import insurance provided by the Export Development Corporation, AIG
Global Trade & Political Risk, or Euler Hermes (including their respective
successors or permitted assigns) (or such other credit insurance as acceptable
to the Agent and Lenders) on terms and in a manner reasonably satisfactory
to
the Agent;
(14) The
obligor of such Account is not a Governmental Authority, if the enforceability
or effectiveness against such Governmental Authority of an assignment of such
Account is subject to any precondition which has not been
fulfilled;
(15) In
the
case of the sale of goods, the subject goods have been completed, sold and
shipped, on a true sale basis on open account, or subject to contract, and
not
on consignment, on approval, on a “sale or return” basis, or on a “▇▇▇▇ and
hold” or “pre-sale” basis or subject to any other repurchase or return
agreement; no material part of the subject goods has been returned, rejected,
lost or damaged; and such Account is not evidenced by chattel paper or a
promissory note or an instrument of any kind, unless such chattel paper,
promissory note or other instrument has been delivered to the Agent and is
subject to a Lien under the Security Documents;
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11
-
(16) Each
of
the representations and warranties set forth herein and in the Loan Documents
with respect to such Account is true and correct on such date;
(17) A
cheque,
promissory note, draft, trade acceptance or other instrument has not been
received with respect to such Account (or with respect to any other account
due
from the same account debtor), presented for payment and returned uncollected
for any reason;
(18) Such
Account is not in respect of a volume rebate;
(19) The
Agent
does not believe, in the exercise of its reasonable discretion, that the
prospect of collection of such Account is impaired or that the Account may
not
be paid because of the account debtor’s inability to pay;
(20) Such
Account is not a pre-billed account or an account arising from progress
billing;
(21) The
assignment (whether absolutely or by way of security) of such Account is not
limited or restricted by the terms of the contract evidencing or relating to
such Account or, if assignment of such Account is so restricted, such limitation
or restriction has been complied with and the laws of the jurisdiction(s)
governing the validity of such assignment do not provide that such limitation
or
restriction is ineffective as against the secured creditor with a security
interest therein; and
(22) Such
Account is not an Account which the Agent, in the exercise of its good faith
credit discretion, determines to be ineligible for any other reasons deemed
necessary by Agent in its reasonable business judgment, including those which
are customary either in the commercial lending industry or in the lending
practices of the Agent;
provided
that,
notwithstanding the foregoing, Eligible Accounts shall include Accounts for
which payment is less than 210 days past the original invoice date thereof
and
less than 60 days past the due date thereof, up to a maximum aggregate amount
of
Cdn.$3,000,000.
“Eligible
Assignee”
means
(a) another Lender, (b) with respect to any Lender, any Affiliate of
that Lender, (c) any commercial bank having total assets of $25,000,000,000
or more, (d) any (i) trust company, savings bank, savings and loan
association or similar financial institution, or (ii) insurance company
engaged in the business of writing insurance which, in either case (A) has
total assets of $25,000,000,000 or more, (B) is engaged in the business of
lending money and extending credit under credit facilities substantially similar
to those extended under this Agreement, (C) is operationally and
procedurally able to meet the obligations of a Lender hereunder to the same
degree as a commercial bank, and (e) any other financial institution
(including a mutual fund or other fund) having total assets of $25,000,000,000
or more which meets the requirements set forth in subclauses (B) and (C) of
clause (d) above.
“Eligible
Inventory”
means,
at any time with respect to a Credit Party, all Inventory of such Credit Party
valued in Canadian Dollars on a lower of cost (on a first-in, first out basis
and excluding any component of cost representing intercompany profit in the
case
of Inventory acquired from an Affiliate) or market basis in accordance with
GAAP, with detailed calculations
- 12 -
of lower of cost or market to occur on at least a monthly basis, which meets such standards of eligibility as the Agent shall establish from time to time in its reasonable discretion; provided that, in any event, no Inventory shall be deemed Eligible Inventory unless each of the following statements is accurate and complete (and by including such Inventory in any computation of the applicable Borrowing Base, the Borrower shall be deemed to represent and warrant to the Agent, each Issuing Bank and the Lenders the accuracy and completeness of such statements and the compliance of such Inventory with each such other eligibility standard established by the Agent):
(1) Such
Inventory is in good condition, merchantable, meets all standards imposed by
any
Governmental Authority having regulatory authority over it or its use and/or
sale and is not obsolete and is either currently usable or currently saleable
in
the normal course of business of a Credit Party;
(2) Such
Inventory is
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(a)
|
in
possession of such Credit Party and located on real property owned
or
leased by such Credit Party within the United States of America or
Canada
(provided
that if such Inventory is located on real property leased by such
Credit
Party, the landlord of such real property shall have executed and
delivered to the Agent a landlord waiver substantially in the form
attached hereto as Exhibit C),
or
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(b)
|
in
the possession of a bailee within Canada and such bailee shall have
executed and delivered to the Agent, a bailee letter substantially
in the
form attached hereto as Exhibit D,
or
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(c)
|
in
transit within the United States of America or Canada (provided
that the jurisdictions through which such Inventory is in transit
are
jurisdictions where the Liens in such inventory under the Security
Documents are validly perfected first-priority Liens, subject to
Permitted
Liens) and between Credit Parties, and upon arrival at its destination,
will comply with either paragraph (a) or (b) above until title to
such Inventory passes to purchaser;
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(3) Each
of
the representations and warranties set forth in the Loan Documents with respect
to such Inventory is true and correct on such date;
(4) The
Agent
on behalf of the Lenders, has a first-priority perfected Lien covering such
Inventory, and such Inventory is, and at all times will be, free and clear
of
all Liens other than Permitted Liens;
(5) Such
Inventory does not include goods (i) that are not owned by such Credit
Party, (ii) that are held by such Credit Party pursuant to a consignment
agreement, (iii) which have been sold by such Credit Party on a ▇▇▇▇ and
hold basis, or (iv) that are special order goods or discontinued
goods;
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13
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(6) Such
Inventory is not subject to repossession under the BIA except to the extent
the
applicable vendor has entered into an agreement with the Agent, in form and
substance reasonably satisfactory to the Agent, waiving its right to
repossession;
(7) Such
Inventory does not consist of work-in-process, store room materials, supplies,
parts, samples, prototypes, or packing and shipping materials;
(8)
Such
Inventory does not consist of goods that are discontinued, obsolete, slow-moving
or returned or repossessed or used goods taken in trade;
(9) Any
portion of the value of such Inventory which results from a profit or gain
resulting from an inter-company sale or other disposition of such inventory
shall be excluded;
(10) Such
Inventory is not evidenced by negotiable documents of title unless delivered
to
the Agent with endorsements;
(11) Such
Inventory does not constitute Hazardous Materials;
(12) Such
Inventory is covered by casualty insurance;
(13) Such
Inventory is not Inventory which the Agent has determined in the exercise of
its
reasonable discretion that the Agent may not sell or otherwise dispose of in
accordance with the terms of the applicable Security Documents without
infringing upon the rights of another Person or violating any contract with
any
other Person;
(14) Such
Inventory is not Inventory which the Agent, in the exercise of its good faith
credit discretion, determines to be not acceptable for any other reasons deemed
necessary by Agent in its reasonable business judgment, including those which
are customary either in the commercial lending industry or in the lending
practices of the Agent; and
(15) Such
Inventory is located on real property where there is Inventory of such Credit
Party in the aggregate amount of at least Cdn.$100,000.
“Environmental
Laws”
means
all federal, provincial, local or foreign laws, rules, regulations, codes,
ordinances, orders, decrees, judgements, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources, the generation, use, handling, collection, treatment, storage,
transportation, recovery, recycling, release, threatened release or disposal
of
any Hazardous Material, or to health and safety matters.
“Environmental
Liability”
means
any liability, contingent or otherwise (including any liability for damages,
costs of environmental remediation, fines, penalties or indemnities), of any
Credit Party directly or indirectly resulting from or based upon
(a) violation of any Environmental Laws, (b) the generation, use,
handling, collection, treatment, storage, transportation, recovery, recycling
or
disposal of any Hazardous Materials, (c) exposure to any Hazardous
Materials, (d) the Release or threatened Release of any Hazardous Materials
into the environment, or (e) any contract, agreement or other consensual
arrangement pursuant to which liability is assumed or imposed with respect
to
any of the foregoing.
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14
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“Equity
Securities”
means,
with respect to any Person, any and all shares, interests, participations,
rights in, or other equivalents (however designated and whether voting and
non-voting) of, such Person’s capital, whether outstanding on the date hereof or
issued after the date hereof, including any interest in a partnership, limited
partnership or other similar Person and any beneficial interest in a trust,
and
any and all rights, warrants, debt securities, options or other rights
exchangeable for or convertible into any of the foregoing.
“ETA”
means
Part IX of the Excise
Tax Act
(Canada).
“Event
of Default”
has
the
meaning set out in Section 7.1.
“Excess
Availability”
means,
as of any date, the remainder of (a) the remainder of (i) the
Borrowing Base as of such date, minus, without duplication, (ii) the
Availability Reserves with respect to the Borrowing Base as of such date, less
(b) the aggregate outstanding balance of the Indebtedness of the Borrower
hereunder as of such date and the aggregate face amount of undrawn Letters
of
Credit as of such date. Excess Availability shall always be determined on the
basis that all debts and obligations shall be current, and all accounts payable
shall be handled in the normal course of the Borrower’s business consistent with
its past practices.
“Excluded
Taxes”
means,
with respect to the Agent, any Lender or any other recipient of any payment
to
be made by or on account of any obligation of the Borrower hereunder, income
or
franchise Taxes imposed on (or measured by) its taxable income, in each case
by
Canada, or by the jurisdiction under the Applicable Laws of which such recipient
is organized or in which its principal office is located.
“Exposure”
means,
with respect to any Lender at any time, the sum of the outstanding principal
amount of such Lender’s Revolving Loans and its LC Exposure and F/X Exposure at
such time.
“Financial
Officer”
means
the chief financial officer, principal accounting officer, treasurer, controller
or such other officer of the Borrower acceptable to the Agent.
“Fiscal
Quarter”
means,
in relation to the Borrower, the Parent or any Subsidiary thereof, any fiscal
quarter of such Person.
“Fiscal
Year”
means,
in relation to the Borrower, the Parent or any Subsidiary thereof, any fiscal
year of such Person.
“Fixed
Charge Coverage Ratio”
means,
as of the last day of any calendar month, the ratio of (a) without
duplication, the sum of (i) EBITDA for the Rolling Period ended on that
date minus
non-finance Capital Expenditures made by the Borrower during such Rolling
Period; and (ii) Capital Expenditures of up to Cdn.$18,900,000 in the 2006
Fiscal Year and Cdn.$7,000,000 in the 2007 Fiscal Year on account of the Blue
Goose Project to (b) the sum
of
(i) Interest Expense of the Borrower for such Rolling Period plus
(ii) the aggregate of all dividends, distributions and principal payments
on Indebtedness made by the Borrower during such Rolling Period plus
(iii) income taxes paid in cash or cash equivalents by the Borrower during
such Rolling Period.
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15
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“Foreign
Lender”
means
any Lender that is not a Canadian Resident Lender.
“F/X
Bank”
means
CIBC.
“F/X
Contract”
means
a
currency exchange transaction or agreement or any option with respect to any
such transaction now existing or hereafter entered into between the Borrower
and
the Agent or between the Borrower and the F/X Bank with the assistance of the
Agent in accordance with Section 2.19.
“F/X
Contract Sub-Line”
means
the amount of the commitment by the Agent and the Lenders hereunder, in an
aggregate amount of up to but not exceeding Cdn.$3,000,000 to assist the
Borrower in obtaining F/X Contracts from the F/X Bank pursuant to
Section 2.19.
“F/X
Exposure”
means,
at any time, and subject to the F/X Contract Sub-Line, the sum of: (a) the
amount determined by the Agent (at its sole discretion with consideration given
to any determinations provided to the Agent by the F/X Bank) to be the credit
risk associated with all outstanding F/X Contracts, plus (b) the aggregate
amount of all Reimbursement Obligations in respect of all F/X Guarantees at
such
time. The F/X Exposure of any Lender at any time shall be its Applicable
Percentage of the total F/X Exposure at such time with the total of all such
F/X
Exposure of all Lenders not to exceed the F/X Contract Sub-Line. Any F/X
Exposure denominated in U.S. Dollars shall be the Cdn.$ Equivalent
thereof.
“F/X
Guarantee”
means
a
letter of indemnity (which is acceptable to the F/X Bank and the Agent) or
such
other form of guarantee or indemnity agreement which is acceptable to the F/X
Bank and the Agent, supporting F/X Contracts between the Borrower and the F/X
Bank provided the maximum principal amounts of all F/X Guarantees in aggregate
do not exceed the F/X Contract Sub-Line.
“General
Partner”
means
Zellstoff Celgar Limited, a British Columbia corporation, its successors and
permitted assigns.
“Governmental
Authority”
means
the Government of Canada, any other nation or any political subdivision thereof,
whether provincial, state, territorial or local, and any agency, authority,
instrumentality, regulatory body, court, central bank, fiscal or monetary
authority or other authority regulating financial institutions, and any other
entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government, including
the
Bank Committee on Banking Regulation and Supervisory Practices of the Bank
of
International Settlements.
“GST”
means
all amounts payable under the ETA or any similar legislation in any other
jurisdiction of Canada, including QST and HST.
“Guarantee”
of
or
by any Person (in this definition, the “guarantor”)
means
any obligation, contingent or otherwise, of the guarantor guaranteeing or having
the economic effect of guaranteeing any Indebtedness or other obligation of
any
other Person (in this definition, the “primary credit party”) in any manner,
whether directly or indirectly, and including any obligation of the guarantor,
direct or indirect, (a) to purchase or pay (or advance or supply funds
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16
-
for
the
purchase or payment of) such Indebtedness or other obligation or to purchase
(or
to advance or supply funds for the purchase of) any security for the payment
thereof (whether in the form of a loan, advance, stock purchase, capital
contribution or otherwise), (b) to purchase or lease property, securities
or services for the purpose of assuring the owner of such Indebtedness or other
obligation of the payment thereof, (c) to maintain working capital, equity
capital solvency, or any other balance sheet, income statement or other
financial statement condition or liquidity of the primary credit party so as
to
enable the primary credit party to pay such Indebtedness or other obligation,
(d) as an account party in respect of any letter of credit or letter of
guarantee issued to support such Indebtedness or other obligation, or
(e) to purchase, sell or lease (as lessor or lessee) property, or to
purchase or sell services, primarily for the purpose of enabling the debtor
to
make payment of such Indebtedness or to assure the holder of such Indebtedness
against loss.
“Hazardous
Materials”
means
any substance, product, liquid, waste, pollutant, chemical, contaminant,
insecticide, pesticide, gaseous or solid matter, organic or inorganic matter,
fuel, micro-organism, ray, odour, radiation, energy, vector, plasma, constituent
or material which (a) is or becomes listed, regulated or addressed under
any Environmental Laws, or (b) is, or is deemed to be, alone or in any
combination, hazardous, hazardous waste, toxic, a pollutant, a deleterious
substance, a contaminant or a source of pollution or contamination under any
Environmental Laws, including, asbestos, petroleum and polychlorinated
biphenyls, including petroleum or petroleum distillates, asbestos or asbestos
containing materials, polychlorinated biphenyls, radon gas, infectious or
medical wastes and all other substances or wastes of any nature regulated
pursuant to any Environmental Laws.
“HST”
means
all amounts payable as harmonised sales tax in the Provinces of Nova Scotia,
Newfoundland and New Brunswick under the ETA.
“Indebtedness”
of
any
Person means, without duplication, (a) all obligations of such Person for
borrowed money or with respect to deposits or advances of any kind, (b) all
obligations of such Person evidenced by bonds, debentures, notes or similar
instruments, (c) all obligations of such Person upon which interest charges
are customarily paid, (d) all obligations of such Person under conditional
sale or other title retention agreements relating to property acquired by such
Person, (e) all obligations of such Person in respect of the deferred
purchase price of property or services (excluding current accounts payable
incurred in the ordinary course of business), (f) all Indebtedness of
others secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien on property owned
or
acquired by such Person, whether or not the Indebtedness secured thereby has
been assumed, (g) all Guarantees by such Person of Indebtedness of others,
(h) all Capital Lease Obligations of such Person, (i) all obligations,
contingent or otherwise, of such Person as an account party in respect of
letters of credit and letters of guarantee, (j) all obligations, contingent
or otherwise, of such Person in respect of bankers’ acceptances, (k) the
net amount of obligations of such Person (determined on a ▇▇▇▇-to-market basis)
under Swap Agreements, and (l) all obligations of such Person to purchase,
redeem, retire, defease or otherwise acquire for value (other than for other
Equity Securities) any Equity Securities of such Person, valued, in the case
of
redeemable Equity Securities, at the greater of voluntary or involuntary
liquidation preference, plus accrued and unpaid dividends. The Indebtedness
of
any Person shall include the
-
17
-
Indebtedness
of any other entity (including any partnership in which such Person is a general
or limited partner) to the extent such Person is liable therefor as a result
of
such Person’s ownership interest in or other relationship with such entity,
except to the extent the terms of such Indebtedness provide that such Person
is
not liable therefor.
“Indemnified
Taxes”
means
all Taxes other than Excluded Taxes and for greater certainty, includes, without
limitation, capital Taxes imposed on (or measured by) the taxable capital of
the
Lenders as a result of the Borrower’s status as a limited
partnership.
“Indemnitee”
has
the
meaning set out in Section 9.3(b).
“Insured
Account”
means
an Account which is fully insured by export/import insurance provided by Export
Development Corporation (Canada), AIG Global Trade & Political Risk or Euler
Hermes (including their respective successors and permitted assigns) or such
other credit insurance as acceptance to the Agent and Lenders.
“Interest
Expense”
shall
mean, for any period, the total interest expense of the Borrower and its
Restricted Subsidiaries on a consolidated basis, plus, to the extent not
included in such total interest expense, and to the extent incurred by the
Borrower or any of its Restricted Subsidiaries, (i) interest expense
attributable to Capital Lease Obligations of the Borrower or its Restricted
Subsidiaries, (ii) amortization of debt discount or financing fees,
(iii) capitalized interest, (iv) non-cash interest expense,
(v) commissions, discounts and other fees and charges owed with respect to
letters of credit and bankers’ acceptance financing, (vi) net costs
associated with Swap Agreements (including amortization
of fees), (vii) standby fees , (viii) preferred stock dividends
in respect of all preferred stock issued by the Borrower or a Restricted
Subsidiary and held by Persons other than the Borrower or a Restricted
Subsidiary, and (ix) interest actually paid by the Borrower or any
Restricted Subsidiary on any Indebtedness of any other Person.
“Interest
Payment Date”
means,
(a) in the case of any Loan other than a LIBO Rate Loan or a B/A Equivalent
Loan, the first Business Day of each month, (b) in the case of a LIBO Rate
Loan, the last day of each Interest Period relating to such LIBO Rate Loan,
and
(c) in the case of a B/A Equivalent Loan, on the last day of each Contract
Period relating to such B/A Equivalent Loan.
“Interest
Period”
means,
with respect to a LIBO Rate Borrowing, the period commencing on the date of
such
Borrowing and ending on the numerically corresponding day in the calendar month
that is 30, 60 or 90 days thereafter, as the Borrower may elect; provided
that
(i) if any Interest Period would end on a day other than a Business Day,
such Interest Period shall be extended to the immediately succeeding Business
Day unless such next succeeding Business Day would fall in the next calendar
month, in which case such Interest Period shall end on the next preceding
Business Day, (ii) any Interest Period that commences on the last Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the last calendar month of such Interest Period) shall
end
on the last Business Day of the last calendar month of such Interest Period,
(iii) no Interest Period shall extend beyond any date that any principal
payment or prepayment is scheduled to be due unless the aggregate principal
amount of (A) Canadian Prime Borrowings and Base Rate Borrowings and
(B) B/A Borrowings and LIBO Rate Borrowings which have Interest Periods or
Contract Periods which will expire on or before
-
18
-
such
date, less the aggregate amount of any other principal payments or prepayments
due during such Interest Period, is equal to or in excess of the amount of
such
principal payment or prepayment, and (iv) no Interest Period shall extend
beyond the Maturity Date. For purposes hereof, the date of a Borrowing initially
shall be the date on which such Borrowing is made and, in the case of a
converted or continued Borrowing, thereafter shall be the effective date of
the
most recent conversion or continuation of such Borrowing.
“Inventory”
means,
in respect of each Credit Party, all of such Credit Party’s present and
hereafter acquired inventory (as defined in the PPSA) and including all
merchandise, inventory and goods, and all additions, substitutions and
replacements thereof, wherever located, together with all goods and materials
used or usable in manufacturing, processing, packaging or shipping same in
all
stages of production from raw materials through work in process to finished
goods, and all “stores” inventory or “operating and maintenance supplies”
inventory, and all proceeds of any thereof (of whatever sort).
“Investment”
means,
as applied to any Person (the “investor”),
any
direct or indirect purchase or other acquisition by the investor of, or a
beneficial interest in, Equity Securities of any other Person, including any
exchange of Equity Securities for Indebtedness, or any direct or indirect loan,
advance (other than advances to employees for moving and travel expenses,
drawing accounts and similar expenditures in the ordinary course of business)
or
capital contribution by the investor to any other Person, including all
Indebtedness and Accounts owing to the investor from such other Person that
did
not arise from sales or services rendered to such other Person in the ordinary
course of the investor’s business, or any direct or indirect purchase or other
acquisition of bonds, notes, debentures or other debt securities of, any other
Person. The amount of any Investment shall be the original cost of such
Investment plus
the cost
of all additions thereto, without any adjustments for increases or decreases
in
value, or write-ups, write-downs or write-offs with respect to such Investment
minus
any
amounts (a) realized upon the disposition of assets comprising an
Investment (including the value of any liabilities assumed by any Person other
than the Borrower or any Restricted Subsidiary in connection with such
disposition), (b) constituting repayments of Investments that are loans or
advances or (c) constituting cash returns of principal or capital thereon
(including any dividend, redemption or repurchase of equity that is accounted
for, in accordance with GAAP, as a return of principal or capital).
“Issuing
Bank”
means
the bank issuing Letters of Credit for the Borrower with the assistance of
the
Agent in accordance with Section 2.18.
“ITA”
means
the Income
Tax Act
(Canada).
“Lender”
means
any Lender having a Commitment hereunder and/or a Revolving Loan outstanding
hereunder.
“Lender
Affiliate”
means,
with respect to any Lender, an Affiliate of such Lender.
“Lenders”
means
the Persons listed as lenders on Schedule A and any other Person that shall
have become a party hereto pursuant to an Assignment and Transfer, other than
any such Person that ceases to be a party hereto pursuant to an Assignment
and
Transfer.
-
19
-
“Letter
of Credit”
means
a
letter of credit issued by the Issuing Bank for or on behalf of the Borrower
with the assistance of the Agent in accordance with
Section 2.18.
“Letter
of Credit Exposure”
means,
at any time and subject to the Letter of Credit Sub-Line, the sum of:
(a) the aggregate face amount of all outstanding Letters of Credit at such
time, plus (b) the aggregate amount of all Reimbursement Obligations in
respect of all Letter of Guarantees at such time. The Letter of Credit Exposure
of any Lender at any time shall be its Applicable Percentage of the total Letter
of Credit Exposure at such time with the total of all such Letter of Credit
Exposure of all Lenders not to exceed the Letter of Credit Sub-Line. Any Letter
of Credit Exposure denominated in U.S. Dollars shall be the Cdn.$ Equivalent
thereof.
“Letter
of Credit Guarantee”
means
the agreement for the substitution of applicants or such other form of guarantee
or indemnity agreement which is acceptable to the Issuing Bank and the Agent,
supporting the issuance of Letters of Credit by the Issuing Bank provided the
aggregate amount of all such Letters of Credit issued and to be issued shall
not
exceed the Letter of Credit Sub-Line.
“Letter
of Credit Sub-Line”
means
the amount of the commitment by the Agent and the Lenders hereunder, in an
aggregate amount up to but not exceeding Cdn.$2,000,000, to assist the Borrower
in obtaining Letters of Credit.
“LIBO
Rate”
means,
for any Interest Period, the rate for U.S. Dollar borrowings appearing on
Page 3750 of the Telerate Service or Page LIBOR01 of the Reuters
Service (or
on
any successor or substitute page of such Service, or any successor to or
substitute for such Service providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the Agent
from
time to time for purposes of providing quotations of interest rates applicable
to U.S. Dollar deposits in the London interbank market) at approximately
11:00 a.m., London time, two Business Days prior to the commencement of
such Interest Period, as the rate for U.S. Dollar deposits with a maturity
comparable to such Interest Period. In the event that such rate is not available
at such time for any reason, then the “LIBO Rate” for such Interest Period shall
be the rate at which U.S. Dollar deposits of $5,000,000 and for a maturity
comparable to such Interest Period are offered by the principal London office
of
CIBC in immediately available funds in the London interbank market at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period.
“LIBO
Rate Borrowing”
means
a
Borrowing comprised of one or more LIBO Rate Loans.
“LIBO
Rate Loan”
means
a
Loan denominated in U.S. Dollars which bears interest at a rate based upon
the
LIBO Rate.
“Lien”
means,
(a) with respect to any asset, any mortgage, deed of trust, lien, pledge,
hypothec, hypothecation, encumbrance, charge, security interest, royalty
interest, adverse claim, defect of title or right of set off in, on or of such
asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease, title retention agreement or consignment agreement
(or
any financing lease having substantially the same economic effect as any of
the
foregoing) relating to any asset, (c) in the case of securities, any
purchase option, call or similar
-
20
-
right
of
a third party with respect to such securities, (d) any netting arrangement,
defeasance arrangement or reciprocal fee arrangement, and (e) any other
arrangement having the effect of providing security.
“Limited
Partnership Agreement”
means
the limited partnership agreement dated January 10, 2006 among the General
Partner, as general partner and the Parent, as limited partner, constituting
Zellstoff Celgar Limited Partnership, a limited partnership organized under
the
laws of British Columbia.
“Loan”
means
any loan made by the Lenders to the Borrower pursuant to this
Agreement.
“Loan
Documents”
means
this Agreement, the Security Documents, the Subordination Agreement, the Blocked
Account Agreement, the Parent Indemnity, the Borrowing Requests and the
Borrowing Base Reports, together with any other document, instrument or
agreement (other than participation, agency or similar agreements among the
Lenders or between any Lender and any other bank or creditor with respect to
any
indebtedness or obligations of any Credit Party hereunder or thereunder) now
or
hereafter entered into in connection with this Agreement (including any Swap
Agreements), as such documents, instruments or agreements may be amended,
modified or supplemented from time to time.
“Material
Adverse Change”
means
any event, development or circumstance that has had or could in the opinion
of
the Required Lenders reasonably
be expected to have a Material Adverse Effect.
“Material
Adverse Effect”
means
a
material adverse effect on (a) the business, assets, operations or
condition, financial or otherwise, of the Credit Parties taken as a whole,
or
(b) the validity or enforceability of any of the Loan Documents, the
priority of the Liens created thereby or the rights and remedies of the Agent
and the Lenders thereunder or (c) any Material Contract, or (d) the
amount which the Lenders would be likely to receive (after giving effect to
delays in payment and costs of enforcement) upon the liquidation of the
Collateral.
“Material
Contract”
means
(a) the contracts, licences and agreements listed and described on
Schedule C, and
(b) any other contract, licence or agreement (i) to which any Credit
Party is a party or bound, (ii) which is material to, or necessary in, the
operation of the business of any Credit Party, and (iii) which a Credit
Party cannot promptly replace by an alternative and comparable contract with
comparable commercial terms.
“Material
Indebtedness”
means
(a) the Parent Subordinated Debt, and (b) any Indebtedness
(other than the Loans and the Parent Subordinated Debt) of any one or more
of
the Credit Parties in an aggregate principal amount exceeding
Cdn.$2,000,000.
“Maturity
Date”
means
the third anniversary of the Effective Date (or, if such third anniversary
is
not a Business Day, the next Business Day thereafter).
“Moody’s”
means
▇▇▇▇▇’▇ Investors Service, Inc.
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21
-
“Obligations”
means
all obligations, liabilities and indebtedness of the Borrower to the Agent,
the
Lenders or a Lender with respect to the principal of and interest on the Loans
and the payment or performance of all other obligations, liabilities and
indebtedness of the Borrower to the Agent, the Lenders or a Lender hereunder
or
arising under or pursuant to any one or more of the other Loan Documents or
with
respect to the Loans, including, without limitation, all reimbursement and
indemnity obligations of the Borrower to the Agent, the Lenders or a Lender
hereunder or in connection with any Letter of Credit Guarantee, F/X Guarantee
or
otherwise.
“Operating
Account”
means
the bank account maintained by the Borrower at a financial institution
acceptable to the Agent, acting reasonably.
