1
EXHIBIT 10.2
[SCOTIABANK LETTERHEAD]
July 11, 1996
XXXX CORPORATION CANADA LTD. AND
AII AUTOMOTIVE INDUSTRIES CANADA, INC.
c/o Lear Corporation Canada Ltd.
000 Xxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xx. Xxxxxx X. Xxxxxxxx
Dear Sirs:
RE: ESTABLISHMENT OF REVOLVING TERM CREDIT FACILITY
IN FAVOUR OF XXXX CORPORATION CANADA LTD. AND
AII AUTOMOTIVE INDUSTRIES CANADA INC.
The Bank of Nova Scotia (the "Bank") is pleased to advise that, subject to your
acceptance, the Bank will make available the revolving term credit facility
described in this Agreement upon the following terms and conditions, and that
this Agreement shall replace the existing loan agreement dated April 19, 1995
between Xxxx Corporation Canada Ltd. (formerly, Xxxx Seating Canada Ltd.) and
the Bank, accordingly this Agreement shall constitute a refinancing of the
prior facility and not a novation or termination, with outstanding availments
thereunder constituting outstanding applicable Availments (as defined below)
under this Agreement:
BORROWERS Xxxx Corporation Canada Ltd. ("Xxxx Canada") and/or AII
Automotive Industries Canada Inc. ("Automotive Industries").
Each of Xxxx Canada and Automotive Industries shall be
severally liable to the Bank for its obligations hereunder,
provided that Xxxx Canada shall also be jointly and severally
liable to the Bank for the obligations of Automotive Industries
incurred to the Bank under or in connection with this
Agreement. Lear Canada may obtain any Availment hereunder.
Automotive Industries may obtain the overdraft advances
described below only. For the purposes of this Agreement,
Xxxx Canada and Automotive Industries may also be referred to
individually as a "Borrower" and collectively as the
"Borrowers".
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ALL AUTOMOTIVE INDUSTRIES CANADA, INC.
CREDIT FACILITY Revolving Term Credit.
$50,000,000 Cdn., under which are available, subject to
the limitations applicable to the
respective Borrowers as expressed in
this Agreement, Canadian and U.S.
dollar advances (by direct
disbursement and overdraft), bankers'
acceptances of Canadian dollar bills
of exchange (each a "BA") and, up to a
maximum aggregate principal amount of
$2,000,000 Cdn. outstanding at any one
time, standby and commercial letters
of credit and letters of guarantee
(each a "Documentary Instrument"),
the terms and conditions of which are
contained in Schedules "A" and "B"
hereto;
(the "Credit", with each availment thereunder being an
"Availment").
BOOKING Kitchener Main Branch
POINT 00 Xxxx Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxx
X0X 0X0
(the "Branch")
PURPOSES General corporate purposes of the respective Borrowers,
including loans to Affiliates of the Borrower.
INTEREST RATE/ The interest rate for LIBOR Advances, the issuance fees for
FEE ADJUSTMENTS BA's and Documentary Instruments and the stand-by fee shall
all fluctuate in accordance with the Parent Company's
Coverage Ratio, and such ratio shall be determinative as to
the applicable "Pricing Level" in effect for certain interest
rates and fees hereunder at any time and from time to time
as follows:
Coverage Ratio Pricing Level
-------------- -------------
Less than 3.25:1 Level 1
3.25 or greater Level 2
but less than
4.0:1
4.0:1 or greater Level 3
but less than
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ALL AUTOMOTIVE INDUSTRIES CANADA, INC.
5.0:1
5.0:1 or greater Level 4
Subject to the limitations expressed in this section, any
change in the interest rates and fees hereunder (a "Pricing
Change") shall be effective on the second Business Day
(as defined below in the section captioned NOTICE) following
the earlier of:
(I) the Bank's receipt of a quarterly
compliance certificate (as required by the REPORTING
section hereof) indicating that a change has occurred in
the above ratio such that the Pricing Level should be
adjusted; and
(ii) the due date for a quarterly compliance
certificate, if that certificate, whenever actually
received by the Bank, discloses that a change has occurred
in the above ratio such that the Pricing Level should be
adjusted.
The interest rates and fees payable by virtue of any Pricing
Change shall continue to be payable until the second Business
Day following the earlier of the Bank's receipt and the due
date for the next quarterly compliance certificate indicating
that a further Pricing Change should occur as a result of
changes in the above ratio as at the end of the applicable
fiscal period.
No Pricing Change which results in a reduction of interest
rates and fees hereunder shall be permitted at any time that an
Event of Default has occurred and is continuing hereunder.
Further, notwithstanding the foregoing, in the event that any
compliance certificate is not provided to the Bank within 95
days of the end of any fiscal quarter of Lear Canada in any of
its fiscal years, other than any last fiscal quarter, or within
150 days of any last fiscal quarter of Lear Canada in any of
its fiscal years, a Pricing Change shall be deemed to have
occurred on the second Business Day following such date, with
all affected interest rates and fees increasing automatically
to the next Pricing Level having higher interest rates and fees
(unless Pricing Level 1 is already then in effect) and such
increased interest rates and fees shall remain in effect
subject to the terms of this section or until receipt by the
Bank of the relevant overdue compliance certificate, whereupon,
in the latter event only, a further Pricing Change shall occur
on the second Business Day following the date of the Bank's
receipt thereof if warranted by the particulars disclosed in
such certificate.
For the purposes of this Agreement:
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ALL AUTOMOTIVE INDUSTRIES CANADA, INC.
(a) "Parent Company" shall mean Xxxx
Corporation, the U.S. parent company of Xxxx Canada;
(b) "Coverage Ratio", and all defined terms
used in such definition shall have the respective meanings
ascribed to them in the Syndicated Credit Agreement,
provided that such term shall be read for the purposes of
this Agreement as if to exclude the term "Adjustment Date"
; and
(c) "Syndicated Credit Agreement" shall mean
the credit agreement dated as of August 17, 1995, as
amended December 8, 1995 and May 28, 1996 by and among the
Parent Company, as borrower, Chemical Bank, as
administrative agent for the lenders, certain managing
agents including the Bank (the Bank being a lender
thereunder also) and the other lenders signatory thereto
pursuant to which loan commitments currently in the
maximum principal amount of $1,475,000,000 U.S. are
available to the Parent Company, or any successor
agreement entered into to refinance the Syndicated Credit
Agreement..
CREDIT Advances. Canadian and U.S. dollar advances may be obtained
AVAILMENTS under the Credit by Lear Canada selecting in respect of each such
advance one of the interest options as follows:
(1) Canadian dollars as Prime Rate Advances
in whole multiples of $100,000 Cdn. bearing interest at
Prime Lending Rate (as defined below).
(2) U.S. dollars as Base Rate Advances in
whole multiples of $100,000 U.S. bearing interest at
Alternate Base Rate (as defined below).
(3) U.S. dollars as LIBOR Advances in whole
multiples of $100,000 U.S.: LIBO Rates (as defined below)
for 1, 2, 3, 6 or 12 month LIBOR Periods (subject to
availability) plus a per annum margin fluctuating in
accordance with the applicable Pricing Level (determined
above) as follows:
Pricing Interest Rate
Level Margin (%)
-------- -------------
Level 1 1.0
Level 2 0.875
Level 3 0.75
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ALL AUTOMOTIVE INDUSTRIES CANADA, INC.
Level 4 0.50
A conversion from a LIBOR Advance to another Availment may only
be made on the expiry of the applicable LIBOR Period, unless Lear
Canada indemnifies the Bank for the costs of the Bank resulting
from the early termination of such LIBOR Period. No LIBOR Period
may extend beyond the maturity date of the Credit as provided for
below in the section captioned MATURITY, except as provided in
paragraph (3) under the section captioned COVENANTS (Covenants of
Lear Canada and Automotive Industries).
BA's. BA's may be obtained by Lear Canada under the Credit,
provided that each such BA shall be denominated in a whole
multiple of $100,000 Cdn. and shall have a term to maturity of
30 days to 1 year, subject to availability. Lear Canada shall
pay, upon issuance of each BA, a per annum fee determined as
set out below, calculated on the basis of a 365 day year on the
face amount of such BA for the number of days to elapse to
maturity (exclusive of days of grace), subject to a minimum fee
of $100 Cdn. per BA transaction. Each BA may be converted to
another Availment, but only on the maturity date of such BA.
