Exhibit 4(a)
TERM CREDIT AGREEMENT
BETWEEN
THE BANK OF NOVA SCOTIA
AS ADMINISTRATIVE AGENT
AND
ROYAL BANK OF CANADA
AS SYNDICATION AGENT
AND
THE FINANCIAL INSTITUTIONS LISTED
IN SCHEDULE A HERETO AND THEIR ASSIGNS
AS LENDERS
AND
POTASH CORPORATION OF SASKATCHEWAN INC.
AS BORROWER
September 25, 2001
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TABLE OF CONTENTS
ARTICLE 1
1.01 DEFINED TERMS..........................................................2
1.02 OTHER USAGES..........................................................14
1.03 PLURAL AND SINGULAR...................................................14
1.04 HEADINGS..............................................................14
1.05 CURRENCY..............................................................14
1.06 APPLICABLE LAW........................................................14
1.07 TIME OF THE ESSENCE...................................................15
1.08 NON-BANKING DAYS......................................................15
1.09 CONSENTS AND APPROVALS................................................15
1.10 AMOUNT OF OUTSTANDING ACCOMMODATION...................................15
1.11 SCHEDULES.............................................................15
1.12 RELIANCE ON DISCLOSURE................................................15
1.13 EXTENSION OF CONVERSION DATE..........................................15
ARTICLE 2
2.01 ESTABLISHMENT OF CREDIT FACILITY......................................17
2.02 LENDERS' COMMITMENTS..................................................17
2.03 CHANGE OF AMOUNT OF CREDIT FACILITY...................................18
2.04 TERMINATION OF CREDIT FACILITY........................................18
ARTICLE 3
3.01 TYPES OF ACCOMMODATIONS...............................................19
3.02 FUNDING OF LOANS......................................................19
3.03 FAILURE OF LENDER TO FUND LOAN........................................19
3.04 INABILITY TO FUND U.S. DOLLAR ADVANCES IN CANADA......................20
3.05 TIME AND PLACE OF PAYMENTS............................................21
3.06 REMITTANCE OF PAYMENTS DUE TO LENDERS.................................21
3.07 EVIDENCE OF INDEBTEDNESS..............................................22
3.08 NOTICE PERIODS........................................................22
ARTICLE 4
4.01 DRAWDOWN NOTICE.......................................................22
4.02 ONE BORROWING.........................................................22
4.03 FINANCING OF HOSTILE BID..............................................23
ARTICLE 5
5.01 LIBOR LOANS...........................................................23
5.02 ROLLOVER NOTICE.......................................................23
ARTICLE 6
6.01 CONVERTING LOAN TO OTHER TYPE OF LOAN.................................24
6.02 CONVERSION NOTICE.....................................................24
6.03 ABSENCE OF NOTICE.....................................................24
6.04 CONVERSION AFTER DEFAULT..............................................24
ARTICLE 7
7.01 INTEREST RATES........................................................25
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7.02 CALCULATION AND PAYMENT OF INTEREST...................................25
7.03 GENERAL INTEREST RULES................................................25
7.04 SELECTION OF INTEREST PERIODS.........................................26
7.05 STANDBY FEES..........................................................26
7.06 ADJUSTMENT OF APPLICABLE MARGIN AND STANDBY FEE RATE..................26
ARTICLE 8
8.01 CONDITIONS OF CREDIT..................................................26
8.02 CHANGE OF CIRCUMSTANCES...............................................26
8.03 ASSIGNMENT AS A RESULT OF CHANGE OF CIRCUMSTANCES.....................28
8.04 INDEMNITY RELATING TO CREDITS.........................................28
8.05 INDEMNITY FOR TRANSACTIONAL AND ENVIRONMENTAL LIABILITY...............29
8.06 PAYMENTS FREE AND CLEAR OF TAXES......................................30
ARTICLE 9
9.01 REPAYMENT.............................................................31
9.02 VOLUNTARY PREPAYMENTS.................................................31
9.03 PAYMENT NOTICE........................................................31
ARTICLE 10
10.01 REPRESENTATIONS AND WARRANTIES.......................................32
10.02 SURVIVAL OF REPRESENTATIONS AND WARRANTIES...........................35
ARTICLE 11
11.01 AFFIRMATIVE COVENANTS................................................36
11.02 PERFORMANCE OF COVENANTS BY AGENT....................................39
11.03 RESTRICTIVE COVENANTS................................................39
ARTICLE 12
12.01 CONDITIONS PRECEDENT TO ALL ACCOMMODATION............................40
12.02 CONDITIONS PRECEDENT TO INITIAL ACCOMMODATION........................40
12.03 WAIVER...............................................................42
ARTICLE 13
13.01 EVENTS OF DEFAULT....................................................42
13.02 REMEDIES CUMULATIVE..................................................45
13.03 SET-OFF..............................................................45
ARTICLE 14
14.01 APPOINTMENT AND AUTHORIZATION OF AGENT...............................46
14.02 INTEREST HOLDERS.....................................................46
14.03 CONSULTATION WITH COUNSEL............................................46
14.04 DOCUMENTS............................................................46
14.05 AGENT AS LENDER......................................................46
14.06 RESPONSIBILITY OF AGENT..............................................46
14.07 ACTION BY AGENT......................................................47
14.08 NOTICE OF EVENTS OF DEFAULT..........................................47
14.09 RESPONSIBILITY DISCLAIMED............................................47
14.10 INDEMNIFICATION......................................................48
14.11 CREDIT DECISION......................................................48
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14.12 SUCCESSOR AGENT......................................................48
14.13 DELEGATION BY AGENT..................................................49
14.14 WAIVERS AND AMENDMENTS...............................................49
14.15 DETERMINATION BY AGENT CONCLUSIVE AND BINDING........................50
14.16 REDISTRIBUTION OF PAYMENT............................................50
14.17 DISTRIBUTION OF NOTICES..............................................50
ARTICLE 15
15.01 WAIVERS..............................................................51
15.02 NOTICES..............................................................51
15.03 SEVERABILITY.........................................................51
15.04 COUNTERPARTS.........................................................51
15.05 SUCCESSORS AND ASSIGNS...............................................51
15.06 ASSIGNMENT...........................................................51
15.07 UNRELATED COSTS AND EXPENSES.........................................53
15.08 ENTIRE AGREEMENT.....................................................53
15.09 FURTHER ASSURANCES...................................................53
15.10 JUDGMENT CURRENCY....................................................53
Schedule A - Individual Commitments
Schedule B - Compliance Certificate
Schedule C - Form of Assignment
Schedule D-1 - Opinion of Borrower's Ontario Counsel
Schedule D-2 - Opinion of Borrower's General Counsel
Schedule D-3 - Opinion of Guarantor's Delaware Counsel
Schedule E - Subsidiaries
Schedule F - Partnerships, Joint Ventures and Syndicates
Schedule G - Specific Permitted Liens
Schedule H - Additional Disclosure
Schedule I - Form of Guarantee
Schedule J - Material Litigation
TERM CREDIT AGREEMENT
THIS AGREEMENT made as of the 25th day of September, 2001.
B E T W E E N:
THE BANK OF NOVA SCOTIA, a Canadian chartered bank
(herein, in its capacity as administrative agent of the
Lenders, called the "Agent")
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Those financial institutions listed in Schedule A hereto and
those financial institutions to whom the foregoing or their
respective assigns may from time to time assign an undivided
interest in the Credit Facility (as defined herein) and who
agree to be bound by the terms hereof as a Lender
(herein, in their capacities as lenders to the Borrower under
the Credit Facility, collectively called the "Lenders" and
individually called a "Lender")
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POTASH CORPORATION OF SASKATCHEWAN INC., a corporation
incorporated under the laws of the Province of Saskatchewan
(herein called the "Borrower").
WHEREAS the Borrower has requested that the Lenders establish a certain
term credit facility for general corporate purposes to replace a certain term
credit facility under the term credit agreement dated October 4, 1996 between
the Borrower, The Bank of Nova Scotia, as Agent, the Lenders named therein and
certain Co-Agents named therein (as amended, the "Original Credit Agreement");
AND WHEREAS the Lenders are prepared to provide such credit facility to
the Borrower for such purposes on the terms and conditions contained herein and
to concurrently cancel the Original Credit Agreement;
NOW THEREFORE THIS AGREEMENT WITNESSES that, in consideration of the
mutual covenants and agreements herein contained and for other good and valuable
consideration (the receipt and sufficiency of which are hereby acknowledged),
the parties hereto covenant and agree as follows:
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ARTICLE 1
INTERPRETATION
1.01 DEFINED TERMS. The following defined terms shall for all purposes of this
agreement, or any amendment, substitute, supplement, replacement or addition
hereto, have the following respective meanings unless the context otherwise
specifies or requires or unless otherwise defined herein:
"ACCOMMODATION" means accommodation made available to the Borrower by the
Lenders under the Credit Facility, in each case in the manner provided in
Section 3.01.
"ACTING JOINTLY OR IN CONCERT" shall be interpreted in the manner described in
subsection 91(1) of the Securities Act (Ontario).
"AFFILIATE" shall have the meaning ascribed thereto in the Business Corporations
Act (Ontario).
"AGENCY FEE AGREEMENT" means the letter agreement dated September 25, 2001
between the Borrower and BNS, as the same may be amended, modified, supplemented
or replaced from time to time.
"ALTERNATE BASE RATE CANADA" means, for any particular day, the variable rate of
interest per annum, calculated on the basis of a 360-day year, which is equal to
the greater of (a) the Base Rate Canada for such day and (b) the aggregate of
(i) the Federal Funds Rate for such day and (ii) 1/2 of 1% per annum.
"APPLICABLE MARGIN" means, at any time, the applicable rate per annum set forth
in the table below for the applicable S & P rating and the applicable
Utilization Rate:
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S & P'S CORPORATE CREDIT OR UTILIZATION RATE
UNSECURED DEBT RATING OF
BORROWER
-----------------------------------------------------------------------------------------------------
LESS THAN 1/3 MORE THAN 1/3 AND LESS THAN 2/3 MORE THAN 2/3
-----------------------------------------------------------------------------------------------------
A- or above .50% per annum .575% per annum .65% per annum
-----------------------------------------------------------------------------------------------------
BBB+ .60% per annum .675% per annum .75% per annum
-----------------------------------------------------------------------------------------------------
BBB .70% per annum .775% per annum .85% per annum
-----------------------------------------------------------------------------------------------------
BBB- .85% per annum .925% per annum 1.00% per annum
-----------------------------------------------------------------------------------------------------
BB+ or below or unrated 1.10% per annum 1.175% per annum 1.25% per annum
-----------------------------------------------------------------------------------------------------
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"AVAILABLE ACCOMMODATION" means, at any particular time, the amount, if any, by
which the amount of the Credit Facility (as such amount may be reduced from time
to time pursuant to the terms hereof) at such time exceeds the aggregate amount
of Accommodation outstanding at such time.
"BANKING DAY" means any day other than a Saturday or a Sunday on which banks
generally are open for normal banking business in Toronto and New York and, with
respect to transactions involving LIBOR Loans, on which transactions may be
undertaken in the London interbank market.
"BASE RATE CANADA" means, for any particular day, the variable rate of interest
per annum, calculated on the basis of a 360-day year, determined by the Agent
for such day as its base rate for U.S. dollar loans made by the Agent in Canada,
such base rate being a variable per annum reference rate of interest adjusted
automatically upon change by the Agent.
"BASE RATE CANADA LOAN" means an Accommodation under the Credit Facility which
is denominated in United States dollars and upon which interest accrues at a
rate referrable to the Alternate Base Rate Canada.
"BNS" means The Bank of Nova Scotia in its individual capacity and not in its
capacity as the Agent or as a Lender.
"BORROWING" means the outstanding Accommodation made available to the Borrower
under the Credit Facility from time to time, subject to rollovers from time to
time pursuant to Article 5 and conversions from time to time pursuant to Article
6.
"BRANCH OF ACCOUNT" means the Investment Banking Division, Loan Administration
and Agency Services, 00 Xxxx Xxxxxx Xxxx, Xxxxxxx, Xxxxxxx, or such other branch
of the Agent located in Canada as the Borrower and the Agent may agree upon.
"CAPITAL" means, at any particular time, the aggregate of:
(a) Debt at such time; and
(b) Equity at such time.
"CODE" means the Internal Revenue Code of the United States, as amended from
time to time, and any successor statute.
"COMMITMENT SHARE" means, with respect to a particular Lender at a particular
time, the ratio of the Undrawn Commitment of such Lender at such time to the
aggregate of the Undrawn Commitments of all of the Lenders at such time.
"COMPANIES" means the Borrower and the Subsidiaries.
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"CONVERSION DATE" means September 24, 2002, as such date may be extended
pursuant to Section 1.13.
"CONVERSION NOTICE" shall have the meaning ascribed thereto in Section 6.02.
"CREDIT FACILITY" means the term credit facility established by the Lenders
pursuant to Section 2.01.
"DEBT" means, at any particular time, the aggregate of (without duplication):
(a) the aggregate of the amounts which would, in accordance with generally
accepted accounting principles, be classified on the consolidated
balance sheet of the Borrower at such time as indebtedness for
borrowed money of the Borrower and as capital leases of the Borrower
(but specifically excluding Subordinated Debt); and
(b) the aggregate indebtedness for borrowed money of entities other than
the Companies to the extent guaranteed by any of the Companies at such
time.
"DEFAULT" means any event which is or which, with the passage of time, the
giving of notice or both, would be an Event of Default.
"DESIGNATED ACCOUNT" means an account of the Borrower maintained by the Agent at
the Branch of Account for the purposes of transactions under this agreement.
"DRAWDOWN NOTICE" shall have the meaning ascribed thereto in Section 4.01.
"EBITDA" means, for any particular period, Net Income of the Borrower for such
period plus, to the extent deducted in the determination of Net Income of the
Borrower for such period, the aggregate of
(a) Interest Expense of the Borrower for such period;
(b) consolidated income tax expenses (both current and deferred) of the
Borrower (including, without limitation, those reported on the
consolidated income statement of the Borrower as "provincial mining
and other taxes") for such period; and
(c) consolidated depreciation, amortization and other non-cash expenses of
the Borrower for such period.
"ENVIRONMENTAL LAWS" means all applicable federal, state, provincial or local
statutes, laws, ordinances, codes, rules, regulations, consent decrees and
administrative orders having the force of law and relating to public health or
the protection of the environment.
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"EQUITY" means, at any particular time, the aggregate of (i) the amount which
would, in accordance with generally accepted accounting principles, be
classified upon the consolidated balance sheet of the Borrower at such time as
shareholder's equity and (ii) the amount of Subordinated Debt at such time.
"EQUITY SECURITY" shall have the meaning ascribed thereto in subsection 89(1) of
the Securities Act (Ontario).
"ERISA" means the Employee Retirement Income Security Act of 1974 of the United
States, as amended from time to time, and any successor statute.
"ERISA AFFILIATE" means any trade or business (whether or not incorporated)
under common control with the Borrower within the meaning of Section 414(b) or
(c) of the Code (and Sections 414(m) and (o) of the Code for purposes of
provisions relating to Section 412 of the Code).
"ERISA EVENT" means (a) a Reportable Event with respect to a Pension Plan; (b) a
withdrawal by the Borrower or any ERISA Affiliate from a Pension Plan subject to
Section 4063 of ERISA during a plan year in which it was a substantial employer
(as defined in Section 4001(a)(2) of ERISA) or a cessation of operations which
is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete
or partial withdrawal by the Borrower or any ERISA Affiliate from a
Multiemployer Plan or notification that a Multiemployer Plan is in
reorganization; (d) the filing of a notice of intent to terminate, the treatment
of a Plan amendment as a termination under Section 4041 or 4041A of ERISA, or
the commencement of proceedings by the PBGC to terminate a Pension Plan or
Multiemployer Plan; (e) an event or condition which might reasonably be expected
to constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Pension Plan or Multiemployer Plan;
or (f) the imposition of any liability under Title IV of ERISA, other than PBGC
premiums due but not delinquent under Section 4007 of ERISA, upon the Borrower
or any ERISA Affiliate.
"EVENT OF DEFAULT" means any one of the events set forth in Section 13.01.
"EXCHANGE ACT" means the Securities Exchange Act of 1934 of the United States,
as amended from time to time, and any successor statute, and the regulations
promulgated thereunder.
"FEDERAL FUNDS RATE" means, for any day, the rate set forth in the weekly
statistical release designated as H.15(519), or any successor publication,
published by the Federal Reserve Bank of New York (including any such successor,
"H.15(519)") on the preceding Banking Day opposite the caption "Federal Funds
(Effective)"; or, if for any relevant day such rate is not so published on any
such preceding Banking Day, the rate for such day will be the arithmetic mean as
determined by the Agent of the rates for the last transaction in overnight
federal funds arranged prior to 9:00 a.m. (New York time) on that day by each of
three leading brokers of federal funds transactions in New York City selected by
the Agent.
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"FEDERAL RESERVE BANK" means the Federal Reserve Bank of New York.
"FINANCIAL STATEMENTS" means the audited consolidated financial statements of
the Borrower for the fiscal year ended on December 31, 2000.
"FISCAL QUARTER" means any of the three-month periods ending on the last day of
March, June, September and December in each year.
"FISCAL YEAR" means any of the twelve-month periods ending on the last day of
December in each year.
"FRB" means the Board of Governors of the Federal Reserve System, and any
Governmental Authority succeeding to any of its principal functions.
"GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" means generally accepted accounting
principles in effect in Canada from time to time consistently applied.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state, province or
other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
and with respect to any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing when such
corporation or entity is acting pursuant to or performing the functions of such
nation, government, state, province, political subdivision or central bank.
"GUARANTEE" means a guarantee of the Obligations in the form set forth in
Schedule I, executed and delivered by the Guarantor.
"GUARANTOR" means PCS Nitrogen, Inc.
"HAZARDOUS MATERIALS" means any pollutant or contaminant or hazardous or toxic
chemical, material or substance within the meaning of any applicable federal,
state, provincial or local law, regulation, ordinance or requirement (including
consent decrees and administrative orders) relating to or imposing liability or
standards of conduct concerning any hazardous or toxic waste, substance or
material or concerning the environment or public health, all as in effect on the
applicable date.
"INDIVIDUAL COMMITMENT" means, with respect to a particular Lender, the amount
set forth in Schedule A attached hereto, as reduced or amended from time to time
pursuant to Sections 1.13(b), 1.13(d), 2.03, 2.04, 8.03 and 15.06, as the
individual commitment of such Lender under the Credit Facility.
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"INTEREST EXPENSES" of any particular Person means, for any particular period,
the amount which would, in accordance with generally accepted accounting
principles, be classified on the consolidated income statement of such Person
for such period as gross interest expenses.
"INTEREST PERIOD" means, in the case of any LIBOR Loan, the applicable period
for which interest on such Loan shall be calculated pursuant to Article 7.
"LIBOR" means, for a particular Interest Period, the interest rate per annum,
calculated on the basis of a 360-day year, determined by the Agent to be (i) the
arithmetic average (rounded upwards to the nearest 1/16 of 1%) of the interest
rates per annum of the LIBOR Reference Lenders that appear for such Interest
Period on the Telerate Screen Page 3750 for the LIBOR Reference Lenders at
approximately 11:00 a.m. (London time) on the second Banking Day prior to the
commencement of such Interest Period or (ii) if such rate does not appear on
such Page at such time or such Page or a substitute therefor is not available at
such time, the arithmetic average (rounded upwards to the nearest 1/16 of 1%) of
the rates of interest per annum at which the LIBOR Reference Lenders offer
deposits in United States dollars to leading banks in the London interbank
market at approximately 11:00 a.m. (London time) on the second Banking Day prior
to the commencement of such Interest Period, in each case for a deposit period
comparable to such Interest Period and in an amount approximately equal to the
amount of the LIBOR Loan to be outstanding during such Interest Period.
"LIBOR LOAN" means an Accommodation under the Credit Facility which is
denominated in United States dollars and upon which interest accrues at a rate
referrable to LIBOR.
"LIBOR REFERENCE LENDERS" means The Bank of Nova Scotia, Royal Bank of Canada
and such other Lender as is mutually agreed to by the Agent and the Borrower.
"LIEN" means any deed of trust, mortgage, charge, hypothec, assignment, pledge,
lien, vendor's privilege or other security interest or encumbrance of whatever
kind or nature, regardless of form and whether consensual or arising by law
(statutory or otherwise), that secures the payment of any indebtedness or
liability or the observance or performance of any obligation.
"LOAN DOCUMENTS" means this agreement and the Guarantee.
"LOANS" means LIBOR Loans and Base Rate Canada Loans.
"LONG TERM DEBT" means, at any particular time, that portion of Debt at such
time which would not, in accordance with generally accepted accounting
principles, be considered to be current liabilities at such time.
"MAJORITY LENDERS" means (i) at any particular time that there is Accommodation
outstanding hereunder, such group of Lenders which, in the aggregate, have
Outstanding Accommodations which are equal to at least two-thirds of the total
amount of the Outstanding Accommodations of all of the Lenders at such time or
(ii) at any particular time that there is no Accommodation
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outstanding hereunder, such group of Lenders which, in the aggregate, have
Individual Commitments which are equal to at least two-thirds of the total
amount of the Individual Commitments of all of the Lenders at such time.
"MATERIAL ADVERSE CHANGE" means any change of circumstances or any event which
would have a Material Adverse Effect.
"MATERIAL ADVERSE EFFECT" means an adverse effect on the financial condition,
business, assets, properties or prospects of the Borrower on a consolidated
basis which, individually or as part of a series of adverse effects, would have
a material adverse effect on the ability of the Borrower to perform any of its
payment obligations hereunder.
"MATERIAL SUBSIDIARIES" means PCS Sales (USA) Inc., Phosphate Holding Company,
Inc., PCS Finance LLC, PCS Phosphate Company, Inc., White Springs Agricultural
Chemicals, Inc., White Springs Phosphate, Inc., the Guarantor and any other
subsidiary of the Borrower whose book value of assets is greater than 20% of the
book value of the assets of the Borrower on a consolidated basis or whose gross
sales are greater than 20% of the gross sales of the Borrower on a consolidated
basis.
"MATURITY DATE" means the day which is one year following the Conversion Date.
"MULTIEMPLOYER PLAN" means a multiemployer plan, within the meaning of Section
4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate makes, is
making, or is obligated to make contributions or, during the preceding three
calendar years, has made, or been obligated to make, contributions.
"NET INCOME" of a particular Person means, for any particular period, the amount
which would, in accordance with generally accepted accounting principles, be
classified on the consolidated income statement of such Person for such period
as the net income after all unusual and extraordinary items other than any gains
or losses on the disposition of property, plant and equipment and any non-cash
writedowns of assets.
"OBLIGATIONS" means all advances, debts, liabilities, obligations, covenants and
duties arising under any Loan Document, owing by the Borrower to the Agent and
the Lenders, whether direct or indirect (including those acquired by
assignment), absolute or contingent, due or to become due, now existing or
hereafter arising.
"OFFER TO ACQUIRE", "OFFEREE ISSUER" and "OFFEROR'S SECURITIES" shall each have
the respective meaning ascribed thereto in subsection 89(1) of the Securities
Act (Ontario).
"OFFICIAL BODY" means any national government or government of any political
subdivision thereof, or any agency, authority, board, central bank, monetary
authority, commission, department or instrumentality thereof, or any court,
tribunal, grand jury, mediator or arbitrator,
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whether foreign or domestic, or any non-governmental regulating authority to the
extent that the rules, regulations and orders of such body have the force of
law.
"OUTSTANDING ACCOMMODATION" means, with respect to a particular Lender at a
particular time, the aggregate amount of Accommodation outstanding at such time
which has been made available by such Lender.
"PAYMENT NOTICE" shall have the meaning ascribed thereto in Section 9.03.
"PAYMENT SHARE" means, with respect to a particular Lender at a particular time,
the ratio of Outstanding Accommodation of such Lender at such time to the
aggregate of Outstanding Accommodations of all of the Lenders at such time.
"PBGC" means Pension Benefit Guaranty Corporation or any Governmental Authority
succeeding to any of its principal functions under ERISA.
"PENSION PLAN" means a pension plan (as defined in Section 3(2) of ERISA)
subject to Title IV of ERISA which the Borrower sponsors, maintains, or to which
it makes, is making, or is obligated to make contributions, or in the case of a
multiple employer plan (as described in Section 4064(a) of ERISA) has made
contributions at any time during the immediately preceding five (5) plan years.