“Out-of-Pocket
Expenses”
means
all of the Agent’s present and future expenses incurred relative to this
Agreement or any other Loan Documents, whether incurred heretofore or hereafter,
which expenses shall include, without being limited to: the reasonable cost
of
retaining external legal counsel, record searches, all costs and expenses
incurred by the Agent in opening bank accounts, depositing cheques, receiving
and transferring funds, and wire transfer charges, any charges imposed on the
Agent due to returned items and “insufficient funds” of deposited cheques and
the Agent’s standard fees relating thereto, any amounts paid by, incurred by or
charged to, the Agent by the Issuing Bank under a Letter of Credit Guarantee
or
by the F/X Bank under a F/X Guarantee or the reimbursement agreements related
thereto, applications for Letters of Credit or F/X Contracts or other like
document which pertain either directly or indirectly to such Letters of Credit
or F/X Contracts, and the Agent’s standard fees relating to the F/X Contracts
and the Letters of Credit and any drafts thereunder, reasonable travel, lodging
and similar expenses of the Agent’s personnel (or any of its agents) in
connection with inspecting and monitoring the Collateral from time to time
at
reasonable intervals hereunder, any applicable reasonable counsel fees and
disbursements, fees and taxes relative to the filing of financing statements,
and all expenses, costs and fees set forth incurred by or imposed on the Agent
by reason of the exercise of any of its rights and remedies under this Agreement
or any of the other Loan Documents.
“Parent”
means
▇▇▇▇▇▇ International Inc. and its successors and permitted assigns.
“Parent
Credit Agreement”
means
the revolving demand credit facility agreement dated February 14, 2005
between the Parent and 0706906 B.C. Ltd. (predecessor of the General Partner),
with such obligations of 0706906 B.C. Ltd. assumed by the Borrower, as amended,
modified, supplemented or restated from time to time.
“Parent
Guarantee”
means
a
guarantee dated May 19, 2006 made by the Parent to and in favour of the
Agent in form and substance satisfactory to the Agent and the
Lenders.
“Parent
Indemnity”
means
the indemnity dated May 19, 2006 made by the Parent to and in favour of the
Agent and the Borrower in respect of certain tax liabilities of the Borrower
assumed by the Parent.
“Parent
Pulp Agency Agreement”
means
the pulp agency agreement to be entered into between the Parent and the Borrower
after the Effective Date pursuant to which the Parent will agree to market
pulp
on behalf of the Borrower on commercially reasonable terms provided that
- 22 -
the commission rate payable by the Borrower to the Parent thereunder will not exceed 2% based on net product sales..
“Parent
Subordinated Debt”
means
the unsecured Indebtedness of the Borrower to the Parent in the aggregate
principal amount of U.S.$15,000,000 as such amount may be increased or decreased
from time to time, as evidenced by the Parent Credit Agreement.
“Participant”
has
the
meaning set out in Section 9.4.
“Payment
Office”
means
the Agent’s office located at 207 Queen’s Quay West, Suite 700, Toronto,
Ontario, M5J 1A7, Attention: Chief Credit Officer (or such other office or
individual as the Agent may hereafter designate in writing to the other parties
hereto).
“Pension
Plan”
means
any pension benefit plan within the meaning of the Pension
Benefits Act
(Ontario) in respect of which any Credit Party makes or has made contributions
in respect of its employees.
“Permitted
Investments”
means:
| (a) |
direct
obligations of, or obligations the principal of and interest on which
are
unconditionally guaranteed by, the Government of Canada or of any
Canadian
province (or by any agency thereof to the extent such obligations
are
backed by the full faith and credit of the Government of Canada or
of such
Canadian province), in each case maturing within one year from the
date of
acquisition thereof;
|
| (b) |
investments
in commercial paper maturing within 270 days from the date of acquisition
thereof and having, at such date of acquisition, the highest credit
rating
obtainable from any of ▇▇▇▇▇’▇, S&P or
DBRS;
|
| (c) |
investments
in certificates of deposit, bankers’ acceptances and time deposits
maturing within 180 days from the date of acquisition thereof issued
or
guaranteed by or placed with, and money market deposit accounts issued
or
offered by, any Schedule I bank under the Bank
Act
(Canada).
|
“Permitted
Liens”
means:
| (a) |
Liens
in favour of the Lenders for the obligations of the Borrower or any
other
Credit Party under or pursuant to the Loan
Documents;
|
| (b) |
Liens
granted by a Credit Party in favour of another Credit Party in order
to
secure any of its indebtedness to such other Credit Party, provided
that such Liens are subject to assignment and postponement arrangements
satisfactory to the Agent;
|
| (c) |
Purchase
Money Liens securing Indebtedness and Liens to secure Capital Lease
Obligations, in each case only to the extent permitted by
Section 6.1(f);
|
| (d) |
Liens
imposed by any Governmental Authority for Taxes not yet due and delinquent
or which are being contested in good faith in compliance with
Section 5.3, and, during such
|
-
23
-
period
during which such Liens
are being so contested, such Liens shall not be executed on or enforced
against
any of the assets of any Credit Party;
| (e) |
carrier’s,
warehousemen’s, mechanics’, materialmen’s, repairmen’s, construction and
other like Liens arising by operation of Applicable Law, arising
in the
ordinary course of business, which are not overdue for a period of
more
than 30 days or which are being contested in good faith and by appropriate
proceedings, and, during such period during which such Liens are
being so
contested, such Liens shall not be executed on or enforced against
any of
the assets of the Credit Party, provided
that the Credit Party shall have set aside on its books reserves
deemed
adequate therefor and not resulting in qualification by
auditors;
|
| (f) |
statutory
Liens incurred or pledges or deposits made under worker’s compensation,
unemployment insurance and other social security
legislation;
|
| (g) |
Liens
or deposits to secure the performance of bids, tenders, trade contracts,
leases, statutory obligations, surety and appeal bonds, performance
bonds
and other obligations of a like nature (other than for borrowed money)
incurred in the ordinary course of
business;
|
| (h) |
servitudes,
easements, rights-of-way, restrictions and other similar encumbrances
on
real property imposed by Applicable Law or incurred in the ordinary
course
of business and encumbrances consisting of zoning or building
restrictions, easements, licenses, restrictions on the use of property
or
minor imperfections in title thereto which, in the aggregate, are
not
material, and which do not in any case materially detract from the
value
of the property subject thereto or interfere with the ordinary conduct
of
the business of the Credit Parties;
|
| (i) |
Liens
of or resulting from any judgement or award, the time for the appeal
or
petition for rehearing of which shall not have expired, or in respect
of
which the Credit Parties shall at any time in good faith be prosecuting
an
appeal or proceeding for review and in respect of which a stay of
execution pending such appeal or proceeding for review shall have
been
secured;
|
| (j) |
undetermined
or inchoate Liens and charges arising or potentially arising under
statutory provisions which have not at the time been filed or registered
in accordance with Applicable Law or of which written notice has
not been
duly given in accordance with Applicable Law or which although filed
or
registered, relate to obligations not due or
delinquent;
|
| (k) |
the
rights reserved to or vested in Governmental Authorities by statutory
provisions or by the terms of leases, licenses, franchises, grants
or
permits, which affect any land, to terminate the leases, licenses,
franchises, grants or permits or to require annual or other periodic
payments as a condition of the continuance thereof;
|
| (l) |
securities
to public utilities or to any municipalities or Governmental Authorities
or other public authority when required by the utility, municipality
or
Governmental Authorities
|
-
24
-
or
other public authority in connection with the supply of services
or utilities to a Credit Party;
| (m) |
Liens
or covenants restricting or prohibiting access to or from lands abutting
on controlled access highways or covenants affecting the use to which
lands may be put; provided
that, in the case of a Credit Party such Liens or covenants do not
materially and adversely affect the use of the lands by the Credit
Party;
|
| (n) |
Liens
consisting of royalties payable with respect to any asset or property
of a
Credit Party existing as of the Effective Date; provided
that the existence of any such Lien on any material property or asset
of a
Credit Party shall have been disclosed in writing to the Lenders
prior to
the Effective Date;
|
| (o) |
Liens
securing reimbursement obligations relating to letters of credit
issued
pursuant to this Agreement, provided
that the value of the collateral subject to any such Lien does not
exceed
the amount of the related reimbursement
obligation;
|
| (p) |
statutory
Liens incurred or pledges or deposits made in favour of a Governmental
Authority to secure the performance of obligations of a Credit Party
under
Environmental Laws to which any assets of such Credit Party are subject,
provided
that no Default or Event of Default shall have occurred and be
continuing;
|
| (q) |
a
Lien granted by a Credit Party to a landlord to secure the payment
of
arrears of rent in respect of leased properties in the Province of
Quebec
leased from such landlord, provided
that such Lien is limited to the assets located at or about such
leased
properties;
|
| (r) |
any
Lien on any property or asset of a Credit Party existing on the date
hereof and set forth in Schedule 3.10; provided
that (i) such Lien shall not apply to any other property or asset of
such Credit Party, and (ii) such Lien shall secure only those
obligations which it secures on the date
hereof;
|
| (s) |
any
Lien existing on any property or asset prior to the acquisition thereof
by
a Credit Party or existing on any property or asset of any Person
that
becomes a Credit Party after the date hereof prior to the time such
Person
becomes a Credit Party; provided that (i) such Lien is not created in
contemplation of or in connection with such acquisition or such Person
becoming a Credit Party, as the case may be, (ii) such Lien shall not
apply to any other property or assets of such Credit Party, and
(iii) such Lien shall secure only those obligations which it secures
on the date of such acquisition or the date such Person becomes a
Credit
Party, as the case may be; and
|
| (t) |
any
extension, renewal or replacement of any of the foregoing; provided,
however, that the Liens permitted hereunder shall not be extended
to cover
any additional Indebtedness of the Credit Parties or their property
(other
than a substitution of like property), except Liens in respect of
Capital
Lease Obligations and Purchase Money Liens as permitted by (c)
above.
|
-
25
-
“Person”
includes any natural person, corporation, company, limited liability company,
trust, joint venture, association, incorporated organization, partnership,
Governmental Authority or other entity.
“Phase
I Environmental Report”
means
the existing phase I environmental assessment report prepared by URS Canada
Inc.
dated November, 2004.
“PPSA”
means
the Personal
Property Security Act (British
Columbia), as amended from time to time.
“Priority
Payables”
means,
with respect to any Person, any amount payable by such Person which is secured
by a Lien in favour of a Governmental Authority which ranks or is capable of
ranking prior to or pari passu with the Liens created by the Security Documents
in respect of any Eligible Accounts or Eligible Inventory, including amounts
owing for wages, vacation pay, severance pay, employee deductions, sales tax,
excise tax, Tax payable pursuant to Part IX of the Excise
Tax Act (Canada)
(net of GST input credits), income tax, workers compensation, government
royalties, pension fund obligations, overdue rents or Taxes, and other statutory
or other claims that have or may have priority over, or rank pari
passu
with,
such Liens created by the Security Documents.
“PST”
means
all taxes payable under the Retail
Sales Tax Act
(Ontario) or any similar statute of another jurisdiction of Canada.
“Purchase
Money Lien”
means
a
Lien taken or reserved in personal property to secure payment of all or part
of
its purchase price, provided
that
such Lien (i) secures an amount not exceeding the purchase price of such
personal property, (ii) extends only to such personal property and its
proceeds, and (iii) is granted prior to or within 30 days after the
purchase of such personal property.
“QST”
means
the Quebec sales tax imposed pursuant to an Act
respecting the Québec sales tax.
“Register”
has
the
meaning set out in Section 9.4(c).
“Reimbursement
Obligations”
means,
at any date, the sum of the outstanding obligations of the Borrower to reimburse
the Agent at such time to the extent that the Agent is obligated to reimburse:
(a) the Issuing Bank at such time pursuant to any Letter of Credit
Guarantee; and (b) the F/X Bank at such time pursuant to any F/X
Guarantee.
“Related
Parties”
means,
with respect to any Person, such Person’s Affiliates and the respective
directors, officers, employees, agents and advisors of such Person and of such
Person’s Affiliates.
“Release”
is
to
be broadly interpreted and shall include an actual or potential discharge,
deposit, spill, leak, pumping, pouring, emission, emptying, injection, escape,
leaching, seepage or disposal of a Hazardous Materials which is or may be in
breach of any Environmental Laws.
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26
-
“Required
Lenders”
means,
at any time, Lenders having Exposure and unused Commitments representing more
than 50% of the sum of the total Exposure and unused Commitments at such
time.
“Responsible
Officer”
means,
with respect to any Person, the chairman, the president, any vice president,
the
chief executive officer, the chief operating officer, or such other officer
acceptable to the Agent and, in respect of financial or accounting matters,
any
Financial Officer of such Person; unless otherwise specified, all references
herein to a Responsible Officer mean a Responsible Officer of the
Borrower.
“Restricted
Payment”
shall
mean, with respect to any Person, any payment by such Person (i) of any
dividends on any of its Equity Securities, (ii) on account of, or for the
purpose of setting apart any property for a sinking or other analogous fund
for,
the purchase, redemption, retirement or other acquisition of any of its Equity
Securities or any warrants, options or rights to acquire any such shares, or
the
making by such Person of any other distribution in respect of any of its Equity
Securities, (iii) of any principal of or interest or premium on or of any
amount in respect of a sinking or analogous fund or defeasance fund for any
Indebtedness of such Person ranking in right of payment subordinate to any
liability of such Person under the Loan Documents, (iv) of
any
principal of or interest or premium on or of any amount in respect of a sinking
or analogous fund or defeasance fund for any Indebtedness of such Person to
a
shareholder of such Person or to an Affiliate of a shareholder of such Person,
(v) in respect of an Investment, or (vi) of any management, consulting
or similar fee or any bonus payment or comparable payment, or by way of gift
or
other gratuity, to any Affiliate of such Person or to any director or officer
thereof.
“Restricted
Subsidiary”
means
each Subsidiary of the Borrower which is not an Unrestricted
Subsidiary.
“Revolving
Loan”
has
the
meaning set out in Section 2.1.
“Rolling
Period”
means,
as at the end of any calendar month such calendar month taken together with
the
eleven immediately preceding calendar months.
“S&P”
means
Standard & Poor’s Ratings Services, a division of the ▇▇▇▇▇▇-▇▇▇▇ Companies,
Inc.
“Sale/Leaseback
Obligations”
of any
Person means the obligations of such Person to pay rent or other amounts under
a
Sale/Leaseback Transaction.
“Sale/Leaseback
Transaction”
means
any arrangement between a Credit Party or any Restricted Subsidiary with any
Person whereby the Credit Party or any such Restricted Subsidiary
shall sell or transfer any property, whether now owned or hereafter acquired,
and whereby the Credit Party or any such Restricted Subsidiary
shall then or thereafter rent or lease as lessee such property or any part
thereof or other property which the Credit Party or any such
Restricted Subsidiary
intends to use for substantially the same purpose or purposes as the property
sold or transferred.
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27
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“Scheduled
Capital Expenditures”
means
Capital Expenditures of the Borrower and its Restricted Subsidiaries permitted
for any Fiscal Year pursuant to Section 6.14.
“Security
Documents”
means
the agreements, documents or instruments described or referred to in
Section 4.1 and Section 5.11 (including, to the extent such Section
describes an amendment, the agreement, document or instrument amended thereby)
and any and all other agreements, documents or instruments now or hereafter
executed and delivered by any Credit Party or any other Person as security
for
the payment or performance of all or part of the obligations of the Borrower
(or
such Credit Party or other Person) hereunder or under any other Loan Documents,
as any of the foregoing may have been, or may hereafter be, amended, modified
or
supplemented.
“Settlement
Date”
means
the date, which shall be weekly, or more frequently at the discretion of the
Agent upon the occurrence of an Event of Default or a continuing decline or
increase of the Loans, that the Agent and the Lenders shall settle among
themselves so that (a) the Agent shall not at any time have, as the agent
for the Lenders, any money at risk, and (b) on such Settlement Date each
Lender shall be responsible for its pro rata amount of the Revolving Loan,
calculated on the basis of each of their Applicable Percentages in respect
of
the outstanding Exposure as at such date, provided that each Settlement Date
shall be a Business Day.
“Subordination
Agreement”
means
the subordination agreement between the Agent and the Parent in respect of
the
Parent Subordinated Debt.
“Subsidiary”
means,
with respect to any Person (in this definition, the “parent”)
at any
date, any other Person the accounts of which would be consolidated with those
of
the parent in the parent’s consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as
any
other Person (a) of which securities or other ownership interests
representing more than 50% of the equity or more than 50% of the ordinary voting
power or, in the case of a partnership, more than 50% of the general partnership
interests are, as of such date, owned, controlled or held, or (b) that is,
as of such date, otherwise Controlled, by the parent or one or more Subsidiaries
of the parent or by the parent and one or more Subsidiaries of the
parent.
“Swap
Agreement”
means
any
agreement with respect to any swap, forward, future or derivative transaction
or
option or similar agreement involving, or settled by reference to, one or more
rates, currencies, commodities, equity or debt instruments or securities, or
economic, financial or pricing indices or measures of economic, financial or
pricing risk or value or any similar transaction or any combination of these
transactions.
“Taxes”
means
all taxes, charges, fees, levies, imposts and other assessments, including
all
income, sales, use, goods and services, value added, capital, capital gains,
alternative, net worth, transfer, profits, withholding, payroll, employer
health, excise, real property and personal property taxes, and any other taxes,
customs duties, fees, assessments, or similar charges in the nature of a tax,
including Canada Pension Plan and provincial pension plan contributions,
unemployment insurance payments and workers’ compensation premiums, together
with any instalments with respect thereto,
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28
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and any interest, fines and penalties with respect thereto, imposed by any Governmental Authority (including federal, state, provincial, municipal and foreign Governmental Authorities), and whether disputed or not.
“Transactions”
means
the execution, delivery and performance by the Borrower of this Agreement and
the other Loan Documents, the borrowing of Loans, the use of the proceeds
thereof and the issuance of Letters of Credit hereunder.
“Type”,
when
used in reference to any Loan or Borrowing, refers to whether the rate of
interest on such Loan, or on the Loans comprising such Borrowing, is determined
by reference to the Canadian Prime Rate, the CDOR Rate, the Base Rate, the
LIBO
Rate, or is an LC.
“Unrestricted
Subsidiary”
means
any Subsidiary of the Borrower which, together with its Subsidiaries, represents
less than 5% of the consolidated assets or consolidated gross revenues of the
Borrower.
“U.S.
Dollars”
and
“U.S.$”
refer
to lawful money of the United States of America.
“U.S.$
Equivalent”
means,
on any day, the amount of U.S. Dollars that the Agent could purchase, in
accordance with its normal practice, with a specified amount of Canadian Dollars
based on the spot rate at which U.S. Dollars are offered at the start of such
day by CIBC in Toronto, Ontario.
1.2 Classification
of Loans and Borrowings.
For
purposes of this Agreement, Loans may be classified and referred to by Type
(e.g.,
a
“Canadian Prime Rate Loan”) and Borrowings also may be classified and referred
to by Type (e.g.,
a
“Canadian Prime Rate Borrowing”).
1.3 Terms
Generally.
The
definitions of terms herein shall apply equally to the singular and plural
forms
of the terms defined. Whenever the context may require, any pronoun shall
include the corresponding masculine, feminine and neuter forms. The words
“include”, “includes” and “including” shall be deemed to be followed by the
phrase “without limitation”. The word “will” shall be construed to have the same
meaning and effect as the word “shall” . The word “or” is disjunctive; the word
“and” is conjunctive. The word “shall” is mandatory; the word “may” is
permissive. The words “to the knowledge of” means, when modifying a
representation, warranty or other statement of any Person, that the fact or
situation described therein is known by the Person (or, in the case or a Person
other than a natural Person, known by the Responsible Officer of that Person)
making the representation, warranty or other statement, or with the exercise
of
reasonable due diligence under the circumstances (in accordance with the
standard of what a reasonable Person in similar circumstances would have done)
would have been known by the Person (or, in the case of a Person other than
a
natural Person, would have been known by such Responsible Officer of that
Person). Unless the context requires otherwise (a) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein),
(b) any reference herein to any statute or any section thereof shall,
unless otherwise expressly stated, be deemed to be a reference to such statute
or section as amended, restated or re-enacted from time to time, (c) any
reference herein to any Person shall be construed to include such Person’s
successors and permitted assigns,
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29
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(d) the
words “herein”, “hereof” and “hereunder”, and words of similar import, shall be
construed to refer to this Agreement in its entirety and not to any particular
provision hereof, (e) all references herein to Articles, Sections, Exhibits
and Schedules shall be construed to refer to Articles and Sections of, and
Exhibits and Schedules to, this Agreement, and (f) the words “asset” and
“property” shall be construed to have the same meaning and effect and to refer
to any and all tangible and intangible assets and properties, including cash,
securities, accounts and contract rights.
1.4 Accounting
Terms; GAAP.
Except
as otherwise expressly provided herein, all terms of an accounting or financial
nature shall be construed in accordance with GAAP. All calculations for the
purposes of determining compliance with the financial ratios and financial
covenants contained herein shall be made on a basis consistent with GAAP in
existence from time to time and used in the preparation of the financial
statements of the Borrower referred to in Section 5.1(a).
1.5 Time.
All time
references herein shall, unless otherwise specified, be references to local
time
in ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇. Time is of the essence of this Agreement and the other
Loan
Documents.
1.6 Permitted
Liens.
Any
reference in any of the Loan Documents to a Permitted Lien is not intended
to
subordinate or postpone, and shall not be interpreted as subordinating or
postponing, or as any agreement to subordinate or postpone, any Lien created
by
any of the Loan Documents to any Permitted Lien.
ARTICLE
2
THE
CREDITS
2.1 Commitments.
Subject
to the terms and conditions set forth herein, each Lender commits to make Loans
(each such Loan made under this Section 2.1, a “Revolving
Loan”)
to the
Borrower from time to time during the period commencing on the Effective Date
and ending on the Maturity Date (each such commitment, a “Commitment”)
in an
aggregate principal amount equal to the amount set forth beside such Lender’s
name in Schedule A under the heading “Commitment”, provided
that any
Revolving Loans made by any Lender as requested by the Borrower will not result
in (i) such Lender’s Exposure exceeding such Lender’s Commitment, or
(ii) the sum of the total Exposure exceeding either the total Commitment or
the Borrowing Base. Within the foregoing limits and subject to the terms and
conditions set forth herein, the Borrower may borrow, repay and reborrow
Revolving Loans.
2.2 Loans
and Borrowings.
(a) Each
Revolving Loan shall be made as part of a Borrowing consisting of Revolving
Loans made by the Lenders ratably in accordance with their respective
Commitments. The failure of any Lender to make any Loan required to be made
by
it shall not relieve any other Lender of its obligations hereunder; provided
that the
Commitments of the Lenders are several and no Lender shall be responsible for
any other Lender’s failure to make Loans as required.
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30
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(b) Subject
to the Letter of Credit Sub-Line limitation, the F/X Contract Sub-Line
limitation, the Borrowing Base limitations and the other limitations on Loans
and Borrowings as provided in this Agreement, each Borrowing shall be comprised
entirely of Canadian Prime Loans, B/A Equivalent Loans, Base Rate Loans, LIBO
Rate Loans and/or the delivery of Letters of Credit Guarantees or F/X Guarantees
as the Borrower may request in accordance herewith.
(c) Each
Lender may at its option make any LIBO Rate Loan by causing any domestic or
foreign branch or Affiliate of such Lender to make such Loan; provided
that any
exercise of such option shall not result in any increased costs for the Borrower
or affect the obligation of the Borrower to repay such Loan in accordance with
the terms of this Agreement. At the commencement of each Interest Period for
any
LIBO Rate Borrowing, such Borrowing shall be in an aggregate amount that is
an
integral multiple of Cdn.$500,000 and not less than Cdn.$1,000,000. At the
commencement of each Contract Period for any B/A Borrowing, such Borrowing
shall
be in an aggregate amount that is an integral multiple of Cdn.$500,000 and
not
less than Cdn.$1,000,000. Borrowings of more than one Type and Class may be
outstanding at the same time; provided
that
there shall not at any time be more than a total of five B/A Borrowings or
five
LIBO Rate Borrowings outstanding.
2.3 Requests
for Borrowings.
(a) To
request a Borrowing, the Borrower shall notify the Agent of such request by
written Borrowing Request (i) in the case of a LIBO Rate Borrowing, not
later than 1:00 p.m., Toronto time, three Business Days before the date of
the proposed Borrowing, (ii) in the case of a B/A Borrowing, not later than
1:00 p.m., Toronto time, two Business Days before the date of the proposed
Borrowing, or (iii) in the case of a Canadian Prime Borrowing or a Base
Rate Borrowing, not later than 1:00 p.m., Toronto time, one Business Day
before the date of the proposed Borrowing; provided
that any
such notice of a Canadian Prime Borrowing or a Base Rate Borrowing to finance
the reimbursement of an LC Disbursement may be given not later than
1:00 p.m., Toronto time, on the date of the proposed Borrowing, or
(iv) in the case of the issuance of a Letter of Credit Guarantee in
accordance with Section 2.18 or the issuance of an F/X Guarantee in
accordance with Section 2.19, not later than 1:00 p.m., Toronto time,
five (5) Business Days before the date of the proposed Borrowing. The Agent
and
each Lender are entitled to rely and act upon any written Borrowing Request
given or purportedly given by the Borrower, and the Borrower hereby waives
the
right to dispute the authenticity and validity of any such request or resulting
transaction once the Agent or any Lender has advanced funds or made a B/A
Equivalent Loan or issued a Letter a Credit Guarantee or F/X Guarantee based
on
such written Borrowing Request. Each such written Borrowing Request shall be
substantially in the form of Exhibit B and shall specify the following
information:
| (i) |
the
aggregate amount of each requested Borrowing and the Class
thereof;
|
| (ii) |
the
date of such Borrowing, which shall be a Business
Day;
|
| (iii) |
whether
such Borrowing is to be a Canadian Prime Borrowing, a B/A Borrowing,
a
Base Rate Borrowing, a LIBO Rate Borrowing, the issuance
|
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of
a Letter of
Credit Guarantee in accordance with Section 2.18 or the issuance of an F/X
Guarantee in accordance with Section 2.19;
| (iv) |
in
the case of a LIBO Rate Borrowing, the initial Interest Period to
be
applicable thereto, which shall be a period contemplated by the definition
of the term “Interest
Period”,
and in the case of a B/A Borrowing, the initial Contract Period to
be
applicable thereto, which shall be a period contemplated by the definition
of the term “Contract
Period”;
and
|
| (v) |
the
location and number of the Borrower’s account to which funds are to be
disbursed, which shall comply with the requirements of this
Agreement.
|
(b) If
no
election as to the Type of Borrowing is specified, then the requested Borrowing
shall be a Canadian Prime Borrowing (if denominated in Canadian Dollars) or
a
Base Rate Borrowing (if denominated in U.S. Dollars). If no currency is
specified, the Borrowing shall be denominated in Canadian Dollars. If no
Interest Period is specified with respect to any requested LIBO Rate Borrowing,
then the Borrower shall be deemed to have selected an Interest Period of a
one
month duration. If no Contract Period is specified with respect to any requested
B/A Borrowing, then the Borrower shall be deemed to have selected a Contract
Period of a one month duration.
(c) Each
Borrowing initially shall be of the Type specified in the applicable Borrowing
Request. Thereafter, the Borrower may elect to convert a Borrowing to a
different Type or to continue such Borrowing and, in the case of (i) a LIBO
Rate Borrowing, may elect a new Interest Period therefor, or (ii) a B/A
Borrowing, may elect a new Contract Period therefor, all as provided in this
Section 2.3(c). The Borrower may elect different options with respect to
different portions of the affected Borrowing, in which case each such portion
shall be allocated ratably among the Lenders holding the Loans comprising such
Borrowing in accordance with their Applicable Percentage, and the Loans
comprising each such portion shall be considered a separate Borrowing. To make
an election pursuant to this Section 2.3(c), the Borrower shall notify the
Agent of such election in the manner and by the time that a Borrowing Request
would be required under Section 2.3(a) if the Borrower were requesting a
Borrowing of the Type resulting from such election to be made on the effective
date of such election. In addition to the information specified in
Section 2.3(a), each Borrowing Request shall specify the Borrowing to which
such request applies and, if different options are being elected with respect
to
different portions thereof, the portions thereof to be allocated to each
resulting Borrowing.
(d) In
the
absence of a timely and proper election with regard to (i) LIBO Rate
Borrowings, the Borrower shall be deemed to have elected to convert such LIBO
Rate Borrowings to Base Rate Borrowings on the last day of the Interest Period
of the relevant LIBO Rate Borrowings, and (ii) B/A Borrowings, the Borrower
shall be deemed to have elected to convert such B/A Borrowings to Canadian
Prime
Borrowings on the last day of the Contract Period of the relevant B/A
Borrowings.
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2.4 Funding
of Borrowings.
(a) Each
Lender shall make each Loan to be made by it hereunder on the proposed date
thereof by wire transfer of immediately available funds by 2:00 p.m.,
Toronto time, to the account of the Agent most recently designated by it for
such purpose by notice to the Lenders. The Agent will make such Loans available
to the Borrower by promptly crediting the amounts so received, in like funds,
to
an account of the Borrower and designated by the Borrower in the applicable
Borrowing Request. The Borrower shall satisfy Reimbursement Obligations promptly
as they arise by way of a request for a Loan and all Loans made hereunder to
satisfy Reimbursement Obligations: (i) in respect of any Letter of Credit
Guarantee shall be remitted by the Agent to the Issuing Bank in accordance
with
such Letter of Credit Guarantee (unless the Issuing Bank has already been fully
reimbursed directly by the Borrower in respect of drawings under the Letter
of
Credit which is the subject of such Letter of Credit Guarantee) and (ii) in
respect of any F/X Guarantee shall be remitted by the Agent to the F/X Bank
in
accordance with such F/X Guarantee (unless the F/X Bank has already been fully
reimbursed directly by the Borrower in respect of all such losses in respect
of
the F/X Contract which is the subject of such F/X Guarantee).
