1
Exhibit 10.10
September 13, 0000
Xxxxxxxx Xxxxxxx Xxxxxx Corporation and
Imperial Parking (U.S.), Inc.
Suite 000 - 000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, X.X.
X0X 0X0
Dear Sirs:
HSBC Bank Canada (the "Bank") has agreed to establish the following credit
facilities (the "Loans") on the terms and conditions set out below.
1. BORROWER:
1.1 Imperial Parking Canada Corporation ("CANCO")
1.2 Imperial Parking (U.S.), Inc. ("USCO")
Collectively, the "Borrower".
2. OPERATING LOAN
2.1 Amount:
------
USD5,000,000 or Canadian Dollar Equivalent demand revolving
loan (the "Operating Loan").
2.2 Purpose:
-------
To assist in financing the day-to-day operating requirements
of CANCO.
2.3 Availability:
------------
Available to CANCO by way of account overdraft following
satisfaction of the conditions precedent below. All or a
portion of the Operating Loan shall also be available by way
of banker's acceptances. CANCO shall ensure that the amount
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advanced and outstanding under the Operating Loan shall at no
time exceed the authorized limit net of credit balances held
as security by the Bank.
2.4 Repayment:
---------
All amounts outstanding under the Operating Loan shall be
repaid on demand by the Bank. Interest shall be paid at the
rate(s) set out below and at the times and in the manner
provided in the attached Schedule.
2.5 Interest:
--------
At the Borrower's option, exercisable by the delivery of the
Required Notice, at:
a) the Bank's Prime Rate per annum;
b) the Bank's U.S. Base Rate per annum;
2.6 Fees:
----
The Borrower shall pay to the Bank:
a) on the last day of each month, a loan administration
fee of USD500;
b) at the time of acceptance of each banker's acceptance
under the Operating Loan, a stamping fee of 1.25% per
annum, based on the face amount of such banker's
acceptance and calculated over its term;
3. ACQUISITION LOAN
3.1 Amount:
------
USD12,500,000 demand non-revolving loan or the Canadian Dollar
Equivalent (the "Acquisition Loan").
3.2 Purpose:
-------
a) To assist in financing target acquisitions of the
Borrower.
b) To assist in financing the Borrower's capital
expenditure program including the funding of
equipment or improvements to properties leased by the
Borrower.
Form 2 - 2 -
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3.3 Availability:
------------
Available in lump sums to a maximum of USD2,000,000 per
acquisition, following receipt of satisfaction of the
conditions precedent below, by way of a direct advance in
Canadian or U.S. dollars, banker's acceptances or letters of
credit issued on behalf of the Borrower. The maximum amount to
be drawn down for purposes of funding annual capital
expenditures shall at no time exceed USD3,000,000.
3.4 Repayment:
---------
All amounts outstanding under the Acquisition Loan shall be
repaid on demand by the Bank. Principal repayments shall be
made on the last day of each month commencing 6 months after
which an advance under the Acquisition Loan is made. Principal
repayment will be determined based on the lesser of a seven
year amortization or the length of lease if applicable.
Interest shall be paid at the rate(s) and at the times set out
below and in the manner provided in the attached Schedule.
3.5 Interest:
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At the Borrower's option, exercisable by the giving of the
Required Notice, at:
a) the Bank's Prime Rate plus 0.125% per annum;
b) the Bank's Fixed Cost of Funds plus 1.625% per annum,
subject to availability;
c) the Bank's U.S. Base Rate plus 0.125% per annum;
d) LIBOR plus 1.625% per annum, subject to availability.
3.6 Fees:
----
The Borrower shall pay to the Bank:
a) at the time of acceptance of each banker's acceptance
under the Acquisition Loan, a stamping fee of 1.625%
per annum, based on the face amount of such banker's
acceptance and calculated over its term;
b) at the time of issuance of each letter of credit
under the Acquisition Loan, a fee equal to 1.125% per
annum, calculated against the face amount and over
the term of each letter of credit.
Form 2 - 3 -
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c) at the time of each lump sum advance under the
Acquisition Loan, a draw fee equal to 0.125% of the
amount drawn with a minimum fee of USD250 per draw.
4. STANDBY LETTERS OF CREDIT FACILITY
4.1 Amount:
------
USD2,500,000 or the Canadian Dollar Equivalent (the "LC
Loan").
4.2 Purpose:
-------
To accommodate the Borrower's bid and performance bond
requirements.