"PERMITTED LIENS" means any one or more of the following with respect to the
assets of the Companies:
(a) inchoate or statutory Liens for taxes, assessments and other
governmental charges or levies which are not delinquent (taking into
account any relevant grace periods) or the validity of which are
currently being contested in good faith by appropriate proceedings and
in respect of which there shall have been set aside a reserve
(segregated to the extent required by generally accepted accounting
principles) in an amount which is adequate therefor;
(b) inchoate or statutory Liens of contractors, subcontractors, mechanics,
workers, suppliers, materialmen, carriers and others in respect of
construction, maintenance, repair or operation of assets of the
Companies, provided that such Liens are related to obligations not due
or delinquent (taking into account any applicable grace or cure
periods), are not registered as encumbrances against title to any
assets of the Companies and adequate holdbacks are being maintained as
required by applicable legislation or such Liens are being contested
in good faith by appropriate proceedings and in respect of which there
shall have been set aside a reserve (segregated to the extent required
by generally accepted accounting principles) in an amount which is
adequate with respect thereto and provided further that such Liens do
not in the aggregate materially detract from
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the value of the assets of the Companies encumbered thereby or
materially interfere with the use thereof in the operation of the
business of the Companies;
(c) easements, rights-of-way, servitudes, restrictions and similar rights
in real property comprised in the assets of the Companies or interests
therein granted or reserved to other persons, provided that such
rights do not in the aggregate materially detract from the value of
the assets of the Companies subject thereto or materially interfere
with the use thereof in the operation of the business of the
Companies;
(d) title defects or irregularities which are of a minor nature and which
do not in the aggregate materially detract from the value of the
assets of the Companies encumbered thereby or materially interfere
with the use thereof in the operation of the business of the
Companies;
(e) Liens incidental to the conduct of the business or the ownership of
the assets of the Companies (other than those described in clauses (f)
and (g) of this definition) which were not incurred in connection with
the borrowing of money or the obtaining of advances or credit
(including, without limitation, unpaid purchase price), and which do
not in the aggregate materially detract from the value of the assets
of the Companies encumbered thereby or materially interfere with the
use thereof in the operation of the business of the Companies;
(f) Liens securing appeal bonds and other similar Liens arising in
connection with court proceedings (including, without limitation,
surety bonds, security for costs of litigation where required by law
and letters of credit) or any other instruments serving a similar
purpose;
(g) attachments, judgments and other similar Liens arising in connection
with court proceedings; provided, however, that such Liens are in
existence for less than 30 days after the entry therefor or the
execution or other enforcement of such Liens is effectively stayed and
the claims secured thereby are being actively contested in good faith
and by appropriate proceedings;
(h) the reservations, limitations, provisos and conditions, if any, (i)
expressed in any original grant from the Crown of any real property or
any interest therein or in any comparable grant in jurisdictions other
than Canada or (ii) expressed pursuant to the Land Titles Act
(Saskatchewan);
(i) Liens, charges or other security interests given to a public utility
or any municipality or governmental or other public authority when
required by such utility or other authority in connection with the
operation of the business or the ownership of the assets of the
Companies, provided that such Liens do not in the
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aggregate reduce the value of the assets of the Companies or
materially interfere with the use thereof in the operation of the
business of the Companies;
(j) servicing agreements, development agreements, site plan agreements,
and other agreements with governmental or public authorities
pertaining to the use or development of any of the assets of the
Companies, provided same are complied with including, without
limitation, any obligations to deliver letters of credit and other
security as required;
(k) applicable municipal and other governmental restrictions, including
municipal by-laws and regulations, affecting the use of land or the
nature of any structures which may be erected thereon, provided such
restrictions have been complied with;
(l) Purchase Money Obligations arising in the ordinary course of business,
where "Purchase Money Obligations" means any Lien created, issued or
assumed by the Companies to secure indebtedness assumed as part of, or
issued or incurred to pay or provide funds to pay, all or a part of
the purchase price of any property (other than the securities of any
Subsidiary or of any company which becomes a Subsidiary upon such
purchase), provided that such Lien is limited to the property so
acquired and is created, issued or assumed substantially concurrently
with the acquisition of such property;
(m) Liens securing industrial revenue bonds issued by the Companies;
(n) the right reserved to or vested in any Official Body by any statutory
provision, or by the terms of any lease, licence, franchise, grant or
permit of any of the Companies, to terminate any such lease, licence,
franchise, grant or permit, or to require annual or other payments as
a condition to the continuance thereof;
(o) the Liens set forth in Schedule G;
(p) any amounts payable and obligations owing to any Person in respect of
royalty interests held by such Person on the production of minerals by
the Companies;
(q) the interests of lessors pursuant to all leases, including the capital
leases, under which a Company is the lessee;
(r) Liens securing the indebtedness of companies which become Subsidiaries
after the date hereof, which Liens and indebtedness are outstanding on
the date the relevant company became a Subsidiary, provided that such
indebtedness does not at any time exceed $75,000,000 in the aggregate;
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(s) any deemed security interest in accounts arising as a result of the
securitization thereof by the transfer thereof to a securitized asset
pool;
(t) the extension, renewal or refinancing of any Permitted Lien, provided
that the amount so secured does not exceed the original amount secured
immediately prior to such extension, renewal or refinancing; and
(u) Liens granted to the Agent and the Lenders to secure the indebtedness
hereunder.
"PERSON" means any natural person, corporation, firm, partnership, joint
venture, joint stock company, incorporated or unincorporated association,
government, governmental agency or any other entity, whether acting in an
individual, fiduciary or other capacity.
"PLAN" means an employee benefit plan (as defined in Section 3(3) of ERISA)
which the Borrower or any of its subsidiaries sponsors or maintains or to which
the Borrower or any of its subsidiaries makes, is making, or is obligated to
make contributions and includes any Pension Plan.
"PROPERTY" means all of the property owned, operated or used by the Companies.
"PRO RATA SHARE" means, with respect to a particular Lender at a particular
time, the ratio of the Individual Commitment of such Lender at such time to the
aggregate of the Individual Commitments of all of the Lenders at such time.
"QUALIFYING BID" means a Take-Over Bid which, based on such evidence as a
particular Lender, acting reasonably and in good faith, considers to be
satisfactory, is or will be supported by the management and/or directors of the
offeree issuer, which support continues from the date upon which the Borrower
gives notice of such Take-Over Bid to the Agent pursuant to Section 4.03 to the
date upon which the offeror (as defined in the definition of Take-Over Bid)
takes up and pays for the voting securities or equity securities forming the
subject matter of the Take-Over Bid.
"REPAYMENT AMOUNT" means the aggregate amount of Accommodation outstanding under
the Credit Facility at 5:00 p.m. (Toronto time) on the Conversion Date.
"REPORTABLE EVENT" means any of the events set forth in Section 4043(c) of ERISA
or the regulations thereunder, other than any such event for which the thirty
(30) day notice requirement under ERISA has been waived in regulations issued by
the PBGC.
"ROLLOVER NOTICE" shall have the meaning ascribed thereto in Section 5.02.
"S & P" means Standard & Poor's Rating Services and any successor thereto.
"STANDBY FEE RATE" means, at any time, the applicable rate per annum set forth
in the table below opposite the applicable S & P rating:
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-------------------------------------------------------------------------------
S & P'S CORPORATE CREDIT OR STANDBY FEE RATE
UNSECURED DEBT RATING OF BORROWER
-------------------------------------------------------------------------------
A- or above .10% per annum
-------------------------------------------------------------------------------
BBB+ .125% per annum
-------------------------------------------------------------------------------
BBB .15% per annum
-------------------------------------------------------------------------------
BBB- .175% per annum
-------------------------------------------------------------------------------
BB+ or below or unrated .25% per annum
-------------------------------------------------------------------------------
"SUBORDINATED DEBT" means, at any particular time, unsecured indebtedness of the
Borrower (for greater certainty, excluding the Subsidiaries) which would
otherwise be Debt but which is subordinated in writing, on terms satisfactory to
the Majority Lenders acting reasonably (including, without limitation,
subordination and postponement of principal repayments and restrictions on
rights to accelerate and commence proceedings), to the indebtedness of the
Borrower to the Agent and the Lenders hereunder.
"SUBSIDIARIES" shall have the meaning ascribed thereto in the Business
Corporations Act (Ontario).
"SUBSIDIARIES" means the subsidiaries of the Borrower including, without
limitation, those identified as such in Schedule E (as such Schedule is updated
pursuant to Section 11.01(a)(iii)).
"TAKE-OVER BID" means an offer to acquire voting securities or equity securities
of a class made by the Borrower or any subsidiary or affiliate of the Borrower
alone or acting jointly in concert with any other Person (collectively, the
"offeror") to any security holder of the offeree issuer, where the securities
subject to the offer to acquire, together with the offeror's securities,
constitute in the aggregate 20% or more of the outstanding securities of that
class of securities at the date of the offer to acquire, but excluding any such
offer which, under the securities laws of the jurisdiction in which such offer
is made, would be exempt from the formal requirements of a take-over bid.
"TANGIBLE NET WORTH" means, at any particular time, Equity at such time less the
aggregate of the amounts which would, in accordance with generally accepted
accounting principles, be classified on the consolidated balance sheet of the
Borrower at such time as intangible assets, including, without limitation,
goodwill and deferred expenses.
"TOTAL ASSETS" means, at any particular time, the amount which would, in
accordance with generally accepted accounting principles, be classified on the
consolidated balance sheet of the Borrower at such time as total assets.
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"UNDRAWN COMMITMENT" means, with respect to a particular Lender at a particular
time, the Individual Commitment of such Lender at such time less the Outstanding
Accommodation of such Lender at such time.
"UNFUNDED PENSION LIABILITY" means the excess of a Pension Plan's benefit
liabilities under Section 4001(a)(16) of ERISA over the current value of that
Pension Plan's assets, determined in accordance with the assumptions used for
funding the Pension Plan pursuant to Section 412 of the Code for the applicable
plan year.
"U.S. DOLLAR EQUIVALENT" means as of any particular date, with reference to any
amount expressed in Canadian dollars (the "Canadian Dollar Amount"), the amount
expressed in United States dollars which would be required to buy the Canadian
Dollar Amount using the noon spot rate of exchange for Canadian interbank
transactions applied in converting United States dollars into Canadian dollars
published by the Bank of Canada for such date.
"UTILIZATION RATE" means, at any particular time, the fraction obtained by
dividing the amount of Accommodation outstanding under the Credit Facility at
such time by the amount of the Credit Facility at such time.
"VOTING SECURITIES" shall have the meaning ascribed thereto in subsection 1(1)
of the Securities Act (Ontario).
1.02 OTHER USAGES. References to "this agreement", "the agreement", "hereof",
"herein", "hereto" and like references refer to this Term Credit Agreement and
not to any particular Article, Section or other subdivision of this agreement.
Any references herein to any agreements (including, without limitation, this
agreement) or documents shall mean such agreements or documents as amended,
supplemented or otherwise modified from time to time in accordance with the
terms hereof and thereof.
1.03 PLURAL AND SINGULAR. Where the context so requires, words importing the
singular number shall include the plural and vice versa.
1.04 HEADINGS. The division of this agreement into Articles and Sections and the
insertion of headings in this agreement are for convenience of reference only
and shall not affect the construction or interpretation of this agreement.
1.05 CURRENCY. Unless otherwise specified herein, all statements of or
references to dollar amounts in this agreement shall mean lawful money of the
United States of America.
1.06 APPLICABLE LAW. This agreement shall be governed by and construed in
accordance with the laws of the Province of Ontario and the federal laws of
Canada applicable therein. Any legal action or proceeding with respect to this
agreement may be brought in the courts of the Province of Ontario and, by
execution and delivery of this agreement, the parties hereby accept for
themselves and in respect of their property, generally and unconditionally, the
non-exclusive
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jurisdiction of the aforesaid courts. Each party irrevocably consents to the
service of process out of any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, to such party to the address prescribed by Section 15.02, such
service to become effective when received. Nothing herein shall limit the right
of any party to serve process in any manner permitted by law or to commence
legal proceedings or otherwise proceed against any other party in any other
jurisdiction.
1.07 TIME OF THE ESSENCE. Time shall in all respects be of the essence of this
agreement.
1.08 NON-BANKING DAYS. Subject to Section 7.04(c), whenever any payment to be
made hereunder shall be stated to be due or any action to be taken hereunder
shall be stated to be required to be taken on a day other than a Banking Day,
such payment shall be made or such action shall be taken on the next succeeding
Banking Day and, in the case of the payment of any amount, the extension of time
shall be included for the purposes of computation of interest, if any, thereon.
1.09 CONSENTS AND APPROVALS. Whenever the consent or approval of a party hereto
is required in a particular circumstance, unless otherwise expressly provided
for herein, such consent or approval shall not be unreasonably withheld or
delayed by such party.
1.10 AMOUNT OF OUTSTANDING ACCOMMODATION. Any reference herein to the amount of
Accommodation outstanding shall mean, at any particular time, in the case of a
Base Rate Canada Loan or a LIBOR Loan, the principal amount thereof.
1.11 SCHEDULES. Each and every one of the schedules which is referred to in this
agreement and attached to this agreement shall form a part of this agreement.
1.12 RELIANCE ON DISCLOSURE. Where in connection with any representation or
warranty or event of default, the Borrower has made a disclosure of certain
facts herein, it is acknowledged by all of the parties hereto that such
disclosure has been made in good faith by the Borrower and for purposes of
greater certainty and that:
(a) such disclosure is not an admission by the Borrower that such facts
constitute a Material Adverse Change or Material Adverse Effect; and
(b) the nature of such disclosure shall not be relied upon by any of the
parties hereto as evidence of what constitutes a Material Adverse
Change or Material Adverse Effect.
1.13 EXTENSION OF CONVERSION DATE.
(a) The Borrower may, by written notice given to the Agent at least 60 days
but not more than 90 days prior to the then current Conversion Date, request
that the Conversion Date be extended to a date which is 364 days following the
then current Conversion Date. Such
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extension shall become effective on the then current Conversion Date if, but
only if, all of the Lenders notify the Agent in writing that they consent to
such extension (whether such notification is provided either initially or after
the completion of the procedures set forth in clauses (b), (c) and (d) below) at
least 10 days prior to the then current Conversion Date, which consent may be
withheld by the Lenders in their sole and absolute discretion. Any such notice
to the Agent of consent to such extension which is given to the Agent more than
30 days prior to the then current Conversion Date shall be revocable by the
Lender until the 30th day prior to the then current Conversion Date.
(b) If the Borrower makes a request for an extension of the then current
Conversion Date pursuant to Section 1.13(a), the Agent shall forthwith notify
the Lenders of such request and each Lender shall, at least 30 days prior to the
then current Conversion Date, notify the Agent as to whether or not it consents
to such extension. If a group of Lenders (collectively, the "Extending Lenders"
and individually, an "Extending Lender") whose Individual Commitments constitute
in the aggregate at the time of such request at least 80% of the total
Individual Commitments at such time have so notified the Agent that they consent
to such extension (which notices have not been revoked) at least 30 days prior
to the then current Conversion Date, and the remaining Lenders (collectively,
the "Non-Extending Lenders" and individually, a "Non-Extending Lender") have
either failed to so notify the Agent or have so notified the Agent that they do
not consent to such extension at least 30 days prior to the then current
Conversion Date, then the Borrower may indicate to the Agent in writing that it
desires to replace the Non-Extending Lenders with one or more of the Extending
Lenders, and the Agent shall then forthwith give notice to the Extending Lenders
that any Extending Lender or Extending Lenders may, in the aggregate, assume all
(but not part) of the Non-Extending Lenders' Individual Commitments and
obligations hereunder and, in the aggregate, acquire all (but not part) of the
rights of the Non-Extending Lenders hereunder (but in no event shall any
Extending Lender or the Agent be obliged to so do). If one or more Extending
Lenders shall so agree in writing (collectively, the "Assenting Lenders" and
individually, an "Assenting Lender") with respect to such acquisition and
assumption, the Individual Commitments and the rights and obligations of each
such Assenting Lender hereunder shall be increased by its respective pro rata
share (based on the relative Individual Commitments of the Assenting Lenders) of
the Non-Extending Lenders' Individual Commitments and rights and obligations
hereunder on a date no later than 20 days prior to the then current Conversion
Date but otherwise mutually acceptable to the Assenting Lenders and the
Borrower. On such date, the Assenting Lender shall pay to each Non-Extending
Lender the advances of such Non-Extending Lender then outstanding, together with
all interest accrued thereon and all other amounts owing to such Non-Extending
Lender hereunder, and, upon such payment by the Assenting Lenders, such
Non-Extending Lender shall cease to be a "Lender" for purposes of this agreement
and shall no longer have any obligations hereunder. Upon the assumption of such
Non-Extending Lender's Individual Commitment as aforesaid by an Assenting
Lender, Schedule A hereto shall be deemed to be amended to increase the
Individual Commitment of such Assenting Lender by the respective amounts of such
assumption and to reduce the Individual Commitment of such Non-Extending Lender
to nil.
- 17 -
(c) If all of the Non-Extending Lenders' Individual Commitments and rights
and obligations hereunder are not acquired and assumed by the Extending Lenders
pursuant to Section 1.13(b), each Non-Extending Lender shall use its best
efforts to sell on a timely basis (i.e., on or before a date no later than 10
days prior to the then current Conversion Date) its remaining Individual
Commitment and rights and obligations hereunder to a Purchasing Lender (as
defined in Section 15.06(c)) pursuant to Section 15.06(c), which Purchasing
Lender is prepared to consent to the requested extension of the Conversion Date.
If the Borrower identifies to a Non-Extending Lender such a specific Purchasing
Lender, such Non-Extending Lender shall sell its remaining Individual Commitment
and rights and obligations hereunder to such Purchasing Lender.
(d) If no sale has been made pursuant to Section 1.13(c) by the date
which is 10 days prior to the then Conversion Date, the Borrower may prepay on
such date all Accommodations made available to it by each Non-Extending Lender
together with all accrued and unpaid fees and interest with respect thereto
(provided that, with respect to any such Accommodations which are LIBOR Loans,
they may be so prepaid as they mature), whereupon the Individual Commitment of
such Non-Extending Lender shall be reduced to nil and such Non-Extending Lender
shall cease to be a Lender hereunder.
ARTICLE 2
CREDIT FACILITY
2.01 ESTABLISHMENT OF CREDIT FACILITY. Subject to the terms and conditions
hereof, the Lenders hereby establish in favour of the Borrower a term credit
facility (the "Credit Facility") in the amount of U.S. $650,000,000.
2.02 LENDERS' COMMITMENTS. Subject to the terms and conditions hereof, the
Lenders severally agree to make Accommodation available to the Borrower under
the Credit Facility from time to time provided that the aggregate amount of
Accommodation to be made available by each Lender under the Credit Facility
shall not at any time exceed the Individual Commitment of such Lender and
further provided that the aggregate amount of Accommodation outstanding under
the Credit Facility shall not at any time exceed the amount of the Credit
Facility. All Accommodation requested under the Credit Facility shall be made
available to the Borrower contemporaneously by all of the Lenders. Each Lender
shall provide to the Borrower its Commitment Share of each Accommodation,
whether such Accommodation is made available or continued, as the case may be,
by way of drawdown, rollover or conversion. The number of different types of
Accommodations outstanding at any time shall not exceed ten and, for such
purposes, LIBOR Loans having different Interest Periods shall constitute
different types of Accommodations. No Lender shall be responsible for any
default by any other Lender in its obligation to provide its Commitment Share of
any Accommodation nor shall the Individual Commitment of any Lender be increased
as a result of any such default of another Lender. The failure of any Lender to
make available to the Borrower its Commitment Share of any Accommodation shall
not relieve any other Lender of its obligation hereunder to make available
- 18 -
to the Borrower its Commitment Share of such Accommodation. Notwithstanding any
other provision hereof, the Agent is authorized by the Borrower and the Lenders
to allocate amongst the Lenders the LIBOR Loans to be advanced in such manner
and amounts as the Agent may, in its sole and unfettered discretion acting
reasonably, consider necessary, rounding up or down, so as to ensure that no
Lender is required to advance a LIBOR Loan for a fraction of U.S. $100,000.
2.03 CHANGE OF AMOUNT OF CREDIT FACILITY. At 5:00 p.m. (Toronto time) on the
Conversion Date, the amount of the Credit Facility shall be permanently reduced
to the aggregate amount of Accommodation outstanding under the Credit Facility
at such time. The amount of the Credit Facility will be permanently reduced at
the time of and by the amount of each prepayment pursuant to Section 1.13(d) and
each prepayment or repayment after the Conversion Date pursuant to Article 9.
The Borrower may, from time to time on or prior to the Conversion Date and upon
two Banking Days' notice to the Agent, reduce the amount of the Credit Facility
to the extent the Credit Facility is not utilized. Upon any change in the amount
of the Credit Facility (other than a reduction thereof by reason of a prepayment
pursuant to Section 1.13(d)), the Individual Commitment of each Lender shall
thereupon be correspondingly changed by an amount equal to such Lender's Pro
Rata Share of the amount of such change in the amount of the Credit Facility.
2.04 TERMINATION OF CREDIT FACILITY. The Credit Facility shall terminate upon
the earliest to occur of:
(a) the Maturity Date;
(b) the termination of the Credit Facility in accordance with Section
13.01; and
(c) the date on which the Credit Facility has been permanently reduced to
zero pursuant to Section 2.03.
Upon the termination of the Credit Facility, (i) the right of the Borrower to
obtain or maintain Accommodation under the Credit Facility and all of the
obligations of the Lenders to make Accommodation available under the Credit
Facility shall automatically terminate and (ii) the Individual Commitment of
each Lender shall be reduced to nil.
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ARTICLE 3
GENERAL PROVISIONS RELATING TO ACCOMMODATIONS
3.01 TYPES OF ACCOMMODATIONS. Subject to the terms and conditions hereof, the
Borrower may obtain and maintain Accommodation under the Credit Facility by way
of one or more Base Rate Canada Loans and, subject to availability of LIBOR
funding in the financial markets, LIBOR Loans.
3.02 FUNDING OF LOANS. Each Lender shall make available to the Agent its
Commitment Share of the principal amount of each Loan under the Credit Facility
prior to 11:30 a.m. (Toronto time) on the date of the Accommodation. The Agent
shall, upon fulfilment by the Borrower or waiver by the Majority Lenders of the
terms and conditions set forth in Article 12, make such funds available to the
Borrower on the date of the Accommodation by crediting the Designated Account
unless otherwise irrevocably authorized and directed in the Drawdown Notice.
Unless the Agent has been notified by a Lender prior to 11:30 a.m. (Toronto
time) on the date of the Accommodation that such Lender will not make available
to the Agent its Commitment Share of such Loan, the Agent may assume that such
Lender has made such portion of the Loan available to the Agent on the date of
the Accommodation in accordance with the provisions hereof and the Agent may, in
reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If the Agent has made such assumption, to the extent such
Lender shall not have so made its Commitment Share of the Loan available to the
Agent, such corresponding amount made available by the Agent shall not
constitute a Loan hereunder, and the Agent shall be entitled to recover from
such Lender, by way of reimbursement, such corresponding amount together with
all reasonable costs incurred by the Agent in connection therewith and interest
thereon (calculated at the then prevailing interbank rate for each day from the
date such amount is made available to the Borrower until such amount is
reimbursed to the Agent), for each day from the date such amount was made
available to the Borrower until such amounts are reimbursed; provided that if
the Lender fails to pay then the Borrower shall reimburse such amounts to the
Agent. The amount payable by such Lender to the Agent pursuant hereto shall be
set forth in a certificate delivered by the Agent to such Lender and the
Borrower (which certificate shall contain reasonable details of how the amount
payable is calculated) and shall constitute prima facie evidence of such amount
payable. If such Lender makes the payment to the Agent required herein, the
amount so paid shall constitute such Lender's Commitment Share of the Loan for
purposes of this agreement and shall entitle the Lender to all rights and
remedies against the Borrower in respect of such Loan. The failure of any Lender
to make available to the Agent its Commitment Share of a Loan shall not relieve
any other Lender of its obligation hereunder to make available to the Agent its
Commitment Share of the Loan on the date of the Accommodation.
3.03 FAILURE OF LENDER TO FUND LOAN. If any Lender fails to make available to
the Agent its Commitment Share of any Loan under the Credit Facility as required
(such Lender being herein called the "Defaulting Lender") and the Agent has not
funded pursuant to Section 3.02, the Agent shall forthwith give notice of such
failure by the Defaulting Lender to the Borrower
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and the other Lenders and such notice shall state that any Lender may make
available to the Agent all or any portion of the Defaulting Lender's Commitment
Share of such Loan (but in no way shall any other Lender or the Agent be obliged
to do so) in the place and stead of the Defaulting Lender. If more than one
Lender gives notice that it is prepared to make funds available in the place and
stead of a Defaulting Lender in such circumstances and the aggregate of the
funds which such Lenders (herein collectively called the "Contributing Lenders"
and individually called the "Contributing Lender") are prepared to make
available exceeds the amount of the advance which the Defaulting Lender failed
to make, then each Contributing Lender shall be deemed to have given notice that
it is prepared to make available its pro rata share of such advance based on the
Contributing Lenders' relative commitments to advance in such circumstances. If
any Contributing Lender makes funds available in the place and stead of a
Defaulting Lender in such circumstances, then the Defaulting Lender shall pay to
any Contributing Lender making the funds available in its place and stead,
forthwith on demand, any amount advanced on its behalf together with interest
thereon at the then prevailing interbank rate for each day from the date of
advance to the date of payment, against payment by the Contributing Lender
making the funds available of all interest received in respect of the Loan from
the Borrower. In addition to interest as aforesaid, the Borrower shall pay all
amounts owing by the Borrower to the Defaulting Lender hereunder (with respect
to the amounts advanced by the Contributing Lenders on behalf of the Defaulting
Lender) to the Contributing Lenders in accordance with Section 3.04 until such
time as the Defaulting Lender pays to the Agent for the Contributing Lenders all
amounts advanced by the Contributing Lenders on behalf of the Defaulting Lender.
