XXXXXX WESTERN FOREST PRODUCTS LTD.
AS BORROWER
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CANADIAN IMPERIAL BANK OF COMMERCE,
HSBC BANK CANADA, BANK OF MONTREAL
AND THE OTHER FINANCIAL INSTITUTIONS
FROM TIME TO TIME PARTY HERETO,
AS LENDERS
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CANADIAN IMPERIAL BANK OF COMMERCE
AS AGENT
CREDIT AGREEMENT
DATED AS OF JUNE 27, 2001
CREDIT AGREEMENT
THIS CREDIT AGREEMENT dated as of June 27, 2001 is made by and among
XXXXXX WESTERN FOREST PRODUCTS LTD., as Borrower (the "Borrower"), CANADIAN
IMPERIAL BANK OF COMMERCE, HSBC BANK CANADA, BANK OF MONTREAL AND THE OTHER
FINANCIAL INSTITUTIONS which from time to time pursuant to and in accordance
with the provisions hereof have entered into an Assignment Agreement amending
Schedule F and become party hereto as Lenders (collectively, the "Lenders") and
CANADIAN IMPERIAL BANK OF COMMERCE, as Agent for the Lenders;
WHEREAS the Borrower has requested and the Lenders have agreed to
establish certain credits in favour of the Borrower;
NOW THEREFORE it is agreed by the parties hereto as follows:
ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS
In this Agreement, unless the context otherwise requires:
"ACCOMMODATION" means accommodation obtained under the Credits as
applicable by way of Prime Rate Loans, US Base Rate Loans, LIBOR Loans,
Bankers' Acceptances, Letters of Credit, or sundry Accommodation as is
available under the Swingline Credit, or any combination thereof;
"ACCOUNT DEBTOR" means a Person obligated under an Account Receivable;
"ACCOUNT RECEIVABLE" means any right of the Borrower to receive payment
for goods sold or for services rendered;
"AGENT" means CIBC;
"AGREEMENT" means this Credit Agreement as originally executed
(including all Schedules and Exhibits hereto), as it may be amended,
supplemented, modified, replaced or restated from time to time, and the
expressions "HEREOF", "HEREIN", "HERETO", "HEREUNDER", "HEREBY" and
similar expressions refer to this Agreement and not to any particular
Article, Section, other portion hereof or Schedule or Exhibit hereto;
"APPLICABLE LAW" means all international, federal, provincial, state,
municipal, local and foreign statutes, laws, regulations, treaties,
ordinances, orders, judgements and decrees, which are applicable to,
and all applicable official
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directives, rules, guidelines, orders and policies of any Official Body
having jurisdiction over, any specified Person, property, transaction
or event;
"APPLICABLE MARGIN" means for each Lender the applicable fee or margin
amount from time to time agreed between the Borrower and such Lender as
the applicable fee or margin amount for Accommodation under the
Credits;
"ASSIGNMENT AGREEMENT" means an agreement substantially in the form of
Exhibit A pursuant to which a financial institution assumes a
Commitment and becomes a Lender;
"AUDITORS" means, at any time, the firm of chartered accountants who at
the relevant time (i) are duly appointed as the auditors of the
Borrower and (ii) are in fact independent of the Borrower;
"AVAILABILITY PERIOD" means the period commencing from the Closing Date
to and including the Maturity Date;
"BA DISCOUNT RATE" means with respect to any Bankers' Acceptance
purchased by a:
(i) Schedule 1 (under the Bank Act Canada), Lender, CDOR; and
(ii) Non-Schedule 1 (under the Bank Act Canada), Lender, the lower
of (a) the bid rate quoted by such Lender for its own bankers'
acceptance of a like term with effect as at about 10:00 a.m.
on the applicable drawdown, rollover or switch date; and (b)
CDOR plus 10.0 basis points;
"BA EQUIVALENT NOTE" has the meaning specified therefor in Section
2.9(2);
"BANKERS' ACCEPTANCE" means a draft of the Borrower denominated in
Canadian Dollars which has been accepted by a Lender as described in
Article 5 (and shall include BA Equivalent Notes unless otherwise
specified);
"BANKING DAY" means:
(a) with respect to Prime Rate Loans or Bankers' Acceptances, any
day, other than a Saturday or a Sunday, on which financial
institutions are open for domestic and foreign exchange
business in Toronto, Ontario;
(b) with respect to LIBOR Loans, any day, other than a Saturday or
a Sunday, on which financial institutions are open for
domestic and foreign exchange business in Toronto, Ontario,
New York, New York and which is also a day on which dealings
are carried out in the London Interbank Eurocurrency Market;
and
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(c) with respect to US Base Rate Loans, any day, other than a
Saturday or a Sunday, on which financial institutions are open
for domestic and foreign exchange business in Toronto, Ontario
and New York, New York;
"BORROWER" means Xxxxxx Western Forest Products Ltd., a corporation
incorporated under the laws of Alberta;
"BORROWING BASE" means:
(a) during the months of June to and including November in each
year an amount equal to the lesser of (a) the amount of the
Revolving Credit and (b) the sum of (i) Eligible Accounts
Receivable as margined pursuant to subparagraph (c), and (ii)
50% of Eligible Inventory provided that the amount
attributable to Eligible Inventory shall not exceed 50% of the
Borrowing Base, and less 100% of estimated Priority Payables;
and
(b) during the months of December to and including May in each
year, the above Borrowing Base will apply except that the
amount of Eligible Inventory which may comprise the Borrowing
Base will be 50% of Eligible Inventory, provided that such
amount does not exceed 60% of the Borrowing Base;
(c) the margin for Eligible Accounts Receivable shall be as
follows:
(i) 95% of Eligible Accounts Receivable which are insured
by the Export Development Corporation in favour of
the Borrower in form and substance satisfactory to
the Agent and the Lenders;
(ii) 95% of Eligible Accounts Receivable which are
supported by a letter of credit in form and substance
satisfactory to the Agent and the Lenders and issued
by a counterparty rated at least (A High) by S&P or
the equivalent rating by Moody's;
(iii) 95% of Eligible Accounts Receivable which are owing
by the Government of Canada or by any Canadian
province; and
(iv) 75% of remaining Eligible Accounts Receivable.
"CANADIAN DOLLARS", "CDN. DOLLARS", "DOLLARS", "$", "CDN.$", and "$
CDN." means lawful currency of Canada;
"CANADIAN DOLLAR AMOUNT" means that any time with respect to
outstanding Accommodation under a Credit, the aggregate of (i) the
amount in Cdn. Dollars of all such Accommodation that is denominated in
Cdn. Dollars, and (ii) the Exchange Equivalent at such time of all such
Accommodation that is denominated in a currency other than Cdn.
Dollars;
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"CAPITAL EXPENDITURE" means, for any particular period, those
expenditures of the Borrower which would, in accordance with GAAP, on a
consolidated basis, be considered Capital Expenditures of the Borrower,
for such period (including Capitalized Leased Obligations, provided
that notwithstanding the requirements of GAAP, the amount attributable
to Capitalized Leased Obligations for such period shall be the amount
recorded during such period on the cash flow statement of the Borrower
as principal lease payments on Capital Leases;
"CAPITAL LEASE" means, with respect to any Person, any lease of
personal property or other arrangement relating to personal property or
assets which would be required to be accounted for as a capital lease
obligation on a balance sheet of such Person if such balance sheet were
prepared in accordance with GAAP;
"CAPITALIZED LEASED OBLIGATIONS" means with respect to any Person, any
payment obligation of such Person, under a Capital Lease that, in
accordance with GAAP, is required to be capitalized;
"CDOR" means the average annual rate (rounded upward to the nearest two
decimal places, calculated on the basis of a 365 day year for bankers'
acceptances denominated in Dollars for a specified term that appears on
the Reuters Screen CDOR page as of 10:00 a.m. Toronto time on the date
of determination), provided that if such rate does not appear on the
Reuters Screen CDOR page at such time on such date, the rate for such
date will be determined as of 10:00 a.m. on the next preceding Banking
Day and if there is no available rate for such date, the CDOR will be
the discount rate quoted by the applicable Lender for Canadian Dollar
bankers' acceptances for such specified term, at such time and on such
date;
"CIBC" means Canadian Imperial Bank of Commerce;
"CLOSING DATE" means June 28, 2001 or such other date as the parties
may agree to in writing;
"COMMITMENT" means with reference to any Lender, the aggregate amount
of Credits which that Lender has severally agreed to make available to
the Borrower on the terms of this Agreement, expressed as a percentage
of the Commitments of all the Lenders, which amount is set forth in
Schedule D or in an Assignment Agreement amending Schedule D executed
by such Lender;
"COMPLIANCE CERTIFICATE" means the officer's certificate described in
Section 10.4(2)(iii);
"CONSTATING DOCUMENTS" means, with respect to any Person, the articles
and by-laws of such Person or other organizing documents of such
Person, as the same may heretofore or hereafter be amended, together
with all other governing
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documents of such Person, including all shareholder agreements, of or
relating to such Person;
"CONTAMINANT" means any hazardous or non-hazardous substance, matter,
waste, radioactivity or thing, subject to or regulated by Environmental
Law, including petroleum products, asbestos and polychlorinated
byphenyls;
"CREDITS" means, collectively, the Revolving Credit and the Swingline
Credit which forms part of the Revolving Credit and "APPLICABLE CREDIT"
means one or more of the Credits as the context requires;
"DEFAULT" means any event which, with the giving of notice or the lapse
of time, or both, and/or a determination being made under the relevant
provisions hereof, would constitute an Event of Default;
"DEFAULTING LENDER" has the meaning specified therefor in Section
2.5(2);
"DOCUMENTS" means, collectively, this Agreement, Bankers' Acceptances,
the Security and all agreements with respect to Accommodation under the
Swingline Credit, and any certificate delivered hereunder;
"EBITDA" means, for any period, the sum of: (a) Net Income for such
period (excluding unusual and/or extraordinary gains or losses of a
non-cash nature for such period), plus (b) Interest Expense for such
period, plus (c) consolidated income taxes, whether paid or deferred,
which are deducted in determining Net Income for such period, plus (d)
consolidated depreciation and amortization expense and other non-cash
charges for such period, all (unless otherwise defined) as defined by
and determined in accordance with GAAP, consistently applied;
"ELIGIBLE ACCOUNT RECEIVABLE" means an Account Receivable which meets
each of the following requirements:
(a) it arises from the sale or lease of goods, and such goods have
been shipped or delivered to the Account Debtor under such
Account Receivable;
(b) it is a valid and legally enforceable obligation of the
Account Debtor thereunder, and is not subject to any offset,
counterclaim or other defence on the part of such Account
Debtor, or to any claim on the part of such Account Debtor
denying liability thereunder in whole or in part; provided
that the net amount of the obligation of the Government of
Canada with respect to Goods and Services Tax rebates may be
included;
(c) it is not subject to any Security Interest whatsoever other
than the Security, except (i) Permitted Liens which are
subordinate in priority to the interests of the Lenders and
(ii) any statutory Liens in respect of Priority Payables;
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(d) it is evidenced by an invoice (dated not later than the date
of shipment or performance and having payment terms in
accordance with the usual practice of the industry) rendered
to such Account Debtor, and is not evidenced by any instrument
or chattel paper unless all necessary steps have been taken to
perfect the Security Interest contained in the instrument or
chattel paper;
(e) it is not owing by an Account Debtor who, in the opinion of
the Agent, and the Lenders acting reasonably, may at any time
be unable to meet its obligations as they fall due;
(f) no invoice evidencing such Account Receivable is unpaid ninety
(90) days after the date of invoicing; provided this
subparagraph does not apply to those Accounts Receivable
referred to in subparagraph (c)(i) and (ii) of the Borrowing
Base;
(g) such Account Receivable is not owing by an Account Debtor who
has failed to pay in full any invoice evidencing another
Account Receivable within ninety (90) days after the date of
invoicing (except for, with the written consent of the Agent
in response to a written request by the Borrower for such
consent (the Agent agreeing that it will respond promptly,
whether in the affirmative or in the negative, to each such
request), invoices which are being contested in good faith, as
determined by the Agent, acting reasonably); provided this
subparagraph does not apply to those Accounts Receivable
referred to in subparagraph (c)(i) and (ii) of the Borrowing
Base;
(h) the Account Debtor under such Account Receivable has been
invoiced in good faith by the Borrower to an address in a
Canadian Province or in the case of Xxxxxxxx Xxxxx Inc., an
American State, in which public notice of the Security over
Accounts Receivable (i) is required by law to be registered or
recorded in accordance with the law of that Province or State
in order to perfect the Security in such Account Receivable,
and (ii) has been registered or recorded to the extent
necessary to perfect the Security in such Account Receivable;
provided that the foregoing does not apply to any Account
Debtor to the extent that such Account Receivable is insured
by the Export Development Corporation in favour of the
Borrower in form and substance satisfactory to the Agent and
the Lenders or is supported by a letter of credit or other
credit enhancement satisfactory to the Agent and the Lenders;
(i) the Account Debtor is at arm's length (as that term is used in
the Income Tax Act (Canada)) with the Borrower; and
(j) it is validly and effectively charged by the Security;
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Any Account Receivable which at any time is an Eligible Account
Receivable but which subsequently fails to meet any of the foregoing
requirements shall forthwith cease to be an Eligible Account
Receivable;
"ELIGIBLE INVENTORY" means any Inventory which meets each of the
following requirements:
(a) it is owned by the Borrower;
(b) it is not subject to any Security Interest whatsoever other
than the Security except Permitted Liens which are subordinate
in priority to the interests of the Lenders;
(c) it is located within any of those Provinces of Canada in which
public notice of the Security over Inventory (i) is required
by law to be registered or recorded in accordance with the law
of that Province in order to perfect the Security in such
Inventory, and (ii) has been registered or recorded to the
extent necessary to perfect the Security over such Inventory;
(d) it is validly and effectively charged by the Security; and
(e) Inventory at any time consisting of logs located other than at
the mill, if such logs are insured as required by Section
10.1(7), may comprise Eligible Inventory but only to the
extent that the aggregate gross value of such logs does not
exceed $20,000,000.
Any Inventory which is at any time Eligible Inventory, but which
subsequently fails to meet any of the foregoing requirements, shall
forthwith cease to be Eligible Inventory;
"ENVIRONMENTAL ACTIVITY" means any past, present or future activity,
event or circumstances in respect of a Contaminant, including its
storage, use, holding, collection, purchase, accumulation, assessment,
generation, manufacture, construction, processing, treatment,
stabilization, disposition, handling or transportation or its Release,
emission, escape, leaching, dispersal or migration into the natural
environment including the movement through or in the air, soil,
subsoil, surface water or groundwater;
"ENVIRONMENTAL LAW" means any Applicable Law relating to the
environment, public health or safety, or any Environmental Activity;
"EVENT OF DEFAULT" means an event specified in Section 11.1;
"EXCHANGE EQUIVALENT" in respect of one currency (the "ORIGINAL
CURRENCY"), being Cdn. Dollars or US Dollars, as the case may be,
means, at the date of determination, the amount of currency expressed
in the other currency, based on
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the Bank of Canada noon rate which is applicable for any settlement
made on the date of determination, with the specified amount of the
original currency on such date;
"EXISTING CREDIT AGREEMENT" means the Credit Agreement dated as of May
7, 1998 between the Borrower, CIBC and the other financial institutions
from time to time party thereto and CIBC as Agent as amended by
Amending Agreement No. 1 dated December 1, 1998 and Amending Agreement
No. 2 dated August 15, 2000;
"FEDERAL FUNDS RATE" shall mean, for any day, the weighted average of
the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as published
on the next succeeding Banking Day by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day which is a
Banking Day, the average of the quotations for the day of such
transactions received by the Agent from three federal funds brokers of
recognized standing selected by it;
"FINANCIAL COVENANTS" means those covenants of the Borrower referred to
in Section 10.4;
"FIXED CHARGE COVERAGE RATIO" means the ratio of (a) EBITDA less the
amount of (i) Maintenance Capital Expenditures and (ii) income taxes
paid in cash to (b) Interest Expense and payments of principal for
borrowed money, all calculated on a rolling four quarter basis;
"FOREIGN EXCHANGE CONTRACT" means any foreign exchange contract
established by a Lender in favour of the Borrower which has a duration
of the lesser of thirteen months and the Maturity Date and is supported
by the Lender's standard documentation for such foreign exchange
contract including an ISDA agreement, if applicable;
"GAAP" means generally accepted accounting principles in Canada,
consistently applied, including the statements and interpretations (if
applicable) issued by the Canadian Institute of Chartered Accountants
or any successor body in effect from time to time;
"GUARANTEE" by any Person means:
(i) any guarantee, sale with recourse, endorsement (other than for
collection or deposit in the ordinary course of business) or
other obligation (contingent or otherwise) to pay, purchase,
repurchase or otherwise acquire or become liable upon or in
respect of any Indebtedness of another; and
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(ii) without limiting the generality of the foregoing, any
obligation (contingent or otherwise) to make a payment to
another for goods, property or services regardless of the
non-delivery or non-furnishing thereof, or to make an
investment in another, or to maintain the capital, working
capital, solvency or general financial condition of another,
or to indemnify another Person against and hold such Person
harmless from damage, loss or liability, all under
circumstances intended to enable another to incur or pay any
Indebtedness or to comply with agreements relating thereto or
otherwise to assure or protect creditors against loss in
respect of Indebtedness;
The amount of each Guarantee will be deemed to be the amount of all
Indebtedness of the obligor to which the Guarantee relates, unless the
Guarantee is limited to a determinable amount in which case the amount
of such Guarantee will be deemed to be such determinable amount;
"INDEBTEDNESS" of a Person means, without duplication:
(i) all indebtedness, obligations and liabilities of such Person
which, in accordance with GAAP, would be included in
determining total liabilities as shown in the liability
section of the balance sheet of such Person, including,
without limitation, indebtedness, obligations and liabilities
for borrowed money or in respect of any bankers' acceptance
credit facility;
(ii) all indebtedness and liabilities of such Person under
outstanding forward exchange contracts, interest rate swaps
and other hedging products;
(iii) all indebtedness, obligations and liabilities of such Person
secured by any Lien on any property or asset owned or held by
such Person, whether or not any other Person has assumed or is
liable for the indebtedness, obligations, or liabilities so
secured and whether or not the rights and remedies of the
secured party thereunder are limited to repossession or sale
of property or assets covered thereby;
(iv) any Capital Lease;
(v) any Guarantee by such Person;
(vi) all liabilities of such Person as a partner or venturer in any
partnership, joint venture or other enterprise but only to the
extent of the amount of such liability if such liability is
limited;
(vii) all items of indebtedness convertible into, or exchangeable
for, shares in the capital of such Person, any other
debentures, notes, other evidences of Indebtedness and similar
instruments which may be issued by a Person from time to time;
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(viii) all shares in the capital of, or partnership units in, such
Person which are redeemable or retractable at the option of
any other Person; and
(ix) all liabilities of such Person, contingent or otherwise, under
any letter of credit or letter of guarantee issued on behalf
of such Person;
"INTEREST EXPENSE" means, in respect of any particular period, the
aggregate amount payable by the Borrower on a consolidated basis,
during such period on account of interest, fees or discount for
borrowed money including Capital Leases, all as calculated in
accordance with GAAP;
"INVENTORY" means all lumber, log and pulp inventory owned by the
Borrower and consisting of finished goods and raw materials which are
acceptable to the Agent and the Lenders and valued in each case at the
lower of cost or net realizable value;
"LENDERS" means, collectively CIBC, HSBC Bank Canada, Bank of Montreal
and any other financial institution which has entered into an
Assignment Agreement amending Schedule F, and their respective
successors and permitted assigns;
"LETTER OF CREDIT" means any letter of credit or letter of guarantee
issued by a Lender at the request of the Borrower pursuant to the
Letter of Credit Swingline Credit;
"LETTER OF CREDIT SWINGLINE CREDIT" has the meaning set out in Section
2.1(3);
"LIBOR" means, with respect to each LIBOR Period for each LIBOR Loan,
the annual interest rate (calculated on the basis of a 360 day year)
for deposits of US Dollars for a period most nearly comparable to such
LIBOR Period to be the arithmetic average, rounded upward to the
nearest 1/16th of 1%, at which deposits in US Dollars in amounts
comparable to the amount of such LIBOR Loan, for value on the first day
of such LIBOR Period and for a term equal to the requested LIBOR
Period, are offered to the applicable Lender in accordance with its
normal practice in the London Interbank Eurocurrency Market at or about
11:00 a.m. (London time) on the second Banking Day prior to the
commencement of such LIBOR Period, as determined by such Lender;
"LIBOR LOAN" means a borrowing in US Dollars which bears interest
calculated on the basis of LIBOR;
"LIBOR PERIOD" means a period of 1, 2 or 3 months ending on a Banking
Day, determined in accordance with the provisions of this Agreement and
readily available in the London Interbank Eurocurrency Market;
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"LIEN" means any mortgage, charge, pledge, lien (statutory or
otherwise), hypothecation, assignment intended as security, title
