South Central Ontario Region 381 King St. W. & Francis St., 2nd Fl. Kitchener, Ontario N2G 1B8 Telephone No.: (519) 570-7322 Fax No.: (519) 579-2610
Xxxxxxx
00.0
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Xxxxx
Xxxxxxx Xxxxxxx Xxxxxx
000
Xxxx Xx. X. & Xxxxxxx St., 2nd Fl.
Xxxxxxxxx,
Xxxxxxx
X0X
0X0
Telephone
No.: (000) 000-0000
Fax
No.: (000) 000-0000
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February
19, 0000
Xxxxxxxx
Xxxxx Xxxxxx, Ltd.
00
Xxxxxx
Xxx
Xxxxxxxxx,
XX X0X 0X0
Attn:
Xx.
Xxxx Xxxxxx,
Dear
Sir,
We
are
pleased to offer the Borrower the following credit facilities (the
"Facilities"), subject to the following terms and conditions.
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BORROWER
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(the
"Borrower")
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LENDER
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The
Toronto-Dominion Bank
(the "Bank"), through its South Central Ontario Region branch, in
Kitchener, Ontario.
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CREDIT
LIMIT
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1) CDN
$500,000
2)
CDN $895,253 as reduced pursuant to the section headed "Repayment
and
Reduction of Amount of Credit Facility".
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| TYPE OF CREDIT AND BORROWING OPTIONS |
1)
Operating
Loan
available at the Borrower's option by way of:
Prime Rate Based Loans in CDN$ ("Prime Based Loans")
2)
Committed
Reducing Term Facility (Single
Draw)available
at the Borrower's option by way of:
Fixed Rate Term Loan in CDN$
Floating Rate Term Loan available by way of:
Prime Rate Based Loans in CDN$ ("Prime Based
Loans")
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PURPOSE
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1)
Working Capital
2)
Real Estate Financing
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TENOR
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1)
Uncommitted
2)
Committed
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CONTRACTUAL
TERM
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1)
No term
2)
March 15, 2009
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RATE
TERM (FIXED
RATE TERM
LOAN)
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1)
No term
2)
Fixed rate: 6 month, 1-3 years but never to exceed the Contractual
Term Maturity Date
Floating rate: No term
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AMORTIZATION
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2)
15 years to January 2015
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| INTEREST RATES AND FEES |
Advances
shall bear interest and fees as follows:
1)
Operating
Loan:
Prime
Based Loans: Prime Rate + 0% per
annum
2)
Committed
Reducing Term Facility:
Fixed
Rate Term Loans: As determined by the
Bank, in its sole discretion, for the Rate Term selected bythe Borrower,
and as set out in the Rate and Payment Terms Notice applicable to
that
Fixed Rate Term Loan.
Floating Rate Term Loans available by way of:
Prime Based Loans: Prime Rate + 0% per annum
For
all Facilities, interest payments will be made in accordance with
Schedule
"A" attached hereto unless otherwise stated in this Letter or in
the Rate
and Payment Terms Notice applicable for a particular drawdown. Information
on interest rate and fee definitions, interest rate calculations
and
payment is set out in the Schedule "A" attached hereto.
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DRAWDOWN
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1)
On a revolving basis.
2)
Fully drawn. Amounts repaid may not be redrawn.
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BUSINESS
CREDIT SERVICE
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The
Borrower will have access to the Operating Loan (Facility 1) via
Loan
Account Number 0000000-2752 (the "Loan Account") up to the Credit
Limit of
the Operating Loan by withdrawing funds from the Borrower's Current
Account Number 327791-2752 (the "Current Account"). The Borrower
agrees
that each advance from the Loan Account will be in an amount equal to
$10,000 (the "Transfer Amount") or a multiple thereof. If the Transfer
Amount is NIL, the Borrower agrees that an advance from the Borrower's
Loan Account may be in an amount sufficient to cover the debits made
to
the Current Account.
The
Borrower agrees that:
a)
all other overdraft privileges which have governed the Borrower's
Current
Account are hereby cancelled.
b)
all outstanding overdraft amounts under any such other agreements
are now
included in indebtedness under this Agreement.
The
Bank may, but is not required to, automatically advance the Transfer
Amount or a multiple thereof or any other amount from the Loan Account
to
the Current Account in order to cover the debits made to the Current
Account if the amount in the Current Account is insufficient to cover
the
debits. The Bank may, but is not required to, automatically and without
notice apply the funds in the Current Account in amounts equal to
the
Transfer Amount or any multiple thereof or any other amount to repay
the
outstanding amount in the Loan Account.
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REPAYMENT
AND REDUCTION
OF AMOUNT
OF CREDIT FACILITY
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1)
On demand. If the Bank demands repayment, the Borrower will pay to
the
Bank all amounts outstanding under the Operating Loan.
2)
All amounts outstanding will be repaid on or before the Contractual
Term
Maturity Date. The drawdown will be repaid in equal monthly payments.
The
details of repayment and interest rate applicable to such drawdown
will be set out in the" Rate and Payment Terms Notice" applicable
to that
drawdown. Any amounts repaid may not be reborrowed.
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SECURITY
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The
following security shall be provided, shall, unless otherwise indicated,
support all present and future indebtedness and liability of the
Borrower
and the grantor of the security to the Bank including without limitation
indebtedness and liability under guarantees, foreign exchange contracts,
cash management products, and derivative contracts, shall be registered
in
first position, and shall be on the Bank's standard form, supported
by
resolutions and solicitor's opinion, all acceptable to the
Bank:
a)
General Security Agreement ("GSA") representing a first charge on
all the
Borrower’s assets and undertakings with SLO and Resolution
b)
General Assignment of Fire Insurance.
c)
Continuing Collateral Mortgage, representing a first charge, on real
property located at 00 Xxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxx, in the principal
amount of $1,500,000, beneficially owned by and registered in the
name of
Xxxxxxxx Xxxxx Canada, Ltd.
d)
Guarantee of Advances from Xxxxxxxx Xxxxx Co.