3.04 INABILITY TO FUND U.S. DOLLAR ADVANCES IN CANADA. If any Lender (the
"Affected Lender") determines in good faith, which determination shall be final,
conclusive and binding on the Borrower, and the Affected Lender notifies the
Borrower that (i) by reason of circumstances affecting financial markets inside
or outside Canada, deposits of United States dollars are unavailable to the
Affected Lender in Canada, (ii) adequate and fair means do not exist for
ascertaining the applicable interest rate on the basis provided in the
definition of LIBOR, (iii) the making or continuation of United States dollar
advances in Canada has been made impracticable by the occurrence of a
contingency (other than a mere increase in rates payable by the Affected Lender
to fund the advance) which materially and adversely affects the funding of the
advances at any interest rate computed on the basis of LIBOR, or by reason of a
change in any applicable law or government regulation, guideline or order
(whether or not having the force of law but, if not having the force of law, one
with which a responsible bank would comply) or in the interpretation thereof by
any Official Body affecting the Affected Lender or any relevant financial
market, which results in LIBOR no longer representing the effective cost to the
Affected Lender of deposits in such market for a relevant Interest Period, or
(iv) any change to present law or any future law, regulation, order, treaty or
official directive (whether or not having the force of law but, if not having
the force of law, one with which a responsible bank would comply) or any change
therein or any interpretation or application thereof by any Official Body has
made it unlawful for the Affected Lender to make or maintain or give effect to
its obligations in respect of United States dollar advances in Canada as
contemplated herein, then
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(a) the right of the Borrower to obtain any affected type of Accommodation
from the Affected Lender shall be suspended until the Affected Lender
determines that the circumstances causing such suspension no longer
exist and the Affected Lender so notifies the Borrower;
(b) if any affected type of Accommodation is not yet outstanding, any
applicable Drawdown Notice, Rollover Notice or Conversion Notice shall
be cancelled and the advance requested therein shall not be made; and
(c) if any LIBOR Loan is already outstanding at any time when the right of
the Borrower to obtain Accommodation by way of a LIBOR Loan is
suspended, it shall be converted 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) to a Base Rate Canada Loan in the
principal amount equal to the principal amount of the LIBOR Loan.
3.05 TIME AND PLACE OF PAYMENTS. The Borrower shall make all payments pursuant
to this agreement or pursuant to any document, instrument or agreement delivered
pursuant hereto by deposit to the applicable Designated Account before 12:00
noon (Toronto time) on the day specified for payment and the Agent shall be
entitled to withdraw the amount of any payment due to the Agent or the Lenders
from such account on the day specified for payment.
3.06 REMITTANCE OF PAYMENTS DUE TO LENDERS. Forthwith after the withdrawal from
the applicable Designated Account by the Agent of any payment of principal,
interest, fees, or other amounts for the benefit of the Lenders pursuant to
Section 3.05, the Agent shall, subject to Section 8.03, remit to each Lender
entitled thereto, in immediately available funds, such Lender's Payment Share of
such payment (or such Lender's Commitment Share of such payment in the case of
standby fees, calculated on a daily average basis); provided that if the Agent,
on the assumption that it will receive, on any particular date, a payment of
principal (including, without limitation, a prepayment), interest, fees or other
amount hereunder, remits to each Lender entitled thereto its Payment Share or
Commitment Share, as the case may be, of such payment and the Borrower fails to
make such payment, each of the Lenders agrees to repay to the Agent, forthwith
on demand, to the extent that such amount is not recovered from the Borrower on
demand and after reasonable efforts by the Agent to collect such amount (without
in any way obligating the Agent to take any legal action with respect to such
collection), such Lender's Payment Share or Commitment Share, as the case may
be, of the payment made to it pursuant hereto together with interest thereon at
the then prevailing interbank rate for each day from the date such amount is
remitted to the Lenders until the date such amount is paid or repaid to the
Agent, the exact amount of the repayment required to be made by the Lenders
pursuant hereto to be as set forth in a certificate delivered by the Agent to
each Lender, which certificate shall constitute prima facie evidence of such
amount of repayment.
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3.07 EVIDENCE OF INDEBTEDNESS. The Agent shall open and maintain accounts
wherein the Agent shall record the amount and type of Accommodation outstanding,
each advance and each payment of principal and interest on account of each Loan
and all other amounts becoming due to and being paid to the Lenders or the Agent
hereunder. The Agent's accounts constitute, in the absence of manifest error,
prima facie evidence of the indebtedness of the Borrower to the Lenders and the
Agent hereunder.
3.08 NOTICE PERIODS. Each Drawdown Notice, Rollover Notice, Conversion Notice
and Payment Notice shall be given to the Agent:
(a) prior to 11:30 a.m. (Toronto time) on the third Banking Day prior to
the date of a drawdown of, rollover of, conversion into, conversion
of, conversion into, repayment of or prepayment of a LIBOR Loan; and
(b) prior to 11:30 a.m. (Toronto time) on the second Banking Day prior to
the date of any other drawdown, rollover, conversion, repayment or
prepayment.
ARTICLE 4
DRAWDOWN
4.01 DRAWDOWN NOTICE. Provided that all of the applicable conditions precedent
set forth in Article 12 have been fulfilled by the Borrower or waived by the
Majority Lenders and subject to Section 4.03, the Borrower may have
Accommodation made available to it under the Credit Facility from time to time
prior to the Conversion Date by giving to the Agent an irrevocable notice
("Drawdown Notice") in accordance with Section 3.08 and specifying
(a) the date such Accommodation is to be made available;
(b) whether such Accommodation is to be made available by way of LIBOR
Loan or Base Rate Canada Loan;
(c) the principal amount of the Loan, and, in the case of any LIBOR Loan,
the Interest Period with respect thereto;
(d) the details of any irrevocable authorization and direction with
respect to the disbursement of the proceeds of such drawdowns; and
(e) confirmation that the conditions precedent set out in Section 12.01
have been fulfilled.
4.02 ONE BORROWING. For greater certainty, there shall only be one Borrowing
under the Credit Facility after the Conversion Date. Rollovers of Accommodations
pursuant to Article 5
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and conversions from one type of Accommodation to another pursuant to Article 6
represent variations only in the terms of the outstanding Borrowing that is a
continuous obligation.
4.03 FINANCING OF HOSTILE BID. If the Borrower wishes to have an Accommodation
made available to it under the Credit Facility for the purpose of financing a
Take-Over Bid, the Borrower shall deliver to the Agent a written notice
("Take-Over Bid Notice") thereof at least 10 days prior to the date on which it
gives to the Agent a Drawdown Notice requesting such Accommodation. Such
Take-Over Bid Notice shall include the details of such Take-Over Bid and any
evidence that such Take-Over Bid is a Qualifying Bid. As soon as possible but in
any event within 3 days of the giving of the Take-Over Bid Notice, each Lender
shall, acting reasonably and in good faith, determine whether or not it
considers the Take-Over Bid to be a Qualifying Bid and shall so notify the Agent
and the Borrower and, if the Lender so determines that the Take-Over Bid is not
a Qualifying Bid, the Lender shall, in such notice, elect whether or not it
wishes to fund its Commitment Share of such drawdown. Notwithstanding any other
provisions hereof, if any Lender so determines that the Take-Over Bid is not a
Qualifying Bid and elects not to fund its Commitment Share of the drawdown, such
Lender shall not be required to fund its Commitment Share of such drawdown and
the drawdown shall be reduced accordingly.
ARTICLE 5
ROLLOVERS
5.01 LIBOR LOANS. Provided that the Borrower has, by giving notice to the Agent
in accordance with Section 5.02, requested the Lenders to continue to make
Accommodation available by way of LIBOR Loan at the end of the then outstanding
Interest Period, each Lender shall, at the end of such Interest Period, continue
to make Accommodation available to the Borrower by way of LIBOR Loan (without a
further advance of funds to the Borrower) for the Interest Period specified in
the Rollover Notice and in the principal amount equal to the principal amount of
the outstanding LIBOR Loan to the extent it was made available by such Lender.
5.02 ROLLOVER NOTICE. The notice to be given to the Agent pursuant to Section
5.01 ("Rollover Notice") shall be irrevocable, shall be given in accordance with
Section 3.08 and shall specify:
(a) the expiry date of the Interest Period of the outstanding LIBOR Loan;
(b) the principal amount of the LIBOR Loan;
(c) the new Interest Period of the LIBOR Loan; and
(d) confirmation that the conditions precedent set out in Section 12.01
have been fulfilled.
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ARTICLE 6
CONVERSIONS
6.01 CONVERTING LOAN TO OTHER TYPE OF LOAN. Provided that the Borrower has, by
giving notice to the Agent in accordance with Section 6.02, requested that all
or a portion of an outstanding Loan of a particular type be converted into
another type of Loan, each Lender shall, on the date of conversion (which, in
the case of the conversion of all or a portion of an outstanding LIBOR Loan,
shall be the last day of the Interest Period of such Loan), continue to make
Accommodation available to the Borrower by way of the type of Loan into which
the outstanding Loan or a portion thereof is converted (without a further
advance of funds to the Borrower) in the aggregate principal amount equal to the
principal amount of the outstanding Loan or the portion thereof which is being
converted to the extent it was made available by such Lender.
6.02 CONVERSION NOTICE. The notice to be given to the Agent pursuant to Section
6.01 ("Conversion Notice") shall be irrevocable, shall be given in accordance
with Section 3.08 and shall specify:
(a) the type of Loan to be converted;
(b) the date on which the conversion is to take place;
(c) the principal amount of the Loan or the portion thereof which is to be
converted;
(d) the type and amount of the Loan into which the outstanding Loan is to
be converted;
(e) if outstanding Accommodation is to be converted into a LIBOR Loan, the
applicable Interest Period; and
(f) confirmation that the conditions precedent set out in Section 12.01
have been fulfilled.
6.03 ABSENCE OF NOTICE. In the absence of a Rollover Notice or Conversion Notice
within the appropriate time periods referred to herein, a LIBOR Loan at the end
of its Interest Period shall be automatically converted to a Base Rate Canada
Loan as though a notice to such effect had been given in accordance with Section
6.02.
6.04 CONVERSION AFTER DEFAULT. If an Event of Default has occurred and is
continuing at 10:00 a.m. (Toronto time) on the third Banking Day prior to the
last day of the Interest Period of a LIBOR Loan, the Agent may, with the
approval of the Majority Lenders and upon notice to the Borrower, convert such
LIBOR Loan to a Base Rate Canada Loan as though a notice to such effect had been
given in accordance with Section 6.02.
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ARTICLE 7
INTEREST AND FEES
7.01 INTEREST RATES. The Borrower shall pay to the Lenders, in accordance with
Section 3.08, interest on the outstanding principal amount from time to time of
each such Loan at the rate per annum equal to:
(a) the Alternate Base Rate Canada in the case of each Base Rate Canada
Loan; and
(b) LIBOR plus the Applicable Margin in the case of each LIBOR Loan.
After the Conversion Date, the Applicable Margin shall increase by 0.15% per
annum.
7.02 CALCULATION AND PAYMENT OF INTEREST.
(a) Interest on the outstanding principal amount from time to time of each
LIBOR Loan and Base Rate Canada Loan shall accrue from day to day from and
including the date on which Accommodation is made available by way of such Loan
to but excluding the date on which such Loan is repaid in full (both before and
after maturity and before and after judgment) and shall be calculated on the
basis of the actual number of days elapsed divided by 360.
(b) Accrued interest shall be paid,
(i) in the case of interest on Base Rate Canada Loans, monthly in
arrears on the last Banking Day of each calendar month; and
(ii) in the case of interest on LIBOR Loans, on the last day of the
applicable Interest Period and, where the Interest Period is
longer than three months, every three months after the beginning
of such Interest Period.
7.03 GENERAL INTEREST RULES.
(a) For the purposes hereof, whenever interest is calculated on the basis
of a year of 360 days, each rate of interest determined pursuant to such
calculation expressed as an annual rate for the purposes of the Interest Act
(Canada) is equivalent to such rate as so determined multiplied by the actual
number of days in the calendar year in which the same is to be ascertained and
divided by 360.
(b) Interest on each Loan shall be payable in United States dollars.
(c) If the Borrower fails to pay any principal, interest, fee or other
amount of any nature payable by it hereunder on the due date therefor, the
Borrower shall pay to the Lenders to whom such amount is due interest on such
overdue amount in the same currency as such overdue amount is payable from and
including such due date to but excluding the date of actual payment
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(as well after as before judgment) at the rate per annum, calculated and
compounded monthly, which is equal to the Alternate Base Rate Canada plus 1%.
7.04 SELECTION OF INTEREST PERIODS. With respect to each LIBOR Loan, the
Borrower shall specify in the Drawdown Notice, Rollover Notice or Conversion
Notice, the duration of the Interest Period provided that:
(a) Interest Periods for LIBOR Loans shall have a duration of one, two,
three, six, nine or twelve months and shall end on or before the
Maturity Date;
(b) the first Interest Period for a LIBOR Loan shall commence on and
include the day on which Accommodation is made available by way of
such Loan and each subsequent Interest Period applicable thereto shall
commence on and include the date of the expiry of the immediately
preceding Interest Period applicable thereto; and
(c) if any Interest Period would end on a day which is not a Banking Day,
such Interest Period shall be extended to the next succeeding Banking
Day unless such next succeeding Banking Day falls in the next calendar
month, in which case such Interest Period shall be shortened to end on
the immediately preceding Banking Day.
7.05 STANDBY FEES. Upon the first Banking Day immediately following the
completion of each Fiscal Quarter and upon the termination of the Credit
Facility pursuant to Section 2.04, the Borrower shall pay to the Lenders, in
arrears, a standby fee, calculated and accruing daily from the date of the
execution and delivery of this agreement at the rate per annum, calculated on
the basis of a year of 365 days or 366 days in the case of a leap year, equal to
the Standby Fee Rate on the Available Accommodation during such Fiscal Quarter.
Such standby fee shall be non-refundable and shall be fully earned when due.
7.06 ADJUSTMENT OF APPLICABLE MARGIN AND STANDBY FEE RATE. The Applicable Margin
and the Standby Fee Rate shall be adjusted on, and any such adjustment shall be
effective as of, the Banking Day immediately following any announcement, change,
or withdrawal of S & P's corporate credit or debt rating of the Borrower which
results in a different Applicable Margin or Standby Fee Rate being applicable.
ARTICLE 8
RESERVE, CAPITAL, INDEMNITY AND TAX PROVISIONS
8.01 CONDITIONS OF CREDIT. The obtaining or maintaining of Accommodation
hereunder shall be subject to the terms and conditions contained in this Article
8.
8.02 CHANGE OF CIRCUMSTANCES.
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(a) If, after the date hereof, the introduction of or any change in or in
the interpretation of, or any change in its application to any Lender of, any
law or any regulation or guideline issued by any Official Body, including,
without limitation, any reserve or special deposit requirement or any tax (other
than tax on a Lender's general income) or any capital requirement, has, due to a
Lender's compliance, the effect, directly or indirectly, of (i) increasing the
cost to such Lender of performing its obligations hereunder; (ii) reducing any
amount received or receivable by such Lender hereunder or its effective return
hereunder or on its capital; or (iii) causing such Lender to make any payment or
to forego any return based on any amount received or receivable by such Lender
hereunder, then the Lender shall deliver to the Borrower a certificate setting
out the reason for and the calculation of the relevant amount and, upon demand
from time to time, the Borrower shall pay such amount as shall compensate such
Lender for any such cost, reduction, payment or foregone return (but no earlier
than the amount to which it pertains would have been required to be paid
hereunder) provided that the Borrower shall be obligated under this Section
8.02(a) to compensate such Lender for capital adequacy requirements measured
against its outstanding obligations hereunder only to the extent such capital
adequacy requirements are in excess of the capital adequacy requirements as of
the date hereof. Any certificate of a Lender in respect of the foregoing will be
conclusive and binding upon the Borrower, except for manifest error, provided
that such Lender shall determine the amounts owing to it in good faith using any
reasonable averaging and attribution methods.
(b) Each Lender agrees that, as promptly as practicable after it becomes
aware of the occurrence of an event or the existence of a condition that would
cause it to seek additional amounts from the Borrower pursuant to Section
8.02(a), it will use reasonable efforts to make, fund or maintain the affected
Accommodation through another lending office or take such other actions as it
deems appropriate if as a result thereof the additional moneys which would
otherwise be required to be paid in respect of such Accommodation pursuant to
Section 8.02(a) would be reduced and if, as determined by such Lender in its
sole discretion, the making, funding or maintaining of such Accommodation
through such other lending office or the taking of such other actions would not
otherwise adversely affect such Accommodation or such Lender and would not, in
such Lender's sole discretion, be commercially unreasonable.
(c) Notwithstanding Section 8.02(a), the Borrower shall not be liable to
compensate a Lender for any such cost, reduction, payment or foregone return:
(i) resulting from any law, regulation or guideline now in effect or
of which such Lender has received actual notice as of the date
hereof and which will take effect during the term of this
agreement;
(ii) occurring more than 60 days before receipt by the Borrower of the
certificate described in Section 8.02(a); or
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(iii) if such compensation is not being claimed as a general practice
from customers of such Lender who by agreement are liable to pay
such or similar compensation.
In determining the amount of compensation payable by the Borrower under Section
8.02(a), such Lender shall use all reasonable efforts to minimize the
compensation payable by the Borrower including, without limitation, using all
reasonable efforts to obtain refunds or credits in the ordinary course of its
business, and any compensation paid by the Borrower which is later determined
not to have been properly payable or in respect of which a refund, credit or
compensation has been received shall forthwith be reimbursed by such Lender to
the Borrower.
8.03 ASSIGNMENT AS A RESULT OF CHANGE OF CIRCUMSTANCES. If any Lender but not
all of the Lenders seeks additional compensation pursuant to Section 8.02(a)
(the "Affected Lender"), then the Borrower may indicate to the Agent in writing
that it desires the Affected Lender to be replaced with one or more of the other
Lenders, and the Agent shall then forthwith give notice to the other Lenders
that any Lender or Lenders may, in the aggregate, assume all (but not part) of
the Affected Lender's Individual Commitment and obligations hereunder and
acquire all (but not part) of the rights of the Affected Lender and assume all
(but not part) of the obligations of the Affected Lender under each of the other
agreements and instruments delivered pursuant hereto (but in no event shall any
other Lender or the Agent be obliged to do so). If one or more Lenders shall so
agree in writing (herein collectively called the "Assenting Lenders" and
individually called an "Assenting Lender") with respect to such acquisition and
assumption, the Individual Commitment and the obligations of such Assenting
Lender under this agreement and the rights and obligations of such Assenting
Lender under each of the other agreements and instruments delivered pursuant
hereto shall be increased by its respective pro rata share (based on the
relative Individual Commitments of the Assenting Lenders) of the Affected
Lender's Outstanding Accommodation and Individual Commitment and obligations
under this agreement and rights and obligations under each of the other
agreements and instruments delivered pursuant hereto on a date mutually
acceptable to the Assenting Lenders and the Borrower. On such date, the
Assenting Lenders shall pay to the Affected Lender the amount of the outstanding
Accommodations which it has made available to the Borrower and the Affected
Lender shall cease to be a "Lender" for purposes of this agreement and shall no
longer have any obligations hereunder. Upon the assumption of the Affected
Lender's Individual Commitment as aforesaid by an Assenting Lender, Schedule A
hereto shall be deemed to be amended to increase the Individual Commitment of
such Assenting Lender by the respective amounts of such assumption. If there are
no Assenting Lenders, the Borrower may designate to the Agent by written notice
a Canadian chartered bank which is not a Lender and, for all purposes of this
Section 8.03, such bank shall be the sole Assenting Lender.
8.04 INDEMNITY RELATING TO CREDITS. Upon notice from the Agent to the Borrower
(which notice shall be accompanied by a detailed calculation of the amount to be
paid by the Borrower), the Borrower shall pay to the Agent or the Lenders such
amount or amounts as will compensate the Agent or the Lenders for any loss, cost
or expense incurred by them in the liquidation or
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redeposit of any funds acquired by the Lenders to fund or maintain any portion
of a LIBOR Loan as a result of:
(a) the failure of the Borrower to borrow or make repayments on the dates
specified under this agreement or in any notice from the Borrower to
the Agent; or
(b) the repayment or prepayment of any amounts on a day other than the
payment dates prescribed herein or in any notice from the Borrower to
the Agent.
8.05 INDEMNITY FOR TRANSACTIONAL AND ENVIRONMENTAL LIABILITY.
(a) The Borrower hereby agrees to indemnify, exonerate and hold the Agent
and each Lender and each of their respective officers, directors and agents
(collectively, the "Indemnified Parties") free and harmless from and against any
and all claims, demands, actions, causes of action, suits, losses, costs
(including, without limitation, all documentary, recording, filing, mortgage or
other stamp taxes or duties), charges, liabilities and damages, and expenses in
connection therewith (irrespective of whether such Indemnified Party is a party
to the action for which indemnification hereunder is sought), and including,
without limitation, reasonable legal fees and out of pocket disbursements
(collectively, in this Section 8.05(a), the "Indemnified Liabilities"), paid,
incurred or suffered by the Indemnified Parties or any of them as a result of,
or arising out of, or relating to (i) any transaction financed or to be financed
in whole or in part, directly or indirectly, with the proceeds of any
Accommodation obtained hereunder, or (ii) the execution, delivery, performance
or enforcement of this agreement and any instrument, document or agreement
executed pursuant hereto, except for any such Indemnified Liabilities that a
court of competent jurisdiction determined arose on account of the relevant
Indemnified Party's gross negligence or willful misconduct.
(b) Without limiting the generality of the indemnity set out in Section
8.05(a), the Borrower hereby further agrees to indemnify, exonerate and hold the
Indemnified Parties free and harmless from and against any and all claims,
demand, actions, causes of action, suits, losses, costs, charges, liabilities
and damages, and expenses in connection therewith, including, without
limitation, reasonable legal fees and out of pocket disbursements, of any and
every kind whatsoever (collectively, in this Section 8.05(b), the "Indemnified
Liabilities"), paid, incurred or suffered by the Indemnified Parties or any of
them for, with respect to, or as a direct or indirect result of, (i) the
presence on or under, or the escape, seepage, leakage, spillage, discharge,
emission or release from, any Property of any Hazardous Material or (ii) the
breach or violation of any Environmental Law by any of the Companies, except for
any such Indemnified Liabilities that a court of competent jurisdiction
determined arose on account of the relevant Indemnified Party's gross negligence
or willful misconduct.
(c) All obligations provided for in this Section 8.05 shall survive any
termination of the Credit Facilities or this agreement and shall not be reduced
or impaired by any investigation made by or on behalf of the Agent or any of the
Lenders.
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(d) The Borrower hereby agrees that, for the purposes of effectively
allocating the risk of loss placed on the Borrower by this Section 8.05, the
Agent and each of the Lenders shall be deemed to be acting as the agent or
trustee on behalf of and for the benefit of its officers, directors and agents.
(e) If, for any reason, the obligations of the Borrower pursuant to this
Section 8.05 shall be unenforceable, the Borrower agrees to make the maximum
contribution to the payment and satisfaction of each obligation that is
permissible under applicable law, except to the extent that a court of competent
jurisdiction determines such obligations arose on account of the gross
negligence or willful misconduct of any Indemnified Party.
8.06 PAYMENTS FREE AND CLEAR OF TAXES. The Borrower hereby agrees, in favour of
the Agent and each Lender that:
(a) Any and all payments made by the Borrower under or pursuant to this
agreement or any agreement or instrument delivered pursuant hereto
shall be made free and clear of, and without deduction for, any and
all present or future taxes, levies, imposts, deductions, charges,
fees, duties or withholding or other charges of any nature imposed by
any taxing authority, whether domestic or foreign, and all liabilities
with respect thereto, imposed as a consequence of the making of any
payment under or pursuant to this agreement or any agreement or
instrument delivered pursuant hereto excluding, in the case of the
Agent or any Lender, taxes imposed on its net income or capital taxes
or receipts and franchise taxes (all such non-excluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If the Borrower shall be required
by law to deduct any Taxes from or in respect of any sum payable to
the Agent or any Lender under or pursuant to this agreement or any
agreement or instrument delivered pursuant hereto, the sum so payable
shall be increased as may be necessary so that after making all
required deductions (including deductions applicable to additional
sums payable under this Section 8.06) the Agent or such Lender, as the
case may be, receives an amount equal to the sum it would have
received had no such deductions been made.
(b) The Borrower hereby indemnifies and holds harmless the Agent and each
Lender for the full amount of Taxes, and for any incremental Taxes due
to the Borrower's failure to remit to the Agent and the Lenders the
required receipts or other required documentary evidence or due to the
Borrower's failure to pay any Taxes when due to the appropriate taxing
authority (including, without limitation, any taxes imposed by any
jurisdiction on amounts payable under this Section 8.06) which are
paid by the Agent or any Lender, as the case may be, and any liability
(including penalties, interest and expenses) arising therefrom or with
respect thereto, whether or not such Taxes or taxes were correctly or
legally assessed. The Agent or any Lender who pays any Taxes or taxes
shall promptly
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notify the Borrower of such payment and, if such payment was made
pursuant to an incorrect or illegal assessment, shall reasonably
cooperate with the Borrower, at the expense of the Borrower, in any
dispute of such assessment. Payment pursuant to this indemnification
shall be made within 30 days from the date the Agent or such Lender,
as the case may be, makes written demand therefor.