retention agreement or arrangement, security interest or other
encumbrance;
"MAINTENANCE CAPITAL EXPENDITURES" means Capital Expenditures incurred
for the purpose of maintaining, repairing or replacing an existing
asset of the Borrower;
"MATERIAL ADVERSE CHANGE" means, with respect to the Borrower, a
material adverse change in the financial condition or business or
operations of the Borrower which has the effect of making it reasonably
likely that the Borrower will be unable to perform its obligations with
respect to its Indebtedness;
"MATERIAL ADVERSE EFFECT" means, with respect to any Person, an effect
which:
(a) materially impairs the Borrower's ability to perform its
obligations under any Document to which it is a party,
(b) materially prejudices, restricts or renders unenforceable or
ineffective any of the rights intended or purported to be
granted to any Lender under any Document, or
(c) results in a Material Adverse Change;
"MATERIAL AGREEMENTS" means the agreements referred to in Schedule G;
"MATURITY DATE" means June 27, 2002 or such later date as may be agreed
by all of the Lenders and the Borrower pursuant to Section 7.7;
"MOODY'S" means Xxxxx'x Investors Service and its successors;
"NET INCOME" means, for any period, the amount which would, in
accordance with GAAP be classified on the consolidated income statement
of the Borrower for such period as net income of the Borrower;
"NOTICE OF BORROWING" means a notice of the Borrower in substantially
the form of Exhibit B;
"NOTICE OF ROLLOVER/SWITCH" means a notice of the Borrower in
substantially the form of Exhibit C;
"OFFERING MEMORANDUM" means the offering memorandum dated May 7, 1998
issued by the Borrower in connection with a private placement of the
Senior Notes;
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"OFFICIAL BODY" means any government of a country or any political
subdivision thereof, any agency, authority, bureau, central bank,
commission, department or instrumentality of any such government or
political subdivision thereof, or any regulatory authority, court,
tribunal, grand jury or arbitrator, whether foreign or domestic having
jurisdiction over the property, business or assets of the applicable
Person;
"PARTICIPANT" has the meaning specified therefor in Section 14.7(2);
"PARTICIPATION" has the meaning specified therefor in Section 14.7(1);
"PERMITTED LIENS" means, as at any time, the Liens listed in Schedule
A, as such Schedule may be amended from time to time by agreement
between the Required Lenders and the Borrower;
"PERSON" will be broadly interpreted and includes an individual, a
corporation, a limited liability company, a partnership, a trust, a
joint venture, a co-ownership, an association, an unincorporated
organization or an Official Body and the heirs, executors,
administrators or other legal representatives of an individual;
"PRIME INTEREST RATE" means the rate of interest per annum (calculated
on the basis of a 365 or 366 day year) that is the greater of (a) the
rate of interest per annum from time to time declared by the applicable
Lender as its prime interest rate for Cdn. Dollar commercial loans made
in Canada and (b) 1.0% above the average of the discount rates from
time to time quoted on the CDOR page of Reuters, rounded up to the
second decimal place, at approximately 10:00 a.m. (Toronto time) for
30-day Canadian Dollar bankers' acceptances; provided that any change
in the Prime Interest Rate shall be effective on the effective day of
any change in the reference rate referred to in (a) above or (b) above,
respectively;
"PRIME RATE LOAN" means a borrowing in Canadian Dollars which bears
interest at a rate based on the Prime Interest Rate;
"PRIORITY PAYABLES" means all statutory Liens, deemed trusts and
preferred claims of any Person, including claims for employee wages,
vacation pay, termination or severance pay, employee withholdings,
pension plan contributions, workers' compensation assessments, goods
and services taxes, retail sales taxes and municipal Taxes, and claims
by public utilities, which rank in priority to the Security over any
Eligible Accounts Receivable;
"PURCHASE MONEY LIEN" means any Lien created upon any personal property
of the Borrower to secure or securing the whole or any part of the
purchase price of such property or to secure or securing the repayment
of money borrowed to pay the whole or any part of such purchase price
or cost or any vendor's privilege or lien on such property securing all
or any part of such purchase price or cost and
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any Lien to which any property acquired by the Borrower is subject at
the time of such acquisition; provided that any such Lien is limited to
the property so acquired;
"RELEASE" includes discharge, spray, inject, inoculate, abandon,
deposit, spill, leak, seep, pour, emit, empty, throw, dump, place and
exhaust, and when used as a noun has a similar meaning;
"REQUIRED LENDERS" means with respect to the Credits, any two or more
Lenders who have in the aggregate at least 66-2/3% of the then maximum
available Commitments under the Credits;
"REVOLVING CREDIT" has the meaning specified in Section 2.1(1);
"RIGHTS" has the meaning specified therefor in Section 14.7(1);
"S&P" means Standard & Poor's Rating Group and its successors;
"SECURITY" means the secured referred to in Section 8.1;
"SECURITY INTEREST" means any mortgage, hypothec, title retention,
pledge, right of set-off, lien, charge, security interest or other
encumbrance whatsoever, whether fixed or floating and howsoever created
or arising;
"SENIOR NOTES" means the 9-7/8% Senior Notes due 2008 issued by the
Borrower pursuant to the Offering Memorandum;
"SHAREHOLDERS' EQUITY" means with respect to a Person, at any time, the
aggregate of all common, preferred and other share capital in and all
warrants of such Person, which would in accordance with GAAP be
reflected as equity on the balance sheet of such Person at such time,
together with retained earnings and contributed surplus of, such
Person, which would, in accordance with GAAP, be reflected on the
balance sheet of such Person at such time;
"SHORT NOTICE SWINGLINE CREDIT" has the meaning setting out in Section
2.1(2);
"SHORT NOTICE SWINGLINE LENDER" means the Agent;
"SUBORDINATED DEBT" means indebtedness of the Borrower for borrowed
money which is fully subordinated as to principal, interest, fees or
other amounts and as to any security interest such that no payments to
the subordinate creditor may be made or accepted and no actions may be
taken by the subordinate creditor to enforce its security until all
indebtedness and liability of the Borrower to the Agent and the Lenders
under this Agreement have been repaid and the Credits have been
cancelled or otherwise terminated;
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"SWINGLINE CREDIT" means the Letter of Credit Swingline Credit and the
Short Notice Swingline Credit collectively;
"SUBSIDIARY" has the meaning ascribed to a "subsidiary body corporate"
in the Business Corporations Act (Alberta);
"TAXES" includes all taxes, levies, imposts, stamp taxes, duties,
including property taxes, business taxes, corporations taxes, fees,
deductions, withholdings and any restrictions or conditions resulting
in a charge to tax and all penalty, interest and other payments on or
in respect thereof;
"US" means the United States of America;
"US BASE RATE" means the rate of interest per annum (calculated on the
basis of a 365 or 366 day year) that is the greater of (a) the rate of
interest per annum from time to time declared by the applicable Lender
as its reference rate of interest for determining interest chargeable
by it on US Dollar commercial loans made in Canada and (b) 0.50% above
the Federal Funds Rate in effect at the time of determination; provided
that if for any reason, such Lender shall have determined (which
determination shall be conclusive, absent manifest error) that it is
unable to ascertain the Federal Funds Rate for any reason, (including
the inability of such Lender to obtain sufficient quotations in
accordance with the terms set out in the definition of Federal Funds
Rate herein), the US Base Rate shall be determined without regard to
clause (b) above until the circumstances giving rise to such inability
no longer exist; provided further that any change in the US Base Rate
shall be effective on the effective day of such change in the reference
rate referred to in (a) above or the Federal Funds Rate, respectively;
"US BASE RATE LOAN" means a borrowing in US Dollars which bears
interest at a rate based on the US Base Rate;
"US DOLLARS" and "US $" means lawful currency of the United States of
America;
"UTILIZED PORTION OF THE REVOLVING CREDIT" means, at the date of
determination, the Canadian Dollar Amount of all Accommodation
outstanding under the Revolving Credit including under the Swingline
Credit; and
"WORKING CAPITAL RATIO" means at any time, the ratio of the Borrower's
consolidated current assets to its consolidated current liabilities
calculated in each case in accordance with GAAP, but in any event,
including in current liabilities all amounts outstanding under the
Credits other than for Letters of Credits which are issued in support
of current liabilities, and excluding from current assets all prepaid
expenses;
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1.2 HEADINGS, ETC.
The division of this Agreement into Articles, Sections and other
portions thereof and the insertion of headings and captions are for convenience
of reference only and will not affect the construction or interpretation of this
Agreement. Unless something in the subject matter or context is inconsistent
therewith, references herein to Articles, Sections, other portions thereof,
Schedules or Exhibits are to Articles, Sections, other portions thereof,
Schedules or Exhibits of or to this Agreement.
1.3 NUMBER, GENDER AND EXPRESSIONS
Words importing the singular number only will include the plural and
vice versa, words importing the masculine gender will include the feminine and
neuter genders and vice versa and words importing natural persons will include
Persons and vice versa. Where any term or expression is defined herein,
derivations of such term or expression will have a corresponding meaning.
1.4 TIME
Unless otherwise expressly stated, any reference herein to a time will
mean Toronto, Ontario local time.
1.5 NON-BANKING DAYS
Whenever any payment hereunder is stated to be due on a day other than
a Banking Day, the payment will be made on the immediately following Banking
Day. In the case of interest payable pursuant to the terms of this Agreement,
the extension or contraction of time will be considered in determining the
amount of interest. Whenever any action to be taken hereunder is stated or
scheduled to be required to be taken on, or any period of time stated or
scheduled herein to commence or terminate on, a day other than a Banking Day,
the action will be taken or the period of time will commence or terminate, as
the case may be, on the immediately following Banking Day.
1.6 CALCULATIONS
Except as otherwise expressly provided herein, all accounting
calculations required or permitted under this Agreement will be made on the
basis of GAAP using accounting policies and standards of disclosure with respect
to the business operations similar to those of the Borrower, which are applied
in accordance with recommendations from time to time of the Canadian Institute
of Chartered Accountants, or any successors thereof, as at the date on which
such generally accepted accounting principles are applied.
1.7 STATUTORY REFERENCES
Unless otherwise expressly stated, any reference in this Agreement or
any of the other Documents to any act or statute or section thereof will be
deemed to be a reference to such
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act or statute or section as amended, renamed, restated or re-enacted or
replaced from time to time (and includes all regulations from time to time made
under such act or statute).
1.8 SEVERABILITY
Any provision of this Agreement that is prohibited or unenforceable in
any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of
such prohibition or unenforceability and shall be severed from the balance of
this Agreement, all without affecting the remaining provisions of this Agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction.
1.9 ENTIRE AGREEMENT
This Agreement and all agreements herein contemplated to be entered
into among, by or with the parties hereto constitutes the entire agreement
between the parties hereto with respect to the Credits and the other matters
contemplated in this Agreement as of the date hereof.
- 17 -
ARTICLE II
THE CREDITS
2.1 ESTABLISHMENT OF CREDITS
1) The Revolving Credit: Subject to the terms and conditions hereof
(including the restrictions contained in this Article), the Lenders hereby
establish in favour of the Borrower a revolving credit in the maximum principal
amount of $50,000,000 or the Exchange Equivalent thereof in U.S.$.
2) Short Notice Swingline Credit: As part of the Revolving Credit, the
Short Notice Swingline Lender hereby establishes in favour of the Borrower a
revolving credit in the maximum principal amount of $5,000,000 or the Exchange
Equivalent thereof in U.S. Dollars. Accommodation obtained under this Credit
will be considered an availment of the Revolving Credit so that the maximum
principal amount under the Revolving Credit, the Letter of Credit Swingline
Credit and the Short Notice Swingline Credit shall not exceed $50,000,000 or the
Exchange Equivalent thereof in U.S. Dollars. Subject to the terms and conditions
hereof, the Borrower may from time to time obtain Accommodation under the Short
Notice Swingline Credit by way of overdrafts in Cdn. and U.S. Dollars and other
types of sundry Accommodation as agreed upon. Fees for such Accommodation other
than overdrafts shall be as agreed from time to time, and Prime Rate Loans and
U.S. Base Rate Loans by way of overdraft will bear interest as set out in
Sections 3.2(1) and (2).
3) Letter of Credit Swingline Credit: As part of the Revolving Credit,
the Lenders hereby establish in favour of the Borrower a revolving credit in the
maximum amount of $15,000,000 or the exchange equivalent in US Dollars.
Accommodation obtained under the Letter of Credit Swingline Credit will be
considered an availment of the Revolving Credit so that the maximum amount under
the Revolving Credit, the Short Notice Swingline Credit and the Letter of Credit
Swingline Credit shall not exceed $50,000,000 or the exchange equivalent thereof
in US Dollars. Subject to the terms and conditions hereof, the Borrower may from
time to time obtain Accommodation under the Letter of Credit Swingline Credit by
way of letters of credit and letters of guarantee to be provided by one or more
of the Lenders as the Borrower in its sole discretion may sole select. Fees for
such Accommodation shall be as agreed by the Borrower separately with each
Lender by agreement in the form attached hereto as Exhibit F.
2.2 UTILIZATION OF PROCEEDS
The Borrower will use Accommodation obtained under the Credits for the
Borrower's general corporate and working capital purposes (including to
refinance the amount outstanding under the Existing Credit Agreement on the
Closing Date) other than to finance any asset acquisition out of the ordinary
course of business or any investment in any Person.
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2.3 TYPES OF ACCOMMODATION AVAILABLE UNDER THE REVOLVING CREDIT
1) The Revolving Credit. Subject to the terms and conditions hereof,
the Borrower may from time to time obtain the following types of Accommodation
under the Revolving Credit:
Prime Rate Loans
US Base Rate Loans
LIBOR Loans
Bankers' Acceptances
2) The Revolving Credit Borrowing Base. The Borrower may not request
Accommodation under the Revolving Credit (including under the Swingline Credit)
if the Utilized Portion of the Revolving Credit (including the maximum amount of
the Swingline Credit), after giving effect to the proposed Accommodation, is
greater than the Borrowing Base then in effect. At no time shall the Utilized
Portion of the Revolving Credit exceed the Borrowing Base then in effect.
2.4 DRAWDOWN, ROLLOVERS AND SWITCHES OF ACCOMMODATION. Subject to the terms
and conditions hereof, the Borrower will have the right at all times to
determine the manner and the proportions in which it will draw down the
Revolving Credit and until the Revolving Credit has been cancelled, the Borrower
may, at its option, subject to the terms and conditions hereof, rollover or
switch its methods of utilizing the Revolving Credit, provided that:
(a) each drawdown which is not by way of Prime Rate Loan or US
Base Rate Loan shall involve a minimum of Cdn.$3,000,000 or
US$3,000,000, as applicable, or any whole multiple of
Cdn$100,000 or US$100,000, as applicable, thereafter;
(b) each drawdown which involves a Prime Rate Loan or a US Base
Rate Loan shall involve a minimum of Cdn$1,000,000 or
US$1,000,000, as applicable, or any whole multiple of
Cdn$100,000 or US$100,000, as applicable, thereafter;
(c) all switches shall involve at least Cdn.$3,000,000 or
US$3,000,000, as applicable;
(d) no switch out of Bankers' Acceptances or LIBOR Loans shall be
made except upon the maturity of a corresponding amount of
Bankers' Acceptances or LIBOR Loans; and
(e) the date on which a drawdown, rollover or switch is to be made
hereunder shall be a Banking Day.
2.5 PRO RATA ACCOMMODATION
1) Requirement to Advance Accommodation. Subject to the terms and
conditions of this Agreement, all Accommodation requested under the Revolving
Credit other than the Swingline Credit will be made available contemporaneously
by the Lenders, on a pro rata basis in the same proportions as their respective
Commitments (except that for this purpose, the Commitments of the Short Notice
Swingline Lender shall be reduced by the maximum amount of the Short Notice
Swingline Credit); provided that the Agent will be entitled at any time to
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request Accommodation from the Lenders otherwise than in accordance with their
respective Commitments if the same is required by, or consistent with, the
traditional treasury management practices of the Agent or normal money market
practices. No Lender will be responsible for any default by any other Lender in
its obligation to make its proportionate share of requested Accommodation
available nor will the Commitment of any Lender be increased as a result of the
default by any other Lender in its obligation to make Accommodation available,
except as provided in Section 2.5(2).
2) Reset Mechanism. If at any time, because of utilization of the
Swingline Credit, the ratio of the indebtedness of the Borrower to any Lender
under the Credits to the aggregate indebtedness of the Borrower to the Lenders
under the Credits is not in the same proportion as such Lenders' Commitment
bears to the aggregate Commitments of all Lenders then the Agent, shall at the
request of any Lender, make such adjustments of Accommodation among the Lenders
as may be necessary or appropriate in order that the outstanding Accommodation
of the Lenders is proportional to their respective Commitments. Each Lender
agrees to execute any documentation reasonably required by the Agent to
accomplish the required adjustments.
3) Failure to Advance Accommodation. In the event that any Lender fails
to make available its portion of any Accommodation as required (a "DEFAULTING
LENDER"), the Agent will forthwith give notice thereof to each of the other
Lenders, and any other Lender, upon notice to the Borrower, the Agent and the
other Lenders and acknowledgement by the Agent, may advance to the Borrower the
amount (or if more than one Lender so elects, its pro rata share of the amount
based upon the Commitments of such electing Lenders) of the Defaulting Lender's
portion of such Accommodation. Upon the making of such advance(s), the Lender or
Lenders making such advance(s) will have the right to forthwith recover the same
from the Defaulting Lender(s) or, if required by any Lender making any such
advance, the Lenders, the Agent and the Borrower will enter into such
documentation, in form and substance satisfactory to the parties, as may be
appropriate to evidence the adjustment of the Commitments of the Lenders
necessitated by the advance made by such Lender(s). Nothing herein contained
will be deemed to relieve any Lender from its obligation to fulfil its
respective Commitments in respect of the Credits or to prejudice any rights
which a Borrower may have against any Lender as a result of any default by such
Lender hereunder.
2.6 DRAWDOWN OF CREDITS
1) Notice of Borrowing. The Borrower will give to the Agent, in
accordance with the following schedule, a Notice of Borrowing prior to each
proposed draw under the Revolving Credit:
Type of Accommodation Requested Notice Required
------------------------------- ---------------
Prime Rate Loans 1 Banking Day
US Base Rate Loans 1 Banking Day
LIBOR Loans 3 Banking Days
Bankers' Acceptances 1 Banking Day
Swingline Credit Accommodation As agreed
- 20 -
Each Notice of Borrowing shall be delivered on a Banking Day by the Borrower on
or prior to noon Toronto time to the Agent on the date on which the Notice of
Borrowing is required. Any Notice of Borrowing delivered after such time shall
be deemed to have been delivered on the next Banking Day.
2) Irrevocability. Each Notice of Borrowing given to the Agent by a
Borrower shall be irrevocable, and the Borrower shall borrow the stated amount
on the stated date in accordance with the Notice of Borrowing; provided,
however, that if any Default or Event of Default shall have occurred and be
continuing, the Agent and the Lenders may refuse to give effect to any Notice of
Borrowing.
3) Notification of Lenders. Upon receipt of each duly completed Notice
of Borrowing, the Agent shall promptly notify by facsimile transmission each
Lender of (i) the proposed draw, (ii) the amount and type of Accommodation to be
made available by such Lender, and (iii) the particulars of the account (as
designated by the Borrower to the Agent) to which the proceeds of any
Accommodation are to be credited.
2.7 ROLLOVERS AND SWITCHES OF ACCOMMODATION
1) Timing of Notices. Subject to Section 2.7(4), the Borrower shall
deliver on a Banking Day to the Agent, in accordance with the schedule set out
for Notices of Borrowing in Section 2.6(1), a duly completed Notice of
Rollover/Switch prior to a proposed switch or rollover of Accommodation under
the Revolving Credit.
2) Irrevocability. Each Notice of Rollover/Switch delivered to the
Agent by the Borrower shall be irrevocable, and the Borrower shall rollover or
switch the stated Accommodation on the stated date in accordance with the Notice
of Rollover/Switch.
3) Notification of Lenders. Upon receipt of a Notice of
Rollover/Switch, the Agent shall promptly notify by facsimile transmission each
Lender of (i) the proposed rollover/switch, (ii) the amount and type of
Accommodation to be made available by such Lender under the Revolving Credit on
the rollover/switch date, and (iii) the particulars of the account (as
designated by the Borrower to the Agent) to which the proceeds of any
Accommodation to be effected on the rollover/switch are to be credited.
4) Failure to Provide Notice of Rollover/Switch. In the event that the
Borrower does not provide the Agent with the required Notice of Rollover/Switch
in accordance with Section 2.7(1) for any rollover/switch of Accommodation, then
a duly completed Notice of Rollover/Switch shall be deemed to have been given
pursuant to Section 2.7(1) and such Accommodation shall be switched to (i) a
Prime Rate Loan for any amounts outstanding in Canadian Dollars on the
rollover/switch date or (ii) a US Base Rate Loan for all amounts outstanding in
US Dollars on the rollover/switch date.