Limited
$1,500,000
All
persons and entities required to provide a guarantee shall be referred
to
herein individually as a "Surety" and/or "Guarantor" and collectively
as
the "Guarantors".
All
of the above security and guarantees shall be referred to collectively
in
this Agreement as "Bank Security".
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DISBURSEMENT
CONDITIONS
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The
obligation of the Bank to permit any drawdown hereunder is subject
to the
Standard Disbursement Conditions contained in Schedule "A" and the
following additional drawdown conditions:
a)
Borrower Questionnaire and Site Visit to be completed satisfactory
to the
Bank.
b)
Accountant Prepared Financial statements for the year ended Aug 31,
2006
are to be provided to the bank with no material change from management
prepared statements.
c)
Management prepared interim financial statements for the most recent
period ended are to be provided to the bank.
d)
Borrower to commit to transferring all day-to-day banking to
TDBFG.
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REPRESENTATIONS
AND
WARRANTIES
|
All
representations and warranties shall be deemed to be continually
repeated
so long as any amounts remain outstanding and unpaid under this Agreement
or so long as any commitment under this Agreement remains in effect.
The
Borrower makes the Standard Representations and Warranties set out
in
Schedule "A".
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POSITIVE
COVENANTS
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So
long as any amounts remain outstanding and unpaid under this Agreement
or
so long as any commitment under this Agreement remains in effect,
the
Borrower will and will ensure that its subsidiaries and each of the
Guarantors will observe the Standard Positive Covenants set out in
Schedule "A" and in addition will:
a)
provide to the Bank annually, Audited year end financial statements
for
Xxxxxxxx Xxxxx Co. within 120 days of each fiscal year end,
b)
provide to the Bank annually, Accountant Prepared Notice to Reader
Financial Statements for Xxxxxxxx Xxxxx Canada, Ltd. , within 120
days of
each fiscal year end,
c)
obtain prior approval from the Bank and it's solicitor, for any lease
or
easement that would restrict use of the property. Approval not to
be
unreasonably withheld.
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NEGATIVE
COVENANTS
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So
long as any amounts remain outstanding and unpaid under this Agreement
or
so long as any commitment under this Agreement remains in effect,
the
Borrower will and will ensure that its subsidiaries and each of the
Guarantors will observe the Standard Negative Covenants set out in
Schedule "A". In addition the Borrower will not and will ensure that
its
subsidiaries and each of the Guarantors will not:
a)
allow the subject property herein to be further
encumbered.
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REPORTING
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The
Borrower acknowledges that the financial reporting obligations contained
herein, including the submission of the financial statements to the
Bank
on a timely basis, constitute a material condition precedent to the
Bank
providing the credit facilities contemplated herein. Should the Borrower
fail to fulfill such obligations within the delays set forth herein
and
such default is not remedied within 10 days from the date of the
Bank's
written notice to the Borrower setting forth the nature of the default,
then the Borrower shall be deemed to have committed an "Event of
Default"
as hereinafter defined.
Notwithstanding
the foregoing, and without prejudice to and under strict reserve
thereof,
of any rights and recourses the Bank may have in the circumstances,
the
Bank shall nevertheless have the right to engage, at the Borrower's
expense, an independent auditor to examine the Borrower's books,
records
and physical assets, and perform such tests and analysis and such
other
verifications as the Bank may, in its sole discretion, determine
necessary
to assess its loan risk and realizable value of the
Security.
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PERMITTED
LIENS
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Permitted
Liens as referred to in Schedule "A" are:
Purchase
Money Security Interests in equipment which Purchase Money Security
Interest exists on the date of this Agreement ("Existing PMSIs")
which are
known to the Bank and all future Purchase Money Security Interests
on
equipment acquired to replace the equipment under Existing PMSIs,
provided
that the cost of such replacement equipment may not exceed the cost
of the
equipment subject to the Existing Lien by more than 10%.
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FINANCIAL
COVENANTS
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The
Borrower agrees at all times to:
a)
maintain a Debt Service Coverage ratio, of not less than 1.25:1.
Tested
Annually.
The
Debt
Service Coverage
ratio to be calculated as follows:
EBITDA
- Any Capital Cash Outflows to related company (Dividends, Shareholder
loans, etc.) - Capital Expenditures
Principal
+ Interest
EBITDA
is
defined as Earnings Before Interest, Income Taxes, Depreciation,
and
Amortization.
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EVENTS
OF DEFAULT
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The
Bank may accelerate the payment of principal and interest under any
committed credit facility hereunder and cancel any undrawn portion
of any
committed credit facility hereunder, at any time after the occurrence
of
any one of the Standard Events of Default contained in Schedule "A"
attached hereto.
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ANCILLARY
FACILITIES
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As
at the date of this Agreement, the following uncommitted ancillary
products are made available. These products may be subject to other
agreements.
1)
TD Visa Business cards.
2)
Spot Foreign Exchange Facility which allows the Borrower to enter
into
US$1,000,000 for settlement on a spot basis.
3)
Certain treasury products, such as forward foreign exchange
transactions.
The
Borrower agrees that treasury products will be used to hedge its
risk and
will not be used for speculative purposes.
The
paragraph headed "FX CLOSE OUT" as set out in Schedule "A" shall
apply to
FX Transactions.
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AVAILABILITY
OF OPERATING
LOAN
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The
Operating Loan is uncommitted, made available at the Bank's discretion,
and is not automatically available upon satisfaction of the terms
and
conditions, conditions precedent, or financial tests set out
herein.
The
occurrence of an Event of Default is not a precondition to the Bank's
right to accelerate repayment and cancel the availability of the
Operating
Loan.
