Exhibit 10.22
CREDIT AGREEMENT
Bearing Formal Date of February 5, 1998
among
PHOENIX INTERNATIONAL LIFE SCIENCES INC.
as Borrower
- and -
BANQUE NATIONALE DE PARIS (CANADA)
and
ROYAL BANK OF CANADA
as Lenders
TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS
Section 1.1 - Definitions ......................................... 1
Section 1.2 - Headings and Table of Contents ...................... 27
Section 1.3 - References .......................................... 27
Section 1.4 - Rules of Interpretation ............................. 27
Section 1.5 - Accounting Terms and Computations ................... 27
Section 1.6 - Time ................................................ 27
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1 - Representations and Warranties of the Borrower ...... 28
2.1.1 Corporate Existence, Compliance with Law and
Constating Documents ............................... 28
2.1.2 Governmental Approvals .............................. 28
2.1.3 Chief Executive Offices, Inventory Locations ........ 28
2.1.4 Corporate Power; Authorization; No
Violation; Enforceable Obligations ................. 28
2.1.5 Approvals Required .................................. 29
2.1.6 No Litigation ....................................... 29
2.1.7 No Default .......................................... 30
2.1.8 Financial Statements, No Material Adverse
Change ............................................. 30
2.1.9 Liabilities ......................................... 31
2.1.10 Pro Forma Budget .................................... 31
2.1.11 Ownership of Property; Liens ....................... 31
2.1.12 Intellectual Property ............................... 32
2.1.13 Subsidiaries ........................................ 32
2.1.14 Burdensome Restrictions ............................. 32
2.1.15 Additional Adverse Facts ............................ 33
2.1.16 Labour Matters ...................................... 33
2.1.17 Taxes ............................................... 33
2.1.18 Canadian Benefit and Pension Plans .................. 33
2.1.19 ERISA ............................................... 34
2.1.20 Accuracy of Information ............................. 34
2.1.21 No Omissions ........................................ 35
2.1.22 Environmental Matters ............................... 35
2.1.23 Competition and Anti-trust Laws ..................... 36
2.1.24 Investment Company Act of 1940 of the United
States ............................................. 36
2.1.25 Full Disclosure ..................................... 37
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2.1.26 Solvency ............................................ 37
2.1.27 Insurance ........................................... 37
2.1.28 Millennium Compliance ............................... 37
2.1.29 Survival and Deemed Repetition ...................... 37
ARTICLE III
THE CREDIT FACILITY
Section 3.1 - Obligations of the Lenders .......................... 38
Section 3.2 - BNP Credit Facilities ............................... 38
3.2.1 BNP Acquisition Facility ............................ 38
3.2.2 BNP Revolver Back-Up Facility ....................... 39
3.2.3 BNP FEF Facility .................................... 39
Section 3.3 - Royal Credit Facilities ............................. 39
3.3.1 Royal Acquisition Facility .......................... 39
3.3.2 Royal Capex Facility and Extension of the
Royal Capex Facility ............................... 39
3.3.3 Royal Credit Line Facility .......................... 40
3.3.4 Royal FEF Facility .................................. 40
3.3.5 Royal Visa Facility ................................. 40
Section 3.4 - Purposes of the Credit Facilities ................... 40
3.4.1 BNP Acquisition Facility ............................ 40
3.4.2 BNP Revolver Back-Up Facility ....................... 41
3.4.3 BNP FEF Facility .................................... 41
3.4.4 Royal Acquisition Facility .......................... 41
3.4.5 Royal Capex Facility ................................ 41
3.4.6 Royal Credit Line Facility .......................... 41
3.4.7 Royal FEF Facility .................................. 41
3.4.8 Royal Visa Facility ................................. 41
Section 3.5 - Manner of Borrowing ................................. 41
3.5.1 By Way of Overdraft ................................. 42
3.5.2 Prime Rate Loans and US Base Rate Loans ............. 42
3.5.3 Libor Loans ......................................... 42
3.5.4 Bankers' Acceptances ................................ 42
3.5.5 Letters of Credit ................................... 42
3.5.6 FEF Contracts ....................................... 42
3.5.7 Credit Cards ........................................ 43
Section 3.6 - Mandatory Repayments and Reductions ................. 43
3.6.1 Repayment on the Maturity Date ...................... 43
3.6.2 Automatic Reduction of the BNP Acquisition
Facility and the Royal Acquisition Facility ........ 43
3.6.3 Proceeds from Sale of Assets ........................ 43
3.6.4 Proceeds from Sale or Issuance of Capital
Stock or Debt ...................................... 44
Section 3.7 - Voluntary Payments .................................. 44
Section 3.8 - Cancellation ........................................ 45
Section 3.9 - Conversion Option ................................... 45
Section 3.10 - Deposit of Proceeds of Loans and
Discounted Proceeds ................................ 46
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Section 3.11 - Currency Adjustment ................................ 47
Section 3.12 - Reliance on Oral Instructions ...................... 47
Section 3.13 - Request from Taxing Authority ...................... 47
ARTICLE IV
PAYMENT OF INTEREST AND FEES
Section 4.1 - Payment of Interest ................................ 48
4.1.1 Interest on Prime Rate Loans ....................... 48
4.1.2 Interest on US Base Rate Loans ..................... 48
4.1.3 Interest on Libor Loans ............................ 48
4.1.4 Interest on Fixed Rate Loan ........................ 49
Section 4.2 - Default Interest ................................... 49
Section 4.3 - Nominal Rates of Interest .......................... 50
Section 4.4 - Standby Fee in respect of the Royal Capex
Facility .......................................... 50
Section 4.5 - Acceptance Fee ..................................... 50
Section 4.6 - Letter of Credit Fees .............................. 50
Section 4.7 - Set Up Fees and Annual Review Fees ................. 51
ARTICLE V
CONDITIONS APPLICABLE TO LIBOR LOANS
Section 5.1 - Selection of Libor Interest Periods ................ 52
Section 5.2 - Alternate Basis of Borrowing ....................... 52
Section 5.3 - Illegality Relative to Libor Loans ................. 53
ARTICLE VI
CONDITIONS APPLICABLE TO LETTERS OF CREDIT
Section 6.1 - Initial Letters of Credit .......................... 53
Section 6.2 - Issue of Other Letters of Credit by Royal .......... 54
Section 6.3 - Restrictions on Letters of Credit .................. 54
Section 6.4 - Fees and Charges for Letters of Credit ............. 55
Section 6.5 - Interest on Amounts Paid ........................... 55
Section 6.6 - Indemnity .......................................... 55
Section 6.7 - Reimbursement Following Termination ................ 56
ARTICLE VII
CONDITIONS APPLICABLE TO BANKERS' ACCEPTANCES
Section 7.1 - Bankers' Acceptances ............................... 56
Section 7.2 - Conditions Applicable to Bankers'
Acceptances ....................................... 56
7.2.1 Notice and Documents ............................... 56
7.2.2 Procedures for the Issue of Bankers'
Acceptances ....................................... 57
7.2.3 Delivery of Bankers' Acceptances ................... 57
7.2.4 Execution of Bankers' Acceptances .................. 58
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7.2.5 Procedures relating to the Maturity and Face
Amount of all Bankers' Acceptances ................ 58
7.2.6 Acceptance Fee ..................................... 59
7.2.7 Alternate Basis of Borrowing ....................... 59
7.2.8 Waiver of Claim .................................... 60
7.2.9 Payment by Lender on Maturity ...................... 60
ARTICLE VIII
CONDITIONS APPLICABLE TO FEF CONTRACTS
Section 8.1 - FEF Contracts ...................................... 60
Section 8.2 - Interest on Amounts Payable under FEF Contracts .... 61
Section 8.3 - Documentation, Fees and Charges .................... 61
ARTICLE IX
PAYMENT, TAXES, INCREASED COSTS, EVIDENCE OF INDEBTEDNESS
AND TIMING OF MATURITIES
Section 9.1 - Place of Payment of Principal, Interest
and Charges ....................................... 62
Section 9.2 - Account Debit Authorization ........................ 62
Section 9.3 - Application of Payments ............................ 62
Section 9.4 - Manner of Payment and Taxes ........................ 62
Section 9.5 - Increased Costs .................................... 63
Section 9.6 - Payment of Portion ................................. 64
Section 9.7 - Commitment and Timing of Maturities ................ 64
Section 9.8 - Evidence of Indebtedness ........................... 65
ARTICLE X
SUBSIDIARY GUARANTEE AND COLLATERAL DOCUMENTS
Section 10.1 - Subsidiary Guarantees .............................. 66
10.1.1 Supporting Documents ............................... 66
10.1.2 No Prejudice to Other Documents .................... 66
Section 10.2 - Security ........................................... 66
Section 10.3 - Additional Collateral and Registration ............. 67
Section 10.4 - Conflict ........................................... 68
Section 10.5 - No Prejudice to Other Security ..................... 68
ARTICLE XI
CONDITIONS TO BE SATISFIED
Section 11.1 - Conditions to be Satisfied ......................... 68
11.1.1 Initial Conditions to Borrowings ................... 68
11.1.2 Conditions Precedent to each Borrowing ............. 71
Section 11.2 - Waiver of Conditions Precedent ..................... 71
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ARTICLE XII
COVENANTS OF THE BORROWER
Section 12.1 - Affirmative Covenants of the Borrower .............. 72
12.1.1 Payment Covenant ................................... 72
12.1.2 Corporate Existence ................................ 72
12.1.3 Conduct of Business ................................ 72
12.1.4 Compliance with Laws ............................... 72
12.1.5 Prompt Payment of Indebtedness ..................... 72
12.1.6 Insurance .......................................... 73
12.1.7 Contracts .......................................... 74
12.1.8 Financial Statements and Information ............... 75
12.1.9 Change in Auditors ................................. 76
12.1.10 Notice of Default and Other Events ................. 76
12.1.11 Notice of Breach of Permit ......................... 76
12.1.12 Notice of Litigation ............................... 77
12.1.13 Access ............................................. 77
12.1.14 Reliance ........................................... 77
12.1.15 Change of Name, New Locations ...................... 77
12.1.16 Maintenance of, and Additional, Security ........... 77
12.1.17 Liens on After-acquired Property ................... 78
12.1.18 Intellectual Property .............................. 78
12.1.19 Distributions from Subsidiaries .................... 79
12.1.20 Supplemental Disclosure ............................ 79
12.1.21 Canadian Benefit and Pension Plans ................. 79
12.1.22 ERISA Reporting .................................... 79
12.1.23 Environmental Matters .............................. 80
12.1.24 Environmental Permits .............................. 81
12.1.25 Environmental Information .......................... 81
12.1.26 Environmental Access ............................... 81
12.1.27 Saint-Laurent Property ............................. 81
12.1.28 Financial Ratios ................................... 81
12.1.29 Key Men ............................................ 82
Section 12.2 - Negative Covenants of the Borrower ................. 82
12.2.1 Negative Pledge .................................... 82
12.2.2 Sale of Assets ..................................... 83
12.2.3 Indebtedness, Guarantees, Loans .................... 83
12.2.4 Reorganization and Amalgamation .................... 83
12.2.5 No Change in Nature of Business .................... 84
12.2.6 Distributions ...................................... 84
12.2.7 Capital Expenditures ............................... 84
12.2.8 Financial Year ..................................... 84
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ARTICLE XIII
REIMBURSEMENT OF EXPENSES AND INDEMNITY
Section 13.1 - Reimbursement of Expenses .......................... 84
Section 13.2 - Indemnity .......................................... 85
Section 13.3 - Survival of Indemnification Obligations ............ 87
ARTICLE XIV
OTHER TAXES
Section 14.1 - Other Taxes ........................................ 87
Section 14.2 - Survival of Obligations ............................ 87
ARTICLE XV
EVENTS OF DEFAULT
Section 15.1 - Events of Default .................................. 87
15.1.1 Failure to Pay ..................................... 87
15.1.2 Breach of Financial Covenants ...................... 88
15.1.3 Other Breaches ..................................... 88
15.1.4 Bankruptcy ......................................... 88
15.1.5 Seizure ............................................ 89
15.1.6 Judgment ........................................... 89
15.1.7 Invalidity or Unenforceability ..................... 89
15.1.8 Cross-Default ...................................... 89
15.1.9 Phoenix (USA) Term Facility and IBRD
Revolving Facility ................................ 90
15.1.10 Ceasing to Carry on Business ....................... 90
15.1.11 Ownership of Subsidiaries .......................... 90
15.1.12 Representations and Warranties ..................... 90
15.1.13 Subsidiary Guarantees and Collateral
Documents ......................................... 90
15.1.14 Environmental Matter ............................... 90
15.1.15 Material Adverse Change and Detrimental
Legal Proceedings ................................. 90
Section 15.2 - Acceleration ....................................... 91
Section 15.3 - No Notices ......................................... 92
ARTICLE XVI
REMEDIES
Section 16.1 - Remedies Cumulative ................................ 92
ARTICLE XVII
WAIVER OF DEFAULT
Section 17.1 - Waiver of Default .................................. 93
ARTICLE XVIII
INTERLENDER AGREEMENTS
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Section 18.1 - Separate Credit Facilities ......................... 93
Section 18.2 - Event of Default ................................... 93
Section 18.3 - Intercreditor and Security Sharing
Agreement ......................................... 94
Section 18.4 - Disclaimer ......................................... 94
Section 18.5 - Acknowledgement of Lenders ......................... 94
Section 18.6 - Other Transactions ................................. 95
Section 18.7 - No Preference ...................................... 95
Section 18.8 - No Association among Lenders ....................... 95
Section 18.9 - Amendment of this Article XVIII .................... 95
ARTICLE XIX
SUCCESSORS AND ASSIGNS
Section 19.1 - Benefit and Burden of this Agreement ............... 95
Section 19.2 - The Borrower ....................................... 95
Section 19.3 - The Lenders ........................................ 96
Section 19.4 - Disclosure ......................................... 96
Section 19.5 - Further Documents .................................. 96
Section 19.6 - Expenses ........................................... 96
ARTICLE XX
COMPENSATION
Section 20.1 - Set-off, Compensation .............................. 97
ARTICLE XXI
JUDGMENT CURRENCY
Section 21.1 - Judgment Currency .................................. 97
ARTICLE XXII
GOVERNING LAW
Section 22.1 - Governing Law ...................................... 98
ARTICLE XXIII
NOTICE
Section 23.1 - Address for Notice ................................. 98
Section 23.2 - Notice ............................................. 98
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ARTICLE XXIV
MISCELLANEOUS
Section 24.1 - Severability ....................................... 99
Section 24.2 - Interest Limitation ................................ 99
Section 24.3 - Survival of Representations and
Undertakings ...................................... 99
Section 24.4 - Whole Agreement .................................... 99
Section 24.5 - Amendments ......................................... 99
Section 24.6 - Counterparts ....................................... 100
Section 24.7 - Further Assurances ................................. 100
Section 24.8 - Risks of Force Majeure ............................. 100
Section 24.9 - Good Faith and Fair Consideration .................. 100
Section 24.10 - Term of Agreement .................................. 100
Section 24.11 - Formal Date ........................................ 100
Section 24.12 - Language ........................................... 101
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LIST OF SCHEDULES
SCHEDULE "A" - BORROWING BASE REPORT
(Sections 1.1, 3.3.3, 12.1.8)
SCHEDULE "B" - IBRD REVOLVING FACILITY
(Sections 1.1 and 2.1.9)
SCHEDULE "C" - PERMITTED LIENS
(Sections 1.1, 2.1.11 and 12.2.1)
SCHEDULE "D" - PHOENIX (USA) TERM FACILITY
(Sections 1.1 and 2.1.9)
SCHEDULE "E" - REAL PROPERTY
(Sections 1.1, 2.1.11 and 12.1.17)
SCHEDULE "F" - SUBSIDIARY GUARANTEE
(Sections 1.1 and 10.1)
SCHEDULE "G" - PLACES OF BUSINESS (AND RECORDS)
(Section 2.1.3)
SCHEDULE "H" - LITIGATION
(Section 2.1.6)
SCHEDULE "I" - LOCATIONS OF ACCOUNT DEBTORS
(Sections 2.1.11(f) and 12.1.16(b))
SCHEDULE "J" - INTELLECTUAL PROPERTY
(Section 2.1.12)
SCHEDULE "K" - LIST OF SUBSIDIARIES AND CAPITAL STOCK HELD
(Section 2.1.13)
SCHEDULE "L" - LABOUR MATTERS
(Section 2.1.16)
SCHEDULE "M" - ENVIRONMENTAL MATTERS
(Section 2.1.22)
SCHEDULE "N" - NOTICE OF BORROWING
(ADVANCE, CONVERSION OR CONTINUATION)
(Sections 3.5, 3.9, 5.1 and 7.2.5(a))
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SCHEDULE "O" - NOTICE OF BORROWING BY WAY
OF LETTER OF CREDIT
(Sections 3.5.5 and 6.1)
SCHEDULE "P" - NOTICE OF REPAYMENT OR PREPAYMENT
(Section 3.7)
SCHEDULE "Q" - BNP LETTER OF GUARANTEE OF US$11,440,000
SCHEDULE "R" - ROYAL LETTER OF CREDIT OF US$14,000,000
SCHEDULE "S" - CERTIFICATE OF COMPLIANCE
(Sections 11.1.1.5 and 12.1.8(e))
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THIS AGREEMENT bearing Formal Date of February 5, 1998 is made
AMONG PHOENIX INTERNATIONAL LIFE SCIENCES INC., a corporation
incorporated under the laws of Canada, having its registered
office at Xxxxx Xxxxx-Xxxxxxx, Xxxxxxxx xx Xxxxxx, Xxxxxx (the
"BORROWER"),
AND BANQUE NATIONALE DE PARIS (CANADA), a Canadian chartered bank,
having its head office in the City of Montreal, Province of
Quebec, Canada ("BNP" or, sometimes, a "LENDER"),
AND ROYAL BANK OF CANADA, a Canadian chartered bank, having its head
office in the City of Montreal, Province of Quebec, Canada
("ROYAL" or, sometimes, a "Lender"),
(BNP and Royal, as well as their respective successors and
assigns, being herein collectively called the "LENDERS").
WHEREAS the Borrower has requested the Lenders, acting separately and not
solidarily, to provide it with Credit Facilities to, INTER ALIA, finance in part
the acquisition by a Wholly-Owned Subsidiary of the Borrower of the shares of
the Capital Stock of IBRD-Rostrum Global Inc. based in California, USA; and
WHEREAS the Lenders have agreed to provide their respective Commitments to the
Borrower, subject to the terms and conditions of this Agreement;
THEREFORE, in consideration of the premises, the mutual covenants contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 - DEFINITIONS
----------------------------------------
In this Agreement and the Schedules, as well as in all notices pursuant to this
Agreement, unless something in the subject matter or context is inconsistent
therewith, the following words and phrases shall have the following meanings:
"ACCEPTANCE FEE" means the fee payable at the time of the acceptance of Bankers'
Acceptances established by multiplying the face amount of such Bankers'
Acceptances by:
(A) the applicable Margin, in the case of BNP, and
(B) the Prime Acceptance Fee increased by the applicable Margin, in the case
of Royal,
and by multiplying the product so obtained by a fraction having a numerator
equal to the number of days in the term of such Bankers' Acceptances and a
denominator of 365;
"ACCOUNT FOR PAYMENTS" means, as applicable,
(i) BNP's Account for Payments for all payments to BNP, or
(ii) Royal's Account for Payments for all payments to Royal;
"ACQUISITION TRANSACTION" means the acquisition by Phoenix (USA), of the
outstanding Capital Stock of IBRD;
"ACT OF BANKRUPTCY" shall have the meaning set forth in Section 15.1.4;
"ADDITIONAL COMPENSATION" shall have the meaning set forth in Section 9.5;
"ADVANCE" means the disbursement of funds by or on behalf of a Lender or for the
account of the Borrower pursuant to Section 3.5;
"AFFECTED LENDER" shall have the meaning set forth in Sections 5.2 and 5.3;
"AFFECTED BORROWING" shall have the meaning set forth in Sections 5.2, 5.3 and
9.6;
"AFFILIATE" means with respect to any Person, any other Person which, directly
or indirectly, controls or is controlled by, or is under common control with,
such Person, and for the purposes of this definition, "CONTROL" (including, with
correlative meanings, the terms "CONTROLLED BY" and "UNDER COMMON CONTROL WITH")
means the power to direct or cause the direction of the management and policies
of any Person, whether through the ownership of shares or by contract or
otherwise; and without restricting the above, one Person shall be deemed to be
affiliated with another Person if one of them is the Subsidiary of the other or
both are Subsidiaries of the same Person, and if two Persons are affiliated with
the same Person at the same time, they are each deemed to be affiliated with
each other;
"AGREEMENT" or "CREDIT AGREEMENT" means this agreement, including the Schedules,
as the same may be amended, modified, supplemented or restated from time to
time;
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"ANNUAL BUDGET" means the annual twelve month Consolidated and unconsolidated
operations budget and business plan for the Borrower and its Subsidiaries as
approved by the Board of Directors of the Borrower, which budget and business
plan (i) shall be presented by division or operating unit (each operating unit
to be reported separately and on a Consolidated basis) and shall include
Consolidated and unconsolidated income statements, monthly cash flow statements,
balance sheets and the underlying principal assumptions, (ii) shall contain
evidence of compliance with all financial covenants and ratios set out in this
Agreement and (iii) shall be accompanied by pro forma Consolidated and
unconsolidated financial statements of the Borrower and each of its
Subsidiaries;
"APPLICABLE LAW" means, in respect of any person, property, transaction or
event, all present or future applicable laws, statutes, regulations, treaties,
judgements and decrees and (whether or not having the force of law) all
applicable official directives, rules, guidelines, orders, approvals and
policies of any governmental, regional, municipal or local bodies (including,
without limitation, the U.S. Food and Drug Administration) having authority over
any of the Credit Parties and all applicable orders and decrees of courts and
arbitrators;
"ASSIGNEE" shall have the meaning set forth in Section 19.3;
"ASSIGNING LENDER" shall have the meaning set forth in Section 19.3;
"AUDITORS" means (i) the present auditors (and any successor firms) of the
Borrower, or (ii) an independent firm or independent firms of chartered
accountants selected among the six largest firms of chartered accountants
nationally recognized in Canada and duly appointed as auditors of the Borrower,
or (iii) another independent firm or other independent firms of chartered
accountants duly appointed as auditors of the Borrower and acceptable to the
Lenders;
"BANKERS' ACCEPTANCE" means a non-interest bearing xxxx of exchange on a
Lender's usual form, denominated in Canadian Dollars, drawn and endorsed by the
Borrower and accepted by such Lender at its Branch of Account pursuant to this
Agreement;
"BANKING DAY" means a Business Day on which dealings in US Dollar deposits may
be carried on by and between banks in the London interbank eurodollar market;
"BNP" means Banque Nationale de Paris (Canada), a signatory to this Agreement,
and its successors and assigns;
"BNP (LOS ANGELES)" means Banque Nationale de Paris, acting through its branch
or office located at Suite 2090, 725 South Xxxxxxxx Street, Los Angeles,
California, USA, or through any other of its branches or offices as to which it
may notify the Lenders from time to time, and its successors and assigns;
"BNP'S ACCOUNT FOR PAYMENTS" means the place or account as to which BNP may
notify the Borrower from time to time;
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"BNP ACQUISITION FACILITY" means the non-revolving term credit facility of up to
US$14,000,000 or the Equivalent Amount in Canadian Dollars which, subject to the
terms and conditions of this Agreement, BNP has, on the Formal Date, made
available to the Borrower until the Maturity Date to finance or support the
financing of approximately 50% of the cost of the Acquisition Transaction by way
of a Letter of Credit (in the form set forth in SCHEDULE "Q") issued in favour
of BNP (Los Angeles) to cover a portion of the Phoenix (USA) Term Facility and
by way of a direct Advance available or convertible as a Prime Rate Loan, US
Base Rate Loan, Libor Loan, Bankers' Acceptances or Fixed Rate Loan, or any
combination thereof, to the extent not cancelled, reduced or terminated pursuant
to this Agreement;
"BNP CREDIT FACILITIES" means the BNP Acquisition Facility, the BNP FEF Facility
and the BNP Revolver Back-Up Facility which BNP is hereby making available to
the Borrower, and "BNP CREDIT FACILITY" means any one of the BNP Credit
Facilities, as applicable;
"BNP FEF FACILITY" means the credit facility of up to Cdn$10,000,000 which,
subject to the terms and conditions of this Agreement, BNP is hereby making
available to the Borrower until the Maturity Date by way of FEF Contracts Risk
Amount, as well as a Cdn$5,000,000 delivery risk in respect of FEF Contracts, to
the extent not cancelled, reduced or terminated pursuant to this Agreement;
"BNP REVOLVER BACK-UP FACILITY" means the credit facility of up to US$7,000,000
which, subject to the terms and conditions of this Agreement, BNP is hereby
making available to the Borrower until the Maturity Date by way of a Letter of
Credit to be issued in favour of BNP (Los Angeles) to cover the IBRD Revolving
Facility, to the extent not cancelled, reduced or terminated pursuant to this
Agreement;
"BORROWER" means Phoenix International Life Sciences Inc., a signatory to this
Agreement, and its successors and permitted assigns;
"BORROWER'S ACCOUNT" means:
(A) with respect to dealings with BNP, a Canadian Dollar account and a US
Dollar account of the Borrower maintained with BNP at BNP's Branch of
Account, and
(B) with respect to dealings with Royal, a Canadian Dollar account and a US
Dollar account of the Borrower maintained with Royal at Royal's Branch
of Account;
"BORROWING" means a utilization and "BORROWINGS" means the aggregate of the
utilizations at the relevant time by the Borrower of a Credit Facility by way of
either Loans, Bankers' Acceptances, FEF Contracts, Letters of Credit or usages
of credit cards expense account, to the extent available under such Credit
Facility; the total amount of "Borrowings" outstanding at any time under a
Credit Facility is the total amount of all Loans outstanding at that time under
such Credit Facility, plus the total face amount of all Bankers' Acceptances
outstanding at that time under such Credit Facility, plus the total of the FEF
Contracts Risk Amount outstanding at that time under such Credit Facility, plus
the total amount of all Letters of Credit outstanding at that
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time under such Credit Facility, plus the total amount owing at that time under
the credit card expense account under such Credit Facility;
"BORROWING BASE" means, with respect to Borrowings under the Royal Credit Line
Facility as of any date of determination thereof and as set forth in the most
recent Borrowing Base Report delivered pursuant to Section 12.1.8, the sum
(calculated in Canadian Dollars and using the Equivalent Amount thereof in
Canadian Dollars for amounts in other currencies) of:
(a) 75% of Eligible Receivables of the Borrower which are subject to the
Liens of the Collateral Documents,
PLUS
(b) 50% of the excess (which amount shall not be negative) of (I) the costs
and estimated profit in excess of progress xxxxxxxx on contracts in
progress OVER (II) progress xxxxxxxx in excess of costs and estimated
profit on contracts in progress, the whole determined by using the
percentage of completion method,
PLUS
(c) 75% of federal and provincial tax credits of the Borrower filed and
payable under the ITA and corresponding provincial tax legislation for
scientific research and development expense, LESS the portion of those
tax credits that cannot be taken into account in calculating the
provisional amount to be paid as tax on capital and income tax,
PLUS
(d) 50% of federal and provincial tax credits of the Borrower accrued and
payable under the ITA and corresponding provincial tax legislation for
scientific research and development expense, LESS the portion of those
tax credits that cannot be taken into account in calculating the
provisional amount to be paid as tax on capital and income tax,
LESS
(e) all Preferred Claims;
"BORROWING BASE REPORT" means a report of the Borrower substantially in the form
set forth in SCHEDULE "A" delivered from time to time to Royal in accordance
with Section 12.1.8(f);
"BRANCH OF ACCOUNT" means with respect to each Lender, the branch or office of
such Lender at the address set out opposite such Lender's name on the signature
pages hereto or such other branch or office of such Lender as may be advised in
writing from time to time to the Borrower by such Lender;
-5-
"BUSINESS DAY" means a day on which the Lenders are open for money market
dealings in Montreal, Province of Quebec and Toronto, Province of Ontario,
excluding Saturday, Sunday and any other day which is in any such cities a legal
holiday or a day on which banking institutions are required by law or by local
proclamation to close, and in respect of a Libor Loan, means a day which is also
a Banking Day;
"CANADIAN BENEFIT PLANS" means all material employee benefit plans maintained or
contributed to by a Credit Party that are not pension plans accepted for
registration under the ITA or under other applicable pension benefits or tax
laws of Canada or a province or territory thereof including, without limitation,
all profit sharing, savings, supplemental retirement, retiring allowance,
severance, deferred compensation, welfare, bonus, supplementary unemployment
benefit plans or arrangements and all life, health, dental and disability plans
and arrangements in which the employees or former employees of any of the Credit
Parties employed in Canada participate or are eligible to participate but
excluding all stock option or stock purchase plans;
"CANADIAN DOLLAR", "CANADIAN DOLLARS" and the symbols "CDN$" and "$" each means
lawful money of Canada;
"CANADIAN PENSION PLAN" means any plan, program, arrangement or understanding
that is a pension plan for the purposes of any applicable pension benefits or
tax laws of Canada or a province or territory thereof (whether or not registered
under any such laws) which is maintained, administered or contributed to by (or
to which there is or may be an obligation to contribute by) a Credit Party in
respect to any person's employment in Canada or a province or territory thereof
with the Credit Party, all related funding agreements and all related
agreements, arrangements and understandings in respect of, or related to, any
benefits to be provided thereunder or the effect thereof on any other
compensation or remuneration of any employee;
"CAPITAL EXPENDITURES" means, as to any Person, the aggregate of (a)
expenditures made by such Person in respect of the purchase or other acquisition
of fixed assets by such Person having a useful life of greater than one year,
including, for greater certainty, Capital Lease Obligations of such Person
(excluding, to the extent otherwise included herein, interest capitalized during
such period in accordance with GAAP) which would, in accordance with GAAP, be
set forth as capital expenditures on a consolidated statement of cash flows of
such Person and (b) all investments made by such Person, other than investments
which are paid for by way of the issuance of Capital Stock of such Person;
"CAPITAL LEASE" means, with respect to a Person, any lease or other arrangement
relating to property or assets which would be required to be accounted for as a
capital lease obligation on a balance sheet of such Person if such balance sheet
were prepared in accordance with GAAP;
"CAPITAL LEASE OBLIGATIONS" means, with respect to a Person, the amount of the
obligation of such Person under a Capital Lease that, in accordance with GAAP,
would appear on a balance sheet of such Person in respect of such Capital Lease
or otherwise be disclosed in a note to such balance sheet, but excluding
leasehold inducements and deferred credits;
-6-
"CAPITAL STOCK" means any and all shares or other equivalents (however
designated) of capital stock of a corporation, any and all equivalent ownership
interests in a Person (other than a corporation) and any and all warrants or
options or other arrangements to purchase any of the foregoing;
"CDOR RATE" means, on any day, the annual rate which is the arithmetic average
(rounded upwards, if necessary, to the nearest 0.01%) of the "BA 1 month" rates
applicable to Canadian Dollar bankers' acceptances displayed and identified as
such on the "Reuters Screen CDOR Page" (as defined in the International Swap and