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2.8 DISBURSEMENT - PRIME RATE LOANS, US BASE RATE LOANS AND LIBOR LOANS
Each Prime Rate Loan, US Base Rate Loan and LIBOR Loan made by a Lender
under the Revolving Credit will be made by such Lender crediting the applicable
funds to such account of the Agent as the Agent shall have designated to the
Lenders and the Agent will credit the applicable funds to the account of the
Borrower as the Borrower shall have designated to the Agent in same day funds
for same day value on the applicable drawdown, rollover or switch date.
2.9 DISBURSEMENT - BANKERS' ACCEPTANCES
1) Discounting. Each Banker's Acceptance (other than BA Equivalent
Notes) issued under the Revolving Credit shall be deemed to be discounted at the
BA Discount Rate applicable to such Lender plus the Applicable Margin in effect
at the time such Bankers' Acceptance is discounted. The Borrower shall provide
the Agent with written advice of the amounts of Banker's Acceptance proceeds to
be received from each Lender and each Lender will credit or transfer, as the
case may be, its proportionate share of the Banker's Acceptance proceeds so
determined to such account as is designated by the Agent and the Agent shall
credit the Bankers' Acceptance proceeds so determined to such account of the
Borrower as the Borrower shall have designated to the Agent in same day funds on
the applicable drawdown, rollover or switch date.
2) Non-Bank Lender. If a Lender is not a chartered bank under the Bank
Act (Canada) or if a Lender notifies the Agent in writing that it is unable or
unwilling to accept Bankers' Acceptances, such Lender will, instead of
discounting Bankers' Acceptances, purchase from the Borrower a non-interest
bearing note (a "BA EQUIVALENT NOTE"), in the form of Exhibit D, issued by the
Borrower in the amount and for the same term as the draft which such Lender
would otherwise have been required to discount hereunder, at a purchase price
calculated on the same basis as Bankers' Acceptances are discounted by the
Lender pursuant to Section 2.9(1). Each such Lender will credit or transfer, as
the case may be, the purchase price to such account as is designated by the
Agent and the Agent shall credit such amount to such account of the Borrower as
the Borrower shall have designated in same day funds on the applicable drawdown,
rollover or switch date.
2.10 EXISTING LETTERS OF CREDIT
CIBC has issued letters of credit at the request of the Borrower under
the Existing Credit Agreement and which will be outstanding as of the Closing
Date. Such letters of credit shall be deemed to be Accommodation obtained by the
Borrower from CIBC under the Letter of Credit Swingline Credit.
- 22 -
ARTICLE III
PRIME RATE LOANS, US RATE BASE LOANS AND LIBOR LOANS
3.1 RECORDING IN BOOKS AND RECORDS
The Borrower hereby authorizes the Agent and each Lender to record,
from time to time, in its books and records, the date and amount of
Accommodation made by it, the unpaid balance thereof, and all payments received
by the Agent on behalf of the Lender on account of the principal of such
outstanding Accommodation or interest thereon or otherwise and such other
information as it may see fit. All amounts so recorded shall be prima facie
evidence (absent manifest error) of such unpaid principal balance, interest and
other amounts owing hereunder. The failure to record, or any error in recording,
any such amount shall not, however, limit or otherwise affect the obligations of
the Borrower to repay the principal amount of the outstanding Accommodation
together with all interest accrued thereon and all other amounts owing
hereunder, nor shall the failure to record any payment result in the Borrower
owing any amount paid and not so recorded.
3.2 INTEREST
1) Prime Rate Loans. Each Prime Rate Loan will bear interest in Cdn.
Dollars as well after as before maturity, demand, default and judgement at a
variable rate per annum (calculated on the basis of a 365 or 366 day year) equal
at all times to the Prime Interest Rate plus the Applicable Margin in effect
from time to time which applicable rate per annum shall change automatically
without notice to the Borrower.
2) US Base Rate Loans. Each US Base Rate Loan will bear interest in US
Dollars as well after as before maturity, demand, default and judgement at a
variable rate per annum (calculated on the basis of a 365 or 366 day year) equal
at all times to the US Base Rate plus the Applicable Margin which applicable
rate per annum shall change automatically without notice to the Borrower.
3) LIBOR Loans. Each LIBOR Loan will bear interest in US Dollars as
well after as before maturity, demand, default and judgement at LIBOR
(calculated on the basis of a 360 day year) plus the Applicable Margin in effect
at the date of such LIBOR Loan.
3.3 PAYMENT OF INTEREST
Interest on Prime Rate Loans and US Base Rate Loans will accrue daily
and be payable by the Borrower directly to each Lender monthly in arrears on the
first Banking Day of each month following receipt of an invoice for such
interest from the applicable Lender, provided, however, that interest on each
other amount referred to in Section 3.6 and interest on overdue interest shall
be payable on demand. Interest on LIBOR Loans shall accrue daily and shall be
payable on the last Banking Day of each LIBOR Period, provided that where the
LIBOR
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Period exceeds three (3) months, interest shall be payable on the expiration of
each 90 day period during the term of the LIBOR Period and on the last day of
the LIBOR Period.
3.4 MAXIMUM RATE OF RETURN
Notwithstanding any provision to the contrary contained in this
Agreement, in no event will the aggregate "interest" (as defined in section 347
of the Criminal Code (Canada) payable under this Agreement exceed the effective
annual rate of interest on the "the credit advanced" (as defined in that
section) under this Agreement lawfully permitted under that section and, if any
payment, collection or demand pursuant to this Agreement in respect of
"interest" (as defined in that section) is determined to be contrary to the
provisions of that section, such payment, collection or demand will be deemed to
have been made by mutual mistake of the Borrower, the Agent and the Lenders and
the amount of such payment or collection will be refunded to the Borrower. For
purposes of this Agreement, the effective annual rate of interest will be
determined in accordance with generally accepted actuarial practices and
principles over the term of the Revolving Credit on the basis of annual
compounding of the lawfully permitted rate of interest and, in the event of
dispute, a certificate of a Fellow of the Canadian Institute of Actuaries
appointed by the Agent will be conclusive for the purposes of such
determination.
3.5 INTEREST ACT (CANADA)
The parties agree that for the purposes of the Interest Act (Canada),
(i) the principle of deemed reinvestment of interest will not apply to any
interest calculation under this Agreement, (ii) the rates of interest stipulated
in this Agreement are intended to be nominal rates, and not effective rates or
yields and (iii) whenever interest to be paid under this Agreement or under any
other Document is to be calculated on the basis of a period of time that is less
than a calendar year, the yearly rate of interest to which the rate determined
pursuant to such calculation is equivalent is the rate so determined multiplied
by the actual number of days in the calendar year in which the same is to be
ascertained and divided by such period of time.
3.6 INTEREST ON AMOUNTS OWING HEREUNDER
Notwithstanding Section 3.3, any amounts payable by the Borrower to the
Agent or any Lender under this Agreement or any other Document which are not
paid when due shall bear interest (as well after as before demand, maturity,
default or judgement), payable on demand, on the unpaid amount thereof from and
including the date of such non-payment until paid in full calculated (but not
compounded) daily at a nominal rate per annum equal to (a) the Prime Interest
Rate plus 2% for amounts due in Canadian Dollars and (b) the US Base Rate plus
2% for amounts due in US Dollars, which rates per annum shall change
automatically without notice to the Borrower as and when the Prime Interest Rate
or the US Base Rate, as applicable, shall change; provided that any amounts
disputed by the Borrower as payable may be paid by the
- 24 -
Borrower to the applicable Lender, and if such dispute is decided in favour of
the Borrower the amounts so paid will be returned to the Borrower, together with
interest at the rate of interest given by the applicable Lender for deposits of
a similar amount and for a similar duration, on demand.
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ARTICLE IV
GENERAL PROVISIONS RELATING TO LIBOR LOANS
4.1 GENERAL
1) Minimum LIBOR Loan. The principal amount of each LIBOR Loan shall be
at least US$3,000,000 and shall be a whole multiple of US$100,000 thereafter.
2) LIBOR Periods. In accordance with Sections 2.6 and 2.7, the Borrower
shall, prior to each draw by it which is to be a LIBOR Loan, notify the Agent of
the amount of such LIBOR Loan and the LIBOR Period which shall apply thereto;
provided that the Borrower shall not select LIBOR Periods which extend beyond
the Maturity Date.
4.2 EARLY TERMINATION OF LIBOR PERIODS
1) Breakage Costs. To the extent that a Lender is required to arrange
for early termination of any LIBOR Period, the Borrower shall reimburse the
Lender for all losses and out-of-pocket expenses incurred by it as a result of
the early termination of the LIBOR Period in question or as a result of entering
into the new arrangement to the extent that such losses and expenses result from
such payment. For such purpose, a certificate of the Lender setting out the
particulars of such losses and expenses shall, in the absence of manifest error,
be prima facie evidence of such losses or expenses. If any such early
termination or new arrangement cannot be effected by the Lender, the Borrower
shall continue to pay interest to such Lender in US Dollars at the rate
specified hereunder for LIBOR Loans upon an amount of US Dollars equal to the
amount of the principal repayment for the remainder of the then current LIBOR
Period.
4.3 INABILITY TO MAKE LIBOR LOANS
In the event that on any date a Lender determines in good faith (which
determination shall be conclusive) that its ability to make a requested LIBOR
Loan has become impracticable, unlawful or impossible, or has been materially
adversely affected because (a) of any change in Applicable Laws, or (b) of any
material adverse change in or the termination of the London Interbank
Eurocurrency Market for US Dollars, or (c) there exists no adequate and fair
means for ascertaining the LIBOR for any LIBOR Period for the LIBOR Loan, then
in any such case such Lender shall forthwith give notice thereof, including
reasonable particulars of the events or circumstances giving rise to the notice,
to the Borrower and the Agent (such notice to be given by telephone confirmed by
same day facsimile transmission), and thereafter and so long as such
circumstances continue, such Lender shall have no further obligation with
respect to such LIBOR Loan, provided that the Borrower may (i) if the requested
LIBOR Loan was requested pursuant to a Notice of Borrowing, obtain a drawdown
(other than by way of LIBOR Loan) pursuant to Section 2.6, or (ii) if the
requested LIBOR Loan was requested pursuant to a Notice of Rollover/Switch,
obtain another type of Accommodation pursuant to Section 2.7.
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4.4 INABILITY TO MAINTAIN LIBOR LOANS
In the event that on any date a Lender determines in good faith (which
determination shall be conclusive) that its ability to maintain an outstanding
LIBOR Loan has become impracticable, unlawful or impossible because (a) of any
change in Applicable Laws or (b) of any material adverse change in or the
termination of the London Interbank Eurocurrency Market for US Dollars, or (c)
the imposition of any condition, restriction or limitation upon such Lender by
an Official Body, then in any such case the Lender shall forthwith give notice
thereof, including reasonable particulars of the events or circumstances giving
rise to the notice to the Borrower and the Agent (such notice to be given by
telephone confirmed by same day facsimile transmission), and the Borrower shall,
subject to Section 4.6, forthwith repay to such Lender all outstanding LIBOR
Loans which have been made by such Lender to the Borrower together with all
unpaid interest accrued thereon to the date of repayment and all other expenses
incurred in connection with the termination (including any expenses resulting
from the termination of any LIBOR Period relating thereto in accordance with
Section 4.2(1)) provided that the Borrower may, without the requirement of a
Notice of Borrowing, upon delivery of the required Notice of Rollover/Switch,
switch such LIBOR Loan to a US Base Rate Loan, as applicable.
4.5 INCREASED COSTS
1) If the basis of taxation to a Lender of payments to be received by
it in respect of a LIBOR Loan or interest thereon is changed or there is imposed
or made applicable any reserve, capital adequacy or special deposit requirements
against any of the assets, deposits or accounts of such Lender or there is a
change in the interpretation or administration of Applicable Laws or regulations
by an Official Body or any condition, restriction or limitation is imposed upon
such Lender and the result of any of the foregoing is to increase the cost to
such Lender of making or maintaining such LIBOR Loan or to reduce the amount of
principal or interest payable in respect of such LIBOR Loan under this
Agreement, then the Borrower shall forthwith, upon request, pay to such Lender
as interest all amounts necessary to compensate such Lender for any such
increased cost, such principal or interest reduction or such other expense. The
Lender shall make reasonable efforts to reduce or avoid the imposition of such
increased costs and, for the purposes of this Section, a certificate of the
applicable Lender setting out particulars of the events or circumstances giving
rise to the request for the additional compensation and the calculation, in
reasonable detail, of the amounts payable by the Borrower shall, in the absence
of manifest error, be prima facie evidence thereof. Such certificate shall be
delivered to the applicable Borrower within thirty (30) Banking Days of the
Lender's determination, acting reasonably, that increased costs are payable
hereunder. Failure by a Lender to provide such certificate within the stated
period shall result in such Lender disentitling itself to compensation for any
period in excess of thirty (30) Banking Days prior to the day upon which such
certificate is given.
2) The obligation of the Borrower to pay the amounts referred to in
Section 4.5(1) will be subject to the following: (a) the Borrower will not
compensate any Lender for increased costs due to taxes on the overall net income
or capital of a Lender (otherwise than pursuant to applicable capital adequacy
rules); and (b) the Borrower will be treated no less favourably than other
customers of the Lender to whom the Lender is able to pass through such
increased costs.
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4.6 INDEMNITY
The Borrower unconditionally indemnifies each Lender against any loss
or expense (including, but not limited to, loss of profit relating to the
Lender's spread over its cost of funds) which it may sustain in employing
deposits to effect, fund or maintain a LIBOR Loan as a consequence of any
failure by the Borrower to make any payment when due. The Borrower
unconditionally further indemnifies each Lender against any loss or expense
(including but not limited to, loss of profit relating to the Lender's spread
over its cost of funds) which such Lender reasonably incurs as a result of the
failure of the Borrower to consummate any borrowing of which it has given notice
to the Agent. A certificate as to such cost, setting forth the calculations
therefor in reasonable detail, shall be promptly submitted by each such Lender
to the Borrower and shall be prima facie evidence of such costs and binding on
the Borrower save for manifest error. Such certificate shall be delivered to the
Borrower within thirty (30) Banking Days of the Lender's determination, acting
reasonably, that such costs are payable hereunder. Failure by the Lender to
provide such certificate within the stated period shall result in such Lender
disentitling itself to compensation for any period in excess of thirty (30)
Banking Days prior to the day upon which such certificate is given.
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ARTICLE V
BANKERS' ACCEPTANCES AND LETTERS OF CREDIT
5.1 GENERAL
Each Accommodation by way of Bankers' Acceptance tendered by the
Borrower for acceptance will be payable in Canada, will be for the minimum
aggregate principal amount of Cdn.$3,000,000, will be in a principal amount
which is a whole multiple of Cdn.$100,000 and will have a term of approximately
1, 2 or 3 months; provided that the Borrower shall not select Bankers'
Acceptance maturity dates which extend beyond the Maturity Date.
5.2 ACCEPTANCE
The Borrower will provide for each accepted draft at its maturity,
either by payment of the full principal amount thereof or through utilization of
the Revolving Credit in accordance with this Agreement or through a combination
thereof in accordance with this Agreement, provided that the Borrower is
otherwise entitled to a drawdown, rollover or conversion of Accommodation. The
obligation of the Borrower to pay the full principal amount of the maturing
Bankers' Acceptance shall not be prejudiced by the fact that the holder of any
such Bankers' Acceptance is the Lender that accepted such Bankers' Acceptance.
Any amount owing by the Borrower in respect of any Bankers' Acceptance which is
not paid in accordance with the foregoing will automatically be switched into a
Prime Rate Loan.
5.3 ACCELERATION
If the Agent has declared the obligations of the Borrower hereunder to
be immediately due and payable pursuant to Section 11.2, the Borrower will
forthwith pay to the Agent for deposit to an escrow account maintained by the
Agent an amount equal to the Lenders' maximum potential liability under
outstanding Bankers' Acceptances. Such amount will be held by the Agent for
set-off against future indebtedness owing by the Borrower to such Lenders in
respect of such Bankers' Acceptances, and pending such application will bear
interest at the rate declared by the Agent from time to time as that payable by
it in respect of thirty-day certificates of deposit for such amount.
5.4 CHANGE IN CIRCUMSTANCES
1) If the basis of taxation to a Lender of payments, including interest
and fees, to be received by it in respect of a Bankers' Acceptance or Letter of
Credit is changed or there is imposed or made applicable any reserve or capital
adequacy requirements or special deposit requirements against any of the assets,
deposits or accounts of a Lender or there is a change in the interpretation or
administration of Applicable Laws or regulations by competent authorities or any
condition, restriction or limitation is imposed upon a Lender and the result of
any of the foregoing is to increase the cost to a Lender of making or
maintaining such Bankers' Acceptance or Letter of Credit or to reduce the amount
of principal or any fee payable with respect to such
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Bankers' Acceptance or Letter of Credit, then the Borrower shall forthwith, upon
request, pay to such Lender all amounts necessary to compensate it for any such
increased cost, such principal or fee reduction or such other expense. The
Lender shall make reasonable efforts to reduce or avoid the imposition of such
increased costs and, for the purpose of this Section, a certificate of the
Lender setting out the particulars of the calculation in reasonable detail of
the amounts payable by the Borrower will, in the absence of manifest error, be
prima facie evidence thereof. Such certificate shall be delivered within thirty
(30) Banking Days of the Lender's determination, acting reasonably, that
increased costs are payable hereunder. Failure by a Lender to provide such
certificate within the stated period shall result in such Lender disentitling
itself to compensation for any period in excess of thirty (30) Banking Days
prior to the day upon which such certificate is given.
2) The obligation of the Borrower to pay the amounts referred to in
Section 5.4(1) will be subject to the following: (a) the Borrower will not
compensate any Lender for increased costs due to taxes on the overall net income
or capital of a Lender (otherwise than pursuant to applicable capital adequacy
rules); and (b) the Borrower will be treated no less favourably than other
customers of the Lender to whom the Lender is able to pass through such
increased costs.
5.5 PROVISIONS OF BANKERS' ACCEPTANCES
The Borrower shall provide to each Lender an appropriate number of
executed drafts drawn by the Borrower upon the Lender and endorsed by the
Borrower as payee, in the form prescribed by the Lender for Bankers' Acceptances
denominated in Dollars. The dates, maturity dates and principal amounts of all
drafts delivered by the Borrower shall be left blank, to be completed by the
Lender as required hereby.
5.6 POWER OF ATTORNEY FOR BANKERS' ACCEPTANCES
Notwithstanding Section 5.5, bills of exchange of the Borrower to be
accepted as Bankers' Acceptances hereunder may be signed by each Lender as the
attorney of the Borrower. In this regard, the Borrower hereby irrevocably
appoints each Lender as its attorney to sign and endorse on its behalf, manually
or by facsimile or by mechanical signature, any bills of exchange to be accepted
as Bankers' Acceptances hereunder. All Bankers' Acceptances signed or endorsed
on the Borrower's behalf by a Lender shall be binding on the Borrower as if duly
executed and issued by the Borrower.
5.7 OUTSTANDING BANKERS' ACCEPTANCES ON AN EVENT OF DEFAULT
If any Bankers' Acceptance is outstanding at any time that an Event of
Default occurs, the Borrower shall forthwith upon demand by the Agent pay to the
Agent for the benefit of the Lenders, for the account of the holder of such
Bankers' Acceptance, Dollars in an amount equal to the face amount thereof. Such
funds (together with interest thereon) shall be held by the applicable Lender
for payment of the liability of the Borrower in respect of such Bankers'
Acceptance, and shall bear interest for such terms as are selected from time to
time by the Lender at the wholesale money market rate of the Lender for deposits
of similar amounts and maturities.
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5.8 LETTERS OF CREDIT
1) The Lenders as selected from time to time by the Borrower will issue
Letters of Credit under the Letter of Credit Swingline Credit on behalf of the
Borrower upon being satisfied as to the purpose, terms, conditions and
beneficiaries thereof and upon execution by the Borrower of the applicable
Lender's usual forms. Each Letter of Credit may be for periods of up to one year
from date of issue; provided that no such period shall extend beyond the
Maturity Date.
2) The Borrower shall pay to each Lender issuing a Letter of Credit, an
issuance fee in respect of such Letter of Credit at the rate agreed upon between
the Borrower and such Lender. Issuance fees in respect of Letters of Credit
shall be calculated on the maximum daily liability of the Lender under the
Letter of Credit and shall be payable in advance.
3) The Borrower shall forthwith reimburse each Lender for any payment
made by such Lender pursuant to a Letter of Credit, either by payment thereof in
full or through utilization of the Credits in accordance with this Agreement or
through a combination thereof.
4) If any Letter of Credit is outstanding at any time that an Event of
Default occurs, the Borrower shall forthwith upon demand by the Agent pay to the
Agent for the benefit of the Lenders who have issued the outstanding Letters of
Credit, Dollars in an amount equal to the face amount of such Letters of Credit.
Such funds (together with interest thereon) shall be held by the applicable
Lender for payment of the liability of the Borrower in respect of such Letters
of Credit, and shall bear interest for such terms as are selected from time to
time by the Lender at the wholesale money market rate of the Lender for deposits
of similar amounts and maturities.