(b) The
Agent
may, upon notice given by the Agent no later than 2:00 p.m., Toronto time
on any Settlement Date, request each Lender to make, and each Lender hereby
agrees to make, a Revolving Loan in an amount equal to such Lender’s Applicable
Percentage (calculated with respect to the aggregate Commitments then
outstanding) of the aggregate amount of the Revolving Loans made by the Agent
from the preceding Settlement Date to the date of such notice. Each Lender’s
obligation to make the Revolving Loans and to make the settlements pursuant
to
this Section 2.4 shall not be affected by any circumstance, including
(i) any set-off, counterclaim, recoupment, defence or other right which any
such Lender or the Borrower may have against the Agent, the Borrower, any Lender
or any other Person for any reason whatsoever; (ii) any adverse change in
the condition (financial or otherwise) of the Borrower; or (iii) any other
circumstance, happening or event whatsoever, whether or not similar to any
of
the foregoing. Without limiting the liability and obligation of each Lender
to
make such advances, the Borrower authorizes the Agent to charge the Borrower’s
Operating Account to the extent amounts received from the Lenders are not
sufficient to repay in full the amount of any such deficiency. To the extent
that any Lender has failed to fund all such payments and Revolving Loans, the
Agent shall be entitled to set off the funding short-fall against that Lender’s
pro rata share of all payments received from the Borrower.
(c) The
Agent, for the account of the Lenders, shall disburse all amounts to the
Borrower and shall handle all collections. It is understood that for purposes
of
advances to the Borrower and for purposes of this Section 2.4, the Agent is
using the funds of the Agent.
(d) Unless
the Agent shall have been notified in writing by any Lender prior to any advance
to the Borrower that such Lender will not make the amount which would constitute
its share of the Borrowing on such date available to the Agent, the Agent may
assume that such Lender shall make such amount available to the Agent on a
Settlement Date, and the Agent may, in reliance upon such assumption, make
available to the Borrower a corresponding amount. A certificate of the Agent
submitted to any Lender with respect to any amount owing under this
Section 2.4 shall be conclusive, absent manifest error. If such Lender’s
share of
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33
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such Borrowing is not in fact made available to the Agent by such Lender on the Settlement Date, the Agent shall be entitled to recover such amount with interest thereon at the rate per annum applicable to Revolving Loans hereunder, on demand, from the Borrower without prejudice to any rights which the Agent may have against such Lender hereunder. Nothing contained in this shall relieve any Lender which has failed to make available its Applicable Percentage of any borrowing hereunder from its obligation to do so in accordance with the terms hereof. Nothing contained herein shall be deemed to obligate the Agent to make available to the Borrower the full amount of a requested advance when the Agent has any notice (written or otherwise) that any of the Lenders will not advance its Applicable Percentage thereof.
(e) On
the
Settlement Date, the Agent and the Lenders shall each remit to the other, in
immediately available funds, all amounts necessary so as to ensure that, as
of
the Settlement Date, the Lenders shall have their Applicable Percentage share
of
all outstanding Obligations.
(f) The
Agent
shall forward to each Lender, at the end of each calendar month, a copy of
the
account statement rendered by the Agent to the Borrower.
(g) The
Agent
shall, after receipt of any interest and fees earned under this Agreement,
promptly remit to the Lenders their Applicable Percentage of any (i) fees
they are entitled to receive, and (ii) interest computed at the rate and as
provided for in this Agreement on all outstanding amounts advanced by the
Lenders on each Settlement Date, prior to adjustment, that are subsequent to
the
last remittance by the Agent to the Lenders of such interest
amounts.
2.5 Interest.
(a) The
Loans
comprising each Canadian Prime Borrowing shall bear interest (computed on the
basis of the actual number of days elapsed over a year of 365 days or 366 days,
as the case may be) at a rate per annum equal to the Canadian Prime Rate plus
0.50%. The Loans comprising each B/A Borrowing shall bear interest (computed
in
advance on the basis of the actual number of days in the relevant Contract
Period over a year of 365 days or 366 days, as the case may be) at a rate per
annum equal to the B/A Rate plus 2.25%. The Loans comprising each Base Rate
Borrowing shall bear interest (computed on the basis of the actual number of
days elapsed over a year of 360 days) at a rate per annum equal to the Base
Rate
plus 0.50%. The Loans comprising each LIBO Rate Borrowing shall bear interest
(computed on the basis of the actual number of days in the relevant Interest
Period over a year of 360 days) at the LIBO Rate for the Interest Period in
effect for such LIBO Rate Borrowing plus 2.25%.
(b) If
there
is a Default or an Event of Default has occurred and is continuing, all amounts
outstanding hereunder (including all Loans and all Letter of Credit Exposure
and
F/X Exposure) shall bear interest, after as well as before judgment, at a rate
per annum equal to 2% plus the rate otherwise applicable to such Loan or, in
the
case of any amount not constituting principal or interest on a Loan, at a rate
equal to 2% plus the rate otherwise applicable to, in the case of Canadian
Dollar amounts, Canadian Prime Loans, or in the case of U.S. Dollar amounts,
Base Rate Loans.
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34
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(c) Accrued
interest on each Loan shall be payable in arrears on the earlier of
(i) each applicable Interest Payment Date, and (ii) the date of
termination of the Commitments. In addition, in the event of any repayment
or
prepayment of any Loan, accrued interest on the principal amount repaid or
prepaid shall be payable on the date of such repayment or
prepayment.
(d) All
interest hereunder shall be payable for the actual number of days elapsed
(including the first day but excluding the last day). Any Loan that is repaid
on
the same day on which it is made shall bear interest for one day. The applicable
Canadian Prime Rate, Base Rate, LIBO Rate or B/A Rate shall be determined by
the
Agent, and such determination shall be conclusive absent manifest
error.
(e) For
the
purposes of the Interest
Act (Canada)
and disclosure thereunder, whenever any interest or any fee to be paid hereunder
or in connection herewith is to be calculated on the basis of a 360-day, 365-day
or 366-day year, the yearly rate of interest to which the rate used in such
calculation is equivalent is the rate so used multiplied by the actual number
of
days in the calendar year in which the same is to be ascertained and divided
by
360, 365 or 366, as applicable. The rates of interest under this Agreement
are
nominal rates, and not effective rates or yields. The principle of deemed
reinvestment of interest does not apply to any interest calculation under this
Agreement.
(f) If
any
provision of this Agreement would oblige the Borrower to make any payment of
interest or other amount payable to any Lender in an amount or calculated at
a
rate which would be prohibited by any Applicable Law or would result in a
receipt by that Lender of “interest” at a “criminal rate” (as such terms are
construed under the Criminal
Code (Canada)),
then, notwithstanding such provision, such amount or rate shall be deemed to
have been adjusted with retroactive effect to the maximum amount or rate of
interest, as the case may be, as would not be so prohibited by Applicable Law
or
so result in a receipt by that Lender of “interest” at a “criminal rate”, such
adjustment to be effected, to the extent necessary (but only to the extent
necessary), as follows:
| (i) |
first,
by reducing the amount or rate of interest required to be paid to
the
affected Lender under Section 2.5;
and
|
| (ii) |
thereafter,
by reducing any fees, commissions, costs, expenses, premiums and
other
amounts required to be paid to the affected Lender which would constitute
interest for purposes of section 347 of the Criminal
Code (Canada).
|
2.6 Termination
and Reduction of Commitments.
(a) Unless
previously terminated, the Commitments shall terminate on the Maturity
Date.
(b) The
Borrower may, upon five Business Days prior written notice to the Agent,
permanently cancel any unused portion of the Commitments, provided, however,
that the Borrower shall pay to the Agent, on the date on which such cancellation
becomes effective, the
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35
-
Early Termination Fee in respect of the cancelled portion of the Commitments. Notwithstanding the foregoing, (i) if such cancellation occurs following the first anniversary of the Effective Date, then no Early Termination Fee shall be payable if the Borrower enters into financing arrangements with CIBC concurrently with the effectiveness of such cancellation, and (ii) the Borrower may permanently cancel up to Cdn.$5,000,000 of the unused Commitments without accruing any Early Termination Fee thereon, as long as a termination of all of the Commitments does not occur within 90 days of the termination of such portion of the Commitments, in which case the Early Termination Fee shall then be payable on such portion. The Agent shall promptly notify each Lender of the receipt by the Agent of any such notice. Any such cancellation shall be applied rateably in respect of the Commitments of each Lender. Each notice delivered by the Borrower pursuant to this Section 2.6(b) shall be irrevocable.
(c) Unless
the Commitments have been previously terminated, upon the occurrence of the
Maturity Date in respect of any Lender, the Commitment thereof shall be
permanently reduced to an amount equal to the amount of the Loans made by such
Lender at such date and the Commitment shall be permanently reduced by an amount
equal to such reduction of such Commitment.
(d) Subject
to the other terms and conditions of this Agreement and unless the Commitments
have been earlier terminated, the Commitments shall be available hereunder
from
the Effective Date until the Maturity Date. The Maturity Date may be extended
for successive one year periods upon request by the Borrower providing written
notice to the Agent requesting that the Commitments hereunder are to be extended
as at the then applicable Maturity Date. Any such request shall be provided
by
the Borrower no later than 90 days
prior to the then applicable Maturity Date. Each Lender may agree to extend
its
Commitments for the period specified within 30 days of receiving a copy of
such
notice. The Maturity Date shall not be extended unless each Lender approves
such
extension request within the specified 30 days. Any Lender which fails to extend
its Commitments within the specified 30 days shall be deemed to have refused
to
extend such Commitments.
2.7 Repayment
of Loans.
The
Borrower hereby unconditionally promises to pay to the Agent for the account
of
each Lender the then unpaid principal amount of each Revolving Loan on the
earlier of the Maturity Date and the date that the Commitment is terminated
pursuant to Section 2.6(b) or Section 7.1.
2.8 Evidence
of Debt.
(a) Each
Lender shall maintain in accordance with its usual practice an account or
accounts evidencing the Indebtedness of the Borrower to such Lender resulting
from each Borrowing made by such Lender hereunder, including the amounts of
principal and interest payable and paid to such Lender from time to time
hereunder.
(b) The
Agent
shall maintain accounts in which it shall record (i) the amount of each
Borrowing made hereunder, the Type thereof and, in the cases of B/A Equivalent
Loans and LIBO Rate Loans, the relevant Contract Period or Interest Period,
applicable thereto, (ii) the amount of any principal or interest due and
payable or to become due and payable from the
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Borrower to each Lender hereunder, and (iii) the amount of any sum received by the Agent hereunder for the account of the Lenders and each Lender’s share thereof.
(c) The
entries made in the accounts maintained pursuant to Sections 2.8(a) and (b)
shall be conclusive evidence (absent manifest error) of the existence and
amounts of the obligations recorded therein; provided
that the
failure of any Lender or the Agent to maintain such accounts or any error
therein shall not in any manner affect the obligation of the Borrower to repay
the Borrowings in accordance with the terms of this Agreement. In the event
of a
conflict between the records maintained by the Agent and any Lender, the records
maintained by the Agent shall govern.
(d) Any
Lender may request that Loans (other than B/A Equivalent Loans) made by it
be
evidenced by a promissory note. In such event, the Borrower shall prepare,
execute and deliver to such Lender a promissory note payable to the order of
such Lender (or, if requested by such Lender, to such Lender and its registered
assigns) and in a form approved by the Agent. Thereafter, the Loans evidenced
by
such promissory note and interest thereon shall at all times be represented
by
one or more promissory notes in such form payable to the order of the payee
named therein (or, if such promissory note is a registered note, to such payee
and its registered assigns).
2.9 Prepayments.
(a) Mandatory
Borrowing Base Prepayments.
If at
any time the aggregate Exposure of all Lenders is in excess of the Borrowing
Base, the Borrower shall immediately pay to the Agent, for the account of the
Lenders, the amount of such excess to be applied (i) first, in satisfaction
of all Reimbursement Obligations, if any, outstanding at such time,
(ii) second, as a prepayment of the Revolving Loans, and (iii) third,
as Cover for any remaining Letter of Credit Exposure and F/X Exposure in an
amount of such remaining excess.
(b) Currency
Fluctuations.
If, at
any time, the Canadian $ Equivalent of the Loans made by any Lender to the
Borrower under any Credit exceeds the Commitment of such Lender under such
Credit (any such excess being referred to in this Section as an “Excess
Amount”),
then
the Borrower will repay to the Agent, for the account of each applicable Lender,
an amount equal to the Excess Amount with respect to such Lender. If the amount
of any Excess Amount with respect to any Lender is equal to or greater than
3%
of the Commitment of such Lender for the applicable Credit, then the repayment
of the Excess Amount to such Lender shall be made by the Borrower within one
Business Day after the Agent requests such repayment. If the amount of any
Excess Amount with respect to any Lender is less than 3% of the Commitment
of
such Lender for such credit, then the repayment of the Excess Amount to such
Lender shall be made on the next Quarterly Date. The Agent shall request
repayment of any Excess Amount forthwith upon request therefor by any Lender,
but the Agent is not otherwise required to monitor Excess Amount levels or
to
request repayment thereof.
(c) Notice
by Borrower.
Each
prepayment notice provided by the Borrower hereunder in respect of any permanent
repayment or prepayment hereunder shall be in a form acceptable to the Agent
and
shall be irrevocable.
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(d) Notice
by Agent.
Upon
receipt of a notice of prepayment pursuant to this Section 2.9, the Agent
shall promptly notify each applicable Lender of the contents thereof and of
such
Lender’s Applicable Percentage of such prepayment and the corresponding Early
Termination Fee, if any.
2.10 Fees.
(a) The
Borrower shall pay to the Agent for the account of and distribution to each
Lender rateably in accordance with each such Lender’s Applicable Percentage a
standby fee for the period commencing on the Effective Date to and including
the
Maturity Date (or such earlier date as the Commitments shall have been
terminated entirely) computed at a rate of 0.25% per annum on the average daily
excess amount of the aggregate Commitments over the aggregate Exposure (but
excluding, solely for the purposes of this Section 2.10, any F/X Exposure).
The standby fees on the Commitments shall be calculated monthly in arrears
on
the last Business Day of each calendar month (and on the date on which the
Commitments terminate) and each such calculated amount shall be payable on
the
first Business Day of the immediately following calendar month (or on the date
on which the Commitments terminate, as the case may be). All standby fees shall
be computed on the basis of a year of 365 or 366 days, as the case may be,
and
shall be payable for the actual number of days elapsed (including the first
day
but excluding the last day).
(b) The
Borrower agrees to pay to the Agent for the account of each Lender rateably
in
accordance with each Lender’s Applicable Percentage, a guarantee fee (an
“LC
Guarantee Fee”)
with
respect to the provision of Letter of Credit Guarantees, at the rate of 1.75%
per annum on the average daily amount of the Letter of Credit Exposure during
the period from and including the Effective Date (or the date on which any
Letter of Credit Exposure first exists to but excluding the latter of:
(i) the date of termination of the Commitments and (ii) the date on
which there ceases to be any Letter of Credit Exposure. During such time as
the
Issuing Bank is CIBC, the Borrower agrees to pay to the Agent, for the account
of each Lender rateably in accordance with each such Lender’s Applicable
Percentage, a further guarantee fee (a “Further
Guarantee Fee”)
which
shall accrue at the rate of 0.20% per annum on the average daily amount of
the
Letter of Credit Exposure related to Letters of Credit issued by CIBC during
the
period from and including the Effective Date (or the date on which any such
Letter of Credit Exposure first exists) to but excluding the latter of:
(x) the date of termination of the Commitments with respect to Letters of
Credit issued by CIBC, and (y) the date on which there ceases to be any
Letter of Credit Exposure related to Letters of Credit issued by CIBC. All
such
LC Guarantee Fees and Further LC Guarantee Fees (collectively, “LC
Fees”)
shall
be calculated monthly in arrears on the last Business Day of each calendar
month
(and on the date on which the Commitments terminate) and each such calculated
amount shall be payable on the first Business Day of the immediately following
calendar month (or on the date on which the Commitments terminate, as the case
may be); provided that all LC Fees, together with all Standard LC Fees (as
defined below), accruing after the date on which the Commitments terminate
shall
be payable on demand. All LC Fees payable pursuant to this Section 2.10(b)
shall be computed on the basis of a year of 365 or 366 days, as the case may
be,
and shall be payable for the actual number of days elapsed (including the first
day but excluding the last day). The Borrower also agrees to pay to the Agent,
for the account of the
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Issuing Bank, the Issuing Bank’s standard fees (the “Standard LC Fees”) with respect to the administration, handling, amendment, renewal or extension of any Letter of Credit or processing of drawings thereunder. Such standard fees shall be payable within 10 days after demand by the Agent or the Issuing Bank. It is acknowledged and agreed by the Lenders that the Issuing Bank may charge fees and other amounts directly to the Agent as a condition to issuing Letters of Credit and such fees and other amounts, to the extent that the Agent has not been reimbursed therefor by the Borrower, shall be charged by the Agent against each Lender’s rateable share (taking into account each such Lender’s Applicable Percentage) of other amounts owing from the Agent to each Lender (including, without limitation, each such Lender’s rateable share of LC Fees).
(c) In
the
event that the Borrower utilizes the F/X Contract Sub-Line under this Agreement
by requesting the provision of an F/X Guarantee to assist the Borrower in
obtaining an F/X Contract between the Borrower and the F/X Bank, the Borrower
agrees to pay to the Agent, for the account of each Lender rateably in
accordance with each such Lender’s Applicable Percentage, a fee (an
“F/X
Fee”)
for
the provision of each such F/X Guarantee at the rate of 0.20% per annum on
the
average daily amount of the F/X Exposure during the period from and including
the Effective Date to but excluding the latter of: (i) the date of
termination of the Commitments and (ii) the date on which there ceases to
be any F/X Exposure. All such F/X Fees shall be calculated monthly in arrears
on
the last Business Day of each calendar month (and on the date on which the
Commitments terminate) and each such calculated amount shall be payable on
the
first Business Day of the immediately following calendar month (or on the date
on which the Commitments terminate, as the case may be); provided that all
F/X
Fees accruing after the date on which the Commitments terminate shall be payable
on demand. All F/X Fees payable pursuant to this Section 2.10(c) shall be
computed on the basis of a year of 365 days or 366 days, as the case may be,
and
shall be payable for the actual number of days elapsed (including the first
day
but excluding the last day).
(d) The
Borrower agrees to pay to the Agent, for its own account, the loan facility
fee
in an amount equal to Cdn.$225,000, which Borrower acknowledges and agrees
shall
be fully earned and payable on the Effective Date.
(e) The
Borrower agrees to pay to the Agent, for its own account, on the Effective
Date
and on the first Business Day of each calendar month thereafter an
administrative management fee in an amount equal to Cdn.$2,000, which the
Borrower acknowledges and agrees shall be fully earned when paid.
(f) The
Borrower agrees to pay to the Agent, for its own account, the Agent’s standard
charges, fees, costs and expenses for its field examinations, verifications
and
audits in an amount equal to $1,200 per person per day plus such field
examiner’s and auditor’s reasonable out-of-pocket expenses.
(g) The
Borrower agrees to pay to the Agent, for its own account, fees payable in the
amounts and at the times separately agreed upon in writing between the Borrower
and the Agent.
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(h) All
fees
payable hereunder shall be paid on the dates due, in immediately available
funds, to the Agent, for its own account or for distribution to the Lenders
or
CIBC, as the case may be. Fees paid shall not be refundable except in the case
of manifest error in the calculation of any fee payment.
2.11 B/A
Equivalent Loans.
(a) Subject
to the terms and conditions of this Agreement, the Borrower may request a B/A
Borrowing in accordance with Section 2.3. Promptly following receipt of a
Borrowing Request specifying a B/A Borrowing, the Agent shall so advise the
Lenders and provide information as to the applicable Contract Period and the
B/A
Rate of such B/A
Equivalent Loan.
(b) No
Contract Period with respect to a B/A Equivalent Loan under the Credit shall
extend beyond the Maturity Date.
(c) Subject
to repayment requirements, on the last day of the relevant Contract Period
for a
B/A Equivalent Loan, the Borrower shall be entitled to convert such B/A
Equivalent Loan into another Type of Loan, or to roll over such B/A Equivalent
Loan into another B/A Equivalent Loan, all in accordance with the applicable
provisions of this Agreement.
(d) With
respect to each B/A Borrowing, at or before 10:00 a.m. two Business Days
before the last day of the Contract Period of such B/A Borrowings, the Borrower
shall notify the Agent in writing, if the Borrower intends to roll over such
B/A
Equivalent Loan into another B/A Equivalent Loan on such last day of the
Contract Period. If the Borrower fails to notify the Agent of its intention
to
roll over such B/A Equivalent Loan into another B/A Equivalent Loan on such
last
day of the Contract Period, the Borrower shall provide payment to the Agent
on
behalf of the Lenders of an amount equal to the aggregate face amount of such
B/A Borrowings on the last day of the Contract Period thereof. If the Borrower
fails to make such payment, such maturing B/A Borrowings shall be deemed to
have
been converted on the last day of the Contract Period into a Canadian Prime
Loan
in an amount equal to the aggregate amount of such B/A Borrowings.
(e) Except
as
required by any Lender upon the occurrence of an Event of Default, no B/A
Equivalent Loan may be repaid by the Borrower prior to the expiry date of the
Contract Period applicable to such B/A Equivalent Loan; provided,
however, that the Borrower may defease any B/A Equivalent Loan by depositing
with the Agent an amount that is sufficient to repay such B/A Equivalent Loan
on
the expiry date of the Contract Period applicable to such B/A Equivalent
Loan.
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2.12 Increased
Costs; Illegality.
(a) If
any
Change in Law shall:
| (i) |
impose,
modify or deem applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of,
or
credit extended by, any Lender; or
|
| (ii) |
impose
on any Lender or the Issuing Bank or the London interbank market
any other
condition affecting this Agreement (including the imposition on any
Lender
of, or any change to, any Indemnified Tax or other charge with respect
to
its LIBO Rate Loans or any Letter of Credit or participation therein,
or
its obligation to make LIBO Rate Loans or any Letter of
Credit);
|
and
the
result of any of the foregoing shall be to increase the cost to such Lender
of
making or maintaining any Loan (or of maintaining its obligation to make any
such Loan) or to increase the cost to such Lender of participating in, issuing
or maintaining any Letter of Credit or any Loan or to reduce the amount of
any
sum received or receivable by such Lender hereunder (whether of principal,
interest or otherwise), then the Borrower will pay to such Lender, such
additional amount or amounts as will compensate such Lender, for such additional
costs incurred or reduction suffered.
(b) If
any
Lender determines that any Change in Law regarding capital requirements has
or
would have the effect of reducing the rate of return on such Lender’s capital or
on the capital of such Lender’s, if any, as a consequence of this Agreement or
the Loans made by, or participations in Letters of Credit held by such Lender,
or the Letters of Credit issued by the Issuing Bank, to a level below that
which
such Lender or such Lender’s holding company could have achieved but for such
Change in Law (taking into consideration such Lender’s policies and the policies
of such Lender’s holding company with respect to capital adequacy) and such
Lender’s desired return on capital, then from time to time the Borrower will pay
to such Lender, such additional amount or amounts as will compensate such Lender
or such Lender’s holding company for any such reduction suffered.
(c) A
certificate of a Lender setting forth amount or amounts necessary to compensate
such Lender as specified in Sections 2.12(a) or (b), together with a brief
description of the Change of Law, shall be delivered to the Borrower, and shall
be conclusive absent manifest error. In preparing any such certificate, a Lender
shall be entitled to use averages and to make reasonable estimates, and shall
not be required to “match contracts” or to isolate particular transactions. The
Borrower shall pay such Lender the amount shown as due on any such certificate
within 10 days after receipt thereof.
(d) Failure
or delay on the part of any Lender to demand compensation pursuant to this
Section 2.12 shall not constitute a waiver of such Lender’s right to demand
such compensation.
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(e) In
the
event that any Lender shall have determined (which determination shall be
reasonably exercised and shall, absent manifest error, be final, conclusive
and
binding upon all parties) at any time that the current or reasonably expected
foreign currency markets are unusually unstable or that the making or
continuance of any Loan denominated in a currency other than Canadian Dollars
has become unlawful or materially restricted as a result of compliance by such
Lender in good faith with any Applicable Law, or by any applicable guideline
or
order (whether or not having the force of law and whether or not failure to
comply therewith would be unlawful), then, in any such event, such Lender shall
give prompt notice (by telephone and confirmed in writing) to the Borrower
and
to the Agent of such determination (which notice the Agent shall promptly
transmit to the other Lenders). Upon the giving of the notice to the Borrower
referred to in this Section 2.12(e), the Borrower’s right to request (by
continuation, conversion or otherwise), and such Lender’s obligation to make,
Loans denominated in a currency other than Canadian Dollars shall be immediately
suspended, and thereafter any requested Borrowing of Loans denominated in a
currency other than Canadian Dollars shall, as to such Lender only, be deemed
to
be a request for a Canadian Prime Loan, and if the affected Loan or Loans are
then outstanding, the Borrower shall immediately, or if permitted by Applicable
Law, no later than the date permitted thereby, upon at least one Business Day
prior written notice to the Agent and the affected Lender, convert each such
Loan denominated in a currency other than Canadian Dollars into a Canadian
Prime
Loan, provided
that if
more than one Lender is affected at any time, then all affected Lenders must
be
treated the same pursuant to this Section 2.12(e).
2.13 Break
Funding Payments.
In the
event of (a) the failure by the Borrower to borrow, convert, continue or
prepay any Loan on the date specified in any notice delivered by the Borrower
pursuant hereto, or (b) the payment or conversion of any principal of any
B/A Borrowing or LIBO Rate Loan other than on the last day of a Contract Period
or, as applicable, Interest Period applicable thereto (including as a result
of
an Event of Default), or (c) the prepayment or conversion of any B/A
Borrowing or LIBO Rate Loan other than on the last day of the Interest Period
applicable thereto, then, in any such event, the Borrower shall compensate
each
Lender for the loss, cost and expense attributable to such event. A certificate
of any Lender setting forth any amount or amounts that such Lender is entitled
to receive pursuant to this Section 2.13 shall be delivered to the Borrower
and shall be conclusive absent manifest error. The Borrower shall pay such
Lender the amount shown as due on any such certificate within 10 days after
receipt thereof.
2.14 Taxes.
(a) Any
and
all payments by or on account of any obligation of the Borrower hereunder shall
be made free and clear of and without deduction or withholding for any
Indemnified Taxes; provided
that if
the Borrower shall be required to deduct or withhold any Indemnified Taxes
from
such payments, then (i) the sum payable shall be increased as necessary so
that, after making all required deductions or withholdings (including deductions
or withholdings applicable to additional sums payable under this
Section 2.14), the Agent, or Lender (as the case may be) receives an amount
equal to the sum it would have received had no such deduction or withholding
been made, (ii) the Borrower shall make such deduction or
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withholding, and (iii) the Borrower shall pay to the relevant Governmental Authority in accordance with Applicable Law the full amount deducted or withheld.
(b) In
addition to the payments by the Borrower required by Section 2.14(a), the
Borrower shall pay any and all present or future stamp or documentary Taxes
or
any other excise or property Taxes, charges or similar levies arising from
any
payment made hereunder or from the execution, delivery or enforcement of, or
otherwise with respect to, this Agreement to the relevant Governmental Authority
in accordance with Applicable Law.
(c) The
Borrower shall indemnify the Agent, and each Lender, within 10 days after
written demand therefor, for the full amount of any Indemnified Taxes paid
by
the Agent, such Lender, as the case may be, on or with respect to any payment
by
or on account of any obligation of the Borrower hereunder (including Indemnified
Taxes imposed or asserted on or attributable to amounts payable under this
Section 2.14) and any penalties, interest and reasonable expenses arising
therefrom or with respect thereto, whether or not such Indemnified Taxes were
correctly or legally imposed or asserted by the relevant Governmental Authority.
A certificate as to the amount of such payment or liability delivered to the
Borrower by a Lender, or by the Agent on its own behalf or on behalf of a
Lender, shall be conclusive absent manifest error.
(d) As
soon
as practicable after any payment of Indemnified Taxes by the Borrower to a
Governmental Authority, the Borrower shall deliver to the Agent the original
or
a certified copy of a receipt issued by such Governmental Authority evidencing
such payment, a copy of the return reporting such payment or other evidence
of
such payment reasonably satisfactory to the Agent.
(e) If,
following the imposition of any Taxes on any payment by the Borrower to any
Lender in respect of which the Borrower is required to make an additional
payment pursuant to this Section 2.14, any Lender receives or is granted a
credit against or remission for or deduction from or in respect of any Taxes
paid by it or shall obtain any other relief which, in such Lender’s opinion, is
both reasonably identifiable and quantifiable by it without involving it in
an
unacceptable administrative burden (any of the foregoing being a “saving”), such
Lender will reimburse the Borrower with such amount as such Lender shall have
concluded, in its absolute discretion but in good faith, to be the amount or
value of the relevant saving. Nothing herein contained shall interfere with
the
right of any Lender to arrange its affairs in whatever manner it thinks fit
and,
in particular, no Lender shall be under any obligation to claim relief for
tax
purposes on its corporate profits or otherwise, or to claim such relief in
priority to any other claims, reliefs, credits or deductions available to it
or
to disclose details of its affairs. Each Lender will notify the Borrower
promptly of the receipt by such Lender of any such saving and of such Lender’s
opinion as to the amount or value thereof, and any reimbursement to be made
by
such Lender will be made promptly on the date of receipt of such saving by
such
Lender or, if later, on the last date on which the applicable taxation authority
would be able in accordance with applicable law to reclaim or reduce such
saving.