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SCHEDULE
"A" - STANDARD
TERMS
AND
CONDITIONS
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Schedule
"A" sets out the Standard Terms and Conditions ("Standard Terms and
Conditions") which apply to these credit facilities. The Standard
Terms
and Conditions, including the defined terms set out therein, form
part of
this Agreement, unless this letter states specifically that one or
more of
the Standard Terms and Conditions do not apply or are
modified.
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We
trust you will find these facilities helpful in meeting your ongoing financing
requirements. We ask that if you wish to accept this offer of financing (which
includes the Standard Terms and Conditions), please do so by signing and
returning the attached duplicate copy of this letter to the undersigned. This
offer will expire if not accepted in writing and received by the Bank on or
before February
26, 2007.
Yours
truly,
THE
TORONTO-DOMINION BANK
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Xxxx
X. Xxxxxxx
Relationship
Manager
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Xxxxxx
Xxxxx
Manager
Commercial Credit
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TO
THE TORONTO-DOMINION BANK:
hereby
accepts the foregoing offer this
day
of ,
2007.
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Signature
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Signature
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Print
Name & Position
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Print
Name & Position
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cc.
Guarantor(s)
The
Bank
is providing the guarantor(s) with a copy of this letter as a courtesy only.
The
delivery of a copy of this letter does not create any obligation of the Bank
to
provide the guarantor(s) with notice of any changes to the credit facilities,
including without limitation, changes to the terms and conditions, increases
or
decreases in the amount of the credit facilities, the establishment of new
credit facilities or otherwise. The Bank may, or may not, at its option,
provide
the guarantor(s) with such information, provided that the Bank will provide
such
information upon the written request of the guarantor.
SCHEDULE
A
STANDARD
TERMS AND CONDITIONS
1.INTEREST
RATE DEFINITIONS
Prime
Rate means the rate of interest per annum (based on a 365/366 day year)
established and reported by the Bank to the Bank of Canada from time to time
as
the reference rate of interest for determination of interest rates that the
Bank
charges to customers of varying degrees of creditworthiness in Canada for
Canadian dollar loans made by it in Canada.
The
Stamping Fee rate per annum for CDN$ B/As is based on a 365/366 day year
and the
Stamping Fee is calculated on the Face Amount of each B/A presented to the
Bank
for acceptance. The Stamping Fee rate per annum for US$ B/As is based on a
360 day year and the Stamping Fee is calculated on the Face Amount of each
B/A
presented to the Bank for acceptance.
LIBOR
means the rate of interest per annum (based on a 360 day year) as determined
by
the Bank (rounded upwards, if necessary to the nearest whole multiple of
1/16th
of 1%) at which the Bank may make available United States dollars which are
obtained by the Bank in the Interbank Euro Currency Market, London, England
at
approximately 11:00 a.m. (Toronto time) on the second Business Day before
the
first day of, and in an amount similar to, and for the period similar to
the
interest period of, such advance.
USBR
means the rate of interest per annum (based on a 365/366 day year) established
by the Bank from time to time as the reference rate of interest for the
determination of interest rates that the Bank charges to customers of varying
degrees of creditworthiness for US dollar loans made by it in Canada.
Any
interest rate based on a period less than a year expressed as an annual rate
for
the purposes of the Interest Act (Canada) is equivalent to such determined
rate
multiplied by the actual number of days in the calendar year in which the
same
is to be ascertained and divided by the number of days in the period upon
which
it was based.
2.
INTEREST CALCULATION AND PAYMENT
Interest
on Prime Based Loans and USBR Loans is calculated daily and payable monthly
in
arrears based on the number of days the subject loan is outstanding unless
otherwise provided in the Rate and Payment Terms Notice.
The
Stamping Fee is calculated based on the amount and the term of the B/A and
payable upon acceptance by the Bank of the B/A. The net proceeds received
by the
Borrower on a B/A advance will be equal to the Face Amount of the B/A discounted
at the Bank's then prevailing B/A discount rate for CDN$ B/As or US$ B/As as the
case may be, for the specified term of the B/A less the B/A Stamping
Fee.
Interest
on LIBOR Loans is calculated and payable on the earlier of contract maturity
or
quarterly in arrears, for the number of days in the LIBOR interest
period.
L/C
and
L/G fees are payable at the time set out in the Letter of Credit Indemnity
Agreement applicable to the issued L/C or L/G.
Interest
on Fixed Rate Term Loans is compounded monthly and payable monthly in arrears
unless otherwise provided in the Rate and Payment Terms Notice.
Interest
is payable both before and after maturity or demand, default and
judgment.
Each
payment under this Agreement shall be applied first in payment of costs and
expenses, then interest and fees and the balance, if any, shall be applied
in
reduction of principal.
For
loans
not secured by real property, all overdue amounts of principal and interest
and
all amounts outstanding in excess of the Credit Limit shall bear interest
from
the date on which the same became due or from when the excess was incurred,
as
the case may be, until the date of payment or until the date the excess is
repaid at 21% per annum, or such lower interest rate if the Bank agrees to
a
lower interest rate in writing. Nothing in this clause shall be deemed to
authorize the Borrower to incur loans in excess of the Credit
Limit.
3.
DRAWDOWN PROVISIONS
Prime
Based and USBR Loans
There
is
no minimum amount of drawdown by way of Prime Based Loans and USBR Loans,
except
as stated in the section of the Agreement titled "Business Credit Services
Agreement", if that section of the Agreement has not been deleted. The Borrower
shall provide the Bank with 3 Business Days' notice of a requested Prime
Based
Loan or USBR Loan over $1,000,000.
B/As
The
Borrower shall advise the Bank of the requested term or maturity date for
B/As
issued hereunder. The Bank shall have the discretion to restrict the term
or maturity dates of B/As. In no event shall the term of the B/A exceed the
Contractual Term Maturity Date. The minimum amount of a drawdown by way of
B/As
is $1,000,000 and in multiples of $100,000 thereafter. The Borrower shall
provide the Bank with 3 Business Days' notice of a requested B/A
drawdown.