4.3 Availability:
------------
Available following satisfaction of the conditions precedent
below, by issuance of Standby Letters of Credit in Canadian or
US currency maximum period of 365 days. The Borrower shall
ensure that the amount outstanding under the LC Loan shall at
no time exceed the authorized limit.
4.4 Repayment:
---------
All amounts paid by the Bank under the letters of credit shall
be repaid and all liabilities of the Bank under the letters of
credit shall be satisfied by the Borrower on demand by the
Bank.
4.5 Interest and Fees:
-----------------
a) At the time of issuance of each letter of credit, a
fee equal to 1.0% per annum, calculated against the
face amount and over the term of each letter of
credit.
b) Interest on any amount drawn under the letters of
credit in Canadian dollars or U.S. dollars shall be
payable at the rate and at the times and in the
manner specified for the Operating Loan.
Form 2 - 4 -
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5. INTEREST RATE SWAP FACILITY
5.1 Amount:
------
CAD500,000 (being an interest rate swap facility in the amount
of CAD20,000,000 with a notional risk of 2.5%)
5.2 Purpose:
-------
To assist the Borrower in managing its costs of borrowing by
entering into Interest Rate Swap Agreements.
5.3 Availability:
------------
At the request of the Borrower
6. SECURITY
The liability and indebtedness of the Borrower under the Loans and this
Facility Letter shall be evidenced, governed and secured, as the case
may be, by the following documents (the "Security Documents") completed
in form and manner satisfactory to the Bank's solicitors:
6.1 Canadian Dollar and US Dollar line of credit by way of current
account overdraft agreements executed by CANCO (Operating
Loan);
6.2 promissory notes to evidence advances based on the Bank's
Prime Rate, Bank's U.S. Base Rate, Bank's Fixed Cost of Funds
or LIBOR, as applicable, executed by the Borrower;
6.3 LIBOR Agreement executed by the Borrower;
6.4 the Bank's standard application and indemnity agreement with
respect to the issuance of letters of credit, executed by the
Borrower;
6.5 Banker's Acceptances Agreement, executed by the Borrower;
6.6 general security agreement in favour of the Bank, creating a
first fixed charge over all present and after acquired
personal property of the Borrower and a floating charge over
land, executed by the Borrower;
6.7 Interest Rate Swap Agreement;
Form 2 - 5 -
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6.8 assignment by the Borrower to the Bank of all risk insurance
(including extended coverage endorsement) in amounts and from
an insurer acceptable to the Bank, on all lands, buildings,
equipment and inventory owned by the Borrower, showing the
Bank as first loss payee on all amounts in excess of
USD50,000, such policy to include business interruption and
public liability insurance;
6.9 first ranking general assignment of book debts in favour of
the Bank executed by the Borrower and registered in all
jurisdictions in which the chief places of business of the
Borrower's customers are maintained;
6.10 first ranking security from the Borrower in favour of the Bank
under Section 427 of the Bank Act, including all --------
ancillary forms of the Bank in this regard;
6.11 guarantee of the indebtedness of CANCO to the Bank, executed
by USCO supported by a General Security Agreement;
6.12 guarantee of the indebtedness of USCO to the Bank, executed by
CANCO supported by a General Security Agreement;
6.13 guarantee of the indebtedness of the Borrower to the Bank,
executed by the following Subsidiaries and related companies
of the Borrower and supported by General Security Agreements
and appropriate UCC filings as applicable:
-Advanced Parking Systems Ltd.
-City Collection Company Ltd.
-3006712 Nova Scotia Company
-Imperial Parking Corporation
-Citation Collection Company Ltd.
6.14 security over cash, credit balances and deposit instruments
executed by the Borrower;
6.15 assignment of target acquisition shares purchased, if
applicable;
6.16 Corporate Guarantee executed by target acquisition supported
by a first ranking General Security Agreement and appropriate
UCC filings if applicable;
6.17 all supporting certificates and opinions as the Bank may
reasonably require.
Copies of the Bank's usual forms of security and supporting documents
are available for inspection upon request.
Form 2 - 6 -
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Notwithstanding the terms of the Security Documents:
(a) If the granting of an assignment or security interest under any
Security Document would constitute a breach or cause an acceleration of
rights under or a loss of any agreement or intangible in which the
grantor has an interest from time to time, such assignment or security
interest shall not apply thereto unless and until all consents and
approvals required so as to avoid any such breach, acceleration or loss
with respect thereto have been obtained, but the grantor shall (subject
to the foregoing) hold its interest therein in trust for the Bank and
shall not amend, terminate or dispose of any interest in any such asset
(including by way of security interest) except as the Bank may direct;
and
(b) Nothing in the Security Documents shall be construed as
constituting an absolute transfer or assignment of any intellectual
property or interests therein, but each general security agreement
comprised in the Security Documents shall be construed as granting to
the Bank a security interest in and a charge over all of the grantor's
present and after-acquired intellectual property and interests therein.