Any BA not paid by Lear Canada on its maturity date will be
paid by the Bank and such payment shall constitute a Prime Rate
Advance under the Credit. No term of a BA may extend beyond
the maturity date of the Credit as provided for below in the
section captioned MATURITY, except as provided in paragraph (3)
under the section captioned COVENANTS (Covenants of Lear Canada
and Automotive Industries). The issuance fee for BA's shall
fluctuate in accordance with the applicable Pricing Level
(determined above) as follows:
Pricing Issuance Fee
Level Per Annum (%)
-------- -------------
Level 1 1.0
Level 2 0.875
Level 3 0.75
Level 4 0.50
Overdrafts.
(a) XXXX CANADA.
Upon presentment to the Bank for payment of any item
drawn by Xxxx Canada or by any other Customer (as defined
below)
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ALL AUTOMOTIVE INDUSTRIES CANADA, INC.
on any Designated Account (as defined below) or
upon any other demand for payment made in accordance with the
provisions of any Mirror Netting Services Agreement (as
defined below), which, when charged against a particular Pool
Account (as defined below), creates or increases a net debit
balance in such Pool Account, the Bank shall transfer such
amounts as may be required to pay such item, provided that,
after transferring the relevant amount, the aggregate amount
of these funds transfers made to such Pool Account (and each
of them, if more than one) and outstanding at any time shall
constitute an Availment of the Credit outstanding to Lear
Canada.
(b) AUTOMOTIVE INDUSTRIES.
Upon presentment to the Bank for payment of any item
drawn by Automotive Industries or by any other Customer
(as defined below) on any Designated Account (as defined
below) or upon any other demand for payment made in
accordance with the provisions of any Mirror Netting
Services Agreement (as defined below), which, when
charged against a particular Pool Account (as defined
below), creates or increases a net debit balance in such
Pool Account, the Bank shall transfer such amounts as may
be required to pay such item, provided that, after
transferring the relevant amount, the aggregate amount of
these funds transfers made to such Pool Account (and each
of them, if more than one) and outstanding at any time
shall constitute an Availment of the Credit outstanding
to Automotive Industries, and further provided however
that the aggregate amount of all such transfers made and
outstanding at any time and from time to time shall not
exceed:
(I) $1,000,000 Cdn., in the case of one or more Canadian
dollar Pool Accounts; and
(ii) $500,000 U.S., in the case of one or more U.S. dollar
Pool Accounts.
If an applicable Mirror Netting Services Agreement entered into
by either Borrower provides for a Pool Account which is a
Canadian dollar account, the aggregate amount of overdrafts
outstanding thereunder shall bear interest at the Prime Lending
Rate. If an applicable Mirror Netting Services Agreement
entered into by either Borrower provides for a Pool Account
which is a U.S. dollar account, the aggregate amount of
overdrafts outstanding thereunder shall bear interest at the
Alternate Base Rate.
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ALL AUTOMOTIVE INDUSTRIES CANADA, INC.
Notwithstanding any other term or condition hereof, if any
Mirror Netting Services Agreement is terminated in accordance
with the applicable provisions thereof, each Borrower hereby
acknowledges and agrees that the borrowing privileges of Lear
Canada or Automotive Industries, as the case may be, hereunder
with respect to that particular Mirror Netting Services
Agreement shall also be canceled automatically at the same
time, without any additional requirement that notice of such
cancellation be given to either Borrower and irrespective of
whether or not notice of such cancellation is referred to in
the notice of termination with respect to a particular Mirror
Netting Services Agreement. Any such cancellation shall be
without prejudice to the Bank's rights of repayment hereunder
in respect of amounts transferred to a Pool Account affected
by the termination of a particular Mirror Netting Services
Agreement (provided that such amounts are transferred prior to
the time that termination of the applicable Mirror Netting
Services Agreement becomes effective and that such transfers
occur in accordance with the provisions of this Agreement),
and any such cancellation shall be without prejudice to any
other right or remedy of the Bank hereunder.
To the extent that the provisions of this Agreement conflict
with the provisions of any Mirror Netting Services Agreement
(and, in particular, any provisions thereof and hereof relating
to the maximum amount of credit which will be made available to
a Borrower under a Mirror Netting Services Agreement and
relating to the rate of interest applicable to funds transfers
made by the Bank to fund net debit balances in any Pool
Account), the provisions of this Agreement shall prevail to the
extent necessary to remove the conflict.
For the purposes of this Agreement:
(1) "Mirror Netting Services Agreement" shall mean any
Money Management Services Mirror Netting Service
Agreement entered into among Lear Canada, any of its
eligible Affiliates and the Bank or, as the case may be,
entered into among Automotive Industries, any of its
eligible Affiliates and the Bank, as such agreement may
be amended, revised, replaced or otherwise modified in
whole or in part from time to time, and each of the terms
"Customer", "Designated Account" and "Pool Account" shall
have the respective meanings ascribed to them in the
applicable Mirror Netting Services Agreement; and
(2) "Affiliate" means an affiliated corporation as defined
in the Ontario Business Corporations Act, as the same may
be amended, re-enacted or substituted.
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ALL AUTOMOTIVE INDUSTRIES CANADA, INC.
Documentary Instruments. Refer to the attached Schedules "A"
and "B" to this Agreement.
STAND-BY FEE Xxxx Canada shall pay, on the last Business Day of each calendar
quarter, a per annum stand-by fee determined as set out below,
computed on the unused portion of the committed limit of the
Credit as it may be reduced from time to time, calculated daily
in arrears on the basis of a 365 day year for the actual number
of days elapsed from and including July 11, 1996, to the
Termination of the Credit. For purposes of calculating the
amount of stand-by fee payable in respect of U.S. dollar
Availments outstanding hereunder, the Canadian dollar exchange
equivalent thereof shall be determined by the Bank on and for
each Business Day in accordance with the spot rate of exchange
for U.S. dollars as announced by the Bank of Canada not later
than 12:00 noon (Toronto time) on such day, or, if such rate is
not announced by the Bank of Canada by such time on any Business
Day, the applicable rate of exchange for the relevant currency
conversion shall be that which was last announced by the Bank of
Canada. Xxxx Canada shall be entitled to cancel all or any of
the unused portion of the committed limit of the Credit at any
time and from time to time without penalty on not less than 30
days' written notice to the Bank and upon payment of all accrued
stand-by fee to such date of cancellation, whereupon the
committed limit of the Credit shall be permanently reduced
accordingly. The stand-by fee shall fluctuate in accordance with
the applicable Pricing Level (determined above) as follows:
Pricing Stand-by Fee
Level Per Annum (%)
------- -------------
Level 1 0.375
Levels 2
and 3 0.25
Level 4 0.20
MATURITY Termination. The Credit shall revolve and may be drawn down
until the earlier of (a) March 31, 1998 inclusive and (b) the
date of expiry of the loan commitments under the Syndicated
Credit Agreement or any successor thereto, when all amounts then
outstanding or accrued hereunder shall be payable. The term of
the Credit may be extended for successive periods of up to one
year in the absolute discretion of the Bank, upon Xxxx Canada's
written request therefor received not later than January 31 of
each year, provided that, in no event shall the term of the
Credit be extended beyond September 30, 2001. If the Bank does
not give written notice to Xxxx Canada of its
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ALL AUTOMOTIVE INDUSTRIES CANADA, INC.
consent to any such requested extension on or before March 1 in
any year, neither the requested extension nor any further
extension shall be permitted thereafter and the term of the
Credit shall expire as otherwise provided. No extension shall
be effective if maturity of the Credit shall first occur for
the reason specified above in clause (b) of this section or if
the Bank terminates the Credit at any time prior to the
commencement of any extended term upon the occurrence of any
Event of Default hereunder. If any scheduled date of
termination should not fall on a Business Day, then all amounts
otherwise payable under this Agreement upon termination of the
Credit shall instead be payable on the Business Day immediately
preceding such date.