5) Each Lender shall be entitled to honour each demand made under a
Letter of Credit in accordance with the terms thereof without inquiring as to
the propriety, sufficiency or genuineness of any such demand.
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ARTICLE VI
FEES AND INDEMNITIES, ETC.
6.1 FEES
The Borrower will pay such fees to the Agent and to the Lenders as
agreed by the Borrower separately with the Agent and with each of the Lenders by
agreement in the form attached hereto as Exhibit F.
6.2 REGULATORY CHANGE INDEMNITY
1) If any regulatory change imposes, modifies or deems applicable any
capital adequacy, capital maintenance or similar requirement, (a "REGULATORY
CHANGE") and as a result thereof, in the opinion of a Lender acting reasonably,
the rate of return on such Lender's capital as a consequence of its obligations
hereunder is reduced to a level below that which such Lender could have achieved
but for such circumstances, then the Borrower shall pay to such Lender such
additional amount or amounts as will compensate such Lender for such reduction
in rate of return. If any Lender shall give notice pursuant to this Section, the
Agent at the request of the Borrower shall make reasonable efforts to assist the
Borrower to replace such Lender hereunder. For the purpose of this Section, a
certificate of the Lender setting out the particulars of the calculation of the
amounts payable by the Borrower and certifying that such calculation has been
applied similarly to all such Lender's customers similarly affected will, in the
absence of manifest error, be prima facie evidence thereof.
2) The obligation of the Borrower to pay the amounts referred to in
Section 6.2(1) will be subject to the following: (a) the Borrower will not
compensate the Agent or any Lender for increased costs due to taxes on the
overall net income or capital of such Lender (otherwise than pursuant to
applicable capital adequacy rules); (b) the Borrower will only be responsible
for costs incurred after the date that written notice of capital adequacy
requirements is received, such notice to include reasonable details of the
increased costs; and (c) the Borrower will not compensate the Agent or any
Lender for costs that are already a factor in determining the basis of the
interest rates or fees charged.
6.3 CURRENCY INDEMNITY
Any payment on account of an amount payable hereunder in a specified
currency made to or for the account of the Agent or any Lender in a currency
other than the specified currency (whether voluntarily or pursuant to a
judgement or order of a court or tribunal of any jurisdiction or otherwise)
shall constitute a discharge of the Borrower's indebtedness and liabilities to
the Agent and the Lenders only to the extent of the amount of the specified
currency which the Agent, the Lenders or any of them as the case may be, is/are
able, on the date of receipt of such payment, to purchase in Toronto, Ontario
with the amount so received by it/them. If the amount of the specified currency
which the Agent, the Lenders or any of them is/are so
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able to purchase is less on such date than the amount of the specified currency
originally due to it/them, the Borrower unconditionally indemnifies and saves
the Agent and each Lender harmless from and against any loss or damage arising
as a result of such deficiency other than any loss or damage due to such
Person's gross negligence or wilful misconduct. This indemnity shall constitute
an obligation separate and independent from the other obligations contained in
this Agreement, shall give rise to a separate and independent cause of action,
shall apply irrespective of any indulgence granted by the Agent or any of the
Lenders from time to time and shall continue in full force and effect
notwithstanding any judgement or order for a liquidated sum in respect of an
amount due hereunder or under any judgement or order.
6.4 ENVIRONMENTAL INDEMNITY
The Borrower unconditionally indemnifies and holds harmless the Agent
and each of the Lenders and their directors, officers, employees and agents in
respect of any costs, losses, damages, expenses, judgements, suits, claims,
awards, fines, sanctions and liabilities whatsoever (including any reasonable
costs or expenses of defending or denying the same and including the reasonable
costs or expenses of preparing any necessary environmental assessment report or
other such reports required for such defense) both (i) arising as a result of
the Agent and the Lenders arranging or providing the Credits to the Borrower and
(ii) arising out of, or in respect of: (a) any release, deposit, discharge or
disposal of any hazardous or toxic materials, pollutants, contaminants, waste or
other substances in violation of Environmental Laws in connection with the
Borrower's property or business; and (b) the remedial action (if any) taken by
any of the Agent or the Lenders in respect of any such release, deposit,
discharge or disposal. This indemnity will survive the repayment or cancellation
of the Credits or any termination of this Agreement.
6.5 GENERAL INDEMNITY
The Borrower unconditionally indemnifies and holds harmless the Agent
and each of the Lenders and their directors, officers, employees and agents
(each an "Indemnified Person") in respect of any costs, losses, damages,
expenses, judgements, actions, suits, proceedings, claims, awards, fines,
sanctions and liabilities whatsoever (including reasonable costs or expenses of
investigating, defending or denying the same and including the reasonable costs
or expenses of preparing any reports for such investigation, defense or denial,
whether or not such Indemnified Person is a party to any action, suit or
proceeding out of which any such costs or expenses arise) as a result of or
arising out of or in any way related to or resulting from the establishment of
the Credits or the making of any Accommodation under the Credits, provided that
the Borrower shall not be obliged to indemnify any Indemnified Person for any
such costs, losses, damages, expenses, judgements, suits, claims, awards, fines,
sanctions and liabilities where such costs, losses, damages, expenses,
judgements, suits, claims, awards, fines, sanctions and liabilities have been
determined by a court of competent jurisdiction to have arisen as a result of or
from the gross negligence or wilful misconduct of any Indemnified Person.
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6.6 NATURE OF INDEMNITIES
1) Survival of Indemnity. Notwithstanding any other provision of this
Agreement or the other Documents, the indemnities in favour of the Agent and/or
the Lenders referred to in this Agreement and in the other Documents shall
survive the repayment, cancellation or termination of the Credits and shall
continue in full force and effect so long as the possibility of any such
liability, claim or loss exists and shall apply notwithstanding any knowledge
which the Agent or any Lender may have relating to such liabilities, claims or
losses, either now or in the future.
2) Indemnity Separate. The indemnities in favour of the Agent and/or
the Lenders referred to in this Agreement and in the other Documents shall each
constitute an obligation separate and independent from the other obligations
contained in this Agreement, shall give rise to a separate and independent cause
of action, and shall apply irrespective of any indulgence granted by the Agent
or any Lender from time to time. A separate action or actions may be brought and
prosecuted against the Borrower in respect of each such indemnity, whether or
not any action is brought against any other Person or whether or not any other
Person is joined in such action or actions.
- 34 -
ARTICLE VII
REPAYMENT AND PREPAYMENT
7.1 REPAYMENT OF CREDITS
1) The Revolving Credit. Amounts borrowed under the Revolving Credit
may be repaid at any time upon the Borrower providing to the Agent the written
notice set out for borrowings for such Accommodation under Section 2.6(1),
provided that all of the following conditions are met:
(i) each repayment by the Borrower other than in respect of a
Prime Rate Loan or a US Base Rate Loan is in a minimum amount
of Cdn$3,000,000 or US$3,000,000, as applicable, and in whole
multiples of Cdn$100,000 or US$100,000, as applicable,
thereafter;
(ii) any repayment by the Borrower of a Prime Rate Loan or a US
Base Rate Loan is in a minimum amount of Cdn$1,000,000 or
US$1,000,000, as applicable and in whole multiples of
Cdn$100,000 or US$100,000, as applicable thereafter;
(iii) any repayment of LIBOR Loans shall be subject to Section 4.2;
and
(iv) any repayment of a Bankers' Acceptance must be made on the
maturity of such Bankers' Acceptance.
Amounts so repaid may be reborrowed from time to time in accordance with the
provisions of this Agreement.
2) Maturity Date. Subject to Article 11, the Borrower will repay all
Accommodation outstanding under the Credits, together with all unpaid and
accrued interest thereon and all amounts relating thereto hereunder, on the
Maturity Date.
3) LIBOR Loans. The Borrower shall repay to the Agent on behalf of the
Lenders all outstanding LIBOR Loans for which it is liable under the Revolving
Credit on the expiration of the relevant LIBOR Periods but shall be entitled
from time to time to obtain further LIBOR Loans or other Accommodation from the
applicable Lenders in accordance with this Agreement.
4) Bankers' Acceptances. The Borrower shall redeem at maturity all
outstanding Bankers' Acceptances issued on its behalf but shall be entitled from
time to time to obtain further Accommodation by way of Bankers' Acceptances or
other Accommodation in accordance with this Agreement.
- 35 -
7.2 CURRENCY OF REPAYMENTS
Each repayment will be made in the currency or currencies of the
Accommodation being repaid.
- 36 -
7.3 EXCEEDING LIMIT OF CREDIT
If the Canadian Dollar Amount of aggregate amount of Accommodation
outstanding at any time under the Revolving Credit exceeds the maximum amount of
the Revolving Credit at such time taking into consideration Section 2.3(2)
(regardless of the manner in which such event occurred) and such excess is
outstanding for 3 Banking Days, the Borrower will immediately repay such excess
to the Agent so that the amount of all Accommodation outstanding under the
Revolving Credit does not at any time exceed the limit of such Credit at such
time.
7.4 AUTOMATIC DEBIT
The Borrower authorizes and directs the Agent to automatically debit,
by electronic or manual means, the account of the Borrower as the Borrower shall
have designated to the Agent and any other bank account of the Borrower for any
principal, interest, fees, or other amounts from time to time payable by the
Borrower under or in respect of any and all of the Documents.
7.5 CANCELLATION OF COMMITMENT
The Borrower may at any time and from time to time, upon five (5) days
prior written notice to the Agent, permanently cancel any undrawn portion of the
Lenders' aggregate Commitments for the Revolving Credit in a minimum amount of
$3,000,000 and in whole multiples of $1,000,000 thereafter, in which case the
Commitment of each Lender will be reduced, as of the commencement of the next
Banking Day, by an amount which equals that proportion of the sum so specified
by the Borrower which such Lender's Commitment is of the maximum principal
amount of Accommodation available under the Revolving Credit.
7.6 PAYMENTS
Except as specifically provided in this Agreement, all payments under
the Revolving Credit will be made to the Agent on behalf of the Lenders on a pro
rata basis in accordance with each Lender's share of the total Accommodation
outstanding under such Credit immediately before such repayment.
7.7 EXTENSION OF MATURITY DATE
At least 60 days but not more than 90 days prior to the Maturity Date,
the Borrower shall be entitled to request, by written notice to the Agent with
such notice to be accompanied by the business plan referred to in Section
10.4(3)(a)(ii), that the Maturity Date be extended by a further period of 364
days. If all Lenders confirm to the Agent, in writing, not less than 30 days
prior to the Maturity Date, that the extension is acceptable to them, the
Maturity Date shall be extended to that date which is 364 days from the date of
receipt by the Agent of the written consent to the extension from all of the
Lenders and the Agent shall so advise the Borrower.
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If a Lender should fail to provide any written notice to the Agent prior to the
date which is 30 days prior to the Maturity Date, it shall be deemed to have
declined the extension. If one or more Lenders has declined or be deemed to have
declined the proposed extension, the Agent shall so advise the Borrower and the
Maturity Date shall not be extended.
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ARTICLE VIII
SECURITY
8.1 SECURITY
The present and future indebtedness and liability (including in respect
of fees and expenses) of the Borrower to the Agent and the Lenders under this
Agreement and under any Foreign Exchange Contracts will be secured by the
following:
(a) a general security agreement granting to the Agent a first
ranking security interest in all of the Borrower's present and
future inventory and accounts receivable;
(b) an assignment under Section 427 of the Bank Act (Canada) in
favour of each Lender which is chartered under such Act; and
(c) all policies of insurance issued to the Borrower with respect
to accounts receivable and inventory with loss payable clauses
in favour of the Agent.
8.2 FORM, SUBSTANCE AND REGISTRATION OF SECURITY
The Security and all acknowledgements referred to in this Section will
be in such form and forms and the Security will be registered in such
jurisdictions, as the Agent may from time to time reasonably require. If
required, the Borrower will provide to the Agent security by way of a debenture
if in the reasonable opinion of the Agent such security is required to secure
inventory for the benefit of all of the Lenders in those jurisdictions which do
not have Personal Property Security Act legislation.
8.3 AFTER ACQUIRED PROPERTY AND FURTHER ASSURANCES
The Borrower shall from time to time, execute and deliver all such
further deeds or other instruments of conveyance, assignment, transfer,
mortgage, pledge or charge in connection with its accounts receivable and
inventory acquired by the Borrower after the date hereof and intended to be
subject to the Security and shall take all other action as reasonably required
to give the Agent and the Lenders the Security contemplated hereby as the Agent
may from time to time reasonably request.
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8.4 GENERAL
Nothing herein contained or in any Security now held or hereafter
acquired by the Lenders or the Agent on behalf of the Lenders, nor any act or
omission of the Agent or the Lenders with respect to any such Security, will in
any way prejudice or affect the rights, remedies or powers of the Agent and the
Lenders with respect to any other Security at any time held by the Agent or the
Lenders.
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ARTICLE IX
REPRESENTATIONS AND WARRANTIES
9.1 REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Agent and each of the
Lenders as follows:
1) Due Incorporation, etc. The Borrower is a corporation duly
incorporated and validly subsisting under the laws of Alberta. The Borrower is
duly qualified to carry on its business in each jurisdiction where the nature of
any material assets owned by it or where any business carried on by it that is
material to its financial condition makes such qualification necessary.
2) Qualification, Licences etc. The Borrower has obtained, maintained
and is in good standing with respect to, all required licences, permits and
approvals from any and all Official Bodies and all applicable stock exchange and
securities commission rules required in respect of its property and operations
and the listing of its securities which are material to the financial condition
of the Borrower. The Borrower has made all filings required under Applicable
Laws which are material to the operation of its business.
3) Corporate Power. The Borrower has the corporate power and authority
to own its properties and to carry on its businesses as presently carried on by
it and to enter into and perform its obligations under the Documents.
4) Compliance with Laws, Regulations, etc. The Borrower is conducting
its business and operations in compliance in all material respects with all
Applicable Laws and all applicable stock exchanges and securities commission
rules.
5) Environmental Compliance. Except as disclosed in Schedule B, as such
Schedule may be amended from time to time by written notice given by the
Borrower to the Agent and the Lenders, the Borrower has received no notice, nor,
is it aware that its business or operations are not in material compliance with
all applicable Environmental Laws and the properties of the Borrower comply in
all material respects with all Environmental Laws.
6) Due Execution, etc. Each Document has been duly authorized, executed
and delivered by the Borrower and constitutes a legal, valid and binding
obligation of the Borrower, enforceable against it in accordance with its terms,
subject to applicable bankruptcy, insolvency, moratorium and similar laws
affecting the rights of creditors generally, and equitable principles which may
limit the availability of certain remedies including the remedy of specific
performance.
7) Consents etc. No consent, approval or authorization of, or
declaration, registration, filing or qualification with, or giving of notice to,
or taking of any other action in
- 41 -
respect of, any Official Body or stock exchange or securities commission or any
other Person is required in connection with the execution, delivery or
enforcement of the Documents or the performance thereof or the consummation of
any of the transactions contemplated thereby.
8) No Default Caused. Neither the execution nor the delivery of any
Document, the consummation of the transactions therein contemplated, nor
compliance with the terms, conditions and provisions thereof, conflicts with, or
will conflict with, or results or will result in, any breach of, or
contravention of, or constitutes a default (or which would constitute such a
default or event of default with the giving of notice, the lapse of time, or
both) under any of the provisions of (i) the Constating Documents of the
Borrower; (ii) any material agreement or instrument to which the Borrower is a
party or by which it or any of its property or assets are bound; (iii) any
judgement or order, writ, injunction, decree or demand of any Official Body;
(iv) any licence or permit held by the Borrower; or (v) any law or rule or
regulation to which the Borrower or its property or assets are subject; or (vi)
results or will result in the creation or imposition of any Lien upon any of its
property or assets, nor will such execution or delivery constitute an event
permitting termination of any material agreement, consent, licence or instrument
to which the Borrower is a party or its property or assets are subject.
9) No Event of Default. No event has occurred which constitutes a
Default or an Event of Default nor will any such Default or Event of Default
occur by reason of the Borrower entering into any Document to which it is a
party or performing its obligations thereunder or entitling itself to any
benefits available to it thereunder or the completion of any of the transactions
contemplated thereunder.
10) Subsidiaries. The Borrower has no Subsidiaries.
11) Financial Statements. The Borrower has furnished the Agent with its
most recent annual and quarterly financial statements; all such financial
statements have been prepared in accordance with GAAP applied on a consistent
basis during such period; and each balance sheet as therein contained presents
fairly the financial position of the Borrower as at the date thereof; and each
statement of profit and loss as therein contained presents fairly the results of
the Borrower's operations for the periods indicated;
12) Material Adverse Change. Since the date of the most recent annual
and quarterly financial statements, (i) there has been no Material Adverse
Change in the financial condition of the Borrower as shown on its balance sheet
as at that date; and (ii) the business, operations and assets of the Borrower
have not been materially adversely affected as a result of any act or event
including fire, explosion, casualty, flood, drought, riot, storm, condemnation,
act of God, accident, labour trouble, expropriation or act of any government.
13) Disclosure. Neither the financial statements referred to above, nor
any other statement or report furnished to the Agent by or on behalf of the
Borrower or in connection with the negotiation or confirmation of the
transactions contemplated herein contain, as at the time such statements were
furnished, any untrue statement of a material fact or any omission of a material
fact necessary to make the statements contained therein not misleading, and all
such
- 42 -
statements and reports, taken as a whole together with this Agreement and the
Security, do not contain any untrue statement of a material fact or omit a
material fact necessary to make the statements contained herein or therein not
misleading.
14) Title to Properties. The Borrower is the sole registered, legal and
beneficial owner of all of its properties, real and personal, and has good and
marketable title (or good and marketable leasehold interest with respect to
leased property) to all of its real property (including fixtures), and good and
marketable title (or good and marketable leasehold interest with respect to
leased personal property) to all of its personal property, free of all Liens
except Permitted Liens.
15) Intellectual Property Rights by License or Otherwise. The Borrower
has, by license or otherwise, all patents, trade-marks, trade names, service
marks, copyrights, industrial designs, inventions, technology and other similar
rights and all rights for the use of any patents, trade-marks, trade names,
service marks, copyrights, industrial designs, inventions, technology or other
similar rights which are material and necessary to carry on the business of the
Borrower.
16) Condition of Assets. All of the material assets and material
properties of the Borrower which are necessary for the operation of its business
are, in all material respects, in good working condition for such operation,
ordinary wear and tear excepted, and are able to serve the function for which
they are currently being used.
17) Litigation. There are no actions, suits or proceedings pending or
threatened against or affecting the Borrower at law or in equity or before or by
any governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, or before any arbitrator of any kind,
which would result in any Material Adverse Change in the business, operations,
prospects, properties, assets or condition, financial or otherwise, of the
Borrower, or in the ability of the Borrower to perform its obligations under the
Documents or any agreement or instrument delivered pursuant hereto or thereto;
and the Borrower is not aware of any existing ground on which any such action,
suit or proceeding might be commenced with any reasonable likelihood of success;
and the Borrower is not in default with respect to any judgement, order, writ,
injunction, decree, award, rule or regulation of any court, arbitrator or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, which, either separately or in the aggregate, would result
in any such Material Adverse Change, other than as set out in Schedule C.
18) Truth and Accuracy. As of the respective dates that they were
furnished, no information, statement or report furnished by or on behalf of the
Borrower to the Agent or any Lender contains any untrue statement of a material
fact, or omitted as of such time, a material fact necessary to make such
information, statement or reports not misleading.
19) Taxes. The Borrower has filed all tax returns which, to the
knowledge of the Borrower, are required to have been filed, has paid all taxes
shown to be due and payable on such returns or on any assessments made against
it or any of its property and all other taxes, fees or other charges imposed on
it or any of its property by any Official Body (other than those the
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amount or validity of which is currently being contested in good faith by
appropriate proceedings and with respect to which reserves in conformity with
GAAP have been provided on its books) and no tax liens have been filed and, to
the knowledge of the Borrower, after due inquiry, no claims are being asserted
with respect to any such taxes, fees or other charges.
20) Insurance. The Borrower maintains insurance for its assets and
businesses, including business interruption insurance, in such amount, against
such risks and with such deductibles as are generally maintained by companies
carrying on a business comparable to that carried on by the Borrower which
policies pertaining to the Borrower's inventory and accounts receivable contain
mortgage and loss payable clauses in favour of the Agent.
21) Material Agreements. All of the Material Agreements are in good
standing.
9.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
All representations and warranties made by the Borrower in this
Agreement and in any other Document are material and shall be deemed to have
been relied upon by the Agent and the Lenders, notwithstanding any independent
investigation heretofore or hereafter made by the Agent or any of the Lenders,
and shall continue in full force and effect, notwithstanding the date any
Accommodation is made, for so long as any amount remains unpaid to any of the
Agent or any of the Lenders pursuant to the terms of this Agreement or any other
Document.