The
Borrower shall pay to the Bank the full amount of the B/A at the maturity
date of the B/A.
The
Borrower appoints the Bank as its attorney to and authorizes the Bank to
(i)
complete, sign, endorse, negotiate and deliver B/As on behalf of the Borrower
in
handwritten form, or by facsimile or mechanical signature or otherwise, (ii)
accept such B/As, and (iii) purchase, discount, and/or negotiate
B/As.
LIBOR
The
Borrower shall advise the Bank of the requested LIBOR contract maturity
period. The Bank shall have the discretion to restrict the LIBOR contract
maturity. In no event shall the term of the LIBOR contract exceed the
Contractual Term Maturity Date. The minimum amount of a drawdown by way of
a LIBOR Loan is $1,000,000, and shall be in multiples of $100,000 thereafter.
The Borrower will provide the Bank with 3 Business Days' notice of a requested
LIBOR Loan.
L/C
and/or L/G
The
Bank
shall have the discretion to restrict the maturity date of L/Gs or
L/Cs.
B/A
- Prime Conversion
The
Borrower will provide the Bank with at least 3 Business Days' notice of its
intention either to convert a B/A to a Prime Based Loan or vice versa, failing
which, the Bank may decline to accept such additional B/As or may charge
interest on the amount of Prime Based Loans resulting from maturity of B/As
at
the rate of 115% of the rate applicable to Prime Based Loans for the 3 Business
Day period immediately following such maturity. Thereafter, the rate shall
revert to the rate applicable to Prime Based Loans.
Notice
Prior
to
each drawdown and at least 10 days prior to each Rate Term Maturity, the
Borrower will advise the Bank of its selection of drawdown options from
those made available by the Bank. The Bank will, after each drawdown,
other than drawdowns by way of BA, LIBOR Loan or under the operating loan,
send
a Rate and Payment Terms Notice to the Borrower.
4.
PREPAYMENT
(a)
10% Prepayment Option Chosen. If the Borrower has elected a 10% Prepayment
Option for a Facility the following shall apply to all Fixed Rate Loans made
under that Facility. Each calendar year, ("Year"), the Borrower may prepay
in one lump sum, once each Year, an amount outstanding under a Fixed Rate
Term
Loan not exceeding 10% of the original amount of the Fixed Rate Term Loan
being
prepaid, upon payment of all interest accrued to the date of prepayment
("Prepayment Date") without paying any prepayment charge, provided that an
Event
of Default has not occurred. This privilege is not cumulative from Year to
Year.
(b)
10% Prepayment Option Not Chosen or Borrower Prepaying More than 10%.
During each Year, the Borrower may, provided that an Event of Default has
not
occurred:
if
it has
not chosen the 10% Prepayment Option, prepay all or any part of the principal
then outstanding under Fixed Rate Term Loans, or,
if
it has
chosen the 10% Prepayment Option, prepay more than 10% of the original amount
of
the Fixed Rate Term Loan being prepaid, in any Year,
in
either
case, upon payment of all interest accrued to the Prepayment Date and prepayment
charges equal to the greater of:
(a)
three months' interest on the amount of the prepayment (and in the case where
the Borrower has chosen the 10% Prepayment Option, the amount of prepayment
is
the amount of prepayment exceeding the 10% limit) using the interest rate
applicable to the Fixed Rate Term Loan being prepaid; and
(b)
the Interest Rate Differential, being the amount by which:
the
total
amount of interest on the amount of the prepayment using the interest rate
applicable to the Fixed Rate Term Loan being prepaid calculated for the period
of time equal to the Remaining Term, exceeds
the
total
amount of interest on the amount being prepaid using the interest rate
applicable to a fixed rate term loan that the Bank would make to a borrower
for
a comparable facility on the Prepayment Date, calculated for the period of
time
from the Prepayment Date until the Rate Term Maturity Date for the Fixed
Rate
Term Loan being prepaid ("Remaining Term").
5.
STANDARD DISBURSEMENT CONDITIONS
The
obligation of the Bank to permit any drawdowns hereunder at any time is subject
to the following conditions precedent:
a)
The Bank shall have received the following documents which shall be in form
and
substance satisfactory to the Bank:
i) A copy of a duly
executed resolution of the Board of Directors of the Borrower empowering
the
Borrower to enter into this Agreement;
ii) A copy of any
necessary government approvals authorizing the Borrower to enter into this
Agreement;
iii) All of the Bank Security
and supporting resolutions and solicitors' letter of opinion required
hereunder;
iv) The Borrower's compliance
certificate certifying compliance with all terms and conditions hereunder;
v) all operation of account
documentation; and
vi) For drawdowns under the
Facility by way of L/C or L/G, the Bank’s standard form Letter of Credit
Indemnity Agreement
b)
The representations and warranties contained in this Agreement are
correct.
c)
No event has occurred and is continuing which constitutes an Event of Default
or
would constitute an Event of Default, but for the requirement that notice
be
given or time elapse or both.
d)
The Bank has received the arrangement fee payable hereunder (if any) and
the
Borrower has paid all legal and other expenses incurred by the Bank in
connection with the Agreement or the Bank Security.
6.