Derivatives Association, Inc. definitions, as modified and amended from time to
time) as at approximately 10:00 a.m. on such day, or if such day is not a
Business Day then on the immediately preceding Business Day (as adjusted after
10:00 a.m. to reflect any error in a posted rate of interest or in the posted
average annual rate of interest); PROVIDED, however, if such rates do not appear
on the Reuters Screen CDOR Page as contemplated, then the CDOR Rate on any day
shall be the 30-day discount rate applicable to Canadian Dollar bankers'
acceptances quoted by the relevant Lender as of approximately 10:00 a.m. on such
day, or if such day is not a Business Day, then on the immediately preceding
Business Day;
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 of the United States, as amended from time to time;
"CERCLIS" means the Comprehensive Environmental Response, Compensation and
Liability Information System maintained by the US Environmental Protection
Agency;
"COLLATERAL" means the assets, property and undertaking upon which a Lien is
purported to be created by any Collateral Document, and any agreement,
instrument, document, financing statement, financing change statement, warehouse
receipt, xxxx of lading, notice of assignment of accounts receivable, schedule
of accounts receivable assigned and other written matter necessary or requested
by any of the Lenders to perfect and maintain perfected the Lenders' Lien on the
Collateral for the benefit of the Lenders;
"COLLATERAL DOCUMENTS" means the security and related documentation to be
granted to or for the benefit of the Lenders as described in Article IX and any
other security or collateral documents from time to time entered into as
provided in this Agreement by any of the Credit Parties in favour or for the
benefit of the Lenders or either of them;
"COMMITMENT" means:
(a) with respect to BNP, the obligation of BNP to make available to the
Borrower the BNP Credit Facilities or any of them, and
(b) with respect to Royal, the obligation of Royal to make available to the
Borrower the Royal Credit Facilities or any of them,
-7-
the whole subject to the terms and conditions of this Agreement, and when
"COMMITMENT" is used without specification as to whether it is with respect to a
particular Credit Facility, then "COMMITMENT" shall refer to any of the
Commitments with respect to any of the BNP Credit Facilities or the Royal Credit
Facilities, as appropriate, and "COMMITMENTS" of a Lender refers to all
Commitments of such Lender collectively;
"COMPUTER EQUIPMENT" means the computer equipment and embedded systems currently
owned or used by the Borrower and any of its Subsidiaries, including, without
limitation, all ancillary and communication equipment connected to it;
"COMPUTER SOFTWARE" means all computer software owned or used by the Borrower or
any of its Subsidiaries including, without limitation, all operating systems
software comprised in the Computer Equipment and all applications software and
all other software owned or used by the Borrower or any of its Subsidiaries or
which the Borrower or any of its Subsidiaries is entitled to have or to use by
virtue of its interest in the Computer Equipment or in software owned or used by
it;
"COMPUTER SYSTEMS" means the Computer Equipment and the Computer Software,
collectively;
"CONSOLIDATED" means produced by aggregating the relevant financial statements
or accounts of the Subsidiaries of a Person on a line-by-line basis (i.e.:
adding together corresponding items of assets, liabilities, revenues and
expenses) with the relevant financial statements or account of such Person,
eliminating inter-company balances and transactions and providing for any
minority interest in Subsidiaries;
"CONVERSION DATE" means a Business Day notified by the Borrower to a Lender
pursuant to Section 3.9 as being a date on which the Borrower has elected to
convert a Borrowing from such Lender already outstanding hereunder into another
form of Borrowing; or if the Borrower is deemed to have converted a Borrowing
into another form of Borrowing hereunder pursuant to Section 5.1, 5.2, 5.3, 6.5,
7.2.5 or 8.2, it shall mean the day on which such deemed conversion occurs;
"COUNSEL" means, with regard to a Lender, a barrister or solicitor or firm of
barristers or solicitors retained or employed by such Lender and, with regard to
any Credit Party, a barrister or solicitor or firm of barristers or solicitors
retained or employed by such Credit Party and acceptable to the Lenders;
COVERAGE RATIO" means, for any period, the ratio of:
(a) EBITDA for such period
to
(b) Interest Expenses for such period PLUS (I) the amount of all repayments
made during such period on all interest bearing or discounted
Indebtedness, whether or not evidenced by
-8-
any note, bond, debenture or instrument and (II) all payments made on
account of any Capital Lease Obligations during such period;
"CREDIT DOCUMENTS" means this Agreement, the Subsidiary Guarantees, the
Collateral Documents and all other contracts, agreements, consents, powers of
attorney, notices or other documents, whether heretofore, now or hereafter
executed by or on behalf of any of the Credit Parties and delivered to the
Lenders or either of them in connection with this Agreement or the transactions
contemplated by this Agreement;
"CREDIT FACILITIES" means the BNP Credit Facilities and the Royal Credit
Facilities, and "CREDIT FACILITY" means any one of the BNP Credit Facilities and
the Royal Credit Facilities, as applicable;
"CREDIT PARTIES" means collectively, the Borrower, Phoenix (USA) and IBRD, and
"CREDIT PARTY" means any one of them;
"CURRENT ASSETS" means, with respect to any Person, at a particular date,
inventory, accounts receivable, work in progress, trade and income tax credits,
cash, term deposits and prepaid expenses;
"CURRENT LIABILITIES" means, with respect to any Person, at a particular date,
direct operating loans owing to the Lenders and other Persons, accounts payable
and accrued charges, including outstanding cheques and all income taxes payable,
but excluding the current portion of long term debt and the current portion of
long term lease obligations;
CURRENT RATIO" means, at any time, the ratio to 1.0 of the quotient obtained
when Current Assets are divided by Current Liabilities;
"DEFAULT" means any event or circumstance which constitutes an Event of Default
or which, with the giving of notice or lapse of time or both would, unless cured
or waived, become an Event of Default;
"DEPOSIT" shall have the meaning set forth in Section 20.1;
"DISCOUNT" with respect to any issue of Bankers' Acceptances with the same
maturity date, means the amount by which the face value of such Bankers'
Acceptances exceeds the Discounted Proceeds of such Bankers' Acceptances;
"DISCOUNT RATE" means, with respect to an issue of Bankers' Acceptances with the
same maturity date accepted by a Lender, the rate determined by such Lender as
being its discount rate, calculated on the basis of a year of 365 days,
established in accordance with its normal practices at or about 10:00 a.m. on
the date of issue and acceptance by it of such Bankers' Acceptances, for
bankers' acceptances accepted by it having a comparable face value and an
identical maturity date to the face value and maturity date of the Bankers'
Acceptances forming part of such issue to be accepted by such Lender;
-9-
"DISCOUNTED PROCEEDS" means, in respect of any Bankers' Acceptance to be
accepted by a Lender on any day, an amount (rounded to the nearest whole cent,
and with one-half of one cent being rounded up) calculated on such day by
multiplying:
(a) the face amount of such Bankers' Acceptance, by
(b) the price, where the price is determined by dividing one by the sum of
one plus the product of:
(i) the Discount Rate (expressed as a decimal); and
(ii) a fraction, the numerator of which is the number of days in the
term of such Bankers' Acceptance and the denominator of which is
365;
with the price as so determined being rounded up or down to the fifth
decimal place and .000005 being rounded up;
"DISTRIBUTION" means:
(a) any declaration, payment, setting aside for payment, or distribution of
any dividends or return of capital to holders of the capital stock of a
Person, and any purchase, redemption, reduction, repayment or other
retirement of any shares of the capital stock of a Person, whether in
cash or in kind, and
(b) any payment, setting aside for payment or distribution of any management
fee, management bonus, consulting fee, salary, loan or other payment to
any director, former director, officer, shareholder, former shareholder,
or employee of a corporation, or to any Person related by blood,
adoption or marriage to any such Person or to any corporation not
dealing at arm's length (as such term is defined in the ITA) with any
such Person, except to the extent that such fee, bonus or other payment
constitutes normal remuneration payable in the ordinary course of
business of the corporation;
"DRAWDOWN DATE" means a Business Day on which an Advance is to be made as
specified in the notices referred to in Section 3.5;
"EBITDA" means, for any period, net earnings before income taxes on such net
earnings for such period PLUS, but only to the extent deducted in the
computation of net earnings before income taxes on net earnings, Interest
Expenses, provisions for income taxes, depreciation and amortization;
"ELIGIBLE RECEIVABLES" means good quality accounts receivable of the Borrower,
excluding:
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(a) inter-company accounts between the Borrower and any of its Subsidiaries
or any of its Affiliates or associates (within the meaning of the term
"associate" set forth in the CANADA BUSINESS CORPORATIONS Act),
(b) accounts receivable any portion of which has been due for more than 90
days, except for accounts which have been previously approved by Royal
as good quality accounts receivable notwithstanding that any portion
thereof may be past due beyond 90 days, in which case the portion of
such accounts receivable which has been outstanding for less than 90
days may be included as "Eligible Receivables",
(c) accounts receivable which represent work-in-progress, progress billing
or advance payments for services not yet rendered,
(d) accounts receivable which are subject to any provision prohibiting their
assignment or the grant of security thereon or requiring notice of, or
consent to, such assignment or grant of security, and
(e) accounts receivable which are subject to any claim or assertion of a
right of compensation or set-off on the part of the account debtor, to
the extent of such claim or assertion,
PROVIDED, in any event, that the determination of "good quality accounts
receivable" shall be made in the reasonable judgment of Royal and that Royal
reserves the right, acting reasonably, to eliminate any other receivables
therefrom;
"ENVIRONMENTAL CLAIMS" means any and all administrative, regulatory or judicial
actions, suits, demands, demand letters, claims, liens, notices of
non-compliance or violation, investigations or proceedings relating in any way
to any Environmental Law or any permit issued under any such Law (hereafter
"CLAIMS") including without limitation (i) any and all Claims by governmental or
regulatory authorities for enforcement, cleanup, removal, response, remedial or
other actions or damages pursuant to any applicable Environmental Law and (ii)
any and all Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief in connection
with Hazardous Materials or arising from alleged injury or threat of injury to
health, safety or the environment;
"ENVIRONMENTAL LAWS" means all applicable federal, provincial, state, municipal,
local and foreign laws and regulations, ordinance, code, guideline, policy or
rule of civil or common law now or hereinafter in effect and in each case as
amended and any judicial or administrative order, consent, decree or judgment
relating to pollution or protection of human health, Hazardous Materials or the
environment (including, without limitation, ambient air, surface water, ground
water, land surface or subsurface strata, emissions, discharges, releases or
threatened releases of Hazardous Materials, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials);
"EQUIVALENT AMOUNT" means, on any date, the amount of one currency (the "FIRST
CURRENCY") into which an amount in another currency (the "OTHER CURRENCY") may
be converted using for
-11-
the purposes of such conversion the rate determined by the relevant Lender in
accordance with its standard practices as being the rate at which such Lender,
at the relevant time, considers that it may sell the Other Currency to obtain
the First Currency; notwithstanding the foregoing, until notice to the contrary
is given by Royal (at its discretion) to the Borrower, the "Equivalent Amount"
in US Dollars of an amount in Canadian Dollars for purposes of calculating the
amount of Borrowings in US Dollars remaining available from Royal or for
calculating the outstanding amount of Borrowings from Royal, Royal will use a
conversion rate of 1.35 Canadian Dollars for each US Dollar, which conversion
rate may be changed by Royal at any time at its discretion, such change to take
effect immediately;
"ERISA" means the UNITED STATES EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974
(or any successor legislation thereto), as amended, and any regulations
promulgated and rulings issued thereunder;
"ERISA AFFILIATE" means any Person that for purposes of Title IV of ERISA is a
member of the controlled group of any Credit Party, within the meaning of
Section 414 of the Internal Revenue Code;
"ERISA EVENT" means:
(a) (i) the occurrence of a reportable event, within the meaning of
Section 4043 of ERISA, with respect to any Plan unless the
30-day notice requirement with respect to such event has been
waived by the PBGC, or
(ii) the requirements of subsection (1) of Section 4043(b) of ERISA
(without regard to subsection (2) of such Section) are met with
respect to a contributing sponsor, as defined in Section
4001(a)(13) of ERISA, of a Plan, and an event described in
paragraph (9), (10), (11), (12) or (13) of Section 4043(c) of
ERISA is reasonably expected to occur with respect to such Plan
within the following 30 days,
(b) the application for a minimum funding waiver with respect to a Plan,
(c) the provision by the administrator of any Plan of a notice of intent to
terminate such Plan, pursuant to Section 4041(a)(2) of ERISA (including
any such notice with respect to a plan amendment referred to in Section
4041(e) of ERISA),
(d) the cessation of operations at a facility of any Credit Party or any
ERISA Affiliate in the circumstances described in Section 4062(e) of
ERISA,
(e) the withdrawal by any Credit Party or any ERISA Affiliate from a
Multiple Employer Plan during a plan year for which it was a substantial
employer, as defined in Section 4001(a)(2) of ERISA,
(f) the conditions for imposition of a lien under Section 302(f) of ERISA
shall have been met with respect to any Plan,
-12-
(g) the adoption of an amendment to a Plan requiring the provision of
security to such Plan pursuant to Section 307 of ERISA, or
(h) the institution by the PBGC of proceedings to terminate a Plan pursuant
to Section 4042 of ERISA, or the occurrence of any event or condition
described in Section 4042 of ERISA that constitutes grounds for the
termination of, or the appointment of a trustee to administer, such
Plan;
"EVENT OF DEFAULT" means any of the events or circumstances set out in Section
15.1;
"FEDERAL FUNDS EFFECTIVE RATE" means, for any day, an interest rate per annum
equal to the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System in the United States of
America arranged by federal funds brokers, as published for such day by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day in
respect of such transactions received by the relevant Lender from three federal
funds brokers of recognized standing selected by it; in the case of a day which
is not a Business Day, the "Federal Funds Effective Rate" for such day shall be
the "Federal Funds Effective Rate" in effect on the immediately preceding
Business Day;
"FEF CONTRACT" means a contract for the purchase or sale of, subject to
availability at the sole discretion of the relevant Lender, any freely traded
foreign currency with maturities not greater than 24 months from the date of
issue, unless otherwise agreed by the relevant Lender; provided that for the
purpose of determining the total amount of Borrowings outstanding under the BNP
FEF Facility or the Royal FEF Facility, as applicable, only the FEF Contracts
Risk Amount in respect thereof (together with any outstanding delivery risk in
respect thereof, in the case of the BNP FEF Facility) shall be deemed to be a
Borrowing;
"FEF CONTRACTS RISK AMOUNT" means at any time for purposes of determining the
amount of Borrowings outstanding under the BNP FEF Facility or the Royal FEF
Facility, an amount determined at any relevant time by BNP or Royal, as the case
may be, in accordance with its standard practices as being the amount then
considered by it to represent the amount of its risk arising from all FEF
Contracts previously issued and then outstanding hereunder and any FEF Contract
proposed to be issued hereunder at the time of determination; the whole taking
into account the FEF Contracts at their market value and in the light of the
time remaining on each FEF Contract;
"FIXED RATE LOAN" means the Loans granted by BNP under the BNP Acquisition
Facility in respect of which the Borrower and BNP shall have agreed to establish
a fixed rate of interest to apply thereto during the term remaining until the
Maturity Date, as set forth in Section 3.2.1 and on which the Borrower must pay
interest in accordance with Section 4.1.4;
"FORMAL DATE" means February 5, 1998, as set forth in Section 24.11;
-13-
"GAAP" means generally accepted accounting principles in effect from time to
time in Canada or, as the case may be, the United States of America, applicable
to the relevant party, applied in a consistent manner from period to period;
"GOVERNMENTAL APPROVAL" means any authorization, certificate, attestation,
permit, approval, grant, licence, consent, registration, filing, commitment,
order, judgment, direction, ordinance or decree issued or granted by or under
law or by any Governmental Body, as well as acquired or vested rights acquired
under or recognized pursuant to Environmental Laws;
"GOVERNMENTAL BODY" means any government, parliament, legislature, regulatory
authority, agency, tribunal, department, commission, board or court or other
law, regulation or rule making entity (including a Minister of the Crown),
national or supranational, and any corporation or other entity owned or
controlled in any manner by any of the foregoing, exercising or purporting to
exercise legislative, judicial, administrative or regulatory authority on behalf
of any nation, state, province, municipality or district, or any subdivision
thereof;
"GUARANTEE" of any Person means, without duplication, all guarantees, sales made
where the purchaser has recourse against the seller, endorsements (other than
for collection or deposit in the ordinary course of business) and other
obligations (contingent or otherwise) to pay, purchase, repurchase or otherwise
acquire or become liable upon or in respect of any Indebtedness of others,
investment in others, obligations to maintain the capital, working capital,
solvency or general financial condition of others, or indemnities of others
against or the holding harmless or protection of others from damages, losses or
liabilities to the extent such guarantees, sales, endorsements and obligations,
indemnities, holding harmless or protection above mentioned are incurred or made
by a Person otherwise than in the ordinary course of business of such Person;
the amount of each guarantee shall be deemed to be the amount of all
Indebtedness of the other obligor to whom the guarantee relates, unless the
guarantee is limited to a determinable amount in which case the amount of such
guarantee shall be deemed to be such determinable amount;
"HAZARDOUS MATERIALS" means (i) any petroleum or petroleum products, radioactive
materials, asbestos in any form that is or could become friable, urea
formaldehyde foam insulation, transformers or other equipment that contains
dielectric fluid containing levels of polychlorinated biphenyls, and radon gas;
(ii) any chemicals, materials or substances defined as or included in the
definition of the "hazardous substances", "hazardous waste", "hazardous
materials", "extremely hazardous waste", "restricted hazardous waste", "toxic
substances", "toxic pollutants", "contaminants", or "pollutants", or words of
similar import, under any applicable Environmental Law; and (iii) or any other
chemical, material or substance, exposure to which is prohibited, limited or
regulated by any governmental authority;
"IBRD" means IBRD-Rostrum Global Inc., a corporation incorporated under the laws
of the State of Delaware, United States of America, having its head office at
Irvine, California, United States of America;
"IBRD REVOLVING FACILITY" means a revolving demand credit facility of a maximum
amount of US$7,000,000 to be made available by BNP (Los Angeles) to IBRD (and to
Phoenix USA,
-14-
following its amalgamation with IBRD), such credit facility to be substantially
upon the terms set forth in SCHEDULE "B", subject to the modifications to such
terms as may be agreed to by the Lenders;
"INDEBTEDNESS" of a Person means, without duplication,
(a) all debts and liabilities of such Person,
(b) all Capital Lease Obligations, excluding leasehold inducements and
deferred credits,
(c) all debts and liabilities secured by any charge, hypothec, lien,
encumbrance on or other security interest in or mortgage, assignment,
pledge or hypothecation of property or assets owned or acquired by such
Person even though such Person has not assumed or become liable for the
debts and liabilities secured thereby,
(d) all debts and liabilities of such Person representing the deferred
acquisition cost of property or assets created or arising under any
conditional sale agreement or other title retention agreement even
though the rights and remedies of the seller under such agreement in the
event of default are limited to repossession or sale of property or
assets covered thereby,
(e) all debts and liabilities of such Person under any bankers' or trade
acceptance credit facility or any standby or commercial letter of credit
or guarantee facility,
(f) all obligations of such Person evidenced by notes, bonds, debentures or
other similar instruments,
(g) all obligations of such Person to purchase, redeem, retire, decease or
otherwise make any payment in respect of any Capital Stock of or other
ownership or profit interest in such Person or any other Person, valued,
in the case of redeemable preferred stock, at the greater of its
voluntary or involuntary liquidation preference plus accrued and unpaid
dividends,
(h) all obligations of such Person in respect of interest rate, foreign
exchange or commodity price hedging arrangements,
(i) all obligations of such Person for production payments from property
operated by or on behalf of such Person and other similar arrangements
with respect to natural resources, and
(f) all Guarantees;
"INDEMNITEES" shall have the meaning set forth in Section 13.2;
-15-
"INTELLECTUAL PROPERTY" means all patents, industrial designs, trade-marks,
trade secrets and know-how including, without limitation, environmental
technology, biotechnology and other technologies, confidential information,
trade-names, goodwill, copyrights, integrated circuit topographies, software and
all other forms of intellectual and industrial property, and all rights and
options to use any of the foregoing and any registrations and applications for
registration of any of the foregoing;
"INSUFFICIENCY" means, with respect to any Plan, the amount, if any, of its
unfunded benefit liabilities, as defined in Section 4001(a)(18) of ERISA;
"INTEREST DATE" means the first day of each month;
"INTEREST DETERMINATION DATE" means with respect to a Libor Loan, the date which
is two Banking Days prior to the first day of the Libor Interest Period
applicable to such Libor Loan;
"INTEREST EXPENSE" means, with respect to any Person, for any period, the
interest expense of such Person during such period as determined in accordance
with GAAP including, without limitation, interest in respect of bank
indebtedness, bankers acceptances, discounts and acceptance fees and the
interest portion of payments under Capital Leases;
"INTEREST PAYMENT DATE" means with respect to a Prime Rate Loan and a US Base
Rate Loan, each Interest Date or if such Interest Date is not a Business Day,
the immediately following Business Day;
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986 of the United
States of America, as amended from time to time, and the regulations and rulings
issued thereunder;
"ITA" means the INCOME TAX ACT (Canada) and the regulations promulgated
thereunder, as amended or re-enacted from time to time;
"JUDGMENT CONVERSION DATE" shall have the meaning set forth in Section 21.1;
"JUDGMENT CURRENCY" means judgment currency as defined in Section 21.1;
"LENDERS" means BNP and Royal, and their respective successors and assigns and
"LENDER" means any one of them;
"LETTER OF CREDIT" means a letter of guarantee (including a letter of guarantee
or letter of credit guaranteeing the reimbursement of any advance payment or of
holdbacks, a performance guarantee or a bid guarantee and including letters of
credit and letters of guarantee issued or to be issued by BNP and Royal,
respectively, to BNP (Los Angeles) under the BNP Acquisition Facility, the BNP
Revolver Back-Up Facility and the Royal Acquisition Facility), a letter of
credit or an acceptance under a letter of credit issued by a Lender under this
Agreement, in each case denominated in any freely tradable currencies acceptable
to such Lender, PROVIDED that letters of credit shall (unless agreed otherwise
by the issuing Lender) be subject to the current
-16-
Uniform Customs and Practice for Documentary Credits as published by the
International Chamber of Commerce;
"LIBOR" means with respect to a Libor Loan during the relevant Libor Interest
Period:
(a) the rate per annum (expressed on the basis of a 360-day year) shown on
Telerate, page 3750, as published by the British Bankers Association as
of 11:00 a.m. (London, England time) on the Interest Determination Date
for US Dollar deposits for a period comparable to such Libor Interest
Period, and if different rates are quoted for US Dollar deposits in
varying amounts, in an amount which is closest to the amount of such
Libor Loan, or
(b) if for any reason the Telerate rates are unavailable to determine the
rate applicable to a Libor Loan, "Libor" for such Libor Loan during the
relevant Libor Interest Period, shall mean the rate of interest per
annum (expressed on the basis of a 360-day year) determined by reference
to the rates quoted on the Reuters Monitor Screen (page LIBO) as being
the arithmetic average (rounded upwards, if necessary, to the nearest
whole multiple of 1/16th of 1%) of the rates offered in London, England
by reference banks shown on such screen as of 11:00 a.m. (London,
England time) on the Interest Determination Date to make deposits with
leading banks in the London interbank eurodollar market in US Dollars
for a period equal to such Libor Interest Period, and if different rates
are quoted for deposits in varying amounts, in the amount which is
closest to such Libor Loan, or
(c) if for any reason, neither the Telerate rates nor the Reuters Monitor
Screen rates are available in respect of the relevant Libor Interest
Period, "Libor" for such Libor Loan during the relevant Libor Interest
Period, shall mean the annual rate of interest (expressed on the basis
of a year of 360 days and rounded upwards, if necessary, to the nearest
whole multiple of 1/16th of 1%) at which BNP (in the case of Libor Loans
granted by BNP) or Royal (in the case of Libor Loans granted by Royal),
in accordance with its normal practices, would be prepared to offer to
leading banks in the London interbank eurodollar market for delivery on
the first day of the relative Libor Interest Period for a period equal
to such Libor Interest Period based on the number of days comprised
therein, deposits in US Dollars of amounts comparable to such Libor Loan
(and of any other Libor Loan of such Lender having a Libor Interest
Period of the same duration and commencing on the same date) to be
outstanding under this Agreement during such Libor Interest Period, at
or about 11:00 a.m. (London, England time) on the applicable Interest
Determination Date;
"LIBOR INTEREST DATE" means the last day of each Libor Interest Period, or if
the Borrower selects a Libor Interest Period longer than three months, it shall
mean the date falling every three months after the beginning of such Libor
Interest Period and on the last day of the Libor Interest Period so selected;
"LIBOR INTEREST PERIOD" means with respect to a Libor Loan, the initial period
of approximately one month, two months, three months or six months (or any other
period agreed to by the relevant Lender), as selected by the Borrower and
notified to the relevant Lender pursuant to
-17-
Section 3.5 or 3.9, but always subject to availability to such Lender)
commencing on and including the Drawdown Date or Conversion Date, as the case
may be, applicable to such Libor Loan and ending on and including the last day
of such period, and, thereafter (subject to availability to such Lender), each
successive period, if any, of approximately one month, two months, three months
or six months (or any other period agreed to by such Lender), as selected by the
Borrower for such Libor Loan and notified to the relevant Lender pursuant to
Section 5.1, but in all cases expiring no later than on the relevant Maturity
Date;
"LIBOR LOAN" means, at any given time, the Loan or any portion thereof which the
Borrower has elected pursuant to Section 3.5, 3.9 or 5.1 to denominate in US
Dollars and on which the Borrower must pay interest in accordance with Section
4.1.3;
"LIEN" means any hypothec, security interest, mortgage, pledge, prior claim,
lien, claim, charge, cession, transfer, assignment or encumbrance of whatever
kind or nature that secures the payment of any Indebtedness or liability or the
observance or performance of any obligation, including any title retention
agreement, lessor's interest under a Capital Lease or analogous instrument in,
of, or on any property or the income or profits therefrom of a Person;
"LOANS" means at any given time, the aggregate of the Borrowings made available
by the Lenders to, or to the order of, the Borrower by way of Prime Rate Loans,
US Base Rate Loans, Libor Loans or Fixed Rate Loan;
"LOAN ACCOUNT" means the account or accounts established by each Lender pursuant
to Section 9.8;
"LOSSES" shall have the meaning set forth in Section 13.2;
"MARGIN" means, as applicable:
(a) in respect of the BNP Credit Facilities:
(i) for Prime Rate Loans and US Base Rate Loans: 1/2 of 1% per
annum,
(ii) for Libor Loans: 1 3/4% per annum,
(iii) for the calculation of the Acceptance Fee: 1 3/4% per annum, or
such other rate as may, at aNy time, be fixed by BNP upon 30
days' notice to the Borrower, and
(iv) for the calculation of the Letter of Credit fees payable in
respect of the standby Letter of Credit issued under the BNP
Acquisition Facility: 1-2/5% per annum,
PROVIDED that in the event that Borrowings outstanding under the BNP
Acquisition Facility exceed US$7,000,000 as at November 30, 1998, the
"Margins" set forth in subparagraphs (i), (ii), (iii) and (iv) of this
paragraph (a), insofar as they form part of the BNP Acquisition
Facility, will each automatically be increased by 1/4 of 1% per annum
-18-
as and from such date, and PROVIDED FURTHER that in the event that
Borrowings outstanding under the BNP Acquisition Facility exceed
US$7,000,000 as at May 31, 1999, the "Margins" set forth in
subparagraphs (i), (ii), (iii) and (iv) of this paragraph (a), insofar
as they form part of the BNP Acquisition Facility (as already increased
by 1/4 of 1% per annum), will each automatically be further increased
by another 1/4 of 1% per annum as and from such date;
(b) in respect of the Royal Capex Facility:
(i) for Prime Rate Loans and US Base Rate Loans: 1/4 of 1% per
annum,
(ii) for Libor Loans: 1 1/2% per annum, and
(iii) for the calculation of the Acceptance Fee: the Prime Acceptance
Fee then in effect,
increased by 1/2 of
1% per annum; and
(c) in respect of the Royal Credit Line Facility:
(i) for Prime Rate Loans: zero,
(ii) for US Base Rate Loans: 1/8 of 1% per annum,
(iii) for Libor Loans: 1-1/4% per annum, and
(iii) for the calculation of the Acceptance Fee: the Prime Acceptance
Fee then in effect,
increased by 1/4 of
1% per annum;
"MATERIAL ADVERSE CHANGE" means any event, development or circumstance which, in
the opinion of either of the Lenders, acting reasonably, has had or would
reasonably be expected to have:
(a) a material adverse effect on the Acquisition Transaction,
(b) a material adverse effect on the business, assets, property, operations,
condition (financial or otherwise) or prospects of any Credit Party, or
(c) an adverse effect on the validity or enforceability of any of the Credit
Documents or the rights and remedies of either of the Lenders under any
of the Credit Documents not attributable solely to the fault or neglect
of the Lenders;
"MATERIAL ADVERSE EFFECT" means, when used with reference to any event or
circumstance, an event or circumstance which, in the opinion of either of the
Lenders, acting reasonably, has had or would reasonably be expected to have:
-19-
(a) a material adverse effect on the Acquisition Transaction,
(b) a material adverse effect on the business, assets, property, operations,
condition (financial or otherwise) or prospects of any Credit Party, or
(c) a material adverse effect on the ability of any of the Credit Parties to
perform and discharge its obligations under any of the Credit Documents,
or
(d) an adverse effect on the validity or enforceability of any of the Credit
Documents or the rights and remedies of either of the Lenders under any
of the Credit Documents not attributable solely to the fault or neglect
of the Lenders;
"MATURITY DATE" means:
(a) with respect to the BNP Credit Facilities, other than the BNP FEF
Facility: February 19, 2000, or if such date is not a Business Day, the
immediately following Business Day, except for the Loans and/or Bankers'
Acceptances under the BNP Acquisition Facility which shall mature and be
owing on February 5, 2000, or if such date is not a Business Day, the
immediately following Business Day,
(b) with respect to the BNP FEF Facility: the earlier of (i) the date upon
which BNP shall, at its sole discretion, terminate the availability of
such Credit Facility and (ii) the relevant times set forth in the Credit
Documents relating to FEF Contracts with BNP,
(c) with respect to the Royal Acquisition Facility: February 19, 2000, or if
such date is not a Business Day, the immediately following Business Day,
unless the expiry of the standby Letter of Credit issued thereunder is
extended beyond such date, in which case the "Maturity Date" with
respect thereto shall be the date of such expiry,
(d) with respect to the Royal Capex Facility: February 19, 2000, or if such
date is not a Business Day, the immediately following Business Day, or
such later date falling one year later as may be agreed to by Royal
pursuant to Section 3.3.2;
(e) with respect to the Royal FEF Facility and the Royal Visa Facility: the
earlier of (i) the date upon which Royal shall, at its sole discretion,
terminate the availability of such Credit Facilities and (ii) the
relevant times set forth in the Credit Documents relating to the FEF
Contracts with Royal or to the Royal Visa Facility, as applicable, and
(f) with respect to the Royal Credit Line Facility: the date set forth in
any demand notice of Royal to the Borrower terminating the Royal Credit
Line Facility;
"MILLENNIUM COMPLIANT" means that the Computer Systems Software are capable of
the following functions before, during and after January 1, 2000:
-20-
(a) handling date information involving all and any dates before, during and
after January 1, 2000, including, accepting date input (either from an
internal or external source), providing date output and performing date
calculations in whole or in part and any date format (i.e., julian,
gregorian, international or any other format),
(b) operating accurately without interruption on and in respect of any and
all dates before, during and after January 1, 2000 and without any
change in performance,
(c) responding to and processing any digit year input (either from an
internal or external source) without creating any ambiguity as to the
century, and
(d) receiving, storing, providing and communicating date output information
without creating any ambiguity as to the century;
"MULTIEMPLOYER PLAN" means a multiemployer plan, as defined in Section
4001(a)(3) of ERISA, to which any Credit Party or any ERISA Affiliate is making
or accruing an obligation to make contributions, or has within any of the
preceding five plan years made or accrued an obligation to make contributions;
"MULTIPLE EMPLOYER PLAN" means a single employer plan, as defined in Section
4001(a)(15) of ERISA, that:
(a) is maintained for employees of any Credit Party or any ERISA Affiliate
and at least one Person other than such Credit Party or ERISA Affiliates
or
(b) was so maintained and in respect of which any Credit Party or ERISA
Affiliate could have liability under Section 4064 or 4069 of ERISA in
the event such plan has been or were to be terminated;
"NET WORTH" means the sum of the following, determined on a Consolidated basis
in accordance with GAAP:
(a) the amount of the issued and outstanding paid up share capital of the
Borrower, PLUS
(b) the amount of capital surplus and retained earnings (or, in the case of
a surplus or retained earnings deficit, MINUS the amount of such
deficit), and
(c) PLUS OR MINUS foreign exchange adjustments;
"NPL" means the National Priorities List under CERCLA;
"OBLIGATIONS" means all the liability, obligations and Indebtedness of the
Borrower at any time and from time to time existing or arising under or in
connection with this Agreement and the other Credit Documents;
-21-
"PBGC" means the Pension Benefit Guaranty Corporation of the United States (or
any successor thereto);
"PERMITTED LIENS" has the meaning given to it in SCHEDULE "C";
"PERSON" or "PERSONS" has the meaning set forth in Section 1.4;
"PHOENIX (USA)" means Phoenix International Life Sciences (U.S.) Inc., a
Subsidiary of the Borrower incorporated under the laws of the State of Delaware,
United States of America, having its head office at Cincinnati, Ohio, United
States of America;
"PHOENIX (USA) TERM FACILITY" means a non-revolving term credit facility of a
maximum amount of US$28,000,000 made available by BNP (Los Angeles) to Phoenix
(USA) for a term of two years to finance the acquisition by Phoenix (USA) of the
Capital Stock of IBRD, such credit facility to be substantially upon the terms
set forth in SCHEDULE "D", subject to the modifications to such terms as may be
agreed to by the Lenders;
"PLAN" means a Single Employer Plan or a Multiple Employer Plan;
"PREFERRED CLAIMS" means the aggregate amount of claims ranking prior to the
Lien of the Collateral Documents on Eligible Receivables such as, but not
limited to:
(a) the claims secured by any Lien granted or registered prior to the date
of execution or registration of the Collateral Documents;
(b) the claims of Her Majesty in Right of Canada which are due and payable
and which are not contested in good faith and by appropriate measures
before a court or governmental authority:
(i) for deductions at source of which the Borrower is liable
pursuant to the ITA,
(ii) for amounts of which a Credit Party is liable pursuant to Part
IX of the EXCISE TAX ACT (Canada) as modified by Chapter 45 of
the Statutes of Canada and as may be further modified from time
to time (tax on goods and services), and
(iii) for deductions, interests, penalties and other amounts payable
by a Person pursuant to Part III of the EMPLOYMENT INSURANCE ACT
(Canada);
(c) the claims of Her Majesty in right of a province of Canada which are due
and payable and which are not contested in good faith and by appropriate
measures before a court or governmental authority:
(i) pursuant to a fiscal law granting to the government of such
province or any department thereof a Lien (whether or not filed
or registered) in respect of Eligible Receivables of the
Borrower, and
-22-
(ii) for dues in respect of industrial accidents and occupational
diseases;
(d) the 30-day claims of an unpaid seller provided under Section 81.1 of the
BANKRUPTCY AND INSOLVENCY ACT (Canada), in respect of sold goods which
are identifiable;
(e) the claims of the lessor of leased premises in respect of rental which
is due but remains unpaid,
(f) the claims of employees with respect to salaries, earnings and other
remuneration; and
(g) the claims of any creditor in any foreign jurisdiction similar in effect
to the claims listed in subparagraph (a) to (f) of this definition;
"PRIME ACCEPTANCE FEE" means the annual rate announced by Royal from time to
time as its reference rate then in effect for determining fees on Canadian
Dollar bankers' acceptances accepted by Royal in Canada;
"PRIME RATE" in effect on any one day means the rate of interest per annum that
is the greater of (i) the interest rate per annum publicly announced on such day
by BNP in the case of amounts owing to BNP hereunder or by Royal in the case of
amounts owing to Royal hereunder, as being its reference rate then in effect for
determining interest rates on commercial loans in Canadian Dollars made in
Canada by BNP or Royal, as applicable, and (ii) the annual rate of interest
equal to the sum of the CDOR Rate PLUS 1% per annum, the whole as adjusted from
time to time without notice to the Borrower;
"PRIME RATE LOAN" means at any given time, the Loan or any portion thereof which
the Borrower has elected, pursuant to Section 3.5 or 3.9, to denominate in
Canadian Dollars and on which the Borrower must pay interest in accordance with
Section 4.1.1;
"PROPERTIES" shall have the meaning set forth in Section 2.1.22(a);
"PURCHASE MONEY OBLIGATIONS" means
(a) any Lien created, issued or assumed after the date of this Agreement to
secure Indebtedness not in excess of the value of the underlying
property assumed as a part of, or issued or incurred to provide funds to
pay, the purchase price of any real immovable or personal or movable
property, PROVIDED that such Lien is limited to the property so acquired
and is created, issued or assumed substantially concurrently with the
acquisition of such property; and
(b) any renewal, refunding or extension of any such Lien securing
Indebtedness in a principal amount not in excess of the unpaid principal
amount of the Indebtedness secured thereby immediately prior to such
renewal, refunding or extension;
-23-
"REAL PROPERTY" means the immovable property, real property and interests
described in SCHEDULE "E", and any immovable property or real property acquired
by any of the Credit Parties in the future;
"RESPONSIBLE OFFICER" means, with respect to any Person, the chief executive
officer, the president, a vice president, the secretary or the managing director
and, with respect to financial matters, the chief financial officer or treasurer
of such Person;
"ROYAL" means Royal Bank of Canada, a signatory to this Agreement, and its
successors and assigns;
"ROYAL'S ACCOUNT FOR PAYMENTS" means:
(a) for all payments in Canadian Dollars hereunder to Royal, the place or
account as to which Royal may notify the Borrower from time to time for
the payment of Canadian Dollars to Royal,
and
(b) for all payments in US Dollars hereunder to Royal, the place or account
as to which Royal may notify the Borrower from time to time for the
payment of US Dollars to Royal,
or such other place(s) or account(s) as may be agreed upon by Royal and the
Borrower from time to time;
"ROYAL ACQUISITION FACILITY" means the non-revolving term credit facility of up
to the Equivalent Amount in US Dollars of Cdn$20,000,000 which, subject to the
terms and conditions of this Agreement, Royal has, on the Formal Date, made
available to the Borrower until the Maturity Date to support the financing of
approximately 50% of the cost of the Acquisition Transaction, by way of a
standby Letter of Credit (in the form set forth in SCHEDULE "R") issued in
favour of BNP (Los Angeles) to cover a portion of the Phoenix (USA) Term
Facility, to the extent not cancelled, reduced or terminated pursuant to this
Agreement;
"ROYAL CAPEX FACILITY" means the revolving credit facility of up to
Cdn$15,000,000 or the Equivalent Amount in US Dollars which, subject to the
terms and conditions of this Agreement, Royal is hereby making available to the
Borrower until the Maturity Date by way of Prime Rate Loans, US Base Rate Loans,
Libor Loans or Bankers' Acceptances, or any combination thereof, to the extent
not cancelled, reduced or terminated pursuant to this Agreement;
"ROYAL CREDIT FACILITIES" means the Royal Acquisition Facility, the Royal Capex
Facility, the Royal FEF Facility, the Royal Credit Line Facility and the Royal
Visa Facility which Royal is hereby making available to the Borrower, and "ROYAL
CREDIT FACILITY" means any one of the Royal Credit Facilities, as applicable;
-24-
"ROYAL FEF FACILITY" means the credit facility of up to Cdn$4,000,000 which,
subject to the terms and conditions of this Agreement, Royal is hereby making
available to the Borrower until the Maturity Date by way of FEF Contracts Risk
Amount, to the extent not cancelled, reduced or terminated pursuant to this
Agreement;
"ROYAL CREDIT LINE FACILITY" means the demand revolving credit facility of up to
Cdn$10,000,000 or the Equivalent Amount in US Dollars which, subject to the
terms and conditions of this Agreement, Royal is hereby making available to the
Borrower, until terminated at Royal's sole discretion, by way of Prime Rate
Loans, US Base Rate Loans, Libor Loans, Bankers' Acceptances or (subject to a
sub-limit of Cdn$1,500,000 or the Equivalent Amount in other freely convertible
currencies acceptable to Royal) Letters of Credit, or any combination thereof,
to the extent not cancelled, reduced or terminated pursuant to this Agreement;
"ROYAL VISA FACILITY" means the credit facility of up to Cdn$100,000 which,
subject to the terms and conditions of this Agreement, Royal is hereby making
available to the Borrower by way of corporate expense cards account, to the
extent not cancelled, reduced or terminated pursuant to this Agreement or the
other Credit Documents relating thereto;
"SCHEDULES" means the schedules to this Agreement as the same may be amended,
modified, supplemented or restated from time to time;
"SHAREHOLDERS' EQUITY" in respect of the Borrower, means the shareholders'
equity of the Borrower determined in accordance with Canadian GAAP;
"SINGLE EMPLOYER PLAN" means a single employer plan, as defined in Section
4001(1)(15) of ERISA, that
(a) is maintained for employees of any Credit Party or ERISA Affiliate and
no Person other than a Credit Party and its ERISA Affiliates, or
(b) was so maintained and in respect of which any Credit Party or ERISA
Affiliate could have liability under Section 4069 of ERISA in the event
such plan has been or were to be terminated;
"SOLVENT" means, when used with respect to any Person, that
(a) the aggregate of such Person's property is, at a fair valuation,
sufficient, or, if disposed of at a fairly conducted sale under legal
process, would be sufficient, to enable payment of all such Person's
obligations, due and accruing due,
(b) such Person is able to meet its obligations as they generally become
due,
(c) such Person has not ceased paying its current obligations in the
ordinary course of business as they generally become due, and
-25-
(d) such Person does not intend to, and does not believe that it will, incur
debts or liabilities beyond its ability to pay as such debts and
liabilities mature,
(e) such person is not engaged, and is not about to engage, in business or a
transaction for which its property would constitute an unreasonably
small capital, and
(f) such Person is otherwise solvent under Applicable Law;
"SUBSIDIARY" means, with respect to any Person, any other Person (a) securities
of which having ordinary voting power to elect a majority of the board of the
directors (or other persons having similar functions) or (b) other ownership or
participating interests of which ordinarily constituting a majority voting
interest, are at the time, directly or indirectly, owned by such first Person,
or by one or more of its Subsidiaries, or by such Person and one or more of its
Subsidiaries; unless otherwise specified, any Person which is a Subsidiary of a
Subsidiary of another Person is deemed to be a "SUBSIDIARY" of such other
Person;
"SUBSIDIARY GUARANTEE" means a guarantee executed and delivered by a Subsidiary
of the Borrower, as required under this Agreement, substantially in the form of
SCHEDULE "F", as amended, restated, supplemented or otherwise modified from time
to time;
"TAX" includes all present and future taxes, levies, imposts, stamp taxes,
duties, charges to tax, fees, deductions and any restrictions or conditions
resulting in a charge to tax and all penalty, interest and other payments on or
in respect thereof, imposed, assessed, levied or collected by or under the laws
of any country or government, or any political subdivision or taxing authority
thereof, but does not include any tax on the overall income of a Lender;
"US BASE RATE" in effect on any one day, means the rate of interest per annum
that is the greater of (i) the interest rate per annum publicly announced on
such day by BNP in the case of amounts owing to BNP hereunder or by Royal in the
case of amounts owing to Royal hereunder as being its reference rate then in
effect for determining interest rates on commercial loans in US Dollars made in
Canada by BNP or Royal, as applicable and (ii) the annual rate of interest equal
to the sum of the Federal Funds Effective Rate then in effect PLUS 1% per annum,
the whole as adjusted from time to time without notice to the Borrower;
"US BASE RATE LOAN" or "US BASE RATE LOANS" means at any given time, the Loan,
or any portion thereof which the Borrower has elected, pursuant to Section 3.5
or 3.9 to denominate in US Dollars and on which the Borrower must pay interest
in accordance with Section 4.1.2;
"US DOLLARS", the symbol "US$", "UNITED STATES DOLLARS" or "LAWFUL MONEY OF THE
UNITED STATES" each means lawful money of the United States of America in same
day immediately available funds, or if such funds are not available, the form of
money of the United States of America that is customarily used in the settlement
of international banking transactions on the day any payment is due to be made
hereunder;
"WELFARE PLAN" means a welfare plan, as defined in Section 3(1) of ERISA;
-26-
"WHOLLY-OWNED SUBSIDIARY" means, with respect to any Person, any Subsidiary all
of the outstanding Capital Stock of which is owned by such Person either
directly or indirectly through other Wholly-Owned Subsidiaries;
"WITHDRAWAL LIABILITY" has the meaning specified in Part I of Subtitle E of
Title IV of ERISA.
SECTION 1.2 - HEADINGS AND TABLE OF CONTENTS
-----------------------------------------------------------
The headings of the Articles, Sections, Subsections or paragraphs herein and the
table of contents are inserted for convenience of reference only and shall not
affect the construction or interpretation of this Agreement.
SECTION 1.3 - REFERENCES
---------------------------------------
Unless the context otherwise requires or unless otherwise provided, all
references to Sections, Subsections, Articles and Schedules are to Sections,
Subsections, and Articles of and Schedules to, this Agreement. The words
"HERETO", "HEREIN", "HEREOF", "HEREUNDER" and similar expressions mean and refer
to this Agreement.
SECTION 1.4 - RULES OF INTERPRETATION
----------------------------------------------------
In this Agreement, unless the context otherwise requires or unless otherwise
provided, the singular includes the plural and vice versa, "MONTH" means a
calendar month and "PERSON" or "PERSON" includes any individual, firm, company,
corporation, government, governmental body or agency, instrumentality and
unincorporated body of persons, partnership, limited partnership, association,
trust or joint venture, and "IN WRITING" or "WRITTEN" includes printing,
typewriting or any electronic means of communication capable of being legibly
reproduced at the point of reception, including telecopier, telex or telegraph.
SECTION 1.5 - ACCOUNTING TERMS AND COMPUTATIONS
--------------------------------------------------------------
Each accounting term used in this Agreement has the meaning assigned to it under
GAAP unless otherwise defined herein and reference to any balance sheet item or
income statement item means such item as computed from the applicable statement
prepared in accordance with GAAP.
All financial statements required to be delivered hereunder shall be made and
prepared in accordance with GAAP consistently applied throughout the periods
involved.
SECTION 1.6 - TIME
---------------------------------
Except where otherwise indicated in this Agreement, any reference to a time
shall mean local time in the City of Montreal, Province of Quebec, Canada.
-27-
ARTICLE II
REPRESENTATIONS AND WARRANTIES
SECTION 2.1 - REPRESENTATIONS AND WARRANTIES OF THE BORROWER
---------------------------------------------------------------------------
The Borrower represents and warrants to each of the Lenders as follows:
2.1.1 CORPORATE EXISTENCE, COMPLIANCE WITH LAW AND CONSTATING DOCUMENTS: each
of the Credit Parties (i) is a corporation duly incorporated and
organized and is validly subsisting under the laws of its jurisdiction
of incorporation, (ii) has the requisite power and authority to own,
operate and lease its properties and assets and to conduct its business
as now, heretofore and proposed to be conducted, (iii) is duly qualified
and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of properties or assets or the conduct of
its business as now conducted requires such qualification except where
the failure to be so qualified would not have a Material Adverse Effect
and (iv) to the best of the knowledge and belief of the Borrower, is in
compliance with all Applicable Laws including, without limitation, all
Environmental Laws and with its constating documents and its by-laws
except to the extent that the failure to comply therewith would not have
a Material Adverse Effect;
2.1.2 GOVERNMENTAL APPROVALS: each of the Credit Parties has obtained all
Governmental Approvals which are necessary for the conduct of its
business as presently conducted, the failure to obtain which would have
a Material Adverse Effect, and each such Governmental Approval is in
full force and effect, is a good, valid and subsisting approval which
has not been surrendered, forfeited or become void or voidable, and
there are no proceedings in progress, and to the best of the knowledge
of any Responsible Officer of the Borrower, there are no proceedings
pending or threatened, which may result in the revocation, suspension or
modification of any such Governmental Approval which would have a
Material Adverse Effect;
2.1.3 CHIEF EXECUTIVE OFFICES, INVENTORY LOCATIONS: on the date hereof, the
locations of the chief executive offices, principal places of business,
and other material offices and places of business of each of the Credit
Parties are specified in SCHEDULE "G", and such offices and places of
business specified for each Credit Party are the sole offices and places
of business of such Credit Party. On the date hereof, none of the Credit
Parties keeps records regarding its accounts receivable or inventory at
any location other than the locations set forth in SCHEDULE "G" in
respect of such Credit Party;
2.1.4 CORPORATE POWER; AUTHORIZATION; NO VIOLATION; ENFORCEABLE OBLIGATIONS:
the execution, delivery and performance by each Credit Party of any
Credit Document
-28-
to be executed, delivered and performed by it and the creation of all
Liens provided for herein and therein: (i) are within the corporate
power of the Credit Party; (ii) have been duly authorized by all
necessary or proper corporate or other action; (iii) are not in
contravention of, and do not conflict with, violate or result in a
breach of any provision of the constating documents or by-laws of the
Credit Party or any Applicable Law; (iv) will not conflict with or
result in the breach or termination of, constitute a default under, or
accelerate any performance required by, any indenture, mortgage,
hypothec, deed of trust, lease, agreement or other instrument to which
the Credit Party is a party or by which the Credit Party or any of its
property is bound (or would be bound but for such default), where such
conflict, breach, termination, default or acceleration would have a
Material Adverse Effect; (v) will not result in the creation or
imposition of any Lien upon any of the property of any of the Credit
Parties other than those in favour of the Lenders and (vi) do not
require the consent or approval of any Governmental Body or any other
Person except to the extent that such consents and approvals have been
obtained; each of the Credit Documents to be delivered at such time
shall have been duly executed and delivered by each Credit Party which
is a party thereto, and shall constitute a legal, valid and binding
obligation of each Credit Party which is a party thereto enforceable
against each of them, in accordance with its terms, subject to
applicable bankruptcy, insolvency, moratorium laws or similar laws
affecting creditors' rights generally and to general principles of
equity;
2.1.5 APPROVALS REQUIRED: no material registration, publication, order,
permit, filing, consent, authorization, licence, decree or approval of,
from or with any Person, including any Governmental Body, or in any
public office or any other place, is necessary (i) in order to ensure
the legality, validity, binding effect and enforceability of any of the
Credit Documents, (ii) in order that the Credit Parties may grant to the
Lenders Liens in the Collateral pursuant to the Collateral Documents,
(iii) in order that each Lender may exercise any of its rights or
remedies under the Credit Documents or (iv) in order to ensure the
legality, validity, binding effect and enforceability of the Acquisition
Transaction, except, in each instance, to the extent that such
registration, publication, order, permit, filing, consent, licence,
decree or approval has been made or obtained and evidence thereof
satisfactory to each Lender has been delivered to the Lenders;
2.1.6 NO LITIGATION: except as disclosed in the relevant financial statements
of a Credit Party delivered to any of the Lenders or as set forth in
SCHEDULE "H", no action, litigation, arbitration, claim or proceeding is
now pending or, to the best of the knowledge of the Borrower, threatened
against any of the Credit Parties at law, in equity or otherwise, before
any Governmental Body, or before any arbitrator or panel or arbitrators
in any jurisdiction. None of such matters disclosed in such financial
statements or set forth in SCHEDULE "H", nor all of such matters taken
together, if determined adversely, has or could reasonably be expected
to have a Material Adverse Effect. None of the matters set forth therein
questions the
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validity of the Acquisition Transaction or the Credit Documents or any
action taken or to be taken pursuant thereto;
2.1.7 NO DEFAULT : none of the Credit Parties is in default, nor to the best
of the knowledge of the Borrower is any third party in default, under or
with respect to any contract, agreement, lease, license or other
instrument to which any of the Credit Parties is a party where such
default has or could reasonably be expected to have a Material Adverse
Effect. No Default or Event of Default has occurred and is continuing;
2.1.8 FINANCIAL STATEMENTS, NO MATERIAL ADVERSE CHANGE
(a) the audited Consolidated and the unaudited unconsolidated
financial statements of the Borrower and the unaudited
unconsolidated financial statements of the other Credit Parties,
which have been furnished to the Lenders on or before the date
hereof, have been prepared using accounting methods, procedures
and policies which are in accordance with GAAP applied on a
basis consistent with that of prior years and present fairly the
financial positions of each of the Credit Parties, on a
Consolidated basis or on an unconsolidated basis, as the case
may be, in each case as at the dates thereof, and the results of
operations and the statements of cash flows for the periods then
ended (as to any unaudited interim financial statements, subject
to normal year-end audit adjustments and the absence of
footnotes). Such statements include, without limitation:
(i) the audited Consolidated and the unaudited
unconsolidated financial statements of the Borrower and
the unaudited unconsolidated financial statements of
Phoenix (USA), for the two most recent fiscal years
ended before the date hereof with respect to which such
financial statements are available, and
(ii) the forecasted pro forma Consolidated balance sheet of
the Borrower as at February 28, 1998, adjusted to give
effect to the completion of the Acquisition Transaction
and the transactions contemplated by this Agreement,
(b) as of the date hereof, neither the Borrower and its Subsidiaries
on a Consolidated basis, nor any of the Credit Parties alone,
had any material obligations, contingent liabilities or
liabilities in the form of Taxes or any long-term leases or
unusual forward long-term commitments which would be required by
GAAP to be reflected in the balance sheet of such Credit Party
and which are not reflected in the latest financial statements
referred to in Section 2.1.8(a),
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(c) since the date of the financial statements referred to in
Section 2.1.8(a), there has been no Material Adverse Change;
2.1.9 LIABILITIES: as of the date hereof, none of the Credit Parties had any
debts, liabilities or obligations to any Person, whether direct or
indirect, absolute or contingent, matured or not, or other obligations
for the payment of money which, according to GAAP, are material to the
applicable Credit Party, and which are not disclosed in the audited
Consolidated balance sheet of such Credit Party referred to in Section
2.1.8(a) and the related audited Consolidated statements of net earnings
and cash flows and the notes thereto, other than the Phoenix (USA) Term
Facility and the IBRD Revolving Facility and other than under this
Agreement;
2.1.10 PRO FORMA BUDGET: the pro forma annual budget of the Borrower and its
Subsidiaries dated January 21, 1998 provided to the Lenders for the
period ending August 31, 1998 is based upon reasonable estimates and
assumptions, all of which are fair in light of current conditions, have
been prepared on the basis of the such implied assumptions and reflect
the reasonable estimate of the Borrower of the results of operations and
other information projected therein;
2.1.11 OWNERSHIP OF PROPERTY; LIENS
(a) each of the Credit Parties has good and marketable title to all
of the Real Property described on SCHEDULE "E" and identified in
such Schedule as being owned by such Credit Party, free and
clear of all Liens, except Permitted Liens. On the date hereof,
none of the Credit Parties owns any immovable property or real
property other than those described in SCHEDULE "E". Each of the
Credit Parties has received all deeds, assignments, waivers,
consents, non-disturbance and recognition or similar agreements,
bills of sale and other documents, and duly effected all
recordings, filings and other actions necessary to establish,
protect and perfect its right, title and interest in and to all
such property owned by it, except where the failure to receive
such documents or effect such recordings, filings or other
actions would not have a Material Adverse Effect,
(b) each Credit Party has good and marketable title to all of the
Collateral upon which a Lien is purported to be created by any
Collateral Document to which it is a party free and clear of all
Liens except Permitted Liens. None of the Credit Parties is
restricted or limited in any way from granting the Lien on any
of the Collateral purported to be granted and created by any of
the Collateral Documents to which it is a party. Except with
respect to such as may have been filed or registered in respect
of the Lien in favour of the Lenders under the Collateral
Documents or in respect of Permitted Liens, to the best of the
knowledge of the Borrower after due enquiry, no effective
financing statement, application for the registration
-31-
of a hypothec or other instrument similar in effect covering all
or part of the Collateral is on file in any filing or recording
office. To the best knowledge of the Borrower after due enquiry,
none of the Credit Parties has received notice from any party
asserting, claiming or exercising any right of deduction,
set-off, compensation or other right or claim with respect to
any material amount or portion of the Collateral,
(c) SCHEDULE "I" sets out, as of the date hereof, the nations and
the states and/or provinces in which all of each of the
Borrower's and Phoenix (USA)'s account debtors are located,
together with the aggregate amount of accounts receivable owing
by such account debtors in each relevant jurisdiction, in each
case where the aggregate amount of such accounts receivable in
such relevant jurisdiction exceeds Cdn$500,000 or the Equivalent
Amount thereof in any other currency;
2.1.12 INTELLECTUAL PROPERTY: each Credit Party owns all material Intellectual
Property necessary to conduct its business as now conducted by it. Each
material Intellectual Property owned by any of the Credit Parties is
listed, together with Canadian and all foreign Intellectual Property
application or registration numbers, where applicable, in SCHEDULE "J".
To the best of the knowledge of the Borrower, each Credit Party conducts
its business without material infringement or claim of material
infringement of any Intellectual Property of others. To the best of the
knowledge of the Borrower, there is no material infringement or claim of
material infringement by others of any Intellectual Property of any
Credit Party;
2.1.13 SUBSIDIARIES: on the date hereof, the Subsidiaries of each of the Credit
Parties, together with their respective jurisdictions of organization,
the authorized and issued and outstanding Capital Stock by class and
number of each such Subsidiary and of any partnership, joint venture,
corporation, association or other business organization of which any
Credit Party or any of its Subsidiaries owns, directly or indirectly,
any Capital Stock, or, in the case of any public corporation, 10% of the
Capital Stock, together with the number and class of such Capital Stock
beneficially owned by any Credit Party or any of its Subsidiaries are
set out in SCHEDULE "K". All such Capital Stock was issued in compliance
with all Applicable Laws and is owned beneficially and of record
(including all economic rights and benefits and voting rights with
respect thereto) by the Persons designated in such Schedule. Except as
set forth in such Schedule, none of the Credit Parties owns or controls,
directly or indirectly, any interest in any partnership, joint venture,
corporation, association or other business organization of any nature;
2.1.14 BURDENSOME RESTRICTIONS: no contract, lease, agreement or other
instrument to which any Credit Party is a party or is bound contains any
provision or restriction outside customary commercial practice which is
likely to have a Material Adverse Effect and no provision of Applicable
Laws has a Material Adverse Effect, or
-32-
insofar as the Borrower can reasonably foresee, will have a Material
Adverse Effect;
2.1.15 ADDITIONAL ADVERSE FACTS: no fact or circumstance is known to the
Borrower that, either alone or in conjunction with all other such facts
and circumstances, has had or could reasonably be expected to have a
Material Adverse Effect;
2.1.16 LABOUR MATTERS: on the date hereof, except as set out in SCHEDULE "L",
there are no strikes or other labour disputes against any Credit Party
pending or, to the best of the knowledge of the Borrower, apprehended.
