EXHIBIT 10(ii)
CREDIT AGREEMENT
DATED AS OF APRIL 30, 2002
BETWEEN
CO-STEEL INC.
AS BORROWER
AND
1300554 ONTARIO LIMITED, 1102590 ONTARIO LIMITED,
CO-STEEL DISTRIBUTION CANADA LIMITED, CO-STEEL (U.S.) LTD.,
CO-STEEL FINANCE CORP., LAKE ONTARIO STEEL COMPANY INC.,
CO-STEEL USA DISTRIBUTION, INC., CO-STEEL USA HOLDINGS, INC.,
CO-STEEL RARITAN, INC., CO-STEEL SAYREVILLE, INC.,
RARITAN RIVER URBAN RENEWAL CORPORATION AND
THE OTHER SUBSIDIARIES OF THE BORROWER FROM
TIME TO TIME PARTY HERETO
AS GUARANTORS
XXX
XXXX XXX, XX, XXXXXX BRANCH, BANK OF TOKYO-MITSUBISHI (CANADA),
CANADIAN IMPERIAL BANK OF COMMERCE, COMERICA BANK, CANADA
BRANCH, MIZUHO CORPORATE BANK (CANADA), THE BANK OF NOVA SCOTIA, THE
TORONTO-DOMINION BANK AND THE OTHER FINANCIAL INSTITUTIONS
FROM TIME TO TIME PARTY HERETO
AS LENDERS
AND
THE TORONTO-DOMINION BANK
AS ADMINISTRATION AGENT FOR THE LENDERS
AND
THE BANK OF NOVA SCOTIA
AS SYNDICATION AGENT FOR THE LENDERS
XXXXXXXX XXXXXXXX LLP
GOODMANS LLP
TABLE OF CONTENTS
ARTICLE 1 - INTERPRETATION........................................................................................1
1.01 Defined Terms.........................................................................................1
1.02 Headings and Internal References.....................................................................26
1.03 Number and Gender....................................................................................26
1.04 Accounting Terms and Principles......................................................................26
1.05 Interest Act (Canada)................................................................................27
1.06 Schedules............................................................................................27
1.07 Exhibits.............................................................................................28
1.08 Determination of Materiality.........................................................................28
1.09 Certificates and Opinions, etc.......................................................................28
1.10 Governing Law........................................................................................28
1.11 Currency.............................................................................................28
ARTICLE 2 - CREDIT FACILITIES....................................................................................28
2.01 The Revolving Facility...............................................................................28
2.02 The Swingline Facility...............................................................................29
2.03 Purpose of Credit Facilities.........................................................................29
2.04 Manner of Borrowing - Revolving Facility.............................................................29
2.05 Manner of Borrowing - Swingline Facility.............................................................30
2.06 Notice of Borrowing..................................................................................31
2.07 Notification of Lenders Under Credit Facilities......................................................32
2.08 Disbursement of Loans Under Credit Facilities........................................................32
2.09 Issuance of Bankers' Acceptances and Letters of Credit...............................................32
2.10 Pro-Rata Advances Under Credit Facilities............................................................32
2.11 Conversions..........................................................................................33
2.12 Rollovers............................................................................................33
2.13 Evidence of Borrowings...............................................................................34
2.14 Hedging Contracts....................................................................................34
ARTICLE 3 - REPAYMENT AND PAYMENT................................................................................34
3.01 Repayment of Revolving Facility......................................................................34
3.02 Repayment of Swingline Facility......................................................................35
3.03 Mandatory Prepayment and Reduction of Availability under Credit Facilities...........................35
3.04 Excess Amount........................................................................................36
3.05 Place and Manner of Payments.........................................................................36
3.06 Net Payments, etc....................................................................................37
3.07 Application of Payments..............................................................................38
ARTICLE 4 - INTEREST AND FEES....................................................................................38
4.01 Computation of Interest and Fees.....................................................................38
4.02 Accrual and Payment of Interest on Loans.............................................................39
4.03 Currency.............................................................................................39
4.04 LIBOR Loans..........................................................................................39
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4.05 Fees.................................................................................................39
4.06 Administration Agent's Certificate...................................................................40
4.07 Late Payment.........................................................................................40
4.08 Maximum Rate of Return...............................................................................40
ARTICLE 5 - BANKERS' ACCEPTANCES AND LETTERS OF CREDIT...........................................................41
5.01 Bankers' Acceptances.................................................................................41
5.02 Letters of Credit....................................................................................44
ARTICLE 6 - CHANGE IN CIRCUMSTANCES AND INDEMNITIES..............................................................46
6.01 Increased Costs......................................................................................46
6.02 Income Tax Act, etc..................................................................................47
6.03 Lack of LIBOR Rate...................................................................................47
6.04 Inability to Fund in U.S. Dollars....................................................................47
6.05 Unlawful, etc........................................................................................49
6.06 General Indemnity....................................................................................49
6.07 Environmental Indemnity..............................................................................50
6.08 Agents and Lenders Not Liable........................................................................51
6.09 Survival.............................................................................................52
ARTICLE 7 - CONDITIONS PRECEDENT.................................................................................52
7.01 Closing..............................................................................................52
7.02 Conditions Precedent to Closing......................................................................52
7.03 Conditions Precedent to Each Drawdown Under the Revolving Facility...................................55
7.04 Conditions Precedent to Each Drawdown Under the Swingline Facility...................................56
7.05 Post-Closing Deliveries..............................................................................57
ARTICLE 8 - Security Documents...................................................................................60
8.01 Form of Security Documents...........................................................................60
8.02 Valid Lien...........................................................................................61
8.03 Registration.........................................................................................61
8.04 After Acquired Property and Further Assurances.......................................................61
8.05 Form, Substance and Registration of Security.........................................................62
8.06 Benefit of Security..................................................................................62
ARTICLE 9 - REPRESENTATIONS AND WARRANTIES.......................................................................62
9.01 Representations and Warranties.......................................................................62
ARTICLE 10 - COVENANTS...........................................................................................71
10.01 Positive Covenants...................................................................................71
10.02 Financial Covenants..................................................................................79
10.03 Negative Covenants...................................................................................81
10.04 Accounting Financial Statements and Other Information................................................87
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ARTICLE 11 - DEFAULT AND ENFORCEMENT.............................................................................91
11.01 Events of Default....................................................................................91
11.02 Deferral of Advances.................................................................................93
11.03 Termination of Credit Facilities.....................................................................94
11.04 Acceleration.........................................................................................94
11.05 Legal Proceedings....................................................................................94
11.06 No Prejudice, etc....................................................................................95
11.07 Set-off..............................................................................................95
11.08 Remedies Cumulative..................................................................................95
11.09 Appropriation of Monies Received.....................................................................95
11.10 Non-Merger...........................................................................................96
11.11 Pro Rata Sharing.....................................................................................96
11.12 Sharing of Set-Offs..................................................................................97
ARTICLE 12 - THE ADMINISTRATION AGENT AND THE SYNDICATION AGENT..................................................98
12.01 Appointment..........................................................................................98
12.02 Dealing by Borrower with the Administration Agent....................................................98
12.03 Delegation of Duties.................................................................................99
12.04 Retention of Advisors................................................................................99
12.05 Indemnity............................................................................................99
12.06 Limitation of Agent's Liability.....................................................................100
12.07 Reliance............................................................................................100
12.08 Exchange of Information.............................................................................101
12.09 The Administration Agent and the Syndication Agent, Individually....................................101
12.10 Resignation.........................................................................................101
12.11 Administration of the Credits.......................................................................102
12.12 Instructions by Lenders.............................................................................103
12.13 Arrangements for Repayment of Advances..............................................................104
12.14 Repayment by Lenders to Administration Agent........................................................104
12.15 Delivery of Assignment Agreement....................................................................105
12.16 Provisions for Benefit of Lenders Only..............................................................105
ARTICLE 13 - ASSIGNMENT AND PARTICIPATION.......................................................................105
13.01 Benefit and Burden of this Agreement................................................................105
13.02 Borrower............................................................................................105
13.03 Participation and Syndication.......................................................................106
13.04 Assignment by Lenders After Event of Default........................................................107
13.05 Borrower's Documents................................................................................107
ARTICLE 14 - MISCELLANEOUS......................................................................................107
14.01 Exchange and Confidentiality of Information.........................................................107
14.02 Payment of Expenses.................................................................................108
14.03 Judgement Currency..................................................................................108
14.04 Notice..............................................................................................109
14.05 Reliance on Instructions............................................................................110
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14.06 Survival of Representations, Warranties and Covenants...............................................111
14.07 Further Assurances..................................................................................111
14.08 Amendment, Waiver etc...............................................................................111
14.09 Remedies Cumulative.................................................................................111
14.10 Non-Merger..........................................................................................112
14.11 Conflict............................................................................................112
14.12 Severability........................................................................................112
14.13 Counterparts........................................................................................112
14.14 Benefit of Agreement................................................................................113
14.15 Time of Essence.....................................................................................113
14.16 Entire Agreement....................................................................................113
CREDIT AGREEMENT
THIS AGREEMENT dated as of April 30, 2002 is made by and between
Co-Steel Inc., as Borrower, 1300554 Ontario Limited, 1102590 Ontario Limited,
Co-Steel Distribution Canada Limited, Co-Steel (U.S.) Ltd., Co-Steel Finance
Corp., Lake Ontario Steel Company Inc., Co-Steel USA Distribution, Inc.,
Co-Steel USA Holdings, Inc., Co-Steel Raritan, Inc., Co-Steel Sayreville, Inc.
and Raritan River Urban Renewal Corporation as Guarantors and The
Toronto-Dominion Bank, The Bank of Nova Scotia and the other financial
institutions listed in Schedule A and the financial institutions which from time
to time have entered into an Assignment Agreement amending Schedule A to become
a party to this Agreement, as Lenders, and The Toronto-Dominion Bank, as
Administration Agent for the Lenders and The Bank of Nova Scotia as Syndication
Agent for the Lenders.
In consideration of the mutual covenants in this Agreement and other
good and valuable consideration, the receipt and sufficiency of which the
parties each acknowledge, the parties agree as follows:
ARTICLE 1 - INTERPRETATION
1.01 Defined Terms
In this Agreement, the following words and phrases shall have the
following meanings:
"ACCOUNT DEBTOR" means any Person who is obligated to pay an Account
Receivable.
"ACCOUNTS RECEIVABLE" means any right of a Person to payment for goods
sold or leased or services rendered in the ordinary course of business,
classified as an account receivable in accordance to GAAP.
"ADJUSTED COST BASE" means the dollar amount by which the Unrestricted
Subsidiaries would be carried as at December 31, 1998 in the accounts of the
Borrower, if the Unrestricted Subsidiaries were accounted for, from inception,
by the equity method of accounting. Furthermore: (i) the Adjusted Cost Base will
have no further adjustments subsequent to December 31, 1998 for net income or
loss of, or unrealized gains or losses on, the Unrestricted Subsidiaries; (ii)
consistent with the equity method of accounting all inter-company transactions
and balances would be eliminated; and (iii) the Adjusted Cost Base will be
increased or decreased, as the case may be, for any amounts contributed or
received in the form of subscription for equity, contribution of surplus, or
receipt of dividends. For greater certainty, realized gains or losses on
disposals of Unrestricted Subsidiaries will be reflected in the Special Purpose
Financial Statements. For the purposes of this definition, the Hungarian Finance
Structure Companies and NJSC shall be deemed to be Restricted Subsidiaries.
"ADMINISTRATION AGENT" means The Toronto-Dominion Bank and its
successors or permitted assigns.
"ADVANCE" means an advance of funds hereunder by way of a Prime Rate
Loan, a Base Rate Loan, a LIBOR Loan, a Bankers' Acceptance, a BA Equivalent
Note or the issuance of a
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Letter of Credit, including deemed Advances and Conversions, renewals and
Rollovers of existing Advances, and any reference relating to the amount of
Advances shall mean the sum of the principal amount of all outstanding Prime
Rate Loans, Base Rate Loans, LIBOR Loans plus the face amount of Bankers'
Acceptances, BA Equivalent Notes and outstanding Letters of Credit.
"AFFILIATE" means, with respect to any Person, any of (i) a director or
executive officer of the Person or any other Person described in clause (ii)
below and (ii) any other Person which, directly or indirectly, through one or
more intermediaries, Controls, is Controlled by, or is under common Control with
the Person and, with respect to the Borrower, shall include each of its
Subsidiaries.
"AGREEMENT" means this agreement together with all amendments from time
to time made to it in accordance with its provisions.
"APPLICABLE LAW" means, with respect to any Person, property,
transaction or event, all present or future applicable laws, statutes,
regulations, by-laws, treaties, judgements and decrees and all applicable
official directives if legally binding and all other legally binding
requirements of any Governmental Authority or Person having authority over such
Person, property, transaction or event.
"APPLICABLE MARGIN" means with respect to any Advance under the Credit
Facilities the percentage per annum determined in accordance with the following
table, based on the Borrower's ratio of Consolidated Total Net Debt to
Normalized Consolidated EBITDA as at the end of its most recently completed
fiscal quarter (in this definition such fiscal quarter is the "RELEVANT
QUARTER"):
Consolidated Total Net Debt Base Rate Stamping Fee/ LIBOR Commitment Fee Rate
to Normalized Consolidated Margin/Prime Rate Margin/ Letter of
EBITDA Margin Credit Fee Rate
----------------------------------------------------------------------------------------------------
=<3:0:1 1.00% 2.00% 0.75%
----------------------------------------------------------------------------------------------------
> 3:0:1, =<4:0:1 2.00% 3.00% 1.10%
----------------------------------------------------------------------------------------------------
> 4.0:1, =<5.0:1 2.75% 3.75% 1.40%
----------------------------------------------------------------------------------------------------
> 5.0:1, <=7.5:1 3.25% 4.25% 1.65%
----------------------------------------------------------------------------------------------------
>7.5:1, <=10.0:1 3.50% 4.50% 1.80%
----------------------------------------------------------------------------------------------------
>10.0:1 4.00% 5.00% 2.00%
----------------------------------------------------------------------------------------------------
The Applicable Margin to be applied with respect to an Advance, Conversion or
Rollover shall be the Applicable Margin on the relevant date of the Advance,
Conversion or Rollover, as the case may be. The Applicable Margin shall change,
if required, one Banking Day after receipt by the Administration Agent of the
financial statements required to be delivered pursuant to Section 10.04 for the
Relevant Quarter, and the related Compliance Certificate required to be
delivered pursuant to Section 10.04, are delivered to the Administration Agent;
provided, however, that for
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the purpose of determining the Applicable Margin, if the Borrower fails to
deliver such financial statements and Compliance Certificate when required, the
Borrower's ratio of Consolidated Total Net Debt to Normalized Consolidated
EBITDA shall be deemed to exceed 10.0:1 until the same have been delivered.
"APPROVED ASSET SALE" has the meaning set out in Section 10.03(6).
"ASSET MONETIZATION PROGRAM" means the asset monetization program for
the Borrower and its Subsidiaries dated February 25, 2002, which program is
attached hereto as Schedule AA, as revised from time to time pursuant to Section
10.01(26).
"ASSIGNMENT AGREEMENT" means an agreement substantially in the form of
Exhibit A by which a financial institution assumes a Commitment and becomes a
Lender.
"ASW HOLDINGS" means ASW Holdings plc, a corporation incorporated under
the laws of England.
"AUDITOR" means (i) PricewaterhouseCoopers LLP, Chartered Accountants,
or (ii) another nationally recognized firm of chartered accountants who at the
relevant time (a) are the duly appointed auditors of the Borrower and (b) are in
fact independent of the Borrower.
"BA DEPOSIT AMOUNT" has the meaning set out in Section 5.01(11).
"BA DISCOUNT RATE" means with respect to any Bankers' Acceptance
purchased by a:
(a) Schedule 1 Lender, CDOR; and
(b) Schedule 2 Lender or Schedule 3 Lender, the lower (a) of the
bid rate quoted by such Lender for its own acceptance of a
like term with effect as at about 10:00 a.m. on the applicable
date; and (b) CDOR plus 10 basis points.
"BA EQUIVALENT NOTE" has the meaning set out in Section 5.01(9).
"BANKERS' ACCEPTANCE" means a depository xxxx, as defined in the
Depository Bills and Notes Act (Canada) in Canadian dollars that is in the form
of a draft signed by the Borrower and accepted by a Lender or, for Lenders not
participating in clearing services as contemplated in that Act, a draft or other
xxxx of exchange in Canadian Dollars that is drawn by the Borrower and accepted
by a Lender.
"BANKING DAY" means:
(a) with respect to a Prime Rate Loan and a Bankers' Acceptance,
any day other than a Saturday or a Sunday, on which all of the
Lenders are open to the public for carrying on substantially
all of their banking functions in Toronto, Ontario;
(b) with respect to a LIBOR Loan, any day, other than a Saturday
or a Sunday, on which the Administration Agent is open to the
public for carrying on substantially all of their banking
functions in Toronto, Ontario, New York, New York and
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which is also a day on which dealings are carried out in the
London Interbank Eurocurrency Market;
(c) with respect to a Base Rate Loan, any day, other than a
Saturday or Sunday, on which all of the Lenders are open to
the public for carrying on substantially all of their banking
functions in Toronto, Ontario and New York, New York; and
(d) for any other purpose any day, other than a Saturday or
Sunday, on which all of the Lenders are open to the public for
carrying on substantially all of their banking functions in
Xxxxxxx, Xxxxxxx.
"BANKRUPTCY EVENT" means, with respect to any Person, the occurrence of
any one or more of the following events:
(a) it passes a resolution, institutes proceedings, (whether
formal or informal), or consents to the filing of a notice of
intention to file a proposal, a proposal, petition for its
winding-up, liquidation or dissolution or files or consents to
the filing of a notice of intention to file a proposal, a
proposal, a petition, answer or consent seeking
reorganization, readjustment, arrangement in connection with
any insolvency proceeding, composition or similar relief under
any Applicable Law or a receiver, receiver-manager, manager,
custodian, liquidator or trustee or similar officer or
official of itself or any part of its property is appointed,
or it makes an assignment for the benefit of creditors or is
unable, or admits its inability, to pay its debts as they
become due or otherwise acknowledges its insolvency or
voluntarily suspends transaction of its usual business or any
action is taken by such Person in furtherance of any of the
aforesaid purposes or if such Person commits any other act of
bankruptcy under the Bankruptcy Code of the United States, 11
U.S.C. Section 1.01 et. seq. or the Bankruptcy and Insolvency
Act (Canada) or if such Person makes any application or filing
pursuant to the Companies' Creditors Arrangement Act (Canada),
the Bankruptcy and Insolvency Act (Canada) or the Winding-Up
and Restructuring Act (Canada) or any other similar statute;
or
(b) any application, petition or proposal is made with respect to
it under the Companies' Creditors Arrangement Act (Canada),
the Bankruptcy Code of the United States, 11 U.S.C. Section
1.01 et. seq. or the Bankruptcy and Insolvency Act (Canada) or
the Winding-Up and Restructuring Act (Canada) or any other
legislation seeking reorganization, readjustment or
arrangement in connection with any insolvency proceeding,
composition or similar relief under any other Applicable Law,
or a proceeding, (whether formal or informal), is instituted,
filed or initiated for its winding up, liquidation or
dissolution or seeking an order adjudging it insolvent or the
appointment of any receiver, receiver-manager, manager,
custodian, liquidator or trustee or similar officer or
official of it or over all or any part of its property or a
petition in bankruptcy is instigated by a Person other than
it, and such application, proceeding or petition is not
dismissed, stayed or withdrawn within 60 days after it has
notice or knowledge of the institution of such proceedings
provided that a Bankruptcy Event shall have occurred
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immediately (i) upon the appointment of a receiver, trustee,
custodian, liquidator or similar officer of the Person, (ii)
if it is determined by the Required Lenders, acting reasonably
in their sole discretion, that the Person against whom such
application, petition or proceeding is brought is not
contesting such application, proceeding or petition in good
faith, or (iii) if assets with an aggregate fair market value
in excess of $5,000,000 have been attached, in all cases
whether or not such application, proceeding or petition is
dismissed, stayed or withdrawn within 60 days after the Person
against whom such application, petition or proceeding is
brought has notice or knowledge of the institution thereof.
"BASE RATE" means the greater of: (a) the variable rate per annum
established by the Administration Agent as the reference rate of interest for
the determination of the interest rate that it will charge to customers of
varying degrees of credit worthiness in Canada for United States Dollar loans in
Toronto, Canada which shall be adjusted automatically from time to time without
notice to the Borrower; and (b) the Federal Funds Rate plus 0.50%.
"BASE RATE LOAN" means a U.S. Dollar loan made to the Borrower under
this Agreement on which interest is calculated with reference to the Base Rate.
"BASE RATE MARGIN" means, for any period, the percentage rate per annum
relevant to the period in respect of which a determination is being made
indicated beside or below the reference to Base Rate Margin in the definition of
"Applicable Margin".
"BI-ANNUAL AUDITOR'S REPORT" has the meaning set out in Section
10.01(29).
"BIS GUIDELINES" means the guidelines relating to capital adequacy
proclaimed in July, 1988 by the Basle Committee on Banking Regulation and
Supervisory Practices of the Bank of International Settlements.
"BLOCKED ACCOUNT AGREEMENT" means a blocked account agreement entered
into by a bank with which the Borrower or a Subsidiary, (other than Co-Steel
C.S.M. Corp. and its Subsidiaries), maintains an account in a form and substance
acceptable to the Administration Agent and the Borrower.
"BORROWER" means Co-Steel Inc., a corporation incorporated under the
laws of the Province of Ontario.
"BREAKAGE COSTS" means all costs, losses and expenses incurred by any
Lender by reason of the liquidation or deployment of deposits or other funds,
the breakage of hedging and LIBOR contracts, the redeployment of funds, the loss
of investment opportunity or for any other reason whatsoever resulting from the
prepayment of any Advance, all as set out in a certificate delivered to the
Borrower by any Lender entitled to receive same.
"BUSINESS PLAN" means a detailed and comprehensive twenty-four month
business plan and forecast for the Borrower, including a written management
discussion, all as approved by the Borrower's Board of Directors.
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"CANADIAN DOLLARS", "CDN. DOLLARS", "DOLLARS", "$", and "CDN.$" mean
lawful currency of Canada.
"CANADIAN SECURITY AGENT" means Computershare Trust Company of Canada
in its capacity as Canadian security agent for and on behalf of the
Administration Agent, the Noteholders and PNC pursuant to the Inter-Creditor
Agreement.
"CAPITAL EXPENDITURE" means any expenditure made by any Person for the
purchase, lease or acquisition of capital assets (other than Current Assets)
required to be capitalized in accordance with GAAP, including, without
limitation, Capitalized Lease Obligations.
"CAPITALIZED LEASE OBLIGATIONS" means, with respect to any Person, at
any time, all liabilities of the Person as lessee in respect of all rentals
under any lease of (or other arrangement conveying the right to use) real or
personal property, which, in accordance with GAAP, have been or are required to
be capitalized on the books of the Person; the term "rentals" means, all
payments which the lessee is required to make by the terms of any lease or other
arrangement.
"CDOR" means the annual rate (rounded upward to the nearest two decimal
places), calculated on the basis of a 365 day year, for bankers' acceptances of
the applicable Lender denominated in Dollars for a specified term that appears
on the Reuters Screen CDOR page as of 10:00 a.m. Toronto time on the date of
determination, provided that if a rate does not appear on the Reuters Screen
CDOR page at 10:00 a.m. Toronto time on such date the rate for that date shall
be determined as of 10:00 a.m. Toronto time on the next preceding Banking Day
provided further that if a rate does not appear on the Reuters Screen CDOR page
at 10:00 a.m. Toronto time on such next preceding Banking Day, CDOR shall be the
discount rate quoted by the Administration Agent for Canadian Dollar bankers'
acceptances for the specified term at 10:00 a.m. Toronto time on that next
preceding Banking Day.
"CLOSING DATE" means April 30, 2002 or such other date as the parties
may agree upon in writing.
"COLLATERAL" means all property, of whatever nature or kind, which is
the subject of any Lien created by any Security Document.
"COLLATERAL AUDIT" has the meaning set out in Section 10.01(28).
"COMMITMENT" means with reference to any Lender, the percentage set
forth in Schedule B or in an Assignment Agreement amending Schedule B, which
represents the aggregate amount which that Lender has severally agreed to make
available to the Borrower under the terms of this Agreement, expressed as a
percentage of the aggregate amount which all of the Lenders have agreed to make
available to the Borrower under the terms of this Agreement.
"COMMITMENT FEE RATE" means, for any period, the percentage rate per
annum relevant to the period in respect of which a determination is being made
indicated beside or below the reference to Commitment Fee Rate in the definition
of "Applicable Margin".
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"COMPLIANCE CERTIFICATE" means a certificate in the form of Exhibit B
executed by a Senior Officer of the Borrower and setting out, among other things
a detailed calculation of compliance with the Financial Covenants.
"CONSOLIDATED CURRENT ASSETS" means, for any period, the trade accounts
receivable (net of any allowance for doubtful accounts and prepaid expenses) and
inventory (net of obsolescence or valuation reserves) of the Borrower which, at
the date of determination, are, in accordance with GAAP, classified as current
on the balance sheet contained in the most recent Special Purpose Financial
Statements, but excluding cash and cash equivalents.
"CONSOLIDATED CURRENT LIABILITIES" means, for any period, the accounts
payable and accrued liabilities of the Borrower which, at the date of
determination, are, in accordance with GAAP, classified as current on the
balance sheet contained in the most recent Special Purpose Financial Statements,
but excluding bank indebtedness and the current portion of long-term
liabilities.
"CONSOLIDATED EBITDA" means, for any period: (i) the Consolidated Net
Earnings in the period; plus (ii) Consolidated Net Interest Expense in the
period; plus (iii) income taxes, whether paid or deferred, which are deducted in
determining Consolidated Net Earnings in the period, if any; plus (iv)
depreciation and amortization expense for the period; minus (v) to the extent
added in determining Consolidated Net Earnings, extraordinary gains; plus (vi)
to the extent deducted in determining Consolidated Net Earnings, non-cash
extraordinary losses (which for greater certainty shall include the non-cash
Cdn. $13 million pension curtailment charge from the third fiscal quarter of
2001); plus (vii) all cash receipts from Gallatin that have been used by the
Borrower and its Subsidiaries to permanently repay indebtedness to the
Noteholders, PNC and the Lenders; plus (viii) to the extent deducted in
determining Consolidated Net Earnings unrealized foreign exchange losses; minus
(ix) the amount of loans or advances to Gallatin pursuant to Section 10.03(9);
minus (x) to the extent added in determining Consolidated Net Earnings
unrealized foreign exchange gains; all as set forth on the Special Purpose
Financial Statements for such period and all as determined in accordance with
GAAP.
"CONSOLIDATED NET EARNINGS" means for any period, the net earnings, for
such period, as set forth on the Special Purpose Financial Statements for such
period.
"CONSOLIDATED NET INTEREST EXPENSE" means, for any period, the
aggregate of interest charges, finance charges and debt service charges, fees or
discounts for borrowed money, paid, payable or accrued in respect of
interest-bearing Indebtedness (including without limitation Bankers'
Acceptances) net of all interest and dividend income and specifically excluding
all fees but not interest charges payable under or in connection with this
Agreement for such period, all as set forth on the Special Purpose Financial
Statements for such period, plus, for greater certainty, all interest paid in
respect of the Convertible Debentures together with interest, calculated on an
accrual basis, on the equity component of the Convertible Debentures before
income taxes.
"CONSOLIDATED TOTAL NET DEBT" means, at any time, the principal amount
of all outstanding interest bearing Indebtedness including, without limitation,
the principal amount of the Convertible Debentures, the face amount of
outstanding Bankers' Acceptances, Letters of
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Credit and the amount of Capitalized Lease Obligations (net of interest
component) but specifically excluding accounts payable and accrued liabilities,
and deducting cash and short term investments (rated R-1 (middle) or better by
Dominion Bond Rating Service), all as set forth on the Special Purpose Financial
Statements for such period plus the face amount of all guarantees provided by
any Restricted Subsidiary for the benefit of any Unrestricted Subsidiary,
excluding, for greater certainty, the guarantee by the Borrower of the
obligations of Co-Steel (UK) Limited pursuant to the share purchase agreement
dated December 23, 1998 between Co-Steel (UK) Limited, ASW Holdings and the
Borrower.
"CONTAMINANT" means any pollutant, dangerous substance, liquid waste,
industrial waste, hauled liquid waste, toxic substance, hazardous waste,
hazardous material, hazardous substance, nuclear material, contaminant or like
substance including any of the foregoing controlled, regulated or prohibited
under any Environmental Law or otherwise.
"CONTROL" has the meaning set out in the Business Corporations Act
(Ontario), and "CONTROLLED" has a corresponding meaning.
"CONTROLLED GROUP" means all members of a controlled group of
corporations and all members of a controlled group of trades or businesses
(whether or not incorporated) under common control which, together with each US
Guarantor, are treated as a single employer under Section 414 of the Code or
Section 4001 of ERISA.
"CONVERSION" has the meaning set out in Section 2.11.
"CONVERSION NOTICE" means a notice in the form of Exhibit C executed by
a Senior Officer of the Borrower.
"CONVERTIBLE DEBENTURES" means the 10 year, convertible, unsecured,
subordinated debentures of the Borrower in the principal amount of
Cdn.$125,000,000 carrying a 6.5% coupon.
"CO-STEEL HUNGARY" means Co-Steel Liquidity Management Hungary Limited
Liability Company, a corporation incorporated pursuant to the laws of Hungary
and licensed as a Hungarian off-shore company.
"CREDIT FACILITY" means either of the Revolving Facility or the
Swingline Facility and "CREDIT FACILITIES" means each of them collectively.
"CUMULATIVE CONSOLIDATED EBITDA" means Consolidated EBITDA calculated
for a period from October 1, 2001 to the date of calculation, which date shall
be the last calendar day of a month.
"CURRENT ASSETS" means the consolidated current assets of any Person,
as defined and determined in accordance with GAAP.
"DEBENTURE" means a debenture entered into by an Obligor in favour of
the Canadian Security Agent on behalf of the Noteholders, PNC and the
Administration Agent on behalf of the Lenders containing a first ranking fixed
charge (subject to Permitted Priority Liens), in favour of
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the Canadian Security Agent with respect to the Borrower's leasehold interest in
the North York Property, the Borrower's freehold interest in each Ontario
Property and other assets and a floating charge over the remaining present and
future assets of the Borrower delivered or pledged to the Canadian Security
Agent pursuant to a debenture delivery or pledge agreement.
"DEFAULT" means an event which, with the giving of notice or lapse of
time or both, would constitute an Event of Default.
"DEFAULT RATE" means the highest rate of interest or fee payable
hereunder for a particular type of Advance, regardless of the then Applicable
Margin, plus an additional 2% per annum, or 2% as applicable.
"DEFAULTING LENDER" has the meaning set out in Section 2.10(2).
"DEFICIT LENDER" has the meaning set out in Section 11.11(2).
"DISCOUNT PROCEEDS" means the face amount of any Bankers' Acceptance
less the discount to its face amount required to yield an interest rate per
annum equal to the BA Discount Rate in effect on the date of the applicable
Drawdown, Conversion or Rollover.
"DOCUMENTS" means each of this Agreement, the Inter-Creditor Agreement,
the Security Documents, any Bankers' Acceptance, any B.A. Equivalent Note, any
Hedging Contract, any Guarantee and all letter agreements, including the Fee
Side Letter, entered into on the Closing Date and all certificates and other
documents delivered or to be delivered to the Administration Agent or any Lender
pursuant to this Agreement or any other Document.
"DRAWDOWN" means the advance of a Loan by a Lender to the Borrower
under a Credit Facility or the acceptance or purchase by a Lender of a Bankers'
Acceptance or BA Equivalent Note or the issuance of a Letter of Credit by the LC
Lender under the Revolving Facility.
"DRAWDOWN NOTICE" means a notice in the form of Exhibit D executed by a
Senior Officer of the Borrower.
"ENGLISH FINANCE STRUCTURE COMPANIES" means each of Co-Steel Amsterdam
B.V., Co-Steel (UK) Limited and Cansteel Antilles N.V.
"ENVIRONMENT" shall mean soil, surface waters, ground waters, land
stream sediments, surface or subsurface strata, ambient air, and any
environmental medium.
"ENVIRONMENTAL ACTIVITY" means any past, present or future activity,
event or circumstance in respect of a Contaminant, including its storage, use,
holding, collection, purchase, accumulation, assessment, generation,
manufacture, construction, processing, treatment, stabilization, disposition,
handling or transportation, or its Release, escape, leaching, dispersal or
migration into the natural environment, including the movement through or in the
air, soil, surface water or groundwater.
"ENVIRONMENTAL LAW" means any and all Applicable Laws relating to the
environment, occupational health and safety or any Environmental Activity,
including the requirements to
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comply with or obtain any authorizations, permits, licences or approvals issued
by or from any Governmental Authority.
"EQUIVALENT AMOUNT" means, on any date, the equivalent amount in
Canadian Dollars or United States Dollars, as the case may be, after giving
effect to a conversion of a specified amount of United States Dollars to
Canadian Dollars or of Canadian Dollars to United States Dollars, as the case
may be, at the official noon rate of exchange as quoted by the Bank of Canada on
page BOFC on the Reuters service for the purchase of the applicable currency in
the wholesale market on the date in question at approximately noon (Toronto
time) for the purchase of United States Dollars with Canadian Dollars or at the
rate that is the reciprocal thereof for the purchase of Canadian Dollars with
United States Dollars, as the case may be.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute thereto of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA also refer to any successor sections thereto.
"EVENT OF DEFAULT" has the meaning set out in Section 11.01.
"EXCESS AMOUNT" means, in respect of a Credit Facility, the excess, if
any, as at the date of determination of (a) the Utilized Portion of the Credit
Facility at that date over (b) the maximum available principal amount of the
Credit Facility at that date, provided that if the amount of difference
calculated is less than $10,000 the difference shall be deemed to be nil.
"EXCESS REVOLVER PAYDOWN" means, as of the end of any fiscal quarter of
the Borrower, the amount by which the outstanding amount, if any, of the sum of
(x) the Advances and (y) the Equivalent Amount in Canadian Dollars of the
principal amount advanced under the PNC Sayreville Credit Agreement and the PNC
Raritan Credit Agreement is less than the result of (a) the sum of (x) the
Commitments and (y) the Equivalent Amount in Canadian Dollars of all commitments
under the PNC Sayreville Credit Agreement and the PNC Raritan Credit Agreement
at such time minus (b) Cdn.$50,000,000.
"EXCLUDED TAXES" means any Tax imposed on the Administration Agent's or
a Lender's net income or capital by any Governmental Authority as a result of
the Administration Agent or a Lender (a) carrying on a trade or business or
having a permanent establishment in such jurisdiction, (b) being organized under
the laws of such jurisdiction, or (c) being or being deemed to be resident in
such jurisdiction.
"F.R.S. BOARD" means the Board of Governors of the Federal Reserve
System or any successor thereto.
"FEDERAL FUNDS RATE" means, for any day, the variable rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Banking Day
next succeeding such day, provided that if the day for which such rate is to be
determined is not a Banking Day, the Federal Funds Rate for such day shall be
such rate on such
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transactions on the next day preceding Banking Day as so published on the next
succeeding Banking Day.
"FEE SIDE LETTER" means the fee letter dated the date hereof between
the Borrower and the Administration Agent providing for certain agency fees
payable to the Administration Agent.
"FINANCIAL COVENANTS" means the covenants set out in Section 10.02.
"FINANCIAL FORECAST" means the financial forecast for the Borrower and
its Subsidiaries dated October 1, 2001 for the fiscal years ending December 31,
2001, 2002 and 2003, which financial forecast is attached hereto as Schedule W.
"GAAP" means the generally accepted accounting principles from time to
time approved by the Canadian Institute of Chartered Accountants, or any
successor institute.
"GALLATIN" means Gallatin Steel Company, a partnership created under
the laws of Kentucky.
"GALLATIN COUNTY INDUSTRIAL REVENUE BONDS" means the industrial revenue
bonds issued by Gallatin to Gallatin County, Kentucky, U.S.A. pursuant to an
indenture dated as of March 1, 1994.
"GENERAL SECURITY AGREEMENT" means a security agreement entered into by
an Obligor in favour of a Security Agent on behalf of the Noteholders, PNC, the
Administration Agent and the Lenders creating a first ranking security interest
in favour of such Security Agent on all the present and future assets of the
Obligor (subject in each case to Permitted Priority Liens).
"GOVERNMENTAL AUTHORITY" means the government of any nation or any
province, municipality, state or other political subdivision of any nation, any
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, and any corporation or other entity
owned or controlled (through stock or capital ownership or otherwise) by any of
the foregoing.
"GUARANTEE" means a guarantee agreement from a Guarantor in favour of
the Administration Agent on behalf of itself, the Syndication Agent and the
Lenders, guaranteeing the payment and performance of all obligations to the
Administration Agent, the Syndication Agent and each Lender by the Borrower,
substantially in the form of Exhibit E.
"GUARANTOR" means each of 1300554 Ontario Limited, 1102590 Ontario
Limited, Co-Steel Distribution Canada Limited, Co-Steel (U.S.) Ltd., Co-Steel
Finance Corp., Lake Ontario Steel Company Inc., Co-Steel USA Distribution, Inc.,
Co-Steel USA Holdings, Inc., Co-Steel Raritan, Inc., Co-Steel Sayreville, Inc.,
and Raritan River Urban Renewal Corporation and each Restricted Subsidiary of
the Borrower which becomes a party hereto as a Guarantor from time to time
pursuant to Section 10.01(13).
"HAZARDOUS MATERIAL" shall mean any pollutant, toxic substance,
hazardous waste, hazardous material, hazardous substance, or oil as defined in
or pursuant to the Resource Conversation and Recovery Act, as amended, the
Comprehensive Environmental Response,
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Compensation, and Liability Act, as amended, the Federal Clean Water Act, or any
other federal, state, provincial or local environmental law, regulation,
ordinance, rule or by-law of the United States, Canada or the United Kingdom,
whether existing as of the date hereof, previously enforced, or subsequently
enacted.
"HEDGING CONTRACT" means a contract entered into between the Borrower
and any Lender with respect to any interest rate or currency hedging product.
"HUNGARIAN FINANCE STRUCTURE COMPANIES" means Goldmarsh Enterprises,
Acierco S. A. and Co-Steel Hungary.
"HUNGARIAN GUARANTEE" has the meaning set out in Section 7.05(3).
"HUNGARIAN GUARANTEE DOCUMENTS" has the meaning set out in Section
7.05(3).
"HUNGARIAN LOAN NOTES" means:
(i) promissory note from Co-Steel C.S.M. Corp. for
U.S.$25,000,000 maturing November 23, 2004 (Approximate
Cdn.$39,730,000);
(ii) promissory note from Co-Steel C.S.M. Corp. for
U.S.$25,000,000 maturing November 23, 2004 (Approximate
Cdn.$39,730,000);
(iii) promissory note from Co-Steel C.S.M. Corp. for
U.S.$28,650,000 maturing July 31, 2006 (Approximate
Cdn.$45,530,000);
(iv) term loan to Co-Steel USA Holdings Inc. for U.S.$100,000,000
maturing January 8, 2008 (Approximate Cdn.$158,920,000);
(v) term loan to Co-Steel Sayreville, Inc. for U.S.$13,000,000
maturing January 30, 2008 (Approximate Cdn.$20,659,600);
(vi) term loan to Co-Steel Sayreville, Inc. for U.S.$3,600,000
maturing June 30, 2008 (Approximate Cdn.$5,721,120);
(vii) term loan to Co-Steel Sayreville, Inc. for U.S.$5,683,330
maturing June 30, 2008 (Approximate Cdn.$9,031,948); and
(viii) promissory note from Co-Steel C.S.M. Corp. for U.S.$150,000
(Approximate Cdn.$238,000).
"HUNGARIAN LOAN REORGANIZATION DOCUMENTS" has the meaning set out in
Section 7.05(3).
"INCHOATE LIEN" means, with respect to any property or asset of any
Person, the following Liens:
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(a) any Lien for taxes, local improvement charges, levies, rates,
assessments or utility charges not yet due or being contested
in good faith by appropriate proceedings and for which a
provision has been taken in accordance with GAAP, if
applicable;
(b) any carriers, warehousemen, mechanics or materialmen's lien in
respect of charges accruing in favour of any Person, so long
as the charges are not yet due or are being contested in good
faith by appropriate proceedings and for which a provision has
been taken in accordance with GAAP, if applicable; and
(c) undetermined or inchoate liens, privileges or charges
incidental to current operations which have not at such time
been filed pursuant to law against the Person's property or
assets or which relate to obligations not due or delinquent.