STANDARD REPRESENTATIONS AND WARRANTIES
The
Borrower hereby represents and warrants, which representations and
warranties shall be deemed to be continually repeated so long as any amounts
remain outstanding and unpaid under this Agreement or so long as any commitment
under this Agreement remains in effect, that:
a)
The Borrower is a duly incorporated corporation, a limited partnership,
partnership, or sole proprietorship, duly organized, validly existing and
in
good standing under the laws of the jurisdiction where the Branch/Centre
is
located and each other jurisdiction where the Borrower has property or assets
or
carries on business and the Borrower has adequate corporate power and authority
to carry on its business, own property, borrow monies and enter into agreements
therefore, execute and deliver the Agreement, the Bank Security, and documents
required hereunder, and observe and perform the terms and provisions of this
Agreement.
b)
There are no laws, statutes or regulations applicable to or binding upon
the
Borrower and no provisions in its charter documents or in any by-laws,
resolutions, contracts, agreements, or arrangements which would be contravened,
breached, violated as a result of the execution, delivery, performance,
observance, of any terms of this Agreement.
c)
No Event of Default has occurred nor has any event occurred which, with the
passage of time or the giving of notice, would constitute an Event of Default
under this Agreement or which would constitute a default under any other
agreement.
d)
There are no actions, suits or proceedings, including appeals or applications
for review, or any knowledge of pending actions, suits, or proceedings against
the Borrower and its subsidiaries, before any court or administrative agency
which would result in any material adverse change in the property, assets,
financial condition, business or operations of the Borrower.
e)
All material authorizations, approvals, consents, licenses, exemptions, filings,
registrations and other requirements of governmental, judicial and public
bodies
and authorities required to carry on its business have been or will be obtained
or effected and are or will be in full force and effect.
f)
The financial statements and forecasts delivered to the Bank fairly present
the
present financial position of the Borrower, and have been prepared by the
Borrower and its auditors in accordance with Canadian Generally Accepted
Accounting Principles consistently applied.
g)
All of the remittances required to be made by the Borrower to the federal
government and all provincial and municipal governments have been made, are
currently up to date and there are no outstanding arrears. Without
limiting the foregoing, all employee source deductions (including income
taxes,
Employment Insurance and Canada Pension Plan), sales taxes (both provincial
and
federal), corporate income taxes, corporate capital taxes, payroll taxes
and
Workers' Compensation dues are currently paid and up to date.
7.
STANDARD POSITIVE COVENANTS
So
long
as any amounts remain outstanding and unpaid under this Agreement or so long
as
any commitment under this Agreement remains in effect, the Borrower will,
and
will ensure that its subsidiaries and each of the Guarantors will:
a)
Pay all amounts of principal, interest and fees on the dates, times and place
specified herein, under the Rate and Payment Terms Notice, and under any
other
agreement between the Bank and the Borrower.
b)
Advise the Bank of any change in the amount and the terms of any credit
arrangement made with other lenders or any action taken by another lender
to
recover amounts outstanding with such other lender.
c)
Advise promptly after the happening of any event which will result in a material
adverse change in the financial condition, business, operations, or prospects
of
the Borrower or the occurrence of any Event of Default or default under this
Agreement or under any other agreement for borrowed money.
d)
Do all things necessary to maintain in good standing its corporate existence
and
preserve and keep all material agreements, rights, franchises, licenses,
operations, contracts or other arrangements in full force and
effect.
e)
Take all necessary actions to ensure that the Bank Security and its obligations
hereunder will rank ahead of all other indebtedness of and all other security
granted by the Borrower.
f)
Pay all taxes, assessments and government charges unless such taxes,
assessments, or charges are being contested in good faith and appropriate
reserves shall be made with funds set aside in a separate trust
fund.
g)
Provide the Bank with information and financial data as it may request from
time
to time.
h)
Maintain property, plant and equipment in good repair and working
condition.
i)
Inform the Bank of any actual or probable litigation and furnish the Bank
with
copies of details of any litigation or other proceedings, which might affect
the
financial condition, business, operations, or prospects of the
Borrower.
j)
Provide such additional security and documentation as may be required from
time
to time by the Bank or its solicitors.
k)
Continue to carry on the business currently being carried on by the Borrower
its
subsidiaries and each of the Guarantors at the date hereof.
l)
Maintain adequate insurance on all of its assets, undertakings, and business
risks.
m)
Permit the Bank or its authorized representatives full and reasonable access
to
its premises, business, financial and computer records and allow the duplication
or extraction of pertinent information therefrom and
n)
Comply with all applicable laws.
8.
STANDARD NEGATIVE COVENANTS
So
long
as any amounts remain outstanding and unpaid under this Agreement or so long
as
any commitment under this Agreement remains in effect, the Borrower will
not and
will ensure that its subsidiaries and each of the Guarantors will
not:
a)
Create, incur, assume, or suffer to
exist, any mortgage, deed of trust, pledge, lien, security interest, assignment,
charge, or encumbrance (including without limitation, any conditional sale,
or
other title retention agreement, or finance lease) of any nature, upon or
with
respect to any of its assets or undertakings, now owned or hereafter acquired,
except for those Permitted Liens, if any, set out in the Letter.
b)
Create, incur, assume or suffer to exist any other indebtedness for borrowed
money (except for indebtedness resulting from Permitted Liens, if any) or
guarantee or act as surety or agree to indemnify the debts of any other
Person.
c)
Merge or consolidate with any other Person, or acquire all or substantially
all
of the shares, assets or business of any other Person.
d)
Sell, lease, assign, transfer, convey or otherwise dispose of any of its
now
owned or hereafter acquired assets (including, without limitation, shares
of
stock and indebtedness of subsidiaries, receivables and leasehold interests),
except for inventory disposed of in the ordinary course of
business.
e)
Terminate or enter into a surrender
of any lease of any property mortgaged under the Bank Security.
f)
Cease to carry on the business currently being carried on by each of the
Borrower, its subsidiaries, and the Guarantors at the date hereof.
g)
Permit any change of ownership or change in the capital structure of the
Borrower.
9.
ENVIRONMENTAL
The
Borrower represents and warrants (which representation and warranty shall
continue throughout the term of this Agreement) that the business of the
Borrower, its subsidiaries and each of the Guarantors is being operated in
compliance with applicable laws and regulations respecting the discharge,
omission, spill or disposal of any hazardous materials and that any and all
enforcement actions in respect thereto have been clearly conveyed to the
Bank.