(c) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower
contained in this Section 8.06 shall survive the repayment of the
outstanding Accommodation hereunder and the termination of the Credit
Facility or this agreement.
(d) Notwithstanding any other provision hereof, any Lender which is not a
resident of Canada for the purpose of the Income Tax Act (Canada)
shall not be entitled to the benefits of Section 8.05(a), (b) and (c)
to the extent they relate to withholding tax on payments to be made by
the Borrower to such Lender.
ARTICLE 9
REPAYMENT AND PREPAYMENTS
9.01 REPAYMENT. The Borrower shall repay to the Lenders the balance of the
outstanding Accommodation under the Credit Facility on the Maturity Date.
Amounts which are repaid as aforesaid may not be reborrowed.
9.02 VOLUNTARY PREPAYMENTS.
(a) Subject to Section 9.03, the Borrower shall be entitled, at its
option, to prepay all or any portion of the Accommodation under the Credit
Facility which is outstanding by way of Loan at any time provided that Section
8.04 shall be complied with in connection with any such prepayment.
(b) Amount which are prepaid pursuant to this Section 9.02 prior to the
Conversion Date may be reborrowed. Amounts which are prepaid pursuant to this
Section 9.02 on or after the Conversion Date may not be reborrowed.
9.03 PAYMENT NOTICE. The Borrower shall give written notice ("Payment Notice")
to the Agent of each repayment pursuant to Section 9.01 and each voluntary
prepayment pursuant to Section 9.02. Such notice shall be irrevocable, shall be
given in accordance with Section 3.08 and shall specify:
(a) the date on which the repayment or prepayment is to take place; and
(b) the manner in which the repayment or prepayment is to be effected.
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ARTICLE 10
REPRESENTATIONS AND WARRANTIES
10.01 REPRESENTATIONS AND WARRANTIES. To induce the Lenders and the Agent to
enter into this agreement and to make Accommodation available to the Borrower
hereunder from time to time, the Borrower hereby represents and warrants to the
Lenders and the Agent, as at the date hereof and, with respect to Sections
10.01(e) to (h), as at the date of each drawdown pursuant to Article 4, each
rollover pursuant to Article 5 and each conversion pursuant to Article 6 and as
at the last day of each Fiscal Quarter, as follows and acknowledges and confirms
that the Lenders and the Agent are relying upon such representations and
warranties in executing this agreement and in making Accommodation available
hereunder:
(a) STATUS AND POWER. The Borrower is a corporation duly incorporated and
organized and validly subsisting in good standing under the laws of
the Province of Saskatchewan. Each of the Material Subsidiaries (other
than PCS Finance LLC) is a corporation duly incorporated and organized
and validly subsisting in good standing under the laws of its
jurisdiction of incorporation as set forth in Schedule E. PCS Finance
LLC is a limited liability company validly subsisting under the laws
of the State of Delaware. The Borrower and each of the Material
Subsidiaries is duly qualified, registered or licensed in all
jurisdictions where such qualification, registration or licensing is
required. The Borrower and each of the Material Subsidiaries has all
requisite corporate capacity, power and authority to own, hold under
licence or lease its properties and to carry on its business as now
conducted. The Borrower has all requisite corporate capacity, power
and authority to enter into and carry out the transactions
contemplated by this agreement.
(b) AUTHORIZATION AND ENFORCEMENT. All necessary action, corporate or
otherwise, has been taken to authorize the execution, delivery and
performance by the Borrower of this agreement. The Borrower has duly
executed and delivered this agreement. This agreement is a legal,
valid and binding obligation of the Borrower enforceable against the
Borrower by the Agent and the Lenders in accordance with its terms,
subject to the qualifications contained in the opinion of the
Borrower's counsel delivered pursuant to Section 12.02(d)(vii).
(c) COMPLIANCE WITH OTHER INSTRUMENTS. The execution, delivery and
performance by the Borrower of this agreement and the consummation of
the transactions contemplated herein do not conflict with, result in
any breach or violation of, or constitute a default under the terms,
conditions or provisions of the charter or constating documents or
by-laws of, or any unanimous shareholder agreement relating to, the
Borrower or of any law, regulation, judgment, decree or order binding
on or applicable to the Borrower or to which its property is subject
or of any material agreement, lease, licence, permit or other
instrument to
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which the Borrower is a party or is otherwise bound or by which the
Borrower benefits or to which its property is subject and do not
require the consent or approval of any Official Body or any other
party.
(d) FINANCIAL STATEMENTS. The Financial Statements were prepared in
accordance with generally accepted accounting principles and no
Material Adverse Change has occurred since December 31, 2000. The
balance sheets contained in the Financial Statements fairly present
the consolidated financial condition of the Borrower as at the
respective dates thereof and the statements of income contained in the
Financial Statements fairly present the consolidated results of
operations of the Borrower during the respective fiscal periods
covered thereby.
(e) LITIGATION. There are no actions, suits, inquiries, claims or
proceedings (whether or not purportedly on behalf of any of the
Companies) which have been commenced against or affecting any of the
Companies before any Official Body which could reasonably be expected
to have a Material Adverse Effect other than as disclosed in Schedule
J.
(f) OUTSTANDING DEFAULTS. No event has occurred which constitutes or
which, with the giving of notice, lapse of time or both, would
constitute a default under or in respect of any agreement, undertaking
or instrument to which any of the Companies is a party or to which its
property or assets may be subject, where such default could reasonably
be expected to have a Material Adverse Effect, other than as disclosed
in Schedule H.
(g) ERISA COMPLIANCE. Except as specifically disclosed in Schedule H:
(i) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other federal or
state law. Each Plan which is intended to qualify under Section
401(a) of the Code has received a favorable determination letter
from the IRS or an application for such a letter is currently
being processed by the IRS with respect thereto or an
application for such a letter will be made on or before December
31, 2001 and nothing has occurred which would prevent, or cause
the loss of, such qualification. The Borrower and each ERISA
Affiliate has made all required contributions to any Plan
subject to Section 412 of the Code, and no application for a
funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been made with respect
to any Plan.
(ii) There are no pending or threatened claims, actions or lawsuits,
or action by any Governmental Authority, with respect to any
Plan which has resulted or could reasonably be expected to
result in a Material Adverse Effect. There has been no
prohibited transaction or violation of the
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fiduciary responsibility rules with respect to any Plan which
has resulted or could reasonably be expected to result in a
Material Adverse Effect.
(iii) (A) No ERISA Event has occurred or is reasonably expected to
occur; (B) no Pension Plan has any Unfunded Pension Liability;
(C) neither the Borrower nor any ERISA Affiliate has incurred,
or reasonably expects to incur, any liability under Title IV of
ERISA with respect to any Pension Plan (other than premiums due
and not delinquent under Section 4007 of ERISA); (D) neither the
Borrower nor any ERISA Affiliate has incurred, or reasonably
expects to incur, any liability (and no event has occurred
which, with the giving of notice under Section 4219 of ERISA,
would result in such liability) under Section 4201 or 4243 of
ERISA with respect to a Multiemployer Plan; and (E) neither the
Borrower nor any ERISA Affiliate has engaged in a transaction
that could be subject to Section 4069 or 4212(c) of ERISA.
(h) ENVIRONMENTAL COMPLIANCE.
(i) The Property (including underlying groundwater) has, since the
date of its acquisition by the applicable Company, been owned,
operated and used in compliance with all Environmental Laws
except where such failure could not reasonably be expected to
have a Material Adverse Effect.
(ii) There are no actions or proceedings which have been commenced in
connection with an alleged violation of any Environmental Law by
any Company which could reasonably be expected to have a
Material Adverse Effect.
(iii) There have been no releases of Hazardous Materials at, on or
under the Property in violation of Environmental Law where such
releases could reasonably be expected to have a Material Adverse
Effect.
(iv) Each of the Companies has been issued and is in compliance with
all permits, certificates, approvals, licenses and other
authorizations required under any Environmental Laws to own its
properties and assets and to carry on its businesses except
where such non-issuance or noncompliance could not reasonably be
expected to have a Material Adverse Effect.
(i) CORPORATE NAME. The corporate name of the Borrower as it appears in
its articles of incorporation is Potash Corporation of Saskatchewan
Inc.
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(j) INTER-CORPORATE RELATIONSHIPS. The share ownership of each of the
Subsidiaries is as set forth in Schedule E (as such Schedule is
updated pursuant to Section 11.01(a)(iii)).
(k) SUBSIDIARIES AND PARTNERSHIPS. There are no subsidiaries of the
Borrower other than the Subsidiaries. The jurisdiction of
incorporation of each of the Subsidiaries is as set forth in Schedule
E (as such Schedule is updated pursuant to Section 11.01(a)(iii)).
None of the companies is, directly or indirectly, a member of or
participant in any partnership, joint venture or syndicate other than
as described in Schedule F (as such Schedule is updated pursuant to
Section 11.01(a)(iii)).
(l) REGULATION U OR X. None of the Companies is engaged in the business
of extending credit for the purpose of purchasing or carrying margin
stock, and no proceeds of any Accommodation made hereunder shall be
used for a purpose which violates, or would be inconsistent with,
Regulation U or X of the Board of Governors of the Federal Reserve
System.
10.02 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the representations and
warranties of the Borrower contained in Section 10.01 shall survive the
execution and delivery of this agreement and shall continue (with reference to
the actual dates at which such representations and warranties are made) until
all outstanding Accommodation hereunder has been repaid and the Credit
Facilities have been terminated notwithstanding any investigation made at any
time by or on behalf of the Agent or any of the Lenders.
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ARTICLE 11
COVENANTS
11.01 AFFIRMATIVE COVENANTS. The Borrower hereby covenants and agrees with the
Agent and the Lenders that, until all outstanding Accommodation hereunder has
been repaid in full and the Credit Facility has been terminated, and unless the
Agent with the approval of the Majority Lenders otherwise expressly consents in
writing:
(a) FINANCIAL REPORTING. The Borrower shall furnish the Agent with the
following documents, statements and reports:
(i) within 120 days after the end of each Fiscal Year, a copy of the
audited consolidated financial statements of the Borrower with
respect thereto and the auditors' report thereon;
(ii) within 120 days after the end of each Fiscal Year, a copy of the
unaudited unconsolidated financial statements of each Material
Subsidiary with respect thereto;
(iii) within 120 days after the end of each Fiscal Year, an updated
Schedule E, an updated Schedule F and an updated list of the
Material Subsidiaries, each certified by a senior officer of the
Borrower to be true and correct as of the date thereof;
(iv) within 60 days after the end of each of the first three Fiscal
Quarters of each Fiscal Year, a copy of the unaudited
consolidated financial statements of the Borrower with respect
thereto;
(v) within 120 days after the end of each Fiscal Year and within 60
days after the end of each Fiscal Quarter, a duly executed and
completed compliance certificate, in the form attached as
Schedule B hereto, evidencing compliance with the terms of this
agreement; and
(vi) such additional financial or operating reports or statements as
the Agent on the instructions of the Majority Lenders may, from
time to time, reasonably require.
(b) CORPORATE EXISTENCE. Except as expressly permitted in Section
11.03(b), the Borrower shall, and shall cause each of the Material
Subsidiaries to, maintain its corporate existence in good standing and
shall, and shall cause each of the Subsidiaries to, qualify and remain
duly qualified to carry on business and own property in each
jurisdiction in which such qualification is necessary to the extent
that a failure to so qualify could reasonably be expected to have a
Material Adverse Effect.
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(c) CONDUCT OF BUSINESS. The Borrower shall, and shall cause each of the
Subsidiaries to, conduct its business in such a manner so as to comply
in all respects with all laws and regulations, so as to observe and
perform all its obligations under leases, licences and agreements
necessary for the proper conduct of its business and so as to preserve
and protect its property and assets and the earnings, income and
profits therefrom (including, without limitation, Environmental Laws
and laws relating to the discharge, spill, disposal or emission of
Hazardous Materials) to the extent that such non-compliance,
non-observance or non-performance could reasonably be expected to have
a Material Adverse Effect. The Borrower shall, and shall cause each of
the Subsidiaries to, obtain and maintain all material licenses,
certificates of approval, consents, registrations, permits, government
approvals, franchises, authorizations and other rights necessary for
the operation of its business to the extent that a failure to do so
could reasonably be expected to have a Material Adverse Effect.
(d) USE OF PROCEEDS. The Borrower shall apply all of the proceeds of the
drawdowns pursuant to Section 4.01 to general corporate purposes.
(e) LONG TERM DEBT TO EBITDA. The Borrower shall maintain or cause to be
maintained the ratio of Long Term Debt as at the last day of each
Fiscal Quarter to EBITDA for the four consecutive Fiscal Quarters
ending on such day in a ratio of less than or equal to 3.5 to 1.
(f) DEBT TO CAPITAL. The Borrower shall at all times maintain or cause to
be maintained the ratio of Debt to Capital in a ratio of less than or
equal to 0.55 to 1.
(g) TANGIBLE NET WORTH. The Borrower shall at all times maintain or cause
to be maintained Tangible Net Worth in an amount greater than or equal
to $1,250,000,000.
(h) INSURANCE. The Borrower shall, and shall cause each of the Material
Subsidiaries to, maintain insurance with respect to its properties and
business against loss or damage of the kind customarily insured
against by companies engaged in the same or similar business, of such
types and in such amounts as are customarily carried under such
circumstances by such other companies.
(i) TAXES. The Borrower shall, and shall cause each of the Material
Subsidiaries to, file all tax returns and tax reports required by law
to be filed by it and pay all material taxes, rates, government fees
and dues levied, assessed or imposed upon it and upon its property or
assets or any part thereof, as and when the same become due and
payable (save and except when and so long as the validity of any such
taxes, rates, fees, dues, levies, assessments or imposts is being
contested in good faith by appropriate proceedings and adequate
reserves are being maintained in accordance with generally accepted
accounting principles), and the
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Borrower shall deliver to the Agent, when requested, written evidence
of such filings and payments.
(j) REIMBURSEMENT OF EXPENSES. The Borrower shall reimburse the Agent, on
demand, for all reasonable out-of-pocket costs, charges and expenses
incurred by or on behalf of the Agent (including, without limitation,
travel costs and the reasonable fees and out-of-pocket disbursements
of its counsel) in connection with:
(i) the development, negotiation, preparation, execution,
delivery, interpretation and enforcement of this agreement and
all other documentation ancillary to the completion of the
transactions contemplated hereby and any amendments hereto or
thereto and any waivers of any provisions hereof or thereof
(whether or not consummated or entered into);
(ii) the syndication of the Credit Facility; and
(iii) any lien search fees relating to the transactions contemplated
hereby;
and the Borrower may contest the reasonableness of such costs, charges
and expenses in good faith.
(k) BOOKS AND RECORDS. The Borrower shall, and shall cause each of the
Subsidiaries to, keep proper books of account and records covering all
its business and affairs on a current basis, make full, true and
correct entries in all material respects of their transactions in such
books, set aside on their books from their earnings all such proper
reserves as required by generally accepted accounting principles and
permit representatives of the Agent to inspect such books of account,
records and documents and to make copies therefrom during reasonable
business hours and upon reasonable notice and to discuss the affairs,
finances and accounts of the Companies with the officers of the
Companies and their auditors during reasonable business hours and upon
reasonable notice.
(l) ENVIRONMENTAL MATTERS. The Borrower shall, as soon as practicable and
in any event within 30 days, notify the Agent and provide copies upon
receipt of all written claims, complaints, notices or inquiries from
an Official Body relating to the condition of the facilities and
properties of the Companies or compliance with Environmental Laws,
which claims, complaints, notices or inquiries relate to matters which
would have, or may reasonably be expected to have, a Material Adverse
Effect, and shall, and shall cause each of the Subsidiaries to,
proceed diligently to resolve any such claims, complaints, notices or
inquiries relating to compliance with Environmental Laws and provide
such information and
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certifications which the Agent may reasonably request from time to
time to evidence compliance with this provision.
(m) NOTICE OF DEFAULT OR EVENT OF DEFAULT. Upon the occurrence of a
Default or an Event of Default, the Borrower shall promptly deliver to
the Agent a notice specifying the nature and date of occurrence of
such Default or Event of Default and the action which the Borrower
proposes to take with respect thereto.
11.02 PERFORMANCE OF COVENANTS BY AGENT. The Agent may, on the instructions of
the Majority Lenders and upon notice by the Agent to the Borrower, perform any
covenant of the Borrower under this agreement which the Borrower fails to
perform or cause to be performed and which the Agent is capable of performing,
including any covenants the performance of which requires the payment of money,
provided that the Agent shall not be obligated to perform any such covenant on
behalf of the Borrower (unless so instructed by the Majority Lenders) and no
such performance by the Agent shall require the Agent to further perform the
Borrower's covenants or shall operate as a derogation of the rights and remedies
of the Agent or the Lenders under this agreement or as a waiver of such covenant
by the Agent or the Lenders. Any amounts paid by the Agent as aforesaid shall be
reimbursed by the Lenders in their Pro Rata Shares and shall be repaid by the
Borrower to the Agent on behalf of the Lenders on demand.
11.03 RESTRICTIVE COVENANTS. The Borrower hereby covenants and agrees with the
Agent and the Lenders that, until all outstanding Accommodation hereunder has
been repaid in full and the Credit Facility has been terminated, and unless the
Agent with the approval of the Majority Lenders otherwise expressly consents in
writing:
(a) ENCUMBRANCES. The Borrower shall not, and shall not suffer or permit
any of the Subsidiaries to, enter into or grant, create, assume or
suffer to exist any Lien affecting any of its property, assets or
undertaking, save and except only for the Permitted Liens.
(b) CORPORATE EXISTENCE. The Borrower shall not change its jurisdiction of
incorporation except that it may continue under the Canada Business
Corporations Act. The Borrower shall not, and shall not suffer or
permit any of the Material Subsidiaries to, take part in any
amalgamation, merger, winding-up, dissolution, capital or corporate
reorganization or similar proceeding or arrangement, except that any
of them may amalgamate or merge with any Subsidiary which is a direct
or indirect wholly-owned subsidiary of the Borrower and any Material
Subsidiary may wind up into any other Subsidiary or the Borrower if it
is a direct wholly-owned subsidiary of the entity or entities into
which it is winding up and any of them may transfer any or all of its
assets to any Subsidiary which is a direct or indirect wholly-owned
subsidiary of the Borrower.
(c) CHANGE IN OPERATIONS. The Borrower shall not materially change the
nature or conduct of its consolidated operations as carried on as at
the date hereof.
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(d) DISPOSITION OF ASSETS. During any Fiscal Year, the aggregate net book
value of the assets disposed of by the Companies (including any
disposition by reason of an expropriation of such assets but excluding
any disposition of inventory in the ordinary course of business) shall
not exceed 25% of Total Assets as at the last day of the immediately
preceding Fiscal Year. Notwithstanding the foregoing but for greater
certainty, the disposition of assets as a result of the securitization
of assets shall only be included in the foregoing calculation if the
assets are transferred to create a securitized asset pool or to
increase the overall size of a securitized asset pool but not if the
assets are transferred to replenish a depleting securitized asset
pool.
(e) DEBT OF SUBSIDIARIES. Debt of the Subsidiaries (other than the
Guarantor) shall not at any time exceed $250,000,000 in the aggregate.
Debt attributable to the Guarantor shall not at any time exceed
$340,000,000.
ARTICLE 12
CONDITIONS PRECEDENT TO ACCOMMODATION
12.01 CONDITIONS PRECEDENT TO ALL ACCOMMODATION. The obligation of the Lenders
to make Accommodation available under the Credit Facility (whether by drawdown,
rollover or conversion) is subject to fulfilment of the following conditions
precedent at the time such Accommodation is made available:
(a) no Event of Default has occurred and is continuing or would arise
immediately after giving effect to or as a result of such
Accommodation;
(b) the Borrower shall have complied with the requirements of Article 4, 5
or 6, as the case may be, in respect of the relevant Accommodation;
and
(c) the representations and warranties of the Borrower contained in
Sections 10.01(e) to (h) shall be true and correct in all material
respects on the date such Accommodation is made available as if such
representations and warranties were made on such date.
12.02 CONDITIONS PRECEDENT TO INITIAL ACCOMMODATION. The obligation of the
Lenders to make Accommodation available under the Credit Facility for the first
time is subject to fulfilment of the following conditions precedent at the time
such Accommodation is made available:
(a) no Default has occurred or is continuing or would arise immediately
after giving effect to or as a result of such Accommodation;
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(b) the Borrower shall have complied with the requirement of Article 4 in
respect of such Accommodation;
(c) the representations and warranties of the Borrower contained in
Section 10.01 shall be true and correct in all material respects on
the date such Accommodation is made available as if such
representations and warranties were made on such date;
(d) the Agent has received, in form and substance satisfactory to the
Agent:
(i) a duly certified resolution of the board of directors of the
Borrower authorizing the Borrower to execute, deliver and
perform its obligations under this agreement;
(ii) a certificate of a senior officer of the Borrower setting
forth specimen signatures of the individuals authorized to
sign this agreement on behalf of the Borrower;
(iii) a duly certified resolution of the board of directors of the
Guarantor authorizing the Guarantor to execute, deliver and
perform its obligations under the Guarantee;
(iv) a certificate of a senior officer of the Guarantor setting
forth specimen signatures of the individuals authorized to
sign the Guarantee on behalf of the Guarantor;
(v) a certificate of a senior officer of the Borrower certifying
that, to the best of his knowledge after due inquiry, no
Default has occurred and is continuing or would arise
immediately after giving effect to or as a result of such
Accommodation;
(vi) insurance binders, certificates of insurance and statements of
coverage with respect to the insurance referred to in Section
11.01(h);
(vii) all duly completed current account documentation which is
required to open the Designated Account;
(viii) an opinion of the Borrower's Ontario counsel in substantially
the form of Schedule D-1 hereto;
(ix) an opinion of the General Counsel of the Borrower in
substantially the form of Schedule D-2 hereto;
(x) an opinion of the Guarantor's Delaware counsel in
substantially the form of Schedule D-3 hereto; and
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(xi) an opinion of the Agent's counsel with respect to such
matters as may be reasonably required in connection with
the transactions hereunder;
(e) the Borrower has executed and delivered the Agency Fee Agreement and
all fees payable thereunder shall have been paid by the Borrower to
BNS;
(f) the Guarantor has executed and delivered the Guarantee;
(g) there has not occurred a Material Adverse Change; and
(h) there has not occurred, in the sole and absolute judgment of the
Agent, a material adverse change in the financial markets in Canada.
12.03 WAIVER. The terms and conditions of Sections 12.01 and 12.02 are inserted
for the sole benefit of the Agent and the Lenders. The Agent, insofar as it
relates to Section 12.02(g), and otherwise the Agent with the approval of the
Majority Lenders, may waive such terms and conditions in whole or in part, with
or without terms or conditions, in respect of any Accommodation, without
prejudicing their right to assert them in whole or in part in respect of any
other Accommodation.
ARTICLE 13
DEFAULT AND REMEDIES
13.01 EVENTS OF DEFAULT. Upon the occurrence of any one or more of the following
events, unless expressly waived in writing by the Majority Lenders:
(a) a breach of Section 9.01;
(b) the non-payment of any amount due hereunder (other than the repayment
pursuant to Section 9.01) within five Banking Days after notice of
non-payment has been given to the Borrower by the Agent;
(c) the commencement by the Borrower or a Material Subsidiary of
proceedings for its dissolution, liquidation or winding up or for the
suspension of its operations except as permitted under Section
11.03(b);
(d) the commencement by any person (other than the Companies) of
proceedings for the dissolution, liquidation or winding-up of, or for
the suspension of the operations of, the Borrower or a Material
Subsidiary unless such proceedings are dismissed or stayed within 20
Banking Days of the commencement thereof;
(e) the Borrower or any Material Subsidiary:
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(i) admits its inability to pay its debts generally as they become
due or fails to pay its debts generally as they become due;
(ii) files an assignment or petition in bankruptcy or a petition to
take advantage of any insolvency statute;
(iii) makes an assignment for the benefit of its creditors;
(iv) consents to the appointment of a receiver, trustee, sequestrator
or other custodian of the whole or any part of its assets;
(v) files a petition, notice or answer seeking a reorganization,
proposal, arrangement, adjustment or composition under
applicable bankruptcy laws or any other applicable law or
statute; or
(vi) is adjudged by a court having jurisdiction a bankrupt or
insolvent, or a decree or order of a court having jurisdiction
is entered for the appointment of a receiver, liquidator,
trustee or assignee in bankruptcy with such decree or order
remaining in force and undischarged or unstayed for a period of
30 days;
(f) any representation or warranty made by any of the Companies in any
Loan Document or in any other document, agreement or instrument
delivered pursuant hereto or referred to herein proves to have been
incorrect when made or furnished except to the extent that the
circumstances giving rise to this Event of Default are cured within 10
Banking Days of the occurrence thereof;
(g) a writ, execution, attachment or similar process is issued or levied
against all or any portion of the property or assets of the Borrower
or any Material Subsidiary in connection with any judgment against the
Borrower or any Material Subsidiary in an amount exceeding Cdn.