"INDEBTEDNESS" means, with respect to any Person, at any time, the
aggregate, without duplication, of:
(a) all indebtedness, obligations and liabilities, (other than
accounts payable and accrued liabilities), of the Person
which, in accordance with GAAP, would be included in
determining total liabilities as shown in the liability
section of the balance sheet of the Person, including, without
limitation, indebtedness, obligations and liabilities for
borrowed money (whether on account of principal, interest or
otherwise) or in respect of any bankers' or trade acceptance
credit facility, but excluding, for greater certainty, any
inter-company debt that is eliminated upon consolidation;
(b) all indebtedness, obligations and liabilities of the Person
secured by any Lien on any property or asset owned or held by
the Person, whether or not any other Person has assumed or is
liable for the indebtedness, obligations or liabilities so
secured and whether or not the rights and remedies of the
secured party are limited to repossession or sale of the
property or assets covered, but, for greater certainty,
excluding operating leases;
(c) any Synthetic Lease or other transfer of property of assets
which has been made with recourse to the transferor or any
obligation to repurchase any property or assets or to purchase
property or assets regardless of the delivery or non-delivery
thereof;
(d) any liability under any instrument of guarantee or indemnity
or arising under any guarantee, endorsement or undertaking
which may be made or issued to others for the account of the
Person and at the request of such Person, including any
Advance made by way of Letter of Credit or Bankers' Acceptance
or BA Equivalent Note;
(e) all indebtedness, obligations and liabilities of others which
the Person has directly or indirectly guaranteed, endorsed
(otherwise than for collection or deposit in the ordinary
course of business), discounted with recourse or other
obligation to pay or under agreement (contingently or
otherwise) to purchase, repurchase or otherwise acquire or
become liable for, or in respect of which the Person has
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provided a comfort letter or agreed to supply or advance funds
(whether by way of loan, share purchase or capital
contribution, through a commitment to pay for property or
services regardless of the non-delivery of the property or the
non-furnishing of the services or otherwise) or in respect of
which the Person has otherwise become directly or indirectly
liable; and the amount of each such indebtedness, obligation
or liability (each in this definition a "GUARANTEE OF
INDEBTEDNESS") shall be deemed to be the amount of the
Indebtedness in respect of which the Guarantee of Indebtedness
relates, unless the Guarantee of Indebtedness is limited to a
determinable amount in which case the amount of the Guarantee
of Indebtedness shall be deemed to be the lesser of the amount
of the Indebtedness in respect of which the Guarantee of
Indebtedness relates and the determinable amount and for
greater certainty a Guarantee of Indebtedness shall be deemed
to be in the same principal amount and bear the same rate of
interest as the Indebtedness which is the subject of such
Guarantee of Indebtedness;
(f) all liabilities of the Person as a partner or venturer in any
partnership, joint venture or other enterprise;
(g) all items of indebtedness convertible into, or exchangeable
for, shares in the capital of the Person;
(h) all shares in the capital of, or partnership units in, the
Person which are redeemable or retractable at the option of
any Person (other than the Person in respect of whom a
determination of Indebtedness is being made); and
(i) any Capitalized Lease Obligation.
"INDEMNIFIED PERSONS" has the meaning set out in Section 6.06.
"INFORMATION" has the meaning set out in Section 14.01.
"INSURANCE PROCEEDS" has the meaning set out in Section 10.01(18).
"INTELLECTUAL PROPERTY RIGHTS" has the meaning set out in Section
9.01(30).
"INTER-CREDITOR AGREEMENT" means the inter-creditor agreement dated the
date hereof between the Canadian Security Agent, the US Security Agent, PNC, the
Administration Agent and the Noteholders as consented to by the Borrower and
each of the Guarantors.
"INTEREST PAYMENT DATE" means the last day of an Interest Period and
also, in the case of an Interest Period which is longer than three months, each
date within such Interest Period which follows at intervals of three months
after the first day of such Interest Period.
"INTEREST PERIOD" means, in relation to a LIBOR Loan, the period
selected by the Borrower pursuant to this Agreement for computing interest on
the LIBOR Loan.
"INVENTORY" means tangible personal property that is held by a Person
for sale or lease or that has been leased or that is to be furnished or has been
furnished under a contract of service, or
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that is raw materials, work in process or materials used or consumed in a
business or profession, which has been, or properly may be, classified as
inventory in accordance with GAAP.
"JUDGEMENT CONVERSION DATE" has the meaning set out in Section 14.03.
"JUDGEMENT CURRENCY" has the meaning set out in Section 14.03.
"KEY EMPLOYEE LOANS" means loans to key employees of the Borrower for
the purpose of purchasing shares of the Borrower or for other employment
benefits.
"LANDLORD'S CONSENTS" means collectively, such consents in form and
substance satisfactory to the Administration Agent of landlords of Leased
Properties to the granting of a Lien in favour of a Security Agent and such
other matters as the Administration Agent may reasonably require.
"LATE PAYMENT RATE" means, without duplication of any applicable
Default Rate, in the case of amounts payable in Canadian Dollars, the rate then
applicable to Prime Rate Loans plus 2% and, in the case of amounts payable in
U.S. Dollars, the rate then applicable to Base Rate Loans plus 2%.
"LC DEPOSIT AMOUNT" has the meaning set out in Section 5.02(8).
"LC LENDER" means The Toronto-Dominion Bank.
"LEASED PROPERTIES" means all lands and premises described in Schedule
C and any lands and premises which are subsequently leased by any Obligor.
"LEASEHOLD MORTGAGE" means a leasehold mortgage with assignment of
subleases and rents, security agreement and fixture filing as a first ranking
encumbrance against all leasehold property, right, title and interest in the
premises identified thereon in favour of a Security Agent on behalf of the
Noteholders, PNC, the Administration Agent and the Lenders (subject in each case
to Permitted Priority Liens).
"LENDERS" means The Toronto-Dominion Bank, The Bank of Nova Scotia and
the other financial institutions which have executed this Agreement and are
listed in Schedule A and the financial institutions which from time to time
pursuant to and in accordance with the provisions of this Agreement have entered
into an Assignment Agreement amending Schedule A to become a party to this
Agreement.
"LETTER OF CREDIT" means a documentary or stand-by letter of credit or
letter of guarantee issued by the LC Lender at the request and for the account
of the Borrower under this Agreement.
"LETTER OF CREDIT FEE RATE" means, with respect to a Letter of Credit,
the applicable percentage rate per annum indicated beside or below the reference
to "Letter of Credit Fee Rate" in the definition of "Applicable Margin" relevant
to the period in respect of which a determination is being made.
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"LIBOR LOAN" means a U.S. Dollar loan made to the Borrower under this
Agreement and on which interest is calculated by reference to the LIBOR Rate.
"LIBOR MARGIN" means, for any period, the applicable percentage rate
per annum applicable to that period as indicated beside or below the reference
to "LIBOR Margin" in the definition of "Applicable Margin" relevant to the
period in respect of which a determination is being made.
"LIBOR RATE" means, for each Interest Period, a rate of interest per
annum, calculated on the basis of a 360 day year, equal to:
(a) the simple average (rounded upward, if necessary, to the
nearest whole multiple of 1/16 of one percent) of the rates
shown on the display referred to as the "LIBOR Page" (or any
display substituted therefor) of the Reuters Domestic Money
Service with respect to the banks in the London interbank
market named in the display as at 11:00 a.m. (London, England
time) on the second Banking Day prior to the first day of the
Interest Period, in an amount similar to the LIBOR Loan and
for a deposit period comparable to the Interest Period; or
(b) if a rate is not determinable pursuant to clause (a) of this
definition at the relevant time, the rate expressed as a rate
of interest per annum on the basis of a year of 360 days, at
which United States Dollars are offered by the principal
lending office in London, England of the Administration Agent
to prime banks in the London interbank market at approximately
11:00 a.m. (London, England time) on the second Banking Day
prior to the first day of the Interest Period, in an amount
similar to the LIBOR Loan and for a deposit period comparable
to the Interest Period; or
(c) if a rate is not determinable pursuant to clause (a) or (b) of
this definition at the relevant time, the Base Rate.
"LIEN" means any mortgage, hypothec, title retention arrangement,
pledge, lien, right of set-off, charge, security interest, assignment or other
encumbrance whatsoever, whether fixed or floating, however created or arising.
"LOAN" means a Prime Rate Loan, Base Rate Loan or LIBOR Loan.
"LOSSES" has the meaning set out in Section 6.06.
"MAJORITY LENDERS" means, at any time, if any Advance is outstanding
under the Credit Facilities, any one or more Lenders who have in the aggregate
extended at least 50% of Advances outstanding at that time under the Credit
Facilities and if no Advance is outstanding under the Credit Facilities, any two
or more Lenders who have in the aggregate at least 50% of the then maximum
available Commitments under the Credit Facilities.
"MANAGING SECURITY AGENT" means the Managing Security Agent appointed
from time to time pursuant to the Inter-Creditor Agreement.
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"MARCH 2002 SIGNIFICANT SHARE OFFERING" means the Borrower's offering
of 20,907,000 of its common shares which closed on March 12, 2002.
"MATERIAL ADVERSE EFFECT" means, with respect to the Borrower and the
Guarantors any circumstances or event which (i) has or could reasonably be
expected to have a material adverse effect upon the validity or enforceability
of this Agreement, the Security Documents, any Guarantee or the Inter-Creditor
Agreement, (ii) is material and adverse to the business, properties, assets,
financial condition, results of operations or prospects of the Obligors, taken
as a whole, (iii) impairs materially the ability of the Obligors, taken as a
whole, to duly and punctually pay or perform the obligations hereunder, or (iv)
impairs materially the ability of the Administration Agent or the Lenders to the
extent permitted, to enforce their legal remedies pursuant to this Agreement and
the other Documents.
"MATERIAL CONTRACTS" means, collectively, those contracts listed in
Schedule G and any contract or lease to which an Obligor is now or hereafter
becomes a party and which is at any time on or after the date of this Agreement,
material to the business of any Obligor in each case whether oral or written,
and in each case as the same may be amended, supplemented or otherwise modified
and in effect from time to time, but excluding (a) any collective agreements,
(b) any pension plan and benefits agreements, and (c) insurance policies.
"MATERIAL LICENCES" means, collectively, those licences, permits or
approvals listed on Schedule H any licence, permit or approval issued by any
Governmental Authority, applicable stock exchange or securities commission, to
an Obligor, and which is at any time on or after the date of this Agreement,
necessary or material to the business and operations of an Obligor or to the
listing of its securities.
"MATURITY DATE" means the earlier of (i) January 15, 2004, and (ii) the
date the Credit Facilities are terminated pursuant to Section 11.03 or
accelerated pursuant to Section 11.04.
"MORTGAGE" means a mortgage with assignment of leases and rents,
security agreement and fixture filing as a first ranking encumbrance against all
real property, right, title and interest in the properties identified therein in
favour of US Security Agent on behalf of the Noteholders, PNC, the
Administration Agent and the Lenders (subject in each case to Permitted Priority
Liens).
"MOVEABLE HYPOTHEC" means a deed of moveable hypothec entered into by
an Obligor in favour of the Canadian Security Agent on behalf of the
Noteholders, PNC, the Administration Agent and the Lenders creating a first
ranking security interest in favour of the Canadian Security Agent on all the
present and future assets of such Obligor located in the Province of Quebec
(subject in each case to Permitted Priority Liens).
"NET CASH PROCEEDS" means the aggregate cash proceeds (including any
cash payment received by way of deferred payment of principal pursuant to a note
or instalment receivable or purchase price adjustment receivable or otherwise,
but only as and when received) of any sale or of any offering of debt or equity
securities, net of (without duplication): (i) reasonable and documented legal,
accounting and investment banking fees and/or commissions (actually paid to any
Person that is not an Affiliate of the Company), (ii) in the case of an asset
disposition
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amounts required to be applied to the repayment of Indebtedness secured by a
Lien, (other than a Lien created by any Security Document), expressly permitted
under this Agreement on any asset which is the subject of the asset disposition,
(iii) amounts agreed between the Administration Agent on behalf of the Lenders,
the Noteholders and PNC pursuant to the Inter-Creditor Agreement, and (iv) in
the case of an asset disposition other customary fees actually incurred in
connection with the sale, all net of taxes paid or reasonably estimated to be
payable as a result of the asset disposition.
"NET TANGIBLE ASSETS" means, with respect to any Restricted Subsidiary
the aggregate amount of assets of such Restricted Subsidiary after deducting
therefrom (i) all goodwill, trade names, trade marks, patents, organization
expenses and other like intangibles; (ii) all equity held by it in another
Restricted Subsidiary, and (iii) inter-company loans and advances to another
Subsidiary of the Borrower, all as set forth on the most recent balance sheet of
such Restricted Subsidiary, computed in accordance with GAAP (provided that such
balance sheet shall be prepared on a non-consolidated basis).
"NEW HOLDCO" has the meaning set out in Schedule BB.
"NEW JERSEY PROPERTIES" means the lands and premises described in
Schedule D and all plant, buildings, structures, erections, improvements,
appurtenances and fixtures (including fixed machinery and fixed equipment)
situate on those lands.
"NEW SUBORDINATED LOAN NOTES" has the meaning set out in Schedule BB.
"1999 CREDIT AGREEMENT" means the Credit Agreement dated as of May 28,
1999 between Borrower, certain of the Guarantors, the Lenders, the
Administration Agent and the Syndication Agent.
"NJSC" means N.J.S.C. Investment Co., Inc., a corporation incorporated
pursuant to the laws of the State of Delaware.
"NORMALIZED CONSOLIDATED EBITDA" means Consolidated EBITDA calculated
quarterly on a rolling twelve-month basis, except for the period ended December
31, 2001 only, which shall be calculated using only the preceding 9 months
beginning April 1, 2001 and annualizing such number over 12 months.
"NORMALIZED CONSOLIDATED EBITDA NET OF CAPEX" means, for any period,
Normalized Consolidated EBITDA minus (a) cash Capital Expenditures, (b) to the
extent not already deducted in the calculation of Normalized Consolidated
EBITDA, scheduled payments in respect of Capitalized Lease Obligations, and (c)
to the extent not otherwise already deducted in the calculation of Normalized
Consolidated EBITDA, mandatory funding requirements in respect of pension
obligations, in each case of any member of the Restricted Group during such
period.
"NORTH YORK PROPERTY" means the leased premises of the Borrower located
at 00 Xxxxxx Xxxxx, Xxxxx Xxxx, Xxxxxxx.
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"NOTEHOLDERS" means The Prudential Insurance Company of America, U.S.
Private Placement Fund or any other holders from time to time of notes under the
Prudential Note Agreement.
"NOTICE OF BORROWING" means, in the case of a Drawdown, a Drawdown
Notice, in the case of a Conversion, a Conversion Notice and in the case of a
Rollover, a Rollover Notice.
"OBLIGOR" means the Borrower or any Guarantor.
"ONTARIO PROPERTIES" means the lands and premises described in Schedule
E and all plant, buildings, structures, erections, improvements, appurtenances
and fixtures (including fixed machinery and fixed equipment) situate on those
lands.
"OUTSTANDING ADVANCE" has the meaning set out in Section 2.11.
"OWNED PROPERTY" means the lands and premises described in Schedule N
and all plant, buildings, structures, erections, improvements, appurtenances and
fixtures (including fixed machinery and fixed equipment) situated on these
lands.
"PARTICIPANT" has the meaning set out in Section 13.03(2).
"PARTICIPATION" has the meaning set out in Section 13.03(1).
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"PENSION PLAN" means a "pension plan", as such term is defined in
Section 3(2) of ERISA, which is subject to Title IV of ERISA (other than a
multi-employer plan as defined in Section 4001(a)(3) of ERISA), and to which
each US Guarantor or any corporation, trade or business that is, along with such
US Guarantor, a member of a Controlled Group, may have liability, including any
liability by reason of having been a substantial employer within the meaning of
Section 4063 of ERISA at any time during the preceding five years, or by reason
of being deemed to be a contributing sponsor under Section 4069 of ERISA.
"PERMITTED ASSET SALES" means (i) sales of inventory in the ordinary
course of business upon customary credit terms; or (ii) sales of assets between
any Obligor; or (iii) sales of assets (excluding items set forth in (i) and
(ii)) valuing less than Cdn.$2,500,000 provided that the total amount of asset
sales under item (iii) do not exceed Cdn.$5,000,000 in the aggregate per annum,
calculated on a calendar year basis, for the Restricted Group.
"PERMITTED INTERCOMPANY INDEBTEDNESS" means (a) loans from an
Unrestricted Subsidiary to a Restricted Subsidiary, provided that no such loan
exceeds Cdn. $1,500,000 and that such loans in the aggregate do not exceed Cdn.
$3,000,000; (b) loans from a Restricted Subsidiary to another Restricted
Subsidiary; and (c) Indebtedness described in Schedule Y.
"PERMITTED LIENS" means, with respect to any property or asset of any
Person, the following Liens:
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(a) any Inchoate Lien;
(b) Liens respecting Priority Payables;
(c) minor encumbrances, and those municipal agreements, easements,
rights of way, servitudes, rights in the nature of an
easement, reservations, restrictions and other similar rights
in land granted to or reserved by other Persons, rights of way
for sewers, electric lines, telegraph and telephone lines and
other similar purposes, or zoning or other restrictions as to
the use of real properties which do not in the aggregate
materially detract from the value of the real properties or
materially impair their use or operation;
(d) Liens arising out of judgements or awards against such Person
with respect to which enforcement has been stayed and such
Person at the time shall currently be prosecuting an appeal or
proceeding for review in good faith by appropriate proceedings
diligently conducted and with respect to which such Person has
created adequate reserves or has adequate insurance
protection; provided, however, that at no time may the
aggregate dollar amount of such liens exceed $5,000,000;
(e) Liens respecting Capitalized Lease Obligations provided such
Liens secure Indebtedness which is permitted under Section
10.03(1)(l);
(f) any right reserved to or vested in any Governmental Authority
by the terms of any lease, license, franchise, grant or permit
acquired by the Person, or by any statutory provision to
terminate any such lease, license, franchise, grant or permit,
or to require annual or other periodic payments as a condition
of the continuance thereof;
(g) security given by the Person to a utility or any Governmental
Authority when required by such utility or Governmental
Authority in connection with the operations of the Person and
in the ordinary course of its business;
(h) reservations, limitations, provisos and conditions, if any,
expressed in any original grants from the Crown or State, as
applicable;
(i) any Lien securing a purchase money obligation, provided that
(a) no such Lien affects any property other than the property
acquired by the incurring of such purchase money obligation;
(b) such Lien does not secure an amount in excess of the
original purchase price of such property, less repayments made
from time to time; and (c) such Lien secures Indebtedness
which is permitted under Section 10.03(1)(l);
(j) the Liens in favour of the Security Agents in their capacity
as security agents pursuant to the Inter-Creditor Agreement;
and
(k) any Lien consented to in writing by the Administration Agent
on the instruction of the Majority Lenders,
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provided, however, that no Lien described in clauses (a) through (e) above shall
constitute a Permitted Lien if such Lien materially detracts from the value of
property of the Person or materially impairs its use in the operation of the
business of the Person.
"PERMITTED PARENT GUARANTEES" guarantees by Borrower of the obligations
of a Restricted Subsidiary provided that the obligations guaranteed are
otherwise permitted pursuant to Section 10.03(1) and the guarantee by the
Borrower of the obligations of Co-Steel (UK) Limited pursuant to the share
purchase agreement dated December 23, 1998 between Co-Steel (UK) Limited, ASW
Holdings and the Borrower.
"PERMITTED PRIORITY LIENS" means those encumbrances set forth in
subsections (a), (b), (c), (e), (f), (g), (h) and (i) of the definition of
Permitted Liens or any other Lien consented to in writing by the Administration
Agent on the instruction of the Majority Lenders.
"PERSON" means an individual, a partnership, a corporation, a trust, an
unincorporated organization, a government or any governmental department or
agency or any other entity whatsoever and the heirs, executors, administrators
or other legal representatives of an individual.
"PNC" means PNC Bank National Association, a U.S. national banking
association.
"PNC INDEBTEDNESS" means indebtedness of Co-Steel Raritan, Inc. to PNC
pursuant to the PNC Raritan Credit Agreement up to U.S.$15,633,564.23 and of
Co-Steel Sayreville, Inc. to PNC pursuant to the PNC Sayreville Credit Agreement
up to U.S.$11,748,614.61.
"PNC RARITAN CREDIT AGREEMENT" means the second amended and restated
credit agreement dated as of the date hereof between PNC and Co-Steel Raritan,
Inc. pursuant to which PNC is providing a revolving line of credit in an amount
up to U.S.$15,633,564.23 to Co-Steel Raritan Inc., together with an accompanying
promissory note.
"PNC SAYREVILLE CREDIT AGREEMENT" means the second amended and restated
credit agreement dated as of the date hereof between PNC and Co-Steel
Sayreville, Inc. pursuant to which PNC is providing a revolving line of credit
up to U.S.$11,748,614.61 to Co-Steel Sayreville, Inc., together with an
accompanying promissory note.
"PRIME RATE" means the variable rate of interest per annum (calculated
on the basis of a 365 or 366 day year) that is the greater of (a) the variable
rate of interest per annum from time to time established by the Administration
Agent as its reference rate of interest for the determination of interest that
it will charge to customers of varying degrees of credit worthiness for Canadian
Dollar demand loans made in Canada; and (b) 0.75% above the average of the rates
from time to time quoted on the CDOR page of Reuters, rounded up to the second
decimal place, at approximately 10:00 a.m. (Toronto time) for one-month Canadian
Dollar bankers' acceptances; provided that any change in the Prime Rate shall be
effective on the effective day of any change in the reference rate referred to
in (a) above or (b) above, respectively.
"PRIME RATE LOAN" means a Canadian Dollar loan made to the Borrower
under this Agreement and on which interest is calculated by reference to the
Prime Rate.
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"PRIME RATE MARGIN" means, for any period, the applicable percentage
rate per annum as indicated beside or below the reference to Prime Rate Margin
in the definition of "Applicable Margin".
"PRIORITY PAYABLES" means all statutory liens, deemed trusts and
preferred claims of any Person, including claims for employee wages, vacation
pay, termination or severance pay, employee withholdings, pension plan
contributions, workers' compensation assessments, municipal Taxes and claims by
public utilities.
"PROPORTIONATE SHARE" means, in respect of each Lender, from time to
time, (i) with respect to any Credit Facility, the percentage of such Credit
Facility that a Lender has agreed to advance to the Borrower, determined by
dividing the Lender's Commitment in respect of the Credit Facility by the
aggregate of all of the Lenders' Commitments with respect to such Credit
Facility and, (ii) with respect to an Advance, means such percentage of the
Credit Facility under which such Advance is made.
"PRUDENTIAL NOTE AGREEMENT" means the second amended and restated note
agreement dated as of the date hereof amending and restating (i) the Note
Agreement, dated as of January 10, 1994, as amended and restated by an Amended
and Restated Note Agreement, dated as of February 4, 2000, pursuant to which the
Borrower issued U.S.$100,000,000 of its senior promissory notes due January 15,
2004, and (ii) the Note Agreement dated as of February 20, 1997, as amended and
restated pursuant to the Amended and Restated Note Agreement, dated as of
February 4, 2000 pursuant to which the Borrower issued U.S.$75,000,000 of its
senior promissory notes due July 15, 2006.
"RELEASE" means discharge, spray, inject, inoculate, abandon, deposit,
spill, leak, seep, pour, emit, empty, throw, dump, place and exhaust, and when
used as a noun, has a similar meaning.
"REQUIRED LENDERS" means, at any time, if any Advance is outstanding
under the Credit Facilities, any one or more Lenders who have in the aggregate
extended at least 66 2/3% of Advances outstanding at that time under the Credit
Facilities and if no Advance is outstanding under the Credit Facilities, any two
or more Lenders who have in the aggregate at least 66 2/3% of the then maximum
available Commitments under the Credit Facilities.
"RESTRICTED GROUP" means the Borrower and the Restricted Subsidiaries
collectively.
"RESTRICTED SUBSIDIARY" means each of 1300554 Ontario Limited, 1102590
Ontario Limited, Co-Steel Distribution Canada Limited, Co-Steel (U.S.) Ltd.,
Co-Steel Finance Corp., Lake Ontario Steel Company Inc., Co-Steel USA
Distribution, Inc., Co-Steel USA Holdings, Inc., Co-Steel Sayreville, Inc.,
Raritan River Urban Renewal Corporation, Co-Steel Raritan, Inc. and such other
Subsidiary of the Borrower that becomes a Guarantor hereunder or as may be
designated as a Restricted Subsidiary by the Borrower and the Required Lenders
from time to time provided that the Hungarian Finance Structure Companies and
NJSC shall be considered Restricted Subsidiaries for the purposes of calculation
of the covenants set forth in Section 10.02, for the purposes of the Special
Purpose Financial Statements and for the purposes of Section 9.01(25) only.
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"REVOLVING FACILITY" means the credit facility established by Section
2.01.
"REVOLVING FACILITY AMOUNT" means initially an amount up to but not
exceeding Cdn.$155,713,930 or the Equivalent Amount in U.S.$, less the Swingline
Facility Amount, as permanently reduced from time to time pursuant to Section
3.03.
"RIGHTS" has the meaning set out in Section 13.03.
"ROLLOVER" means the obtaining of a new LIBOR Loan upon the expiration
of the Interest Period of an outstanding LIBOR Loan, or the drawing and
acceptance of a new Bankers' Acceptance upon the maturity of a Bankers'
Acceptance outstanding under this Agreement.
"ROLLOVER NOTICE" means a notice in the form of Exhibit G executed by a
Senior Officer of the Borrower.
"SCHEDULE 1 LENDER" means a bank listed on Schedule 1 of the Bank Act
(Canada).
"SCHEDULE 2 LENDER" means a bank listed on Schedule 2 of the Bank Act
(Canada).
"SCHEDULE 3 LENDER" means a bank listed on Schedule 3 of the Bank Act
(Canada).
"SECURITY" means the Liens created by the Security Documents.
"SECURITY AGENTS" means the Canadian Security Agent and the US Security
Agent collectively and "SECURITY AGENT" means either of them.
"SECURITY DOCUMENTS" means the Documents referred to in Article 8.
"SENIOR OFFICER" means, in respect of any corporation, its chairman,
president, chief executive officer, executive vice-president, finance and
administration, vice-president finance, treasurer or chief financial officer or
any person holding a similar office.
"SETTLEMENT AMOUNTS" has the meaning equivalent to that provided in
clause (e) of the definition of "Specified Transaction" in the Inter-Creditor
Agreement.
"SHARE PLEDGE AGREEMENT" means a share pledge agreement entered into in
favour of a Security Agent for and on behalf of the Noteholders, PNC, the
Administration Agent and the Lenders.
"SHAREHOLDERS' EQUITY" means, shareholders' equity as reflected on the
balance sheet in the most recent Special Purpose Financial Statements excluding
that portion of the Convertible Debentures classified as equity in accordance
with GAAP.
"SIGNIFICANT SHARE OFFERING" means a public offering by the Borrower of
its common shares, the gross proceeds of which equal or exceed Cdn.$50,000,000
and for greater certainty, excludes the March 2002 Significant Share Offering.
"SIGNIFICANT U.S. LEASED PROPERTIES" means all lands and premises
described in Schedule O.
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"SPECIAL PURPOSE FINANCIAL STATEMENTS" means the consolidated financial
statements of the Borrower prepared under GAAP, except that the Unrestricted
Subsidiaries, (excluding the Hungarian Finance Structure Companies and NJSC),
are not consolidated but are accounted for at Adjusted Cost Base.
"SPECIFIED TRANSACTION CERTIFICATE" means a certificate of a Senior
Officer of the Borrower substantially in the form of Exhibit F.
"STAMPING FEE" means, with respect to a Bankers' Acceptance or a BA
Equivalent Note, the applicable percentage rate per annum indicated beside or
below the reference to "Stamping Fee" in the definition of "Applicable Margin"
relevant to the period in respect of which a determination is being made.
"STANDSTILL AGREEMENT" means a standstill agreement from Co-Steel (UK)
Limited in favour of the Administration Agent on behalf of the Lenders, the
Noteholders and PNC in form and substance reasonably satisfactory to the
Administration Agent.
"STRATEGIC PLAN" has the meaning set out in Section 10.01(27).
"SUBSIDIARY" means, with respect to any Person at any time: (i) any
other Person of which either (a) 50% or more of the shares in its capital or
other interests which entitle it to vote in the election of directors or
comparable Persons performing similar functions (excluding shares or other
interests entitled to vote only upon the failure to pay dividends thereon or
other contingencies) are owned by the former person or (b) it has a 50% interest
in the profits or capital of such other Person, at the time owned directly (or
indirectly through one or more Subsidiaries) by such Person, or (ii) any other
Person whose net earnings, or any portion thereof, are consolidated with the net
earnings of such Person and are recorded on the books of such Person for
financial reporting purposes in accordance with GAAP, and includes any entity in
like relation to a Subsidiary.
"SURPLUS LENDER" has the meaning set out in Section 11.11(2).
"SWINGLINE ACCOUNTS" has the meaning set out in Section 2.05.
"SWINGLINE FACILITY" means the credit facility established by Section
2.02.
"SWINGLINE FACILITY AMOUNT" means an amount up to but not exceeding
Cdn. $5,000,000.
"SWINGLINE LENDER" means The Toronto-Dominion Bank.
"SYNDICATE PORTION" means the amount allocated pursuant to the terms of
the Inter-Creditor Agreement to the Administration Agent for the benefit of the
Lenders to prepay the Credit Facilities in respect of the amounts detailed in
Section 3.03(1).
"SYNDICATION" has the meaning set out in Section 13.03(1).
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"SYNDICATION AGENT" means The Bank of Nova Scotia, and its successors
and permitted assigns.
"SYNTHETIC LEASE" means any lease that, in accordance with GAAP, is
classified by the lessee as an operating lease for financial reporting purposes
but is treated as a secured financing for the purposes of income tax reporting.
"TANGIBLE NET WORTH" means, as at any date, the amount equal to the
Shareholders' Equity (excluding foreign currency translation adjustments), less
all goodwill, investments in and amounts due from ASW Holdings PLC, trade names,
trade marks, patents, organization expenses, deferred financing expenses,
amounts due from employees and other like intangibles, all calculated based on
the Special Purpose Financial Statements prepared as at such date.
"TAX" or "TAXES" means all taxes, charges, fees, levies, imposts and
other assessments, including all income, sales, use, goods and services, value
added, capital, capital gains, alternative, net worth, transfer, profits,
withholding, payroll, employer health, excise, franchise, real property and
personal property taxes, and any other taxes, customs duties, fees, assessments,
royalties, duties, deductions, compulsory loans or similar charges in the nature
of a tax, including Canada Pension Plan and provincial pension plan
contributions, employment insurance payments and workers compensation premiums,
together with any instalments, and any interest, fines and penalties, imposed by
any Governmental Authority, whether disputed or not.
"THIS AGREEMENT", "HEREIN", "HEREOF", "HERETO" and similar expressions
mean and refer to this agreement and include any instrument amending or
supplementing the same, and the expressions "ARTICLE", "SECTION", "SECTION " and
"SCHEDULE" followed by a number or letter and no reference to another agreement
mean and refer to the specified Article, Section, Section or Schedule of this
agreement.
"UNDERWRITERS" means the Administration Agent and the Syndication Agent
collectively.
"UNITED STATES DOLLARS, U.S. DOLLARS", "$U.S." and "U.S.$" means lawful
currency of the United States of America.
"UNRESTRICTED SUBSIDIARIES" means each of 1062316 Ontario Limited,
Co-Steel Dofasco LLC, Co-Steel Benefit Plans Inc., Co-Steel C.S.M. Corp.,
Gallatin, Gallatin Terminal Company and Gallatin Transit Authority, Co-Steel
Benefit Plans USA Inc., Co-Steel Amsterdam B.V., Cansteel Antilles N.V.,
Co-Steel (UK) Limited, ASW Holdings PLC, NJSC, Goldmarsh Enterprises, Acierco
S.A., Co-Steel Hungary and such other Subsidiary of the Borrower as may be
designated as an Unrestricted Subsidiary by the Borrower with the consent of the
Required Lenders from time to time and "Unrestricted Subsidiary", means any of
them, provided that the Hungarian Finance Structure Companies and NJSC shall not
be considered Unrestricted Subsidiaries for the purposes of calculation of the
covenants set forth in Section 10.02, for the purposes of the Special Purpose
Financial Statements and for the purposes of Section 9.01(25) only.
"UNUTILIZED PORTION" means, in respect of any Credit Facility, on any
date, the maximum principal amount of such Credit Facility at such date, after
giving effect to any
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reductions required by this Agreement, minus the Utilized Portion of such Credit
Facility, at such date.
"US GUARANTORS" means Co-Steel (U.S.) Ltd., Co-Steel Finance Corp.,
Lake Ontario Steel Company Inc., Co-Steel USA Distribution, Inc., Co-Steel USA
Holdings, Inc., Co-Steel Raritan, Inc., Co-Steel Sayreville, Inc. and Raritan
River Urban Renewal Corporation and each Restricted Subsidiary carrying on
business in the United States that from time to time becomes a Guarantor
pursuant to the terms of this Agreement.
"US SECURITY AGENT" means State Street Bank and Trust Company in its
capacity as US Security Agent for and on behalf of the Administration Agent, the
Noteholders and PNC pursuant to the Inter-Creditor Agreement.
"UTILITY" means a Person which supplies natural gas, electricity or
oxygen.
"UTILIZED PORTION" means the sum of (i) all Advances outstanding under
a facility in Canadian Dollars at the date of determination plus (ii) the
Equivalent Amount in Canadian Dollars of the amount of all Advances outstanding
under such facility in U.S. Dollars at that date; and in determining the
foregoing amount, the face amount of all outstanding Bankers' Acceptances, BA
Equivalent Notes and Letters of Credit shall be used.
1.02 Headings and Internal References
The division of this Agreement into Articles and Sections and the
insertion of headings are for convenience of reference only and shall not affect
its construction or interpretation. The terms "this Agreement", "hereof",
"hereunder" and similar expressions refer to this Agreement together with any
amendments or supplements, and not to any particular Article, Section or other
portion of this Agreement or its amendments or supplements. Unless inconsistent
with the subject matter or context, textual references to Articles and Sections
are to Articles and Sections of this Agreement.
1.03 Number and Gender
Words importing the singular number only shall include the plural and
vice versa, words importing the masculine gender shall include the feminine and
neuter genders and vice versa and words importing persons shall include
individuals, partnerships, associations, trusts, unincorporated organizations
and corporations and vice versa.
1.04 Accounting Terms and Principles
All accounting terms not otherwise defined in this Agreement shall have
the meanings ascribed to them in accordance with GAAP, consistently applied,
provided that, if any change in GAAP subsequent to the date of this Agreement is
material for the purpose of determining the Borrower's compliance with a
covenant contained in this Agreement or any calculations hereunder, then:
(a) the change shall not be effective for the purpose of
determining compliance with the covenant, (i) without the
consent of the Required Lenders, if the change
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makes the covenant less restrictive, or (ii) without the
consent of the Borrower, if the change makes the covenant more
restrictive; provided that once an amendment in accordance
with Section (b) below has been made the change shall
immediately become effective; and
(b) the Borrower, the Underwriters and the Lenders agree to enter
into negotiations at the request of any of them, in order to
amend any covenant to equitably reflect any change in GAAP,
with the desired result that the criteria for evaluating the
Borrower's financial condition shall be the same after the
change as before the change.
1.05 Interest Act (Canada)
Interest rates expressed in this Agreement on the basis of a 360 day
year shall be deemed to be also expressed at a yearly rate of interest
determined by multiplying the expressed rate by the actual number of days in the
calendar year divided by 360.
1.06 Schedules
The following Schedules are annexed to, incorporated by reference in
and deemed to be part of this Agreement:
Schedule A - Lenders Party to this Agreement
Schedule B - Commitments of Lenders
Schedule C - Leased Properties
Schedule D - New Jersey Properties
Schedule E - Ontario Properties
Schedule G - Material Contracts
Schedule H - Material Licenses
Schedule I - Jurisdictions for Registration of Security
Schedule J - Environmental Notices
Schedule K - Debt Default
Schedule L - Litigation
Schedule M - Exceptions from title to Assets - Borrower
Schedule N - Owners of Owned Property and Municipal Address Thereof
Schedule O - Significant U.S. Leased Properties
Schedule P - Jurisdictions in which Borrower and Subsidiaries Carry on Business
Schedule Q - Subsidiaries
Schedule R - Intentionally Deleted
Schedule S - Intellectual Property Rights
Schedule T - Licenses, Agency and Distribution Agreements
Schedule U - Wind Up of English Finance Structure
Schedule V - Assets and Liabilities of Certain Subsidiaries
Schedule W - Financial Forecast
Schedule X - Bank Accounts
Schedule Y - Inter-Corporate Indebtedness
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Schedule Z - Pension Plans
Schedule AA - Asset Monetization Plan
Schedule BB - Hungarian Loan Reorganization
1.07 EXHIBITS
The following Exhibits are annexed to, incorporated by reference in and
deemed to be part of this Agreement:
Exhibit A - Assignment Agreement
Exhibit B - Compliance Certificate
Exhibit C - Conversion Notice
Exhibit D - Drawdown Notice
Exhibit E - Guarantee
Exhibit F - Specified Transaction Certificate
Exhibit G - Rollover Notice
1.08 DETERMINATION OF MATERIALITY
In any Document, except where specifically stated otherwise, whether
any event or state of affairs is "material" shall be determined by the
Administration Agent and the Majority Lenders, acting reasonably.
1.09 CERTIFICATES AND OPINIONS, ETC.
Whenever the delivery of a certificate or opinion by or on behalf of
any Person is a condition precedent to the taking of any action by the
Administration Agent or the Lenders under any Document, the truth and accuracy
of the facts and opinions stated in the certificate or opinion shall in each
case be conditions precedent to the right of the Person to have the action
taken, and each statement of fact contained in the certificate or opinion shall
be deemed to be a representation and warranty of the Person for the purposes of
this Agreement.
1.10 GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the Province of Ontario and the laws of Canada applicable within the
Province of Ontario.
1.11 CURRENCY
Unless expressly stated otherwise, all amounts expressed herein are in
Canadian Dollars.
ARTICLE 2 - CREDIT FACILITIES
2.01 THE REVOLVING FACILITY
Subject to the terms and conditions of this Agreement, the Lenders and
the LC Lender establish in favour of the Borrower a revolving credit facility
(the "Revolving Facility") in the
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Revolving Facility Amount which shall be available from and including the
Closing Date to but excluding the Maturity Date.
2.02 THE SWINGLINE FACILITY
Subject to the terms and conditions of this Agreement, the Swingline
Lender establishes in favour of the Borrower a revolving credit facility (the
"Swingline Facility") in the Swingline Facility Amount which shall be available
from and including the Closing Date to but excluding the Maturity Date.
2.03 PURPOSE OF CREDIT FACILITIES
(1) Revolving Facility Purpose. The first Advance under the
Revolving Facility shall only be used to pay and cancel currently outstanding
Indebtedness of the Borrower to each Lender pursuant to the 1999 Credit
Agreement and subsequent Advances under the Revolving Facility shall only be
used for working capital and/or general corporate purposes in the ordinary
course of business of the Borrower.
(2) Swingline Facility Purpose. Advances under the Swingline
Facility shall only be used for working capital and/or general corporate
purposes in the ordinary course of business of the Borrower.
2.04 MANNER OF BORROWING - REVOLVING FACILITY
Subject to the further terms and conditions of this Agreement, (a) the
Borrower may make Drawdowns, Rollovers or Conversions under the Revolving
Facility on and after the Closing Date up to the earlier of (i) the occurrence
of a Default and (ii) the Maturity Date; on the following terms:
(a) the Borrower may request a Drawdown, Conversion or Rollover
under the Revolving Facility by delivering the appropriate
Notice of Borrowing to the Administration Agent in accordance
with Section 2.06;
(b) each Rollover or Conversion under the Revolving Facility shall
be used solely to fund the repayment of an outstanding Advance
under the Revolving Facility;
(c) each Drawdown or Conversion may take the form of a Prime Rate
Loan, a Base Rate Loan, a Bankers' Acceptance or a BA
Equivalent Note, a LIBOR Loan or a Letter of Credit;
(d) each Prime Rate Loan shall be in a minimum amount of Cdn.
$1,000,000 and in integral multiples of Cdn. $100,000;
(e) each Base Rate Loan shall be in a minimum amount of
U.S.$1,000,000 and in integral multiples of U.S.$100,000;
(f) each Bankers' Acceptance or BA Equivalent Note shall be in a
minimum amount of Cdn. $1,000,000, in integral multiples of
Cdn. $100,000 and for a term not
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exceeding six months provided that each Bankers' Acceptance
shall mature on a Banking Day and shall not extend beyond the
Maturity Date;
(g) there shall not be more than seven different Bankers'
Acceptance or BA Equivalent Note maturity dates at any one
time;
(h) LIBOR Loans are subject to availability as set out in Section
6.03, shall be in minimum amounts of U.S.$1,000,000 and in
integral multiples of U.S.$100,000 and for terms of
approximately 30, 60, 90 or 180 days; provided that each LIBOR
Loan shall mature on a Banking Day and shall not extend beyond
the Maturity Date;
(i) there shall not be more than seven Interest Periods in respect
of LIBOR Loans with different termination dates at any one
time;
(j) each Drawdown of a Letter of Credit shall be subject to the
terms and conditions of the LC Lender's standard agreements
and practices respecting Letters of Credit;
(k) Letters of Credit may not have a term longer than one year and
shall not extend beyond the Maturity Date;
(l) the aggregate amount of Letters of Credit which may be
outstanding at any time shall not exceed Cdn.$20,000,000 or
the Equivalent Amount in U.S.$; and
(m) after a Drawdown, Conversion or Rollover, the Utilized Portion
of the Revolving Facility shall not exceed the Revolving
Facility Amount.