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ARTICLE X
COVENANTS
10.1 AFFIRMATIVE COVENANTS
The Borrower covenants and agrees with the Agent and each of the
Lenders that, so long as this Agreement is in force and except as otherwise
permitted by the prior written consent of the Required Lenders, it will:
1) Corporate Existence. Do or cause to be done all things necessary to
keep in full force and effect its corporate existence and all properties,
rights, franchises, licenses and qualifications necessary to carry on its
business or own property in each jurisdiction in which it carries on business or
owns property.
2) Compliance with Laws, etc. Comply with its Constating Documents and
all Applicable Laws (including Environmental Laws) and all applicable stock
exchange and securities commission rules and obtain and maintain in good
standing all licenses, permits and approvals from any and all Official Bodies
and all applicable stock exchanges and securities commissions required in
respect of its operations and the listing of its securities.
3) Use of Credits. Use Accommodation obtained under the Credits only
for the purposes set out in Section 2.2.
4) Payment. Duly and punctually pay or cause to be paid to the Agent
and all Lenders all principal, interest, fees and other amounts payable by it
hereunder and under the other Documents on the dates, at the places and in the
monies and manner set forth herein and therein.
5) Maintenance of Properties, Etc. Maintain and preserve all of its
material properties, assets and undertaking necessary in the proper conduct of
its business in good working order and condition in all material respects
(ordinary wear and tear, obsolescence and redundancy excepted), and defend its
title to such property against the claims of all Persons other than holders of
Permitted Liens.
6) Obligations and Taxes. Pay or discharge, or caused to be paid or
discharged, before the same shall become delinquent (i) all Taxes imposed upon
it or upon its income or profits or in respect of its business or property and
file all tax returns in respect thereof, (ii) all lawful claims for labour,
materials and supplies which, if unpaid, may by Applicable Law become a Lien
upon the property and assets of the Borrower, except any such tax or claim which
is being contested in good faith and by proper proceeding and with respect to
which a reserve in conformity with GAAP has been provided on its books.
7) Insurance. Maintain insurance of such types, in such amounts and
against such risks as is prudent for a business carrying on the business carried
on by it of an established
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reputation with financially sound and reputable insurers with the policies
pertaining to the Borrower's inventory containing loss payable and mortgage
clauses in favour of the Agent.
8) Senior Notes. Comply with all of the obligation and requirements of
the Borrower under the Senior Notes.
10.2 NEGATIVE COVENANTS OF THE BORROWERS
The Borrower covenants with the Agent and each of the Lenders that, so
long as this Agreement is in force and except as otherwise permitted by the
prior written consent of the Required Lenders, it will not:
1) Business. Engage in any business other than as presently carried on
by the Borrower and shall continue to conduct and operate such business in a
proper, efficient and business-like manner and will not incorporate or acquire
any Subsidiaries.
2) Liens. Create, assume or permit to exist over all or any part of its
business or assets, whether now owned or hereafter acquired, any Lien other than
Permitted Liens.
3) Sale of Assets. Sell, lease, assign, transfer or otherwise dispose
of or enter into any agreement to sell, lease, assign, transfer or dispose of,
any assets, other than its inventory, whether now owned or hereafter acquired,
which in any fiscal year, exceeds $5,000,000.
4) Fiscal Year. Change its fiscal year end.
5) Reorganization. Enter into any corporate transaction (or series of
transactions) (whether by way of reconstruction, reorganization, consolidation,
amalgamation, merger or otherwise) whereby all or substantially all of its
undertaking, property and assets would become the property of any other Person
or in the case of any such amalgamation, the property of the continuing
corporation.
6) Capital Expenditures. Incur Capital Expenditures in any consecutive
four fiscal quarters of the Borrower in excess of $6,000,000 for Maintenance
Capital Expenditures and for other capital expenditures in excess of the amount
indicated in the forecast of the Borrower dated March 13, 2001 provided by the
Borrower to the Agents and the Lenders.
7) Investments, Etc. Make any investments, acquisitions, asset
purchases other than current assets, loans, advances or guarantees, whether
inter-company, with an affiliate, with a shareholder or otherwise which in
aggregate exceed more than $5,000,000 in any fiscal year.
8) Additional Debt. Incur any additional Indebtedness for borrowed
money other than by way of Senior Notes outstanding at the Closing Date, by way
of Indebtedness secured by Purchase Money Liens to the extent such Purchase
Money Liens are Permitted Liens or by way of Subordinated Debt.
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9) Distributions. Pay any dividends or make any other distributions
including by way of redemption or purchase of shares, to its shareholders in any
fiscal year.
10) Amendment. Amend any of its Constating Documents, by-laws or
Material Agreements in a manner which would be prejudicial to the interest of
the Lenders.
11) Foreign Exchange Contracts. Have outstanding at any time Foreign
Exchange Contracts in an aggregate amount which exceeds US$80,000,000.00.
12) Senior Notes. Not redeem, purchase or prepay any of the Senior
Notes.
10.3 FINANCIAL COVENANTS
The Borrower covenants with the Agent and each of the Lenders that, so
long as this Agreement is in force and except as otherwise permitted by the
prior written consent of the Required Lenders, it will:
(i) Ensure that the Fixed Charge Coverage Ratio will be no less
than 1.0:1;
(ii) Maintain a Working Capital Ratio of no less than 1.75:1 for
each of its fiscal quarters.
The above tests will be calculated in each Compliance Certificate delivered to
the Agent pursuant to Section 10.4(2)(iii).
10.4 ACCOUNTING, FINANCIAL STATEMENTS AND OTHER INFORMATION
1) Maintenance of Records. The Borrower shall maintain a system of
accounting established and administered in accordance with GAAP consistently
applied, and will set aside on its books all such proper reserves as such
accounting principles shall require. The Borrower shall permit for the purposes
of this Agreement the Agent to visit and inspect, at the expense of the Agent or
Lender, any properties of the Borrower, to examine the books, financial records
and other records thereof (whether paper, electronic or otherwise) and to
examine all or any aspect of the operations of the Borrower, all at such
reasonable times and as often as may reasonably be requested by the Agent, and
the Borrower, agrees to answer any reasonable inquiries related to such
examinations or inspections which the Agent or any Lender may have. The Agent
shall have no duty to make any such visits, inspections or examinations nor
shall it incur any liability or obligation (other than in respect of the costs
and expenses related thereto) or lose any rights for not making the same.
2) Financial Reports. The Borrower shall furnish to the Agent with
sufficient copies for all of the Lenders:
(i) Annual Audited Financial Statements. Promptly upon
availability and in any event within 120 days after the end of
each fiscal year of the Borrower, the annual audited financial
statements of the Borrower
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prepared on a consolidated basis in accordance with GAAP
applied on a consistent basis, and setting forth in
comparative form the corresponding figures for the preceding
fiscal period of the Borrower, all in reasonable detail, and
reported upon by the Auditors;
(ii) Unaudited Quarterly Financial Statements. Promptly upon
availability and in any event within 60 days after the end of
each of the first three fiscal quarters in each fiscal year of
the Borrower, the quarterly unaudited financial statements of
the Borrower (including a balance sheet and statements of
profit and loss and cashflows for such fiscal quarter)
prepared on a consolidated basis in accordance with GAAP
applied on a consistent basis, and setting forth in
comparative form the corresponding figures for the previous
fiscal year, all in reasonable detail and certified by a
senior financial officer of the Borrower; and
(iii) Quarterly Compliance Certificates. Together with each delivery
of unaudited quarterly financial statements pursuant to
Section 10.4(2)(ii), and with each delivery of annual audited
financial statements pursuant to Section 10.4(2)(i), a
Compliance Certificate, stating that (a) the signers have
reviewed the relevant terms of the Documents, (b) the signers
do not have knowledge of the existence, as at the date of such
certificate, of any condition or event which constitutes a
Default or an Event of Default, or if any such condition or
event existed or exists, specifying the nature and period of
existence thereof and the action which the Borrower has taken
or proposes to take with respect thereto, (c) the
representations and warranties contained in Section 9.1 are
true and correct in all material respects as of the date of
the certificate or, if untrue or incorrect as of such date,
providing a list of the representations and warranties which
are untrue or incorrect, a description in reasonable detail of
the circumstances or events which result in the
representations and warranties being untrue or incorrect and
an amendment to each Schedule related to the representations
and warranties which requires amendment in order to be
accurate and correct and (d) demonstrating, in reasonable
detail, compliance with the Financial Covenants.
3) Notices and Other Information.
(a) The Borrower shall furnish to the Agent and each Lender:
(i) Reports and Filings. As soon as available, copies of
all proxy circulars, information circulars, offering
circulars, material change reports and any other
report or information provided by it to a securities
commission or stock exchange, and copies of all of
its press releases;
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(ii) Annual Business Plan. At such time as required under
Section 7.7 an annual business plan for the following
fiscal year which will include, an income statement,
balance sheet, statement of changes in financial
position, the assumptions on which the business plan
is based and disclose in reasonable detail the
Borrower's projected Capital Expenditures on a
consolidated basis;
(iii) Borrowing Base. Promptly upon availability and in any
event within 30 days after the end of each month, an
aged listing of Eligible Accounts Receivable and
Eligible Inventory along with the calculation of the
then available Borrowing Base and such other
supporting documents as the Lenders may reasonably
request;
(b) The Borrower shall furnish to the Agent and the Lenders:
(i) Default or Event of Default. Promptly upon any senior
officer of the Borrower obtaining knowledge of any
condition or event which constitutes a Default or an
Event of Default, a certificate of the Borrower
specifying the nature and occurrence of a Default or
an Event of Default and what action the Borrower has
taken or proposes to take with respect thereto;
(ii) Material Adverse Effect. Promptly upon any senior
officer of the Borrower obtaining knowledge of any
event which is a Material Adverse Effect, a
certificate of the Borrower specifying the nature and
occurrence of the Material Adverse Effect and what
action the Borrower has taken or proposes to take
with respect thereto;
(iii) Other Information. Promptly, such other information
as the Agent on behalf of any Lender may from time to
time reasonably request;
(iv) Change of Name. Promptly, notice of any change in the
name of the Borrower; and
(v) EDC Insurance Policies. Promptly, upon receipt of or
upon any amendment thereto, copies of insurance
policies issued by the Export Development Corporation
in favour of the Borrower which policies shall have
loss payable clauses in favour of the Agent.
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ARTICLE XI
EVENTS OF DEFAULT
11.1 EVENTS OF DEFAULT
Any one or more of the following events will constitute an Event of
Default hereunder:
(a) DEFAULT IN PRINCIPAL - If the Borrower fails to repay any
Indebtedness on account of principal payable under the
Credits, on the due date thereof;
(b) DEFAULT IN INTEREST, ETC. - If the Borrower fails to repay any
Indebtedness on account of, interest, fees, expenses or any
other amount (other than principal) payable under this
Agreement or any other Document, on the due date thereof and
such failure continues for three (3) Banking Days or more;
(c) DEFAULT IN PERFORMANCE, ETC. - Subject to Section 11.1(a) and
(b), if the Borrower defaults in the performance or observance
of any covenant contained in Article 10 of this Agreement;
provided with respect to the covenants contained in Article
10.1 such default continues unremedied for thirty (30) days
after notice thereof is given to the Borrower by the Agent,
specifying such default and requiring it to be remedied;
(d) REPRESENTATIONS AND WARRANTIES - If (i) any representation or
warranty made in this Agreement or in any of the Documents is
untrue or incorrect in any material respect when made or
deemed to have been made, (ii) any representation or warranty
made in any quarterly Compliance Certificate which is
delivered by the Borrower pursuant to Section 10.4(2)(iii) is
untrue or incorrect in any material respect as of the date on
which such quarterly compliance certificate is delivered to
the Agent, or (iii) any representation or warranty made in any
Notice of Borrowing is untrue or incorrect in any material
respect as of the date of such Notice of Borrowing;
(e) CROSS DEFAULT - If
(i) the Borrower has defaulted or at any time defaults,
in the payment of any Indebtedness in an aggregate
cumulative amount of more than $1,000,000 when the
same becomes due, including any period of grace
applicable thereto; or
(ii) the Borrower defaults in the observance or
performance of any agreement or condition relating to
any Indebtedness having an outstanding amount in
excess of $1,000,000 or its equivalent in any other
currency, at the time of default and any applicable
cure period has expired or if the Borrower defaults
in the performance of any other covenant contained in
any
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agreement under which such obligations are created
and any applicable cure period has expired so that
the repayment of Indebtedness having an outstanding
amount in excess of $1,000,000 has become
accelerateable;
(f) JUDGEMENTS - If final judgements for the payment of money in
excess of $1,000,000 in the aggregate are rendered against the
Borrower and within 30 days after the date of entry has
expired, such judgements have not been discharged bonded,
stayed on appeal, paid or dismissed;
(g) ENCUMBRANCES - If an encumbrancer takes possession of any
property or asset of the Borrower with a fair market value in
excess of $1,000,000 in the aggregate or if distress or
execution or any similar process is levied or enforced
thereagainst and remains unsatisfied for such period as would
permit such property or assets to be sold thereunder;
(h) CONSENTS, ETC. - If any governmental or other consent,
license, or authorization required to make any Document legal,
valid, binding and enforceable or required in order to enable
the Borrower thereunder to perform its obligations thereunder
is withdrawn or ceases to be in full force and effect;
(i) VOLUNTARY INSOLVENCY, ETC. - If the Borrower passes a
resolution or institutes proceedings for its winding-up,
liquidation or dissolution or takes action to become a
voluntary bankrupt, or consents to the filing of a bankruptcy
proceeding against it, or files a proposal, a notice of
intention to make a proposal, a petition or answer or consent
seeking reorganization, readjustment, arrangement, composition
or similar relief under the Bankruptcy and Insolvency Act
(Canada), the Companies' Creditors Arrangement Act, the Canada
Business Corporations Act, the Business Corporations Act
(Alberta), or any other similar law or consents to the filing
of any such petition or proceeding, or consents to the
appointment of a receiver, liquidator, trustee or assignee in
bankruptcy or insolvency or similar officer of itself, of its
property, or makes an assignment for the benefit of creditors,
or is unable, or an officer or director of the Borrower admits
in writing its inability to pay its debts as they become due,
or otherwise acknowledges its insolvency, or commits any other
act of bankruptcy, or voluntarily suspends transaction of its
usual business or any action is taken by the Borrower in
furtherance of any of the foregoing;
(j) INVOLUNTARY INSOLVENCY, ETC. - If the Borrower is deemed for
the purposes of any Applicable Law to be insolvent or if any
application is made with respect to the Borrower under the
Companies Creditors Arrangement Act (Canada), the Bankruptcy
and Insolvency Act (Canada), or similar legislation, domestic
or foreign, seeking reorganization, readjustment, arrangement,
composition or similar relief for the Borrower under any
Applicable Law, or if a proceeding is instituted for the
winding up, liquidation or dissolution of the Borrower or
seeking an order adjudging the Borrower insolvent or the
appointment of any receiver,
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liquidator, trustee or similar officer of the Borrower or over
all or a substantial part of its property, or a petition in
bankruptcy is presented against the Borrower under a
bankruptcy or similar statute, domestic or foreign, provided
that such application, proceeding or petition is not
dismissed, stayed or withdrawn within thirty (30) days after
the Borrower has notice or knowledge of the institution
thereof; provided further that an Event of Default shall have
occurred under this Section 11.1(j) immediately (i) upon the
appointment of a receiver, trustee, custodian, liquidator or
similar officer of the Borrower, (ii) if it is determined by
the Required Lenders, acting reasonably in their sole
discretion, that the applicable Borrower is not contesting
such application, proceeding or petition in good faith, or
(iii) if assets with an aggregate fair market value in excess
of $1,000,000 have been attached, in all cases whether or not
such application, proceeding or petition is dismissed, stayed
or withdrawn within thirty (30) days after the Borrower has
notice or knowledge of the institution thereof;
(k) CHANGE OF CONTROL OF THE BORROWER - If members of the Xxxxxx
family including their successors and assigns within the
Xxxxxx family, cease to hold beneficially and directly or
indirectly at least 50.1% of the issued and outstanding voting
shares in the capital of the Borrower or cease to directly or
indirectly effectively control the Borrower.
11.2 ACCELERATION
1) Subject to Section 11.2(2), upon the occurrence and during the
continuance of any Event of Default, the Agent will, upon written request by the
Required Lenders, by written notice to the Borrower, take any or all of the
following actions: (a) declare the principal of and accrued interest owing in
respect of any of the Credits and all other amounts owing hereunder or under any
of the other Documents to which the Borrower is a party to be, and the same will
thereupon become, immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby expressly waived by
the Borrower; (b) declare the Commitments terminated, whereupon the Commitment
of each Lender will terminate immediately; (c) realize upon any Security; and
(d) without limitation, proceed by any other action, suit, remedy or proceeding
authorized or permitted by this Agreement, by any other Document or by law or by
equity.
2) If (i) a receiving order is issued under the Bankruptcy and
Insolvency Act (Canada) against the Borrower; (ii) the Borrower makes a
voluntary assignment into bankruptcy under the Bankruptcy and Insolvency Act
(Canada); (iii) the Borrower files a proposal or an intention to make a proposal
under the Bankruptcy and Insolvency Act (Canada), (iv) an initial order is made
in respect of the Borrower under the Companies' Creditors Arrangement Act
(Canada) declaring the Borrower to be an insolvent company, (v) an order is made
or a resolution is passed for the winding-up or voluntary dissolution of a
Borrower, whether under the Winding-Up Act (Canada) or any analogous statute, or
(vi) an application is made by the Borrower under the Canada Business
Corporations Act, the Business Corporations Act (Alberta), or under any similar
or analogous statute, for an arrangement involving the Borrower
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and in connection with such application, the Borrower seeks to obtain the
benefit of a stay of proceedings which limits or restricts the enforcement by
the Lenders, or any person on behalf of the Lenders, of the remedies provided
under this Agreement, then all indebtedness owing by the Borrowers under the
Credits shall be automatically due and payable without notice, presentment,
protest, demand, notice of dishonour or any other demand or notice whatsoever,
all of which are hereby expressly waived by the Borrower.
11.3 SET OFF. Upon the occurrence of an Event of Default, notice of which
has been given in writing by the Agent to the Borrower upon written request by
the Required Lenders (other than an Event of Default described in Sections
11.1(i) or 11.1(j)) in addition to and not in limitation of any rights now or
hereafter granted under Applicable Law or the Documents, the Agent and each
Lender may, to the extent permitted by law, without notice to the Borrower at
any time and from time to time: (i) combine, consolidate or merge any or all of
the deposits or other accounts of the Borrower with the Agent or Lender (whether
term, notice, demand or otherwise and whether matured or unmatured), and the
Indebtedness of the Borrower to such Agent or Lender, and (ii) set-off, apply or
transfer any or all sums standing to the credit of any such deposits or accounts
in or towards the satisfaction of any of the Indebtedness of such Borrower or to
the Agent or Lender under the Documents, and may do so notwithstanding that the
balances on such accounts and the Indebtedness may not be expressed in the same
currency and the Agent or Lender is hereby authorized to effect any necessary
conversions at the rate of exchange of the Agent or Lender then prevailing.
11.4 REMEDIES CUMULATIVE
The rights and remedies of the Agent and the Lenders hereunder are
cumulative and in addition to, and not in substitution for, any rights or
remedies provided by any other Document, by law or by equity.
11.5 AVAILABILITY OF ACCOMMODATION AFTER DEFAULT AND APPROPRIATION OF MONIES
RECEIVED
1) No Further Accommodation. The Agent and any Lender may from time to
time when a Default or an Event of Default has occurred, refuse to grant any
further Accommodation to the Borrower under the Credits or permit any
rollovers/switches thereof (except rollovers or switches to Prime Rate Loans or
US Base Rate Loans during the cure period provided for hereunder or thereafter
so long as the Lenders have not made demand of all outstanding Credits) and
appropriate any monies received under this Agreement as the Agent and each
Lender in its discretion may see fit, and the Borrower will have no right to
require any inconsistent appropriation.
2) Payments Received by Lenders. Subject to Section 11.7, if any Lender
at any time receives payment or satisfaction of all or any part of its loans,
interest thereon or any amount payable under this Agreement by whatever means
(including by set-off) to which it is not otherwise entitled under this
Agreement, then such Lender will pay to the Agent, on behalf of
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the other Lenders such amount as will ensure that each Lender will receive such
payment to which it is entitled under this Agreement.
3) Where Refund Required by Lender. In the event that at any time any
Lender is required to refund (as a preference or otherwise) any amount which has
been paid to or received by it on account of any part of its loans, interest
thereon or any other amount payable hereunder and which has been paid to any
other Lender pursuant to this Section 11.5, such other Lender will repay a
proportionate amount of the sums so refunded without interest, or, as the case
may be, repurchase for cash from the first-mentioned Lender a proportionate part
of the Indebtedness of the Borrower to such first-mentioned Lender.