All material amounts due from any Credit Party on account of employee
income taxes (including, without limitation, source deductions),
workers' compensation, unemployment insurance, health and welfare
insurance and other social security of every kind, and vacation pay have
been paid or accrued as a liability on the books of the applicable
Credit Party. There are no complaints or charges against any Credit
Party pending or, to the best of the knowledge of the Borrower,
threatened to be filed with any Governmental Body or arbitrator based
on, arising out of, in connection with, or otherwise relating to the
employment or termination of employment by any Credit Party which could
have a Material Adverse Effect;
2.1.17 TAXES: each of the Credit Parties has filed when due all Tax returns,
reports and statements required to be filed by it with the appropriate
Governmental Body. Each of the Credit Parties has paid when due all
Taxes due and payable and, in the case of Taxes not due or payable, has
made adequate provision for such Taxes in its books and records in
accordance with GAAP consistently applied; there are no unpaid
assessments or reassessments for any Taxes of any Credit Party in
respect of which adequate provision is not reflected in the financial
statements required to be delivered to the Lenders hereunder and there
are no outstanding disputes relating to Taxes of any Credit Party in
respect of which adequate provision is not reflected in the financial
statements required to be delivered to the Lenders hereunder. Each of
the Credit Parties has properly withheld or collected from its
employees, customers and any other applicable payees, and remitted to
the appropriate Governmental Body, all Taxes required to be withheld or
collected and remitted under any Applicable Laws;
2.1.18 CANADIAN BENEFIT AND PENSION PLANS: the Canadian Pension Plans are duly
registered under the provisions of the ITA and any other Applicable Laws
and no event has occurred which is reasonably likely to cause the loss
of such registered status. The Canadian Pension Plans and the Canadian
Benefits Plans have been administered in accordance with the ITA and all
other Applicable Laws. All material obligations of each Credit Party
(including fiduciary and funding obligations) required to be performed
in connection with the Canadian Pension Plans and the funding media
therefor have been performed. No promises of benefit improvements under
the Canadian Pension Plans or the Canadian Benefit Plans have been made
except where such improvement could not have a Material
-33-
Adverse Effect. There have been no improper withdrawals or applications
of the assets of the Canadian Pension Plans or the Canadian Benefit
Plans. Each of the Canadian Pension Plans and the Canadian Benefit Plans
is fully funded and there exist no going concern unfunded actuarial
liabilities or solvency deficiencies in respect of such plans;
2.1.19 ERISA:
(a) no ERISA Event has occurred or is reasonably expected to occur
with respect to any Plan,
(b) as of the last annual actuarial valuation date, if any, the
funded current liability percentage, as defined in Section
302(d)(8) of ERISA, of each Plan exceeds 90% and there has been
no material adverse change in the funding status of any such
Plan since such date,
(c) Schedule "B" (Actuarial Information) to the most recent annual
report (Form 5500 Series) for each Plan, if any, copies of which
have been filed with the Internal Revenue Service of the United
States, is complete and accurate and fairly presents the funding
status of such Plan, and since the date of such Schedule "B"
there has been no material adverse change in such funding
status,
(d) neither any Credit Party nor any ERISA Affiliate has incurred or
is reasonably expected to incur any Withdrawal Liability to any
Multiemployer Plan,
(e) neither any Credit Party nor any ERISA Affiliate has been
notified by the sponsor of a Multiemployer Plan that such
Multiemployer Plan is in reorganization or has been terminated,
within the meaning of Title IV of ERISA, and no such
Multiemployer Plan is reasonably expected to be in
reorganization or to be terminated, within the meaning of Title
IV of ERISA;
2.1.20 ACCURACY OF INFORMATION: all information concerning the Credit Parties,
provided by the Borrower to the Lenders in respect of the Credit
Parties, is true and accurate in all material respects and the said
information contains no material misstatement of fact nor does it omit a
material fact which is necessary to make such information not
misleading, and there is no fact which the Borrower has not disclosed in
writing to the Lenders which materially and adversely affects, or so far
as the Borrower can now reasonably foresee, will materially and
adversely affect the assets, liabilities, affairs, business, prospects,
operations or conditions, financial or otherwise, of any of the Credit
Parties or their respective ability to perform their obligations under
this Agreement or any document contemplated herein;
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2.1.21 NO OMISSIONS: neither the Borrower nor any of its Subsidiaries has
withheld from the Lenders any information relating to the financial
condition, business or prospects of the Borrower, or any of its
Subsidiaries which could reasonably be expected to be material to a
prospective lender contemplating a loan of the size and nature
contemplated in this Agreement;
2.1.22 ENVIRONMENTAL MATTERS: except as set forth in SCHEDULE "M" hereto and
except for issues the aggregate cost of remedying the same would not, in
the opinion of either of the Lenders, exceed Cdn$500,000, or the
Equivalent Amount in US Dollars:
(a) the use of any contaminant, waste material (hazardous or other)
or other substance on the properties owned or occupied by any of
the Credit Parties (herein referred to as the "PROPERTIES") and
the emission, transportation or disposal of such substances in
or onto the Properties into the environment or by or allowed by
any of the Credit Parties or by prior occupants of the
Properties has at all times been effected in compliance with all
applicable Environmental Laws,
(b) all required certificates, permits, authorizations and registers
have been obtained or maintained, as the case may be, in respect
of the operations of each of the Credit Parties, including,
without limitation, any permits, certificates and registers
required for air emissions, effluent discharges, release of
contaminants, production of hazardous materials, conduct of
hazardous activities and waste disposal,
(c) the operations and activities of each of the Credit Parties and
the use of the Properties by the Credit Parties, including the
construction and modification of any building or equipment on
the Properties have been effected in compliance with all
applicable Environmental Laws,
(d) no contaminant, waste material (hazardous or other) or other
substance has been released or spilled into the environment from
the Properties which has not been cleaned up in conformity with
all applicable Environmental Laws and to the satisfaction of the
appropriate authorities,
(e) proper procedures are used in respect of all Properties for the
handling and storage of PCB waste,
(f) procedures for spill prevention and containment as well as leak
detection testing have been or are presently being established
at all Properties,
(g) all underground storage tanks located on the Properties have
been installed and maintained in conformity with all government
standards and no
-35-
leakage has been detected from such tanks which has not been
remedied in accordance with all applicable Environmental Laws,
(h) there are no pending or, to the best knowledge of the Borrower,
threatened material Environmental Claims against any of the
Credit Parties,
(i) to the best of the Borrower's knowledge, the Properties incurred
no environmental damage or contamination prior to any of the
Credit Parties taking ownership or control of the Properties,
(j) no terms of any credit or financing arrangements between any of
the Credit Parties and any financial institution have been
altered or terminated as a result of considerations of
environmental risk linked to any of the Properties,
(k) there are no facts, circumstances, conditions or occurrences on
any Property that could reasonably be anticipated (i) to form
the basis of an Environmental Claim against any of the Credit
Parties, or any Properties or assets; or (ii) to cause such
Properties or assets to be subject to any restrictions on the
ownership, occupancy, use or transferability of such Properties
under any applicable Environmental Law, and
(l) none of the Properties is listed or proposed for listing on the
NPL or the CERCLIS or any analogous foreign, state or local list
or is adjacent to any such property;
2.1.23 COMPETITION AND ANTI-TRUST LAWS: each of the Credit Parties is in
compliance with all competition and anti-trust legislation insofar as
any of its acquisitions as of the date hereof (including, without
limitation, the Acquisition Transaction) may be concerned, and the
Borrower has no indication and no reason to believe that any such
acquisitions might be challengeable on any competition or anti-trust
grounds by Canadian or foreign governmental authorities;
2.1.24 INVESTMENT COMPANY ACT XX 0000 XX XXX XXXXXX XXXXXX: neither any Credit
Party nor any of its Subsidiaries is an "investment company", or an
"affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the INVESTMENT
COMPANY ACT of 1940 of the United States of America, as amended. Neither
the making of any Advances, nor the acceptance of any Bankers'
Acceptance, nor the issuance of any Letters of Credit, nor the
application of the proceeds or repayment thereof by the Borrower, nor
the consummation of the other transactions contemplated hereby, will
violate any provision of such Act or any rule, regulation or order of
the Securities and Exchange Commission thereunder.
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2.1.25 FULL DISCLOSURE: the information, exhibits, certificates, financial
statements and reports provided to the Lenders by any Credit Party under
any of the Credit Documents or filed with any Governmental Body in
connection with the Acquisition Transaction do not, to the best of the
knowledge of the Borrower, contain any untrue statement of a material
fact or omit to state a material fact which may be necessary to make the
statements contained herein and therein not misleading;
2.1.26 SOLVENCY: as of the date hereof, each Credit Party is individually and,
together with its Subsidiaries, Solvent and after giving effect to the
Acquisition Transaction and the payment of all estimated legal,
investment banking, accounting and other fees related hereto and
thereto, and after giving effect to the transactions contemplated by the
Credit Documents, on the date hereof and at all times thereafter, each
Credit Party and its Subsidiaries will be Solvent;
2.1.27 INSURANCE: each of the Credit Parties maintains or causes to be
maintained insurance in accordance with the requirements under Section
12.1.6 and all premiums and other sums of money payable for that purpose
have been paid;
2.1.28 MILLENNIUM COMPLIANCE: by June 30, 1999, the Borrower shall have used
all its best efforts to cause:
(a) the Computer Systems to be Millennium Compliant,
(b) the Computer Systems not to require any remedial work or
replacement to enable them (or any part of them) to continue
functioning accurately before, during and after January 1, 2000
in the manner set forth in the definition of "Millennium
Compliant", and
(c) the Computer Systems and each element of them to pass and
continue to pass date information between each other (and any
third parties' computer systems with which they habitually
communicate) in a way which does not, and will not, create
inaccuracies, errors or problems before, during and after
January 1, 2000;
2.1.29 SURVIVAL AND DEEMED REPETITION: the representations and warranties
contained in Section 2.1 as well as all representations and warranties
contained in any certificate or material delivered hereunder shall:
(a) survive the execution and delivery of this Agreement and shall
continue in effect until payment and performance of all debts,
liabilities and obligations under this Agreement and under all
other Credit Documents,
(b) be deemed to be repeated on each Drawdown Date, Conversion Date
and on each date of renewal of a Bankers' Acceptance or Libor
Loan hereunder
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as if made on and as of such date, unless made as of a date
specified in such representation and warranty, in which case
such representation and warranty shall be deemed to be repeated
as of such specified date, and
(c) will be deemed to have been relied upon by the Lenders
notwithstanding any investigation heretofore or hereafter made
by any of the Lenders or by their Counsel or any other
representatives of any of the Lenders.
ARTICLE III
THE CREDIT FACILITY
SECTION 3.1 - OBLIGATIONS OF THE LENDERS
-------------------------------------------------------
Relying on each of the representations and warranties set out in Article II and
subject to the terms and conditions herein contained, the Lenders individually
as separate obligors, and not as solidary obligors, agree to make their
respective Commitments available to the Borrower.
SECTION 3.2 - BNP CREDIT FACILITIES
--------------------------------------------------
Subject to the terms and conditions of this Agreement, BNP hereby establishes in
favour of the Borrower the BNP Credit Facilities which shall be available until
the applicable Maturity Date as follows:
3.2.1 BNP ACQUISITION FACILITY: the BNP Acquisition Facility, being a
non-revolving term credit in a maximum aggregate amount of US$14,000,000
or the Equivalent Amount in Canadian Dollars, has been made available by
BNP to the Borrower (a) by way of the issuance of a Letter of Credit in
the principal amount of US$11,440,000 (in the form set forth in SCHEDULE
"Q" and any renewal or extension thereof) in favour of BNP (Los Angeles)
guaranteeing a portion of the Phoenix (USA) Term Facility, (b) through a
single Advance in the principal amount of US$2,560,000 by way of Prime
Rate Loan, US Base Rate Loan, Libor Loan or Bankers' Acceptances, or (c)
by way of any combination of the foregoing; the Borrower agrees that the
amount of such Letter of Credit and Advance constitute Borrowings
hereunder which are subject to the terms and conditions of this
Agreement;
Should the Borrower elect to have a portion of the BNP Acquisition
Facility outstanding by way of Loan or Bankers' Acceptances, the
Borrower will have the option, which it may exercise only once by giving
a ten day prior notice thereof to BNP, to convert all such Loans and
Borrowings by way of Bankers' Acceptances into a Fixed Rate Loan
denominated in US Dollars, expiring on the applicable Maturity Date and
bearing such fixed rate of interest as shall have been offered by
-38-
BNP to the Borrower and accepted by the Borrower at least two Business
Days prior to the Conversion Date with respect thereto;
3.2.2 BNP REVOLVER BACK-UP FACILITY: the BNP Revolver Back-Up Facility, being
a credit in a maximum aggregate amount of US$7,000,000, is hereby made
available by BNP to the Borrower by way of a Letter of Credit (in the
form of a letter of guarantee) in favour of BNP (Los Angeles) in the
same amount as the IBRD Revolving Facility and guaranteeing the IBRD
Revolving Facility;
3.2.3 BNP FEF FACILITY: the BNP FEF Facility, allowing the entering into of
FEF Contracts between the Borrower and BNP, is hereby made available to
the Borrower (a) for a maximum aggregate amount of Cdn$10,000,000 of FEF
Contracts Risk Amount, PROVIDED that the aggregate spot --------
settlement amounts of all FEF Contracts to be entered into under the BNP
FEF Facility may at no time exceed Cdn$100,000,000 or the Equivalent
Amount in other currencies as well as (b) for a maximum aggregate amount
of Cdn$5,000,000 of delivery risk on the Borrower which BNP will accept
by agreeing to execute its obligation in respect of an FEF Contract
before receiving confirmation that the Borrower has delivered its
counterpart upon expiry of the FEF Contract.
SECTION 3.3 - ROYAL CREDIT FACILITIES
----------------------------------------------------
Subject to the terms and conditions of this Agreement, Royal hereby establishes
in favour of the Borrower the Royal Credit Facilities which shall be available
until the applicable Maturity Date as follows:
3.3.1 ROYAL ACQUISITION FACILITY: the Royal Acquisition Facility, being a
non-revolving term credit in a maximum aggregate amount of the
Equivalent Amount in US Dollars of Cdn$20,000,000, has been made
available by Royal to the Borrower by way of the issuance of a standby
Letter of Credit in the principal amount of US$14,000,000 in favour of
BNP (Los Angeles) (in the form set forth in SCHEDULE "R") guaranteeing a
portion of the Phoenix (USA) Term Facility;
3.3.2 ROYAL CAPEX FACILITY AND EXTENSION OF THE ROYAL CAPEX FACILITY: the
Royal Capex Facility, being a revolving term credit in a maximum
aggregate amount of Cdn$15,000,000 or the Equivalent Amount in US
Dollars, is hereby made available by Royal to the Borrower by way of
Prime Rate Loans, US Base Rate Loans, Libor Loans or Bankers'
Acceptances, or any combination thereof.
Provided no Default or Event of Default has occurred and is continuing
(without having been waived or cured as permitted herein), Royal, in its
sole discretion, may offer to extend the Maturity Date for the Royal
Capex Facility for an additional period of 12 months beginning on the
then current Maturity Date of the Royal Capex Facility, by giving
written notice thereof to the Borrower prior to the
-39-
initial Maturity Date, in which case the Borrower shall have ten days
following such notice to accept in writing such offer of extension;
3.3.3 ROYAL CREDIT LINE FACILITY: the Royal Credit Line Facility, being a
demand revolving credit in a maximum aggregate amount of Cdn$10,000,000
or the Equivalent Amount in US Dollars, has been made available by Royal
to the Borrower by way of Prime Rate Loans, US Base Rate Loans, Libor
Loans, Bankers' Acceptances or (subject to the sub-limit set forth in
Section 6.3) Letters of Credit, or any combination thereof, PROVIDED
that the aggregate amount of all Borrowings -------- outstanding under
the Royal Credit Line Facility may at no time exceed the Borrowing Base
as set forth in the most recent Borrowing Base Report delivered to Royal
pursuant to Section 12.1.8; the Borrower agrees that the amounts already
made available to the Borrower by Royal by way of Advances (as evidenced
by the accounts and records of Royal) constitute Borrowings hereunder
which are subject to the terms and conditions of this Agreement;
3.3.4 ROYAL FEF FACILITY: the Royal FEF Facility, allowing the entering into
of FEF Contracts between the Borrower and Royal, is hereby made
available to the Borrower for a maximum aggregate amount of
Cdn$4,000,000 of FEF Contracts Risk Amount, PROVIDED that the aggregate
amounts of all FEF Contracts to be entered into under the Royal FEF
Facility may at no time exceed Cdn$20,000,000 or the Equivalent Amount
in other currencies;
3.3.5 ROYAL VISA FACILITY: the Royal Visa Facility, providing for corporate
expense cards bearing the Visa xxxx to be issued by Royal to officers,
employees or other representatives of the Borrower in accordance with
Royal's standard practices for such service, is hereby made available to
the Borrower in a maximum aggregate amount of Cdn$100,000. The Borrower
shall execute all documentation and undertakings which may be required
by Royal in respect of the Royal Visa Facility and the issuance of
credit cards thereunder, and the Borrower shall comply with the
provisions of all such documents and undertakings and make, or cause the
making of, the payment of all amounts charged on the accounts for such
credit cards when due, irrespective of any dispute or irregularity in
respect of the use of any such cards. In the event of inconsistency
between the terms contained in the said documentation and undertakings
and the terms contained herein, the former shall prevail.
The indemnity provisions set forth in Section 13.2 shall apply in
respect of the Royal Visa Facility and the credit cards issued
thereunder.
SECTION 3.4 - PURPOSES OF THE CREDIT FACILITIES
--------------------------------------------------------------
3.4.1 BNP ACQUISITION FACILITY: the BNP Acquisition Facility shall have been
used exclusively to finance or support the financing of approximately
50% of the cost
-40-
of the Acquisition Transaction by guaranteeing the Phoenix (USA) Term
Facility in favour of BNP (Los Angeles) and by making a direct Advance
to the Borrower;
3.4.2 BNP REVOLVER BACK-UP FACILITY: the BNP Revolver Back-Up Facility shall
be used exclusively to guarantee the IBRD Revolving Facility in favour
of BNP (Los Angeles);
3.4.3 BNP FEF FACILITY: the BNP FEF Facility shall be used exclusively to
allow the Borrower to enter into FEF Contracts with BNP, subject to the
FEF Contracts Risk Amount in respect thereof never exceeding
Cdn$10,000,000;
3.4.4 ROYAL ACQUISITION FACILITY: the Royal Acquisition Facility shall have
been used exclusively to support the financing of approximately 50% of
the cost of the Acquisition Transaction by guaranteeing the Phoenix
(USA) Term Facility in favour of BNP (Los Angeles);
3.4.5 ROYAL CAPEX FACILITY: the Royal Capex Facility shall be used to finance
Capital Expenditures and for other general corporate purposes of the
Borrower;
3.4.6 ROYAL CREDIT LINE FACILITY: the Royal Credit Line Facility shall be used
to finance the Borrower's operations generally through the financing of
accounts receivable of the Borrower and income tax credits for
scientific research and development expense of the Borrower;
3.4.7 ROYAL FEF FACILITY: the Royal FEF Facility shall be used exclusively to
allow the Borrower to enter into FEF Contracts with Royal, subject to
the FEF Contracts Risk Amount in respect thereof never exceeding
Cdn$4,000,000;
3.4.8 ROYAL VISA FACILITY: the Royal Visa Facility shall be used exclusively
for the corporate expense cards program of the Borrower.
SECTION 3.5 - MANNER OF BORROWING
------------------------------------------------
The parties acknowledge that the BNP Acquisition Facility, the Royal Acquisition
Facility and a portion of the Royal Credit Line Facility have already been made
available or advanced to the Borrower on or after the Formal Date and constitute
outstanding Borrowings hereunder.
Subject to the provisions of this Agreement and provided no Default or Event of
Default has occurred and is continuing (without having been waived as provided
herein), the Borrower may from time to time request Borrowings (in addition to
the Borrowings already outstanding as acknowledged in the preceding paragraph of
this Section) from a Lender under a Credit Facility, up to the amount of its
Commitment with respect thereto, to the extent not cancelled, reduced or
terminated under this Agreement:
-41-
3.5.1 BY WAY OF OVERDRAFT: with respect to a Prime Rate Loan or a US Base Rate
Loan from Royal under the Royal Credit Line Facility, by creating an
overdraft in the Borrower's Account maintained with Royal, in which case
Royal will make an Advance into the said Borrower's Account in a minimum
amount of Cdn$25,000 or US$25,000, as the case may be, or any multiple
thereof so as to cover the overdraft;
3.5.2 PRIME RATE LOANS AND US BASE RATE LOANS: with respect to Borrowing by
way of a Prime Rate Loan or a US Base Rate Loan otherwise than by
overdraft under the Royal Credit Line Facility as contemplated in
Section 3.5.1 (which Borrowing must be in a minimum amount of Cdn$25,000
or US$25,000, as the case may be, or the undrawn amount of the
applicable Commitment), upon giving to BNP or Royal, as the case may be,
an irrevocable telephone notice at least by 10:30 a.m. on the Business
Day preceding the Drawdown Date or Conversion Date, as the case may be,
followed by a written confirmation on the same day addressed to BNP or
Royal, as the case may be, substantially in the form set forth in
SCHEDULE "N", or such other form as BNP or Royal, as applicable, may
approve;
3.5.3 LIBOR LOANS: with respect to a Libor Loan (which must be in a minimum
amount of US$1,000,000 or any multiple thereof), upon giving to BNP or
Royal, as the case may be, an irrevocable telephone notice at least by
10:30 a.m. on the Interest Determination Date applicable thereto,
followed by a written confirmation on the same day addressed to BNP or
Royal, as the case may be, substantially in the form set forth in
SCHEDULE "N", or such other form as BNP or Royal, as the case may be,
may approve;
3.5.4 BANKERS' ACCEPTANCES: with respect to a Borrowing by way of Bankers'
Acceptances (which must be in a minimum aggregate amount of Cdn$500,000
and in increments of Cdn$100,000), upon giving to Royal an irrevocable
telephone notice at least by 10:30 a.m. two Business Days prior to the
Drawdown Date, Conversion Date or date of renewal at maturity, as the
case may be, followed by a written confirmation on the same day
addressed to BNP or Royal, as the case may be, substantially in the form
set forth in SCHEDULE "N", or such other form as BNP or Royal, as the
case may be, may approve;
3.5.5 LETTERS OF CREDIT: with respect to a Borrowing by way of Letter of
Credit, upon giving to BNP or Royal, as the case may be, an irrevocable
written notice at least three Business Days prior to the anticipated
date of issuance of such Letter of Credit substantially in the form set
forth in SCHEDULE "O", or such other form as BNP or Royal, as the case
may be, may approve, such notice to be given after the making of
appropriate arrangements with BNP or Royal, as the case may be, for the
purpose of the Letter of Credit to be so issued as provided in Section
6.1;
3.5.6 FEF CONTRACTS: with respect to a Borrowing by way of FEF Contracts, by
making appropriate arrangements with a Lender as provided in Section
8.1; and
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3.5.7 CREDIT CARDS: with respect to Borrowings from Royal by way of the use of
credit cards issued by Royal under the credit cards expense account made
available under the Royal Visa Facility;
and, subject to the terms hereof, such Borrowings shall be made available to the
Borrower to the extent that BNP or Royal, as the case may be, shall have
determined that on the related Drawdown Date, Conversion Date or date of renewal
at maturity, as the case may be, its relevant Commitment remaining unadvanced
and uncancelled hereunder is then sufficient to allow for the requested
Borrowing; and for such purpose, the Equivalent Amount in Canadian Dollars or US
Dollars, as applicable, of all outstanding Borrowings shall be calculated at
each such time.
SECTION 3.6 - MANDATORY REPAYMENTS AND REDUCTIONS
----------------------------------------------------------------
3.6.1 REPAYMENT ON THE MATURITY DATE: subject to the other terms and
conditions of this Agreement, the Borrower covenants and agrees to fully
repay to each Lender all Borrowings outstanding with such Lender under
each Credit Facility on the Maturity Date applicable to such Credit
Facility (as may be extended as provided herein in the case of the Royal
Capex Facility), at which time all amounts of principal, interest, fees
and other amounts then outstanding in respect of the said Credit
Facility shall be due and payable by the Borrower to the relevant
Lender, without penalty other than the indemnities contemplated by
Section 13.2;
3.6.2 AUTOMATIC REDUCTION OF THE BNP ACQUISITION FACILITY AND THE ROYAL
ACQUISITION FACILITY: the BNP Acquisition Facility and the Royal
Acquisition Facility, as well as each Lender's Commitment in respect
thereof, shall automatically reduce, without penalty (except as provided
in the Phoenix (USA) Term Facility), without any action required on the
part of either Lender, concurrently with the scheduled reduction of the
Phoenix (USA) Term Facility;
3.6.3 PROCEEDS FROM SALE OF ASSETS: the Borrower covenants and agrees (a) that
the net proceeds in excess of Cdn$500,000, or the Equivalent Amount in
other currencies, from any sale (either through a single transaction or
a series of related transactions) of assets owned by the Borrower and
conducted outside the normal course of business of the Borrower, shall
be used by the Borrower to permanently repay and reduce or retire
Borrowings under the RBC Capex Facility and to permanently reduce and
cancel the Commitment in respect thereof in a like amount and (b) that
the net proceeds in excess of US$50,000 from any sale (either through a
single transaction or a series of related transactions) of assets owned
by Phoenix (USA) or IBRD and conducted outside the normal course of
business of the said entities, shall be used to permanently repay and
reduce or retire borrowings under the Phoenix (USA) Term Facility, with
a concurrent pro-rata reduction of the Letters of Credit respectively
issued under the BNP Acquisition Facility and the Royal Acquisition
Facility, the whole without penalty other than
-43-
the indemnities contemplated by Section 13.2 and as provided in the
Phoenix (USA) Term Facility; and
3.6.4 PROCEEDS FROM SALE OR ISSUANCE OF CAPITAL STOCK OR DEBT: the Borrower
covenants and agrees that the net proceeds from any public or private
issuance by the Borrower, Phoenix (USA) or IBRD of Capital Stock or of
debt or debt instruments shall first be used to permanently repay and
reduce or retire borrowings under the Phoenix (USA) Term Facility with a
concurrent pro-rata reduction of the Letters of Credit respectively
issued under the BNP Acquisition Facility and the Royal Acquisition
Facility, the whole without penalty other than the indemnities
contemplated by Section 13.2 and as provided in the Phoenix (USA) Term
Facility.
SECTION 3.7 - VOLUNTARY PAYMENTS
-----------------------------------------------
The Borrower may, without penalty (other than pursuant to the following
provisions of this Section and Section 13.2), repay or otherwise retire the
Borrowings outstanding hereunder in whole or in part from time to time, in
minimum amounts similar to the minimum amounts, if any, set forth for Borrowings
under Section 3.5 or any whole multiple thereof or the remaining balance due in
respect of the relevant Credit Facility, with accrued interest and fees
applicable thereto, by making repayment of the Royal Credit Line Facility
through deposits of funds in the Borrower's account or upon giving an
irrevocable telephone notice to BNP or Royal, as the case may be, followed by
written confirmation on the same day substantially in the form set forth in
SCHEDULE "P", or such other form as BNP or Royal, as the case may be, may
approve, within notice periods preceding the anticipated repayment similar to
the notice periods required for the relevant form of Borrowing by Section 3.5.
Any amount prepaid by the Borrower (whether through a payment or through a
reduction of the face amount of the relevant Letter of Credit) under the BNP
Acquisition Facility or the Royal Acquisition Facility may not be re-borrowed
under this Agreement and shall constitute a permanent reduction of the
Commitment in respect of such Credit Facility.
Notwithstanding the foregoing, a Borrowing outstanding:
(a) by way of Libor Loans may not be so repaid or prepaid prior to the last
day of the applicable Libor Interest Period, unless the repayment or
prepayment is accompanied by the payment to the relevant Lender of the
indemnity to be paid under Section 13.2 hereof in connection with the
amount being repaid;
(b) by way of Letters of Credit may only be repaid or retired prior to the
expiry date thereof by (i) the relevant Lender being fully released and
discharged of all its liabilities and obligations arising from such
Letters of Credit and by written evidence satisfactory to such Lender of
such release and discharge being delivered to it, or (ii) by way of the
issue to the relevant Lender by a bank acceptable to such Lender of a
full unconditional counter-guarantee or indemnity in favour of such
Lender acceptable to it in respect of such Letters of Credit;
-44-
(c) by way of Bankers' Acceptances may not be so repaid or prepaid save for
a repayment on the Maturity Date of the relevant Bankers' Acceptances;
(d) by way of FEF Contracts may not be so repaid or prepaid save for a
payment on the expiry of the related FEF Contracts or by paying the
indemnities set forth in Section 13.2 hereof;
(e) by way of a Fixed Rate Loan with BNP may not be prepaid prior to the
expiry thereof, unless the prepayment is accompanied by (i) the payment
to BNP of a prepayment premium of Cdn$100,000, except if such prepayment
is made with the proceeds of a public offering or a private placement or
with internally generated funds and (ii) the payment to BNP of the
indemnity, if any, to be paid under Section 13.2 hereof in connection
with the amount being prepaid.
SECTION 3.8 - CANCELLATION
-----------------------------------------
The Borrower may at any time, upon giving not less than three Business Days
prior written notice thereof to Royal, cancel and reduce any portion of the
Commitment in respect of the Royal Capex Facility, in minimum amounts of
Cdn$1,000,000 or multiples thereof (or the Equivalent Amount thereof in US
Dollars or any combination of Canadian Dollars and US Dollars), or the remaining
balance of the Commitment in respect of the Royal Capex Facility. Such notice of
cancellation with respect to any drawn portion of the Royal Capex Facility shall
be without effect unless on or before the last day of such notice period (i)
such drawn portion shall have been repaid or otherwise retired in accordance
herewith, (ii) the accrued interest on such drawn portion shall have been paid
and (iii) any other fees and charges in connection therewith shall have been
paid. Any amount so reduced and cancelled may not be reinstated hereunder and
any such cancellation and reduction is irrevocable and shall permanently reduce
the Commitment of Royal in respect of the Royal Capex Facility in the amount of
such cancellation and reduction.
SECTION 3.9 - CONVERSION OPTION
----------------------------------------------
The Borrower may, during the term of this Agreement, upon giving to BNP or
Royal, as applicable, prior irrevocable telephone notice within notice periods
similar to those provided in Section 3.5, followed by written confirmation on
the same day substantially in the form and substance set out in SCHEDULE "N",
effective on any Business Day, convert, in whole or in part, any form of
Borrowing outstanding under a BNP Credit Facility or a Royal Credit Facility
into any other form of Borrowing available under the relevant Credit Facility,
provided that:
(a) no Default or Event of Default has occurred and is continuing;
(b) a Libor Loan may be converted, in whole or in part, only on the last day
of the relevant Libor Interest Period, and provided that if less than
all such Libor Loan is converted, then after such conversion not less
than US$1,000,000 (and multiples thereof) shall remain as a Libor Loan;
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(c) a conversion into a Borrowing by way of Libor Loans shall only be made
to the extent that the conditions outlined in Section 3.11, 5.2 or 5.3
shall not exist on the relevant Conversion Date;
(d) a Borrowing by way of Bankers' Acceptances may be converted, in whole or
in part, only on the relevant maturity date of such Bankers' Acceptances
and provided that if less than all Borrowings by way of Bankers'
Acceptances are converted, then after such conversion not less than
Cdn$500,000 (and multiples of Cdn$100,000 in excess thereof) shall
remain as Borrowings by way of Bankers' Acceptances;
(e) a conversion into a Borrowing by way of Bankers' Acceptances shall only
be made to the extent that the conditions outlined in Section 3.11 or
7.2.7 shall not exist on the relevant Conversion Date;
(f) a Borrowing by way of Letter of Credit may be converted, in whole or in
part, only on the relevant expiry date of such Letter of Credit; and
(g) on the Conversion Date, the amount of the outstanding Borrowings (after
any such conversion) would not exceed the relevant Commitment at that
time;
AND PROVIDED FURTHER that if, pursuant to the foregoing provisions of this
Section 3.9, a Borrowing denominated in Canadian Dollars is to be converted into
a Borrowing denominated in US Dollars, or VICE VERSA, the calculation of the
converted amount shall be made by using the Equivalent Amount of the amount to
be converted as then determined, and such Borrowing shall thereupon be repaid or
retired in the original outstanding currency and forthwith re-advanced or
reinstated without novation in the other currency selected by the Borrower, be
equal to such Equivalent Amount and be repayable in such other currency with
interest accruing thereon on the basis of the Borrowing selected by the
Borrower.
The conversion of any Borrowing as provided above shall not be deemed to
constitute a repayment of any Borrowing hereunder or a new Advance of funds
hereunder.
With respect to all matters referred to in this Section, the determination by a
Lender shall be final and conclusive, save in the case of manifest error.
SECTION 3.10 - DEPOSIT OF PROCEEDS OF LOANS AND DISCOUNTED PROCEEDS
--------------------------------------------------------------------------------
Until such time as a Lender is otherwise directed by the Borrower in writing,
such Lender shall deposit to the Borrower's Account on the applicable Drawdown
Date the proceeds of each Borrowing by way of Loans made on such Drawdown Date
and the Discounted Proceeds in respect of each Bankers' Acceptance accepted and
purchased by such Lender on such Drawdown Date.
SECTION 3.11 - CURRENCY ADJUSTMENT
-----------------------------------------------
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If, on any day during the term of this Agreement, a Lender determines that as a
result of a change in the exchange rate of the currency against another currency
or for any other reason, the Borrowings under a Credit Facility would exceed the
Commitment in respect of such Credit Facility (or such applicable lesser amount
if a portion thereof has been cancelled, reduced or terminated pursuant to the
terms of this Agreement), as determined by the relevant Lender on such day, the
Borrower shall forthwith, upon demand by the said Lender, repay and retire the
Borrowings under the relevant Credit Facility to the extent of the amount of
such excess (subject to the provisions of Section 13.2).