7. CONDITIONS PRECEDENT
In addition to the conditions precedent set out in the attached
Schedule, it shall be a condition precedent to the advance and
continued availability of the Acquisition Loans that the Bank shall
have received the appropriate security duly executed and registered and
a satisfactory Draw Certificate from a senior officer of the Borrower,
declaring the following:
7.1 Loan amount requested is within the total authorized limit and
does not exceed the USD2,000,000 limit
7.2 Loan amount requested does not exceed seven times the target
acquisition's historical Annualized EBITDA
7.3 No prior encumbrances on the assets acquired, if applicable
7.4 The Borrower is in compliance with all other terms and
conditions as outlined in this letter.
8. Conditions of Credit
In addition to the conditions of credit set out in the attached
Schedule, so long as the Borrower is indebted to the Bank, it shall
not, without the prior written consent of the Bank:
8.1 permit its ratio of Total Funded Debt to Tangible Net Worth to
at any time exceed 1.0:1.0;
Form 2 - 7 -
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8.2 permit its Tangible Net Worth to at any time be less than
USD12,000,000 increasing to USD15,000,000 as at December 31,
2001 and thereafter;
8.3 make capital expenditures aggregating in any one fiscal year
in excess of USD3,000,000 excluding approved acquisitions
under the Acquisition Loan, which amount shall not be
cumulative from year to year;
8.4 permit its Debt Service Coverage Ratio to fall below 1.20:1
for the period up to and including November 30, 2001. As at
December 31, 2001 and thereafter, the Debt Service Coverage
shall be no less than 1.50:1;
8.5 permit its Interest Coverage Ratio to fall below 2.0:1 for the
period up to and including November 30, 2001. As at December
31, 2001 and thereafter, the Interest Service Coverage shall
be no less than 2.50:1
8.6 grant a mortgage or security interest, lien or encumber its
real estate assets or the real estate assets of any of its
direct and indirect subsidiaries in any way whatsoever.
All of the aforementioned financial covenants will be based on the
consolidated financial statements of USCO.
Each of the Borrowers and the Guarantors and their subsidiaries may
(provided that the Borrower is not is not in default hereunder or under
the Security Documents): (a) sell or otherwise dispose of immaterial
(equipment having a fair market value of CAD250,000 or less) which has
become worn out, damaged, obsolete or otherwise unsuitable for its
purpose; and (b) grant and permit to exist purchase money security
interests in goods acquired for the purpose of carrying on the
grantor's business.
9. FINANCIAL STATEMENTS AND REPORTS
The Borrower shall deliver to the Bank the following:
9.1 Monthly, within 30 days of each calendar month end:
a) internally-prepared profit and loss statements and
balance sheet for the Borrower;
Form 2 - 8 -
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9.2 Quarterly, within 30 days of each quarter end:
a) Covenant Compliance certificate signed by a senior
officer of the Borrower setting out the calculation
financial covenants as listed above for the preceding
month end;
9.3 Annually, within 90 days of the Borrower's fiscal year end:
a) audited consolidated financial statements for USCO;
b) accountant prepared, unconsolidated financial
statements of the Borrower and its subsidiaries
c) pro forma financial statements, cash flow statement
and budget for the following fiscal year of the
Borrower;
9.4 Such additional financial statements and information as and
when requested by the Bank.
10. BANK'S SOLICITORS
Legal work and documentation is to be performed on behalf of the Bank
by Xxxxx Xxxxxx, Barristers and Solicitors. .
11. LAPSE, PERIODIC REVIEW AND CANCELLATION
At the option of the Bank this Facility Letter shall lapse and the
obligations of the Bank shall end if there has, in the opinion of the
Bank, been a material adverse change in the financial condition of the
Borrower, or if the conditions precedent have not been met and initial
disbursement made, within three months of the date of this Facility
Letter. The Loans shall be subject to periodic review by the Bank not
less frequently than annually, with corporate and, if applicable, land
registry searches to be conducted annually at the Borrower's cost. Any
unadvanced portion of the Loan(s) shall be canceled upon demand being
made by the Bank for repayment of the amount outstanding under the
Loan(s).