4) Effect on Borrower's Indebtedness. If a Lender is required to make
any payment to any other Lender pursuant to this Section 11.5, it will give
notice thereof to the Agent and, subject to Section 11.5(3), the liability of
the Borrower to the Lender making such payment under this Agreement will be
treated as not having been reduced by the amount of such payment and the
liability of the Borrower to any Lender receiving such payment will be treated
as having been reduced by the amount of the payment received by such Lender.
11.6 NON-MERGER
The taking of a judgement or judgements or any other action or dealing
whatsoever by the Agent or any Lender in respect of any Document will not
operate as a merger of any Indebtedness of the Borrower to the Agent or any of
the Lenders or in any way suspend payment or affect or prejudice the rights,
remedies and powers, legal or equitable, which the Agent or any of the Lenders
may have in connection with such liabilities and the surrender, cancellation or
any other dealings with any security for such liabilities will not release or
affect the liability of the Borrower hereunder or under any security held by or
on behalf of any of the Lenders.
11.7 PRO RATA SHARING
After notice is given by the Agent to the Borrower pursuant to Section
11.2, all amounts received (including by way of set-off) will be shared pro rata
among the Lenders in the same proportion as is the Accommodation extended by
each Lender under the Credits and under Foreign Exchange Contracts to the total
of all outstanding Accommodation under the Credits and Foreign Exchange
Contracts.
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ARTICLE XII
CONDITIONS PRECEDENT
12.1 CLOSING
Time is of the essence of this Agreement. The execution and delivery of
this Agreement shall take place on the Closing Date.
12.2 CONDITIONS PRECEDENT TO THE ESTABLISHMENT BY LENDERS OF THE CREDITS
The establishment of the Credits by the Lenders shall be subject to the
fulfilment of each of the following conditions precedent to the satisfaction of
all of the Lenders on or prior to the Closing Date, it being understood that the
said conditions are included for the exclusive benefit of the Agent and the
Lenders and may be waived in writing by the Agent and all the Lenders, in their
sole discretion, in whole or in part from time to time:
1) No Default. There shall exist no Default or Event of Default
on the Closing Date and the Borrowers shall have delivered to
the Agent an Officer's Certificate to such effect.
2) Representations and Warranties. All representations and
warranties contained in Section 9.1 shall be true on and as of
the Closing Date with the same effect as if such
representations and warranties had been made on and as of such
date and the Borrower shall have delivered to the Agent an
Officer's Certificate to such effect.
3) Security. The Agent shall have received the Security in form
and substance satisfactory to the Agent which shall have been
registered where reasonably required by the Agent.
4) Compliance with Financial Covenants, etc. The Agent and the
Lenders shall have received a Compliance Certificate
demonstrating, and including calculations to evidence,
compliance with each of the Financial Covenants and a
calculation of the available Borrowing Base.
5) Credit Documents. The Agent and the Lenders shall have
received this Agreement and the other Documents duly
authorized, executed and delivered.
6) Delivery of Additional Documents. The following documents in
form, substance and execution acceptable to the Agent shall
have been delivered to and reviewed by, the Agent and the
Lenders:
(i) Constating Documents. Certified copies of the
Constating Documents of the Borrower and certified
copies of all corporate proceedings required to
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be taken by the Borrower to authorize the execution
and delivery of the Documents and the performance by
it of the transactions contemplated in such
Documents;
(ii) Incumbency. Certificates of incumbency of the
Borrower setting forth specimen signatures of the
persons authorized to execute on behalf of the
Borrower the Documents;
(iii) Borrower's Opinion. The opinion of solicitors for the
Borrower respecting such legal matters incidental to
this Agreement and the transactions provided for or
contemplated herein as the Agent has reasonably
requested (including as to the enforceability of the
Documents; and
(iv) Agents' and Lenders' Solicitors' Opinions. The
opinions of counsel for the Agent and the Lenders in
form and substance satisfactory to the Agent.
7) Fees. All fees and expenses payable to the Agent and the
Lenders on or before the initial advance will have been paid.
8) No Material Adverse Change. There shall have occurred no
Material Adverse Change with respect to the Borrower, and the
Borrower shall have delivered to the Agents and the Lenders an
Officer's Certificate to such effect.
9) Delivery of Financial Information. The Agent and the Lenders
shall have received:
(i) the audited financial statements of the Borrower for
the fiscal year ending December 31, 2000; and
(ii) the unaudited quarterly financial statements of the
Borrower for the quarter ending March 31, 2001.
10) EDC Insurance Policies. The Agent shall have been provided
with copies of all existing policies issued by the Export
Development Corporation with loss payable clauses in favour of
the Agent.
12.3 CONDITIONS PRECEDENT TO THE FIRST AND EACH SUBSEQUENT DRAWDOWN UNDER A
CREDIT
The first and each subsequent drawdown of Accommodation under a Credit
shall be subject to the fulfilment of each of the following conditions precedent
to the satisfaction of the Agent on or prior to the date of the proposed
drawdown, it being understood that the said conditions are included for the
exclusive benefit of the Agent and the Lenders and may be waived in writing by
the Agent and all the Lenders for the first drawdown and the Agent and the
Required Lenders thereafter, in their sole discretion, in whole or in part, from
time to time:
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1) Notice of Borrowing. The Agent and the Lenders shall have
received the required Notice of Borrowing in the case of a
drawdown under the Revolving Credit and any other
documentation required to be delivered by the Borrower in
connection with such Notice of Borrowing.
2) No Default. There shall exist no Default or Event of Default
on the applicable date of drawdown and the completion of the
drawdown shall not result in the occurrence of a Default or
Event of Default.
3) Representations and Warranties. All representations and
warranties contained in Section 9.1 shall be true in all
material respects on and as of the date of a Notice of
Borrowing and after giving effect to the proposed drawdown
with the same effect as if such representations and warranties
had been made on and as of such date.
4) Material Adverse Change. Since the date of this Agreement,
there shall have occurred no Material Adverse Change with
respect to the Borrower.
5) Initial Drawdown Conditions. All conditions specified in
Section 12.2, to the extent not previously satisfied for any
reason, shall have been satisfied and in addition, the amount
of the initial advance shall be sufficient to repay and shall
be applied in payment of all indebtedness and liability of the
Borrower to CIBC under the Existing Credit Agreement other
than amounts set out in Section 2.10.
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ARTICLE XIII
THE AGENT
13.1 APPOINTMENTS
The Lenders appoint CIBC to act as Agent for the Lenders in the manner
and upon the terms provided herein. Except as may be specifically provided to
the contrary herein, each of the Lenders irrevocably authorizes CIBC as the
agent for such Lender, to take such action on its behalf under the provisions of
the Documents and any other instruments and agreements referred to in them, and
to exercise such powers and to perform such duties under such documents as are
delegated to the Agent by the terms of those documents, together with such other
powers as are reasonably incidental thereto, which it may be necessary for the
Agent to exercise in order that the provisions of the Documents are carried out,
including, without limitation, such powers as are necessary to comply in all
technical aspects with the practices of the London Interbank Eurocurrency
Market. The Agent will only be required to exercise such powers and perform such
duties as agent under this Agreement as it is instructed to exercise from time
to time by the Lenders and will not be required to act upon any instructions
received directly by the Agent from a Participant under or in respect of a
Participation.
13.2 DEALING BY BORROWER WITH THE AGENT
(a) Except as herein expressly provided, the Borrower shall deal
with the Agent in lieu of the Lenders for the purposes set out
in this Agreement.
(b) The Borrower may rely, and shall be fully protected in so
relying, without any obligation to inquire into the
correctness thereof, upon any action taken, notice, direction,
waiver, consent, determination, communication or agreement by
the Agent purporting to be on behalf of the Lenders hereunder,
any of which shall, as regards the Borrower, be deemed to be
an action, notice, direction waiver, consent, determination,
communication or agreement of the Lenders.
13.3 DELEGATION OF DUTIES
The Agent may perform any of its duties under any Document or any other
instruments and agreements referred to therein by or through its agents or
employees and will be entitled to the advice of counsel concerning all matters
pertaining to its duties thereunder.
13.4 INDEMNITY
The Lenders hereby indemnify the Agent (to the extent not reimbursed by
the Borrower) rateably according to their Commitments from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgements,
suits, costs, expenses or disbursements of any nature or kind whatsoever which
may be imposed on, incurred by, or asserted against the Agent in such capacity
in any way relating to or arising out of the
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Documents and any other instruments and agreements referred to in them or any
action taken or omitted by the Agent under the Documents or any other
instruments and agreements referred to in them; provided that no Lender will be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgements, suits, costs, expenses or disbursements
resulting from the Agent's gross negligence or wilful misconduct. Without
limiting the generality of the foregoing, each Lender agrees to reimburse the
Agent promptly upon demand for its rateable share as above described of
out-of-pocket expenses (including the fees and disbursements of counsel)
incurred by the Agent in connection with the determination or preservation of
any rights of the Agent or the Lenders under, or the enforcement of, or legal
advice in respect of rights or responsibilities under, the Documents or any
other instruments and agreements referred to in them, to the extent that the
Agent is not reimbursed for such expenses by the Borrowers on demand. In
addition, the Agent may refrain from exercising any right, power or discretion
or taking any action to protect or enforce the rights of the Agent or any Lender
under the Documents or any other instruments and agreements referred to in them
until it has been indemnified or secured to its satisfaction against any and all
costs, losses, expenses or liabilities (including legal fees) which it would or
might sustain or incur as a result of such exercise or action.
13.5 EXCULPATION
The Agent will have no duties or responsibilities except those
expressly set out in this Agreement. The Agent or any of its officers,
directors, employees or agents will not be liable for any action taken or
omitted to be taken under this Agreement or in connection with it, unless caused
by its or their gross negligence or wilful misconduct. The duties of the Agent
will be mechanical and administrative in nature. The Agent will not have by
reason of this Agreement or any other Document a fiduciary relationship in
respect of any Lender and nothing herein or therein, expressed or implied, is
intended to, or will be construed so as to, impose upon the Agent any obligation
except as expressly set out herein. The Agent will not be responsible for any
recitals, statements, representations or warranties herein or therein or which
may be contained in any document subsequently received by the Agent or for the
authorization, execution, effectiveness, genuineness, validity or enforceability
of the Documents or any other instruments and agreements referred to therein and
will not be required to make any inquiry concerning the performance or
observance of any of the terms, provisions or conditions of the Documents or any
other instruments and agreements referred to therein. Each of the Lenders
severally represents and warrants to the Agent that it has made and will
continue to make such independent investigation of the financial condition and
affairs of the Borrower as such Lender deems appropriate in connection with its
entering into this Agreement and the making and continuance of borrowings under
the Credits, that such Lender has and will continue to make its own appraisal of
the creditworthiness of the Borrower and that such Lender in connection with
such investigation and appraisal has not relied upon any information provided to
such Lender by the Agent. The Agent may at any time request instructions from
the Lenders with respect to any actions or approvals which, by the terms of this
Agreement or any other Document, the Agent is permitted or required to take or
to grant, and the Agent will be absolutely entitled to refrain from taking any
action or to withhold any approval and will not be under any liability
whatsoever to any Person for refraining from taking any action or withholding
any approval under this
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Agreement or any other Document until it has received such instructions from the
Required Lenders, or all Lenders, as the case may be. Except with respect to any
instructions that are specifically stated to be required of all of the Lenders,
no such Lender will have any right of action whatsoever against the Agent as a
result of the Agent acting or refraining from acting hereunder or under any
other Document in accordance with instructions received from the Required
Lenders.
13.6 RELIANCE
The Agent will be entitled to rely upon any writing, notice, statement,
certificate, facsimile, telex, teletype message, cablegram, radiogram, order or
other document or telephone conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper person or persons,
and, with respect to all legal matters pertaining to this Agreement or any other
Document and its duties hereunder or thereunder, upon the advice of counsel
selected by it.
13.7 EXCHANGE OF INFORMATION
The Borrower agrees that the Agent and each Lender may provide to the
other Lenders or the Agent such information concerning the financial position,
property and operations of the Borrower, which in the opinion of the Agent or
such Lender, is relevant to the ability of the Borrower to fulfil its
obligations under or in connection with this Agreement or any other Document
provided that the Agent will be under no obligation to disclose any information
to any of the Lenders in respect of the Borrower, other than providing to such
Lenders and the Agent copies of this Agreement, the financial statements and
other materials delivered by the Borrower pursuant to this Agreement and copies
of any certificates delivered by the Borrower pursuant to this Agreement. All
information supplied by the Borrower to the Agent or any Lender will be kept
strictly confidential and used only for the purpose of managing, participating,
syndicating, selling or assigning the Credits.
13.8 THE AGENT, INDIVIDUALLY
With respect to its Commitment and the Accommodation granted by it
under the Credits, the Agent will have the same rights and powers under this
Agreement as any other Lender and may exercise the same as though it were not an
Agent, and the term "Lenders" or any similar terms will, unless the context
clearly indicates otherwise, include the Agent in its capacity as a Lender
hereunder. It is understood and agreed by all of the Lenders that the Agent may
accept deposits from, lend money to, and generally engage in banking business
with the Borrower, as if it were not an Agent under this Agreement.
13.9 RESIGNATION
If at any time the Agent deems it advisable, in its sole discretion, it
may, as hereinafter provided, deliver to each of the Lender and the Borrower
written notification of its resignation insofar as it acts on behalf of the
Lenders pursuant to this Article 13, such resignation
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to be effective upon the date of the appointment by the Required Lenders of a
successor acceptable to the Borrower, such appointment to be promptly made. If
no such appointment has been made within thirty (30) days the Agent may make
such appointment on behalf of the Lenders and will forthwith give notice of such
appointment to the Lenders and the Borrower, provided that the Person appointed
as a successor Agent is acceptable to the Borrower.
13.10 INSTRUCTIONS BY LENDERS
1) Except with respect to any approval, instruction or other expression
that is specifically stated to be required of all of the Lenders, an approval,
instruction or other expression of the applicable Lenders may be obtained by
instrument in writing as provided in Section 13.10(2) or may be included in a
resolution that is submitted to a meeting or adjourned meeting of all Lenders
duly called and held for the purpose of considering the same as hereinafter
provided and will be deemed to have been obtained if such resolution is passed
by the affirmative vote of not less than 66-2/3% of the votes given on a poll of
such Lenders with respect to such resolution. A meeting of Lenders may be called
by the Agent or the Borrower and will be called by the Agent upon the request of
any Lender. Every such meeting will be held in the City of Toronto, or at such
other reasonable place as the Agent may approve. At least ten (10) Banking Days
notice of the time and place of any such meeting will be given to the Lenders
and will include or be accompanied by a draft of the resolution to be submitted
to such meeting, but the notice may state that such draft is subject to
amendment at the meeting or any adjournment thereof. The Lenders who are present
in person or by proxy at the time and place specified in the notice will
constitute a quorum. A person nominated in writing by the Agent will be chairman
of the meeting. Upon every poll taken at any such meeting every Lender who is
present in person or represented by a proxy duly appointed in writing (who need
not be a Lender) will be entitled to one vote in respect of each Dollar of
outstanding Accommodation calculated as applicable for a vote of Required
Lenders which it is then owed, calculated as of the Banking Day first preceding
the day of the meeting, or if no Accommodation is outstanding as at such date,
will be entitled to one vote in respect of each percentage of the Commitment
made by such Lender of the total Commitments of all Lenders. In respect of all
matters concerning the convening, holding and adjourning of Lenders' meetings,
the form, execution and deposit of instruments appointing proxies and all other
relevant matters, the Agent may from time to time make such reasonable
regulations not inconsistent with this Section as it will deem expedient and any
regulations so made by the Agent will be binding upon the Borrower, the Agent
and the Lenders. A resolution passed pursuant to this Section will be binding
upon all Lenders, and the Agent (subject to the provisions for its indemnity
herein contained) will be bound to give effect thereto accordingly.
2) Subject to Section 13.10(3), any approval, instruction or other
expression of the Lenders may also be obtained by an instrument in writing
signed in one or more counterparts by Lenders which have made at least 66-2/3%
of the Dollar amount of the Accommodation calculated as applicable for a vote of
Required Lenders, or if no Accommodation is outstanding at such time, by Lenders
which have made Commitments which in the aggregate equal 66-2/3% or more of the
Credits.
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3) Any approval, instruction or other expression that is specifically
stated to be required of the Required Lenders or of all of the Lenders may be
obtained either by a resolution passed at a meeting of the Lenders called and
held in accordance with Section 13.10(1) (disregarding the percentage vote
referred to in such Section, in the case where the expression in question is
required of all of the Lenders) or by an instrument in writing signed in one or
more counterparts by the Required Lenders, the Lenders or all of the Lenders, as
the case may be.
13.11 ARRANGEMENTS FOR REPAYMENT OF ACCOMMODATION
Prior to an acceleration of the payment of amounts outstanding under
this Agreement pursuant to Section 11.2, the Agent will, upon receipt by it of
payments from the Borrower on account of principal or any other payment made to
the Agent on behalf of the Lenders, pay over to each Lender the amount to which
it is entitled under this Agreement on a pro rata basis in accordance with the
then outstanding amount of each Lender's Commitment. Such payment will be made
promptly following receipt and, in any event, the Agent will use its best
efforts to pay to each Lender at the Lender's branch of account such amount on
the same Banking Day as such amount is received by the Agent.
13.12 REPAYMENT BY LENDERS TO AGENT
1) Unless the Agent has been notified in writing by the Borrower at
least one (1) Banking Day prior to the date on which any payment to be made by
the Borrower under this Agreement is due that the Borrower does not intend to
remit such payment, the Agent may, in its discretion, assume that the Borrower
has remitted such payment when so due and the Agent may, in its discretion and
in reliance upon such assumption, make available to each Lender on such payment
date an amount equal to such Lender's rateable portion of such assumed payment.
If the Borrower does not in fact remit such payment to the Agent, without
restricting the obligation of the Borrower to make such payment, the Agent will
promptly notify each Lender and each such Lender will forthwith on demand repay
to the Agent the amount of such assumed payment made available to such Lender,
together with interest thereon until the date of repayment thereof at a rate
determined by the Agent (such rate to be conclusive and binding on such Lender)
in accordance with the Agent's usual banking practice for such advances to
financial institutions of like standing to such Lender, but in any event at a
rate no greater than the usual interbank offered rate for the sale of deposits
in the applicable currency.
2) Unless the Agent has been notified in writing by the Lender at least
one (1) Banking Day prior to a drawdown date that such Lender does not intend to
make available its proportion of any Accommodation under the Credits, the Agent
may, in its discretion, assume that such Lender has remitted funds to the Agent
and the Agent may, in its discretion and in reliance upon such assumption, make
available to the Borrower on such drawdown date an amount equal to such Lender's
proportion of such Accommodation. If a Lender does not in fact remit such funds
to the Agent, without restricting the obligation of such Lender to make such
funds available and for damages as a result of the failure to do so, the Agent
will promptly notify such Lender and Borrower, and the Borrower will forthwith
on demand repay to the Agent the amount made available by the Agent on behalf of
such Lender, together with interest thereon
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until the date of repayment thereof at a rate determined by the Agent (such rate
to be conclusive and binding on such Lender and the Borrower) in accordance with
the Agent's usual banking practice for advances to financial institutions of
like standing to such Lender, but in any event at a rate no greater than the
usual interbank offered rate for the sale of deposits in the applicable
currency.
13.13 DELIVERY OF ASSIGNMENT AGREEMENT
The Agent undertakes and agrees to deliver to the Borrower a copy of
each Assignment Agreement executed pursuant to this Agreement forthwith after
execution thereof.
13.14 PROVISIONS FOR BENEFIT OF LENDERS ONLY
The provision of this Article 13 relating to the rights and obligations
of the Agent and the Lenders inter se shall be operative as between the Agent
and the Lenders only, and the Borrower shall have no rights under nor be
entitled to rely for any purposes upon such provisions.
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ARTICLE XIV
MISCELLANEOUS
14.1 PAYMENTS TO THE LENDERS
1) Payments. All payments required to be made by a Borrower hereunder
or under any other Document will be made in immediately available funds and
amounts payable by the Borrower to the Agent for the account of the Lenders
hereunder or thereunder on account of principal will be paid by the Borrower at
the office of the Agent designed by the Agent or by the Agent debiting the same
to the account of the Borrower as such Borrower shall have designated to the
Agent, which account the Borrower will ensure is not in an unauthorized
overdraft position, provided that the foregoing shall not limit the recourse of
the Agent and the Lenders to any single source of funds.
2) Net Payments, etc. Subject to Section 14.7(5), all payments by the
Borrower under any Document, whether in respect of principal, interest, fees or
any other item, shall be made in full without any deduction or withholding
(whether in respect of set off, counterclaim, duties, Taxes, charges or
otherwise whatsoever) unless the Borrower is prohibited by law from doing so, in
which event the Borrower shall ensure that the deduction or withholding does not
exceed the minimum amount legally required;
(i) forthwith pay to the applicable Lender such additional amount
so that the net amount received by such Lender will equal the
full amount which would have been received by it had no such
deduction or withholding been made;
(ii) pay to the relevant taxation or other authorities within the
period for payment permitted by Applicable Law the full amount
of the deduction or withholding (including, the full amount of
any deduction or withholding from any additional amount paid
pursuant to Section 14.1(2)(i)); and
(iii) furnish to the Lender, within the period for payment permitted
by Applicable Law, an official receipt of the relevant
taxation or other authorities involved for all amounts
deducted or withheld as aforesaid.