2.05 MANNER OF BORROWING - SWINGLINE FACILITY
Subject to the further terms and conditions of this Agreement, the
Borrower may make Drawdowns under the Swingline Facility on and after the
Closing Date up to the earlier of (a) the occurrence of a Default and (b) the
Maturity Date on the following terms:
(a) no Notice of Borrowing shall be necessary for a Drawdown;
(b) each Drawdown may take the form of a Prime Rate Loan or a Base
Rate Loan;
(c) each Drawdown shall only be by way of overdraft on accounts
(the "Swingline Accounts") established by the Borrower with
the Swingline Lender and designated for that purpose;
(d) each Drawdown shall be subject to the terms and conditions set
out in the Swingline Lender's standard account documentation
entered into by the Borrowers in accordance with Section
7.02(12);
(e) each Drawdown by way of overdraft on any Swingline Account
shall have no minimum requirement;
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(f) if at any time the Borrower is a party to a cash concentration
agreement with the Swingline Lender, the amount of overdraft
from time to time in the concentration account of the Borrower
established pursuant to such arrangement shall be deemed to be
an Advance under the Swingline Facility;
(g) the Swingline Accounts shall be subject to a cash management
system administered by the Swingline Lender in accordance with
the Swingline Lender's standard practice; and
(h) after making an Advance the Utilized Portion of the Swingline
Facility shall not exceed the Swingline Facility Amount.
2.06 NOTICE OF BORROWING
(1) Notice of Borrowing - Credit Facilities. The Borrower shall
give the Administration Agent prior notice of each intended Drawdown under the
Revolving Facility by delivery to the Administration Agent of a Notice of
Borrowing on or prior to the times respectively set forth below:
Type of Advance Notice Required
--------------- ---------------
Prime Rate Loans One Banking Day
Base Rate Loans One Banking Day
LIBOR Loans Three Banking Days
Bankers' Acceptances or BA Equivalent One Banking Day for a Drawdown or Conversion,
Notes Three Banking Days for a Rollover
Letter of Credit Five Banking Days
No Notice of Borrowing is required to Drawdown a Prime Rate Loan or a
Base Rate Loan by way of overdraft under the Swingline Facility.
(2) Timing. Each Notice of Borrowing shall be delivered to the
Administration Agent on a Banking Day on or prior to 11:00 a.m. (Toronto time)
to the Administration Agent, on the date on which the Notice of Borrowing is
required. Any Notice of Borrowing delivered after 11:00 a.m. (Toronto time)
shall be deemed to have been delivered on the next Banking Day.
(3) Irrevocability. Each Notice of Borrowing given to the
Administration Agent by the Borrower shall be irrevocable and the Borrower shall
borrow the stated amount on the stated date in accordance with the Notice of
Borrowing.
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2.07 NOTIFICATION OF LENDERS UNDER CREDIT FACILITIES
Upon receipt of a duly completed Notice of Borrowing in respect of the
Revolving Facility in accordance with the provisions of this Agreement, the
Administration Agent shall notify each Lender before 5:00 p.m. (Toronto time) on
the day of receipt of the Notice of Borrowing with respect to (i) the proposed
Advance, (ii) the amount and type of Advance to be made available by each
Lender, (iii) the particulars of the Administration Agent's account to which the
proceeds of any Advance are to be credited and (iv) such other particulars as
may be provided for elsewhere in this Agreement.
2.08 DISBURSEMENT OF LOANS UNDER CREDIT FACILITIES
Each Loan made by a Lender to the Borrower under a Credit Facility
shall be made by that Lender crediting the account of the Administration Agent
that the Administration Agent shall have designated to the Lenders for that
purpose in same day funds for same day value by 10:00 a.m. (Toronto time) on the
date of the applicable Drawdown or Conversion and the Administration Agent shall
credit the applicable funds to the account the Borrower shall have designated to
the Administration Agent in the Notice of Borrowing in same day funds for same
day value by 11:00 a.m. (Toronto time) on the date of the applicable Drawdown or
Conversion.
2.09 ISSUANCE OF BANKERS' ACCEPTANCES AND LETTERS OF CREDIT
Bankers' Acceptances or BA Equivalent Notes shall be accepted or
purchased and Letters of Credit shall be issued in accordance with Article 5 of
this Agreement.
2.10 PRO-RATA ADVANCES UNDER CREDIT FACILITIES
(1) Requirement to Advance. Subject to the terms and conditions of
this Agreement, all Advances under the Credit Facilities shall be made available
contemporaneously by the Lenders on a pro rata basis in the same proportions as
their respective Commitments; provided that the Administration Agent shall be
entitled at any time to request an Advance from the Lenders otherwise than in
accordance with their respective Commitments if required by, or consistent with,
the traditional treasury management practices of the Administration Agent or
normal money market practices. The obligations of the Lenders to make an Advance
shall be several and no Lender shall be responsible for any default by any other
Lender in its obligation to make its proportionate share of Advances available
nor shall the Commitment of any Lender be increased as a result of the default
by any other Lender in its obligation to make Advances available, except as
provided in Subsection (2) of this Section.
(2) Failure to Advance Under Credit Facility. In the event that
any Lender (a "Defaulting Lender") fails to make available its portion of any
Advance under a Credit Facility as required, the Administration Agent shall
forthwith give notice of that failure to each of the other Lenders and the
Borrower, and any other Lender, upon notice to the Administration Agent and the
other Lenders and acknowledgement by the Administration Agent, may advance to
the Borrower the amount (or if more than one Lender so elects, its pro rata
share of the amount based upon the Commitments of the electing Lenders) of the
Defaulting Lender's portion of the Advance. The Lender or Lenders after making
the advances shall have the right to forthwith recover the same from the
Defaulting Lender together with costs incurred by such Lender or
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Lenders or, if required by any Lender making any advance on behalf of another
Lender, the Lenders, the Administration Agent and the Borrower shall enter into
documentation, in form and substance satisfactory to the parties (other than the
Defaulting Lender), as may be appropriate to evidence an adjustment of the
Commitments of the Lenders necessitated by the Advance made by the Lender(s).
Nothing in this Section shall be deemed to relieve any Lender from its
obligation in respect of the Credit Facilities or to prejudice any rights which
the Borrower may have against any Lender as a result of any default by that
Lender under this Agreement.
2.11 CONVERSIONS
The Borrower may at any time deliver a Conversion Notice in accordance
with Section 2.06 to the Administration Agent requesting one or more Drawdowns
under a Credit Facility the proceeds of which shall be used to retire one or
more outstanding Advances under the relevant Credit Facility in order to convert
the outstanding Advance into a different type of Advance (the "Conversion"),
provided that:
(a) the Conversion Notice identifies the outstanding Advance or
Advances to be retired (the "Outstanding Advance");
(b) the Conversion would otherwise be a permitted Drawdown and the
Borrower complies with the provisions of this Agreement
relating to the obtaining of a Drawdown;
(c) the aggregate principal amount of the Conversion then
requested is not greater than the aggregate principal amount
of the Outstanding Advance;
(d) the entire proceeds of the Conversion are used to retire in
full the Outstanding Advance;
(e) each Conversion is made contemporaneously with the retirement
of the Outstanding Advance; and
(f) if the Conversion is to be outstanding in a currency different
from that of the Outstanding Advance, the amount of the
Conversion shall be the Equivalent Amount of the Outstanding
Advance.
2.12 ROLLOVERS
(1) Delivery of Rollover Notice. Prior to the expiration of the
Interest Period on a LIBOR Loan or the maturity of a Bankers' Acceptance, the
Borrower may deliver a Rollover Notice in accordance with Section 2.06 to the
Administration Agent:
(a) in respect of a LIBOR Loan, selecting the next Interest Period
applicable to the LIBOR Loan which new Interest Period shall
commence on and include the last day of the previous Interest
Period; and
(b) in respect of a Bankers' Acceptance, stating that it intends
to draw and present for acceptance on the maturity date of the
maturing Bankers' Acceptance, a new
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Bankers' Acceptance in the same face amount as the maturing
Bankers' Acceptance.
(2) Failure to Deliver Notice. If the Borrower fails to deliver a
Rollover Notice or a Conversion Notice to the Administration Agent in respect of
the expiration of the Interest Period of a LIBOR Loan or the maturity of a
Bankers' Acceptance then:
(a) in the case of an expiring LIBOR Loan, the Borrower shall be
deemed to have given a Conversion Notice to the Administration
Agent electing to convert the LIBOR Loan into a Base Rate
Loan; and
(b) in the case of a maturing Bankers' Acceptance, the Borrower
shall be deemed to have given a Conversion Notice to the
Administration Agent electing to convert the Bankers'
Acceptance into a Prime Rate Loan.
2.13 EVIDENCE OF BORROWINGS
The Administration Agent shall maintain records evidencing all Advances
and all other amounts owing by the Borrower to the Lenders pursuant to this
Agreement. The Administration Agent shall enter in the foregoing records details
of all amounts from time to time owing, paid or repaid by the Borrower. The
information kept in the foregoing records shall, absent manifest error,
constitute prima facie evidence of the obligations of the Borrower to the
Lenders with respect to all amounts owing by the Borrower to the Lenders
pursuant to this Agreement.
2.14 HEDGING CONTRACTS
The Lenders may, but shall not be obliged to, arrange Hedging
Contracts. Any Hedging Contracts arranged shall be subject to terms and
conditions to be negotiated at the time the Hedging Contract is arranged. The
obligation of the Borrower to any Lender under Hedging Contracts if related to
Advances under this Agreement shall rank pari passu with the obligations
hereunder and shall be secured by the Security Documents.
ARTICLE 3 - REPAYMENT AND PAYMENT
3.01 REPAYMENT OF REVOLVING FACILITY
(1) Revolving. The Borrower may repay Advances under the Revolving
Facility at any time up to the Maturity Date and during such period amounts
repaid may be reborrowed from time to time in accordance with the provisions of
this Agreement.
(2) Prepayment and Repayment. The Borrower shall from time to time
prepay the Revolving Facility in accordance with Section 3.04 and shall repay to
the Administration Agent for the account of the Lenders the outstanding balance
of all amounts owing by the Borrower under the Revolving Facility on the
Maturity Date.
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3.02 REPAYMENT OF SWINGLINE FACILITY
(1) Revolving. The Borrower may repay Advances under the Swingline
Facility at any time and amounts repaid may be reborrowed from time to time in
accordance with the provisions of this Agreement.
(2) Repayment. The Borrower shall repay the Administration Agent
for the account of the Swingline Lender the balance of all amounts owing by the
Borrower under the Swingline Facility on the Maturity Date.
3.03 MANDATORY PREPAYMENT AND REDUCTION OF AVAILABILITY UNDER CREDIT
FACILITIES
(1) Specified Transactions. Borrower shall prepay the Credit
Facilities by an amount equal to the Syndicate Portion of:
(a) the Net Cash Proceeds received by the Borrower or any member
of the Restricted Group from time to time under the Asset
Monetization Program;
(b) the Net Cash Proceeds received by the Borrower or any member
of the Restricted Group from time to time from Approved Asset
Sales or any other sales of assets in excess of $1,000,000
from any one transaction or series of transactions or in
excess of $5,000,000 in the aggregate per annum;
(c) the Net Cash Proceeds received by the Borrower or any member
of the Restricted Group from any offering by any such entity
of debt or equity securities that is not a Significant Share
Offering;
(d) two-thirds of the Net Cash Proceeds received by the Borrower
from a Significant Share Offering.
(e) 100% of the Borrower's share of cash or other property
received from Gallatin;
(f) 100% of all Settlement Amounts received by the Borrower or any
member of the Restricted Group;
(g) all Insurance Proceeds received or deemed received by an
Obligor which are required to be paid to a Security Agent
pursuant to the terms of Section 10.01(18); and
(h) the amount of any Excess Revolver Paydown.
For greater certainty, any transaction in accordance with Section 10.01(11) or
7.05(3) shall not result in a prepayment obligation hereunder.
(2) Time of Payment. The Syndicate Portion of all Insurance
Proceeds paid directly to a Security Agent by an insurer that constitute a
prepayment in accordance with the terms of the Inter-Creditor Agreement shall be
deemed a prepayment hereunder upon receipt by such Security Agent. All
prepayments required pursuant to Section 3.03(1)(a) through (g) shall be
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made within three Banking Days of receipt of funds by the Borrower, and the
prepayment required pursuant to Section 3.03(1)(h) shall be made within five
Banking Days following the end of each fiscal quarter of the Borrower. All such
prepayments shall permanently reduce the amount available under the Credit
Facility prepaid. All such prepayments shall be applied first to Loans and
thereafter to Letters of Credit.
(3) Manner of Payment. All prepayments to be made by the Borrower
under this Section 3.03 shall be made to the Managing Security Agent. Once so
received by the Managing Security Agent, the Borrower shall have discharged its
obligations in respect thereof. The Borrower shall deliver to the Managing
Security Agent and the Administration Agent a Specified Transaction Certificate
together with each prepayment under this Section 3.03. The Borrower shall
specify, pursuant to the Specified Transaction Certificate, the Advances against
which to apply such prepayment; and all prepayments shall be made in the same
currency in which the Advance is outstanding. For greater certainty, the
Borrower shall not deduct any cost of converting from one currency to another
from a prepayment hereunder and any conversions from United States Dollars shall
be made to the Equivalent Amount of Canadian Dollars and any conversions from
Canadian Dollars shall be made to the Equivalent Amount of United States
Dollars. All prepayments to be made by the Borrower under Section 3.03 shall be
made in immediately available funds and received by the Managing Security Agent
before 12:00 p.m. (Toronto time) on the date due. Prepayments received after
that time shall be deemed to have been received on the next Banking Day.
Whenever any prepayment under this Section 3.03 is due on a day which is not a
Banking Day, the due date shall be extended to the next succeeding Banking Day
unless that Banking Day falls in the next calendar month in which event the due
date shall be the immediately preceding Banking Day. During any extension of the
date due for payment of any amount payable under this Section 3.03, interest
shall be payable on unpaid amounts at the rate or rates borne by the those
amounts.
3.04 EXCESS AMOUNT
If at any time there exists an Excess Amount in respect of any Credit
Facility whether as a result of currency fluctuations or otherwise, the Borrower
shall pay to the Administration Agent on behalf of the Lenders upon demand by
the Administration Agent the amount of the Excess Amount together with Breakage
Costs incurred by each of the Lenders as a result of the payment provided,
however, that the Lenders agree that the Borrower shall not be required to break
any LIBOR Loan or Bankers' Acceptance prior to its maturity date in order to pay
any Excess Amount and such Excess Amount shall, in such case be paid upon the
maturing of such LIBOR Loan or Bankers' Acceptance.
3.05 PLACE AND MANNER OF PAYMENTS
(1) Payments. Except as set forth in Section 3.03(3), all payments
to be made by the Borrower hereunder shall be made to the Administration Agent
in the same currency in which any pertinent Advance is outstanding provided that
if any payment does not relate specifically to any Advance, that payment shall
be made in Canadian Dollars. All payments to be made by the Borrower shall be
made in immediately available funds and received by the Administration Agent
before 12:00 p.m. (Toronto time) on the date due. Payments received after that
time shall be deemed to have been received on the next Banking Day. Whenever any
payment hereunder is
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due on a day which is not a Banking Day, the due date shall be extended to the
next succeeding Banking Day unless that Banking Day falls in the next calendar
month in which event the due date shall be the immediately preceding Banking
Day. During any extension of the due date for payment of any amount payable
hereunder pursuant to this Section, interest shall be payable on unpaid amounts
at the rate or rates borne by those amounts.
(2) Debiting of Accounts. The Borrower authorizes and directs the
Administration Agent and each Lender to debit the amount of all principal,
interest, fees and all other amounts due and owing by the Borrower under this
Agreement from time to time from any account it has with the Administration
Agent or any Lender.
3.06 NET PAYMENTS, ETC.
(1) No Set-Off or Deductions. Any and all payments made by the
Borrower hereunder shall be made to the Administration Agent, the Managing
Security Agent or to the Lenders in full, without set-off or counterclaim and
free and clear of and without deduction or withholding for, or on account of,
any and all present and future Taxes. If the Borrower is required by law to
deduct or withhold any Taxes from or in respect of any sum payable hereunder,
(i) the sum payable shall be increased, as may be necessary, so that after
making all required deductions and withholdings (including deductions and
withholdings applicable to additional sums payable under this Section) the
Administration Agent, the Managing Security Agent or the Lenders, as the case
may be, receives an amount equal to the sum that it would have received had no
deductions or withholdings been made, (ii) the Borrower shall make the required
deductions or withholdings, and (iii) the Borrower shall pay the full amount
deducted or withheld to the relevant taxing authority in accordance with
Applicable Laws. Each Lender agrees to repay or credit to the Borrower any
refund or tax credit which such Lender receives or receives the benefit of with
respect to Taxes that were paid by the Borrower pursuant to this Section
3.06(1).
(2) Tax Indemnity. The Borrower shall indemnify the Administration
Agent and the Lenders for the full amount of any Taxes (other than Excluded
Taxes) imposed by any jurisdiction on amounts payable by the Borrower under this
Section paid or payable by the Administration Agent and the Lenders and for any
liability (including penalties, interest and reasonable expenses) arising
therefrom or with respect thereto, whether or not such Taxes were correctly or
legally asserted, and for any Taxes (other than Excluded Taxes) levied or
imposed with respect to any indemnity payment made under this Section. This
indemnification shall be made within 30 days after the date the Administration
Agent or any of the Lenders makes written demand therefor.
(3) Evidence of Payment. Within 30 days after the date of any
payment of Taxes withheld by the Borrower in respect of any payment by the
Borrower to the Administration Agent or any of the Lenders, the Borrower shall
furnish to the Administration Agent or the applicable Lenders the original or a
certified copy of a receipt issued by the relevant taxing authority evidencing
payment by the Borrower to the taxing authority of any Taxes (other than
Excluded Taxes) with respect to any payment payable to the Administration Agent
or the applicable Lenders.
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(4) Survival. The obligations of the Borrower under this Section
shall survive the termination of this Agreement and the payment of all amounts
payable under this Agreement.
3.07 APPLICATION OF PAYMENTS
If any Event of Default shall occur and be continuing, all payments
made by the Borrower hereunder shall be applied in the following order:
(a) to amounts due hereunder as costs and expenses;
(b) to amounts due hereunder as commitment fees;
(c) to amounts due hereunder as default interest;
(d) to amounts due hereunder as Bankers' Acceptance or Letter of
Credit fees;
(e) to amounts due hereunder as interest;
(f) to amounts due hereunder as principal; and
(g) any other amounts owing hereunder.
ARTICLE 4 - INTEREST AND FEES
4.01 COMPUTATION OF INTEREST AND FEES
(1) Rates of Interest. The Borrower shall pay interest to the
Administration Agent for the account of the Lenders, or in the case of Swingline
Facility to the Swingline Lender, (a) on Prime Rate Loans at a rate per annum
equal to the sum of the Prime Rate plus the Prime Rate Margin; (b) on Base Rate
Loans at a rate per annum equal to the sum of the Base Rate plus the Base Rate
Margin; and (c) on LIBOR Loans at a rate per annum equal to the sum of the LIBOR
Rate plus the LIBOR Margin.
(2) Default Interest. During the continuance of an Event of
Default, the Borrower shall pay interest to the Administration Agent for the
account of the Lenders, or in the case of Swingline Facility to the Swingline
Lender, on all Advances at a rate of interest per annum equal to the Default
Rate unless prohibited by law, in which event such amount, if payable in
Canadian Dollars, shall bear interest at the rate applicable to a Prime Rate
Loan under the applicable Credit Facility or, if payable in U.S. Dollars, shall
bear interest at the rate applicable to a Base Rate Loan under the applicable
Credit Facility. Such interest shall be calculated daily and payable monthly
with interest on overdue interest at the same rate.
(3) Computation. The Administration Agent or the Swingline Lender,
as applicable, shall calculate interest daily, according to its regular
practice, both before and after demand, maturity, default and judgement and (i)
in the case of a Prime Rate Loan or Base Rate Loan, on the basis of a year of
365 days or 366 days, as the case may be and (ii) in the case of a LIBOR Loan,
on the basis of a year of 360 days.
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(4) Bankers' Acceptance and Letter of Credit Fees. The Borrower
shall pay the fees set out in Article 5 with respect to Bankers' Acceptances, BA
Equivalent Notes and Letters of Credit to the Administration Agent for the
account of the Lenders.
4.02 ACCRUAL AND PAYMENT OF INTEREST ON LOANS
Each Loan shall accrue interest from day to day including the date of
advance but excluding the date of repayment and which shall be payable:
(a) in the case of each Prime Rate Loan and Base Rate Loan,
monthly in arrears on the last Banking Day of each month or
otherwise in accordance with the usual practice of the
Administration Agent or the Swingline Lender, as applicable,
as advised by the Administration Agent or the Swingline
Lender, as applicable, to the Borrower and as changed by the
Administration Agent or the Swingline Lender, as applicable,
upon notice to the Borrower from time to time; and
(b) in the case of each LIBOR Loan, on each Interest Payment Date.
4.03 CURRENCY
The Borrower shall pay any interest or fee owing in respect of an
Advance in the same currency as that Advance is denominated.
4.04 LIBOR LOANS
(1) Repayment of LIBOR Loans. Each LIBOR Loan shall be repaid on
the last day of its Interest Period.
(2) Interest Periods in respect of LIBOR Loans. The right of the
Borrower to choose the duration of an Interest Period in respect of a LIBOR Loan
shall be limited as follows:
(a) Interest Periods shall be for approximately 30, 60, 90 or 180
days (or the interest periods then being offered in the London
interbank market) and of a duration to permit the Borrower to
make the reductions or repayments required by this Agreement;
(b) the first Interest Period for a LIBOR Loan shall commence on
the day of its advance and each subsequent Interest Period
shall commence forthwith upon the expiry of the immediately
preceding Interest Period; and
(c) the last day of each Interest Period shall be determined in
accordance with the practices of the London interbank market
as from time to time in effect.
4.05 FEES
(1) Commitment Fees. The Borrower shall pay to the Administration
Agent on account of the Lenders a commitment fee calculated daily on the
Unutilized Portion of the Revolving Facility at a rate per annum equal to the
Commitment Fee Rate. The Borrower shall
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pay to the Swingline Lender a commitment fee calculated daily on the Unutilized
Portion of the Swingline Facility at a rate per annum equal to the Commitment
Fee Rate. The Borrower shall pay all fees quarterly in arrears within two
Banking Days following the end of each calendar quarter and on the day any
Credit Facility is repaid pursuant to this Agreement. All fees shall be
calculated on the basis of 365 or 366 days, as the case may be. For greater
certainty, all fees payable in connection with the Revolving Facility shall be
without duplication to those payable in respect of the Swingline Facility.
(2) Restructuring Fee. The Borrower shall pay to the
Administration Agent, for the benefit of the Lenders, a fee of Cdn. $890,000
payable on the Closing Date, and a further fee of Cdn. $445,000 payable on
August 30, 2002.
(3) Administration Fee. The Borrower shall pay to the
Administration Agent, for the Administration Agent's own account, the fees set
forth in the Fee Side Letter.
4.06 ADMINISTRATION AGENT'S CERTIFICATE
A certificate of the Administration Agent or the Swingline Lender, as
applicable, shall be, absent manifest error, prima facie evidence of each rate
of interest or fee payable under this Agreement and the amount thereof due from
the Borrower.
4.07 LATE PAYMENT
If any payment required to be made by the Borrower hereunder is not
made on the due date thereof, the Borrower shall pay interest on the amount of
such required payment at the Late Payment Rate until payment in full of such
required payment has been made.
4.08 Maximum Rate of Return
Notwithstanding any provision to the contrary in this Agreement, in no
event shall the aggregate "interest" (as defined in Section 347 of the Criminal
Code, Revised Statutes of Canada, 1985, c. 46 as the same may be amended,
replaced or re-enacted from time to time) payable under this Agreement exceed
the effective annual rate of interest on the "credit advanced" (as defined in
that section) under this Agreement lawfully permitted under that section and, if
any payment, collection or demand pursuant to this Agreement in respect of
"interest" (as defined in that section) is determined to be contrary to the
provisions of that section, such payment, collection or demand shall be deemed
to have been made by mutual mistake of the Borrower and the Lenders and the
amount of such payment or collection shall be refunded to the Borrower; for the
purposes of this Agreement the effective annual rate of interest shall be
determined in accordance with generally accepted actuarial practices and
principles over the term of the Credit Facilities on the basis of annual
compounding of the lawfully permitted rate of interest and, in the event of
dispute, a certificate of a Fellow of the Canadian Institute of Actuaries
appointed by the Administration Agent shall be conclusive for the purposes of
such determination.
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ARTICLE 5 - BANKERS' ACCEPTANCES AND LETTERS OF CREDIT
5.01 BANKERS' ACCEPTANCES
(1) Obligation to Accept. The Borrower may request an Advance by
way of Bankers' Acceptances by delivering to the Administration Agent a Notice
of Borrowing in accordance with Section 2.06. Upon receipt of a Notice of
Borrowing given in accordance with this Agreement and subject to the provisions
of this Agreement each Lender shall accept, from time to time, such Bankers'
Acceptances under the Revolving Facility as the Borrower may request in the
Notice of Borrowing.
(2) General. Subject to the other requirements in this Agreement,
Bankers' Acceptances shall only be issued on the following terms:
(a) each Bankers' Acceptance shall be issued on a Banking Day;
(b) each Bankers' Acceptance shall have the term elected by the
Borrower in the relevant Notice of Borrowing, provided that
each Bankers' Acceptance shall mature on a Banking Day and the
Borrower shall choose Bankers' Acceptances of durations to
ensure that the Borrower complies in all respects with its
reduction or repayment obligations under this Agreement; and
(c) each Bankers' Acceptance shall be in a form acceptable to the
applicable Lender acting reasonably.
(3) Bankers' Acceptance Stamping Fees. Upon the acceptance by a
Lender of any Bankers' Acceptance of the Borrower pursuant to the Agreement, the
Borrower shall pay to the Administration Agent for the account of the Lender the
applicable Stamping Fee, which payment obligation shall be satisfied:
(a) in the case of a Drawdown, by each Lender withholding the
amount of the Stamping Fee from the Discount Proceeds
otherwise payable to the Borrower; and
(b) in the case of a Rollover or a Conversion, by the Borrower
paying the amount of the Stamping Fee by wire transfer to the
account designated by the Administration Agent, who thereafter
shall direct those Stamping Fees received to the applicable
Lender by wire transfer to the account designated by the
applicable Lender to the Administration Agent.
(4) Purchase of Bankers' Acceptances. Each Lender shall purchase
each Bankers' Acceptance accepted by it for a price equal to the Discount
Proceeds. Each Lender may at any time and from time to time hold, sell,
rediscount or otherwise dispose of any Bankers' Acceptance purchased by it.
(5) Drawdowns. On each date that a Drawdown of a Bankers'
Acceptance occurs, each Lender shall transfer to the Administration Agent at the
Administration Agent's account immediately available Canadian Dollars in an
aggregate amount equal to the Discount Proceeds
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of all Bankers' Acceptances accepted by it (less the amount of Stamping Fees).
The Administration Agent shall make the amounts received by it from the Lenders
available to the Borrower by depositing the same in immediately available funds
on the applicable date that a Drawdown occurs according to the instructions on
the relevant Drawdown Notice.
(6) Rollovers. In the case of a Rollover of a Bankers' Acceptance,
in order to satisfy the continuing liability of the Borrower to a Lender for the
face amount of the maturing Bankers' Acceptance, the Lender shall determine and
retain the Discount Proceeds of the new Bankers' Acceptance and the Borrower
shall, on the maturity date of the maturing Bankers' Acceptance, pay to the
Administration Agent for the account of the relevant Lender (i) the difference
between the principal amount of the maturing Bankers' Acceptance and the
Discount Proceeds from the new Bankers' Acceptance and (ii) the Stamping Fee in
respect of the new Bankers' Acceptance.
(7) Conversions.
(a) In the case of a Conversion into a Bankers' Acceptance, in
order to satisfy the continuing liability of the Borrower to
the Lender for the amount of the converted Advance, the Lender
shall determine and retain for its own account the Discount
Proceeds of the Bankers' Acceptance and the Borrower shall on
the date of Conversion pay to the Administration Agent for the
account of the relevant Lender (i) the difference between the
principal amount of the converted Advance and the Discount
Proceeds from the Bankers' Acceptance, and (ii) the Stamping
Fee in respect of the Bankers' Acceptance.
(b) In the case of a Conversion of a Bankers' Acceptance into
another type of Advance, in order to satisfy the continuing
liability of the Borrower to the Lender for an amount equal to
the face amount of the Bankers' Acceptance being converted,
the Administration Agent shall record the obligation of the
Borrower to the Lender as an Advance of the type into which
the obligation has been converted.
(8) General.
(a) In order to facilitate the issuance of Bankers' Acceptances
pursuant to this Agreement, the Borrower authorizes each of
the Lenders to complete, sign and endorse drafts on its behalf
in handwritten form or by facsimile or mechanical signature or
otherwise and, once so completed, signed and endorsed, to
accept them as Bankers' Acceptances under this Agreement and
then purchase, discount or negotiate them in accordance with
the provisions of this Article. Drafts so completed, signed,
endorsed and negotiated on behalf of the Borrower by any
Lender shall bind the Borrower as fully and effectively as if
those acts were performed by an authorized officer of the
Borrower.
(b) Any executed drafts to be used for Bankers' Acceptances which
are held by any Lender need only be held in safekeeping with
the same degree of care as if they were that Lender's own
property and that Lender was keeping them at the place at
which they are to be held. The Borrower shall, by written
notice to the
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Administration Agent, designate the persons authorized to give
the Administration Agent and each Lender instructions
regarding the manner in which Bankers' Acceptances are to be
completed and the times at which they are to be issued.
Neither the Administration Agent nor any Lender nor any of
their respective directors, officers, employees or
representatives shall be liable for any action taken or
omitted to be taken by any of them under this Article except
for its own gross negligence or wilful misconduct.
(c) Each Lender shall maintain a record with respect to Bankers'
Acceptances (i) accepted by it hereunder; (ii) cancelled at
their respective maturities; or (iii) voided by it for any
reason. Each Lender further agrees to retain the foregoing
records in the manner and for the statutory periods provided
in the various provincial or federal statutes and regulations
which apply to such Lender.
(d) The Borrower shall not claim any days of grace for the payment
at maturity of any Bankers' Acceptance. The obligations of the
Borrower with respect to Bankers' Acceptances under this
Section shall be unconditional and irrevocable and shall be
paid strictly in accordance with the terms of this Agreement
under all circumstances, including, without limitation, the
following circumstances:
(i) any lack of validity or enforceability of any xxxx of
exchange accepted by a Lender as a Bankers'
Acceptance; or
(ii) the existence of any claim, set-off, defence or other
right which the Borrower may have at any time against
the holder of a Bankers' Acceptance, or any other
Person, whether in connection with this Agreement or
otherwise.
(9) Non-Bank Lender. If a Lender is not a chartered bank under the
Bank Act (Canada) or if a Lender notifies the Administration Agent in writing
that it is unable or unwilling to accept Bankers' Acceptances, that Lender
shall, instead of discounting Bankers' Acceptances, purchase from the Borrower a
non-interest bearing note (a "BA Equivalent Note"), issued by the Borrower in
the amount and for the same term as the Bankers' Acceptance the Lender would
otherwise have been required to discount under this Agreement, at a purchase
price calculated on the same basis as Bankers' Acceptances are discounted by the
Administration Agent. Each such Lender shall credit or transfer, as the case may
be, the purchase price to the account designated by the Administration Agent and
the Administration Agent shall credit to such account of the Borrower as the
Borrower shall have designated to the Administration Agent in same day funds on
the applicable date of a Drawdown, Conversion or Rollover.
(10) BA Equivalent Notes. The provisions of this Section apply
mutatis mutandis to BA Equivalent Notes, and unless otherwise specified a BA
Equivalent Note is considered to be a Bankers' Acceptance for the purposes of
this Agreement.
(11) Bankers' Acceptances and BA Equivalent Notes Outstanding Upon
Event of Default. If any Bankers' Acceptance or BA Equivalent Note is
outstanding upon the occurrence of an Event of Default, the Borrower shall
forthwith pay to the Administration Agent an amount
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(the "BA Deposit Amount") equal to the face amount of the outstanding Bankers'
Acceptance or BA Equivalent Note, which BA Deposit Amount shall be held by the
Administration Agent in an interest bearing account for application against the
Indebtedness owing by the Borrower to a particular Lender in respect of the
outstanding Bankers' Acceptance or BA Equivalent Note. In the event that the
particular Lender is not called upon to make full payment on the outstanding
Bankers' Acceptance or BA Equivalent Note, the BA Deposit Amount, or any part
thereof as has not been paid out, together with accrued interest, shall be
applied first to any other amounts payable pursuant to this Agreement and any
amount remaining shall be returned to the Borrower.
5.02 LETTERS OF CREDIT
(1) Documentation. The Borrower may request a Letter of Credit by
delivering to the Administration Agent, together with the required Notice of
Borrowing, three duly executed copies of the LC Lender's usual documentation
relating to the issuance and administration of letters of credit or letters of
guarantee (which shall include the LC Lender's standard forms of application for
a letter of credit or guarantee, indemnity and such other forms as the LC Lender
may require).
(2) Form. Each Letter of Credit shall be in a form and on such
terms as determined by the LC Lender in its sole and unfettered discretion.
(3) Face Amount Deemed Advance. The full face amount of each
Letter of Credit shall be deemed to be an Advance under the Revolving Facility
for the purposes of determining the Utilized Portion of the Revolving Facility
Amount, which Advance shall be retired upon the earlier of:
(a) the return of the Letter of Credit to the LC Lender for
cancellation;
(b) the expiry date of the Letter of Credit;
(c) the provision of cash collateral for the Letter of Credit
satisfactory to the LC Lender; or
(d) the deeming of the amount drawn on the Letter of Credit to be
a Prime Rate Loan or a Base Rate Loan under the Revolving
Facility pursuant to Section 5.02(7).
(4) Fees. One Banking Day prior to issuance of a Letter of Credit,
the Borrower shall pay to the Administration Agent a fee calculated at the
Letter of Credit Fee Rate and calculated on the aggregate amount payable under
the Letter of Credit for the duration of its stated term on the basis of the
actual number of days in the stated term, commencing on, and including, the date
of issuance of the Letter of Credit and ending on, but excluding, its stated
expiry date. The Administration Agent shall deduct from and remit to the LC
Lender 0.125% of the amount of each such fee paid by the Borrower pursuant to
this Section .
(5) Payments. The LC Lender, on behalf of each of the Lenders
shall at all times be entitled, and are irrevocably authorized by the Borrower,
to make any payment under the Letters of Credit for which a request or demand
has been made in the required form without any further reference to the Borrower
and any investigation or enquiry, need not concern themselves or itself
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with the propriety or validity of any claim made or purported to be made under
the terms of such Letter of Credit (except as to compliance with the payment
conditions of such Letters of Credit) and shall be entitled to assume that any
Person expressed in such Letter of Credit as being entitled to make demand or
receive payments thereunder is so entitled. Accordingly, so long as a request or
demand has been made as aforementioned it shall not be a defence to any demand
made of the Borrower hereunder, nor shall the Borrower or its obligations
hereunder be impaired by the fact (if it be the case) that the LC Lender, the
Administration Agent or the Lenders were or might have been justified in
refusing payment, in whole or in part, of the amounts so claimed.
(6) Reimbursement Obligations of the Borrower. The Borrower shall
reimburse the LC Lender, for the account of the Lenders, on demand for any
amounts paid by the LC Lender from time to time as contemplated by Section
5.02(5) and, without limiting the foregoing, the Borrower shall indemnify and
save the LC Lender and the other Lenders harmless on demand from and against any
and all other losses (other than lost profits), costs, damages, expenses,
claims, demands or liabilities which any of them may suffer or incur arising in
any manner whatsoever in connection with the making of any such payments
(including, without limitation, in connection with proceedings to restrain the
LC Lender from making, or to compel the LC Lender to make, any such payment).
(7) Overdue Amounts and Indemnity.
(a) Without limiting any other provisions of this Agreement, if
the Borrower shall fail to reimburse the LC Lender, on behalf
of the Lenders, in respect of any payments made by the LC
Lender under a Letter of Credit as contemplated in Section
5.02(5), the amount that the Borrower fails to reimburse the
LC Lender shall be deemed to be, if in Canadian Dollars, an
Advance of a Prime Rate Loan under the Revolving Facility and,
if in U.S. Dollars, an Advance of a Base Rate Loan under the
Revolving Facility. The LC Lender shall forthwith give notice
of such Advance to the Borrower and the Administration Agent
(which shall promptly give notice to the other Lenders). Each
Lender shall deliver its Proportionate Share of such Advance
to the Administration Agent for the benefit of the LC Lender
not later than 2:00 p.m. (Toronto time) on the day that such
Advance is deemed to have been made.
(b) Each Lender agrees to indemnify the LC Lender (to the extent
not reimbursed by the Borrower), rateably according to its
Proportionate Share of the Credit Facilities from and against
any and all liabilities and obligations, losses, damages,
penalties, actions, judgements, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be
imposed on, incurred by, or asserted against the LC Lender in
any way relating to or arising out of the issuance of a Letter
of Credit in accordance with this Agreement, provided that no
Lender shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgements,
suits, costs, expenses or disbursements resulting from the LC
Lender's gross negligence or wilful misconduct.
(8) Letters of Credit Outstanding Upon Event of Default. If any
Letter of Credit is outstanding upon the occurrence of an Event of Default or
upon a demand for payment under the
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Revolving Facility, the Borrower shall forthwith pay to the Administration Agent
an amount (the "LC Deposit Amount") equal to 105% of the undrawn principal
amount of each outstanding Letter of Credit, which LC Deposit Amount shall be
held by the Administration Agent in an interest bearing account for application
against the Indebtedness owing by the Borrower to the LC Lender in respect of
any draw on any outstanding Letter of Credit. In the event that the LC Lender or
the Administration Agent is not called upon to make full payment on the
outstanding Letter of Credit prior to its expiry date, the LC Deposit Amount, or
any part thereof as has not been paid out, together with accrued interest, shall
be applied first to any other amounts payable pursuant to this Agreement and any
amount remaining shall be returned to the Borrower.
(9) Evidence. A certificate of the Administration Agent and/or the
LC Lender as to the amounts paid by any Lender pursuant to this Section or the
amount paid out under any Letter of Credit shall, in the absence of manifest
error, be prima facie evidence of the existence and amount of such payment in
any legal action or proceeding arising out of or in connection herewith.
ARTICLE 6 - CHANGE IN CIRCUMSTANCES AND INDEMNITIES
6.01 INCREASED COSTS
(1) Lenders' Determination. If at any time a Lender determines in
good faith (which determination shall be conclusive, absent manifest error) and
notifies the Borrower that (i) any Applicable Law (relating to capital adequacy
or otherwise); (ii) any change in, or in the interpretation or application of
Applicable Law by a court or by any authority charged with the administration of
Applicable Law (including, without limitation, the Superintendent of Financial
Institutions for Canada); or (iii) any compliance by that Lender with any
request, directive or guideline (whether or not having the force of law) of any
applicable monetary, fiscal or other governmental agency or authority
(including, without limitation, the Superintendent of Financial Institutions for
Canada), has the effect of:
(a) increasing the cost to that Lender of making, maintaining or
funding an Advance;
(b) reducing the amount of principal, interest, fees or other
amounts received or receivable by that Lender under this
Agreement or the effective return of that Lender under this
Agreement; or
(c) causing that Lender to make any payment, or to forego any
interest or other return on or calculated by reference to, any
sum received or receivable by that Lender under this
Agreement,
then, upon demand being made from time to time to the Borrower by that Lender,
the Borrower shall, within 30 days, pay to that Lender the amount necessary to
compensate it for its additional cost, reduction, payment, foregone interest or
other return. If that Lender becomes entitled to claim any additional amounts
pursuant to this Section, it shall promptly notify the Borrower of the event by
reason of which it has become so entitled, provide the Borrower with particulars
of the basis of the claim and of the calculation of the additional amount
payable by the Borrower under this Section as a result of the event and provide
the Borrower with a certificate setting out
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the additional amount payable which shall be, absent manifest error, prima facie
evidence of the amount payable. The Borrower shall also be entitled, upon 30
days' notice, to prepay to the Administration Agent for the account of that
Lender that Lender's Proportionate Share of outstanding Advances hereunder
together with Breakage Costs. The amount of such prepayment shall be a permanent
reduction of the Credit Facilities.
(2) BIS Guidelines. The Borrower acknowledges and agrees that for
all purposes relating to this Agreement, including, without limitation, for the
purposes of this Section, the rates and fees set forth in this Agreement have
been agreed to by the Lenders taking the BIS Guidelines into account. Any change
to the administration, interpretation, application of or compliance with the BIS
Guidelines after the date of this Agreement may, in accordance with this
Section, entitle the Lenders to receive additional compensation pursuant to this
Section.
6.02 INCOME TAX ACT, ETC.
The Administration Agent and each of the Lenders shall have the right
to comply with a request to pay specified amounts to the Receiver General issued
under Section 224(1.1) of the Income Tax Act (Canada) or Section 317(2) of the
Excise Tax Act (Canada) in respect of the Borrower. After the date of receipt of
any such request, and for so long as it may require the Administration Agent or
any Lender to make payments to the Receiver General, the Administration Agent or
any Lender may, but shall not be obligated to, fund any further Advances under
this Agreement.