The terms and conditions contained in the attached Schedule are incorporated
into and form an integral part of this Facility Letter. This Facility Letter may
be accepted by the Borrower by signing, dating and returning to the Bank by 5:00
p.m. on August 31, 2000, the enclosed copy of this letter executed by the
Borrower and the Guarantors as set out below. Failing such acceptance, this
offer shall be of no further force or effect.
Form 2 - 9 -
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We appreciate the opportunity to continue our relationship with the Impark Group
of Companies and look forward to your response.
Yours very truly,
HSBC BANK CANADA
Xxxxxxxx Xxxxx Xxxx Xxxxxx
Account Manager Vice President
Commercial Banking Commercial Banking
AGREED TO AND ACCEPTED THIS DAY OF , 2000.
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THE BORROWER:
Imperial Parking Canada Corporation Imperial Parking (U.S.), Inc.
Per: Per:
------------------------- -------------------------
Per: Per:
------------------------- -------------------------
THE GUARANTORS:
Imperial Parking Canada Corporation
Per: Per:
------------------------- -------------------------
Imperial Parking Corporation
Per: Per:
------------------------- -------------------------
Advanced Parking Systems Ltd.
Per: Per:
------------------------- -------------------------
Form 2 - 10 -
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City Collection Company Ltd.
Per: Per:
------------------------- -------------------------
3006712 Nova Scotia Company
Per: Per:
------------------------- -------------------------
Imperial Parking (U.S.) Inc.
Per: Per:
------------------------- -------------------------
Citation Collection Company Ltd.
Per: Per:
------------------------- -------------------------
Form 2
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SCHEDULE TO FACILITY LETTER
FROM HSBC BANK CANADA
TO IMPERIAL PARKING CANADA CORPORATION AND
IMPERIAL PARKING (US) INC.
DATED SEPTEMBER 13, 2000
The credit facilities as described in the Facility Letter shall be governed by
the following terms and conditions:
DEFINITIONS
For the purpose of the Facility Letter, the following terms shall have the
meanings indicated below:
"Annualized CAPEX" means for any period of months, the aggregate amount of
capital expenditures for such period annualized over 12 months
"Annualized EBITDA" means for any period of months, the net income plus the sum
of i.) Interest Charges, ii) income tax expense and iii) depreciation and
amortization, for such period annualized over 12 months.
"Annualized Interest Charges" means for any period of months, the amount of
interest earned on all deposits held at the bank less interest expense paid in
accordance with Generally Accepted Accounting Principals, for such period
annualized over 12 months.
"Bank's Fixed Cost of Funds" means the aggregate cost as determined by the Bank
and accepted by the Borrower of the requested funds on an annual fixed rate
basis for a period of 30, 60, 90, or 180 days or 1, 2, 3, 4 or 5 years, as
selected by the Borrower (but maturing not later than the final date for payment
of the subject Loan, in any event), including dealer commissions and such
reserves as are applicable;
"Bank's Prime Rate" means the floating annual rate of interest established and
recorded as such by the Bank from time to time as a reference rate for purposes
of determining rates of interest it will charge on loans denominated in Canadian
dollars and which was 7.50% on August 14, 2000;
"Bank's U.S. Base Rate" means the floating annual rate of interest established
and recorded as such by the Bank from time to time as a reference rate for
purposes of determining rates of interest it will charge on loans denominated in
United States dollars in Canada based on a year of 360 days, and which was 10.0%
on August 14, 2000;
"Business Day" means a day upon which the Bank is open for business in the
branch first above written;
"Canadian Dollar Equivalent" means at any time on any date in relation to any
amount in a currency other than Canadian dollars, the amount of Canadian dollars
required for the Borrower to purchase that amount of such other currency at the
rate of exchange quoted by the Bank at or about 8:00 a.m. Pacific time on such
date, including all premiums and costs of exchange;
"Compensating Amount" means an amount determined by the Bank to be the net cost,
if any, incurred by the Bank as a direct result of the repayment of all or a
portion of a Loan accruing interest based on the Bank's Fixed Cost of Funds or
LIBOR, or with respect to any portion of the Loans drawn down by way of Bankers
Acceptances or Interest Rate Swap Agreement on a date other than the expiration
of the selected interest period or LIBOR Period or maturity date of a Bankers
Acceptance or an Interest Rate Swap Agreement, respectively, including, without
limitation, the loss or expense sustained or incurred by the Bank relating to
such payment. A certificate of a manager or account
Form 2 S-3
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manager of the Bank shall, absent manifest error, be conclusive evidence of the
Compensating Amount from time to time;
"Debt Service Coverage" means the ratio of Annualized EBITDA less Annualized
CAPEX to current portion of long term debt plus annualized Interest Charges;
"Facility Letter" means the letter from the Bank to the Borrower to which this