3) In the event that all or any part of any payment by the Borrower
received by an Agent or a Lender is thereafter set aside, avoided or recovered
from the Agent or a Lender for any reason whatsoever (including, in connection
with any receivership, liquidation, reorganization or bankruptcy proceeding),
the applicable Lenders shall, upon demand by the Agent, contribute the amount
set aside, avoided or recovered together with interest at the rate required to
be paid by the Agent upon the amount required to be repaid by it and the
Indebtedness of the Borrower in respect of any such amounts shall be reinstated,
remain outstanding and be due and payable, all as though such payment had not
been made.
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14.2 EXPENSES
Whether or not the transactions contemplated by this Agreement shall be
consummated, the Borrower shall on demand pay to the Agent all reasonable
out-of-pocket expenses and taxes thereon incurred by the Agent including the
reasonable fees and disbursements of any experts or advisers (including lawyers
on a solicitor and client basis and independent consultants) retained by the
Agent, in connection with (i) the preparation of this Agreement and the other
Documents and any amendment, modification or waiver of any of the provisions
hereof or thereof, (ii) searches conducted, (iii) the protection and enforcement
of the rights of the Agent and the Lenders provided for in the Documents, (iv)
registrations, recordings or filings relating to the execution and delivery of,
or consummation of, any of the transactions contemplated by, or any amendment,
supplement or modification of, or any waiver or consent under or in respect of
the Documents, and (v) such costs and expenses in relation to the Syndication or
Participation of the Credits, including any advertising fees in relation
thereto.
14.3 AMENDMENT, WAIVER, ETC.
No waiver or delay on the part of the Agent or any of the Lenders in
exercising any right or privilege hereunder or under any other Document will
operate as a waiver hereof or thereof unless made in writing and signed by an
authorized officer of the Agent, provided however that no amendment, waiver or
consent, unless in writing and signed by all of the Lenders, will be effective
to do any of the following: (a) reduce or forgive the payment of any principal,
interest, fees or any other amount payable by the Borrower pursuant to this
Agreement; (b) postpone any maturity date of any amount payable by the Borrower
pursuant to this Agreement; (c) increase the Commitments of the Lenders or
subject the Lenders to any additional obligations; (d) change the percentage of
the Commitments or of the aggregate unpaid principal amount of the Credits, or
the number of Lenders, which will be required for the Lenders or any of them to
take any action under this Agreement; (e) amend this Section; or (f) release any
material portion of the Security; and provided further that no amendment, waiver
or consent will, unless in writing and signed by the Agent and all of the
Lenders, affect the rights or duties of the Agent under this Agreement. No
written waiver will preclude the further or other exercise by the Agent or any
of the Lenders of any right, power or privilege hereunder or under any other
Document, or extend to or apply to any further Default or Event of Default. Each
Lender acknowledges and agrees that a waiver of a Default or an Event of Default
shall not constitute a postponement of the Maturity Date of any amount payable
hereunder or an increase in the obligations or Commitment of any Lender
hereunder.
14.4 FURTHER ASSURANCES
The Borrower will from time to time immediately on the Agent's request
do, make and execute all such financing statements, further assignments,
documents, acts, matters and things as may reasonably be required by the Agent
with respect to this Agreement or any other Document to give effect to these
presents including any financing statements, further assignments, documents,
acts, matters or things required by the Agent or any Lender in respect of any
Syndication by a Lender.
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14.5 DEALINGS BY AGENTS AND LENDERS
Neither the Agent nor any Lender will be obligated to exhaust its
recourse against the Borrower or any other Person or against any security any of
them may hold in respect of the obligations of the Borrower to the Agent and the
Lenders before realizing upon or otherwise dealing with any other security in
such manner as the Agent and the Lenders may consider desirable. The Agent and
any of the Lenders may grant extensions of time and other indulgences, take and
give up securities, accept compositions, grant releases and discharges and
otherwise deal with the Borrower and any other Person, sureties and others and
any securities as they may see fit without prejudice to the obligations of the
Borrower under this Agreement and under any other Document or the Agents or the
Lender's right to hold and enforce this Agreement and any other Document and any
of their rights and remedies hereunder and thereunder. The powers conferred on
the Agent, the Lenders or any of them under this Agreement and under any other
Document are solely to protect their interests therein and will not impose any
duty upon the Agent or any Lender to exercise any such powers.
14.6 NOTICES
Any notice or communication to be given under this Agreement or any of
the other Documents may be effectively given by delivering the same at the
addresses hereinafter set out or by sending the same by prepaid registered mail
or facsimile to the parties at such addresses. Any notice so mailed shall be
deemed to have been received on the third Banking Day next following the mailing
thereof provided the postal service is in operation during such time. Any notice
sent by facsimile will be deemed to have been received on transmission provided
that printed confirmation of such transmission to the correct telephone number
shall have been generated by the sender's facsimile machine. The addresses and
facsimile numbers of the parties for the purposes hereof will respectively be:
in the case of the Borrower: Xxxxxx Western Forest Products Ltd.
00000-000 Xxxxxx
Xxxxxxxx, Xxxxxxx
X0X 0X0
Attention: President
Fax No.: (000) 000-0000
with a copy to: Fraser Xxxxxx Casgrain
2900, 00000-000 Xxxxxx
Xxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxx
X0X 0X0
Attention: X. Xxxxxx
Fax No.: (000) 000-0000
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in the case of the Agent: Canadian Imperial Bank of Commerce
Canadian Credit Capital Markets -
BCE Place
8th Floor
000 Xxx Xxxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Director
Fax No.: (000) 000-0000
In the case of a Lender, the address and facsimile number of such Lender as set
out in Schedule E or the applicable Assignment Agreement.
The Borrower, the Agent or any Lender may from time to time notify the
other parties hereto, in accordance with the provisions of this Agreement, of
any change of address or facsimile number which thereafter, until changed by
like notice, will be the address or facsimile number of such party for all
purposes of this Agreement.
14.7 PARTICIPATION AND SYNDICATION
1) The rights, benefits and obligations of each of the Lenders under or
in respect of this Agreement and the other Documents (referred to in this
Section as the "RIGHTS") may in whole or in part, be participated (a
"PARTICIPATION"), or syndicated, sold or assigned (a "SYNDICATION") by a Lender
from time to time to one or more financial institutions; provided that (a) in
the case of a Syndication the Lender shall first have notified the Borrower and
the Agent, and the Agent and the Borrower shall have consented thereto in
writing, such consents not to be unreasonably withheld, (b) any Syndication of
less than all of such Lender's interests in a Credit shall be in a minimum
amount of $2,500,000 or any whole multiples of $1,000,000 thereafter, unless
such Lender is assigning to another Lender some or all of its interests in a
Credit, in which event no minimum amount shall apply, (c) the Participant in a
Syndication shall execute and deliver to the Agent a duly completed Assignment
Agreement (other than for the signature of the Agent), and (d) the syndicating,
selling or assigning Lender shall pay to the Agent an administration fee of
$3,000 with respect to each Syndication.
2) For the purpose of such Participations or Syndications, any Lender
may provide to a potential participant, transferee or assignee (a "PARTICIPANT")
on a confidential basis access to any and all information disclosed to the Agent
or any Lenders pursuant to this Agreement or in the possession of the Agent or
any of the Lenders.
3) In the event of a Syndication to a Participant, such Participant, to
the extent of the rights and obligations syndicated, sold or assigned to it,
shall become a "Lender" under this Agreement and shall become entitled to such
rights and obligations to the same extent as if such Participant were an
original party to this Agreement in respect thereof, and the syndicating Lender
shall be released and discharged accordingly.
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4) If the Rights are the subject of a Participation, all references in
this Agreement to a Lender will thereafter be construed as a reference to such
Lender and the Participants, provided that the Borrower and the Agent will be
entitled to deal with such Lender as if it were the sole owner of the Rights and
such Lender will not be released from any of its obligations under this
Agreement by virtue of the Participation and provided further that such
documents do not adversely modify the Borrowers' rights or increase its
obligations under this Agreement. The Borrower acknowledges and agrees that each
Lender is entitled, in its own name and on behalf of the Participants, to
enforce for the benefit of, or as agent for, any Participants, any and all
rights, claims and interests of such Participants, in respect of the Rights
subject to a Participation. A Lender granting a Participation shall not grant or
assign any Participant any rights to approve any amendment, waiver, proposed
consent to or under this Agreement or the other Documents. Neither the Agent nor
any Lender will be responsible for any default by any other Lender in its
obligation not to so grant or assign any of such rights.
5) Notwithstanding Section 14.1(2), in the event that any Participation
or Syndication is made to a Participant that is not a resident of Canada for the
purposes of the Income Tax Act (Canada) (a "non-resident"), then any amounts
that the Borrower pays pursuant to the Income Tax Act (Canada) on account of
withholding tax in respect of monies payable by the Borrower to such
non-resident Participant shall be treated as if paid by the Borrower to the
non-resident Participant and applied against the indebtedness of the Borrower to
the non-resident under this Agreement.
14.8 ASSIGNMENT BY LENDERS AFTER EVENT OF DEFAULT
Notwithstanding the restrictions contained in Section 14.7, upon the
occurrence of an Event of Default, the rights, benefits and obligations of each
of the Lenders under or in respect of this Agreement and the other Documents may
in whole or in part be syndicated, sold or assigned by a Lender to one or more
Persons without restriction. For the purpose of such syndication, sale or
assignment, any Lender may provide to a potential syndicate member, transferee
or assignee on a confidential basis access to any and all information disclosed
to the Agent or any Lender pursuant to this Agreement or in the possession of
the Agent or any Lender.
14.9 REPLACEMENT OF A LENDER
If any Lender does not consent to a request of the Borrower requiring
unanimous consent of the Lenders and the Required Lenders have consented to the
request, the Borrower shall be entitled for a period of up to 30 days from the
date the decision of the Lenders was determined, to propose one or more Canadian
chartered banks or other Canadian financial institutions which, if not a Lender,
shall be acceptable to the remaining Lenders (which acceptance shall not be
unreasonably withheld) which banks or other institutions would be prepared to
accept an assignment of the Credits of the declining Lender in accordance with
Section 14.7. If, within that time period, the Borrower is able to propose such
assignees and, if applicable, the proposed assignees are acceptable to the
remaining Lenders, the declining Lender shall at the end of such period but
conditional upon such assignments having been arranged in respect of the entire
loan position of such declining Lender, assign its rights and obligations
- 68 -
hereunder to such proposed assignees in accordance with Section 14.7 for a price
equal to in the case of each declining Lender, the then outstanding principal
amount of all outstanding Accommodation of that declining Lender plus accrued
interest and fees on the principal amount of all outstanding Accommodation of
that declining Lender. The Agent agrees to assist the Borrower in arranging
replacement Lenders.
14.10 SURVIVAL
This Agreement will continue in full force and effect so long as any of
the Credits are available or any Indebtedness, liability or obligation is due
and payable to the Agent or any of the Lenders in respect of the Credits unless
it is varied or terminated in writing and all agreements, representations,
warranties and covenants of the Borrower made herein or in any other Document or
otherwise, will be deemed to have been relied on by the Agent and the Lenders
notwithstanding any investigation heretofore or hereafter made by the Agent or
any of the Lenders, their respective solicitors or any representative of the
Agent or any of the Lenders and will survive the execution of this Agreement,
the other Documents and the granting of Accommodation under the Credits until
repayment in full of all amounts owing to the Agent and the Lenders.
14.11 SUCCESSORS AND ASSIGNS
This Agreement will be binding upon and will enure to the benefit of
the Borrower, the Agent, the Lenders and their respective successors and
permitted assigns, provided that the Borrower will not assign any of its rights
or obligations hereunder or under any of the other Documents without the prior
written consent of all of the Lenders.
14.12 GOVERNING LAW
1) The Documents and all certificates and other instruments delivered
to the Agent or the Lenders pursuant thereto will be construed and interpreted
in accordance with the laws of the Province of Alberta and the federal laws of
Canada applicable therein unless otherwise specifically stated therein.
2) The Borrower, the Agent and the Lenders hereby irrevocably and
unconditionally waive, to the maximum extent not prohibited by law, any right
they may have to claim or recover in any legal action or proceeding relating to
the Credit Agreement or any of the other Documents, any special, exemplary,
punitive or consequential damages.
14.13 COUNTERPARTS
This Agreement may be simultaneously executed in any number of
counterparts, each of which shall be deemed to be an original.
- 69 -
14.14 SCHEDULES AND EXHIBITS
The Schedules and Exhibits attached hereto and forming part of this
Agreement are as follows:
SCHEDULES
Schedule A - Permitted Liens
Schedule B - Environmental Matters
Schedule C - Litigation
Schedule D - Commitments
Schedule E - Addresses of Lenders
Schedule F - Lenders
Schedule G - Material Agreements
EXHIBITS
Exhibit A - Assignment Agreement
Exhibit B - Notice of Borrowing
Exhibit C - Notice of Rollover/Switch
Exhibit D - BA Equivalent Note
Exhibit E - Compliance Certificate
Exhibit F - Form of Arrangements Letter
14.15 PERFORMANCE BY THE AGENT OF BORROWER'S OBLIGATIONS
If the Borrower fails to perform or comply with any of its agreements
contained in this Agreement or in any other Document to which it is a party, the
Agent shall be entitled to, but need not, perform or otherwise cause the
performance or compliance of such agreement, provided that such performance or
compliance shall not constitute a waiver, remedy or satisfaction of such
default, and expenses of the Agent incurred in connection with any such
performance or compliance will be payable by the Borrower to the Agent on
demand.
- 70 -
IN WITNESS WHEREOF the parties hereto have executed this Agreement on
the date first above written.
XXXXXX WESTERN FOREST PRODUCTS LTD.
By:
------------------------------------
Name:
Title:
By:
------------------------------------
Name:
Title:
CANADIAN IMPERIAL BANK OF
COMMERCE, IN ITS CAPACITY AS AGENT
By:
------------------------------------
Name:
Title:
By:
------------------------------------
Name:
Title:
CANADIAN IMPERIAL BANK OF COMMERCE IN ITS
CAPACITY AS A LENDER
By:
------------------------------------
Name:
Title:
By:
------------------------------------
Name:
Title:
- 71 -
HSBC BANK CANADA
By:
------------------------------------
Name:
Title:
By:
------------------------------------
Name:
Title:
BANK OF MONTREAL
By:
------------------------------------
Name:
Title:
By:
------------------------------------
Name:
Title:
SCHEDULE A
PERMITTED LIENS
(1) Liens for taxes not overdue, or which are being contested if
adequate reserves with respect thereto are maintained by the
Borrower in accordance with GAAP and the enforcement of any
related Lien is stayed;
(2) undetermined or inchoate Liens arising in the ordinary course
of business which relate to obligations not overdue or a claim
for which has not been filed or registered pursuant to
Applicable Law;
(3) carriers', warehousemens', mechanics', materialmens',
repairmens', construction or other similar Liens arising in
the ordinary course of business which relate to obligations
not overdue;
(4) easements, rights-of-way, restrictions and other similar
encumbrances or rights in property reserved by other persons
incurred in the ordinary course of business which, in the
aggregate, do not materially detract from the value of the
property subject thereto or interfere with the ordinary
conduct of the business of the Borrower;
(5) zoning and building by-laws and ordinances and municipal
by-laws and regulations so long as the same are complied with;
(6) statutory Liens incurred or deposits made in the ordinary
course of business in connection with workers' compensation,
unemployment insurance and other social security legislation;
(7) the reservations and exceptions contained in, or implied by
statute in, the original disposition from the Crown and grants
made by the Crown of interests so reserved or excepted;
(8) security given by the Borrower to a public utility or any
municipality or governmental or other public authority when
and to the extent required by such utility or municipality or
other authority in the ordinary course of business;
(9) the right reserved to or vested in any municipality or
governmental or other public authority by the terms of any
lease, license, franchise, grant or permit, or by any
statutory provision to terminate any such lease, license,
franchise, grant or permit or to require annual or other
periodic payments as conditions of the continuance thereof;
and
(10) Purchase Money Liens not exceeding $2,000,000 in aggregate at
any time.
SCHEDULE B
ENVIRONMENTAL MATTERS
NIL
SCHEDULE C
LITIGATION
NIL
SCHEDULE D
COMMITMENTS
Name of Lender Revolving Credit Short Notice
(including Letter of Credit Swingline Credit
Swingline Credit)
Canadian Imperial Bank $15,000,000 $5,000,000
of Commerce
HSBC Bank Canada $20,000,000 $ nil
Bank of Montreal $10,000,000 $ nil
NOTE: THE SHORT NOTICE SWINGLINE CREDIT FORMS PART OF THE REVOLVING
CREDIT AND THE AGGREGATE COMMITMENT IS $50,000,000
SCHEDULE E
ADDRESSES OF LENDERS
Canadian Imperial Bank of Commerce
Commerce Place
00000-000 Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxx, Xxxxxxx
X0X 0X0
Attention: Director, Commercial Banking
Fax No.: (000) 000-0000
HSBC BANK CANADA
000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0
Attention: Vice-President, Commercial Financial Services
Fax No.: (000) 000-0000
BANK OF MONTREAL
9th Floor, First Canadian Centre
000 - 0xx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Senior Manager, Corporate Finance
Fax No.: (000) 000-0000
SCHEDULE F
LENDERS
Canadian Imperial Bank of Commerce
HSBC Bank Canada
Bank of Montreal
SCHEDULE G
MATERIAL AGREEMENTS
1. Power Syndicate Agreement dated as of January 1, 2001 between
Epcor PPA Management Inc., Slave Lake Pulp Partnership, the
Borrower, Dow Chemical Canada Inc. and ANC Power Company.
EXHIBIT A
ASSIGNMENT AGREEMENT
THIS ASSIGNMENT AGREEMENT dated as of o is made among o
(the "ASSIGNOR"), a Lender under the Credit Agreement referred to and defined
hereafter, Canadian Imperial Bank of Commerce, as Agent (the "AGENT"), Xxxxxx
Western Forest Products Ltd. (the "BORROWER") and o (the "ASSIGNEE").
RECITALS:
1. Pursuant to a credit agreement dated as of June 27, 2001 (as amended,
modified, replaced, supplemented and restated from time to time, the "CREDIT
AGREEMENT") among inter alia the Borrower, the Agent, and the financial
institutions specified therein as lenders (collectively the "LENDERS"), the
Lenders have provided certain credit facilities to the Borrower.
2. The Assignor has agreed to assign and sell to the Assignee all of its
right, title and interest in and to o % of the Revolving Credit (the
"ASSIGNED INTEREST") and the Assignee has agreed to accept and purchase the
Assigned Interest and to assume all liabilities and obligations of the Assignor
in respect of the Assigned Interest.
3. The Borrower has agreed to acknowledge the release and assumption of the
Assigned Interest.
AGREEMENT:
NOW THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. Capitalized terms defined in the Credit Agreement which
appear herein without definition shall have the meanings ascribed thereto in the
Credit Agreement.
2. CONVEYANCE OF ASSIGNED INTEREST. Pursuant to Section 14.7 of the Credit
Agreement and subject to the terms of this Agreement, the Assignor hereby
assigns, sells, conveys and transfers to the Assignee, without recourse, all of
its undivided interest in and to the Assigned Interest.
3. ASSUMPTION. Pursuant to Section 14.7 of the Credit Agreement and subject
to the terms of this Agreement, the Assignee hereby accepts and assumes the
Assigned Interest by payment to the Assignor of the amount set forth on Schedule
"A" hereto and the Assignee hereby agrees to be bound by the terms and
conditions of the Credit Agreement and the other Documents as if it were an
original Lender and acknowledges and expressly assumes in the name, place and
stead of the Assignor all obligations and liabilities attaching to the Assigned
Interest and agrees to perform the terms, conditions and agreements on its part
to be performed as a Lender in respect thereof under the Credit Agreement and
the other Documents.
4. REPRESENTATION AND WARRANTIES OF THE ASSIGNOR. The Assignor hereby
represents and warrants and the Borrower hereby acknowledges that, as at the
date hereof, the outstanding principal amount under the Assigned Interest and
interest accrued and unpaid in respect thereof is as set forth on Schedule "A"
hereto. The Assignor further represents and warrants that it has not previously
assigned, pledged or otherwise encumbered the Assigned Interest.
5. REPRESENTATION AND WARRANTIES OF THE ASSIGNEE. The Assignee hereby
represents and warrants that it is a Canadian [NON-CANADIAN] resident financial
institution and the Assignee hereby indemnifies the Agent for any liability
which the Agent may incur in connection with any amount for which the Borrower
becomes liable with respect to required deduction or withholding pursuant to
Section 14.7(5) as a consequence of such assignment.
