EXHIBIT 10.38
[TD COMMERCIAL BANKING LOGO]
Mississauga Centre CBC Branch
00 Xxxxxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxx
X0X 0X0
Telephone No.: (000) 000-0000
Fax No.: (000) 000-0000
March 15, 2001
DAISYTEK (CANADA) INC.
00 Xxxxxxxxxx Xxxxx, Xxxx 0
Xxxxxxx, XX X0X 0X0
CAN
Attn: Xxxxxx Xxxxx, Vice President Finance & Treasury
We are pleased to offer the Borrower the following credit facilities (the
"Facilities"), subject to the terms and conditions outlined below.
BORROWER Daisytek (Canada) Inc. (the "Borrower")
LENDER THE TORONTO-DOMINION BANK (the "Bank"), through its
00 Xxxxxxxxx Xxxxx & Xxxxxxx #00 xxxxxx, xx
Xxxxxxxxxxx, Xxxxxxx
CREDIT LIMIT 1) CDN $10,000,000 [or its US$ Equivalent]
TYPE OF CREDIT
AND BORROWING
OPTIONS 1) 3 YEAR COMMITTED REVOLVING LOAN available at
the Borrower's option by way of:
o Prime Rate Based Loans in
CDN$ ("Prime Based Loans")
o Bankers Acceptances in CDN$
("B/As")
o United States Base Rate
Loans in US$ ("USBR Loans")
PURPOSE 1) Finance day-to-day working capital
requirements
TENOR 1) Committed
TERM 1) 3 years
INTEREST RATES Advances shall bear interest and fees as follows:
AND FEES
1) COMMITTED REVOLVING LOAN:
o Prime Based Loans: Prime
Rate + .50% per annum
Daisytek (Canada), Inc. March 15, 2001
o B/As: Stamping Fee at 200
bps per annum
o United States Base Rate
Loans: USBR + .50% per annum
Interest Payments will be made in accordance with
Schedule "A" attached hereto. Information on Interest
Rate and Fee Definitions, Interest Rate Calculations
and Payment is set out in the Schedule "A" attached
hereto.
ARRANGEMENT
FEE The Borrower has paid or will pay prior to any
drawdown hereunder a non-refundable arrangement fee
of $25,000.00.
COMMITMENT
FEE (For Committed Revolving Facilities only) On the
third Business Day following the last Business Day of
March, June, September, and December, in each year,
the Borrower shall pay to the Bank a Commitment Fee
for the Committed Revolving Loan in an amount equal
to 25 bps per annum calculated on a daily average
amount of the undrawn portion of the Committed
Revolving Loan during the quarter just ended.
ADMINISTRATION
FEE Waived
RENEWAL FEE Waived
DRAWDOWN 1) On a revolving basis. Notice periods,
minimum amounts of draws, interest periods,
contract maturity, terms for Banker's
Acceptances and other similar details are
set out in the Schedule "A" attached hereto.
REPAYMENT 1) Advances under the facility can be repaid at
any time, other than B/A Instruments which
may be repaid at maturity.
PREPAYMENT 1) Prepayment charges referred to in Schedule
"A" for Facilities where the Tenor is
described as Committed and Drawdown is not
on a revolving basis are waived for amounts
outstanding that have been borrowed by way
of Prime Based Loans or USBR Loans.
SECURITY The following security shall be provided, shall
support all present and future indebtedness and
liability of the Borrower and the grantor of the
security to the Bank including without limitation
indebtedness and liability under guarantees, foreign
exchange contracts, cash management products, and
derivative contracts, shall be registered in first
position, and shall be on the Bank's standard form,
supported by resolutions and solicitor's opinion, all
acceptable to the Bank:
a) General Security Agreement, with an agreed
delay of attachment until negotiated trigger
events occur, over all present and future
personal property.
b) Postponement and Subordination of Daisytek,
Incorporated, and any subsidiary of
Daisytek, Incorporated identified by the
Bank, as to intercorporate obligations
including inventory return.
c) Assignment of Fire Insurance.
d) Inter-Creditor Agreement between the
Toronto-Dominion Bank, and the Bank of Nova
Scotia, covering but not limited to
advances, repayment, security, defaults,
cross default, realization, etc.
Daisytek (Canada), Inc. March 15, 2001
e) Bankers' Acceptance Agreement.
All of the above security and guarantees shall be
referred to collectively in this Agreement as "Bank
Security."
DISBURSEMENT The obligation of the Bank to make any loan hereunder
CONDITIONS is subject to the Standard Disbursement Conditions
contained in Schedule "A" and the following
additional drawdown conditions:
Delivery to the Bank of:
a) Receipt of Executed Copy of the December 18,
2000 Syndicate Credit Arrangement with Banc
One, Texas, N.A.
b) Written Approval/Confirmation/Acknowledgment
from Banc One, Texas, N.A. (Administrative
Agent) that Daisytek (Canada) Inc.:
1. Can enter into a "springing lien"
security interest arrangement with its
Canadian Lending Group
2. Acknowledgment that upon payout of Banc
One Canada's credit facilities, TD Bank will
replace Banc One Canada
3. Confirm that the aggregate level of
non-US indebtedness does not exceed
USD$40,000,000
4. There is no upstream guarantee provided
by Daisytek (Canada) Inc. to the US
Syndicate
REPRESENTATIONS
AND WARRANTIES All representations and warranties shall be deemed to
be continually repeated so long as any amounts remain
outstanding and unpaid under this Agreement or so
long as any commitment under this Agreement remains
in effect. The Borrower makes the Standard
Representations and Warranties set out in Schedule
"A."