6.03 LACK OF LIBOR RATE
If at any time prior to the commencement of an Interest Period with
respect to a LIBOR Loan the Administration Agent shall have determined (which
determination shall be conclusive) that:
(a) by reason of circumstances affecting the London interbank
market, adequate and fair means do not exist for ascertaining
the rate of interest applicable to an Advance intended to be
outstanding during the proposed Interest Period; or
(b) deposits in U.S. Dollars for the duration of the proposed
Interest Period are not available to the Administration Agent
in the London interbank market in sufficient amounts in the
ordinary course of business having regard to its aggregate
funding requirements to all its customers,
then, from and after the date of determination, the Borrower shall not have the
right to obtain or maintain a LIBOR Loan from the Lenders. If thereafter the
circumstances referred to in this Section cease to exist, the Administration
Agent shall notify the Borrower within 10 Banking Days of becoming aware that
the circumstances no longer exist and thereafter the Borrower shall have the
right to drawdown a LIBOR Loan in accordance with the provisions of this
Agreement.
6.04 INABILITY TO FUND IN U.S. DOLLARS
If the Administration Agent determines in good faith, which
determination shall be final, conclusive and binding on the Borrower, and
notifies the Borrower that (i) by reason of
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circumstances affecting financial markets inside or outside Canada or the United
States, deposits of United States dollars are unavailable to a Lender, (ii)
adequate and fair means do not exist for ascertaining the applicable interest
rate on the basis provided in the definition of Interest Period or Base Rate, as
the case may be, (iii) the making or continuation of any United States dollar
advance has been made impracticable by the occurrence of a contingency (other
than a mere increase in rates payable by a Lender to fund the advance) which
materially and adversely affects the funding of the advance at any interest rate
computed on the basis of the Interest Period or Base Rate, as the case may be,
or by reason of a change since the date hereof in any Applicable Law or
interpretation thereof by any Governmental Authority affecting a Lender or any
relevant financial market, which results in the Interest Period or Base Rate, as
the case may be, no longer representing the effective cost to a Lender of
deposits in such market, or (iv) any change to present law or any future
Applicable Law or any interpretation or application thereof by any Governmental
Authority has made it unlawful for a Lender to make or maintain or give effect
to its obligations in respect of United States dollar advances as contemplated
herein, then:
(a) the right of the Borrower to obtain any affected type of
credit shall be suspended until the Administration Agent
determines that the circumstances causing such suspension no
longer exist and the Administration Agent so notifies the
Borrower;
(b) if any affected type of credit is not yet outstanding, any
applicable Notice of Borrowing shall be cancelled and the
advance requested therein shall not be made;
(c) if any LIBOR Loan is already outstanding at any time when the
right of the Borrower to obtain credit by way of a LIBOR Loan
is suspended, it shall, subject to the Borrower having the
right to obtain credit by way of a Base Rate Loan at such
time, be converted to a Base Rate Loan on the last day of the
Interest Period applicable thereto (or on such earlier date as
may be required to comply with any Applicable Law) or, if the
Borrower does not have the right to obtain credit by way of a
Base Rate Loan at such time, such LIBOR Loan shall be
converted to a Prime Rate Loan on the last day of the Interest
Period applicable thereto (or on such earlier date as may be
required to comply with any applicable law) in the principal
amount equal to the Equivalent Amount of the principal amount
of such LIBOR Loan; and
(d) if any Base Rate Loan is already outstanding at any time when
the right of the Borrower to obtain credit by way of a Base
Rate Loan is suspended, it shall be immediately converted to a
Prime Rate Loan in the Equivalent Amount in Canadian Dollars
of the Base Rate Loan.
Provided that the Borrower shall be entitled, upon 30 days' notice, to prepay to
the Administration Agent for the account of the Lenders all outstanding United
States dollar advances that are affected by this Section 6.04 together with
Breakage Costs. The amount of such prepayment shall be a permanent reduction of
the Credit Facilities.
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6.05 UNLAWFUL, ETC.
Notwithstanding anything in this Agreement, if at any time while any
Advance is outstanding a Lender determines in good faith that, by reason of any
Applicable Law, any change in Applicable Law or in the interpretation or
application of Applicable Law by any court or by any governmental or other
authority charged with the administration of Applicable Law (including, without
limitation, the Superintendent of Financial Institutions for Canada), it is
unlawful, impracticable or contrary to the direction of such court or any such
authority for that Lender to make or fund any Drawdown, maintain any Advance or
give effect to any of its related obligations as contemplated by this Agreement,
that Lender, by notice to the Administration Agent and the Borrower, may declare
that its obligations under this Agreement are terminated and the Borrower shall
repay forthwith or at the end of the period that the Lender shall have advised
the Borrower in its notice, the whole of each Advance together with all unpaid
interest accrued thereon to the date of repayment and all other unpaid amounts
payable to the Lender under this Agreement in respect of its Advances. If an
Advance is a Bankers' Acceptance, the Borrower shall provide the applicable
Lender, forthwith upon request by the applicable Lender, the amount required by
the Lender to discharge its obligations with respect to the Bankers' Acceptance.
If the Advance is a Letter of Credit, the Borrower shall provide the LC Lender
with an amount equal to the undrawn principal amount of the Letter of Credit,
forthwith upon request by the LC Lender, which amount shall be applied by the LC
Lender as provided in Section 5.02(8). If any Applicable Law, or any change in
Applicable Law, shall only affect a portion of the Lender's obligations under
this Agreement which portion is, in the opinion of the Lender, severable from
the remainder of this Agreement so that the remainder of this Agreement may
continue in full force and effect without otherwise affecting any of the
obligations of the Lender under this Agreement or any other Document, the Lender
shall only declare its obligations under that portion terminated.
6.06 GENERAL INDEMNITY
(1) Indemnity Obligation. In addition to all the rights and
remedies available to the Administration Agent, the Syndication Agent and each
of the Lenders at law or in equity, the Borrower and each Guarantor hereby
indemnifies the Administration Agent, the Syndication Agent and each Lender and
their successors and permitted assigns and their respective Affiliates,
shareholders, officers, directors, employees, agents, and representatives
(collectively, the "Indemnified Persons") and save and hold each of them
harmless against and pay on behalf of, or reimburse each of them for, any loss
(including diminutions in value and consequential damages), liability, demand,
suit, claim, action, cause of action, judgement, cost, damage, debt, obligation,
deficiency, Tax (including any Taxes imposed with respect to indemnity payments
made under this Agreement), penalty, fine, charge and expense, whether or not
arising out of any claims by or on behalf of the Borrower, a Guarantor or any
other Person, including interest, penalties, reasonable lawyers' fees and
expenses and all amounts paid in investigation, defence or settlement of any of
the foregoing (collectively "Losses") which any Indemnified Persons may suffer,
sustain, or become subject to, as a result of, in connection with, relating or
incidental to, or by virtue of:
(a) any misrepresentation or breach of warranty on the part of the
Borrower or any Guarantor under Article 9 of this Agreement;
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(b) without duplication of clause (a) above, any misrepresentation
in or omission from any of the representations, warranties,
statements, schedules and exhibits in or to this Agreement or
any certificate or other instrument or document furnished to
the Administration Agent, the Syndication Agent or any Lender
by the Borrower or any Guarantor pursuant to this Agreement or
any other Document;
(c) any non-fulfilment or breach of any covenant or agreement on
the part of the Borrower or any Guarantor under this Agreement
or the Inter-Creditor Agreement including, without limitation,
any failure by the Borrower or any Guarantor to pay any
amounts owing to a Security Agent pursuant to the terms of the
Inter-Creditor Agreement; or
(d) any claim whenever made, relating in any way to the Borrower
or any Subsidiary and any claim, whenever made, arising out
of, relating to, resulting from or caused by any transaction,
status, event, condition, occurrence or situation relating to,
arising out of or in connection with (i) the status or conduct
of the Borrower or any Subsidiary, (ii) the execution,
performance and delivery by the Borrower, any Guarantor or any
Subsidiary of this Agreement and the Documents and agreements
contemplated hereby or (iii) any actions taken by or omitted
to be taken by any of the Indemnified Persons in connection
with this Agreement or any of the Documents and agreements
contemplated hereby,
the obligations under this Section shall not extend to Losses of an Indemnified
Person arising because of the gross negligence or wilful misconduct of such
Indemnified Person.
(2) Timing. The indemnification of any Indemnified Person by the
Borrower or any Guarantor pursuant to this Section shall be effected by wire
transfer of immediately available funds from the Borrower to an account
designated by the Indemnified Person within 15 days after determination of the
requirement for indemnification.
6.07 ENVIRONMENTAL INDEMNITY
Without in any way limiting the indemnity obligation set out in Section
6.06, the Borrower and each Guarantor shall at all times indemnify and hold
harmless each Indemnified Person against and from any and all Losses of any
nature whatsoever suffered or incurred by any Indemnified Person upon
realization upon any Security Document or the Borrower's, any Restricted
Subsidiaries' or any English Finance Structure Companies' assets, or as a result
of any order, investigation or action by any Governmental Authority relating to
the Borrower, any Restricted Subsidiary or any English Finance Structure Company
or its business or assets, or as mortgagee in possession of any property of any
Obligor, or as successor-in-interest to any Obligor by foreclosure deed or deed
in lieu of foreclosure, or under or on account of any Environmental Law or
Environmental Activity including the assertion of any Lien thereunder, with
respect to any one or more of the following:
(a) the Release or threat of Release of a Contaminant, or the
presence of any Contaminant at, on or near any real property
owned, leased or controlled by the Borrower, any Restricted
Subsidiary or any English Finance Structure Company,
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whether or not the same originates or emanates from such
property or any contiguous real property;
(b) the Release of a Contaminant owned by, or under the charge,
management or control of the Borrower, any Restricted
Subsidiary or any English Finance Structure Company or any
predecessor of or assignor to the Borrower, any Restricted
Subsidiary or any English Finance Structure Company, at a
place other than real property owned, leased or controlled by
the Borrower, any Restricted Subsidiary or any English Finance
Structure Company;
(c) any costs of removal or remedial action incurred by any
Governmental Authority or any costs or damages incurred by any
Person as a result of injury to, destruction of or loss of
natural resources in relation to any real property owned,
leased or controlled by the Borrower, any Restricted
Subsidiary or any English Finance Structure Company or any
contiguous real property or elsewhere, including reasonable
costs of assessing injury, destruction or loss;
(d) liability for personal injury or property damage arising under
any statutory or common law, including damages assessed for
the maintenance of a public or private nuisance or for the
carrying on of a dangerous activity at, on or near any
property owned, leased or controlled by the Borrower, any
Restricted Subsidiary or any English Finance Structure Company
or elsewhere; and
(e) any other environmental matter within the jurisdiction of any
Governmental Authority,
provided that no indemnification shall enure to the extent suffered or incurred
by the Indemnified Person as a result of the negligence or wilful misconduct of
the Indemnified Person. The obligations of the Borrower and each Guarantor under
this Section shall arise upon the discovery of the presence of any Contaminant,
whether or not any Governmental Authority has taken or threatened any action in
connection with the presence of any Contaminant. The Borrower and each Guarantor
shall be liable for any obligation arising under this Section even if the amount
of liability incurred exceeds the amount of the Credit Facilities outstanding or
available at any time.
6.08 AGENTS AND LENDERS NOT LIABLE
The Borrower and each Guarantor agrees that the Administration Agent,
the Syndication Agent and the Lenders shall not be liable to the Borrower or any
Guarantor for any Losses which the Borrower or any Subsidiary may suffer,
sustain or become subject to as a result of, in connection with, relating or
incidental to or by virtue of any action taken or not taken or anything done or
not done by the Administration Agent, the Syndication Agent or any Lender under
or in respect of this Agreement, any Drawdown or Advance, save and except for
any Losses which arise out of, or result from, the negligence, fraud or wilful
misconduct of the Administration Agent, the Syndication Agent or any Lender,
provided that none of the Administration Agent, the Syndication Agent nor any
Lender shall be liable for any consequential damages under any circumstances and
in any case the Administration Agent, the Syndication Agent and each Lender
shall be severally and not jointly liable.
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6.09 SURVIVAL
The obligations of the Borrower, each Guarantor, the Administration
Agent, the Syndication Agent and the Lenders under this Article are in addition
to any indemnities in the Security Documents, shall survive the execution and
delivery of this Agreement, the consummation of the transactions contemplated by
this Agreement, the payment of all Advances and the termination of the Credit
Facilities and the Security, indefinitely, regardless of any investigation,
enquiry or examination made for, or on behalf of, or any knowledge of, any of
the other Indemnified Persons or the acceptance by the Administration Agent, the
Syndication Agent or any Lender of any certificate or opinion.
ARTICLE 7 - CONDITIONS PRECEDENT
7.01 CLOSING
Subject to the fulfilment of the conditions precedent specified in
Section 7.02, the closing of the transaction contemplated in this Agreement
shall take place on the Closing Date at the offices of XxXxxxxx Xxxxxxxx, Suite
4700, Toronto Xxxxxxxx Xxxx Xxxxx, Xxxxxxx, Xxxxxxx.
7.02 CONDITIONS PRECEDENT TO CLOSING
The obligation of the Lenders to establish the Credit Facilities and to
permit the first Drawdown is subject to the fulfilment of each of the following
conditions precedent to the satisfaction of the Administration Agent and all of
the Lenders on or prior to the Closing Date. The following conditions precedent
are included for the exclusive benefit of the Administration Agent and all of
the Lenders and may only be waived, in whole or in part, in writing by the
Administration Agent and all of the Lenders in their sole discretion.
(1) Due Diligence. The Lenders shall have completed, and be
satisfied with the results of, their due diligence review of the business,
operations, affairs, financial information and management of the Borrower and
its Subsidiaries.
(2) No Material Adverse Effect. There shall not have occurred any
condition, event or change in the business, liabilities, operations, results of
operations, assets or prospects of the Borrower or any of its Subsidiaries which
constitutes or has, or could reasonably be expected to constitute or have, a
Material Adverse Effect on any of them.
(3) No Event of Default. There shall exist no Default or Event of
Default on the Closing Date.
(4) No Change in Applicable Law. There shall not have occurred on
or before the Closing Date: (i) any change in any Applicable Law or its
interpretation by any authority charged with its administration or by any court
which in the opinion of counsel for the Administration Agent would make it
unlawful or impossible for any Lender to make any Advance; or (ii) any event
which, if an Advance was outstanding, would have brought or would entitle any
Lender to bring into operation the provisions of Section 6.01 or 6.05.
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(5) Documents. The Administration Agent shall have received
original counterparts of this Agreement, the Security Documents, (other than the
Standstill Agreement), the Fee Side Letter and all other documents required by
this Agreement duly authorized, executed and delivered by each party thereto.
(6) Guarantee. The Administration Agent shall have received a
Guarantee from each Guarantor duly authorized, executed and delivered by each
Guarantor.
(7) Solvency Certificate. Each Guarantor subject to any financial
assistance restriction shall have executed and delivered to the Administration
Agent a certificate respecting solvency matters, in form and substance
satisfactory to all of the Lenders, dated as at the Closing Date.
(8) Asset Monetization Program. The Administration Agent and the
Lenders shall have received the Asset Monetization Program which shall be in
form and substance satisfactory to the Administration Agent and each Lender in
their sole and absolute discretion.
(9) Business Plan. The Administration Agent and the Lenders shall
have received the Borrower's Business Plan in respect of fiscal 2002 and 2003,
(without duplication for those items included in the Financial Forecast for
fiscal 2002), which shall be in form and substance satisfactory to the
Administration Agent and each Lender in their sole and absolute discretion.
(10) Financial Statements. The Administration Agent and the Lenders
shall have received the monthly financial statements of the Borrower pursuant to
Section 10.04(2)(e) for the month ended March 31, 2002.
(11) Repayment of 1999 Credit Agreement. The Borrower shall have
(x) irrevocably directed the Administration Agent to apply the proceeds of the
first Advance under the Revolving Facility and (y) shall have made irrevocable
arrangements to direct proceeds of the March 2002 Significant Share Offering
which together are sufficient to pay in full and cancel all outstanding
Indebtedness of the Borrower to each Lender pursuant to the 1999 Credit
Agreement.
(12) Other Documentation. The Administration Agent and/or the
Swingline Lender shall have received from the Borrower the Fee Side Letter and
its customary documentation concerning the administration of this Agreement and
the Drawdowns, including, if required, the Administration Agent's and/or the
Swingline Lender's standard account documents and centralized cash control
agreements for Cdn. Dollar and U.S. Dollar accounts, and each Lender's standard
form of indemnity in respect of Bankers' Acceptances or BA Equivalent Notes and
the LC Lender's standard form of indemnity respecting Letters of Credit.
(13) Representations and Warranties. The representations and
warranties contained in Article 9 shall be true and correct on and as of the
Closing Date with the same effect as though made on and as of the Closing Date
and the Borrower and each Guarantor shall have delivered to the Administration
Agent a certificate to that effect, dated the Closing Date and signed by a
Senior Officer of the Borrower or such Guarantor, as applicable.
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(14) Constating Documents and Authorizing Resolutions. The
Administration Agent shall have received from the Borrower and each Guarantor
certified copies of its articles of incorporation, by-laws and resolutions
authorizing the actions taken under this Agreement and the incumbency of the
officers signing this Agreement, any Guarantee and any other Document.
(15) Share Certificates. A Security Agent shall have received the
original share certificates representing all of the capital stock in each
Guarantor and ASW Holdings together with a duly executed stock transfer power in
respect of same.
(16) Registrations. All Security Documents shall have been
registered in all offices in which, in the opinion of the Administration Agent
and its counsel, registration is necessary or of advantage to preserve the
priority of the Liens intended to be created by the Security Documents,
including in the jurisdictions identified in Schedule I, and duplicate copies of
security instruments bearing or accompanied by appropriate endorsements or
certificates of registration with respect to the Security Documents shall have
been delivered to the Administration Agent by the Borrower.
(17) Insurance. A Security Agent shall have received certificates
of insurance or binders with respect to all insurance policies of each Obligor,
which policies shall: (i) show a Security Agent on behalf of the Administration
Agent and the Lenders as loss payee as its interests may appear; or (ii) in the
case of liability policies show a Security Agent on behalf of the Administration
Agent and the Lenders as additional insured; and (iii) in the case of any
insurance maintained with respect to the Owned Property, shall be endorsed with
a standard mortgage clause.
(18) Searches. The Administration Agent shall have received and be
satisfied with the results of all real property, personal property, Bank Act
(Canada), bankruptcy, bulk sale, execution and other searches conducted by
counsel for the Administration Agent with respect to the Borrower and each
Restricted Subsidiary (including all predecessors and prior names).
(19) Discharges, Estoppel Letters, Subordinations. The
Administration Agent shall have received from creditors of the Borrower and each
Restricted Subsidiary all releases, discharges, estoppel letters and
subordination agreements as the Administration Agent may require.
(20) Regulatory Approvals. The Administration Agent shall have
received copies of all approvals and all consents of all Governmental
Authorities which are required to be obtained by the Borrower or any Guarantor
in order to complete the transactions contemplated by this Agreement or any
Guarantee and perform its obligations under this Agreement or any other
Document.
(21) Material Contracts. The Administration Agent shall have
received from the Borrower a certified, complete and correct copy of each
Material Contract listed in Schedule G.
(22) Landlord's Consent. The applicable Security Agent shall have
received such Landlord's Consents as may be required by the Administration
Agent.
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(23) Material Licenses. The Administration Agent shall have
received from the Borrower a certified complete and correct copy of each
Material License listed in Schedule H.
(24) Consents to Guarantees. The Administration Agent shall have
received consents from PNC and the Noteholders, in form and substance
satisfactory to each Lender, consenting to the Borrower entering into this
Agreement and the Guarantors entering into the Guarantees.
(25) Inter-Creditor Agreement. The Administration Agent on behalf
of the Lenders shall have entered into the Inter-Creditor Agreement and the
Borrower and each Guarantor shall have executed the consent and agreement
thereto.
(26) Fees. All fees and expenses payable to the Administration
Agent, the Syndication Agent and/or the Lenders on or before the Closing Date or
the initial advance, as the case may be, including those set forth in the Fee
Side Letter, shall have been paid.
(27) Payment of Legal Fees and Other Expenses. The Borrower shall
have paid all reasonable out-of-pocket expenses (including all reasonable legal
fees and consultant's fees) incurred by or on behalf of the Administration
Agent, the Syndication Agent and/or the Lenders in connection with this
Agreement and the transactions and other documents contemplated by this
Agreement.
(28) Opinion of Canadian Counsel for Borrower and the Guarantors.
The Administration Agent, the Syndication Agent and the Lenders shall have
received from Goodmans LLP, and other Canadian counsel for the Borrower,
opinions dated the Closing Date in form and substance reasonably satisfactory to
the Administration Agent.
(29) Opinion of US Counsel for the Guarantors. The Administration
Agent, the Syndication Agent and the Lenders shall have received from US counsel
acceptable to each of them, an opinion dated the Closing Date and in form and
substance reasonably satisfactory to the Administration Agent.
(30) [INTENTIONALLY DELETED]
(31) Certificate of Status/Compliance. To the extent available, the
Borrower shall have delivered to the Administration Agent a recently dated
certificate of status with respect to itself and each Guarantor.
(32) Compliance with Financial Covenants. The Administration Agent
shall have received a Senior Officer's certificate demonstrating, and including
calculations to evidence, compliance with each of the Financial Covenants as at
March 31, 2002.
(33) Other. The Administration Agent shall have received such
further agreements, instruments and other documents as the Administration Agent
may reasonably require.
7.03 CONDITIONS PRECEDENT TO EACH DRAWDOWN UNDER THE REVOLVING FACILITY
The obligation of the Administration Agent and the Lenders to permit
any Drawdown, including the first Drawdown, under the Revolving Facility is
subject to fulfilment of the
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following conditions precedent on or prior to the date of Drawdown. The
following conditions precedent are included for the exclusive benefit of the
Administration Agent and the Lenders and may be waived, in whole or in part, in
writing by the Administration Agent and all of the Lenders at any time.
(1) Notice. The Administration Agent shall have received a
Drawdown Notice within the time specified in Section 2.06 and any other document
required to be delivered in connection with a Notice of Borrowing.
(2) Representations and Warranties. The representations and
warranties contained in Article 9 shall be true and correct on and as of the
date of Drawdown, both before and after giving effect to the proposed Drawdown,
with the same effect as though made on and as of the date of the Drawdown and,
if required by the Administration Agent, the Borrower and each Guarantor shall
deliver a certificate of a Senior Officer to that effect.
(3) No Event of Default. There shall exist no Default or Event of
Default on the applicable date of Drawdown and the completion of the Drawdown
shall not result in the occurrence of a Default or an Event of Default.
(4) Material Adverse Effect. Since the date of this Agreement,
there shall not have occurred any condition, event or change in the business,
liabilities, operations, results of operations, assets or prospects of the
Borrower or any of its Subsidiaries which constitutes or which has, or could be
reasonably be expected to constitute or have, a Material Adverse Effect on the
Borrower or any of its Subsidiaries.
(5) Compliance Certificate. The Administration Agent shall have
received a Senior Officer's certificate certifying compliance with Sections (2),
(3) and (4) of this Section.
7.04 CONDITIONS PRECEDENT TO EACH DRAWDOWN UNDER THE SWINGLINE FACILITY
The obligation of the Swingline Lender to permit any Drawdown,
including the first Drawdown, under the Swingline Facility is subject to
fulfilment of the following conditions precedent on or prior to the date of
Drawdown. The following conditions precedent are included for the exclusive
benefit of the Swingline Lender and may be waived, in whole or in part, in
writing by the Swingline Lender in its sole discretion, at any time.
(1) No Event of Default. There shall exist no Default or Event of
Default on the applicable date of Drawdown and the completion of the Drawdown
shall not result in the occurrence of a Default or an Event of Default.
(2) Material Adverse Effect. Since the date of this Agreement,
there shall not have occurred any condition, event or change in the business,
liabilities, operations, results of operations, assets or prospects of the
Borrower or any of its Subsidiaries which constitutes or which has, or could be
reasonably be expected to constitute or have, a Material Adverse Effect on the
Borrower or any of its Subsidiaries.
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7.05 POST-CLOSING DELIVERIES
(1) Ten Banking Days following the general resumption of public services in
the Province of Ontario the Borrower shall cause to be delivered to the
Administration Agent for and on behalf of the Lenders the following:
(a) Registrations. Evidence of registration of all Security
Documents in all offices in the Province of Ontario in which,
in the opinion of the Administration Agent and its counsel,
registration is necessary or of advantage to preserve the
priority of the Liens intended to be created by the Security
Documents together with duplicate copies of security
instruments bearing or accompanied by appropriate endorsements
or certificates of registration with respect to such Security
Documents.
(b) Searches. Search results showing personal property security
registrations, bulk sales and executions with respect to the
Borrower and each Restricted Subsidiary which has tangible
personal property or a place of business in the Province of
Ontario.
(c) Certificate of Status. A currently dated certificate of status
for the Borrower and each Guarantor incorporated pursuant to
the laws of the Province of Ontario.
(d) Opinion of Ontario Counsel. An opinion of counsel respecting
customary matters that would have been included in the opinion
of Ontario counsel delivered on the Closing Date but for the
public service employee strike in the Province of Ontario, in
form and substance satisfactory to the Administration Agent.
(e) Other. Such further agreements, instruments and other
documents as the Administration Agent may reasonably request
in respect of customary closing matters not completed because
of the public service employee strike in the Province of
Ontario.
(2) Twenty Banking Days following the Closing Date the
Administration Agent and the Lenders shall have received the annual financial
statements of the Borrower required pursuant to Section 10.04(2)(b) for the year
ended December 31, 2001.
(3) The Borrower shall cause to be delivered to the Administration
Agent for and on behalf of the Lenders, or where indicated to a Security Agent,
at the option of the Borrower, either the documents specified in Section
7.05(3)(a) (collectively, the "Hungarian Guarantee Documents") or the documents
specified in Section 7.05(3)(b) (collectively the "Hungarian Loan Reorganization
Documents") in accordance with the provisions of Section 7.05(3)(c).
(a) Hungarian Guarantee Documents
The Borrower, if it chooses this option, shall deliver the
following Hungarian Guarantee Documents:
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(i) Guarantee. A guarantee by Co-Steel Hungary of all of
the obligations of the Borrower to the Lenders, in a
form and substance reasonably satisfactory to the
Administration Agent which guarantee shall include,
without limitation, a pledge of the Hungarian Loan
Notes in favour of the US Security Agent (the
"Hungarian Guarantee");
(ii) Constating Documents and Authorizing Resolutions.
Certified copies of the articles of incorporation,
by-laws and resolutions (or in each case the
Hungarian equivalent ) authorizing the actions taken
under the Hungarian Guarantee and the incumbency of
the officers signing the Hungarian Guarantee.
(iii) Loan Notes. The original Hungarian Loan Notes
delivered to the US Security Agent and duly endorsed
in favour of the US Security Agent.
(iv) Registrations. Evidence of registration of the
Hungarian Guarantee in all offices, if any, in which,
in the opinion of the Administration Agent and its
counsel, registration is necessary or of advantage to
preserve the priority of the Liens intended to be
created by the Hungarian Guarantee together with
duplicate copies of security instruments bearing or
accompanied by appropriate endorsements or
certificates of registration with respect to the
Hungarian Guarantee.
(v) Regulatory Approvals. Copies of all approvals and all
consents of all Governmental Authorities which are
required to be obtained by the Borrower or Co-Steel
Hungary in order to complete the transactions
contemplated by the Hungarian Guarantee and perform
its obligations under the Hungarian Guarantee.
(vi) Opinion of Hungarian Counsel. A legal opinion of
Hungarian counsel in form and substance reasonably
satisfactory to the Administration Agent in respect
of the Hungarian Guarantee.
(vii) Other. Such further agreements, instruments and other
documents as the Administration Agent may reasonably
request in respect of the foregoing.
(b) Hungarian Guarantee Documents
The Borrower, if it chooses this option, shall deliver the
following Hungarian Loan Reorganization Documents in respect
of the transaction described in Schedule BB:
(i) Constating Documents and Authorizing Resolutions.
Certified copies of the articles of incorporation,
by-laws and resolutions of 1102590 Ontario Limited,
Co-Steel (U.S.) Ltd., New Holdco, Co-Steel C.S.M.
Corp., Co-Steel USA Holdings, Inc., Co-Steel
Sayreville, Inc. and Co-Steel Hungary authorizing the
actions taken under Schedule BB and the incumbency of
the officers signing the documents contemplated in
Schedule BB.
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(ii) New Subordinated Loan Notes. The original New
Subordinated Loan Notes delivered to a Security Agent
and duly endorsed in favour of such Security Agent.
(iii) Registrations. Evidence of registration of all the
security described in Schedule BB in all offices, if
any, in which, in the opinion of the Administration
Agent and its counsel, registration is necessary or
of advantage to preserve the priority of the Liens
intended to be created by the security described in
Schedule BB together with duplicate copies of
security instruments bearing or accompanied by
appropriate endorsements or certificates of
registration with respect to such security.
(iv) Regulatory Approvals. Copies of all approvals and all
consents of all Governmental Authorities which are
required to be obtained by the Borrower or any
Subsidiary in order to complete the transactions
contemplated by Schedule BB and perform its
obligations under Schedule BB.
(v) Opinions of Counsel. Such opinions of counsel in form
and substance reasonably satisfactory to the
Administration Agent respecting the transactions
described in Schedule BB.
(vi) Other. Such further agreements, instruments, tax
rulings and other documents as the Administration
Agent may reasonably request in respect of the
foregoing.
(c) If the Borrower fails to deliver either the Hungarian
Guarantee Documents or the Hungarian Loan Reorganization
Documents within 90 days following the Closing Date, the
margin otherwise applicable to Advances hereunder shall, in
lieu of interest at the Default Rate, be increased by 20 basis
points and 120 days thereafter by a further 15 basis points
all until such time as the Borrower has caused to be completed
either the Hungarian Guarantee Documents or the Hungarian Loan
Reorganization Documents. For greater certainty, the
transactions contemplated by the Hungarian Guarantee Documents
or the Hungarian Loan Reorganization Documents may be
completed notwithstanding any restriction in Section 10.01 or
10.03. In the event of a margin increase under this Section
7.05(3)(c), the margin applicable to Advances shall revert to
the otherwise applicable margin upon delivery of either the
Hungarian Guarantee Documents or the Hungarian Loan
Reorganization Documents.
(4) If the Borrower has not sold the land and buildings located at
000 Xxxxxxx Xxxxxx, Xxxxxxx, Xxx Xxxxxx by July 31, 2002, it shall on or before
August 15, 2002, provide to the Administration Agent a policy of title insurance
from an insurer and with reinsurance reasonably satisfactory to and, together
with such endorsements as are reasonably required, by the Administration Agent
in an amount reasonably requested by the Administration Agent, and insuring,
among such other matters that the Administration Agent may reasonably request,
that
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Co-Steel Sayreville, Inc. has good and marketable title to such property and the
mortgage of the US Security Agent in respect of such property is a valid first
Lien.
(5) On or before June 1, 2002 the Administration Agent and the
Lenders shall receive:
(a) Standstill Agreement. The Standstill Agreement duly executed
by Co-Steel (UK) Limited.
(b) Opinion of UK Counsel. An opinion of counsel reasonably
acceptable to the Administration Agent and in form and
substance reasonably satisfactory to the Administration Agent
in respect of the Standstill Agreement.
ARTICLE 8 - SECURITY DOCUMENTS
8.01 FORM OF SECURITY DOCUMENTS
As general and continuing collateral security for the payment and
performance of all obligations of each Obligor at any time owing to the
Administration Agent or any Lender, the following security documents shall be
delivered to the Security Agents for and on behalf of the Administration Agent
and each Lender, in each case in form and substance satisfactory to the
Administration Agent:
(a) a General Security Agreement from the Borrower and each
Guarantor, together with all necessary consents (including
Landlord's Consents);
(b) a Moveable Hypothec from the Borrower, Co-Steel Distribution
Canada Limited, Co-Steel Raritan, Inc. and Co-Steel
Sayreville, Inc.
(c) a Debenture from Borrower comprising a first ranking fixed
charge, (subject to Permitted Liens), in favour of the
Canadian Security Agent on the Borrower's interest in all of
the Ontario Properties and the North York Property and other
fixed assets and a floating charge over the remaining present
and future assets of Borrower, pledged to the Canadian
Security Agent pursuant to a debenture pledge agreement
together with a Landlord's Consent from the landlord of the
North York Property;
(d) a Mortgage with assignment of leases and rents, security
agreement and fixture filing encumbering the New Jersey
Properties as a first ranking fixed charge, (subject to
Permitted Liens), in favour of the US Security Agent;
(e) a Leasehold Mortgage with assignment of subleases and rents,
security agreement and fixture filing encumbering the North
York Property with a Landlord's Consent from the landlord of
the North York Property;
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(f) a Share Pledge Agreement from the Borrower pledging all the
securities held by the Borrower in the capital of each of its
direct Subsidiaries, (other than Co-Steel Benefit Plans Inc.),
and ASW Holdings in favour of the Canadian Security Agent;
(g) a Share Pledge Agreement from each Guarantor pledging all the
securities held by such Person in the capital of each of its
direct Subsidiaries;
(h) an assignment in favour of the applicable Security Agent by
each Obligor of all insurance, including business
interruption, liability and property insurance, maintained by
each Obligor in respect of their respective businesses and
assets, together with evidence of (i) the applicable Security
Agent being noted as loss payee as its interests may appear;
or (ii) in the case of liability policies, the applicable
Security Agent being noted as additional insured; or (iii) in
the case of any insurance maintained in respect of the Ontario
Properties, that insurance being endorsed with a standard
mortgage clause (as approved by the Insurance Bureau of
Canada, from time to time);
(i) a Guarantee from each Guarantor of all of the obligations of
Borrower in favour of the Administration Agent for and on
behalf of the Lenders;
(j) a Standstill Agreement from Co-Steel (UK) Limited; and
(k) such other security as may reasonably be required by the
Administration Agent from time to time in order to preserve
and protect the interest of the Administration Agent, the
Lenders or either Security Agent in the assets and property of
any Obligor from time to time.
8.02 VALID LIEN
All Security granted by any Obligor to either Security Agent shall rank
prior and senior to all other Liens on such assets and undertaking of each
Obligor, except for Permitted Priority Liens, and as otherwise expressly agreed
by the Administration Agent in writing.
8.03 REGISTRATION
The Borrower shall, at its expense, register, file or record the
Security Documents in all offices where such registration, filing or recording
is necessary or of advantage to the creation, perfection and preserving of the
security applicable to each Obligor including, without limitation, any land
registry offices.
8.04 AFTER ACQUIRED PROPERTY AND FURTHER ASSURANCES
The Borrower shall, and it shall cause each of its Restricted
Subsidiaries or any other Person that grants security hereunder from time to
time to, upon the request of the Administration Agent, provide the applicable
Security Agent for the benefit of the Administration Agent and the Lenders with
such further security instruments as may be required in connection with any
assets or shares acquired by the Borrower, any of its Restricted Subsidiaries or
any other Person that grants security hereunder after the date hereof.
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8.05 FORM, SUBSTANCE AND REGISTRATION OF SECURITY
The Security Documents and all acknowledgements referred to in this
Article shall be in form and substance satisfactory to the Administration Agent,
and the Security Documents shall be registered in those jurisdictions that the
Administration Agent may from time to time reasonably require.
8.06 BENEFIT OF SECURITY
The Security shall enure to the benefit of the Administration Agent and
each of the Lenders until this Agreement is terminated and all indebtedness and
liability of each Obligor to all the Lenders and any of them, whether under this
Agreement or otherwise, shall have been paid. The provisions of this Section
shall have effect notwithstanding that any obligations may at any time or from
time to time be fully discharged while this Agreement is still in full force and
effect. None of the Security Documents shall be amended, released or discharged,
in whole or in part, without the prior written consent of all of the Lenders,
acting reasonably. The Security shall continue to be effective or be reinstated,
as the case may be, if at any time any amount received by a Security Agent, the
Administration Agent or the Lenders in respect of the Credit Facilities or any
Document is rescinded or must otherwise be restored or returned upon the
occurrence of a Bankruptcy Event with respect to any Obligor or any substantial
part of any Obligor's properties, or otherwise, all as though that amount had
not been received.
ARTICLE 9 - REPRESENTATIONS AND WARRANTIES
9.01 REPRESENTATIONS AND WARRANTIES
To induce the Administration Agent, the Syndication Agent and each of
the Lenders to enter into this Agreement, establish and maintain the Credit
Facilities and permit Drawdowns under the Credit Facilities, the Borrower and
each Guarantor represents and warrants to the Administration Agent, the
Syndication Agent and each Lender, upon each of which representations and
warranties the Administration Agent, the Syndication Agent and each Lender
specifically relies, as follows:
(1) Corporate Existence. It is a corporation duly incorporated and
validly subsisting under the laws of its jurisdiction of incorporation, each US
Guarantor is duly qualified to do business and is in good standing as a foreign
corporation in each jurisdiction material to its business where the nature of
its business requires such qualification or incorporation and it has all
necessary corporate power and authority to own its properties and carry on its
business as presently owned and carried on by it and it is duly licensed,
registered and qualified in all jurisdictions where the character of its
property owned or leased or the nature of the activities conducted by it makes
licensing, registration or qualification necessary or desirable.
(2) Corporate Authority. It has full corporate power and authority
to enter into and perform its obligations and exercise its rights hereunder and
under each other Document.
(3) Qualification, Licences, etc. It has obtained, maintained and
is in good standing with respect to, all material licences, permits and
approvals from any and all Governmental
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Authorities and all applicable stock exchange and securities commission rules
applicable in respect of its property and operations and the listing of its
securities. It has made all material filings required under Applicable Laws.
(4) Due Execution. It has duly authorized, executed and delivered
this Agreement and each other Document and this Agreement and each other
Document constitutes its valid and binding obligation, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, insolvency,
moratorium and similar laws affecting the rights of creditors generally, and
equitable principles which may limit the availability of certain remedies
including the remedy of specific performance.
(5) Consents. No material consent, approval or authorization of,
or declaration, registration, filing or qualification with, or giving of notice
to, or taking of any other action in respect of, any Governmental Authority or
stock exchange or securities commission or any other Person is required in
connection with the execution, delivery or enforcement of this Agreement or any
other Document or the performance of this Agreement or any other Document or the
consummation of any of the transactions contemplated by this Agreement or any
other Document, except the Security Documents to which it is a party, which
require registration under applicable security registration systems.
(6) Laws, Regulations, etc. It is conducting its business
operations in material compliance with its articles of incorporation and its
by-laws and all Applicable Laws and it has obtained and maintained in good
standing all licences, permits and approvals from any and all Governmental
Authorities and all applicable stock exchanges and securities commissions
required in respect of its operations and the listing of its securities.
(7) Environmental Compliance. Except as disclosed in Schedule J,
the Borrower has no knowledge of any claim nor has received any notice of any
claim, and no proceeding has been instituted raising any claim against the
Borrower, any of its Restricted Subsidiaries or any of the English Finance
Structure Companies or any of their respective real properties now or formerly
owned, leased or operated by any of them or other assets, alleging any damage to
the environment or violation of any Environmental Laws, except, in each case,
such as could not reasonably be expected to result in a Material Adverse Effect.
Except as otherwise disclosed in Schedule J,
(a) the Borrower has no knowledge of any facts which would give
rise to any claim, public or private, of violation of
Environmental Law or damage to the Environment emanating from,
occurring on or in any way related to real properties now or
formerly owned, leased or operated by the Borrower, any of its
Restricted Subsidiaries or any of the English Finance
Structure Companies or to other assets or their use, except,
in each case, such as could not reasonably be expected to
result in a Material Adverse Effect;
(b) neither the Borrower, any Restricted Subsidiary or any of the
English Finance Structure Companies has stored any Hazardous
Materials on real properties now or formerly owned, leased or
operated by the Borrower, any of its Restricted Subsidiaries
or any of the English Finance Structure Companies nor has
disposed
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of any Hazardous Materials in a manner contrary to any
Environmental Law in each case in any manner that could
reasonably be expected to result in a Material Adverse Effect;
and
(c) all buildings on all real properties now owned, leased or
operated by the Borrower, any of its Restricted Subsidiaries
or any of the English Finance Structure Companies are in
compliance with applicable Environmental Laws, except where
failure to comply could not reasonably be expected to result
in a Material Adverse Effect.
(8) Tax Returns. It has filed all tax returns which are required
to be filed by it and it has paid all Taxes which have become due as shown on
tax returns or any assessments received by it except those Taxes (if any) that
are being contested in good faith by appropriate proceedings and for which a
provision in accordance with GAAP and satisfactory to the Administration Agent
is currently provided; and it is not aware of any proposed additional Tax
assessment against it.
(9) Compliance with Covenants. It is in compliance with each of
the covenants set out in Article 10 of this Agreement.
(10) No Event of Default. No Default or Event of Default has
occurred.
(11) Debt Default. Except as disclosed in Schedule K, neither it
nor any of its Subsidiaries is in default or breach under any instrument
evidencing any Indebtedness in an aggregate principal amount greater than Cdn.
$5,000,000 or under the terms of any instrument pursuant to which an instrument
evidencing any Indebtedness in an aggregate principal amount greater than Cdn.
$5,000,000 has been issued or made and delivered.
(12) No Event of Default Caused. Neither the execution nor the
delivery of this Agreement or any other Document, the consummation of the
transactions contemplated in this Agreement or any other Document, nor
compliance with the terms, conditions and provisions in this Agreement or any
other Document conflicts with, or will conflict with, or results or will result
in, any breach of, or constitutes a default under any provisions of its articles
of incorporation or by-laws or of any Material Contract, Material License, the
leases for the North York Property or the Significant U.S. Leased Properties to
which it is a party or by which it is, or any of its property or assets are,
bound, or, results or will result in the creation or imposition of any Lien upon
any of its properties or assets (other than Permitted Liens) or the
contravention of any Applicable Law. All necessary approvals from the other
parties to the Material Contracts and Material Licences, the leases for the
North York Property or the Significant U.S. Leased Properties have been obtained
so as to allow it to bind itself in accordance with the terms and conditions of
the Documents.