SECTION 3.12 - RELIANCE ON ORAL INSTRUCTIONS
----------------------------------------------------------
Each Lender shall be entitled to act upon the oral instructions of any Person
who such Lender believes is a person the Borrower has identified in writing from
time to time to such Lender as being a Person authorized by the Borrower to give
instructions regarding the completion and issuance of Letters of Credit,
Bankers' Acceptances or FEF Contracts or credit cards and the drawdown or
conversion of Borrowings and no Lender shall be responsible for any error or
omission in such instructions or in the performance thereof except in the case
of gross negligence or wilful misconduct by that Lender or its employees. Any
such oral instructions so given shall be immediately confirmed in writing by the
Borrower to the applicable Lender. The Borrower may revoke the authority of such
Persons so authorized by notifying the relevant Lender, in writing, which notice
shall be effective on the Business Day immediately following the date of its
actual receipt by such Lender. Any instructions given to any Lender before the
day such notice becomes effective shall remain effective for the purpose of this
Agreement.
SECTION 3.13 - REQUEST FROM TAXING AUTHORITY
----------------------------------------------------------
If, in respect of the Borrower, any Lender receives a request to pay specified
amounts to the Receiver General of Canada or other applicable federal or
provincial taxing authority by virtue of Section 224(1.1) of the ITA or any
analogous provision of any other provincial or federal taxing statute then, so
long as such request may require such Lender to make payments to the Receiver
General of Canada or other applicable federal or provincial taxing authority,
such Lender may, but shall not be obligated to, make further Advances under this
Agreement and shall have the right to comply with such request(s).
ARTICLE IV
PAYMENT OF INTEREST AND FEES
SECTION 4.1 - PAYMENT OF INTEREST
------------------------------------------------
The Borrower covenants and agrees to pay to the relevant Lender at or before
11:00 a.m. on each relevant day hereafter set forth, interest on Loans
outstanding from time to time from the date of
-47-
the respective Advances and conversions to the date of payment in full at the
rates per annum (subject to the provisions of Section 4.2) determined as
follows:
4.1.1 INTEREST ON PRIME RATE LOANS: the Borrower shall pay to the relevant
Lender on each outstanding Prime Rate Loan of such Lender, as evidenced
by the Loan Account, interest in Canadian Dollars for value on each
Interest Date at a rate per annum equal to the Prime Rate PLUS the
applicable Margin. Each change in the fluctuating interest rate for a
Prime Rate Loan will take place concurrently with the corresponding
change in the Prime Rate. Such interest shall accrue from day to day,
shall be payable monthly in arrears on each Interest Payment Date and
shall be calculated on the daily outstanding balance of such Prime Rate
Loan on the basis of the actual number of days elapsed (including the
first day but excluding the last day of any period of time during which
a Prime Rate Loan is outstanding) in a year of 365 days;
4.1.2 INTEREST ON US BASE RATE LOANS: the Borrower shall pay to the relevant
Lender on each outstanding US Base Rate Loan of such Lender, as
evidenced by the Loan Account, interest in US Dollars for value on each
Interest Date at a rate per annum equal to the US Base Rate PLUS the
applicable Margin. Each change in the fluctuating interest rate for a US
Base Rate Loan will take place concurrently with the corresponding
change in the US Base Rate. Such interest shall accrue from day to day,
shall be payable monthly in arrears on each Interest Payment Date and
shall be calculated on the daily outstanding balance of such US Base
Rate Loan on the basis of the actual number of days elapsed (including
the first day but excluding the last day of any period of time during
which a US Base Rate Loan is outstanding) in a year of 365 days;
4.1.3 INTEREST ON LIBOR LOANS: the Borrower shall pay to the relevant Lender
on each outstanding Libor Loan of such Lender interest in US Dollars for
value on each relative Libor Interest Date of each Libor Interest Period
applicable to such Libor Loan, as evidenced by the Loan Account, at a
rate per annum equal to Libor PLUS the applicable Margin. Such interest
shall accrue from day to day, shall be payable in arrears on each Libor
Interest Date and shall be calculated on the daily outstanding balance
of such Libor Loan on the basis of the actual number of days elapsed
(including the first day of each Libor Interest Period but excluding the
last day thereof) divided by 360 days; and
4.1.4 INTEREST ON FIXED RATE LOAN: the Borrower shall pay to BNP on the Fixed
Rate Loan, if any, established pursuant to the second paragraph of
Section 3.2.1, as evidenced by the Loan Account, interest in US Dollars
for value on each Interest Date at a rate per annum equal to the
applicable rate offered by BNP and accepted by the Borrower pursuant to
the said provisions of Section 3.2.1. Such interest shall accrue from
day to day, shall be payable in arrears on each Interest Payment Date
and shall be calculated on the daily outstanding balance of such Fixed
Rate Loan on the basis of the actual number of days elapsed (including
the first day of
-48-
the period thereof but excluding the last thereof) divided by 360 or 365
days as agreed to at the time of the establishment of the Fixed Rate
Loan.
For purposes of disclosure under the INTEREST ACT (Canada), the yearly rates of
interest to which the rates determined in accordance with the foregoing
provisions of Section 4.1 are equivalent, are the rates so determined multiplied
by the actual number of days in the year and divided by 365 when calculating
interest on a Prime Rate Loan, a US Base Rate Loan or (if the interest
applicable thereto has been agreed to be calculated on 365 days at the time of
the establishment thereof) on the Fixed Rate Loan, or by 360 when calculating
interest on a Libor Loan or (if the interest applicable thereto has been agreed
to be calculated on 360 days at the time of the establishment thereof) on the
Fixed Rate Loan.
Each determination by a Lender of the applicable rate of interest in respect of
a Borrowing pursuant to this Section 4.1 shall, in the absence of manifest
error, be final, conclusive and binding on the Borrower.
SECTION 4.2 - DEFAULT INTEREST
---------------------------------------------
Subject to the following provisions of this Section 4.2, upon a default by the
Borrower in the payment of any sum hereunder when due (whether of principal,
interest, fees, expenses or other amounts), the Borrower covenants and agrees to
pay interest on such sum to the Lender or Lenders to which the said sum is
owing, calculated at a rate per annum equal to:
(a) the Prime Rate PLUS the Margin applicable to Prime Rate Loans, if such
sum is owed in Canadian Dollars or currencies other than US Dollars, and
(b) the US Base Rate PLUS the Margin applicable to US Base Rate Loans, if
such sum is owed in US Dollars,
increased in each case, to the extent permitted by law, by 2% per annum from the
date of such default so long as such default shall continue, before and after
demand and judgment, such interest to be compounded monthly on each Interest
Date and to be payable on demand. Such interest shall accrue from day to day on
the basis of the actual number of days elapsed divided by 365.
Notwithstanding the foregoing, upon a default by the Borrower in the payment of
any Acceptance Fee when payable hereunder, the Borrower covenants and agrees to
pay interest on the unpaid amount of such Acceptance Fee to the relevant Lender,
calculated at the rate of 15% per annum, based on a year of 365 days, from the
date of such default so long as such default shall continue, before and after
demand and judgment, such interest to be compounded monthly on each Interest
Date and to be payable on demand.
For purposes of disclosure under the INTEREST ACT (Canada), the yearly rate of
interest to which each of the rates set forth in this Section 4.2 is equivalent
is the rate so determined multiplied by the actual number of days in the year
and divided by 365.
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SECTION 4.3 - NOMINAL RATES OF INTEREST
------------------------------------------------------
The parties acknowledge that the rates of interest specified in this Agreement
are nominal rates and that all interest payments and computations are to be made
without allowance or deduction for deemed reinvestment.
SECTION 4.4 - STANDBY FEE IN RESPECT OF THE ROYAL CAPEX FACILITY
-------------------------------------------------------------------------------
As and by way of a standby fee, the Borrower covenants and agrees to pay to
Royal monthly in arrears on each Interest Payment Date from the date of
execution of this Agreement, an amount in Canadian Dollars equal to 3/8 of 1%
per annum of that portion of the Royal Capex Facility in excess of Cdn$5,000,000
from time to time remaining undrawn pursuant to Section 3.5 and uncancelled
pursuant to Section 3.8, computed daily (on the basis of a year of 365 days)
from and including the date of execution of this Agreement (or from and
including the Interest Date of the relevant month, as the case may be), up to
and excluding the next Interest Date. For purposes of calculating the standby
fees payable to Royal pursuant to this Section 4.4, the Loans outstanding under
the Royal Capex Facility in currencies other than Canadian Dollars on each day
will be deemed to be outstanding in the Equivalent Amount thereof in Canadian
Dollars as in effect on the relevant Interest Date.
SECTION 4.5 - ACCEPTANCE FEE
-------------------------------------------
Upon acceptance of a Bankers' Acceptance by a Lender hereunder, the Borrower
shall pay to the said Lender the applicable Acceptance Fee as set forth in
Section 7.2.6.
SECTION 4.6 - LETTERS OF CREDIT FEES
---------------------------------------------------
The Borrower shall, prior to the issue of any Letter of Credit at its request
under this Agreement and upon the acceptance of any draft thereunder and the
making of any payments thereunder and upon the making of amendments in respect
thereof, pay to the Lender issuing or having issued such Letter of Credit,
letter of credit fees, letter of guarantee fees, acceptance fees, drawing fees,
amendment fees and other fees, as the case may be, as may be established by the
relevant Lender on the appropriate date or at such other rates as may be
negotiated from time to time by the Borrower and the said Lender. The issuance
fees shall be based upon the face amount of the Letter of Credit issued and
calculated on the number of days that the Letter of Credit is to be outstanding
on the basis of 365 days.
Notwithstanding the preceding paragraph:
(a) the Borrower shall pay to BNP, a non-refundable fee with respect to the
Letter of Credit issued under the BNP Acquisition Facility at a rate per
annum equal to the applicable Margin, for the entire term of such Letter
of Credit, which fee shall be payable quarterly in advance on the date
of issuance of such Letter of Credit and thereafter, on the basis of the
then outstanding face amount of such Letter of Credit, on the same date
of each of the
-50-
months of May, August, November and February of each year until
termination of such Letter of Credit;
(b) the Borrower shall pay in advance to Royal the following non-refundable
fees with respect to the Letter of Credit issued under the Royal
Acquisition Facility, namely:
(i) upon issuance of such Letter of Credit, an amount equal to 1
2/5% per annum of the face amount of such Letter of Credit for
the entire period of the Royal Acquisition Facility from the
date of issuance of the said Letter of Credit to and including
the stated date of expiry of such Letter of Credit,
(ii) on November 30, 1998 (if the said Letter of Credit still remains
outstanding), an amount equal to 1/4 of 1% per annum of the then
outstanding face amount of the said Letter of Credit for the
period from and including November 30, 1998 to and including the
Maturity Date of the Royal Acquisition Facility, and
(iii) on May 31, 1999 (if the said Letter of Credit still remains
outstanding) an amount equal to 1/4 of 1% per annum of the then
outstanding face amount of the said Letter of Credit for the
period from and including May 31, 1999 to and including the
stated date of expiry of such Letter of Credit.
SECTION 4.7 - SET UP FEES AND ANNUAL REVIEW FEES
---------------------------------------------------------------
As and by way of set up fees, the Borrower shall have paid to each of the
Lenders, prior to the execution of this Agreement, the non-refundable set up
fees respectively agreed to between the Borrower and each Lender in their
separate offers or confirmations of financing to the Borrower dated January 30,
1998, in the case of BNP, and dated February 3, 1998, in the case of Royal.
In addition, the Borrower undertakes to pay to Royal, as and by way of annual
review fees, at the latest on the fifth day following annual written
confirmation by Royal to the Borrower of the Royal Credit Facilities (and of any
amendments thereto) the amount agreed to between the Borrower and Royal in
Royal's confirmation of financing to the Borrower dated February 3, 1998.
ARTICLE V
CONDITIONS APPLICABLE TO LIBOR LOANS
SECTION 5.1 - SELECTION OF LIBOR INTEREST PERIODS
----------------------------------------------------------------
All Libor Loans shall be drawn down in the minimum amounts set forth in Section
3.5 and shall be for a Libor Interest Period, subject to availability to each
Lender, respectively.
-51-
If the Borrower has chosen a Borrowing by way of a Libor Loan pursuant to
Section 3.5 or has made a conversion into a Libor Loan pursuant to Section 3.9,
the Borrower shall, prior to the expiry of the then current relevant Libor
Interest Period, select and irrevocably notify the applicable Lender of the next
Libor Interest Period to apply without novation (subject to availability to such
Lender) to such Libor Loan or of the intention of the Borrower to repay or
convert such Libor Loan at the end of the relative Libor Interest Period, such
notice to be given by telephone within notice periods similar to those provided
in Section 3.5, followed by written confirmation on the same day substantially
in form and substance as set out in SCHEDULE "N".
If the Borrower shall choose a new Libor Interest Period for an outstanding
Libor Loan, and thus to renew such Borrowing without novation in the same form
of Loan, the new Libor Interest Period shall commence on and include the last
day of the relative Libor Interest Period during which such choice is made. If
the Borrower fails to so notify the relevant Lender as provided in this Section,
the Borrower shall be deemed to have notified such Lender of its intention to
convert without novation the relevant Libor Loan into a US Base Rate Loan.
SECTION 5.2 - ALTERNATE BASIS OF BORROWING
---------------------------------------------------------
If at any time during the term of this Agreement, a Lender determines in good
faith (which determination shall be final, conclusive and binding upon the
Borrower) that:
(a) adequate and fair means do not exist for ascertaining the rate of
interest with respect to a Libor Loan to be made by it;
(b) the cost to such Lender of making, funding or maintaining its Libor Loan
does not accurately reflect the effective cost thereof;
(c) the making or continuing of Libor Loans by such Lender has been made
impracticable by the occurrence of any event which materially and
adversely affects the London interbank eurodollar market; or
(d) deposits in US Dollars are not available to such Lender in the London
interbank eurodollar market in sufficient amounts in the ordinary course
of business for the applicable Libor Interest Period to make, fund or
maintain a Libor Loan during such Libor Interest Period,
then, the Lender affected by such event or circumstance (the "AFFECTED LENDER"),
shall notify the Borrower of such determination in writing with an indication of
the Borrowing affected by such determination (the "AFFECTED BORROWINGS"). For so
long as the circumstances referred to in Section 5.2(a), (b), (c) or (d) shall
continue and until notice to the contrary is given to the Borrower by the
Affected Lender, the Affected Lender shall not be obligated to make any further
Affected Borrowings available under the Credit Facilities. The principal amount
of all outstanding Affected Borrowings granted by the Affected Lender shall, at
the expiry of the related Libor Interest Period, be converted without novation
into such other form of available Borrowings as the Borrower may request by
notice to the Affected Lender or failing such notice
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by the Borrower, into US Base Rate Loans, and thereafter such Affected Lender
shall only be obligated to extend Affected Borrowings in such other forms of
Borrowings or US Base Rate Loans, as the case may be.
SECTION 5.3 - ILLEGALITY RELATIVE TO LIBOR LOANS
---------------------------------------------------------------
If the adoption of any Applicable Law, or any change therein or in the
interpretation or application thereof by any court or by any governmental or
other authority or central bank or comparable agency or any other entity charged
with the interpretation or administration thereof or compliance by any Lender
with any request or direction (whether or not having the force of law but if
not, compliance with which is generalized and standard in the banking industry)
of any such authority, central bank or comparable agency or entity now or
hereafter makes it unlawful or impossible for any Lender to make, fund or
maintain the Libor Loans or a portion thereof or to perform its obligations
under this Agreement, such Lender (the "AFFECTED LENDER") may, by written notice
thereof to the Borrower, suspend its obligations under this Agreement with
respect to the Loans affected by such illegality or prohibition (the "AFFECTED
BORROWINGS") for the duration of the period of such illegality or prohibition,
and the Borrower shall, to the extent possible and subject to the provisions of
Section 13.2, forthwith (or at the end of such period as the Affected Lender in
its discretion agrees) convert without novation the Affected Borrowings or such
portion thereof together with accrued interest thereon for the remainder of the
related Libor Interest Period(s) into such other forms of Borrowings as the
Borrower may request by notice to the Affected Lender within not more than two
Business Days after receipt by the Borrower of the notice of the Affected
Lender, and, for the period between such notice by the Affected Lender and such
notice by the Borrower or failing such notice by the Borrower, into US Base Rate
Loans, and thereafter such Affected Lender shall only be obligated to extend its
Affected Borrowings in such other forms of Borrowings or US Base Rate Loans, as
the case may be.
ARTICLE VI
CONDITIONS APPLICABLE TO LETTERS OF CREDIT
SECTION 6.1 - INITIAL LETTERS OF CREDIT
------------------------------------------------------
The Borrower acknowledges that:
(a) the Letter of Credit in the initial face amount of US$11,440,000 issued
on February 5, 1998 by BNP in favour of BNP (Los Angeles) under the BNP
Acquisition Facility, a copy of which is set forth in SCHEDULE "Q",
(b) the Letter of Credit in the initial face amount of US$14,000,000 issued
on February 5, 1998 by Royal in favour of BNP (Los Angeles) under the
Royal Acquisition Facility, a copy of which is set forth in SCHEDULE
"R", and
-53-
(c) the Letter of Credit in the initial face amount of US$7,000,000 to be
issued by BNP in favour of BNP (Los Angeles) under the BNP Revolver
Back-Up Facility,
as any such Letter of Credit may be extended, amended, replaced or otherwise
modified from time to time, shall constitute Letters of Credit requested to be
issued by the Lenders hereunder and for which the Borrower shall be fully and
irrevocably liable in accordance with the provisions of this Agreement,
including more particularly the reimbursement and indemnity provisions of this
Article VI.
SECTION 6.2 - ISSUE OF OTHER LETTERS OF CREDIT BY ROYAL
----------------------------------------------------------------------
Prior to effecting Borrowings by way of Letters of Credit under the Royal Credit
Line Facility, the Borrower shall make arrangements with Royal for the issuance
of the said Letters of Credit. All such Letters of Credit shall be issued at the
request of the said Borrower and under the indemnity described in Section 6.6.
Prior to effecting Borrowings by way of Letters of Credit under the Royal Credit
Line Facility, the Borrower, after having made arrangements with Royal as
provided above, may give written notice thereof to Royal at the latest on the
third Business Day preceding the anticipated date of issuance substantially in
the form of SCHEDULE "O", or such other form or by such other method as Royal
may approve, and shall execute and deliver to Royal duly completed Letters of
Credit application(s) and other documents, using such form(s) as may be approved
by Royal at the time of issue. In the event of any inconsistency between the
terms contained in such application(s) and documents, and the terms contained
herein, the former shall prevail.
SECTION 6.3 - RESTRICTIONS ON LETTERS OF CREDIT
--------------------------------------------------------------
In addition to the Letters of Credit already issued under the BNP Acquisition
Facility and the Royal Acquisition Facility and the Letter of Credit to be
issued under the BNP Revolver Back-Up Facility, letters of Credit hereunder may
only be issued under the Royal Credit Line Facility. A Lender may refuse to
issue any particular Letter of Credit at any time at its sole discretion.
Letters of Credit issued under the BNP Revolver Back-Up Facility and the Royal
Credit Line Facility and any renewals or extensions thereof shall, by their
terms, expire not later than one year following the date of issue or the date of
extension or renewal thereof, as the case may be, and the aggregate outstanding
amount of all Letters of Credit issued under the Royal Credit Line Facility may
at no time exceed Cdn$1,500,000 or the Equivalent Amount in other currencies.
SECTION 6.4 - FEES AND CHARGES FOR LETTERS OF CREDIT
-------------------------------------------------------------------
The Borrower shall pay to the Lender issuing or having issued a Letter of Credit
hereunder, the said Lender's fees set forth in Section 4.6 at the prevailing
rates, as well as the fees of any correspondent bank for or in connection with
such Letter of Credit and documents thereunder.
-54-
SECTION 6.5 - INTEREST ON AMOUNTS PAID
-----------------------------------------------------
Subject to Section 6.6 hereof, if a Lender makes a payment under a Letter of
Credit issued or outstanding in accordance herewith, the amount or amounts so
paid by the said Lender shall, unless otherwise funded by or for the account of
the Borrower, be deemed to constitute a Prime Rate Loan if such payment is made
in Canadian Dollars or any currency other than US Dollars and a US Base Rate
Loan if such payment is made in US Dollars, and the amount so paid shall bear
interest accordingly from the date of payment by the relevant Lender until full
repayment by the Borrower and shall be repayable on demand. If such payment is
made in a currency other than Canadian Dollars or US Dollars, the amount of such
payment shall be deemed to constitute a Prime Rate Loan in an amount equal to
the Equivalent Amount thereof in Canadian Dollars.
SECTION 6.6 - INDEMNITY
--------------------------------------
If and when a payment is made by a Lender pursuant to a Letter of Credit issued
by it, the Borrower shall forthwith pay to the said Lender, in the currency(ies)
in which such payment was made, the whole amount so paid under the said Letter
of Credit and if the Borrower fails to make such payment, the amount of such
payment shall be deemed to constitute a demand Loan hereunder in accordance with
Section 6.5 hereof.
Without restriction to the foregoing, the Borrower shall, in addition, indemnify
the issuing Lender and hold it harmless from and against any claims, demands,
losses, costs, liabilities, actions, judgements or suits, damages and expenses,
including legal fees and expenses reasonably incurred which such Lender may
suffer or incur by reason of having issued any Letter of Credit or having
properly accepted drafts or documents thereunder or by reason of false or
incomplete information being provided by or on behalf of the Borrower to the
said Lender in respect of Borrowings or proposed Borrowings by way of Letters of
Credits or acceptances thereunder or by reason of any action taken, admitted or
suffered to be taken in good faith in reliance upon any instructions,
applications, request or order from the Borrower or any other party for whose
account such Letter of Credit was issued or upon other paper or documents
reasonably believed by the relevant Lender to be genuine in connection with a
Letter of Credit or acceptances under a Letter of Credit issued by it.
The reimbursement and indemnity obligations of the Borrower herein shall not be
released, discharged or otherwise affected by any circumstance or occurrence
whatsoever including, without limitation, (A) the lack of validity or
enforceability of the underlying Letter of Credit or any acceptance or other
documentation presented for drawing thereunder, or (B) any dealing by a Lender
with a beneficiary or negotiating, advising or confirming bank in connection
with Letters of Credit and acceptances thereunder.
SECTION 6.7 - REIMBURSEMENT FOLLOWING TERMINATION
----------------------------------------------------------------
When a Lender shall have determined at its discretion that it is no longer
liable under a Letter of Credit outstanding hereunder, and provided all amounts
owing in respect of the Credit Facilities have then been fully and undefeasibly
paid to the Lenders, such Lender will reimburse to the
-55-
Borrower, without interest, such amount, if any, as shall have been paid by the
Borrower to such Lender in respect of such Letter of Credit upon a demand for
full repayment of the Credit Facilities or of any Credit Facility.
ARTICLE VII
CONDITIONS APPLICABLE TO BANKERS' ACCEPTANCES
SECTION 7.1 - BANKERS' ACCEPTANCES
-------------------------------------------------
The Borrower may effect Borrowings under the BNP Acquisition Facility (to the
extent not converted into a Fixed Rate Loan), the Royal Capex Facility and the
Royal Credit Line Facility by way of Bankers' Acceptances denominated in
Canadian Dollars in accordance with the provisions of Section 3.5 and this
Article VII.
For the purposes of this Agreement, the full face value of Bankers' Acceptances,
without Discount, shall be used when calculations are made to determine the
amount of Borrowings.
Each determination by the relevant Lender of the Acceptance Fee, of the Discount
Rate, of the Discounted Proceeds and of the Discount applicable to Bankers'
Acceptances to be accepted by it shall, in the absence of manifest error, be
final, conclusive and binding on the Borrower.
SECTION 7.2 - CONDITIONS APPLICABLE TO BANKERS' ACCEPTANCES
--------------------------------------------------------------------------
7.2.1 NOTICE AND DOCUMENTS: the Borrower shall request that Advances be made
by way of Bankers' Acceptances, that outstanding Borrowings be converted
into Bankers' Acceptances or that Borrowings outstanding by way of
Bankers' Acceptances be renewed in the same form of Borrowing, by giving
on a timely basis the notice required under Section 3.5, 3.9 or 7.2.5,
as applicable.
Each Lender may at any time cease to accept Bankers' Acceptances
hereunder or set limits on the overall value of Bankers' Acceptances to
be accepted hereunder.
The Borrower shall execute and deliver to each Lender the documentation
relating to Bankers' Acceptances usually required by such Lender from
its clients. In the event of inconsistency between the terms contained
in the said documentation and the terms contained herein, the former
shall prevail;
7.2.2 PROCEDURES FOR THE ISSUE OF BANKERS' ACCEPTANCES:
7.2.2.1 Bankers' Acceptances issued pursuant to this Agreement:
(a) will be denominated in Canadian Dollars, in amounts of
Cdn$100,000 or multiples thereof,
-56-
(b) will be issued in minimum aggregate amounts of
Cdn$500,000,
(c) will have a term of 30 to 180 days, subject to
availability, and shall not allow for days of grace,
(d) will mature on a Business Day on or before the Maturity
Date, and
(e) may be held by the relevant Lender for its own account
or sold or traded in the money market, either directly
or through stock brokers or dealers;
7.2.2.2 Upon each issue of Bankers' Acceptances:
(a) which are purchased by a Lender for its own account, the
Borrower shall be entitled to be credited with the
Discounted Proceeds thereof, less the Acceptance Fee,
(b) as a result of the conversion of outstanding Borrowings
into Bankers' Acceptances or as a result of the renewal
of outstanding Bankers' Acceptances, the Borrower shall,
concurrently with the conversion or renewal, pay in
advance out of its own funds to the accepting Lender an
amount equal to the Discount applicable to such issue,
to be applied against the principal of the Borrowing
being so converted or renewed, plus the applicable
Acceptance Fee;
7.2.3 DELIVERY OF BANKERS' ACCEPTANCES: if the Borrower has chosen a Borrowing
by way of Bankers' Acceptances, the Borrower shall have delivered to the
relevant Lender for acceptance at its Branch of Account, at the latest
by 10:00 a.m. on the Business Day preceding the date of issue of the
related Bankers' Acceptances, an appropriate number of signed and
endorsed forms of Bankers' Acceptances in order to allow such Lender to
accept such instruments in the aggregate and face amounts and for the
maturities chosen by the Borrower. In this respect, Royal will deliver
from time to time to the Borrower blank forms of Bankers' Acceptances to
be signed and returned by the Borrower in order to maintain an adequate
supply of such instruments for acceptance hereunder. No Lender shall be
responsible or liable for its failure to accept a Bankers' Acceptance as
required hereunder if the cause of such failure is, in whole or in part,
due to the failure of the Borrower to provide duly executed and endorsed
drafts to such Lender on a timely basis nor shall any Lender be liable
for any damage, loss or other claim arising by reason of any loss or
improper use of any such instrument except a loss or improper use
arising by reasons of the gross negligence or wilful misconduct of such
Lender or its employees;
-57-
7.2.4 EXECUTION OF BANKERS' ACCEPTANCES: drafts of the Borrower to be accepted
as Bankers' Acceptances hereunder shall be signed by a duly authorized
officer or duly authorized officers of the Borrower. Notwithstanding
that any person whose signature appears on any Bankers' Acceptance as
one of such officers may no longer be an authorized signatory for the
Borrower at the date of issuance of a Bankers' Acceptance, such
signature shall nevertheless be valid and sufficient for all purposes as
if such authority had remained in force at the time of such issuance and
any such Bankers' Acceptance so signed shall be binding on the Borrower;
7.2.5 PROCEDURES RELATING TO THE MATURITY AND FACE AMOUNT OF ALL BANKERS'
ACCEPTANCES:
(a) If Bankers' Acceptances are outstanding hereunder, the Borrower
shall prior to the date of maturity of the then current Bankers'
Acceptances, irrevocably notify the Lender having accepted them
of the intention of the Borrower to repay, renew or convert such
Borrowing at the maturity of the related Bankers' Acceptances,
such notice to be given by telephone within notice periods
similar to those provided in Section 3.5, followed by written
confirmation on the same day substantially in the form attached
as SCHEDULE "N",
(b) if the Borrower shall choose to renew a Borrowing outstanding by
way of Bankers' Acceptances in the same form of Borrowing, the
Borrower shall cause the term of the new Bankers' Acceptances to
commence on and include the date of maturity of the relative
Bankers' Acceptances being renewed. If the Borrower fails to so
notify the relevant Lender as provided in Subsection 7.2.5(a),
the Borrower shall be deemed to have notified the said Lender of
its intention to convert the relevant Borrowing by way of
Bankers' Acceptances into a Prime Rate Loan,
(c) the Borrower shall, by no later than 11:00 a.m. on the maturity
date of each Bankers' Acceptance, pay to the Lender having
accepted Bankers' Acceptances hereunder an amount equal to the
face amount of all Bankers' Acceptances accepted by such Lender
and maturing on that day by effecting such payment out of its
own funds, or by converting such Borrowing by way of Bankers'
Acceptances into another form of Borrowing then available
hereunder or by renewing such Bankers' Acceptances hereunder,
the whole subject to the payment of the Discount as provided in
Subsection 7.2.2.2(b); and in each case of conversion or
renewal, the Discounted Proceeds, together with the Discount
paid in respect thereof, shall be applied to the reduction of
the Borrowing being converted or renewed, as the case may be,
and
(d) in the event that the Borrower fails to provide payment of the
face amount of a Bankers' Acceptance on its maturity date as
required pursuant to
-58-
Subsection 7.2.5(c), then the Canadian Dollar amount of such
failed payment shall be deemed for all purposes of this
Agreement to be and shall be treated in all respects as a
Borrowing by way of a Prime Rate Loan as and from such maturity
date;
7.2.6 ACCEPTANCE FEE: the Borrower shall pay to each Lender the Acceptance Fee
in Canadian Dollars forthwith upon the acceptance hereunder by such
Lender of a Bankers' Acceptance issued by the Borrower. The Borrower
authorizes and directs the Lenders to deduct from the Discounted
Proceeds of Bankers' Acceptances purchased by them for their own
account, the amount of each such Acceptance Fee upon the issue of each
Bankers' Acceptance;
7.2.7 ALTERNATE BASIS OF BORROWING: if at any time during the term of this
Agreement, a Lender determines in good faith (which determination shall
be final, conclusive and binding upon the Borrower) that by reasons of
circumstances or changes affecting the market for Bankers' Acceptances:
(a) it is no longer possible to establish the Discount Rate in
respect of Bankers' Acceptances, or
(b) the market for Bankers' Acceptances no longer exists, is too
weak for its normal use or is not capable in the normal course
of business to absorb Bankers' Acceptances accepted hereunder,
then, such Lender shall immediately notify the Borrower of its
determination in writing. For so long as the circumstances referred to
in paragraphs (a) or (b) of this subsection shall continue, no further
Borrowings will be available by way of Bankers' Acceptances from such
Lender and thereafter, until notice to the contrary is given to the
Borrower by such Lender, the said Lender shall only be obligated to make
other forms of Borrowings available to the Borrower hereunder, and the
principal amount of all Borrowings outstanding by way of Bankers'
Acceptances shall, at the expiry of the related Bankers' Acceptances, be
converted without novation into such other form of Borrowing as the
Borrower may request by notice to the relevant Lender or failing such
notice, into Prime Rate Loans;
7.2.8 WAIVER OF CLAIM: the Borrower shall have no right to set up as against
either of the Lenders any defence or right of action, of indemnification
or of set-off or compensation or any similar claim of any nature
whatsoever which the Borrower may have had at any time or may have in
the future with respect to any holder of one or more Banker's
Acceptance(s) issued hereunder;
7.2.9 PAYMENT BY LENDER ON MATURITY: on the maturity date of each Bankers'
Acceptance issued by a Lender hereunder, such Lender will pay to the
redeeming holder, if any, of each Bankers' Acceptance, at the time of
presentment thereof, the face amount of such Bankers' Acceptance.