POSITIVE So long as any amounts remain outstanding and unpaid
COVENANTS under this Agreement or so long as any commitment
under this Agreement remains in effect, the Borrower
will and will ensure that its subsidiaries and each
of the Guarantors will observe the Standard Positive
Covenants set out in Schedule "A" and in addition
will provide:
a) Monthly Borrowing Base Compliance
Certificate from Daisytek (Canada) Inc. to
be received within 30 days of month end.
b) Annual Review Engagement Financial
Statements of Daisytek (Canada) Inc. within
120 days of fiscal year end.
c) Annual Audited Consolidated Financial
Statements of Daisytek International
Corporation, along with, Annual Internally
Prepared Consolidated Financial Statements
of Daisytek, Incorporated, and Annual
Internally Prepared Financial Statements of
BSD Holdings Inc., within 120 days of fiscal
year end.
d) Annual Unconsolidated Quarterly Projected
Financial Statements of Daisytek (Canada)
Inc., within 120 days of fiscal year end.
e) Quarterly Internally Prepared Financial
Statements of the Borrower, within 60 days
of period end.
f) Quarterly Prepared Consolidated Financial
Statements from Daisytek International
Corporation, within 60 days of period end.
Daisytek (Canada), Inc. March 15, 2001
g) Quarterly Compliance Certificate from
Daisytek, Incorporated, and Daisytek
(Canada) Inc. certifying compliance with all
conditions of both the US & Canadian credit
facilities, within 60 days of period end.
h) A copy of any amendment to Daisytek,
Incorporated Credit Agreement, or any new
Credit Agreement in its entirety at the time
of execution.
NEGATIVE
COVENANTS So long as any amounts remain outstanding and unpaid
under this Agreement or so long as any commitment
under this Agreement remains in effect, the Borrower
will and will ensure that its subsidiaries and each
of the Guarantors will observe the Standard Negative
Covenants set out in Schedule "A"."
a) The Borrower is not permitted to negotiate
any other outside financing arrangements
without the prior written consent of both
the Toronto-Dominion Bank, and the Bank of
Nova Scotia.
b) No change in ownership of the Borrower.
c) The Borrower will not pledge their
respective assets or provide a guarantee to
another party unless otherwise agreed to in
writing by the Bank
d) No Dividends, withdrawals, advances to
shareholders, or affiliates are permitted.
e) No payments by the Borrower are to be made
to any shareholder, and/or affiliate other
than in the normal course of business.
f) All advances in excess of CAD $1MM deemed
the swingline will be shared on a 50/50
basis with the Bank of Nova Scotia.
g) Any default under the Credit Agreement dated
December 18, 2000 and as subsequently
amended of Daisytek, Incorporated and
Daisytek International Corporation
constitutes a default under the terms or
credit outlined herein, notwithstanding of
cure, amendment, or forbearance with regard
to the US Syndicate lending arrangement.
h) In the event of an extension, the Borrower
is to provide written notice no less than 40
days and up to 90 days prior to expiry,
requesting an extension for a further
period, subject to no event of default
having occurred and with the extension
subject to the Bank's approval.
i) The Borrower agrees that the terms and
conditions including without limitation any
security granted by the borrower to any
lender, including the Bank of Nova Scotia
shall not be more favorable than the terms
and conditions set out herein. In the event
that the Borrower does grant more favorable
terms, conditions or security to any other
lender, the Borrower agrees that it shall
grant the same terms and conditions
including equal ranking security to the Bank
hereunder.
Permitted Liens as referred to in Schedule "A"
include all liens related to current security
interests and all future liens for the replacement of
equipment for which a security interest currently
exists.
Daisytek (Canada), Inc. March 15, 2001
FINANCIAL
COVENANTS The Borrower agrees at all times to:
a) Advances under both the TD Bank and the Bank
of Nova Scotia facilities are not to exceed
the Borrowing Base which is defined as 80%
of good quality under 90 day accounts
receivable, net of intercompany accounts,
plus 50% of inventory net of 0-30 day
payables. Payables due to Daisytek,
Incorporated, and any of its subsidiaries
are not deducted from inventory for
calculation purposes.
b) Ratio of Current Assets to Current
Liabilities is to be maintained at 1.20:1 or
higher at all times.
c) Minimum Shareholder's Equity of $10MM is to
be maintained at all times
Shareholder's Equity is defined as the sum
of Share Capital, Earned and Contributed
Surplus
d) Ratio of Senior Debt to EBITDA is to be
lower than 3:1.
EBITDA is defined as Earnings Before
Interest, Income Taxes, Depreciation, and
Amortization, and is calculated on a rolling
4 quarters basis.
Senior Debt is defined as amounts
outstanding on both the TD Bank, and the
Bank of Nova Scotia facilities.