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2.15 Payments
Generally; Pro Rata Treatment; Sharing of Set-offs.
(a) The
Borrower shall make each payment required to be made by it hereunder (whether
of
principal, interest, fees or amounts payable in respect of Reimbursement
Obligations, amounts payable under any of Sections 2.12, 2.13 or 2.14, or
amounts otherwise payable hereunder) prior to 1:00 p.m., Toronto time, on
the date when due, in immediately available funds, without set-off or
counterclaim. Any amounts received after such time on any date may, in the
discretion of the Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Agent at the Payment Office, except that payments pursuant
to any indemnities contained herein shall be made directly to the Persons
entitled thereto. The Agent shall distribute any such payments received by
it
for the account of any other Person to the appropriate recipient promptly
following receipt thereof. If any payment hereunder shall be due on a day that
is not a Business Day, the date for payment shall be extended to the next
succeeding Business Day, and, in the case of any payment accruing interest,
interest thereon shall be payable for the period of such extension, provided
that, in
the case of any payment with respect to a LIBO Rate Loan, the date for payment
shall be advanced to the next preceding Business Day if the next succeeding
Business Day is in a subsequent calendar month. All payments under this
Section 2.15 in respect of LIBO Rate Loans and Base Rate Loans shall be
made in U.S. Dollars. All other payments under this Section 2.15 shall be
made in Canadian Dollars. The Borrower hereby authorizes the Agent to debit
the
Operating Account to effect any payment due to the Lenders or the Agent pursuant
to this Agreement. Any resulting overdraft in such account shall be payable
by
the Borrower to the Agent in same day funds.
(b) If
at any
time insufficient funds are received by and available to the Agent to pay fully
all amounts of principal, interest, fees, amounts payable in respect of
Repayment Obligations, amounts payable under any of Sections 2.12, 2.13 or
2.14 and other amounts payable hereunder, any available funds shall be applied
(i) first, towards payment of interest and fees then due hereunder,
rateably among the parties entitled thereto in accordance with the amounts
of
interest and fees then due to such parties, (ii) second, towards payment of
principal and in satisfaction of Reimbursement Obligations then due hereunder,
rateably among the parties entitled thereto in accordance with the amounts
of
principal and Reimbursement Obligations, and (iii) third, towards payment
of amounts payable under any of Sections 2.12, 2.13 or 2.14 and other
amounts otherwise payable hereunder.
(c) If
any
Lender shall, by exercising any right of set-off or counterclaim or otherwise,
obtain payment in respect of any principal of or interest on or fees in respect
of any of its Revolving Loans or its share of Reimbursement Obligations
resulting in such Lender receiving payment of a greater proportion of the
aggregate amount of any principal of or interest on or fees in respect of any
of
its Revolving Loans or participations in Reimbursement Obligations than the
proportion to which it is entitled, then the Lender receiving such greater
proportion shall purchase (for cash at face value) participations in the
Revolving Loans or participations in Reimbursement Obligations owed to other
Lenders (as the case may be) to the extent necessary so that the benefit of
all
such payments shall be shared by the Lenders rateably taking into account each
of the Applicable Percentages in respect of each Lender;
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provided
that
(i) if any such participations are purchased and all or any portion of the
payment giving rise thereto is recovered, such participations shall be rescinded
and the purchase price restored to the extent of such recovery, without
interest, and (ii) this Section 2.15(c) shall not apply to any payment
made by the Borrower pursuant to and in accordance with the express terms
of
this Agreement or any payment obtained by a Lender as consideration for the
assignment of or sale of a participation in any of its Loans or participations
in Reimbursement Obligations to any assignee or participant, other than to
the
Borrower or any Subsidiary or Affiliate thereof (as to which the provisions
of
this paragraph shall apply). The Borrower consents to the foregoing and agrees,
to the extent it may effectively do so under Applicable Law, that any Lender
acquiring a participation pursuant to the foregoing arrangements may exercise
against the Borrower rights of set-off and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of the Borrower
in the amount of such participation.
(d) Unless
the Agent shall have received written notice from the Borrower prior to the
date
on which any payment is due to the Agent for the account of the Lenders
hereunder that the Borrower will not make such payment, the Agent may assume
that the Borrower has made such payment on such date in accordance herewith
and
may, in reliance upon such assumption, distribute to the Lenders, the amount
due. In such event, if the Borrower has not in fact made such payment, then
each
of the Lenders, severally agrees to repay to the Agent forthwith on demand
the
amount so distributed to such Lender with interest thereon, for each day from
and including the date such amount is distributed to it to but excluding the
date of payment to the Agent, at the applicable rate for Canadian Prime Loans
(if such amount is denominated in Canadian Dollars) or the applicable rate
for
Base Rate Loans (if such amount is denominated in U.S. Dollars).
(e) If
any
Lender shall fail to make any payment required to be made by it pursuant to
Section 2.15(d), then the Agent may, in its discretion (notwithstanding any
contrary provision hereof), apply any amounts thereafter received by the Agent
for the account of such Lender to satisfy such Lender’s obligations under such
Section 2.15(d) until all such unsatisfied obligations are fully
paid.
(f) Nothing
in this Agreement shall be deemed to obligate any Lender to obtain the funds
for
any Loan in any particular place or manner or to constitute a representation
by
any Lender that it has obtained or will obtain the funds for any Loan in any
particular place or manner.
2.16 Currency
Indemnity.
If, for
the purposes of obtaining judgment in any court in any jurisdiction with respect
to this Agreement or any other Loan Document, it becomes necessary to convert
into a particular currency (the “Judgment
Currency”)
any
amount due under this Agreement or under any other Loan Document in any currency
other than the Judgment Currency (the “Currency
Due”),
then
conversion shall be made at the rate of exchange prevailing on the Business
Day
before the day on which judgment is given. For this purpose “rate of exchange”
means the rate at which the Agent is able, on the relevant date, to purchase
the
Currency Due with the Judgment Currency in accordance with its normal practice
at its head office in ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇. In the event that there is a change
in
the rate of exchange prevailing between the Business Day before the day on
which
the judgment is given and the date of receipt
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by
the
Agent of the amount due, the Borrower will, on the date of receipt by
the
Agent, pay such additional amounts, if any, or be entitled to receive
reimbursement of such amount, if any, as may be necessary to ensure that the
amount received by the Agent on such date is the amount in the Judgment Currency
which when converted at the rate of exchange prevailing on the date of receipt
by the Agent is the amount then due under this Agreement or such other Loan
Document in the Currency Due. If the amount of the Currency Due which the Agent
is so able to purchase is less than the amount of the Currency Due originally
due to it, the Borrower shall indemnify and save the Agent and the Lenders
harmless from and against all loss or damage arising as a result of such
deficiency. This indemnity shall constitute an obligation separate and
independent from the other obligations contained in this Agreement and the
other
Loan Documents, shall give rise to a separate and independent cause of action,
shall apply irrespective of any indulgence granted by the Agent from time to
time and shall continue in full force and effect notwithstanding any judgment
or
order for a liquidated sum in respect of an amount due under this Agreement
or
any other Loan Document or under any judgment or order.
2.17 Collection
of Accounts.
(a) The
Borrower shall, and shall cause each other Credit Party to, at its expense,
enforce, collect and receive all amounts owing on its Accounts in the ordinary
course of its business and any proceeds it so receives shall be subject to
the
terms hereof. Any proceeds received by a Credit Party in respect of Accounts,
and any cheques, cash, credit card sales and receipts, notes or other
instruments or property received by a Credit Party with respect to any
Collateral, shall be held by such Credit Party in trust for the Agent, separate
from such Credit Party’s own property and funds, and promptly turned over to the
Agent with proper assignments or endorsements by deposit to the Blocked
Accounts.
(b) The
Borrower shall, and shall cause each other Credit Party to at the request of
the
Agent: (i) indicate on all of its invoices that funds should be delivered
to and deposited in a lock box or a Blocked Account; (ii) direct all of its
account debtors to deposit any and all proceeds of Collateral into the lock
boxes or the Blocked Accounts; (iii) irrevocably authorize and direct any
bank which maintains any Credit Party’s initial receipt of cash, cheques and
other items to promptly wire transfer all available funds to a Blocked Account;
and (iv) advise all such banks of the Agent’s security interest in such
funds. The Borrower shall, and shall cause each other Credit Party to, provide
the Agent with prior written notice of any and all deposit accounts opened
or to
be opened subsequent to the Effective Date. All amounts received by the Agent
in
payment of Accounts will be credited to the Operating Account when the Agent
is
advised by its bank of its receipt of “collected funds” at the Agent’s bank
account in Toronto, Ontario on the Business Day of such advise if advised no
later than 12:00 noon, Toronto time, or on the next succeeding Business Day
if
so advised after 12:00 noon, Toronto time. No cheques, drafts or other
instrument received by the Agent shall constitute final payment to the Agent
unless and until such instruments have actually been collected.
(c) The
Borrower shall, and shall cause each other Credit Party to, establish and
maintain, in its own respective name and at its expense, deposit accounts and
lock boxes with such banks as are acceptable to the Agent (the “Blocked
Accounts”)
into
which the Borrower shall promptly cause to be deposited: (i) all proceeds
of Collateral received by any Credit Party, including all amounts payable to
any
Credit Party from credit card issuers and credit
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card processors, and (ii) all amounts on deposit in deposit accounts used by any Credit Party at each of its locations, all as further provided in Section 2.17(b). The banks at which the Blocked Accounts are established and the applicable Credit Parties shall enter into three-party agreements, in form and substance satisfactory to the Agent (the “Blocked Account Agreements”), providing that, among other things, all cash, cheques and items received or deposited in the Blocked Accounts are subject to Liens in favour of the Agent, that the depository bank has no Lien upon, or right of set off against, the Blocked Accounts and any cash, cheques, items, wires or other funds from time to time on deposit therein, except as otherwise provided in the Blocked Account Agreements, and that on a daily basis the depository bank will wire, or otherwise transfer, in immediately available funds, all funds received or deposited into the Blocked Accounts to such bank account as the Agent may from time to time designate for such purpose. The Borrower hereby confirms and agrees that all amounts deposited in such Blocked Accounts and any other funds received and collected by the Agent, whether as proceeds of Inventory or other Collateral or otherwise, shall be subject to the Liens in favour of the Agent. The Blocked Accounts Agreements will be “springing dominion agreements” and the Agent will be entitled to exercise full dominion and control over the blocked accounts at any time when Excess Availability is less than Cdn.$8,000,000.
2.18 Letters
of Credit.
In order
to assist the Borrower in establishing Letters of Credit with the Issuing Bank,
the Borrower has requested the Agent and the Agent has agreed to execute a
Letter of Credit Guarantee subject to the following terms and
conditions:
(a) Within
the limits of the Commitments and the Borrowing Base, and the other limitations
contained in this Agreement, the Agent shall assist the Borrower in obtaining
Letters of Credit, denominated in Canadian Dollars or U.S. Dollars, in an amount
not to exceed the outstanding amount of the Letter of Credit Sub-Line. The
Agent’s assistance for amounts in excess of the limitation set forth herein
shall at all times and in all respects be in the Agent’s sole discretion. It is
understood that the term, form and purpose of each Letter of Credit and all
documentation in connection therewith, and any amendments, modifications or
extensions thereof, must be mutually acceptable to the Agent, the Issuing Bank
and the Borrower. Any and all outstanding Letter of Credit Guarantees shall
be
reserved dollar for dollar from the Borrowing Base as an Availability Reserve.
Upon the expiry of a Letter of Credit Guarantee, amounts reserved as an
Availability Reserve in respect of such Letter of Credit Guarantee, as the
case
may be, shall no longer be reserved from the Borrowing Base as an Availability
Reserve.
(b) The
Agent
shall have the right, without notice to the Borrower, to charge the Borrower’s
Operating Account with the amount of any and all indebtedness, liability or
obligation of any kind incurred by the Agent under the Letter of Credit
Guarantees at the earlier of (a) payment by the Agent under the Letter of
Credit Guarantee; or (b) the occurrence and continuance of an Event of
Default. Any amount so charged to the Borrower’s Operating Account shall be
deemed a Canadian Prime Rate Loan or a US Base Rate Loan hereunder, depending
on
the currency of the Borrower’s payment obligation thereunder, and shall incur
interest at the rate provided in Section 2.5.
(c) The
Borrower unconditionally indemnifies the Agent and holds the Agent harmless
from
any and all loss, claim or liability incurred by the Agent arising from any
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transactions or occurrences relating to Letters of Credit established or opened for the Borrower’s account, the collateral relating thereto and any drafts or acceptances thereunder, and all Obligations thereunder, including any such loss or claim due to any errors, omissions, negligence, misconduct or action taken by any Issuing Bank, other than for any such loss, claim or liability arising out of the gross negligence or willful misconduct by the Agent under the Letter of Credit Guarantee. This indemnity shall survive termination of this Agreement. The Borrower agrees that any charges incurred by the Agent for the Borrower’s account from the Issuing Bank shall be conclusive upon the Agent and may be charged to the Borrower’s Operating Account.
(d) The
Agent
shall not be responsible for: (a) the existence, character, quality,
quantity, condition, packing, value or delivery of the goods purporting to
be
represented by any documents; (b) any difference or variation in the
character, quality, quantity, condition, packing, value or delivery of the
goods
from that expressed in the documents; (c) the validity, sufficiency or
genuineness of any documents or of any endorsements thereon, even if such
documents should in fact prove to be in any or all respects invalid,
insufficient, fraudulent or forged; (d) the time, place, manner or order in
which shipment is made; partial or incomplete shipment, or failure or omission
to ship any or all of the goods referred to in the Letters of Credit or
documents; (e) any deviation from instructions; (f) delay, default, or
fraud by the shipper and/or anyone else in connection with the goods or the
shipping thereof; or (g) any breach of contract between the shipper or
vendors and the Borrower.
(e) The
Borrower agrees that any action taken by the Agent, if taken in good faith,
or
any action taken by any Issuing Bank, under or in connection with the Letters
of
Credit, the Letter of Credit Guarantees, the drafts or acceptances, or the
Collateral, shall be binding on the Borrower and shall not result in any
liability whatsoever of the Agent to the Borrower. In furtherance thereof,
the
Agent shall have the full right and authority to: (a) clear and resolve any
questions of non compliance of documents; (b) give any instructions as to
acceptance or rejection of any documents or goods; (c) execute any and all
steamship or airways guarantees (and applications therefor), indemnities or
delivery orders; (d) grant any extensions of the maturity of, time of
payment for, or time of presentation of, any drafts, acceptances, or documents;
and (e) agree to any amendments, renewals, extensions, modifications,
changes or cancellations of any of the terms or conditions of any of the
applications, Letters of Credit, drafts or acceptances or Letters of Credit
Guarantees; all in the Agent’s sole discretion. The Issuing Bank shall be
entitled to comply with and honor any and all such documents or instruments
executed by or received solely from the Agent, all without any consent from
the
Borrower. In addition, without the Agent’s express consent and endorsement in
writing, the Borrower agrees: (a) not to (i) execute any applications
for steamship or airway guarantees, indemnities or delivery orders;
(ii) grant any extensions of the maturity of, time of payment for, or time
of presentation of, any drafts, acceptances or documents; or (iii) agree to
any
amendments, renewals, extensions, modifications, changes or cancellations of
any
of the terms or conditions of any of the applications, Letters of Credit, drafts
or acceptances or Letters of Credit Guarantees; and (b) upon the occurrence
and during the continuance of an Event of Default, not to (i) clear and
resolve any questions of non compliance of documents, or (ii) give any
instructions as to acceptances or rejection of any documents or
goods.
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(f) The
Borrower shall, and shall cause each other Credit Party to: (a) procure any
necessary import, export or other licenses or certificates for the import or
handling of the Collateral; (b) comply with all Applicable Law in regard to
the shipment and importation of the Collateral, or the financing thereof; and
(c) deliver to the Agent any certificates in that regard that the Agent may
at any time request to be furnished. In connection herewith, the Borrower
warrants and represents that all shipments made under any such Letters of Credit
are in accordance with Applicable Law of the countries in which the shipments
originate and terminate, and are not prohibited by any such Applicable Law.
The
Borrower assumes all risk, liability and responsibility for, and agrees to
pay
and discharge, all present and future local, provincial, state, federal or
foreign Taxes, duties, or levies with respect to such Collateral. Any embargo,
restriction, laws, customs or regulations of any country, state, city, or other
political subdivision, where the Collateral is or may be located, or wherein
payments are to be made, or wherein drafts may be drawn, negotiated, accepted,
or paid, shall be solely the Borrower’s risk, liability and
responsibility.
(g) Upon
any
payments made to the Issuing Bank under the Letter of Credit Guarantee, the
Agent shall acquire by subrogation, any rights, remedies, duties or obligations
granted or undertaken by the Borrower to the Issuing Bank in any application
for
Letters of Credit, any standing agreement relating to Letters of Credit or
otherwise, all of which shall be deemed to have been granted to the Agent and
apply in all respects to the Agent and shall be in addition to any rights,
remedies, duties or obligations contained herein.
2.19 F/X
Contracts.
In
order
to assist the Borrower in entering into F/X Contracts with the F/X Bank, the
Borrower has requested the Agent to execute an F/X Guarantee subject to the
following terms and conditions:
(a) Within
the limits of the Commitments and the Borrowing Base and the other limitations
as contained in this Agreement, the Agent shall assist the Borrower in obtaining
F/X Contracts in an amount not to exceed the outstanding amount of the F/X
Contract Sub-Line. The Agent’s assistance for amounts in excess of the
limitation set forth herein shall at all times and in all respects be in the
Agent ’s sole discretion. It is understood that the term, form and purpose of
each F/X Contract and all confirmations and other documentation in connection
therewith, and any amendments, modifications or extensions thereof, must be
mutually acceptable to the Agent, the F/X Bank and the Borrower. Any and all
outstanding F/X Guarantees shall be reserved dollar for dollar from the
Borrowing Base as an Availability Reserve. Upon the expiry of a F/X Guarantee,
amounts reserved as an Availability Reserve in respect of such F/X Guarantee
shall no longer be reserved from the Borrowing Base as an Availability
Reserve.
(b) The
Agent
shall have the right, without notice to the Borrower, to charge the Borrower’s
Operating Account with the amount of any and all indebtedness, liability or
obligation of any kind incurred by the Agent under the F/X Guarantee at such
time which is the earlier of (a) payment by the Agent under the F/X
Guarantee; or (b) the occurrence and continuance of an Event of Default.
Any amount charged to Borrower’s Operating Account shall be deemed a Canadian
Prime Rate Loan or a US Base Rate Loan hereunder, depending on the currency
of
the Borrower’s payment obligation in respect of such F/X Guarantee, and shall
incur interest at the rate provided in Section 2.5.
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(c) The
Borrower unconditionally indemnifies the Agent and holds the Agent harmless
from
any and all loss, claim or liability incurred by the Agent arising from any
transactions or occurrences relating to F/X Contracts, the collateral relating
thereto, and all Obligations thereunder, including any such loss or claim due
to
any errors, omissions, negligence, misconduct or action taken by the F/X Bank,
other than for any such loss, claim or liability arising out of the gross
negligence or willful misconduct by the Agent under the F/X Guarantee. This
indemnity shall survive termination of this Agreement. The Borrower agrees
that
any charges incurred by the Agent for the Borrower’s account by the F/X Bank
shall be conclusive on the Agent and may be charged to the Borrower’s Operating
Account.
(d) The
Borrower agrees that any action taken by the Agent, if taken in good faith,
or
any action taken by the F/X Bank, under or in connection with the F/X Contracts,
the F/X Guarantee, or the Collateral, shall be binding on the Borrower and
shall
not result in any liability whatsoever of the Agent to the
Borrower.
(e) Upon
any
payments made to the F/X Bank under the F/X Guarantee, the Agent shall acquire
by subrogation, any rights, remedies, duties or obligations granted or
undertaken by the Borrower to the F/X Bank in any application for F/X Contracts,
any standing agreement relating to F/X Contracts or otherwise, all of which
shall be deemed to have been granted to the Agent and apply in all respects
to
the Agent and shall be in addition to any rights, remedies, duties or
obligations contained herein.
ARTICLE 3
REPRESENTATIONS
AND WARRANTIES
In
order
to induce the Agent and the Lenders to enter into this Agreement, to make any
Loans hereunder and to issue any Letters of Credit hereunder, each Credit Party
hereby represents and warrants to the Agent and each Lender that each statement
set forth in this Article 3 is true and correct on the date hereof, and
will be true and correct on the date of each Borrowing, on the date each Letter
of Credit is requested hereunder and on the date each Letter of Credit is issued
hereunder:
3.1 Organization;
Powers.
The
Borrower and each other Credit Party is duly organized, validly existing and
in
good standing under the laws of the jurisdiction of its organization, has all
requisite power and authority to carry on its business as now and formerly
conducted and, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect, is qualified to do business in, and is in good standing in, every
jurisdiction where such qualification is required.
3.2 Authorization;
Enforceability.
The
Transactions are within each Credit Party’s corporate or partnership powers and
have been duly authorized by all necessary corporate and, if required,
shareholder action. This Agreement and the other Loan Documents have been duly
executed and delivered by the Borrower and each other Credit Party party thereto
and constitute legal, valid and binding obligations of the Borrower and each
other Credit Party party thereto, enforceable in accordance with their terms,
subject to applicable bankruptcy, insolvency, reorganisation, moratorium or
other Applicable Laws affecting creditors’ rights generally and
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subject
to general principles of equity, regardless of whether considered in a
proceeding in equity or at law.
3.3 Governmental
Approvals; No Conflicts.
The
Transactions (a) do
not
require any consent or approval of, registration or filing with, or any other
action by, any Governmental Authority, except as disclosed in Schedule 3.3,
(b) will
not
violate any Applicable Law or the charter, by-laws or other organizational
documents of the Borrower or any other Credit Party or any order of any
Governmental Authority, (c) will
not
violate or result in a default under any indenture, agreement or other
instrument binding upon the Borrower or any other Credit Party or their
respective assets, or give rise to a right thereunder to require any payment
to
be made by the Borrower or any other Credit Party, and (d) will
not
result in the creation or imposition of any Lien on any asset of the Borrower
or
any other Credit Party, except for any Lien arising in favour of the Agent,
for
the benefit of the Lenders, under the Loan Documents.
3.4 Financial
Condition; No Material Adverse Effect.
(a) The
Borrower has furnished to the Lenders its consolidated balance sheets and
statements of income, retained earnings and changes in financial position as
of
and for the portion of the Fiscal Year ended December 31, 2005. Such
financial statements present fairly, in all material respects, the consolidated
financial position and results of operations and cash flows of the Borrower
as
of such dates and for such periods in accordance with GAAP.
(b) Since
December 31, 2005, there has been no event, development or circumstance
that has had or could reasonably be expected to have a Material Adverse
Effect.
(c) All
information (including that disclosed in all financial statements) pertaining
to
the Borrower and its Subsidiaries (other than projections) (in this
Section 3.4(c), the “Information”)
that
has been or will be made available to the Lenders, or the Agent by the Borrower
or any representative of the Borrower and the other Credit Parties, taken as
a
whole, is or will be, when furnished, complete and correct in all material
respects and does not or will not, when furnished, contain any untrue statement
of a material fact or omit to state a material fact necessary in order to make
the statements contained therein not materially misleading in light of the
circumstances under which such statements are made. The projections that have
been or will be made available to the Lenders, or the Agent by the Borrower
or
any representative of the Borrower have been or will be prepared in good faith
based upon reasonable assumptions.
3.5 Litigation.
(a) Except
as
disclosed in Schedule 3.5, there are no actions, suits, counterclaims or
proceedings (including any Tax-related matter) by any Person or investigation
by
any Governmental Authority pending against or, to the knowledge of the Borrower,
threatened against or affecting the Borrower or any of the other Credit Parties
(i) as
to
which there is a reasonable possibility of an adverse determination and that,
if
adversely determined, could reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect (other than the Disclosed
Matters), or (ii) that
involve this Agreement, any other Loan Document, or the
Transactions.
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(b) Since
the
date of this Agreement, there has been no change in the status of the Disclosed
Matters that, individually or in the aggregate, has resulted in, or materially
increased the likelihood of, a Material Adverse Effect.
3.6 Compliance
with Applicable Laws and Agreements.
The
Borrower and each other Credit Party is in compliance with all Applicable Laws
applicable to it or its property and all indentures, agreements and other
instruments binding upon it or its property, except where the failure to do
so,
individually or in the aggregate, could not reasonably be expected to result
in
a Material Adverse Effect. Neither the Borrower nor any other Credit Party
has
violated or failed to obtain any Authorization necessary to the ownership of
any
of its property or assets or the conduct of its business, which violation or
failure could reasonably be expected to have (in the event that such a violation
or failure were asserted by any Person through appropriate action) a Material
Adverse Effect.
3.7 Ownership.
As at
the Effective Date, the registered and beneficial holders of all of the Equity
Securities of the Borrower are as set out on Schedule 3.7.
3.8 Taxes.
Other
than as disclosed in Schedule B, the Borrower and each other Credit Party
has timely filed or caused to be filed all Tax returns and reports required
to
have been filed and has paid or caused to be paid all Taxes required to have
been paid by it (including all instalments with respect to the current period)
and has made adequate provision for Taxes for the current period, except Taxes
that are being contested in good faith by appropriate proceedings and for which
the Borrower or such other Credit Party, as applicable, has set aside on its
books adequate reserves.
3.9 Titles
to Real Property.
The
Borrower and each other Credit Party have indefeasible fee simple title to
their
respective owned real properties (or in Quebec, immoveable properties), and
with
respect to leased real properties, indefeasible title to the leasehold estate
with respect thereto, pursuant to valid and enforceable leases, free and clear
of all Liens except Permitted
Liens,
including the Liens disclosed to the Lenders in Schedule 3.9.
3.10 Titles
to Personal Property.
The
Borrower and each other Credit Party have title to their respective owned
personal properties (or, in Quebec, moveable properties), and with respect
to
leased personal properties, title to the leasehold estate with respect thereto,
pursuant to valid and enforceable leases, free and clear of all Liens except
Permitted
Liens,
including the Liens disclosed in Schedule 3.10.
3.11 Pension
Plans.
The
Pension Plans are duly registered under the ITA and
any
other Applicable Laws which require registration, have been administered in
accordance with the ITA and such other Applicable Laws and no event has occurred
which could reasonably be expected to cause the loss of such registered status,
except to the extent that any failure to do so could not reasonably be expected
to have a Material Adverse Effect. All material obligations of the Borrower
and
each other Credit Party (including fiduciary, funding, investment and
administration obligations) required to be performed in connection with the
Pension Plans and the funding agreements therefor have been performed on a
timely basis, except to the extent that any failure to do so could not
reasonably be expected to have a Material Adverse Effect. There are no
outstanding disputes concerning the assets of the Pension Plans or any benefit
plans. No
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promises
of benefit improvements under the Pension Plans or any benefit plans have been
made except where such improvement could not reasonably be expected to have
a
Material Adverse Effect. All contributions or premiums required to be made
or
paid by the Borrower and each other Credit Party to the Pension Plans or any
benefit plans have been made on a timely basis in accordance with the terms
of
such plans and all Applicable Laws. There have been no improper withdrawals
or
applications of the assets of the Pension Plans or any benefit plans. Except
as
disclosed in Schedule 3.11, as of the date hereof, each of the Pension
Plans is fully funded on a solvency basis and going concern basis (using
actuarial methods and assumptions which are consistent with the valuations
last
filed with the applicable Governmental Authorities and which are consistent
with
GAAP).
3.12 Disclosure.
The
Borrower has disclosed to the Lenders all agreements, instruments and corporate
or other restrictions to which it or any other Credit Party is subject, and
all
other matters known to it, that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect.
3.13 Defaults.
Neither
the Borrower nor any other Credit Party is in default nor has any event or
circumstance occurred which, but for the passage of time or the giving of
notice, or both, would constitute a default (in any respect that would have
a
Material Adverse Effect) under any loan or credit agreement, indenture,
mortgage, deed of trust, security agreement or other instrument or agreement
evidencing or pertaining to any Indebtedness of or Lien against the Borrower
or
any other Credit Party, or under any material agreement or instrument to which
the Borrower or any other Credit Party is a party or by which the Borrower
or
any other Credit Party is bound, except as disclosed to the Lenders in
Schedule 3.13. No Default has occurred and is continuing.
3.14 Casualties;
Taking of Properties.
Since
December 31, 2005, neither the business nor the properties of the Borrower
or any other Credit Party have been affected in a manner that has had, or could
reasonably be expected to have, a Material Adverse Effect as a result of any
fire, explosion, earthquake, flood, drought, windstorm, accident, strike or
other labour disturbance, embargo, requisition or taking of property or
cancellation of contracts, permits or concessions by any domestic or foreign
Governmental Authority, riot, activities of armed forces, or acts of God or
of
any public enemy.