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ARTICLE VIII
CONDITIONS APPLICABLE TO FEF CONTRACTS
SECTION 8.1 - FEF CONTRACTS
------------------------------------------
Prior to effecting Borrowings by way of FEF Contract under this Agreement, the
Borrower shall make arrangements with the relevant Lender for the execution of
such FEF Contract and all documentation, agreements and master agreements
requested by such Lender in respect thereof, including appropriate confirmations
relating thereto. In the event of inconsistency between the terms contained in
such documentation and the terms contained herein, the former shall prevail.
Borrowings by way of FEF Contracts shall be made available by such Lender
entering into FEF Contracts with the Borrower provided, however, that the said
Lender shall have no obligation to make such Borrowing available to the Borrower
and to enter into any FEF Contract hereunder unless such Lender, in its absolute
discretion, is satisfied that the FEF Contracts Risk Amount for purposes of such
Borrowing, when taken together with the FEF Contracts Risk Amount of all other
outstanding FEF Contracts, does not exceed (a) Cdn$10,000,000 (with a maximum
spot settlement risk for all outstanding FEF Contracts not to exceed
Cdn$100,000,000) with respect to all FEF Contracts entered into with BNP and (b)
Cdn$4,000,000 (with a maximum spot settlement risk for all outstanding FEF
Contracts not to exceed Cdn$20,000,000) with respect to all FEF Contracts
entered into with Royal.
In addition, BNP accepts a delivery risk on the Borrower for an aggregate
maximum amount of Cdn$5,000,000 with respect to all FEF Contracts between the
Borrower and BNP, whereby BNP executes its obligations in respect of an FEF
Contract before receiving confirmation that the Borrower has delivered its
counterpart upon expiry of the same FEF Contract. Accordingly, for delivery
under an FEF Contract of any amount denominated in a currency other than
Canadian Dollars the Equivalent Amount of which exceeds Cdn$5,000,000, the
Borrower undertakes to deliver and pay its counterpart in respect of such FEF
Contract before BNP may be required to execute its own obligation with respect
to such FEF Contract.
Notwithstanding the foregoing, a Lender may in any event refuse to enter into
any particular FEF Contract if, acting reasonably, it is not satisfied with the
conditions of issue (including, without limitation, the duration thereof) the
currencies thereof or generally, the market risk relating to the issue of such
FEF Contract. Moreover, a Lender may, in its entire discretion, refuse to enter
into any FEF Contract, the purpose of which is to control, fix or regulate
currency exchange fluctuation in connection with a currency which, in the
opinion of such Lender, is not freely convertible. It is expressly understood
and agreed that unless otherwise acknowledged and agreed to in writing by a
Lender, all FEF Contracts entered into during the term of this Agreement between
the Borrower and such Lender shall, for so long as they remain outstanding,
constitute a Borrowing made by the Borrower under this Agreement and outstanding
under the BNP FEF Facility or the Royal FEF Facility, as applicable.
-60-
SECTION 8.2 - INTEREST ON AMOUNTS PAYABLE UNDER FEF CONTRACTS
----------------------------------------------------------------------------
If the Borrower fails to pay to a Lender when due any and all amounts payable
under any FEF Contract or any and all other amounts payable hereunder by the
Borrower in respect of the cancellation or termination of any FEF Contract or
otherwise related to Borrowings outstanding under the BNP FEF Facility or the
Royal FEF Facility, as applicable, all such amounts not paid when due shall be
deemed to be converted into and to constitute a Prime Rate Loan in the case of
an amount owing in Canadian Dollars or in any currency other than US Dollars and
shall be deemed to constitute a US Base Rate Loan in the case of an amount owing
in US Dollars; any such Prime Rate Loan and US Base Rate Loan shall be payable
to the relevant Lender forthwith on demand and shall bear interest accordingly
from the date such amounts so become due until full payment to the Lender; if
the amount the Borrower has so failed to pay is denominated in a currency other
than Canadian Dollars or US Dollars, then upon the Borrower failing to pay such
amount, the indebtedness of the Borrower to the relevant Lender in respect
thereof shall, for the purposes of the foregoing, be converted into the
Equivalent Amount thereof in Canadian Dollars using the spot buying rate of the
said Lender as in effect on the date of such conversion.
SECTION 8.3 - DOCUMENTATION, FEES AND CHARGES
------------------------------------------------------------
The Borrower undertakes to execute and deliver to each Lender all such Lender's
standard documentation which the Lender may require from time to time in respect
of FEF Contracts, including all confirmations thereof when required.
The Borrower also undertakes to pay to each Lender, at its request, the said
Lender's usual fees and charges at the prevailing rates in respect of FEF
Contracts entered into hereunder.
ARTICLE IX
PAYMENT, TAXES, INCREASED COSTS, EVIDENCE
OF INDEBTEDNESS AND TIMING OF MATURITIES
SECTION 9.1 - PLACE OF PAYMENT OF PRINCIPAL, INTEREST AND CHARGES
--------------------------------------------------------------------------------
All payments of principal, interest, additional interest, fees (other than the
standby fee, the set-up fees and the annual review fees pursuant to Sections 4.4
and 4.7 which shall be payable as provided in such Sections) and other charges
to be made by the Borrower pursuant to this Agreement shall be made in the
currency in which the Borrowing is outstanding for value on the day such amount
is due and if such day is not a Business Day, on the Business Day next
following, by payment or transfer of monies to the appropriate Account for
Payments. Any amounts received from the Borrower after 3:00 p.m., on any
Business Day, shall be applied to the appropriate payment, repayment or
prepayment due on such day, on the next following Business Day. Until so
applied, interest shall continue to accrue as provided in this Agreement on the
amount of such payment, repayment or prepayment.
-61-
SECTION 9.2 - ACCOUNT DEBIT AUTHORIZATION
--------------------------------------------------------
The Borrower authorizes and directs each Lender, in its discretion, to
automatically debit, by mechanical, electronic or manual means, the bank
accounts of the Borrower maintained with it for all amounts payable by the
Borrower under this Agreement, including but not limited to the repayment of
principal and the payment of interest, fees, expenses and all other charges for
the keeping of such bank accounts.
SECTION 9.3 - APPLICATION OF PAYMENTS
----------------------------------------------------
All payments received by a Lender from or on behalf of the Borrower pursuant to
this Agreement shall be applied prior to the occurrence of an Event of Default
to such liabilities of the Borrower as the Borrower shall indicate to such
Lender at the time such payment is made and, if no such indication is made or if
an Event of Default has occurred, to the liabilities of the Borrower hereunder
in such order as such Lender shall from time to time decide.
SECTION 9.4 - MANNER OF PAYMENT AND TAXES
--------------------------------------------------------
The Borrower shall make all payments to the Lenders pursuant to this Agreement
without set-off, compensation or counterclaim, free and clear of, and exempt
from, and without deduction for or on account of, any Tax. If any Tax is
deducted or withheld from any payments, the Borrower shall promptly remit to the
affected Lender an amount which shall be equal to the Tax so deducted or
withheld, together with certified copies of the relevant official receipts or
other evidence satisfactory to the affected Lender, evidencing payment to the
appropriate taxing authority of each such Tax by the Borrower on behalf of the
affected Lender.
If the Borrower is prevented by operation of law or otherwise from paying,
causing to be paid or remitting such Tax, the Borrower shall pay to the affected
Lender such additional amounts as may be necessary to ensure that such Lender
receives a net amount in the appropriate currency equal to the full amount it
would have received had such Tax not been so deducted or withheld.
The obligations of the Borrower under this Section 9.4 to effect payments for
Taxes shall survive the repayment of the principal and interest on the
Borrowings and the payment of all other amounts due hereunder if such Taxes have
not been paid.
SECTION 9.5 - INCREASED COSTS
--------------------------------------------
If after the date of execution hereof, any introduction of any Applicable Law or
any change or introduction of a change in any Applicable Law (whether or not
having the force of law but if not, compliance with which is generalized and
standard in the banking industry) or in the interpretation or application
thereof by any court or by any governmental agency, central bank or other
judicial, governmental, administrative or other authority or entity charged with
the administration thereof or any change in the compliance of a Lender
therewith, or if present or future compliance by a Lender with any new or
changed request or directive (compliance with
-62-
which is in accordance with the practice of responsible banks or financial
institutions) from any central bank or other fiscal authority (whether or not
having the force of law), now or hereafter:
(a) subjects a Lender to, or causes the withdrawal or termination of a
previously granted exemption with respect to, any Tax or changes the
basis of taxation, or increases any existing Tax, on payments of
principal, interest, fees or other amounts payable by the Borrower to
such Lender under this Agreement (except for taxes on the overall net
income of such Lender and capital taxes payable by such Lender imposed
by the jurisdiction in which its principal or lending offices are
located),
(b) imposes, modifies or deems applicable any reserve, special deposit,
deposit insurance or similar requirements against assets held by, or
deposits in or for the account of or loans by or any other acquisition
of funds by, an office of such Lender or with respect to Bankers'
Acceptances, Letters of Credit, FEF Contracts or credit cards expense
account arrangements hereunder,
(c) imposes on such Lender or expects there to be maintained by such Lender
any capital adequacy or additional capital requirements in respect of
any Borrowing or the Commitment of such Lender hereunder or any other
condition with respect to this Agreement, or
(d) imposes any Tax or reserves or deemed reserves with respect to the
undrawn portion of the Commitment of a Lender;
and the result of any of the foregoing, in the sole determination of the
affected Lender acting reasonably, shall be to increase the cost to, or reduce
the amount of principal, interest or other amount received or receivable by such
Lender hereunder or its effective return hereunder in respect of making,
maintaining or funding Loans, Bankers' Acceptances, Letters of Credit, FEF
Contracts or credit cards expense account arrangements under this Agreement,
such Lender shall, acting reasonably, determine that amount of money which shall
compensate such Lender for such increase in cost or reduction in income (herein
referred to as "ADDITIONAL COMPENSATION"). Upon such Lender having determined
that it is entitled to Additional Compensation in accordance with the provisions
of this Section 9.5, such Lender shall promptly so notify the Borrower and the
other Lender. Such Lender shall provide to the Canadian Borrower a photocopy of,
or an extract from, the relevant law, rule, guideline, regulation, treaty or
official directive and a certificate of a duly authorized officer of such Lender
setting forth the Additional Compensation and the basis of calculation therefor,
which shall be conclusive evidence of such Additional Compensation in the
absence of manifest error. The Borrower shall pay to such Lender within ten
Business Days of the giving of such notice such Lender's Additional Compensation
calculated to the date of such notification. Such Lender shall be entitled to be
paid such Additional Compensation from time to time to the extent that the
provisions of this Section 9.5 are then applicable notwithstanding that such
Lender has previously been paid any Additional Compensation. Such Lender shall
make commercially reasonable efforts to limit the incidence of any such
Additional Compensation, including seeking recovery for the account of the
Borrower, by appealing any assessment at the expense of the Borrower upon the
Borrower's
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request, provided such Lender, in its sole determination, suffers no appreciable
economic, legal, regulatory or other disadvantage.
The obligation of the Borrower under this Section 9.5 shall survive the
repayment of the principal and interest on the Borrowings and the payment of all
other amounts due hereunder.
SECTION 9.6 - PAYMENT OF PORTION
-----------------------------------------------
Notwithstanding the provisions hereof, if a Lender gives the notice provided for
in Section 9.5 with respect to any Borrowing (an "AFFECTED BORROWING"), the
Borrower may at its option, upon ten Business Days notice to that effect given
to such Lender (which notice shall be irrevocable), unless such prepayment or
assignment causes a Default to have occurred hereunder, prepay in full without
penalty such Affected Borrowing outstanding together with accrued and unpaid
interest on the principal amount so prepaid up to the date of such prepayment,
such Additional Compensation as may be applicable to the date of such payment
and all costs, losses and expenses incurred by such Lender by reason of the
liquidation or re-employment of deposits or other funds or for any other reason
whatsoever resulting from the repayment of such Affected Borrowing or any part
thereof on other than the last day of the applicable interest period or term.
Upon such payment being made, such Lender's obligations in respect of such
Affected Borrowing under this Agreement shall terminate.
SECTION 9.7 - COMMITMENT AND TIMING OF MATURITIES
----------------------------------------------------------------
The Borrower shall only be entitled to convert an outstanding Borrowing into
another form of Borrowing hereunder or to renew an outstanding Borrowing at the
maturity thereof if, immediately prior to the relevant Conversion Date or prior
to the expiry of the then current relevant Libor Interest Period or prior to the
maturity of the relevant Bankers' Acceptances or Letters of Credit , as
applicable, the total of all the Borrowings then outstanding under the relevant
Credit Facility (converted, if necessary, into the Equivalent Amount thereof in
Canadian Dollars) does not exceed the Commitment with respect to such Credit
Facility (or such applicable lesser amount if a portion thereof has been
cancelled or reduced pursuant to the terms of this Agreement). However, the
Borrower shall be entitled to effect the conversion or renewal if, concurrently
therewith, it pays to the relevant Lender an amount equal to the difference
between such outstanding total amount and the relevant Commitment.
The Borrower shall time the maturities of the Libor Interest Periods and the
Bankers' Acceptances so that they fall on or before the applicable date on which
principal is due to be paid in respect thereof under this Agreement in an amount
at least equal to the amount of such principal being repaid so as not to exceed
the relevant Commitment following such applicable date. If the Borrower fails to
time such maturities in such way in respect of a Libor Loan, the relevant Lender
will make the necessary arrangements for early termination of such Libor
Interest Periods, in an amount sufficient to effect the repayment of principal
in accordance with this Agreement, and the Borrower will pay to the relevant
Lender an amount equal to any loss or expense incurred by such Lender as a
result of such early termination, including but not limited to all reasonable
sums (whether in respect of principal, interest or otherwise) paid or payable by
a
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Lender for funds borrowed by such Lender in order to fund or maintain the amount
of any such unpaid amount, as well as any costs incurred in maintaining or
rearranging deposits as a result of early termination; a certificate of the
relevant Lender setting forth the basis for the determination of the amount
necessary to indemnify it is, in the absence of manifest error, conclusive and
binding upon the Borrower for all purposes. If the Borrower fails to time the
maturities of Bankers' Acceptances as set forth above, the Borrower will, on
demand by the Lender having accepted the said Bankers' Acceptances, pay to such
Lender an amount in Canadian Dollars equal to the face value of the relevant
unmatured Bankers' Acceptances or such lesser amount as will cover the
deficiency, and, upon such payment, the Borrower shall be released of its
liability to the said Lender in respect of such unmatured Bankers' Acceptances,
to the extent of the amount so paid.
SECTION 9.8 - EVIDENCE OF INDEBTEDNESS
-----------------------------------------------------
Each Lender shall open and maintain in its books, accounts and records
evidencing the Borrowings made available by it under this Agreement. Each Lender
shall record therein the amount of each Borrowing made available by it, by way
of Loans and shall record therein each payment of principal on account thereof
and shall record the Bankers' Acceptances accepted, paid and cancelled by it,
the Letters of Credit and acceptances thereunder issued or accepted by it
hereunder and the payments and cancellations in respect thereof, the FEF
Contracts entered into by it with the Borrower hereunder and all payments in
respect thereof and the credit cards issued under the Royal Visa Facility and
all debits and credits in respect thereof, and all other amounts becoming due to
such Lender under this Agreement, including interest, fees and charges and all
payments on account thereof. Such accounts and records will constitute, in the
absence of manifest error, PRIMA FACIE evidence of the Indebtedness of the
Borrower owing to such Lender pursuant to this Agreement, the date of each
Borrowing made available by such Lender and the amount thereof and the amounts
which and the dates on which the Borrower has made payments from time to time on
account of the principal thereof and interest thereon, fees and charges and
Bankers' Acceptances accepted, paid and cancelled by such Lender, Letters of
Credit and acceptances thereunder issued, accepted and paid by or to such Lender
hereunder, FEF Contracts entered into and paid or terminated hereunder and
credit cards issued and cancelled under the Royal Visa Facility and payments in
respect thereof.
ARTICLE X
SUBSIDIARY GUARANTEE AND COLLATERAL DOCUMENTS
SECTION 10.1 - SUBSIDIARY GUARANTEES
--------------------------------------------------
The Borrower shall deliver or cause to be delivered to the Lenders a Subsidiary
Guarantee duly authorized and executed by each of the Credit Parties (other than
the Borrower), the whole to serve as continuing guarantee for the payment and
performance of the Obligations of the Borrower to the Lenders, both present and
future, in respect of the Credit Facilities, the whole subject to the following:
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10.1.1 SUPPORTING DOCUMENTS: the execution of a Subsidiary Guarantee by a
Credit Party shall be accompanied by certified copies of such Credit
Party's constating documents, by-laws (or other equivalent document),
directors' resolution authorizing the execution of such Subsidiary
Guarantee, together with the legal opinion of Counsel, in form and
substance acceptable to the Lenders, as to the status of such Credit
Party, the due authorization and execution by it of such Subsidiary
Guarantee and the validity and enforceability thereof under the laws
applicable to such Credit Party; and
10.1.2 NO PREJUDICE TO OTHER DOCUMENTS: this Agreement and the other Credit
Documents shall not be prejudiced by any other guarantee, security or
Collateral Document, whether collateral or additional, now or hereafter
held by the Lenders or either of them in respect of the Obligations, or
by any exchange, release, substitution or variation of any such
guarantee, security or Collateral Document or by the taking of any
additional guarantee, security or Collateral Documents.
SECTION 10.2 - SECURITY
-------------------------------------
The Borrower shall cause to be delivered to the Lenders, as general and
continuing collateral security for the payment and performance of all
Obligations to the Lenders, or either of them, both present or future, in
respect of the Credit Facilities, first-ranking security over all movable or
personal assets and all Real Property of the Credit Parties, subject only to
Permitted Liens, all of which security shall be in form and substance
satisfactory to the Lenders and shall include the documents listed below:
(a) documents creating security under Section 427 of the BANK ACT (Canada)
with respect to all present and future inventory of the Borrower,
(b) a hypothec granted by the Borrower in favour of the Lenders, jointly,
pursuant to which the Borrower grants to the Lenders a Lien on all the
Real Property of the Borrower located in the Province of Quebec and the
universality of all its present and future movable property, corporeal
or incorporeal, wherever located, including a Lien over all the present
and future outstanding Capital Stock of its Subsidiaries owned by or
registered in favour of the Borrower,
(c) security agreements granted by the Borrower in favour of the Lenders
pursuant to which the Borrower grants to the Lenders a Lien on all of
its personal or movable property, present and future, corporeal or
incorporeal, wherever located,
(d) a pledge agreement (which may be contained in the general security
agreements referred to in paragraph (c) of this Section) granted by the
Borrower in favour of the Lenders pursuant to which the Borrower pledges
in favour of the Lenders all the present and future outstanding Capital
Stock of the Credit Parties (other than the Borrower) owned by or
registered in favour of the Borrower, together with all stock
powers/powers of attorney
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endorsed in blank by the Borrower, all necessary or desirable
resolutions of the board of directors of the relevant corporation
authorizing the transfer and registration of such Capital Stock in the
name of the Lenders or their nominee and irrevocable proxies regarding
such Capital Stock,
(e) hypothecs granted by each Credit Party (other than the Borrower) located
in the Province of Quebec and security agreements and mortgages granted
by each Credit Party (other than the Borrower) having assets or doing
business outside the Province of Quebec, in favour of the Lenders,
pursuant to which such Credit Party grants to the Lenders a Lien on all
of its personal or movable property, present and future, corporeal and
incorporeal, wherever located (including a Lien over the shares of the
Capital Stock of any of its Subsidiaries which is a Credit Party to be
documented in a manner similar to that set forth in paragraph (d) of
this Section) and on all the Real Property of such Credit Party,
and all such Collateral Documents shall be supported by appropriate opinions of
Counsel as to matters required to be dealt with by the Lenders and, if required
by the Lenders, title opinions with respect to each Real Property charged under
the Collateral Documents.
SECTION 10.3 - ADDITIONAL COLLATERAL AND REGISTRATION
-------------------------------------------------------------------
The Borrower shall also promptly execute and deliver, and cause to be executed
and delivered, to the Lenders, at the Borrower's own cost and expense, such
additional or complementary security documents or such confirmations or such
notices or documents containing such further description of properties
(including replacement and additions to the properties forming part of the
Collateral) charged or intended to be charged by the Collateral Documents as may
in the reasonable opinion of the Lenders or their Counsel be necessary or
advisable to create and maintain a first ranking security position on the assets
and revenues of the Credit Parties, as set forth in Section 10.2, subject to
Permitted Liens.
The Borrower shall cause to be promptly made all registrations and filings and
to be delivered all opinions, necessary, in the opinion of either of the Lenders
or their Counsel, to render the Collateral Documents fully effective as first
ranking security, subject to Permitted Liens (including registrations against
land and, if required by the Lenders, title opinions in respect thereof).
SECTION 10.4 - CONFLICT
-------------------------------------
In the case of conflict, discrepancy or difference between the provisions of
this Agreement and any of the Collateral Documents, the provisions of this
Agreement shall govern provided, however, that nothing herein shall limit or
restrict the rights and remedies of the Lenders under any of the Collateral
Documents in the absence of actual conflict, discrepancy or difference.
SECTION 10.5 - NO PREJUDICE TO OTHER SECURITY
-----------------------------------------------------------
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This Agreement and the Subsidiary Guarantees and Collateral Documents (which are
in addition to and not in substitution for any other security now or hereafter
held by the Lenders) shall not be prejudiced by any other guarantee or security,
whether collateral or additional, now or hereafter held by the Lenders in
respect of the Borrower's obligations to the Lenders, or by any exchange,
release, substitution or variation of any such guarantee or security or by
taking of any additional guarantee or security.
ARTICLE XI
CONDITIONS TO BE SATISFIED
SECTION 11.1 - CONDITIONS TO BE SATISFIED
-------------------------------------------------------
The obligation of the Lenders to make available to the Borrower Borrowings
hereunder following the execution of this Agreement, is subject to and
conditional upon each of the following terms and conditions first having been
satisfied:
11.1.1 INITIAL CONDITIONS TO BORROWINGS: prior to the drawdown of such of the
Borrowings as are not outstanding on the date of execution hereof, there
shall have been delivered to each of the Lenders, in form and substance
satisfactory to the Lenders:
11.1.1.1 a duly executed copy of this Agreement,
11.1.1.2 a certified copy of the constating documents and by-laws of
each of the Credit Parties certified by a Responsible
Officer of the related Credit Party, accompanied by good
standing or equivalent certificates issued by the
appropriate Governmental Body of each relevant jurisdiction;
11.1.1.3 a duly certified copy of a resolution or resolutions of the
Board of Directors of each Credit Party relating to the
authority of each Credit Party to execute and deliver and to
perform its obligations under the Credit Documents to which
it is a party and all other instruments, agreements,
certificates and papers and other documents provided for or
contemplated by the said Credit Documents and the manner in
which and by whom the foregoing documents are to be executed
and delivered, certified by a Responsible Officer of the
relevant Credit Party as of the date of execution of the
relevant Credit Document or other relevant document,
11.1.1.4 a certificate of each Credit Party setting forth specimen
signatures of the individuals authorized to sign on its
behalf the Credit
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Documents to which it is a party and the instruments,
agreements, certificates, papers and other documents
provided for or contemplated by said Credit Documents,
11.1.1.5 a certificate of compliance of a Responsible Officer of the
Borrower relating to the Credit Parties in form and
substance substantially as attached as SCHEDULE "S",
11.1.1.6 evidence (i) of the due registration, recording or filing of
the Credit Documents in all jurisdictions necessary to
protect or perfect the security and rights created thereby
(including each jurisdiction, other than England and Italy,
wherein account debtors of the Borrower are located if the
aggregate amount of accounts receivable owing to the
Borrower by such account debtors located in the said
jurisdiction exceeds Cdn$500,000 or the Equivalent Amount in
currencies other than Canadian Dollars) and (ii) of the
delivery to the Lenders of the share certificates
representing the Capital Stock of Phoenix (USA) and IBRD,
duly endorsed in blank (or accompanied by duly executed
blank transfer certificates) and accompanied by duly
executed proxies in respect thereof,
11.1.1.7 evidence of appropriate insurance coverage as provided in
Section 12.1.6, showing the Lenders as loss payees thereof,
11.1.1.8 evidence that BNP (Los Angeles) has made available (i) to
Phoenix (USA) the Phoenix (USA) Term Facility and (ii) to
IBRD the IBRD Revolving Facility,
11.1.1.9 evidence that Phoenix (USA) has completed the Acquisition
Transaction,
11.1.1.10 evidence of the payment of all fees and expenses
contemplated herein, to the extent then owing,
11.1.1.11 a copy of the Xxxxxxx waste management contract,
11.1.1.12 evidence that all Governmental Approvals under Environmental
Laws have been obtained and are in effect with respect to
each of the Credit Parties,
11.1.1.13 (intentionally left blank),
11.1.1.14 evidence that each Credit Party has all necessary
Governmental Approvals to operate a contract research
organization (CRO),
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11.1.1.15 evidence (a) of the discharge of all Liens in favour of Bank
of Montreal affecting the assets of the Borrower, or (b) of
the full repayment and cancellation of all existing credit
facilities granted by Bank of Montreal to the Borrower,
including the termination or assignment of all outstanding
foreign exchange forward contracts between the Borrower and
Bank of Montreal,
11.1.1.16 (intentionally left blank),
11.1.1.17 evidence of the discharge of all Liens affecting the Credit
Parties which are not Permitted Liens,
11.1.1.18 execution between the Lenders and BNP (Los Angeles) of an
intercreditor and security sharing agreement in form and
substance acceptable to the Lenders,
11.1.1.19 the favourable opinion of Counsel to each of the Credit
Parties as to the status of each Credit Party, its power and
capacity to enter into and perform its obligations under all
Credit Documents to which it is to be a party, as to the due
authorization and execution by the relevant Credit Party of
such Credit Documents and as to the validity, binding effect
and enforceability of each such Credit Documents and of any
security intended to be created thereby and
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as to such other matters as the Lenders may reasonably
require, each such favourable opinion to be in form and
substance satisfactory to each of the Lenders,
11.1.1.20 the favourable opinions of Counsel in the States of
California, New Jersey, Ohio and Pennsylvania as to
registration and enforceability of the Liens and rights to
be created in each said jurisdictions pursuant to the
Collateral Documents, and
11.1.1.21 the favourable opinion of Lenders' Counsels as to such
matters as the Lenders may reasonably require;
11.1.2 CONDITIONS PRECEDENT TO EACH BORROWING: the obligation of the Lenders to
make any Borrowing available to the Borrower following the execution of
this Agreement is subject to the following conditions:
(a) the representations and warranties of the Borrower contained in
this Agreement shall be true and correct as at each Drawdown
Date, Conversion Date and date of renewal of a form of Borrowing
hereunder,
(b) the relevant Lender shall have received the timely notice of
Borrowing required pursuant to Section 3.5, 3.9, 5.1, 6.1 or
7.2.5, as applicable,
(c) with respect to Borrowings under the Royal Credit Line Facility,
a copy of the most recent Borrowing Base Report required by
Section 12.1.8(f), and
(d) no Default or Event of Default shall have occurred and be
continuing (provided that if such Default or Event of Default
shall have been waived as provided herein, such Default or Event
of Default shall not be deemed to exist or continue in respect
of the particular instance having been waived or during the
waiver period, as applicable).
SECTION 11.2 - WAIVER OF CONDITIONS PRECEDENT
-----------------------------------------------------------
The terms and conditions of Section 11.1 are inserted for the sole benefit of
each Lender and may be waived by a Lender, in whole or in part, with or without
terms or conditions, in respect of all or any portion of the Borrowings without
prejudicing the rights of each of such Lender to assert such terms and
conditions in whole or in part in respect of any other Borrowing.