EVENTS OF
DEFAULT The Bank may accelerate the payment of principal and
interest under any committed credit facility
hereunder and cancel any undrawn portion of any
committed credit facility hereunder, at any time
after the occurrence of any one of the Standard
Events of Default contained in Schedule "A" attached
hereto
SCHEDULE "A" -
STANDARD
TERMS AND
CONDITIONS Schedule "A" sets out the Standard Terms and
Conditions ("Standard Terms and Conditions") which
apply to these credit facilities. The Standard Terms
and Conditions, including the defined terms set out
therein, form part of this Agreement, unless this
letter states specifically that one or more of the
Standard Terms and Conditions do not apply or are
modified.
AMENDMENTS TO
SCHEDULE "A" -
TERMS AND
CONDITIONS The following amendments to the Standard Terms and
Conditions apply:
o Remove Clause "c" in Section 8 Standard
Negative Covenants.
o Add the following sentence "Subject to
written approval by the Borrower which will
not be unreasonably withheld" to the
beginning of Paragraph 2 Section 9
Environmental.
o Add the following sentence "The Bank agrees
to provide prior written notice of any such
increased costs" at the end of Section 15
Added Cost.
We trust you will find these facilities helpful in meeting your ongoing
financing requirements. We ask that if you wish to accept this offer of
financing (which includes the Standard Terms and Conditions), please do so by
signing and returning the attached duplicate copy of this letter to the
undersigned. Please have the Guarantor(s) sign the letter
Daisytek (Canada), Inc. March 15, 2001
below where indicated. This offer will expire if not accepted in writing and
received by the Bank on or before MARCH 23, 2001.
Yours truly,
/S/ XXXX X. XXXXX N496 /S/ XXXXXXX XXXX C1321
-------------------------------- ------- -------------------------------- -------
Xxxx X. Xxxxx Signing Xxxxxx Xxxx Signing
Relationship Manager No. Analyst, Commercial Banking No.
/S/ XXXXX XXXXXX P682
-------------------------------- -------
Xxxxx Xxxxxx Signing
Vice President No.
Daisytek (Canada), Inc. March 15, 2001
TO THE TORONTO-DOMINION BANK:
Daisytek (Canada) Inc. xxxxxx accepts the foregoing offer
this 20th day of March, 2000.
/S/ X. XXXXXXXX /S/ XXXXXX XXXXX
---------------------------------------- ----------------------------------------
Signature Signature
X. Xxxxxxxx EVP&CFO Xxxxxx Xxxxx VP Finance and Treasurer
---------------------------------------- ----------------------------------------
Daisytek (Canada), Inc. March 15, 2001
SCHEDULE A
STANDARD TERMS AND CONDITIONS
1. INTEREST RATE DEFINITIONS
Prime Rate means the rate of interest per annum (based on a 365/365 day year)
established and reported by the Bank to the Bank of Canada from time to time as
the reference rate of interest for determination of interest rates that the Bank
charges to customers of varying degrees of creditworthiness in Canada for
Canadian dollar loans made by it in Canada.
The Stamping Fee rate per annum is based on a 365/366 day year and the Stamping
Fee is calculated on the Face Amount of each B/A presented to the Bank for
acceptance.
LIBOR means the rate of interest per annum (based on a 360 day year) as
determined by the Bank (rounded upwards, if necessary to the nearest whole
multiple of 1/18th of 1%) at which the Bank may make available United States
dollars which are obtained by the Bank in the Interbank Euro Currency Market,
London, England at approximately 11:00 a.m. (Toronto time) on the second
Business Day before the first day of, and in an amount similar to, and for the
period similar to the interest period of, such advance.
USBR means the rate of interest per annum (based on a 365/366 day year)
established by the Bank from time to time as the reference rate of interest for
the determination of interest rates that the Bank charges to customers of
varying degrees of creditworthiness for US dollar loans made by it in Canada.
Any interest rate based on a period of less than a year expressed as an annual
rate for the purposes of he Interest Act (Canada) is equivalent to such
determined rate 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 in the
period upon which it is based.
2. INTEREST CALCULATION AND PAYMENT
Interest on Prime Based Loans and USBR Loans is calculated daily and payable
monthly in arrears based on the number of days the subject loan is outstanding.
The Stamping Fee is calculated based on the amount and the term of the B/A and
payable upon acceptance by the Bank of the B/A. The net proceeds received by the
Borrower on a B/A advance will be equal to the Face Amount of the B/A discounted
at the Bank's then prevailing B/A discount rate for the specified term of the
B/A less the B/A Stamping Fee.
Interest on LIBOR Loans is calculated and payable on the earlier of contract
maturity or quarterly in arrears, for the number of days in the LIBOR interest
period.
L/C and L/G fees are payable at the time of issuance of the L/C or L/G.
Interest on Fixed Rate Loans is compounded monthly and payable monthly in
arrears unless otherwise noted.
Interest is payable both before and after maturity or demand, default and
judgment.
Each payment under this Agreement shall be applied first in payment of costs and
expenses, then interest and fees and the balance, if any, shall be applied in
reduction of principal.
For loans not secured by real property, all overdue amounts of principal and
interest shall bear interest from the date on which the same became due until
the date of payment at the All-In Rate plus 2% per annum.