The
Borrower shall, at the request of the Bank from time to time, and at the
Borrower's expense, obtain and provide to the Bank an environmental audit
or
inspection report of the property from auditors or inspectors acceptable
to the
Bank.
The
Borrower hereby indemnifies the Bank, its officers, directors, employees,
agents
and shareholders, and agrees to hold each of them harmless from all loss,
claims, damages and expenses (including legal and audit expenses) which may
be
suffered or incurred in connection with the indebtedness under this Agreement
or
in connection with the Bank Security.
10.
STANDARD EVENTS OF DEFAULT
The
Bank
may accelerate the payment of principal and interest under any committed
credit
facility hereunder and cancel any undrawn portion of any committed credit
facility hereunder, at any time after the occurrence of any one of the following
Events of Default:
a)
Non-payment of principal outstanding under this Agreement when due or
non-payment of interest or fees outstanding under this Agreement within 3
Business Days of when due.
b)
If any representation, warranty or statement made hereunder or made in
connection with the execution and delivery of this Agreement or the Bank
Security is false or misleading at any time.
c)
If there is a breach or non-performance or non-observance of any term or
condition of this Agreement or the Bank Security and, if such default is
capable
to being remedied, the default continues unremedied for 5 Business Days after
the occurrence.
d)
If the Borrower, any one of its subsidiaries, or, if any of the Guarantors
makes
a general assignment for the benefit of creditors, files or presents a petition,
makes a proposal or commits any act of bankruptcy, or if any action is taken
for
the winding up, liquidation or the appointment of a liquidator, trustee in
bankruptcy, custodian, curator, sequestrator, receiver or any other officer
with
similar powers or if a judgment or order shall be entered by any court approving
a petition for reorganization, arrangement or composition of or in respect
of
the Borrower, any of its subsidiaries, or any of the Guarantors or if the
Borrower, any of its subsidiaries, or any of the Guarantors is insolvent
or
declared bankrupt.
e)
If there exists a voluntary or
involuntary suspension of business of the Borrower, any of its subsidiaries,
or
any of the Guarantors.
f)
If action is taken by an encumbrancer against the Borrower, any of its
subsidiaries, or any of the Guarantors to take possession of property or
enforce
proceedings against any assets.
g)
If any final judgment for the payment of monies is made against the Borrower,
any of its subsidiaries, or any of the Guarantors and it is not discharged
within 30 days from the imposition of such judgment.
h)
If there exists an event, the effect of which with lapse of time or the giving
of notice, will constitute an event of default or a default under any other
agreement for borrowed money in excess the Cross Default Threshold entered
into
by the Borrower, any of its subsidiaries, or any of the Guarantors.
i)
If the Bank Security is not enforceable or if any party to the Bank Security
shall dispute or deny any liability or any of its obligations under the Bank
Security.
j)
If, in the Bank's
determination, a material adverse change occurs in the financial condition,
business operations or prospects of the Borrower, any of the Borrower's
subsidiaries, or any of the Guarantors.
11.
ACCELERATION
If
the
Bank accelerates the payment of principal and interest hereunder, the Borrower
shall immediately pay to the Bank all amounts outstanding hereunder, including
without limitation, the amount of unmatured B/As and LIBOR Loans and the
amount
of all drawn and undrawn L/Gs and L/Cs. All cost to the Bank
of unwinding LIBOR Loans and all loss suffered by the Bank in re-employing
amounts repaid will be paid by the Borrower.
The
Bank
may demand the payment of principal and interest under the Operating Loan
(and
any other uncommitted facility) hereunder and cancel any undrawn portion
of the
Operating Loan (and any other uncommitted facility) hereunder, at any time
whether or not an Event of Default has occurred.
12.
CURRENCY INDEMNITY
US$
loans
must be repaid with US$ and CDN$ loans must be repaid with CDN$ and the Borrower
shall indemnify the Bank for any loss suffered by the Bank if US$ loans are
repaid with CDN$ or vice versa, whether such payment is made pursuant to
an
order of a court or otherwise.
13.
TAXATION ON PAYMENTS
All
payments made by the Borrower to the Bank will be made free and clear of
all
present and future taxes (excluding the Bank's income taxes), withholdings
or
deductions of whatever nature. If these taxes, withholdings or deductions
are required by applicable law and are made, the Borrower, shall, as a separate
and independent obligation, pay to the Bank all additional amounts as shall
fully indemnify the Bank from any such taxes, withholdings or
deductions.
14.
REPRESENTATION
No
representation or warranty or other statement made by the Bank concerning
any of
the credit facilities shall be binding on the Bank unless made by it in writing
as a specific amendment to this Agreement.
15.
ADDED COST
If
the
introduction of or any change in any present or future law, regulation, treaty,
official or unofficial directive, or regulatory requirement, (whether or
not
having the force of law) or in the interpretation or application thereof,
relates to:
i)
the imposition or exemption of taxation of payments due to the Bank or on
reserves or deemed reserves in respect of the undrawn portion of any Facility
or
loan made available hereunder; or,
ii)
any reserve, special deposit, regulatory or similar requirement against assets,
deposits, or loans or other acquisition of funds for loans by the Bank;
or,
iii)
the amount of capital required or expected to be maintained by the Bank as
a
result of the existence of the advances or the commitment made
hereunder;
and
the
result of such occurrence is, in the sole determination of the Bank, to increase
the cost of the Bank or to reduce the income received or receivable by the
Bank
hereunder, the Borrower shall, on demand by the Bank, pay to the Bank that
amount which the Bank estimates will compensate it for such additional cost
or
reduction in income and the Bank's estimate shall be conclusive, absent manifest
error.
16.