Schedule is attached, together with this Schedule, and includes all amendments
and replacements thereof;
"Government Authority" means any government legislature, regulatory authority,
agency, commission, board or court or other law, regulation or rule making
entity having or purporting to have jurisdiction on behalf of any nation, state,
country or other subdivision;
"Guarantor(s)" means the party or parties that are to execute a guarantee or
guarantees of the indebtedness of the Borrower to the Bank as part of the
Security Documents;
"Interest Coverage"means the ratio of Annualized EBITDA less Annualized CAPEX to
Annualized Interest Charges;
"Legal Requirement" means all laws, statutes, codes, ordinances, orders, awards,
judgments, decrees, injunctions, rules, regulations, authorizations, consents,
approvals, orders, permits, franchises, licences, directions and requirements of
all Governmental Authorities;
"LIBOR" means with respect to a particular LIBOR Period, the rate of interest
(rounded upwards if necessary to the nearest full multiple of one-sixteenth of
one percent) at which the Bank, in accordance with its normal practice, would be
prepared to offer to leading banks on the London prime inter-bank market for
delivery on the first day of the applicable LIBOR Period approved by the Bank
and for a period equal to such LIBOR Period based on the number of days
comprised therein, a deposit of a comparable amount of United States dollars to
be outstanding during such LIBOR Period, at or about 11:00 a.m. London, England
local time, two Business Days prior to the commencement of the LIBOR Period;
"LIBOR Period" means a period of one, two, three, four, five or six months or
360 days but expiring not later than the final date for payment of the subject
Loan;
"Required Notice" means a notice in form and content approved by the Bank given
to the branch of the Bank referred to above not later than 10:30 a.m. local time
three Business Days immediately preceding the date on which:
(i) an advance is to be made;
(ii) a rollover is to be made from one interest option to another;
(iii) a banker's acceptance is to be issued for acceptance by the
Bank; or
(iv) a letter of credit is to be issued by the Bank;
as the case may be, stating the date, amount and term of the requested advance
or rollover, or particulars of the banker's acceptance or letter of credit.
And with respect to the foregoing, a certificate of a manager or account manager
of the Bank shall be prima facie evidence of the Bank's Fixed Cost of Funds, the
Bank's Prime Rate, the Bank's U.S. Base Rate and LIBOR, from time to time.
Form 2 S-4
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"Tangible Net Worth" means the amount equal to Shareholders Equity determined as
of such time in accordance with Generally Accepted Accounting Principles less
Goodwill and other intangible assets.
"Total Funded Debt" means the aggregate of the following amounts:
(a) indebtedness for money borrowed and indebtedness represented by notes
payable and drafts accepted representing extensions of credit
(including, as regards any note or draft issued at a discount, the face
amount of such note or draft);
(b) all obligations (whether or not with respect to the borrowing of money)
which are evidenced by bonds, debentures, notes or other similar
instruments or not so evidenced but which would be considered to be
indebtedness for borrowed money in accordance with generally accepted
accounting principles;
(c) all indebtedness upon which interest charges are customarily paid;
(d) capital lease obligations and all other indebtedness issued or assumed
as full or partial payment for property or service or by way of capital
contribution; and
(e) any contingent liability relating to an obligation of a type referred
to in (a) to (d) above, including (without limitation) the aggregate of
all Loans at such time; for greater certainty, trade payables, expenses
accrued in the ordinary course of business, customer advance payments
and deposits received in the ordinary course of business shall not
constitute Total Funded Debt.
REPRESENTATIONS AND WARRANTIES
If a corporation, the Borrower and each Guarantor represents and warrants, as at
the time of drawing under or other utilization of the Loan(s), that:
(a) it has been duly incorporated and organized, is properly constituted,
is in good standing and is entitled to conduct its business in all
jurisdictions in which it carries on business or has assets;
(b) the execution of the Facility Letter and the Security Documents and the
incurring of liability and indebtedness to the Bank does not and will
not contravene:
(i) any Legal Requirement applicable to the Borrower and each
Guarantor, respectively; or
(ii) any provision contained in any other loan or credit agreement
or borrowing instrument or contract to which the Borrower and
each Guarantor, respectively, is a party;
(c) the Facility Letter and the Security Documents to which it is a party
have been duly authorized, executed and delivered by the Borrower and
each Guarantor, and constitute valid and binding obligations of the
Borrower and each Guarantor, as the case may be, and are enforceable in
accordance with their respective terms;
(d) all necessary Legal Requirements have been met and all other
authorizations, approvals, consents and orders have been obtained with
respect to the Loan(s) and the execution and delivery of the Security
Documents.