3.15 Subsidiaries.
As of
the Effective Date, Schedule 3.15 correctly sets forth the (i) names,
(ii) form
of
legal entity, (iii) Equity
Securities issued and outstanding, (iv) Equity
Securities owned by the Borrower or a Subsidiary of the Borrower (and specifying
such owner), and (v) jurisdictions
of organization of all Subsidiaries of the Borrower. Except as described in
Schedule 3.15, as of the Effective Date, the Borrower does not own any
Equity Securities or debt security which is convertible, or exchangeable, for
Equity Securities of any other Person. Unless otherwise indicated in
Schedule 3.15, as of the Effective Date, all of the outstanding Equity
Securities of each Restricted Subsidiary
is owned of record and beneficially by the Borrower, there are no outstanding
options, warrants or other rights to purchase Equity Securities of any such
Restricted Subsidiary,
and all such Equity Securities so owned are duly authorized, validly issued,
fully paid and non-assessable, and were issued in compliance with all applicable
federal, provincial or foreign securities and other Applicable Laws, and are
free and clear of all Liens, except for Permitted Liens.
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3.16 Insurance.
All
policies of fire, liability, workers’ compensation, casualty, flood, business
interruption and other forms of insurance owned or held by the Borrower or
any
other Credit Party are (a) sufficient
for compliance with all requirements of Applicable Law and of all agreements
to
which the Borrower or any other Credit Party is a party, (b) are
valid, outstanding and enforceable policies, (c) provide
adequate insurance coverage in at least such amounts and against at least such
risks (but including in any event public liability) as are usually insured
against in the same general area by Persons engaged in the same or a similar
business to the assets and operations of the Borrower and each other Credit
Party, and (d) will
not
in any way be adversely affected by, or terminate or lapse by reason of, the
Transactions. All such material policies are in full force and effect, all
premiums with respect thereto have been paid in accordance with their respective
terms, and no notice of cancellation or termination has been received with
respect to any such policy. Neither the Borrower nor any other Credit Party
maintains any formalized self-insurance program with respect to its assets
or
operations or material risks with respect thereto. The certificate of insurance
delivered to the Agent pursuant to Section 4.1(f) contains an accurate and
complete description of all material policies of insurance owned or held by
the
Borrower and each other Credit Party on the Effective Date that relate to the
Collateral and business interruption.
3.17 Solvency.
Neither
the Borrower nor any other Credit Party is an “insolvent person” within the
meaning of the BIA.
3.18 Material
Contracts.
Schedule C sets out all Material Contracts as of the Effective Date. A true
and complete copy of each Material Contract has been delivered to the Agent
as
of the Effective Date. Each of the Material Contracts is in full force and
effect. Neither the Borrower nor any Restricted Subsidiary
is in default under or in breach of any term or condition of any Material
Contract that would have, either individually or in the aggregate, a Material
Adverse Effect, nor is the Borrower or any Restricted Subsidiary
aware of any default under or breach of any term or condition of any Material
Contract by any other party thereto that would have a Material Adverse Effect.
No contract to which the Borrower or any Restricted Subsidiary
is a party contains any material provisions which impose burdensome or onerous
obligations on the Borrower or any Restricted Subsidiary
which are inconsistent with prudent commercial activity by the Borrower or
any
Restricted Subsidiary.
3.19 Environmental
Matters.
Except
as disclosed to the Lenders in the Disclosed Matters or set out in the Phase
I
Environmental Report:
(a) Environmental
Laws.
Neither
any property of the Borrower or its Subsidiaries nor the operations conducted
thereon violate any applicable order of any court or Governmental Authority
or
any Environmental Laws, which violation could reasonably be expected to result
in remedial obligations having a Material Adverse Effect, assuming disclosure
to
the applicable Governmental Authority of all material relevant facts, conditions
and circumstances, if any, pertaining to the relevant property.
(b) Notices
and Permits.
All
notices, permits, licenses or similar authorizations, if any, required to be
obtained or filed by the Borrower or its Subsidiaries in connection with the
operation or use of any and all property of the Borrower or its Subsidiaries,
including but not limited to past or present treatment, transportation, storage,
disposal or Release of Hazardous
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Materials into the environment, have been duly obtained or filed, except to the extent the failure to obtain or file such notices, permits, licenses or similar authorizations could not reasonably be expected to have a Material Adverse Effect, or which could not reasonably be expected to result in remedial obligations having a Material Adverse Effect, assuming disclosure to the applicable Governmental Authority of all material relevant facts, conditions and circumstances, if any, pertaining to the relevant property.
(c) Hazardous
Substances Carriers.
All
Hazardous Materials generated at any and all property of the Borrower or its
Subsidiaries have been treated, transported, stored and disposed of only in
accordance with all Environmental Laws applicable to them, except to the extent
the failure to have such Hazardous Materials transported, treated or disposed
by
such carriers could not reasonably be expected to have a Material Adverse
Effect, and only at treatment, storage and disposal facilities maintaining
valid
permits under applicable Environmental Laws, which carriers and facilities
have
been and are operating in compliance with such permits, except to the extent
the
failure to have such Hazardous Materials treated, transported, stored or
disposed at such facilities, or the failure of such carriers or facilities
to so
operate, could not reasonably be expected to have a Material Adverse Effect
or
which could not reasonably be expected to result in remedial obligations having
a Material Adverse Effect, assuming disclosure to the applicable Governmental
Authority of all material relevant facts, conditions and circumstances, if
any,
pertaining to the relevant property.
(d) Hazardous
Materials Disposal.
The
Borrower and its Subsidiaries have taken all reasonable steps necessary to
determine and have determined that no Hazardous Materials have been disposed
of
or otherwise released and there has been no threatened Release of any Hazardous
Materials on or to any property of the Borrower or its Subsidiaries other than
in compliance with Environmental Laws, except to the extent the failure to
do so
could not reasonably be expected to have a Material Adverse Effect or which
could not reasonably be expected to result in remedial obligations having a
Material Adverse Effect, assuming disclosure to the applicable Governmental
Authority of all material relevant facts, conditions and circumstances, if
any,
pertaining to the relevant property.
(e) No
Contingent Liability.
The
Borrower and its Subsidiaries have no material contingent liability in
connection with any Release or threatened Release of any Hazardous Materials
into the environment other than such contingent liabilities at any one time
and
from time to time which could reasonably be expected to exceed Cdn.$250,000
in
excess of applicable insurance coverage and for which adequate reserves for
the
payment thereof as required by GAAP have been provided, or which could
reasonably be expected to result in remedial obligations having a Material
Adverse Effect, assuming disclosure to the applicable Governmental Authority
of
all relevant facts, conditions and circumstances, if any, pertaining to such
Release or threatened Release.
3.20 Employee
Matters.
(a) Except
as
set forth on Schedule 3.20 as of the Effective Date, none of the Borrower
or any of the other Credit Parties, nor any of their respective employees,
is
subject to any collective bargaining agreement. There are no strikes, slowdowns,
work stoppages or controversies pending or, to the best knowledge of the
Borrower, threatened against the
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Borrower or any other Credit Party, or their respective employees, which could reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect. Except as set forth in Schedule 3.20 as of the Effective Date, none of the Borrower nor any other Credit Party is subject to an employment contract providing for a fixed term of employment or providing for special payments on termination of employment.
(b) Each
of
the Borrower and the other Credit Parties has withheld from each payment to
each
of their respective officers, directors and employees the amount of all Taxes,
including income tax, pension plan, unemployment insurance and other payments
and deductions required to be withheld therefrom, and has paid the same to
the
proper taxation or other receiving authority in accordance with Applicable
Law.
None of the Borrower nor any other Credit Party is subject to any claim by
or
liability to any of their respective officers, directors or employees for salary
(including vacation pay) or benefits which would rank in whole or in part
pari
passu
with or
prior to the Liens created by the Security Documents, other than Permitted
Liens
to the extent reserved for as Priority Payables. No Pension Plan or fund
maintained by or on behalf of the Borrower or any of other Credit Party for
the
benefit of any officer, director or employee of the Borrower or any other Credit
Party is a so-called defined benefit plan. For any Pension Plan or fund, and
for
any other employee benefit plan, which is a defined contribution plan requiring
the Borrower or any Restricted Subsidiary
to contribute thereto, or to deduct from payments to any individual and pay
such
deductions into or to the credit of such Pension Plan or fund, all required
employer contributions have been properly withheld by the Borrower or such
Restricted Subsidiary
and fully paid into the funding arrangements for the applicable Pension Plan
or
fund. Any assessments owed to the Pension Benefits Guarantee Fund established
under the Pension
Benefits Act
(Ontario), or other assessments or payments required under similar legislation
in any other jurisdiction, have been paid when due. None of the Borrower, any
Restricted Subsidiary
or any of their respective Affiliates is subject to the United
States Employee Retirement Income Security Act
of 1974,
as amended.
3.21 Fiscal
Year.
The
Fiscal Year of the Borrower ends on December of each calendar year.
3.22 Intellectual
Property Rights.
The
Borrower and each Restricted Subsidiary
is the registered and beneficial owner of, with good and marketable title,
free
of all licenses, franchises and Liens other than Permitted Liens, to all
patents, patent applications, trade marks, trade ▇▇▇▇ applications, trade names,
service marks, copyrights, industrial designs, integrated circuit topographies,
or other rights with respect to the foregoing and other similar property, used
in or necessary for the present and planned future conduct of its business,
without any conflict with the rights of any other Person, other than as listed
on Schedule 3.22, or other than for such conflicts as could not reasonably
be expected to have a Material Adverse Effect. All material patents, trade
marks, trade names, service marks, copyrights, industrial designs, integrated
circuit topographies, and other similar rights owned or licensed by the Borrower
or any Restricted Subsidiary,
and all rights of the Borrower and each Restricted Subsidiary
to the use of any patents, trade marks, trade names, service marks, copyrights,
industrial designs, integrated circuit topographies, or other similar rights,
are described in Schedule 3.22 (collectively, the “Intellectual
Property Rights”).
Except as set forth in Schedule 3.22, no material claim has been asserted
and is pending by any Person with respect to the use by the Borrower or any
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Restricted Subsidiary
of any intellectual property or challenging or questioning the validity,
enforceability or effectiveness of any intellectual property necessary for
the
conduct of the business of the Borrower or any Restricted Subsidiary.
Except as disclosed in Schedule 3.22 or except as could not reasonably be
expected to have a Material Adverse Effect, (i) the
Borrower and each Restricted Subsidiary
has the exclusive right to use the intellectual property which the Borrower
(or
each Restricted Subsidiary)
owns, (ii) all
applications and registrations for such intellectual property are current,
and
(iii) to
the
knowledge of the Borrower, the conduct of the Borrower’s and each
Restricted Subsidiary’s
business does not infringe the intellectual property rights of any other
Person.
3.23 Residency
of Borrower for Tax Purposes.
The
Borrower is a resident of Canada for Canadian tax purposes.
3.24 Distributions.
No
Distribution has been declared, paid, or made upon or in respect of Equity
Securities in any Credit Party since December 31, 2005.
3.25 Debt.
None of
the Credit Parties nor any of their Subsidiaries has any Indebtedness except
(a) the Obligations, (b) the Indebtedness set forth in the most recent
financial statements delivered to the Agent, or the notes thereto, (c) Tax
obligations (including deferred Taxes), trade payables and other contractual
obligations arising in the ordinary course of business as carried on by the
Credit Parties and their Subsidiaries since the date of such financial
statements, and (d) Indebtedness created in accordance with
Section 6.1.
3.26 Workers’
Compensation.
None of
the Credit Parties has any unpaid workers’ compensation or like obligations
except as are being incurred, and paid on a current basis in the ordinary course
of business, and there are no proceedings, claims, actions, orders or
investigations of any Governmental Authority relating to workers’ compensation
outstanding, pending or, to their knowledge, threatened relating to them or
any
of their employees or former employees which could reasonably be expected to
have a Material Adverse Effect.
3.27 Bank
Accounts.
Schedule 3.27 contains as of the Effective Date a complete and accurate
list of all bank accounts maintained by the Credit Parties with any bank or
other financial institution.
3.28 Real
Property and Leases.
Schedule 3.28 hereto is a correct and complete list, of all real property
owned by each Credit Party, all leases and subleases of real property or movable
or personal property by any Credit Party, as lessee or sublessee, and all leases
and subleases of real property or movable or personal property by any Credit
Party, as lessor or sublessor.
3.29 Further
Real Property Matters.
(a) Except
as
advised in writing to the Agent, to the best of the knowledge of the Borrower,
no investigation or proceeding of any Governmental Authority is pending in
respect of real property owned by any of the Credit Parties. No part of any
such
real property has been condemned, taken or expropriated by any Governmental
Authority, federal, state, provincial, municipal or any other competent
authority.
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(b) Except
as
advised in writing to the Agent, all present uses in respect of any real
property of the Credit Parties may lawfully be continued and all permitted
uses
are satisfactory for the Credit Parties’ current and intended purposes;
and
(c) No
Inventory is located at any leased real property of the Credit Parties except
as
indicated in Schedule 3.28.
3.30 Jurisdictions
of Credit Parties.
Schedule 3.30 sets out the various jurisdictions in which the Borrower and
each other Credit Party carries on business or has tangible assets having an
aggregate value in excess of Cdn.$250,000.
ARTICLE 4
CONDITIONS
4.1 Effective
Date.
The
obligations of the Lenders to make Loans or provide a Letter of Credit Guarantee
or an F/X Guarantee hereunder shall not become effective until the date on
which
each of the following conditions is satisfied (or waived in accordance with
Section 9.2):
(a) Credit
Agreement.
The
Agent (or its counsel), each Lender, and the Issuing Bank shall have received
from each party hereto either (i) a
counterpart of this Agreement signed on behalf of each party hereto, or
(ii) written
evidence satisfactory to the Agent (which may include facsimile transmission
of
a signed signature page of this Agreement) that each such party has signed
a
counterpart of this Agreement.
(b) Legal
Opinions.
The
Agent shall have received a favourable written opinion of counsel to the
Borrower, and covering such matters relating to the Borrower, the Credit
Parties, this Agreement, the other Loan Documents, or the Transactions as the
Lenders shall reasonably request (together with copies of all factual
certificates and legal opinions delivered to such counsel in connection with
such opinion upon which counsel has relied). The Agent shall also have received
favourable written opinions of such special and local counsel as may be required
by the Agent (together with copies of all factual certificates and legal
opinions delivered to such counsel in connection with such opinion upon which
such counsel has relied). The Borrower hereby requests each such counsel to
deliver such opinions and supporting materials. All opinions and certificates
referred to in this Section 4.1(b) shall be addressed to the Agent and the
Lenders and dated the Effective Date.
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(c) Corporate
Certificates.
The
Agent shall have received:
| (i) |
certified
copies of the resolutions of the Board of Directors of the General
Partner, and any other Credit Party which is a party to any Loan
Document,
dated as of the Effective Date, and approving, as appropriate, the
Loans,
this Agreement and the other Loan Documents, and all other documents,
if
any, to which the Borrower or such other Credit Party is a party
and
evidencing corporate authorization with respect to such documents;
and
|
| (ii) |
a
certificate of the Secretary or an Assistant Secretary of the Borrower,
and any other Credit Party which is a party to any Loan Document,
dated as
of the Effective Date, and certifying (A) the
name, title and true signature of each officer of such Person authorized
to execute this Agreement and the other Loan Documents to which it
is a
party, (B) the
name, title and true signature of each officer of such Person authorized
to provide the certifications required pursuant to this Agreement,
including certifications required pursuant to Section 5.1 and
Borrowing Requests, and (C) that
attached thereto is a true and complete copy of the Certificate of
Limited
Partnership and Limited Partnership Agreement of the Borrower, and
any
other Credit Party which is a party to any Loan Document, as amended
to
date, and a recent certificate of status, certificate of compliance,
good
standing certificate or analogous
certificate.
|
(d) Closing
Conditions Certificate.
The
Agent shall have received a certificate, dated the Effective Date and signed
by
a Responsible Officer of the Borrower, confirming compliance with the financial
covenants set forth in Section 5.12 and with the conditions set forth in
Section 4.2(a) and (b).
(e) Fees.
The
Agent and the Lenders shall have received all fees and other amounts due and
payable on or prior to the Effective Date, including, to the extent invoiced,
reimbursement or payment of all legal fees and other Out-of-Pocket Expenses
required to be reimbursed or paid by the Borrower hereunder or under any other
Loan Document.
(f) Insurance.
The
Agent shall have received a certificate of insurance coverage, naming CIT,
as
agent, as first loss payee in respect of the Collateral and in respect of
business interruption insurance dated not more than 30 days prior to the
Effective Date, evidencing that the Borrower and its Restricted Subsidiaries
are
carrying insurance in accordance with Section 5.9 hereof.
(g) Inventory
Control Systems; Appraisal; Field Audit; Opening Availability.
The
Agent shall have reviewed and be satisfied with the Collateral, the inventory
control systems, the books and records and the reporting capability of the
Credit Parties. The Agent shall have received appraisals, completed by a
reputable and independent appraisal firm at the expense of the Borrower,
determining the value-in-use of the real and personal property of the Credit
Parties. In addition, the Agent shall have received the results of an updated
field audit, and the Borrowing Base on the Effective Date shall be sufficient
in
value, as determined by Agent, to
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provide Borrower with a Borrowing Base, after giving effect to the extensions of credit to be made hereunder on the Effective Date (on a pro forma basis, with trade payables being paid currently, and expenses and liabilities being paid in the ordinary course of business and without acceleration of sales or deterioration of working capital) of at least Cdn.$5,000,000.
(h) Environmental
Report.
The
Agent shall have received a copy of the Phase I Environmental
Report.
(i) No
Cessation of Financing Market.
There
shall have not been occurred and be continuing on the Effective Date any general
banking moratorium or any practical cessation in the bank or private debt
financing markets, and there shall not have been introduced any material
governmental restrictions imposed on lending institutions, which materially
affect the type of lending transactions contemplated by this
Agreement.
(j) Execution
and Delivery of Documentation.
The
Borrower and any other Credit Party which is a party to any Loan Document shall
have duly authorized, executed and delivered all documents, including Loan
Documents, required hereunder, all in form and substance satisfactory to the
Agent, acting reasonably, and all of the Security Documents shall have been
registered in all offices in which, in the opinion of the Agent or its counsel,
registration is necessary or of advantage to preserve the priority of the Liens
intended to be created thereby, and duplicate copies of such Security Documents
bearing or accompanied by appropriate endorsements or certificates of
registration shall have been delivered to the Agent. The Agent shall have
received and be satisfied with the results of all personal property, pending
litigation, judgment, bankruptcy, bulk sale, execution and other searches
conducted by the Agent and its counsel with respect to the Borrower and any
other Credit Party in all jurisdictions selected by the Agent and its
counsel.
(k) Security
Documents.
The
Agent shall have received:
| (i) |
the
Parent Guarantee and a guarantee executed by each Credit Party other
than
the Borrower (if any) in favour of the Agent, as agent for the Lenders,
dated as of the Effective Date;
|
| (ii) |
a
security agreement executed by each Credit Party in favour of the
Agent,
as agent for the Lenders, dated as of the Effective Date, constituting
a
first-priority Lien on all present and after acquired (a) accounts
receivable, (b) inventory, (c) intangibles, (d) collateral
proceeds accounts and (e) Equity Securities, of each Subsidiary of
the Borrower, subject only to Permitted Liens;
and
|
| (iii) |
securities
pledge agreements executed by each Credit Party in favour of the
Agent, as
agent for the Lenders, dated as of the Effective Date, together with
all
stock certificates, instruments and other documents required to be
delivered to the Agent pursuant to such securities pledge
agreements,
|
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provided
that if
any of the foregoing documents are not suitable for use in any jurisdiction,
the
applicable Credit Party shall provide to the Agent alternative document(s)
with
substantially equivalent substantive effect and which are suitable for use
in
such jurisdiction.
(l) Landlord
Waivers; Bailee Letters.
The
Agent shall have received (i) executed copies of a landlord waiver, in form
and substance satisfactory to the Agent, acting reasonably, from each landlord
of Real Property where any Collateral of any of the Credit Parties is located
and (ii) bailee letters, in form and substance reasonably satisfactory to
the Agent, from each bailee who is in possession of any Collateral of any of
the
Credit Parties.
(m) Regulatory
Approval; Consents; Waivers.
The
Agent and the Lenders shall be satisfied, acting reasonably, that all material
Authorizations required in connection with the Transactions contemplated hereby
have been obtained and are in full force and effect (including all approvals
listed in Schedule 3.3), and that all consents and waivers required to
consummate the Transactions have been obtained, to the extent that consummation
of the Transactions would otherwise be restricted or prohibited under the terms
of any Material Contract to which the Borrower or any other Credit Party is
a
party, or by which it is bound, in each case without the imposition of any
burdensome provisions.
(n) Delivery
of Financial Statements.
The
Agent and the Lenders shall have received and be satisfied with the unaudited
consolidated and consolidating balance sheets, statements of income and retained
earnings and statements of changes in financial position of the Borrower and
its
Subsidiaries for the Fiscal Year ended December 31, 2005.
(o) No
Material Adverse Change.
The
Agent and the Lenders shall be satisfied that, since December 31, 2005,
there has not been a Material Adverse Change.
(p) Other
Documentation.
The
Agent and the Lenders shall have received such other documents and instruments
as are customary for transactions of this type or as they may reasonably
request.
(q) Indebtedness.
The
Transactions contemplated in this Agreement and the other Loan Documents shall
not have caused any event or condition to occur which has resulted, or which
will result, in any Material Indebtedness becoming due prior to its scheduled
maturity or that permits (with or without the giving of notice, the lapse of
time, or both) the holder or holders of any Material Indebtedness or any trustee
or agent on its or their behalf to cause any Material Indebtedness to become
due, or to require the prepayment, repurchase, redemption or defeasance thereof,
prior to its scheduled maturity, or which will result in the creation of any
Liens under any Indebtedness.
(r) Blocked
Account/Cash Management Systems.
The
Agent shall have received evidence satisfactory to the Agent that, as of the
Effective Date, blocked account and cash management systems complying with
Section 2.17 have been established and are currently being maintained in
the manner set forth in such Section 2.17, and the Agent shall have
received copies of duly executed tri-party blocked account and other control
agreements
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satisfactory to the Agent, acting reasonably, with the banks and other Persons as required hereunder or pursuant to Section 5.14.
(s) Material
Contracts.
The
Agent and the Lenders shall be satisfied with the terms and conditions of each
of the Material Contracts.
(t) Cancellation
of Existing Credit Lines.
Other
than the Parent Subordinated Debt, the Borrower shall have repaid all amounts
outstanding under its existing credit lines or will irrevocably direct the
Lenders to do so from the first advance hereunder, and all such existing credit
lines shall have been or will, concurrent with such advance, be cancelled
permanently.
(u) Capitalization
Arrangement.
The
Lenders shall be satisfied with the capital structure of the Borrower, that
the
Borrower is solvent, and that the Borrower has sufficient working capital to
pay
its debts as they become due.
(v) Post-Closing
Matters Agreement.
The
Agent shall have received a fully executed copy of a Post-Closing Matters
Agreement substantially in the form set out in Schedule 5.14
The
obligations of the Lenders to make Loans or provide a Letter of Credit Guarantee
or an F/X Guarantee hereunder shall not become effective unless each of the
foregoing conditions is satisfied (or waived pursuant to Section 9.2) at or
prior to 3:00 p.m., Toronto time, on May 24, 2006 (and, in the event
such conditions are not so satisfied or waived by such time, the Commitments
shall terminate at such time).
4.2 Each
Credit Event.
The
obligation of each Lender to make a Loan or provide a Letter of Credit Guarantee
or an F/X Guarantee on the occasion of any Borrowing, (including on the
occasions of the initial Borrowings hereunder), is subject to the satisfaction
of the following conditions:
(a) the
representations and warranties of the Borrower set forth in this Agreement
shall
be true and correct on and as of the date of each such Borrowing (including
the
date of issuance, amendment, renewal or extension of such Letter of Credit,
as
applicable) as if made on such date (except where such representation or
warranty refers to a different date);
(b) at
the
time of and immediately after giving effect to such Borrowing (including the
issuance, amendment, renewal or extension of such Letter of Credit, as
applicable), no Default shall have occurred and be continuing;
(c) the
Agent
shall have received a Borrowing Request in the manner and within the time period
required by Section 2.3; and
(d) except
as
may be otherwise agreed to from time to time by the Agent and the Borrower
in
writing, after giving effect to the extension of credit requested to be made
by
the Borrower on such date, the aggregate Exposure will not exceed the lesser
of
(i) the Commitments, or (ii) an amount equal to the Borrowing
Base.
Each
Borrowing, including each issuance, amendment, renewal or extension of a Letter
of Credit, shall be deemed to constitute a representation and warranty by the
Borrower on the date
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thereof
as to the accuracy of the matters specified in paragraphs (a) and (b)
above. This requirement does not apply on the conversion or rollover of an
existing Borrowing provided
that the
aggregate outstanding Borrowings will not be increased as a consequence
thereof.
ARTICLE 5
AFFIRMATIVE
COVENANTS
From
(and
including) the Effective Date until the Commitments have expired or been
terminated and the principal of and interest on each Loan and all fees payable
hereunder shall have been paid in full and all Letters of Credit, F/X Contracts,
Letter of Credit Guarantees, and F/X Guarantees shall have expired and been
terminated and all Reimbursement Obligations have been satisfied by the
Borrower, the Borrower and each other Credit Party covenants and agrees with
the
Lenders that:
5.1 Financial
Statements and Other Information.