EXPENSES
The
Borrower shall pay, within 5 Business Days following notification, all fees
and
expenses (including but not limited to all legal fees) incurred by the Bank
in
connection with the preparation, registration and ongoing administration
of this
Agreement and the Bank Security and with the enforcement of the Bank's rights
and remedies under this Agreement and the Bank Security whether or not any
amounts are advanced under the Agreement. These fees and expenses shall
include, but not be limited, to all outside counsel fees and expenses and
all
in-house legal fees and expenses, if in-house counsel are used, and all outside
professional advisory fees and expenses. The Borrower shall pay interest
on
unpaid amounts due pursuant to this paragraph at the All-In Rate plus 2%
per
annum.
17.
NON WAIVER
Any
failure by the Bank to object to or take action with respect to a breach
of this
Agreement or any Bank Security or upon the occurrence of an Event of Default
shall not constitute a waiver of the Bank's right to take action at a later
date
on that breach. No course of conduct by the Bank will give rise to any
reasonable expectation which is in any way inconsistent with the terms and
conditions of this Agreement and the Bank Security or the Bank's rights
thereunder.
18.
EVIDENCE OF INDEBTEDNESS
The
Bank
shall record on its records the amount of all loans made hereunder, payments
made in respect thereto, and all other amounts becoming due to the Bank under
this Agreement. The Bank's records constitute, in the absence of manifest
error, conclusive evidence of the indebtedness of the Borrower to the Bank
pursuant to this Agreement.
The
Borrower will sign the Bank’s standard form Letter of Credit Indemnity Agreement
for all L/Cs and L/Gs issued by the Bank.
With
respect to chattel mortgages taken as Bank Security, this Agreement is the
Promissory Note referred to in same chattel mortgage, and the indebtedness
incurred hereunder is the true indebtedness secured by the chattel
mortgage.
19.
ENTIRE AGREEMENTS
This
Agreement replaces any previous letter agreements dealing specifically with
terms and conditions of the credit facilities described in the Letter.
Agreements relating to other credit facilities made available by the Bank
continue to apply for those other credit facilities. This Agreement, and
if applicable, the Letter of Credit Indemnity Agreement, are the entire
agreements relating to the Facilities described in this Agreement.
20.
ASSIGNMENT
The
Bank
may assign or grant participation in all or part of this Agreement or in
any
loan made hereunder without notice to and without the Borrower's consent.
The
Borrower may not assign or transfer all or any part of its rights or obligations
under this Agreement.
21.
RELEASE OF
INFORMATION
The
Borrower hereby irrevocably authorizes and directs the Borrower's accountant,
(the "Accountant") to deliver all financial statements and other financial
information concerning the Borrower to the Bank and agrees that the Bank
and the
Accountant may communicate directly with each other.
22.
FX CLOSE OUT
The
Borrower hereby acknowledges and agrees that in the event any of the following
occur: (i) Default by the Borrower under any forward foreign exchange contract
("FX Contract"); (ii) Default by the Borrower in payment of monies owing
by it
to anyone, including the Bank; (iii) Default in the performance of any other
obligation of the Borrower under any agreement to which it is subject; or
(iv)
the Borrower is adjudged to be or voluntarily becomes bankrupt or insolvent
or
admits in writing to its inability to pay its debts as they come due or has
a
receiver appointed over its assets, the Bank shall be entitled without advance
notice to the Borrower to close out and terminate all of the outstanding
FX
Contracts entered into hereunder, using normal commercial practices employed
by
the Bank, to determine the gain or loss for each terminated FX contract.
The Bank shall then be entitled to calculate a net termination value for
all of
the terminated FX Contracts which shall be the net sum of all the losses
and
gains arising from the termination of the FX Contracts which net sum shall
be
the "Close Out Value" of the terminated FX Contracts. The Borrower
acknowledges that it shall be required to forthwith pay any positive Close
Out
Value owing to the Bank and the Bank shall be required to pay ant negative
Close
Out Value owing to the Borrower, subject to any rights of set-off to which
the
Bank is entitled or subject.
23.
SET-OFF
In
addition to and not in limitation of any rights now or hereafter granted
under
applicable law, the Bank may at any time and from time to time without notice
to
the Borrower or any other Person, any notice being expressly waived by the
Borrower, set-off and compensate and apply any and all deposits, general
or
special, time or demand, provisional or final, matured or unmatured, in any
currency, and any other indebtedness or amount payable by the Bank (irrespective
of the place of payment or booking office of the obligation), to or for the
credit of or for the Borrower's account, including without limitation, any
amount owed by the Bank to the Borrower under any FX Contract or other treasury
or derivative product, against and on account of the indebtedness and liability
under this Agreement notwithstanding that any of them are contingent or
unmatured or in a different currency than the indebtedness and liability
under
this Agreement.
When
applying a deposit or other obligation in a different currency than the
indebtedness and liability under this Agreement to the indebtedness and
liability under this Agreement, the Bank will convert the deposit or other
obligation to the currency of the indebtedness and liability under this
Agreement using the Bank's noon spot rate of exchange for the conversion
of such
currency.
24.
USE OF INFORMATION
The
word
"Information" means the Borrower's business and credit information and the
Guarantor's personal, business and credit information. It includes
information provided to the Bank by the Borrower and Guarantors, including
through the products and services the Borrower and Guarantor(s) uses, and
information obtained from others.
The
Borrower and the Guarantor agree to the use of its Information as
follows:
Use
of
Information - The Bank may use Information to establish and serve the Borrower
as its customer, determine whether any products or services of the TD Bank
Financial Group are suitable for the Borrower and offer them to the Borrower,
or
when required or permitted by law. The Bank may share Information within
the TD
Bank Financial Group where permitted by law;
Collection
and Use of Credit Information - THE BANK MAY OBTAIN INFORMATION FROM PARTIES
OUTSIDE THE TD BANK FINANCIAL GROUP, INCLUDING THROUGH A CREDIT CHECK, AND
VERIFY INFORMATION WITH THEM. THE BORROWER AND THE GUARANTOR AUTHORIZE
THOSE PARTIES TO GIVE THE BANK INFORMATION. The Bank may disclose
Information to other lenders and credit bureaus.