Each of the Borrower and the Guarantor(s) also represents and warrants to the
Bank that all financial and other information provided to the Bank in connection
with the Loan(s) is true and accurate, and acknowledges that the offer of credit
contained in the Facility Letter is made in reliance on the truth and accuracy
of this information and the above representations and warranties.
Form 2 S-5
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INTEREST, FEES AND PAYMENT
(a) Interest on the daily balance of principal advanced under the Loan(s)
and remaining unpaid from time to time shall be payable by the Borrower
as set out in the Facility Letter both before and after default and
judgment;
(b) In the case of interest based on the Bank's Fixed Cost of Funds, the
Bank's Prime Rate and the Bank's U.S. Base Rate, interest shall be
compounded and payable on the last day of each month;
(c) In the case of interest based on LIBOR, interest shall be payable on
the expiration of the LIBOR Period selected by the Borrower or every 3
months, whichever is earlier;
(d) If the Borrower repays any portion of the Loan(s) accruing interest
based on the Bank's Fixed Cost of Funds or LIBOR or drawn down by way
of Bankers Acceptance or Interest Rate Swap Agreement on a date other
than the expiration of the selected interest period or LIBOR Period or
the maturity date of the Bankers Acceptance or the Interest Rate Swap
Agreement, as the case may be, whether as a result of a demand for
repayment by the Bank or otherwise, it shall also concurrently pay to
the Bank the applicable Compensating Amount;
(e) Interest based on the Bank's U.S. Base Rate and on LIBOR shall be
computed on the basis of a year of 360 days and for actual days that
the amounts are outstanding under the Loan(s) on this basis. For the
purpose of the Interest Act, the annual rate of interest to which
interest computed on the basis of a year of 360 days is equivalent is
the rate of interest as provided in the Facility Letter multiplied by
the number of days in such year and divided by 360;
(f) Loan(s) made available based on the Bank's Fixed Cost of Funds or
LIBOR, and banker's acceptances, shall be drawn in the minimum amount
of CAD 500,000 and integral multiples of CAD 100,000 and for periods of
one, two, three, four, five or six months in the case of banker's
acceptances;
(g) Upon the expiration of a LIBOR Period, the term during which interest
is accruing at the Bank's Fixed Cost of Funds, or on payment by the
Bank on the maturity of a banker's acceptance, unless another interest
rate option is selected by the Borrower, interest shall accrue at the
applicable rate in the Facility Letter based on the Bank's Prime Rate
or the Bank's U.S. Base Rate, as the case may be, depending on whether
the funds are outstanding in Canadian or United States dollars;
(h) The fees collected by the Bank shall be its property as consideration
for the time, effort and expense incurred by it in the review of
documents and financial statements, and the Borrower acknowledges and
agrees that the determination of these costs is not feasible and that
the fees set out in the Facility Letter represent a reasonable estimate
of such costs;
(i) Any amounts which become payable to the Bank under the Facility Letter
or the Security Documents and which are not paid when due shall accrue
interest and be payable from the due date at the Bank's Prime Rate plus
3% per annum, compounded and payable monthly on the last day of each
month, both before and after default and judgment, if no other interest
rate is expressed for such amounts;
(j) All payments by the Borrower to the Bank shall be made at the address
of the branch of the Bank set out on the first page of the Facility
Letter or at such other place as the Bank may specify in writing from
time to time. Any payment delivered or made to the Bank by 1:00 p.m.
local time at the place where such payment is to be made shall be
credited as of that day, but if made afterwards shall be credited as of
the next day on which the said branch is open for business;
Form 2 S-6
16
(k) Notwithstanding anything to the contrary contained in the Facility
Letter, the Bank may, in its discretion, make an advance under the
Loan(s) to pay any unpaid interest or fees which have become due under
the terms of the Facility Letter;
(l) The obligation of the Borrower to make all payments under the Facility
Letter and the Security Documents shall be absolute and unconditional
and shall not be limited or affected by any circumstance, including,
without limitation:
(i) any set-off, compensation, counterclaim, recoupment, defense
or other right which the Borrower may have against the Bank or
anyone else for any reason whatsoever; or
(ii) any insolvency, bankruptcy, reorganization or similar
proceedings by or against the Borrower.