The
Borrower will furnish to the Agent and each Lender:
(a) as
soon
as available and in any event within 120 days after the end of each Fiscal
Year
of the Borrower, its audited consolidated balance sheet and related statements
of income, retained earnings and changes in financial position as of the end
of
and for such Fiscal Year, setting forth in each case in comparative form the
figures for the previous Fiscal Year, all reported on by independent auditors
of
recognized national standing (without a “going concern” or like qualification or
exception and without any qualification or exception as to the scope of such
audit) to the effect that such consolidated financial statements present fairly
in all material respects the financial condition and results of operations
of
the Borrower and its Subsidiaries on a consolidated basis in accordance with
GAAP consistently applied;
(b) as
soon
as available and in any event within 90 days after the end of each Fiscal Year
of the Parent, its audited consolidated balance sheet and related statements
of
income, retained earnings and changes in financial position as of the end of
and
for such Fiscal Year, setting forth in each case in comparative form the figures
for the previous Fiscal Year, all reported on by independent auditors of
recognized national standing (without a “going concern” or like qualification or
exception and without any qualification or exception as to the scope of such
audit) to the effect that such consolidated financial statements present fairly
in all material respects the financial condition and results of operations
of
the Parent and its Subsidiaries on a consolidated basis in accordance with
GAAP
consistently applied;
(c) as
soon
as available and in any event within: (i) 30 days after the end of each
calendar month, except in respect of its first, second and third Fiscal
Quarters; and (ii) 45 days after the end of its first, second and third
Fiscal Quarters, its unaudited consolidated balance sheet and related statements
of income, retained earnings and changes in financial position as of the end
of
such month and the then elapsed portion of the Fiscal Year which includes such
calendar month, setting forth in each case in comparative form the figures
for
the corresponding period or periods of (or, in the case of the balance sheet,
as
of the end of) the previous Fiscal Year, all certified by a Responsible Officer
as presenting fairly in all material respects the financial condition and
results of operations of the Borrower and its Subsidiaries
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on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments;
(d) concurrently
with the financial statements required pursuant to Sections 5.1(a) and (b)
above, a certificate of the Borrower, signed by a Responsible Officer
(i) stating
that a review of such financial statements during the period covered thereby
and
of the activities of the Borrower and the Subsidiaries has been made under
such
Responsible Officer’s supervision with a view to determining whether the
Borrower and the Subsidiaries have fulfilled all of their obligations under
this
Agreement and the other Loan Documents, (ii) stating
that the Borrower and the Subsidiaries have fulfilled their obligations under
this Agreement and the other Loan Documents and that all representations made
in
this Agreement continue to be true and correct as if made on the date of such
certification (or specifying the nature of any change), except where such
representation or warranty refers to a different date, or, if there shall be
a
Default or Event of Default, specifying the nature and status thereof and the
Borrower’s proposed response thereto, (iii) demonstrating
in reasonable detail compliance (including showing all material calculations)
as
at the end of the most recently completed Fiscal Year or the most recently
completed calendar month, as the case may be, with the covenants in
Section 5.12, and (iv) containing
or accompanied by such financial or other details, information and material
as
the Agent may reasonably request to evidence such compliance;
(e) concurrently
with the financial statements required pursuant to Section 5.1(a) and (b),
a certificate of the Borrower, signed by a Responsible Officer, demonstrating
in
reasonable detail compliance (including showing all material calculations)
as at
the end of the most recently completed Fiscal Year or the most recently
completed calendar month, as the case may be, with Section 6.3, describing
by category (utilizing the same categories as are used by the Borrower in its
internal financial reports) any Acquisitions permitted by Section 6.4 and
any Capital Expenditures made by the Borrower or any Restricted Subsidiary
as of the end of such Fiscal Year;
(f) copies
of
each management letter issued to the Borrower by its auditors promptly following
consideration or review thereof by the Board of Directors of the Borrower,
or
any committee thereof (together with any response thereto prepared by the
Borrower);
(g) promptly
upon the request of the Agent, and in any event no less frequently than monthly,
within 20 days of the last day of each calendar month, (together with a copy
of
all or any part of the following reports requested by any Lender in writing
after the Effective Date), each of the following reports and certificates,
each
of which shall be prepared by the Borrowers as of the last day of the
immediately preceding calendar month (in a manner satisfactory to the
Agent):
| (i) |
a
certified Borrowing Base Report, accompanied by such supporting detail
and
documentation as shall be requested by the Agent in its reasonable
discretion;
|
| (ii) |
a
monthly accounts receivable aging (including both summary and detail
format); showing Accounts outstanding aged from invoice date as follows:
1
to 30 days past due, 31 to 60 days past due, 61-90 days past
|
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64
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|
due,
and 91 days or more past due, accompanied by such supporting detail
and
documentation as shall be requested by the Agent in its reasonable
discretion, including the ledger for disputed/legal
accounts;
|
| (iii) |
a
monthly accounts payable aging (including both summary and detail
format
when available);
|
| (iv) |
a
reconciliation of Accounts aging to the general ledger and to the
financial statement as at the month
end;
|
| (v) |
a
calculation of the Accounts which would not meet the criteria of
an
Eligible Account Receivable;
|
| (vi) |
a
copy of the internally generated monthly sales, credit memo, debit
memo
journals and invoice register;
|
| (vii) |
a
copy of the internally generated month end cash receipts and collections
journal;
|
| (viii) |
a
reconciliation of the cash receipts journal to the blocked depository
account;
|
| (ix) |
an
aged listing of the ten largest customer accounts for the
month;
|
| (x) |
an
aged listing of the ten largest accounts payable for the
month;
|
| (xi) |
a
detailed, monthly, Inventory listing based on a perpetual inventory
listing system (as determined by the Agent in its audit
process);
|
| (xii) |
a
summary of Inventory of the Borrowers by location and type with a
supporting perpetual Inventory report, in each case, accompanied
by such
supporting detail and documentation as shall be requested by the
Agent in
its reasonable discretion; such summaries and reports shall include
the
dollar value thereof (both at cost, determined on a first in, first
out
basis, and at fair market value) by location and product
group;
|
| (xiii) |
a
reconciliation of the monthly inventory perpetual listing to the
general
ledger and to the financial statement as at month
end;
|
| (xiv) |
a
monthly general ledger/trial balance;
and
|
| (xv) |
a
calculation and report as to the Inventory which does not meet the
definition of Eligible Inventory.
|
(h) promptly
upon the request of the Agent, and in any event no less frequently than weekly,
on the 4th business day of the week (together with a copy of all or any part
of
the following reports requested by any Lender in writing after the Effective
Date), each of the
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following reports and certificates, each of which shall be prepared by the Borrowers as of the last day of the immediately preceding week (in a manner satisfactory to the Agent):
| (i) |
a
Borrowing Base Report (such weekly Borrowing Base Reports to include
Inventory values set out in the most recent month end delivery unless
requested otherwise by the Agent in consultation with the
Borrower);
|
| (ii) |
a
weekly accounts receivable aging (including both summary and detail
format); showing Accounts outstanding aged from invoice date as follows:
1
to 30 days past due, 31 to 60 days past due, 61-90 days past due,
and 91
days or more past due, accompanied by such supporting detail and
documentation as shall be requested by the Agent in its reasonable
discretion, including the ledger for disputed/legal
accounts;
|
| (iii) |
a
copy of the internally generated weekly sales journal, invoice
register;
|
| (iv) |
a
copy of the internally generated credit memo journal (if not included
in
the weekly sales journal);
|
| (v) |
a
copy of the internally generated debit memo journal (if not included
in
the weekly sales journal); and
|
| (vi) |
a
copy of the internally generated weekly cash receipts and collections
journal.
|
(i) by
the
25th day of each calendar month, as at the 15th day of the current calendar
month, (until the Agent advises the Borrowers otherwise, the Agent is requesting
Inventory information on a twice-monthly basis, however, the Agent may, in
its
sole discretion, determine that twice-monthly inventory information is
unnecessary and amend to monthly) a perpetual inventory listing, by location,
which reflects any differences from the month end Borrowing Base submitted
as to
such Inventory;
(j) such
other reports designating, identifying and describing the Accounts as required
by the Agent and on a more frequent basis as the Agent may reasonably request
in
its reasonable credit discretion;
(k) such
other reports designating, identifying and describing the Inventory as required
by the Agent and on a more frequent basis as the Agent may reasonably request
in
its reasonable credit discretion;
(l) at
the
time of delivery of each of the monthly financial statements delivered pursuant
to Section 5.1(c), (i) a listing of Accounts the assignment of which
would be subject to the Financial
Administration Act
(Canada)
or the Federal
Assignment of Claims Act of 1940
of the
United States of America or any similar law of any jurisdiction or subject
to a
limitation or restriction contained in the contract evidencing or relating
to
such Accounts and (ii) a list of any applications for the registration of
any patent, trademark or copyright filed by the Borrowers or
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any Subsidiary with the Canadian Intellectual Property Office or any similar office or agency in the prior calendar month;
(m) the
results of each physical verification, if any, that the Borrower may have made,
or caused any other Person to have made on its behalf, of all or any portion
of
its Inventory, within 10 Business Days of completion of any such physical
verification (and, if a Default or an Event of Default has occurred and be
continuing, the Borrower shall, upon the request of the Agent, conduct, and
deliver the results of, such physical verifications as the Agent may
require);
(n) such
appraisals determining the net orderly liquidation value of the Inventory of
the
Borrower and the Restricted Subsidiaries as the Agent may request at any time,
such appraisals to be conducted by an appraiser that is acceptable to the Agent,
and shall be in scope, form and substance acceptable to the Agent; provided
that
if no Default or Event of Default has occurred during a Fiscal Year of the
Borrower, then the Borrower will only be liable for the expense of one (1)
such
appraisal that is requested by the Agent in such Fiscal Year;
(o) promptly
after the Borrower learns of the receipt or occurrence of any of the following,
a certificate of the Borrower, signed by a Responsible Officer, specifying
(i) any
official notice of any violation, possible violation, non-compliance or possible
non-compliance, or claim made by any Governmental Authority pertaining to all
or
any part of the properties of the Borrower or any of the Subsidiaries which
could reasonably be expected to have a Material Adverse Effect, (ii) any
event
which constitutes a Default or Event of Default, together with a detailed
statement specifying the nature thereof and the steps being taken to cure such
Default or Event of Default, (iii) the
receipt of any notice from, or the taking of any other action by, the holder
of
any promissory note, debenture or other evidence of Indebtedness of the Borrower
or any of the Subsidiaries in an amount in excess of Cdn.$2,000,000 with respect
to an actual or alleged default, together with a detailed statement specifying
the notice given or other action taken by such holder and the nature of the
claimed default and what action the Borrower or the relevant Subsidiary is
taking or proposes to take with respect thereto, (iv) any
default or non-compliance of any party to any of the Loan Documents with any
of
the terms and conditions thereof or any notice of termination or other
proceedings or actions which could reasonably be expected to adversely affect
any of the Loan Documents, (v) the
creation, dissolution, merger or acquisition of any Restricted Subsidiary,
(vi) any
event
or condition not previously disclosed to the Agent, which violates any
Environmental Law and which could potentially, in the Borrower’s reasonable
judgment, have a Material Adverse Effect, (vii) any
material amendment to, termination of, or material default under a Material
Contract or any execution of, or material amendment to, termination of, or
material default under, any material collective bargaining agreement, and
(viii) any
other
event, development or condition which may reasonably be expected to have a
Material Adverse Effect;
(p) promptly
after the occurrence thereof, notice of the institution of or any material
adverse development in any action, suit or proceeding or any governmental
investigation or any arbitration before any court or arbitrator or any
Governmental Authority or official against the Borrower or any Restricted
Subsidiary or any material property of any thereof which could reasonably be
expected to have a Material Adverse Effect;
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(q) annually,
together with its delivery pursuant to Section 5.1(a), copies of each
annual and other report (including applicable schedules) with respect to each
Pension Plan of the Borrower or any Restricted
Subsidiary or
any
trust created thereunder;
(r) at
the
cost of the Borrower, up to a maximum amount of Cdn.$40,000 per year (and
without limit if a Default or Event of Default shall have occurred and be
continuing), a report or reports of an independent collateral field examiner
(which collateral field examiner may be the Agent or an Affiliate thereof)
approved (i) by
the
Borrower, whose approval shall not be unreasonably withheld, and (ii) by
the
Agent with respect to the Eligible Accounts and Eligible Inventory components
included in the Borrowing Base. The calculation of the foregoing maximum amount
shall not include reasonable out-of-pocket expenses incurred in connection
therewith, which shall also be for the account of the Borrower. The Agent may
(and, at the direction of the Required Lenders, shall) request such reports
or
additional reports as it (or the Required Lenders) shall reasonably deem
necessary;
(s) upon
request by the Agent, a summary of the insurance coverages of the Borrower
and
the other Credit Parties, in form and substance reasonably satisfactory to
the
Agent, and upon renewal of any insurance policy, a copy of an insurance
certificate summarizing the terms of such policy, and upon request by the Agent,
copies of the applicable policies;
(t) on
or
before the earlier of the 10th day after approval by the Board of Directors
of
the Borrower and the 30th day before each Fiscal Year end, an annual budget
of
the Borrower and each Restricted Subsidiary,
approved by the Board of Directors of the General Partner, setting forth in
reasonable detail and on a monthly basis the
projected revenues and expenses of the Borrower for the following Fiscal Year,
and shall include the Capital Expenditure Plan, it being recognized by the
Lenders that projections as to future results are not to be viewed as fact
and
that the actual results for the period or periods covered by such projections
may differ from the projected results; and
(u) concurrently
with any delivery of financial statements under Section 5.1 (a) or (b)
above, a certificate of a Responsible Officer of the Borrower (i) stating
whether any change in GAAP or in the application thereof has occurred since
the
date of the audited financial statements referred to in Section 5.1(a) and,
if any such change has occurred, specifying the effect of such change on the
financial statements accompanying such certificate, (ii) identifying all
its Subsidiaries existing on the date of such certificate and indicating, for
each such Subsidiary, whether such Subsidiary is a Restricted Subsidiary and
whether such Subsidiary was formed or acquired since the end of the previous
calendar month, (iii) identifying any parcels of real property or
improvements thereto that have been acquired by any Credit Party since the
end
of the previous calendar month, and (iv) identifying any Permitted
Acquisitions that have been completed since the end of the previous calendar
month, including the date on which each such Permitted Acquisition was completed
and the consideration therefor.
5.2 Existence;
Conduct of Business.
The
Borrower will, and will cause each Restricted Subsidiary
to, do or cause to be done all things necessary to preserve, renew and keep
in
full force and effect its legal existence (subject only to Section 6.3),
and obtain, preserve, renew and keep in full force and effect any and all
rights, licenses, permits, privileges and franchises material to the conduct
of
its business.
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5.3 Payment
of Obligations.
The
Borrower will, and will cause each Restricted Subsidiary to, pay its
obligations, including Tax liabilities, that, if not paid, could result in
a
Material Adverse Effect before the same shall become delinquent or in default,
except where (a) the
validity or amount thereof is being contested in good faith by appropriate
proceedings, (b) the
Borrower or such Restricted Subsidiary has set aside on its books adequate
reserves with respect thereto in accordance with GAAP, and (c) the
failure to make payment pending such contest could not reasonably be expected
to
result in a Material Adverse Effect.
5.4 Maintenance
of Properties.
The
Borrower will, and will cause each Restricted Subsidiary to, keep and maintain
all property material to the conduct of its business in good working order
and
condition, ordinary wear and tear excepted, except to the extent that the
failure to do so could not reasonably be expected to have a Material Adverse
Effect.
5.5 Books
and Records; Inspection Rights.
The
Borrower will, and will cause Restricted Subsidiary to, keep proper books of
record and account in which full, true and correct entries are made of all
dealings and transactions in relation to its business and activities. The
Borrower will, and will cause each Restricted Subsidiary to, permit any
representatives designated by the Agent or any Lender, upon reasonable prior
notice, to visit and inspect its properties, to examine and make extracts from
its books and records, and to discuss its affairs, finances and condition with
its officers and independent accountants, all at such reasonable times and
as
often as reasonably requested.
5.6 Compliance
with Applicable Laws and Material Contracts.
The
Borrower will, and will cause each Restricted Subsidiary to, comply with all
Applicable Laws and orders of any Governmental Authority applicable to it or
its
property and with all of its material contractual obligations, except where
the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect. The Borrower shall not modify,
amend or alter its Limited Partnership Agreement other than in a manner which
does not adversely affect the rights of the Lenders or the Agent.
5.7 Use
of Proceeds and Letters of Credit.
The
proceeds of the Revolving Loans will be used to repay existing Indebtedness
to
Royal Bank of Canada and for working capital and other general corporate
purposes of the Borrower. Letters of Credit will be issued only to support
general corporate purposes of the Borrower.
5.8 Further
Assurances.
The
Borrower will and will cause each other Credit Party to cure promptly any
defects in the execution and delivery of the Loan Documents, including this
Agreement. Upon request, the Borrower will, at its expense, as promptly as
practical, execute and deliver to the Agent, all such other and further
documents, agreements and instruments (and cause each other Credit Party to
take
such action) in compliance with or performance of the covenants and agreements
of the Borrower or any other Credit Party in any of the Loan Documents,
including this Agreement, or to further evidence and more fully describe the
Collateral, or to correct any omissions in any of the Loan Documents, or more
fully to state the security obligations set out herein or in any of the Loan
Documents, or to perfect, protect or preserve any Liens created pursuant to
any
of the Loan Documents, or to make any recordings, to file any notices, or obtain
any consents, all as may be necessary or appropriate in connection therewith,
in
the judgment of the Agent, acting reasonably.
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5.9 Insurance.
The
Borrower shall, and shall cause each other Credit Party to, maintain insurance
on its property and assets under such policies of insurance, with such insurance
companies, in such reasonable amounts and covering such insurable risks as
are
at all times reasonably satisfactory to the Agent. All such policies are subject
to the rights of any holders of Permitted Liens holding claims senior to the
Agent, to be made payable to the Agent, to the extent required herein, in case
of loss, under a standard non contributory “mortgagee”, “lender” or “secured
party” clause and are to contain such other provisions as the Agent may require
to fully protect the Agent’s interest in the property and assets subject to the
Liens in favour of the Agent and to any payments to be made under such policies.
All original policies or true copies thereof are to be delivered to the Agent,
premium prepaid, with a loss payable endorsement in respect of the Collateral
and in respect of business interruption insurance in the Agent’s favour, and
shall provide for not less than thirty (30) days prior written notice to the
Agent of the exercise of any right of cancellation. Upon the occurrence and
continuance of an Event of Default which is not waived in writing by the Agent,
the Agent shall, subject to the rights of any holders of Permitted Liens holding
claims senior to the Agent, have the sole right, in the name of the Agent,
the
Borrower or any other applicable Credit Party, to file claims under any
insurance policies in respect of the Collateral and in respect of business
interruption insurance, to receive, receipt and give acquittance for any
payments that may be payable thereunder, and to execute any and all
endorsements, receipts, releases, assignments, reassignments or other documents
that may be necessary to effect the collection, compromise or settlement of
any
such claims under any such insurance policies. Upon the occurrence and during
the continuance of an Event of Default, all insurance proceeds in respect of
any
Collateral shall be paid to the Agent. The Agent may apply such insurance
proceeds to the Obligations in such manner as it may deem advisable in its
sole
discretion. In the event the Borrower fails to provide the Agent with timely
evidence, acceptable to the Agent, of the maintenance of insurance coverage
required pursuant to this Section 5.9, or in the event that any Credit
Party fails to maintain such insurance, the Agent may purchase or otherwise
arrange for such insurance, but at the Borrower’s expense and without any
responsibility on the Agent’s part for: (i) obtaining the insurance;
(ii) the solvency of the insurance companies; (iii) the adequacy of
the coverage; or (iv) the collection of claims. The insurance acquired by
the Agent may, but need not, protect the Borrower’s or any other Credit Party’s
interest in the Collateral, and therefore such insurance may not pay claims
which the Borrower may have with respect to the Collateral or pay any claim
which may be made against the Borrower in connection with the Collateral. In
the
event the Agent purchases, obtains or acquires insurance covering all or any
portion of the Collateral, the Borrower shall be responsible for all of the
applicable costs of such insurance, including premiums, interest (at the
applicable interest rate for Revolving Loans set forth in Section 2.5),
fees and any other charges with respect thereto, until the effective date of
the
cancellation or the expiration of such insurance. The Agent may charge all
of
such premiums, fees, costs, interest and other charges to the Borrower’s
Operating Account. The Borrower hereby acknowledges that the costs of the
premiums of any insurance acquired by the Agent may exceed the costs of
insurance which the Borrower may be able to purchase on its own. In the event
that the Agent purchases such insurance, the Agent will promptly, and in any
event within fifteen (15) days, notify the Borrower of said
purchase.
5.10 Operation
and Maintenance of Property.
The
Borrower will, and will cause each other Credit Party to, manage and operate
its
business or cause its business to be managed and
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operated
(i) in
accordance with prudent industry practice in all material respects and in
compliance in all material respects with the terms and provisions of all
applicable licenses, leases, contracts and agreements, and (ii) in
compliance with all Applicable Laws of the jurisdiction in which such businesses
are carried on, and all Applicable Laws of every other Governmental Authority
from time to time constituted to regulate the ownership, management and
operation of such businesses, except in each instance where a failure to so
manage and operate would not have a Material Adverse Effect.
5.11 Additional
Subsidiaries; Additional Liens.
If, at
any time on or after the Effective Date, the Borrower or any
Restricted Subsidiary
creates or acquires an additional Subsidiary or in some other fashion becomes
the holder of any Equity Securities of a new Subsidiary:
(a) the
Borrower will, and will cause any relevant Restricted Subsidiary,
to immediately execute and deliver to the Agent a securities pledge agreement,
in form and substance satisfactory to the Agent, granting a security interest
in
100% of the Equity Securities of such new Subsidiary owned by the Borrower
or
such Restricted Subsidiary;
and
(b) to
the
extent permitted by Applicable Law, the Borrower will cause such new Subsidiary
to immediately execute and deliver to the Agent (i) a
Guarantee, and (ii) mortgages,
security agreements and other security-related documents covering such new
Subsidiary’s property, all in form and substance satisfactory to the Agent,
acting reasonably;
provided
that,
if such
new Subsidiary does not have, but only for so long as such new Subsidiary does
not have, assets of more than Cdn.$1,000,000, the Borrower shall not be required
to comply with this Section with respect to such new Subsidiary. If, at any
time
after the Effective Date, the Borrower or any Restricted Subsidiary
makes a permitted acquisition with respect to a Person that is not a
Restricted Subsidiary,
the Borrower shall, and shall cause such Restricted Subsidiary,
to execute and deliver to the Agent at the time of such permitted acquisition,
additional pledge agreements granting a security interest in 100% of the Equity
Securities of such Person owned by the Borrower or such Restricted Subsidiary,
respectively. In connection with the execution and delivery of any guarantee,
pledge agreement, mortgage, security agreement or related document pursuant
to
this Section, the Borrower will, or will cause the relevant Credit Party to,
deliver to the Agent such corporate resolutions, certificates, legal opinions
and such other related documents as shall be reasonably requested by the Agent
and consistent with the relevant forms and types thereof delivered on the
Effective Date or as shall be otherwise reasonably acceptable to the Agent.
Each
guarantee, pledge agreement, mortgage, security agreement and other document
delivered pursuant to this Section shall be deemed to be a Security Document
from and after the date of execution thereof.
5.12 Financial
Covenants.
(a) If,
at
any time, the Excess Availability is less than Cdn.$8,000,000 (the “Threshold
Amount”),
and
until the Excess Availability thereafter becomes greater than or equal to the
Threshold Amount for a period of not less than 7 Business Days, the Borrower
shall maintain a Fixed Charge Coverage Ratio of not less than 1.10:1.00, such
calculation to be based on financial statements having been delivered to the
Agent pursuant to Section 5.1 as at:
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71
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| (i) |
June 30,
2006, based on the 2 month period prior to such
date;
|
| (ii) |
September 30,
2006, based on the 5 month period prior to such
date;
|
| (iii) |
December 31,
2006, based on the 8 month period prior to such
date;
|
| (iv) |
March 31,
2007, based on the 11 month period prior to such date;
and
|
| (v) |
thereafter,
for each Rolling Period
|
provided
that, if the Excess Availability becomes greater than or equal to the Threshold
Amount for a period of not less than 7 Business Days immediately thereafter,
upon each such occurrence, such Excess Availability greater than or equal to
the
Threshold Amount shall be deemed to have been in effect from the date such
Threshold Amount was first re-established, solely for the purpose of allowing
the Borrower to comply with Fixed Charge Coverage Ratio hereunder.
(b) The
Borrowing Base shall be subject to an Availability Reserve of Cdn.$4,000,000.
Such Availability Reserve shall be permanently released on or after the expiry
of such twelve month period upon receipt by the Agent of financial statements
delivered to the Agent pursuant to Section 5.1 for the most recent Rolling
Period evidencing a Fixed Charge Coverage Ratio of not less than
1.50:1:00.
5.13 Parent
Subordinated Debt.
The
Borrower shall maintain the Parent Subordinated Debt with a commitment level
of
no less than U.S.$15,000,000.
5.14 Post
Closing Undertakings.
Borrower
will ensure that all post closing undertakings contained in the Post-Closing
Matters Agreement (collectively, the “Undertakings”)
have
been satisfied within the time periods set forth therein and any failure to
satisfy any of the Undertakings within the applicable time periods shall
constitute an Event of Default.
ARTICLE 6
NEGATIVE
COVENANTS
From
(and
including) the Effective Date until the Commitments have expired or been
terminated and the principal of and interest on each Loan and all fees payable
hereunder shall have been paid in full and all Letters of Credit, F/X Contacts,
Letter of Credit Guarantees and Reimbursement Obligations have been satisfied
by
the Borrower, the Borrower and each Credit Party covenants and agrees with
the
Lenders that:
6.1 Indebtedness.
No
Credit Party will, and will not permit any Restricted Subsidiary
to, create, incur, assume or permit to exist any Indebtedness,
except:
(a) any
Indebtedness created hereunder;
(b) any
Indebtedness existing on the date hereof and set forth in Schedule 6.1
(including, any extensions or renewals but excluding any replacements of any
such Indebtedness);
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(c) the
Parent Subordinated Debt;
(d) any
Indebtedness of one Credit Party to another Credit Party;
(e) any
Guarantee by a Credit Party of Indebtedness of any other Credit
Party;
(f) any
Indebtedness of the Credit Parties incurred under Purchase Money Liens, Sale
and
Leasebacks or to Capital Lease Obligations in an aggregate amount not exceeding
Cdn.$5,000,000 for all Credit Parties;
(g) any
Indebtedness of any Person that becomes a Credit Party after the date hereof,
provided
that
(i) such
Indebtedness exists at the time such Person becomes a Credit Party and is not
created in contemplation of or in connection with such Person becoming a Credit
Party and is on terms reasonably satisfactory to the Lenders, and
(ii) the
aggregate principal amount of Indebtedness permitted by this clause (g)
shall not exceed Cdn.$250,000 at any time outstanding;
(h) any
Indebtedness in respect of trade letters of credit;
(i) any
Indebtedness in respect of Swap Agreements permitted hereunder, provided
that the
aggregate notional amounts under all such Swap Agreements shall not exceed
Cdn.$25,000,000;
(j) annually,
if no Default or Event of Default shall have occurred and be continuing and
there is an Excess Availability equal to or greater than such amount, any
Indebtedness of the Borrower to the Parent incurred on the Business Day
immediately prior to the fiscal year end of the Lenders, such Indebtedness
being
permitted only up to and including the Business Day immediately following the
fiscal year end of the Lenders; and
(k) any
Indebtedness of the Borrower to the Parent (on terms and conditions satisfactory
to the Agent and Lenders) in respect of funds used solely for the purpose of
curing any Default occurring as a result of the Borrower being in breach of
its
Fixed Charge Coverage Ratio.
6.2 Liens.
No
Credit Party will, and will not permit any Restricted Subsidiary
to, create, incur, assume or permit to exist any Lien on any property or asset
now owned or hereafter acquired by the Credit Party or any
Restricted Subsidiary,
or assign or sell any income or revenues (including Receivables) or rights
in
respect of any thereof, except Permitted Liens.
6.3 Fundamental
Changes.
(a) No
Credit
Party will, and will not permit any Restricted Subsidiary
to, merge into or amalgamate or consolidate with any other Person, or permit
any
other Person to merge into or amalgamate or consolidate with it, or sell,
transfer, lease or otherwise dispose of (in one transaction or in a series
of
transactions) all or substantially all of its assets, or all or any of the
Equity Securities of any of its Subsidiaries (in each case, whether now owned
or
hereafter acquired), or liquidate or dissolve, except that, if at the time
thereof and immediately after giving effect thereto no Default shall have
occurred and be continuing, (i) any
Restricted
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Subsidiary may amalgamate with the Borrower, (ii) any Restricted Subsidiary may amalgamate with any other Restricted Subsidiary, (iii) any Restricted Subsidiary may sell, transfer, lease or otherwise dispose of its assets to the Borrower or to another Restricted Subsidiary, and (iv) any Restricted Subsidiary may liquidate or dissolve if the Borrower determines in good faith that such liquidation or dissolution is in the best interests of the Borrower and the Agent determines that such liquidation or dissolution is not disadvantageous to the Lenders; provided that any amalgamation pursuant to Sections 6.3(a)(i) or (ii) shall not be permitted unless permitted by Section 6.4 and unless the amalgamated corporation confirms to the Agent in writing that the amalgamated corporation is liable, by operation of law or otherwise, for the obligations of the Borrower under this Agreement.
(b) No
Credit
Party will, and will not permit any Restricted Subsidiary
to, engage to any material extent in any material business other than businesses
of the type conducted by the Credit Party on the date of execution of this
Agreement and businesses reasonably related thereto.
6.4 Investments,
Loans, Advances, Guarantees and Acquisitions.
No
Credit Party will, and will not permit any Restricted Subsidiary
to, purchase, hold or acquire (including pursuant to any amalgamation with
any
Person that was not a wholly-owned Restricted Subsidiary
prior to such amalgamation) any Equity Securities, evidences of indebtedness
or
other securities (including any option, warrant or other right to acquire any
of
the foregoing) of, make or permit to exist any loans or advances to, Guarantee
any obligations of, or make or permit to exist any investment or any other
interest in, any other Person, or purchase or otherwise acquire (in one
transaction or a series of transactions) any assets of any other Person or
otherwise make an Acquisition, except:
(a) investments
by a Credit Party in the Equity Securities of any other Credit
Party;
(b) loans
or
advances made by one Credit Party to any other Credit Party;
(c) Guarantees
constituting Indebtedness permitted by Section 6.1; and
(d) Permitted
Investments.
6.5 Swap
Agreements.
No
Credit Party will, and will not permit any Restricted Subsidiary
to, enter into any Swap Agreement, except (i) Swap
Agreements entered into to hedge or mitigate risks to which the Borrower or
any
other Credit Party has actual exposure (other than those in respect of Equity
Securities, (ii) Swap Agreements entered into in order to effectively cap,
collar or exchange interest rates (from fixed to floating rates, from one
floating rate to another floating rate or otherwise) with respect to any
interest-bearing liability or investment of the Borrower or any other Credit
Party, and (iii) other Swap Agreements entered into pursuant to
Section 2.19.
6.6 Restricted
Payments.
No
Credit Party will, and will not permit any Restricted Subsidiary
to, declare, pay or make, or agree to pay or make, directly or indirectly,
any
Restricted Payment, except that, provided that no Default or Event of Default
shall have occurred and be continuing before or immediately after any of the
following, the Credit Parties may make
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the
following Restricted Payments (and for greater certainty, subject to the
occurrence and continuance of a Default or an Event of Default, the exceptions
listed below are each permitted payments):
(a) the
Borrower may declare and pay dividends with respect to its Equity
Securities;
(b) any
Restricted Subsidiary
may declare and pay dividends to the Borrower or any wholly-owned
Restricted Subsidiary
and any wholly-owned Restricted Subsidiary
may redeem or repurchase its own Equity Securities;
(c) the
Borrower may make Restricted Payments pursuant to and in accordance with stock
option plans, profit sharing plans and/or other benefit plans for management
or
employees of the Borrower and its Subsidiaries, provided
that the
aggregate amount of cash payments made by the Borrower and the Subsidiaries
in
any Fiscal Year pursuant to all such stock option plans, profit sharing plans
and other compensation benefit plans shall not exceed
Cdn.$2,000,000;
(d) the
Borrower may pay to the Parent any amounts required to pay income taxes on
earnings attributed from the Borrower’s business to the Parent;
(e) the
Borrower may make payments of (i) interest under the Parent Subordinated
Debt at any time and (ii) principal under the Parent Subordinated
Debt;
(f) the
Borrower may make any payment to the Parent which is permitted by any of
Sections 6.7(d), (e) or (f); and
(g) the
Borrower may distribute any amount to the Parent in any Fiscal
Year.