(13) Litigation. Except as disclosed in Schedule L (as amended from
time to time with the consent of the Administration Agent), there are no
actions, suits or proceedings pending or, to the best of its knowledge and
belief, after due inquiry and all reasonable investigation, threatened against
or affecting it at law or in equity or before or by any Governmental Authority,
domestic or foreign, or before any arbitrator that are reasonably likely to
have, either separately
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or in the aggregate, a Material Adverse Effect upon it. It is not in default
with respect to any judgement, order, writ, injunction, decree, award, rule or
regulation of any court, arbitrator or Governmental Authority, domestic or
foreign.
(14) Burdensome Provisions. etc. To the best of its knowledge, it
is not a party to any agreement or instrument or subject to any corporate
restriction or any judgement, order, writ, injunction, decree, award, rule or
regulation which has, or is reasonably likely to have, a Material Adverse Effect
upon it.
(15) Title to Assets. Except as disclosed in Schedule M (as amended
from time to time with the consent of the Administration Agent), it and each of
its Subsidiaries has good and marketable title to its assets, free and clear of
all Liens except Permitted Liens. There are no agreements, options, contracts or
commitments to sell, transfer or otherwise dispose of any of its or any of its
Subsidiaries' assets or which would restrict its or any of its Subsidiaries'
ability to transfer any of its or any of its Subsidiaries' assets.
(16) Liens. The Security Documents create in favour of the Security
Agents for and on behalf of the Administration Agent and the Lenders valid,
binding and perfected (when registered) Liens on all right, title and interest
in all of the Collateral which is the subject matter of the Security Documents
and those Liens have first priority for all purposes over any other Liens on the
Collateral, except for Permitted Priority Liens.
(17) Property Descriptions. The Security Documents to which it is a
party, including their attached schedules (if any), contain accurate
descriptions of all of its material assets and the Security Documents to which
each Guarantor is a party, including their attached schedules (if any), contain
accurate descriptions of all material assets of the Guarantor party thereto.
(18) Owned Property. It does not, nor does any of its Restricted
Subsidiaries, own any real property or have any interest in any real property
other than the Owned Properties. Schedule N correctly sets out the name of each
Person which owns any Owned Property and the municipal address of each Owned
Property. There are no agreements, options, contracts or commitments to sell,
transfer or otherwise dispose of any Owned Property or which would restrict the
transfer of the Owned Properties other than those in connection with a Permitted
Asset Sale. The Ontario Properties and the New Jersey Properties comprise all of
the Owned Properties that in the reasonable good faith estimate of the Borrower
have a value individually in excess of Cdn.$5,000,000.
(19) Leased Properties. It is not, nor is any of its Restricted
Subsidiaries, bound by any agreement to lease any real property except the
Leased Properties. The names of payees under the leases for the Leased
Properties, the description of the Leased Properties and the term, rent and
other amounts payable under the leases for the Leased Properties are accurately
described in Schedule C. All rent and other payments and obligations required to
be paid and performed pursuant to the leases for the Leased Properties have been
duly paid and performed. Neither it nor any of its Restricted Subsidiaries, as
applicable, is in default of any of its obligations under the leases for any of
the Leased Properties. The North York Property and the Significant U.S. Leased
Properties are the only Leased Properties that are material to the business of
the Borrower or any of its Restricted Subsidiaries.
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(20) Ownership of Inventories Retained on Leased Properties.
Co-Steel Distribution Canada Limited has good and marketable title to all of the
Inventory retained on Leased Properties located in Canada and Co-Steel USA
Distribution, Inc. has good and marketable title to all of the Inventory
retained on Leased Properties located in the United States.
(21) Ownership of Third Party Accounts Receivable. Co-Steel
Distribution Canada Limited has good and marketable title to all of the Accounts
Receivable payable by arm's length Account Debtors of any member of the
Restricted Group located in Canada, (other than Accounts Receivable relating to
the Borrower's recycling division which are owned by the Borrower), and Co-Steel
USA Distribution, Inc. has good and marketable title to all of the Accounts
Receivable payable by arm's length Account Debtors of any member of the
Restricted Group located in the United States.
(22) Contracts Affected by Change of Control. It is not bound by
any material contract or commitment which requires prior approval of any
transfer of the shares of any Person which are pledged to a Security Agent for
and on behalf of the Administration Agent and the Lenders pursuant to the
Security Documents.
(23) Material Contracts and Material Licences.
(a) Schedule G accurately sets out all Material Contracts and
Schedule H accurately sets out all Material Licences.
(b) A true and complete certified copy of each Material Contract
and Material Licence has been delivered to the Administration
Agent and each Material Contract and Material Licence is in
full force and effect, unamended except as permitted under
this Agreement.
(c) No event has occurred and is continuing caused by any member
of the Restricted Group or, to the best of Borrower's
knowledge, caused by any other party to a Material Contract or
Material Licence which would constitute a material breach of
or a default under any Material Contract or Material Licence.
(d) Each Material Contract to which it is a party is binding upon
it and, to its knowledge, is a binding agreement of each other
Person who is a party to the Material Contract, in each case
enforceable in accordance with its terms, subject to any
bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors' rights generally.
(e) It has not made any prepayments to or received any prepayments
from third parties under any Material Contract out of the
ordinary course of its business.
(24) Jurisdictions. The jurisdictions in which it and each of its
Restricted Subsidiaries carries on business and has assets are accurately set
forth in Schedule P. The registered office, principal place of business and
chief executive office and the location where its and each of its Restricted
Subsidiaries' records are kept, is specified in Schedule P. Its jurisdiction of
incorporation and the jurisdiction of incorporation of each of its Restricted
Subsidiaries is accurately set forth in Schedule P.
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(25) Subsidiaries. etc. It does not own any shares in the capital
of any Person other than as listed in Schedule Q (as amended from time to time).
It is not a party to any shareholders agreement. Except for its interest in
Gallatin, it is not a partner in any partnership or a party to any joint venture
or a party to any agreement pursuant to which it has agreed to become a partner
in any partnership or a party to any joint venture. Schedule Q accurately lists
each Subsidiary of the Borrower and the percentage ownership by the Borrower in
each Subsidiary.
(26) Restricted Subsidiaries. Other than the Guarantors, no
Restricted Subsidiary has Net Tangible Assets in excess of Cdn.$5,000,000.
(27) Bank Accounts. Schedule X accurately sets out each bank
account maintained by it and each of its Subsidiaries (other than Gallatin) and
accurately sets forth the institution and location where each such account is
maintained. Other than as permitted pursuant to Section 10.03(24), the bank
account maintained by Acierco S.A. with the Banque de Luxembourg in Luxembourg
will at no time hold deposits exceeding the lesser of U.S.$1,000,000 and the
then contingent tax liability of Acierco S.A. and the bank account maintained by
Lake Ontario Steel Company Inc. with Manufacturers and Traders Trust Company in
Buffalo, New York will at no time hold deposits exceeding U.S.$500,000, and
except as permitted by the foregoing provisions of this sentence, each bank
account of the Borrower or any of its Subsidiaries (other than Co-Steel C.S.M.
and its Subsidiaries) shall be either maintained with either the Administration
Agent or PNC or shall be the subject of a Blocked Account Agreement or if it
does not meet any of the foregoing criteria shall contain less than Cdn.$150,000
(or the Equivalent Amount in U.S.$) and less than Cdn.$600,000 (or the
Equivalent Amount in U.S.$) in the aggregate for all such accounts.
(28) Inter-Corporate Indebtedness. Schedule Y accurately describes
each inter-company loan between it and any of its Subsidiaries or between any of
its Subsidiaries and in each case sets forth the principal amount of each such
inter-company loan together with the interest rate it bears and the term of each
such inter-company loan.
(29) Computer Systems. It makes commercially reasonable efforts to
ensure that all computer systems used in its businesses and material to its
business, owned or leased by it including hardware and software, are, free from
viruses and disabling codes and devices, and it continues to take all steps and
implement all procedures necessary to ensure that those systems are free from
viruses and disabling codes and shall remain so. It has in place appropriate
disaster recovery plans, procedures and facilities and has taken all steps and
implemented all procedures necessary to safeguard and restrict unauthorized
access to its computer systems.
(30) Intellectual Property Rights. It is the registered (if
registration is possible) and beneficial owner or licensee of, with good and
marketable title to, all patents, patent applications, trade marks, trade xxxx
applications, trade names, service marks, copyrights, industrial designs,
inventions, technology and other rights with respect to the foregoing and other
similar property which are material to its business, free of all licenses,
franchises and Liens and without any conflict with the rights of any other
Person. All patents, trade-marks, trade names, service marks, copyrights,
industrial designs, inventions, technology and other similar rights owned by it,
all rights licensed by it to third parties and all rights by which it has the
use of any patents, trade-marks, trade names, service marks, copyrights,
industrial designs, inventions, technology or
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other similar rights owned by others which are material to its business are
accurately described in Schedule S, as amended by written notice by it to the
Administration Agent from time to time (collectively, the "Intellectual Property
Rights"). It has the right to use the Intellectual Property Rights, all
applications and registrations in Canada, the United States and elsewhere for
the Intellectual Property Rights are current, and the conduct of its business
does not to its knowledge infringe the intellectual property rights of any other
Person.
(31) Licenses, Agency and Distribution Agreements. Schedule T, as
amended by written notice by it to the Administration Agent from time to time,
accurately lists all material agreements to which it is a party or by which it
is bound under which the right to manufacture, use or market any product,
service, technology, information, data, computer hardware or software or other
property has been granted, licensed or otherwise provided to it or by it to any
other Person, or under which it has been appointed or any Person has been
appointed by it as an agent, distributor, licensee or franchisee for any of the
foregoing. None of the agreements listed in Schedule T grants to any Person any
authority to incur any liability or obligation to enter into any agreement on
behalf of it.
(32) Insurance. It maintains all risks property insurance in
connection with its assets and business and other types of insurance, including
business interruption insurance and liability insurance with respect to claims
for personal injury, death or property damage, with respect to the operation of
its business, all with responsible and reputable insurance companies in such
amounts and with such deductibles as are customary in the case of businesses of
established reputation engaged in the same or similar businesses.
(33) Financial Year End. Its financial year end is December 31.
(34) Financial Statements. The annual audited consolidated
financial statements of the Borrower for the fiscal year most recently ended,
furnished to the Administration Agent and the Lenders are the most recent annual
audited financial statements of the Borrower and its Subsidiaries. The
Borrower's financial statements have been prepared on a consolidated basis
(which consolidation includes all of its Subsidiaries) and in accordance with
GAAP, except as stated in the financial statements or in the notes thereto. The
Borrower's audited financial statements (i) present fairly in all material
respects its and its Subsidiaries' financial position and its results of
operations at the dates thereof and for the periods covered therein, and (ii)
disclose all liabilities of it and its Subsidiaries, including contingent or
unmatured liabilities as of the date thereof, which are required to be disclosed
thereon, in each case in accordance with GAAP.
(35) Special Purpose Financial Statements. The Special Purpose
Financial Statements of the Borrower for the fiscal year most recently ended,
furnished to the Administration Agent and the Lenders are the most recent
Special Purpose Financial Statements of the Borrower and its Subsidiaries,
(other than the Unrestricted Subsidiaries). The Special Purpose Financial
Statements have been prepared on a consolidated basis (which consolidation
includes all of its Subsidiaries (other than the Unrestricted Subsidiaries)),
and in accordance with GAAP, except as stated in the Special Purpose Financial
Statements or in the notes thereto. The Special Purpose Financial Statements (i)
present fairly in all material respects its and its Subsidiaries', (other than
the Unrestricted Subsidiaries), financial position and its results of operations
at the dates thereof and for the periods covered therein, and (ii) disclose all
liabilities of it and its Subsidiaries, (other
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than the Unrestricted Subsidiaries), including contingent or unmatured
liabilities as of the date thereof, which are required to be disclosed thereon,
in each case in accordance with GAAP.
(36) Financial Forecast. The Borrower has prepared the Financial
Forecast and is responsible for developing the assumptions on which the
Financial Forecast is based. The Financial Forecast is based on reasonable
assumptions as to all legal and factual matters material to the estimates set
forth therein. With respect to the Financial Forecast, Underwriters and each
Lender acknowledge that (i) there are uncertainties inherent in attempting to
make such projections and forecasts, (ii) they are familiar with such
uncertainties, and (iii) they acknowledge and agree that the Financial Forecast
are projections and the actual results will likely differ. The Financial
Forecasts have been approved by the Borrower's Board of Directors.
(37) Asset Monetization Program. The Borrower has prepared the
Asset Monetization Program and is responsible for developing the assumptions on
which the Asset Monetization Program is based. The Asset Monetization Program is
based on reasonable assumptions as to all legal and factual matters material to
the estimates set forth therein. With respect to the Asset Monetization Program,
Underwriters and each Lender acknowledge that (i) there are uncertainties
inherent in attempting to make such a program; (ii) they are familiar with such
uncertainties; and (iii) they acknowledge and agree that the Asset Monetization
Program may not be achieved in the time frame or in amounts projected. The Asset
Monetization Program has been approved by the Borrower's Board of Directors.
(38) Material Adverse Effect. Since the date of the Borrower's most
recent annual audited financial statements provided to the Administration Agent,
there has been no condition (financial or otherwise), event or change in the
Borrower's or any Subsidiaries' business, liabilities, operations, results of
operations, assets or prospects which constitutes or has, or could reasonably be
expected to constitute, or have, a Material Adverse Effect.
(39) Solvency. It is not and none of its Subsidiaries is insolvent
nor will it be insolvent immediately following the completion of the
transactions contemplated by, or referred to in, this Agreement.
(40) Employment Disputes. There are no disputes pending or, to its
best knowledge after due inquiry by its Senior Officers, threatened, between it
and any of its employees which could reasonably be expected to have a Material
Adverse Effect.
(41) Benefit and Pension Plans. Its benefit and pension plans are
fully insured or otherwise funded in accordance with Applicable Law and all
premiums and other payments due by it under its benefit and pension plans have
been fully paid and all benefits and pension payments due under its benefit and
pension plans have been paid. No Pension Plan that is subject to ERISA has
incurred any "accumulated funding deficiency" within the meaning of Section 302
of ERISA or Section 412 of the Internal Revenue Code of the United States and no
Pension Plan that is subject to ERISA has applied for or received a waiver of
the minimum funding standards imposed by section 412 of such Internal Revenue
Code. No Pension Plan that is subject to ERISA has been involved in any
transaction that (A) violates the fiduciary requirements of Section 404 of ERISA
or (B) is a "prohibited transaction" within the meaning of Section 406(a) or
406(b) of ERISA or Section 4975(c) of such Internal Revenue Code.
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(42) Pension Plans. Except as disclosed on Schedule Z during the
twelve-consecutive-month period prior to the date of the execution and delivery
of this Agreement and prior to the date of any Advance hereunder, no steps have
been taken to terminate any Pension Plan (other than a standard termination
under Section 4041(b) of ERISA), and no contribution failure has occurred with
respect to any Pension Plan sufficient to give rise to a Lien under Section
302(f) of ERISA. No condition exists or event or transaction has occurred with
respect to any Pension Plan which might result in the incurrence by any US
Guarantor or any member of the Controlled Group of any material liability, fine
or penalty.
(43) Regulations U and X. None of the US Guarantors is engaged in
the business of extending credit for the purpose of purchasing or carrying
margin stock, and no proceeds of any Advance will be used to purchase or carry
margin stock or otherwise for a purpose which violates, or would be inconsistent
with, F.R.S. Board Regulation U or X. Terms for which meanings are provided in
F.R.S. Board Regulation U or X or any regulations substituted therefor, as from
time to time in effect, are used in this Section with such meanings.
(44) Full Disclosure. All information provided or to be provided to
the Administration Agent, the Syndication Agent and/or the Lenders in connection
with the Credit Facilities is true and correct and none of the documentation
furnished to the Administration Agent, the Syndication Agent and/or the Lenders
by or on behalf of it, to its knowledge, omits or will omit as of such time, a
material fact necessary to make the statements contained therein not misleading
in any material way, and all expressions of expectation, intention, belief and
opinion contained therein were honestly made on reasonable grounds after due and
careful inquiry by it (and any other Person who furnished such material on
behalf of them).
(45) Deemed Repetition. The representations and warranties
contained in this Article shall continue in effect until payment and performance
of all Indebtedness under this Agreement and each other Document and termination
of the Credit Facilities notwithstanding any investigation made by or on behalf
of the Administration Agent, the Syndication Agent or any Lender or any other
person or any knowledge of the Administration Agent, the Syndication Agent or
any Lender or any person and shall be deemed to be repeated as if made on the
date of each Drawdown, Conversion or Rollover.
(46) English Finance Structure Companies. Each of the English
Finance Structure Companies carries on the business of providing financing to
related corporations or owns the shares of other companies that are English
Finance Structure Companies and carries on no other business. The assets and
liabilities of each of the English Finance Structure Companies are summarized in
Schedule V.
(47) Hungarian Finance Structure Companies. Each of the Hungarian
Finance Structure Companies carries on the business of providing financing to
related corporations or owns the shares of other companies that are Hungarian
Finance Structure Companies and carries on no other business. The assets and
liabilities of each of the Hungarian Finance Structure Companies are summarized
in Schedule V.
(48) Co-Steel C.S.M. Corp. Co-Steel C.S.M. Corp. carries on its
business as a partner in Gallatin and carries on no other business. Gallatin is
an active business which operates a
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minimill in Kentucky specializing in the production of flat rolled steel.
Co-Steel C.S.M. Corp.'s assets and liabilities are summarized in Schedule V.
(49) NJSC. NJSC is inactive and is currently in the process of
being dissolved.
ARTICLE 10 - COVENANTS
10.01 POSITIVE COVENANTS
The Borrower and each Guarantor covenants with the Administration
Agent, the Syndication Agent and each of the Lenders that, until the Credit
Facilities are cancelled and there is no outstanding Advance or other
Indebtedness of the Borrower to any of the Administration Agent, the Syndication
Agent or any Lender hereunder or of a Guarantor under a Guarantee, it shall
comply with each of the covenants set out in this Section, except as otherwise
permitted by the prior written consent of the Administration Agent on the
instruction of the Required Lenders.
(1) Corporate Existence. It shall do or cause to be done all
things necessary to ensure it remains a corporation duly incorporated and
validly subsisting under the laws of its jurisdiction of incorporation and to
maintain all necessary corporate power and authority to own its property and
carry on its business as presently owned and carried on by it and to keep in
full force and effect its material licences, registrations, and qualifications
in all jurisdictions where the character of its property owned or leased or the
nature of the activities conducted by it makes licensing, registration or
qualification necessary.
(2) Laws, Regulations etc. It shall conduct its business and
operations in material compliance with its articles of incorporation and by-laws
and all Applicable Laws and all applicable official directives, rules, consents,
approvals, authorizations, guidelines, orders and policies of any Governmental
Authorities or Persons having authority over it or them, including health,
safety, environmental protection, employment standards and labour codes of all
applicable Governmental Authorities and all applicable stock exchange and
securities commission rules and obtain and maintain in good standing all
material licenses, permits and approvals from any and all Governmental
Authorities and all applicable stock exchanges and securities commissions
required in respect of its and their operations and the listing of its
securities.
(3) Obligations and Taxes. It shall pay or discharge, or cause to
be paid or discharged, before the same shall become delinquent (i) all Taxes
imposed upon it or upon its income or profits or in respect of its business or
property and file all tax returns in respect thereof, (ii) all lawful claims for
labour, materials and supplies (iii) all required payments under any of its
Indebtedness, and (iv) all other obligations; provided, however that it shall
not be required to pay or discharge or to cause to be paid or discharged any
such amount so long as the validity or amount thereof shall be contested in good
faith by appropriate proceedings and a reserve in accordance with GAAP and
satisfactory to the Administration Agent has been established in its books and
records and by way of separate trust fund.
(4) Payment. It shall duly and punctually pay or cause to be paid
to the Administration Agent, the Managing Security Agent, the Syndication Agent
and each Lender all
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principal, interest, fees and other amounts payable by it under this Agreement
and any other Document on the dates, times, at the places and in the moneys and
manner set forth herein and therein.
(5) Use of Credit. It shall use the proceeds of the Credit
Facilities as contemplated by Section 2.03.
(6) Business. It shall and shall cause each of its Subsidiaries to
conduct and operate a business substantially of the same nature as that engaged
in by it or any Subsidiary, as applicable, on the date of this Agreement and
shall conduct and shall cause its Subsidiaries to conduct its business in a
proper, efficient and business-like manner.
(7) Assets. It shall keep all of the material assets and
properties used or useful in the conduct of its business in good repair, working
order and condition, ordinary wear and tear excepted, and from time to time
make, or cause to be made, all necessary and proper repairs, renewals,
replacements and improvements thereto, all as in its reasonable judgement may be
necessary so that its business may be properly and advantageously conducted at
all times.
(8) Inventory. It shall maintain contractual relationships, in
form and substance satisfactory to the Administration Agent, to ensure that the
title to all Inventory located on Leased Properties located in Canada is held in
the name of Co-Steel Distribution Canada Limited and that all Inventory located
on Leased Properties located in the United States is held in the name of
Co-Steel USA Distribution, Inc.
(9) Accounts Receivable. It shall ensure that Co-Steel
Distribution Canada Limited has title to all Account Receivable in respect of
the sale of Inventory payable by arm's length Account Debtors of any member of
the Restricted Group located in Canada, (other than Accounts Receivable relating
to the Borrower's recycling division), that the Borrower has title to all
Accounts Receivable relating to the Borrower's recycling division and that
Co-Steel USA Distribution, Inc. has title to all Accounts Receivable in respect
of the sale of Inventory payable by arm's length Account Debtors of any member
of the Restricted Group located in the United States.
(10) Co-Steel (UK) Limited - Borrower Loan. On or before June 30,
2002 it shall document the intercompany loan between Co-Steel (UK) Limited and
the Borrower in a form approved by the Administration Agent.
(11) Wind-up of English Finance Structure. It shall use its
commercially reasonable efforts to complete the transaction described in
Schedule U on or before December 31, 2002. For greater certainty the transaction
described in Schedule U may be completed notwithstanding any restriction in
Section 10.01 or 10.03 and no step in such transaction shall constitute a
Bankruptcy Event hereunder.
(12) Security Over English Finance Structure. On or before December
31, 2002, if there is any inter-company indebtedness from the Borrower or any
Restricted Subsidiary to any English Finance Structure Company or successor
thereof, it shall either (x) (i) continue or incorporate a Subsidiary pursuant
to the Ontario Business Corporations Act, which Subsidiary will be the sole
holder of any intercompany indebtedness formerly held by any of the English
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Finance Structure Companies; (ii) cause such new Subsidiary to provide to the
Administration Agent a Guarantee and provide to the Canadian Security Agent a
General Security Agreement; and (iii) deliver to the Administration Agent
customary evidence of perfection of the security interests granted by the
foregoing General Security Agreement together with a customary opinion of
counsel in respect of same in form and substance reasonably satisfactory to the
Administration Agent, or (y) provide such other security, together with
customary legal opinions in respect of same, in form and substance reasonably
requested by the Administration Agent and the Required Lenders in respect of the
English Finance Structure Companies.
(13) Guarantors. It shall cause each Subsidiary, (other than
Co-Steel C.S.M. Corp. and its Subsidiaries and 1062316 Ontario Limited and its
Subsidiaries), having Net Tangible Assets in excess of Cdn. $5,000,000 to
execute and deliver to the Administration Agent a Guarantee and a supplement to
this Agreement in such form as the Administration Agent reasonably deems
necessary to have such Subsidiary become a party hereto as a Guarantor.
(14) Material Contracts and Material Licences. It shall and shall
cause each Guarantor to:
(a) perform all of its duties and obligations under, comply with
all the terms of, and enforce its rights under, the Material
Contracts and Material Licences all in accordance with prudent
business practice;
(b) deliver to the Administration Agent true and complete copies
of each Material Contract or Material Licence and each other
contract which has been requested by the Administration Agent,
and, if requested by the Administration Agent, execute and
deliver to the Administration Agent a specific assignment of
each contract in favour of the Administration Agent and use
reasonable commercial efforts to obtain the consent to
assignment of the other party or parties to each Material
Contract or Material Licence in a form acceptable to the
Administration Agent;
(c) promptly upon request by the Administration Agent, provide the
Administration Agent with all information regarding
contractual relations of the Borrower of a material nature
which is requested by the Administration Agent; and
(d) use reasonable commercial efforts to obtain and deliver to the
Administration Agent the consent of any party that the
Administration Agent requests with respect to the Lien on any
Material Contract or Material Licence in favour of the
Administration Agent, such consent to be in form and substance
acceptable to the Administration Agent.
(15) Jurisdictions. It shall advise the Administration Agent of any
change in the location at which its or any of its Restricted Subsidiaries'
assets may be located from the location disclosed on Schedule P and any
additional jurisdictions in which it is carrying on business of a material
nature or any change in the jurisdiction of incorporation of it or any of its
Restricted Subsidiaries.
(16) Computer Systems. It shall take commercially reasonable steps
to ensure, so far as reasonably possible, that all computer systems used in its
business
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and material to its business and owned or leased by it, including hardware and
software, remain free from viruses and disabling codes and devices and shall
maintain in place appropriate disaster recovery plans, procedures and facilities
and to take steps and implement all procedures necessary to safeguard and
restrict unauthorized access to its computer systems.
(17) Intellectual Property Rights. The Borrower shall:
(a) maintain all registrations and applications for registration
for any Intellectual Property Rights in good standing for so
long as such Intellectual Property Rights remain material to
its business, including without limitation paying all fees and
making all such filings as may be required from time to time;
(b) notify the Administration Agent if it knows, or has reason to
know, of any application or registration, relating to any
patent or trade xxxx material to its business that may expire,
become abandoned or dedicated to the public domain, or of any
material adverse determination or development (including the
institution of, or any such determination or development in,
any proceeding in the Canadian or U.S.A. Patent and Trade Xxxx
Offices or any court or tribunal in any other country)
regarding its ownership of any material Intellectual Property
Right or its right to register the same or to keep and
maintain the same; and
(c) report to the Administration Agent any application for the
registration of any trade xxxx material to its business with
the Canadian or U.S.A. Trade Xxxx Office and any application
for any patent material to its business with the Canadian or
U.S.A. Patent Office, in each case within 30 days after the
last day of the fiscal quarter in which any application occurs
(whether the application is made by itself or through any
agent, employee, licensee or designee).
(18) Insurance.
(a) It shall maintain insurance of such type, in such amounts and
against such risks as is prudent for a business of an
established reputation with financially sound and reputable
insurers, including product liability, business interruption
liability and property insurance.
(b) It shall, from time to time at the Administration Agent's
request, deliver certified copies of its insurance policies
(or satisfactory evidence of its policies) to the
Administration Agent.
(c) At any time during normal business hours and following
reasonable notice from the Administration Agent, but, in any
case, not more than twice in each calendar year, acting
reasonably, it shall co-operate and assist in any review of
the insurance policies maintained by it by a firm of
independent insurance consultants selected by the
Administration Agent, the cost of any such review being for
its account.
(d) If it does not obtain or maintain the insurance in accordance
with Section 10.01(18)(a), the Administration Agent may, but
need not, do so, in which event it
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shall immediately on demand reimburse the Administration Agent
for all payments made by the Administration Agent in
connection with obtaining and maintaining such insurance, and
until reimbursed any such payment shall bear interest at the
Default Rate unless prohibited by law, in which event such
amount, if payable in Canadian Dollars shall bear interest at
the rate applicable to a Prime Rate Loan, or if payable in
U.S. Dollars, shall bear interest at the rate applicable to a
Base Rate Loan.
(e) All proceeds of any insurance policy maintained by the
Borrower or any Subsidiary (the "Insurance Proceeds") less
than Cdn.$2,500,000 in respect of any one instance or less
than Cdn.$5,000,000 annually may be retained by the Borrower
or applicable Subsidiary; for greater certainty if the
Borrower or any Subsidiary receives Insurance Proceeds
consisting of property insurance and business interruption
insurance in respect of the same loss, the amount of the
business interruption insurance shall not be used in
determining such Cdn.$2,500,000 and Cdn.$5,000,000 thresholds.
All Insurance Proceeds in excess of such amounts shall be paid
by the insurers directly to a Security Agent and if paid to
the Borrower or any Guarantor, such Insurance Proceeds shall
be received only in trust for the Managing Security Agent,
shall be segregated from other funds of the Borrower or
Guarantor, as applicable, and shall be forthwith paid over to
the Managing Security Agent in the same form as received. All
Insurance Proceeds paid to a Security Agent shall be applied
in accordance with the terms of the Inter-Creditor Agreement.
(19) Benefit and Pension Plans. It shall comply with all Applicable
Laws in respect of its employees' benefit and pension plans, including, but not
limited to, payment of all contributions and premiums to be paid thereunder, and
it shall ensure that all premiums and payments relating to employee benefits and
pensions are paid as due.
(20) Notices, etc. Each US Guarantor will furnish, or will cause to
be furnished, to the Administration Agent with sufficient copies for each Lender
copies of reports, notices and information immediately upon becoming aware of
(i) the institution of any steps by any US Guarantor or any other Person to
terminate any Pension Plan (other than a standard termination under Section
4041(b) of ERISA), (ii) the failure to make a required contribution to any
Pension Plan if such failure is sufficient to give rise to a Lien under Section
302(f) of ERISA, (iii) the taking of any action with respect to a Pension Plan
which could result in the requirement that any US Guarantor furnish a bond or
other security to the PBGC or such Pension Plan, or (iv) the occurrence of any
event with respect to any Pension Plan which could result in the incurrence by
any US Guarantor of any material liability, fine or penalty, notice thereof and
copies of all documentation relating thereto.
(21) Defence of Claims. It shall diligently defend itself and its
properties from and against any lawsuits or claims in accordance with prudent
business practice.
(22) Notices. It shall provide the Administration Agent with
immediate written notice of the commencement or occurrence of any of the
following events of which it becomes aware:
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(a) the institution of any proceeding for the condemnation,
expropriation or other taking of any of its or any Restricted
Subsidiaries' property;
(b) the issuance by any Governmental Authority of any injunction,
order or decision involving it or any Restricted Subsidiary or
any of its or any Restricted Subsidiaries' property that could
reasonably be expected to have a Material Adverse Effect;
(c) the filing or commencement of any action, suit or proceeding
against or affecting it or a Restricted Subsidiary or any of
its or any Restricted Subsidiaries' property, whether at law
or equity or by or before any court or any Governmental
Authority or any arbitrator where the amount claimed is in
excess of $5,000,000 or the aggregate amount claimed under all
such actions, suits or proceedings which are unresolved is in
excess of $10,000,000 in the aggregate, and any such notice
shall specify the nature of such action, suit or proceeding
and its Restricted Subsidiaries' proposed response and shall
from time to time provide all information requested by the
Administration Agent respecting any action, suit or
proceeding;
(d) the imposition of any Lien which is not a Permitted Lien
against any of its or any Restricted Subsidiaries' property;
(e) any change in the amount and/or terms of any credit
arrangement made with other lenders or any action taken by
another lender to recover amounts outstanding with such other
lender;
(f) any claim, demand or action impairing title to any of its or
any Restricted Subsidiaries' property with a value in excess
of $5,000,000;
(g) any development in its or any of its Subsidiaries' business or
affairs which has had or which is likely to have a Material
Adverse Effect on its or any of its Subsidiaries' business,
properties, operations or condition, financial or otherwise;
(h) any Leased Property, other than the North York Property or the
Significant U.S. Leased Properties becoming material to the
Business of the Borrower or any of its Restricted
Subsidiaries;
(i) its entry into any contract or undertaking not in the ordinary
course of its business containing cumulative obligations of
the Borrower or any of its Subsidiaries in excess of
$5,000,000;
(j) its, or any Obligor's, acquisition of any property that is not
subject to the Security Documents, or any other event or
condition that may require additional action of any nature in
order to preserve the effectiveness and perfected status of
the Liens of either Security Agent with respect to the
Security Documents;
(k) the preparation of any financial or strategic report by any
third party for the benefit of the Borrower or any Subsidiary
other than Gallatin, and with respect to
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Gallatin any such financial or strategic report not subject to
a confidentiality obligation;
(l) any other adverse action by or notice from any Governmental
Authority with respect to it, any Restricted Subsidiary or any
Hungarian Finance Structure Company or any of its, any
Restricted Subsidiaries' or any Hungarian Finance Structure
Companies' property which, if determined adversely, would have
a Material Adverse Effect;
(m) any condition or event which constitutes a Default or an Event
of Default or a default under any other agreement for borrowed
money with the notice specifying the nature and occurrence of
the Default, Event of Default or other default and the action
it has taken or proposes to take with respect to the Default,
Event of Default or other default; or
(n) the effecting of any Capital Expenditure pursuant to the
proviso to Section 10.03(13).
(23) Additional Covenants. It shall promptly notify the
Administration Agent if at any time it has entered into any new instrument or
agreement or has amended an existing instrument or agreement relating to any
Indebtedness in an aggregate principal amount greater than Cdn. $5,000,000 to
include covenants or defaults (or their equivalent) not substantially provided
for in this Agreement or more favourable to the lender or lenders thereunder
than those provided for in this Agreement. Thereupon, if the Administration
Agent shall request, the parties to this Agreement shall amend this agreement to
provide for substantially the same covenants and defaults (or their equivalent)
as those provided for in such instrument or agreement.
(24) Environmental Reporting. It shall immediately provide to the
Administration Agent written notice of any of the following events of which it
becomes aware which could result in a Material Adverse Effect:
(a) any proceeding or order of any Governmental Authority
requiring it to comply with or take action under any
Environmental Laws;
(b) its receipt of any written notice to the effect that it is
liable to any Person as a result of the Release or threatened
Release of any Contaminant into the environment;
(c) its receipt of any written notice that it is subject to
investigation by any Governmental Authority evaluating whether
any remedial action by it is needed to respond to the Release
or threatened Release of any Contaminant into the environment;
(d) its receipt of any written notice of, or its obtaining
knowledge of, a condition with respect to any property which
it owns, leases, occupies or has control of, or previously
owned, leased, occupied or had control of which might
reasonably result in a notice of violation by it of any
Environmental Law;
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(e) its receipt of any written notice of the commencement of any
judicial or administrative proceeding alleging a violation of
any Environmental Law with respect to any property which it
owns, leases, occupies or has control of or owned, leased
occupied or had control of; or
(f) its undertaking of any activities as a result of new or
proposed changes to any existing Environmental Law (whether or
not having the force of law) that could reasonably be expected
to have a Material Adverse Effect upon it or any of its
Subsidiaries.
(25) Maintenance of Bank Accounts. It shall and shall cause each
Subsidiary to maintain each of its bank accounts with either the Administration
Agent or PNC; provided however that (i) Acierco S.A. may maintain, up to the
lesser of U.S.$1,000,000 and its then contingent tax liability in the account
with Banque de Luxembourg in Luxembourg, identified in Schedule X, (ii) Lake
Ontario Steel Company Inc. may maintain up to U.S.$500,000 in the account with
Manufacturers and Traders Trust Company in Buffalo, New York identified in
Schedule X, and (iii) Co-Steel C.S.M. Corp. and any of its Subsidiaries may
maintain any bank account from time to time, and with the consent of the
Administration Agent, the Borrower or any Subsidiary may retain deposits in any
bank account with respect to which a Security Agent has been provided with a
duly executed Blocked Account Agreement from the bank maintaining such account
and may retain amounts individually less than Cdn.$150,000 and cumulatively less
than Cdn.$600,000 in bank accounts not maintained with the Administration Agent
or PNC or not subject to a Blocked Account Agreement. Notwithstanding the
foregoing, in connection with loans and advances permitted pursuant to Section
10.03(24), up to U.S.$10,200,000 may be transferred to and retained for up to
three Banking Days in the bank account of Co-Steel Hungary at HSBC London,
England identified in Schedule X and the bank account of Acierco S.A. at Banque
de Luxembourg in Luxembourg and identified in Schedule X.
(26) Asset Monetization Program. It shall use its commercially
reasonable efforts to implement and adhere to the timetable set forth in the
Asset Monetization Program, and shall, if necessary, and as soon as practical,
revise the Asset Monetization Program based on the Strategic Plan. Any revision
to the Asset Monetization Program shall be subject to the approval of the
Administration Agent and the Required Lenders and shall be approved by the
Borrower's Board of Directors.
(27) Strategic Plan. It shall, with the assistance of an
independent consultant, prepare and shall deliver to Administration Agent and
Lenders, on or before July 31, 2002, a detailed written five-year strategic
option plan for the Borrower and its Subsidiaries (the "Strategic Plan"). The
Borrower shall deliver to Administration Agent and Lenders all reports from time
to time received that will form part of the Strategic Plan as well as all drafts
and interim versions of such reports. As well, the Borrower will provide notice
of engagement of any consultant or professional advisor engaged to give
strategic advice to the Borrower together with copies of any agreements relating
to any such engagement, and copies of all work product produced by such
consultants or professional advisors. The Strategic Plan shall include, without
limitation: (i) an analysis of strategies and options to maximize value for the
Borrower and its Subsidiaries, including its Raritan operations and its
interests in Gallatin; (ii) a detailed written capital expenditure plan for the
Borrower and each of its Subsidiaries; (iii) general cost reduction and
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efficiency strategies for the Borrower and its Subsidiaries, including a
cost/benefit analysis of each such strategy; (iv) an update of the Asset
Monetization Program, including any additional assets subject thereto; and (v) a
proposed timetable for implementing the foregoing. The Strategic Plan shall be
in a form reasonably satisfactory to the Administration Agent and the Required
Lenders and shall be updated annually on or before July 31. The Strategic Plan
and each annual update thereof shall be approved by the Borrower's Board of
Directors.
(28) Collateral Audit. It shall assist a consultant of
Administration Agent's and the Required Lender's choice in the preparation of a
detailed collateral audit and/or appraisal of accounts receivable, inventory,
accounts payable, cash and related systems, machinery, equipment and real estate
of the Borrower and each Subsidiary (the "Collateral Audit"), such report shall
be dated as of August 31, 2003.
(29) Bi-Annual Auditor's Report. It shall, twice annually; (i) on
or before 60 days following March 31, and (ii) on or before 60 days following
September 30, provide to the Administration Agent and the Lenders from auditors
acceptable to the Majority Lenders an audit report of the Borrower's and its
Subsidiaries' accounts receivable, inventory, accounts payable, cash and related
systems (the "Bi-Annual Auditor's Report"). The first such Bi-Annual Auditor's
Report shall be delivered by the Borrower to the Administration Agent on or
before June 15, 2002. Such report shall be satisfactory in form and content to
the Administration Agent and the Required Lenders.
(30) Other Reports. It shall, from time to time, prepare or provide
such reports to the Administration Agent and the Lenders as may be reasonably
requested by the Administration Agent or any Lender, including, without
limitation, reports identified by the Borrower pursuant to Section 10.01(22)(k).
In addition, it shall notify the Administration Agent upon receipt of
any report with respect to environmental audits conducted by or on behalf of, or
provided to, the Borrower or any Subsidiary, and upon request shall forthwith
provide copies of same, with sufficient copies for each Lender, to the
Administration Agent.
10.02 FINANCIAL COVENANTS
The Borrower covenants with the Administration Agent, the Syndication
Agent and each of the Lenders that, until the Credit Facilities are cancelled
and there is no outstanding Advance or other Indebtedness of the Borrower to any
of the Administration Agent, the Syndication Agent or any Lender hereunder or of
a Guarantor under a Guarantee, it shall comply with each of the covenants set
out in this Section, except as otherwise permitted by the prior written consent
of the Administration Agent on the instruction of the Required Lenders.
(1) The Borrower shall ensure that the ratio of Consolidated
Current Assets to Consolidated Current Liabilities, calculated at the end of
each fiscal quarter of the Borrower, commencing on December 31, 2001, is not
less than:
(i) as at December 31, 2001, 1.8:1
(ii) as at March 31, 2002, 1.7:1;
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(iii) as at June 30, 2002, 1.6:1;
(iv) as at September 30, 2002, 1.7:1;
(v) as at December 31, 2002, 1.6:1;
(vi) as at March 31, 2003, 1.6:1;
(vii) as at June 30, 2003, 1.7:1;
(viii) as at September 30, 2003, 1.6:1; and
(ix) as at December 31, 2003, 1.6:1.
(2) The Borrower shall ensure that Consolidated Current Assets,
for any fiscal period, are not less than 85% of the Consolidated Current Assets
projected for such fiscal period in the Financial Forecast, tested quarterly
commencing on December 31, 2001.
(3) The Borrower shall ensure that the ratio of Consolidated Total
Net Debt to Normalized Consolidated EBITDA at the end of each of the following
fiscal quarters of the Borrower does not exceed:
(i) as at December 31, 2001, 14.0:1;
(ii) as at March 31, 2002, 14.3:1;
(iii) as at June 30, 2002, 13.5:1;
(iv) as at September 30, 2002, 12.2:1;
(v) as at December 31, 2002, 9.1:1;
(vi) as at March 31, 2003, 7.3:1;
(vii) as at June 30, 2003, 6.0:1;
(viii) as at September 30, 2003, 5.0:1; and
(ix) as at December 31, 2003, 4.5:1.