$40,000,000 or the U.S. Dollar Equivalent thereof and such writ,
execution, attachment or similar process is not released, bonded,
satisfied, discharged, vacated or stayed within thirty days after its
entry, commencement or levy;
(h) the breach or failure of due observance or performance by the Borrower
of any of Sections 11.01(e), (f) or (g) or 11.03(d);
(i) the breach or failure of due observance or performance by the Borrower
of any covenant or provision of this agreement other than those
heretofore or hereafter dealt with in this Section 13.01, or the
breach or failure of due observance or performance by any of the
Companies of any covenant or provision of any other document,
agreement or instrument delivered pursuant hereto or referred to
herein (including, without limitation, the Guarantee and the Agency
Fee
- 44 -
Agreement), which is not remedied within 10 Banking Days after written
notice to do so has been given by the Agent to the Borrower;
(j) one or more encumbrancers, lienors or landlords take possession of
property or assets of the Borrower or any Material Subsidiary in
respect of a claim in excess of Cdn. $40,000,000 or the U.S. Dollar
Equivalent thereof or attempt to enforce their security or other
remedies against any part of the property or assets of the Borrower or
any Material Subsidiary in respect of a claim in excess of Cdn.
$40,000,000 or the U.S. Dollar Equivalent thereof and such possession
or enforcement is not released, bonded, satisfied, discharged, vacated
or stayed within thirty days after its entry, commencement or levy;
(k) other than as disclosed in Schedule H, an event of default (after the
expiry of all applicable grace periods) under any one or more
agreements, indentures or instruments under which the Borrower or any
Material Subsidiary has outstanding Debt in excess of Cdn. $40,000,000
or the U.S. Dollar Equivalent thereof shall happen and be continuing
without being cured or discharged by repayment, or any Debt of the
Borrower or any Material Subsidiary in excess of Cdn. $40,000,000 or
the U.S. Dollar Equivalent thereof which is payable on demand is not
paid on demand;
(l) this agreement is determined by a court of competent jurisdiction not
to be valid and enforceable by the Agent and the Lenders against the
Borrower, and this agreement has not been replaced by a valid and
enforceable document which is prepared by the Agent and presented to
the Borrower and is equivalent in effect and commercial terms (where
possible) to this agreement (other than its validity and
enforceability) and is executed and delivered by the Borrower within
thirty days following such presentment;
(m) the Guarantee is determined by a court of competent jurisdiction not
to be valid and enforceable by the Agent and the Lenders against the
Guarantor, and the Guarantee has not been replaced by a valid and
enforceable document which is prepared by the Agent and presented to
the Borrower and is equivalent in effect and commercial terms (where
possible) to the Guarantee (other than its validity and
enforceability) and is executed and delivered by the Guarantor within
thirty days following such presentment;
(n) any ERISA Affiliate shall fail to pay when due an amount or amounts
aggregating in excess of the U.S. Dollar Equivalent of Cdn.
$40,000,000 which it shall have become liable to pay under Section
4062, 4063 or 4064 of ERISA; or notice of intent to terminate a Plan
shall be filed under Title IV of ERISA by any ERISA Affiliate, any
plan administrator or any combination of the foregoing if such
termination would result in a Material Adverse Effect; or the PBGC
shall
- 45 -
institute proceedings under Title IV of ERISA to terminate, to impose
liability (other than for premiums under Section 4007 of ERISA) in
respect of, or to cause a trustee to be appointed to administer any
Plan, if such action by the PBGC would result in a Material Adverse
Effect; or there shall occur a complete or partial withdrawal from, or
a default, within the meaning of Section 4219(c)(5) of ERISA, with
respect to, one or more Multiemployer Plans which could cause one or
more ERISA Affiliates to incur a current annual payment obligation in
excess of U.S. Dollar Equivalent of Cdn. $40,000,000; or
(o) any Person alone or acting jointly in concert with any other Person
owns more than one-third of the outstanding voting securities of the
Borrower;
the Agent, by notice to the Borrower and subject to Section 14.08, may terminate
the Credit Facility and may declare all indebtedness of the Borrower to the
Lenders pursuant to this agreement to be immediately due and payable whereupon
all such indebtedness shall immediately become and be due and payable (provided,
however, that the Credit Facility shall terminate and all such indebtedness of
the Borrower to the Lenders shall automatically become due and payable, without
notice of any kind, upon the occurrence of an event described in clause (c), (d)
or (e) above).
13.02 REMEDIES CUMULATIVE. The Borrower expressly agrees that the rights and
remedies of the Agent and the Lenders under this agreement are cumulative and in
addition to and not in substitution for any rights or remedies provided by law.
Any single or partial exercise by the Agent or any of the Lenders of any right
or remedy for a default or breach of any term, covenant or condition in this
agreement does not waive, alter, affect or prejudice any other right or remedy
to which the Agent or such Lender may be lawfully entitled for the same default
or breach. Any waiver by the Agent with the approval of the Majority Lenders of
the strict observance, performance or compliance with any term, covenant or
condition of this agreement is not a waiver of any subsequent default and any
indulgence by the Lenders with respect to any failure to strictly observe,
perform or comply with any term, covenant or condition of this agreement is not
a waiver of the entire term, covenant or condition or any subsequent default.
13.03 SET-OFF. In addition to any rights now or hereafter granted under
applicable law, and not by way of limitation of any such rights, after the
occurrence of an Event of Default which is continuing, the Agent and each Lender
is authorized, without notice to the Borrower or to any other person, any such
notice being expressly waived by the Borrower, to set-off, appropriate and apply
any and all deposits, matured or unmatured, general or special, and any other
indebtedness at any time held by or owing by the Agent or such Lender, as the
case may be, to or for the credit of or the account of the Borrower against and
on account of the obligations and liabilities of the Borrower which are due and
payable to the Agent or such Lender, as the case may be, under this agreement.
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ARTICLE 14
THE AGENT
14.01 APPOINTMENT AND AUTHORIZATION OF AGENT. Each Lender hereby appoints and
authorizes, and hereby agrees that it will require any assignee of any of its
interests herein (other than the holder of a participation in its interests
herein) to appoint and authorize the Agent to take such actions as agent on its
behalf and to exercise such powers hereunder as are delegated to the Agent by
such Lender by the terms hereof, together with such powers as are reasonably
incidental thereto. Neither the Agent nor any of its directors, officers,
employees or agents shall be liable to any of the Lenders for any action taken
or omitted to be taken by it or them hereunder or in connection herewith, except
for its own gross negligence or wilful misconduct and each Lender hereby
acknowledges that the Agent is entering into the provisions of this Section
14.01 on its own behalf and as agent and trustee for its directors, officers,
employees and agents.
14.02 INTEREST HOLDERS. The Agent may treat each Lender set forth in Schedule A
hereto or the person designated in the last notice delivered to it under Section
15.06 as the holder of all of the interests of such Lender hereunder.
14.03 CONSULTATION WITH COUNSEL. The Agent may consult with legal counsel
selected by it as counsel for the Agent and the Lenders and shall not be liable
for any action taken or not taken or suffered by it in good faith and in
accordance with the advice and opinion of such counsel.
14.04 DOCUMENTS. The Agent shall not be under any duty to the Lenders to
examine, enquire into or pass upon the validity, effectiveness or genuineness of
this agreement or any instrument, document or communication furnished pursuant
to or in connection herewith and the Agent shall, as regards the Lenders, be
entitled to assume that the same are valid, effective and genuine, have been
signed or sent by the proper parties and are what they purport to be.
14.05 AGENT AS LENDER. With respect to those portions of the Credit Facility
made available by it, the Agent shall have the same rights and powers hereunder
as any other Lender and may exercise the same as though it were not the Agent.
The Agent and its affiliates may accept deposits from, lend money to and
generally engage in any kind of business with the Borrower and its affiliates
and persons doing business with the Borrower and/or any of its affiliates as if
it were not the Agent and without any obligation to account to the Lenders
therefor.
14.06 RESPONSIBILITY OF AGENT. The duties and obligations of the Agent to the
Lenders hereunder are only those expressly set forth herein. The Agent shall not
have any duty to the Lenders to investigate whether a Default or an Event of
Default has occurred. The Agent shall, as regards the Lenders, be entitled to
assume that no Default or Event of Default has occurred and is continuing unless
the Agent has actual knowledge or has been notified by the Borrower of such fact
or has been notified by a Lender that such Lender considers that a Default or
Event of Default has occurred and is continuing, such notification to specify in
detail the nature thereof.
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14.07 ACTION BY AGENT. The Agent shall be entitled to use its discretion with
respect to exercising or refraining from exercising any rights which may be
vested in it on behalf of the Lenders by and under this agreement; provided,
however, that the Agent shall not exercise any rights under Section 13.01 or
expressed to be on behalf of or with the approval of the Majority Lenders
without the request, consent or instructions of the Majority Lenders.
Furthermore, any rights of the Agent expressed to be on behalf of or with the
approval of the Majority Lenders shall be exercised by the Agent upon the
request or instructions of the Majority Lenders. Subject to the foregoing, the
Agent shall incur no liability to the Lenders hereunder with respect to anything
which it may do or refrain from doing in the reasonable exercise of its judgment
or which may seem to it to be necessary or desirable in the circumstances,
except for its gross negligence or wilful misconduct. The Agent shall in all
cases be fully protected in acting or refraining from acting hereunder in
accordance with the instructions of the Majority Lenders and any action taken or
failure to act pursuant to such instructions shall be binding on all Lenders. In
respect of any notice by or action taken by the Agent hereunder, the Borrower
shall at no time be obliged to enquire as to the right or authority of the Agent
to so notify or act.
14.08 NOTICE OF EVENTS OF DEFAULT. In the event that the Agent shall acquire
actual knowledge or shall have been notified of any Default or Event of Default,
the Agent shall promptly notify the Lenders and shall take such action and
assert such rights under Section 13.01 of this agreement as the Majority Lenders
shall request in writing and the Agent shall not be subject to any liability by
reason of its acting pursuant to any such request. If the Majority Lenders shall
fail for five Banking Days after receipt of the notice of any Default or Event
of Default to request the Agent to take such action or to assert such rights in
respect of such Default or Event of Default, the Agent may, but shall not be
required to, and subject to subsequent specific instructions from the Majority
Lenders, take such action or assert such rights (other than rights under Section
13.01 of this agreement and other than giving an express waiver of any Default
or any Event of Default) as it deems in its discretion to be advisable for the
protection of the Lenders except that, if the Majority Lenders have instructed
the Agent not to take such action or assert such rights, in no event shall the
Agent act contrary to such instructions unless required by law to do so.
14.09 RESPONSIBILITY DISCLAIMED. The Agent shall be under no liability or
responsibility whatsoever as agent hereunder:
(a) to the Borrower or any other person as a consequence of any failure or
delay in the performance by, or any breach by, any Lender or Lenders
of any of its or their obligations hereunder;
(b) to any Lender or Lenders as a consequence of any failure or delay in
performance by, or any breach by, the Borrower of any of its
obligations hereunder; or
(c) to any Lender or Lenders for any statements, representations or
warranties herein or in any other documents contemplated hereby or in
any other information
- 48 -
provided pursuant to this agreement or any other documents
contemplated hereby or for the validity, effectiveness, enforceability
or sufficiency of this agreement or any other document contemplated
hereby.
14.10 INDEMNIFICATION. The Lenders agree to indemnify the Agent (to the extent
not reimbursed by the Borrower) pro rata according to the Pro Rata Share of each
of them from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
nature whatsoever which may be imposed on, incurred by or asserted against the
Agent in any way relating to or arising out of this agreement or any other
document contemplated hereby or any action taken or omitted by the Agent under
this agreement or any document contemplated hereby, except that no Lender shall
be liable to the Agent for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the gross negligence or wilful misconduct of the Agent.
14.11 CREDIT DECISION. Each Lender represents and warrants to the Agent that:
(a) in making its decision to enter into this agreement and to make its
Commitment Share of Accommodation available to the Borrower, it is
independently taking whatever steps it considers necessary to evaluate
the financial condition and affairs of the Borrower and that it has
made an independent credit judgment without reliance upon any
information furnished by the Agent; and
(b) so long as any portion of the Credit Facility is being utilized by the
Borrower, it will continue to make its own independent evaluation of
the financial condition and affairs of the Borrower.
14.12 SUCCESSOR AGENT. Subject to the appointment and acceptance of a successor
Agent as provided below, the Agent may resign at any time by giving 30 days
written notice thereof to the Lenders. Upon any such resignation, the Majority
Lenders shall have the right to appoint a successor Agent who shall be one of
the Lenders unless none of the Lenders wishes to accept such appointment. If no
successor Agent shall have been so appointed and shall have accepted such
appointment by the time of such resignation, then the retiring Agent may, on
behalf of the Lenders, appoint a successor Agent which shall be a bank listed in
Schedule 1 to the Bank Act (Canada) which has an office in Toronto. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges, duties and obligations of the retiring Agent (in its
capacity as Agent but not in its capacity as a Lender) and the retiring Agent
shall be discharged from its duties and obligations hereunder (in its capacity
as Agent but not in its capacity as a Lender). After any retiring Agent's
resignation or removal hereunder as the Agent, provisions of this Article 14
shall continue in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as the Agent.
- 49 -
14.13 DELEGATION BY AGENT. With the prior approval of the Majority Lenders, the
Agent shall have the right to delegate any of its duties or obligations
hereunder as Agent to any affiliate of the Agent so long as the Agent shall not
thereby be relieved of such duties or obligations.
14.14 WAIVERS AND AMENDMENTS.
(a) Subject to Sections 14.14(b), (c) and (d), any term, covenant or
condition of this agreement may only be amended with the consent of the Borrower
and the Majority Lenders or compliance therewith may be waived (either generally
or in a particular instance and either retroactively or prospectively) by the
Majority Lenders and in any such event the failure to observe, perform or
discharge any such covenant, condition or obligation, so amended or waived
(whether such amendment is executed or such consent or waiver is given before or
after such failure), shall not be construed as a breach of such covenant,
condition or obligation or as a Default or Event of Default.
(b) Notwithstanding Section 14.14(a), without the prior written consent of
each Lender, no such amendment or waiver shall:
(i) increase the amount of the Credit Facility or the amount of the
Individual Commitment of any Lender (other than as contemplated
in Sections 1.13, 2.03, 8.03 and 15.06);
(ii) extend the Maturity Date or the time for the payment under
Section 9.01;
(iii) extend the time for the payment of the interest on any Loan,
forgive any portion of principal thereof, reduce the stated
rate of interest thereon or amend the requirement of pro rata
application of all amounts received by the Agent in respect
thereof (other than payments pursuant to Section 1.13(d));
(iv) change the percentage of the Lenders' requirement to constitute
the Majority Lenders or otherwise amend the definition of
Majority Lenders;
(v) reduce the stated amount of any fees to be paid pursuant to
Article 7 of this agreement;
(vi) permit any subordination of the indebtedness hereunder;
(vii) release or discharge, in whole or in part, the liability or
obligations of the Guarantor under the Guarantee;
- 50 -
(viii) alter the terms of any provision hereof to the extent that such
provision provides for the consent or approval of all of the
Lenders to any action or course of action; or
(ix) alter the terms of this Section 14.14.
(c) Without the prior written consent of the Agent, no amendment to or
waiver of Sections 14.01 through 14.13 or any other provision hereof
to the extent it affects the rights or obligations of the Agent shall
be effective.
(d) Notwithstanding Sections 14.14(a) and (b), an amendment of the Agency
Fee Agreement shall only require the consent of the Borrower and the
Agent and compliance therewith may be waived by the Agent alone.
14.15 DETERMINATION BY AGENT CONCLUSIVE AND BINDING. Any determination to be
made by the Agent on behalf of or with the approval of the Lenders or the
Majority Lenders under this agreement shall be made by the Agent in good faith
and, if so made, shall be binding on all parties, absent manifest error.
14.16 REDISTRIBUTION OF PAYMENT. If a Lender shall receive payment of a portion
of the aggregate amount of principal and interest due to it hereunder which is
greater than the proportion received by any other Lender in respect of the
aggregate amount of principal and interest due hereunder (having regard to the
respective Payment Shares of the Lenders), the Lender receiving such
proportionately greater payment shall purchase a participation (which shall be
deemed to have been done simultaneously with receipt of such payment) in that
portion of the aggregate outstanding Accommodation of the other Lender or
Lenders under the Credit Facility so that the respective receipts shall be pro
rata to their respective participation in the Accommodations under the Credit
Facility; provided, however, that if all or part of such proportionately greater
payment received by such purchasing Lender shall be recovered from the Borrower,
such purchase shall be rescinded and the purchase price paid for such
participation shall be returned by such selling Lender or Lenders to the extent
of such recovery, but without interest.
14.17 DISTRIBUTION OF NOTICES. With respect to each notice which is delivered to
the Agent hereunder on behalf of certain of or all of the Lenders, the Agent
shall provide a copy of such notice to each of such Lenders no later than 5:00
p.m. (Toronto time) on the date it is received by the Agent if such date is a
Banking Day and it is received by the Agent prior to noon (Toronto time) on such
date; otherwise, the Agent shall provide a copy of such notice to each of such
Lenders within one Banking Day of receipt by the Agent. With respect to each
other document which is delivered to the Agent hereunder on behalf of certain of
or all of the Lenders, the Agent shall provide a copy of such document to each
of such Lenders within one Banking Day of receipt by the Agent.
- 51 -
ARTICLE 15
MISCELLANEOUS
15.01 WAIVERS. No failure or delay by the Agent, the Lenders or the Majority
Lenders in exercising any remedy, right or power hereunder or otherwise shall
operate as a waiver thereof, except a waiver which is specifically given in
writing by the Agent, and no single or partial exercise of any power, right or
privilege hereunder will preclude any other or further exercise thereof or the
exercise of any other power, right or privilege.
15.02 NOTICES. Subject to Section 1.06, all notices, demands and other
communications provided for herein shall be in writing and shall be personally
delivered to an officer or other responsible employee of the addressee or sent
by telefacsimile, charges prepaid, at or to the applicable addresses or
telefacsimile numbers, as the case may be, set opposite the party's name on the
signature page hereof (in the case of the Borrower and the Agent) or set forth
in Schedule A hereto (in the case of the Lenders) or at or to such other address
or addresses or telefacsimile number or numbers as any party hereto may from
time to time designate to the other parties in such manner. Any communication
which is personally delivered as aforesaid shall be deemed to have been validly
and effectively given on the date of such delivery if such date is a Banking Day
and such delivery was made during normal business hours of the recipient;
otherwise, it shall be deemed to have been validly and effectively given on the
Banking Day next following such date of delivery. Any communication which is
transmitted by telefacsimile as aforesaid shall be deemed to have been validly
and effectively given on the date of transmission if such date is a Banking Day
and such transmission was made during normal business hours of the recipient;
otherwise, it shall be deemed to have been validly and effectively given on the
Banking Day next following such date of transmission.
15.03 SEVERABILITY. Any provision hereof which is prohibited or unenforceable
shall be ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof.
15.04 COUNTERPARTS. This agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original and all of which taken together
shall be deemed to constitute one and the same instrument binding upon the
parties hereto and their respective successors and permitted assigns.
15.05 SUCCESSORS AND ASSIGNS. This agreement shall enure to the benefit and
shall be binding upon the parties hereto and their respective successors and
permitted assigns.
15.06 ASSIGNMENT.
(a) Neither this agreement nor the benefit hereof may be assigned by the
Borrower.
(b) Subject to five Banking Days' prior written notice to the Borrower and
consultation with the Borrower during such period, a Lender may at any time sell
to one or more
- 52 -
other persons ("Participants") participating interests in any Accommodation
outstanding hereunder, any commitment of the Lender hereunder or any other
interest of the Lender hereunder. In the event of any such sale by a Lender of a
participating interest to a Participant, the Lender's obligations under this
agreement to the Borrower shall remain unchanged, the Lender shall remain solely
responsible for the performance thereof and the Borrower shall continue to be
obligated to the Lender in connection with the Lender's rights under this
agreement. The Borrower agrees that if amounts outstanding under this agreement
are due and unpaid, or shall have been declared to be or shall have become due
and payable further to the occurrence of an Event of Default, or any Default
which might mature into an Event of Default, each Participant shall be deemed to
have the right of setoff in respect of its participating interest in amounts
owing under this agreement to the same extent as if the amount of its
participating interest were owing directly to it as the Lender under this
agreement. The Borrower also agrees that each Participant shall be entitled to
the benefits of Section 8.06 with respect to its participation hereunder;
provided, that no Participant shall be entitled to receive any greater amount
pursuant to such Section than the Lender would have been entitled to receive in
respect of the amount of the participation transferred by the Lender to such
Participant had no such transfer occurred.
(c) Subject to obtaining the prior written consent of the Borrower (which
consent shall not be unreasonably withheld), a Lender may at any time sell all
or any part of its rights and obligations hereunder to one or more persons
("Purchasing Lenders") for an aggregate amount exceeding U.S. $20,000,000 in the
case of a partial sale. Notwithstanding the preceding sentence, a Lender may
sell all or any part of its rights and obligations hereunder to a Purchasing
Lender without the consent of the Borrower (i) for so long as an Event of
Default has occurred and is continuing, or (ii) if the Purchasing Lender is
another Lender. Upon such sale, the Lender shall, to the extent of such sale, be
released from its obligations hereunder and each of the Purchasing Lenders shall
become a party hereto to the extent of the interest so purchased. Any such
assignment by a Lender shall not be effective unless and until such Lender has
paid to the Agent an assignment fee in the amount of $2,500 for each Purchasing
Lender (except where the Purchasing Lender is an affiliate or a branch of such
Lender), unless and until the assignee has executed an instrument substantially
in the form of Schedule C hereto whereby such assignee has agreed to be bound by
the terms hereof as a Lender and has agreed to a specific Individual Commitment
and a specific address and telefacsimile number for the purpose of notices as
provided in Section 15.02 and unless and until a copy of a fully executed copy
of such instrument has been delivered to each of the Agent and the Borrower.
Upon any such assignment becoming effective, Schedule A hereto shall be deemed
to be amended to include the assignee as a Lender with the specific Individual
Commitment, address and telefacsimile number as aforesaid and the Individual
Commitment of the Lender making such assignment shall be deemed to be reduced by
the amount of the Individual Commitment of the assignee. The Borrower also
agrees that each Purchasing Lender shall be entitled to the benefits of Article
8 with respect to its purchase hereunder.
- 53 -
(d) The Borrower authorizes the Agent and the Lenders to disclose to any
Participant or Purchasing Lender (each, a "Transferee") and any prospective
Transferee and authorizes each of the Lenders to disclose to any other Lender
any and all financial information in their possession concerning the Borrower
which has been delivered to them by or on behalf of the Borrower pursuant to
this agreement or which has been delivered to them by or on behalf of the
Borrower in connection with their credit evaluation of the Borrower prior to
becoming a party to this agreement, so long as any such Transferee agrees not to
disclose any confidential, non-public information to any person other than its
non-brokerage affiliates, employees, accountants or legal counsel, unless
required by law.
15.07 UNRELATED COSTS AND EXPENSES. The Borrower shall not be responsible for
any failure by the Agent to distribute funds received by the Agent from the
Borrower among the Lenders in accordance with their respective interests or for
any costs incurred by the Agent or any Lender by reason of any such failure by
the Agent or by reason of any dispute which may arise between the Agent and any
one or more of the Lenders or for any costs or expenses incurred by any Lender
or Participant or Purchasing Lender in connection with the utilization of the
provisions of Section 15.06.
15.08 ENTIRE AGREEMENT. This agreement and the agreements referred to herein and
delivered pursuant hereto constitute the entire agreement between the parties
hereto and supersede any prior agreements, commitment letters, undertakings,
declarations, representations and understandings, both written and verbal, in
respect of the subject matter hereof.
15.09 FURTHER ASSURANCES. The Borrower shall from time to time and at all times
hereafter, upon every reasonable request of the Agent, make, do, execute, and
deliver or cause to be made, done, executed and delivered all such further acts,
deeds, assurances and things as may be necessary in the opinion of the Agent for
more effectually implementing and carrying out the true intent and meaning of
this agreement or any agreement delivered pursuant thereto as the Agent may from
time to time request, in form and substance satisfactory to the Agent.
15.10 JUDGMENT CURRENCY.
(a) If, for the purpose of obtaining or enforcing judgment against the
Borrower in any court in any jurisdiction, it becomes necessary to convert into
a particular currency (such currency being hereinafter in this Section 15.10
referred to as the "Judgment Currency") an amount due in another currency (such
other currency being hereinafter in this Section 15.10 referred to as the
"Indebtedness Currency") under this agreement, the conversion shall be made at
the rate of exchange prevailing on the Banking Day immediately preceding:
(i) 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 such
conversion being made on such date; or
- 54 -
(ii) the date on which the judgment is given, in the case of any
proceeding in the courts of any other jurisdiction (the date as
of which such conversion is made pursuant to this Section
15.10(a)(ii) being hereinafter in this Section 15.10 referred to
as the "Judgment Conversion Date").
(b) If, in the case of any proceeding in the court of any jurisdiction
referred to in Section 15.10(a)(ii), there is a change in the rate of exchange
prevailing between the Judgment Conversion Date and the date of actual payment
of the amount due, the Borrower shall pay to the appropriate judgment creditor
or creditors such additional amount (if any, but in any event not a lesser
amount) as may be necessary to ensure that the amount paid in the Judgment
Currency, when converted at the rate of exchange prevailing on the date of
payment, will produce the amount of the Indebtedness Currency which could have
been purchased with the amount of Judgment Currency stipulated in the judgment
or judicial order at the rate of exchange prevailing on the Judgment Conversion
Date.