6.7 Transactions
with Affiliates.
No
Credit Party will, and will not permit any Restricted Subsidiary
to, sell, lease or otherwise transfer any property or assets to, or purchase,
lease or otherwise acquire any property or assets from, or otherwise engage
in
any other transactions with, any of its Affiliates, except (a) in the
ordinary course of business at prices and on terms and conditions not less
favourable to the Credit Party than could be obtained on an arm’s-length basis
from unrelated third parties, (b) transactions between or among the Credit
Parties not involving any other Affiliate, (c) any Restricted Payment
permitted by Section 6.6, (d) foreign exchange transactions with the
Parent at market rates in the normal course of business and any agreements
existing as at the Effective Date with the Parent provided no material change
shall be permitted thereunder without consent of the Agent, (e) pursuant to
the Parent Credit Agreement, and (f) pursuant to the Parent Pulp Agency
Agreement. The foregoing restrictions shall not apply to: (i) the payment
of reasonable and customary fees to directors of the Credit Party, (ii) any
other transaction with any employee, officer or director of a Credit Party
pursuant to employee profit sharing and/or benefit plans and compensation and
non-competition arrangements in amounts customary for corporations similarly
situated to the Credit Party and entered into in the ordinary course of business
and approved by the board of directors of the Credit Party, or (iii) any
reimbursement of reasonable out-of-pocket costs incurred by an Affiliate of
the
Credit Party on behalf of or for the account of the Credit Party.
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6.8 Repayment
of Debt.
No
Credit Party will, and will not permit any Restricted Subsidiary
to, repay, prepay, redeem, repurchase, defease or otherwise make any payment
on
account of any Indebtedness for borrowed money except for (a) payment on
account of Indebtedness owing to the Agent or the Lenders under this Agreement,
(b) any payment consented to in writing by the Required Lenders, and
(c) payment on account of Indebtedness for borrowed money permitted by
Section 6.1, the repayment of which is not restricted by
Section 6.6.
6.9 Restrictive
Agreements.
No
Credit Party will, and will not permit any Restricted Subsidiary
to, directly or indirectly, enter into, incur or permit to exist any agreement
or other arrangement that prohibits, restricts or imposes any condition upon
(a) the ability of the Borrower or any Restricted Subsidiary
to create, incur or permit to exist any Lien upon any of its property or assets,
(b) the ability of any Restricted Subsidiary
to pay dividends or other distributions with respect to any Equity Securities
or
with respect to, or measured by, its profits or to make or repay loans or
advances to the Borrower or any Restricted Subsidiary
or to provide a Guarantee of any Indebtedness of the Borrower or any
Restricted Subsidiary,
(c) the ability of the Borrower or any Restricted Subsidiary
to make any loan or advance to the Borrower or any of the Subsidiaries, or
(d) the ability of the Borrower or any Restricted Subsidiary
to sell, lease or transfer any of its property to the Borrower or any of the
Subsidiaries; provided
that
(i) the foregoing shall not apply to restrictions and conditions imposed by
Applicable Law or by this Agreement, (ii) the foregoing shall not apply to
restrictions and conditions existing on the date hereof identified on
Schedule 6.9 (but shall apply to any extension or renewal of, or any
amendment or modification expanding the scope of, any such restriction or
condition), (iii) the foregoing shall not apply to customary restrictions
and conditions contained in agreements relating to the sale of an
Restricted Subsidiary
pending such sale, provided
such
restrictions and conditions apply only to the Restricted Subsidiary
that is to be sold and such sale is permitted hereunder,
(iv) clause (a) of the foregoing shall not apply to restrictions or
conditions imposed by any agreement relating to secured Indebtedness permitted
by this Agreement if such restrictions or conditions apply only to the property
or assets securing such Indebtedness, and (v) clause (a) of the
foregoing shall not apply to customary provisions in leases and other ordinary
course contracts restricting the assignment thereof.
6.10 Capital
Lease Obligations; Sale/Leaseback Obligations.
No
Credit Party will, and will not permit any Restricted Subsidiary
to, create, incur, assume or suffer to exist, any Capital Lease Obligations
or
Sale/Leaseback Obligations, whether directly or as a guarantor, if, after giving
effect thereto, the aggregate amount of all payments required to be made by
the
Credit Parties on a consolidated basis pursuant to Capital Lease Obligations
and
Sale/Leaseback Obligations would exceed Cdn.$2,500,000 in any Fiscal
Year.
6.11 Pension
Plan Compliance.
No
Credit Party will (a) terminate, or permit any Restricted Subsidiary
to terminate, any Pension Plan in a manner, or take any other action with
respect to any Pension Plan, which could reasonably be expected to result in
any
material liability of the Borrower or a Restricted Subsidiary
of the Borrower, (b) fail to make, or permit any Restricted Subsidiary
to fail to make, full payment when due of all amounts which, under the
provisions of any Pension Plan, agreement relating thereto or Applicable Law,
the Credit Party or any Restricted Subsidiary
is required to pay as contributions thereto, except where the failure to make
such payments could not reasonably be expected to have a Material Adverse
Effect,
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(c) permit
to exist, or allow any Restricted Subsidiary
to permit to exist, any accumulated funding deficiency, whether or not waived,
with respect to any Pension Plan in an amount which could reasonably be expected
to cause a Material Adverse Effect, (d) contribute to or assume an
obligation to contribute to, or permit any Restricted Subsidiary
(other than any Restricted Subsidiary
acquired as permitted pursuant to Section 5.11) to contribute to or assume
an obligation to contribute to, any “multi-employer pension plan” as such term
is defined in the Pension
Benefits Act
(Ontario), (e) acquire, or permit any Restricted Subsidiary
to acquire, an interest in any Person if such Person sponsors, maintains or
contributes to, or at any time in the six-year period preceding such acquisition
has sponsored, maintained, or contributed to any “multi-employer pension plan”
as such term is defined in the Pension
Benefits Act
(Ontario); provided
that,
the Credit Party or any Restricted Subsidiary
may acquire an interest in any such Person if such Person is acquired as a
Permitted Acquisition and neither the Credit Party nor any of its other
Subsidiaries has any legal liability to perform such Person’s obligations or
assume such Person’s liabilities, and (f) permit, or allow any
Restricted Subsidiary
to permit, the actuarial present value of the benefit liabilities (computed
on
an accumulated benefit obligation basis in accordance with GAAP) under all
Pension Plans in the aggregate to exceed the current value of the assets of
all
Pension Plans in the aggregate that are allocable to such benefit liabilities,
in each case only to the extent such liabilities and assets relate to benefits
to be paid to employees of the Credit Parties, by an amount that could
reasonably be expected to cause a Material Adverse Effect.
6.12 Sale
or Discount of Receivables.
No
Credit Party will, and will not permit any Restricted Subsidiary to, discount
or
sell (with or without recourse) any of its or the Restricted Subsidiaries’
Accounts, provided the Borrower shall be entitled to compromise, adjust, or
extend the time for payment of its Accounts, in the ordinary course of business,
consistent with past practice or existing arrangements with customers or
agents.
6.13 Unconditional
Purchase Obligations.
No
Credit Party will, and will not permit any Restricted Subsidiary to, enter
into
or be a party to, any material contract for the purchase of materials, supplies
or other property or services, if such contract requires that payment be made
by
it regardless of whether or not delivery of such materials, supplies or other
property or services is ever made, provided that this Section 6.13 shall
not restrict the ability of any Credit Party or any Restricted Subsidiary
to enter into any such contract in the ordinary course of its business to the
extent that the materials, supplies or other property or services which are
the
subject matter of such contract are reasonably expected to be used by the
applicable Credit Party in the ordinary course of its business.
6.14 Capital
Expenditures.
No
Credit Party will make, and will not permit any Restricted Subsidiary to, make
Capital Expenditures in any period for the Credit Parties on a consolidated
basis in excess of the 1.20 times the Borrower’s budgeted Capital Expenditures,
measured annually using the Capital Expenditure Plan.
6.15 No
Amendments to Material Contracts.
No
Credit Party will, and will not permit any Restricted Subsidiary
to, amend, modify or terminate (or waive any provision of or provide any consent
under), any Material Contract in a manner which may reasonably be expected
to
have a Material Adverse Effect.
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ARTICLE 7
EVENTS
OF DEFAULT
7.1 Events
of Default.
If any
of the following events (“Events
of Default”)
shall
occur:
(a) the
Borrower shall fail to pay any principal of any Loan or any reimbursement
obligation in respect of any LC Disbursement within 2 Business Days of the
due
date thereof;
(b) the
Borrower shall fail to pay any interest on any Loan or any fee or any other
amount (other than an amount referred to in clause (a) above) payable under
this Agreement within 2 Business Days of the due date thereof;
(c) any
representation or warranty made or deemed made by or on behalf of any Credit
Party in or in connection with any Loan Document or any amendment or
modification thereof or waiver thereunder, or in any report, certificate,
financial statement or other document furnished pursuant to or in connection
with any Loan Document or any amendment or modification thereof or waiver
thereunder, shall prove to have been incorrect when made or deemed to be
made;
(d) any
Credit Party shall fail to observe or perform any covenant, condition or
agreement contained in Section 5.1(o) (notices of Defaults or Events of
Default), 5.2 (with respect to the Credit Party’s existence), 5.9 or in
Article 6 (or in any comparable provision of any other Loan
Document);
(e) any
Credit Party shall fail to observe or perform any covenant, condition or
agreement contained in Section 5.12, and such failure shall continue
unremedied for a period of seven days after notice thereof from the Agent to
the
Borrower (which shall be given at the request of any Lender);
(f) any
Credit Party shall fail to observe or perform any covenant, condition or
agreement contained in this Agreement (other than those specified in
clauses (a), (b) or (d) above) or any other Loan Document, and such failure
shall continue unremedied for a period of 30 days after notice thereof from
the
Agent to the Borrower (which notice will be given at the request of any
Lender);
(g) any
Credit Party shall fail to make any payment whether of principal or interest,
and regardless of amount, in respect of any Material Indebtedness, when and
as
the same shall become due and payable within 2 Business Days after receipt
of
notice thereof;
(h) any
event
or condition occurs that results in any Material Indebtedness becoming due
prior
to its scheduled maturity or that enables or permits (with or without the giving
of notice, the lapse of time or both) the holder or holders of any Material
Indebtedness or any trustee or agent on its or their behalf to cause any
Material Indebtedness to become due, or to require the prepayment, repurchase,
redemption or defeasance thereof, prior to its scheduled maturity; provided
that
this Section 7.1(h) shall not apply to secured Indebtedness that becomes
due as a result of the voluntary sale or transfer of the property or assets
securing such Indebtedness so long as the proceeds of such sale or transfer
are
sufficient to, and are applied
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to, reduce such secured Indebtedness to nil within 2 Business Days after receipt of notice thereof;
(i) any
Credit Party:
| (i) |
becomes
insolvent, or generally does not or becomes unable to pay its debts
or
meet its liabilities as the same become due, or admits in writing
its
inability to pay its debts generally, or declares any general moratorium
on its indebtedness, or proposes a compromise or arrangement between
it
and any class of its creditors;
|
| (ii) |
commits
an act of bankruptcy under the BIA, or makes an assignment of its
property
for the general benefit of its creditors under the BIA, or makes
a
proposal (or files a notice of its intention to do so) under the
BIA;
|
| (iii) |
institutes
any proceeding seeking to adjudicate it an insolvent, or seeking
liquidation, dissolution, winding-up, reorganization, compromise,
arrangement, adjustment, protection, moratorium, relief, stay of
proceedings of creditors generally (or any class of creditors), or
composition of it or its debts or any other relief, under any federal,
provincial or foreign Applicable Law now or hereafter in effect relating
to bankruptcy, winding-up, insolvency, reorganization, receivership,
plans
of arrangement or relief or protection of debtors (including the
BIA, the
Companies’
Creditors Arrangement Act
(Canada), the
United States Bankruptcy Code
and any applicable corporations legislation) or at common law or
in
equity, or files an answer admitting the material allegations of
a
petition filed against it in any such
proceeding;
|
| (iv) |
applies
for the appointment of, or the taking of possession by, a receiver,
interim receiver, receiver/manager, sequestrator, conservator, custodian,
administrator, trustee, liquidator or other similar official for
it or any
substantial part of its property;
or
|
| (v) |
threatens
to do any of the foregoing, or takes any action, corporate or otherwise,
to approve, effect, consent to or authorize any of the actions described
in this Section 7.1(i) or in Section 7.1(j), or otherwise acts
in furtherance thereof or fails to act in a timely and appropriate
manner
in defense thereof,
|
(j) any
petition is filed, application made or other proceeding instituted against
or in
respect of any Credit Party:
| (i) |
seeking
to adjudicate it an insolvent;
|
| (ii) |
seeking
a receiving order against it under the
BIA;
|
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| (iii) |
seeking
liquidation, dissolution, winding-up, reorganization, compromise,
arrangement, adjustment, protection, moratorium, relief, stay of
proceedings of creditors generally (or any class of creditors), or
composition of it or its debts or any other relief under any federal,
provincial or foreign Applicable Law now or hereafter in effect relating
to bankruptcy, winding-up, insolvency, reorganization, receivership,
plans
of arrangement or relief or protection of debtors (including the
BIA, the
Companies’
Creditors Arrangement Act
(Canada) or the United
States Bankruptcy Code
and any applicable corporations legislation) or at common law or
in
equity; or
|
| (iv) |
seeking
the entry of an order for relief or the appointment of, or the taking
of
possession by, a receiver, interim receiver, receiver/manager,
sequestrator, conservator, custodian, administrator, trustee, liquidator
or other similar official for it or any substantial part of its
property;
|
and
such
petition, application or proceeding continues undismissed, or unstayed and
in
effect, for a period of 30 days after the institution thereof, provided
that if
an order, decree or judgment is granted or entered (whether or not entered
or
subject to appeal) against the Credit Party thereunder in the interim, such
grace period will cease to apply, and provided further
that if
the Credit Party files an answer admitting the material allegations of a
petition filed against it in any such proceeding, such grace period will cease
to apply;
(k) any
other
event occurs which, under the Applicable Laws of any applicable jurisdiction,
has an effect equivalent to any of the events referred to in either of
Sections 7.1(i) or (j);
(l) one
or
more judgments for the payment of money in a cumulative amount in excess of
Cdn.$1,000,000 (or its then equivalent in any other currency) in the aggregate
is rendered against the Borrower, any other Credit Party or any combination
thereof and the Borrower or the other Credit Party has not (i) provided for
its discharge in accordance with its terms within 30 days from the date of
entry
thereof, or (ii) procured a stay of execution thereof within 30 days from
the date of entry thereof and within such period, or such longer period during
which execution of such judgment has not been stayed, appealed such judgment
and
caused the execution thereof to be stayed during such appeal, provided
that if
enforcement and/or realization proceedings are lawfully commenced in respect
thereof in the interim, such grace period will cease to apply;
(m) any
property of any Credit Party having a fair market value in excess of
Cdn.$2,000,000 (or its then equivalent in any other currency) in the aggregate
is seized (including by way of execution, attachment, garnishment, levy or
distraint), or any Lien thereon securing Indebtedness in excess of
Cdn.$2,000,000 (or its then equivalent in any other currency) is enforced,
or
such property has become subject to any charging order or equitable execution
of
a Governmental Authority, or any writ of execution or distress warrant exists
in
respect of the Borrower, any other Credit Party or the property of any of them,
or any sheriff or other Person becomes lawfully entitled by operation of law
or
otherwise to seize or distrain upon such property and in any case such seizure,
enforcement, execution, attachment,
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garnishment, distraint, charging order or equitable execution, or other seizure or right, continues in effect and is not released or discharged for more than 45 days or such longer period during which entitlement to the use of such property continues with the Credit Party (as the case may be), and the Credit Party (as the case may be) is contesting the same in good faith and by appropriate proceedings, provided that if the property is removed from the use of the Credit Party (as the case may be), or is sold, in the interim, such grace period will cease to apply;
(n) one
or
more final judgments, not involving the payment of money and not otherwise
specified in this Section 7.1(n), has been rendered against any Credit
Party, the result of which could reasonably be expected to result in a Material
Adverse Effect, so long as the Credit Party (as the case may be) has not
(i) provided for its discharge in accordance with its terms within 30 days
from the date of entry thereof, or (ii) procured a stay of execution
thereof within 30 days from the date of entry thereof and within such period,
or
such longer period during which execution of such judgment has been stayed,
appealed such judgment and caused the execution thereof to be stayed during
such
appeal, provided
that if
enforcement and/or realization proceedings are lawfully commenced in respect
thereof in the interim, such grace period will cease to apply;
(o) this
Agreement, any other Loan Document or any material obligation or other provision
hereof or thereof at any time for any reason (other than through the fault
of
the Agent or the Lenders, except where the Borrower refuses to reinstate such
obligation or provision) terminates or ceases to be in full force and effect
and
a legally valid, binding and enforceable obligation of any Credit Party, is
declared to be void or voidable or is repudiated, or the validity, binding
effect, legality or enforceability hereof or thereof is at any time contested
by
any Credit Party, or any Credit Party denies that it has any or any further
liability or obligation hereunder or thereunder or any action or proceeding
is
commenced to enjoin or restrain the performance or observance by any Credit
Party of any material terms hereof or thereof or to question the validity or
enforceability hereof or thereof, or at any time it is unlawful or impossible
for any Credit Party to perform any of its material obligations hereunder or
thereunder;
(p) any
Lien
purported to be created by any Security Document shall cease to be, or shall
be
asserted by any Credit Party not to be, a valid, perfected, first priority
(except as otherwise expressly provided in this Agreement or such Security
Document) Lien in Collateral with a fair market value or book value (whichever
is greater) in excess, individually or in the aggregate, of $1,000,000 (except
where such Lien ceases to be a valid, perfected first priority Lien through
the
failure or inaction of the Agent or the Lenders);
(q) a
Material Adverse Change shall occur;
(r) the
Parent fails to directly own (i) 50% or more of the aggregate issued and
outstanding limited partnership units in the capital of the Borrower or
(ii) 100% of the aggregate issued and outstanding shares in the capital of
the General Partner;
then,
and
in every such event, and at any time thereafter during the continuance of such
event or any other such event, the Agent may, and at the request of the Required
Lenders shall, by notice
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to
the
Borrower, take any or all of the following actions, at the same or different
times: (i) terminate the Commitments, and thereupon the Commitments shall
terminate immediately, (ii) declare the Loans then outstanding to be due
and payable in whole (or in part, in which case any principal not so declared
to
be due and payable may thereafter be declared to be due and payable), and
thereupon the principal of the Loans so declared to be due and payable, together
with accrued interest thereon and all fees and other obligations of the Borrower
accrued hereunder, shall become due and payable immediately, without
presentment, demand, protest or other notice of any kind except as set forth
earlier in this paragraph, all of which are hereby waived by the Borrower,
(iii) apply any amounts outstanding to the credit of the Borrower to
repayment of all amounts outstanding under this Agreement, and (iv) declare
any or all of the Security Documents to be immediately enforceable.
ARTICLE 8
THE
AGENT
8.1 Appointment
of Agent.
Each
Lender hereby designates CIT Business Credit Canada Inc. as Agent to act as
herein specified and as specified in the other Loan Documents. Each Lender
hereby irrevocably authorizes the Agent to take such action on its behalf under
the provisions of the Loan Documents and to exercise such powers and to perform
such duties thereunder as are specifically delegated to or required of the
Agent
by the terms thereof and such other powers as are reasonably incidental thereto.
The Agent may perform any of its duties hereunder by or through its agents
or
employees.
8.2 Limitation
of Duties of Agent.
The
Agent shall have no duties or responsibilities except those expressly set forth
with respect to the Agent in this Agreement and as specified in the other Loan
Documents. Neither the Agent nor any of its Related Parties shall be liable
for
any action taken or omitted by it hereunder or in connection herewith, unless
caused by its or their gross negligence or willful misconduct. The duties of
the
Agent shall be mechanical and administrative in nature; the Agent shall not
have, by reason of this Agreement or the other Loan Documents, a fiduciary
relationship in respect of any Lender. Nothing in this Agreement or the other
Loan Documents, expressed or implied, is intended to or shall be so construed
as
to impose upon the Agent any obligations in respect of this Agreement except
as
expressly set forth herein. The Agent shall be under no duty to take any
discretionary action permitted to be taken by it pursuant to this Agreement
or
the other Loan Documents unless it is requested in writing to do so by the
Required Lenders.
8.3 Lack
of Reliance on the Agent.
(a) Independent
Investigation.
Independently, and without reliance upon the Agent, each Lender, to the extent
it deems appropriate, has made and shall continue to make (i) its own
independent investigation of the financial condition and affairs of the Borrower
and its Subsidiaries in connection with the taking or not taking of any action
in connection herewith, and (ii) its own appraisal of the creditworthiness
of the Borrower and its Subsidiaries, and, except as expressly provided in
this
Agreement and the other Loan Documents, the Agent shall have no duty or
responsibility, either initially or on a continuing basis, to provide any Lender
with any credit or other information with respect thereto, whether coming into
its possession before the consummation of the Transactions or at any time or
times thereafter.
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(b) Agent
Not Responsible.
The
Agent shall not be responsible to any Lender for any recitals, statements,
information, representations or warranties herein or in any document,
certificate or other writing delivered in connection herewith or for the
execution, effectiveness, genuineness, validity, enforceability, collectibility,
priority or sufficiency of this Agreement or the other Loan Documents or the
financial condition of the Borrower and its Subsidiaries or be required to
make
any inquiry concerning either the performance or observance of any of the terms,
provisions or conditions of this Agreement or the other Loan Documents, or
the
financial condition of the Borrower and its Subsidiaries, or the existence
or
possible existence of any Default or Event of Default.
8.4 Certain
Rights of the Agent.
If the
Agent shall request instructions from the Lenders or the Required Lenders (as
the case may be) with respect to any act or action (including the failure to
act) in connection with this Agreement or the other Loan Documents, the Agent
shall be entitled to refrain from such act or taking such action unless and
until the Agent shall have received written instructions from the Lenders or
the
Required Lenders, as applicable, and the Agent shall not incur liability to
any
Person by reason of so refraining. Without limiting the foregoing, no Lender
shall have any right of action whatsoever against the Agent as a result of
the
Agent acting or refraining from acting under this Agreement and the other Loan
Documents in accordance with the instructions of the Required Lenders, or,
to
the extent required by Section 9.2, all of the Lenders.
8.5 Reliance
by Agent.
The
Agent shall be entitled to rely, and shall be fully protected in relying, upon
any note, writing, resolution, notice, statement, certificate, telex, teletype
or facsimile message, electronic mail, cablegram, radiogram, order or other
documentary teletransmission or telephone message believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person. The
Agent may consult with legal counsel (including counsel for the Borrower),
independent public accountants and other experts selected by it and shall not
be
liable for any action taken or omitted to be taken by it in good faith in
accordance with the advice of such counsel, accountants or experts.
8.6 Indemnification
of Agent.
To the
extent the Agent is not reimbursed and indemnified by the Borrower, each Lender
will reimburse and indemnify the Agent, in proportion to its aggregate
Applicable Percentage, for and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
(including reasonable counsel fees and disbursements) or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by or asserted
against the Agent in performing its duties hereunder, in any way relating to
or
arising out of this Agreement or any other Loan Document; provided
that no
Lender shall be liable to the Agent for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the Agent’s gross negligence (it being
acknowledged that ordinary negligence does not necessarily constitute gross
negligence) or willful misconduct.
8.7 The
Agent in its Individual Capacity.
With
respect to its obligations under this Agreement and the Loans made by it, CIT
Business Credit Canada Inc., in its capacity as a Lender hereunder, shall have
the same rights and powers hereunder as any other Lender and may exercise the
same as though it were not performing the duties, if any, specified herein;
and
the terms “Lenders”,
“Required
Lenders”,
and
any similar terms shall, unless the context clearly
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otherwise
indicates, include CIT Business Credit Canada Inc., in its capacity as a Lender
hereunder. The Agent may accept deposits from, lend money to, and generally
engage in any kind of banking, trust, financial advisory or other business
with
the Borrower or any affiliate of the Borrower as if it were not performing
the
duties, if any, specified herein, and may accept fees and other consideration
from the Borrower for services in connection with this Agreement and otherwise
without having to account for the same to the Lenders.
8.8 May
Treat Lender as Owner.
The
Borrower and the Agent may deem and treat each Lender as the owner of the Loans
recorded on the Register maintained pursuant to Section 9.4(c) for all
purposes hereof until a written notice of the assignment or transfer thereof
shall have been filed with the Agent. Any request, authority or consent of
any
Person who at the time of making such request or giving such authority or
consent is the owner of a Loan shall be conclusive and binding on any subsequent
owner, transferee or assignee of such Loan.
8.9 Successor
Agent.
(a) Agent
Resignation.
The
Agent may resign at any time by giving written notice thereof to the Lenders,
the Issuing Bank and the Borrower. Upon any such resignation or removal, the
Required Lenders shall have the right, upon five Business Days’ notice to the
Borrower, to appoint a successor Agent (who shall not be a non-resident of
Canada within the meaning of the ITA), subject to the approval of the Borrower,
such approval not to be unreasonably withheld. If no successor Agent shall
have
been so appointed by the Required Lenders, and shall have accepted such
appointment, within 30 days after the retiring Agent’s giving of notice of
resignation or the Required Lenders’ removal of the retiring Agent, then, upon
five Business Days’ notice to the Borrower, the retiring Agent may, on behalf of
the Lenders, appoint a successor Agent (subject to approval of the Borrower,
such approval not to be unreasonably withheld), which shall be a financial
institution organized under the laws of Canada having a combined capital and
surplus of at least Cdn.$100,000,000 or having a parent company with combined
capital and surplus of at least Cdn.$100,000,000.
(b) Rights,
Powers, etc.
Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations under this Agreement.
After any retiring Agent’s resignation or removal hereunder as Agent, the
provisions of this Article 8 shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this
Agreement.
8.10 No
Independent Legal Action by Lenders.
No
Lender
may take any independent legal action to enforce any obligation of the Borrower
hereunder. Each Lender hereby acknowledges that, to the extent permitted by
Applicable Law, the Security Documents and the remedies provided thereunder
to
the Lenders are for the benefit of the Lenders collectively and acting together
and not severally, and further acknowledges that each Lender’s rights hereunder
and under the Security Documents are to be exercised collectively, not
severally, by the Agent upon the decision of the Required Lenders. Accordingly,
notwithstanding any of the provisions contained herein or in the Security
Documents, each of the Lenders hereby covenants and agrees that it shall not
be
entitled to take any action hereunder or thereunder, including any declaration
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of
default hereunder or thereunder, but that any such action shall be taken only
by
the Agent with the prior written agreement of the Required Lenders, provided
that,
notwithstanding the foregoing, in the absence of instructions from the Lenders
(or the Required Lenders) and where in the sole opinion of the Agent the
exigencies of the situation so warrant such action, the Agent may without notice
to or consent of the Lenders (or the Required Lenders) take such action on
behalf of the Lenders as it deems appropriate or desirable in the interests
of
the Lenders. Each Lender hereby further covenants and agrees that upon any
such
written consent being given by the Required Lenders, it shall co-operate fully
with the Agent to the extent requested by the Agent, and each Lender further
covenants and agrees that all proceeds from the realization of or under the
Security Documents, to the extent permitted by Applicable Law, are held for
the
benefit of all of the Lenders and shall be shared among the Lenders rateably
in
accordance with this Agreement, and each Lender acknowledges that all costs
of
any such realization (including all amounts for which the Agent is required
to
be indemnified under the provisions hereof) shall be shared among the Lenders
rateably in accordance with this Agreement. Each Lender covenants and agrees
to
do all acts and things and to make, execute and deliver all agreements and
other
instruments, so as to fully carry out the intent and purpose of this Section
and
each Lender hereby covenants and agrees that it shall not seek, take, accept
or
receive any security for any of the obligations and liabilities of the Borrower
hereunder or under the other Loan Documents, or any other document, instrument,
writing or agreement ancillary hereto or thereto, other than such security
as is
provided hereunder or thereunder, and that it shall not enter into any agreement
with any of the parties hereto or thereto relating in any manner whatsoever
to
the Credit(s), unless all of the Lenders shall at the same time obtain the
benefit of any such security or agreement, as the case may be.
8.11 Quebec
Security.
For
greater certainty, and without limiting the powers of the Agent or any other
Person acting as an agent or mandatary for the Agent hereunder or under any
of
the other Loan Documents, the Borrower hereby acknowledges that, for purposes
of
holding any security granted by the Borrower or any Restricted Subsidiary on
property pursuant to the laws of the Province of Quebec to secure obligations
of
the Borrower or any Restricted Subsidiary under any debenture, the Agent shall
be the holder of an irrevocable power of attorney (fondé
de pouvoir)
(within
the meaning of the Civil
Code of Quebec)
for all
present and future Lenders and in particular for all present and future holders
of any such debenture. Each Lender hereby irrevocably constitutes, to the extent
necessary, the Agent as the holder of an irrevocable power of attorney
(fondé
de pouvoir)
(within
the meaning of Article 2692 of the Civil
Code of Quebec)
in
order to hold security granted by the Borrower or any Restricted Subsidiary
in
the Province of Quebec to secure the obligations of the Borrower or any
Restricted Subsidiary under any debenture. Each assignee of a Lender shall
be
deemed to have confirmed and ratified the constitution of the Agent as the
holder of such irrevocable power of attorney (fondé
de pouvoir)
by
execution of an Assignment and Transfer. Notwithstanding the provisions of
section 32 of the An
Act respecting the special powers of legal persons
(Quebec), the Agent may acquire and be the holder of any debenture. The Borrower
hereby acknowledges that such debenture constitutes a title of indebtedness,
as
such term is used in Article 2692 of the Civil
Code of Quebec.