The
Borrower and the Guarantor may obtain the Bank’s Privacy Code - "Protecting Your
Privacy" or review its options for refusing or withdrawing this consent,
including its option not to be contacted about offers of products or services,
by contacting the Branch or calling the Bank at 1-800-9TD BANK.
25.
MISCELLANEOUS
i)
The Borrower has received a signed copy of this Agreement;
ii)
If more than one Person, firm or corporation signs this Agreement as the
Borrower, each party is jointly and severally liable hereunder, and the Bank
may
require payment of all amounts payable under this Agreement from any one
of
them, or a portion from each, but the Bank is released from any of its
obligations by performing that obligation to any one of them;
iii)
Accounting terms will (to the extent not defined in this Agreement) be
interpreted in accordance with accounting principles established from time
to
time by the Canadian Institute of Chartered Accountants (or any successor)
consistently applied, and all financial statements and information provided
to
the Bank will be prepared in accordance with those principles;
iv)
This Agreement is governed by the law of the Province or Territory where
the
Branch/Centre is located.
v)
Unless stated otherwise, all amounts referred to herein are in Canadian
dollars
26.
DEFINITIONS
Capitalized
Terms used in this Agreement shall have the following meanings:
"All-In
Rate" means the greater of the Interest Rate that the Borrower pays for
Prime Based Loans (which for greater certainty includes the percent per annum
added to the Prime Rate) or the highest fixed rate paid for Fixed Rate Term
Loans.
"Agreement"
means the agreement between the Bank and the Borrower set out in the Letter
and
this Schedule "A" - Standard Terms and Conditions.
"Business
Day" means any day (other than a Saturday or Sunday) that the Branch/Centre
is open for business.
"Branch/Centre"
means The Toronto-Dominion Bank branch or banking centre noted on the first
page
of the Letter, or such other branch or centre as may from time to time be
designated by the Bank.
"Contractual
Term Maturity Date" means the date set out in the Letter under the heading
"Contractual Term".
"Face
Amount" means, in respect of:
(i)
a B/A, the amount payable to the holder thereof on its maturity;
(ii)
A L/C or L/G, the maximum amount payable to the beneficiary specified therein
or
any other Person to whom payments may be required to be made pursuant to
such
L/C or L/G.
"Fixed
Rate Term Loan" means any drawdown in Canadian dollars under a Credit
Facility at an interest rate which is fixed for a Rate Term at such rate
as is
determined by the Bank as its sole discretion.
"Inventory
Value" means, at any time of determination, the total value (based on the
lower of cost or market) of the Borrower's inventories that are subject to
the
Bank Security (other than (i) those inventories supplied by trade creditors
who
at that time have not been fully paid therefore and would have a right to
repossess all or part of such inventories if the Borrower were then either
bankrupt or in receivership, (ii) those inventories comprising work in process
and (iii) those inventories that the Bank may from time to time designate
in its
sole discretion) minus the total amount of any claims, liens or encumbrances
on
those inventories having or purporting to have priority over the
Bank.
"Letter"
means the letter from the Bank to the Borrower to which this Schedule "A"
- Standard Terms and Conditions is attached.
"Letter
of Credit" or "L/C" means a documentary letter of credit or similar
instrument in form and substance satisfactory to the Bank.
"Letter
of Guarantee" or "L/G" means a stand-by letter of guarantee or
similar instrument in form and substance satisfactory to the Bank.
"Person"
includes any individual, sole proprietorship, corporation, partnership, joint
venture, trust, unincorporated association, association, institution, entity,
party, or government (whether national, federal, provincial, state, municipal,
city, county, or otherwise and including any instrumentality, division, agency,
body, or department thereof).
"Purchase
Money Security Interest" means a security interest on equipment which is
granted to a lender or to the seller of such equipment in order to secure
the
purchase price of such equipment or a loan to acquire such equipment, provided
that the amount secured by the security interest does not exceed the cost
of the
equipment, the Borrower provides written notice to the Bank prior to the
creation of the security interest, and the creditor under the security interest
has, if requested by the Bank, entered into an inter-creditor agreement with
the
Bank, in a format acceptable to the Bank.
"Rate
Term" means that period of time as selected by the Borrower from the options
offered to it by the Bank, during which a Fixed Rate Term Loan will bear
a
particular interest rate. If no Rate Term is selected, the Borrower will
be deemed to have selected a Rate Term of 1 year.
"Rate
Term Maturity" means the last day of a Rate Term which day may never exceed
the Contractual Term Maturity Date.
"Rate
and Payment Terms Notice" means the notice sent by the Bank setting out the
interest rate and payment terms for a particular drawdown.
"Receivable
Value" means, at any time of determination, the total value of those of the
Borrower's trade accounts receivable that are subject to the Bank Security
other
than (i) those accounts then outstanding for 90 days, (ii) those accounts
owing
by Persons, firms or corporations affiliated with the Borrower, (iii) those
accounts that the Bank may from time to time designate in its sole discretion,
(iv) those accounts subject to any claim, liens, or encumbrance having or
purporting to have priority over the Bank, (v) those accounts which are subject
to a claim of set-off by the obligor under such account, MINUS the total
amount
of all claims, liens, or encumbrances on those receivables having or purporting
to have priority over the Bank.
"Receivables/Inventory
Summary" means a summary of the Customer's trade account receivables and
inventories, in form as the Bank may require and certified by a senior
officer/representative of the Borrower.
"US$
Equivalent" means, on any date, the equivalent amount in United States
Dollars after giving effect to a conversion of a specified amount of
Canadian Dollars to United States Dollars at the Bank's noon spot rate of
exchange for Canadian Dollars to United States Dollars established by the
Bank
for the day in question.