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ARTICLE XII
COVENANTS OF THE BORROWER
SECTION 12.1 - AFFIRMATIVE COVENANTS OF THE BORROWER
------------------------------------------------------------------
While any Obligations remain outstanding or either of the Lenders has any
obligations under any of the Credit Documents, the Borrower covenants and agrees
with each Lender that, unless each of the Lenders shall otherwise consent in
writing:
12.1.1 PAYMENT COVENANT: it will, and it will cause each of its Subsidiaries
to, duly and punctually pay all sums of money due and payable by it
under the terms of this Agreement and any other Credit Document at the
times and places, in the currencies, and in the manner specified;
12.1.2 CORPORATE EXISTENCE: it will, and it will cause each of its Subsidiaries
to, do or cause to be done all things necessary to keep in full force
and effect its corporate existence and all rights, franchises, licences,
approvals, privileges, consents and qualifications to carry on its
business or to own, lease or operate property in each jurisdiction in
which it carries on business or owns, leases or operates property where
the failure to do so would have a Material Adverse Effect;
12.1.3 CONDUCT OF BUSINESS: it will, and it will cause each of its Subsidiaries
to:
(a) conduct its business in a proper and efficient manner,
(b) diligently maintain, repair, use and operate its property and
premises in a proper and efficient manner, and
(c) maintain its physical assets in good condition such that each
asset may be used at all times for the purpose for which it was
intended;
12.1.4 COMPLIANCE WITH LAWS: it will, and will cause each of its Subsidiaries
to, comply in all material respects with all Applicable Laws including,
without limitation, Environmental Laws, ERISA and the RACKETEER
INFLUENCED AND CORRUPT ORGANIZATIONS Chapter of the ORGANIZED CRIME
CONTROL ACT OF 1970 of the United States of America, except to the
extent failure to comply with such laws does not have a Material Adverse
Effect;
12.1.5 PROMPT PAYMENT OF INDEBTEDNESS: it will, and it will cause each of its
Subsidiaries, to promptly pay and discharge when due:
(a) any Indebtedness outstanding,
(b) Taxes charged or attributable to it, and
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(c) obligations which may result in Liens (other than Permitted
Liens) on its assets;
unless the relevant payment, Tax or obligation is being actively and
diligently contested in good faith by appropriate proceedings and is
adequately reserved against on its books in accordance with GAAP, as
applicable, or unless failure to comply with this Section 12.1.5 would
not have a Material Adverse Effect;
12.1.6 INSURANCE: it will:
(a) maintain and will cause each of its Subsidiaries to maintain
with financially sound, independent and reputable insurers
insurance:
(A) upon all its buildings, plant and other property and
assets which are of an insurable nature against such
liabilities and risks including, without limitation, all
risk property damage, business interruption and third
party liability insurance, in such amounts, with such
deductibles and in such manner, that adequately protects
it and such subsidiaries and as is customary for
companies carrying on businesses similar that being
carried on by it or by such Subsidiaries, as the case
may be, and, if applicable, as may be required by
Applicable Law, or as otherwise may be reasonably
requested by any of the Lenders, and, in any event, in
amounts sufficient to prevent it or any of its
Subsidiaries from becoming a co-insurer, except to the
extent of the deductibles permitted above;
(B) (i) that names each of the Lenders, as an additional
insured under all liability coverages and as loss payee
under all property, casualty and business interruption
coverages and includes a mortgage clause acceptable to
each of the Lenders; (ii) that provides that all
insurance proceeds aggregating Cdn$500,000 or less per
occurrence, or the Equivalent Amount thereof in any
other currency, shall be payable to the Borrower or the
relevant Subsidiary, as the case may be, and that all
insurance proceeds aggregating more than Cdn$500,000 per
occurrence, or the Equivalent Amount thereof in any
other currency, shall be payable to the Lenders, and it
is agreed that any such proceeds received by the Lenders
shall be received as mandatary for the Borrower or the
relevant Subsidiary, as the case may be and, provided
that no Default or Event of Default has occurred and is
continuing, shall be paid forthwith by the Lenders to
the Borrower or Subsidiary, as the case may be, and, in
the case of insurance proceeds in respect of damage to
property, shall be used by the Borrower or Subsidiary,
as the case may be, to repair or replace such property;
PROVIDED HOWEVER, that after a Default or an
---------------- Event of Default has occurred and while
such Default or Event of Default is continuing, all
insurance proceeds shall be payable to the Lenders, and
a notice from the Lenders notifying an insurer of a
Default or an Event of Default shall be sufficient
evidence of a Default or an Event of Default for the
purpose of this provision; and (iii) that provides that
the insurers thereof will give to the Lenders at least
30 days prior written notice before any of the policies
evidencing such insurance is modified, terminated or
cancelled except that 15 days prior written notice shall
be given in the case of non-payment of any premium;
PROVIDED
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HOWEVER, that in respect of insurance to be maintained
by any Subsidiary of the Borrower this clause (B) shall
only be applicable to the extent that such Subsidiary is
required to grant to the Lenders collateral security
under or pursuant to this Agreement,
(b) duly and punctually pay or cause to be paid the premiums and
other sums of money payable in connection with such insurance,
(c) after a Default or an Event of Default has occurred and while
such Default or Event of Default is continuing, hold separate
from all other funds, as mandatary of the Lenders, and pay to
the Lenders promptly all insurance proceeds received and payable
to the Lenders, and cause each of its Subsidiaries to do so, and
(d) promptly deliver to each Lender from time to time upon request
such information relating to the insurance required to be
maintained under this Section 12.1.6, including insurers'
certificates of insurance addressed to the Lenders confirming
that such insurance is in effect and that the Lenders may rely
on such certificates;
12.1.7 CONTRACTS: it will, and will cause each of its Subsidiaries to:
(a) faithfully observe, perform and discharge the covenants,
conditions and obligations imposed on it by any contract,
agreement, lease, license or other instrument in which it has
any interest or to which it is a party, except to the extent and
for so long as its obligation to do so is contested in good
faith by it unless failure to comply with this Section 12.1.7
does not have a Material Adverse Effect, and
(b) do all other things necessary or expedient in order to preserve,
protect, maintain and renew any such contract, agreement, lease,
license or other instrument and all of its rights thereunder and
under each renewal or replacement thereof, to the extent
necessary for the conduct of the business
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of the Borrower or such Subsidiary, unless failure to comply
with this Section 12.1.7 does not have a Material Adverse
Effect;
12.1.8 FINANCIAL STATEMENTS AND INFORMATION: it will, and will cause each of
its Subsidiaries to, keep and maintain proper books of account and other
accounting records and it will furnish or cause to be furnished to each
Lender:
(a) as soon as available and, in any event, within 60 days after the
end of the first three quarterly accounting periods in each
fiscal year, copies of the Consolidated and unconsolidated
financial statements of the Borrower, and the unconsolidated
financial statements of each Subsidiary and Affiliate of the
Borrower, prepared in-house in accordance with GAAP as of the
close of such quarter, setting forth in each case in comparative
form the figures for the corresponding periods of the previous
fiscal year,
(b) as soon as available and, in any event, within 90 days after the
end of each fiscal year, copies of the Consolidated and
unconsolidated financial statements of the Borrower, and the
unaudited unconsolidated financial statements of each Subsidiary
and Affiliate of the Borrower, as of the end of such fiscal
year, together with comparative figures for the immediately
preceding fiscal year, all prepared in accordance with GAAP in
reasonable detail and accompanied, in the case of the Borrower,
by the unqualified opinion thereon of the Auditors, except with
respect to a qualification or exception relating to a change in
its application of accounting principles, which change shall be
concurred in by the Auditors,
(c) as soon as available and, in any event, within 120 days after
the end of each fiscal year, the Borrower's annual report to its
shareholders,
(d) within 90 days of its fiscal year end commencing with the fiscal
year ending on August 31, 1998 an Annual Budget for the current
fiscal year in form and substance acceptable to the Lenders,
(e) concurrently with the financial statements referred to in
Sections 12.1.8(a) and 12.1.8(b), a compliance certificate,
signed by a Responsible Officer of the Borrower, substantially
in the form of SCHEDULE "S", certifying (a) that the financial
and other information contained therein is true and correct in
all material respects as of the date the certificate is
delivered to the Lenders, (b) that the officer executing such
certificate has no knowledge of any Default or Event of Default,
which is continuing or, if such officer does have knowledge of
any such Default or Event of Default, describing the Default or
Event of Default, including the date of its commencement and any
remedial action taken, (c) that the officer executing such
certificate has no knowledge of any Material Adverse Effect
which has not been cured or waived in writing by the Lenders,
and
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(d) as to certain details and calculations, as specified
therein, with respect to compliance with the covenants set forth
in Section 12.1.28,
(f) within 60 days after the end of each quarterly accounting period
in each fiscal year, a report signed by a Responsible Officer of
the Borrower setting forth, as at the end of such quarterly
period, the Borrowing Base of the Borrower as well as the order
backlog of the Borrower, such report to be in the form and
substance of SCHEDULE "A",
(g) promptly after the same are sent, copies of all financial
statements, reports and other disclosure information which the
Borrower or any of its Subsidiaries makes public or sends to its
common or preferred stockholders as a class, and promptly after
the same are filed, copies of all regular or periodic reports or
similar materials filed by the Borrower or any of its
Subsidiaries with any securities exchange or securities
commission or similar governmental authority, and
(h) promptly following the request of a Lender therefor, such other
information relating to the Borrower or any of its Subsidiaries,
including without limitation, information relating to their
financial or other condition, business, assets, operations or
prospects, as a Lender may from time to time reasonably request,
in each case, in form and substance and certified in a manner
satisfactory to the requesting Lender;
12.1.9 CHANGE IN AUDITORS: it will promptly give notice to each Lender of a
change in its Auditors and the reasons underlying the change;
12.1.10 NOTICE OF DEFAULT AND OTHER EVENTS: it will promptly, after obtaining
knowledge thereof, give notice to each Lender of the occurrence of any
Default or Event of Default and of any event which constitutes a default
to comply with any of the terms and conditions of the Phoenix (USA) Term
Facility or the IBRD Revolving Facility, including the date of its
commencement and the action which it or its relevant Subsidiary proposes
to take with respect to the same and the estimated date when the same
will be remedied or resolved; it will also promptly after the occurrence
of any event which has had or is reasonably likely to have a Material
Adverse Effect notify each Lender of the details thereof;
12.1.11 NOTICE OF BREACH OF PERMIT: it will give prompt written notice to each
Lender of any breach of any certificate, approval, permit, consent,
order or direction concerning its operations or that of any of its
Subsidiaries or concerning the installation or operation of any of its
equipment or facility or machinery, equipment or facility of any of its
Subsidiaries or concerning any structure, activity, or facility on any
of its lands or premises or the lands or premises of any of its
Subsidiaries, which breach could have a Material Adverse Effect;
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12.1.12 NOTICE OF LITIGATION: it will promptly give notice to each Lender of the
occurrence of any litigation, proceeding or dispute affecting it or any
of its Subsidiaries if its result could have a Material Adverse Effect
and will from time to time provide all reasonable information requested
by any Lender concerning the status of any such litigation, proceeding
or dispute;
12.1.13 ACCESS: it will, and will cause each of its Subsidiaries to, permit each
Lender or representatives of any Lender, to inspect its properties, as
the case may be, and make abstracts from and copies of their books,
accounts and records and discuss their affairs with its management, all
at such reasonable times as such Person may desire upon giving prior
reasonable notice to whole at the expenses of the Borrower;
12.1.14 RELIANCE: it will permit each Lender to rely on the authority of the
individuals providing any certificate, report, notices and other
information delivered under any of the Credit Documents including,
without limitation, the certificate and reports delivered under Section
12.1.8, until notice to the contrary is received by each Lender;
12.1.15 CHANGE OF NAME, NEW LOCATIONS: it will advise each Lender or cause each
Lender to be advised in writing not less than 30 days before any of the
Credit Parties
(A) makes any change to its name or
(B) changes the location of its chief executive office or principal
place of business or acquires any new such locations, other than
those set forth in SCHEDULE "G";
before any such change of name or of location or before any acquisition
of another location (whether by purchase, lease or otherwise) by the
Borrower or any of its Subsidiaries, the Borrower shall provide the
Lenders with such financing statements, charges, assignments, hypothecs,
security interests, (and, on a best efforts basis, landlord agreements,
warehouseman/bailee agreements, mortgagee consents and agreements),
other Credit Documents and legal opinions as any of the Lenders may
reasonably require in order to assure and maintain the perfected, first
priority Lien on the Collateral, subject only to Permitted Liens, and to
assure access thereto;
12.1.16 MAINTENANCE OF, AND ADDITIONAL, SECURITY: it will fully and effectually
maintain and keep maintained and cause each of the other Credit Parties
having granted security to the Lenders pursuant to any of the Credit
Documents to fully and effectually maintain and keep maintained the
Liens granted pursuant to the Credit Documents as valid, effective and
perfected, first priority Liens at all times
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(subject to Permitted Liens) so long as any of the Obligations shall be
outstanding and will, in this respect, comply with the provisions of
Article X.
Without restricting the foregoing, within 60 days of a request therefor
by the Lenders, the Borrower shall, at its expense, cause additional
Liens to be granted to the Lenders and/or registrations, recordings or
filings to be made, in England and/or Italy and/or any other
jurisdiction (as the Lenders may reasonably designate in the said
request) so as to ensure that the Lenders shall have first priority
Liens (subject to Permitted Liens) over the accounts receivable owing to
the Borrower by account debtors located in the said jurisdiction for
aggregate amounts in excess of Cdn$500,000 or the Equivalent Amount in
currencies other than Canadian Dollars, the whole supported by legal
opinions satisfactory to the Lenders;
12.1.17 LIENS ON AFTER-ACQUIRED PROPERTY: it will promptly notify the Lenders of
any Real Property owned or acquired by the Borrower or any of the other
Credit Parties after the date hereof which is not listed on SCHEDULE "E"
and not then subject to a Lien in favour of the Lenders. It will, within
30 days after the request of the Lenders, execute or cause to be
executed by the relevant Credit Party in favour of and deliver to the
Lenders all agreements and other documentation necessary to establish in
favour of the Lenders perfected, first priority Liens (subject to
Permitted Liens) in all such Real Property, in form and substance
satisfactory to the Lenders, and opinions of counsel acceptable to the
Lenders, in form and substance satisfactory to the Lenders, as to, among
other things, the validity and perfection of such Liens and the
enforceability of such Liens, PROVIDED that the requirements of this
Section 12.1.17 shall not apply to Subsidiaries, if any, not required to
provide security to the Lenders pursuant to this Agreement;
12.1.18 INTELLECTUAL PROPERTY
it will, and it will cause each of its Subsidiaries to, make application
to register its material Intellectual Property, as is appropriate in its
best interests, and use its best efforts to preserve and maintain all of
its material Intellectual Property, as is appropriate in its best
interests; with respect to all options or licence rights constituting
material Intellectual Property in which security was granted to the
Lenders pursuant to any of the Credit Documents, it shall promptly
deliver or cause to be delivered to the Lenders, in form and substance
satisfactory to them, acting reasonably, an agreement duly executed by
each owner and (in the case of rights sub-licensed to any of the Credit
Parties) licensor of such Intellectual Property consenting to the grant
of security in such rights and Lenders' use of such rights on the
exercise of their rights and remedies under the Credit Documents;
12.1.19 DISTRIBUTIONS FROM SUBSIDIARIES: it shall cause all of its Subsidiaries
to make cash Distributions to or for the benefit of the Borrower so as
to ensure that the
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Borrower shall at all times remain Solvent and able to meet its payment
and other Obligations under all Credit Documents;
12.1.20 SUPPLEMENTAL DISCLOSURE. the Borrower will promptly supplement each
Schedule with respect to any matter arising after the date hereof which,
if existing on or before the date hereof, would have been required to be
set out or described in such Schedule or which is necessary to correct
any information in such Schedule which has been rendered inaccurate
after the date hereof; provided, however, that such supplemental
disclosure shall not constitute a cure or waiver of any Default or Event
of Default arising or existing as a result of the matter so disclosed;
12.1.21 CANADIAN BENEFIT AND PENSION PLANS:
(a) for each existing Canadian Pension Plan and Canadian Benefit
Plan and for any Canadian Pension Plan or Canadian Benefit Plan
hereafter adopted, it will, and will cause its Subsidiaries to,
perform, in a timely fashion, all obligations (including
fiduciary, funding, investment and administration obligations)
required to be performed in connection with such plan and the
funding media therefor in accordance with the terms of such plan
and all Applicable Laws,
(b) it will, and will cause its Subsidiaries to, deliver to the
Lenders (i) if requested by a Lender, acting reasonably,
promptly after the filing thereof by it or one of its
Subsidiaries with the appropriate authorities, copies of each
annual and other return, report or valuation with respect to
each Canadian Pension Plan, copies of any actuarial report with
respect to each Canadian Pension Plan and a copy of the audited
annual financial report with respect to each Canadian Pension
Plan and (ii) promptly after receipt thereof, a copy of any
direction, notice or other communication in respect of any
breach of Applicable Law relating to the Canadian Pension Plans
and Canadian Benefit Plans of the Borrower and its Subsidiaries
(a) which would have the effect of increasing the funding
obligation in respect of each such plan, or (b) which could
result in the imposition of any Lien on any of the properties or
assets of the Borrower or one of its Subsidiaries, as well as a
copy of any order or ruling that such Credit Party may receive
from any applicable authority with respect to any Canadian
Pension Plan or Canadian Benefit Plan;
12.1.22 ERISA REPORTING: the Borrower will make, or cause its Subsidiaries to
make, the following reporting to the Lenders:
(a) ERISA EVENTS AND ERISA REPORTS: (i) promptly and, in any event,
within ten days after the Borrower or any of its Subsidiaries or
any ERISA Affiliate knows or has reason to know that any ERISA
Event has occurred,
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a statement of a Responsible Officer of the Borrower describing
such ERISA Event and the action, if any, that the Borrower or
such Subsidiary or such ERISA Affiliate has taken and proposes
to take with respect thereto, and (ii) on the date any records,
documents or other information must be furnished to the PBGC
with respect to any Plan pursuant to Section 4010 of ERISA, a
copy of such records, documents and information;
(b) PLAN TERMINATIONS: promptly and, in any event, within two
Business Days after receipt thereof by the Borrower or any of
its Subsidiaries or any ERISA Affiliate, copies of each notice
from the PBGC stating its intention to terminate any Plan or to
have a trustee appointed to administer any Plan;
(c) ACTUARIAL REPORTS: promptly upon receipt thereof by the Borrower
or any of its Subsidiaries or any ERISA Affiliate, a copy of the
annual actuarial valuation report for each Plan the funded
current liability percentage (as defined in Section 302(d)(8) of
ERISA) of which is less than 90%;
(d) PLAN ANNUAL REPORTS: promptly and, in any event, within 30 days
after the filing thereof with the Internal Revenue Service of
the United States of America, copies of each Schedule B
(Actuarial Information) to the annual report (Form 5500 Series)
with respect to each Plan; and
(e) MULTIEMPLOYER PLAN NOTICES: promptly and, in any event, within
five Business Days after receipt thereof by the Borrower or any
of its Subsidiaries or any ERISA Affiliate from the sponsor of a
Multiemployer Plan, copies of each notice concerning (i) the
imposition of Withdrawal Liability by any such Multiemployer
Plan, (ii) the reorganization or termination, within the meaning
of Title IV of ERISA, of any such Multiemployer Plan or (iii)
the amount of liability incurred, or that may be incurred, by
the Borrower or such Subsidiary or any ERISA Affiliate in
connection with any event described in clause (i) or (ii);
12.1.23 ENVIRONMENTAL MATTERS: it shall, and shall cause each of its
Subsidiaries to, comply strictly and in all respects with the
requirements of environmental protection laws, regulations, by-laws and
other requirements applicable to its property and activities and shall
notify the Lenders immediately in the event of any release or discovery
of any contaminant upon, under, over or within its property or any
continguous real property or any real property on or near which a
contaminant could reasonably be anticipated to be released that may
materially adversely affect its property and activities;
12.1.24 ENVIRONMENTAL PERMITS: it shall, and shall cause each of its
Subsidiaries to, promptly forward to the Lenders copies of all notices,
permits, orders, demands or other documents and reports in connection
with any release or the presence of any
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contaminant or any matters relating to environmental protection laws or
otherwise as they materially affect its property and activities;
12.1.25 ENVIRONMENTAL INFORMATION: it shall, and shall cause each of its
Subsidiaries to, provide the Lenders, upon demand and at the Borrower's
expense, with all the information that a Lender may reasonably require
regarding the environmental situation of the Borrower or any of its
Subsidiaries, notably concerning their respective activities, movable
and immovable property, including an environmental audit report prepared
by an environmental engineering firm acceptable to the Lenders.
The Borrower acknowledges that it will be reasonable for a Lender to
periodically request from the Borrower a confirmation that the
statements regarding the environment contained herein are still true and
that as of the date of such confirmation, no event occurred that may
materially affect in any way its property and activities or that of its
Subsidiaries insofar as environmental protection is concerned;
12.1.26 ENVIRONMENTAL ACCESS: it shall, and shall cause each of its Subsidiaries
to, allow each Lender and its agents reasonable access to its property
or to any information regarding its property or activities to enable
such Lender to assess the risk that the environmental situation of the
Borrower or any of its Subsidiaries represents to the Lenders, to
anticipate its effect or to take corrective action;
12.1.27 SAINT-LAURENT PROPERTY: within 30 days from the date of execution of
this Agreement, the Borrower shall deliver to the Lenders, in form and
substance satisfactory to the Lenders, a copy of a subdivision plan
dated no earlier than in 1995 and a copy of a title report (which need
not be addressed to the Lenders) with respect to the Real Property of
the Borrower located in Saint-Laurent described in SCHEDULE "E"; such
plan, if dated more than three months prior to the date of execution of
this Agreement, shall be accompanied by a certificate of a Responsible
Officer of the Borrower to the effect that the said Real Property has
not been subject to any structural change since the date of the said
plan and that such plan accurately sets forth the present state of the
said Real Property;
12.1.28 FINANCIAL RATIOS: the Borrower will maintain, on a Consolidated basis:
12.1.28.1 a Shareholders' Equity of not less than:
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- Cdn$110,000,000, as at February 28, 1998 through to
November 29, 1998,
- Cdn$115,000,000, as at November 30, 1998 through to
August 30, 1999,
- Cdn$120,000,000, as at August 31, 1999 and at all times
thereafter;
12.1.28.2 a Coverage Ratio, for each period of four consecutive fiscal
quarters, of not less than:
- for the period of four consecutive fiscal quarters
ending on February 28, 1998: 4.00:1.00,
- for the period of four consecutive fiscal quarters
ending on May 31, 1998: 3.25:1.00,
- commencing with the period of four consecutive fiscal
quarters ending August 31, 1998 and for each period of
four consecutive fiscal quarters thereafter: 1.75:1.00;
12.1.28.3 a Current Ratio of not less than:
- at all times during the fiscal year ending August 31,
1998: 1.00:1.00,
- at all times during the fiscal year ending August 31,
1999: 1.15:1.00, and
- at all times after August 31, 1999: 1.35:1.00; and
12.1.29 KEY MEN: the Borrower shall ensure that Xx. Xxxx X. Xxxxxx and Xx.
Xxxxxx Xxxxx shall remain closely associated with the Borrower or its
Subsidiaries, either as employees, officers or directors, on a permanent
basis until the termination of this Agreement.
SECTION 12.2 NEGATIVE COVENANTS OF THE BORROWER
-------------------------------------------------------------
While any Obligations remain outstanding or either of the Lenders have any
obligations under any of the Credit Documents, the Borrower covenants and agrees
with each of the Lenders that, unless the Lenders shall otherwise consent in
writing:
12.2.1 NEGATIVE PLEDGE: it will not, nor will it permit any of its Subsidiaries
to, create, incur, assume or suffer to exist any Lien upon any of its
undertaking, property,
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rights, revenues or assets, whether now owned or hereafter acquired,
save for Permitted Liens;
12.2.2 SALE OF ASSETS: it will not, and will not permit any of its Subsidiaries
to, sell, alienate, assign, lease or otherwise dispose of any of its
property and assets, whether now owned or possessed or hereafter
acquired or possessed, or enter into any sale and leaseback transaction
with respect to any such property or assets, save for sales,
alienations, assignments or leases of property and assets of the
Borrower and its Subsidiaries in the ordinary course of business and for
the purpose of carrying on the same and save for dispositions of assets
having a fair market value of less than five percent of the total assets
of the Borrower and all its Subsidiaries in any fiscal year, unless
otherwise consented to by the Lenders (which consent shall not be
unreasonably withheld or delayed);
12.2.3 INDEBTEDNESS, GUARANTEES, LOANS: it will not, nor will it permit the
other Credit Parties to, incur additional Indebtedness, or enter into or
assume any responsibility under any Guarantee, or make any additional
loans to or investments in any other Person, if the aggregate amount of
the foregoing additional indebtedness, guarantees and loans at any one
time outstanding would exceed US$1,600,000, including, for purposes of
clarification, the following:
(a) Guarantees outstanding on the date hereof in favour of Star
Bank, N.A. of Cincinnati in the principal amount of
US$1,300,000, and
(b) a Guarantee outstanding on the date hereof in favour of Human
Biologics International Inc. in the principal amount of
US$300,000;
12.2.4 REORGANIZATION AND AMALGAMATION: it will not, and will not permit any of
the other Credit Parties to, wind up, liquidate or dissolve its
business, affairs or assets or enter into any transaction of
reorganization, amalgamation, merger or consolidation, or convey, sell,
lease or otherwise dispose of (or agree to do any of the foregoing at
any future time) any substantial part of its property and assets, save
as permitted under Section 12.2.2, and except that IBRD may be
amalgamated with Phoenix (USA) (the continuing corporation from any such
amalgamation, the "CONTINUING CORPORATION"); provided that (i) the
Lenders have received 30 days' prior written notice of such
amalgamation, (ii) the Continuing Corporation shall have assumed all of
the obligations of the amalgamating corporations under all the Credit
Documents to which one or more amalgamating corporations are parties and
shall have agreed to be bound by all such Credit Documents in one or
more supplemental indentures in form and substance satisfactory to the
Lenders, acting reasonably, and shall have delivered such supplemental
indentures to the Lenders, (iii) no condition or event shall exist
either at the time of or immediately after any such amalgamation and
after giving full effect thereto or after the Continuing Corporation
complies with the provisions of clause (ii) above which constitutes a
Default or Event of Default,
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(iv) such amalgamation shall be carried out on such terms and in such
manner as will preserve and not impair or be prejudicial to the
interests of the Lenders, (v) after giving effect to such amalgamation,
the Lenders shall have a perfected, first priority Lien, subject only to
Permitted Liens, in all property rights and assets of the Continuing
Corporation and (vi) the Lenders shall have received such other
documents, instruments, agreements, waivers, consents, legal opinions
(including, without limitation, as to each amalgamation being on terms
as to preserve and not impair any of the rights and remedies of the
Lenders) and certificates as the Lenders may request in connection with
such transactions;
12.2.5 NO CHANGE IN NATURE OF BUSINESS: it will not, and it will ensure that
each of the other Credit Parties do not significantly change the nature
of its business;
12.2.6 DISTRIBUTIONS: it will not, and will not permit any of its Subsidiaries
to, make any Distribution other than as required by Section 12.1.19;
12.2.7 CAPITAL EXPENDITURES: it will not, and will not allow any of its
Subsidiaries to undertake any Capital Expenditures (including
investments) hereafter exceeding an aggregate amount of Cdn$15,000,000
in fiscal year 1998 and of Cdn$10,000,000 in fiscal year 1999; and
12.2.8 FINANCIAL YEAR: it will not, and it will cause each of its Subsidiaries
not to, change its financial year, except for a change thereof to a
financial year-end identical to that of the Borrower;
ARTICLE XIII
REIMBURSEMENT OF EXPENSES AND INDEMNITY
SECTION 13.1 - REIMBURSEMENT OF EXPENSES
------------------------------------------------------
All statements, reports, certificates, opinions and other documents or
information required to be furnished to the Lenders or either of the Lenders by
the Borrower or the other Credit Parties under this Agreement and the other
Credit Documents shall be supplied without cost to the Lenders. Furthermore, the
Borrower agrees to reimburse promptly to the Lenders or either of the Lenders on
demand, all of the Lenders' reasonable legal fees, costs and other out-of-pocket
expenses (and tax on goods and services in respect thereof) incurred from time
to time in the preparation, negotiation, execution, registration, if applicable,
and operation of this Agreement and the related documents, including the
Subsidiary Guarantees and the Collateral Documents. In addition, the Borrower
agrees to pay all of such legal fees, costs and expenses (and tax on goods and
services in respect thereof) of each of the Lenders incurred in the enforcement
of this Agreement and of any other document to be executed and issued as
provided herein, including the Subsidiary Guarantees and the Collateral
Documents.
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The Borrower will reimburse the Lenders and either of them promptly with
interest after written demand at a rate per annum equal to the applicable rate
set forth in Section 4.2 for any and all expenditures which the Lenders or
either of them may from time to time make, lay out or expend pursuant to this
Section 13.1 and in providing such protection in respect of insurance, discharge
of Liens, Taxes, dues, assessments, governmental charges, fines and penalties
lawfully imposed, repairs, attorney's fees and other matters as the Borrower or
any other Credit Party is obligated herein or in any other Credit Document to
provide, but fails to provide. Such reimbursement obligations shall be an
additional Indebtedness due from the Borrower and shall be payable by the
Borrower on demand. The Lenders though privileged so to do, shall be under no
obligation to the Borrower to make any such expenditure and the making thereof
by a Lender shall not relieve the Borrower or any other Credit Party of any
default in that respect.
SECTION 13.2 - INDEMNITY
--------------------------------------
Whether or not a Default or an Event of Default has occurred, the Borrower
covenants and undertakes to indemnify, defend, protect and hold harmless each of
the Lenders and its directors, officers, employees, attorneys, trustees and
agents (collectively, the "INDEMNITEES") against and from all losses, damages
(including foreseeable and unforeseeable consequential damages and punitive
damages), expenses, liabilities, obligations, penalties, actions, judgements,
suits, claims, costs, expenses and disbursements (including reasonable
attorneys' and consultants' fees and disbursements) (hereinafter, "LOSSES")
which any Indemnitee may sustain or incur (including, without limitation, any
loss of profit and expenses a Lender may incur (a) by reason of the liquidation,
re-employment or re-deployment of deposits or other funds acquired by such
Lender to fund or to maintain the Borrowings, (b) by reason of any interest,
charges or other amounts paid or payable by a Lender to providers of funds
borrowed or acquired in order to make, to fund or to maintain the Borrowings or
any amount unpaid by the Borrower or other Credit Party hereunder or under any
of the other Credit Documents or (c) by reason of the termination, or otherwise
in connection with, any Letter of Credit or FEF Contract) as a consequence of or
in connection with (including without limitation, in connection with any
investigation, litigation or proceeding or preparation of a defence in
connection therewith):
13.2.1 the Acquisition Transaction,
13.2.2 the Credit Facilities and any use made or proposed to be made with the
proceeds thereof,
13.2.3 any failure of the Borrower to borrow in the amount and on the date
specified therefor in any notice of Borrowing pursuant to this
Agreement,
13.2.4 any failure of the Borrower to timely provide a conversion or renewal
notice when required in respect of any Borrowing pursuant to the terms
hereof,
13.2.5 any failure of the Borrower to make a payment, repayment, prepayment or
conversion specified in a notice of repayment, prepayment or conversion
hereunder, or when otherwise due hereunder,
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13.2.6 the payment by the Borrower of principal amounts in respect of a Libor
Loan or a Bankers' Acceptance on any day other than the last day of the
related Libor Interest Period or other than the date of maturity of such
Bankers' Acceptance, as the case may be,
13.2.7 the payment of amounts owing in respect of an FEF Contract on a day
other than the scheduled expiry thereof,
13.2.8 the issuance of any Letter of Credit as contemplated herein or any of
the matters contemplated by the provisions of Section 6.6,
13.2.9 the issuance of credit cards under the Royal Visa Facility and any use
of such credit cards or any claim made in respect thereof,
13.2.10 any misrepresentation by the Borrower or any other Credit Party
contained in or delivered in writing in connection with this Agreement,
the other Credit Documents or the Acquisition Transaction,
13.2.11 the occurrence of a Default or an Event of Default,
13.2.12 defending and/or counterclaiming or claiming over against third parties
in respect of any action or matter in connection with or relating to
this Agreement, or the other Credit Documents, or
13.2.13 the actual or alleged presence of Hazardous Materials on, under or in
any Properties or the escape, seepage, leakage, spillage, discharge,
emission or release from, any Property or into or upon any land, the
atmosphere, or any watercourse, body of water or wetland, of any
Hazardous Materials or any Environmental Claim relating to the Borrower,
any other Credit Party or any other Subsidiaries of the Borrower, or any
of the Properties or arising out of the use of any of the Properties;
and the provisions of and undertakings and indemnification set out in this
Section shall survive the satisfaction and release of the Subsidiary Guarantees,
the Collateral Documents and other security for, and payment and satisfaction of
the Indebtedness and liability of the Borrower to the Lenders pursuant to this
Agreement and the other Credit Documents.
Without restricting the foregoing provisions, in the event that BNP's Fixed Rate
Loan is repaid prior to the expiry of its term as agreed to at the time of the
granting thereof, the Borrower will pay to BNP an additional indemnity equal to
the surplus of (a) the interest which the repaid amount would have produced, at
the applicable interest rate on the date of reimbursement, for the period
beginning at such date and ending on the Maturity Date, over (b) the interest
which the repaid amount would have produced, for the same period, at BNP's then
prevailing rate for a term deposit of the same amount and period, as posted by
BNP.
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SECTION 13.3 - SURVIVAL OF INDEMNIFICATION OBLIGATIONS
--------------------------------------------------------------------
Without prejudice to the survival or termination of any other agreement of the
Borrower under this Agreement, the obligations of the Borrower under Sections
13.1 and 13.2 shall survive the payment of principal and interest on all
Borrowings and the termination of the Commitments.