(c) Any amount due from the Borrower under the provisions of Section
15.10(b) shall be due to the appropriate judgment creditor or creditors as a
separate debt and shall not be affected by judgment being obtained for any other
amounts due under or in respect of this agreement.
(d) The term "rate of exchange" in this Section 15.10 means the noon spot
rate of exchange for Canadian interbank transactions applied in converting the
Indebtedness Currency into the Judgment Currency published by the Bank of Canada
for the day in question.
- 55 -
IN WITNESS WHEREOF the parties hereto have executed this agreement.
THE BANK OF NOVA SCOTIA THE BANK OF NOVA SCOTIA,
Corporate Banking AS AGENT
00 Xxxx Xxxxxx Xxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
By: /s/
-------------------------------
Attention: Syndication Department Name: X. Xxxxx
Telefax: (000) 000-0000 Title: M.D.
By: /s/
-------------------------------
Name: X. Xxxxxx
Title: Associate
POTASH CORPORATION OF POTASH CORPORATION OF
SASKATCHEWAN INC. SASKATCHEWAN INC.
Xxxxx 000, 000-0xx Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxxxx
X0X 0X0 By: /s/
-------------------------------
Name: Xxxxx X. Xxxxxxxx c.s.
Attention: Chief Financial Officer Title: Sr. VP Treasurer & CFO
Telefax: (000) 000-0000
By: /s/
-------------------------------
Name: Xxxxx-Xxx Xxxxxx
Title: Sr. VP Corporate Relations
THE BANK OF NOVA SCOTIA,
AS LENDER
By: /s/
-------------------------------
Name: Xxxx Cebryk
Title: Director
By:
-------------------------------
Name:
Title:
- 56 -
ROYAL BANK OF CANADA
By: /s/
-------------------------------
Name: Xxxxx Xxxxxxx
Title: Manager
By: /s/
-------------------------------
Name: Xxxxx Xxxxxx
Title: Managing Director
CREDIT SUISSE FIRST BOSTON CANADA
By: /s/
-------------------------------
Name: Xxxxx Xxxxxx
Title: Director
By: /s/
-------------------------------
Name: Xxxxx Xxxxxxx
Title: Vice President
BANK OF AMERICA CANADA
By: /s/
-------------------------------
Name: X.X. Xxxxxxxxxx
Title: Managing Director
By:
-------------------------------
Name:
Title:
THE TORONTO-DOMINION BANK
By: /s/
-------------------------------
Name: Xxxxxxx Xxxxx
Title: VP
By:
-------------------------------
Name:
Title:
- 57 -
COMERICA BANK - CANADA
By: /s/
-------------------------------
Name: Xxxx X. Xxxxxx
Title: Assistant Vice President
By:
-------------------------------
Name:
Title:
CITIBANK CANADA
By: /s/
-------------------------------
Name: W. Xxxxx Xxxxxxxx
Title: Managing Director
By:
-------------------------------
Name:
Title:
EXPORT DEVELOPMENT
CORPORATION
By: /s/
-------------------------------
Name: Xxxxx Xxxxxxx
Title: FSM
By: /s/
-------------------------------
Name: Xxxxxx Xxxxxx
Title: FSM
BANK OF MONTREAL
By: /s/
-------------------------------
Name: X. Xxxxxx
Title: Vice-President
By:
-------------------------------
Name:
Title:
SCHEDULE A
INDIVIDUAL COMMITMENTS
NAME AND ADDRESS OF LENDER INDIVIDUAL COMMITMENT
The Bank of Nova Scotia $170,000,000
Saskatoon Commercial Banking Centre
000 - 0xx Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxxxx
X0X 0X0
Attention: Manager
Telefax: 000-000-0000
Royal Bank of Canada $150,000,000
00xx Xxxxx, Xxxxx Xxxxx
Xxxxx Xxxx Xxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxx Xxxxxxx
Telefax: 000-000-0000
Credit Suisse First Boston Canada $100,000,000
0 Xxxxx Xxxxxxxx Xxxxx, Xxxxx 0000
X.X. Xxx 000
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxx Xxxxxx
Telefax: 000-000-0000
Bank of America Canada $60,000,000
0000, 000 - 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: X.X. Xxxxxxxxxx, Managing Director
Telefax: 000-000-0000
A-2
The Toronto-Dominion Bank $50,000,000
8th Floor
00 Xxxxxxxxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxxx Xxxxx
Telefax: 000-000-0000
Comerica Bank - Canada $35,000,000
Xxxxx 0000, Xxxxx Xxxx Xxxxx, Xxxxx Xxxxx
000 Xxx Xxxxxx
X.X. Xxx 00
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxx X. Xxxxxx
Telefax: 000-000-0000
Citibank Canada $30,000,000
000 Xxxxx Xxxxxx Xxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxx Xxxxxx
Telefax: 000-000-0000
Export Development Corporation $30,000,000
000 X'Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxx Xxxxxxx
Telefax: 000-000-0000
A-3
Bank of Montreal $25,000,000
0xx Xxxxx
0 Xxxxx Xxxxxxxx Xxxxx
P.O. Box 150
Toronto, Ontario
M5X 1H3
Attention: Xxxxxx Xxxxxx
Telefax: 000-000-0000
SCHEDULE B
COMPLIANCE CERTIFICATE
TO: THE BANK OF NOVA SCOTIA
I, _________________________, the Chief Financial Officer of Potash
Corporation of Saskatchewan Inc. (the "Borrower") in such capacity and not
personally, hereby certify that:
1. I am the duly appointed Chief Financial Officer of the Borrower, the
borrower named in the term credit agreement made as of September 25, 2001
between the Borrower, The Bank of Nova Scotia, as agent, and the Lenders
referred to therein (the "Credit Agreement") and as such I am providing this
certificate for and on behalf of the Borrower pursuant to the Credit Agreement.
2. I am familiar with and have examined the provisions of the Credit Agreement
including, without limitation, those of Articles 10, 11 and 13 therein.
3. To the best of my knowledge, information and belief and after due inquiry,
no Default has occurred and is continuing as at the date hereof.
4. As of the last day of or for the [Fiscal Quarter/Fiscal Year] ending
_______________, the amounts and financial ratios referred to in Sections
11.01(e), 11.01(f) and 11.01(g) and Sections 11.03(d) and (e) of the Credit
Agreement are as follows:
Required Amount
Actual Amount or Limit
------------- ---------------
(a) Debt to Capital _____:1 0.55:1
(b) Long Term Debt to EBIDTA _____:1 3.5:1
(c) Tangible Net Worth $_____ $1,250,000,000
(d) Net Book Value of Disposed Assets $_____ N/A
(e) 25% of Total Assets $_____ N/A
(f) Debt of Subsidiaries $_____ $250,000,000
(other than Guarantor)
(g) Debt of Guarantor $_____ $19,000,000
5. Unless the context otherwise requires, capitalized terms in the Credit
Agreement which appear herein without definitions shall have the meanings
ascribed thereto in the Credit Agreement.
B-2
DATED this _____ day of __________________, __________.
_______________________
Chief Financial Officer
SCHEDULE C
FORM OF ASSIGNMENT
Dated __________, _____
Reference is made to the Term Credit Agreement made as of September 25,
2001, as amended (the "Credit Agreement"), between Potash Corporation of
Saskatchewan Inc., The Bank of Nova Scotia, as agent (in that capacity, the
"Agent") and the Lenders referred to therein. Terms defined in the Credit
Agreement are used herein as therein defined.
______________________________ (the "Assignor") and ___________________
(the "Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, and the Assignee
hereby purchases and assumes from the Assignor, a ___% interest in and to all of
the Assignor's rights and obligations under the Credit Agreement and any
agreements, documents and instruments delivered pursuant thereto (collectively,
the "Loan Documents") as of the Effective Date (as defined below) (including,
without limitation, such percentage interest in the Assignor's Individual
Commitment as in effect on the Effective Date and the Accommodation made
available by the Assignor under the Credit Facility and outstanding on the
Effective Date).
2. The Assignor (i) represents and warrants that as of the date hereof its
Individual Commitment is U.S. $_________ (without giving effect to assignments
thereof which have not yet become effective, including, but not limited to, the
assignment contemplated hereby), and the aggregate outstanding amount of
Accommodation made available by the Assignor under the Credit Facility is U.S.
$_________ (without giving effect to assignments thereof which have not yet
become effective, including, but not limited to, the assignment contemplated
hereby); (ii) represents and warrants that it is the legal and beneficial owner
of the interest being assigned by it hereunder and that such interest is free
and clear of any adverse claim; (iii) makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Loan Documents or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Loan Documents or any other instrument or document furnished pursuant
thereto; (iv) makes no representation or warranty and assumes no responsibility
with respect to the financial condition of any of the Companies or the
performance or observance by the Borrower of any of its obligations under the
Loan Documents or any other instrument or document furnished pursuant thereto;
and (v) gives notice to the Agent of the assignment to the Assignee hereunder.
3. The effective date of this Assignment (the "Effective Date") shall be the
later of ____________ and the date on which a copy of a fully executed copy of
this Assignment has been delivered to Potash Corporation of Saskatchewan Inc.
and the Agent in accordance with Section 15.02 of the Credit Agreement.
C-2
4. The Assignee hereby agrees to the specific Individual Commitment in the
amount of U.S. $_________ and to the address and telefacsimile number set out
after its name on the signature page hereof for the purpose of notices as
provided in Section 15.02 of the Credit Agreement.
5. As of the Effective Date (i) the Assignee shall, in addition to any rights
and obligations under the Loan Documents held by it immediately prior to the
Effective Date, have the rights and obligations under the Loan Documents that
have been assigned to it pursuant to this Assignment and (ii) the Assignor
shall, to the extent provided in this Assignment, relinquish its rights and be
released from its obligations under the Loan Documents.
6. The Assignor and Assignee shall make all appropriate adjustments in
payments under the Loan Documents for periods prior to the Effective Date
directly between themselves.
7. This Assignment shall be governed by, and construed in accordance with, the
laws of the Province of Ontario and the laws of Canada applicable therein.
8. There shall be no novation or recreation of any of the obligations of the
Borrower under any of the Loan Documents by reason of the assignment provided
for herein.
[ASSIGNOR]
By: ___________________________________
Title:
[ASSIGNEE]
By: ___________________________________
Title:
Address
-------
_______________________________________
_______________________________________
_______________________________________
Attention: ____________________________
Telefax: ______________________________
C-3
If no Event of Default has occurred and is continuing, insert the following:
Potash Corporation of Saskatchewan Inc. hereby consents to the foregoing
assignment as of the _________ day of ____________ , _____.
POTASH CORPORATION OF
SASKATCHEWAN INC.
Per: __________________________________
Name:
Title:
SCHEDULE D-1
OPINION OF BORROWER'S AND GUARANTOR'S ONTARIO COUNSEL
[LETTERHEAD OF BORROWER'S AND GUARANTOR'S ONTARIO COUNSEL]
_______________ , 0000
Xxx Xxxx xx Xxxx Xxxxxx
Corporate Banking - Syndications
00 Xxxx Xxxxxx Xxxx
00xx Xxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Dear Sirs:
Re: U.S. $650,000,000 Term Credit Facility provided to Potash Corporation of
Saskatchewan Inc. (the "Borrower") pursuant to a Term Credit Agreement made
as of September 25, 2001 between the Borrower, The Bank of Nova Scotia, as
Agent, and the Lenders referred to therein (the "Credit Agreement") and
Guarantee Agreement made as of September 25, 2001 by PCS Nitrogen, Inc.
(the "Guarantor") in favour of The Bank of Nova Scotia, as Agent (The
"Guarantee")
-------------------------
We have acted as Ontario counsel to the Borrower in connection with the
negotiation, execution, and delivery by the Borrower of the Credit Agreement and
as Ontario counsel to the Guarantor in connection with the negotiation of the
Guarantee. This opinion is being provided to The Bank of Nova Scotia as agent
for and on behalf of itself and the Lenders. All capitalized terms which are
used herein and not otherwise defined herein shall have the meanings ascribed
thereto in the Credit Agreement.
In connection with the foregoing, we have examined certified copies of certain
corporate proceedings of the Borrower, certificates of public officials and an
officer's certificate of the Borrower, a copy of which is annexed hereto as
Schedule "A", and have made such other investigations of fact and law as we have
deemed relevant and necessary as the basis for the opinions herein expressed. In
such examination, we have assumed the genuineness of all signatures and the
authenticity of documents submitted as originals and the conformity to originals
of all documents submitted as copies thereof.
For the purposes of our opinions expressed herein, we have relied on the opinion
of Xx. Xxxx X.X. Xxxxxxx, General Counsel of the Borrower, of even date herewith
as to the matters set out therein (the "Borrower Opinion") and the opinion of
Arent Fox, Delaware counsel to the Guarantor, of even date herewith as to the
matters set out therein (the "Guarantor Opinion"). The Borrower Opinion is
attached hereto as Schedule "B". The Guarantor Opinion is attached hereto
D-2
as Schedule "C". Each of the Borrower Opinion and the Guarantor Opinion is
satisfactory in form and we consider that you and we are justified in relying
thereon.
Our opinion expressed below in paragraph 5 is based upon, among other things,
the provisions of the Income Tax Act (Canada) including the regulations
promulgated thereunder (the "Act"), and the equivalent provisions of the tax
legislation of the Province of Ontario in force at the date of this letter, and
takes into account all proposed amendments to such law that have been publicly
announced as at such date as well as our understanding of the published
administrative practice of Revenue Canada, Customs, Excise and Taxation.
Based upon the foregoing and subject to the qualifications hereinafter set
forth, we are of the opinion that:
1. Each of the Credit Agreement and the Agency Fee Agreement (collectively,
the "Borrower Documents") has been duly executed and delivered by the
Borrower.
2. There are no consents, approvals, orders, authorizations, licences,
exemptions or designations or registrations, qualifications, declarations,
or filings of or by any governmental or regulatory body or person which are
necessary as of the date hereof in order for the Borrower to execute and
deliver the Borrower Documents and to perform its obligations thereunder or
in order for the Guarantor to execute and deliver the Guarantee and to
perform its obligations thereunder.
3. Each Borrower Document is a legal, valid and binding obligation of the
Borrower, enforceable against the Borrower in accordance with its terms.
4. The Guarantee is a legal, valid and binding obligation of the Guarantor,
enforceable against the Guarantor in accordance with its terms.
5. No stamp tax or similar duty or levy is payable in connection with the
execution and delivery of the Borrower Documents or the Guarantee.
The opinions set forth above as to the enforceability of the Borrower Documents
and the Guarantee are subject to:
(a) applicable, bankruptcy, insolvency, preference, winding up,
reorganization, arrangement, moratorium or other similar laws
affecting creditors rights generally;
(b) the enforceability of the Borrower Documents and the Guarantee and the
rights and remedies set out therein may be limited by general
principles of equity;
(c) a court may not treat as conclusive those certificates and
determinations which the Borrower Documents or the Guarantee state are
to be so treated;
D-3
(d) the ability to recover or claim for certain costs or expenses may be
subject to judicial discretion;
(e) pursuant to the Currency Act (Canada), judgment by a court in any
province in Canada may be awarded in Canadian currency only;
(f) validity and enforceability of the severability provisions contained
in the Borrower Documents and the Guarantee may be subject to judicial
discretion;
(g) the requirement in the Borrower Documents or the Guarantee that
interest be paid at a higher rate after than before default may not be
enforceable as it may be construed as a penalty; and
(h) the effectiveness of provisions which purport to relieve a person from
a liability or duty otherwise owed may be limited by law, and
provisions requiring indemnification or reimbursement may not be
enforced by a court to the extent that they relate to the failure of
such person to have performed such duty or liability.
The opinions expressed herein are limited to matters governed by the laws of the
Province of Ontario and the law of Canada applicable therein.
The opinions expressed herein are provided totally for the benefit of The Bank
of Nova Scotia, as agent for and on behalf of itself and the Lenders, in
connection with the financing transaction described above. The opinion letter
may not be quoted or relied upon by anyone else without our prior written
consent.
Yours truly,
D-4
SCHEDULE D-2
OPINION OF BORROWER'S GENERAL COUNSEL
[LETTERHEAD OF BORROWER'S GENERAL COUNSEL]
_______________ , 2001
The Bank of Nova Scotia
Corporate Banking - Syndications
00 Xxxx Xxxxxx Xxxx
00xx Xxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Stikeman, Xxxxxxx
Xxxxxxxx Xxxxx Xxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx
X0X 0X0
Dear Sirs:
Re: U.S. $650,000,000 Term Credit Facility provided to Potash Corporation of
Saskatchewan Inc. (the "Borrower") pursuant to a Term Credit Agreement made
as of September 25, 2001 between the Borrower, The Bank of Nova Scotia, as
Agent, and the Lenders referred to therein (the "Credit Agreement")
-------------------------
I am the Vice-President, General Counsel and Secretary of the Borrower and in
that capacity have acted on behalf of the Borrower in connection with the
authorization, execution, and delivery by the Borrower of the Credit Agreement.
This opinion is being provided to The Bank of Nova Scotia as agent for and on
behalf of itself and the Lenders. All capitalized terms which are used herein
and not otherwise defined herein shall have the meanings ascribed thereto in the
Credit Agreement.
In connection with the foregoing, I have examined originals of the articles of
incorporation, and such other corporate proceedings and records of the Borrower,
and certificates of public officials and have made such other investigations of
fact and law as I have deemed relevant and necessary as the basis for the
opinions herein expressed. In such examination I have assumed the genuineness of
all signatures and the authenticity of documents submitted as originals and the
conformity to originals of all documents submitted as copies thereof.
Based upon the foregoing and subject to the qualifications hereinafter set
forth, I am of the opinion that:
D-5
1. The Borrower is a corporation duly incorporated and validly existing under
the laws of the Province of Saskatchewan.
2. The Borrower has full corporate capacity, power and authority to enter into
the Credit Agreement and the Agency Fee Agreement (collectively, the
"Documents") and to observe and perform the obligations on its part to be
observed and performed thereunder.
3. The entering into of the Documents and the observance and performance by
the Borrower of the obligations on its part to be observed and performed
thereunder do not (a) violate any provision of its articles or bylaws, or
(b) contravene any existing law, regulation or authorization to which the
Borrower is subject.
4. Each Document has been duly authorized by all necessary corporate action on
the part of the Borrower.
5. There are no consents, approvals, orders, authorizations, licences,
exemptions or designations or registrations, qualifications, declarations,
or filings of or by any governmental or regulatory body or person which are
necessary in order for the Borrower (a) to execute and deliver the
Documents and (b) to perform its obligations thereunder.
6. As the Credit Agreement is stated to be governed by the laws of the
Province of Ontario, I am unable to opine as to whether the Credit
Agreement constitutes a legal, valid and binding obligation of the
Borrower, enforceable against it in accordance with its terms. However,
there is nothing in Saskatchewan law which would prohibit the Borrower from
entering into the Credit Agreement or from performing its obligations
thereunder. I am not aware of any provision of the Credit Agreement which
would appear to violate the public policy of Saskatchewan.
7. The courts of Saskatchewan would give a judgment based on a judgment
obtained in the courts of the Province of Ontario against the Borrower with
respect to the Credit Agreement without re-examination of the merits,
assuming proper service of process in respect of the proceeding in which
such Ontario judgment was obtained in accordance with the laws of Ontario
and assuming such process was duly served on the Borrower and provided that
such judgment was for a debt or fixed sum of money, not obtained by fraud
or any manner contrary to the principles of natural justice, not for a
claim in respect of any laws of Ontario which a court in Saskatchewan would
characterize as revenue, expropriating, penal or similar laws, and not
contrary to public policy, as that term is understood under the laws of
Saskatchewan.
D-6
The opinions expressed herein are limited to matters governed by the laws of the
Province of Saskatchewan and the laws of Canada applicable therein.
Yours truly,
POTASH CORPORATION OF SASKATCHEWAN INC.
Xxxx X.X. Xxxxxxx
Vice-President, General Counsel and Secretary
D-7
SCHEDULE D-3
OPINION OF GUARANTOR'S DELAWARE COUNSEL
[LETTERHEAD OF GUARANTOR'S DELAWARE COUNSEL]
_______________ , 0000
Xxx Xxxx xx Xxxx Xxxxxx
Corporate Banking - Syndications
00 Xxxx Xxxxxx Xxxx
00xx Xxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Dear Sirs:
Re: Guarantee Agreement made as of September 25, 2001 by PCS Nitrogen, Inc.
(the "Guarantor") in favour of The Bank of Nova Scotia, as Agent (the
"Guarantee")
-------------------------
We have acted as Delaware counsel to the Guarantor in connection with the
authorization, execution, and delivery by the Guarantor of the Guarantee. This
opinion is being provided to The Bank of Nova Scotia as agent for and on behalf
of itself and the Lenders. All capitalized terms which are used herein and not
otherwise defined herein shall have the meanings ascribed thereto in the
Guarantee.
In connection with the foregoing, we have examined originals of the articles of
incorporation, and such other corporate proceedings and records of the
Guarantor, and certificates of public officials and have made such other
investigations of fact and law as we have deemed relevant and necessary as the
basis for the opinions herein expressed. In such examination we have assumed the
genuineness of all signatures and the authenticity of documents submitted as
originals and the conformity to originals of all documents submitted as copies
thereof.
Based upon the foregoing and subject to the qualifications hereinafter set
forth, I am of the opinion that:
1. The Guarantor is a corporation duly incorporated and validly existing under
the laws of the State of Delaware.
2. The Guarantor has full corporate capacity, power and authority to enter
into the Guarantee and to observe and perform the obligations on its part
to be observed and performed thereunder.
D-8
3. The entering into of the Guarantee and the observance and performance by
the Guarantor of the obligations on its part to be observed and performed
thereunder do not (a) violate any provision of its articles or bylaws, or
(b) contravene any existing law, regulation or authorization to which the
Guarantor is subject.
4. The Guarantee has been duly authorized by all necessary corporate action on
the part of the Guarantor.
5. There are no consents, approvals, orders, authorizations, licences,
exemptions or designations or registrations, qualifications, declarations,
or filings of or by any governmental or regulatory body or person which are
necessary in order for the Guarantor (a) to execute and deliver the
Guarantee and (b) to perform its obligations thereunder.
6. As the Guarantee is stated to be governed by the laws of the Province of
Ontario, we are unable to opine as to whether the Guarantee constitutes a
legal, valid and binding obligation of the Guarantor, enforceable against
it in accordance with its terms. However, there is nothing in Delaware law
which would prohibit the Guarantor from entering into the Guarantee or from
performing its obligations thereunder. We are not aware of any provision of
the Guarantee which would appear to violate the public policy of Delaware.
7. The courts of Delaware would give a judgment based on a judgment obtained
in the courts of the Province of Ontario against the Guarantor with respect
to the Guarantee without re-examination of the merits, assuming proper
service of process in respect of the proceeding in which such Ontario
judgment was obtained in accordance with the laws of Ontario and assuming
such process was duly served on the Guarantor and provided that such
judgment was for a debt or fixed sum of money, not obtained by fraud or any
manner contrary to the principles of natural justice, not for a claim in
respect of any laws of Ontario which a court in Delaware would characterize
as revenue, expropriating, penal or similar laws, and not contrary to
public policy, as that term is understood under the laws of Delaware.
The opinions expressed herein are limited to matters governed by the laws of the
State of Delaware and the laws of the United States of America applicable
therein.
Yours truly,
SCHEDULE E
SUBSIDIARIES
JURISDICTION OF
INCORPORATION OR
NAME OF ENTITY FORMATION
----------------------------------------------------------------------------------
609430 Saskatchewan Ltd. Saskatchewan
628550 Saskatchewan Ltd. Saskatchewan
AA Sulfuric Corporation Louisiana
Canpotex Bulk Terminals Limited Canada
Chilkap Resources Ltd. Yukon
Inversiones PCS Chile Limitada Chile
Minera Saskatchewan Limitada Chile
PCS Administration (USA), Inc. Delaware
PCS (Barbados) Shipping, Ltd. Barbados
PCS Xxxxxxx Lake Company Ontario
PCS Chile I LLC Delaware
PCS Chile II LLC Delaware
PCS Fosfatos do Brasil Ltda. Brazil
PCS Hungary Holding Limited Hungary
PCS Industrial Products Inc. Delaware
PCS Joint Venture, LP Florida
PCS L.P. Inc. Delaware
PCS Luxembourg Finance S.a.r.l. Luxembourg
PCS Nitrogen Ammonia Terminal Corporation I Texas
PCS Nitrogen Ammonia Terminal Corporation II Delaware
PCS Nitrogen Cayman Limited Cayman Islands
PCS Nitrogen Fertilizer, L.P. Delaware
PCS Nitrogen Fertilizer Operations, Inc. Delaware
PCS Nitrogen Holding Company Delaware
PCS Nitrogen, Inc. Delaware
PCS Nitrogen LCD Corporation Delaware
PCS Nitrogen Limited Trinidad
PCS Nitrogen Ohio, L.P. Delaware
PCS Nitrogen Payroll Corporation Delaware
PCS Nitrogen Trinidad Corporation Delaware
PCS Nitrogen Trinidad Fertilizer Corporation Delaware
PCS Nitrogen Trinidad Finance Ltd. United Kingdom
PCS Nitrogen Trinidad Limited Trinidad
PCS Phosphate Company, Inc. Delaware
PCS Purified Phosphates Virginia
PCS Sales (Canada) Inc. Saskatchewan
PCS Sales (Indiana), Inc. Indiana
PCS Sales (Iowa), Inc. Iowa
PCS Sales (USA), Inc. Delaware
PCS Yumbes S.C.M. Chile
Phosphate Holding Company, Inc. Delaware
Potash Corporation of Saskatchewan (Florida) Inc. Florida
Potash Corporation of Saskatchewan Transport Limited Saskatchewan
Potash Holding Company, Inc. Delaware
Texasgulf Aircraft Inc. Delaware
TG Corporation Delaware
White Springs Agricultural Chemicals, Inc. Delaware
SCHEDULE F
PARTNERSHIPS, JOINT VENTURES AND SYNDICATES
See Schedule E
SCHEDULE G
SPECIFIC PERMITTED LIENS
Intentionally left blank
SCHEDULE H
ADDITIONAL DISCLOSURE
Intentionally left blank
SCHEDULE I
GUARANTEE AGREEMENT
To: The Bank of Nova Scotia (the "Agent")
Corporate Banking - Syndications
00 Xxxx Xxxxxx Xxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxx X0X 0X0
And To: The Lenders under the Credit Agreement (defined below)
WHEREAS PCS Nitrogen, Inc. (hereinafter called the "Guarantor") is
an indirect wholly-owned subsidiary of Potash Corporation of Saskatchewan Inc.