Outstanding BA's. If, at any time prior to the maturity date
of any BA issued hereunder, the Credit is terminated, Xxxx
Canada shall pay to the Bank, on demand, an amount with respect
to each such BA equal to the total of amounts which would be
required to purchase in the Canadian money market, as of 10:00
a.m. (Eastern time) on the date of payment of such demand,
Government of Canada treasury bills in an aggregate amount
equal to the face amount of such BA and having in each case a
term to maturity similar to the period from such demand to
maturity of such BA; provided that, subject to the provisions
of paragraph (3) of the section below captioned COVENANTS
(Covenants of Lear Canada and Automotive Industries), no such
payment shall be required to be made by Xxxx Canada with
respect to any BA prior to its date of maturity if such BA is
outstanding at the time of Xxxx Canada's receipt of any notice
of repayment given by the Bank to Lear Canada in accordance
with the aforesaid paragraph (3) of the section captioned
COVENANTS . Upon payment by Lear Canada as required under this
paragraph, Xxxx Canada shall have no further liability in
respect of each such BA and the Bank shall be entitled to all
of the benefits of, and be responsible for all payments to
third parties under, such BA and the Bank shall indemnify and
hold harmless Xxxx Canada in respect of all amounts which Lear
Canada may be required to pay under each such BA to any party
other than the Bank.
Outstanding Documentary Instruments. Refer to the attached
Schedule "A" to this Agreement.
CALCULATION Determination of Rates. "Prime Lending Rate" is a variable per
& PAYMENT annum reference rate of interest (as announced and adjusted by
the Bank from time to time) for loans made by the Bank in
Canada in Canadian dollars. "Alternate Base Rate" is a
fluctuating interest rate per annum (as shall be in effect from
time to time) (rounded to the nearest 1/100 of 1%) for loans
made by the Bank in Canada in U.S. dollars equal to the
greater of: (a) the annual rate of interest
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ALL AUTOMOTIVE INDUSTRIES CANADA, INC.
announced from time to time by the Bank in Canada as its "Base
Rate Canada"; and (b) 0.5% per annum above the rate set forth
for such date opposite the caption "Federal Funds (Effective)"
in the weekly statistical release designated as "H.15(519)",
or any successor publication, published by the Federal Reserve
System. If for any reason the Bank shall have determined
(which determination shall be conclusive, absent manifest
error) that it is unable to ascertain the Federal Funds
(Effective) for any reason, including without limitation, the
inability or failure of the Bank to obtain sufficient bids or
publications in accordance with the terms hereof, the rate
announced by the Bank in Canada as its "Base Rate Canada" shall
be the Alternate Base Rate until the circumstances giving rise
to such inability no longer exist. The "LIBO Rate" for each
LIBOR Period (being the applicable interest period chosen by
Lear Canada for a LIBOR Advance) means the rate of interest per
annum at which the Bank is offered deposits by prime banks in
the London interbank market, as at 11:00 a.m. (London, England
time), on the second Business Day prior to the commencement of
such LIBOR Period, in an amount of U.S. dollars similar to the
amount of the applicable LIBOR Advance for a deposit period
comparable to such LIBOR Period. LIBOR Advances are offered
subject to the availability to the Bank of appropriate LIBO
Rate quotations.
Interest Calculation and Payment. Interest computed with
reference to Prime Lending Rate or Alternate Base Rate shall
accrue from day to day for the actual number of days elapsed
and shall be calculated and payable quarterly, not in advance,
on the last Business Day of each calendar quarter. Interest
computed with reference to a LIBO Rate shall accrue from day to
day for the actual number of days elapsed and shall be
calculated and payable at the end of the applicable LIBOR
Period and, if such LIBOR Period is in excess of 3 months, at
the end of each 3 month period during such LIBOR Period. If
the last day of any LIBOR Period should not fall on a Business
Day, then all interest payable in respect of the applicable
advance upon maturity thereof shall instead be payable on the
Business Day immediately preceding the last day of such LIBOR
Period. Interest computed with reference to Prime Lending Rate
shall be calculated on the basis of a 365 day year, but
interest computed with reference to the Alternate Base Rate or
a LIBO Rate shall be calculated on the basis of a year of 360
days.
Change In Margin. Whenever this Agreement calls for an
increase or decrease on a certain date in a margin over a
reference rate in respect of interest on an advance or the fees
for issuance of a BA or for the issuance of a Documentary
Instrument, Lear Canada shall pay interest or fees or shall be
entitled to receive a refund from the Bank on interest or fees
already paid, as applicable, calculated
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ALL AUTOMOTIVE INDUSTRIES CANADA, INC.
proportionately with reference to the new margin effective from
such date, notwithstanding that, in the case of an advance,
such advance was made prior to such date and, in the case of a
BA or Documentary Instrument, the applicable issuance fee is to
be calculated and paid prior to such date.
LIBOR Periods. Lear Canada shall designate the LIBOR Period to
apply to each LIBOR Advance in its notice of any drawdown of
such advance, any conversion to such advance and any renewal of
an existing LIBOR Period, provided that, upon failure of Lear
Canada to give notice of any such designation, when applicable,
as required under this Agreement, the Bank shall convert the
affected LIBOR Advance to a Base Rate Advance for the purpose
of determining the interest rate with respect to same.
Default of Payment. Amounts not paid when due in respect of a
Prime Rate Advance or a Base Rate Advance shall bear interest
at the rates applicable thereto, plus 2% per annum. Amounts
not paid when due in respect of a LIBOR Advance may be
constituted a Base Rate Advance by the Bank and the Bank may so
convert such advance. Any other monetary obligation of either
Borrower arising under this Agreement which is not paid when
due shall be deemed to be an amount not paid when due in
respect of a Prime Rate Advance or a Base Rate Advance, as
applicable. Interest payable under this paragraph shall accrue
from day to day for the actual number of days elapsed, shall be
calculated and payable upon demand, and shall be compounded
monthly until paid. The rights of the Bank under this
paragraph shall continue to apply from the date of such default
for so long as such default shall continue, both before and
after demand and judgment.
Interest Act (Canada). Whenever a rate of interest hereunder
is calculated on the basis of a year (the "deemed year") which
contains fewer days than the actual number of days in the
calendar year of calculation, such rate of interest shall be
expressed as a yearly rate for purposes of the Interest Act
(Canada) by multiplying such rate of interest by the actual
number of days in the calendar year of calculation and dividing
it by the number of days in the deemed year.
REPAYMENTS Lear Canada may make any repayment of an advance in a whole
multiple of $100,000 Cdn. in the case of Prime Rate Advances
and of $100,000 U.S. in the case of a Base Rate Advance, but any
repayment in respect of a LIBOR Advance may be made only in a
whole multiple of $100,000 U.S. and shall be subject to the
terms and conditions set out in the section below captioned
INDEMNITY PROVISIONS. No repayment of any advance made by way
of
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overdraft to Automotive Industries shall be subject to any
limitation that it be in a whole multiple or minimum of any
amount.
SECURITY Unsecured.
CONDITIONS TO Initial Drawdown. The right of either Xxxxxxxx to obtain the
UTILIZATION initial drawdown of an Availment hereunder is subject to the
conditions precedent that, to the extent that they have not
already done so, the Borrowers have provided to the Bank, in
form and substance satisfactory to the Bank, evidence of each
Borrower's authority to borrow hereunder and to execute and
deliver this Agreement, together with executed copies of such
documentation and, if requested by the Bank, opinions of counsel
as to the validity and enforceability of the same.
Each Utilization. The right of either Borrower to obtain at
any time any drawdown of an Availment (including the initial
drawdown) or any conversion from one Availment to another or
any renewal of a LIBOR Period hereunder (each a "Utilization")
is subject to the further conditions precedent that at the time
of such Utilization:
(1) in the case where such Utilization is a drawdown, a
conversion to a LIBOR Advance or a renewal of any LIBOR
Advance, no event or circumstance has occurred and is
continuing, or would result from the making of such
Utilization, which constitutes an Event of Default or
would constitute an Event of Default but for the
requirement that notice be given or time elapse, or both,
or, which when considered by itself or together with other
past or then existing events or circumstances, constitutes
or would constitute a material adverse change in the
business prospects or financial condition of Lear Canada
and its subsidiaries on a consolidated basis; and
(2) the Bank has received such other information as the Bank
may have reasonably requested upon giving prior reasonable
notice thereof to Xxxx Canada.