ARTICLE XIV
OTHER TAXES
SECTION 14.1 - OTHER TAXES
----------------------------------------
The Borrower covenants and agrees that it will pay any documentary, stamp or
other Taxes (including interest and penalties) which may be payable or
determined to be payable by any governmental or taxation authority in respect of
the execution and delivery of this Agreement, the other Credit Documents and the
related documents, including the Bankers' Acceptances, Letters of Credit or
acceptances thereunder, FEF Contracts and credit cards issued under the Royal
Visa Facility and transactions thereunder or the performance of the terms and
provisions hereof or thereof, and will save each of the Lenders harmless against
any loss or liability resulting from non-payment or delay in payment of any such
documentary, stamp or other Taxes.
SECTION 14.2 - SURVIVAL OF OBLIGATIONS
----------------------------------------------------
The obligation of the Borrower under Section 14.1 to pay the Taxes referred to
therein shall survive the payment of principal and interest on all Borrowings
and the termination of the Commitment if such Taxes have not been paid.
ARTICLE XV
EVENTS OF DEFAULT
SECTION 15.1 - EVENTS OF DEFAULT
----------------------------------------------
The occurrence of any one or more of the following events or circumstances shall
constitute an Event of Default under this Agreement:
15.1.1 FAILURE TO PAY: if the Borrower defaults (a) in the payment of any
principal sum payable hereunder when the same shall become due and
payable or (b) in the payment of any interest, fees or other sum payable
hereunder other than principal within three days of the time the same
shall become due and payable;
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15.1.2 BREACH OF FINANCIAL COVENANTS: if the Borrower breaches any financial
ratio set forth in Section 12.1.28 of this Agreement;
15.1.3 OTHER BREACHES: if the Borrower fails to carry out or observe any
covenant or condition contained in this Agreement (other than under
Sections 12.1.1 or 12.1.28) or in any other agreement with a Lender, to
be observed or performed by the Borrower and such failure, if capable of
being cured, shall remain uncured for a period of 10 days following
notice by a Lender;
15.1.4 BANKRUPTCY: the occurrence of any Act of Bankruptcy (as defined below);
for the purposes of this Section 15.1.4, an "ACT OF BANKRUPTCY" means
any of the following:
(a) any Credit Party admits in writing its inability to pay its
debts generally as they become due,
(b) any Credit Party makes a general assignment for the benefit of
creditors,
(c) any Credit Party becomes subject to any bankruptcy proceedings
which it is not contesting in good faith, diligently and by
appropriate means or which proceedings continue undischarged,
unstayed or undismissed for a period of 45 days,
(d) any Credit Party submits to or makes any application for the
purpose of suspension of payment of its liabilities,
(e) any Credit Party petitions to or applies to any tribunal or
authority for the appointment of any administrator, receiver,
trustee or intervenor for it or for any substantial part of its
property,
(f) any Credit Party commences or has commenced against it any
proceedings (including a notice of intention or a proposal under
the BANKRUPTCY AND INSOLVENCY ACT (Canada) and including any
proceeding under the COMPANIES CREDITORS' ARRANGEMENT ACT
(Canada)) under any domestic or foreign law, statute, regulation
or decree whether now or hereafter in effect, relating to it or
its debt, reorganization, arrangement, adjustment, dissolution
or liquidation, which proceedings it is not contesting in good
faith, diligently and by appropriate means or which proceedings
continue undischarged, unstayed or undismissed for a period of
45 days,
(g) any Credit Party becomes bankrupt within the meaning of the
BANKRUPTCY AND INSOLVENCY ACT (Canada), or any successor or
equivalent legislation in any jurisdiction,
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(h) any Credit Party by any act indicates its consent to, approval
of, or acquiescence in any bankruptcy, reorganization or
insolvency proceeding under any domestic or foreign law relating
to bankruptcy, insolvency or relief of debtors or any proceeding
for the appointment of a receiver or trustee for itself or for
any substantial part of its property or suffers any such
receivership or trustee to remain undischarged for a period of
45 days,
(i) the directors or shareholders of any Credit Party pass a
resolution for the winding-up or dissolution of such Credit
Party, or any Credit Party instigates proceedings for its
winding-up or dissolution or consents to, approves of or
acquiesces in, any filing or petition with respect to such
proceedings,
(j) either Lender receives a request, in respect of the Borrower,
from any relevant taxing authority as contemplated by Section
3.13;
15.1.5 SEIZURE: if an encumbrancer takes possession of any part of the assets
of any Credit Party having a book value or a fair value in excess of
Cdn$500,000 or the Equivalent Amount in other currencies, or if a
seizure, distress or execution or any similar process is levied or
enforced thereagainst and remains unsatisfied for such period as would
permit such part thereof, to be sold thereunder;
15.1.6 JUDGMENT: if a final judgment or order of a court for the payment of
money in excess of Cdn$500,000 or the Equivalent Amount in any other
currency is rendered against any Credit Party and is not paid or
discharged within 30 days;
15.1.7 INVALIDITY OR UNENFORCEABILITY: if at any time a court of competent
jurisdiction makes any judgment or order or any law, ordinance, decree
or regulation is enacted, the effect whereof is to render this Agreement
or any of the other Credit Documents or any material provision hereof or
thereof, invalid or unenforceable, and if within 30 days after the
making of such judgment, order, law, ordinance, decree or regulation,
the Borrower fails to furnish or cause to be furnished to the Lenders
replacement documents evidencing and, where applicable, guaranteeing or
securing its Indebtedness hereunder which are adequate in the opinion of
the Lenders;
15.1.8 CROSS-DEFAULT: if any Credit Party fails to pay upon demand, in the case
of monies payable on demand, or at maturity, or within any applicable
period of grace, any obligation for monies borrowed, raised or
guaranteed in an amount of Cdn$500,000 or more or the Equivalent Amount
in any other currency or fails to observe or perform any term, covenant
or agreement contained in any agreement by which it is bound evidencing
or securing monies borrowed, raised or guaranteed in an amount of
Cdn$500,000 or more or the Equivalent Amount in any other currency, and,
as a result, the holder or holders, or beneficiary or
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beneficiaries, thereof or of any such obligations issued thereunder
cause or are entitled to cause the acceleration of the maturity thereof
or of any such obligation;
15.1.9 PHOENIX (USA) TERM FACILITY AND IBRD REVOLVING FACILITY: if there occurs
an "event of default" within the meaning of the Phoenix (USA) Term
Facility or the IBRD Revolving Facility, PROVIDED that any requirement
for the giving of notice, the lapse of time, or both, or any other
condition, has been satisfied;
15.1.10 CEASING TO CARRY ON BUSINESS: if any Credit Party ceases or threatens to
cease to carry on in the ordinary course its business or a substantial
part thereof;
15.1.11 OWNERSHIP OF SUBSIDIARIES: if either of Phoenix (USA) or IBRD ceases at
any time to be Wholly-Owned Subsidiaries of the Borrower;
15.1.12 REPRESENTATIONS AND WARRANTIES: if any representation or warranty made
by any Credit Party in this Agreement, in any other Credit Document or
in any document or certificate furnished to the Lenders in connection
herewith or therewith shall prove at any time to have been incorrect in
any material respect, as at the date made or deemed to have been made;
15.1.13 SUBSIDIARY GUARANTEES AND COLLATERAL DOCUMENTS: if any of the Subsidiary
Guarantees and Collateral Documents ceases for any reason to be in full
force and effect at any time, with or without the Lenders being notified
thereof;
15.1.14 ENVIRONMENTAL MATTER: if there occurs a material breach of any law,
regulation, by-law or requirement, whether federal, provincial, state,
municipal or otherwise, concerning pollution of the environment, toxic
materials, or other environmental hazards, or public health and safety,
affecting any of the Credit Parties' property or activities; or
15.1.15 MATERIAL ADVERSE CHANGE AND DETRIMENTAL LEGAL PROCEEDINGS: if, in the
opinion, of either of
the Lenders:
(a) there occurs an event, act, circumstance or condition (financial
or other) which constitutes a Material Adverse Change, or
(b) any Credit Party is subject to legal proceedings detrimental to
the affairs of the Borrower,
and such act, circumstance or condition or such legal proceeding, if
capable of being remedied or terminated, has not been remedied or
terminated in a manner satisfactory to the Lenders within ten days
following written notice thereof by a Lender to the Borrower.
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SECTION 15.2 - ACCELERATION
Without in any way restricting the right of BNP, at its sole discretion, to
terminate at any time the BNP FEF Facility and of Royal, at its sole discretion,
to terminate at any time the Royal Credit Line Facility, the Royal FEF Facility
and the Royal Visa Facility, or any of them, and to require at any time the
payment of any Borrowings under demand facilities hereunder, upon the occurrence
and during the continuance of any Event of Default with respect to a Lender,
such Lender may declare its Commitment to be terminated and thereby terminate
the right of the Borrower to apply for further Borrowings from such Lender, and
in addition such Lender may, by written notice to the Borrower declare all
Indebtedness and liabilities of the Borrower outstanding to the said Lender
hereunder to be immediately due and payable without presentation, demand,
protest or other notice of any kind, all of which are expressly waived by the
Borrower, provided that the Commitments of both Lenders and the right of the
Borrower to apply for further Borrowings shall automatically be terminated and
all Indebtedness and liabilities of the Borrower to the Lenders outstanding
hereunder shall be immediately due and payable without any written notice to the
Borrower as provided above and without any other presentation, demand, protest
or other notice of any kind if an Event of Default has occurred in respect of a
Credit Party pursuant to Section 15.1.4. In such event, the Borrower shall pay
immediately to the Lender having given the written notice or to both Lenders (in
the case of an Event of Default under Section 15.1.4), as applicable, and the
Borrower hereby acknowledges that it shall then be indebted for the payment of
all amounts owing or payable under this Agreement to the Lender having given the
aforementioned written notice or to both Lenders (in the case of an Event of
Default under Section 15.1.4), as applicable, including, without limitation:
(a) all principal and interest owing in respect of outstanding Loans with
such Lender or Lenders, as applicable,
(b) the face amount of all Bankers' Acceptances accepted by the said Lender
or Lenders, as applicable, and outstanding, together with the Discount
and Acceptable Fees unpaid in respect thereof,
(c) an amount equal to the full outstanding amount of all Letters of Credit
issued hereunder by such Lender or Lenders, as applicable, together with
all fees and costs in respect thereof,
(d) an amount equal to all such amounts, if any, as would then have to be
paid by the Borrower to the said Lender or Lenders, as applicable, in
respect of any FEF Contracts then outstanding which are terminated as
provided herein or as provided in such FEF Contracts, and
(e) all fees, costs, expenses and indemnities payable by the Borrower under
this Agreement,
failing which all rights and remedies of the Lender having given the aforesaid
written notice or of both Lenders (in the case of an Event of Default under
Section 15.1.4), as applicable, shall
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thereupon become enforceable. The Borrower shall have no right to set up as
against either of the Lenders any defence or right of action, of indemnification
or of set-off or compensation or any similar claim of any nature whatsoever
which the Borrower may have had at any time or may have in the future with
respect to any holder of one or more Banker's Acceptance(s) issued hereunder or
to any beneficiary or other Person in connection with one or more Letter(s) of
Credit issued hereunder or FEF Contract(s) entered into as contemplated herein.
SECTION 15.3 - NO NOTICES
-------------------------------------
Save as otherwise expressly provided for herein, no notice or mise en demeure of
any kind shall be required to be given to the Borrower by the Lenders for the
purpose of putting the Borrower in default, the latter being in default by the
mere lapse of time allowed for the performance of an obligation or by the mere
happening of an event or circumstance constituting an Event of Default.
ARTICLE XVI
REMEDIES
SECTION 16.1 - REMEDIES CUMULATIVE
------------------------------------------------
Subject to Section 17.1 and for greater certainty, it is expressly understood
and agreed that the rights and remedies of the Lenders under this Agreement are
cumulative and are in addition to and not in substitution for any rights or
remedies provided by law; any single or partial exercise by a Lender of any
right or remedy for a default or breach of any term, covenant, condition or
agreement herein contained, shall not be deemed to be a waiver of or to alter,
affect or prejudice any other right or remedy or other rights or remedies to
which a Lender may be lawfully entitled for the same default or breach, and any
waiver by a Lender of the strict observance, performance or compliance with any
term, covenant, condition or agreement herein contained, and any indulgence
granted by a Lender, shall be deemed not to be a waiver of that or any
subsequent default.
Each Lender may, to the extent permitted by Applicable Law, bring suit at law,
in equity or otherwise for any available relief or purpose including but not
limited to (A) the specific performance of any covenant or agreement contained
in this Agreement, or in any other Credit Document, (B) an injunction against a
violation of any of the terms hereof or thereof, (C) the exercise of any power
granted hereby or thereby or by law, or (D) obtaining and enforcing judgment for
any and all amounts due in respect of the Borrowings or amounts otherwise due
hereunder or under any other Credit Document.
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ARTICLE XVII
WAIVER OF DEFAULT
SECTION 17.1 - WAIVER OF DEFAULT
----------------------------------------------
(a) If at any time after the occurrence of an Event of Default concerning a
Lender, the Borrower offers to cure completely such Event of Default and
to pay all expenses, advances and damages to such Lender consequent to
such Event of Default, with interest at the rates or increased rates
then applicable to the respective outstanding Borrowings, then the said
Lender may, but shall not be obligated to, accept such offer and
payment, but such action shall not affect any subsequent Event of
Default or impair any rights consequent thereon;
(b) no waiver by a Lender of any Event of Default shall in any way be, or be
construed to be, a waiver by such Lender of any future or subsequent
Event of Default, to the extent permitted by Applicable Law; and
(c) no Event of Default may be waived or discharged orally by a Lender but
(in each case) only by an instrument in writing signed by such Lender.
ARTICLE XVIII
INTERLENDER AGREEMENTS
SECTION 18.1 - SEPARATE CREDIT FACILITIES
-------------------------------------------------------
The parties hereto acknowledge (A) that the Royal Credit Facilities are made
available to the Borrower by Royal, and that the Royal Credit Facilities are to
be administered by Royal independently without any intervention of BNP except as
herein set forth and (B) that the BNP Credit Facilities are made available to
the Borrower by BNP, and that the BNP Credit Facilities are to be administered
by BNP independently without any intervention of Royal, except as herein set
forth.
Notwithstanding the foregoing, Royal and BNP will cooperate with each other and
exchange information in respect of the Credit Parties as deemed appropriate from
time to time, and the Borrower hereby consents to such exchange of information.
SECTION 18.2 - EVENT OF DEFAULT
---------------------------------------------
In the event that an officer or employee of a Lender familiar with the terms of
this Agreement learns of any Event of Default or receives any material
information from a Credit Party in respect thereof, such information shall be
promptly notified to the other Lender.
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SECTION 18.3 - INTERCREDITOR AND SECURITY SHARING AGREEMENT
-------------------------------------------------------------------------
The Lenders agree that the provisions of the intercreditor and security sharing
agreement referred to in Section 11.1.1.18 shall apply in respect of their
dealings with the Credit Parties and the realization of the Liens on the
Collateral following an Event of Default.
SECTION 18.4 - DISCLAIMER
---------------------------------------
No Lender makes any representation or warranty, and accepts any responsibility,
with respect to the due execution, legality, validity, sufficiency or
enforceability of this Agreement and the other Credit Documents or any
instrument or document referred to herein or therein. No Lender assumes any
responsibility for the financial condition of the Credit Parties or for the
payment of any of the Borrowings. No Lender assumes any responsibility with
respect to the accuracy, authenticity, legality, validity, sufficiency or
enforceability of any documents, papers, materials or other information
furnished by the Borrower or any other Credit Party or Person to either Lender
in connection with the Credit Documents or any matter referred to herein or
therein.
No Lender shall be liable to the other Lender for any error in judgment or for
any action taken or omitted by it or with respect to anything which it may do or
refrain from doing in the reasonable exercise of its own judgment or which may
seem to it to be necessary or desirable in the circumstances, except for gross
negligence or wilful misconduct.
SECTION 18.5 - ACKNOWLEDGEMENT OF LENDERS
-------------------------------------------------------
Each Lender acknowledges that it has been, and will continue to be, solely
responsible for making its own independent appraisal of and investigation into
the financial condition, creditworthiness, affairs, status and nature of the
Credit Parties and accordingly each Lender confirms to the other Lender that it
has not relied, and will not hereafter rely on the other Lender.
(a) to check or enquire on its behalf into the adequacy, accuracy or
completeness of any information provided by any Credit Party or in
connection with the Credit Documents (whether or not such information
has been or is hereafter circulated to such other Lender); or
(b) to assess or keep under review on its behalf the financial condition,
creditworthiness, affairs, status or nature of any Credit Party.
In addition, each Lender acknowledges that a copy of this Credit Agreement, of
the Schedules thereto and of the other Credit Documents have been made available
to it for its review and that it is satisfied with the form and substance
thereof.
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SECTION 18.6 - OTHER TRANSACTIONS
-----------------------------------------------
Each Lender may, outside the scope of this Agreement, deal with the Borrower and
the other Credit Parties in all transactions and generally do any banking
business with the Credit Parties, without having any liability to account to the
other Lender therefor.
SECTION 18.7 - NO PREFERENCE
------------------------------------------
No Lender shall have, previous to this Agreement, entered into or, subsequent to
this Agreement, enter into any arrangement with the Credit Parties or any other
Person, without the prior written consent of the other Lender, which would have
the effect of giving such Lender preference or priority over the other Lender in
respect of the Indebtedness of the Borrower under this Agreement.
SECTION 18.8 - NO ASSOCIATION AMONG LENDERS
---------------------------------------------------------
Nothing contained in this Agreement and no action taken pursuant to it shall, or
shall be deemed to, constitute the Lenders a partnership, association, joint
venture or other similar entity.
SECTION 18.9 - AMENDMENT OF THIS ARTICLE XVIII
------------------------------------------------------------
The provisions of this Article XVIII may be amended or added to, from time to
time, by execution by the Lenders of an instrument in writing and such
instrument in writing shall validly and effectively amend or add to any or all
of the provisions of this Article XVIII without requiring the execution of such
instrument in writing by the Borrower provided such amendment or addition does
not adversely affect the rights or obligations of the Borrower.
ARTICLE XIX
SUCCESSORS AND ASSIGNS
SECTION 19.1 - BENEFIT AND BURDEN OF THIS AGREEMENT
-----------------------------------------------------------------
This Agreement shall enure to the benefit of and be binding on the parties
hereto, their respective successors and any permitted assignees or transferees
of some or all of the parties' rights or obligations hereunder.
SECTION 19.2 - THE BORROWER
-----------------------------------------
The Borrower shall not assign or transfer all or any part of its rights or
obligations hereunder without the prior written consent of both Lenders.
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SECTION 19.3 - THE LENDERS
----------------------------------------
A Lender (herein sometimes called an "ASSIGNING LENDER") may, with the prior
consent of the other Lender and the Borrower (such consent not to be
unreasonably withheld), assign all or part of its rights to, and may have its
obligations in respect of, the Credit Facilities in which it participates
assumed by any other person (the "ASSIGNEE") without cost to the Borrower. An
assignment shall be for a minimum amount of Cdn$5,000,000 or the Equivalent
Amount in US Dollars and shall become effective when the Borrower has been
notified of it by the Assigning Lender and has received from the Assignee an
undertaking (addressed to all the parties to this Agreement) to be bound by this
Agreement and to perform the obligations assigned to it, in form and substance
reasonably satisfactory to the Assigning Lender and the Borrower. Any such
Assignee shall be and be treated as a Lender for all purposes of this Agreement,
shall be entitled to the full benefit hereof, shall be subject to the
obligations hereunder to the same extent as if it were an original party in
respect of the rights or obligations assigned to it and shall have a Commitment
hereunder equal to that portion of the Assigning Lender's Commitment assumed by
it, and the Assigning Lender shall be released and discharged accordingly and to
the same extent.
In the event that BNP or Royal assigns all of its rights hereunder to an
Assignee, and thereby ceases to be a Lender, all references in this Agreement to
BNP or Royal, as the case may be, shall for all purposes be deemed to be
replaced by references to such Assignee.
SECTION 19.4 - DISCLOSURE
---------------------------------------
Each Lender may disclose to any serious prospective Assignee, on a confidential
basis, such information concerning the Credit Parties as it considers
appropriate.
SECTION 19.5 - FURTHER DOCUMENTS
----------------------------------------------
The Borrower will, at the expense of the Assigning Lender, execute such further
documents and instruments and do such other things as an Assigning Lender may
reasonably request for the purpose of any assignment pursuant to Section 19.3,
including without limitation all such documents, instruments and things as may
reasonably be required by the Assignee's Counsel to ensure that the Assignee may
benefit from the Collateral Documents.
SECTION 19.6 - EXPENSES
-------------------------------------
A Lender which assigns all or any part of its rights hereunder as set forth in
Section 19.3 shall be responsible for, and pay on demand to the other Lender,
all expenses, including but not limited to legal fees (and value-added tax
thereon), incurred by the other Lender in connection with such assignment,
including all expenses relating to the documents, instruments and things
required to ensure that the Assignee may benefit from the Collateral Documents.
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ARTICLE XX
COMPENSATION
SECTION 20.1 - SET-OFF, COMPENSATION
--------------------------------------------------
Each Lender is authorized (but not obligated) at any time or from time to time,
without notice to any Credit Party or to any other Person, any such notice being
expressly waived by the Credit Parties, to set off, compensate and to apply any
and all deposits (general or special) held for or in the name of a Credit Party
and any Indebtedness or liability at any time owing or payable by such Lender to
or for the credit of or the account of such Credit Party against and on account
of the obligations and liabilities of the said Credit Party owing or payable to
such Lender under this Agreement or the other Credit Documents, irrespective of
currency and of whether or not such Lender has made any demand under this
Agreement or the other Credit Documents and whether or not these obligations and
liabilities of the said Credit Party, or any of them, have matured. The
provisions of this Section 20.1 shall not restrict such rights as the Lenders
may be entitled to without relying upon the provisions of this Agreement. For
the purposes of the application of this Section 20.1, the Credit Parties and the
Lenders agree that the benefit of any term applicable to any Lender's deposit,
credit, Indebtedness, liability or obligation (collectively referred to in this
Section 20.1 as the "DEPOSIT") shall be lost immediately before the time when
such Lender shall exercise its rights under this Section 20.1 in respect of a
relevant Deposit of such Lender.
ARTICLE XXI
JUDGMENT CURRENCY
SECTION 21.1 - JUDGMENT CURRENCY
----------------------------------------------
If for the purpose of obtaining judgment in any court in any jurisdiction with
respect to the Credit Documents, it becomes necessary to convert into the
currency of such jurisdiction (herein called the "JUDGMENT CURRENCY") any amount
due under the Credit Documents in any currency other than the Judgment Currency,
then conversion shall be made at the rate of exchange prevailing on the Business
Day preceding (a) the date of actual payment of the amount due, in the case of
proceedings in the courts of any jurisdiction that will give effect to such
conversion being made on such day, or (b) the day on which the judgment is
given, in the case of proceedings in the courts of the Province of Quebec or of
any other jurisdiction (the applicable date as of which such conversion is made
pursuant to this Section being hereinafter called the "JUDGMENT CONVERSION
DATE"). For this purpose, "RATE OF EXCHANGE" means the rate at which the Lender
to which the relevant amount is owed would be prepared on the relevant date, to
sell the currency of the amount due under the Credit Documents at one of its
principal offices against the Judgment Currency. In the event that there is a
change in the rate of exchange prevailing between the Judgment Conversion Date
and the date of payment of the amount due, the relevant Credit Party will, on
the date of payment, pay such additional amounts (if any) as may be necessary to
ensure that the amount paid on such date is the amount in the Judgment Currency
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which, when converted at the rate of exchange prevailing on the date of payment,
is the amount then due under the Credit Documents in Canadian Dollars or US
Dollars, as the case may be. Any additional amount due under this Section 21.1
will be due as a separate debt and shall not be affected by judgment being
obtained for any other sums due under or in respect of the Credit Documents.
ARTICLE XXII
GOVERNING LAW
SECTION 22.1 - GOVERNING LAW
------------------------------------------
The parties agree that this Agreement is conclusively deemed to be made under,
and for all purposes to be governed by and construed in accordance with, the
laws of the Province of Quebec and federal laws of Canada applicable therein.
ARTICLE XXIII
NOTICE
SECTION 23.1 - ADDRESS FOR NOTICE
-----------------------------------------------
Unless otherwise provided in this Agreement, any demand, request or notice to be
given under this Agreement shall be given by delivering the same or by mailing,
by registered mail, postage prepaid or by telexing by way of tested telex or by
telecopying the same, addressed as indicated opposite the names of the
signatories on the signature pages of this Agreement, or to such other address
as may be notified by any party to the others pursuant to Section 23.2.
SECTION 23.2 - NOTICE
-----------------------------------
Any such demand, request or notice sent as aforesaid shall be deemed to have
been received by the party to whom it is addressed (a) upon receipt, if
delivered or sent by registered mail (b) on the Business Day next following the
date of transmission if telexed and the appropriate answerback is received and
(c) if telecopied before 3:00 p.m. on a Business Day, on that day and if
telecopied after 3:00 p.m. on a Business Day, on the Business Day next following
the date of transmission; provided, however, that in the event normal mail
service, telecopier service or telex service shall be interrupted by strike,
force majeure or other cause, then the party sending the demand, request or
notice, shall utilize any other mode of communication which shall ensure prompt
receipt of such demand, request or notice by the other party or parties.
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ARTICLE XXIV
MISCELLANEOUS
SECTION 24.1 - SEVERABILITY
-----------------------------------------
Any provision of this Agreement which is or becomes prohibited or unenforceable
in any jurisdiction, does not invalidate, affect or impair the remaining
provisions thereof and any such prohibition or unenforceability in any
jurisdiction does not invalidate or render unenforceable such provision in any
other jurisdiction.
SECTION 24.2 - INTEREST LIMITATION
------------------------------------------------
The parties agree that no provision of this Agreement shall have the effect of
imposing on the Borrower any obligation to pay interest (as such term is defined
in section 347 of the Criminal Code of Canada) to a Lender at a rate in excess
of 60% per annum, taking into account all other amounts which must be taken into
account for the purpose thereof; and, to such extent, the Borrower's obligation
to pay interest hereunder is so limited.
SECTION 24.3 - SURVIVAL OF REPRESENTATIONS AND UNDERTAKINGS
-------------------------------------------------------------------------
The representations and warranties made by the Borrower in Article II of this
Agreement and the covenants, undertakings and agreements contained in this
Agreement survive the execution and delivery of this Agreement and continue in
full force and effect until the full payment and satisfaction of all liabilities
and obligations of the Borrower to the Lenders under this Agreement.
SECTION 24.4 - WHOLE AGREEMENT
--------------------------------------------
This Agreement constitutes the whole and entire agreement between the parties
hereto with respect to the subject matter thereof and cancels and supersedes any
prior offers, agreements, undertakings, declarations and representations,
written or verbal in respect thereof.
SECTION 24.5 - AMENDMENTS
---------------------------------------
No amendment, modification or waiver of any provision of this Agreement or
consent to any departure by the Borrower from any provision of this Agreement
will in any event be effective unless it is signed by all parties hereto or
unless it is in conformity with Section 18.9 and then the amendment,
modification, waiver or consent will be effective only in the specific instance,
for the specific purpose and for the specific length of time for which it is
given.
Notwithstanding the foregoing paragraph, BNP and Royal are hereby authorized to
correct any typographical error or other error of an editorial nature in this
Agreement and to substitute such corrected text in the counterparts of this
Agreement, provided that such corrections do not modify in any manner the
meaning or the interpretation of this Agreement.
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SECTION 24.6 - COUNTERPARTS
-----------------------------------------
This Agreement may be executed in any number of counterparts, each of which when
executed and delivered is an original but all of which taken together constitute
one and the same instrument; any party may execute this Agreement by signing any
counterpart of it and may communicate such signing by telecopier or otherwise.
SECTION 24.7 - FURTHER ASSURANCES
-----------------------------------------------
The Borrower and the Lenders shall do all such further acts and execute and
deliver all such further documents as shall be reasonably required in order to
fully perform and carry out the terms of this Agreement.
SECTION 24.8 - RISKS OF FORCE MAJEURE
---------------------------------------------------
The Borrower expressly assumes all risks of superior force, such that it shall
be bound to timely execute each and every of its obligations under this
Agreement and the other Credit Documents notwithstanding the existence or
occurrence of any event or circumstance constituting a superior force within the
meaning of Article 1693 of the CIVIL CODE OF QUEBEC.
SECTION 24.9 - GOOD FAITH AND FAIR CONSIDERATION
--------------------------------------------------------------
The Borrower acknowledges and declares that it has entered into this Agreement
freely and of its own will. In particular, the Borrower acknowledges that this
Agreement and the other Credit Documents were negotiated by it and the Lenders
in good faith, and that there was no exploitation of the Borrower by the
Lenders, nor is there any serious disproportion between the consideration
provided by the Lenders and that provided by the Borrower.
SECTION 24.10 - TERM OF AGREEMENT
----------------------------------------------
The term of this Agreement is until the later of the termination of all
Commitments and payment in full of all the obligations of the Borrower incurred
pursuant to this Agreement.
SECTION 24.11 - FORMAL DATE
----------------------------------------
This Agreement shall bear the formal date of February 5, 1998 notwithstanding
the actual date of execution thereof by the parties hereto and may be referred
to as bearing such date.
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SECTION 24.12 - LANGUAGE
-------------------------------------
The Borrower and the Lenders confirm that they have requested that this
Agreement, the other Credit Documents and all documents and notices contemplated
hereby or thereby be drawn up in the English language. L'Emprunteur et les
Preteurs confirment avoir requis que cette convention, les autres documents de
credit et tous les documents et avis qui y sont envisages soient rediges en
langue anglaise.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be duly
executed at Montreal, Canada on the 13th day of March, 1998.
ADDRESS:
Phoenix International Life Sciences Inc.
0000 Xxxxx Xxxxxx
Xxxxx-Xxxxxxx, Xxxxxx, Xxxxxx
X0X 0X0
ATTENTION: Senior Vice-President and Chief
Financial Officer
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
PHOENIX INTERNATIONAL LIFE SCIENCES INC.
(AS BORROWER)
By: /s/ Xxxx-Xxxx Xxxxx
Name: Xxxx-Xxxx Xxxxx, C.A.
Title: Senior Vice-President and Chief Financial
Officer
ADDRESS:
Royal Bank of Canada
Business Banking Centre
000 Xx-Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxxx-Xxxxxx, Xxxxxx, Xxxxxx
X0X 0X0
ATTENTION: Assistant Manager
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
ROYAL BANK OF CANADA
(AS LENDER)
By: /s/ Xxxxx Xxxxxx
Name: Xxxxx Xxxxxx
Title: Senior Account Manager
-101-
ADDRESS:
Banque Nationale de Paris (Canada)
Tour BNP, 4th Floor
0000 XxXxxx Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxx, Xxxxxx
X0X 0X0
ATTENTION: Vice-President, Deputy Manager
Commercial and Export Banking
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
BANQUE NATIONALE DE PARIS (CANADA)
(AS LENDER)
By: /s/ Xxxxxxx Xxxxxxxxx
---------------------------------
Name: Xxxxxxx Xxxxxxxxx
Title: Vice-President, Deputy Manager
Commercial and Export Banking
By: /s/ Xxxxxxx Xxxxxx
---------------------------------
Name: Xxxxxxx Xxxxxx
Title: Assistant Vice-President
Commercial and Export Banking
-102-