CONDITIONS PRECEDENT
In addition to the conditions precedent previously set out, it shall also be a
condition precedent to the initial advance and continued availability of the
Loan(s) that the Bank shall have received:
(a) The Security Documents completed and, where necessary, registered in
form and manner satisfactory to the Bank's solicitors;
(b) Satisfactory banker's and/or other agency reports on the financial
position of the Borrower, the Guarantor(s) and such customers of the
Borrower as the Bank may specify from time to time;
(c) Verification of insurance arranged by the Borrower conforming to the
Bank's requirements;
(d) If deemed necessary by the Bank, an environmental assessment, by a
consultant and in form and content, acceptable to the Bank;
(e) confirmation that the Borrower is in compliance with each of the terms
and conditions of the Facility Letter.
CONDITIONS OF CREDIT
In addition to the conditions previously set out, the following conditions shall
apply until the Loan(s) are repaid in full and canceled:
(a) The Borrower shall not, without the prior written consent of the Bank:
(i) grant or allow any lien, charge, privilege, hypothec or other
encumbrance, whether fixed or floating, to be registered
against or exist on any of its assets, and in particular,
without limiting the generality of the foregoing, shall not
grant a trust deed or other instrument in favour of a trustee;
(ii) become guarantor or endorser or otherwise become liable upon
any note or other obligation other than in the normal course
of business of the Borrower;
(iii) declare or pay dividends on any class or kind of its shares,
repurchase or redeem any of its shares or reduce its capital
in any way whatsoever or repay any shareholders' advances;
(iv) amalgamate with or permit all or substantially all of its
assets to be acquired by any other person, firm or corporation
or permit any reorganization or change of control of the
Borrower;
Form 2 S-7
17
(b) The Bank shall have the right to waive the delivery of any Security
Documents or the performance of any term or condition of the Facility
Letter, and may advance all or any portion of the Loan(s) prior to
satisfaction of any of the aforesaid conditions precedent, but waiver
by the Bank of any obligation or condition shall not constitute a
waiver of such obligation or condition for any future advance;
(c) All financial terms and covenants shall be determined in accordance
with generally accepted accounting principles, applied consistently;
(d) If the amount outstanding under any Loan in Canadian dollars plus the
Canadian Dollar Equivalent of the amount outstanding under any Loan in
a currency other than Canadian dollars at any time exceeds the amount
authorized under that Loan, the Bank may, from time to time, in its
sole discretion:
(i) limit the further utilization of that Loan;
(ii) convert all or part of the amount outstanding under that Loan
to Canadian Dollars in which event, interest shall accrue and
be paid on such converted amounts at the rate set out in the
Facility Letter for Canadian dollar advances accruing interest
with reference to the Bank's Prime Rate. If no such rate is
set out in the Facility Letter, interest shall accrue on the
amount so converted at the Bank's Prime Rate plus 3% per
annum, compounded and payable monthly on the last day of each
month, both before and after default and judgment, until paid;
(iii) require the Borrower to pay off the excess;
(e) Any amount payable by the Borrower to the Bank under the Facility
Letter or the Security Documents may be debited to any account of the
Borrower with the Bank;
(f) The Borrower shall indemnify the Bank against any loss incurred by it
as a result of any judgment or order being given or made for the
payment of any amount due under the Facility Letter or the Security
Documents, where:
(i) such judgment or order is expressed and paid in a currency
(the "Judgment Currency") other than the currency of an
outstanding loan (the "Loan Currency"); and
(ii) there is a variation between:
A. the rate of exchange at which the Loan Currency
amount is converted into the Judgment Currency for
the purposes of such judgment or order, and
B. the rate of exchange at which the Bank is able to
purchase the Loan Currency with the amount of the
Judgment Currency when actually received by the Bank.
The foregoing indemnity shall constitute a separate and independent
obligation of the Borrower and shall apply irrespective of any
indulgence granted to the Borrower from time to time, and shall
continue in full force and effect notwithstanding any such judgment or
order as aforesaid. The term "rate of exchange" shall include any
premiums and costs of exchange payable in connection with the purchase
of, or conversion into, the relevant currency.
(g) The Bank and its related companies in the US, are to be the main
operating bankers of the Borrower and its affiliated companies.
(h) The Bank is to have right of first refusal on all future financings
contemplated by the Borrower or any of its subsidiaries.