For the purposes of determining compliance with this covenant only, the exchange
rate for the calculation of debt in effect at the Closing Date included in
Consolidated Total Net Debt shall be pegged at $1.55 Cdn.: $1 U.S. per Borrower
projections.
(4) The Borrower shall ensure that the ratio of Normalized
Consolidated EBITDA Net of Capex to Consolidated Net Interest Expense at the end
of each of the following fiscal quarters of the Borrower is not less than:
(i) as at December 31, 2001, 0.2:1;
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(ii) as at March 31, 2002, 0.1:1;
(iii) as at June 30, 2002, 0.1:1;
(iv) as at September 30, 2002, 0.3:1;
(v) as at December 31, 2002, 0.7:1;
(vi) as at March 31, 2003, 0.9:1;
(vii) as at June 30, 2003, 1.3:1;
(viii) as at September 30, 2003, 1.5:1; and
(ix) as at December 31, 2003, 1.6:1.
(5) The Borrower shall ensure that Tangible Net Worth, calculated
as at the end of each fiscal quarter of the Borrower commencing December 31,
2001: (i) on or before September 30, 2002 exceeds $390 million, minus the amount
of write-downs of assets resulting from asset sales approved in advance by the
Administration Agent and the Required Lenders; and (ii) after and, including
December 31, 2002 exceeds $380 million, minus the amount of write-downs of
assets resulting from asset sales approved in advance by the Administration
Agent and the Required Lenders.
(6) The Borrower shall ensure that Cumulative Consolidated EBITDA,
tested at each quarter end, is greater than or equal to:
--------------------------------------------------------------------
($Cdn. 000's)
Quarter Ending the
last day of 2001 2002 2003
--------------------------------------------------------------------
March n/a 10,288 71,632
June n/a 24,725 98,473
September n/a 38,192 122,437
December 3,418 53,312 143,020
10.03 NEGATIVE COVENANTS
The Borrower and each Guarantor covenants with the Administration
Agent, the Syndication Agent and each of the Lenders that, until the Credit
Facilities are cancelled and there is no outstanding Advance or other
Indebtedness of the Borrower to any of the Administration Agent, the Syndication
Agent or any Lender hereunder or of a Guarantor under a Guarantee, it shall
comply with each of the covenants set out in this Section, except as otherwise
permitted by the prior written consent of the Administration Agent on the
instruction of the Required Lenders.
(1) Indebtedness. It shall not and shall not permit any Restricted
Subsidiary to create, incur, assume or permit to exist any Indebtedness except:
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(a) Indebtedness in favour of the Administration Agent and the
Lenders under this Agreement;
(b) Indebtedness pursuant to the Prudential Note Agreement;
(c) Indebtedness pursuant to the Convertible Debentures;
(d) Indebtedness pursuant to the PNC Indebtedness;
(e) Indebtedness pursuant to Permitted Intercompany Indebtedness;
(f) Indebtedness pursuant to Permitted Parent Guarantees;
(g) unsecured indemnities incurred in the ordinary course of
business;
(h) unsecured accounts payable and accrued liabilities, owed to
Persons other than an Affiliate which are incurred in the
normal course of business or accrued pension liabilities;
(i) deferred revenue classified as a liability;
(j) deferred taxes;
(k) unsecured Indebtedness arising under one or more outstanding
judgements being appealed in good faith (except where their
existence would give rise to an Event of Default);
(l) Capitalized Lease Obligations and Indebtedness secured by
purchase money security interests in an aggregate amount
outstanding at any time not greater than $5,000,000; and
(m) any unsecured Indebtedness as endorsee under negotiable
instruments received in payment of account receivables and
endorsed for deposit in the ordinary course of business.
(2) Other Indebtedness and Agreements. It shall not and shall not
permit any Restricted Subsidiary to make any amendment or modification to any
indenture, note or other agreement evidencing or governing any of its
Indebtedness, or directly or indirectly voluntarily prepay, defease or in
substance defease, purchase, redeem, retire or otherwise acquire any other
Indebtedness in advance of Indebtedness outstanding under this Agreement.
(3) Payments to other Senior Lenders. Other than as permitted
pursuant to the terms of the Inter-Creditor Agreement no Obligor shall make any
payment of any kind to the Noteholders or PNC. Notwithstanding the foregoing,
provided no Event of Default or Default has then occurred, the Borrower may from
time to time pay interest as required pursuant to the terms of the Prudential
Note Agreement and Co-Steel Raritan, Inc. may from time to time pay interest as
required pursuant to the terms of the PNC Raritan Credit Agreement and Co-Steel
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Sayreville, Inc. may from time to time pay interest as required pursuant to the
terms of the PNC Sayreville Credit Agreement.
(4) Negative Pledge. It shall not and shall not permit any
Restricted Subsidiary to create, assume or permit to exist over all or any part
of its or their business or assets, whether now owned or hereafter acquired, any
Lien (whether prior or subsequent to or pari passu with any Lien in favour of
the Security Agents) other than Permitted Liens.
(5) Material Contracts and Material Licences. It shall not and
shall not permit any Guarantor to:
(a) allow any circumstances to arise which would allow any
Material Contract or Material Licence to lapse or be
terminated during its term; provided that, for greater
certainty, termination of a Material Contract at the end of
its term, in the ordinary course of business, is not
prohibited hereby;
(b) amend any Material Contract or Material Licence if such
amendment could reasonably be expected to have a material and
adverse effect on the Administration Agent or the Lenders or
the repayment of the obligations hereunder; or
(c) assign any Material Contract or Material Licence, except for
assignment to a Security Agent pursuant to the Security
Documents.
(6) Sale of Assets. Other than Permitted Asset Sales, or sales
pursuant to the Asset Monetization Program it shall not and shall not permit any
Subsidiary to sell, lease, license, transfer, assign or otherwise dispose of any
of its business, assets, rights, revenues or property, real, personal or mixed,
tangible or intangible (including, without limitation, shares of stock and
indebtedness of Subsidiaries, receivables and leasehold interests), whether in
one or a series of transactions, except on terms and conditions approved by the
Required Lenders (each such asset sale so approved an "Approved Asset Sale").
(7) Sale and Leaseback Transactions. Other than as permitted by
the Asset Monetization Program or in connection with the incurrence of a
Capitalized Lease Obligation permitted under Section 10.03(1), it shall not and
shall not permit any Restricted Subsidiary to become or remain liable in any
way, whether directly or by assignment or as a guarantor or other contingent
obligor, for the obligations of the lessee or user under any lease or contract
for the use of any real or personal property if such property is owned on the
date of this Agreement or thereafter acquired by it or any of its Affiliates and
has been or is to be sold or transferred to any other Person and was, is or
shall be used by it or any of its Affiliates for substantially the same purpose
as such property was used by it or such Affiliate prior to such sale or
transfer.
(8) Acquisitions. It shall not and shall not permit any Restricted
Subsidiary to (i) acquire or incorporate any Subsidiary; or (ii) acquire all or
a substantial part of, in one or a series of transactions (whether by way of
amalgamation (other than pursuant to Section 10.01(11)), merger, share purchase,
asset purchase or otherwise) the assets, shares or any other equity interests of
any Person. Provided that the foregoing shall not prevent the Borrower or any
Restricted Subsidiary receiving equity of an arm's length Person as part of a
compromise of such
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arm's length Person's debt pursuant to a Bankruptcy Event. And provided further
that the foregoing shall not prevent the Borrower or any Restricted Subsidiary
from acquiring:
(i) debt securities having a maturity of not more than
one year issued or guaranteed by the United States or
Canadian government or by an agency or
instrumentality thereof;
(ii) certificates of deposit, bankers acceptances and time
deposits, which in each case mature within one year
from the date of purchase thereof and which are
issued by a Lender;
(iii) commercial paper maturing in 270 days or less from
the date of issuance which, at the time of
acquisition by the Borrower either (A) is accorded
the highest rating by Standard and Poor's Rating
Group, a division of McGraw Hill, Inc. or Xxxxx'x
Investors Service, Inc. or (B) is issued by a Lender;
(iv) direct obligations of the United States of America or
Canada or any agency or instrumentality of the United
States of America or Canada or guarantee of which
constitutes a full faith and credit obligation of the
United States of America or Canada, in each case
maturing in twelve months or less from the date of
acquisition;
(v) ownership of the capital stock of Subsidiaries and
ASW existing on the Closing Date or as otherwise
provided herein; and
(vi) money market funds or income funds that invest solely
in the investments identified in clauses (i) to (iv),
inclusive in this Section 10.03(8).
(9) Loans, Investments etc. Other than Key Employee Loans
not to exceed Cdn.$5,000,000 at any time, it shall not and shall not permit any
Restricted Subsidiary to:
(i) directly or indirectly make any loan or advance, to,
or make any investment in the debt obligations of, or
guarantee, or otherwise undertake to perform or
warrant or ensure performance of any Indebtedness or
obligation of, or enter into any agreement that has
the effect of assuming the payment or performance of
any Indebtedness or obligation of, any Person, in
each case other than to another member of the
Restricted Group; or
(ii) directly or indirectly subordinate or postpone any
claim which it has against any Person, except the
extension of credit in the ordinary course of
business to trade debtors in accordance with
customary trade terms.
Notwithstanding the foregoing, (i) Co-Steel (US) Ltd. shall be permitted to make
loans or advances to Co-Steel C.S.M. Corp., provided that the equivalent amount,
(net of up to Cdn. $100,000 for operating expenses), of such loans or advances
is received by the Borrower, immediately prior to, or contemporaneously
therewith and further provided that each previous
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payment under subsection (i) of this notwithstanding clause has been duly
received by the Borrower; (ii) provided that at the time of and immediately
after giving effect to such loan or advance no Event of Default or Default would
result (or the equivalent with respect to the credit facilities of Gallatin),
the Borrower may from time to time make loans or advances to Gallatin totalling
per annum up to the lesser of (x) Cdn.$3,000,000; and (y) the amount by which
the Lenders, the Noteholders and PNC have been prepaid pursuant to payments of
the nature described in Section 3.03(1)(e); and (iii) the Borrower or any
Restricted Subsidiary may make investments from time to time as permitted under
the second proviso of Section 10.03(8).
(10) Dividends, etc. The Borrower shall not declare any dividends
from, or set apart any sum for the payment of any dividends on, or make any
other distribution (by reduction of capital or otherwise) in respect of, any of
the Borrower's shares.
(11) No Reduction of Capital. It shall not, or shall ensure that
the Restricted Subsidiaries shall not, (as applicable), apply any of its assets
to the purchase, redemption or other acquisition or retirement of any shares in
the Borrower's capital or otherwise reduce the Borrower's issued or paid up
capital in respect of any of its shares.
(12) No Issue of Capital. Other than pursuant to a Significant
Share Offering or by issuance of common shares pursuant to stock options granted
to employees or former employees, or pursuant to a redemption or a conversion of
the Convertible Debentures in accordance with their terms, it shall not, without
the consent of the Majority Lenders, issue any new capital by way of equity or
subordinated debt offering or otherwise. Notwithstanding the foregoing, any
Guarantor may issue new capital by way of equity provided that such new equity
is subject to the Lien of a Share Pledge Agreement, and the certificates
representing such new capital are forthwith delivered to a Security Agent.
(13) Capital Expenditures. In each fiscal year the Restricted Group
cumulatively shall not make, or enter into any agreement which would require
them cumulatively to make any Capital Expenditures (including by way of
Capitalized Lease Obligations) in excess of those provided for in the Financial
Forecast; provided that the foregoing shall not restrict the Restricted Group
from making Capital Expenditures in any fiscal year in amounts up to 20% of the
amounts otherwise provided for in the Financial Forecast but only if such
Capital Expenditures are in respect of insurance deductibles for insured losses,
the proceeds with respect to which are payable to the Borrower.
(14) Accounting Changes. It shall not make and shall not permit any
Subsidiary to make any changes in accounting treatment and reporting practices
except as permitted by GAAP and disclosed to the Administration Agent and it
shall not change its financial year end.
(15) Transactions with Affiliates. Except as otherwise permitted in
this Section, it shall not and shall not permit any Restricted Subsidiary to:
(a) enter into any transaction with any Affiliate, including,
without limitation, any transaction for the purchase, sale or
exchange of property, the rendering of any services, the
making or obtaining of any loans or advances, and the entering
into of any contracts, except that it may enter into a
transaction or contract with an
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Affiliate which is in the ordinary course of its business and
which is upon fair and reasonable terms no less favourable to
it than it would obtain in a comparable arm's-length
transaction with a Person who is not an Affiliate of it; or
(b) pay any fees or expenses to, or reimburse or assume any
obligation for the reimbursement of any expenses incurred by
any Affiliate of it, except payments to reimburse Affiliates
of it for reasonable out-of-pocket expenses incurred in good
faith in the conduct of its business.
(16) Fundamental Changes. It shall not and it shall not permit any
Restricted Subsidiary to enter into any corporate transaction (or series of
transactions), whether by way of reconstruction, arrangement, reorganization,
consolidation, amalgamation, merger or otherwise, whereby all or substantially
all of its or their undertaking and assets would become the property of any
other Person or in the case of any amalgamation, the property of the continuing
corporation resulting from the amalgamation. Notwithstanding the foregoing, if
at the time of and immediately after giving effect to any amalgamation, no
Default shall have occurred:
(a) any Guarantor may amalgamate with any other Guarantor; or
(b) any Guarantor may sell, transfer, lease or otherwise dispose
of its assets to the Borrower or another Guarantor,
provided that such Guarantor provides the Administration Agent with prior notice
of any such transaction and upon any amalgamation, the resulting company
delivers to the applicable Security Agent the Security Documents to which each
predecessor entity was party and an assumption agreement pursuant to which the
amalgamated company confirms its assumption of all of the obligations of the
amalgamating companies under the Documents to which each predecessor entity was
party and such other security, certificates and opinions as may be required by
the Administration Agent including, if applicable, a pledge of the amalgamated
company's shares.
(17) Hedging Contracts. It shall not and shall not permit any of
its Subsidiaries to engage in currency trading, convert Loans from one currency
into another or enter into any currency or interest rate hedge for speculative
reasons.
(18) Nature of Business. It shall not and shall not permit any of
its Subsidiaries to make any substantial change in the nature of its business
from that engaged in on the date of this Agreement or engage in any other
businesses other than those in which it is engaged on the date of this
Agreement.
(19) Inconsistent Agreements. It shall not and shall not permit any
of its Subsidiaries to enter into any agreement containing any provision which
would be violated or breached by this Agreement or any of the transactions
contemplated by this Agreement by its or their performance of the obligations in
connection therewith.
(20) Announcements. Except as required by Applicable Law, it shall
not make or permit any press release or other public announcement to be made by
or on its behalf which
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mentions either Underwriter or any Lender without each Underwriter's and each
Lender's prior written approval of the press release or public announcement.
(21) Industrial Bonds. It shall not permit Co-Steel Dofasco LLC to
sell the Gallatin County Industrial Revenue Bonds except to another Affiliate or
Subsidiary of the Borrower.
(22) English Finance Structure Companies. Except as set forth in
Schedule U, (i) it shall not permit any of the English Finance Structure
Companies to carry on any business other than the current business activities of
providing financing to related companies, (ii) it shall not and shall not permit
any of its Subsidiaries to transfer any assets to any of the English Finance
Structure Companies, and (iii) it shall not permit any of the English Finance
Structure Companies to incur additional liabilities.
(23) Co-Steel C.S.M. Corp. Other than its duties as a partner in
Gallatin, it shall not permit Co-Steel C.S.M. Corp. to carry on any business and
it shall not and shall not permit any of its Subsidiaries to transfer any assets
to Co-Steel C.S.M. Corp. Notwithstanding the foregoing, it may and may permit
its Subsidiaries to transfer funds to Co-Steel C.S.M. Corp. (i) pursuant to its
regular tax planning if (x) no Event of Default or Default then exists or would
occur because of such transfer, and (y) an amount equivalent to the amount so
transferred is received by the Borrower or a Guarantor on the same Banking Day
as such transfer or (ii) if otherwise permitted pursuant to Section 10.03(9).
(24) Payment of Intercompany Indebtedness. It shall not permit any
Restricted Subsidiary to make any payment on account of principal or interest in
respect of the Permitted Intercompany Indebtedness described in Schedule Y.
Notwithstanding the foregoing, so long as no Default or Event of Default exists
or would occur because of such a payment, and provided that each previous
payment under this notwithstanding clause has been duly received by a Restricted
Subsidiary, it may twice annually permit payment of up to U.S. $10,200,000 in
respect of interest on the Permitted Intercompany Indebtedness described in
Schedule Y, if the amount of such interest payment (net of up to Cdn. $100,000
for operating expenses), is received by a Restricted Subsidiary within three
Banking Days of such payment.
(25) Unrestricted Subsidiaries' Cumulative Net Tangible Assets. It
shall not permit the aggregate Net Tangible Asset of all Unrestricted
Subsidiaries, (other than Co-Steel C.S.M. Corp. or 1062316 Ontario Limited and
their Subsidiaries), to exceed Cdn.$10,000,000 at any time.
10.04 ACCOUNTING FINANCIAL STATEMENTS AND OTHER INFORMATION
(1) General. The Borrower and each Subsidiary shall maintain a
system of accounting established and administered in accordance with GAAP, and
shall set aside on its books all such proper provisions as required by GAAP. The
Borrower and each Subsidiary shall permit Persons reasonably designated by the
Administration Agent or any consultant reasonably appointed by the
Administration Agent to visit and inspect, at the expense of the Borrower, any
properties of the Borrower or a Subsidiary, to examine the books and financial
records of the Borrower or a Subsidiary and to discuss its affairs, finances and
accounts, all at reasonable times and as often as may reasonably be requested by
the Administration Agent and the Borrower and
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each Subsidiary agrees to answer any inquiries made by any designated Persons or
consultants fully and fairly to the best of its ability. The Persons designated
or the consultants appointed by the Administration Agent pursuant to this
Section may include accountants or management consultants reasonably appointed
by the Administration Agent to examine reasonable aspects of the operations of
the Borrower or a Subsidiary. The Borrower and each Subsidiary further
acknowledge that any designated Persons or consultants may make extracts from
its records to prepare reports to the Administration Agent concerning the
financial position and business prospects of the Borrower or any Subsidiary and
the Administration Agent shall have no obligation to disclose the content of any
reports to the Borrower or any Subsidiary. The Administration Agent shall have
no duty to make any visits, inspections or examinations or to have any
discussions and shall not incur any liability or obligation nor lose any rights
for not making the same.
(2) Financial Reports. The Borrower shall furnish to the
Administration Agent with sufficient copies for itself, the Syndication Agent
and each Lender:
(a) promptly upon availability and in any event within 90 days
after the end of its fiscal year, its annual audited financial
statements (including a balance sheet and statements of profit
and loss and cash flow for such fiscal year) prepared on a
consolidated basis and annual unaudited financial statements
prepared separately for the Borrower and each of its
Subsidiaries, in each case in accordance with GAAP, and
setting forth in comparative form the corresponding figures
for the corresponding period of the preceding fiscal period,
all in reasonable detail, together, in the case of the
Borrower's audited financial statements, with the Auditor's
report to directors, shareholders or lenders, as appropriate,
thereon, which report shall contain no qualifications;
(b) promptly upon availability and in any event within 90 days
after the end of its fiscal year, its annual audited Special
Purpose Financial Statements, and setting forth in comparative
form, the corresponding figures for the corresponding period
of the preceding fiscal period and the corresponding figures
for the corresponding period set forth in the Financial
Forecast, all in reasonable detail, together with the
Auditor's report to directors or lenders, as appropriate,
thereon, which report shall be substantially in the form
delivered to the Lenders under the 1999 Credit Agreement and
shall otherwise contain no qualifications;
(c) promptly upon availability and in any event within 45 days
after the end of each of its first three fiscal quarters in
each fiscal year, its unaudited quarterly Special Purpose
Financial Statements and unaudited quarterly financial
statements (including a balance sheet and statements of profit
and loss and cash flow) for such quarterly fiscal period,
prepared on a consolidated basis and separately for the
Borrower and each of its Lasco, Raritan, Sayreville, Recycling
and Corporate operating units, in each case in accordance with
GAAP, setting forth in comparative form the corresponding
figures for the corresponding period of the preceding fiscal
period, and the corresponding figures for the corresponding
period set forth in the Financial Forecast all in reasonable
detail and accompanied by a management discussion and analysis
of variances between actual results and
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the Financial Forecast and of significant matters, including,
without limitation of labour negotiations, pending and current
litigation and general market conditions, and market
positioning of the Borrower;
(d) at the times referred to in (a), (b) and (c) above, a
Compliance Certificate;
(e) promptly upon availability and in any event within 25 days
after the end of each month other than December and within 45
days after the end of each December, (i) unaudited monthly
financial statements (including a balance sheet and statements
of profit and loss and cash flow) for such month for each of
the Borrower's Lasco, Raritan, Sayreville and Recycling
operating units, in each case in accordance with GAAP, setting
forth in comparative form the corresponding figures for the
corresponding period of the preceding fiscal period, and the
corresponding figures for the corresponding period set forth
in the Financial Forecast all in reasonable detail and
accompanied by a management discussion and analysis of
variances between actual results and the Financial Forecast
and of significant matters, including, without limitation of
labour negotiations, pending and current litigation, pension
and trade cases and general market conditions and market
positioning of the Borrower; (ii) an unaudited consolidated
earnings summary for the Borrower; (iii) a summary of cash
balances, accounts receivable, accounts payable, inventory and
capital expenditures for such month, in form and substance
satisfactory to the Administration Agent and the Majority
Lenders; and (iv) a summary of aged accounts receivable and
accounts payable (not aged) for the twenty largest
customers/vendors with detailed aged accounts receivable and
accounts payable trial balances by customer/vendor to be made
available upon request of any Lender;
(f) promptly upon availability and in any event within 25 days
after the end of each month other than December and within 45
days after the end of each December, delivery of a
roll-forward summary satisfactory in form and content to the
Administration Agent and the Majority Lenders of the
Borrower's monthly back-order log segregated by individual
operating unit, indicating year to date sales and commitments
by fiscal quarter in which sales occurred or commitments are
to be fulfilled and showing volume and average price by major
product category;
(g) promptly upon availability and in any event within 25 days
after the end of each month other than December and within 45
days after the end of each December, delivery of an operating
report for the Borrower, satisfactory in form and content to
the Administration Agent and the Majority Lenders, providing
details of, among other matters, tons produced, utilization at
the melt shops and bar xxxxx, major production downtimes,
significant changes in component input costs and supply
contracts, as well as significant events related to
environmental and safety matters and detailing progress made,
to the date of such report, in effecting the Asset
Monetization Program, effecting approved capital expenditures
and in implementing the Strategic Plan;
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(h) promptly upon availability: (i) unaudited quarterly and
audited annual financial statements of Gallatin (including a
balance sheet and statements of profit and loss and cash
flow), for such fiscal period, prepared in accordance with
GAAP, setting forth in comparative form the corresponding
figures for the corresponding period of the preceding fiscal
year; (ii) all reports, of any nature, delivered from time to
time in respect of Gallatin, that are not subject to a
confidentiality obligation; and (iii) a list of all other
reports, of any nature, delivered from time to time in respect
of Gallatin respecting which Borrower shall use its best
efforts to obtain a release of any confidentiality obligation
and provide same to the Administration Agent and the Lenders
if so requested by the Administration Agent or any Lender;
(i) on or before September 30 of each year, its Business Plan for
the next two fiscal years, such Business Plan to be in form
and substance acceptable to the Borrower and the Required
Lenders in their absolute discretion;
(j) promptly upon availability and in any event within 45 days
after the end of each of its fiscal quarters, commencing with
the fiscal quarter in which the Closing Date falls, an update
to its then current Business Plan, (the first such update to
be delivered no later than June 15, 2002), such updates to be
approved by the Borrower's Board of Directors;
(k) promptly, and in any event at least 15 days after the filing
thereof, all continuous disclosure materials it has filed with
any securities regulator;
(l) promptly, and in any event within 10 days after receipt, a
copy of any management letter or comparable analysis prepared
by its Auditors or any annual, interim or special audit
conducted by its Auditors or any other independent public
accountants concerning the Borrower; and
(m) promptly, upon request, all other information as the
Administration Agent or any Lender may from time to time
reasonably request.
(3) Excess Revolver Paydown. The Borrower shall deliver to the
Administration Agent and the Managing Security Agent, on or before the fifth
Banking Day following the end of each of its fiscal quarters, a certificate of a
Senior Officer setting forth a calculation of the amount by which the
outstanding amount of the sum of (x) the Advances and (y) the Equivalent Amount
in Canadian Dollars of the principal amount advanced under the PNC Sayreville
Credit Agreement and the PNC Raritan Credit Agreement is less than the result of
(a) the sum of (x) the Commitments and (y) the Equivalent Amount in Canadian
Dollars of all commitments under the PNC Sayreville Credit Agreement and the PNC
Raritan Credit Agreement at such time minus, (b) Cdn.$50,000,000.
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ARTICLE 11 - DEFAULT AND ENFORCEMENT
11.01 EVENTS OF DEFAULT
The occurrence of any one or more of the following events (each an
"Event of Default") shall constitute a default under this Agreement:
(a) the Borrower shall fail to pay any principal amount due under
this Agreement, or under any other Document, on the due date
thereof;
(b) the Borrower shall fail to pay when due any interest, fee or
other amount not referred to in Section (a) of this Section
which is payable under this Agreement, or under any other
Document, and the failure to pay continues for three Banking
Days or more;
(c) the Borrower or any Guarantor shall fail to duly perform the
covenants set out in Section 10.03(9) or 10.03(24) within the
time limit set forth therein, or fail to duly perform and
observe any other term, condition or covenant contained in
this Agreement or under any other Document or any other
document, agreement or instrument made between it and the
Administration Agent or the Syndication Agent or the Lenders
or delivered by it or on its behalf to the Administration
Agent or to the Syndication Agent or the Lenders, and the
failure, is not corrected within fifteen Banking Days from the
date the Borrower or any Guarantor, as applicable, is notified
of such failure by the Administration Agent, the Syndication
Agent or any Lender or otherwise becomes aware of such
failure;
(d) any representation, warranty or statement which is made, or
deemed to have been made, or acknowledged to have been made by
or on behalf of the Borrower or any Guarantor in this
Agreement or any other Document, or which is contained in any
certificate, statement, legal opinion or notice provided under
or in connection with this Agreement or any other Document, is
untrue, incorrect or misleading in any material respect when
made or deemed to have been made;
(e) the Borrower or any of its Subsidiaries shall default in: (i)
the payment, when due, of any Indebtedness (other than under
this Agreement or the other Documents) having an aggregate
principal amount greater than Cdn.$5,000,000; or (ii) the
payment, performance or observance of any obligation or
condition with respect or relating to any Indebtedness having
an aggregate principal amount greater than Cdn.$5,000,000; or
(iii) any other event occurs, and the effect of such other
event is to accelerate the maturity of any Indebtedness having
an aggregate principal amount greater than Cdn.$5,000,000, or
to permit the holder or holders of any Indebtedness having an
aggregate principal amount greater than Cdn.$5,000,000, or any
trustee or agent for any holder or holders, to cause such
Indebtedness to become due and payable, or capable of becoming
due and payable, prior to its expressed maturity, except for
defaults in payment (if any) as are being contested in good
faith by appropriate proceedings and for which cash collateral
satisfactory
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to the Administration Agent (acting reasonably) is provided to the
Administration Agent;
(f) a Bankruptcy Event shall occur in respect of the Borrower or
any Subsidiary of the Borrower;
(g) one or more final non-appealable judgements in an aggregate
amount in excess of Cdn.$5,000,000 shall be rendered against
the Borrower or any Subsidiary of the Borrower and shall not
be discharged within 30 days;
(h) one or more encumbrancers shall take possession of any
property or assets valued in excess of Cdn.$5,000,000 of the
Borrower or any Subsidiary of the Borrower or a distress or
execution or any similar process is levied or enforced against
any property or assets valued in excess of Cdn.$5,000,000 of
the Borrower or any Subsidiary of the Borrower and remains
unsatisfied for the shorter of a period of 10 days and the
period that would permit that property or those assets to be
sold in accordance with Applicable Law;
(i) any provision in this Agreement or any other Document shall
terminate or cease to be legally valid, binding and
enforceable against the Borrower or any Guarantor, as
applicable, or if the Borrower or any Guarantor, as
applicable, contests in any manner, the legality, validity,
binding nature or enforceability of this Agreement or any
other Document;
(j) in the sole judgement of the Required Lenders, any Security
Document shall cease to be a valid and perfected first
priority security interest against third parties, (other than
in respect of Permitted Priority Liens), and the Borrower is
unable to rectify the problem to the satisfaction of the
Required Lenders within 14 days after the Administration Agent
gives notice to the Borrower of the problem;
(k) the Borrower shall fail to pay any amount owing by it under
any Hedging Contract and the failure to pay continues for the
duration of the grace period (if any) allowable under the
Hedging Contract and an early termination date under the
Hedging Contract has occurred;
(l) any Obligor shall default in any material respect under any
Material Contract and the Obligor has not, within 30 days of
the occurrence of that default, taken steps to remedy, cure or
otherwise respond to the default in a manner satisfactory to
the Required Lenders;
(m) any consent, licence or authorization of any Governmental
Authority or any other Person which is required to make any
Material Contract or Material Licence legal, valid, binding
and enforceable or is required in order to enable any Borrower
or any other party thereto to perform its obligations
hereunder or thereunder shall be withdrawn or ceases to be in
full force and effect;
(n) other than as a result of the conversion or redemption of the
Convertible Debentures to common shares of the Borrower in
accordance with their terms, a
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change of Control of the Borrower from that which existed on
the Closing Date shall have occurred;
(o) any consent, license or authorization of any Governmental
Authority or any other Person which is required to make this
Agreement or any other Document legal, valid, binding and
enforceable or is required in order to enable the Borrower,
any Guarantor or any other party thereto to perform its
obligations hereunder or thereunder shall be withdrawn or
ceases to be in full force and effect;
(p) other than as permitted pursuant to Section 10.03(16), if the
Borrower or any Restricted Subsidiary shall effect or pass an
effective resolution authorizing (i) its consolidation, merger
or amalgamation with any Person, or (ii) the sale, transfer or
other disposition of all, or a material part of, its assets to
one or more Persons whether in one transaction or a series of
transactions, related or not;
(q) the Borrower or any Subsidiary of the Borrower shall (i)
change the nature or scope of its business or (ii) other than
pursuant to an Approved Asset Sale or as contemplated by
Section 10.01(11), cease to carry on business;
(r) all or a material part of the assets of the Borrower or any
Subsidiary of the Borrower shall be lost or destroyed and the
resulting losses are not fully covered by insurance subject to
applicable deductibles;
(s) the institution of any steps by any US Guarantor, any member
of its Controlled Group or any other Person to terminate a
Pension Plan if, as a result of such termination, such US
Guarantor or any such member could be required to make a
contribution to such Pension Plan, or could reasonably expect
to incur a liability or obligation to such Pension Plan, in
excess of $1,000,000;
(t) a contribution failure occurs with respect to any Pension Plan
sufficient to give rise to a Lien under Section 302(f) of
ERISA;
(u) any Release of a Contaminant shall occur or is discovered or
any environmental complaint shall be filed by any Person that
has, or is reasonably likely to have, a Material Adverse
Effect;
(v) in the sole, absolute and unfettered opinion of the Required
Lenders there shall occur any Material Adverse Effect; or
(w) if the Noteholders shorten the maturity of the Prudential Note
Agreement or if PNC shortens the maturity under the PNC
Raritan Credit Agreement or the PNC Sayreville Credit
Agreement, so that any such indebtedness matures sooner than
January 15, 2004.
11.02 DEFERRAL OF ADVANCES
Upon the occurrence of any Default, the right of the Borrower to obtain
further Advances under this Agreement shall, at the option of the Required
Lenders be deferred until the Default is
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remedied to the satisfaction of the Required Lenders; provided that the
foregoing shall not prevent the Lenders from making an Advance in accordance
with the provisions hereof or from disbursing money under this Agreement in
reduction of outstanding Bankers' Acceptances, BA Equivalent Notes and Letters
of Credit.
11.03 TERMINATION OF CREDIT FACILITIES
Upon the occurrence of any Event of Default, the Administration Agent
may on instruction of the Required Lenders and, by written notice to the
Borrower, terminate the Credit Facilities; provided that the foregoing shall not
prevent the Lenders from making an Advance in accordance with the provisions
hereof or from disbursing money under this Agreement in reduction of outstanding
Bankers' Acceptances, BA Equivalent Notes and Letters of Credit.
11.04 ACCELERATION
Upon the occurrence of any Event of Default:
(a) the entire principal amount of each Loan then outstanding and
all accrued and unpaid interest thereon;
(b) the principal amount of each Bankers' Acceptance and BA
Equivalent Note which is unmatured;
(c) the face amount of each unexpired Letter of Credit;
(d) all unwinding costs under any Hedging Contract; and
(e) all other payments due under this Agreement or any other
Document,
shall, at the option of the Required Lenders, become immediately due and payable
with interest thereon, at the Default Rate to the date of actual payment
thereof, all without notice, presentment, protest, demand, notice of dishonour
or any other demand or notice whatsoever, all of which are hereby expressly
waived by the Borrower. In such event, the Administration Agent, on behalf of
the Lenders and the Syndication Agent, may exercise any right or recourse and
proceed by any action, suit, remedy or proceeding against the Borrower as
authorized or permitted by law for the recovery of all the indebtedness and
liabilities of the Borrower to the Administration Agent, the Syndication Agent
or the Lenders and proceed to exercise any and all rights hereunder and no such
remedy for the enforcement of the rights of the Administration Agent, the
Syndication Agent or any Lender shall be exclusive of, or dependent on, any
other remedy but any one or more remedy may, from time to time, be exercised
independently or in combination.
11.05 LEGAL PROCEEDINGS
After an Event of Default has occurred, the Administration Agent shall,
upon the written request of the Required Lenders, commence a legal action or
other proceedings as it, in its sole discretion, deems expedient to collect the
Indebtedness of the Borrower under this Agreement and the other Documents and to
exercise its rights under the Security Documents and the
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Guarantees, all without any additional notice, presentation, demand, or protest,
all of which the Borrower, to the extent permitted by law, expressly waives.
11.06 NO PREJUDICE, ETC.
Nothing contained in any Document, nor any act or omission of the
Administration Agent with respect to any Document, shall in any way prejudice or
affect the rights, remedies and powers of the Administration Agent with respect
to any other Document.
11.07 SET-OFF
Upon the occurrence of an Event of Default, in addition to and not in
limitation of any rights now or ever granted under Applicable Law or the
Security Documents, the Administration Agent, the Syndication Agent or any
Lender may, to the extent permitted by law, without notice to the Borrower, at
any time and from time to time: (i) combine, consolidate or merge any or all of
the deposits or other accounts of the Borrower with the Administration Agent,
the Syndication Agent or any Lender (whether term, notice, demand or otherwise
and whether matured or unmatured) and the Indebtedness of the Borrower to the
Administration Agent, the Syndication Agent or the Lender and (ii) set-off,
apply or transfer any or all sums standing to the credit of any deposits or
accounts in or towards the satisfaction of any of the Indebtedness of the
Borrower to the Administration Agent, the Syndication Agent or the Lenders under
any Document, and may do so notwithstanding that the balances on any account and
the Indebtedness may not be expressed in the same currency and the
Administration Agent, the Syndication Agent or the applicable Lender is
authorized to effect any necessary conversions at the rate of exchange of the
Administration Agent, the Syndication Agent or applicable Lender then
prevailing. The parties acknowledge and agree that this Section is not intended
to create, and shall not be construed as creating, a security interest in any
property of the Borrower.
11.08 REMEDIES CUMULATIVE
The rights and remedies of the Administration Agent, the Syndication
Agent and the Lenders under this Agreement are cumulative and in addition to,
and not in substitution for, any rights or remedies provided by any other
Document, by law or by equity.
11.09 APPROPRIATION OF MONIES RECEIVED
(1) Appropriation. The Administration Agent or any Lender may from
time to time, when an Event of Default has occurred which is continuing,
appropriate any monies received under this Agreement as the Administration Agent
or that Lender in its discretion may see fit, and the Borrower shall have no
right to require any inconsistent appropriation.
(2) Payments Received by Lenders. If any Lender at any time
receives payment or satisfaction of all or any part of its Advances, interest
thereon or any amount payable under this Agreement by whatever means (including
by set-off) to which it is not otherwise entitled under this Agreement, then
that Lender shall pay to the Administration Agent, on behalf of the other
Lenders, an amount that shall ensure that each Lender shall receive the payment
to which it is entitled under this Agreement.
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(3) Where Refund Required by Lender. In the event that at any time
any Lender is required to refund (as a preference or otherwise) any amount which
has been paid to or received by it on account of any part of its Advances,
interest thereon or any other amount payable hereunder and which has been paid
to any other Lender pursuant to this Section, such other Lender shall repay a
proportionate amount of the sums so refunded without interest, or, as the case
may be, repurchase for cash from the first-mentioned Lender a proportionate part
of the Indebtedness of the Borrower to such first-mentioned Lender.
(4) Effect on Borrower's Indebtedness. If a Lender is required to
make any payment to any other Lender pursuant to this Section it shall give
notice of the required payment to the Administration Agent and the liability of
the Borrower to the Lender making a payment under this Agreement shall be
treated as not having been reduced by the amount of the payment and the
liability of the Borrower to any Lender receiving the payment shall be treated
as having been reduced by the amount of the payment received by that Lender.
11.10 NON-MERGER
The taking of a judgement or judgements or any other action or dealing
whatsoever by the Administration Agent, the Syndication Agent or any Lender in
respect of any Document shall not operate as a merger of any Indebtedness of the
Borrower to the Administration Agent, the Syndication Agent or any of the
Lenders or in any way suspend payment or affect or prejudice the rights,
remedies and powers, legal or equitable, which the Administration Agent, the
Syndication Agent or any of the Lenders may have in connection with such
liabilities.
11.11 PRO RATA SHARING
(1) Pro Rata Sharing of Lenders. All amounts received by the
Administration Agent, the Syndication Agent or the Lenders following a Default
or an Event of Default shall be shared pro rata among the Lenders in the same
proportion as the Advances extended by each Lender bears to the total of all
outstanding Advances under the Credit Facilities; provided that following a
Default or an Event of Default, payments received by any of the Lenders shall be
applied first to amounts outstanding under the Credit Facilities until fully
paid.
(2) Allocation of Advances. Following a Default or an Event of
Default, the Administration Agent shall allocate outstanding Advances among the
Lenders so that the total Advances under all of the Credit Facilities in the
same proportion as the total Commitment of each Lender bears to the total
Commitments of all of the Lenders. Without limiting the foregoing, if, at any
time after the Credit Facilities have been terminated, the total Advances under
the Credit Facilities are not in the same proportion as the total commitment of
each Lender bears to the total Commitments of all of the Lenders any Lender who
has an excess outstanding (the "Surplus Lender") shall sell to any relevant
Lender that has deficit outstanding (the "Deficit Lender"), and the Deficit
Lender shall purchase from the Surplus Lender, for cash, at par, without
representation or warranty from or recourse to the Surplus Lender, an interest
in such of the Advances outstanding from the Surplus Lender as results in the
percentage of the Advances outstanding from each Lender for each Credit Facility
being equal to the percentage of their Lender's Commitment for the Credit
Facility. The intention of this Section is that when any and
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all purchases and sales required hereby have been completed, the outstanding
Advances will be held by each Lender in the percentage of the Lender's
Commitment in each Credit Facility.
(3) Allocation of Advances Under Swingline Facility. At any time
and from time to time in its discretion, the Swingline Lender may notify the
Administration Agent that the Swingline Lender wishes each of the other Lenders
to provide its Proportionate Share of the Advances made under the Swingline
Facility, in which case the Administration Agent shall forthwith notify each of
the Lenders of such requirement and each Lender, including the Swingline Lender,
as a Lender, shall thereupon provide to the Administration Agent, for the
account of the Swingline Lender, such Lender's Proportionate Share under the
Revolving Facility of the then outstanding Advances under the Swingline
Facility, as an advance on the Revolving Facility. The amounts so provided by
the Lenders in respect of the payment to the Swingline Lender of the Lender's
Proportionate Share of the Swingline Facility advanced in Canadian Dollars shall
be deemed to be Prime Rate Loans denominated in Canadian Dollars and advanced in
US Dollars shall be deemed to be Base Rate Loans denominated in US Dollars,
under the Revolving Facility, in accordance with the provisions of this
Agreement (but for such purposes any notice provisions or minimum amounts of
such Advances otherwise required under this Agreement shall be disregarded). The
aggregate of the amounts paid by the Lenders to the Administration Agent in
respect of the Swingline Facility shall be paid by the Administration Agent to
the Swingline Lender and applied by the Swingline Lender to reduce the then
outstanding Advances under the Swingline Facility.
11.12 SHARING OF SET-OFFS
Each Lender agrees that if it shall, by exercising any right of set-off
or counterclaim or otherwise, receive payment of a proportion of the aggregate
amount of principal and interest then due and payable with respect to any
Advance which is greater than the proportion received by any other Lender in
respect of the aggregate amount of principal and interest then due and payable
to such other Lender with respect to such Advance, the Lender receiving such
proportionately greater payment shall purchase such participations in the
Advances held by the other Lenders, and such other adjustments shall be made, as
may be required so that all such payments of principal and interest with respect
to the Advances held by the Lenders shall be shared by the Lenders pro rata;
provided that nothing in this Section shall impair or restrict in any manner the
right of any Lender to exercise any right of set-off or counterclaim it may have
and to apply the amount subject to such exercise to the payment of indebtedness
of the Borrower other than its indebtedness hereunder. Each Lender agrees that
amounts received or retained upon exercise of a right of set-off are subject to
distribution pursuant to the terms of the Inter-Creditor Agreement and agrees to
provide such amounts to the Administration Agent for such purpose. The Borrower
agrees that any holder of any participation in an Advance may exercise rights of
set-off or counterclaim and other rights with respect to such participation as
fully as if such holder of such participation were a direct creditor of the
Borrower in the amount of such participation.