(hereinafter called the "Borrower");
AND WHEREAS, pursuant to the terms of a term credit agreement, dated
as of September 25, 2001 (as it may be amended, modified or supplemented from
time to time, the "Credit Agreement") between the Borrower, the Lenders named
therein and The Bank of Nova Scotia, as Agent, the Lenders established a certain
term credit facility in favour of the Borrower;
AND WHEREAS, as security for the payment of the full amount of the
indebtedness, liabilities and obligations of the Borrower to the Agent and the
Lenders under the Credit Agreement, the Guarantor has agreed to guarantee
payment of the Borrower's indebtedness, liabilities and obligations to the Agent
and the Lenders under the Credit Agreement on the terms and subject to the
conditions hereinafter set forth;
AND WHEREAS, it is in the best interests of the Guarantor to execute
and deliver this agreement, inasmuch as the Guarantor will derive the
substantial direct and indirect benefits from the establishment of the aforesaid
credit facility by the Lenders in favour of the Borrower;
NOW THEREFORE, for good and valuable consideration, the Guarantor
hereby covenants to and for the benefit of the Agent and the Lenders as follows:
ARTICLE 1
INTERPRETATION
1.01 DEFINED TERMS. In this agreement or any amendment to this agreement, unless
the context clearly indicates to the contrary:
"BANKING DAY" means any day other than a Saturday or a Sunday on which banks
generally are open for business in Xxxxxxx, Xxxxxxx.
"CREDIT AGREEMENT" is defined in the second recital.
"DESIGNATED CURRENCY" shall have the meaning ascribed thereto in Section 2.01.
I-2
"EVENT OF DEFAULT" shall have the meaning ascribed thereto in the Credit
Agreement.
"OBLIGATIONS" means all advances, debts, liabilities, obligations, covenants and
duties arising under the Credit Agreement, owing by the Borrower to the Agent
and the Lenders, whether direct or indirect (including those acquired by
assignment), absolute or contingent, due or to become due, now existing or
hereafter arising.
"OTHER TAXES" shall have the meaning ascribed thereto in Section 2.10(b).
"PERSON" means any natural person, corporation, firm, partnership, joint
venture, joint stock company, incorporated or unincorporated association,
government, governmental agency or any other entity, whether acting in an
individual, fiduciary or other capacity.
"TAXES" shall have the meaning ascribed thereto in Section 2.10(a).
1.02 OTHER USAGES. References to "this agreement", "the agreement", "hereof",
"herein", "hereto" and like references refer to this Guarantee Agreement, as
amended, modified, supplemented or replaced from time to time, and not to any
particular Article, Section or other subdivision of this agreement.
1.03 PLURAL AND SINGULAR. Where the context so requires, words importing the
singular number shall include the plural and vice versa.
1.04 HEADINGS. The division of this agreement into Articles and Sections and the
insertion of headings in this agreement are for convenience of reference only
and shall not affect the construction or interpretation of this agreement.
1.05 APPLICABLE LAW. This agreement shall be governed by and construed in
accordance with the laws of the Province of Ontario. Any legal action or
proceeding with respect to this agreement may be brought in the courts of the
Province of Ontario and, by execution and delivery of this agreement, the
Guarantor hereby accepts for itself and in respect of it property, generally and
unconditionally, the non-exclusive jurisdiction of the aforesaid courts. The
Guarantor irrevocably consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to the Guarantor at
the address set opposite its name on the signature page hereof, such service to
become effective 5 Banking Days after such mailing. Nothing herein shall limit
the right of the Agent or the Lenders to serve process in any manner permitted
by law or to commence legal proceedings or otherwise proceed against the
Guarantor in any other jurisdiction.
1.06 TIME OF THE ESSENCE. Time shall in all respects be of the essence of this
agreement, and no extension or variation of this agreement or any obligation
hereunder shall operate as a waiver of this provision.
I-3
ARTICLE 2
GUARANTEE
2.01 GUARANTEE. The Guarantor hereby unconditionally, absolutely and irrevocably
guarantees the full and punctual payment to the Agent and the Lenders, as and
when due, whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise, of all of the Obligations in the same
currency (the "Designated Currency") as the currency of the Obligations, whether
for principal, interest, fees, expenses, indemnities or otherwise.
2.02 ACCELERATION OF GUARANTEE. The Guarantor agrees that, in the event of the
dissolution or insolvency of the Guarantor, or the inability or failure (after
any applicable grace periods) of the Guarantor to pay debts as they become due,
or an assignment by the Guarantor for the benefit of creditors, or the
commencement of any proceeding in respect of the Guarantor under any bankruptcy,
insolvency or similar laws (and, if such proceedings are commenced by a person
other than the Guarantor, such proceedings are not dismissed or stayed within 90
days of the commencement thereof), and if such event shall occur at a time when
any of the Obligations may not then be due and payable, the Guarantor will pay
to the Agent and the Lenders forthwith the full amount which would be payable
hereunder by the Guarantor if all such Obligations were then due and payable.
2.03 NATURE OF GUARANTEE. Subject to Section 2.02, the Guarantee shall in all
respects be a continuing, absolute, unconditional and irrevocable guarantee of
payment when due and not of collection, and shall remain in full force and
effect until all Obligations have been paid in full, all obligations of the
Guarantor hereunder have been paid in full and the commitments of the Lenders
under the Credit Agreement have been permanently terminated. The Guarantor
guarantees that the Obligations will be paid strictly in accordance with the
terms of the Credit Agreement, regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the Agent or the Lenders with respect thereto. The liability of the
Guarantor under this agreement shall be absolute, unconditional and irrevocable
irrespective of, and without being lessened or limited by:
(a) any lack of validity, legality, effectiveness or enforceability of the
Credit Agreement;
(b) the failure of the Agent or the Lenders:
(i) to assert any claim or demand or to enforce any right or remedy
against the Borrower or any other Person (including any other
guarantor) under the provisions of the Credit Agreement, or
otherwise, or
(ii) to exercise any right or remedy against any other guarantor of,
or collateral securing, any of the Obligations;
(c) any change in the time, manner or place of payment of, or in any other
term of, all or any of the Obligations, or any other extension,
compromise, indulgence or renewal of any Obligation;
I-4
(d) any reduction, limitation, variation, impairment, discontinuance or
termination of the Obligations for any reason (other than by reason of
any payment which is not required to be rescinded), including any
claim of waiver, release, discharge, surrender, alteration or
compromise, and shall not be subject to (and the Guarantor hereby
waives any right to or claim of) any defence or setoff, counterclaim,
recoupment or termination whatsoever by reason of the invalidity,
illegality, nongenuineness, irregularity, compromise, unenforceability
of, or any other event or occurrence affecting, the Obligations or
otherwise (other than by reason of any payment which is not required
to be rescinded);
(e) any amendment to, rescission, waiver or other modification of, or any
consent to any departure from, any of the terms of the Credit
Agreement or any other guarantees or security;
(f) any addition, exchange, release, discharge, renewal, realization or
non-perfection of any collateral security for the Obligations or any
amendment to, or waiver or release or addition of, or consent to
departure from, any other guarantee held by the Bank as security for
any of the Obligations;
(g) the loss of or in respect of or the unenforceability of any other
guarantee or other security which the Agent or the Lenders may now or
hereafter hold in respect of the Obligations, whether occasioned by
the fault of the Agent or the Lenders or otherwise;
(h) any change in the name of the Borrower or in the constating documents,
capital structure, capacity or constitution of the Borrower, the
bankruptcy or insolvency of the Borrower, the sale of any or all of
the Borrower's business or assets or the Borrower being consolidated,
merged or amalgamated with any other Person; or
(i) any other circumstance (other than final payment in full of all
Obligations) which might otherwise constitute a defence available to,
or a legal or equitable discharge of, the Borrower, any surety or any
guarantor.
2.04 ENFORCEMENT. Upon any of the Obligations becoming due and payable and not
being paid by the Borrower, the Guarantor shall, within 2 Banking Days after
notice thereof has been given to the Guarantors by the Agent, pay to the Agent
and the Lenders, the total amount of such Obligations and the Agent and the
Lenders may apply the sum so paid against such of such Obligations as the Agent
and the Lenders may see it and change any such application in whole or in part
from time to time. A written statement of the Borrower as to the amount
remaining unpaid to the Agent and the Lenders by the Borrower at any time shall
be conclusive evidence against the Guarantor, absent manifest error, as to the
amount remaining unpaid to the Agent and the Lenders by the Borrower at such
time. A written statement of the Agent as to the amount remaining unpaid to the
Agent and the Lenders by the Borrower at any time shall be prima facie evidence
against the Guarantor, absent manifest error, as to the amount remaining unpaid
to the Agent and the Lenders by the Borrower at such time.
I-5
2.05 GUARANTEE IN ADDITION TO OTHER SECURITY. This guarantee shall be in
addition to and not in substitution for any other guarantee or other security
which the Agent and the Lenders may now or hereafter hold in respect of the
Obligations, and the Agent and the Lenders shall be under no obligation to
marshal in favour of the Guarantor any other guarantee or other security or any
moneys or other assets which the Agent and the Lenders may be entitled to
receive or may have a claim upon.
2.06 REINSTATEMENT. This guarantee and all other terms of this agreement shall
continue to be effective or shall be reinstated, as the case may be, if at any
time any payment (in whole or in part) of any of the Obligations is rescinded or
must otherwise be returned or restored by the Agent or the Lenders by reason of
the insolvency, bankruptcy or reorganization of the Borrower or for any other
reason not involving the wilful misconduct or gross negligence of the Agent or
the Lenders, all as though such payment had not been made.
2.07 WAIVER OF NOTICE, ETC. The Guarantor hereby waives promptness, diligence,
notice of acceptance and any other notice (other than the notice referred to in
Section 2.04) with respect to any of the Obligations and this agreement.
2.08 SUBROGATION RIGHTS. The Guarantor will not exercise any rights which it may
acquire by way of subrogation under this agreement, by any payment made
hereunder or otherwise, until the prior satisfaction in full of all of the
Obligations. Any amount paid to the Guarantor on account of any such subrogation
rights prior to the satisfaction in full of all Obligations shall be held in
trust for the Agent and the Lenders and shall immediately be paid to the Agent
and credited and applied against the Obligations, whether matured or unmatured,
in accordance with the terms of the Credit Agreement; provided, however, that if
(a) the Guarantor has made payment to the Agent of all or any part of the
Obligations, and
(b) all Obligations have been paid in full and all commitments of the
Lenders under the Credit Agreement have been permanently terminated,
the Agent and the Lenders agree that, at the Guarantor's request, the Agent and
the Lenders will execute and deliver to the Guarantor appropriate documents
(without recourse and without representation and warranty) necessary to evidence
the transfer by subrogation to the Guarantor of an interest in the Obligations
resulting from such payment by the Guarantor. In furtherance of the foregoing,
for so long as any Obligations or any commitments of the Lenders to the Borrower
remain outstanding, the Guarantor hereby postpones any and all claims it may
have against the Borrower to the Obligations and agrees to refrain from taking
any action or commencing any proceeding against the Borrower or its successors
or assigns, whether in connection with a bankruptcy proceeding or otherwise, to
recover any amounts in respect of payments made under this agreement to the
Agent or the Lenders, provided, however, that so long as no Event of Default has
occurred and is continuing, the foregoing postponement shall not apply.
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2.09 ADVANCES AFTER CERTAIN EVENTS. All advances, renewals and credits made or
granted by the Lenders purportedly to or for the Borrower after the bankruptcy
or insolvency of the Borrower, but before the Agent or the Lenders have received
notice thereof, shall be deemed to form part of the Obligations, and all
advances, renewals and credits obtained from the Lenders purportedly by or on
behalf of the Borrower shall be deemed to form part of the Obligations,
notwithstanding any lack or limitation of power, incapacity or disability of the
Borrower or of the directors or agents thereof and notwithstanding that the
Borrower may not be a legal entity and notwithstanding any irregularity, defect
or informality in the obtaining of such advances, renewals or credits. The
Guarantor will indemnify the Agent and the Lenders for any such advance, renewal
or credit that is not repaid to the Agent and the Lenders.
2.10 PAYMENTS FREE AND CLEAR OF TAXES, ETC. The Guarantor hereby agrees that:
(a) Any and all payments made by the Guarantor hereunder shall be made
free and clear of, and without deduction for, any and all present or
future taxes, levies, imposts, deductions, charges or withholdings,
and all liabilities with respect thereto, excluding, in the case of
the Agent or any Lender, taxes imposed on its net income (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings
and liabilities being hereinafter referred to as "Taxes"). If the
Guarantor shall be required by law to deduct any Taxes from or in
respect of any sum payable hereunder to the Agent or any Lender
(i) the sum payable shall be increased as may be necessary so that
after making all required deductions (including deductions
applicable to additional sums payable under this Section 2.10)
the Agent or such Lender receives an amount equal to the sum it
would have received had no such deductions been made,
(ii) the Guarantor shall make such deductions, and
(iii) the Guarantor shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance
with applicable law.
(b) The Guarantor shall pay any present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies
which arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this
agreement (hereinafter referred to as "Other Taxes").
(c) The Guarantor hereby indemnifies and holds harmless the Agent and the
Lenders for the full amount of Taxes or Other Taxes (including,
without limitation, any Taxes or Other Taxes imposed by any
jurisdiction on amounts payable under this Section 2.10) paid by the
Agent or any Lender and any liability (including penalties, interest
and expenses) arising therefrom or with respect thereto, whether or
not such Taxes or Other Taxes were correctly or legally assessed.
I-7
(d) Within 30 days after the date of any payment of Taxes or Other Taxes
by the Guarantor, the Guarantor will furnish to the Agent the original
or a certified copy of a receipt evidencing payment thereof. If no
Taxes or Other Taxes are payable in respect of any payment hereunder
to the Agent, the Guarantor will, upon the request of the Agent,
furnish to the Agent a certificate from each appropriate taxing
authority, or an opinion of counsel acceptable to the Agent, in either
case stating that such payment is exempt from or not subject to Taxes
or Other Taxes.
(e) Without prejudice to the survival of any other agreement of the
Guarantor hereunder, the agreements and obligations of the Guarantor
contained in this Section 2.10 shall survive the payment in full of
the Obligations.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.01 REPRESENTATIONS AND WARRANTIES. To induce the Agent and the Lenders to
extend credit to the Borrower, the Guarantor hereby represents and warrants to
the Agent and the Lenders as follows and acknowledges and confirms that the
Agent and the Lenders are relying upon such representations and warranties in
extending credit to the Borrower:
(a) STATUS AND POWER. The Guarantor is a corporation duly incorporated and
organized and validly subsisting in good standing under the laws of
the State of Delaware. The Guarantor has all requisite corporate
capacity, power and authority to own, hold under licence or lease its
properties, to carry on its business as now conducted and to otherwise
enter into, and carry out the transactions contemplated by, this
agreement.
(b) AUTHORIZATION AND ENFORCEMENT OF DOCUMENTS. All necessary action has
been taken to authorize the execution, delivery and performance of
this agreement by the Guarantor. The Guarantor has duly executed and
delivered this agreement. This agreement is a legal, valid and binding
obligation of the Guarantor, enforceable against the Guarantor by the
Agent and the Lenders in accordance with its terms, except to the
extent that the enforceability thereof may be limited by applicable
bankruptcy, insolvency, moratorium, reorganization and other similar
laws limiting the enforcement of creditors' rights generally and the
fact that the courts may deny the granting or enforcement of equitable
remedies.
(c) COMPLIANCE WITH OTHER INSTRUMENTS. The execution, delivery and
performance of this agreement by the Guarantor, and the consummation
of the transactions contemplated herein do not and will not conflict
with, result in any material breach or violation of, or constitute a
material default under, the terms, conditions or provisions of the
charter or constating documents or by-laws of, or any shareholder
agreement relating to, the Guarantor or of any law, regulation,
judgment, decree or order binding on or applicable to the Guarantor or
to which
I-8
its property is subject or of any material agreement, lease, licence,
permit or other instrument to which the Guarantor is a party or is
otherwise bound or by which the Guarantor benefits or to which its
property is subject and do not require the consent or approval of any
Person except any conflicts, breaches, violations or defaults which do
not have a material adverse effect on the Guarantor.
3.02 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the representations and
warranties of the Guarantor contained in Section 3.01 shall survive the
execution and delivery of this agreement notwithstanding any investigation made
at any time by or on behalf of the Agent or any Lender.
ARTICLE 4
GENERAL CONTRACT PROVISIONS
4.01 NOTICES. All notices, requests, demands, directions and other
communications provided for herein shall be in writing and shall be personally
delivered to an officer or other responsible employee of the addressee or sent
by telefacsimile, charges prepaid, at or to, in the case of the Agent or any
Lender, the address or telefacsimile number of the Agent set forth on the first
page hereof and, in the case of the Guarantor, the address or telefacsimile
number set opposite its name on the signature page hereof, or to such other
address or addresses or telefacsimile number or numbers as either party hereto
may from time to time designate to the other party in such manner. Any
communication which is personally delivered as aforesaid shall be deemed to have
been validly and effectively given on the date of such delivery if such date is
a Banking Day and such delivery was made during normal business hours of the
recipient; otherwise, it shall be deemed to have been validly and effectively
given on the Banking Day next following such date of delivery. Any communication
which is transmitted by telefacsimile as aforesaid shall be deemed to have been
validly and effectively given on the date of transmission if such date is a
Banking Day and such transmission was made during normal business hours of the
recipient; otherwise, it shall be deemed to have been validly and effectively
given on the Banking Day next following such date of transmission.
4.02 FURTHER ASSURANCES. The Guarantor shall do, execute and deliver or shall
cause to be done, executed and delivered all such further acts, documents and
things as the Agent may reasonably request for the purpose of giving effect to
this agreement.
4.03 SEVERABILITY. Wherever possible, each provision of this agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this agreement shall be prohibited by or invalid under
such law, such provision shall be ineffective to the extent of such prohibition
or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this agreement.
4.04 SUCCESSORS AND ASSIGNS. This agreement shall enure to the benefit of the
Agent and the Lenders and their respective successors and assigns and shall be
binding upon the Guarantor and its successors and assigns.
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4.05 AMENDMENTS AND WAIVERS. No amendment to or waiver of any provision of this
agreement, nor consent to any departure by the Guarantor herefrom, shall in any
event be effective unless the same shall be in writing and signed by the Agent
and all of the Lenders, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.
4.06 ENTIRE AGREEMENT. This agreement and the agreements referred to herein
constitute the entire agreement between the parties hereto and supersede any
prior agreements, undertakings, declarations, representations and
understandings, both written and verbal, in respect of the subject matter
hereof.
4.07 JUDGMENT CURRENCY.
(a) If, for the purpose of obtaining or enforcing judgment against the
Guarantor in any court in any jurisdiction, it becomes necessary to convert into
any other currency (such other currency being hereinafter in this Section 4.07
referred to as the "Judgment Currency") an amount due in a Designated Currency
under this agreement, the conversion shall be made at the rate of exchange
prevailing on the Banking Day immediately preceding:
(i) 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
such conversion being made on such date; or
(ii) the date on which the judgment is given, in the case of any
proceeding in the courts of any other jurisdiction (the date as
of which such conversion is made pursuant to this Section
4.07(a)(ii) being hereinafter in this Section 4.07 referred to
as the "Judgment Conversion Date").
(b) If, in the case of any proceeding in the court of any jurisdiction
referred to in Section 4.07(a)(ii), there is a change in the rate of exchange
prevailing between the Judgment Conversion Date and the date of actual payment
of the amount due, the Guarantor shall pay such additional amount (if any, but
in any event not a lesser amount) as may be necessary to ensure that the amount
paid in the Judgment Currency, when converted at the rate of exchange prevailing
on the date of payment, will produce the amount of the Designated Currency which
could have been purchased with the amount of Judgment Currency stipulated in the
judgment or judicial order at the rate of exchange prevailing on the Judgment
Conversion Date.
(c) Any amount due from the Guarantor under the provisions of Section
4.07(b) shall be due as a separate debt and shall not be affected by judgment
being obtained for any other amounts due under or in respect of this agreement.
(d) The term "rate of exchange" in this Section 4.07 means the noon rate of
exchange of the Judgment Currency into the Designated Currency published by the
Bank of Canada for the day in question for Canadian interbank transactions.
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4.08 SET-OFF. In addition to any rights now or hereafter granted under
applicable law, and not by way of limitation of any such rights, the Agent and
each Lender is authorized upon any amounts being payable by the Guarantor to the
Agent or such Lender hereunder, without notice to the Guarantor or to any other
Person, any such notice being expressly waived by the Guarantor, to setoff,
appropriate and apply any and all deposits, matured or unmatured, general or
special, and any other indebtedness at any time held by or owing by the Agent or
such Lender to or for the credit of or the account of the Guarantor against and
on account of the obligations and liabilities of the Guarantor which are due and
payable to the Agent and the Lenders under this agreement.
4.09 NO WAIVER; REMEDIES; NO DUTY. In addition to, and not in limitation of,
Section 2.03 and Section 2.07, no failure on the part of the Agent or any Lender
to exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law. Neither the Agent nor any Lender has any duty or
responsibility to provide the Guarantor with any credit or other information
concerning the Borrower's affairs, financial condition or business which may
come into the Agent's or such Lender's possession.
IN WITNESS WHEREOF the Guarantor has executed this agreement as of
the 25th day of September, 2001.
PCS Nitrogen, Inc. PCS NITROGEN, INC.
0000 Xxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: Legal Department c.s.
Telefax: (000) 000-0000 Per: /s/
-------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Vice President & Treasurer
- with a copy to -
Potash Corporation of Saskatchewan Inc.
Xxxxx 000, 000 Xxxxx Xxx. Xxxxx
Xxxxxxxxx, Xxxxxxxxxxxx X0X 0X0
Attention: General Counsel
Telefax: (000) 000-0000
SCHEDULE J
MATERIAL LITIGATION
(a) As described in Note 27 to the Borrower's consolidated financial statements
for 2000, a copy of which is attached hereto as Appendix I.
(b) As described in the Borrower's Annual Report on Form 10-K for 2000, Item 3
Legal proceedings (and items incorporated by reference therein), a copy of
which is attached hereto as Appendix II.
(c) As described in the Borrower's Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 2001, Part II, Item 1 Legal Proceedings, a
copy of which Item 1 is attached as Appendix III.
APPENDIX I
27. Contingencies
PCS is a shareholder in Canpotex which markets potash offshore. Should any
operating losses or other liabilities be incurred by Canpotex, the shareholders
have contractually agreed to reimburse Canpotex for such losses or liabilities
in proportion to their productive capacity. There were no such operating losses
or other liabilities in 2000.
In common with other companies in the industry, the Company is unable to
acquire insurance for underground assets.
In 1997, five former officers of Arcadian Corporation filed lawsuits
against PCS. The complaints allege that PCS breached employment agreements
between Arcadian and the officers and breached the related assumption agreement
among PCS, PCS Nitrogen and Arcadian. Two of the claims were settled in January
1999. On December 1, 1998, the court entered judgments in the amount of $18.5
(plus additional amounts to offset the effect of excise taxes) with respect to
three of the claims. The Company appealed these judgments. On February 2, 2001,
the Appellate Court substantially affirmed the judgments and remanded the case
for further proceedings, which are expected to result in a reduction of the
judgments by approximately $1.0 million. Management of the Company believes that
the lawsuits will not have a material adverse effect on the Company's financial
condition or results of operations.
On May 11 and 12, 1999, representatives of the United States Environmental
Protection Agency ("EPA"), Federal Bureau of Investigation and other state and
local agencies executed a search warrant on the Company's Geismar facility in
connection with a grand jury investigation. The grand jury investigation is
continuing. The Company cannot predict at this time what may result from the
government investigation, or whether any such result would have a material
adverse effect on the Company.