3. DRAWDOWN PROVISIONS
Prime Based and USBR Loans
There is no minimum amount of drawdown by way of Prime Based Loans and USBR
Loans, except as stated in the section of the Agreement titled "Business Credit
Services Agreement", if that section of the Agreement has not been deleted. The
Borrower shall provide the Bank with 3 Business Day's notice of a requested
Prime Based Loan or USBR Loan over $1,000,000.
B/As
The Borrower shall advise the Bank of the requested term or maturity date for
B/As issued hereunder. The Bank shall have the discretion to restrict the term
or maturity dates of B/As. In no event shall the term of the B/A exceed the
Maturity Date. The minimum amount of a drawdown by way of B/As is $500,000 and
in multiples of $100,000 thereafter. The Borrower shall provide the Bank with 3
Business Day's notice of a requested B/A drawdown.
The Borrower shall pay to the bank the final amount of the B/A at the maturity
date of the B/A.
LIBOR
The Borrower shall advise the Bank of the requested LIBOR contract maturity
period. The Bank shall have the discretion to restrict the LIBOR contract
maturity. In no event shall the term of the LIBOR contract exceed the Maturity
Date. The minimum amount of a drawdown by way of a LIBOR Loan is $1,000,000, and
shall be in multiples of $100,000 thereafter. The Borrower will provide the Bank
with 3 Business Day's notice of a requested LIBOR Loan.
L/C and/or L/G
The Bank shall have the discretion to restrict the maturity date of L/Gs or
L/Cs.
B/A - Prime Conversion
The Borrower will provide the Bank with at least 3 Business Days notice of its
intention either to convert a B/A to a Prime Based Loan or vice versa, failing
which, the Bank may decline to accept such additional B/As or may charge
interest on the amount of Prime Based Loans resulting from maturity of B/As at
the rate of 115% of the rate applicable to Prime Based Loans for the 3 Business
Day period immediately following such maturity. Thereafter, the rate shall
revert to the date applicable to Prime Based Loans.
4. PREPAYMENT
For Facilities available on a "revolving" basis, prepayment is not applicable.
For Facilities where the Tenor is described as "Committed" and Drawdown is not
on a revolving basis, when not in default, the Borrower may prepay all or any
part of the principal then outstanding upon payment of interest accrued to the
date of prepayment ("Prepayment Date") and prepayment charges equal to the
greater of:
(a) three months' interest on the amount of the prepayment using the interest
rate applicable to the loan facility being prepaid; and
(b) the Interest Rate Differential. "Interest Rate Differential" means the
amount, by which (i) the total amount of interest the Bank would have received
on the amount prepaid had it not been prepaid but remained outstanding to the
Maturity Date exceeds (ii) the total amount of interest the Bank would receive
on the amount prepaid on a Fixed Rate Loan made for a term from the date of
prepayment until the Maturity Date using the interest rate applicable to a Fixed
Rate Loan the Bank would make to a borrower for a comparable facility on the
Prepayment Date for a term expiring on the Maturity Date.
Daisytek (Canada), Inc. March 15, 2001
5. STANDARD DISBURSEMENT CONDITIONS
The obligation of the Bank to make any loan or advance hereunder at any time is
subject to the following conditions precedent:
a) The Bank shall have received the following documents which shall be in
form and substance satisfactory to the Bank:
i) A copy of a duly executed resolution of the Board of Directors of
the Borrower empowering the Borrower to enter into this Agreement;
ii) A copy of any necessary government approvals authorizing the
Borrower to enter into this Agreement;
iii) All of the Bank Security and supporting resolutions and
solicitors' letter of opinion required hereunder;
iv) The Borrower's compliance certificate certifying compliance with
all terms and conditions hereunder; and
v) all operation of account documentation;
b) The representations and warranties contained in this Agreement are
correct.
c) No event has occurred and is continuing which constitutes an Event of
Default or would constitute an Event of Default, but for the
requirement that notice be given or time elapse or both.
d) The Bank has received the arrangement fee payable hereunder (if any)
and the Borrower has paid all legal and other expenses incurred by the
Bank in connection with the Agreement or the Bank security.
6. STANDARD REPRESENTATIONS AND WARRANTIES
The Borrower hereby represents and warrants, which representations and
warranties shall be deemed to be continually repeated so long as any amounts
remain outstanding and unpaid under this Agreement or so long as any commitment
under this Agreement remains in effect, that:
a) The Borrower is a corporation duly incorporated and organized, validly
existing and in good standing under the laws of the jurisdiction where
the Branch/Centre is located and each other jurisdiction where the
Borrower has property or assets or carries on business and the Borrower
has adequate corporate power and authority to carry on its business,
own property, borrow monies and enter into agreements therefor, execute
and deliver the Agreement, the Bank Security, and documents required
hereunder, and observe and perform the terms and provisions of this
Agreement.
b) There are no laws, statutes or regulations applicable to or binding
upon the Borrower and no provisions in its charter documents or in any
by-laws, resolutions, contracts, agreements, or arrangements which
would be contravened, breached, violated as a result of the execution,
delivery, performance, observance, of any terms of this Agreement.
c) No Event of Default has occurred nor has any event occurred which, with
the passage of time or the giving of notice, would constitute an Event
of Default under this Agreement or which would constitute a default
under any other agreement.