6. RELEASE BY THE BORROWER. The Borrower hereby acknowledges the release of
the Assignor from all obligations and liabilities attaching to the Assigned
Interest and acknowledges the assumption of all such liabilities and obligations
by the Assignee.
7. COMMITMENTS. As of and from the date hereof, and after giving effect to
this Assignment Agreement, the Commitment of the Assignee shall be $ o and
the Commitment of the Assignor shall be reduced by $ o and shall be $ o .
Schedule D to the Credit Agreement setting forth the Commitments of the
Lenders is superseded and replaced effective as of the date hereof by the
revised Schedule D attached hereto as Schedule B.
8. ASSIGNEE'S ACKNOWLEDGEMENT. The Assignee hereby acknowledges that it has
received a copy of the Credit Agreement and the Documents and takes cognizance
of the provisions thereof. The Assignee further acknowledges that it has
conducted its own independent investigation as to the financial condition of the
Borrower and the Guarantors.
9. RECOGNITION AS LENDER. The parties hereto acknowledge that the Assignee
is, by virtue of compliance with the provisions of Section 14.7 of the Credit
Agreement, as of and from the date hereof, a Lender under and as defined in the
Credit Agreement for the purposes thereof and for the purposes of all other
Documents. Schedule F to the Credit Agreement setting forth the names of the
Lenders is superseded and replaced effective as of the date hereof by the
revised Schedule F attached hereto as Schedule C.
10. NO REPRESENTATIONS. Except as otherwise expressly provided herein, the
Assignee confirms that this Assignment Agreement is entered into by the Assignee
without any representations or warranties by the Assignor or the Agent in any of
their respective capacities under the Credit Agreement or otherwise, on any
matter whatsoever including, without limitation, the effectiveness of the Credit
Agreement or any document delivered pursuant thereto or in connection therewith
or any of the terms, covenants and conditions therein or the financial
condition, creditworthiness, condition, affairs, status or nature of the
Borrower, any of its Subsidiaries or any other party to the Credit Agreement.
The Assignee confirms that it has relied solely on its own investigations and
analysis in connection with all such matters and all other matters incidental to
this Assignment Agreement and the transactions contemplated herein and therein
and the Assignee confirms that it has not in any way relied upon, and will not
hereafter rely upon, the Assignor or the Agent in respect of any such matters.
11. FEES, COSTS AND EXPENSES. The Assignor and the Assignee shall be
responsible for their own costs and expenses incurred in connection with the
negotiation, preparation, execution and performance of this Assignment
Agreement. Upon the execution hereof by each of the parties hereto, the
administration fee of $3,000 contemplated by Section 14.7 of the Credit
Agreement shall be paid to the Agent by the Assignor.
12. AMENDMENTS AND WAIVERS. Any amendment or modification or waiver of any
right under any provision of this Assignment Agreement shall be in writing (in
the case of an amendment or modification, signed by the parties) and any such
waiver shall be effective only for the specific purpose for which given and for
the specific time period, if any, contemplated therein. No failure or delay by
any party in exercising any right, power or privilege under this Assignment
Agreement shall operate as a waiver thereof and any waiver of any breach of the
provisions of this Assignment Agreement shall be without prejudice to any rights
with respect to any other or further breach.
13. NOTICES. All notices hereunder shall be given and received as provided
in Section 14.6 of the Credit Agreement and the address and facsimile number of
the Assignee for the purposes of notices shall be as set out on the execution
page of this Assignment Agreement.
14. FURTHER ASSURANCES. The parties hereto shall at all times hereafter
execute and deliver, upon request, all such further documents and instruments,
and shall do and perform all such acts, as may reasonably be necessary to give
full effect to the intent and meaning hereof.
15. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. All agreements,
representations, warranties, indemnities and covenants made by the Assignor or
the Assignee herein shall survive the execution and delivery of this Assignment
Agreement and continue in full force and effect without termination.
16. TIME OF THE ESSENCE. Time shall be of the essence in this Assignment
Agreement.
17. GOVERNING LAW. This Assignment Agreement shall be governed by and
construed in accordance with the laws of the Province of Alberta and the laws of
Canada applicable therein and shall be treated in all respects as an Alberta
contract.
18. ENUREMENT. This Assignment Agreement shall enure to the benefit of and
be binding upon the parties hereto and their respective successors and permitted
assigns.
19. COUNTERPARTS. This Assignment Agreement may be executed in counterparts,
each of which shall be deemed an original and which, taken together, shall
constitute one and the same instrument.
IN WITNESS WHEREOF the parties have executed this Assignment Agreement
under the hands of their proper officers duly authorized in that behalf as of
the date first above written.
XXXXXX WESTERN FOREST PRODUCTS LTD.
By:
------------------------------------
Name:
Title:
By:
------------------------------------
Name:
Title:
[ASSIGNOR]
By:
------------------------------------
Name:
Title:
By:
------------------------------------
Name:
Title:
[ASSIGNEE]
Attention: By:
------------------------ ------------------------------------
Facsimile: o Name:
Title:
Attention: By:
------------------------ ------------------------------------
Facsimile: o Name:
Title:
CANADIAN IMPERIAL BANK OF COMMERCE, in
its capacity as Agent
By:
------------------------------------
Name:
Title:
By:
------------------------------------
Name:
Title:
CANADIAN IMPERIAL BANK OF COMMERCE
By:
------------------------------------
Name:
Title:
By:
------------------------------------
Name:
Title:
HSBC BANK CANADA
By:
------------------------------------
Name:
Title:
By:
------------------------------------
Name:
Title:
BANK OF MONTREAL
By:
------------------------------------
Name:
Title:
By:
------------------------------------
Name:
Title:
SCHEDULE A
TO ASSIGNMENT AGREEMENT DATED o
PURCHASE PRICE
SCHEDULE B
TO ASSIGNMENT AGREEMENT DATED o
COMMITMENTS
SCHEDULE C
TO ASSIGNMENT AGREEMENT DATED o
LENDERS
EXHIBIT B
NOTICE OF BORROWING
TO: Canadian Imperial Bank of Commerce, as Agent
This Notice of Borrowing is delivered to you pursuant to Section 2.6 of the
Credit Agreement dated as of June 27, 2001 among Xxxxxx Western Forest Products
Ltd. as Borrower, Canadian Imperial Bank of Commerce, HSBC Bank Canada, Bank of
Montreal and the financial institutions which from time to time become party
thereto, as Lenders, Canadian Imperial Bank of Commerce, as Agent (as
supplemented, amended, modified, replaced or restated from time to time, the
"CREDIT AGREEMENT"). All capitalized terms set forth herein and not otherwise
defined will have the respective meanings specified in the Credit Agreement.
1. We hereby give you notice that on ________________________, _______, we
wish to obtain the following Accommodation under the Revolving Credit referred
to in the Credit Agreement:
Prime Rate Loan Amount - Cdn.$_____________________
US Base Rate Loan Amount - US$_______________________
LIBOR Loan Amount - US$_______________________
LIBOR Period __________________________
Bankers' Acceptances:
Principal Amount - Cdn.$_____________________
Term & Maturity - __________________________
Person to Whom the Bankers'
Acceptances are to be delivered
(if applicable) - __________________________
2. We confirm that:
(a) there is no Default or Event of Default on the date hereof and
the completion of the drawdown requested herein, will not
result in the occurrence of a Default or Event of Default; and
(b) all representations and warranties contained in Section 9.1
are true in all material respects on and as of the date hereof
and after giving effect to the drawdown requested herein with
the same effect as if such representations and warranties had
been made on and as of such date.
3. Since June 27, 2001, there has occurred no Material Adverse Change with
respect to the Borrower which has not been waived.
DATED this _______________ day of _________________________, _______.
XXXXXX WESTERN FOREST PRODUCTS LTD.
By: ____________________________________
Name:
Title:
By: ____________________________________
Name:
Title:
EXHIBIT C
NOTICE OF ROLLOVER/SWITCH
TO: Canadian Imperial Bank of Commerce, as Agent
This Notice of Rollover/Switch is delivered to you pursuant to Section 2.7 of
the Credit Agreement dated as of June 27, 2001 among Xxxxxx Western Forest
Products Ltd., as Borrower, Canadian Imperial Bank of Commerce, HSBC Bank
Canada, Bank of Montreal and the financial institutions which from time to time
become party thereto, as Lenders, Canadian Imperial Bank of Commerce, as Agent
(as supplemented, amended, modified, replaced or restated from time to time, the
"CREDIT AGREEMENT"). All capitalized terms set forth herein and not otherwise
defined will have the respective meanings specified in the Credit Agreement.
1. We hereby give you notice that on ________________________, _______ ,
we wish to undertake a rollover/switch of the following Accommodation
outstanding under the Revolving Credit into the following Accommodation:
DATED this _______________ day of _________________________, ________.
XXXXXX WESTERN FOREST PRODUCTS LTD.
By: ____________________________________
Name:
Title:
By: ____________________________________
Name:
Title:
EXHIBIT D
BA EQUIVALENT NOTE
FORM OF BA-EQUIVALENT NOTE
CDN. $ o DATE: ______________
The undersigned refers to the Credit Agreement dated as of June 27,
2001 among Xxxxxx Western Forest Products Ltd., as Borrower, Canadian Imperial
Bank of Commerce, HSBC Bank Canada, Bank of Montreal and the financial
institutions which from time to time become party thereto, as Lenders, Canadian
Imperial Bank of Commerce, as Agent (as supplemented, amended, modified,
replaced or restated from time to time, the "CREDIT AGREEMENT"). All capitalized
terms set forth herein and not otherwise defined will have the respective
meanings specified in the Credit Agreement.
For value received, the undersigned promises to pay on o or on
such earlier date as such amount may become due pursuant to the provisions of
the Credit Agreement ( the "MATURITY DATE"), to or to the order of o (the
"HOLDER") the sum of Cdn. $ o , without interest until the Maturity Date,
and thereafter, with interest in accordance with the Credit Agreement.
The undersigned hereby waives presentment, protest and notice of every
kind and waives any defence based upon indulgences which may be granted by the
Holder to the undersigned and waives any days of grace.
Payment of this note shall be made in Cdn. Dollars in immediately
available funds. This note evidences debt incurred under, is secured as provided
in, and is subject to the terms and provisions of, the Credit Agreement
including payment of interest after the Maturity Date.
This note shall be governed by the laws of the Province of Alberta and
the laws of Canada applicable in such Province.
DATED this _______________ day of _________________________, _______.
XXXXXX WESTERN FOREST PRODUCTS LTD.
By: ____________________________________
Name:
Title:
EXHIBIT E
COMPLIANCE CERTIFICATE
TO: Canadian Imperial Bank of Commerce (the "Agent")
RE: Credit Agreement dated as of June 27, 2001 among Xxxxxx Western Forest
Products Ltd., as Borrower, Canadian Imperial Bank of Commerce, HSBC
Bank Canada and Bank of Montreal and the financial institutions which
from time to time become party thereto, as Lenders, Canadian Imperial
Bank of Commerce, as Agent (as supplemented, amended, modified,
replaced or restated from time to time, the "CREDIT AGREEMENT").
The undersigned, the [TITLE/A SENIOR OFFICER IS REQUIRED] of the
Borrower, hereby certifies, in that capacity and not personally, as follows:
1. I have read and am familiar with the provisions of the Credit Agreement
and I have made such examinations and investigations, including the review of
the applicable books and records of the Borrower, as I have deemed necessary to
enable me to express an informed opinion as to the matters set out herein.
2. The Borrower is in compliance with the Financial Covenants contained in
Section 10.3 of the Credit Agreement and more particularly,
(a) Fixed Charge Coverage Ratio is o :1 calculated as follows:
(i) EBITDA $ o
(ii) Maintenance Capital Expenditures $ o
(iii) income taxes paid in cash $ o
(iv) total of (ii) and (iii) $ o
(v) difference between (i) and (iv) $ o
(vi) Interest Expense $ o
(vii) principal payments for borrowed
money $ o
(viii) total of (vi) and (vii) $ o
(ix) (v) divided by (viii) $ o
(b) Working Capital Ratio is o :1 calculated as follows:
(i) consolidated assets $ o
(ii) prepaid expenses $ o
(iii) difference between (i) and (ii) $ o
(iv) current liabilities $ o
(v) amount outstanding under the
Credits excluding amount in
respect of Letters of Credit
issued in support of
current liabilities $ o
(vi) total of (iv) and (v) $ o
(vii) (iii) divided by (vi) $ o
3. The aggregate amount of Foreign Exchange Contracts outstanding as of
o [THE MOST RECENT COMPLETED FISCAL QUARTER OF THE BORROWER] is US$ o .
4. Each of the representations and warranties contained in Article 9 of
the Credit Agreement is true and correct on the date hereof as if made on and as
of the date hereof.
5. The Borrower is not in breach of any of the covenants set out in
Article 10 of the Credit Agreement on the date hereof.
6. No Default or Event of Default has occurred.
The certificate is delivered to you pursuant to Section 10.4(2)(iii) of
the Credit Agreement. Initially capitalized terms used in this Compliance
Certificate have the meanings given in the Credit Agreement.
DATED: _____________________________ [within 60 days of the end of each
of the first three fiscal quarters of the Borrower and 120 days of the end of
the Borrower's fiscal year]
By: _____________________________________
Name:
Title:
EXHIBIT F
FORM OF ARRANGEMENTS LETTER
TO: Xxxxxx Western Forest Products Ltd.
RE: Credit Agreement dated as of June 27, 2001 among Xxxxxx Western Forest
Products Ltd., as Borrower, Canadian Imperial Bank of Commerce, HSBC Bank
Canada, Bank of Montreal and the financial institutions which from time to time
become party thereto, as Lenders, Canadian Imperial Bank of Commerce, as Agent
(as supplemented, amended, modified, replaced or restated from time to time, the
"CREDIT AGREEMENT").
1. APPLICABLE MARGIN:
The undersigned Lender agrees that the applicable margins for
Accommodation under the Credits for the undersigned Lender is as follows:
Prime Rate Loans o %
US Base Rate Loans o %
LIBOR Loans o %
Bankers' Acceptances o %
2. STANDBY FEE:
The Borrower will pay to the undersigned Lender a standby fee at the
rate per annum of o % calculated daily on the undrawn amount of the Revolving
Credit (taking into account outstanding accommodation under the Swing Line
Credit and without taking into account any limitation resulting from the
Borrowing Base requirements). The standby fee shall be calculated commencing on
the Closing Date and shall be payable quarterly in arrears on the first banking
day following the quarter end of March, June, September and December of each
year. The first payment is due October, 2001.
3. UPFRONT FEE:
The Borrower will pay to the undersigned Lender on the Closing Date an
upfront fee of $ o .
4. ISSUANCE FEES FOR LETTERS OF CREDIT
The Borrower shall pay to the undersigned the following issuance fees
pursuant to Section 5.8(2) of the Credit Agreement:
Financial Letters of Credit $ o
Non-Financial Letters of Credit $ o
5. DEPOSIT RATES:
The undersigned Lender will pay interest at the following rates per
annum for deposits in minimum amounts of $ o for a minimum period of o :
Cdn $ deposits Prime Interest Rate minus o % per annum
US $ deposits US Base Rate minus o % per annum
Executed June 27, 2001 by: [Lender]
By: _____________________________________
Name:
Title:
By: _____________________________________
Name:
Title:
TABLE OF CONTENTS
PAGE
ARTICLE I INTERPRETATION ......................................................1
1.1 Definitions......................................................1
1.2 Headings, Etc...................................................15
1.3 Number, Gender and Expressions..................................15
1.4 Time............................................................15
1.5 Non-Banking Days................................................15
1.6 Calculations....................................................15
1.7 Statutory References............................................15
1.8 Severability....................................................16
1.9 Entire Agreement................................................16
ARTICLE II THE CREDITS.....................................................17
2.1 Establishment of Credits........................................17
2.2 Utilization of Proceeds.........................................17
2.3 Types of Accommodation Available under the Revolving Credit.....18
2.4 Drawdown, Rollovers and Switches of Accommodation...............18
2.5 Pro Rata Accommodation..........................................18
2.6 Drawdown of Credits.............................................19
2.7 Rollovers and Switches of Accommodation.........................20
2.8 Disbursement - Prime Rate Loans, US Base Rate Loans and
LIBOR Loans.....................................................21
2.9 Disbursement - Bankers' Acceptances.............................21
2.10 Existing Letters of Credit......................................21
ARTICLE III PRIME RATE LOANS, US RATE BASE LOANS AND LIBOR LOANS............22
3.1 Recording in Books and Records..................................22
3.2 Interest........................................................22
3.3 Payment of Interest.............................................22
3.4 Maximum Rate of Return..........................................23
3.5 Interest Act (Canada)...........................................23
3.6 Interest On Amounts Owing Hereunder.............................23
ARTICLE IV GENERAL PROVISIONS RELATING TO LIBOR LOANS......................25
4.1 General.........................................................25
TABLE OF CONTENTS
(CONTINUED)
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4.2 Early Termination of LIBOR Periods..............................25
4.3 Inability to Make LIBOR Loans...................................25
4.4 Inability to Maintain LIBOR Loans...............................26
4.5 Increased Costs.................................................26
4.6 Indemnity.......................................................27
ARTICLE V BANKERS' ACCEPTANCES AND LETTERS OF CREDIT......................28
5.1 General.........................................................28
5.2 Acceptance......................................................28
5.3 Acceleration....................................................28
5.4 Change in Circumstances.........................................28
5.5 Provisions of Bankers' Acceptances..............................29
5.6 Power of Attorney for Bankers' Acceptances......................29
5.7 Outstanding Bankers' Acceptances on an Event of Default.........29
5.8 Letters of Credit...............................................30
ARTICLE VI FEES AND INDEMNITIES, ETC.......................................31
6.1 Fees............................................................31
6.2 Regulatory Change Indemnity.....................................31
6.3 Currency Indemnity..............................................31
6.4 Environmental Indemnity.........................................32
6.5 General Indemnity...............................................32
6.6 Nature of Indemnities...........................................33
ARTICLE VII REPAYMENT AND PREPAYMENT........................................34
7.1 Repayment of Credits............................................34
7.2 Currency of Repayments..........................................35
7.3 Exceeding Limit of Credit.......................................36
7.4 Automatic Debit.................................................36
7.5 Cancellation of Commitment......................................36
7.6 Payments........................................................36
7.7 Extension of Maturity Date......................................36
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ARTICLE VIII SECURITY........................................................38
8.1 Security........................................................38
8.2 Form, Substance and Registration of Security....................38
8.3 After Acquired Property and Further Assurances..................38
8.4 General.........................................................39
ARTICLE IX REPRESENTATIONS AND WARRANTIES..................................40
9.1 Representations and Warranties..................................40
9.2 Survival of Representations and Warranties......................43
ARTICLE X COVENANTS.......................................................44
10.1 Affirmative Covenants...........................................44
10.2 Negative Covenants of the Borrowers.............................45
10.3 Financial Covenants.............................................46
10.4 Accounting, Financial Statements and Other Information..........46
ARTICLE XI EVENTS OF DEFAULT...............................................49
11.1 Events of Default...............................................49
11.2 Acceleration....................................................51
11.3 Set Off.........................................................52
11.4 Remedies Cumulative.............................................52
11.5 Availability of Accommodation After Default and Appropriation
of Monies Received..............................................52
11.6 Non-Merger......................................................53
11.7 Pro Rata Sharing................................................53
ARTICLE XII CONDITIONS PRECEDENT............................................54
12.1 Closing.........................................................54
12.2 Conditions Precedent to the Establishment by Lenders of the
Credits.........................................................54
12.3 Conditions Precedent to the First and each Subsequent Drawdown
under a Credit..................................................55
ARTICLE XIII THE AGENT.......................................................57
13.1 Appointments....................................................57
13.2 Dealing by Borrower with the Agent..............................57
13.3 Delegation of Duties............................................57
13.4 Indemnity.......................................................57
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13.5 Exculpation.....................................................58
13.6 Reliance........................................................59
13.7 Exchange of Information.........................................59
13.8 The Agent, Individually.........................................59
13.9 Resignation.....................................................59
13.10 Instructions by Lenders.........................................60
13.11 Arrangements for Repayment of Accommodation.....................61
13.12 Repayment by Lenders to Agent...................................61
13.13 Delivery of Assignment Agreement................................62
13.14 Provisions for Benefit of Lenders Only..........................62
ARTICLE XIV MISCELLANEOUS...................................................63
14.1 Payments to the Lenders.........................................63
14.2 Expenses........................................................64
14.3 Amendment, Waiver, etc..........................................64
14.4 Further Assurances..............................................64
14.5 Dealings by Agents and Lenders..................................65
14.6 Notices.........................................................65
14.7 Participation and Syndication...................................66
14.8 Assignment by Lenders After Event of Default....................67
14.9 Replacement of a Lender.........................................67
14.10 Survival........................................................68
14.11 Successors and Assigns..........................................68
14.12 Governing Law...................................................68
14.13 Counterparts....................................................68
14.14 Schedules and Exhibits..........................................69
14.15 Performance by the Agent of Borrower's Obligations..............69