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ARTICLE 9
MISCELLANEOUS
9.1 Notices.
(a) Except in the case of notices and other communications expressly
permitted to be given by telephone (and subject to paragraph (b) below),
all notices and other communications provided for herein shall be in writing
and
shall be delivered by hand or overnight courier service, mailed by certified
or
registered mail or sent by facsimile in each case to the addressee, as
follows:
(i) if
to the
Borrower or any other Credit Party:
▇▇▇▇▇
▇▇▇▇
▇▇▇
▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇,
▇.▇. ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇
▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇)
▇▇▇-▇▇▇▇
with
a
copy to:
SANGRA
MOLLER LLP
▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇
▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇,
▇.▇. ▇▇▇ ▇▇▇
Attention: ▇▇▇
▇▇▇▇▇▇
Facsimile: (▇▇▇)
▇▇▇-▇▇▇▇
(ii) if
to the
Agent:
CIT
BUSINESS CREDIT CANADA INC.
207
Queen’s Quay West, Suite 700
Toronto,
Ontario M5J 1A7
Attention: Credit
Manager
Facsimile: (▇▇▇)
▇▇▇-▇▇▇▇
with
a
copy to:
BLAKE,
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
Suite
2600, Three Bentall Centre
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇.
▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇▇▇▇,
▇.▇. ▇▇▇ ▇▇▇
Attention: ▇▇▇▇
▇.
▇▇▇▇
Facsimile: (▇▇▇)
▇▇▇-▇▇▇▇
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(iii) if
to any
Lender or any Issuing Bank, to it at its address (or facsimile number) set
forth
opposite its name in the execution page(s) of this Agreement or the applicable
Assignment and Transfer Agreement, as the case may be.
(b) Notices
and other communications to the Lenders hereunder may be delivered or furnished
by electronic communications pursuant to procedures approved by the Agent.
The
Agent or the Borrower may, in its discretion, agree to accept notices and other
communication to it hereunder by electronic communications pursuant to
procedures approved by it; provided
that
approval of such procedures may be limited to particular notices or
communications.
(c) Any
party
hereto may change its address or facsimile number for notices and other
communications hereunder by notice to the other parties hereto. All notices
and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of
receipt.
9.2 Waivers;
Amendments.
(a) No
failure or delay by the Agent or any Lender in exercising any right or power
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or discontinuance of
steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The rights and remedies
of
the Agent and the Lenders hereunder are cumulative and are not exclusive of
any
rights or remedies that they would otherwise have. No waiver of any provision
of
this Agreement or consent to any departure by the Borrower therefrom shall
in
any event be effective unless the same shall be permitted by
Section 9.2(b), and then such waiver or consent shall be effective only in
the specific instance and for the purpose for which given. Without limiting
the
generality of the foregoing, the making of a Loan or issuance of a Letter of
Credit shall not be construed as a waiver of any Default, regardless of whether
the Agent or any Lender may have had notice or knowledge of such Default at
the
time.
(b) Neither
this Agreement nor any other Loan Document (or any provision hereof or thereof)
may be waived, amended or modified except pursuant to an agreement or agreements
in writing entered into by the Borrower and the Required Lenders or by the
Borrower and the Agent with the consent of the Required Lenders (and for greater
certainty, any such waiver, amendment or modification shall not require any
consent or other agreement of any Credit Party other than the Borrower,
notwithstanding that any such Credit Party may be a party to this Agreement
or
any other Loan Document); provided
that no
such agreement shall:
| (i) |
increase
the amount or extend the expiry date of any Commitment of any Lender;
|
| (ii) |
reduce
the principal amount of any Loan or reduce the rate of interest or
any fee
applicable to any Loan;
|
| (iii) |
postpone
the scheduled date of payment of the principal amount of any Loan,
or any
interest thereon, or any fees payable in respect thereof, or
|
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|
reduce
the amount of, waive or excuse any such payment, or postpone the
scheduled
date of expiration of any
Commitment;
|
| (iv) |
change
any aspect of this Agreement in a manner that would alter the pro
rata
sharing of payments required
herein;
|
| (v) |
change
any of the provisions of this Section 9.2 or the definition of
“Required
Lenders”
or any other provision hereof specifying the number or percentage
of
Lenders required to waive, amend or modify any rights hereunder or
make
any determination or grant any consent hereunder;
|
| (vi) |
waive
any Event of Default under Section 7.1(i), (j) or (k);
or
|
| (vii) |
release
the Borrower or any Subsidiary from any material obligations under
the
Security Documents and other instruments contemplated by this Agreement,
release or discharge any of the Liens arising under the Security
Documents, permit the creation of any Liens, other than Permitted
Liens,
on any of the assets subject to the Liens arising under the Security
Documents, lower the priority of any Lien arising under any of the
Security Documents, or lower the priority of any payment obligation
of the
Borrower or any Subsidiary under any of the Loan Documents or, in
the case
of clauses (i), (ii), (iii) or (iv), without the prior written
consent of each Lender directly affected
thereby;
|
in
each
case without the prior written consent of each Lender; or, in the case of the
matters referred to in clauses (i), (ii), (iii) and (iv), without the prior
written consent of each Lender directly affected thereby and provided
further
that no such agreement shall amend, modify or otherwise affect the rights or
duties of the Agent hereunder, without the prior written consent of the Agent.
For greater certainty, the Agent may release and discharge the Liens constituted
by the Security Documents to the extent necessary to enable the Borrower to
complete any asset sale which is not prohibited by this Agreement or the other
Loan Documents.
9.3 Expenses;
Indemnity; Damage Waiver.
(a) The
Borrower shall pay (i) all reasonable Out-of-Pocket Expenses incurred by
the Agent and its Affiliates, including the reasonable fees, charges and
disbursements of counsel for the Agent and all applicable Taxes, in connection
with the syndication of the credit facilities provided for herein and the
preparation and administration of this Agreement and the other Loan Documents,
(ii) all reasonable Out-of-Pocket Expenses incurred by the Agent and its
Affiliates, including the reasonable fees, charges and disbursements of counsel
for the Agent and applicable Taxes, in connection with any amendments,
modifications or waivers of the provisions hereof or of any of the other Loan
Documents, (whether or not the transactions contemplated hereby or thereby
shall
be consummated), and (iii) all Out-of-Pocket Expenses incurred by the Agent
or any Lender, including the fees, charges and disbursements of any counsel
for
the Agent or any Lender and all applicable Taxes, in connection with the
enforcement or protection of their rights in connection with this Agreement,
including its rights
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under this Section, or in connection with the Loans made hereunder, including all such Out-of-Pocket Expenses incurred during any workout, restructuring or negotiations in respect of such Loans.
(b) The
Borrower shall indemnify the Agent and each Lender, as well as each Related
Party and each assignee of any of the foregoing Persons (each such Person and
each such assignee being called an “Indemnitee”)
against, and hold each Indemnitee harmless from, any and all losses, claims,
cost recovery actions, damages, expenses and liabilities of whatsoever nature
or
kind and all Out-of-Pocket Expenses and all applicable Taxes to which any
Indemnitee may become subject arising out of or in connection with (i) the
execution or delivery of the Loan Documents or any agreement or instrument
contemplated thereby, the performance by the parties thereto of their respective
obligations thereunder, and the consummation of the Transactions or any other
transactions thereunder, (ii) any Loan or Letter of Credit or F/X Contract
or any actual or proposed use of the proceeds therefrom, including any refusal
by the Issuing Bank to honour a demand for payment under a Letter of Credit
if
the documents presented in connection with such demand do not strictly comply
with the terms of such Letter of Credit, (iii) any actual or alleged
presence or release of Hazardous Materials on or from any property owned or
operated by the Borrower or any of its Subsidiaries, or any Environmental
Liability related in any way to the Borrower or any of its Subsidiaries,
(iv) any actual or prospective claim, litigation, investigation or
proceeding relating to any of the foregoing, whether based on contract, tort
or
any other theory and regardless of whether any Indemnitee is a party thereto,
(v) any other aspect of this Agreement and the other Loan Documents, or
(vi) the enforcement of any Indemnitee’s rights hereunder and any related
investigation, defence, preparation of defence, litigation and enquiries, in
each case regardless of whether or not the Acquisition is consummated;
provided
that
such indemnity shall not, as to any Indemnitee, be available to the extent
that
such losses, claims, damages, liabilities or related expenses are determined
by
a court of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence (it being acknowledged that ordinary
negligence does not necessarily constitute gross negligence) or wilful
misconduct of or material breach of this Agreement by such
Indemnitee.
(c) To
the
extent that the Borrower fails to pay any amount required to be paid under
Sections 9.3 (a) or (b), each Lender severally agrees to pay to the Agent
such Lender’s Applicable Percentage (determined as of the time that the
applicable unreimbursed expense or indemnity payment is sought) of such unpaid
amount; provided
that the
unreimbursed expense or indemnified loss, claim, damage, liability or related
expense, as the case may be, was incurred by or asserted against the Agent,
in
its capacity as such.
(d) The
Borrower shall not assert, and hereby waives (to the fullest extent permitted
by
applicable Law), any claim against any Indemnitee, on any theory of liability,
for special, indirect, consequential or punitive damages (as opposed to direct
or actual damages) arising out of, in connection with, or as a result of, any
Loan Document, or any agreement or instrument contemplated thereby, the
Transactions, any Loan or Letter of Credit or the use of the proceeds
thereof.
(e) Any
inspection of any property of the Borrower or any of its Subsidiaries made
by or
through the Agent or any Lender is for purposes of administration of the Credits
only, and
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neither the Borrower nor any of its Subsidiaries is entitled to rely upon the same (whether or not such inspections are at the expense of the Borrower).
(f) By
accepting or approving anything required to be observed, performed, fulfilled
or
given to the Agent or the Lenders pursuant to the Loan Documents, neither the
Agent nor the Lenders shall be deemed to have warranted or represented the
sufficiency, legality, effectiveness or legal effect of the same, or of any
term, provision or condition thereof, and such acceptance or approval thereof
shall not constitute a warranty or representation to anyone with respect thereto
by the Agent or the Lenders.
(g) The
relationship between the Borrower and the Agent and the Lenders is, and shall
at
all times remain, solely that of borrowers and lenders. Neither the Agent nor
the Lenders shall under any circumstance be construed to be partners or joint
venturers of the Borrower or its Affiliates. Neither the Agent nor the Lenders
shall under any circumstance be deemed to be in a relationship of confidence
or
trust or a fiduciary relationship with the Borrower or its Affiliates, or to
owe
any fiduciary duty to the Borrower or its Affiliates. Neither the Agent nor
the
Lenders undertake or assume any responsibility or duty to the Borrower or its
Affiliates to select, review, inspect, supervise, pass judgment upon or inform
the Borrower or its Affiliates of any matter in connection with their property
or the operations of the Borrower or its Affiliates. The Borrower and its
Affiliates shall rely entirely upon their own judgment with respect to such
matters, and any review, inspection, supervision, exercise of judgment or supply
of information undertaken or assumed by the Agent or the Lenders in connection
with such matters is solely for the protection of the Agent and the Lenders,
and
neither the Borrower nor any other Person is entitled to rely
thereon.
(h) The
Agent
and the Lenders shall not be responsible or liable to any Person for any loss,
damage, liability or claim of any kind relating to injury or death to Persons
or
damage to Property caused by the actions, inaction or negligence of the Borrower
or any Subsidiary and/or their Affiliates and the Borrower hereby indemnifies
and holds the Agent and the Lenders harmless from any such loss, damage,
liability or claim.
(i) This
Agreement is made for the purpose of defining and setting forth certain
obligations, rights and duties of the Borrower, the Agent and the Lenders in
connection with the Loans, and is made for the sole benefit of the Borrower,
the
Agent and the Lenders, and the Agent’s and each Lender’s successors and assigns.
Except as provided in Sections 9.3(b) and 9.4, no other Person shall have
any rights of any nature hereunder or by reason hereof.
(j) All
amounts due under this Section 9.3 shall be payable not later than three
Business Days after written demand therefor.
9.4 Successors
and Assigns.
(a) The
provisions of this Agreement shall be binding upon and inure to the benefit
of
the parties hereto and their respective successors and assigns permitted hereby,
except that (i) the Borrower may not assign or otherwise transfer any of
its rights or obligations hereunder without the prior written consent of each
Lender (and any attempted assignment or transfer by the Borrower without such
consent shall be null and void), and (ii) no Lender may assign or
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otherwise transfer its rights or obligations hereunder except in accordance with this Section. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby and, to the extent expressly contemplated hereby, the Related Parties of each of the Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.
(b) Any
Lender may assign to one or more assignees (treating any fund that invests
in
bank loans and any other fund that invests in bank loans and is managed by
the
same investment advisor of such fund or by an Affiliate of such investment
advisor as a single assignee) all or a portion of its rights and obligations
under this Agreement and the other Loan Documents (including all or a portion
of
its Commitments and the Loans at the time owing to it); provided
that
(i) except in the case of an assignment of any Commitment to an assignee
that is a Lender with a Commitment immediately prior to giving effect to such
assignment, each of the Agent and the Borrower must give its prior written
consent to such assignment (which consent shall not be unreasonably withheld
or
delayed); and provided further
that
(ii) the Borrower’s consent shall not be required with respect to any
assignment made at any time after the occurrence and during the continuance
of
an Event of Default, (iii) except in the case of an assignment to a Lender
or a Lender Affiliate or an assignment of the entire remaining amount of the
assigning Lender’s Commitment, the amount of the Commitment of the assigning
Lender subject to each such assignment (determined as of the date on which
the
Assignment and Transfer relating to such assignment is delivered to the Agent)
shall not be less than Cdn.$5,000,000 (or, in the case of a U.S.
Dollar-denominated Commitment, the U.S.$ Equivalent of Cdn.$5,000,000), unless
each of the Borrower and the Agent otherwise consent in writing and the amount
held by each Lender after each such assignment shall not be less than
Cdn.$5,000,000 (or, in the case of a U.S. Dollar-denominated Commitment, the
U.S.$ Equivalent of Cdn.$5,000,000), unless each of the Borrower and the Agent
otherwise consent in writing, (iv) each partial assignment in respect of a
Commitment and the related Loans shall be made as an assignment of a
proportionate part of all the assigning Lender’s rights and obligations under
this Agreement in respect of such Commitment and the related Loans, (v) the
parties to each assignment shall execute and deliver to the Agent an Assignment
and Transfer, together with (except in the case of an assignment to a Lender
or
a Lender Affiliate) a processing and recordation fee of Cdn.$3,500, payable
by
the assigning Lender, (vi) in the case of an assignment to a Foreign
Lender, such Foreign Lender shall not be entitled to require any payment under
Section 2.14(a)(i) as a result of any withholding tax exigible in respect
of any payment by the Borrower to such Foreign Lender hereunder, and
(vii) the assignee, if it shall not be a Lender, shall deliver to the Agent
an Administrative Questionnaire. The Agent shall provide the Borrower and each
Lender with written notice of any change in (or new) address of a Lender
disclosed in an Administrative Questionnaire. Subject to acceptance and
recording thereof pursuant to Section 9.4(d), from and after the effective
date specified in each Assignment and Transfer, the assignee thereunder shall
be
a party hereto and, to the extent of the interest assigned by such Assignment
and Transfer, shall have all of the rights and obligations of a Lender under
this Agreement, and the assigning Lender thereunder shall, to the extent of
the
interest assigned by such Assignment and Transfer, be released from its
obligations under this Agreement (and, in the case of an Assignment and Transfer
covering all of the assigning Lender’s rights and obligations under this
Agreement, such Lender shall cease to be a party hereto but shall continue
to be
entitled to the benefits of Sections 2.12, 2.13, and
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2.14 and 9.3). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 9.4 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with Section 9.4(e).
(c) The
Agent, acting for this purpose as an agent of the Borrower, shall maintain
at
one of its offices in Toronto, Ontario a copy of each Assignment and Transfer
delivered to it and a register for the recordation of the names and addresses
of
the Lenders, and the Commitment of, and principal amount of the Loans and the
amount of the Reimbursement Obligations owing to, each Lender pursuant to the
terms hereof from time to time (the “Register”).
The
entries in the Register shall be conclusive, and the Borrower, the Agent, and
the Lenders may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the Borrower and
any Lender at any reasonable time and from time to time upon reasonable prior
notice.
(d) Upon
its
receipt of a duly completed Assignment and Transfer executed by an assigning
Lender and an assignee, the assignee’s completed Administrative Questionnaire
(unless the assignee shall already be a Lender hereunder), the processing and
recordation fee referred to in Section 9.4(b) and any written consent to
such assignment required by Section 9.4(b), the Agent shall accept such
Assignment and Transfer and record the information contained therein in the
Register. No assignment shall be effective for purposes of this Agreement unless
it has been recorded in the Register as provided in this
Section 9.4(d).
(e) Any
Lender may, without notice to the Borrower or the consent of the Borrower or
the
Agent, sell participations to one or more Persons (a “Participant”)
in all
or a portion of such Lender’s rights and obligations under this Agreement and
the other Loan Documents (including all or a portion of its Commitment and
the
Loans owing to it); provided
that
(i) such Lender’s obligations under this Agreement shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, and (iii) the Borrower, the
Agent, and the other Lenders shall continue to deal solely and directly with
such Lender in connection with such Lender’s rights and obligations under this
Agreement. Any agreement or instrument pursuant to which a Lender sells such
a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver
of
any provision of this Agreement; provided
that
such agreement or instrument may provide that such Lender will not, without
the
consent of the Participant, agree to any amendment, modification or waiver
described in the first proviso to Section 9.2(b) that affects such
Participant. Subject to Section 9.4(f), the Borrower agrees that each
Participant shall be entitled to the benefits of Sections 2.12, 2.13 and
2.14 to the same extent as if it were a Lender and had acquired its interest
by
assignment pursuant to this Section 9.4(b). To the extent permitted by
Applicable Law, each Participant also shall be entitled to the benefits of
Section 9.8 as though it were a Lender, provided
that
such Participant agrees to be subject to Section 2.15(c) as though it were
a Lender.
(f) A
Participant shall not be entitled to receive any greater payment under
Section 2.13 or 2.14 than the applicable Lender would have been entitled to
receive with respect to the participation sold to such Participant, unless
the
sale of the participation to such
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Participant is made with the Borrower’s prior written consent. A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 2.14 unless the Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrower, to comply with Section 2.14(e) as though it were a Lender.
(g) Any
Lender may at any time pledge or assign a security interest in all or any
portion of its rights under this Agreement to secure obligations of such Lender,
including any pledge or assignment to secure obligations to a Federal Reserve
Bank, and Section 9.4 shall not apply to any such pledge or assignment of a
security interest; provided
that no
such pledge or assignment of a security interest shall release a Lender from
any
of its obligations hereunder or substitute any such pledgee or assignee for
such
Lender as a party hereto.
(h) Any
assignment or grant of a participation pursuant to Section 9.4 shall
constitute neither a repayment by the Borrower to the assigning or granting
Lender of any Loan included therein, nor a new advance of any such Loan to
the
Borrower by such Lender or by the Assignee or Participant, as the case may
be.
The parties acknowledge that the Borrower’s obligations hereunder with respect
to any such Loans will continue and will not constitute new obligations as
a
result of such assignment or participation.
9.5 Survival.
All
covenants, agreements, representations and warranties made by the Borrower
herein and in the certificates or other instruments delivered in connection
with
or pursuant to this Agreement shall be considered to have been relied upon
by
the other parties hereto and shall survive the execution and delivery of this
Agreement and the making of any Loans and issuance of any Letters of Credit,
regardless of any investigation made by any such other party or on its behalf
and notwithstanding that the Agent or any Lender may have had notice or
knowledge of any Default or incorrect representation or warranty at the time
any
credit is extended hereunder, and shall continue in full force and effect as
long as the principal of or any accrued interest on any Loan or any fee or
any
other amount payable under this Agreement is outstanding and unpaid or any
Letter of Credit is outstanding and so long as the Commitments have not expired
or terminated. Sections 2.12, 2.13, 2.14 and 9.3
and
Article 8 shall survive and remain in full force and effect, regardless of
the consummation of the Transactions, the repayment of the Loans, the expiration
or termination of the Letters of Credit and the Commitments or the termination
of this Agreement or any provision hereof.
9.6 Counterparts;
Integration; Effectiveness.
This
Agreement may be executed in counterparts (and by different parties hereto
on
different counterparts), each of which shall constitute an original, but all
of
which when taken together shall constitute a single contract. This Agreement,
the other Loan Documents and any separate letter agreements with respect to
fees
payable to the Agent, constitute the entire contract among the parties relating
to the subject matter hereof and supersede any and all previous agreements
and
understandings, oral or written, relating to the subject matter hereof. Except
as provided in Section 4.1, this Agreement shall become effective when it
shall have been executed by the Agent and when the Agent shall have received
counterparts hereof which, when taken together, bear the signatures of each
of
the other parties hereto, and thereafter shall be binding upon and inure to
the
benefit of the parties hereto and their respective successors and assigns.
Delivery of an executed original counterpart of a
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signature
page of this Agreement by facsimile or other electronically scanned method
of
delivery shall be as effective as delivery of a manually executed original
counterpart of this Agreement.
9.7 Severability.
Any
provision of this Agreement held to be invalid, illegal or unenforceable in
any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such invalidity, illegality or unenforceability without affecting the validity,
legality and enforceability of the remaining provisions hereof, and the
invalidity of a particular provision in a particular jurisdiction shall not
invalidate such provision in any other jurisdiction.
9.8 Right
of Set-Off.
If an
Event of Default shall have occurred and be continuing, each Lender and each
of
its Affiliates is hereby authorized at any time and from time to time, to the
fullest extent permitted by Applicable Law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any
time
held and other obligations at any time owing by such Lender or Affiliate to
or
for the credit or the account of the Borrower against any of and all of the
obligations of the Borrower now or hereafter existing under this Agreement
held
by such Lender, irrespective of whether or not such Lender shall have made
any
demand under this Agreement and although such obligations may be unmatured.
The
rights of each Lender under this Section are in addition to other rights and
remedies (including other rights of set off) which such Lender may
have.
9.9 Governing
Law; Jurisdiction; Consent to Service of Process.
(a) This
Agreement shall be construed in accordance with and governed by the Laws of
the
Province of British Columbia.
(b) The
Borrower hereby irrevocably and unconditionally submits, for itself and its
property, to the non-exclusive jurisdiction of the Courts of the Province of
British Columbia, and any appellate court thereof, in any action or proceeding
arising out of or relating to this Agreement, or any other Loan Document or
for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of
any
such action or proceeding may be heard and determined in British Columbia.
Each
of the parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by Applicable Law. Nothing
in this Agreement shall affect any right that the Agent or any Lender may
otherwise have to bring any action or proceeding relating to this Agreement
or
any other Loan Document against the Borrower or its properties in the courts
of
any other jurisdiction.
(c) The
Borrower hereby irrevocably and unconditionally waives, to the fullest extent
it
may legally and effectively do so, any objection which it may now or hereafter
have to the laying of venue of any suit, action or proceeding arising out of
or
relating to this Agreement in any court referred to in this Section 9.9.
Each of the parties hereto hereby irrevocably waives, to the fullest extent
permitted by Applicable Law, any forum
non conveniens
defence
to the maintenance of such action or proceeding in any such court.
(d) Each
party to this Agreement irrevocably consents to service of process in the manner
provided for notices in Section 9.1. Nothing in this Agreement will affect
the right of
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any party to this Agreement to serve process in any other manner permitted by Applicable Law.
9.10 WAIVER
OF JURY TRIAL.
EACH
PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN
DOCUMENT, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED
ON
CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT
NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT
IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT
BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.
9.11 Headings.
Article
and Section headings and the Table of Contents used herein are for convenience
of reference only, are not part of this Agreement and shall not affect the
construction of, or be taken into consideration in interpreting, this
Agreement.
9.12 Confidentiality.
Each of
the Agent and each Lender agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed
(a) to each of their, and each of their Affiliates’, directors, officers,
employees, agents and advisors, including accountants, legal counsel and other
advisors (it being understood that the Persons to whom such disclosure is made
will be informed of the confidential nature of such Information and instructed
to keep such Information confidential), (b) to
the
extent requested by any rating agency, regulatory authority or other
Governmental Authority, or their legal counsel, (c) to
the
extent required by applicable laws or regulations or by any subpoena or similar
legal process, (d) to
any
other party to this Agreement, (e) in
connection with the exercise of any remedies under any Loan Document or any
suit, action or proceeding relating to any Loan Document or the enforcement
of
rights thereunder, (f) subject
to an agreement containing provisions substantially the same as those of this
Section, to (i) any
actual or prospective assignee of or Participant (or such assignee’s or
Participant’s advisors) in any of its rights or obligations under this
Agreement, or (ii) any
actual or prospective counterparty (or its advisors) to any swap or derivative
transaction relating to the Borrower and its obligations, (g) any
financial institution, credit reporting agency or credit bureau, (h) any
Person with whom the Borrower may have or proposes to have financial dealings,
or (i) with
the
consent of the Borrower. For greater certainty, the Borrower acknowledges that
from time to time as a result of the co-ownership of the Agent by CIT Financial
Limited and Canadian Imperial Bank of Commerce (“CIBC”),
the
Borrower may request the Agent to facilitate the provision of certain financial
services offered by CIBC (the “CIBC
Services”).
In
such circumstances, CIBC policies and procedures (“CIBC’s
Policies”)
will
apply in respect of all transactions undertaken by CIBC in connection with
the
provision of the CIBC Services, including any required due diligence
investigation and related business approval processes conducted in respect
of
the Borrower. In such circumstances, it may be prudent, necessary or cost
effective for the Agent to
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provide
to CIBC information regarding the Borrower that is in the possession or control
of the Agent solely for the purpose of facilitating compliance with CIBC’s
Policies. The Borrower consents to the disclosure of Information by the Agent
to
CIBC for the purpose of facilitating compliance with CIBC’s Policies. For the
purposes of this Section, “Information”
means
all information received from the Borrower or any Credit Party relating to
the
Borrower, any of the Credit Parties, or their respective business, other than
Information that is (i) is or becomes publicly available other than as a
result of a breach of this Section, (ii) any such information that is or
becomes available to the Agent, the Issuing Bank, any Lender or CIBC on a
non-confidential basis prior to disclosure by the Borrower, or (iii) was
already in the possession of the Agent, the Issuing Bank, or any CIBC Lender
prior to its disclosure by the Borrower; provided
that, in
the case of information received from the Borrower after the date hereof, such
information is clearly identified as confidential in writing at the time of
delivery. Any Person required to maintain the confidentiality of Information
as
provided in this Section shall be considered to have complied with its
obligation to do so if such Person has exercised the same degree of care to
maintain the confidentiality of such Information as such Person would accord
to
its own confidential information.
9.13 Press
Releases and Related Materials.
Each
Credit Party agrees that neither it nor its Affiliates will in the future issue
any press releases or other public disclosure using the name of the Agent or
referring to this Agreement, or the other Loan Documents without prior notice
to
the Agent unless (and only to the extent that) such Credit Party or Affiliate
is
required to do so by law or pursuant to any applicable regulatory policy
protocol or rule. Each Credit Party consents to the publication by the Agent
or
any Lender of advertising material relating to the financing transactions
contemplated by this Agreement using its name, product photographs, logo or
trademark. The Agent or such Lender shall provide a draft of any advertising
material to Borrower for review and comment prior to the publication thereof.
The Agent reserves the right to provide to industry trade organizations
information necessary and customary for inclusion in league table
measurements.
[Remainder
of this page intentionally left blank. Signature pages
follow.]
S-1
IN
WITNESS WHEREOF,
the
parties hereto have caused this Agreement to be duly executed by their
respective authorized officers as of the day and year first above
written.
|
Address:
Attention:
Facsimile
No.:
|
ZELLSTOFF
CELGAR LIMITED
PARTNERSHIP,
By its General Partner,
ZELLSTOFF
CELGAR LIMITED
By:
/s/
▇▇▇▇▇
▇▇▇▇▇▇▇▇
Name:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title:
Director
|
SIGNATURE
PAGE TO CREDIT AGREEMENT DATED AS OF MAY 19, ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ INC. AND ZELLSTOFF CELGAR LIMITED
PARTNERSHIP.
S-2
|
Address:
207
Queen’s Quay West, Suite 700
Toronto,
Ontario M5J 1A7
Attention: Credit
Manager
Facsimile
No.: (▇▇▇)
▇▇▇-▇▇▇▇
|
CIT
BUSINESS CREDIT CANADA INC.,
as
Agent and as Lender
By:
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Name:
▇▇▇▇▇▇ ▇▇▇▇▇▇
Title:
Vice President
By:
/s/ ▇▇▇▇ Loma
Name:
▇▇▇▇ Loma
Title:
EVP & Deputy
|
SIGNATURE
PAGE TO CREDIT AGREEMENT DATED AS OF MAY 19, ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ INC. AND ZELLSTOFF CELGAR LIMITED
PARTNERSHIP.