d) There are no actions, suits or proceedings, including appeals or
applications for review, or any knowledge of pending actions, suits or
proceedings against the Borrower and its subsidiaries, before any court
or administrative agency which would result in any material adverse
change in the property, assets, financial condition, business or
operations of the Borrower.
e) All material authorizations, approvals, consents, licenses, exemptions,
filings, registrations and other requirements of governmental, judicial
and public bodies and authorities required to carry on its business
have been or will be obtained or effected and are or will be in full
force and effect.
f) The financial statements and forecasts delivered to the Bank fairly
present the present financial position of the Borrower, and have been
prepared by the Borrower and its auditors in accordance with Canadian
Generally Accepted Accounting Principals consistently applied.
g) All of the remittances required to be made by the Borrower to the
federal government and all provincial and municipal governments have
been made, are currently up to date and there are no outstanding
arrears. Without limiting the foregoing, all employee source deductions
(including income taxes, Employment Insurance and Canada Pension Plan),
sales taxes (both provincial and federal), corporate income taxes,
corporate capital taxes, payroll taxes and worker's compensation dues
are currently paid and up to date.
7. STANDARD POSITIVE COVENANTS
So long as any amounts remain outstanding and unpaid under this Agreement or so
long as any commitment under this Agreement remains in effect, the Borrower
will, and will ensure that its subsidiaries and each of the Guarantors will:
a) Pay all amounts of principal, interest and fees on the dates, times and
place specified herein and under any other agreement between the Bank
and the Borrower.
b) Advise the Bank of any change in the amount and the terms of any credit
arrangement made with other lenders or nay action taken by another
lender to recover amounts outstanding with such other lender.
c) Advise promptly after the happening of any event which will result in a
material adverse change in the financial condition, business,
operations, or prospects of the Borrower or the occurrence of any Event
of Default or default under this Agreement or under any other agreement
for borrowed money.
d) Do all things necessary to maintain in good standing its corporate
existence and preserve and keep all material agreements, rights,
franchises, licenses, operations, contracts or other arrangements in
full force and effect.
e) Take all necessary actions to ensure that the Bank Security and its
obligations hereunder will rank ahead of all other indebtedness of and
all other security granted by the Borrower.
f) Pay all taxes, assessments and governmental charges unless such taxes,
assessments, or charges are being contested in good faith and
appropriate reserves shall be made with funds set aside in a separate
trust fund.
g) Provide the Bank with information and financial data as it may request
from time to time.
h) Maintain property, plant and equipment in good repair and working
condition.
i) Inform the Bank of any actual or probable litigation and furnish the
Bank with copies of details of any litigation or other proceedings,
which might affect the financial condition, business, operations, or
prospects of the Borrower.
j) Provide such additional security and documentation as may be required
from time to time by the Bank or its solicitors.
k) Continue to carry on the business currently being carried on by the
Borrower its subsidiaries and each of the Guarantors at the date
hereof.
l) Maintain adequate insurance on all of its assets, undertakings, and
business risks.
m) Permit the Bank or its authorized representatives full and reasonable
access to its premises, business, financial and computer records and
allow the duplication or extraction of pertinent information therefrom.
8. STANDARD NEGATIVE COVENANTS
So long as any amounts remain outstanding and unpaid under this Agreement or so
long as any commitment under this Agreement remains in effect, the Borrower will
not and will ensure that its subsidiaries and each of the Guarantors will not:
a) Create, incur, assume, or suffer to exist, any mortgage, deed of trust,
pledge, lien, security interest, assignment, charge, or encumbrance
(including without limitation, any conditional sale, or other title
retention agreement, or finance lease) of any nature, upon or with
respect to any of its assets or undertakings, now owned or hereafter
acquired, except for those Permitted Liens, if any, set out in the
Letter.
b) Create, incur, assume or suffer to exist any other indebtedness for
borrowed money (except for indebtedness resulting from Permitted
Daisytek (Canada), Inc. March 15, 2001
Liens, if any) or guarantee or act as surety or agree to indemnify the
debts of any other Person.
c) Merge or consolidate with any other Person, or acquire all or
substantially all of the shares, assets, or business of any other
Person.
d) Sell, lease, assign, transfer, convey or otherwise dispose of any of
its now owned or hereafter acquired assets (including, without
limitation, shares of stock and indebtedness of subsidiaries,
receivables and leasehold interests), except for inventory disposed of
in the ordinary course of business.
e) Terminate or enter into a surrender of any lease of any property
mortgaged under the Bank Security.
f) Cease to carry on the business currently being carried on by each of
the Borrower, its subsidiaries, and the Guarantors at the date hereof.
g) Permit any change of ownership or change in the capital structure of
the Borrower.
9. ENVIRONMENTAL
The Borrower represents and warrants (which representation and warranty shall
continue throughout the term of this Agreement) that the business of the
Borrower, its subsidiaries and each of the Guarantors is being operated in
compliance with applicable laws and regulations respecting the discharge,
omission, spill or disposal of any hazardous materials and that any and all
enforcement actions in respect thereto have been clearly conveyed to the Bank.
The Borrower shall, at the request of the Bank from time to time, and at the
Borrower's expense, obtain and provide to the Bank an environmental audit or
inspection report of the property from auditors or inspectors acceptable to the
Bank.