In 1999, pursuant to an Administrative Order by Consent, PCS Joint Venture
submitted to the EPA Phase I of a work plan to conduct a Remedial Investigation
and Feasibility Study ("RI/FS") of certain releases to the soil and groundwater
of the PCS Joint Venture facility in Lakeland, Florida and other area properties
(collectively, "the site"). The Florida Department of Environmental Protection
("FDEP") had also commenced an investigation and filed a lawsuit against PCS
Joint Venture and a number of other defendants regarding the site, but this
action has been relatively inactive since EPA became involved. In 2000, PCS
Joint Venture and another party completed an interim removal action in which
contaminated soils at the site were excavated. PCS Joint Venture continued to
assess and evaluate the nature and extent of the impacts at the site. No final
determination has yet been made of the nature, timing or cost of remedial action
that may be needed nor to what extent costs incurred may be recoverable from
third parties.
Various other claims and lawsuits are pending against the Company. While it
is not possible to determine the ultimate outcome of such actions at this time,
it is management's opinion that the ultimate resolution of such items, including
those pertaining to environmental matters, will not have a material effect on
the Company's financial condition or results of operations.
APPENDIX II
ITEM 3. Legal Proceedings.
Civil Antirust Complaints
In June 1993, PCS and PCS Sales (Canada) Inc. ("PCS Sales (Canada)") were
served with a complaint relating to a suit filed in the United States District
Court for Minnesota against most North American potash producers, including the
Company. The complaint alleged a conspiracy among the defendants to fix the
price of potash purchased by the plaintiffs as well as potash purchased by the
members of a class of certain purchasers proposed by the plaintiffs. Similar
complaints were filed in the United States District Courts for the Northern
District of Illinois and the Western District of Virginia. On motion of the
defendants, all of the complaints were transferred and consolidated for
pre-trial purposes in the United States District Court for Minnesota. The
complaint sought treble damages and other relief. PCS and PCS Sales (Canada)
filed a motion for summary judgment on December 22, 1995. On January 2, 1997,
Judge Xxxxxxx X. Xxxx issued an order granting the defendants' motions for
summary judgment and dismissing the lawsuit. The plaintiffs appealed that order
to the United States Court of Appeals for the Eighth Circuit. On February 17,
2000, the Eighth Circuit, en banc, affirmed Judge Kyle's summary judgment
ruling. On October 2, 2000, the United States Supreme Court denied the
plaintiffs' petition for writ of certiori. Accordingly, the claims of the
federal court plaintiffs have now been fully and finally dismissed.
Additional complaints were filed in the California and Illinois state
courts on behalf of purported classes of indirect purchasers of potash in those
states. PCS moved to dismiss the California State Court lawsuits for lack of
personal jurisdiction and the court ruled that it does not have personal
jurisdiction over PCS but that it does have personal jurisdiction over PCS Sales
(Canada). Following Judge Kyle's summary judgment decision, the California
litigation was stayed, and the plaintiffs agreed to dismiss their lawsuit if
Judge Kyle's summary judgment ruling withstood appeal. The claims have now been
fully and finally dismissed. The Illinois State Court complaint was dismissed
for failure to state a cause of action and that decision is final and not
subject to appeal.
Former Arcadian Executive Proceedings
On May 7, 1997, J. Xxxxxxx Xxxxxxxx, Xxxxxx X. Xxxxxxxx and Xxxxx X.
Xxxxxx, former officers of Arcadian, filed lawsuits against the Company in the
United States District Court for the Western District of Tennessee. The
complaints allege that the Company breached employment agreements between
Arcadian and the officers and breached the related assumption agreement among
the Company, PCS Nitrogen, and Arcadian. The complaints of Xx. Xxxxxxxx, Xx.
Xxxxxxxx and Xx. Xxxxxx seek damages in excess of $22.2 million, $6.2 million
and $3.7 million, respectively. On August 11, 1998, the Court ruled that the
Company had assumed the obligations of the employment agreements and that
equitable claims and defenses asserted against the executives for breaches of
fiduciary duties, corporate waste, and self-dealing should be asserted by PCS
Nitrogen in the state court action described below. On December 1, 1998 the
court entered judgments in the amounts of $12.7 million, $3.2 million, and $2.6
million in favor of Xx. Xxxxxxxx, Xx. Xxxxxxxx and Xx. Xxxxxx, plus additional
amounts sufficient to offset the impact of certain excise taxes, if applicable.
On February 2, 2001, the Appellate Court substantially affirmed the judgment and
remanded the case for further proceedings, which are expected to result in a
reduction of the judgments by approximately $1 million.
Still pending is an action which the Company and PCS Nitrogen filed in the
Circuit Court of Tennessee for the Thirtieth Judicial District at Memphis
against Messrs. Xxxxxxxx, Xxxxxxxx and Xxxxxx for declaratory relief and
damages. The Company and PCS Nitrogen alleged that the defendants committed
breaches of their fiduciary duties in the negotiation of, obtaining approval
for, and execution of the employment agreements each of them had with Arcadian.
The Company and PCS Nitrogen also seek a declaratory judgment that the
employment agreements are unenforceable. The defendants counterclaims appear to
seek damages substantially equivalent to the damages sought in their
individually filed suits as plaintiffs.
Management of the Company believes that the lawsuits will not have a
material adverse effect on the Company's financial condition or results of
operations.
Geismar Facility Investigation
On May 11 and May 12, 1999, representatives of the EPA, Federal Bureau of
Investigation, and other state and local agencies ("governmental agencies")
executed a search warrant issued by the United States District Court for the
Middle District of Louisiana on the Geismar Facility in connection with a grand
jury investigation. In executing the search warrant, the governmental agencies
seized documents and electronic media, performed environmental sampling, and
interviewed Geismar Facility employees and contract employees. In addition, the
governmental agencies have contacted former Geismar Facility employees in
connection with the investigation. The Company has also been served with grand
jury subpoenas requesting documents and other information from the Geismar
Facility and PCS Nitrogen's headquarters. The grand jury investigation is
continuing. The Company is also conducting its own internal investigation. The
Company cannot predict at this time what may result from the governments'
investigation or whether any such result would have a material adverse effect on
the Company.
Lakeland, Florida Proceeding
On September 23, 1999, an action was served on PCS Joint Venture and eight
other defendants on behalf of a class of persons living in the vicinity of the
site who claim to have suffered damages as a result of releases from the PCS
Joint Venture facility in Lakeland, Florida and other area properties. PCS Joint
Venture has reached an agreement in principle to settle the matter, which
settlement is not expected to have a material adverse effect on the Company.
Before the settlement can be finalized, class members will receive notice of the
proposed settlement and be provided an opportunity to opt out prior to a
fairness hearing before the trial court, which hearing is expected to take place
later in 2001.
Environmental Proceedings
For a description of certain environmental proceedings involving the
Company, see "Environmental Matters".
ENVIRONMENTAL MATTERS
The Company's operations are subject to numerous environmental requirements
under Canadian, U.S., Chilean, Brazilian and Trinidad and Tobago federal,
provincial, state and local laws and regulations. Such laws and regulations
govern, among other matters, air emissions, waste water discharges, land use and
reclamation and solid and hazardous waste management. Many of these laws and
regulations are becoming increasingly stringent, and the cost of compliance with
these requirements can be expected to increase over time. An on-going U.S.
federal grand jury investigation regarding environmental matters at the Geismar
Facility and certain other environmental matters that are the subject of
investigation or litigation are discussed under the heading "Legal Proceedings".
The Company believes that it is currently in material compliance with
applicable environmental laws and regulations. The Company believes that it is
well positioned to meet anticipated requirements under the applicable
environmental laws and regulations. Although significant capital expenditures
and operating costs have been incurred and will continue to be incurred on
account of environmental laws and regulations, the Company does not believe,
except as otherwise set out herein, that such environmental laws and regulations
have had, or will have, a material adverse effect on its business. However, the
Company cannot predict the impact of new or changed laws or regulations or
permit requirements, including the matters discussed below, or changes in the
ways that such laws and regulations are administered, interpreted, or enforced.
The Company anticipates that its routine expenditures related to environmental
regulatory matters in 2001 will not differ materially from the previous year.
The Company and its facilities are also subject to various environmental
statutes and programs focused on site reclamation and restoration and on
investigation and, where necessary, remediation of contaminated properties. The
Company's obligations and potential liabilities under these programs have been
and can be expected to continue to be significant. The Company does not believe,
except as set out herein, that such obligations and potential liabilities have
had, or will have, a material adverse effect on its business. However, it is
often difficult to estimate and predict the potential costs and liabilities
associated with these programs and there is no guarantee that the Company will
not in the future be identified as potentially responsible for additional costs
under these programs, either as a result of changes in existing laws and
regulations or as a result of the identification of additional matters or
properties covered by these programs.
Environmental Expenditures
Reclamation and Restoration Costs
Site restoration and reclamation costs have been accrued for various sites.
At December 31, 2000, the Company had accrued the following amounts for site
reclamation and restoration: $27.3 million for the Aurora Facility, $54.9
million for the White Springs Facility, $0.3 million for various idle sulfur
facilities, $18.6 million for certain Florida Favorite Fertilizer facilities,
and $4.2 million for the Xxxxxxx Lake Facility. The idle sulfur facilities were
part of the acquisition of Texasgulf and are undergoing dismantlement and
environmental restoration efforts. The current portion of restoration and
reclamation costs accrued in 2000 totalled $22.3 million. These amounts
represent the Company's current estimate of potential site restoration and
reclamation costs as last assessed in December 2000. The expenditures are
generally incurred over an extended period of time.
Annual environmental expenditures for reclamation and restoration during
the year ended December 31, 2000 were $59.9 million. Of this amount, $55.2
million was charged to operations, $2.7 million was capitalized and $2.0 million
was charged against accrued reclamation costs.
Capping of Byproduct Gypsum Stacks
Production of phosphoric acid also produces gypsum, which is normally
placed in above-ground storage areas called gypsum stacks. Various jurisdictions
have established programs that require companies to reduce the potential
environmental impacts associated with gypsum stacks. In Florida, these
regulations require companies to "cap" the gypsum stacks in order to reduce
seepage into groundwater when such stacks reach their design capacity (for the
Company, in approximately 35 years), or after March 25, 2001 if groundwater
standards are not being met. The Company has submitted documentation to the
Florida Department of Environmental Protection ("FDEP") to demonstrate its
compliance with this rule. The Company expects to be allowed to continue using
the three gypsum stacks at the White Springs Facility for their remaining useful
lives of approximately 35 years. At December 31, 2000, a balance of $35.4
million was included in accrued reclamation costs for this gypsum stack capping
requirement. The obligations of White Springs regarding the gypsum stacks are
guaranteed by PCS. In the event continued use of the stacks at White Springs
were to be prohibited in the near term under these regulations, the prohibition
would result in a closure/new stack cost currently estimated in excess of $100
million.
The Company also has gypsum stacks at the Aurora Facility in North Carolina
and the Geismar Facility in Louisiana. In North Carolina, on exhaustion of the
mine's phosphate reserves, disposition of the remaining gypsum must comply with
the laws in effect at that time. The inactive portions of the gypsum stacks at
the Geismar Facility must be capped and have stormwater runoff collected. Under
the current laws in North Carolina and Louisiana, the closure or decommissioning
of the gypsum stacks at these two facilities is not expected to have a material
adverse effect on the Company's business.
Other Environmental Costs
The Company's operating expenses, other than reclamation and restoration
and gypsum stack capping, relating to compliance with environmental laws and
regulations governing ongoing operations were approximately $23.0 million for
the year ended December 31, 2000 as compared to $20.2 million for the year ended
December 31, 1999.
Capital Expenditures
The Company routinely undertakes capital projects to improve pollution
control facilities. In 2000, a total of approximately $11.7 million in capital
expenditures (exclusive of capitalized reclamation expenditures) was spent to
meet the Company's environmental control objectives as compared to $5.1 million
in 1999. The Company expects that its capital requirements for environmental
projects may increase in the future due to increasingly stringent environmental
regulations arising from current and future requirements of law.
With respect to air emissions, the Company anticipates that additional
expenditures may be required to meet increasingly stringent U.S. federal and
state regulatory and permit requirements, including existing and anticipated
regulations under the U.S. federal Clean Air Act as amended in 1990. Both
federal and state regulation of hazardous air pollutants are expected to require
additional air emission control equipment and increased operating expenditures
at some U.S. facilities. In particular, recent rules require specific new
controls for hydrogen fluoride emissions in phosphoric acid production. Some
states, including Louisiana, also regulate ammonia and nitric acid as hazardous
air pollutants. Further, the U.S. Environmental Protection Agency ("EPA") has
published new National Ambient Air Quality Standards for both ozone and
particulate matter which are more stringent than existing standards and has
issued a number of regulations establishing requirements to reduce nitrogen
oxide (NOx) emissions. The Company continues to monitor developments in these
various programs and to assess their potential impact on the Company's
operations.
The federal Clean Air Act operating permit program requires the addition of
enhanced emissions monitoring equipment at some facilities, as well as the
imposition of permit fees based upon facility air pollutant emissions. If the
Company undertakes facility expansion at its U.S. plants, preconstruction air
permits (under either the federal Prevention of Significant Deterioration or New
Source Review programs) may need to be obtained for any such expansion of these
facilities. Such permits would impose certain restrictions on air pollutant
emissions from the expanded plants and compliance with those restrictions could
require installation and use of additional pollution control devices.
Site Assessment and Remediation
In addition to environmental regulation of its current operations, the
Company also may incur costs and liabilities in connection with its and its
predecessors' past and current waste disposal practices and ownership and
operation of real property and facilities, as well as its mining activities. The
U.S. federal Comprehensive Environmental Response, Compensation and Liability
Act of 1980 ("CERCLA") and other U.S. federal and state laws impose liability
on, among others, past and present owners and operators of properties or
facilities at which hazardous substances have been released into the environment
and persons who arrange for disposal of hazardous substances that are released
into the environment. Liability under these laws may be imposed jointly and
severally and without regard to fault or the legality of the original actions,
although such liability may be divided or allocated according to various
equitable and other factors. In the course of its current and former operations,
including those of divested and acquired businesses, the Company has generated,
and with respect to its current operations, continues to generate wastes that
could result in liability for the Company under these laws.
The EPA is conducting an investigation into soil and groundwater
contamination of a PCS Joint Venture blending facility located in Lakeland,
Florida and certain adjoining property. In 1998, EPA notified the Company of
potential liability under Section 107(a) of CERCLA. On October 21, 1999, PCS
Joint Venture signed an Administrative Order on Consent with the EPA in which
PCS Joint Venture agreed to conduct a Remedial Investigation and Feasibility
Study ("RI/FS") for the Lakeland Facility and other area properties (the "Landia
Site"). On October 13, 1999, PCS Joint Venture had submitted to the EPA Phase I
of a work plan to conduct the RI/FS. Starting in September 1999, the EPA
conducted additional investigations of environmental
conditions at focused areas of the Landia Site. In February 2000, the EPA
notified PCS Joint Venture and two other entities of the Agency's intent to
undertake interim site response activities at specific areas of the Landia Site
in the event the responsible parties were unable to make a timely commitment to
conduct these site response activities pursuant to a proposed Administrative
Order on Consent. On June 5, 2000, PCS Joint Venture and another entity entered
into an Administrative Order on Consent pursuant to which they undertook certain
of the interim response activities at the Landia Site. The interim response
activities have been completed. No final determination has yet been made of the
nature, timing, or cost of further remedial action that may be needed.
FDEP is also conducting an investigation into soil and ground water
contamination at the Landia Site. On April 8, 1997, FDEP filed a Complaint and
Petition for Enforcement against PCS Joint Venture and others. The Company filed
an Answer, Affirmative Defenses and Cross Claims on May 12, 1997. The matter has
remained relatively inactive since the involvement of EPA in the site.
In 1994, EPA and the Georgia Department of Natural Resources, Environmental
Protection Division ("GEPD") separately wrote to PCS Joint Venture seeking
certain environmental information regarding its Moultrie, Georgia location.
Responses to both requests have been provided by PCS Joint Venture. Preliminary
investigations have confirmed the presence of lead-contaminated soil at the
site. The initial assessment is that this lead contamination is attributable to
former operations at the site, the facilities of which were dismantled some time
ago. However, a complete assessment of the site has not yet been completed, and
the full nature and extent of the contamination cannot be quantified at this
time. A proposed corrective action plan was filed in 1999 but no recommended
course of action has yet been approved by GEPD.
PCS Joint Venture is co-operating with regulatory authorities in their
investigations of the Lakeland and Moultrie sites. It is also attempting to
determine the number and location of other parties who may be liable for
remediation of these sites. However, because site assessments are ongoing and
because other parties may be liable for some or all costs of remediation, the
ultimate liability of PCS Joint Venture has not yet been determined.
The Company is also engaged in ongoing site assessment and/or remediation
activities at a number of other facilities currently or previously owned or
operated by the Company. In each instance, the Company is working with the
appropriate regulatory authorities to address these sites. In addition, the
Company has in the past received notices identifying it as a potentially
responsible party with respect to certain sites that were never owned or
operated by the Company. The Company has reviewed information pertinent to these
sites and has responded to each of these notices. Based on current information
about these various facilities and sites and other potentially responsible
parties, the Company believes that the Company's future obligation with respect
to these facilities and sites will not have a material adverse effect on the
Company's financial condition or results of operation.
Permits and Regulatory Approvals
Many of the Company's operations and facilities are required by federal,
provincial, state and local environmental laws to obtain and operate in
compliance with a range of permits and regulatory approvals. Such permits and
approvals typically have to be renewed or reissued periodically. The Company may
also become subject to new laws or regulations that require it to
obtain new or additional permits or approvals. The Company believes that it is
currently in material compliance with its existing permits and regulatory
approvals. However, there can be no assurance that such permits or approvals
will issue in the ordinary course. Further, the terms and conditions of future
permits and approvals may be more stringent and may require increased
expenditures on the part of the Company.
A significant portion of the Company's phosphate reserves in Aurora, North
Carolina is located in wetlands and, under the U.S. federal Clean Water Act, a
permit must be obtained from the U.S. Army Corps of Engineers (the "Corps")
before mining activity that will disturb the wetlands may occur. As part of the
permit process for PCS Phosphate, the Corps issued a draft Environmental Impact
Statement in January 1994 which was supplemented in May 1995. In 1997, PCS
Phosphate received its required authorizations from the State of North Carolina
and on August 14, 1997, the Corps issued a permit granting approval to mine
certain areas described in the Environmental Impact Statement through 2017. The
permit contains a section on wetlands mitigation approach and methods regarding
wetland impacts associated with mining covered by the permit. The Company has
acquired additional land adjacent to the Aurora Facility for mitigation
purposes. In order to demonstrate the feasibility of such activities, as of
December 31, 2000, the Company had created or restored 2,904 acres of wetlands.
On May 6, 1999, the Southern Environmental Law Center ("SELC") and the
Pamlico-Tar River Foundation ("PTRF") gave notice to the EPA and the Department
of the Army of their intent to file a civil action under the citizens suit
provisions of the Clean Water Act. To date, no such action has been filed. The
notice letter asserts that the Corps failed to comply with certain provisions of
the Clean Water Act when it issued a permit to PCS Phosphate in August 1997. The
notice letter also requests revocation of the permit. PCS Phosphate believes
that the permit was properly issued. PCS Phosphate intends to monitor the status
of this matter and take any steps needed to protect its ability to continue the
operations authorized by the permit.
In addition to the wetlands permit from the Corps, the Company also needs
additional authorizations from agencies of the State of North Carolina to
continue its mining activities in North Carolina. The Company is required to
have State mining permits that contain bonding and reclamation requirements. The
Company has a State mining permit for the areas presently being mined by the
Company that is effective through 2003, but this permit must be amended
periodically to add additional acreage during this period. The Company also
holds another mining permit from the State for the area of the property that
contains the wetlands covered by the permit issued by the Corps. This State
permit has been renewed until 2005.
The gypsum stacks at the White Springs Facility will continue to be used
and when closed will be covered or capped to the extent required under
applicable regulations. The Florida Phosphogypsum Rule permits the use of
existing gypsum stacks until they reach capacity, if groundwater standards are
met as of and after March 25, 2001. Due to the curtailment of phosphoric acid
production at the White Springs Facility, the Company will submit a request for
the temporary deactivation of two of the three gypsum stacks. This request must
be renewed annually as long as the gypsum stacks are temporarily inactive. If
this request were not granted and the stacks remained inactive, then the closure
and capping requirements for gypsum stacks would become applicable to these two
stacks. See "Environmental Expenditures -- Capping of Byproduct Gypsum Stacks".
Lands mined by White Springs after July 1, 1975 and unmined lands used in
certain mining operations after July 1, 1984 are subject to mandatory
reclamation requirements of the State of Florida. Wetlands must be reclaimed on
an acre-for-acre basis under the rules of the FDEP unless otherwise provided in,
or pursuant to, a Memorandum of Agreement ("MOA"), dated February 1, 1995,
between OxyChem and FDEP (which agreement was later assigned to the Company).
The MOA established alternate procedures for the Company to follow. The current
practice of White Springs is to return most upland areas to commercial pine
plantation, which is the predominant pre-operation land use. Reclaimed lands
include uplands, wetlands and lakes.
Land reclamation at White Springs is currently performed pursuant to
federal, state, and local regulatory approvals granted in 1996 and 1997 to
implement the 1995 MOA between OxyChem and FDEP. The MOA provides for mitigation
of mining impacts in a portion of the mining area, particularly impacts to
wetlands, to be done through funding of public acquisition of environmentally
sensitive lands in the region. Land reclamation continues to be done on-site but
is undertaken using the alternate standards of the MOA which do not require the
on-site reclamation of wetlands and which allow for the construction of lands
that are expected to be of greater future utility. The Company's contributions
for the land acquisition program through 2000 totalled $5.2 million.
White Springs has initiated a process for securing an additional federal
permit and ancillary modifications of state and local regulatory approvals
needed for continuation of mining operations beyond the expiration of its
current federal permit in 2002. The process involves environmental studies of
potential mining areas and evaluation of mine plan and reclamation alternatives.
All affected regulatory authorities, various commenting agencies, and interested
outside parties are participating in the process. Selection of mine plan and
reclamation alternatives and the results of the environmental studies could
result in changes to reclamation and mitigation practices with higher costs and
changes to mining areas with reserve impacts. The magnitude of such cost impacts
cannot be estimated until the studies and evaluations are completed. Failure to
secure the required approvals for continuation of the mining operations under
any reclamation or mitigation alternative would negatively affect reserves and
costs.
Potash Decommissioning Regulations
The environmental regulations of the Province of Saskatchewan require each
potash mine to have decommissioning and reclamation (D&R) plans. Financial
assurances for these plans must be established within one year following
approval of these plans by the responsible provincial minister. Pursuant to the
regulations, the Company filed D&R plans with the Minister of the Environment
for Saskatchewan, in the spring of 1997. In February 1998, the Company was
advised that, although the D&R plans were technically acceptable, the regulatory
agency did not accept the schedule proposed to decommission the waste salt
piles. Following further discussions between the provincial potash industry and
the regulatory agency, the Company was advised in July 2000 that the D&R plans
submitted in 1997 were accepted, provided that the plans are revised by 2005. A
government-industry task force was established to produce mutually acceptable
revisions of the plans which would incorporate a cost benefit analysis of the
decommissioning options. The process of revising the D&R plans is continuing.
Concurrently, a committee of industry and government financial experts is
examining the financial instruments that could be used to provide financial
assurance for the D&R plans in the interim period before 2005. A recommendation
from this committee is expected in 2001. Because of the uncertainty
regarding the final nature of the D&R plans, the timing of implementation and
the structure of the financial assurance, the Company is unable, at this time,
to accurately estimate the financial implications of the plans.
GOVERNMENT REGULATIONS
In September 1987, legislation was adopted in Saskatchewan that authorized
the government to control production at potash mines located in the Province of
Saskatchewan. The legislation, which has not taken effect but which can be
brought into effect by proclamation of the Cabinet of Saskatchewan, permits the
Cabinet, and the Potash Resources Board which would be created under such
legislation, to prescribe rates of potash production in Saskatchewan and to
allocate production among individual mines. The Company cannot predict at this
time if or when the legislation will be proclaimed or its impact on the
Company's financial condition or results of operations.
APPENDIX III
PART II. Other Information
ITEM 1. Legal Proceedings
Geismar Facility Investigation
On May 11 and May 12, 1999, representatives of the EPA, Federal Bureau of
Investigation, and other state and local agencies ("governmental agencies")
executed a search warrant issued by the United States District Court for the
Middle District of Louisiana on the Geismar Facility in connection with a grand
jury investigation. In executing the search warrant, the governmental agencies
seized documents and electronic media, performed environmental sampling, and
interviewed Geismar Facility employees and contract employees. In addition, the
governmental agencies have contacted current and former Geismar Facility and
Company employees in connection with the investigation. The Company has also
been served with grand jury subpoenas requesting documents and other information
from the Geismar Facility and PCS Nitrogen's headquarters. In May 2001, the
Company learned that the investigation is expected to continue and that targets
of the investigation include the Company and certain current and former
employees, including individuals with current and/or previous management
responsibility for the Company's nitrogen operations. The Company is also
conducting its own internal investigation. The Company cannot predict at this
time what may result from the governments' investigation or whether any such
result would have a material adverse effect on the Company.