Form 2 S-8
18
HAZARDOUS SUBSTANCES
(a) To the best of the Borrower's knowledge after due and diligent inquiry,
no regulated, hazardous or toxic substances are being stored on any of
the Borrower's premises (the "Premises") or any adjacent property, nor
have any such substances been stored or used on the Premises or any
adjacent property prior to the Borrower's ownership, possession or
control of the Premises. The Borrower agrees to provide written notice
to the Bank immediately upon the Borrower becoming aware that the
Premises or any adjacent property are being or have been contaminated
with regulated, hazardous or toxic substances. The Borrower will not
permit any activities on the Premises which directly or indirectly
could result in the Premises or any other property being contaminated
with regulated, hazardous or toxic substances. For the purposes of the
Facility Letter, the term "regulated, hazardous or toxic substances"
means any substance, defined or designated as hazardous or toxic
wastes, hazardous or toxic material, a hazardous, toxic or radioactive
substance or other similar term, by any applicable federal, provincial
or local statute, regulation or ordinance now or in the future in
effect, or any substance or materials, the use or disposition of which
is regulated by any such statute, regulation or ordinance;
(b) The Borrower shall promptly comply with all statutes, regulations and
ordinances, and with all orders, decrees or judgments of Governmental
Authorities or courts having jurisdiction, relating to the use,
collection, storage, treatment, control, removal or cleanup of
regulated, hazardous or toxic substances in, on, or under the Premises
or in, on or under any adjacent property that becomes contaminated with
regulated, hazardous or toxic substances as a result of construction,
operations or other activities on, or the contamination of, the
Premises, or incorporated in any improvements thereon. The Bank may,
but shall not be obligated to, enter upon the Premises and take such
actions and incur such costs and expenses to effect such compliance as
it deems advisable and the Borrower shall reimburse the Bank on demand
for the full amount of all costs and expenses incurred by the Bank in
connection with such compliance activities; and
(c) The assets of the Borrower which are now or in the future encumbered by
the Security Documents are hereby further mortgaged and charged to the
Bank, and the Bank shall have a security interest in such assets, as
security for the repayment of such costs and expenses and interest
thereon, as if such costs and expenses had originally formed part of
the Loan(s).
BANK VISITS
Representatives of the Bank shall be entitled to attend at the Borrower's
business premises and to view all financial records of the Borrower at any time,
on reasonable notice, and in any event not less frequently than annually in
conjunction with the annual review of the Loan(s).
LEGAL AND OTHER EXPENSES
The Borrower shall pay all reasonable legal fees and disbursements in respect of
the Loan(s), the preparation and issue of the Security Documents, the
enforcement and preservation of the Bank's rights and remedies, and all
reasonable fees and costs relating to appraisals, insurance consultation, credit
reporting and responding to demands of any government or any agency or
department thereof, whether or not the documentation is completed or any funds
are advanced under the Loan(s).
SYNDICATION
The Bank shall have the right to syndicate all or any portion of the Loan(s).
Form 2 X-0
00
XXX-XXXXXX AND NON-ASSIGNMENT
This Facility Letter shall, on execution by the Borrower and each Guarantor,
replace all previous facility letters from the Bank to the Borrower with respect
to the Loan(s). Any existing loan to the Borrower shall be modified, not
refinanced, without novation of the Borrower's existing facilities or
obligations, by virtue of the Facility Letter unless otherwise provided in the
Facility Letter. The terms and conditions of the Facility Letter shall not be
merged by and shall survive the execution of the Security Documents. In the
event of a conflict between the terms of this Facility Letter and the terms of
the Security Documents, the terms of this Facility Letter shall prevail. The
benefits conferred by this Facility Letter shall enure to the benefit of the
Bank and its successors and assigns, and may not be assigned by the Borrower.
WAIVER OR VARIATION
No term or condition of the Facility Letter or any of the Security Documents may
be waived or varied orally or by any course of conduct of any officer, employee
or agent of the Bank. Any amendment to the Facility Letter or the Security
Documents must be in writing and signed by a duly authorized officer of the
Bank.
CREDIT REPORTING
The Borrower and each Guarantor consents to the Bank obtaining from any credit
reporting agency or from any person such information as the Bank may require at
any time, and consents to the disclosure at any time of any information
concerning the Borrower and any Guarantor to any credit grantor with whom the
Borrower and any Guarantor has financial relations or to any credit reporting
agency.
TIME OF ESSENCE
Time shall be of the essence of the Facility Letter.
Form 2 S-10