The Borrower hereby indemnifies the Bank, its officers, directors, employees,
agents and shareholders, and agrees to hold each of them harmless from all loss,
claims, damages and expenses (including legal and audit expenses) which may be
suffered or incurred in connection with the indebtedness under this Agreement or
in connection with the Bank Security.
10. STANDARD EVENTS OF DEFAULT
The Bank may accelerate the payment of principal and interest under any
committed credit facility hereunder and cancel any undrawn portion of any
committed credit facility hereunder, at any time after the occurrence of any one
of the following Events of Default:
a) Non-payment of principal outstanding under this Agreement when due or
non-payment of interest or fees outstanding under this Agreement within
3 Business Days of when due.
b) If any representation, warranty or statement made hereunder or made in
connection with the execution and delivery of this Agreement or the
Bank Security is false or misleading at any time.
c) If there is a breach or non-performance or non-observance of any term
or condition of this Agreement or the Bank Security and, if such
default is capable to being remedied, the default continues unremedied
for 5 Business Days after the occurrence.
d) If the Borrower, any of its subsidiaries, or, if any of the Guarantors
makes a general assignment for the benefit of creditors, files or
presents a petition, makes a proposal or commits any act of bankruptcy,
or if any action is taken for the winding up, liquidation or the
appointment of a liquidator, trustee in bankruptcy, custodian, curator,
sequestrator, receiver or any other officer with similar powers or if a
judgment or order shall be entered by any court approving a petition
for reorganization, arrangement or composition of or in respect of the
Borrower, any of its subsidiaries, or any of the Guarantors or if the
Borrower, any of its subsidiaries, or any of the Guarantors is
insolvent or declared bankrupt.
e) If there exists a voluntary or involuntary suspension of business of
the Borrower, any of its subsidiaries, or any of the Guarantors.
f) If action is taken by an encumbrancer against the Borrower, any of its
subsidiaries, or any of the Guarantors to take possession of property
or enforce proceedings against any assets.
g) If any final judgment for the payment of monies is made against the
Borrower, any of its subsidiaries, or any of the Guarantors and it is
not discharged within 30 days from the imposition of such judgment.
h) If there exists an event, the effect of which with lapse of time or the
giving of notice, will constitute an event of default or a default
under any other agreement for borrowed money in excess the Cross
Default Threshold entered into by the Borrower, any of its
subsidiaries, or any of the Guarantors.
i) If the Bank Security is not enforceable or if any party to the Bank
Security shall dispute or deny any liability or any of its obligations
under the Bank Security.
j) If, in the Bank's determination, a material adverse change occurs in
the financial condition, business operations or prospects of the
Borrower, any of the Borrower's subsidiaries, or any of the Guarantors.
11. ACCELERATION
If the Bank accelerates the payment of principal and interest hereunder, the
Borrower shall immediately pay to the Bank all amounts outstanding hereunder,
including without limitation, the amount of unmatured B/As and LIBOR Loans and
the amount of all drawn and undrawn L/Gs and L/Cs. All cost to the Bank of
unwinding LIBOR Loans and all loss suffered by the Bank in re-employing amounts
repaid will be paid by the Borrower.
The Bank may demand the payment of principal and interest under the Operating
Loan (and any other uncommitted facility) hereunder and cancel any undrawn
portion of the Operating Loan (and any other uncommitted facility) hereunder, at
any time whether or not an Event of Default has occurred.
12. CURRENCY INDEMNITY
US$ loans must be repaid with US$ and CDN$ loans must be repaid with CDN$ and
the Borrower shall indemnify the Bank for any loss suffered by the Bank if US$
loans are repaid with CDN$ or vice versa, whether such payment is made pursuant
to an order of a court or otherwise.
13. TAXATION ON PAYMENTS
All payments made by the Borrower to the Bank will be made free and clear of all
present and future taxes (excluding the Bank's income taxes), withholdings or
deductions of whatever nature. If these taxes, withholdings or deductions are
required by applicable law and are made, the Borrower, shall, as a separate and
independent obligation, pay to the Bank all additional amounts as shall fully
indemnify the Bank from any such taxes, withholdings or deductions.
14. REPRESENTATION
No representation or warranty or other statement made by the Bank concerning any
of the credit facilities shall be binding on the Bank unless made by it in
writing as a specific amendment to this Agreement.
15. ADDED COST
If the introduction of or any change in any present or future law, regulation,
treaty, official or unofficial directive, or regulatory requirement (whether or
not having the force of law) or in the interpretation or application thereof,
relates to:
i) the imposition or exemption of taxation of payments due to the Bank or
on reserves or deemed reserves in respect of the undrawn portion of any
Facility or loan made available hereunder; or
ii) any reserve, special deposit, regulatory or similar requirement against
assets, deposits, or loans or other acquisition of funds for loans by
the Bank; or
iii) the amount of capital required or expected to be maintained by the Bank
as a result of the existence of the advances or the commitment made
hereunder.
and the result of such occurrence is, in the sole determination of the Bank, to
increase the cost of the Bank or to reduce the income received or receivable by
the Bank hereunder, the Borrower shall, on demand by the Bank, pay to the Bank
that amount which the Bank estimates will
Daisytek (Canada), Inc. March 15, 2001
compensate it for such additional cost or reduction in income and the Bank's
estimate shall be conclusive, absent manifest error.
16. EXPENSES
The Borrower shall pay, within 5 Business Days following notification, all fees
and expenses (including, but not limited to all legal fees) incurred by the Bank
in connection with the preparation, registration, and ongoing administration of
this Agreement and the Bank Security and with the enforcement of the Bank's
rights and remedies under this Agreement or the Bank Security whether or not any
amounts are advanced under the Agreement. These fees and expenses shall include,
but not be limited to, all outside counsel fees and expenses and all in-house
legal fees and expenses. If in-house counsel are used, and all outside
professional advisory fees and expenses. The Borrower shall pay interest on
unpaid amounts due pursuant to this paragraph at the Prime Rate plus 2% per
annum.
17. NON-WAIVER
Any failure by the Bank to object to or take action with respect to a breach of
this Agreement or any Bank Security or upon the occurrence of an Event of
Default shall not constitute a waiver of the Bank's right to take action at a
later date on that breach. No course of conduct by the Bank will give rise to
any reasonable expectation which is in any way inconsistent with the terms and
conditions of this Agreement and the Bank Security or the Bank's rights
thereunder.
Page 1
SCHEDULE A
ADDITIONAL TERMS AND CONDITIONS APPLICABLE
TO ALL CREDITS
Calculation and Payment of Interest
1. Interest on loans/advances made in Canadian dollars will be calculated
on a daily basis and payable monthly on the 22nd day of each month
(unless otherwise stipulated by the Bank). Interest shall be payable
not in advance on the basis of a calendar year for the actual number of
days elapsed both before and after demand of payment or default and/or
judgment.
2. Interest on loans/advances made in U.S. dollars will be calculated on a
daily basis and payable monthly on the 22nd day of each month, (unless
otherwise stipulated by the Bank). Interest shall be payable not in
advance on the basis of a 360 day year for the actual number of days
elapsed both before and after demand of payment or default and/or
judgment. The rate of interest based on a 360 day year is equivalent to
a rate based on a calendar year of 365 days of 365/360 times the rate
of interest that applies to the U.S. dollar loans/advances.
Interest on Overdue Interest
3. Interest on overdue interest shall be calculated at the same rate as
interest on the loans/advances in respect of which interest is overdue,
but shall be compounded monthly and be payable on demand, both before
and after demand and judgment.
Indemnity Provision
4. If the introduction or implementation of, or any change in, or in the
interpretation of, or any change in its application to the Borrower of,
any law or any regulation or guideline issued by any central bank or
other governmental authority (whether or not having the force of law),
including, without limitation, any reserve or special deposit
requirement or any tax (other than tax on the Bank's general income) or
any capital requirement, has due to the Bank's compliance the effect,
directly or indirectly, of (i) increasing the cost to the Bank of
performing its obligations hereunder or under any availment hereunder;
(ii) reducing any amount received or receivable by the Bank or its
effective return hereunder or in respect of any availment hereunder or
on its capital; or (iii) causing the Bank to make any payment or to
forgo any return based on any amount received or receivable by the Bank
hereunder or in respect of any availment hereunder, then upon demand
from time to time the Borrower shall pay such amount as shall
compensate the Bank for any such cost, reduction, payment or forgone
return (collectively "Increased Costs") as such amounts are calculated
in a certificate reasonably prepared by the Bank. The Bank agrees to
provide 90 day prior written notice of any such Increased Costs.
In the event of the Borrower becoming liable for such Increased Costs,
the Borrower shall have the right to prepay in full, without penalty,
the outstanding principal balance under the affected credit other than
the face amount of any document or instrument issued or accepted by the
Bank for the account of the Borrower, including, without limitation, a
Letter of Credit, a Letter of Guarantee or a Bankers' Acceptance. Upon
any such prepayment, the Borrower shall also pay the then accrued
interest on the amount prepaid and the Increased Costs to the date of
prepayment together with such amount as will compensate the Bank for
the cost of any early termination of its funding arrangements in
accordance with its normal practices, as such amounts are calculated in
a certificate reasonably prepared by the Bank.
Calculation and Payment of Bankers' Acceptance Fee
5. The fee for the acceptance of each Bankers' Acceptance will be payable
on the face amount of each Bankers' Acceptance at the time of
acceptance of each draft calculated on the basis of a calendar year for
the actual number of days elapsed from and including the date of
acceptance to the due date of the draft.
Page 2
Calculation and Payment of Standby Fee
6. Standby fees shall be calculated daily and payable monthly on the basis
of a calendar year for Canadian dollar credits and on the basis of a
360 day year for U.S. dollar credits from the date of acceptance by the
Borrower of this Commitment Letter.
Environment
7. The Borrower agrees:
(a) to obey all applicable laws and requirements of any federal,
provincial, or any other governmental authority relating to
the environment and the operation of the business activities
of the Borrower;
(b) to allow the Bank upon reasonable prior notice and at
reasonable times access to the business premises of the
Borrower to monitor and inspect all property and business
activities of the Borrower;
(c) to notify the Bank from time to time of any business activity
conducted by the Borrower which involves the use or handling
of hazardous materials or wastes or which increases the
environmental liability of the Borrower in any material
manner;
(d) to notify the Bank of any proposed change in the use or
occupation of the property of the Borrower prior to any change
occurring;
(e) to provide the Bank with immediate written notice of any
environmental problem and any hazardous materials or
substances which have an adverse effect on the property,
equipment, or business activities of the Borrower and with any
other environmental information requested by the Bank from
time to time.
(f) to conduct all environmental remedial activities which a
commercially reasonable person would perform in similar
circumstances to meet its environmental responsibilities and
if the Borrower fails to do so, the Bank may perform such
activities; and
(g) to pay for any environmental investigations, assessments or
remedial activities with respect to any property of the
Borrower that may be performed for or by the Bank from time to
time, subject to written approval by the Borrower, which will
not be unreasonably withheld.
If the Borrower notifies the Bank of any specified activity or
change or provides the Bank with any information pursuant to
subsections (c), (d), or (e), or if the Bank receives any
environmental information from other sources, the Bank, in its
sole discretion, may decide that an adverse change in the
environmental condition of the Borrower or any of the
property, equipment, or business activities of the Borrower
has occurred which decision will constitute, in the absence of
manifest error, conclusive evidence of the adverse change.
Following this decision being made by the Bank, the Bank shall
notify the Borrower of the Bank's decision concerning the
adverse change.
If the Bank decides or is required to incur expenses in
compliance or to verify the Borrower's compliance with
applicable environmental or other regulations, the Borrower
shall indemnify the Bank in respect of such expenses, which
will constitute further advances by the Bank to the Borrower
under this Agreement, subject to the stipulations noted in
subsection (g).
Initial Drawdown
8. The right of the Borrower to obtain the initial drawdown under the
Credit(s) is subject to the condition precedent that there shall not
have been any material adverse changes in the financial condition or
the environmental condition of the Borrower or any guarantor of the
Borrower.
Page 3
Evidence of Indebtedness
9. The Bank's accounts, books and records constitute, in the absence of
manifest error, conclusive evidence of the advances made under this
Credit, repayments on account thereof and the indebtedness of the
Borrower to the Bank.
Acceleration
10. (a) All indebtedness and liability of the Borrower to the Bank
payable on demand, is repayable by the Borrower to the Bank at
any time on demand;
(b) All indebtedness and liability of the Borrower to the Bank not
payable on demand, shall, at the option of the Bank, become
immediately due and payable, the security held by the Bank
shall immediately become enforceable, and the obligation of
the Bank to make further advances or other accommodation
available under the Credits shall terminate, if any one of the
following Events of Default occurs:
(i) the Borrower or any guarantor fails to make when due,
whether on demand or at a fixed payment date, by
acceleration or otherwise, any payment of interest,
principal, fees, commissions or other amounts payable
to the Bank;
(ii) there is a breach by the Borrower or any guarantor of
any other term or condition contained in this
Commitment Letter or in any other agreement to which
the Borrower and/or any guarantor and the Bank are
parties;
(iii) any default occurs under any security listed in this
Commitment Letter under the headings "Specific
Security" or "General Security" or under any other
credit, loan or security agreement to which the
Borrower and/or any guarantor is a party;
(iv) any bankruptcy, re-organization, compromise,
arrangement, insolvency or liquidation proceedings or
other proceedings for the relief of debtors are
instituted by or against the Borrower or any
guarantor and, if instituted against the Borrower or
any guarantor, are allowed against or consented to by
the Borrower or any guarantor or are not dismissed or
stayed within 60 days after such institution;
(v) a receiver is appointed over any property of the
Borrower or any guarantor or any judgement or order
or any process of any court becomes enforceable
against the Borrower or any guarantor or any property
of the Borrower or any guarantor or any creditor
takes possession of any property of the Borrower or
any guarantor;
(vi) any course of action is undertaken by the Borrower or
any guarantor or with respect to the Borrower or any
guarantor which would result in the Borrower's or
guarantor's reorganization, amalgamation or merger
with another corporation or the transfer of all or
substantially all of the Borrower's or any
guarantor's assets;
(vii) any guarantee of indebtedness and liability under the
Credit Line is withdrawn, determined to be invalid or
otherwise rendered ineffective;
(viii) any adverse change occurs in the environmental
condition of:
(A) the Borrower or any guarantor of the
Borrower; or
(B) any property, equipment, or business
activities of the Borrower or any guarantor
of the Borrower.
Page 4
Costs
11. All costs, including legal and appraisal fees incurred by the Bank
relative to security and other documentation and the enforcement
thereof, shall be for the account of the Borrower and may be charged to
the Borrower's deposit account when submitted.
Judgment Currency
12. The obligations of the Borrower or any Guarantor shall be payable in
(Canadian/US) Dollars. Such obligations shall not be discharged or
satisfied by any tender or recovery pursuant to any judgment expressed
in or converted into any other currency except to the extent to which
such tender or recovery shall result in the effective receipt by the
Bank of the full amount of (Canadian/US) Dollars so payable.
Accordingly, the obligation of the Borrower shall be enforceable as an
alternate or additional cause of action for the purpose of recovery in
(Canadian/US) Dollars of the amount (if any) by which such effective
receipt shall fall short of the full amount of (Canadian/U.S.) Dollars
so payable and shall not be affected by any judgment being obtained for
any other sum due hereunder.