NOTICE Lear Canada shall give to the Bank 2 Business Days' notice of
each Utilization or repayment in respect of a LIBOR Advance and
same Business Day's notice of each Utilization (other than a
drawdown by means of an overdraft advance) or repayment in
respect of any other type of Availment. As used herein, a
"Business Day" means any day other than a Saturday, or a
Sunday, or a day that banks are lawfully closed for business in
Toronto, Ontario, or, if in respect of a Base Rate Advance,
New York City, or, if in respect of a LIBOR Advance,
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ALL AUTOMOTIVE INDUSTRIES CANADA, INC.
any other day on which transactions cannot be carried out by
and between banks in the London interbank market.
Any notice or communication shall be deemed to have been given
to a party hereunder (I) upon delivery in writing to such party
at its address as noted on page 1 hereof or at the address of
which such party last notified the other, or (ii) upon oral
(including telephone) transmission to an appropriate officer of
such party, provided that such officer believed at such time in
good faith that such notice or communication was given by an
appropriate officer of the notifying or communicating party, or
(iii) in the case of overdrafts (whether or not actually
resulting in an Availment of the Credit hereunder in accordance
with the provisions of the paragraph above entitled
"Overdrafts"), upon receipt by the Bank of a Canadian or U.S.
dollar cheque or wire transfer drawn on an eligible account of
Lear Canada its affiliates, its subsidiaries or, if applicable,
of Automotive Industries or its subsidiaries maintained with
the Bank. Notice or communication to the Bank hereunder (other
than notice given in the manner as set out in (iii) of this
section) to be effective on a certain Business Day must be
given prior to 11:00 a.m. (Eastern time) on that Business Day.
Each notice or communication given by a party hereunder shall
be binding on it and shall not be revocable without the other
party's consent.
REPRESENTATIONS Xxxx Canada and Automotive Industries.
AND WARRANTIES
Each Borrower represents and warrants that this Agreement is a
legal, valid and binding obligation of such Borrower
enforceable against it in accordance with its terms; is not
contrary to any contractual restriction binding on it; and its
execution and delivery of the same neither requires a third
party consent nor would entitle any third party to accelerate
any debt owing to it.
Lear Canada only.
Xxxx Canada hereby additionally represents and warrants that it
does not have outstanding, as of the date hereof, any
indebtedness for borrowed money, nor any liability for borrowed
money (including, without limitation, contingent liability
under any guarantee), other than indebtedness incurred to the
Province of Ontario having a maximum aggregate principal amount
of $4,500,000 Cdn. plus accrued interest, indebtedness and
liability incurred to the Bank and contingent liability under
a guarantee in a maximum principal amount of $15,000,000 Cdn.
dated April 26, 1989, as amended on August 11, 1992, in respect
of the indebtedness and liability of General Seating of Canada
Ltd. incurred to Dai-Ichi Kangyo Bank (Canada) Ltd.
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ALL AUTOMOTIVE INDUSTRIES CANADA, INC.
All of the representations and warranties of each Borrower
contained herein shall survive the execution and delivery of
this Agreement notwithstanding any investigation made at any
time by or on behalf of the Bank.
COVENANTS Xxxx Canada and Automotive Industries.
Each Borrower hereby covenants:
(1) to maintain, and cause its material subsidiaries to
maintain, their respective corporate existences and
conduct their respective businesses in the normal
course;
(2) to promptly notify the Bank of the occurrence of any
event or circumstance which constitutes an Event of
Default or would constitute an Event of Default but for
the requirement that notice be given or time elapse or
both and to provide to the Bank a detailed statement of
a senior officer of the applicable Borrower of the
steps, if any, being taken to cure or remedy such
default; and
(3) to repay all of its indebtedness and liability
incurred or accrued under this Agreement if the Bank
should at any time withdraw as a party to the
Syndicated Credit Agreement, subject to the Bank giving
Lear Canada not less than 60 days' prior written notice
of the due date for any such repayment, the date
thereof not to be earlier in any event than the date
that the Bank's withdrawal from the Syndicated Credit
Agreement becomes effective; provided that, if any
Availment (excluding any Prime Rate Advance and any
Base Rate Advance) is outstanding on the date of
receipt by Xxxx Canada of any such notice and if the
maturity or expiry date of such Availment should not
occur until after the aforesaid 60-day period has
expired, then, all payments in respect of such
Availment, which, if not for the giving of the notice
provided for in this Covenant (3), would otherwise be
due after expiry of the 60-day period, shall instead be
made as and when otherwise required by this Agreement,
except that, in the case of any applicable Documentary
Instrument, payments of principal, interest and other
amounts arising from any drawing thereunder shall be
made on the second Business Day following such drawing.
Notwithstanding any other term or condition of this
Agreement, each Borrower agrees that no further credit
shall be available to it under this Agreement after the
date of Xxxx Canada's receipt of the notice referred to
above (and Automotive Industries hereby waives any
requirement that the Bank provide any independent
notice to it
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ALL AUTOMOTIVE INDUSTRIES CANADA, INC.
under this paragraph (3) with respect to the repayment
of credit extended to it under this Agreement or the
suspension of its entitlement to obtain additional
credit hereunder) and that, if all amounts payable
under this Covenant (3) are received by the Bank within
the aforesaid 60-day period, the Credit shall terminate
on the date of final payment thereof; provided further
that, the Borrowers' entitlement to obtain credit
hereunder shall be re-instated and the Credit shall
expire on the maturity date as otherwise provided,
subject to the terms and conditions of this Agreement,
if (I) at any time prior to the due date for repayment
specified in any such notice by the Bank, Lear Canada
provides an irrevocable standby letter of credit, in
form and substance satisfactory to the Bank in its sole
discretion, for a principal amount not less than the
committed limit of the Credit at such time, plus
interest, fees and other amounts outstanding and payable
under this Agreement and (ii) no Event of Default or
material adverse change in the financial condition of
Lear Canada has occurred at any time prior to or upon
the Bank's receipt of such letter of credit. The
giving of any notice by the Bank under this Covenant
(3) shall not affect the respective rights, privileges
or obligations of the parties to this Agreement except
as expressly set out in this Covenant (3).
Lear Canada only.
Xxxx Canada additionally hereby covenants:
(a) to maintain, or cause to be maintained, a minimum
Consolidated Net Worth of $25,000,000 Cdn. at all
times. For the purposes of this Agreement,
"Consolidated Net Worth" shall mean, at any particular
time, Shareholders' Equity, where "Shareholders'
Equity" means all amounts which would be included under
shareholders' equity on a consolidated balance sheet
of Xxxx Canada and its subsidiaries determined on a
consolidated basis plus inter-company indebtedness of
Xxxx Canada and its subsidiaries which is postponed and
subordinated to the Bank in a form and manner
satisfactory to the Bank in its sole discretion, all
calculated as at the date of determination in
accordance with generally accepted accounting
principles established by the Canadian Institute of
Chartered Accountants or any successor thereto
("Canadian GAAP"); provided that any amortization of
goodwill, deferred financing fees or license fees
(including any write-offs of deferred financing fees and
license fees) shall not be taken into account in
determining Consolidated Net Worth; and
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ALL AUTOMOTIVE INDUSTRIES CANADA, INC.
(b) not to incur, nor to permit its subsidiaries to incur,
directly or indirectly, any indebtedness or liability for
borrowed money after the date hereof, whether actual or
contingent (including, without limitation, liability
under any guarantee) other than the re-financing of any
existing obligation of Xxxx Canada as disclosed above in
the section hereof captioned REPRESENTATIONS AND
WARRANTIES, amounts that the Bank is satisfied are
incurred in the normal course of business and indebtedness
and liability for borrowed money incurred to Affiliates.
EVENTS OF Upon the occurrence and continuation of any Event of Default, the
DEFAULT Bank may terminate the Credit and/or demand payment of all
indebtedness and liability outstanding and accrued hereunder to the
date of demand and proceed to take such steps as it deems fit. Each
Borrower agrees that an Event of Default occurring with respect to
the other Borrower shall constitute an Event of Default hereunder
with respect to itself also, and, subject to the provisions of this
Agreement, upon the occurrence of an Event of Default, the Bank
shall not be limited in the remedies that may be legally available
to it with respect to either Borrower.
An Event of Default shall occur if:
(1) either Borrower fails to pay any amount of principal
within 3 Business Days of when due or fails to pay any
amount of interest, fees or other amounts within 10
Business Days of when due under the Credit, or makes any
representation or warranty hereunder which is incorrect in
any material respect;
(2) either Borrower breaches any material covenant hereof
(including, without limitation, any covenant made
hereunder in the above section captioned COVENANTS) or
fails to comply with any other material term or condition
hereof and such breach of covenant or material
non-compliance (other than a covenant to pay or a covenant
impossible to remedy or a material breach of any
representation or warranty) continues for 10 Business Days
or more after notice to remedy same; or
(3) either Borrower or any subsidiary, where subsidiary is a
majority owned company, of either Xxxxxxxx admits its
inability to pay its debts generally; becomes a bankrupt
(voluntarily or involuntarily); or, becomes subject to any
proceeding seeking liquidation, rearrangement, relief of
creditors or the appointment of a receiver or trustee
over, or any judgment or order which has or might have a
material and
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ALL AUTOMOTIVE INDUSTRIES CANADA, INC.
adverse effect on, any substantial part of its property or
undertaking; unless, in the event of an involuntary
bankruptcy or a proceeding for any of the remedies
specified above in this section (other than a voluntary
bankruptcy), the affected corporation has obtained a
dismissal, permanent stay or other similar disposition
not more than 60 days from (I) the date of the filing of
a petition, in the case of an involuntary bankruptcy, or
(ii) the date of service of the relevant statement of
claim, application or other process, in the case of any
other proceeding; or
(4) Lear Canada, any subsidiary or affiliate of Lear Canada
(including, without limitation, Automotive Industries):
(a) fails to pay any of its (other) indebtedness or
liability when due, such failure continues after any
applicable grace period specified in an agreement or
instrument relating to such (other) indebtedness or
liability and, as a result thereof, Xxxx Canada or
applicable subsidiary is then in default of payment
of an aggregate principal amount of indebtedness and
liability of $10,000,000 U.S. (or the Canadian
dollar equivalent thereof) or more; or
(b) permits any material default under any agreement or
instrument relating to its (other) indebtedness or
liability, or any other event, to occur and to
continue after any applicable grace period specified
in such agreement or instrument and the effect of
such default or event is to accelerate, or to permit
the acceleration of, the maturity of that
indebtedness or liability such that the aggregate
principal amount of the indebtedness and liability
incurred by Xxxx Canada or applicable subsidiary
which then has been or may be accelerated by the
relevant creditor(s) exceeds $10,000,000 U.S. (or
the Canadian dollar equivalent thereof);
(irrespective of whether either of the aforesaid
aggregate principal amounts, or any portion thereof, is
incurred jointly, severally or jointly and severally,
provided that the calculation of such aggregate principal
amounts shall be made without duplication); or
(5) subject to the above paragraphs (1) and (4) of this
section, an "Event of Default" within the meaning of the
Syndicated Credit Agreement occurs thereunder as a result
of any of the events or circumstances specified in
Section 9 (h) thereof; or
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ALL AUTOMOTIVE INDUSTRIES CANADA, INC.
(6) subject to the above paragraphs (1), (4) and (5) of this
section, any other event of default occurs under the
Syndicated Credit Agreement or any successor thereto which
results in the acceleration of any amount of the Parent
Company's indebtedness or liability outstanding thereunder
and/or the termination of the lenders' commitments
thereunder; or
(7) any course of action is undertaken by Xxxx Canada or any
material subsidiary of Xxxx Canada, or with respect to
such corporation or its capital stock by another party,
which is intended to result in, or would result (in the
reasonable opinion of the Bank) in, its reorganization or
reconstruction, or its consolidation, amalgamation or
merger with another corporation, except when Lear Canada
may wish to amalgamate with Automotive Industries, or the
transfer of all or substantially all of the undertaking
and assets of such corporation; or
(8) there occurs or is announced or is scheduled any change in
the ownership of Lear Canada such that the Parent Company
or any wholly-owned subsidiary of the Parent Company
ceases, or would cease, to beneficially own 100% of the
issued and outstanding capital stock in Lear Canada at
any time; or
(9) any Affiliate of Lear Canada (including, without
limitation, Automotive Industries) or of a subsidiary of
Lear Canada which is a party to a postponement and
subordination agreement entered into with the Bank (a
"Postponement and Subordination Agreement") fails to
substantially perform, observe or otherwise comply with
any material term or condition of that Postponement and
Subordination Agreement and such failure continues for 15
Business Days or more after notice given by the Bank to
the applicable Affiliate to remedy same; or any such
Affiliate party to a Postponement and Subordination
Agreement denies, to any extent, its obligations under
such Postponement and Subordination Agreement or claims
such Postponement and Subordination Agreement to be, with
respect to itself or any other party thereto, invalid or
withdrawn in whole or in part; or any Postponement and
Subordination Agreement is invalidated in whole or in
part by any Act, regulation or governmental action; or any
Postponement and Subordination Agreement ceases to be the
valid, binding and enforceable obligation of the applicable
Affiliate(s).
19
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ALL AUTOMOTIVE INDUSTRIES CANADA, INC.
CHANGE OF No amendment or other modification, substitution, abolition or
INTERPRETATION waiver to or of:
(I) any provision of the Syndicated Credit Agreement, or any
portion of any provision of such agreement, which is
specifically referenced in this Agreement, including,
without limitation, any defined term of the
Syndicated Credit Agreement referenced herein (each a
"Referenced Term"); or
(ii) any defined term of the Syndicated Credit Agreement which
is used in or is otherwise relevant to any Referenced Term
but which is not specifically referenced in this Agreement
(each a "Referenced Term" also)
shall be binding upon the Bank for the purposes of this
Agreement unless the Bank gives its prior written consent
thereto for the express purpose of the relevant amendment,
modification, substitution, abolition or waiver, which consent
may be evidenced by the Bank's execution of a consent pursuant
to the Syndicated Credit Agreement. Each Referenced Term shall
survive termination of or the Bank's withdrawal from the
Syndicated Credit Agreement, any transfer of any or all of the
rights and obligations of the Parent Company or any lender
thereunder and shall survive the invalidity of the Syndicated
Credit Agreement or any portion of any provision or defined
term of such agreement which constitutes a Referenced Term for
the purposes of this Agreement.
DETERMINATION The Bank shall have the right to determine at any time, and in
its discretion reasonably exercised, as to whether any event,
circumstance or thing envisaged in this Agreement is or would
be "material", "adverse" or "substantial", as such terms are
used herein. Any accounting terms used and not specifically
defined herein shall be construed in accordance with Canadian
GAAP or, as applicable, generally accepted U.S. accounting
principles, consistently applied, and except as may be
otherwise provided herein all financial data and statements
submitted pursuant to this Agreement shall be prepared in
accordance with such principles.
20
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ALL AUTOMOTIVE INDUSTRIES CANADA, INC.
JOINT AND The obligation of the Borrowers hereunder with respect to the
SEVERAL indebtedness and liability of Automotive Industries incurred
LIABILITY under this Agreement shall be joint and several between the
Borrowers, one for the other. The obligation of the Borrowers
hereunder shall not be limited, lessened or discharged by any
act on the part of the Bank or either or both of the Borrowers
save due performance by the Borrowers and each of them.
INDEMNITY If the introduction or implementation of or any change in or
PROVISIONS in the interpretation of, or any change in its application to
a Borrower of, any law or any regulation or guideline issued
by any central bank or other governmental authority (whether
or not having the force of law), including, without
limitation, any reserve or special deposit requirement or any
tax (other than tax on the Bank's general income) or any
capital requirement, has due to the Bank's compliance the
effect, directly or indirectly, of (I) increasing the cost to
the Bank of performing its obligations hereunder or under any
BA or Documentary Instrument; (ii) reducing any amount
received or receivable by the Bank or its effective return
hereunder or in respect of any BA or Documentary Instrument or
on its capital; or (iii) causing the Bank to make any payment
or to forgo any return based on any amount received or
receivable by the Bank hereunder or in respect of any BA or
Documentary Instrument, then upon receipt by Xxxx Canada of a
certificate from the Bank setting forth in reasonable detail
any additional costs, reduced amount receivable or foregone
return, the applicable Borrower shall pay such amount as shall
compensate the Bank for any such cost, reduction, payment or
forgone return. Each Borrower shall further indemnify the
Bank for all costs, losses and expenses which may at any time
be imposed on, incurred by or asserted against the Bank in any
way relating to or arising out of the execution, delivery or
enforcement of this Agreement, the transactions contemplated
hereby (including, without limitation, the making and
maintaining of any Availment hereunder) and/or the early
termination of any LIBOR Period and agrees that the Bank shall
have no liability to either Borrower for any reason in
respect of any Availment other than on account of the Bank's
gross negligence or wilful misconduct. Any certificate of the
Bank in respect of the foregoing will be conclusive and
binding upon each Borrower, except for manifest error,
provided that the Bank shall determine the amounts owing to it
in good faith using any reasonable averaging and attribution
methods.
INDEMNITY FOR
ENVIRONMENTAL
HAZARDS Each Borrower hereby represents and warrants that its
business and assets and those of its material subsidiaries are
operated in substantial compliance with applicable
environmental laws, rules,
21
To: XXXX CORPORATION CANADA LTD. AND Page 21
ALL AUTOMOTIVE INDUSTRIES CANADA, INC.
regulations and orders ("Environmental Laws") and that no
enforcement action in respect thereof is threatened or
pending, to the best of the knowledge, information and belief,
after due enquiry, of each and every senior officer of such
Borrower who could reasonably be expected to have knowledge
of such matters. Each Borrower covenants to and to cause its
subsidiaries to continue to so operate and permit the Bank to
conduct inspections and appraisals of all or any of its and
its subsidiaries' records, business and assets at reasonable
times upon prior written notice to the applicable Borrower at
any time and from time to time at such Borrower's expense to
ensure such compliance. If the Bank is required to expend any
funds in compliance with Environmental Laws, the applicable
Borrower shall indemnify the Bank in respect of such
expenditures as if an advance had been made to such Borrower
under this Agreement for such purpose; provided that the Bank
shall have delivered to the applicable Borrower a certificate
setting forth in reasonable detail the basis for its
expenditures, including the Environmental Laws implicated and
the amount and nature of such expenditures.
REPORTING Xxxx Canada shall provide to the Bank, to the attention of
Unit Head, Corporate Banking - Ontario, 00 Xxxx Xxxxxx Xxxx,
Xxxxxxx, Xxxxxxx X0X 0X0:
(1) unaudited, quarterly, consolidated financial statements
of Xxxx Canada within 75 days of the end of each of the
first 3 quarters of each of its fiscal years;
(2) audited, annual, consolidated financial statements of
Xxxx Canada within 150 days of each of its fiscal
year-ends;
(3) quarterly certificates of compliance, supported by
detailed calculations:
(i) demonstrating that Xxxx Canada has maintained all
financial performance tests prescribed in this
Agreement and confirming that no Event of Default
has occurred or is continuing hereunder;
(ii) demonstrating that the Parent Company has
maintained all financial performance tests
prescribed in the Syndicated Credit Agreement and
further confirming that no event of default has
occurred or is continuing thereunder; and
(iii) to confirm the Coverage Ratio affecting the
Pricing Levels for certain interest rates and fees
hereunder (determined in accordance with the
Interest Rate/Fee Adjustments section hereof) which
will be in effect, subject to the terms of the
Interest Rate/Fee
22
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ALL AUTOMOTIVE INDUSTRIES CANADA, INC.
Adjustments section hereof, for the 90-day period
commencing on the second Business Day immediately
following the earlier of the Bank's receipt of a
certificate and the due date therefor;
with each certificate to be signed by a senior executive
officer of Xxxx Canada and the Parent Company and to be
provided as soon as feasible after the end of each fiscal
quarter of Xxxx Canada and in any event (if not already
provided) within 60 days of the end of each of the first
3 quarters of each of Lear Canada's fiscal years and
within 150 days of each of Lear Canada's fiscal
year-ends; and
(4) such other information as the Bank may reasonably request.
EXPENSES All reasonable fees and out-of-pocket expenses of the Bank in
respect of preparation and enforcement of this Agreement will be
for the account of the applicable Borrower.
EXCHANGE Except as otherwise provided hereunder, the Canadian dollar
EQUIVALENCIES exchange equivalent of U.S. dollars shall be determined by the
Bank in accordance with its normal practices from time to time.
The aggregate amount of Canadian dollar Availments and the
Canadian dollar exchange equivalent of U.S. dollar Availments
outstanding at any time under the Credit shall not exceed the
Canadian dollar committed limit of the Credit at such time, and
for such purposes the Bank may require any such excess resulting
for any reason to be repaid within 30 days of notice thereof to
the applicable Borrower and until such repayment may refuse to
allow a drawdown under the Credit.
PAYMENTS Unless otherwise directed by the appropriate party, all
disbursements to a Borrower shall be made into an account
designated by such Borrower and all payments to the Bank shall
be made in the currency in respect of which the obligations
requiring such payment arose by depositing such payments
(whether by wire transfer or otherwise) into an account
designated by the Bank at the Branch for value on the due date.
Upon the occurrence and continuation of any Event of Default
hereunder, each Borrower hereby acknowledges that the Bank shall
be entitled, from time to time and at any time, to the fullest
extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing
by the Bank to or for the credit or the account of the affected
Borrower against any and all of the obligations of such
Borrower now or hereafter
23
To: XXXX CORPORATION CANADA LTD. AND Page 23
ALL AUTOMOTIVE INDUSTRIES CANADA, INC.
existing under this Agreement, irrespective of whether or not
the Bank shall have made any demand under this Agreement. The
currency of account of all payments contemplated hereunder
shall be of the essence of this Agreement.
EVIDENCE OF Each Borrower acknowledges that the actual recording of any
INDEBTEDNESS Availment under the Credit and interest, fees and other amounts
due therefor under this Agreement in an account of such
Borrower maintained by the Bank in respect thereof and payments
made under the Credit in accordance with this Agreement shall
constitute, except for manifest error, conclusive evidence
of such Borrower's indebtedness and liability from time to time
under this Agreement in respect of the Credit; provided that
the failure of the Bank to record the indebtedness and
liability of such Borrower in such account shall not affect the
obligation of such Borrower to pay or repay such indebtedness
and liability in accordance with this Agreement.
JUDGEMENT
CURRENCY The obligation of each Borrower hereunder to make payments in
U.S. dollars shall not be discharged or satisfied by any tender
or recovery pursuant to any judgment expressed in or converted
into Canadian dollars except to the extent to which such tender
or recovery shall result in the effective receipt by the Bank
of the full amount of U.S. dollars so payable hereunder.
Accordingly, the obligation of each Borrower shall be
enforceable as an alternative or additional cause of action for
the purpose of recovery in Canadian dollars of the amount (if
any) by which such effective receipt shall fall short of the
full amount of U.S. dollars so payable hereunder and shall not
be affected by any judgment being obtained for any other sums
due hereunder.
SEVERABILITY The invalidity or unenforceability of any particular provision
of this Agreement shall not affect any other provision herein
and the Agreement shall be construed as if the invalid or
unenforceable provision had been omitted.
ASSIGNABILITY Neither Borrower may assign this Agreement. The Bank may
& GOVERNING LAW assign or grant participation in its rights and obligations
hereunder to any of its subsidiaries or affiliates without
the consent of either Borrower, and may assign or grant
participation in its rights and obligations hereunder to any
other third party with the prior written consent of Xxxx Canada
(not to unreasonably withheld), with each such assignee or
participant to be entitled to rely on the section headed
INDEMNITY PROVISIONS as set out above. This Agreement shall be
construed in accordance with the law of the Province of Ontario.
24
To: XXXX CORPORATION CANADA LTD. AND Page 24
ALL AUTOMOTIVE INDUSTRIES CANADA, INC.
By: ______________________________
Name:_________________________
Title: ______________________
25
To: XXXX CORPORATION CANADA LTD. AND Page 25
ALL AUTOMOTIVE INDUSTRIES CANADA, INC.
Please indicate your acceptance of this Agreement by signing and returning to
the Bank the enclosed duplicate copy of this letter, together with Schedules
"A" and "B" hereto, on or before July 11, 1996, failing which the provisions
hereof shall be of no force or effect. By its execution hereof, Xxxx Canada
also acknowledges, agrees and confirms to the Bank that, without limitation, it
is and shall continue to be indebted or liable to the Bank, as the case may be,
for the amount(s) as properly recorded in the loan account for the predecessor
agreement hereto dated April 19, 1995 which were incurred under or in
connection with that agreement, and that all amounts so recorded shall
constitute indebtedness and liability outstanding under this Agreement, to be
discharged in accordance with the provisions hereof.
Yours truly,
THE BANK OF NOVA SCOTIA
By: ___________________________
X.X. Xxxxx
By: ____________________________
X.X. XxXxxxx
XXXX CORPORATION CANADA LTD.
By: __________________________ Accepted this ___ day
Name: ____________________ of _______, 1996.
Title: ___________________
By: __________________________
Name: ____________________
Title: ___________________
AII AUTOMOTIVE INDUSTRIES CANADA, INC.
By: __________________________ Accepted this ___ day
Name: ____________________ of _________, 1996.
Title: ___________________
26
To: XXXX CORPORATION CANADA LTD. AND Page 26
ALL AUTOMOTIVE INDUSTRIES CANADA, INC.
By: __________________________
Name: ____________________
Title: ___________________
27
SCHEDULE "A"
DOCUMENTARY INSTRUMENTS
This Schedule is part of the letter loan agreement (the "Agreement") dated
as of July 11, 1996, among The Bank of Nova Scotia (the "Bank"), Xxxx
Corporation Canada Ltd. (the "Applicant") and AII Automotive Industries Canada,
Inc. Canadian and U.S. dollar denominated commercial and standby letters of
credit and letters of guarantee (each a "Documentary Instrument"), up to a
maximum aggregate amount outstanding at any time not exceeding $2,000,000 Cdn.,
shall be Availments which may be obtained by the Applicant under the Revolving
Term Credit referred to in the Agreement, provided that each Documentary
Instrument shall be in form satisfactory to the Bank and have a term to expiry
of not more than 365 days and further provided that the issuance thereof will
not contravene any law, regulation or order applicable to such Documentary
Instrument in any jurisdiction. Each Commercial Documentary Instrument shall
be issued subject to the additional terms set forth in Schedule "B" attached
hereto. All other capitalized terms not defined herein shall have the
respective meanings given to them in the Agreement.
IN CONSIDERATION of the Bank issuing each Documentary Instrument, the
Applicant hereby agrees as follows:
1. The availability of the Credit shall be reduced by the face amount of
each Documentary Instrument for and during the period of time that the Bank has
a contingent liability thereunder. The Applicant shall pay, upon issuance of
each Documentary Instrument, a per annum fee fluctuating in accordance with the
applicable Pricing Level as follows:
Pricing Issuance Fee
Level Per Annum (%)
------- -------------
Level 1 0.75
Level 2 0.625
Level 3 0.50
Level 4 0.25
In each case, such fee shall be calculated in each case on the face amount of
such Documentary Instrument for the actual number of days to elapse, based upon
a year of 365 days, from and including the date of issuance thereof to the
applicable date of expiry. The issuance fee shall be recalculated each time a
particular Documentary Instrument is reduced and the Bank will refund to the
Applicant any unearned issuance fee as a result of reductions in or
cancellations or as a result of a change in the Pricing Level of the particular
Documentary Instrument from the date of recalculation hereunder, provided that
in no event shall the minimum issuance fee paid in respect of the particular
Documentary Instrument be less than the greater of $100 Cdn. or U.S., as
applicable, or 1/4 of 1% per annum of the face amount of the Documentary
Instrument issued or renewed. Each
28
-2-
Documentary Instrument may be converted to another Availment, but only on the
expiry or cancellation of such Documentary Instrument. All drafts, bills of
exchange, receipts, acceptances, demands and other requests for payment drawn
or issued under a Documentary Instrument (any such instrument being a "Draft")
and all other amounts paid by the Bank under or in connection with any
Documentary Instrument shall constitute under the Credit a Prime Rate Advance
to the extent that such amounts are in Canadian dollars and a Base Rate Advance
to the extent that such amounts are in U.S. dollars.
2. The Applicant shall pay to the Bank all of the Bank's contingent
liability in respect of (I) any Documentary Instrument outstanding upon any
termination of the Credit, and (ii) any Documentary Instrument which becomes
the subject matter of any order, judgment, injunction or other such
determination (an "Order"), or any petition or other application for any Order
by the Applicant or any other party, restricting payment by the Bank under and
in accordance with such Documentary Instrument or extending the Bank's
liability under such Documentary Instrument beyond the expiration date stated
therein, provided that payment in respect of each such Documentary Instrument
shall be due forthwith upon demand and in the currency in which such
Documentary Instrument is denominated (the "Instrument Currency"); provided
that, subject to the provisions of paragraph (3) of the section below captioned
COVENANTS (Covenants of Lear Canada and Automotive Industries), no such payment
shall be required to be made by the Applicant with respect to any Documentary
Instrument prior to its date of expiry if such Documentary Instrument is
outstanding at the time of the Applicant's receipt of any notice of repayment
given by the Bank to the Applicant in accordance with the aforesaid paragraph
(3) of the section of the Agreement captioned COVENANTS.
3. The Bank hereby agrees that it will, with respect to each Documentary
Instrument subjected to any such demand for payment under the preceding
section, upon the later of:
(a) the date on which any final and non-appealable order, judgment or other
such determination has been rendered or issued either terminating any
applicable Order, or permanently enjoining the Bank from paying under such
Documentary Instrument; and
(b) the earlier of:
(I) the date on which either the original counterpart of such
Documentary Instrument is returned to the Bank for cancellation or the
Bank is released by the beneficiary thereof from any further
obligations in respect of such Documentary Instrument; and,
(ii) the expiry of such Documentary Instrument;
pay to the Applicant an amount in the applicable Instrument Currency equal to
any excess of the amount received by the Bank hereunder in respect of the
Bank's contingent liability under such Documentary Instrument (the "Received
Amount") over the equivalent in such Instrument Currency of the total of
amounts applied to reimburse the Bank for amounts paid by it under or in
connection with such Documentary Instrument (the Bank having the
right to so appropriate an aggregate sum equal to the amounts paid by it under
the applicable Documentary Instrument), together with an additional amount in
such
29
-3-
Instrument Currency computed by applying a per annum rate as set out below
to the amount of such excess from time to time. The applicable per annum rate
shall equal 3% per annum less than the Prime Lending Rate, if the applicable
Documentary Instrument is denominated in Canadian dollars or 3% less than the
Bank's Base Rate Canada, if the applicable Documentary Instrument is
denominated in U.S. dollars. Such additional amount shall be calculated daily
on the basis of a 365 day year for the actual number of days elapsed from and
including the date of payment to the Bank of the Received Amount to (but not
including) the date of return to the Applicant of the excess.
4. Amounts not paid when due hereunder shall, for the purposes of the
Agreement, be deemed to be amounts not paid when due for Prime Rate Advances if
in respect of Canadian dollars and Base Rate Advances if in respect of U.S.
dollars.
5. The obligations of the Applicant hereunder shall be absolute,
unconditional and irrevocable and shall not be reduced by any event or
occurrence including, without limitation, any lack of validity or
enforceability of a Documentary Instrument, or any Draft paid or acted upon by
the Bank or any of its correspondents being fraudulent, forged, invalid or
insufficient in any respect, or any claims which the Applicant may have against
any beneficiary or transferee of any Documentary Instrument; provided that the
Bank shall indemnify the Applicant for any cost, expense or other liability
resulting from the Bank's negligence or wilful misconduct. The obligations of
the Applicant hereunder shall remain in full force and effect and shall apply
to any alteration to or extension of the expiration date of any Documentary
Instrument or any standby letter of credit issued to replace, extend or alter
any Documentary Instrument.
6. Any action, inaction or omission taken or suffered by the Bank or any
of the Bank's correspondents under or in connection with a Documentary
Instrument or any Draft made thereunder, if in good faith and in conformity
with foreign or domestic laws, regulations or customs applicable thereto shall
be binding upon the Applicant and shall not place the Bank or any of its
correspondents under any resulting liability to the Applicant. Without
limiting the generality of the foregoing, the Bank and its correspondents may
receive, accept or pay as complying with the terms of a Documentary Instrument,
any Draft thereunder, otherwise in order which may be signed by, or issued to,
the administrator or any executor of, or the trustee in bankruptcy of, or the
receiver for any property of, or other person or entity acting as the
representative or in the place of, such beneficiary or its successors and
assigns. The Applicant covenants that it will not take any steps against the
Bank or any of its correspondents, issue any instructions to the Bank or any of
its correspondents or institute any proceedings against the Bank or any of its
correspondents intended to derogate from the right or ability of the Bank or
its correspondents to honour and pay any Draft or Drafts.
7. The Applicant agrees to pay, upon 10 days' prior written notice
thereof, all reasonable costs and expenses of the Bank incurred in the
enforcement of the Bank's rights under this Agreement and, further, will
indemnify the Bank on demand against all loss or damage to the Bank arising out
of the issuance of or other action taken by the Bank in connection with any
Documentary Instrument including, without limitation, the costs relating to any
legal process instituted by any party restraining or seeking to restrain the
Bank from accepting or paying any Draft; provided that the Bank shall have
delivered to
30
-4-
the Applicant a certificate setting forth in reasonable detail all such costs,
expenses or damages. The Applicant also agrees that the Bank shall have no
liability to it for any reason in respect of the issuance or payment of or
under any Documentary Instrument other than on account of the Bank's negligence
or wilful misconduct. All payments to be made to the Bank hereunder shall be
made for value on the date due and free of any withholding tax or levy, other
than taxes imposed on the net income of the Bank, and such taxes or levies,
other than as excepted, shall be paid by the Applicant. The provisions of this
paragraph will survive payment in full hereunder.
8. This Schedule and Schedule "B" shall be binding upon the Applicant,
its successors and assigns and shall enure to the benefit of the Bank, its
successors, transferees and assigns. Any provision of this Schedule and any
provision of Schedule "B" which is void or unenforceable shall be ineffective
to the extent void or unenforceable and shall be severable from the other
provisions of the applicable Schedule and this Schedule and Schedule "B" shall
be interpreted as if such provision were not included in Schedule "A" or
Schedule "B", as applicable. Time and the currency of payment hereunder shall
be deemed to be of the essence hereof. None of the terms of this Schedule or
of Schedule "B" shall be amended except in writing signed by the Bank and the
Applicant and any waiver by the Bank shall not constitute any further waiver.
The Uniform Customs and Practice for Documentary Credits as most recently
published by the International Chamber of Commerce (the "UCP") shall in all
respects apply to each standby or commercial letter of credit and shall be
deemed for such purpose to be a part hereof as if fully incorporated herein.
In the event of any conflict between the UCP and the governing law of the
Agreement, the UCP shall prevail to the extent necessary to remove the
conflict.
31
SCHEDULE "B"
COMMERCIAL DOCUMENTARY INSTRUMENTS
This Schedule is part of the letter loan agreement (the "Agreement") dated
as of July 11, 1996, among The Bank of Nova Scotia (the "Bank"), Xxxx
Corporation Canada Ltd. (the "Applicant") and Automotive Industries Canada,
Inc. Canadian and U.S. dollar denominated commercial letters of credit (each a
"Commercial Documentary Instrument") shall be Availments which may be obtained
under the Revolving Term Credit referred to in the Agreement, provided that
each Commercial Documentary Instrument shall be in form satisfactory to the
Bank and have a term to expiry of not more than 365 days and further provided
that the issuance thereof will not contravene any laws, regulations or orders
applicable to such Documentary Instrument in any jurisdiction. All other
capitalized terms not defined herein shall have the respective meanings given
to them in the Agreement.
IN CONSIDERATION of the issue by the Bank from time to time of one or more
Commercial Documentary Instruments prepared in accordance with an application
or applications which have been or will be entered into by the Applicant from
time to time during the term of the Agreement and in addition to the terms
contained in Schedule "A" hereto, the Applicant hereby agrees with the Bank as
follows:
1. If a Commercial Documentary Instrument does not specify the unit price
of the goods, wares and merchandise and other commodities which may be
purchased or shipped under or by virtue of such Commercial Documentary
Instrument (the "Goods") and does not state that partial shipments are not
permitted, the Bank shall be entitled to be paid the full amount of any Draft
honoured in respect of a partial shipment notwithstanding that it is for an
amount that is disproportionate to the relative partial shipment.
2. All users of a Commercial Documentary Instrument shall be deemed to be
agents of the Applicant and neither the Bank nor its agents or correspondents
shall be responsible for the negligence or fraudulence of any user of a
Commercial Documentary Instrument, for the existence, nature, condition,
description, value, quality or quantity of the Goods, for the packing,
shipment, export, import, handling, storage or delivery thereof, or for the
safety or preservation thereof at any time, and neither the Bank nor its agents
or correspondents shall be liable for any loss resulting from the total or
partial destruction of or damage to or deterioration or fall in value of the
Goods, or from the delay in arrival or failure to arrive of either the Goods or
of any of the documents relating thereto, or from the inadequacy or invalidity
of any document or insurance, or from the default or insolvency of any insurer,
carrier or other person issuing any document with respect to the Goods, or from
failure to give or delay in giving notice of arrival of the Goods or any other
notice, or from any error in or misinterpretation of or default or delay in the
sending, transmission, arrival or delivery of any message, whether in cipher or
not, by post, telegraph, cable, wireless or otherwise, and the obligations
hereunder of the Applicant to the Bank shall not be in any way lessened or
affected if any Draft or document accepted, paid or acted upon by the Bank or
its agents or correspondents does not bear a reference or sufficient reference
to a Commercial Documentary Instrument or if no note thereof is made on a
Commercial Documentary Instrument.
32
To: XXXX CORPORATION CANADA LTD. AND Page 24
AII AUTOMOTIVE INDUSTRIES CANADA, INC.
Please indicate your acceptance of this Agreement by signing and returning to
the Bank the enclosed duplicate copy of this letter, together with Schedules "A
and "B" hereto, on or before July 11, 1996, failing which the provisions hereof
shall be of no force or effect. By its execution hereof, Xxxx Canada also
acknowledges, agrees and confirms to the Bank that, without limitation, it is
and shall continue to be indebted or liable to the Bank, as the case may be, for
the amount(s) as properly recorded in the loan account for the predecessor
agreement hereto dated April 19, 1995 which were incurred under or in connection
with that agreement, and that all amounts so recorded shall constitute
indebtedness and liability outstanding under this Agreement, to be discharged in
accordance with the provisions hereof.
Yours truly,
THE BANK OF NOVA SCOTIA
By: X.X. Xxxxx
----------------------
X.X. Xxxxx
By: X.X. XxXxxxx
----------------------
X.X. XxXxxxx
XXXX CORPORATION CANADA LTD.
By: [sig]
--------------------------------
Name: ACCEPTED THIS ___ DAY
------------------------- OF ________, 1996.
Title:
------------------------
By:
--------------------------------
Name:
-------------------------
Title:
------------------------
AII AUTOMOTIVE INDUSTRIES CANADA, INC.
By:
--------------------------------
Name: ACCEPTED THIS ___ DAY
------------------------- OF ________, 1996.
Title:
------------------------
