AGREEMENT
THIS AGREEMENT made as of the 5th day of June, 1997.
BETWEEN:
BRIDGEWATER DEVELOPMENT CORPORATION (Incorporation No. 515729) of
1488 - 000 Xxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0
("Bridgewater")
AND:
XXXXXX CAPITAL CORPORATION (Incorporation No. 299650) of 2100 - 0000 Xxxx
Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0
("Xxxxxx")
AND:
ROYAL BANK OF CANADA a Canadian chartered Bank having a branch office and
postal address at Fraser Valley Regional Business Banking Centre, 00000
Xxxxxxxxxxx Xxxx, Xxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0
("Bank")
WHEREAS:
A. Bridgewater has, inter alia, entered into an agreement made as of November
1996 among Grovecrest Holdings Ltd. ("Grovecrest"), Xxxxxx Bath, Resham
Bath, S K N Enterprises Ltd. ("SKN"), Xxxx Xxxxx Xxxxxxxxx ("Xxxxxxxxx")
and Xxxxxxx Xxxxx Saran ("Saran") (the "Purchase Agreement") pursuant to
which Bridgewater will apply for the subdivision ("Subdivision") of Lots 10
and 11, Block 2 Section 18, Township 2 New Westminster District Plan 7147
(collectively the "Real Property");
B. Upon completion of the Subdivision and upon payment of all moneys and
performances of all of its obligations under the Purchase Agreement, it is
intended that Bridgewater will be the registered owner in fee simple of the
south half of the Real Property, as shown on Schedule "A" attached hereto
("South Half");
X. Xxxxxxxxxxx has, for the purpose, inter alia, of the financing or
refinancing of the costs of acquisition, subdivision and/or development of
the Real Property, established the following credit facilities with the
Bank:
i) temporary credit facilities in the amount of $1,400,000 ("Segment #1
Credit Facility"); and
ii) credit facilities in the amount of $2,360,000 ("Segment #2 Credit
Facility"),
(collectively the "Credit Facilities") not to exceed in the aggregate at
any time the principal amount of $2,360,000, as more particularly set forth
in the offer to finance letter dated February 26, 1997 from the bank to
Bridgewater, as amended by letter dated April 10, 1997 (such letters
together with any and all further amendments, extensions, renewals, or
replacements thereof and thereto in effect from time to time, being herein
collectively called the "Offer Letter");
D. Prior to the subdivision and rezoning of the Real Property, Bridgewater has
requested the Bank to issue in favour of the City of Surrey a letter of
credit in the amount of $1,400,000 ("Letter of Credit") or issue letters of
credit and make advances not exceeding in aggregate the principal sum of
$1,400,000 as contemplated in the Segment #1 Credit Facility;
E. As part of the security for the Credit Facilities, Bridgewater has agreed,
inter alia, to grant to the Bank a demand collateral first mortgage against
the South Half, in the principal amount of $2,360,000 with interest payable
monthly thereunder at the Prime Interest Rate of the Bank from time to time
plus one and one-half per centum ("Bank Mortgage");
F. As part of the security for the Credit Facilities, Xxxxxx has granted to
the Bank a guarantee ("LCC Guarantee") in the principal amount of
$1,400,000 of the debts and liabilities of Bridgewater to the Bank;
G. As part of the security for the LCC Guarantee, Xxxxxx Financial Inc.
("LFI") has agreed to hypothecate and maintain pledged to the Bank ("Share
Pledge") shares in the capital of The Xxxxxx Group Inc. ("LGI");
NOW THEREFORE WITNESSETH that in consideration of the premises and for other
good and valuable consideration (the receipt and sufficiency of which are hereby
acknowledged by each of the parties hereto), the parties hereto hereby covenant
and agree as follows:
1. In the event that the Subdivision has not been completed or that the
registration of the Bank Mortgage as a first financial charge against title
to the South Half has not been completed within six weeks (the "Six Week
Period") of the issuance of the Letter of Credit, Xxxxxx will immediately
upon demand by the Bank pay to the Bank the full amount of the debts and
liabilities of Bridgewater to the Bank then outstanding, up to the maximum
principal amount of $1,400,000, plus interest and other costs and expenses
as provided in the LCC Guarantee, provided that if there is no breach or
default under the terms of the Offer Letter, the Bank will not make such
demand so long as the Bank Mortgage and all other documents necessary to
cause the Bank Mortgage to be registered as a first financial charge
against title to the South Half are in process of registration within the
New Westminster Land Title Office ("LTO") such that the Bank Mortgage will,
in the normal course of LTO practice, be registered as a first ranking
financial charge against title to the South Half. If such process of
registration is delayed for reasons other than the normal course of LTO
practice or halted by the LTO or delayed or halted by or as a result of the
actions of any other party:
(a) at any time after the expiry of the Six Week Period, the
Bank may at any time thereafter make such demand upon
Xxxxxx; or
(b) at any time on or before the expiry of the Six Week Period
and such delay or halt continues to exist on the expiry of
the Six Week Period, the Bank may at any time thereafter
make such demand upon Xxxxxx.
2. The debts and liabilities of Bridgewater referred to in paragraph 1. hereof
include, without limitation, the amount for which the Bank could be liable
under any other letters of credit or letters of guarantee issued by the
Bank at the request of Bridgewater in addition to the Letter of Credit.
3. Upon receipt from Xxxxxx of payment of the full amount demanded pursuant to
paragraph 1. hereof, the Bank will assign to Xxxxxx, absolutely, but
without representations or recourse, all of the security held by the Bank
as described in the Offer Letter for the Credit Facilities.
4. The value on any business day of the shares hypothecated to the Bank
pursuant to the Share Pledge will be calculated by multiplying the number
of such shares so hypothecated by the closing price of a single share of
LGI, as recorded at the close of trading on the Toronto Stock Exchange that
particular business day and shown in the stock tables of THE GLOBE AND MAIL
newspaper. If for three business days, the aggregate value of the shares
comprising the Share Pledge remains below $1,400,000, Xxxxxx will on each
such occasion forthwith after demand by the Bank, cause LFI to hypothecate
and deliver to the Bank sufficient additional shares of LGI so that the
aggregate value of the shares comprising the Share Pledge shall be restored
to and thereafter maintained at not less than $1,400,000.
5. The failure of LFI to pledge and hypothecate additional shares in the
capital of LGI as described in paragraph 4. above will constitute an event
of default under the Credit Facilities and will entitle the Bank to enforce
any and all security it has been granted in relation to the Credit
Facilities.
6. Xxxxxx acknowledges and confirms to the Bank that Xxxxxx is aware that the
Bank has entered into the Segment #1 Credit Facility in reliance primarily
upon the LCC Guarantee and Xxxxxx agrees that the Bank may rely upon the
LCC Guarantee and enforce the same against Xxxxxx immediately following any
breach or default with respect to the Credit Facilities or any security
therefor or any breach or default under the Offer Letter or this Agreement,
notwithstanding the delivery or lack of delivery, the validity or
invalidity or the enforceability or unenforceability of any other security
referred to in the Offer Letter. In particular, but without limiting the
generality of any of the foregoing, Xxxxxx acknowledges, agrees and
confirms that the Bank may exercise its rights and remedies against Xxxxxx
hereunder and under the LCC Guarantee and pursuant to the Share Pledge upon
ten business days notice of such breach or default (unless the value of the
shares comprising the Share Pledge drops as described in paragraph 7 below)
and that the Bank has not given any covenant, express or implied, and is
under no obligation to allow Xxxxxx any greater period of time to remedy
any such breach or default prior to the Bank exercising its rights and
remedies against Xxxxxx to the same extent and with the same effect as if
Xxxxxx were the debtor and primary obligant under the Credit Facilities.
7. In the event the aggregate value of the shares comprising the Share Pledge
drops below $1,400,000 during the notice period described in paragraph 6
above, such notice period will
terminate and the Bank will be entitled to immediately exercise its rights
and remedies against Xxxxxx hereunder and under the LCC Guarantee and
pursuant to the Share Pledge.
8. Any demand, request, notice or consent to be given under this Agreement
shall be in writing unless the parties hereto determine otherwise and shall
be given by delivering or faxing the same (and if faxed, followed by
delivery of written notice) addressed as follows:
If to Bridgewater:
Bridgewater Development Corporation
1488 000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0
If to Xxxxxx:
Xxxxxx Capital Corporation
0000 Xxxxxxx Xxxxxx,
Xxxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0
Attention: Xxxx X. Xxxxxxx
with a copy to:
Xxxxxxx & Dumoulin
2100 - 0000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0
Attention: Art Bensler
If to the Bank:
Royal Bank of Canada
Fraser Valley Regional Business Banking Centre
00000 Xxxxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0
The parties hereto may by notice given in the manner provided herein change
their address for notice under this Agreement.
Any such demand, request, notice or consent sent as aforesaid shall be
deemed to have been received by the party to whom it is addressed upon
delivery, if delivered, and when transmitted, if sent by fax on a business
day, at the close of business on that business day, or otherwise on the
next following business day.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed
by its duly authorized representative as of the day and year first above
written.
THE CORPORATE SEAL of )
BRIDGEWATER DEVELOPMENT )
CORPORATION was hereunto affixed in )
the presence of: )
)
----------------------------------- ) C/S
)
THE CORPORATE SEAL of XXXXXX )
CAPITAL CORPORATION was )
hereunto affixed in the presence of:)
)
----------------------------------- ) C/S
)
ROYAL BANK OF CANADA by its authorized
signatories:
Per:
-------------------------------------
Name:
Title:
