Exhibit 4.3
CDN. $30,000,000
REVOLVING CREDIT FACILITY
MITEL NETWORKS CORPORATION,
As Borrower
- and -
BANK OF MONTREAL,
As Administrative Agent,
Lead Arranger and Lender
- and -
THE LENDERS FROM TIME TO TIME
PARTIES HERETO
---------------------------------------
AMENDED AND RESTATED CREDIT AGREEMENT
MADE AS OF FEBRUARY 27, 2003
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TABLE OF CONTENTS
ARTICLE 1
INTERPRETATION
1.1 Definitions................................................2
1.2 Headings..................................................16
1.3 Extended Meanings.........................................16
1.4 References to the Administrative Agent and Lenders........16
1.5 Accounting Terms and Practices............................16
1.6 Non-Banking Days..........................................17
1.7 References to Time of Day.................................17
1.8 Severability..............................................17
1.9 Currency..................................................17
1.10 References to Statutes....................................17
1.11 References to Agreements..................................17
1.12 Consents and Approvals....................................17
1.13 Schedules.................................................18
ARTICLE 2
THE FACILITY
2.1 The Facility..............................................18
2.2 Purpose...................................................18
2.3 Availability..............................................18
2.4 Making of an Advance......................................19
2.5 Participation of Each Lender..............................20
2.6 Repayment of the Facility.................................20
2.7 Cancellation or Reduction of the Facility.................21
2.8 Application of Repayments.................................22
2.9 Interest on Prime Rate Advances...........................23
2.10 Interest on U.S. Base Rate Advances.......................23
2.11 Libor Advances............................................23
2.12 Method and Place of Payment...............................24
2.13 Commitment Fees...........................................25
2.14 Conversion Options........................................25
2.15 Execution of Notices......................................27
2.16 Evidence of Indebtedness..................................27
2.17 Interest on Unpaid Costs and Expenses.....................28
2.18 Criminal Rate of Interest.................................28
2.19 Compliance with the Interest Act (Canada).................28
2.20 Nominal Rate of Interest..................................28
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ARTICLE 3
LETTERS OF CREDIT
3.1 Term and Availability.....................................28
3.2 Reimbursement.............................................29
3.3 Indemnity for Costs.......................................30
3.4 Fees......................................................30
ARTICLE 4
BANKERS' ACCEPTANCES AND BA EQUIVALENT ADVANCES
4.1 Form of Bankers' Acceptance Advance and Interest..........30
4.2 Minimum Amount............................................31
4.3 Term and Interest Periods.................................31
4.4 Purchase of Drafts, Acceptance Fee and Interest...........31
4.5 Payment on Maturity.......................................31
4.6 Waiver of Days of Grace...................................32
4.7 No Market.................................................32
ARTICLE 5
CHANGE OF CIRCUMSTANCES AND INDEMNIFICATION
5.1 Increased Costs...........................................32
5.2 Illegality................................................34
ARTICLE 6
CONDITIONS PRECEDENT TO DRAWDOWN
6.1 Conditions for Closing....................................34
6.2 Conditions for Subsequent Drawdowns.......................37
ARTICLE 7
REPRESENTATIONS AND WARRANTIES
7.1 Representations and Warranties............................37
7.2 Survival of Representations and Warranties................42
ARTICLE 8
COVENANTS
8.1 Affirmative Covenants.....................................42
8.2 Negative Covenants........................................48
8.3 Financial Covenants.......................................50
ARTICLE 9
GUARANTEES
9.1 Guarantors to Provide Guarantees..........................51
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ARTICLE 10
SECURITY
10.1 Borrower's Security Documents.............................51
10.2 Guarantors' Security Documents............................52
ARTICLE 11
DEFAULT AND ACCELERATION
11.1 Events of Default.........................................53
11.2 Acceleration..............................................55
11.3 Remedies Cumulative and Waivers...........................56
11.4 Suspension of Lenders' Obligations........................56
11.5 Application of Payments After an Event of Default.........56
ARTICLE 12
SUCCESSOR COMPANIES
12.1 Certain Requirements in Respect of Merger, Etc............57
12.2 Vesting of Powers in Successor............................58
ARTICLE 13
COSTS, EXPENSES AND INDEMNIFICATION
13.1 Costs and Expenses........................................59
13.2 Indemnification by the Borrower...........................59
13.3 Funds.....................................................59
13.4 General Indemnity.........................................60
13.5 Environmental Claims......................................61
ARTICLE 14
THE ADMINISTRATIVE AGENT
14.1 The Administrative Agent..................................62
14.2 The Administrative Agent's Responsibility.................62
14.3 Administrative Agent's Duties.............................64
14.4 Protection of Administrative Agent........................64
14.5 Indemnification of Administrative Agent...................65
14.6 Termination or Resignation of Administrative Agent........65
14.7 Rights of Administrative Agent as Lender..................66
14.8 Authorized Waivers, Variations and Omissions..............66
14.9 Financial Information Concerning Borrower.................66
14.10 Knowledge of Financial Situation of Borrower..............66
14.11 Legal Proceedings.........................................66
14.12 Capacity as Administrative Agent..........................67
14.13 Capacity as Lead Arranger.................................67
14.14 Deposits or Loans Respecting the Borrower.................67
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ARTICLE 15
GENERAL
15.1 Term......................................................67
15.2 Survival..................................................67
15.3 Benefit of the Agreement..................................67
15.4 Notices...................................................68
15.5 Amendment and Waiver......................................68
15.6 Governing Law.............................................69
15.7 Further Assurances........................................69
15.8 Enforcement and Waiver by the Lenders.....................69
15.9 Execution in Counterparts.................................69
15.10 Assignment by the Borrower................................69
15.11 Assignments and Transfers by the Lenders..................70
15.12 Set-Off...................................................70
15.13 Time of the Essence.......................................71
15.14 Judgment Currency.........................................71
15.15 Equal Ranking of Lenders..................................71
15.16 Sharing of Information....................................72
15.17 Continuing Obligations and Liabilities....................72
SCHEDULE A - BORROWING BASE CERTIFICATE
SCHEDULE B - DRAWDOWN NOTICE
SCHEDULE C - CONVERSION NOTICE
SCHEDULE D - ROLLOVER NOTICE
SCHEDULE E - [Intentionally deleted]
SCHEDULE F - PERMITTED ENCUMBRANCES
SCHEDULE G - LITIGATION
SCHEDULE H - NON-COMPLIANCE MATTERS
SCHEDULE I - SUBSIDIARIES
SCHEDULE J - TRANSFER AGREEMENT
SCHEDULE K - COMMITTED AMOUNTS
SCHEDULE L - BUSINESS PLAN
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AMENDED AND RESTATED CREDIT AGREEMENT
MEMORANDUM OF AGREEMENT made as of the 27th day of February, 2003.
B E T W E E N:
MITEL NETWORKS CORPORATION,
a corporation incorporated under the laws of
Canada, as borrower
(hereinafter referred to as the "Borrower"),
- and -
THE LENDERS FROM TIME TO TIME PARTIES HERETO,
(hereinafter referred to as the "Lenders"),
- and -
BANK OF MONTREAL,
a Canadian chartered bank, as Administrative Agent
and Lead Arranger
(hereinafter referred to in its own capacity as
"BMO" and in its capacity as administrative agent
on behalf of the Lenders, as the "Administrative
Agent"),
WHEREAS pursuant to a credit agreement made as of May 11, 2001, as
amended and restated by an agreement made as of January 21, 2002 and as
subsequently amended by amending agreement made the 12th day of February, 2002
(collectively, as amended, the "Original Credit Agreement"), a revolving credit
facility was made available to the Borrower upon and subject to the terms and
conditions therein set forth;
AND WHEREAS the Borrower and the Lenders have agreed to extend the
Maturity Date and further amend and restate the Original Credit Agreement by
executing and delivering this Agreement;
NOW THEREFORE THIS AGREEMENT WITNESSES that, in consideration of the
premises, the covenants herein contained and other valuable consideration, the
parties hereto agree as follows:
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ARTICLE 1
INTERPRETATION
1.1 Definitions
In this Agreement:
"Acceptance Fee" means, with respect to each Bankers' Acceptance drawn by
the Borrower as borrower hereunder, an amount equal to the product of (i)
the Applicable Margin, (ii) the Face Amount of each such Bankers'
Acceptance purchased by a Lender on the relevant Drawdown Date and (iii) a
fraction (x) the numerator of which is the number of days in the term to
maturity of such Bankers' Acceptance and (y) the denominator of which is
365 days;
"Accounts" means the accounts kept by the Administrative Agent pursuant to
Section 2.16(a) to record the Borrower's liabilities to the Administrative
Agent and each Lender under this Agreement;
"Additional Compensation" has the meaning specified in Section 5.1;
"Administrative Agent" means BMO, in its capacity as administrative agent
for the Lenders hereunder, or any successor Administrative Agent appointed
pursuant to Section 14.6;
"Administrative Agent's Counsel" means the firm of Davies ▇▇▇▇ ▇▇▇▇▇▇▇▇ &
Vineberg LLP, Toronto, Ontario, or such other firm of legal counsel as the
Administrative Agent may from time to time designate;
"Advance" means a Prime Rate Advance, a Bankers' Acceptance Advance, Libor
Advance or a U.S. Base Rate Advance or the issue of a Letter of Credit,
and "Advances" means all of them;
"Affiliate" means an affiliated body corporate, partnership, joint venture
or other entity and, for the purposes of this Agreement, (i) one body
corporate, partnership, joint venture or other entity is affiliated with
another if one such body corporate, partnership, joint venture or other
entity is the Subsidiary of or is Controlled by the other or both are
Subsidiaries of the same body corporate, partnership, joint venture or
other entity or each of them is Controlled by the same Person and (ii) if
two bodies corporate, partnerships, joint ventures or other entities are
affiliated with the same body corporate, partnership, joint venture or
other entity at the same time, they are deemed to be affiliated with each
other;
"Agreement" means this agreement and all Schedules attached hereto, as the
same from time to time may be amended, restated, replaced or superseded;
"Agreement Currency" shall have the meaning specified in Section 15.14;
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"Applicable Law" means, with respect to any Person, property, transaction
or event, all present or future applicable laws, statutes, regulations,
rules, orders, codes, treaties, conventions, judgments, awards,
determinations and decrees of any governmental, regulatory, fiscal or
monetary authority or court of competent jurisdiction in any applicable
jurisdiction;
"Applicable Margin" means, (i) until such time as the Borrower has
received net proceeds of $20,000,000 from the issue of equity pursuant to
a Confidential Offering Memorandum dated September 25,2002 from persons
other than any Affiliate of the Borrower, 2.5% per annum in the case of a
Prime Rate Advance or a U.S. Base Rate Advance, 3.5% per annum in the case
of a Libor Advance or a Bankers' Acceptance Advance, and (ii) thereafter,
1.5% per annum in the case of a Prime Rate Advance or a U.S. Base Rate
Advance, 2.5% per annum in the case of a Libor Advance or a Bankers'
Acceptance Advance;
"Arm's Length" has the meaning ascribed thereto for the purposes of the
Income Tax Act (Canada) in effect as of the date hereof;
"Available Amount" means, at any time, the lesser of: (a) the Committed
Amount or its Equivalent Amount in U.S. Dollars, and (b) the Borrowing
Base;
"BA Purchase Price" means the difference between (i) the result (rounded
to the nearest whole cent, with one-half of one cent being rounded up)
obtained by dividing the Face Amount of such Bankers' Acceptance by the
sum of one plus the product of (x) the BA Reference Discount Rate
multiplied by (y) a fraction, the numerator of which is the number of days
in the term to maturity of such Bankers' Acceptance, and the denominator
of which is 365 and (ii) the Acceptance Fee;
"BA Reference Discount Rate" means the average rate applicable to bankers'
acceptances denominated in Canadian Dollars for the applicable period
appearing on the "Reuters Screen CDOR Page" (as defined in the
International Swaps and Derivatives Association, Inc. 2000 Definitions)
rounded up to the nearest 1/100th of 1% at approximately 10:00 a.m. on the
relevant Drawdown Date; provided that if such rate is not available, the
"BA Reference Discount Rate" shall mean the arithmetic mean of the bid
rates quoted by Bank of Montreal and the other Lenders, if any, at
approximately 10:00 a.m. for the purchase, on the relevant Drawdown Date,
of bankers' acceptances or drafts having an aggregate Face Amount equal to
and with a term to maturity the same as the Bankers' Acceptances to be
purchased by the Lenders on such Drawdown Date;
"Bankers' Acceptance" means a draft or other ▇▇▇▇ of exchange in Canadian
Dollars drawn by the Borrower and accepted by a Lender in accordance with
Article 4;
"Bankers' Acceptance Advance" means the advance of funds to the Borrower
as borrower by way of creation and issuance of Bankers' Acceptances in
accordance with the provisions of Article 4;
"Banking Day" means a day, other than a Saturday or a Sunday or other day
on which banks are required or authorized to close in either Toronto,
Canada or New York, New
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York and, where used in the context of a Libor Advance, which is also a
day on which banks are not required or authorized to close in London,
England and dealings are carried on in the London interbank market;
"Base Rate" means the greater of (i) the variable rate of interest per
annum, expressed on the basis of a year of 365 or 366 days, as the case
may be, established or quoted from time to time by BMO as the reference
rate of interest then in effect for determining interest rates on U.S.
Dollar denominated commercial loans made by it in Canada; and (ii) the
Federal Funds Effective Rate multiplied by a fraction, the numerator of
which is the actual number of days in the year and the denominator of
which is 360, plus 1/2 of 1% per annum;
"BMO" means Bank of Montreal, a Canadian Schedule I chartered bank and any
successor;
"Borrower" means Mitel Networks Corporation, a corporation incorporated
under the Canada Business Corporations Act, and its permitted successors
and assigns;
"Borrower's Security" has the meaning specified in Section 10.1;
"Borrower's Security Documents" has the meaning specified in Section 10.1;
"Borrowing Base" shall mean, at any time, the sum of:
(i) 75% of Eligible Accounts Receivable; plus
(ii) 90% of EDC Receivables; plus
(iii) 100% of trade accounts of the Borrower and the Guarantors
which are secured by bank letters of credit or guarantee
satisfactory to the Required Lenders which bank letters of
credit or guarantees shall have been assigned to the
Administrative Agent if so requested by the Administrative
Agent; less
(iv) an amount equal to the principal amount outstanding at such
time under the EDC Facility.
For purposes of calculating the Borrowing Base, Eligible Accounts
Receivable and EDC Receivables of the Borrower and the Guarantors and the
principal amount outstanding under the EDC Facility, shall be expressed in
Canadian Dollars based on the Equivalent Amount of the value of any such
amounts in U.S. Dollars, Sterling or Euros;
"Borrowing Base Certificate" shall mean a certificate to be executed by
the Borrower and delivered by the Borrower to the Administrative Agent
from time to time in the form attached to this Agreement as Schedule A;
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"Business" means the communications systems business, including research
and development of communications and related products carried on, or to
be carried on, by the Borrower and its Subsidiaries;
"Business Plan" has the meaning specified in Section 6.1(n);
"Canadian Dollars" and "Cdn. $" mean the lawful currency of Canada in
immediately available funds;
"change in law" has the meaning specified in Section 5.1;
"Claims" has the meaning specified in Section 13.4(a);
"Closing Date" means February 27, 2003;
"Commitment" means, with respect to a Lender, the amount set forth
opposite the name of such Lender on Schedule K, or the Equivalent Amount
in U.S. Dollars, subject to reduction pursuant to Section 2.7;
"Committed Amount" means Cdn. $30,000,000, or the Equivalent Amount in
U.S. Dollars, subject to reduction pursuant to Section 2.7;
"Control" and its derivatives means, with respect to control of a
corporation by a Person, the holding (other than by way of security only)
by or for the benefit of that Person, or affiliates of that Person or
others with whom that Person does not deal at Arm's Length of securities
of such corporation or the right to vote or direct the voting of
securities of such corporation to which, in the aggregate, are attached
more than 50% of the votes that may be cast to elect directors of the
corporation, provided that the votes attached to those securities are
sufficient, if exercised, to elect a majority of the directors of the
corporation and means, with respect to control of a Person other than a
corporation, the power to direct or cause the direction of the management
and policies of such Person, directly or indirectly, and whether through
the ownership or control of voting securities, voting rights, contract or
otherwise, without the cooperation of others;
"Conversion" means the conversion of an Advance pursuant to Section 2.14;
"Conversion Notice" means a notice substantially in the form set out in
Schedule C;
"Corporate Distribution" has the meaning specified in Section 8.2(h);
"Counsel to the Borrower" means Gowling ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP or such
other firm of legal counsel as the Borrower may from time to time
designate with the approval of the Administrative Agent, such approval not
to be unreasonably withheld;
"Debt" of any Person means, at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of
such Person evidenced by bonds, debentures, notes, letters of credit or
other similar instruments, (iii) all obligations of such Person to pay the
deferred purchase price of property or services, except trade accounts
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payable within 90 days that arise in the ordinary course of business, (iv)
all obligations of such Person as lessee which are capitalized in
accordance with GAAP, (v) all indebtedness, liabilities and obligations
secured by a Lien on any asset of such Person, whether or not the same is
otherwise indebtedness, liabilities or obligations of such Person, (vi)
all indebtedness, liabilities and obligations of others which is, directly
or indirectly, guaranteed by such Person or which such Person has agreed
(contingently or otherwise) to purchase or otherwise acquire, (vii) all
indebtedness, liabilities and obligations in respect of financial
instruments which are classified as a liability on the balance sheet of
such Person, and (viii) all obligations of such Person to otherwise assure
a creditor against loss;
"Default" means an event which, with the giving of notice or the passage
of time or the making of any determination or any combination thereof as
provided for herein, could become an Event of Default;
"Drawdown" means a drawdown of an Advance;
"Drawdown Date" means, in relation to any Advance, the date, which shall
be a Banking Day, on which the Drawdown of such Advance is made by the
Borrower pursuant to a Drawdown Notice;
"Drawdown Notice" means a notice substantially in the form set out in
Schedule B;
"EBITDA" means, for any Person on a consolidated basis and for any period,
without duplication, the amount equal to net income less interest income,
income tax recoveries and any non-cash income included in net income,
plus, to the extent deducted from net income, interest expense,
depreciation expense, amortization expense, other non-cash expenses and
income tax expenses; provided that foreign exchange gains or losses and
extraordinary or unusual gains or losses, including gains or losses on the
disposition of assets outside the ordinary course of business and
restructuring charges, shall not be included in EBITDA;
"EDC" means Export Development Canada and its successors;
"EDC Facility" means the credit facility in the aggregate maximum
principal amount of Sterling 4,100,000 made available to MNL by EDC
pursuant to a loan agreement dated on or about the date hereof;
"EDC Receivables" means trade accounts of the Borrower and MNI insured by
EDC;
"Eligible Accounts Receivable" means the combined Canadian, United States
and United Kingdom trade accounts of the Borrower and the Guarantors as
determined in accordance with GAAP, but excluding the following:
(a) any trade accounts which are outstanding for more than 90 days from
the date of invoice, except a limited number of extended term
accounts agreed by the Required Lenders to be Eligible Accounts
Receivable;
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(b) trade accounts if the account debtors are located in a jurisdiction
other than Canada, the United States or in the case of trade
accounts of MNL only, the United Kingdom;
(c) trade accounts which are payable in a currency other than Canadian
Dollars, U.S. Dollars or in the case of trade accounts of MNL only,
Sterling or Euros;
(d) trade accounts if the account debtors are Affiliates of the Borrower
or the Guarantors including, for greater certainty, Breconridge
Manufacturing Solutions, Inc., Breconridge Manufacturing Solutions
Corporation and Breconridge Manufacturing Solutions Limited;
(e) accounts subject to a right of set-off if a claim of set-off has
been asserted by the account debtor;
(f) doubtful or disputed accounts;
(g) EDC Receivables;
(h) those accounts referred to in sub-part (iii) of the definition of
Borrowing Base; and
(i) any accounts, including any account not specifically excluded above,
determined by any Lender, in its sole discretion, not to be
eligible;
"Environmental Claims" means any and all enforcement, clean-up, removal or
other governmental or regulatory actions, orders, directions or
proceedings instituted, pending or completed or, to the best of the
knowledge of the Borrower and the Guarantors, threatened or anticipated
pursuant to any Environmental Laws and all claims made or, to the best of
the knowledge of the Borrower and the Guarantors, threatened, by any third
party against the Borrower or any of the Guarantors, any property of the
Borrower or any of the Guarantors or any of their Subsidiaries or any
party having charge, management or control of any property of any of the
Borrower, the Guarantors or their Subsidiaries relating to damage,
contribution, cost recovery, compensation, loss or injury resulting from
any violation or alleged violation of Environmental Laws;
"Environmental Laws" means any present or future applicable federal,
provincial, state, municipal or other local law, statute, regulation or
by-law, code, ordinance, decree, directive, standard, policy, rule, order,
treaty, convention, judgment, award or determination for the protection of
the environment or human health and safety, present or future;
"Equivalent Amount" on any given date in one currency (the "first
currency") of any amount denominated in another currency (the "second
currency") means the amount of the first currency which could be purchased
with such amount of the second currency at the rate of exchange quoted by
BMO at 11:00 a.m. (Toronto time) on such date for the purchase of the
first currency with the second currency;
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"Euro" means the lawful currency of the member states of the European
Union that have adopted the single currency in accordance with the Treaty
establishing the European Community, as amended by the Treaty on European
Union;
"Event of Default" means any of the events described in Section 11.1;
"Face Amount" means, in respect of a Bankers' Acceptance, the amount
payable to the holder thereof on the maturity thereof and means, in
respect of a Letter of Credit, the maximum amount payable to a beneficiary
thereunder;
"Facility" means the revolving credit facility in an aggregate principal
amount of up to Cdn. $30,000,000 (or the Equivalent Amount in U.S.
Dollars) to be made available to the Borrower by the Lenders as set forth
in Article 2;
"Federal Funds Effective Rate" means, for any particular day, the variable
rate of interest per annum, calculated on the basis of a 360-day year as
determined by BMO for the actual number of days elapsed, equal to:
(i) 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 for such day
(or, if such day is not a Banking Day, for the next preceding
Banking Day) by the Federal Reserve Bank of New York, or
(ii) for any Banking Day on which such rate is not so published by
the Federal Reserve Bank of New York, the average of the
quotations for such day for such transactions received by BMO
from three federal funds brokers of recognized standing
selected by BMO in consultation with the Borrower;
"GAAP" means those generally accepted accounting principles consistently
applied in Canada;
"Governmental Receivables" means trade accounts of the Borrower where the
account debtors are the federal government of Canada or the United States
of America or any provincial government or any state government or any
territorial government or any political subdivision thereof, or of any
political subdivision of a political subdivision thereof, and any entity
exercising executive, legislative, judicial, regulatory, administrative or
other function of or pertaining to government;
"Guarantees" means, collectively, (i) the amended and restated guarantee
and security agreement dated as of January 21, 2002 between MNI and the
Administrative Agent, (ii) the amended and restated guarantee and security
agreement dated as of January 21, 2002 between MNSI and the Administrative
Agent, and (iii) the guarantee and indemnity dated July 25, 2001 between
MNL and the Administrative Agent, and, in each case, as may be amended,
supplemented or restated from time to time and "Guarantee" means any of
them;
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"Guarantors" means, collectively, MNI, MNSI and MNL, and their respective
permitted successors and assigns and "Guarantor" means any of them;
"Guarantors' Security" has the meaning specified in Section 10.2;
"Guarantors' Security Documents" has the meaning specified in Section
10.2;
"Hazardous Material" means any contaminant, pollutant or substance that
causes harm or degradation to the surrounding environment or injury to
human health and, without restricting the generality of the foregoing,
includes any pollutant, contaminant, waste, hazardous waste, deleterious
substance or dangerous good present in such quantity or state that it
contravenes or is regulated under any Environmental Laws or gives rise or
could give rise to any liability or obligation under any Environmental
Law;
"Indemnifying Party" has the meaning specified in Section 13.4(c);
"Indemnitee" has the meaning specified in Section 13.4(a);
"Intercreditor Agreement" means the intercreditor agreement made between
the Administrative Agent, for and on behalf of the Lenders, EDC, the
Borrower and the Guarantors, dated the date of this Agreement;
"Interest Date" means the first day of each calendar month;
"Interest Period" means, with respect to a Libor Advance, a period
commencing (i) in the case of the initial Interest Period for such
Advance, on the date of such Advance; and (ii) in the case of any
subsequent Interest Period for such Advance, on the last day of the
immediately preceding Interest Period applicable thereto and ending, in
either case, on the last day of such period as shall be selected by the
Borrower pursuant to the provisions hereof; provided that if any Libor
Advance arises as a result of a Conversion of another type of Advance
pursuant to the provisions hereof, the initial Interest Period for such
Libor Advance after such Conversion shall commence on the date of such
Conversion;
"Lenders" means the Persons listed as lenders on Schedule K and any other
Person that shall have become a party hereto in accordance with the terms
of Section 14.11;
"Letter of Credit" means a term letter of credit, sight letter of credit,
standby letter of credit or documentary letter of credit issued by a
Lender at the request of the Borrower pursuant to Section 3.1;
"Libor Advance" means a loan made by a Lender to the Borrower in U.S.
Dollars on which interest is payable at the Libor Rate plus the Applicable
Margin;
"Libor Interest Payment Date" has the meaning specified in Section
2.11(c);
"Libor Rate" means, for each Interest Period for each Libor Advance, a
rate of interest per annum, calculated on the basis of a year of 360 days,
equal to the London interbank offered rate for U.S. Dollars, at 11:00 a.m.
(London, England time) on the day that is two
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Banking Days prior to the first day of such Interest Period, and having a
term equal to such Interest Period, as such rate is reported on the
display designated as "page 3750" (or any replacement page) by "Telerate -
the Financial Information Network" published by Telerate Systems, Inc. (or
such other company or service as may be nominated by the British Bankers'
Association as the information vendor for the purpose of displaying
British Bankers' Association Interest Settlement Rates for deposits in
U.S. Dollars) and, if such rate is not available, then the rate of
interest per annum, calculated on the basis of a year of 360 days, at
which BMO is offered deposits in U.S. Dollars by prime banks in the London
interbank market at approximately 11:00 a.m. (London, England time) two
Banking Days prior to the first day of such Interest Period for a period
comparable to such Interest Period and in an amount approximately equal to
the amount of the Libor Advance to be outstanding during such Interest
Period;
"Liens" means mortgages, pledges, liens, hypothecs, charges, security
agreements or other encumbrances or other arrangements that in substance
secure payment or performance of an obligation, statutory and other
non-consensual liens or encumbrances and includes the interest of a vendor
or lessor under any conditional sale agreement, capital lease or other
title retention agreement;
"Loan Documents" means, collectively, this Agreement, the Security
Documents and the Intercreditor
Agreement;
"Losses" has the meaning specified in Section 13.4(a);
"Material Agreement" means any agreement, contract or document which is
material to the Business or to the operations, financial condition or
prospects of the Borrower or any of the Guarantors;
"Maturity Date" means February 26, 2004;
"MNI" means Mitel Networks, Inc. a corporation incorporated under the laws
of Delaware and an indirect wholly-owned Subsidiary of the Borrower;
"MNL" means Mitel Networks Limited, a private company limited by shares
incorporated in England and Wales under number 1309629, whose registered
office is at ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇, and an indirect
wholly-owned Subsidiary of the Borrower;
"MNSI" means Mitel Networks Solutions, Inc., a corporation incorporated
under the laws of the State of Delaware and an indirect wholly-owned
Subsidiary of the Borrower;
"Notice of Amount" has the meaning specified in Section 5.1;
"Notification Date" has the meaning specified in Section 13.5(c);
"Officer's Certificate" means a certificate signed by any one of the
following officers of the Borrower: (i) the Chief Executive Officer, (ii)
the Chief Operating Officer, (iii) the Chief Financial Officer, or (iv)
the Treasurer;
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"Original Credit Agreement" shall have the meaning specified in the
recitals to this Agreement;
"Other Taxes" means any present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies which arise
from any payment made hereunder or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement, or any
other document in connection herewith;
"Outstanding Amount" has the meaning specified in Section 2.6(b);
"Participation" of a Lender means the percentage which such Lender's
Commitment with respect to the Facility is of the aggregate Committed
Amount, as such percentage may be adjusted pursuant to this Agreement and
subject to the Administrative Agent's authority to make allocations among
the Lenders as herein provided, or, as the context requires, the
percentage determined as aforesaid of such Lender in any issue of Bankers'
Acceptances, in any Advance or in any repayment thereof or, as the context
may require, in any payment of interest or fees or other payment;
"Permits" has the meaning specified in Section 7.1(i);
"Permitted Debt" means:
(i) Debt owing hereunder and under the Security Documents;
(ii) Subordinated Debt;
(iii) trade debt and similar unsecured indebtedness incurred in
the ordinary course of business (but excluding indebtedness
for borrowed money not outstanding for more than 90 days
other than certain indebtedness of MNL owing to Mitel
Networks International Limited on account of royalties);
(iv) intercorporate Debt owed by any Subsidiary to the Borrower
or any of the Guarantors;
(v) intercorporate Debt between the Borrower and the
Guarantors;
(vi) intercorporate Debt owed by any wholly-owned Subsidiary of
the Borrower (other than the Guarantors) to another
wholly-owned Subsidiary of the Borrower;
(vii) Debt in an aggregate amount not exceeding Cdn. $15,000,000
(or its Equivalent Amount in another currency) incurred in
connection with the obligations of a Person as lessee which
are capitalized in accordance with GAAP;
(viii) Debt incurred pursuant to performance bonds, bid bonds and
other similar instruments entered into in the ordinary
course of business;
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(ix) Debt for borrowed money in an aggregate amount not
exceeding (pound)15,000,000 incurred pursuant to overdraft,
working capital credit facilities and any other form of
financing by Subsidiaries of the Borrower carrying on
business in the United Kingdom and Europe (including a
(pound)7.5 million real estate mortgage dated January 24,
2002 granted by MNL in favour of Barclays Bank plc and a
(pound)5 million chattel mortgage dated October 31, 2001
granted by MNL in favour of Barclays Bank plc, as each may
be amended, restated, supplemented or replaced from time to
time with the consent of the Required Lenders);
(x) Debt pursuant to letters of credit in an aggregate face
amount not exceeding Cdn. $800,000 issued in respect of the
Borrower's supplemental executive retirement plan;
(xi) Debt incurred or assumed in connection with Permitted
Purchase Money Security Interests;
(xii) Debt secured by assets or properties at the time of
entering into an agreement with respect to the acquisition
of such assets or properties and assumed in connection with
such acquisition and Debt of a corporation existing at the
time such corporation becomes a Subsidiary of the Borrower
provided, in either case, that such Debt was not incurred
in anticipation of such acquisition or in anticipation of
such corporation becoming a Subsidiary and excluding any
extensions or renewals of any such Debt;
(xiii) unsecured Debt incurred in connection with transactions
entered into for the purpose of hedging foreign exchange
risk of the Borrower and its Subsidiaries or for the
purpose of hedging interest rate exposure on Permitted Debt
(but, in either case not for speculative purposes);
(xiv) unsecured Debt in an aggregate amount not exceeding Cdn.
$15,000,000 (or its Equivalent Amount in another currency)
pursuant to a daylight overdraft facility incurred solely
to facilitate the clearance of inter-corporate Debt;
(xv) Debt represented by obligations of MNL in respect of its
defined benefit pension plan;
(xvi) Debt in an aggregate principal amount not exceeding
Sterling 4,100,000 under the EDC Facility (including,
without duplication, Debt represented by guarantees issued
by the Borrower, MNI and MNSI in connection therewith); and
(xvii) unsecured Debt not included in any of the foregoing and not
exceeding Cdn. $5,000,000 (or its Equivalent Amount in
another currency), in the aggregate;
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"Permitted Encumbrances" has the meaning specified in Schedule F;
"Permitted Purchase Money Security Interest" means any Lien on any
property or asset created, issued or assumed to secure Debt incurred,
assumed or issued to satisfy, in whole or in part, the purchase price of
such property or asset (including installation costs) and expenditures
made for any repairs, alterations, construction, development or
improvements performed thereon or added thereto, provided that such Lien,
or any agreement or other instrument under which such Lien is constituted,
is limited to the property or asset acquired in connection with the
assumption, issuance or incurring of such Debt and is created, issued or
assumed concurrently with the acquisition of such property or assets;
"Permitted Securitization Transactions" means any transaction providing
for the sale, securitization or other asset-backed financing of trade
accounts receivable of or owing to the Borrower or a Subsidiary of the
Borrower, and excluding any Canadian, United States or United Kingdom
trade accounts receivable, provided that such disposition of accounts
receivable pursuant to the securitization transactions are without
recourse to the Borrower or such Subsidiary and provided further that the
aggregate amount of accounts receivable sold does not exceed Cdn.
$3,000,000 at any time;
"Person" means an individual, company, partnership (whether or not having
separate legal personality), corporation (including a business trust),
joint stock company, trust, unincorporated association, joint venture or
other entity, or a government, state or political subdivision thereof or
any agency of such government, state or political subdivision;
"Prime Rate" means the greater of (i) the arithmetic mean of the variable
rates of interest per annum, expressed on the basis of a year of 365 or
366 days, as the case may be, established or quoted from time to time by
BMO and the other Lenders, if any, as the reference rate of interest then
in effect for determining interest rates on Canadian Dollar denominated
commercial loans made by it in Canada and (ii) the sum of (x) the rate per
annum for Canadian Dollar bankers' acceptances having a term of 30 days
that appears on the display page designated as the CDOR Page (or any
replacement page) by Reuters Money Market Service (or its successor) as of
10:00 a.m. on the date of determination as reported by the Administrative
Agent, and (y) 1.0% per annum;
"Prime Rate Advance" means a loan made by a Lender to a Borrower in
Canadian Dollars on which interest is payable at the Prime Rate plus the
Applicable Margin;
"Priority Claims" means, at any time, the aggregate of any amounts due and
payable prior to such time, to the extent not paid by the Borrower or any
of the Guarantors in respect of:
(a) wages, salaries, commissions or other remunerations;
(b) vacation pay;
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(c) deductions at source for employees, federal and provincial income
taxes, Canada Pension Plan and Employment Insurance;
(d) GST and PST (net of input tax credits);
(e) Workers' Compensation Board premiums or similar premiums;
(f) all taxes under the federal and state laws of the United States
including, but not limited to, all federal, state or local net or
gross income, gross receipts, net proceeds, sales, use, ad valorem,
value added, franchise, withholding, payroll, employment, excise,
sales, use, property, alternative or add-on minimum, environmental
or other taxes, assessments, duties, fees, levies or other
governmental charges of any nature whatever, whether disputed or
not, together with any interest, penalties, additions to tax or
additional amounts with respect thereto;
(g) all payments in connection with an employee benefit plan, program
and arrangement including, without limitation, any "employee benefit
plan" as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), maintained or
contributed to by the Borrower or any of the Guarantors, or any
other applicable law covering employee benefit plans (including,
without limitation, the Internal Revenue Code of 1986, as amended)
or any applicable agreement controlling such employee benefit
plan(s);
(h) all payments in connection with workers' compensation, workers'
disability insurance, or any similar program as required by any
applicable state or federal law, such as, for example, the New York
State "Workers' Compensation Law" (New York Consolidated Laws
Chapter 67, ss.ss.1 et seq.);
(i) property taxes;
(j) rent;
(k) value added tax (VAT) and all deductions, taxes, premiums and
payments which may be payable by MNL and which are similar to the
deductions, taxes, premiums and payments referred to in paragraphs
(c), (d), (e), (f), (g) and (h) of this definition of "Priority
Claims"; and
(l) claims which may rank in priority to the Administrative Agent's
security interest in respect of accounts receivable.
"rate of exchange" has the meaning specified in Section 15.14;
"Release" has the meaning specified in Section 7.1(j);
"Reorganization" has the meaning specified in Section 12.1;
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"Required Lenders" means, at any time, Lenders having undrawn Commitments
or outstanding Advances representing more than two-thirds of the sum of
the total Committed Amount or outstanding Advances at such time;
"Rollover" means a rollover of a Libor Advance pursuant to and in
accordance with Section 2.11 or a rollover of a Bankers' Acceptance
Advance pursuant to and in accordance with Section 4.5;
"Rollover Notice" means a notice substantially in the form of Schedule D;
"Security" means, collectively, the Borrower's Security and the
Guarantors' Security;
"Security Documents" means, collectively, the Borrower's Security
Documents and the Guarantors' Security Documents;
"Sterling" means the lawful currency of the United Kingdom in immediately
available funds;
"Stock" shall mean all shares, options, warrants, general or limited
partnership interests or other equivalents (regardless of how designated)
of or in a corporation, partnership, limited partnership or equivalent
entity whether voting or non-voting or participating or non-participating;
"Subordinated Debt" shall mean Debt of the Borrower or any Guarantor or
Subsidiary subordinated to all amounts at any time due and payable under
any of the Loan Documents in a manner and form satisfactory to the
Required Lenders in their sole discretion, as to right and time of payment
and as to any other rights and remedies thereunder;
"Subsidiary" means any corporation more than 50% of the Voting Shares of
which at the time of determination are beneficially owned, directly or
indirectly, by the Borrower or any corporation, joint venture, partnership
or other entity which is subject to the direct or indirect Control of the
Borrower;
"Successor Corporation" has the meaning specified in Section 12.1;
"Take-Over Bid" means an offer to acquire made by the Borrower, a
Guarantor or a Subsidiary of the Borrower, alone or acting jointly or in
concert with any other Person or Persons (collectively, the "Offeror"), to
any holder of Voting Shares or securities convertible, exchangeable or
exercisable into Voting Shares (the "Target Shares") of the offeree
issuer, which has not been solicited by or made at the request of the
board of directors of the offeree issuer, or with respect to which the
board of directors of the offeree issuer has not recommended acceptance,
where the Target Shares subject to the offer to acquire, together with the
Target Shares held by or on behalf of the offeror on the date of the
offer, constitute, in aggregate, 20% (or such lesser percentage as would
require compliance with the formal requirements governing take-over bids
(such as the delivery of circulars or equivalent disclosure documents to
shareholders under Applicable Law)) or more of the outstanding Target
Shares at the date of the offer to acquire, but
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excluding any such offer which, under the Applicable Law of the
jurisdiction in which such offer is made, would be exempt from such formal
requirements;
"Taxes" includes all present and future income, corporation, capital
gains, capital and value-added, and goods and services taxes and all stamp
and other taxes and levies, imposts, deductions, duties, charges and
withholdings whatsoever together with interest thereon and penalties with
respect thereto, if any, and charges, fees and other amounts made on or in
respect thereof;
"Transferee" has the meaning specified in Section 15.11(a);
"U.S. Base Rate Advance" means a loan made by a Lender to the Borrower on
which interest is payable at the Base Rate plus the Applicable Margin;
"U.S. Dollars" and "U.S. $" mean the lawful currency of the United States
of America in immediately available funds; and
"Voting Shares" means shares of any class of any corporation carrying
voting rights under all circumstances, provided that, for the purpose of
this definition, shares which only carry the right to vote conditionally
on the happening of an event shall not be considered Voting Shares unless
such right has become exercisable.
1.2 Headings
The division of this Agreement into Articles and Sections and the
insertion of an index and headings are for convenience of reference only and
shall not affect the construction or interpretation hereof. The terms "this
Agreement", "hereof", "hereunder" and similar expressions refer to this
Agreement and not to any particular Article, Section, paragraph or other portion
hereof and include any agreement supplemental hereto. Save as expressly provided
herein, references herein to Articles and Sections are to Articles and Sections
of this Agreement.
1.3 Extended Meanings
Words importing the singular number only shall include the plural
and vice versa, and words importing any gender shall include all genders. The
term "including" means "including without limitation".
1.4 References to the Administrative Agent and Lenders
Any reference in this Agreement to the Administrative Agent and any
Lender shall be construed so as to include its successors and permitted
transferees or assigns hereunder in accordance with its respective interests.
1.5 Accounting Terms and Practices
Unless otherwise provided herein, all accounting terms referred to
herein shall be construed in accordance with Canadian GAAP as established from
time to time by the Canadian Institute of Chartered Accountants and all
financial data submitted pursuant to this Agreement
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shall be prepared in accordance with such principles, consistently applied
except for the absence of footnotes in unaudited statements.
1.6 Non-Banking Days
Whenever any payment to be made hereunder shall be stated to be due
or any action to be taken hereunder shall be stated to be required to be taken
on a day other than a Banking Day, such payment shall be made or such action
shall be taken on the next succeeding Banking Day and, in the case of the
payment of any monetary amount, the extension of time shall be included for the
purposes of computation of interest or fees thereon.
1.7 References to Time of Day
Except as otherwise specified herein, a time of day shall be
construed as a reference to Toronto, Canada time.
1.8 Severability
In the event that one or more of the provisions contained in this
Agreement shall be invalid, illegal or unenforceable in any respect under any
applicable law, the validity, legality or enforceability of the remaining
provisions hereof shall not be affected or impaired thereby.
1.9 Currency
All monetary amounts in this Agreement refer to Canadian Dollars
unless otherwise specified.
1.10 References to Statutes
Except as otherwise provided herein, any reference in this Agreement
to a statute shall be construed to be a reference to such statute as the same
may have been, or may from time to time be, amended or re-enacted.
1.11 References to Agreements
Except as otherwise provided herein, any reference herein to this
Agreement or any other agreement or document shall be construed to be a
reference to this Agreement or such other agreement or document, as the case may
be, as the same may have been, or may from time to time be, amended, varied,
novated or supplemented.
1.12 Consents and Approvals
Whenever the consent or approval of a party hereto is required in a
particular circumstance, unless otherwise expressly provided for therein, such
consent or approval shall not be unreasonably withheld or delayed by such party.
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1.13 Schedules
The following are the Schedules attached hereto and incorporated by
reference and deemed to be part hereof:
Schedule A - Borrowing Base Certificate
Schedule B - Drawdown Notice
Schedule C - Conversion Notice
Schedule D - Rollover Notice
Schedule E - [Intentionally deleted]
Schedule F - Permitted Encumbrances
Schedule G - Litigation
Schedule H - Non-Compliance Matters
Schedule I - Subsidiaries
Schedule J - Transfer Agreement
Schedule K - Committed Amounts
Schedule L - Business Plan
ARTICLE 2
THE FACILITY
2.1 The Facility
Upon the terms and subject to the conditions hereof, each of the
Lenders hereby severally agrees to make the Facility available to the Borrower
up to the maximum amount of its Participation. For greater certainty, any
amounts outstanding under the Original Credit Agreement on the Closing Date
shall be deemed to be and the parties hereto confirm that such amounts are
outstanding hereunder in the amounts specified in the certificate to be
delivered pursuant to Section 6.1(o). The failure of any Lender to make an
Advance required to be made available hereunder by it shall not relieve any
other Lender of its obligations hereunder; provided that the obligations of each
Lender hereunder with respect to its Participation are several and no Lender
shall be responsible for any other Lender's failure to make Advances as required
hereunder.
2.2 Purpose
The Facility is being made available to the Borrower by the Lenders
to finance the Borrower's working capital requirements and general corporate
purposes.
2.3 Availability
(a) The Facility shall be available by way of Drawdown of an Advance by
the Borrower in a minimum amount of Cdn. $1,000,000 (or such lesser amount as
may from time to time be agreed to by the Lenders at their sole discretion) and
integral multiples of Cdn. $100,000 in excess thereof (or, if not such a
multiple, the then remaining Available Amount), at the option of the Borrower,
by way of Prime Rate Advance or Bankers' Acceptance Advance or the issue of
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a Letter of Credit or in a minimum amount of Cdn. $1,000,000 and integral
multiples of Cdn. $100,000 in excess thereof (or, if not such a multiple, the
then remaining Available Amount) (a minimum amount of Cdn. $10,000 in the case
of Letters of Credit denominated in Canadian Dollars) or, at the option of the
Borrower, by way of Libor Advance or U.S. Base Rate Advance or the issue of a
Letter of Credit in a minimum amount of U.S. $1,000,000 and integral multiples
of U.S. $100,000 in excess thereof (or, if not such a multiple, the then
remaining Available Amount) (a minimum amount of U.S. $10,000 in the case of
Letters of Credit denominated in U.S. Dollars), or any combination thereof by
irrevocable Drawdown Notice given to the Administrative Agent not later than (i)
10:00 a.m. on the Banking Day prior to the Drawdown Date in the case of a Prime
Rate Advance or a Bankers' Acceptance Advance in an amount not exceeding Cdn.
$10,000,000 or a U.S. Base Rate Advance or issue of a Letter of Credit in an
amount not exceeding U.S. $10,000,000; (ii) 10:00 a.m. on the second Banking Day
prior to the Drawdown Date in the case of a Prime Rate Advance or a Bankers'
Acceptance Advance in an amount exceeding Cdn. $10,000,000 or a U.S. Base Rate
Advance in an amount exceeding U.S. $10,000,000; or (iii) 10:00 a.m. on the
third Banking Day prior to the relevant Drawdown Date in the case of a Libor
Advance. Subject to the terms and conditions contained herein, the Borrower
shall have the right and option to determine in which of these forms the
Facility shall be utilized from time to time and the Borrower shall have the
right to convert the manner in which the Facility is utilized from one form to
another as it sees fit, subject to Section 2.14.
(b) The Borrower may not make a Drawdown under the Facility if, as a
result of such Drawdown, the aggregate of (i) the aggregate principal amount
outstanding under the Facility and (ii) the maximum amount payable under all
outstanding Letters of Credit, in each case expressed in Canadian Dollars (based
on the Equivalent Amount of any obligations in U.S. Dollars), would exceed the
Available Amount. The Lenders shall have no obligation to make any Advance or
issue any Letters of Credit hereunder at any time after demand has been made
pursuant to Section 11.2 hereof or at any time that the Borrower or any of the
Guarantors has failed to observe or perform any of its covenants or obligations
hereunder or under any of the Security Documents and such default is continuing,
regardless of whether the Administrative Agent or the Lenders have made demand
pursuant to Section 11.2 hereof.
(c) All or any portion of the amount outstanding under the Facility may be
repaid and reborrowed from time to time. The Facility shall terminate on the
Maturity Date.
(d) Notwithstanding Section 2.3(a), the Borrower may, by delivering a
Drawdown Notice to the Administrative Agent not later than 10:00 a.m. on any
Drawdown Date, make a Drawdown on such Drawdown Date by way of a Prime Rate
Advance in an amount not exceeding Cdn. $2,000,000 or by way of a U.S. Base Rate
Advance in an amount not exceeding U.S. $2,000,000.
2.4 Making of an Advance
If the Borrower delivers a Drawdown Notice in accordance with
Section 2.3, the Administrative Agent shall promptly notify each Lender in
writing of the amount of the Advance and such Lender's portion thereof and, if
on the proposed Drawdown Date the amount of such Advance is equal to or less
than the Available Amount, then:
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(i) each Lender shall, not later than 11:00 a.m. on the
Drawdown Date, make, or procure to be made, its portion
of the Advance available to the Administrative Agent;
and
(ii) the Agent shall, not later than 4:00 p.m. on the
Drawdown Date, make such Advance available to the
Borrower.
2.5 Participation of Each Lender
(a) The amount of the Participation of each Lender in any Advance or issue
of Bankers' Acceptances shall be determined by the Administrative Agent by
reference, subject to the Administrative Agent's authority pursuant to Section
2.5(b), to each such Lender's Participation, as such Participation shall be
immediately prior to the making of the Advance or the issue of the Bankers'
Acceptances.
(b) The Administrative Agent is authorized by the Borrower and each Lender
to allocate amongst the Lenders the Bankers' Acceptances to be issued and
purchased in such manner and amounts as the Agent may, in its sole and
unfettered discretion acting reasonably, consider necessary, rounding up or
down, so as to ensure that no Lender is required to accept and purchase a
Bankers' Acceptance for a fraction of Cdn. $100,000, and in such event, the
Lenders' respective Participations in any such Bankers' Acceptances and
repayments thereof shall be altered accordingly. Further, the Administrative
Agent is authorized by the Borrower and each Lender to cause one or more
Lenders' Commitment to be exceeded by not more than Cdn. $100,000 each as a
result of such allocations provided that the principal amount of Advances and
Bankers' Acceptances outstanding shall not thereby exceed the aggregate
Committed Amount.
2.6 Repayment of the Facility
(a) Provided that the Facility is not prepaid or accelerated in accordance
with Article 11, the Borrower shall repay the principal amount of all Advances
outstanding under the Facility, together with accrued and unpaid interest
thereon, on the Maturity Date.
(b) In the event that the sum of (i) the aggregate principal amount of
Prime Rate Advances, (ii) the Face Amount of Bankers' Acceptances, (iii) the
maximum amount which may be drawn in Canadian Dollars and the Equivalent Amount
in Canadian Dollars of the maximum amount which may be drawn in U.S. Dollars
under Letters of Credit which have been issued and are outstanding, (iv) the
Equivalent Amount in Canadian Dollars of the aggregate principal amount of Libor
Advances, and (v) the Equivalent Amount in Canadian Dollars of the aggregate
principal amount of U.S. Base Rate Advances, in each case outstanding under the
Facility (such amount being referred to in this Section 2.6 as the "Outstanding
Amount"), exceeds the amount allowed pursuant to Section 2.3(b) for any reason
whatsoever (including changes in the Canadian Dollar/U.S. Dollar exchange rate),
then any Lender may, by notice to the Borrower, require the Borrower to repay,
within two Banking Days of receipt of such notice, that portion of the
Outstanding Amount which is in excess of the maximum amount allowed pursuant to
Section 2.3(b) determined on the date of such notice; provided, however, that if
the Outstanding Amount exceeds the Available Amount solely because of changes in
the Canadian Dollar/U.S. Dollar exchange rate (and does not exceed the amount of
the Borrowing Base), then unless the amount
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by which the Outstanding Amount exceeds the Available Amount is greater than
Cdn. $750,000, the Borrower shall not be obliged to make a repayment hereunder
until the next following Interest Date, Drawdown Date, date of Rollover or date
of Conversion (whichever is the first to occur following receipt of such notice)
and provided further that if such repayment would result in the repayment of a
Bankers' Acceptance Advance prior to its maturity date or the repayment of a
Libor Advance prior to the last day of its Interest Period, the Borrower may, at
its option and in lieu of repayment of such Advances, deposit with the
Administrative Agent cash collateral in an amount equal to the required
repayment amount to be held by the Administrative Agent as repayment of a
Bankers' Acceptance Advance on its maturity date or repayment of a Libor Advance
on the last day of its then current Interest Period, as the case may be.
Notwithstanding the foregoing, in the event that the Outstanding Amount exceeds
the amount allowed pursuant to Section 2.3(b) because of a decrease in the
amount of the Borrowing Base, the Borrower shall repay, concurrently with
delivery of the Borrowing Base Certificate pursuant to Section 8.1(a)(iv), that
portion of the Outstanding Amount which is in excess of the maximum amount
pursuant to Section 2.3(b) determined on the date of delivery of such Borrowing
Base Certificate without any requirement for notice of a required payment to be
given by the Administrative Agent or any Lender to the Borrower.
(c) Without limiting the obligations of the Borrower under Section 2.3(b),
the Borrower may, upon giving the Administrative Agent three Banking Days' prior
written notice, repay any outstanding Advances, provided further, however, that
repayment of Libor Advances shall be subject to the provisions of Section 2.11.
All repayments of the Facility by the Borrower, other than repayments pursuant
to paragraphs (a) and (b) of this Section 2.6, shall be in a minimum amount of
Cdn. $100,000 or the Equivalent Amount in U.S. Dollars and amounts in excess
thereof in integral multiples of Cdn. $100,000 (or, if less, the remaining
amount of the relevant Advance) and shall be made to the Administrative Agent
for the ratable account of the Lenders. Repayments of any Advance outstanding
under the Facility shall be made in the currency in which such Advance is
denominated.
(d) If the Required Lenders, at any time, become concerned with the
payment of Priority Claims by the Borrower or any of the Guarantors, the
Administrative Agent may, at the direction of the Required Lenders but otherwise
in its absolute sole discretion, reduce the Borrowing Base by the Priority
Claims. Priority Claims from time to time shall be deducted from the Borrowing
Base for the purpose of determining the Available Amount until the Required
Lenders otherwise direct.
2.7 Cancellation or Reduction of the Facility
The Borrower may at any time, upon giving at least three Banking
Days' prior notice to the Administrative Agent, cancel in full or, from time to
time, cancel in part any undrawn portion of the Facility and reduce the
Committed Amount of the Facility accordingly; provided, however, that any such
reduction shall be in minimum amounts of Cdn. $1,000,000 and integral multiples
of Cdn. $100,000 in excess thereof. Any such cancellation shall permanently
reduce the Facility and may not be reinstated.
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2.8 Application of Repayments
(a) Except as otherwise indicated herein, all payments made to the
Administrative Agent by or for the Borrower for the account of the Lenders in
connection herewith shall be distributed the same day by the Administrative
Agent, in accordance with its normal practice, in funds having same day value
among the Lenders to the accounts last designated in writing by such Lenders
respectively to the Administrative Agent pro rata in accordance with their
respective Participations. Amounts so distributed shall be applied by the
Lenders as follows:
(i) to amounts due hereunder in respect of Bankers'
Acceptances;
(ii) to amounts (other than principal or interest) due under any
Loan Document in respect of fees, expenses and other
amounts;
(iii) to amounts due hereunder in respect of interest on any
outstanding Advances; and
(iv) to the principal amount of any outstanding Advances.
Further, payments of interest or principal received by the Lenders shall be
applied against Advances in order of:
(v) in the case of Prime Rate Advances or U.S. Base Rate
Advances, their respective Drawdown Dates or dates of
Conversion, as the case may be, commencing with the earlier
or earliest thereof;
(vi) in the case of Libor Advances, the day following the last
day of their respective Interest Periods, commencing with
the earlier or earliest thereof; and
(vii) in the case of Bankers' Acceptances, their respective
maturity dates, commencing with the earlier or earliest
thereof.
Payments received by the Administrative Agent on the Maturity Date of Bankers'
Acceptances shall be distributed pro rata among the Lenders based on their
Participation in each Bankers' Acceptance. Payments received by the
Administrative Agent on account of the Principal Amount of Bankers' Acceptances
which are maturing or which have previously matured, whether pursuant to
enforcement of remedies or otherwise, shall also be so distributed.
(b) Where a sum is to be paid hereunder by the Borrower or any Lender to
the Administrative Agent for the account of another party hereto, the
Administrative Agent shall not be obliged to make the same available to that
other party hereto, whether such party is the Borrower or a Lender, until it has
been able to establish that it has actually received such sum, but if it does
pay out a sum and it proves to be the case that it had not actually received the
sum it paid out, then the party hereto to whom such sum was so made available,
whether such party is the Borrower or a Lender, shall on request ensure that the
amount so made available is refunded to the Administrative Agent, and shall on
demand indemnify the Administrative Agent against any cost or loss it may have
suffered or incurred by reason of its having paid out such sum prior
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to its having received such sum; provided that nothing in this Section 2.8(b)
shall limit any rights or remedies that the Borrower may otherwise have against
a defaulting Lender or the rights and remedies that a Lender may otherwise have
against the Borrower or a defaulting Lender.
2.9 Interest on Prime Rate Advances
Interest on each Prime Rate Advance shall accrue at a rate per annum
equal to the Applicable Margin plus the Prime Rate in effect from time to time
during the period of time that the Prime Rate Advance is outstanding. Such
interest shall be payable in Canadian Dollars monthly in arrears on the Interest
Date of each calendar month commencing with the Interest Date occurring in the
calendar month following the initial Drawdown Date for the period from and
including the Drawdown Date for such Advance (or, if applicable, the date on
which such Advance was converted into a Prime Rate Advance) or the preceding
Interest Date for such Prime Rate Advance, as the case may be, to and including
the day preceding such Interest Date and shall be calculated on the principal
amount of the Prime Rate Advance outstanding during such period and on the basis
of the actual number of days elapsed in a year of 365 or 366 days, in the case
of an Interest Date occurring in a leap year. Changes in the Prime Rate shall
cause an automatic and immediate adjustment of the interest rate payable on
Prime Rate Advances without the necessity of any notice to the Borrower.
2.10 Interest on U.S. Base Rate Advances
Interest on each U.S. Base Rate Advance shall accrue at a rate per
annum equal to the Applicable Margin plus the Base Rate in effect from time to
time during the period of time that the U.S. Base Rate Advance is outstanding.
Such interest shall be payable in U.S. Dollars monthly in arrears on the
Interest Date of each calendar month commencing with the Interest Date occurring
in the calendar month following the initial Drawdown Date for the period from
and including the Drawdown Date for such Advance (or, if applicable, the date on
which such Advance was converted into a U.S. Base Rate Advance) or the preceding
Interest Date for such U.S. Base Rate Advance, as the case may be, to and
including the day preceding such Interest Date and shall be calculated on the
principal amount of the U.S. Base Rate Advance outstanding during such period
and on the basis of the actual number of days elapsed in a year of 365 or 366
days, in the case of an Interest Date occurring in a leap year. Changes in the
U.S. Base Rate shall cause an automatic and immediate adjustment of the interest
rate payable on U.S. Base Rate Advances without the necessity of any notice to
the Borrower.
2.11 Libor Advances
(a) Libor Advances shall be available in U.S. Dollars in a minimum
principal amount of U.S. $1,000,000 and integral multiples of U.S. $100,000 in
excess thereof. The Drawdown Notice and each Conversion Notice or Rollover shall
specify the applicable Interest Period for the Libor Advance. The duration of
each such Interest Period shall be for periods of approximately one, two, three
or six months (or such other period as may be agreed to by the Required
Lenders), as the Borrower may select in the applicable Drawdown Notice,
Conversion Notice or Rollover Notice. No Libor Advance may have an Interest
Period ending after the Maturity Date. If any Interest Period would end on a day
which is not a Banking Day, such Interest Period shall be extended to the next
succeeding Banking Day unless such next
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succeeding Banking Day falls in the next calendar month, in which case such
Interest Period shall be shortened to end on the immediately preceding Banking
Day.
(b) If a Lender determines that deposits of the necessary amount for the
relevant Interest Period are not available in the London interbank market or if
for any other reason a Lender, acting reasonably, is unable to determine the
applicable Libor Rate, then the relevant Libor Advance will not be made to the
Borrower, such Lender shall notify the Administrative Agent and the
Administrative Agent will notify the Borrower of such event forthwith and will
discuss with the Borrower the particular circumstances and implications of such
event. In the event that such determination is made by a Lender in the case of a
proposed Rollover of an existing Libor Advance or a proposed Conversion of a
U.S. Base Rate Advance into a Libor Advance, the proposed Libor Advance will
automatically be deemed to be a U.S. Base Rate Advance.
(c) Interest on any Libor Advance shall be calculated at a rate per annum
equal to the Libor Rate plus the Applicable Margin, shall accrue from day to day
and shall be calculated on the basis of the actual number of days elapsed
(including the first day of each Interest Period but excluding the last day
thereof) and divided by 360. Interest on any Libor Advance shall be payable in
U.S. Dollars in arrears on the last day of the Interest Period relating thereto;
provided, however, that if the Interest Period is for a term of more than three
months, interest shall be payable on the last day of the first three-month
period and on the last day of each three-month period thereafter, as well as on
the last day of the Interest Period (each such payment date being the "Libor
Interest Payment Date").
(d) If a Libor Advance is neither repaid on the last day of an Interest
Period nor converted into another type of Advance on such date pursuant to
Section 2.14, and if the Administrative Agent has not received a Rollover Notice
or a Conversion Notice specifying the term of the next Interest Period for such
Libor Advance on or before 10:00 a.m. on the third Banking Day prior to the last
day of the then current Interest Period, then the outstanding Libor Advance
shall be deemed to be converted, by way of Conversion on the last day of the
then current Interest Period, to a U.S. Base Rate Advance.
(e) Except as otherwise provided herein, Libor Advances shall not be
repaid, prepaid or converted into another type of Advance except on the last day
of any Interest Period relating thereto unless the Borrower pays to the
Administrative Agent for the account of a Lender any amounts which may be
payable under Section 13.2.
2.12 Method and Place of Payment
All payments of principal, interest and fees hereunder shall be made
for value at or before 12:00 noon on the day such amount is due by deposit or
transfer thereof to an account of the Borrower maintained at the principal
office of the Administrative Agent in Toronto or such other place as the
Borrower and the Administrative Agent may from time to time agree. Payments
received after such time shall be deemed to have been made on the next following
Banking Day. Each payment to be made by the Borrower under this Agreement shall
be made without deduction, set-off or counterclaim. Repayments of any Advance
and payments of interest on any Advance shall be made in the currency in which
such Advance is denominated.
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The Borrower hereby irrevocably authorizes and directs the Administrative Agent
to deduct and set-off from such account all amounts due to the Administrative
Agent from time to time hereunder.
2.13 Commitment Fees
The Borrower shall pay to the Administrative Agent for the ratable
account of the Lenders a commitment fee calculated monthly for the period
commencing on the Closing Date and ending on the Maturity Date at the rate per
annum specified below in this Section 2.13 on the average daily undrawn
Committed Amount of the Facility, determined on the basis of the number of days
elapsed in a year of 365 days or 366 days in the case of a period ending in a
leap year. Such commitment fee shall accrue daily and be due and payable
monthly, in arrears, on the first Banking Date of each calendar month. The
applicable rate per annum for the commitment fee shall be as follows:
(i) if the daily average outstanding principal amount of
Advances under the Facility for any month is less than or
equal to 33.3% of the Committed Amount of the Facility,
then 0.70%;
(ii) if the daily average outstanding principal amount of
Advances under the Facility for any month is greater than
33.3% but less than or equal to 66.7% of the Committed
Amount of the Facility, then 0.60%; and
(iii) if the daily average outstanding principal amount of
Advances under the Facility for any month is greater than
66.7% of the Committed Amount of the Facility, then 0.50%.
2.14 Conversion Options
Subject to the provisions of this Agreement (including, without
limitation, Sections 2.11 and 4.7), the Borrower may convert any type of Advance
outstanding under the Facility into another type of Advance as follows:
(i) provided that no Event of Default has occurred and is
continuing, a Prime Rate Advance or a portion thereof into
a Bankers' Acceptance Advance by giving the Administrative
Agent a Conversion Notice no later than 10:00 a.m. on the
Banking Day prior to the date of the proposed Conversion;
(ii) the Face Amount of a Bankers' Acceptance or a portion
thereof into a Prime Rate Advance on the maturity date of
the Bankers' Acceptance by giving the Administrative Agent
a Conversion Notice no later than 10:00 a.m. on the Banking
Day prior to the date of the proposed Conversion;
(iii) provided that no Event of Default has occurred and is
continuing, a U.S. Base Rate Advance or a portion thereof
into a Libor Advance by giving the Administrative Agent a
Conversion Notice no later than 10:00 a.m. three Banking
Days prior to the date of the proposed Conversion;
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(iv) a Libor Advance or a portion thereof into a U.S. Base Rate
Advance on the last day of the Interest Period of the
relevant Libor Advance by giving the Administrative Agent a
Conversion Notice no later than 10:00 a.m. on the Banking
Day prior to the date of the proposed Conversion;
(v) a Prime Rate Advance or a portion thereof into a U.S. Base
Rate Advance in the Equivalent Amount by giving the
Administrative Agent a Conversion Notice no later than
10:00 a.m. on the Banking Day prior to the date of the
proposed Conversion;
(vi) provided that no Event of Default has occurred and is
continuing, a Prime Rate Advance or a portion thereof into
a Libor Advance in the Equivalent Amount by giving the
Administrative Agent a Conversion Notice no later than
10:00 a.m. three Banking Days prior to the date of the
proposed Conversion;
(vii) the Face Amount of a Bankers' Acceptance or a portion
thereof into a U.S. Base Rate Advance in the Equivalent
Amount on the maturity date of the Bankers' Acceptance by
giving the Administrative Agent a Conversion Notice no
later than 10:00 a.m. on the Banking Day prior to the date
of the proposed Conversion;
(viii) provided that no Event of Default has occurred and is
continuing, the Face Amount of a Bankers' Acceptance or a
portion thereof into a Libor Advance in the Equivalent
Amount on the maturity date of the Bankers' Acceptance by
giving the Administrative Agent a Conversion Notice no
later than 10:00 a.m. three Banking Days prior to the date
of the proposed Conversion;
(ix) a U.S. Base Rate Advance or a portion thereof into a Prime
Rate Advance in the Equivalent Amount by giving the
Administrative Agent a Conversion Notice no later than
10:00 a.m. on the Banking Day prior to the date of the
proposed Conversion;
(x) provided no Event of Default has occurred and is
continuing, a U.S. Base Rate Advance or a portion thereof
into a Bankers' Acceptance Advance by giving the
Administrative Agent a Conversion Notice no later than
10:00 a.m. on the Banking Day prior to the date of the
proposed Conversion;
(xi) a Libor Advance or a portion thereof into a Prime Rate
Advance in the Equivalent Amount on the last day of the
Interest Period of the relevant Libor Advance by giving the
Administrative Agent a Conversion Notice no later than
10:00 a.m. on the Banking Day prior to the date of the
proposed Conversion; and
(xii) provided no Event of Default has occurred and is
continuing, a Libor Advance or a portion thereof into a
Bankers' Acceptance Advance in the Equivalent Amount on the
last day of the Interest Period of the relevant
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Libor Advance by giving the Administrative Agent a
Conversion Notice no later than 10:00 a.m. on the Banking
Day prior to the date of the proposed Conversion.
Notwithstanding the foregoing, if a Default has occurred and is continuing, a
Conversion pursuant to clause (i), (iii), (vi), (viii), (x) or (xii) and
conversions into a different currency of Advance will be permitted only in the
discretion of the Required Lenders. For purposes of Conversions of Advances from
Canadian Dollars into U.S. Dollars or from U.S. Dollars into Canadian Dollars,
the Equivalent Amount shall be the Equivalent Amount on the date of the
Conversion. For greater certainty, Conversions of Advances into the Equivalent
Amount in a different currency are permitted notwithstanding that such
Equivalent Amount may not be in amounts required in connection with a Drawdown
of an Advance in such currency.
2.15 Execution of Notices
Each Drawdown Notice, Conversion Notice, Rollover Notice and notice
of repayment, prepayment or cancellation and, unless otherwise provided herein,
all other notices, requests, demands or other communications to be given to the
Administrative Agent by the Borrower hereunder shall be executed by any one
officer or director of the Borrower.
2.16 Evidence of Indebtedness
(a) The Administrative Agent shall open and maintain in accordance with
its usual practice books of account evidencing all Advances and all other
amounts owing by the Borrower to the Administrative Agent and the Lenders
hereunder. The Administrative Agent shall enter in the foregoing accounts
details of every Drawdown Date, date of Rollover or date of Conversion in
respect of each Advance and of all amounts from time to time owing or paid by
the Borrower to the Administrative Agent, and the amounts of principal, interest
and fees payable from time to time hereunder. The information entered in the
foregoing accounts shall constitute, in the absence of manifest error, prima
facie evidence of the obligations of the Borrower to the Administrative Agent
and the Lenders hereunder, the date each Lender made each Advance available to
the Borrower and the amounts the Borrower has paid from time to time on account
of the principal of, interest on and fees related to the Advances.
(b) Each Lender shall open and maintain in accordance with its usual
practice books of account evidencing all Advances and all other amounts owing by
the Borrower to such Lender hereunder. Such Lender shall enter in the foregoing
accounts details of every Drawdown Date, date of Rollover or date of Conversion
in respect of each Advance by such Lender hereunder and of all amounts from time
to time owing or paid by the Borrower to such Lender, and the amounts of
principal, interest and fees payable to such Lender from time to time hereunder.
The information entered in the foregoing accounts shall constitute, in the
absence of manifest error, prima facie evidence of the obligations of the
Borrower to the Lender hereunder, the date such Lender made each Advance
available to the Borrower and the amounts the Borrower has paid from time to
time on account of the principal of, interest on and fees related to the
Advances made by such Lender hereunder. These accounts shall constitute (in the
absence of manifest error or of contradictory entries in the accounts of the
Administrative Agent referred to in Section 2.16(a)) prima facie evidence of
their content against the Borrower and the Guarantors.
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2.17 Interest on Unpaid Costs and Expenses
Unless the payment of interest is otherwise specifically provided
for herein, where the Borrower fails to pay any amount required to be paid by
the Borrower hereunder when due, having received notice that such amount is due,
the Borrower shall pay interest on such unpaid amount, including overdue
interest from the time such amount is due until paid at an annual rate equal to
the sum of (i) 1%, plus (ii) the Applicable Margin, plus (iii) the Prime Rate,
in the case of amounts payable in Canadian Dollars, and the U.S. Base Rate, in
the case of amounts payable in U.S. Dollars. Such interest shall be determined
daily, compounded monthly in arrears on the last Banking Day of each calendar
month in each year and payable on demand.
2.18 Criminal Rate of Interest
Notwithstanding the foregoing provisions of this Article 2, the
Borrower shall in no event be obliged to make any payments of interest or other
amounts payable to the Administrative Agent or any Lender hereunder in excess of
an amount or rate which would be prohibited by law or would result in the
receipt by the Administrative Agent or any Lender of interest at a criminal rate
(as such terms are construed under the Criminal Code (Canada)).
2.19 Compliance with the Interest Act (Canada)
For the purposes of this Agreement, whenever any interest is
calculated on the basis of a period of time other than a calendar year, the
annual rate of interest to which each rate of interest determined pursuant to
such calculation is equivalent for the purposes of the Interest Act (Canada) is
such rate as so determined multiplied by the actual number of days in the
calendar year in which the same is to be ascertained and divided by the number
of days used in the basis of such determination.
2.20 Nominal Rate of Interest
The parties acknowledge and agree that all calculations of interest
under this Agreement are to be made on the basis of the nominal interest rate
described herein and not on the basis of effective yearly rates or on any other
basis which gives effect to the principle of deemed reinvestment of interest.
The parties acknowledge that there is a material difference between the stated
nominal interest rates and the effective yearly rates of interest and that they
are capable of making the calculations required to determine such effective
yearly rates of interest.
ARTICLE 3
LETTERS OF CREDIT
3.1 Term and Availability
Upon the terms and subject to the conditions hereof, BMO shall, at
the request of the Borrower, issue as Advances under the Facility irrevocable
Letters of Credit in BMO's usual form and expiring no later than the Maturity
Date and having a Face Amount which, together with the aggregate undrawn Face
Amount of all outstanding Letters of Credit, would not exceed
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Cdn. $5,000,000 (or its Equivalent Amount in U.S. Dollars). The Borrower may
request Letters of Credit to be denominated in Canadian Dollars or in U.S.
Dollars. Each Lender severally agrees to participate in Letters of Credit issued
for the account of the Borrower in accordance with the terms of this Agreement.
Accordingly, each Lender shall be deemed to, and hereby irrevocably and
unconditionally agrees to, purchase from BMO a participation in any Letter of
Credit outstanding on the Closing Date which was issued by BMO pursuant to the
provisions of the Original Credit Agreement or issued at any time following the
Closing Date in accordance with the terms of this Agreement in an amount equal
to such Lender's Participation, multiplied by the amount of such Letter of
Credit. Each Lender hereby severally agrees to indemnify and hold harmless BMO
with respect to any loss, cost, expense, damages or claim asserted by any Person
against BMO as a result of the issuance by BMO of any such Letter of Credit and
agrees to reimburse BMO on a pro rata basis with the other Lenders for any
amounts paid by BMO under any such Letter of Credit and to make funds available
to the Administrative Agent for the account of BMO in accordance with Section
2.4(i). Each Lender's obligation to make Advances to reimburse BMO for amounts
drawn under such Letters of Credit, as contemplated by this Section 3.1, shall
be absolute and unconditional and shall not be affected by any circumstance,
including (A) any set-off, counterclaim, recoupment, defence or other right
which such Lender may have against BMO, the Borrower or any other Person for any
reason whatsoever; (B) the occurrence or continuance of a Default; or (C) any
other occurrence, event or condition, whether or not similar to any of the
foregoing. Any such reimbursement shall not relieve or otherwise impair the
obligation of the Borrower to reimburse BMO for the amount of any payment made
by BMO under any such Letter of Credit, together with interest as provided
herein.
3.2 Reimbursement
In the event that BMO is called upon by a beneficiary to honour a
Letter of Credit, BMO shall forthwith give notice thereof to the Borrower and
the Administrative Agent. Unless the Borrower has made other arrangements with
BMO with respect to payment to BMO of an amount sufficient to permit BMO to
discharge its obligations under the Letter of Credit plus that amount equal to
any and all charges and expenses which BMO may pay or incur relative to such
Letter of Credit, any such payment so payable shall be deemed to be a Drawdown
in accordance with Sections 2.3 and 2.4 of a Prime Rate Advance if payment under
such Letter of Credit was made in Canadian Dollars and shall be deemed to be a
Drawdown of a U.S. Base Rate Advance if payment under such Letter of Credit was
made in U.S. Dollars; provided that the provisions of Section 2.3(a) regarding
Drawdown Notice, the provisions of Section 6.2 regarding conditions for
subsequent Drawdowns and the provisions of Section 11.2 relieving the Lenders of
the obligation to make further Advances shall not apply to such Advances. Such
drawdown shall be deemed to be made on a pro rata basis by all of the Lenders.
In the event that any amount so payable by BMO exceeds the amount available to
be drawn down by the Borrower under the Facility in accordance with the
provisions of Section 2.3(b), then BMO shall so notify the Borrower and the
Administrative Agent and forthwith upon receipt of such notice, the Borrower
shall provide to BMO an amount equal to such excess amount and any amount so
payable shall be deemed to be a Prime Rate Advance (if such excess amount is in
Canadian Dollars) or a U.S. Base Rate Advance (if such excess amount is in U.S.
Dollars), payable on demand.
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3.3 Indemnity for Costs
The Borrower shall indemnify BMO and the other Lenders against any
and all actions, proceedings, costs, damages, expenses, taxes (other than taxes
on overall net income, assets or capital), claims and demands which BMO may
incur or sustain by reason of or arising in any way whatsoever in connection
with the operating, establishing or paying of the amounts payable under each
Letter of Credit or arising in connection with any amounts payable by BMO and
the other Lenders thereunder save and except for amounts which have resulted
from the gross negligence or the wilful misconduct of BMO.
3.4 Fees
(a) At the time of issue of a Letter of Credit following syndication of
the Facility by BMO, the Borrower shall pay to BMO, for its own account, a
fronting fee of 0.125% calculated on the Face Amount of the Letter of Credit on
the basis of the actual number of days in the year for the period from the date
of issue of such Letter of Credit to the expiry date thereof.
(b) The Borrower shall pay to the Administrative Agent for the ratable
account of the Lenders an issuance fee on each Letter of Credit equal to the
Applicable Margin for Bankers' Acceptance Advances calculated on the undrawn
portion of the Face Amount of the Letter of Credit on the basis of the actual
number of days in the year for the period from the date of issue thereof to the
expiry date thereof. Such fee shall be paid quarterly in advance commencing on
the date of issuance of each Letter of Credit and thereafter on the quarterly
anniversary of the date of issuance.
(c) The Borrower shall pay to BMO for its own account an amendment fee in
respect of each amendment to any Letter of Credit in such manner as is customary
for BMO to charge its customers at the time of request for such amendment.
ARTICLE 4
BANKERS' ACCEPTANCES AND BA EQUIVALENT ADVANCES
4.1 Form of Bankers' Acceptance Advance and Interest
Bankers' Acceptance Advances shall be available to the Borrower
under the Facility by way of Drawdown or Rollover or Conversion by the Borrower
delivering to the Administrative Agent a Drawdown Notice or Rollover Notice or
Conversion Notice, as the case may be. To facilitate the procedures contemplated
herein, the Borrower hereby irrevocably appoints each of the Lenders as
attorney-in-fact of the Borrower to execute, endorse and deliver on behalf of
the Borrower, drafts in the form prescribed by it for Bankers' Acceptances
denominated in Canadian Dollars. Each Bankers' Acceptance executed and delivered
by a Lender on behalf of the Borrower as provided herein shall be binding upon
the Borrower as if it had been executed and delivered by a duly authorized
officer or officers of the Borrower. The dates, maturity dates and principal
amounts of all drafts shall be completed by the Lenders as required hereby.
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4.2 Minimum Amount
The aggregate of the Face Amounts of any drafts presented under this
Article 4 for any Drawdown or Conversion shall be not less than Cdn. $1,000,000
and integral multiples of Cdn. $100,000 in excess thereof. The minimum Face
Amount of any draft shall be Cdn. $100,000 or any integral multiple thereof.
4.3 Term and Interest Periods
The term of any Bankers' Acceptance shall be specified in the
draft and in the Drawdown Notice or Rollover Notice or Conversion Notice and the
term of any Bankers' Acceptance shall be for periods of approximately 30, 60, 90
or 180 days, unless otherwise agreed to by the Lenders. The term of each
Bankers' Acceptance shall mature on a Banking Day. The Borrower shall ensure
that no Bankers' Acceptance issued hereunder shall have a maturity date after
the Maturity Date.
4.4 Purchase of Drafts, Acceptance Fee and Interest
Each Drawdown of a Bankers' Acceptance Advance shall be made
pursuant to a Drawdown Notice, Conversion Notice or Rollover Notice given by the
Borrower to the Administrative Agent not later than 10:00 a.m. one Banking Day
prior to the applicable Drawdown Date, or date of Conversion or Rollover;
provided, however, that in the case of a Drawdown of a Bankers' Acceptance
Advance in a Face Amount in excess of Cdn. $10,000,000, the Drawdown Notice
shall be given by the Borrower to the Administrative Agent not later than 10:00
a.m. two Banking Days prior to the applicable Drawdown Date. Each Drawdown
Notice or Rollover Notice or Conversion Notice shall be irrevocable and binding
on the Borrower and shall specify the Drawdown Date or date of Rollover, the sum
of the aggregate Face Amount of the Bankers' Acceptances to be purchased and the
maturity date for such drafts. Not later than 12 noon on the applicable Drawdown
Date or date of Conversion or Rollover, the Lenders shall complete one or more
drafts in accordance with the Drawdown Notice, Conversion Notice or Rollover
Notice and the Lenders accept such drafts and purchase the Bankers' Acceptances
thereby created for the BA Purchase Price. Bankers' Acceptances purchased by a
Lender hereunder may be held by it for its own account until the maturity date
or sold by it at any time prior thereto in any relevant market therefor, in the
Lender's sole discretion.
4.5 Payment on Maturity
The Borrower shall pay to the Administrative Agent for the account
of the Lenders on the maturity of a Bankers' Acceptance an amount equal to the
Face Amount of such maturing Bankers' Acceptance; provided that the Borrower
may, at its option, so reimburse the Lenders, in whole or in part, by delivering
to the Administrative Agent no later than 10:00 a.m. one Banking Day prior to
the maturity date of a maturing Bankers' Acceptance, a Rollover Notice
specifying the term of the Bankers' Acceptances and presenting drafts to the
Lenders for acceptance and purchase having, in the case of reimbursement in
whole by replacement Bankers' Acceptances, an aggregate Face Amount equal to the
Face Amount of the maturing Bankers' Acceptances. In the event that the Borrower
fails to deliver a Rollover Notice and fails to make payment to the
Administrative Agent in respect of the maturing Bankers' Acceptances, the Face
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Amount of the maturing Bankers' Acceptances shall be deemed to be converted to a
Prime Rate Advance on the relevant maturity date. The Borrower shall pay to the
Administrative Agent for the account of the Lenders on the maturity date of the
maturing Bankers' Acceptance the difference between the Face Amount of the
maturing Bankers' Acceptance and the BA Purchase Price for such replacement
Bankers' Acceptances.
4.6 Waiver of Days of Grace
The Borrower renounces and shall not claim any days of grace for the
payment of any Bankers' Acceptance.
4.7 No Market
If a Lender determines in good faith, by reason of circumstances
affecting the Canadian money market, which determination shall be final,
conclusive and binding upon the Borrower, that there is no market for Bankers'
Acceptances, such Lender shall notify the Administrative Agent. The
Administrative Agent shall then notify the Borrower that there is no market for
Bankers' Acceptances, and the right of the Borrower to request the Bankers'
Acceptance Advances shall be suspended until such Lender, acting reasonably,
determines that the circumstances causing such suspension no longer exist and
the Administrative Agent so notifies the Borrower and any notice of drawing of a
Bankers' Acceptance Advance which is outstanding shall be cancelled and the
drawing requested therein shall, at the option of the Borrower, either not be
made or be made as a Prime Rate Advance. The Administrative Agent shall promptly
notify the Borrower of the suspension of the Borrower's right to request a
Bankers' Acceptance Advance and of the termination of any such suspension.
ARTICLE 5
CHANGE OF CIRCUMSTANCES AND INDEMNIFICATION
5.1 Increased Costs
In the event of (i) any Applicable Law coming into force after the
date hereof or (ii) any change in any existing Applicable Law, or in the
interpretation or application thereof by any court or by any governmental or
other authority or entity charged with the administration thereof or (iii)
compliance by a Lender with any direction, request or requirement (whether or
not having the force of law) of any governmental or other authority or entity
charged with the administration of any Applicable Law (each such event being
hereinafter referred to as a "change in law") which now or hereafter:
(a) subjects (whether directly, or as a result of any withholding or
deduction by the Borrower) a Lender to any Tax or changes the basis
of taxation, or increases any existing Tax (in each case, except for
the coming into force of any tax or change in the basis of taxation
or manner of collection of any tax in respect of or the change in
the rate of Tax charged on income or capital of a Lender as a whole
and including any Other Tax that is payable by a Lender on, or
required by Applicable Law to be withheld by the Borrower from, any
Additional Compensation, as hereinafter defined), on payments of
principal, interest or other amounts payable
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by the Borrower to the Administrative Agent for the account of such
Lender hereunder or on or by reference to the amount of any Advances
made or to be made by such Lender hereunder or on or by reference to
the commitment of such Lender hereunder, or
(b) imposes, modifies or deems applicable any reserve, special deposit
or similar requirements or otherwise imposes any cost on a Lender in
funding or maintaining all or any of the Advances hereunder, or
(c) will have the effect of increasing the amount of overall capital
required to be maintained by a Lender, taking into account the
existence of such Lender's participation in any Advance hereunder
(including, without limitation, all or any part of its commitment),
and the result of any of the foregoing is to increase the cost to such Lender,
reduce the income receivable by it or reduce the effective return on the capital
of such Lender in respect of any Advances and/or its Commitment to an extent
which such Lender believes to be material, such Lender shall give notice thereof
to the Borrower and to the Administrative Agent (herein called a "Notice of
Amount") stating the event by reason of which it believes it is entitled to
Additional Compensation (as hereinafter defined), such cost and/or such
reduction in such return (or such proportion of such reduction as is, in the
reasonable and bona fide opinion of such Lender, attributable to its obligations
hereunder), the amount of such Additional Compensation (as hereinafter defined)
incurred by such Lender and supplying reasonable supporting evidence (including,
in the event of change of Applicable Law, a photocopy of the Applicable Law
evidencing such change) together with a certificate of a duly authorized officer
of such Lender setting forth the Additional Compensation and the basis of
calculation of such Additional Compensation; provided that such Lender shall not
be required to disclose any information required to be kept confidential by
Applicable Law. In the event such Lender subsequently recovers all or part of
the Additional Compensation paid by the Borrower, it shall repay an equal amount
to the Borrower. The Borrower shall pay to the Administrative Agent for the
account of such Lender, within 10 Banking Days of the date of receipt of any
Notice of Amount, the amount specified in such Notice of Amount (in this Article
5 referred to as "Additional Compensation"). The obligation to pay such
Additional Compensation for subsequent periods will continue until the earlier
of termination of the Advance or the Commitment affected by the change in law or
the lapse or cessation of the change in law giving rise to the initial
Additional Compensation. Each Lender shall make reasonable efforts to limit the
incidence of any such Additional Compensation and seek recovery for the account
of the Borrower upon the Borrower's request at the Borrower's expense, provided
a Lender in its reasonable determination suffers no appreciable economic, legal,
regulatory or other disadvantage. Notwithstanding the foregoing provisions, a
Lender shall only be entitled to rely upon the provisions of this Section 5.1 if
and for so long as it is not treating the Borrower in any materially different
or in any less favourable manner than is applicable to any other customers of
such Lender, where such other customers are bound by similar provisions to the
foregoing provisions of this Section 5.1.
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5.2 Illegality
If, with respect to a Lender, the implementation of any existing
provision of Applicable Law or the adoption of any Applicable Law, or any change
therein or in the interpretation or application thereof by any court or by any
statutory board or commission now or hereafter makes it unlawful for such Lender
to make, fund or maintain all or any portion of an outstanding Advance, to
maintain all or any part of its commitment hereunder or to give effect to its
obligations in respect of all or any portion of an outstanding Advance, such
Lender may, by written notice thereof to the Borrower (supported, at the request
and expense of the Borrower, by an opinion of such Lender's counsel), declare
the obligations of such Lender under this Agreement to be terminated whereupon
the same shall forthwith terminate, and the Borrower shall repay to the
Administrative Agent for the account of such Lender within the time required by
such law (or as promptly as practicable if already unlawful or at the end of
such longer period, if any, as such Lender, in its bona fide opinion, may agree)
the principal of the Advances made by such Lender. If any such change shall
affect only that portion of such Lender's obligations under this Agreement that
is, in the bona fide opinion of such Lender, severable from the remainder of
this Agreement so that the remainder of this Agreement may be continued in full
force and effect without otherwise affecting any of the obligations of such
Lender or the Borrower hereunder, such Lender shall declare its obligations
under only that portion so terminated.
ARTICLE 6
CONDITIONS PRECEDENT TO DRAWDOWN
6.1 Conditions for Closing
The following conditions shall be satisfied by the Borrower on the
Closing Date:
(a) this Agreement and the Borrower's Security Documents, in form and on
terms satisfactory to the Lenders, acting reasonably, shall have
been duly authorized, executed and delivered to the Administrative
Agent by the Borrower and shall constitute legal, valid and binding
obligations of the Borrower;
(b) the Guarantees and the Guarantors' Security Documents, in form and
on terms satisfactory to the Lenders, acting reasonably, shall have
been duly authorized, executed and delivered by the Guarantors party
thereto to the Administrative Agent and shall constitute legal,
valid and binding obligations of the Guarantors party thereto;
(c) the Borrower shall have delivered to the Administrative Agent
certified copies of its constating documents and by-laws, all as
amended to date, the resolution authorizing this Agreement and the
Borrower's Security Documents and the incumbency of officers signing
this Agreement and the Borrower's Security Documents and any
documents to be provided pursuant to the provisions hereof or
thereof and a certificate of compliance, good standing or like
certificate with respect to the Borrower issued by appropriate
government officials of the jurisdiction of its incorporation;
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(d) each of the Guarantors shall have delivered to the Administrative
Agent certified copies of its certificate of incorporation and
by-laws, all as amended to date, the resolution authorizing the
Guarantees and the Guarantors' Security Documents to which such
Guarantor is a party and the incumbency of officers signing the
Guarantee and the Guarantors' Security Documents to which such
Guarantor is a party and any documents to be provided pursuant to
the provisions hereof or thereof and a certificate of status, good
standing or like certificate with respect to such Guarantor issued
by appropriate government officials of the jurisdiction of its
incorporation;
(e) MNL shall have delivered to the Administrative Agent such consent or
acknowledgement regarding the continuation of the security and
applicability of the Guarantor's Security Documents to which it is a
party, and the Security granted thereunder, to the obligations of
the Borrower under this Agreement notwithstanding the amendment to
the terms of the Original Credit Agreement in form and on terms
satisfactory to the Lenders, acting reasonably;
(f) the representations and warranties set forth in Section 7.1 shall be
true and correct in all material respects on and as of the Closing
Date by reference to the facts and circumstances then existing and
the Borrower shall have delivered an Officer's Certificate to such
effect;
(g) no Default or Event of Default shall have occurred and be continuing
and the Borrower shall have delivered an Officer's Certificate to
such effect;
(h) a Borrowing Base Certificate as at the fiscal month ending January
26, 2003 shall have been delivered to the Administrative Agent;
(i) the Security and all necessary financing change statements shall
have been duly registered, filed and recorded in all jurisdictions
where such registration, filing or recording, in the opinion of the
Lenders, is necessary or advantageous to preserve, protect and
perfect the charges and security interest created or intended to be
created by the Security Documents;
(j) the Borrower shall have delivered to the Administrative Agent
evidence of a policy of insurance by EDC in favour of the Borrower
in form and substance satisfactory to the Lenders and an
acknowledgement by EDC of the direction to pay delivered by the
Borrower as part of the Borrower's Security Documents;
(k) all fees and expenses payable in connection with the transactions
contemplated hereby shall be paid in full, to the extent that such
fees and expenses shall then be due and payable;
(l) opinions of Counsel to the Borrower and counsel to the Guarantors,
addressed to the Administrative Agent and the Lenders from time to
time party hereto, in form and substance satisfactory to the
Administrative Agent and each Lender, shall have been delivered to
the Administrative Agent (except for the opinion of
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counsel to MNL, which shall be delivered on a date occurring not
more than 3 Banking Days following the Closing Date);
(m) there shall have been no material adverse change in the assets,
liabilities, business, operations, condition (financial or
otherwise) or prospects of the Borrower and its Subsidiaries,
considered as a whole, which has occurred since October 27, 2002,
the end of the Borrower's second quarter of its 2003 fiscal year;
(n) a business plan (the "Business Plan") for the Borrower and its
Subsidiaries in the form attached hereto as Schedule L has been
approved by the board of directors of the Borrower for the period
commencing on November 12, 2002 and ending on October 29, 2004;
(o) the Borrower shall have repaid Advances outstanding under the
Original Credit Agreement such that the total principal amount
outstanding on the Closing Date shall not exceed Cdn. $25,000,000,
provided that the aggregate undrawn Face Amount of outstanding
Letters of Credit shall be deemed, for such purpose, to be principal
amounts outstanding under Advances. The Administrative Agent shall
prepare a statement as to all Advances outstanding under the
Original Credit Agreement on the Closing Date and the Borrower shall
provide confirmation of the details in such statement;
(p) all outstanding Debt of the Borrower and its Subsidiaries to T.H.
▇▇▇▇▇▇▇▇ being an aggregate amount of approximately Cdn.
$21,000,000, shall have been subordinated on terms and conditions
satisfactory to the Lenders;
(q) the Borrower shall have received net proceeds of not less than an
aggregate amount consisting of Cdn. $10,000,000 and U.S. $7,500,000,
or in each case the Equivalent Amount in another currency, from the
issuance of preferred shares to T.H. ▇▇▇▇▇▇▇▇ on terms satisfactory
to the Lenders, acting reasonably (or, in the alternative, such net
proceeds shall have been received from the Borrower from T.H.
▇▇▇▇▇▇▇▇ by way of subordinated debt on terms satisfactory to the
Lenders, in their sole discretion);
(r) accounts receivable owing to the Borrower from Mitel Knowledge
Corporation in the aggregate amount of Cdn. $5,195,712 and from
Mitel Systems Corporation in the aggregate amount of Cdn. $733,000
shall have been paid in full;
(s) the Debt of BreconRidge Manufacturing Solutions Corporation,
BreconRidge Manufacturing Solutions, Inc. and BreconRidge
Manufacturing Solutions Limited to the Borrower, MNI and MNL in the
principal amount of U.S. $2,466,346.02, U.S. $421,665.86 and U.S.
$2,312,852.03, respectively, plus accrued interest, as evidenced by
three promissory notes dated August 31, 2001, shall have been repaid
in full; and
(t) the Administrative Agent shall have received such additional
evidence, documents or undertakings as the Lenders may reasonably
request to establish the consummation of the transactions
contemplated hereby.
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In each case where a document shall be delivered to the
Administrative Agent, the Borrower shall provide a sufficient number of copies
for delivery of an originally executed copy of each document to each Lender. The
conditions set forth in this Section 6.1 are inserted for the sole benefit of
each Lender and may be waived by each Lender in whole or in part, with or
without terms or conditions.
6.2 Conditions for Subsequent Drawdowns
The following conditions shall be satisfied by the Borrower at or
prior to the time of each Drawdown of an Advance (other than a deemed Drawdown
of a Prime Rate Advance pursuant to the provisions of Section 3.2 or 4.5 or a
deemed Drawdown of a U.S. Base Rate Advance pursuant to the provisions of
Section 2.11(b) or (d) or Section 3.2) under the Facility subsequent to the
first Drawdown:
(a) the Borrower shall have given to the Administrative Agent a Drawdown
Notice in accordance with the provisions of Section 2.3(a);
(b) the representations and warranties set forth in Section 7.1 shall be
deemed to have been given on the Drawdown Date and shall be, mutatis
mutandis, true and correct in all material respects on and as of the
Drawdown Date, both before and after giving effect to the Drawdown
of such Advance and to the application of proceeds therefrom, by
reference to the facts and circumstances then existing and assuming
that each of such representations and warranties and the Schedules
referred to therein had been amended to reflect any notices provided
by the Borrower to the Administrative Agent in respect of the
matters dealt with therein and, with respect to the representation
set forth in Section 7.1(g), the reference to the date October 27,
2002 shall be deemed to be a reference to the date of the financial
statements of the Borrower most recently delivered pursuant to
Section 8.1(a) and, with respect to unaudited financial statements,
that such statements fairly present the financial condition of the
Borrower and its Subsidiaries as at such date and the results of
their operations for the financial period then ended, in accordance
with GAAP consistently applied, subject to normal year end audit
adjustments; and
(c) no Default or Event of Default shall have occurred and be
continuing, nor shall any such event occur as a result of making the
Advances or the application of proceeds therefrom.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES
7.1 Representations and Warranties
The Borrower represents and warrants as follows to the
Administrative Agent and each Lender and acknowledges and confirms that the
Administrative Agent and each Lender is relying upon such representations and
warranties:
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(a) Corporate Status. The Borrower is a corporation duly incorporated
and validly existing under the laws of Canada, each of the
Guarantors other than MNL is a corporation duly incorporated and
validly existing under the laws of Delaware, MNL is a private
company limited by shares duly incorporated and validly existing
under the laws of England and Wales, and each of their Subsidiaries
is a corporation duly incorporated, amalgamated or is validly
existing as a partnership or is otherwise organized and validly
existing under the laws of the jurisdiction of its incorporation and
the Borrower, each Guarantor and each of their Subsidiaries has all
necessary corporate power and authority to conduct its business as
presently conducted and to own or lease its properties and assets in
each jurisdiction where such properties and assets are situated or
such business is conducted.
(b) Corporate Power and Authority. The Borrower and each Guarantor has
full corporate power and authority to enter into the Loan Documents,
to which they are a party, and to do all acts and things and execute
and deliver all documents as are required hereunder or thereunder to
be done, observed or performed by it in accordance with the terms
hereof or thereof.
(c) Authorization and Enforceability. This Agreement and each of the
other Loan Documents to which the Borrower is a party has been
delivered by the Borrower and constitutes a valid and legally
binding obligation of the Borrower enforceable against it in
accordance with its terms, subject to applicable bankruptcy,
insolvency and other laws affecting the enforcement of creditors'
rights generally and, when delivered by a Guarantor, the Guarantee
and each of the Guarantor's Security Documents to which such
Guarantor is a party will constitute a valid and legally binding
obligation of such Guarantor enforceable against it in accordance
with its terms, subject to applicable bankruptcy, insolvency and
other laws affecting the enforcement of creditors' rights generally
and general principles of equity.
(d) Conflict with Constating Documents and Agreements. Neither the
execution and delivery of the Loan Documents nor the consummation by
the Borrower or any Guarantor of any of the transactions herein and
therein contemplated, nor compliance by the Borrower and the
Guarantors with the terms, conditions and provisions, will conflict
with or result in a breach of any of the terms, conditions or
provisions of:
(i) the constating documents, certificates or articles of
incorporation or by-laws of the Borrower and any Guarantor
or any unanimous shareholders' agreement relating to any of
them;
(ii) any resolution of the shareholders, directors or any
committee of directors of the Borrower or any Guarantor;
(iii) in any material respect, any agreement, instrument or
arrangement to which the Borrower, any Guarantor or any
Subsidiary is now a party or by
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which it, or its properties are, or may be, bound, or will
constitute a default thereunder, or will result in the
creation or imposition of any Lien (other than Permitted
Encumbrances) upon any of the properties or assets of the
Borrower, any Guarantor or any Subsidiary;
(iv) any judgment or order, writ, injunction or decree of any
court; or
(v) any Applicable Law presently in effect.
(e) No Other Authorization or Consents Necessary. No action (including,
without limitation, the giving of any consent, licence, right,
approval, authorization, registration, order or permit) of, or
filing with, any governmental or public body or authority is
required to authorize, or is otherwise required in connection with,
the execution, delivery and performance by the Borrower or any
Guarantor of the Loan Documents or in order to render this Agreement
and the Security Documents legal, valid, binding or enforceable and
no consents, approvals or other authorizations are required in
connection with the assignment of accounts receivable pursuant to
the Security Documents except those actions which have been obtained
or filings which have been made and such consents, approvals or
authorizations which may be required in connection with the
assignment of Governmental Receivables pursuant to the Financial
Administration Act (Canada), federal laws of the United States and
comparable provincial, state or territorial legislation or
legislation in any political subdivision thereof.
(f) No Third Party Consents. No consent or approval of any other party
is required in connection with the execution, delivery and
performance by the Borrower or any Guarantor of the Loan Documents
or in order to render this Agreement or any of the Security
Documents legal, valid, binding or enforceable except those consents
or approvals which have been obtained.
(g) Financial Statements. The audited consolidated financial statements
of the Borrower for the year ended April 30, 2002 and the unaudited
consolidated financial statements of the Borrower for the period
ended October 27, 2002 present fairly, in all material respects, the
financial position of the Borrower as at each such respective date,
subject, in the case of the financial statements for the period
ended October 27, 2002, to normal year end adjustments; and since
October 27, 2002, there has been no material adverse change in the
assets, liabilities, condition (financial or otherwise), or
prospects of the Borrower and its Subsidiaries, taken as a whole,
other than changes disclosed in writing to the Administrative Agent.
(h) Litigation. Other than (i) as disclosed in Schedule G, or (ii)
actions, suits or proceedings claiming solely payment (whether by
way of an amount owing, damages or otherwise) of an amount not
exceeding Cdn. $500,000 in respect of any one matter or Cdn.
$1,000,000 in the aggregate, there are no actions, suits or
proceedings pending or, to the best of the knowledge and belief of
the Borrower, threatened against or affecting the Borrower, any
Guarantor or any of their
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Subsidiaries or any of their undertaking, property and assets, at
law, in equity or before any arbitrator or before or by any
governmental department, body, commission, board, bureau, agency or
instrumentality in respect of which the Borrower has determined in
good faith that there is a reasonable possibility of a determination
adverse to the Borrower, any Guarantor or Subsidiary and which
could, if determined adversely, materially and adversely affect the
legality, validity or enforceability of this Agreement or the
Security Documents or the ability of the Borrower or any Guarantor
to perform its obligations under this Agreement and the Security
Documents and none of the Borrower, any Guarantor or any Subsidiary
is in default with respect to any Applicable Law or any order, writ,
injunction or award of any government, commission, board, agency,
court, arbitrator or instrumentality which would have any such
effect.
(i) Licences, etc. and Compliance with Laws. Other than as disclosed in
Schedule H, all licences, franchises, certificates, consents,
rights, rights-of-way, easements, entitlements, approvals,
authorizations, registrations, orders and permits (collectively,
"Permits") required to enable the Borrower, the Guarantors and each
of their Subsidiaries to carry on their respective businesses as now
conducted by them and to own, lease and operate their properties and
assets have been duly obtained and are currently subsisting in good
standing, except for such Permits, the absence of which has not had
and would not reasonably be expected to have, a material adverse
effect on the business, operations or financial condition of the
Borrower and its Subsidiaries taken as a whole. The Borrower, the
Guarantors and each of their Subsidiaries have complied in all
material respects with all terms and provisions presently required
to be complied with by them in all such Permits and with all
Applicable Law (other than Environmental Laws) and they are not in
violation of any of the respective provisions thereof and in respect
of which there is a reasonable possibility that such non-compliance
or violation could materially and adversely affect the business,
operations or financial condition of the Borrower and its
Subsidiaries, taken as a whole, or the ability of the Borrower and
the Guarantors to perform their obligations under the Loan
Documents.
(j) Compliance with Environmental Laws. Other than as disclosed in
Schedule H:
(i) the Borrower, each of the Guarantors and each of their
Subsidiaries and, to the best of the knowledge of the
Borrower and the Guarantors after due inquiry, those of any
party having charge, management or control of any real
property of any of the Borrower, the Guarantors and their
Subsidiaries have been and are in compliance with
Environmental Laws which are currently applicable to their
operations and the release, emission, deposit, issuance,
discharge, transportation or disposal ("Release") of any
Hazardous Materials; the Borrower, the Guarantors and their
Subsidiaries have no contingent liabilities in connection
with any Release or likely Release and have no conditions
on any property, which now, or with the passage of time or
the giving of notice or both, may give rise to liability,
and in respect of which there is a reasonable possibility
that such non-compliance, contingent liabilities or
conditions could have a material
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adverse effect on the Business, operations or financial
condition of the Borrower and its Subsidiaries, taken as a
whole;
(ii) neither the Borrower, the Guarantors nor any of the
Subsidiaries of the foregoing has received notice of any
judicial or administrative proceeding alleging the
violation of or any potential liability under any
Environmental Laws and none of the Borrower, the Guarantors
nor any of their Subsidiaries has received notice of or is
subject to any Environmental Claim; and
(iii) neither of the Borrower, the Guarantors, any of their
Subsidiaries or, to the best of the knowledge of the
Borrower and the Guarantors after due inquiry, or any party
having charge, management or control of any of their real
property has ever caused or permitted any Hazardous
Material to be placed, held, located, stored or disposed of
on, in, under, through or at any such property or any part
thereof except in compliance with Environmental Laws.
(k) Encumbrances. The Borrower, the Guarantors and each of its
Subsidiaries has good and valid title to all of its assets and
property and there are no Liens on any of the assets or undertaking
of the Borrower, the Guarantors or their Subsidiaries other than
Permitted Encumbrances.
(l) No Default or Event of Default. No Default or Event of Default has
occurred and is continuing.
(m) No Action for Winding-Up or Bankruptcy. There has been no voluntary
or involuntary action taken either by or against the Borrower, any
Guarantor or any Subsidiary for any such corporation's winding-up,
dissolution, liquidation, bankruptcy, receivership, administration
or similar or analogous events in respect of such corporation or
partnership or all or any material part of its assets or revenues.
(n) Taxes. The Borrower, each of the Guarantors and each of their
Subsidiaries has filed all tax returns which were required to be
filed, paid all Taxes (including interest and penalties) which are
due and payable other than any Tax the payment of which is being
contested in good faith and for which adequate reserves are being
maintained.
(o) Subsidiaries. Schedule I describes all of the material Subsidiaries
of the Borrower and its interests therein as at the date of this
Agreement. Each of MNI, MNSI and MNL is an indirect wholly-owned
Subsidiary of the Borrower. Neither the Borrower nor the Guarantors
have any material investment or material equity interest in any
other Person other than those entities described in the note to
Schedule I and any such investment or equity acquired in accordance
with Section 8.2(e).
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(p) Location of Business. The chief executive office of the Borrower is
located in Ottawa, Ontario; the principal office of MNI is located
in Herndon, Virginia and payments in respect of MNI's accounts
receivable are made to an account of MNI at Bank One in Detroit,
Michigan; the principal office of MNSI is located in Herndon,
Virginia and payments in respect of its accounts receivable are made
to an account of MNSI at Bank One in Belleville, Michigan; the
principal office of MNL is located at Portskewett, Monmouthshire and
payments in respect of its accounts receivable are made to accounts
of MNL at Barclays Bank plc located at Corporate Banking Centre,
Windsor Court, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇.
(q) Location of Collateral. With the exception of inventory in transit,
at least 95% (on a net book value basis) of all tangible assets
comprising the Borrower's Collateral (as that term is defined in the
Borrower's Security Documents) are situate in the Province of
Ontario.
(r) Registrations. All registrations, filings and recordings as are
necessary to preserve, protect and perfect the charges and security
interest created, or intended to be created by, the Security
Documents have been made.
(s) Pension Plans. All material obligations of the Borrower and the
Guarantors (including fiduciary, funding, investment and
administrative obligations) required to be performed in connection
with the pension plans of the Borrower or any Guarantor, and the
funding agreements therefore, have been performed on a timely basis.
7.2 Survival of Representations and Warranties
The representations and warranties set out in this Article 7 shall
survive the execution and delivery of this Agreement and the making of any
Advances to the Borrower, notwithstanding any investigations or examinations
which may be made by the Administrative Agent, any Lender or the Administrative
Agent's Counsel to any of them.
ARTICLE 8
COVENANTS
8.1 Affirmative Covenants
The Borrower covenants and agrees with the Administrative Agent and
each Lender that, unless the Administrative Agent and the Required Lenders
otherwise consent in writing, so long as any amount payable hereunder is
outstanding:
(a) Financial Reporting. The Borrower shall deliver, or cause to be
delivered, to the Administrative Agent, with sufficient original
copies for each Lender:
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(i) not later than March 15, 2003, a certificate contemplated
by Section 8.1(a)(iii) or other evidence, satisfactory to
the Lenders, that EBITDA for the fiscal quarter ended
January 26, 2003 was positive;
(ii) within 45 days after the end of each of the first three
fiscal quarters of the Borrower in each fiscal year,
commencing with the fiscal quarter on the last Sunday in
January 2003, the unaudited consolidated financial
statements of the Borrower, including balance sheet, income
statement and statement of cash flow, all prepared in
accordance with GAAP (except for the absence of footnotes);
and
(iii) within 120 days after the end of each fiscal year of the
Borrower (commencing with the fiscal year ending on the
last Sunday in April 2003) the audited consolidated
financial statements of the Borrower for such year,
including balance sheet, income statement and statement of
cash flow together with the report thereon of an
independent auditor of recognized national standing;
each of such financial statements referred to in clauses (ii) and
(iii) above to be prepared in accordance with GAAP;
(iv) together with the financial statements delivered pursuant
to Sections 8.1(a)(i) and (ii), a certificate of the Chief
Financial Officer of the Borrower to the effect that the
information contained in such statements is prepared and
presented in accordance with GAAP (except for the absence
of footnotes in unaudited statements) and in a manner
consistent with the past practices of the Borrower and that
such financial statements are true and correct in all
material respects, subject to normal year-end audit
adjustments in the case of unaudited financial statements,
and present fairly the results of operations and changes in
the financial position of the Borrower as of and to the
date of such financial statements and stating that the
Borrower is in compliance with the covenants set forth in
Article 8 including, without limitation, those financial
covenants set forth in Section 8.3 and, in respect of such
financial covenants providing detailed calculations
evidencing compliance therewith, that each of the
representations and warranties of the Borrower set forth in
Section 7.1 is true and correct by reference to the facts
and circumstances existing on the date of such certificate
(or specifying inaccuracies therein) and that no Default or
Event of Default has occurred and is continuing (or
specifying such non-compliance or Default or Event of
Default and stating what action, if any, the Borrower, a
Guarantor or any Subsidiary is taking in connection
therewith); and
(v) within 10 days of the end of each calendar month, a
Borrowing Base Certificate together with a detailed report
on accounts receivable of the Borrower and each Guarantor.
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(b) Corporate Status. Subject to Section 12.1, the Borrower will remain
a corporation duly continued and validly subsisting under the laws
of Canada or a province thereof and the Borrower shall cause each
Guarantor and Subsidiary to remain a corporation duly incorporated
or organized and validly subsisting under the laws of its existing
jurisdiction of incorporation or the laws of Canada or any other
province thereof and, in each case, registered or otherwise
qualified in all material respects to carry on business in each
jurisdiction where necessary to conduct its business.
(c) Conduct of Business. The Borrower will, and will cause each
Guarantor and each other Subsidiary to, continue its business,
except as the board of directors or duly authorized officers of the
Borrower may otherwise, in good faith, determine is in the best
interests of the Borrower, and will not materially and adversely
affect the business, operations or financial condition of the
Borrower and its Subsidiaries, taken as a whole, or the ability to
perform any of their obligations under this Agreement or the
Security Documents. The Borrower will, and will cause each Guarantor
and each other Subsidiary to, manage its business in a proper,
prudent and efficient manner (as the board of directors of the
Borrower may determine in good faith) in all material respects.
(d) Notice of Event of Default. The Borrower will deliver to the
Administrative Agent, forthwith upon becoming aware of any Default
or Event of Default, a certificate of an officer of the Borrower
specifying such Default or Event of Default together with a
statement of an officer of the Borrower setting forth details of
such Default or Event of Default and the action which has been, or
is proposed to be, taken with respect thereto.
(e) Other Notifications. The Borrower shall promptly notify the
Administrative Agent of:
(i) any change in the name or jurisdiction of incorporation or
organization of the Borrower or any Guarantor and of any
change in the location of the registered office or chief
executive office or material assets of any of them which
are subject to a Lien in favour of the Administrative
Agent;
(ii) any action, suit, proceeding, complaint, notice, order or
material Environmental Claim which is commenced or issued
or of which it becomes aware (and which has not been
disclosed in Schedule G or H) which is pending or issued
against or, to the best of its information, knowledge and
belief, affecting the Borrower, any Guarantor or any of
their Subsidiaries or any of their undertaking, property
and assets at law, in equity or before any arbitrator or
before or by any governmental department, body, commission,
board, bureau, agency or instrumentality in respect of
which the Borrower determines in good faith that there is a
reasonable possibility of a determination adverse to the
Borrower, any Guarantor or any other Subsidiary which
would, if determined adversely, reasonably be expected to
materially and adversely affect the business,
-45-
operations or condition (financial or otherwise) of the
Borrower and its Subsidiaries, taken as a whole, or the
ability to perform any of their obligations under this
Agreement or the Security Documents or the enforceability
of the Security, and any action, suit or proceeding
claiming payment (whether by way of an amount owing,
damages or otherwise) of an amount exceeding Cdn. $500,000
in respect of any one matter or Cdn. $1,000,000 in the
aggregate;
(iii) the occurrence of any default or event of default under the
EDC Facility;
(iv) any cancellation, termination, amendment or restatement of
the funding agreement between Her Majesty The Queen in
right of Canada, the Borrower, March Networks Corporation
and Mitel Knowledge Corporation, under the Technology
Partnerships Canada program, signed in October, 2002 (the
"Technology Partnerships Canada Agreement);
(v) the issuance by the Borrower or any of the Guarantors of
any equity or Subordinated Debt, other than any such
issuances by the Borrower or the Guarantors to the Borrower
or any of its wholly-owned subsidiaries, including details
thereof and gross proceeds and costs and expenses of issue;
(vi) any trade account of the Borrower or the Guarantors
becoming secured by way of a bank letter or guarantee, with
the notice including a statement that such security shall
be assigned by the Borrower and/or Guarantors, as
applicable, in favour of the Administrative Agent, if the
Administrative Agent so requests; and
(vii) the results of any report providing an actuarial valuation
or other assessment of any pension plan of the Borrower or
any Guarantor, upon any such report being made available to
the Borrower, including, without limitation, the actuarial
valuation report on the pension plan of MNL as of August
31, 2003 which report is expected to be received by the
Borrower in October 2003.
(f) Compliance with Applicable Laws. The Borrower shall, and shall cause
each of the Guarantors and each other Subsidiary to, comply in all
material respects with all Applicable Laws, including Environmental
Laws, the non-compliance with which would materially and adversely
affect the business, operations or financial condition of the
Borrower and its Subsidiaries, taken as a whole, or the ability to
perform any of their obligations under this Agreement or the
Security Documents or the enforceability of the Security and the
Borrower shall, and shall cause each Guarantor to, comply in all
material respects with the terms of and maintain all consents,
licences, franchises, certificates, consents, rights, approvals,
authorizations, registrations, orders or permits from, and make such
filings with, any governmental or public authority and to comply
with such Applicable Laws as may be necessary to carry on its
respective businesses, to own, lease and
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operate its properties and to enable the Borrower and each of the
Guarantors to enter into and perform their obligations under Loan
Documents or to render this Agreement or the Security Documents
legal, valid, binding or enforceable.
(g) Payment of Taxes. The Borrower shall, and shall cause each Guarantor
and each other Subsidiary to, pay or cause to be paid, when due, all
Taxes, property taxes, business taxes, social security premiums,
assessments and governmental charges or levies imposed upon it or
upon its income, sales, capital or profit or any property belonging
to it unless any such Tax, social security premiums, assessment,
charge or levy is contested by it in good faith with appropriate
reserves, and to collect and remit when due all payroll and
withholding taxes.
(h) Insurance. The Borrower shall maintain, or cause to be maintained,
on behalf of the Borrower and its Subsidiaries, insurance with
responsible and reputable insurance companies or associations in
such amounts and covering such risks as would be prudent for
companies engaged in similar businesses and owning similar
properties and assets in the same general areas in which the
Borrower or such Subsidiaries (as the case may be) operate.
(i) Visitation Rights. The Borrower shall permit the Administrative
Agent and each Lender, at any reasonable time or times, within
normal business hours, following reasonable notice to the Borrower,
to (provided the Administrative Agent and each Lender is accompanied
by a senior officer of the Borrower) visit the properties of and
examine and make copies of and abstracts from the books and records
of the Borrower, the Guarantors and their Subsidiaries. All
information received shall be held by the Administrative Agent and
each Lender in confidence for use in respect of the administration
of the Facility and for no other purpose.
(j) Keeping of Books. The Borrower shall, and shall cause each Guarantor
and each other Subsidiary to, keep proper books of record and
account, in which full and correct entries shall be made of all
financial transactions and the assets and business of the Borrower
and each of its Subsidiaries in accordance with generally accepted
accounting principles consistently applied.
(k) Compliance with Material Leases, Contracts and Other Agreements. The
Borrower shall, and shall cause each Guarantor and each other
Subsidiary to, comply in all material respects and perform its
obligations under all leases (whether real or personal property),
contracts and other agreements to which it is a party or by which it
is bound if the non-compliance or non-performance of obligations
thereunder could reasonably be expected to have a material adverse
effect on the business, operations or financial condition of the
Borrower and its Subsidiaries, taken as a whole, or the ability to
perform any of their obligations under this Agreement or the
Security Documents.
(l) Dividends to Borrower. The Borrower will cause its Subsidiaries to
pay, to the extent they are legally able to do so, dividends,
interest, amounts due in respect of inter-company accounts and
capital or other distributions to the Borrower in an
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aggregate amount sufficient and as may be required to enable the
Borrower to satisfy its obligations under this Agreement and to pay
all amounts due and owing hereunder.
(m) Registrations. The Borrower shall, and shall cause each Guarantor to
maintain all such registrations, filings and recordings as are
necessary to preserve, protect and perfect the charges and security
interest created, or intended to be created, by the Security
Documents.
(n) Dealings with Collateral. The Borrower shall not, without the prior
written consent of the Administrative Agent, locate any Collateral
(as such term is defined in the Borrower's Security Documents) in
any province other than the Province of Ontario if, as a result,
less than 95% (on a net book value basis) of all tangible assets
comprising such Collateral, are situate in the Province of Ontario.
(o) MNI, MNSI and MNL to Remain Subsidiaries. The Borrower shall cause
each of the Guarantors to remain a direct or indirect wholly-owned
Subsidiary of the Borrower.
(p) Governmental Receivables. Upon request by the Administrative Agent
or the Required Lenders at any time following the occurrence of a
Default or Event of Default, the Borrower shall promptly deliver
specific assignments of all or any part of its Governmental
Receivables as requested by the Administrative Agent or the Required
Lenders and shall obtain such consents, acknowledgements and
approvals or authorizations as may be required in connection with
enforcement of the Lien against such Governmental Receivables
granted by the Borrower and the Guarantors to the Administrative
Agent pursuant to the Security Documents as may be required by
applicable law including, without limitation, the Financial
Administration Act (Canada), federal laws of the United States and
comparable provincial, state or territorial legislation or
legislation in any political subdivision thereof.
(q) Establishment of EDC Facility. On or prior to a date occurring not
more than five (5) Banking Days following the Closing Date, (i) the
EDC Facility shall have been established and the Borrower and MNL
shall have satisfied all of the conditions precedent to the
availability of the EDC Facility other than for such conditions
precedent as relate to this Facility, and (ii) the Intercreditor
Agreement, in form and on terms satisfactory to the Lenders, acting
reasonably, shall have been duly authorized, executed and delivered
to the Administrative Agent by each of the Borrower, the Guarantors
and EDC and shall constitute legal, valid and binding obligations of
each of such parties.
(r) Drawdown under EDC Facility. On or prior to a date occurring not
more than eight (8) Banking Days following the Closing Date, the
Borrower shall have fully drawn down the entire amount of Sterling
4,100,000 available under the EDC Facility and shall have provided
notice of same to the Agent pursuant to Section 8.1(s) below.
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(s) Notices under EDC Facility. The Borrower shall notify, or shall
cause MNL to notify the Administrative Agent in writing and provide
to the Administrative Agent a copy of any drawdown notice or similar
document delivered to EDC in connection with the EDC Facility,
simultaneously with the delivery of the same to EDC.
(t) New Equity Round. In the event that, by August 31, 2003, the
Borrower shall not have received net proceeds of at least Cdn.
$20,000,000 from the issuance of common shares or preferred shares
to persons other than Affiliates of the Borrower on terms consistent
with the Confidential Offering Memorandum of the Borrower dated
September 25, 2002, the Borrower shall pay to the Administrative
Agent, for account of the Lenders, on August 31, 2003, a risk
premium fee equal to 1.0% of the Commitment.
8.2 Negative Covenants
The Borrower covenants and agrees with the Administrative Agent and
the Lenders that, unless the Administrative Agent and the Required Lenders
otherwise consent in writing, so long as any amount payable hereunder is
outstanding:
(a) No Merger, Amalgamation, etc. The Borrower shall not, and shall not
permit any Guarantor or other Subsidiary to, directly or indirectly,
sell, lease, transfer, assign, convey or otherwise dispose of all or
substantially all of its property and assets, and will not merge or
amalgamate pursuant to statutory authority or otherwise with any
other Person except upon compliance with Article 12.
(b) Negative Pledge. The Borrower shall not, and shall not permit any
Guarantor or other Subsidiary to, create, incur, assume or permit to
exist any Lien, other than Permitted Encumbrances, on any of its
property, undertaking or assets now owned or hereafter acquired.
(c) Restriction on Debt. The Borrower shall not, and shall not permit
any Guarantor or other Subsidiary to, create, incur, assume or
otherwise become liable upon or suffer to exist (after knowledge of
the existence thereof) any Debt other than Permitted Debt.
(d) Restriction on Disposition of Property. The Borrower shall not, and
shall not permit any Guarantor or other Subsidiary to, enter into
sale and leaseback transactions or securitization transactions or
sell, exchange, lease, release or abandon or otherwise dispose of
any of its fixed property or other assets to any Person other than
(i) bona fide sales, exchanges, leases, releases, abandonments or
other dispositions in the ordinary course of business for the
purpose of carrying on the same, including, without limitation,
sales of inventory in the ordinary course; (ii) Permitted
Securitization Transactions; (iii) sale and leaseback transactions
completed by the Borrower, its Guarantors and Subsidiaries taken
together, in an aggregate amount not exceeding Cdn. $15,000,000 (or
its Equivalent Amount in another currency); and (iv) the disposition
by MNL of the
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managed service contracts portion of its business for gross proceeds
of approximately(pound)8.4 million.
(e) Restriction on Financial Assistance to Non-Wholly-Owned
Subsidiaries. The Borrower shall not, and shall not permit any
Guarantor or other Subsidiary to, directly or indirectly, make any
investment in (other than as permitted in this Section 8.2(e)),
advances to, capital contributions to, loans to or guarantees to, or
give any financial assistance to or for the benefit of any Person
other than (i) financial assistance (including investments in,
advances to, capital contributions to or loans or guarantees to) to
the Borrower or a direct or indirect wholly-owned Subsidiary of the
Borrower, or (ii) financial assistance (including investments in,
advances to, capital contributions to or loans or guarantees to) to
Tianchi-Mitel Telecommunications Corp. or any other Persons in an
amount not exceeding U.S. $5,000,000 in the aggregate, it being
acknowledged by the Administrative Agent and the Lenders that the
existing investments by MNL and MNI in preference shares of Mitel
Knowledge Corporation shall be permitted investments for purposes of
this Section 8.2(e), including the transfer of such investments
within members of the Mitel group of companies.
(f) Restriction on Take-Over Bids. The Borrower shall not, and shall not
permit any Guarantor or other Subsidiary to, directly or indirectly,
make any Take-Over Bid which is financed in full or in part by this
Facility and make investments in or acquisition of other Persons
which are in excess of U.S. $5,000,000 in respect of any one matter
or U.S. $10,000,000 in the aggregate over the term of the Facility.
(g) Transactions with Affiliates. The Borrower shall not, and shall not
permit any Guarantor or other Subsidiary to, enter into any
transaction or series of related transactions with any Person which
is Controlled by T.H. ▇▇▇▇▇▇▇▇, or any Affiliate of such Person,
other than transactions between the Borrower and one or more of the
Guarantors or transactions between two or more of the Guarantors,
except on terms and conditions no less favourable to the Borrower,
the Guarantor or the Subsidiary of the Borrower as could reasonably
be obtained by the Borrower, Guarantor or Subsidiary at that time in
a comparable transaction entered into at Arm's Length with a Person
at Arm's Length with the Borrower and provided that the Borrower, a
Guarantor or any Subsidiary of the Borrower may enter into
employment agreements with respect to the procurement of services of
their respective officers and employees in the ordinary course of
business, including executive compensation arrangements.
(h) Restriction on Distributions. The Borrower shall not, and shall not
permit any Guarantor or other Subsidiary, to declare, make, permit
or pay (i) any dividend or other distribution on issued shares
(other than dividends in kind paid by the issue of shares of the
Borrower); (ii) the purchase, redemption or retirement price of any
issued shares, warrants or any other options or rights to acquire
shares of the Borrower, the Guarantors or any of the Subsidiaries of
the Borrower redeemed or purchased by the Borrower or any of its
Subsidiaries; (iii) loans to any shareholders thereof; (iv) loans to
any directors or officers thereof on terms more
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favourable to such directors or officers than normal commercial
terms; or (v) any similar distributions (each a "Corporate
Distribution") other than (vi) any Corporate Distribution made only
to the Borrower or a Guarantor; and (vii) provided that no Default
or Event of Default would result therefrom and provided further that
each of the covenants of the Corporation set forth in Section 8.3
would be satisfied on a pro forma basis after giving effect to such
Corporate Distribution.
(i) Pension Plan Compliance. The Borrower shall not (a) terminate, or
permit a Guarantor to terminate, any pension plan in a manner, or
take any other action with respect to any pension plan, which would
reasonably be expected to result in any material liability of the
Borrower or a Guarantor, or (b) fail to make, or permit a Guarantor
to fail to make, full payment when due of all amounts which, under
the provisions of any pension plan, agreement relating thereto or
applicable law, the Borrower or a Guarantor is required to pay as
contributions thereto. In addition, the Borrower shall promptly pay,
and shall cause the Guarantors to promptly pay, not less than the
minimum funding requirement from time to time established by any
actuarial report with respect to any pension plan of the Borrower or
any Guarantor.
8.3 Financial Covenants
The Borrower covenants and agrees with the Administrative Agent and
the Lenders that, unless the Administrative Agent and the Required Lenders
otherwise consent in writing, so long as any amount payable hereunder is
outstanding:
(a) Minimum EBITDA. The Borrower shall not permit its EBITDA (determined
on a consolidated basis in accordance with GAAP as in effect on the
date of this Agreement and measured as at the last day of each
fiscal quarter of the Borrower for such fiscal quarter then ending,
commencing with the first such quarter to end following the date of
this Agreement) to be less than 80% of the following amounts, being
the projected EBITDA for the relevant fiscal quarter, as set forth
in the Business Plan:
(i) for the fiscal quarter ending April 27, 2003, Cdn.
$5,600,000,
(ii) for the fiscal quarter ending July 27, 2003, Cdn.
$6,700,000,
(iii) for the fiscal quarter ending October 26, 2003, $8,300,000,
and
(iv) for each fiscal quarter ending on or after January 25,
2004, Cdn. $10,300,000.
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ARTICLE 9
GUARANTEES
9.1 Guarantors to Provide Guarantees
(a) Each Guarantor shall guarantee to the Administrative Agent and the
Lenders the due and punctual payment of all debts, liabilities and obligations
of the Borrower arising hereunder and shall duly authorize, execute and deliver
to the Administrative Agent and the Lenders the Guarantee and the Guarantors'
Security Documents, in substantially the form of the Borrower's Security
Documents or in such other form and terms as are satisfactory to the
Administrative Agent and the Lenders, acting reasonably.
(b) Each Guarantor shall deliver to the Administrative Agent and the
Lenders certified copies of its constating documents and borrowing by-laws (if
any), a resolution authorizing the Guarantee and the Guarantor's Security
Documents to which it is a party and the incumbency of the officers of the
Guarantor signing the Guarantee and the Guarantor's Security Documents and any
other documents or instruments to be provided pursuant to the provisions thereof
and the provisions of this Agreement and a certificate of status, good standing
or like certificate with respect to such Guarantor issued by appropriate
government officials of its jurisdiction of incorporation.
(c) Each Guarantor shall deliver to the Administrative Agent and the
Lenders a confirmation and acknowledgement, in form and on terms satisfactory to
the Lenders, confirming the continuing obligations of such Guarantor under the
Guarantee and the Guarantor's Security Documents notwithstanding the amendments
to the Original Credit Agreement or any subsequent amendments, restatements,
renewals or extensions of this Agreement and the Facility.
(d) The Guarantors shall deliver an opinion of their counsel, addressed to
the Administrative Agent and each Lender from time to time party hereto, in form
and substance satisfactory to the Administrative Agent and each Lender.
ARTICLE 10
SECURITY
10.1 Borrower's Security Documents
(a) As security for all Advances made to it and as security for all its
other liability or indebtedness, both present and future, hereunder, the
Borrower shall assign, by way of security (the "Borrower's Security") in favour
of the Administrative Agent as Agent for itself and each Lender, all of its
receivables howsoever arising in connection with the sale or lease of goods or
services by the Borrower to customers located in Canada or the United States and
shall deliver, or cause to be delivered, the following documents (collectively
called the "Borrower's Security Documents") all in form satisfactory to the
Administrative Agent and each Lender:
(i) a general security agreement of the Borrower;
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(ii) a direction to pay addressed to EDC respecting the
receivables of the Borrower insured by EDC acknowledged by
EDC;
(iii) a general assignment of receivables of the Borrower;
(iv) an assignment by the Borrower under section 427 of the Bank
Act; and
(v) such other documents as the Administrative Agent and each
Lender may now or hereafter reasonably require to give
effect to, register and perfect the security interests
created by the Borrower's Security Documents in the
jurisdiction where such charged assets are located.
(b) So long as no Default or Event of Default has occurred and is
continuing, any amounts received by the Administrative Agent from EDC pursuant
to the direction to pay referred to in Section 10.1(a)(ii) shall be paid to, or
to the order of, the Borrower.
(c) The Borrower hereby confirms and agrees that each of the Borrower's
Security Documents previously delivered by the Borrower and all of the
Borrower's Security continues as security for all Advances made to the Borrower
under this Agreement and as security for all of the Borrower's liabilities and
indebtedness, both present and future, hereunder notwithstanding any amendments
to the Original Credit Agreement or any future amendments, restatements,
extensions or renewals of this Agreement or the Facilities.
10.2 Guarantors' Security Documents
As security for all Advances made to it and as security for all its
other liability or indebtedness, both present and future, hereunder, each of the
Guarantors shall assign, by way of security (the "Guarantors' Security") in
favour of the Administrative Agent as Agent for itself and each Lender, all of
its receivables howsoever arising in connection with the sale or lease of goods
or services by the Guarantor to customers (i) located in Canada or the United
States in the case of MNI and MNSI, and (ii) located in the United Kingdom in
the case of MNL, and shall deliver, or cause to be delivered, the following
documents (collectively called the "Guarantor's Security Documents") all in form
satisfactory to the Administrative Agent and each Lender:
(a) the Guarantee;
(b) a general security agreement of the Guarantor (except for with
respect to MNL);
(c) a general assignment of receivables of the Guarantor; and
(d) such other documents as the Administrative Agent and each Lender may
now or hereafter reasonably require to give effect to, register and
perfect the security interests created by the Guarantor's Security
Documents in the jurisdiction where such charged assets are located.
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ARTICLE 11
DEFAULT AND ACCELERATION
11.1 Events of Default
The occurrence of any one or more of the following events (each such
event and the expiry of the cure period, if any, provided in connection
therewith, being herein referred to as an "Event of Default") shall constitute a
default under this Agreement:
(a) if the Borrower shall fail to pay the principal of any Advance as
and when the same becomes due and payable;
(b) if the Borrower shall fail to pay interest on any Advance or to pay
any other amount due hereunder within three Banking Days following
the due date;
(c) if the Borrower, any Guarantor or any other Subsidiary shall
encumber any of its assets contrary to the provisions of Section
8.2(b) hereof and fails to discharge such Lien within a period of 15
days after notice in writing has been given by the Administrative
Agent to the Borrower requiring such discharge;
(d) if the Borrower shall default in the observance or performance of
any agreement, covenant or condition contained in Section 8.1(a) and
such failure shall remain unremedied for 15 days after notice in
writing has been given by the Administrative Agent to the Borrower;
(e) if the Borrower shall, or shall permit any Guarantor or any other
Subsidiary to, default in the observance or performance of any
agreement, covenant or condition contained in Section 8.2 (other
than Section 8.2(b)) or 8.3;
(f) if the Borrower, any Guarantor or any other Subsidiary shall default
in any material respect in the observance or performance of any
agreement, covenant or condition contained in this Agreement (other
than a covenant or condition whose breach or default in performance
is elsewhere in this Section 11.1 specifically dealt with) and such
default shall not be remedied, if capable of remedy, within a period
of 15 days after notice in writing thereof is given by the
Administrative Agent to the Borrower;
(g) if any one or more of the Borrower, the Guarantors or any other
Subsidiary shall fail to pay the principal of, or premium or
interest on, any Debt outstanding in a principal amount which, when
aggregated with the principal amount of all other Debt in respect of
which any of them has failed to pay the principal of, or premium or
interest on, exceeds Cdn. $1,000,000 (or the Equivalent Amount in
any other currency) (excluding Debt due to the Lenders hereunder and
Debt owing by the Borrower or a Guarantor to any of its
Subsidiaries) when the same becomes due and payable (whether by
scheduled maturity, required prepayment, acceleration, demand or
otherwise) and such failure shall continue after the applicable
grace period, if any, specified in the agreement or instrument
relating to such Debt, or any other event of default or early
termination event (howsoever
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described or designated) shall occur or condition shall exist, and
shall continue after the applicable grace period, if any, specified
in any agreement or instrument relating to any such Debt and the
effect of such event is to accelerate, or permit the acceleration
of, Debt of either of them in a principal amount which, when
aggregated with the principal amount of all other Debt of any of
them which is, or may be, declared due and payable prior to its
specified maturity as a result of an event of default, exceeds Cdn.
$1,000,000 (or the Equivalent Amount in any other currency);
(h) if the Borrower or any Guarantor or any material Subsidiary or any
other Subsidiary which owns shares of a Guarantor shall generally
not pay its debts as such debts become due, or shall admit in
writing its inability to pay its debts generally as they become due
or shall make a general assignment for the benefit of creditors; or
any proceeding shall be instituted by or against the Borrower or any
Guarantor or any material Subsidiary or any other Subsidiary which
owns shares of a Guarantor seeking to adjudicate it a bankrupt or
insolvent, or seeking liquidation, dissolution, winding-up,
reorganization, arrangement, adjustment, protection, relief or
composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver,
trustee or other similar official for it or for any substantial part
of its property and, in the case of any such proceeding instituted
against it (but not instituted by it), either such proceeding shall
remain undismissed or unstayed for a period of 30 days or any of the
actions sought in such proceeding (including, without limitation,
the entry of an order for relief against it or the appointment of a
receiver, trustee, custodian or other similar official for it or for
any substantial part of its property) shall occur; or the Borrower
or any Guarantor or any material Subsidiary or any other Subsidiary
which owns shares of a Guarantor shall take any action to authorize
any of the actions set forth above in this Section 11.1(h);
(i) if any judgment or order or series of judgments or orders (whether
or not related) for the payment of money in an aggregate amount in
excess of Cdn. $1,000,000 (or the Equivalent Amount in any other
currency), other than any judgment or order for which one or more of
the Borrower, the Guarantors and their Subsidiaries will recover
under a policy of insurance, shall be rendered against any one or
more of the Borrower, the Guarantors and their Subsidiaries and (i)
such judgment or order or series of judgments and/or orders are
final with no further right of appeal and the Borrower has not
satisfied the Required Lenders, acting reasonably, that the Borrower
or the relevant Guarantor or Subsidiary is able to satisfy such
judgment or order or series of judgments and/or orders; or (ii)
enforcement proceedings shall have been commenced by any creditor
upon such judgment or order or series of judgments and/or orders, as
the case may be; or (iii) there shall be any period of 20
consecutive days during which a stay of enforcement of such judgment
or order or series of judgments and/or orders, as the case may be,
by reason of a pending appeal or otherwise, shall not be in effect;
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(j) if any representation or warranty made or deemed to be made by the
Borrower or any Guarantor in any of the Loan Documents shall prove
to have been incorrect or misleading in any material respect when
made or deemed to be made;
(k) if the Borrower, any Guarantor or any other Subsidiary shall be the
subject of any proceeding or investigation pertaining to the
discovery of any Hazardous Material on any property or the Release
by such entity of any Hazardous Material or any violation of any
Environmental Law shall occur which, in each case, could reasonably
be expected to have a material and adverse effect on the financial
condition or position of the Borrower and its Subsidiaries taken as
a whole;
(l) if the obligations of the Borrower or any Guarantor hereunder or
under any other Loan Document shall cease to constitute the legal,
valid and binding obligations of the Borrower or the Guarantors or
shall cease to be in full force and effect or the Borrower or any
Guarantor shall have contested the validity of any of the Loan
Documents or denied that it had any liability under any of the Loan
Documents;
(m) if ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ceases to Control (directly or
indirectly) the Borrower or if any of MNI, MNSI or MNL ceases to be
a direct or indirect wholly-owned Subsidiary of the Borrower;
(n) if any of the Security shall cease to be a valid and perfected first
priority security interest relative to third parties (subject to
Permitted Encumbrances) and such Security is not restored to being a
valid and perfected first priority security interest within five
Banking Days after the earlier of (i) the Borrower or any Guarantor
becoming aware thereof, or (ii) notice from the Administrative Agent
or any Lender;
(o) if the Technology Partnerships Canada Agreement (as defined in
Section 8.1(e)(iv)) is cancelled or terminated or any event occurs
which entitles or permits the Government of Canada not to provide
funding under such agreement or such agreement is amended in any
manner which is adverse to the Borrower;
(p) if the covenant in Section 8.1(q) has not been performed on or prior
to a date not later than five (5) Banking Days following the Closing
Date, and such breach of covenant continues for more than an
additional three (3) Banking Days; or
(q) if the covenant in Section 8.1(r) has not been performed on or prior
to a date not later than eight (8) Banking Days following the
Closing Date.
11.2 Acceleration
Upon the occurrence of an Event of Default and at any time
thereafter while an Event of Default is continuing, the Administrative Agent may
or, if so directed by the Required Lenders, shall by written notice to the
Borrower declare the Advances made to the Borrower to be immediately due and
payable (whereupon the same shall become so payable together with accrued
interest thereon and any other sums then owed by the Borrower hereunder) or
declare
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such Advances to be due and payable on demand of the Administrative Agent. If,
pursuant to this Section 11.2, the Administrative Agent declares any Advances
made to the Borrower to be due and payable on demand, then, and at any time
thereafter, the Administrative Agent may by written notice to the Borrower call
for repayment of such Advances on such date or dates as it may specify in such
notice (whereupon the same shall become due and payable on such date together
with accrued interest thereon and any other sums then owed by the Borrower
hereunder and the provisions of Section 11.4 shall apply) or withdraw its
declaration with effect from such date as it may specify in such notice.
11.3 Remedies Cumulative and Waivers
It is expressly understood and agreed that the rights and remedies
of the Administrative Agent and the Lenders hereunder or under any other
instrument executed pursuant to this Agreement are cumulative and are in
addition to and not in substitution for any rights or remedies provided by law
or by equity; and any single or partial exercise by the Administrative Agent or
any Lender of any right or remedy for a default or breach of any term, covenant,
condition or agreement contained in this Agreement shall not be deemed to be a
waiver of or to alter, affect or prejudice any other right or remedy or other
rights or remedies to which the Administrative Agent or any Lender may be
lawfully entitled for such default or breach. Any waiver by the Administrative
Agent and the Lenders of the strict observance, performance or compliance with
any term, covenant, condition or other matter contained herein and any
indulgence granted, either expressly or by course of conduct, by the
Administrative Agent and the Lenders shall be effective only in the specific
instance and for the purpose for which it was given and shall be deemed not to
be a waiver of any rights and remedies of the Administrative Agent or any Lender
under this Agreement as a result of any other default or breach hereunder or
thereunder.
11.4 Suspension of Lenders' Obligations
Without prejudice to the rights which arise out of this Agreement or
by law, the occurrence of a Default or Event of Default shall, while such
Default or Event of Default shall be continuing, relieve the Lenders of all
obligations to make any Advances hereunder (whether or not a Drawdown Notice in
respect of any such Advance shall have been received by the Administrative Agent
prior to the occurrence of a Default or Event of Default) or to accept or comply
with any Drawdown Notice or to convert any Advance into a Libor Advance or a
Bankers' Acceptance Advance or to accept any Rollover Notice in respect of a
Libor Advance or to accept or comply with any Conversion Notice converting an
Advance into an Advance in a different currency.
11.5 Application of Payments After an Event of Default
If any Event of Default shall occur and be continuing, all payments
made by the Borrower hereunder shall be applied in the following order:
(a) to amounts due hereunder as costs and expenses of the Administrative
Agent;
(b) to amounts due hereunder as fees;
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(c) to any other amounts (other than amounts in respect of interest or
principal) due hereunder;
(d) to amounts due hereunder as interest;
(e) rateably to amounts due hereunder as principal; and
(f) any balance to the Borrower or as a court of competent jurisdiction shall
determine.
ARTICLE 12
SUCCESSOR COMPANIES
12.1 Certain Requirements in Respect of Merger, Etc.
The Borrower shall not, and shall not permit the Guarantors to,
enter into any transaction (whether by way of reconstruction, reorganization,
consolidation, amalgamation, merger, transfer, sale 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, of the
continuing company (collectively, a "Reorganization") resulting therefrom, or
whereby the obligation of the Borrower to pay amounts under this Agreement would
become subject to novation or assumed or undertaken by any other such Person or
continuing company, provided that (i) this Section 12.1 is not applicable to a
Reorganization involving the Borrower and a wholly-owned Subsidiary of the
Borrower; provided, however, in the event of such a Reorganization which
involves an amalgamation or merger of the Borrower with any of its Subsidiaries,
the Successor Corporation shall be required to execute and deliver the
supplemental agreement and opinion referred to in Section 12.1(a) and take such
other actions and deliver such other documents and agreements as may be
necessary to ensure that the perfection and priority of the Security is not
impaired; and (ii) it may do so and such Person or continuing company (the
"Successor Corporation") shall become a party to this Agreement if:
(a) the Successor Corporation shall execute and/or deliver to the
Administrative Agent an agreement supplemental hereto in form
reasonably satisfactory to the Administrative Agent and the Lenders
and execute and/or deliver such other instruments, if any, which to
the reasonable satisfaction of the Lenders and in the opinion of
Counsel to the Borrower addressed to the Administrative Agent and
the Lenders, are necessary to evidence the agreement of the
Successor Corporation to observe and perform all the covenants and
obligations of the Borrower under this Agreement and any other Loan
Document and to be bound by all the terms of this Agreement and any
other Loan Document so far as they relate to the Borrower, which
instruments, if any, shall be in form reasonably satisfactory to the
Administrative Agent and the Lenders;
(b) such transaction shall, to the reasonable satisfaction of the
Administrative Agent and the Lenders and in the opinion of Counsel
to the Borrower addressed to the Administrative Agent and the
Lenders, be upon such terms as to preserve and not
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to impair any of the rights and powers of the Administrative Agent
and the Lenders;
(c) the perfection and priority of the Security shall not be impaired;
(d) all Other Taxes payable as a result of such transaction have been
paid by such Successor Corporation;
(e) such transaction will not result in any claim for increased costs
pursuant to Section 5.1 or result in any Tax being levied on or
payable by the Administrative Agent or any Lender (except for Taxes
on the overall net income or capital of the Administrative Agent or
any Lender provided there is no increase in such Taxes as a result
of such transaction);
(f) such transaction will not cause, or have the result of the
Administrative Agent or any Lender being in default under,
non-compliance with, or violation of, any Applicable Law;
(g) an opinion of counsel to the Successor Corporation substantially in
the form and as to matters addressed in the opinion of Counsel to
the Borrower delivered pursuant to Section 6.1 shall have been
delivered to the Administrative Agent and the Lenders;
(h) the creditworthiness of the Successor Corporation (as determined by
the Administrative Agent and each Lender in its sole discretion)
shall not be less than the creditworthiness of the Borrower or the
relevant Guarantor immediately prior to giving effect to such
transaction; and
(i) no Default or Event of Default shall have occurred and be continuing
or will occur as a result of such transaction.
12.2 Vesting of Powers in Successor
Except in the case of an amalgamation or other transaction pursuant
to which the Successor Corporation is liable for all of the obligations of the
Borrower by operation of law, whenever the conditions of Section 12.1 above have
been duly observed and performed, the Administrative Agent and each Lender shall
execute and deliver the supplemental agreement provided for in Section 12.1(a)
and thereupon:
(a) the Successor Corporation shall possess and from time to time may
exercise each and every right and power of the Borrower under this
Agreement in its own name or in the name of the Borrower or
otherwise and any act or proceeding by any provision of this
Agreement or the Security Documents required to be done and
performed with like force and effect by the like directors or
officers of the Successor Corporation; and
(b) at the request of the Borrower, the Borrower shall be released from
its liability and obligations under this Agreement and the
Administrative Agent and the
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Lenders, at the request and at the expense of the Borrower, shall
execute and deliver to the Borrower such instruments as shall
reasonably be requisite to evidence such release.
ARTICLE 13
COSTS, EXPENSES AND INDEMNIFICATION
13.1 Costs and Expenses
The Borrower shall pay promptly, upon request by the Administrative
Agent accompanied by reasonable supporting documentation or other evidence, all
reasonable costs and expenses in connection with preparation, printing,
execution and delivery of this Agreement and the other documents to be delivered
hereunder including, without limitation, the reasonable fees and out-of-pocket
expenses of the Administrative Agent's Counsel with respect thereto. Except for
ordinary expenses of the Administrative Agent relating to the day-to-day
administration of this Agreement, the Borrower further agrees to pay all
reasonable costs and expenses (including reasonable fees and expenses of
counsel, accountants and other experts) in connection with the interpretation,
preservation or enforcement of rights of the Administrative Agent and each
Lender under this Agreement and the Security Documents including, without
limitation, all reasonable costs and expenses sustained by them as a result of
any failure by the Borrower or any Guarantor to perform or observe their
obligations contained in this Agreement and all costs incurred in connection
with obtaining any required consents, approvals or authorizations contemplated
by Section 8.1(p) and otherwise in enforcing and realizing upon the Security.
13.2 Indemnification by the Borrower
In addition to any liability of the Borrower to the Administrative
Agent and each Lender under any other provision hereof, the Borrower shall
indemnify the Administrative Agent and each Lender and hold the Administrative
Agent and each Lender harmless against any reasonable costs or expenses incurred
by the Administrative Agent and each Lender as a result (i) of any failure by
the Borrower or any Guarantor to fulfil any of its obligations hereunder in the
manner provided herein including, without limitation, any cost or expense
incurred by reason of the liquidation or re-employment in whole or in part of
deposits or other funds required by the Administrative Agent and each Lender to
fund or maintain any Advance as a result of the failure of the Borrower to
complete a Drawdown or to make any repayment or other payment on the date
required hereunder or specified by it in any notice given hereunder (but
excluding costs arising solely out of loss of anticipated profits); or (ii) the
failure of the Borrower to pay any other amount including, without limitation,
any interest or fee due hereunder on its due date; or (iii) as a result of the
prepayment or repayment by the Borrower of any Libor Advance prior to its date
of maturity or the last day of the then current Interest Period for such Libor
Advance, including, without limiting the generality of the foregoing, any
repayment or prepayment resulting from the circumstances referred to in Section
2.6(b).
13.3 Funds
Each amount advanced, made available, disbursed or paid hereunder
shall be advanced, made available, disbursed or paid, as the case may be, in
immediately available funds
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or, after notice from the Administrative Agent, in such other form of funds as
may from time to time be customarily used in Toronto, Canada in the settlement
of banking transactions similar to the banking transactions required to give
effect to the provisions of this Agreement on the day such advance, disbursement
or payment is to be made.
13.4 General Indemnity
(a) Indemnity. Subject to paragraphs (b), (c) and (d) below, the Borrower
agrees to indemnify and save harmless the Administrative Agent, each Lender and
each of their respective officers, directors, employees, agents, advisors,
representatives and affiliates (collectively, the "Indemnitees" and
individually, an "Indemnitee") from and against any and all liabilities, costs,
claims, damages, penalties, losses and expenses (including reasonable legal fees
and disbursements of counsel but excluding loss of profits and consequential
damages) (collectively, the "Losses") as a result of any claims, actions or
proceedings ("Claims") asserted against the Indemnitees by a Person other than
the Indemnitees in connection with the agreement of the Administrative Agent and
each Lender to provide the Facility, the commitment of the Lenders to establish
the Facility and the Advances made by the Lenders including, without limitation:
(i) the costs of defending and/or counterclaiming or claiming over against third
parties in respect of any Claim; and (ii) subject to the provisions set forth in
paragraph (d) below, any Losses arising out of a settlement of any Claim made by
the Indemnitees.
(b) Limitations to Indemnity. The foregoing obligations of indemnification
shall not apply to any Losses suffered by the Indemnitees or any of them or to
any Claim asserted against the Indemnitees or any of them to the extent such
Loss or Claim has resulted from the gross negligence or wilful misconduct of the
Indemnitees or any of them.
(c) Notification. Whenever an Indemnitee shall have received notice that a
Claim has been commenced or threatened, which, if successful, would subject the
Borrower (the "Indemnifying Party") to the indemnity provisions of this Section
13.4, the Indemnitee shall, as soon as reasonably possible, notify (to the
extent permitted by law) the Indemnifying Party in writing of the Claim and of
all relevant information the Indemnitee possesses relating thereto; provided,
however, that failure to so notify the Borrower shall not release it from any
liability which it may have on account of the indemnity set forth in this
Section 13.4, except to the extent that the Indemnifying Party shall have been
materially prejudiced by such failure.
(d) Defence and Settlement. The Indemnifying Party shall have the right,
but not the obligation, to assume the defence of any Claim in any jurisdiction
with legal counsel of reputable standard in order to protect the rights and
interest of the Indemnitees. In such respect, (i) the Indemnifying Party shall
require the consent of the Indemnitees of the choice of legal counsel in
connection with the Claim, which consent shall not be unreasonably withheld or
delayed; and (ii) without prejudice to the rights of the Indemnitees to retain
counsel and participate in the defence of the Claim, the Indemnifying Party and
the Indemnitees shall make all reasonable efforts to co-ordinate their course of
action in connection with the defence of such Claim. The related costs and
expenses sustained in such respect by the Indemnitees shall be at the expense of
the Indemnifying Party, provided that the Indemnifying Party shall only be
liable for the costs and expenses of one firm of separate counsel in addition to
the cost of any local counsel that may be required. If the Indemnifying Party
fails to assume defence of the Claim,
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the Indemnitees will (upon further notice to the Borrower) have the right to
undertake, at the expense of the Borrower and the Guarantors, the defence,
compromise or settlement of the Claim on behalf and for the account and risk of
the Indemnifying Party, subject to the right of the Indemnifying Party to assume
the defence of the Claim at any time prior to settlement, compromise or final
determination thereof.
Notwithstanding the foregoing, in the event the Indemnitee, acting
reasonably, does not agree with the manner or timeliness in which the legal
counsel of the Indemnifying Party is carrying on the defence of the Claim, or,
pursuant to the opinion of a reputable counsel retained by the Indemnitee, there
may be one or more legal defences available different from the one carried on by
the legal counsel of the Indemnifying Party, the Indemnitee shall have the right
to assume its own defence in the Claim by appointing its own legal counsel. The
costs and the expenses sustained by the Indemnitee shall be at the expense of
the Indemnifying Party provided that the Indemnifying Party shall only be liable
for the costs and expenses of one firm of separate counsel, in addition to the
costs of any local counsel that may be required.
The Indemnifying Party shall not be liable for any settlement of any
Claim effected without its written consent (which shall not be unreasonably
withheld or delayed). In addition, the Indemnifying Party will not, without the
prior written consent of the Indemnitee (which consent shall not be unreasonably
withheld or delayed), settle, compromise or consent to the entry of any judgment
in or otherwise seek to terminate any Claim or threatened Claim in respect of
which indemnification or contribution may be sought hereunder.
If an offer for settlement made to any Indemnitee and which the
Indemnifying Party has recommended for acceptance is rejected by the Indemnitee
and the final liability of the Indemnitee in respect of such action and all
related damages is greater than such offer, the liability of the Indemnifying
Party will only be to indemnify the Indemnitee up to the amount of such offer.
13.5 Environmental Claims
(a) Indemnity. Subject to paragraphs (b), (c) and (d) below, the Borrower
agrees to indemnify and save harmless each of the Indemnitees from and against
any and all Losses as a result of any Claims asserted against the Indemnitees by
a Person other than the Indemnitees with respect to any material presence or the
Release on, into, onto, under or from any property which at any time was owned,
used, occupied, operated or under the control of any of the Borrower, the
Guarantors or any of the Subsidiaries of any of the foregoing of any Hazardous
Material (as hereinafter defined) or which arises out of or in connection with
any action of, or failure to act by, the Borrower, a Guarantor or any other
Subsidiary or any predecessor or successor thereof in contravention of any
Environmental Laws including, without limitation: (i) the costs of defending
and/or counterclaiming or claiming over against third parties in respect of any
Claim; and (ii) subject to the provisions set forth in paragraph (d) below, any
Losses arising out of a settlement of any Claim made by the Indemnitees.
(b) Limitations to Indemnity. The foregoing obligations of indemnification
shall not apply to any Losses suffered by the Indemnitees or any of them or to
any Claim asserted against the Indemnitees or any of them which relates,
directly or indirectly, to any action or
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omission of any of the Indemnitees while in possession or control of the
property of the Borrower, any Guarantor or any other Subsidiary which is grossly
negligent or constitutes wilful misconduct.
(c) Notification. Whenever an Indemnitee shall have received notice that a
Claim has been commenced or threatened, which, if successful, would subject the
Borrower to the indemnity provisions of this Section 13.5, the Indemnitee shall,
as soon as reasonably possible and in any event on or before the expiry of the
date (the "Notification Date") which is the earlier of (i) the tenth Banking Day
after the receipt of such notice by the Administrative Agent, and (ii) such date
as will afford sufficient time for the Borrower to prepare and file a timely
answer to the Claim, notify the Borrower of the Claim and of all relevant
information the Indemnitee possesses relating thereto. If the Indemnitee shall
fail to so notify the Borrower and provide it with such information on or before
the Notification Date, the Borrower shall not have any liability hereunder in
respect of any Losses suffered by the Indemnitees in respect of such Claim to
the extent such Losses may be reasonably attributable to such failure by the
Indemnitee.
(d) Defence and Settlement. The provisions of Section 13.4(d) shall apply
to any Claims under this Section 13.5.
ARTICLE 14
THE ADMINISTRATIVE AGENT
14.1 The Administrative Agent
Each Lender hereby irrevocably appoints the Administrative Agent to
act as its Administrative Agent in connection with this Agreement, the Loan
Documents, and any matter contemplated hereunder, and authorizes irrevocably the
Administrative Agent to exercise such rights, powers and discretions as are
delegated to the Administrative Agent pursuant to this Agreement, the Loan
Documents, and any matter contemplated thereunder, together with all such
rights, powers and discretions as are incidental hereto or thereto. The Borrower
may in all respects assume that the Administrative Agent has obtained all
necessary authorities from the Lenders and is acting in full conformity with
this Article 14 at all times. The Administrative Agent shall have only those
duties and responsibilities which are expressly specified in this Agreement, and
it may perform such duties by or through its agents or employees. This Agreement
shall not place the Administrative Agent under any fiduciary duties in respect
of any Lender.
14.2 The Administrative Agent's Responsibility
The Administrative Agent may:
(a) assume that:
(i) any representation made by the Borrower in or in connection
with any of this Agreement or any Drawdown Notice is true;
(ii) no Event of Default has occurred; and
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(iii) the Borrower is not in breach of or in default under its
obligations under any of this Agreement or any Bankers'
Acceptances;
and the Administrative Agent may also:
(b) unless it has actual knowledge or actual notice to the contrary,
assume that each Lender's address is that identified with its
signature below until it has received from such Lender a notice
designating some other office of such Lender as its address and act
upon any such notice until the same is superseded by a further such
notice;
(c) engage and pay for the advice or services of any lawyers,
accountants or other experts whose advice or services may to it seem
necessary, expedient or desirable and rely upon any advice so
obtained;
(d) unless it has actual knowledge or actual notice to the contrary,
rely as to matters of fact which might reasonably be expected to be
within the knowledge of the Borrower upon a statement signed by or
on behalf of the Borrower;
(e) unless it has actual knowledge or actual notice to the contrary,
rely upon any communication or document believed by it to be
genuine;
(f) refrain from exercising right, power or discretion vested in it
under this Agreement unless and until instructed by the Required
Lenders as to whether or not such right, power or discretion is to
be exercised and, if it is to be exercised, as to the manner in
which it should be exercised;
(g) refrain from exercising any right, power or discretion vested in it
which would or might in its opinion be contrary to any law of any
jurisdiction or any directive or otherwise render it liable to any
Person, and may do anything which is in its opinion necessary to
comply with any such law or directive;
(h) retain for its own benefit, and without liability to account for,
any fee or other sum receivable by it for its own account;
(i) accept deposits from, lend money to, provide any advisory or other
services to or engage in any kind of banking or other business with
any party (including any Affiliate thereof) to this Agreement; and
(j) refrain from acting in accordance with any instructions of the
Required Lenders to begin any legal action or proceeding arising out
of or in connection with any of this Agreement or any Bankers'
Acceptance until it shall have received such security as it may
require (whether by way of payment in advance or otherwise) against
all costs, claims, expenses (including legal fees) and liabilities
which it will or may expend or incur in complying with such
instruction.
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14.3 Administrative Agent's Duties
The Administrative Agent shall:
(a) promptly upon receipt thereof, inform each Lender of the contents of
any notice, document, request or other information received by it in
its capacity as Administrative Agent hereunder from the Borrower;
(b) promptly notify each Lender of the occurrence of any Event of
Default or any default by the Borrower in the due performance of its
obligations under this Agreement or any document incidental thereto
to which it is expressed to be a party and of which the
Administrative Agent has actual knowledge or actual notice;
(c) each time the Borrower requests the prior written consent of the
Required Lenders, use its best efforts to obtain and communicate to
the Borrower the response of the Required Lenders in a reasonable
and timely manner having due regard to the nature and circumstances
of the request;
(d) subject to the foregoing provisions of this Section 14.3, act in
accordance with any instructions given to it by the Required
Lenders; and
(e) if so instructed by the Required Lenders, refrain from exercising
any right, power or discretion vested in it under this Agreement or
any document incidental thereto.
14.4 Protection of Administrative Agent
Notwithstanding anything to the contrary expressed or implied
herein, the Administrative Agent shall not:
(a) be bound to enquire as to:
(i) whether any representation made by the Borrower in or in
connection with this Agreement or any document incidental
thereto is true;
(ii) the occurrence of any Event of Default;
(iii) the performance by the Borrower of its obligations under
any of this Agreement or any document incidental thereto;
(iv) any breach of or default by the Borrower of or under its
obligations under this Agreement or any document incidental
thereto; or
(v) the use or application by the Borrower of any of the
proceeds of the Facility;
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(b) be bound to account to any Lender for any sum or the profit element
of any sum received by it for its own account;
(c) be bound to disclose to any Person any information relating to the
Borrower if such disclosure would or might in its opinion constitute
a breach of any law or regulation or be otherwise actionable at the
suit of any Person; or
(d) accept any responsibility for the accuracy and/or completeness of
any information supplied in connection herewith or for the legality,
validity, effectiveness, adequacy or enforceability of this
Agreement, any Bankers' Acceptance or any document incidental hereto
or thereto and the Administrative Agent shall not be under any
liability to any Lender as a result of taking or omitting to take
any action in relation to the Agreement, any Bankers' Acceptance or
any document incidental hereto or thereto save in the case of gross
negligence or wilful misconduct, and each of the Lenders agrees that
it will not assert or seek to assert against any director, officer,
employee or agent of the Administrative Agent any claim it might
have against any of them in respect of the matters referred to in
this Section 14.4.
14.5 Indemnification of Administrative Agent
Each Lender shall, on demand by the Administrative Agent, indemnify
the Administrative Agent pro rata in accordance with each such Lender's
Participation at the time of such demand against any and all costs, claims,
reasonable expenses (including legal fees) and liabilities which the
Administrative Agent may incur (and which have not been reimbursed by the
Borrower), otherwise than by reason of its own gross negligence or wilful
misconduct, in acting in its capacity as Administrative Agent under this
Agreement, any Bankers' Acceptance or any document incidental hereto or thereto.
14.6 Termination or Resignation of Administrative Agent
(a) Notwithstanding the irrevocable appointment of the Administrative
Agent, the Required Lenders may (with the consent of the Borrower not to be
unreasonably withheld), upon giving the Administrative Agent 90 days' prior
written notice to such effect, terminate the Administrative Agent's appointment
hereunder provided that a successor Administrative Agent has been appointed at
or prior to expiry of such notice.
(b) The Administrative Agent may resign its appointment hereunder at any
time without assigning any reason therefor by giving written notice to such
effect to each of the other parties hereto. Such resignation shall not be
effective until a successor Administrative Agent has been appointed.
(c) In the event of any such termination or resignation, the Required
Lenders shall appoint a successor Administrative Agent acceptable to the
Borrower, deliver copies of the Accounts to such successor and the retiring
Administrative Agent shall be discharged from any further obligation hereunder
but shall remain entitled to the benefit of the provisions of this Article 14
and the Administrative Agent's successor and each of the other parties hereto
shall
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have the same rights and obligations among themselves as they would have had if
such successor originally had been a party hereto as Administrative Agent.
14.7 Rights of Administrative Agent as Lender
With respect to its portion of the Committed Amount and its
Participation, and to Bankers' Acceptances, the Administrative Agent shall have
the same rights and powers under this Agreement and any Bankers' Acceptances as
any other Lender, and it may exercise such rights and powers as though it were
not performing the duties and functions delegated to it as Administrative Agent
hereunder, and the term "Lender" or any other similar term shall, unless the
context otherwise requires, include the Administrative Agent in its capacity as
a Lender.
14.8 Authorized Waivers, Variations and Omissions
If so authorized in writing by the Required Lenders, the
Administrative Agent may grant waivers, consents, vary the terms of this
Agreement and do or omit to do all such acts and things in connection herewith
or therewith. Except with the prior written agreement of all the Lenders,
nothing in this Section 14.8 shall authorize (i) any decrease in the Applicable
Margin, the Stamping Fee, the Standby Fee or the Libor Margin, (ii) any
extension of the date for, or alteration in the amount, currency or mode of
calculation or computation of any payment of principal or interest or other
amount, (iii) any increase in the Committed Amount of a Lender (other than as
referred to in Section 2.6(b)), (iv) any extension of the Final Maturity Date,
(v) any change in the terms of Articles 9, 10 or 13, (vi) any change in the
definition of Required Lenders (vii) the release of the Borrower or any
Guarantor from its obligations under any Loan Document or (viii) any amendments
to this Section 14.8.
14.9 Financial Information Concerning Borrower
Subject to Section 14.3(a), the Administrative Agent shall not have
any duty or responsibility either initially or on a continuing basis to provide
any Lender with any credit or other information with respect to the financial
condition and affairs of the Borrower.
14.10 Knowledge of Financial Situation of Borrower
Each of the Lenders represents and warrants to the Administrative
Agent that it has made its own independent investigation of the financial
condition and affairs of the Borrower in connection with the making and
continuation of its Participation in this Agreement and that it has not relied
on any information provided to it by the Administrative Agent in connection
herewith or therewith, and each Lender represents and warrants to the
Administrative Agent that it shall continue to make its own appraisal of the
creditworthiness of the Borrower from time to time.
14.11 Legal Proceedings
The Administrative Agent shall not be obligated to take any legal
proceedings against the Borrower or any other Person for the recovery of any
amount due under this Agreement or under any Bankers' Acceptances. No Lender
shall bring legal proceedings against the Borrower or any other Person hereunder
or in connection herewith, or exercise any right
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arising hereunder or in connection herewith over the property and assets of the
Borrower or any other Person without the prior written consent of the Required
Lenders.
14.12 Capacity as Administrative Agent
In performing its functions and duties under this Agreement, the
Administrative Agent shall act solely as the Administrative Agent of the Lenders
and shall not assume, and shall not be deemed to have assumed, any obligation as
agent or trustee for the Borrower or any other Person. The Administrative Agent
shall not be under any liability or responsibility of any kind to the Borrower,
the Lenders, or to any other Person arising out of or in relation to any failure
or delay in performance or breach by any Lender or Lenders or, as the case may
be, by the Borrower or any other Person pursuant to or in any way in connection
with this Agreement.
14.13 Capacity as Lead Arranger
The Borrower and the Lenders and the Administrative Agent hereby
agree and confirm that BMO has performed its functions and duties in connection
with the arrangement of the Facility and shall not be under any liability or
responsibility of any kind to the Borrower, the Lenders, the Administrative
Agent or any of them arising out of or in relation to the arrangement of the
Facility or this Agreement.
14.14 Deposits or Loans Respecting the Borrower
The Administrative Agent and each of the Lenders may accept deposits
from, lend money to and generally engage in any kind of banking or other
business with the Borrower without liability to account to the Administrative
Agent or any Lender.
ARTICLE 15
GENERAL
15.1 Term
The Facility shall expire on the Maturity Date.
15.2 Survival
All covenants, agreements, representations and warranties made
herein or in certificates delivered in connection herewith by or on behalf of
the Borrower, the Guarantors or any other Subsidiary shall survive the execution
and delivery of this Agreement and the making of the Drawdown hereunder and
shall continue in full force and effect so long as there is any obligation of
the Borrower to the Administrative Agent or any Lender hereunder.
15.3 Benefit of the Agreement
This Agreement shall enure to the benefit of and be binding upon the
successors and permitted assigns of the Borrower and the successors and
permitted assigns of the Administrative Agent and the Lenders.
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15.4 Notices
All notices, requests, demands or other communications to or from
the parties hereto shall be in writing and shall be given by overnight delivery
service, by hand delivery or by telecopy to the addressee as follows:
(i) If to the Borrower:
Mitel Networks Corporation
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: Treasurer
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇, ext. 4431
(ii) If to the Administrative Agent:
BMO ▇▇▇▇▇▇▇ ▇▇▇▇▇ Inc.
Structured and Project Lending
1 First Canadian Place
4th Floor, P.O. Box 150
Toronto, Ontario M5X 1H3
Attention: Genga ▇. ▇▇▇▇▇▇▇▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
(iii) If to a Lender:
To the address set forth next to its signature on the
signature page of this Agreement
or at such other address or to such other individual as the Borrower may
designate by notice to the Administrative Agent or the Administrative Agent may
designate by notice to the Borrower. If any notice, request, demand or other
communication is delivered or transmitted on a day other than a Banking Day or
after 3:00 p.m. on any Banking Day, the same shall be deemed to have been
effectively given and received on the next following Banking Day.
15.5 Amendment and Waiver
This Agreement and documents collateral hereto may be modified or
amended and a waiver of any breach of any term or provision of this Agreement
shall be effective only if the Borrower and the Administrative Agent and the
Required Lenders or each Lender, as the case
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may be, so agree in writing. A waiver of any breach of any term or provision of
this Agreement shall be limited to the specific breach waived.
15.6 Governing Law
This Agreement shall be governed by and construed in accordance with
the laws of the Province of Ontario and the federal laws of Canada applicable
therein. Each of the Administrative Agent, the Lenders and the Borrower agree
that any legal suit, action or proceeding arising out of this Agreement may be
instituted in the courts of Ontario, and each of the Administrative Agent, the
Lenders and the Borrower hereby accepts and irrevocably submits to the
non-exclusive jurisdiction of said courts and acknowledges their competence and
agrees to be bound by any judgment thereof.
15.7 Further Assurances
The Borrower shall promptly cure any default in its execution and
delivery of this Agreement. The Borrower, at its expense, will promptly execute
and deliver, or cause to be executed and delivered, to the Administrative Agent
and the Lenders, upon request, all such other and further documents, agreements,
certificates and instruments in compliance with, or accomplishment of the
covenants and agreements of the Borrower and the Guarantors hereunder or under
the Security Documents or more fully to state the obligations of the Borrower
and the Guarantors as set out herein or therein or to make any recording, file
any notice or obtain any consents, all as may be necessary or appropriate in
connection therewith.
15.8 Enforcement and Waiver by the Lenders
The Administrative Agent and the Lenders shall have the right at all
times to enforce the provisions of this Agreement and agreements to be delivered
pursuant hereto in strict accordance with the terms hereof and thereof,
notwithstanding any conduct or custom on the part of the Administrative Agent
and the Lenders in refraining from so doing at any time or times. The failure of
the Administrative Agent and the Lenders at any time or times to enforce its
rights under such provisions, strictly in accordance with the same, shall not be
construed as having created a custom or in any way or manner modified or waived
the same. All rights and remedies of the Administrative Agent and the Lenders
are cumulative and concurrent and the exercise of one right or remedy shall not
be deemed a waiver or release of any other right or remedy.
15.9 Execution in Counterparts
This Agreement may be executed in counterparts, each of which shall
be considered an original and all of which taken together shall constitute a
single agreement.
15.10 Assignment by the Borrower
The rights and obligations of the Borrower under this Agreement are
not assignable to any other Person, except in accordance with Article 12,
without the prior written consent of the Administrative Agent and the Lenders in
its sole discretion.
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15.11 Assignments and Transfers by the Lenders
(a) With the prior written consent of the Borrower, such consent not to be
unreasonably withheld or delayed, any Lender may, at any time, assign all or any
of its rights and benefits hereunder or transfer in accordance with Section
15.11(b) all or any of its rights, benefits and obligations hereunder to another
Person (the "Transferee"); provided that any partial assignment or transfer
shall be with respect to a minimum commitment of Cdn. $5,000,000 and integral
multiples of Cdn. $100,000 in excess thereof or such lesser amount as will
result in each of the Lender and the Transferee having a minimum commitment of
Cdn. $5,000,000. Notwithstanding the foregoing, the consent of the Borrower is
not required in connection with the assignment or transfer of all or any of the
rights, benefits and obligations hereunder to (i) any Subsidiary or Affiliate of
the Lender, provided that, in either case, any such assignment or transfer does
not give rise to a claim for increased costs pursuant to Article 5, or (ii) to
any financial institution or to any other Person if an Event of Default has
occurred and is continuing.
(b) If a Lender assigns all or any of its rights and benefits hereunder in
accordance with Section 15.11(a), then, unless and until the Transferee has
agreed with the Lender and the Borrower pursuant to a transfer agreement
substantially in the form of Schedule J hereto (or such other form as may be
agreed to by the Lender and the Borrower) that the Transferee shall be bound by
the same obligations of the Lender as the Transferee would have been under if
the Transferee had been an original party hereto, the Borrower shall not be
obliged to recognize such Transferee as having the rights against the Borrower
which the Transferee would have had if the Transferee had been such a party
hereto.
(c) A Lender may participate all or any part of its interest hereunder,
provided that any such participation does not give rise to a claim for increased
costs pursuant to Article 5. The Borrower shall not be obligated to deal with
any participant and shall be entitled to deal solely with the Lender and the
Lender shall not be released from any of its obligations to the Borrower or the
Guarantors as a result of such participation except to the extent that the
participant has fulfilled such obligations. Such participants shall be bound to
the same confidentiality provisions with respect to the Facilities and the
Borrower and each Guarantor as are applicable to the Lender.
15.12 Set-Off
Subject to the provisions of the Intercreditor Agreement, if an
Event of Default has occurred and is continuing, each Lender shall have the
right to set off against any accounts, credits or balances maintained by the
Borrower or any of the Guarantors with the Lender any amount due hereunder.
Except for payments to a Lender from the Administrative Agent which were
received by the Administrative Agent for the account of such Lender in
accordance with the provisions of this Agreement, if any Lender shall at any
time receive payment or satisfaction of all or a part of any amounts payable
hereunder, whether by set-off or otherwise, in a proportion which, in relation
to any amounts received by any other Lender or Lenders at the same time,
represents more than its pro rata Participation, then such Lender shall notify
the Administrative Agent thereof and pay to the Administrative Agent for the
account of the other Lenders such amount as will ensure that each Lender will
receive a proportion of such payment
-71-
equal to such Lender's pro rata Participation. In the event that at any time any
Lender shall be required to refund any amount which has been paid to or received
by it by set-off or otherwise on account of any part of the Advances, interest
thereon or any other amount payable hereunder and which has been paid to any
other Lender pursuant to this Section 15.12, such other Lender shall repay a
proportionate amount of the amounts so refunded without interest. If a Lender is
required to make any payment to any other Lender pursuant to this Section 15.12,
then, subject to the foregoing sentence, the liability of the Borrower to the
Lender making such payment under this Agreement shall 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 shall be treated as having been reduced by the
amount of the payment received by such Lender.
15.13 Time of the Essence
Time shall be of the essence in this Agreement.
15.14 Judgment Currency
To the extent permitted by applicable law, if any judgment or order
is rendered and expressed in a currency other than the currency (the "Agreement
Currency") in which amounts are payable under the Facility (i) for the payment
of any amount owing by the Borrower in respect of the Facility or this
Agreement, or (ii) in respect of a judgment or order of another court for the
payment of any amount described in (i) above, the Administrative Agent and each
Lender, after recovery in full of the aggregate amount to which the
Administrative Agent and each Lender is entitled pursuant to the judgment or
order, will be entitled to receive immediately from the Borrowers the amount of
any shortfall in the Agreement Currency received by the Administrative Agent and
each Lender as a consequence of sums paid in such other currency and will refund
promptly to the Borrower any excess of the Agreement Currency received by the
Administrative Agent and each Lender as a consequence of sums paid in such other
currency if such shortfall or such excess arises or results from any variation
between the rate of exchange at which the Agreement Currency is converted into
the currency of the judgment or order for the purposes of such judgment or order
and the rate of exchange at which the Administrative Agent and each Lender is
able, acting in a reasonable manner and in good faith in converting the currency
received into the Agreement Currency, to purchase the Agreement Currency with
the amount of the currency of the judgment or order actually received by the
Administrative Agent and each Lender. The term "rate of exchange" includes,
without limitation, any premiums and costs of exchange payable in connection
with the purchase of or conversion into the Agreement Currency. Any amount due
from the Borrower under the provisions of this Section 15.14 shall be due as a
separate debt and shall not be affected by judgment being obtained for any other
amounts due under or in respect of the Facility or this Agreement.
15.15 Equal Ranking of Lenders
The Lenders, and to the extent necessary, the Borrower, agree as
between themselves that any indebtedness of the Borrower towards any Lender
hereunder, in respect of any Advance or any Bankers' Acceptance, or otherwise
hereunder shall at all times rank equally and without preference or distinction
with the indebtedness of the Borrower towards any other Lender hereunder.
-72-
15.16 Sharing of Information
The Borrower agrees that the Administrative Agent and the Lenders may share
amongst themselves any information which any of them may possess concerning the
Borrower in respect of the Borrower's undertakings, obligations or indebtedness
towards any Lender pursuant to this Agreement, any Advance and any Bankers'
Acceptance, as well as any payment received from the Borrower by any Lender.
15.17 Continuing Obligations and Liabilities
Each of the Borrower and BMO agrees and confirms that all of its
liabilities and obligations under the Original Credit Agreement existing on the
Closing Date are amended and restated by this Agreement and continue in full
force and effect hereunder, except to the extent amended by this Agreement.
IN WITNESS WHEREOF the parties hereto have executed this Agreement.
MITEL NETWORKS CORPORATION
by
-----------------------------
Name:
Title:
by
-----------------------------
Name:
Title:
BANK OF MONTREAL, As
Administrative Agent And Lead
Arranger
by
-----------------------------
Name:
Title:
by
-----------------------------
Name:
Title:
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Address:
BANK OF MONTREAL, As Lender
BMO ▇▇▇▇▇▇▇ ▇▇▇▇▇ Inc.
Structured and Project Financing by
1 First Canadian Place -----------------------------
4th Floor, P.O. Box 150 Name:
Toronto, Ontario Title:
▇▇▇ ▇▇▇
by
-----------------------------
Name:
Title:
SCHEDULE A - BORROWING BASE CERTIFICATE
SCHEDULE B - DRAWDOWN NOTICE
To: Bank of Montreal
Structured and Project Lending
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
1 First Canadian Place
4th Floor, P.O. Box 150
Toronto, Ontario
M5X 1H3
Attention: Manager
This Drawdown Notice is being delivered pursuant to the amended and
restated loan agreement made as of February 27, 2003 (the "Credit Agreement")
made between the Borrower, the Administrative Agent and the Lenders. Capitalized
terms used herein but not defined herein shall have the meanings ascribed to
such terms in the Credit Agreement.
We hereby request the following Advance on __________________,
_______. The Advance shall be pursuant to:
check the applicable boxes
0 Prime Rate Advance in the principal amount of Cdn.$____________.
0 Bankers' Acceptance Advance in the aggregate Face Amount and
principal amount of Cdn.$____________ having a term of _____
days.
0 Libor Advance in the amount of U.S.$____________ and having an
Interest Period of _____ months.
0 U.S. Base Rate Advance in the amount of U.S.$____________.
0 Letter of Credit in the Face Amount of Cdn.$____________ and/or
U.S.$____________ with __________________ as beneficiary
having a term of ____ days.
Payment instructions: _____________________________________
_____________________________________
_____________________________________
The representations and warranties set forth in Section 7.1 of the
Credit Agreement are, mutatis mutandis, true and correct in all material
respects on and as of the date
-2-
hereof, both before and after giving effect to the Drawdown of the requested
Advance and to the application of proceeds therefrom, by reference to the facts
and circumstances now existing and assuming that each of such representations
and warranties and the Schedules referred to therein had been amended to reflect
any notices provided by the Borrower to the Administrative Agent in respect of
the matters dealt with therein and, with respect to the representation set forth
in Section 7.1(g) of the Credit Agreement, the reference to the date October 27,
2002 shall be deemed to be a reference to the date of the financial statements
of the Borrower most recently delivered pursuant to Section 8.1(a) of the Credit
Agreement and, with respect to unaudited financial statements, that such
statements fairly present the financial condition of the Borrower and its
Subsidiaries as at such date and the results of their operations for the
financial period then ended, in accordance with GAAP consistently applied,
subject to normal year end audit adjustments.
No Default or Event of Default has occurred and is continuing, nor
shall any such event occur as a result of making the requested Advance or the
application of proceeds therefrom.
DATED this _____ day of _____________________, ________.
MITEL NETWORKS CORPORATION
by
-----------------------------
Name: |X|
Title: |X|
by
-----------------------------
Name: |X|
Title: |X|
SCHEDULE C - CONVERSION NOTICE
To: Bank of Montreal
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
1 First Canadian Place
4th Floor, P.O. Box 150
Toronto, Ontario
M5X 1H3
Attention: Manager
This Conversion Notice is being delivered pursuant to the amended
and restated loan agreement made as of February 27, 2003 (the "Credit
Agreement") made between the Borrower, the Administrative Agent and the Lenders.
Capitalized terms used herein but not defined herein shall have the meanings
ascribed to such terms in the Credit Agreement.
We hereby request the following Conversions on __________________,
_______. The Conversions shall be as set forth below:
check the applicable boxes
0 Prime Rate Advance in the principal amount of Cdn.$____________
shall be converted into a Bankers' Acceptance Advance having a
term/Interest Period of _____ days.
0 Prime Rate Advance in the principal amount of Cdn.$____________
shall be converted into an Equivalent Amount U.S. Base Rate
Advance.
0 Prime Rate Advance in the principal amount of Cdn.$ shall be
converted into an Equivalent Amount Libor Advance having an
Interest Period of months.
0 Bankers' Acceptance in the aggregate Face Amount of
Cdn.$____________ shall be converted into a Prime Rate
Advance.
0 Bankers' Acceptance in the aggregate Face Amount of
Cdn.$____________ shall be converted into an Equivalent Amount
U.S. Base Rate Advance.
0 Bankers' Acceptance in the aggregate Face Amount of
Cdn.$____________ shall be converted into an Equivalent Amount
Libor Advance having an Interest Period of months.
0 Libor Advance in the principal amount of U.S.$____________ shall be
converted into a U.S. Base Rate Advance.
-2-
0 Libor Advance in the principal amount of U.S.$____________ shall be
converted into an Equivalent Amount Prime Rate Advance.
0 Libor Advance in the principal amount of U.S. $ shall be converted
into an Equivalent Amount Bankers' Acceptance Advance having a
term/Interest Period of days.
0 U.S. Base Rate Advance in the principal amount of U.S.$____________
shall be converted into a Libor Advance having an Interest
Period of _____ months.
0 U.S. Base Rate Advance in the principal amount of U.S.$____________
shall be converted into an Equivalent Amount Prime Rate
Advance.
0 U.S. Base Rate Advance in the principal amount of U.S.$ shall be
converted into an Equivalent Amount Bankers' Acceptance
Advance having a term/Interest Period of days.
No Default or Event of Default has occurred and is continuing, nor
shall any such event occur as a result of making the requested conversion.
DATED this _____ day of _____________________, ________.
MITEL NETWORKS CORPORATION
by
-----------------------------
Name: |X|
Title: |X|
by
-----------------------------
Name: |X|
Title: |X|
SCHEDULE D - ROLLOVER NOTICE
To: Bank of Montreal
Structured and Project Lending
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
1 First Canadian Place
4th Floor, P.O. Box 150
Toronto, Ontario
M5X 1H3
Attention: Manager
This Rollover Notice is being delivered pursuant to the amended and
restated loan agreement made as of February 27, 2003 (the "Credit Agreement")
made between the Borrower, the Administrative Agent and the Lenders. Capitalized
terms used herein but not defined shall have the meanings ascribed to such terms
in the Credit Agreement.
We hereby request the following:
check the applicable box
0 Rollover in respect of the Libor Advance currently outstanding in
the amount of U.S.$____________ and with an Interest Period ending
on _____________, ______. The next Interest Period for such Libor
Advance commencing on such date is to be _____ months.
0 Acceptance of Bankers' Acceptances in the aggregate Face Amount and
principal amount of Cdn.$____________ having a term of _____ days.
No Default or Event of Default has occurred and is continuing, nor
shall any such event occur as a result of making the requested rollover.
DATED this _____ day of _____________________, ________.
MITEL NETWORKS CORPORATION
by
-----------------------------
Name: |X|
Title: |X|
SCHEDULE E - [Intentionally deleted]
SCHEDULE F - PERMITTED ENCUMBRANCES
"Permitted Encumbrances" means the following types of Encumbrances:
(i) liens in respect of taxes, assessments or governmental
charges or claims the payment of which is not, at the time,
overdue;
(ii) statutory liens of landlords, statutory liens of banks and
rights of set-off, statutory liens of carriers,
warehousemen, mechanics, repairmen, workmen and
materialmen, and other liens imposed by law, in each case
incurred in the ordinary course of business (a) for amounts
not yet overdue or (b) for amounts that are overdue and
that (in the case of any such amounts overdue for a period
in excess of five days) are being contested in good faith
by appropriate proceedings, so long as (1) such reserves or
other appropriate provisions, if any, as shall be required
by generally accepted accounting principles as applied in
Canada shall have been made for any such contested amounts,
and (2) in the case of a lien with respect to any portion
of the collateral in respect of which the Lenders, or the
Administrative Agent on their behalf, have a security
interest in respect of the obligations of the Borrower
hereunder (the "Collateral"), such contest proceedings
conclusively operate to stay the sale of any portion of the
Collateral on account of such lien;
(iii) liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation,
unemployment insurance and other types of social security,
or to secure the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases,
government contracts, trade contracts, performance and
return-of-money bonds and other similar obligations
(exclusive of obligations for the payment of borrowed
money), so long as no foreclosure, sale or similar
proceedings have been commenced with respect to any portion
of the Collateral on account thereof;
(iv) any attachment or judgment lien not involving (i) in any
individual case an amount in excess of $1,000,000, or (ii)
in the aggregate at any time outstanding an amount in
excess of $2,500,000 (in either case to the extent such
amount is not adequately covered by insurance as to which a
solvent and unaffiliated insurance company has acknowledged
coverage) except if any such attachment or judgment lien
shall remain undischarged, undisputed (in the case of a
writ in the United Kingdom), unvacated, unbonded or
unstayed for a period of 60 days (or in any event later
than five days prior to the date of any proposed sale
thereunder);
(v) leases or subleases granted to third parties which do not
interfere in any material respect with the ordinary conduct
of the business of the Borrower
-2-
or any of its subsidiaries or result in a material
diminution in the value of any of the Collateral;
(vi) easements, rights-of-way, restrictions, encroachments, and
other minor defects or irregularities in title, in each
case which do not and will not interfere in any material
respect with the ordinary conduct of the business of the
Borrower or any of its subsidiaries or result in a material
diminution in the value of any of the Collateral;
(vii) any (a) interest or title of a lessor or sublessor under
any operating lease in respect of which the Borrower or any
of its subsidiaries shall be, or become liable whether
directly or by assignment or as a guarantor or other surety
for the obligations of the lessee under any such operating
lease, to the extent that the aggregate annual rental
payments of the Borrower and its subsidiaries in respect of
all such operating leases shall not exceed $20,000,000, (b)
restriction or encumbrance that the interest or title of
such lessor or sublessor may be subject to, or (c)
subordination of the interest of the lessee or sublessee
under such lease to any restriction or encumbrance referred
to in the preceding clause (b), so long as the holder of
such restriction or encumbrance agrees to recognize the
rights of such lessee or sublessee under such lease;
(viii) liens arising from the filing of Personal Property Security
Act or UCC financing statements, relating solely to leases;
(ix) liens in favour of customs and revenue authorities arising
as a matter of law to secure payment of customs duties in
connection with the importation of goods;
(x) any zoning or similar law or right reserved to or vested in
any governmental office or agency to control or regulate
the use of any real property;
(xi) liens against owners' or sublessors' interest in any
leasehold property used or occupied by the Borrower or any
of its subsidiaries;
(xii) liens securing obligations (other than obligations
representing indebtedness for borrowed money) under
operating, reciprocal easement or similar agreements
entered into in the ordinary course of business of the
Borrower or any of its subsidiaries;
(xiii) licences of patents, trademarks and other intellectual
property rights granted by the Borrower or any of its
subsidiaries in the ordinary course of business and not
interfering in any material respect with the ordinary
conduct of the business of the Borrower or such subsidiary;
-3-
(xiv) liens granted to evidence the security interests of the
Lenders, or the Administrative Agent on their behalf, in
the Collateral;
(xv) Permitted Purchase Money Security Interests;
(xvi) Liens granted in connection with obligations incurred
pursuant to clause (ix) or (x) of the definition of
Permitted Debt;
(xvii) Liens not included in any of the foregoing in respect of
obligations not exceeding Cdn. $5,000,000 (or its
Equivalent Amount in another currency) in the aggregate;
(xviii) Liens granted to EDC in connection with the obligations of
MNL incurred pursuant to the EDC Facility (including the
Liens granted to EDC by the Borrower, MNI, MNSI and MNL in
connection therewith), provided that EDC shall have
executed an intercreditor agreement with the Administrative
Agent in a form satisfactory to the Administrative Agent
and such agreement is in full force and effect; and
(xix) certain rights of the Government of Canada in the
intellectual property of the Borrower pursuant to the
Technology Partnerships Canada Agreement.
SCHEDULE G - LITIGATION
SCHEDULE H - NON-COMPLIANCE MATTERS
Nil.
SCHEDULE I - SUBSIDIARIES
SCHEDULE J - TRANSFER AGREEMENT
TO: MITEL NETWORKS CORPORATION
WHEREAS the Borrower entered into an amended and restated loan
agreement dated February 27, 2003 (the "Credit Agreement") with the
Administrative Agent and the Lenders whereby the Lenders agreed to provide the
Borrower with a revolving credit facility in an aggregate principal amount not
exceeding Cdn. $30,000,000 or the Equivalent Amount in United States Dollars for
the general corporate purposes of the Borrower;
AND WHEREAS pursuant to and in accordance with Section 15.11 of the
Credit Agreement, any Lender may, with the prior written consent of the
Borrower, assign or transfer all or any of its rights, benefits and obligations
under the Credit Agreement by duly completing, executing and delivering to the
Administrative Agent and to the Borrower this Transfer Certificate;
AND WHEREAS any Lender (the "Transferor") wishes to assign or
transfer to __________________ (the "Transferee") the rights, benefits and
obligations of the Transferor under the Credit Agreement specified herein;
AND WHEREAS the Borrower has consented in writing to such assignment
or transfer;
NOW THEREFORE in consideration of the foregoing and of $1.00 and
other good and valuable consideration, the receipt of which is hereby
acknowledged, the signatories hereto agree as follows:
All capitalized terms defined in the Credit Agreement and not otherwise
defined herein have the same meaning as in the Credit Agreement.
The Transferor assigns and transfers to the Transferee the following rights,
benefits and obligations (the "Transfer"):
[description of the Transferred Rights, Benefits and Obligations,
indicating retained interest or fees, if applicable, and
Transferee's commitment and Participation]
(the "Transferred Rights", the "Transferred Benefits", the
"Transferred Obligations", as applicable, and collectively the "Transferred
Rights, Benefits and Obligations").
The Transferee accepts the Transfer and (if applicable) assumes the
Transferred Obligations (the "Assumption").
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The Transferee agrees with the Administrative Agent and the Borrower that it
shall be bound by the same obligations of the Lenders as the Transferee
would have been under if the Transferee had been an original party to the
Credit Agreement.
The Transfer and the Assumption are governed by and subject to Section 15.11
of the Credit Agreement.
The Transferee acknowledges and confirms that it has not relied upon and that
the Transferor and/or the Administrative Agent has/have not made any
representation or warranty whatsoever as to the due execution, legality,
effectiveness, validity or enforceability of the Credit Agreement or any
other documentation or information delivered by the Transferor and/or the
Administrative Agent to the Transferee in connection therewith or for the
performance thereof by any party thereto or for the performance of any
Guarantee by any Guarantor or for the financial condition of the Borrower
or of any Guarantor. All representations, warranties and conditions
expressed or implied by law or otherwise are hereby excluded.
The Transferee represents and warrants that it is not a non-resident within
the meaning of the Income Tax Act (Canada) and that it has itself been,
and will continue to be, solely responsible for making its own independent
appraisal of and investigation into the financial condition,
creditworthiness, affairs, status and nature of the Borrower and has not
relied and will not hereafter rely on the Transferor and/or the
Administrative Agent to appraise or keep under review on its behalf the
financial condition, creditworthiness, affairs, status or nature of the
Borrower.
Each of the Transferor and the Transferee represents and warrants to the
Borrower and the Guarantors that it has the capacity and power to enter
into the Transfer and the Assumption in accordance with the terms hereof
and to perform its obligations arising therefrom, and all action required
to authorize the execution and delivery hereof and the performance of such
obligations has been duly taken.
This Transfer Certificate shall be governed by and construed in accordance with
the laws of the Province of Ontario, Canada.
DATED this __________ day of _____________________, 200__.
BANK OF MONTREAL
by
-----------------------------
Name: |X|
Title: |X|
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[TRANSFEREE]
by
-----------------------------
Name: |X|
Title: |X|
MITEL NETWORKS CORPORATION
by
-----------------------------
Name: |X|
Title: |X|
SCHEDULE K - COMMITTED AMOUNTS
LENDER
Bank of Montreal Cdn. $30,000,000
SCHEDULE L - BUSINESS PLAN