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ARTICLE 12 - THE ADMINISTRATION AGENT AND THE SYNDICATION AGENT
12.01 APPOINTMENT
(1) Appointment of Administration Agent. Each Lender and the
Syndication Agent hereby appoints The Toronto-Dominion Bank to act as
Administration Agent for the Lenders and the Syndication Agent in the manner and
upon the terms provided in this Agreement. Except as may be specifically
provided to the contrary in this Agreement, each Lender and the Syndication
Agent irrevocably authorizes the Administration Agent as its agent, to take any
action on its behalf under the provisions of the Documents and any other
instruments and agreements referred to in them, and to exercise any powers and
to perform any duties as are delegated to the Administration Agent by the terms
of the Documents, together with such other powers as are reasonably incidental
thereto, which it may be necessary for the Administration Agent to exercise in
order that the provisions of the Documents are carried out, including, without
limitation, powers as are necessary to comply in all technical aspects with the
practices of the London Interbank Eurocurrency Market. The Administration Agent
shall only be required to exercise powers and perform its duties as agent under
the Documents as it is instructed to exercise from time to time by the Lenders
and shall not be required to act upon any instructions received directly by the
Administration Agent from a Participant under a Participation. The
Administration Agent is hereby expressly authorized and directed to enter into
the Inter-Creditor Agreement for and on behalf of the Lenders.
(2) Appointment of Syndication Agent. Each Lender hereby appoints
The Bank of Nova Scotia to act as Syndication Agent for the Lenders in the
manner and upon the terms provided in this Agreement. Except as may be
specifically provided to the contrary in this Agreement, each Lender irrevocably
authorizes the Syndication Agent as its agent, to take any action on its behalf
under the provisions of this Agreement and any other instruments and agreements
referred to in them, and to exercise any powers and to perform any duties as are
delegated to the Syndication Agent by the terms of this Agreement, together with
such other powers as are reasonably incidental thereto, which it may be
necessary for the Syndication Agent to exercise in order that the provisions of
this Agreement are carried out. The Syndication Agent shall only be required to
exercise powers and perform its duties as agent under this Agreement as it is
instructed to exercise from time to time by the Lenders and shall not be
required to act upon any instructions received directly by the Syndication Agent
from a Participant under a Participation.
12.02 DEALING BY BORROWER WITH THE ADMINISTRATION AGENT
(1) Dealing Exclusively with Administration Agent. Except as
expressly provided in this Agreement, the Borrower and each Guarantor shall deal
with the Administration Agent in lieu of the Lenders for the purposes set out in
this Agreement.
(2) Reliance by Borrower on Administration Agent. The Borrower and
each Guarantor may rely, and shall be fully protected in so relying, without any
obligation to inquire into the correctness of its reliance, upon any action,
notice, direction, waiver, consent, determination, communication or agreement by
the Administration Agent purporting to be on
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behalf of the Lenders, any of which shall, as regards the Borrower and each
Guarantor, be deemed to be an action, notice, direction, waiver, consent,
determination, communication or agreement of the Lenders.
12.03 DELEGATION OF DUTIES
The Administration Agent and the Syndication Agent may perform any of
their duties under any Document or any other instruments and agreements referred
to in any Document by or through their agents or employees and shall be entitled
to the advice of counsel concerning all matters pertaining to their duties
thereunder.
12.04 RETENTION OF ADVISORS
In administering the Credit Facilities, the Administration Agent may
retain, at the expense of the Lenders if such expenses are not recoverable from
the Borrower, such solicitors, counsel, auditors, consultants and other experts
and agents as the Administration Agent may select, in its sole discretion,
acting reasonably.
12.05 INDEMNITY
Each Lender hereby separately indemnifies the Administration Agent and
the Syndication Agent (in each case to the extent not reimbursed by the
Borrower) rateably in accordance with its Commitment from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgements,
suits, costs, expenses or disbursements of any nature or kind whatsoever which
may be imposed on, incurred by, or asserted against, either of them in their
respective capacities as Administration Agent and Syndication Agent in any way
relating to or arising out of, the Documents, including, without limitation all
payment obligations under the Inter-Creditor Agreement and any other instruments
and agreements referred to in them or any action taken or omitted by either of
them under the Documents or any other instruments and agreements referred to in
them; provided that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgements,
suits, costs, expenses or disbursements resulting from either of their gross
negligence or wilful misconduct. Without limiting the generality of the
foregoing, each Lender agrees to reimburse the Administration Agent or the
Syndication Agent promptly upon demand for its rateable share, in accordance
with its Commitment, of any payments made pursuant to the Inter-Creditor
Agreement (on account of true up amounts or otherwise), out-of-pocket expenses
(including the fees and disbursements of solicitors, counsel, auditors,
consultants and other experts and agents) incurred by the Administration Agent
or the Syndication Agent in connection with the determination or preservation of
any rights of the Administration Agent or the Syndication Agent or the Lenders
under, or the enforcement of, or legal advice in respect of rights or
responsibilities under, the Documents or any other instruments and agreements
referred to in them, to the extent that the Administration Agent or the
Syndication Agent is not reimbursed for such expenses by the Borrower on demand.
In addition, the Administration Agent or the Syndication Agent may refrain from
exercising any right, power or discretion or taking any action to protect or
enforce the rights of the Administration Agent or the Syndication Agent or any
Lender under the Documents or any other instruments and agreements referred to
in them until it has been indemnified or secured to its satisfaction against
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any and all costs, losses, expenses or liabilities (including legal fees) which
it would or might sustain or incur as a result of such exercise or action.
12.06 LIMITATION OF AGENT'S LIABILITY
Neither the Administration Agent nor the Syndication Agent shall have
any duties or responsibilities except those expressly set out in this Agreement.
The Administration Agent, the Syndication Agent or any of their respective
officers, directors, employees or agents shall not be liable for any action
taken or omitted to be taken under this Agreement or in connection with it,
unless caused by its or their own gross negligence or wilful misconduct. The
duties of the Administration Agent and the Syndication Agent shall be mechanical
and administrative in nature. Neither the Administration Agent nor the
Syndication Agent shall have, by reason of this Agreement or any other Document,
a fiduciary relationship in respect of any Lender and nothing herein or therein,
expressed or implied, is intended to, or shall be construed so as to, impose
upon either of them any obligation except as expressly set out herein. Neither
the Administration Agent nor the Syndication Agent shall be responsible for any
recitals, statements, representations or warranties herein or therein or which
may be contained in any document subsequently received by either of them or for
the authorization, execution, effectiveness, genuineness, validity or
enforceability of the Documents or any other instruments and agreements referred
to therein and shall not be required to make any enquiry concerning the
performance or observance of any of the terms, provisions or conditions of the
Documents or any other instruments and agreements referred to therein. Each of
the Lenders severally represents and warrants to each of the Administration
Agent and the Syndication Agent that it has made and shall continue to make such
independent investigation of the financial condition and affairs of the Borrower
as such Lender deems appropriate in connection with its entering into this
Agreement and the making and continuance of borrowings under the Credit
Facilities, that such Lender has and shall continue to make its own appraisal of
the creditworthiness of the Borrower and that such Lender in connection with
such investigation and appraisal has not relied upon any information provided to
such Lender by the Administration Agent or the Syndication Agent. The
Administration Agent may at any time request instructions from the Lenders with
respect to any actions or approvals which, by the terms of this Agreement or any
other Document, the Administration Agent without any consent of the Lenders is
permitted or required to take or to grant, and it shall be absolutely entitled
to refrain from taking any action or to withhold any approval and shall not be
under any liability whatsoever to any Person for refraining from taking any
action or withholding any approval under this Agreement or any other Document
until it has received such instructions from the Majority Lenders. No Lender
shall have any right of action whatsoever against the Administration Agent or
the Syndication Agent as a result of the Administration Agent or the Syndication
Agent acting or refraining from acting hereunder or under any other Document in
accordance with instructions received from the requisite number of Lenders. No
Lender shall have any right of action whatsoever against the Administration
Agent or the Syndication Agent as a result of the Administration Agent or
Syndication Agent acting hereunder or under any other Document in a manner in
which it is permitted or required to act.
12.07 RELIANCE
In connection with this Agreement or any other Document, each of the
Administration Agent and the Syndication Agent shall be entitled to rely upon
any writing, notice, statement,
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certificate, facsimile or other document or telephone conversation believed by
it to be genuine and correct and to have been signed, sent or made by the proper
Person or Persons, and, with respect to all legal matters pertaining to this
Agreement or any other Document and its duties hereunder or thereunder, upon the
advice of counsel selected by it.
12.08 EXCHANGE OF INFORMATION
The Borrower and each Guarantor agrees that the Administration Agent,
the Syndication Agent and each Lender may provide to each other any information
concerning the financial position, property and operations of the Borrower or
any Restricted Subsidiary which, in their opinion, is relevant to the ability of
the Borrower or any Guarantor to fulfil its obligations under or in connection
with this Agreement or any other Document provided that no such party shall be
under any obligation to disclose any information to any other such party in
respect of the Borrower or any Restricted Subsidiary, other than the
Administration Agent providing to the Lenders copies of this Agreement, the
financial statements and other materials delivered by the Borrower or any
Guarantor pursuant to this Agreement and copies of any certificates delivered by
the Borrower or any Guarantor pursuant to this Agreement and the Administration
Agent providing to the Lenders copies of each Assignment Agreement entered into
from time to time. All information supplied by the Borrower or any Guarantor to
the Administration Agent, the Syndication Agent or any Lender shall be kept
strictly confidential and used only for the purpose of managing, participating,
syndicating, selling or assigning the Credit Facilities.
12.09 THE ADMINISTRATION AGENT AND THE SYNDICATION AGENT, INDIVIDUALLY
With respect to its Commitment and the Advances granted by it under the
Credit Facilities, each of the Administration Agent and the Syndication Agent
shall have the same rights and powers under this Agreement as any other Lender
and may exercise the same as though it were not such an agent, and the term
"Lenders" or any similar terms shall, unless the context clearly indicates
otherwise, include the Administration Agent and the Syndication Agent in their
capacities as Lenders hereunder. It is understood and agreed by each of the
Lenders that the Administration Agent may accept deposits from, lend money to,
and generally engage in banking business with the Borrower, as if it were not an
Administration Agent under this Agreement.
12.10 RESIGNATION
(1) Resignation of Administration Agent. If at any time the
Administration Agent deems it advisable, in its sole discretion, it may, as
hereinafter provided, deliver to each Lender, the Borrower and each Guarantor
written notification of its resignation insofar as it acts on behalf of the
Lenders pursuant to this Article, such resignation to be effective upon the date
of the appointment by the Majority Lenders of a successor agent acceptable to
the Borrower, such appointment to be promptly made. If no such appointment has
been made within 30 days, the Administration Agent may make such appointment on
behalf of the Lenders and shall forthwith give notice of such appointment to the
Lenders, the Borrower and each Guarantor.
(2) Resignation of Syndication Agent. If at any time the
Syndication Agent deems it advisable, in its sole discretion, it may, as
hereinafter provided, deliver to each Lender, the
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Borrower and each Guarantor written notification of its resignation insofar as
it acts on behalf of the Lenders pursuant to this Article, such resignation to
be effective upon the date of the appointment by the Majority Lenders of a
successor agent, such appointment to be promptly made. If no such appointment
has been made within 30 days, the Syndication Agent may make such appointment on
behalf of the Lenders and shall forthwith give notice of such appointment to the
Lenders, the Borrower and each Guarantor.
12.11 ADMINISTRATION OF THE CREDITS
(1) The Administration Agent may exercise any rights of approval
conferred upon it pursuant to this Agreement. The Administration Agent may only
exercise any and all rights of approval conferred upon the Majority Lenders with
the prior consent of the Majority Lenders.
(2) The Administration Agent may take the following actions only
with the prior consent of the Required Lenders, unless otherwise specified in
this Agreement:
(a) exercise any and all rights of approval conferred upon the
Required Lenders by this Agreement;
(b) amend, modify or waive any of the terms of this Agreement
(including waiver of a Default or Event of Default), if such
action is not otherwise provided for in Section 12.11(3);
(c) declare an Event of Default or take action to enforce
performance of the obligations of the Borrower including the
appointment of a receiver, the exercise of powers of distress,
lease or sale given by law and take foreclosure proceedings
and/or pursue any other legal remedy necessary;
(d) decide to accelerate the amounts outstanding under the Credit
Facilities; and
(e) pay insurance premiums, taxes and any other sums as may be
reasonably required to protect the interests of the Lenders.
(3) The Administration Agent may take the following actions only
if the prior unanimous consent of the Lenders is obtained, unless otherwise
specified herein:
(a) exercise any and all rights of approval conferred upon all of
the Lenders by this Agreement;
(b) amend, modify, discharge, terminate or waive any of the terms
of this Agreement if such amendment, modification, discharge,
termination or waiver would increase the amount of a Credit
Facility, reduce the interest rates applicable to a Credit
Facility, reduce the fees payable with respect to a Credit
Facility, extend any date fixed for payment of principal or
interest relating to a Credit Facility, extend the repayment
dates of a Credit Facility or release any Lien of any Security
Document, (provided that the Administration Agent may release
any Lien on property or a specific asset without the consent
of any Lender if disposition of such property or asset is
permitted hereunder);
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(c) increase the Commitment of any Lender under any Credit
Facility;
(d) amend the definition of "Majority Lenders" or "Required
Lenders"; and
(e) amend this Section.
(4) Any decision herein expressed to be a decision of or action to
be taken by the Lenders and not explicitly stated to be a decision or action to
be taken by the Majority Lenders, the Required Lenders or all of the Lenders,
shall be deemed to be a decision of or action to be taken by the Majority
Lenders.
(5) As between the Borrower, on the one hand, and the
Administration Agent and the Lenders, on the other hand:
(a) all statements, certificates, consents and other documents
which the Administration Agent purports to deliver on behalf
of the Lenders, the Majority Lenders or the Required Lenders
shall be binding on each of the Lenders, and the Borrower
shall not be required to ascertain or confirm the authority of
the Administration Agent in delivering such documents;
(b) all certificates, statements, notices and other documents
which are delivered by the Borrower to the Administration
Agent in accordance with this Agreement shall be deemed to
have been delivered to each of the Lenders; and
(c) all payments which are delivered by the Borrower to the
Administration Agent in accordance with this Agreement shall
be deemed to have been duly delivered to each of the Lenders.
12.12 INSTRUCTIONS BY LENDERS
(1) An approval, instruction or other expression of applicable
Lenders, (i.e. the Majority Lenders, the Required Lenders or all of the
Lenders), may be obtained by instrument in writing as provided in Section
12.12(2) or may be included in a resolution that is submitted to a meeting or
adjourned meeting of Lenders duly called and held for the purpose of considering
the same as hereinafter provided and shall be deemed to have been obtained if
such resolution is passed by the affirmative vote of the requisite number of the
votes given on a poll of such Lenders with respect to such resolution. A meeting
of Lenders may be called by the Administration Agent, the Syndication Agent or
the Borrower and shall be called by the Administration Agent upon the request of
any Lender. Every such meeting shall be held in the City of Toronto, or at such
other reasonable place as the Administration Agent may approve. At least 10
Banking Days notice of the time and place of any such meeting shall be given to
each Lender and shall include or be accompanied by a draft of the resolution to
be submitted to such meeting, but the notice may state that such draft is
subject to amendment at the meeting or any adjournment thereof. The Lenders who
are present in person or by proxy at the time and place specified in the notice
shall constitute a quorum. A person nominated in writing by the Administration
Agent shall be chairman of the meeting. Upon every poll taken at any such
meeting, every Lender who is present in person or represented by a proxy duly
appointed in writing (who need not be a Lender) shall be entitled to one vote in
respect of each Dollar of
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outstanding Advances which it is then owed, calculated as of the Banking Day
first preceding the day of the meeting, or if no Advance is outstanding as at
such date, shall be entitled to one vote in respect of each percentage of the
Commitment made by such Lender of the total Commitments of all Lenders. In
respect of all matters concerning the convening, holding and adjourning of
Lenders' meetings, the form, execution and deposit of instruments appointing
proxies and all other relevant matters, the Administration Agent may from time
to time make such reasonable regulations not inconsistent with this Section as
it shall deem expedient and any regulations so made by the Administration Agent
shall be binding upon each of the Borrower, the Guarantors, the Administration
Agent, the Syndication Agent and the Lenders. A resolution passed pursuant to
this Section by the requisite vote of the Majority Lenders, the Required Lenders
or all of the Lenders, as applicable, shall be binding upon all Lenders, and the
Administration Agent or the Syndication Agent, as applicable (subject to the
provisions for its indemnity herein contained) shall be bound to give effect
thereto accordingly.
(2) Any approval, instruction or other expression of applicable
Lenders may also be obtained by an instrument in writing signed in one or more
counterparts by the Majority Lenders, the Required Lenders or all of the
Lenders, as applicable.
12.13 ARRANGEMENTS FOR REPAYMENT OF ADVANCES
Prior to an acceleration of the payment of amounts outstanding under
this Agreement, the Administration Agent shall, upon receipt by it of payments
from the Borrower or the Managing Security Agent on account of principal,
interest, fees or any other payment made to the Administration Agent on behalf
of the Lenders or the Syndication Agent, pay over to each Lender or the
Syndication Agent, as applicable, the amount to which it is entitled under this
Agreement on a pro rata basis in accordance with the then outstanding amount
owed to each Lender. Such payment shall be made promptly following receipt and,
in any event, the Administration Agent shall use its best efforts to pay such
amount on the same Banking Day as such amount is received by the Administration
Agent.
12.14 REPAYMENT BY LENDERS TO ADMINISTRATION AGENT
(1) Unless the Administration Agent has been notified in writing
by the Borrower at least one Banking Day prior to the date on which any payment
to be made by the Borrower under this Agreement is due that the Borrower does
not intend to remit such payment, the Administration Agent may, in its
discretion, assume that the Borrower has remitted such payment when so due, (to
the Administration Agent or Managing Security Agent, as applicable), and the
Administration Agent may, in its discretion and in reliance upon such
assumption, make available to each Lender on such payment date an amount equal
to such Lender's rateable portion of such assumed payment. If the Borrower does
not in fact remit such payment to the Administration Agent or Managing Security
Agent, as applicable, without restricting the obligation of such Borrower to
make such payment, the Administration Agent shall promptly notify each Lender
and each such Lender shall forthwith on demand repay to the Administration Agent
the amount of such assumed payment made available to such Lender, together with
interest thereon until the date of repayment thereof at a rate determined by the
Administration Agent (such rate to be conclusive and binding on each such
Lender) in accordance with the Administration Agent's usual banking practice for
such advances to financial institutions of like
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standing to each such Lender, but in any event at a rate no greater than the
usual interbank offered rate for the sale of deposits in the applicable
currency.
(2) Unless the Administration Agent has been notified in writing
by the Lender at least one Banking Day prior to a Drawdown date that such Lender
does not intend to make available its proportion of any Advance under the Credit
Facilities, the Administration Agent may, in its discretion, assume that such
Lender has remitted funds to the Administration Agent and the Administration
Agent may, in its discretion and in reliance upon such assumption, make
available to the Borrower on such Drawdown date an amount equal to such Lender's
proportion of such Advance. If a Lender does not in fact remit such funds to the
Administration Agent, without restricting the obligation of such Lender to make
such funds available and for damages as a result of the failure to do so, the
Administration Agent shall promptly notify such Lender and the Borrower, and the
Borrower shall forthwith on demand repay to the Administration Agent the amount
made available to the Borrower by the Administration Agent on behalf of such
Lender, together with interest thereon until the date of repayment thereof at a
rate reasonably determined by the Administration Agent (such rate to be
conclusive and binding on such Lender and the Borrower).
12.15 DELIVERY OF ASSIGNMENT AGREEMENT
The Administration Agent undertakes and agrees to deliver to the
Borrower, the Syndication Agent and each Guarantor a copy of each Assignment
Agreement executed pursuant to this Agreement forthwith after execution thereof.
12.16 PROVISIONS FOR BENEFIT OF LENDERS ONLY
The provision of this Article relating to the rights and obligations of
the Administration Agent, the Syndication Agent and the Lenders inter se shall
be operative as between the Administration Agent, the Syndication Agent and the
Lenders only, and neither the Borrower nor any Guarantor shall have rights
under, or be entitled to rely for any purposes upon, such provisions.
ARTICLE 13 - ASSIGNMENT AND PARTICIPATION
13.01 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.
13.02 BORROWER
Neither this Agreement nor the benefit hereof may be assigned by the
Borrower or any Guarantor without the prior written consent of the
Administration Agent and each Lender.
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13.03 PARTICIPATION AND SYNDICATION
(1) The rights, benefits and obligations of each Lender under this
Agreement and the other Documents (referred to in this Section as the "Rights")
may, in whole or in part, be participated (a "Participation") or syndicated,
sold or assigned (a "Syndication") by a Lender from time to time to one or more
financial institutions; provided that (a) in the case of a Syndication, the
Lender shall first have notified the Borrower, the Syndication Agent and the
Administration Agent and each of them shall have consented to the Syndication in
writing, such consent not to be unreasonably withheld, (b) any Syndication of
less than all of a Lender's Commitment shall be in a minimum amount of
$5,000,000, unless such Lender is assigning to another Lender some or all of its
Commitment, in which event no minimum amount shall apply, (c) the participant in
a Syndication shall execute and deliver to the Administration Agent a duly
completed Assignment Agreement, (d) the syndicating, selling or assigning Lender
shall pay to the Administration Agent a syndication fee of $3,500 with respect
to each Syndication, and (e) a non-resident of Canada participant in a
Syndication shall not have the benefit of Section 3.06.
(2) For the purpose of Participations or Syndications, the
Administration Agent, the Syndication Agent or any Lender may provide to a
potential participant, transferee or assignee (a "Participant") access, (on a
confidential basis), to any and all information disclosed to any of the
Administration Agent, the Syndication Agent or a Lender pursuant to this
Agreement or in the possession of any of them. In addition, the Borrower and
each Guarantor agrees (a) to promptly provide, and cause its advisors to
provide, upon request by the Administration Agent or the Syndication Agent, all
information reasonably deemed necessary by the party so requesting to complete a
Participation or Syndication, including, without limitation, information and
projections prepared by the Borrower or a Guarantor or on the Borrower's or a
Guarantor's behalf relating to this Agreement; and (b) to, upon request, assist,
and to cause its advisors to assist the Administration Agent or the Syndication
Agent in the preparation of an information memorandum or other marketing
materials to be used in connection with a potential Participation or
Syndication.
(3) In the event of a Syndication to a Participant, such
Participant, to the extent of the rights and obligations syndicated, sold or
assigned to it, shall become a "Lender" under this Agreement and shall become
entitled to such rights and be bound by such obligations to the same extent as
if such Participant were an original party to this Agreement in respect thereof,
and the syndicating Lender shall be released and discharged accordingly.
(4) If the Rights are the subject of a Participation, all
references in this Agreement to a Lender shall thereafter be construed as a
reference to such Lender and the Participants, provided that the Borrower, each
Guarantor and the Underwriters shall be entitled to deal with such Lender as if
it were the sole owner of the Rights and such Lender shall not be released from
any of its obligations under this Agreement by virtue of the Participation and
provided further that such documents do not adversely modify the Borrower's or
any Guarantor's rights or increase their obligations under this Agreement. The
Borrower and each Guarantor acknowledges and agrees that each Lender is
entitled, in its own name and on behalf of the Participants, to enforce for the
benefit of, or as agent for, any Participants, any and all rights, claims and
interests of such Participants, in respect of the Rights subject to a
Participation. A Lender granting a Participation shall not grant or assign any
Participant any rights to approve any
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amendment, waiver or proposed consent to or under this Agreement or the other
Documents. None of the Administration Agent, the Syndication Agent nor any
Lender shall be responsible for any default by any other Lender in its
obligation not to so grant or assign any of such rights.
13.04 ASSIGNMENT BY LENDERS AFTER EVENT OF DEFAULT
Notwithstanding the restrictions requiring Borrower consent contained
in Section 13.03, but otherwise subject to Section 13.03, upon the occurrence of
an Event of Default, the rights, benefits and obligations of each of the Lenders
under or in respect of this Agreement and the other Documents may, in whole or
in part, be syndicated, sold or assigned by a Lender to one or more Persons
without consent of the Borrower. For the purpose of such syndication, sale or
assignment, any Lender may provide to a potential syndicate member, transferee
or assignee, (on a confidential basis), access to any and all information
disclosed to any of the Administration Agent, the Syndication Agent or a Lender
pursuant to this Agreement or in the possession of any of the Administration
Agent, the Syndication Agent or a Lender.
13.05 BORROWER'S DOCUMENTS
The Borrower and each Guarantor agrees to execute and deliver, at the
Administration Agent's request, such further documentation as the Administration
Agent considers necessary or advisable to put into effect any Syndication,
Participation, sale or assignment permitted by this Article provided that such
further documentation does not adversely modify any of the rights, or increase
any of the obligations, of the Borrower or any Guarantor under the Documents.
ARTICLE 14 - MISCELLANEOUS
14.01 EXCHANGE AND CONFIDENTIALITY OF INFORMATION
The Administration Agent, the Syndication Agent and each of the Lenders
acknowledge the confidential nature of the financial, operational and other
information and data provided and to be provided to them by the Borrower and
each Guarantor pursuant to this Agreement (the "Information") and agree to use
all reasonable efforts to prevent the disclosure of the Information provided,
however, that:
(a) the Administration Agent, the Syndication Agent or any Lender
may disclose all or any part of the Information if, in its
opinion, disclosure is required in connection with any
judicial, administrative or governmental proceeding;
(b) neither the Administration Agent, the Syndication Agent nor
any Lender shall incur any liability in respect of any
disclosure of Information pursuant to the requirements of any
judicial authority, law enforcement agency or taxation
authority; and
(c) the Administration Agent, the Syndication Agent and each
Lender may provide each other and any potential assignee or
participant under this Agreement with any information
concerning the assets, affairs, operations and financial
condition
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Article 14
of the Borrower and each Restricted Subsidiary provided that
such potential assignee or participant shall agree to be bound
by the terms of this Section.
14.02 PAYMENT OF EXPENSES
Whether or not the transactions contemplated by this Agreement are
consummated, the Borrower shall pay on demand all reasonable costs and expenses
of the Administration Agent, the Syndication Agent or the Lenders, and the fees
and disbursements of any experts or advisers (including counsel, insurance
consultants and others) retained by any of the Administration Agent, the
Syndication Agent or the Lenders incurred in connection with: (i) the
preparation, negotiation, execution, administration or interpretation of the
Documents; (ii) any amendment, modification or waiver of any of the provisions
of any Document; (iii) the protection and enforcement of the rights of the
Administration Agent, the Syndication Agent or the Lenders provided for in the
Documents; (iv) any syndication or publicity with respect to any of the Credit
Facilities; and (v) the preparation of any report hereunder, including without
limitation the Collateral Audit.
14.03 JUDGEMENT CURRENCY
(1) Currency Conversion. If, for the purpose of obtaining or
enforcing judgement against the Borrower or any Guarantor in any court in any
jurisdiction, it becomes necessary to convert into any other currency (the other
currency being referred to in this Section as the "Judgement Currency") an
amount due in Canadian Dollars or United States Dollars under this Agreement,
the conversion shall be made at the rate of exchange prevailing on the Banking
Day immediately preceding:
(a) the date of actual payment of the amount due, in the case of
any proceeding in the courts of the Province of Ontario or in
the courts of any other jurisdiction that will give effect to
a conversion being made on that date; or
(b) the date on which the judgement is given, in the case of any
proceeding in the courts of any jurisdiction that will not
give effect to a conversion being made per Section 14.03(1)(a)
(the date as of which conversion is made pursuant to this
Section being referred to in this Section as the "Judgement
Conversion Date").
(2) Change in Rate of Exchange. If, in the case of any proceeding
in the court of any jurisdiction referred to in Section 14.03(1)(b), there is a
change in the rate of exchange prevailing between the Judgement Conversion Date
and the date of actual payment of the amount due, the Borrower or Guarantor, as
applicable, shall pay an additional amount (if any, but in any event not a
lesser amount) as may be necessary to ensure that the amount paid in the
Judgement Currency, when converted at the rate of exchange prevailing on the
date of payment, will produce the amount of Canadian Dollars or United States
Dollars, as the case may be, which could have been purchased with the amount of
Judgement Currency stipulated in the judgement or judicial order at the rate of
exchange prevailing on the Judgement Conversion Date. This obligation shall
constitute an obligation separate and independent from the other obligations
contained in this Agreement and the other Documents, shall give rise to a
separate and independent cause of action, shall apply irrespective of any
indulgence granted by the recipient
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from time to time and shall continue in full force and effect notwithstanding
any judgement or order for a liquidated sum in respect of an amount due under
his Agreement or any other Document or under any judgement or order.
(3) Rate of Exchange. The term "rate of exchange" in this Section
means:
(a) for a conversion of Canadian Dollars into the Judgement
Currency, the reciprocal of the official noon rate of exchange
published by the Bank of Canada for the date in question;
(b) for a conversion of United States Dollars into the Judgement
Currency when the Judgement Currency is Canadian Dollars, the
official noon rate of exchange published by the Bank of
Canada;
(c) for a conversion of United States Dollars to the Judgement
Currency when the Judgement Currency is not Canadian Dollars,
the effective rate obtained when a given amount of United
States Dollars is converted to Canadian Dollars at the rate
determined by Section 14.03(3)(b) and the result is then
converted to the Judgement Currency pursuant to Section
14.03(3)(a); or
(d) if a required rate is not published by the Bank of Canada for
any applicable date, the spot rate quoted by the
Administration Agent at the Administration Agent's main branch
at approximately noon (Toronto time) on that date in
accordance with its normal practice for the applicable
currency conversion in the wholesale market.
14.04 NOTICE
Subject to Section 14.05, any demand, notice or other communication to
be given in connection with this Agreement must be given in writing and shall be
given by personal delivery, by ordinary mail or by electronic means of
communication addressed to the recipient or to any Guarantor as follows:
To the Borrower or to any Guarantor:
Co-Steel Inc.
Xxxxxxx Xxxxxx Xxxxx
Xxxxxx, Xxxxxxx
X0X 0X0
Facsimile No.: 000-000-0000
Attention: Vice President and Chief Financial Officer
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Article 14
To the Administration Agent:
The Toronto-Dominion Bank
Toronto Dominion Bank Tower
38th Floor
00 Xxxxxxxxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Facsimile No.: 000-000-0000
Attention: Vice President, Loan Syndications
To the Syndication Agent:
The Bank of Nova Scotia
00 Xxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Facsimile No.: 000-000-0000
Attention: Senior Manager
To any Lender at the address of such Lender set out next to its signature
hereon, or next to its signature on an Assignment Agreement.
Or to such other address, individual or electronic communication number
as may be designated by notice given by either party to the other. Any demand,
notice or other communication given by personal delivery shall be conclusively
deemed to have been given on the day of actual delivery and, if given by
ordinary mail, on the third Banking Day following the deposit in the mail and,
if given by electronic communication, on the day of transmittal if given before
or during the normal business hours of the recipient and on the next Banking Day
if given after the normal business hours of the recipient.
14.05 RELIANCE ON INSTRUCTIONS
The Administration Agent and the Lenders shall be entitled to act upon
the oral or written instructions of any Person who the Administration Agent or
the Lenders reasonably believe is a Person the Borrower has identified in
writing from time to time to the Administration Agent and the Lenders as being a
person authorized by the Borrower to give instructions regarding the completion
and issuance of Bankers' Acceptances, the making of Drawdowns and other matters
under this Agreement and the Administration Agent and the Lenders shall not be
responsible for any error or omission in any instructions or their performance
except in the case of gross negligence or wilful misconduct by the
Administration Agent or the Lenders or their agents. The Borrower shall
immediately confirm in writing any oral instructions given to the Administration
Agent or a Lender; provided that in the event of any discrepancy between any
parties' records of
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Article 14
the oral instructions and the Borrower's written confirmation, the records of
the Administration Agent or the Lenders shall prevail. The Borrower may revoke
the authority of the persons authorized to give instructions by notifying the
Administration Agent and the Lenders in writing, which notice shall be effective
on the Banking Day immediately following the date of its actual receipt. Any
instruction given prior to the day the notice becomes effective shall remain
effective for the purposes of this Agreement.
14.06 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
All agreements, representations, warranties and covenants made by or on
behalf of the Borrower and each Guarantor in the Documents are material, shall
be considered to have been relied upon by the Administration Agent, the
Syndication Agent and the Lenders and shall survive the execution and delivery
of the Documents, any investigation made at any time by or on behalf of the
Administration Agent, the Syndication Agent or the Lenders and any disposition
or payment of the Advances until repayment in full of all Indebtedness of the
Borrower under the Credit Facilities and cancellation or other termination of
the Credit Facilities. All statements contained in any certificate delivered by
or on behalf of the Borrower or a Guarantor pursuant to the Documents or in
connection with the transactions contemplated by this Agreement shall be deemed
representations and warranties made by the Borrower or such Guarantor, as
applicable, pursuant to this Agreement.
14.07 FURTHER ASSURANCES
The Borrower and each Guarantor shall, at its expense, from time to
time do, execute and deliver, or shall cause to be done, executed and delivered,
all such further acts, documents (including certificates, declarations,
affidavits, reports and opinions) and things as the Administration Agent, the
Syndication Agent or any Lender may reasonably request for the purpose of giving
effect to this Agreement and the other Documents, perfecting, protecting and
maintaining the Liens created by the Security Documents or establishing
compliance with the representations, warranties and conditions of this Agreement
or any other Document.
14.08 AMENDMENT, WAIVER ETC.
No course of conduct, waiver or delay on the part of the Administration
Agent or any of the Lenders in exercising any right or privilege under this
Agreement or under any other Document shall operate as a waiver unless made in
writing and signed by an authorized officer of the Administration Agent. No
written waiver shall preclude the further or other exercise by the
Administration Agent or any of the Lenders of any right, power or privilege
under this Agreement or under any other Document, or extend to or apply to any
further Default or Event of Default. The Borrower acknowledges and agrees that a
waiver of a Default or an Event of Default shall not constitute a postponement
of the maturity date of any amount payable under this Agreement or an increase
in the obligations or Commitment of any Lender under this Agreement.
14.09 REMEDIES CUMULATIVE
No right or remedy conferred upon or reserved to the Administration
Agent, the Syndication Agent or any Lender under this Agreement or any of the
other Documents is
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Article 14
intended to be exclusive of any other right or remedy, and every right and
remedy shall be cumulative and in addition to every other right or remedy
granted under any Document or now or ever existing under any Applicable Law.
Every right and remedy granted by the Documents or by Applicable Law to the
Administration Agent, the Syndication Agent or any Lender may be exercised from
time to time and as often as may be deemed expedient by the Administration
Agent, the Syndication Agent or any Lender and, unless contrary to the express
provisions of this Agreement, irrespective of the occurrence or continuance of
any Default or Event of Default.
14.10 NON-MERGER
The taking of a judgement or judgements or any other action or dealing
whatsoever by the Administration Agent, including in respect of any Security,
shall, to the extent permitted by law, not operate as a merger of any
Indebtedness of the Borrower or any Guarantor to the Administration Agent, the
Syndication Agent or the Lenders or in any way suspend payment or affect or
prejudice the rights, remedies and powers, legal or equitable, which the
Administration Agent may have in connection with any Indebtedness and the
foreclosure, surrender, cancellation or any other dealing with any Security for
any Indebtedness shall, to the extent permitted by law, not release or affect
the Indebtedness of the Borrower or any Security Document.
14.11 CONFLICT
To the extent that any term, condition, representation, covenant or
other provision contained in any Document (other than this Agreement and the
Inter-Creditor Agreement) is at any time inconsistent or conflicts with any
term, condition, representation, covenant or other provision contained in this
Agreement, then this Agreement shall govern.
To the extent that any term, condition, representation, covenant or
other provision contained in this Agreement is inconsistent or conflicts with
any term, condition, representation, covenant or other provision contained in
the Inter-Creditor Agreement, the Inter-Creditor Agreement shall govern.
14.12 SEVERABILITY
Any provision in this Agreement which is prohibited or unenforceable in
any jurisdiction shall, respecting that jurisdiction only, be ineffective to the
extent of the prohibition or unenforceability without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of that
provision in any other jurisdiction.
14.13 COUNTERPARTS
The parties may execute this Agreement in any number of counterparts,
each of which when executed and delivered shall be deemed to be an original, but
all of which when taken together shall constitute one and the same instrument;
any party may execute this Agreement by signing any counterpart of it.
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Article 14
14.14 BENEFIT OF AGREEMENT
This Agreement shall enure to the benefit of and be binding upon each
Borrower, each Guarantor, each Lender, the Administration Agent, the Syndication
Agent and their respective successors and assigns.
14.15 TIME OF ESSENCE
Time shall be of the essence in this Agreement.
14.16 ENTIRE AGREEMENT
This Agreement and each of the Documents constitute the entire
agreement between the parties relating to the subject matter of this Agreement
and the Documents and, except as stated in this Agreement or any Document, they
contain all the representations and warranties of the respective parties
relating to the subject matter of this Agreement and the Documents. This
Agreement and the Documents supersede and invalidate all other commitments,
representations and warranties relating to the subject matter hereof which may
have been made by the parties either orally or in writing prior to the date
hereof, and all of which shall become null and void from the date this Agreement
is signed.
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Article 14
IN WITNESS WHEREOF the parties hereto have executed this Agreement as
of the date and year first above written.
CO-STEEL INC.
By:
----------------------------------------------------
Xxxxx Xxxxxxxx
Executive Vice President, Finance and Administration
By:
----------------------------------------------------
Xxxx Xxxxxxxxx
Vice President & Chief Financial Officer
1300554 ONTARIO LIMITED
By:
----------------------------------------------------
Xxxxx Xxxxxxxx
Vice-President
By:
----------------------------------------------------
Xxxx Xxxxxxxxx
Secretary & Treasurer
1102590 ONTARIO LIMITED
By:
----------------------------------------------------
Xxxxx Xxxxxxxx
Vice-President
By:
----------------------------------------------------
Xxxx Xxxxxxxxx
Secretary & Treasurer
CO-STEEL DISTRIBUTION CANADA LIMITED
By:
----------------------------------------------------
Xxxxx Xxxxxxxx
Vice President
By:
----------------------------------------------------
Xxxx Xxxxxxxxx
Treasurer
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Article 14
CO-STEEL (U.S.) LTD.
By:
-------------------------------------------------------
Xxxxx Xxxxxxxx
Executive Vice President - Finance and Administration
By:
-------------------------------------------------------
Xxxx Xxxxxxxxx
Treasurer and Chief Financial Officer
CO-STEEL FINANCE CORP.
By:
-------------------------------------------------------
Xxxxx Xxxxxxxx
Executive Vice President - Finance and Administration
By:
-------------------------------------------------------
Xxxx Xxxxxxxxx
Treasurer and Chief Financial Officer
LAKE ONTARIO STEEL COMPANY INC.
By:
-------------------------------------------------------
Xxxxx Xxxxxxxx
Executive Vice President - Finance and Administration
By:
-------------------------------------------------------
Xxxx Xxxxxxxxx
Treasurer and Chief Financial Officer
CO-STEEL USA DISTRIBUTION, INC.
By:
-------------------------------------------------------
Xxxxx Xxxxxxxx
Executive Vice President - Finance and
Administration
By:
-------------------------------------------------------
Xxxx Xxxxxxxxx
Treasurer and Chief Financial Officer
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Article 14
CO-STEEL USA HOLDINGS, INC.
By:
-------------------------------------------------------
Xxxxx Xxxxxxxx
Executive Vice President - Finance and Administration
By:
-------------------------------------------------------
Xxxx Xxxxxxxxx
Treasurer and Chief Financial Officer
CO-STEEL RARITAN, INC.
By:
-------------------------------------------------------
Xxxxx Xxxxxxxx
Executive Vice President - Finance and Administration
By:
-------------------------------------------------------
Xxxx Xxxxxxxxx
Treasurer and Chief Financial Officer
CO-STEEL SAYREVILLE, INC.
By:
-------------------------------------------------------
Xxxxx Xxxxxxxx
Executive Vice President - Finance and Administration
By:
-------------------------------------------------------
Xxxx Xxxxxxxxx
Treasurer and Chief Financial Officer
RARITAN RIVER URBAN RENEWAL CORPORATION
By:
-------------------------------------------------------
Xxxxx Xxxxxxxx
Executive Vice President - Finance and Administration
By:
-------------------------------------------------------
Xxxx Xxxxxxxxx
Treasurer and Chief Financial Officer
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Article 14
THE TORONTO-DOMINION BANK AS
ADMINISTRATION AGENT
By:
--------------------------------------
Xxxxx Xxxxxx
Vice President, Loan Syndications
THE BANK OF NOVA SCOTIA, AS SYNDICATION
AGENT
By:
--------------------------------------
Name:
Title:
By:
--------------------------------------
Name:
Title:
Address: XXXX XXX, XX, XXXXXX BRANCH, AS LENDER
BCE Place, X.X. Xxx 000
000 Xxx Xxxxxx, Xxxxx 0000 By:
Toronto, Ontario --------------------------------------
X0X 0X0 Name:
Title:
Attention: Xxxxxxxx X. Xxxxx/
Xxxxxxx Xxxxx By:
--------------------------------------
Name:
Facsimile: 000-000-0000 Title:
Address: BANK OF TOKYO - MITSUBISHI (CANADA),
AS LENDER
Xxxxx Xxxx Xxxxx, Xxxxx Xxxxx,
Xxxxx 0000, X.X. Xxx 00
Toronto, Ontario By:
X0X 0X0 --------------------------------------
Name:
Title:
Attention: Xxxxxx Xxxxxxx/
Xxx XxxXxxx
By:
--------------------------------------
Facsimile: 000-000-0000 Name:
Title:
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Article 14
Address: CANADIAN IMPERIAL BANK OF COMMERCE,
AS LENDER
Commerce Court West
000 Xxx Xxxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxxxx By:
X0X 0X0 --------------------------------------
Name:
Title:
Attention: Xxx Xxxxxx/
Xxxxx XxXxxxxxx
By:
--------------------------------------
Facsimile: 000-000-0000 Name:
Title:
Address: COMERICA BANK, CANADA BRANCH, AS LENDER
Xxxxx 0000, Xxxxx Xxxxx
Xxxxx Xxxx Xxxxx, X.X. Xxx 00 By:
Xxxxxxx, Xxxxxxx --------------------------------------
X0X 0X0 Name:
Title:
Attention: Xxxx Xxxxxx/ By:
Xxxxxx Xxxxxx --------------------------------------
Name:
Title:
Facsimile: 000-000-0000
Address: MIZUHO CORPORATE BANK (CANADA), AS LENDER
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx By:
X0X 0X0 --------------------------------------
Name:
Title:
Attention: Xxxxxxxx McLeish/
Xxx Xxxxxxx
By:
--------------------------------------
Facsimile: 000-000-0000 Name:
Title:
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Article 14
Address: THE TORONTO-DOMINION BANK, AS LENDER
Toronto Dominion Bank Tower
Investment Banking-Corporate Credit
00 Xxxx Xxxxxx Xxxx & Xxx Xxxxxx By:
0xx Xxxxx ------------------------------------
Xxxxxxx, Xxxxxxx Name:
M5K 1A2 Title:
Attention: Xxxxxx X. (Xxx) By:
Xxxxxxxxx/ ------------------------------------
Xxxxxxx Xxxxxx Name:
Title:
Facsimile: 000-000-0000
Address: THE BANK OF NOVA SCOTIA, AS LENDER
00 Xxxx Xxxxxx Xxxx
00xx Xxxxx, Special Accounts Management
Toronto, Ontario By:
X0X 0X0 ------------------------------------
Name:
Attention: Xxxxxx Xxxxx/ Title:
Xxxx Stride
By:
------------------------------------
Facsimile: 000-000-0000 Name:
Title:
THIS AMENDING AGREEMENT made as of the 23rd day of October, 2002
BETWEEN:
CO-STEEL INC.
(TO BE RENAMED GERDAU AMERISTEEL CORPORATION)
(hereinafter called the "Borrower"),
- and -
1300554 ONTARIO LIMITED, 1102590 ONTARIO LIMITED, CO-STEEL
DISTRIBUTION CANADA LIMITED, CO-STEEL (U.S.) LTD., CO-STEEL FINANCE
CORP., LAKE ONTARIO STEEL COMPANY INC., CO-STEEL USA DISTRIBUTION,
INC., CO-STEEL USA HOLDINGS, INC., CO-STEEL RARITAN, INC., CO-STEEL
SAYREVILLE, INC., RARITAN RIVER URBAN RENEWAL CORPORATION
(hereinafter called the "Guarantors"),
XXXX XXX, XX, XXXXXX BRANCH, BANK OF TOKYO-MITSUBISHI (CANADA),
CANADIAN IMPERIAL BANK OF COMMERCE, COMERICA BANK, CANADA BRANCH,
MIZUHO CORPORATE BANK (CANADA), THE BANK OF NOVA SCOTIA AND THE
TORONTO-DOMINION BANK
(hereinafter called the "Lenders"),
- and -
THE TORONTO-DOMINION BANK,
as Administration Agent
(hereinafter called the "Administration Agent"),
- and -
THE BANK OF NOVA SCOTIA,
as Syndication Agent
- 2 -
(hereinafter called the "Syndication Agent"),
WHEREAS the parties hereto entered into a credit agreement dated as of
April 30, 2002 (the "Credit Agreement"), pursuant to which certain credit
facilities were established in favour of the Borrower;
AND WHEREAS the parties now wish to amend certain terms and conditions of
the Credit Agreement;
NOW THEREFORE THIS AGREEMENT WITNESSES THAT in consideration of the
covenants and agreements contained herein and for other good and valuable
consideration, the parties hereto agree to amend the Credit Agreement as
provided herein:
ARTICLE 1 - INTERPRETATION
1.1 TO BE READ WITH CREDIT AGREEMENT.
This Amending Agreement is an amendment to the Credit Agreement. Unless the
context of this Amending Agreement otherwise requires, the Credit Agreement and
this Amending Agreement shall be read together and shall have effect as if the
provisions of the Credit Agreement and this Amending Agreement were contained in
one agreement. The term "Agreement" when used in the Credit Agreement means the
Credit Agreement as amended, supplemented or modified from time to time,
including hereby.
1.2 DEFINED TERMS.
In this Amending Agreement unless otherwise defined or the context
otherwise requires, all capitalized terms shall have the respective meanings
specified in the Credit Agreement.
1.3 DESIGNATION.
The Lenders hereby consent to the designation of each member of the Gerdau
Subgroup as an Unrestricted Subsidiary pursuant to the Credit Agreement.
1.4 SCHEDULES.
The Credit Agreement is hereby amended by deleting Schedules L and Q in
their entirety and replacing them with Schedules L and Q attached hereto.
ARTICLE 2 - AMENDMENTS AND WAIVERS
2.1 AMENDMENTS TO DEFINITIONS.
(a) The following terms are hereby added to the Credit Agreement:
- 3 -
"AMERISTEEL AMALGAMATION" has the meaning set out in Section 2.4(b) of this
Agreement.
"APPROVED TRANSFER DOCUMENTS" means those documents attached hereto as
Exhibit A.
"BORROWER SHARE PLEDGE AGREEMENT" means the share pledge agreement dated as
of April 30, 2002 between the Borrower and Computershare Trust Company of
Canada.
"COURTICE" means Gerdau Courtice Steel Inc., a corporation incorporated
under the laws of Canada.
"EFFECTIVE DATE" has the meaning set out in Article 3 of this Agreement.
"GERDAU ACQUISITION" means the acquisition by the Borrower of all of the
issued and outstanding shares in the capital stock of Gerdau Holdco 2 in
consideration for the issuance by the Borrower of certain of its common shares
to Gerdau Holdco 1 pursuant to and in accordance with the terms of the
Transaction Agreement.
"GERDAU CANADA" means Gerdau Steel Inc., a corporation incorporated under
the laws of Canada.
"GERDAU CANADA CREDIT AGREEMENT" means the amended and restated loan
agreement dated November 8, 1996, among Gerdau Steel Inc., Gerdau Courtice Steel
Inc., Gerdau MRM Steel Inc., GUSAP Partners, Chase Securities Inc., Xxxxxxx
Xxxxx Xxxxxx Inc., The Toronto-Dominion Bank, the financial institutions form
time to time parties thereto as lenders and The Toronto-Dominion Bank as agent,
as further amended or amended and restated from time to time.
"GERDAU HOLDCO 1" means 4104315 Canada Limited, a corporation incorporated
under the laws of Canada.
"GERDAU HOLDCO 2" means Gerdau Nova Scotia Holding Company, a corporation
incorporated under the laws of Nova Scotia.
"GERDAU HOLDCO 2 CONVERSION" means the conversion of Gerdau Holdco 2 from a
Nova Scotia unlimited liability company into a Nova Scotia limited liability
company pursuant to documentation reasonably satisfactory to the Required
Lenders.
"GERDAU SUBGROUP" means Xxxxxx Xxxxxx 0, Xxxxxx MRM Holdings Inc., Gerdau
Courtice Steel Inc., GUSAP Partners, 3038482 Nova Scotia Company, PASUG LLC,
Gerdau USA Inc. and Ameristeel Corporation and their respective direct and
indirect Subsidiaries and, if at any time Intermediate Holding Company holds all
of the issued and outstanding membership interests of Gerdau Holdco 2, shall
also include Intermediate Holding Company.
"GERDAU USA" means Gerdau USA Inc., a corporation incorporated under the
laws of the State of Delaware.
- 4 -
"INTERMEDIATE HOLDING COMPANY" means 2017387 Ontario Limited, a corporation
incorporated under the laws of the Province of Ontario.
"INTERMEDIATE HOLDING COMPANY TRANSFER" means the transfer by Co-Steel to
Intermediate Holding Company of all issued and outstanding securities of Gerdau
Holdco 2 pursuant to the Approved Transfer Documents.
"MATERIAL EVENT" shall mean the occurrence of any of the following:
(a) a Material Adverse Effect;
(b) Gerdau Holdco 2 asserts any claim(s) against the Borrower in excess of
$1,000,000 for any one claim or in excess of $5,000,000 in the
aggregate;
(c) a Bankruptcy Event in respect of Gerdau Holdco 2;
(d) any claim(s) made against Gerdau Holdco 2 in excess of $250,000 for
any one claim or in excess of $1,000,000 in the aggregate;
(e) an Event of Default occurs; or
(f) an event of default occurs under the Gerdau Canada Credit Agreement
entitling the lenders thereunder, with the passage of time or
otherwise, to accelerate their rights thereunder.
"MRM" means Gerdau MRM Steel Inc., a corporation continued under the laws
of the Province of Saskatchewan.
"PARENT AMALGAMATION" means the amalgamation of Gerdau Canada and Gerdau
Holdco 1 on or before January 1, 2003 by way of vertical short form amalgamation
under the Canada Business Corporations Act.
"PROPOSED TRANSACTIONS" means the Gerdau Acquisition, the Parent
Amalgamation and the Ameristeel Amalgamation, collectively.
"STATUS QUO AGREEMENT" means the status quo agreement dated October 22,
2002 between Gerdau Canada, Courtice, MRM, Gerdau USA, Gerdau Holdco 2,
Intermediate Holding Company, the Borrower, State Street Bank and Trust Company,
Computershare Trust Company of Canada, the Administration Agent, PNC Bank
National Association, The Prudential Insurance Company of America, U.S. Private
Placement Fund and The Toronto-Dominion Bank as Administration Agent under the
Gerdau Canada Credit Agreement all in form and substance satisfactory to the
Administration Agent.
"TRANSACTION AGREEMENT" means the transaction agreement dated August 12,
2002 between Gerdau Canada, Xxxxxx X.X. and the Borrower, as amended.
(b) The definition of "Adjusted Cost Base" is hereby deleted and replaced
with the following:
- 5 -
"ADJUSTED COST BASE" means (i) for each Unrestricted Subsidiary (with
the exception of the Gerdau Subgroup) the dollar amount by which the
Unrestricted Subsidiaries would be carried as at December 31, 1998 in
the accounts of the Borrower if the Unrestricted Subsidiaries were
accounted for, from inception, by the equity method of accounting; and
(ii) the Gerdau Subgroup will be carried at cost as of the Effective
Date. Except that, (i) the Adjusted Cost Base will have no further
adjustments for net income or loss of, or unrealized gains or losses
on, the Unrestricted Subsidiaries; (ii) consistent with GAAP all
inter-company transactions and balances would be adjusted as
appropriate to consolidate the Restricted Subsidiaries and all
transactions between or among the Borrower and its Restricted
Subsidiaries on the one hand and the Unrestricted Subsidiaries
(including, without limitation, the Gerdau Subgroup), on the other
hand, shall be treated as transactions between or among unrelated
third parties and accounted for and measured at the exchange amount of
consideration established and agreed to by the parties; and (iii) the
Adjusted Cost Base will be increased or decreased, as the case may be,
for any amounts contributed or received in the form of subscription
for equity, contribution of surplus, or receipt of dividends. For
greater certainty, realized gains or losses on dispositions of
Unrestricted Subsidiaries will be reflected in the Special Purpose
Financial Statements. For the purposes of this definition, the
Hungarian Finance Structure Companies and NJSC shall be deemed to be
Restricted Subsidiaries, provided, however, that as used in Section
5.1(4) of the Amending Agreement "Adjusted Cost Base" shall be
determined solely with respect to the Gerdau Subgroup and will reflect
any permanent impairment of value as determined in accordance with
GAAP.
(c) The definition of "Indebtedness" is hereby amended by deleting
subsection (f) thereof and replacing it with the following:
(f) all liabilities of the Person as a partner, venturer or member in
any partnership, joint venture, unlimited liability company or
other enterprise;
(d) The definition of "Permitted Inter-Company Indebtedness" is hereby
amended by adding the words "(other than a member of the Gerdau
Subgroup)" immediately following the word "Subsidiary" the first time
it appears on the second line of such definition.
(e) The definition of "Special Purpose Financial Statements" is hereby
deleted and replaced with the following:
"Special Purpose Financial Statements" shall mean the consolidated
financial statements of the Borrower prepared under GAAP, except that
the Unrestricted Subsidiaries (excluding the Hungarian Finance
Structure Companies and N.J.S.C. Investment Co. Inc.) are not
consolidated but are accounted for at Adjusted Cost Base. Purchase
accounting related to the Gerdau Acquisition including adjustments to
the assets and liabilities of the Borrower and the Restricted
Subsidiaries to reflect fair market values will be excluded. The
Gerdau Subgroup will be shown at cost.
- 6 -
(f) The definition of "Tangible Net Worth" is hereby deleted and replaced
with the following:
"Tangible Net Worth" as of any date shall mean the amount equal to the
Shareholders' Equity (excluding foreign currency translation
adjustments), less all (i) goodwill, investments in and amounts due
from ASW Holdings PLC, trade names, trademarks, patents, organization
expenses, deferred financing expenses, amounts due from employees and
other like intangibles, all calculated based on the Special Purpose
Financial Statements prepared as of such date, plus (ii) an amount
equal to the greater of (a) the Adjusted Cost Base attributable to the
Gerdau Subgroup or (b) the aggregate investment of the Borrower in the
Gerdau Subgroup, determined as of the Gerdau Transaction Effective
Date, and any increase in such investment arising from the
distribution of any equity of the Borrower after such date to minority
shareholders in Ameristeel Corporation in exchange for their shares in
Ameristeel Corporation.
(g) The definitions of "Asset Monetization Program", "Blocked Account
Agreement", "Consolidated EBITDA", "Financial Forecast" and "Net
Tangible Assets" in the Credit Agreement are hereby amended by deeming
each reference therein to Subsidiary or Subsidiaries, (but not any
reference to any Restricted Subsidiary or Unrestricted Subsidiary), as
excluding the Gerdau Subgroup.
2.2 AMENDMENTS TO REPRESENTATIONS AND WARRANTIES.
Sections 9.01(11), (15), (27), (28), (38) and (39) in the Credit Agreement
are hereby amended by deeming each reference therein to Subsidiary or
Subsidiaries as excluding the Gerdau Subgroup.
2.3 AMENDMENTS TO POSITIVE COVENANTS.
Sections 10.01(6), (13), (18)(e), (22), (24), (25), (27), (28), (29) and
(30) in the Credit Agreement are hereby amended by deeming each reference
therein to Subsidiary or Subsidiaries as excluding the Gerdau Subgroup.
2.4 WAIVERS OF AND AMENDMENTS TO NEGATIVE COVENANTS.
(a) The Lenders hereby consent to the Gerdau Acquisition and the formation
of Intermediate Holding Company and hereby waive compliance by the
Borrower with Sections 10.03(8), (12) and (15) of the Credit Agreement
in connection with the Gerdau Acquisition and the formation of
Intermediate Holding Company.
(b) The Lenders hereby waive compliance by the Borrower with Section
10.03(12) of the Credit Agreement in connection with the issuance by
the Borrower of its common shares pursuant to and in accordance with
Section 3.5 of the Transaction Agreement (the "Ameristeel
Amalgamation") and hereby consent to same.
(c) The Lenders hereby consent to the Parent Amalgamation and hereby waive
compliance by the Borrower with Section 10.03(12) of the Credit
Agreement in
- 7 -
connection with the Parent Amalgamation; provided same occurs on or
before January 1, 2003.
(d) Section 10.03(25) of the Credit Agreement is hereby amended by
deleting the words in parenthesis in the second and third lines
thereof and replacing them with the following: "(excluding Co-Steel
C.S.M. Corp. and its Subsidiaries, 1062316 Ontario Limited and its
Subsidiaries and each member of the Gerdau Subgroup)".
(e) Sections 10.03(6), (14), (17), (18), (19), (21) and (22) in the Credit
Agreement are hereby amended by deeming each reference therein to
Subsidiary or Subsidiaries as excluding the Gerdau Subgroup and
Sections 10.03(1)(h) and (21) are hereby amended by deeming each
reference therein to Affiliate as excluding the Gerdau Subgroup.
2.5 WAIVERS OF AND AMENDMENTS TO EVENTS OF DEFAULTS.
(a) The Lenders hereby waive any Event of Default arising in consequence
of the Proposed Transactions, including without limitation Events of
Default arising pursuant to Section 11.01(n) and (q) of the Credit
Agreement.
(b) Sections 11.01(e), (f), (g), (h), (q) and (r) in the Credit Agreement
are hereby amended by deeming each reference therein to Subsidiary or
Subsidiaries as excluding the Gerdau Subgroup.
ARTICLE 3 - CONDITIONS PRECEDENT
This Amending Agreement shall not be effective until the Administration
Agent and the Required Lenders are satisfied that the following terms and
conditions have been fulfilled (the date that the Administration Agent and the
Required Lenders are so satisfied being referred to herein as the "Effective
Date"):
(a) execution and delivery of this Amending Agreement by the Borrower, the
Administration Agent and the Required Lenders;
(b) delivery to the Administration Agent of fully executed amendments to
the guarantees of the PNC Raritan Credit Agreement and the PNC
Sayreville Credit Agreement consenting to closing of the transactions
contemplated by the Transaction Agreement such amendments to be in
form and substance satisfactory to the Administration Agent, and if
accepted by the Administration Agent the Required Lenders shall be
deemed to have waived Section 10.03(2) in respect of such amendments;
(c) delivery to the Administration Agent of a fully executed amendment to
the Prudential Note Agreement consenting to closing of the
transactions contemplated by the Transaction Agreement such amendment
to be in form and substance satisfactory to the Administration Agent,
and if accepted by the Administration
- 8 -
Agent the Required Lenders shall be deemed to have waived Section
10.03(2) in respect of such amendment;
(d) execution and delivery to the Administration Agent of the Status Quo
Agreement by each party thereto;
(e) delivery to the Administration Agent of certified copies of all
corporate action taken by the Borrower and each Guarantor to authorize
the execution and delivery of this Amending Agreement;
(f) delivery to the Administration Agent of certified copies of all
corporate action taken by each member of the Gerdau Subgroup party to
the Status Quo Agreement and Intermediate Holding Company to authorize
the execution and delivery of the Status Quo Agreement;
(g) if the Effective Date is not the date of execution of this Agreement,
delivery to the Administration Agent of a certificate dated the
Effective Date and signed by a Senior Officer of the Borrower,
certifying: (i) that the warranties and representations contained in
Article 4 of this Amendment are true on the Effective Date with the
same effect as though made on and as of that date; and (ii) that the
Borrower has performed and complied with all agreements and conditions
contained herein that are required to be performed or complied with by
the Borrower on or prior to the Effective Date, and that such
performance and compliance remains in effect on the Effective Date;
(h) delivery to the Administration Agent of a certificate of incumbency
for the Borrower, each Guarantor, the Intermediate Holding Company and
each member of the Gerdau Subgroup party to the Status Quo Agreement;
(i) delivery to the Administration Agent of a certificate of status/good
standing or the equivalent thereof for each Obligor, the Intermediate
Holding Company and each member of the Gerdau Subgroup party to the
Status Quo Agreement;
(j) no Material Adverse Effect having occurred;
(k) delivery to the Security Agent or its nominee of an acknowledgement
concerning rights in membership interests of Holdco 2, together with
all certificates, instruments or other documents representing all of
the issued and outstanding membership interests of Gerdau Holdco 2
endorsed for transfer or accompanied by a power of attorney, all as
satisfactory to the Security Agent;
(l) delivery to the Security Agent of all certificates, instruments or
other documents representing all of the issued and outstanding shares
of Intermediate Holding Company endorsed for transfer or accompanied
by a power of attorney, all as satisfactory to the Security Agent
together with an acknowledgement by the Borrower that such issued and
outstanding shares are subject to the Lien of the Borrower Share
Pledge Agreement;
- 9 -
(m) delivery of an amendment to the Intercreditor Agreement by the parties
thereto, in form and substance satisfactory to the Administration
Agent;
(n) the Gerdau Acquisition shall have occurred in accordance with the
terms of the Transaction Agreement;
(o) delivery to the Administration Agent of pro forma financial statements
incorporating the Gerdau Subgroup;
(p) other than as expressly waived hereunder, no Default or Event of
Default shall be in existence;
(q) payment by the Borrower of all fees (including legal fees and
disbursements of Lenders' counsel) owing to the Lenders including, for
greater certainty, payment to the Administration Agent of a fee
representing 0.1% of the Commitment of each Lender that has executed
this Amending Agreement and confirmed that the conditions precedent
contained herein have been satisfied or waived, to be distributed on a
pro rata basis to such consenting Lenders;
(r) delivery to the Administration Agent of opinions of Canadian, Nova
Scotia and U.S. counsel to the Borrower dated the date hereof in form
and substance reasonably satisfactory to the Administration Agent;
(s) the maturity of the Gerdau Canada Credit Agreement revolver shall have
been renewed and extended until at least September 22, 2003;
(t) delivery to the Administration Agent of copies of all organizational
documents of Gerdau Holdco 2 which shall be in form and substance
satisfactory to the Administration Agent;
(u) delivery to the Administration Agent of all constating documents of
Intermediate Holding Company which shall be in form and substance
satisfactory to the Administration Agent; and
(v) delivery to the Administration Agent of such other documents and
instruments as may be reasonably required by the Administration Agent
or the Lenders.
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES
To induce the Administration Agent, the Syndication Agent and each of the
Lenders party hereto to enter into this Amending Agreement, the Borrower and
each Guarantor represents and warrants to the Administration Agent, the
Syndication Agent and the Lenders as follows, which representations and
warranties shall survive the execution and delivery hereof:
(a) the representations and warranties set forth in Article Nine of the
Credit Agreement as amended hereby continue to be true and correct in
all material
- 10 -
respects as of the date hereof with reference to facts subsisting on
such date except for those representations and warranties which speak
to a specific date;
(b) all necessary action, corporate or otherwise, has been taken to
authorize the execution, delivery and performance of this Amending
Agreement by the Borrower and the Guarantors. The Borrower and each
Guarantor has duly executed and delivered this Amending Agreement.
This Amending Agreement is a legal, valid and binding obligation of
the Borrower and the Guarantors enforceable against it by the
Administration Agent, the Syndication Agent and the Lenders in
accordance with its terms;
(c) as of the date hereof, no Default or Event of Default exists;
(d) the Borrower and Guarantors are in compliance with the covenants
contained in Article Ten of the Credit Agreement;
(e) each of the representations and warranties made by the Borrower in the
Transaction Agreement is true and correct in all material respects,
and such representations and warranties are hereby incorporated herein
by reference with the same effect as though made by the Borrower and
set forth herein in their entirety;
(f) the Borrower has delivered to the Administration Agent and the Lenders
its pro forma consolidated balance sheet dated as of June 30, 2002,
prepared giving effect to all Proposed Transactions as if the Proposed
Transactions had occurred on January 1, 2001, and the related
statements of income for the 12-month period ended December 31, 2001
and for the six month period ended June 30, 2002, in each case
prepared as if the Proposed Transactions had occurred on January 1,
2001. Such pro forma consolidated financial statements were (a)
prepared in good faith and, in the Borrower's opinion, were reasonable
when made and continue to be reasonable as of the Effective Date, (b)
based on the best information reasonably available to the Borrower
after due inquiry, (c) accurately reflect all adjustments necessary to
give effect to the Proposed Transactions, and (d) present fairly, in
accordance with GAAP, in all material respects, the pro forma
financial position of the Borrower and its Subsidiaries (including the
Gerdau Subgroup) as if the Proposed Transactions had occurred on such
date or at the beginning of such periods. The Borrower does not have,
as of the Effective Date, any material liabilities that would be
required to be included in financial statements prepared in accordance
with GAAP that are not reflected in such pro forma financial
statements;
(g) after giving effect to the Proposed Transactions, Gerdau Canada will
own 64.8% of the issued and outstanding common shares of the Borrower
on a fully diluted basis;
(h) any and all fees paid to the Noteholders and PNC, respectively, in
consideration of receiving amendments and waivers similar to this
Amending Agreement are (a)
- 11 -
in respect of the Noteholders, as a collective group, not more than
one-tenth of one percent (0.10%) of the aggregate outstanding
principal amount of Indebtedness outstanding under the Prudential Note
Agreement as of the Effective Date, and (b) in respect of PNC, not
more than one-tenth of one percent (0.10%) of the aggregate
outstanding principal amount of PNC Indebtedness as of the Effective
Date;
(i) the Borrower has delivered to the Administration Agent a true and
correct copy of the Transaction Agreement;
(j) the Borrower is entering into this Amendment and has entered into the
Transaction Agreement without any intent to hinder, delay, or defraud
either current creditors or future creditors of the Borrower;
(k) Gerdau Holdco 2 is an unlimited liability company duly incorporated
and validly existing under the laws of the Province of Nova Scotia and
has all necessary corporate power and authority to own its property
and to carry on its business. Gerdau Holdco 2 carries on the business
of being a holding body corporate of all of the issued and outstanding
shares of MRM and Courtice and directly or indirectly all of the
issued and outstanding shares of Gerdau USA and carries on no other
business. The only assets of Gerdau Holdco 2 are the aforementioned
shareholdings and Gerdau Holdco 2 has no Indebtedness or other
liabilities. As of the Effective Date, all of the issued and
outstanding capital of Holdco 2 will be beneficially owned by the
Borrower; and
(l) Intermediate Holding Company is a corporation duly incorporated and
validly existing under the laws of the Province of Ontario and has all
necessary corporate power and authority to own its property and carry
on its business. Other than as provided in the Status Quo Agreement,
Intermediate Holding Company carries on no business and has no assets,
Indebtedness or other liabilities. As of the Effective Date, all of
the issued and outstanding capital of Intermediate Holding Company
will be beneficially owned by the Borrower.
ARTICLE 5 - COVENANTS
5.1 POSITIVE COVENANTS
The Borrower covenants with the Administration Agent, the Syndication Agent
and each of the Lenders that, until the Credit Facilities are cancelled and
there is no outstanding Advance or other Indebtedness of the Borrower to any of
the Administration Agent, the Syndication Agent or any Lender under the Credit
Agreement or of a Guarantor under a Guarantee, it shall comply with each of the
covenants set out in this Section, except as otherwise permitted by the prior
written consent of the Administration Agent on the instruction of the Required
Lenders.
(1) Corporate Existence. It shall do or cause to be done all things
necessary to ensure that each of Gerdau Holdco 2 and Intermediate Holding
Company remains a company duly created and validly subsisting under the laws of
its jurisdiction of incorporation and maintains all
- 12 -
necessary corporate power and authority to own its property and carry on its
business as presently owned and carried on by it, except as otherwise may be
permitted pursuant to Section 5.1(3) of this Amending Agreement.
(2) Financing Statements. It shall within 30 days following the Effective
Date, at its expense, (i) register, file or record such financing statements or
financing change statements under applicable law as are necessary to perfect or
preserve the perfection of the security of the Administration Agent and the
Lenders in connection with the change of name and change of location of the
Borrower; and (ii) cause to be delivered to the Administration Agent opinions of
its Canadian and U.S. counsel in respect of such registrations in a form and
substance reasonably satisfactory to the Administration Agent.
(3) Transfer to Intermediate Holding Company; Gerdau Holdco 2 Conversion.
(a) TRANSFER TO INTERMEDIATE HOLDING COMPANY. Upon the occurrence of any
of the following events:
(i) in the event that Cumulative Consolidated EBITDA tested on March
31, 2003 does not exceed $105,000,000; or
(ii) in the event that the Adjusted Cost Base of the Gerdau Subgroup
as reflected in the Special Purpose Financial Statements at any
time is less than 99% the Adjusted Cost Base of the Gerdau
Subgroup as reflected in the Special Purpose Financial Statements
as of December 31, 2002; or
(iii) in the event that the Required Lenders reasonably deem that a
Material Event exists;
then the Borrower shall take all steps necessary to effect the
Intermediate Holding Company Transfer. The Intermediate Holding
Company Transfer shall take place within 30 days of an event specified
in clauses (i) or (ii) above and within 5 Business Days of the event
specified in clause (iii) above. The Intermediate Holding Company
Transfer will be effected to ensure that the securities of Gerdau
Holdco 2 so transferred remain subject to the Lien of the Borrower
Share Pledge Agreement.
(b) GERDAU HOLDCO 2 CONVERSION.
(i) If at any time the Required Lenders reasonably deem that a
Material Event exists, whether or not arising from the direct
ownership of Gerdau Holdco 2, then the Borrower will immediately
commence, and diligently proceed with, the Gerdau Holdco 2
Conversion which shall in no event take longer than 5 Business
Days.
(ii) If any relevant Governmental Authority makes a final
determination disapproving of the Ameristeel Amalgamation or the
Borrower has not completed a refinancing of its obligations
hereunder on or before
- 13 -
December 15, 2003, then the Borrower will cause the Gerdau Holdco
2 Conversion to occur within 5 Business Days.
(c) LIMITED WAIVER. Any provision contained herein or in the Credit
Agreement to the contrary notwithstanding, the Borrower shall be
permitted to take any and all acts reasonably necessary to complete
the Intermediate Holding Company Transfer per subsection (a) hereof
and/or the Gerdau Holdco Conversion for the purposes outlined above.
(4) Gerdau Subgroup Investment. From and after January 1, 2003, the
Adjusted Cost Base of the Gerdau Subgroup as reflected in the Special Purpose
Financial Statements shall not at any time be less than ninety percent (90%) of
the Adjusted Cost Base of the Gerdau Subgroup as reflected in the Special
Purpose Financial Statements as of December 31, 2002.
5.2 NEGATIVE COVENANTS
The Borrower covenants with the Administration Agent, the Syndication Agent
and each of the Lenders that, until the Credit Facilities are cancelled and
there is no outstanding Advance or other Indebtedness of the Borrower to any of
the Administration Agent, the Syndication Agent or any Lender under the Credit
Agreement or of a Guarantor under a Guarantee, it shall comply with each of the
covenants set out in this Section, except as otherwise permitted by the prior
written consent of the Administration Agent on the instruction of the Required
Lenders.
(1) Indebtedness. It shall not and shall not permit Gerdau Holdco 2 or
Intermediate Holding Company to create, incur, assume or permit to exist any
Indebtedness.
(2) Negative Pledge. It shall not permit Gerdau Holdco 2 or Intermediate
Holding Company to guarantee, or give an indemnity in respect of, any
Indebtedness, obligation or liability (whether present or future, actual or
contingent) of any Person, or to create, assume or permit to exist over all or
any part of its business or assets, whether now owned or hereafter acquired, any
Lien (whether prior or subsequent to or pari passu with any Lien in favour of
the Security Agents) other than the Liens in favour of The Toronto-Dominion Bank
as Administration Agent under the Gerdau Canada Credit Agreement existing on the
date hereof in the Gerdau Subgroup shares, equity interests and assets.
(3) Sale of Assets. It shall not permit Gerdau Holdco 2 or Intermediate
Holding Company to sell, lease, license, transfer, assign, grant options or
rights in or over, or otherwise dispose of or deal with any of its business,
assets, rights, revenues or property, real, personal or mixed, tangible or
intangible (including, without limitation, shares of stock and indebtedness of
Subsidiaries, receivables and leasehold interests), whether in one or a series
of transactions other than the Liens in favour of The Toronto-Dominion Bank as
Administration Agent under the Gerdau Canada Credit Agreement existing on the
date hereof in the Gerdau Subgroup shares, equity interests and assets.
(4) Acquisitions. It shall not permit Gerdau Holdco 2 either to (i) acquire
or incorporate any Subsidiary; or (ii) acquire all or a substantial part of, in
one or a series of transactions (whether by way of amalgamation, merger, share
purchase, asset purchase or otherwise) the assets, shares or any other equity
interest of any Person. Other than as permitted
- 14 -
pursuant to Section 5.1(3), the Borrower shall not permit Intermediate Holding
Company either to (i) acquire or incorporate any Subsidiary; or (ii) acquire all
or a substantial part of, in one or a series of transactions (whether by way of
amalgamation, merger, share purchase, asset purchase or otherwise) the assets,
shares or any other equity interest of any Person.
(5) Dividends, etc. It shall not permit Gerdau Holdco 2 or Intermediate
Holding Company to declare any dividends from, or set apart any sum for the
payment of any dividends on, or make any other distribution (by reduction of
capital or otherwise) in respect of, any of Gerdau Holdco 2's membership
interests or Intermediate Holding Company's shares.
(6) No Reduction of Capital. It shall ensure that neither Gerdau Holdco 2
nor Intermediate Holding Company apply any of their respective assets to the
purchase, redemption or other acquisition or retirement of any shares or
membership interests in their capital or otherwise reduce issued or paid up
capital in respect of any of their membership interests or shares.
(7) No Issue of Capital. It shall not permit Gerdau Holdco 2 or
Intermediate Holding Company to issue or approve the transfer of any new capital
by way of equity or subordinated debt offering or otherwise other than as
contemplated by Section 5.1(3).
(8) Transactions with Affiliates. It shall not permit Gerdau Holdco 2 or
Intermediate Holding Company to:
(a) enter into any transaction with any Affiliate, including, without
limitation, any transaction for the purchase, sale or exchange of
property, the rendering of any services, the making or obtaining of
any loans or advances, and the entering into of any contracts or
agreements other than the Status Quo Agreement, in respect of the
Gerdau Holdco 2 Conversion or as contemplated by Section 5.1(3); or
(b) pay any fees or expenses to, or reimburse or assume any obligation for
the reimbursement of any expenses incurred by any Affiliate of it.
(9) Fundamental Changes. It shall not permit Gerdau Holdco 2 or
Intermediate Holding Company to enter into any corporate transaction (or series
of transactions), whether by way of reconstruction, arrangement, reorganization,
consolidation, amalgamation, merger or otherwise, whereby all or substantially
all of its or their undertaking and assets would become the property of any
other Person or in the case of any amalgamation, the property of the continuing
corporation resulting from the amalgamation other than pursuant to the Gerdau
Holdco Conversion or the Intermediate Holding Company Transfer.
(10) Nature of Business. It shall not permit Gerdau Holdco 2 or
Intermediate Holding Company to engage in any business other than holding the
common stock of Gerdau Courtice Steel Inc., Gerdau MRM Holdings Inc. and Gerdau
USA Inc. and entering into and performing the terms of the Status Quo Agreement
and those other Agreements consented to by the Administration Agent pursuant to
Section 5.2(11) hereof. The Borrower shall not permit Intermediate Holding
Company to engage in any business other than holding the membership interests of
Gerdau Holdco 2 after the occurrence of the Intermediate Holding Company
Transfer
- 15 -
or entering into and performing the terms of the Status Quo Agreement and the
Approved Transfer Documents.
(11) Agreements. Other than the Status Quo Agreement, the Approved Transfer
Documents and those documents entered into on or before the acquisition by the
Borrower of Gerdau Holdco 2 the form and substance of which have expressly been
approved by the Administration Agent, it shall not permit Gerdau Holdco 2 or
Intermediate Holding Company to enter into any agreement.
(12) No Amendments to Articles. It shall not permit Gerdau Holdco 2 or
Intermediate Holding Company to amend, revise or supplement, or take any action
or omit to take any action which would contravene, any of its organizational
documents.
(13) Subsidiary Transactions With Gerdau Subgroup. It shall not permit any
of its Subsidiaries (other than the Gerdau Subgroup (excluding Gerdau Holdco 2
and Intermediate Holding Company)) to transfer any assets to or incur any
Indebtedness in respect of any member of the Gerdau Subgroup, except in
connection with the Intermediate Holding Company Transfer.
ARTICLE 6 - EXPENSES
The Borrower shall pay all reasonable fees and expenses, including, without
limitation, reasonable legal fees and travel expenses incurred by the
Administration Agent in connection with the preparation, negotiation,
completion, execution, delivery and review of this Amending Agreement and all
other documents and instruments arising therefrom and/or executed in connection
therewith.
ARTICLE 7 - WAIVER
The Administration Agent and the Lenders hereby waive compliance by the
Borrower with Section 7.05(4) of the Credit Agreement arising solely as a result
of the Borrower's failure to deliver the applicable documentation within the
period set forth therein.
ARTICLE 8 - STATUS QUO AGREEMENT
Each Lender and the Syndication Agent hereby authorizes the Administration
Agent to enter into the Status Quo Agreement on their behalf and exercise all
rights, including rights of approval, conferred to the Administration Agent
thereunder.
ARTICLE 9 - CONTINUANCE OF CREDIT AGREEMENT AND SECURITY
The Credit Agreement, as changed, altered, amended or modified by this
Amending Agreement, shall be and continue in full force and effect and is hereby
confirmed and the rights and obligations of all parties thereunder shall not be
affected or prejudiced in any manner except as specifically provided for herein.
It is agreed and confirmed that after giving effect to this
- 16 -
Amending Agreement each Guarantee, all Security and each Security Document
remains in full force and effect.
ARTICLE 10 - COUNTERPARTS
This Amending Agreement may be executed in any number of separate
counterparts, each of which shall be deemed an original and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.
ARTICLE 11 - GOVERNING LAW
This Amending Agreement shall be construed and interpreted in accordance
with the laws of the Province of Ontario and the laws of Canada applicable
therein and each of the parties hereto irrevocably attorns to the jurisdiction
of the courts of the Province of Ontario.
- S1 -
IN WITNESS WHEREOF the parties hereto have executed this Amending Agreement
as of the day and year first above written.
CO-STEEL INC.
By:
------------------------------------
Xxxxx Xxxxxxxx
Executive Vice President,
Finance and Administration
1300554 ONTARIO LIMITED
By:
------------------------------------
Xxxxx Xxxxxxxx
Vice-President
1102590 ONTARIO LIMITED
By:
------------------------------------
Xxxxx Xxxxxxxx
Vice-President
CO-STEEL DISTRIBUTION CANADA LIMITED
By:
------------------------------------
Xxxxx Xxxxxxxx
Vice President
CO-STEEL (U.S.) LTD.
By:
------------------------------------
Xxxxx Xxxxxxxx
Executive Vice President -- Finance
and Administration
- S2 -
CO-STEEL FINANCE CORP.
By:
------------------------------------
Xxxxx Xxxxxxxx
Executive Vice President -- Finance
and Administration
LAKE ONTARIO STEEL COMPANY INC.
By:
------------------------------------
Xxxxx Xxxxxxxx
Executive Vice President -- Finance
and Administration
CO-STEEL USA DISTRIBUTION, INC.
By:
------------------------------------
Xxxxx Xxxxxxxx
Executive Vice President -- Finance
and Administration
CO-STEEL USA HOLDINGS, INC.
By:
------------------------------------
Xxxxx Xxxxxxxx
Executive Vice President -- Finance
and Administration
CO-STEEL RARITAN, INC.
By:
------------------------------------
Xxxxx Xxxxxxxx
Executive Vice President -- Finance
and Administration
CO-STEEL SAYREVILLE, INC.
By:
------------------------------------
Xxxxx Xxxxxxxx
Executive Vice President -- Finance
and Administration
- S3 -
RARITAN RIVER URBAN RENEWAL CORPORATION
By:
------------------------------------
Xxxxx Xxxxxxxx
Executive Vice President -- Finance
and Administration
THE TORONTO-DOMINION BANK AS
ADMINISTRATION AGENT
By:
------------------------------------
Xxxxx Xxxxxx
Vice President, Loan Syndications
THE BANK OF NOVA SCOTIA, AS SYNDICATION
AGENT
By:
------------------------------------
Name:
Title:
By:
------------------------------------
Name:
Title:
XXXX XXX, XX, XXXXXX BRANCH, AS LENDER
By:
------------------------------------
Name:
Title:
By:
------------------------------------
Name:
Title:
- S4 -
BANK OF TOKYO - MITSUBISHI (CANADA),
AS LENDER
By:
------------------------------------
Name:
Title:
By:
------------------------------------
Name:
Title:
CANADIAN IMPERIAL BANK OF COMMERCE,
AS LENDER
By:
------------------------------------
Name:
Title:
By:
------------------------------------
Name:
Title:
COMERICA BANK, CANADA BRANCH, AS LENDER
By:
------------------------------------
Name:
Title:
By:
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Name:
Title:
- S5 -
MIZUHO CORPORATE BANK (CANADA), AS
LENDER
By:
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Name:
Title:
By:
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Name:
Title:
THE TORONTO-DOMINION BANK, AS LENDER
By:
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Name:
Title:
By:
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Name:
Title:
THE BANK OF NOVA SCOTIA, AS LENDER
By:
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Name:
Title:
By:
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Name:
Title:
