CREDIT AGREEMENT dated as of August 12, 2011 among BLUELINX BUILDING PRODUCTS CANADA LTD. as Borrower and THE LENDERS FROM TIME TO TIME PARTIES HERETO as Lenders and CIBC ASSET-BASED LENDING INC. as Agent
Exhibit
10.1
Execution
Copy
dated as of
August 12, 2011
among
BLUELINX BUILDING PRODUCTS CANADA LTD.
as Borrower
and
THE LENDERS FROM TIME TO TIME PARTIES HERETO
as Lenders
and
CIBC ASSET-BASED LENDING INC.
as Agent
THIS CREDIT AGREEMENT is dated as of August 12, 2011 and is entered into among BLUELINX
BUILDING PRODUCTS CANADA LTD., as Borrower, the Lenders from time to time parties hereto, as
Lenders, and CIBC Asset-Based Lending Inc., as Agent.
RECITALS
A. The Lenders have agreed to provide certain credit facilities to the Borrower.
NOW THEREFORE, in consideration of the mutual conditions and agreements set forth in this Agreement
and for good and valuable consideration, the receipt of which is hereby acknowledged, the parties
hereto agree as follows:
ARTICLE 1
DEFINITIONS
DEFINITIONS
1.1 Defined Terms As used in this Agreement, the following terms have the meanings
specified below:
“Acceptance Fee” means a fee payable by the Borrower to the Agent for the account of a Lender
in Canadian Dollars with respect to the acceptance of a Bankers Acceptance or the making of a BA
Equivalent Loan, calculated on the face amount of the Bankers Acceptance or the BA Equivalent Loan
at a rate per annum equal to the Applicable Margin from time to time in effect on the basis of the
actual number of days in the applicable Contract Period (including the date of acceptance and
excluding the date of maturity) and a year of 365 days, (it being agreed that the Applicable Margin
in respect of a BA Equivalent Loan is equivalent to the Applicable Margin otherwise applicable to
the BA Borrowing which has been replaced by the making of such BA Equivalent Loan pursuant to
Section 2.11(h)).
“Access Agreement” means an access and use agreement executed by the Parent and by the Parent
Credit Facility Lender, providing to the Agent access and use of the books and records of the
Parent and providing for the Parent to continue to provide certain services under the Services
Agreement which agreement shall be in form and substance satisfactory to all parties thereto,
acting reasonably.
“Accounts” means, in respect of each Credit Party, all of such Credit Party’s now existing and
future: (a) accounts (as defined in the PPSA), and any and all other receivables (whether or not
specifically listed on schedules furnished to the Agent), including all accounts created by, or
arising from, all of such Credit Party’s sales, leases, loans, rentals of goods or renditions of
services to its customers, including those accounts arising under any of such Credit Party’s trade
names or styles, or through any of such Credit Party’s divisions; (b) any and all instruments,
documents, bills of exchange, notes or any other writing that evidences a monetary obligation and
chattel paper (including electronic chattel paper) (all as defined in the PPSA); (c) unpaid
seller’s or lessor’s rights (including rescission, replevin, reclamation, repossession and stoppage
in transit) relating to the foregoing or arising therefrom;
(d) rights to any goods represented by any of the foregoing, including rights to returned, reclaimed or repossessed
goods; (e) reserves and credit balances arising in connection with or pursuant hereto; (f)
guarantees, indemnification rights, supporting obligations, payment intangibles, tax refunds and
letter of credit rights; (g) insurance policies or rights relating to any of the foregoing; (h)
intangibles pertaining to any and all of the foregoing (including all rights to payment, including
those arising in connection with bank and non-bank credit cards), and including books and records
and any electronic media and software relating thereto; (i) notes, deposits or property of
borrowers or other account debtors securing the obligations of any such borrowers or other account
debtors to such Credit Party; (j) cash and non cash proceeds (as defined in the PPSA) of any and
all of the foregoing; and (k) all monies and claims for monies now or hereafter due and payable in
connection with any and all of the foregoing or otherwise.
“Acquisition” means any transaction, or any series of related transactions, consummated after
the Effective Date, by which any Credit Party, directly or indirectly, by means of a take-over bid,
tender offer, amalgamation, merger, purchase of assets or otherwise (a) acquires any business or
all or substantially all of the assets of any Person engaged in any business, (b) acquires control
of securities of a Person engaged in a business representing more than 50% of the ordinary voting
power for the election of directors or other governing position if the business affairs of such
Person are managed by a board of directors or other governing body, (c) acquires control of more
than 50% of the ownership interest in any Person engaged in any business that is not managed by a
board of directors or other governing body, or (d) otherwise acquires Control of a Person engaged
in a business.
“Action Request” means any request received by any Credit Party or any of its Subsidiaries
from any Governmental Authority under any Environmental Law whereby such Governmental Authority
requests that it take action or steps or do acts or things in respect of any property or assets in
the charge, management or control of such Credit Party to remediate a matter which is not or is
alleged not to be in compliance with all Environmental Laws.
“Adjusted Tangible Net Worth” means, for the Credit Parties on a consolidated basis, the
excess of total consolidated assets over total consolidated liabilities, as determined in
accordance with GAAP on a consistent basis, provided, however, that the
determination of total consolidated assets shall exclude (i) all goodwill, organizational expenses,
research and development expenses, trade marks, trade xxxx applications, trade names, copyrights,
patents, patent applications, licenses and rights in any thereof, and other similar intangibles,
(ii) all prepaid expenses, deferred charges or unamortized debt discount and expense, (iii) all
reserves carried and not deducted from consolidated assets, (iv) Equity Securities of, obligations
or other securities of, or capital contributions to, or investments in, any Subsidiary, (v)
securities which are not readily marketable, (vi) cash held in a sinking fund or other analogous
fund established for the purpose of redemption, retirement or prepayment of Equity Securities or
Indebtedness, (vii) any write-up in the book value of any asset resulting from a revaluation
thereof after the acquisition thereof by the Borrower or any Credit Party, as the case may be, and
(viii) any items not included in clauses (i) through (vii) above which are treated as intangibles
under GAAP.
“Administrative Questionnaire” means an administrative questionnaire in a form supplied by the
Agent.
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“Affiliate” means, (a) any Person which, directly or indirectly, Controls, is Controlled by or
is under common Control with any other Person; (b) any Person which beneficially owns or holds,
directly or indirectly, 10% or more of any class of voting stock or equity interest (including
partnership interests) of any other Person; (c) any Person, 10% or more of any class of the voting
stock (or if such Person is not a corporation, 10% or more of the equity interest, including
partnership interests) of which is beneficially owned or held, directly or indirectly, by any other
Person; or (d) any Person related within the meaning of the ITA to any such Person and includes any
“Affiliate” within the meaning specified in the Canada Business Corporations Act on the date
hereof.
“Agent” means CIBC Asset-Based Lending Inc., in its capacity as Agent for the Lenders
hereunder, or any successor Agent appointed pursuant to Section 8.9.
“Agreement” means this credit agreement and the schedules and exhibits hereto and any
amendments, restatements, supplements or other modifications to this credit agreement or the
schedules or exhibits made at any time and from time to time.
“Applicable Law” means all federal, provincial, municipal, foreign and international statutes,
acts, codes, ordinances, decrees, treaties, rules, regulations, municipal by-laws, judicial or
arbitral or administrative or ministerial or departmental or regulatory judgments, orders,
decisions, rulings or awards or any provisions of the foregoing, including general principles of
common and civil law and equity, and all policies, practices and guidelines of any Governmental
Authority binding on or affecting the Person referred to in the context in which such word is used
(including, in the case of tax matters, any accepted practice or application or official
interpretation of any relevant taxation authority).
“Applicable Margin” means, with respect to any Loan, the applicable rate per annum, expressed
as a percentage, set forth in the relevant column of the table below:
| BA Borrowing or LIBO Rate Loan | Canadian Prime Loan or Base Rate Loan | |
| Applicable Margin | Applicable Margin | |
| 2.50% | 1.00% |
“Applicable Percentage” means with respect to any Lender, the percentage of the total
Commitments represented by such Lender’s Commitment. If any Commitments have terminated or
expired, the Applicable Percentages in respect of the terminated or expired Commitments shall be
determined based upon the relevant Commitments most recently in effect (i.e., prior to their
termination or expiry), giving effect to any assignments.
“Assignment and Assumption” means an assignment and assumption entered into by a Lender and an
assignee (with the consent of any party whose consent is required by Section 9.4), and accepted by
the Agent, in the form of Exhibit I or any other form approved by the Agent.
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“Authorization” means, with respect to any Person, any authorization, order, permit, approval,
grant, licence, consent, right, franchise, privilege, certificate, judgment, writ, injunction,
award, determination, direction, decree, by-law, rule or regulation of any Governmental Authority
having jurisdiction over such Person, whether or not having the force of Applicable Law.
“Availability Reserves” means, as of any date of determination, such amounts as the Agent may
from time to time establish and revise in its Permitted Discretion reducing the Borrowing Base
which would otherwise be available to the Borrower under the lending formulas provided for herein
(a) to reflect criteria, events, conditions, contingencies or risks which, as determined by the
Agent in its Permitted Discretion, do or may affect either (i) any component of the Borrowing Base
or its value, (ii) the assets, business, operations, industry, financial performance, financial
condition or prospects of the Credit Parties, or (iii) the security interests and other rights of
the Agent in the Collateral (including the enforceability, perfection and priority thereof, or the
realization thereon), or (b) to reflect the Agent’s reasonable belief that any collateral report or
financial information furnished by or on behalf of the Borrower to the Agent is or may have been
incomplete, inaccurate or misleading, or (c) in respect of any state of facts which the Agent
determines constitutes a Default or an Event of Default. Without limiting the foregoing, the
Agent, in its Permitted Discretion, may establish and/or increase Availability Reserves (but
without duplication) in respect of: (a) (i) rental payments or similar charges for any of the
leased premises of any Credit Party or other collateral locations where Inventory or books or
records are kept for which the relevant Credit Party has not delivered to the Agent a landlord’s
waiver or bailee’s letter substantially in the form attached hereto as Exhibits G and H,
respectively, plus (ii) any other fees or charges owing by any Credit Party to any applicable
warehousemen or third party processor (all as determined by the Agent in its reasonable business
judgement); (b) any reserve established by the Agent on account of statutory claims, deemed trusts,
or inventory subject to rights of suppliers under Section 81.1 of the BIA (generally known as the
“30-day goods” rule) or under any other Applicable Law; (c) liabilities of any Credit Party under
any Blocked Account Agreement, (d) employee or employee benefit related liabilities and any other
claims which may have priority over the claims of the Agent and the Lenders, including Priority
Payables; (e) liabilities arising under or in respect of any Pension Plan which, if not paid, could
result in a Lien on any of the assets of any Credit Party, (f) claims by Her Majesty in Right of
Canada made pursuant to Section 224(1.2) or 224(1.3) of the ITA, (g) claims pursuant to any
provision of the Canada Pension Plan or the Employment Insurance Act (Canada) that refers to
subsection 224(1.2) of the ITA and provides for the collection of a contribution (as defined in the
Canada Pension Plan), or employee’s premium or employer’s premium (as defined in the Employment
Insurance Act (Canada)), or a premium under Part VII.1 of that Act, and of any related interest,
penalties or other amounts, (h) claims pursuant to any provision of provincial legislation that has
a similar purpose to subsection 224(1.2) of the ITA, or that refers to that subsection, to the
extent that it provides for the collection of a sum, and of any related interest, penalties or
other amounts, where the sum has been withheld or deducted by a person from a payment to another
person and is in respect of a tax similar in nature to the income tax imposed on individuals under
the ITA or is of the same nature as a contribution under the Canada Pension Plan if the province is
a “province providing a comprehensive pension plan” as defined in subsection 3(1) of the Canada
Pension Plan and the provincial legislation establishes a “provincial pension plan” as defined in
that subsection; (i) Cash Management
Reserves, (j) Bank Product Reserves, (k) royalties payable to Persons who are not Credit
Parties in respect of licensed merchandise, if applicable, and (l) and such other reserves as the
Agent may at any time or times deem necessary in its Permitted Discretion as a result of (x)
negative forecasts and/or trends in the Borrower’s business, operations, industry, prospects,
profits, operations or financial condition or assets or (y) other issues, circumstances or facts
that could otherwise negatively impact the Borrower, its business, operations, industry, prospects,
profits, operations or financial condition or assets.
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“BA Borrowing” means a Borrowing comprised of one or more Bankers Acceptances or BA Equivalent
Loans. For greater certainty, unless the context requires otherwise, all provisions of this
Agreement which are applicable to Bankers Acceptances are also applicable, mutatis mutandis, to BA
Equivalent Loans.
“BA Equivalent Loan” is defined in Section 2.11(h).
“Bankers Acceptance” and “B/A” mean an instrument denominated in Canadian Dollars, drawn by
the Borrower and accepted by a Lender in accordance with this Agreement, and includes a “depository
note” within the meaning of the Depository Bills and Notes Act (Canada) and a xxxx of exchange
within the meaning of the Bills of Exchange Act (Canada).
“Bank Products” means any services or facilities provided to any Credit Party by any Lender or
any of its Affiliates on account of (a) each Swap Agreement that is entered into after the
Effective Date with any counterparty that is a Credit Party at the time such Swap Agreement is
entered into, (b) leasing (but only to the extent that the Borrower and the Credit Party furnishing
such lease notify the Agent in writing that such leases are to be deemed Bank Products hereunder),
and (c) factoring arrangements, but excluding Cash Management Services.
“Bank Product Reserves” means such reserves as the Agent may from time to time determine in
its Permitted Discretion as being appropriate to reflect the liabilities and obligations of the
Credit Parties with respect to Bank Products then provided or outstanding; provided that in
the event that any counterparty to a Swap Agreement requires that the Credit Parties provide cash
collateral to secure such Swap Agreement, the amount of the Bank Product Reserve imposed by the
Agent with respect to such Swap Agreement shall take into consideration the amount of such cash
collateral.
“Base Rate” means, on any day, the annual rate of interest equal to the greater of (i) the
annual rate of interest announced from time to time by CIBC and in effect as its base rate at its
principal office in Toronto, Ontario on such day for determining interest rates on U.S.
Dollar-denominated commercial loans made in Canada, and (ii) the LIBO Rate based on an Interest
Period of 30 days plus 1.00%. The Base Rate is a rate set by CIBC based upon various factors
including CIBC’s cost and desired return, general economic conditions and other factors, and is
used as a reference point for pricing some loans; however, CIBC may price loans at, above or below
such announced rate.
“Base Rate Borrowing” means a Borrowing comprised of one or more Base Rate Loans.
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“Base Rate Loan” means a Loan denominated in U.S. Dollars made by the Lenders to the Borrower
hereunder pursuant to a drawdown, rollover or conversion of a Loan on which interest is payable
upon the Base Rate.
“BIA” means the Bankruptcy and Insolvency Act (Canada), as amended from time to time (or any
successor statute).
“Blocked Account Agreement” has the meaning set out in Section 2.17(d).
“Blocked Accounts” has the meaning set out in Section 2.17(d).
“Borrower” means BlueLinx Building Products Canada Ltd., a British Columbia corporation.
“Borrowing” means any availment of the Credit, which includes a Loan and the issuance of a
Letter of Credit Guarantee in accordance with Section 2.18 (or, after a CIBC ABL Reorganization
Date, the issuance of a Letter of Credit in accordance with Section 2.18A), the issuance of an F/X
Guarantee in accordance with Section 2.19 (or, after a CIBC ABL Reorganization Date, the entry into
an F/X Contract in accordance with Section 2.19A), and a Borrowing includes a rollover or
conversion of any outstanding Loan and the provision of any Loan as required for the Agent to
honour any obligations pursuant to any Letter of Credit, Letter of Credit Guarantee, F/X Contract
or F/X Guarantee.
“Borrowing Base” means, at any time, an amount (which may not be less than zero) equal to the
sum of (i) 90% of the aggregate amount of all Eligible Accounts (insured by EDC or another insurer
satisfactory to the Agent, acting reasonably or owed by investment grade debtors approved in
writing by the Agent), plus (ii) 85% of all other Eligible Accounts, plus (iii) the lesser of (A)
65% of the lower of cost or fair market value of all Eligible Inventory, and (B) 85% of the
appraised net orderly liquidation value of all Eligible Inventory, minus (iv) an amount equal to
all Priority Payables, minus (v) an amount equal to all other Availability Reserves, minus (vi) an
availability block of (A) $500,000 if the Access Agreement is delivered on or before the Effective
Date, or (B) $1,000,000 until the Access Agreement is delivered and $500,000 thereafter if the
Access Agreement is delivered after the Effective Date.
“Borrowing Base Report” means the report of the Borrower concerning the amount of the
Borrowing Base, to be delivered pursuant to Section 5.1, substantially in the form attached as
Exhibit A.
“Borrowing Request” means a request by the Borrower for a Borrowing substantially in the form
of Exhibit B.
“Business Day” means any day that is not (i) a Saturday, Sunday or other day on which
commercial banks in Vancouver, British Columbia, Xxxxxxx, Xxxxxxx xxx Xxxxxxx, Xxxxxxx are
authorized or required by Applicable Law to remain closed, and (ii) in the case of any U.S.
Dollar-denominated Borrowing, any other day on which commercial banks in New York, New York are
authorized or required by Applicable Law to remain closed, and (iii) in the case of any
LIBO Rate Loan any other day on which commercial banks in London, England are authorized or
required by Applicable Law to remain closed.
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“Canadian Dollars”, “Dollars”, “Cdn.$” and “$” refer to lawful money of Canada.
“Canadian
$ Equivalent” means, on any day, the amount of Canadian Dollars that the Agent
could purchase, in accordance with its normal practice, with a specified amount of another currency
based on the spot rate at which Canadian Dollars are offered at the start of such day by CIBC in
Toronto, Ontario.
“Canadian Prime Borrowing” means a Borrowing comprised of one or more Canadian Prime Loans.
“Canadian Prime Loan” means a Loan denominated in Canadian Dollars made by the Lenders to the
Borrower hereunder pursuant to a drawdown, rollover or conversion of a Loan which bears interest at
a rate based upon the Canadian Prime Rate.
“Canadian Prime Rate” means, the rate of interest equal to the greater of (i) the annual rate
of interest publicly announced from time to time by CIBC as its reference rate of interest for
loans made in Canadian Dollars to Canadian customers and designated as its “prime” rate, and (ii)
the 30-day CDOR Rate plus 1.00%. The Canadian Prime Rate is a rate set by CIBC based upon various
factors including CIBC’s costs and desired return, general economic conditions and other factors
and is used as a reference point for pricing some loans. However, CIBC may price loans at, above
or below such announced rate.
“Capital Expenditures” means all payments due or accruing due (whether or not paid) during a
Fiscal Year in respect of the cost (including expenditures on materials, contract labour and direct
labour, but excluding expenditures properly chargeable to repairs and maintenance in accordance
with GAAP) of any fixed asset or improvement, or replacement, substitution, or addition thereto,
which have a useful life of more than one (1) year, including, without limitation, those arising in
connection with the direct or indirect acquisition of such assets by way of increased product or
service charges or offset items or in connection with Capital Leases.
“Capital Lease” means any lease of Property that, in accordance with GAAP, is required to be
capitalized on the consolidated balance sheet of the Credit Parties.
“Capital Lease Obligations” of any Person means the obligations of such Person to pay rent or
other amounts under any lease of (or other arrangement conveying the right to use) real or personal
property, or a combination thereof, which obligations are required to be classified and accounted
for as Capital Leases on a balance sheet of such Person under GAAP, and the amount of such
obligations shall be the capitalized amount thereof determined in accordance with GAAP.
“Cash Management Reserves” means such reserves as the Agent, from time to time, determines in
its Permitted Discretion as being appropriate to reflect the reasonably anticipated liabilities and
obligations of the Credit Parties with respect to Cash Management Services then provided or
outstanding.
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“Cash Management Services” means any one or more of the following types of services or
facilities provided to any Credit Party by a Lender or any of its Affiliates: (a) ACH transactions,
(b) cash management services, including controlled disbursement services, treasury, depository,
overdraft, and electronic funds transfer services, (c) foreign exchange facilities, (d) credit card
processing services, (e) credit or debit cards, and (f) purchase cards (but only to the extent
that, prior to the occurrence and continuance of any Default or Event of Default, the Borrower and
the Credit Party issuing such purchase cards notify the Agent in writing that such purchase cards
are to be deemed Cash Management Services hereunder).
“CDOR Rate” means, on any day and for any period, an annual rate of interest equal to the
average rate applicable to Canadian Dollar bankers’ acceptances for the applicable period appearing
on the “Reuters Screen CDOR Page” (as defined in the International Swaps and Derivatives
Association, Inc. 2000 definitions, as modified and amended from time to time), rounded to the
nearest 1/100th of 1% (with .005% being rounded up), at approximately 10:00 a.m.,
Toronto time, on such day, or if such day is not a Business Day, then on the immediately preceding
Business Day, provided that if such rate does not appear on the Reuters Screen CDOR Page on
such day as contemplated, then the CDOR Rate on such day shall be calculated as the rate for such
period applicable to Canadian Dollar bankers’ acceptances quoted by CIBC as of 10:00 a.m., Toronto
time, on such day or, if such day is not a Business Day, then on the immediately preceding Business
Day.
“Change in Control” means (a) the acquisition of ownership, directly or indirectly,
beneficially or of record, by any Person or group of Persons acting jointly or otherwise in
concert, other than the Parent or any direct or indirect Subsidiary of the Parent, of Equity
Securities representing 100% of the aggregate ordinary voting power represented by the issued and
outstanding Equity Securities of the Borrower; (b) the occupation of a majority of the seats (other
than vacant seats) on the board of directors of the Borrower by Persons who were neither (i)
nominated by the board of directors of the Borrower nor (ii) appointed by directors so nominated;
or (c) the acquisition of direct or indirect Control of the Borrower by any Person or group of
Persons acting jointly or otherwise in concert, other than the Parent or any direct or indirect
Subsidiary of the Parent.
“Change in Law” means (i) the adoption of any new Applicable Law after the date of this
Agreement, (ii) any change in any existing Applicable Law or in the interpretation or application
thereof by any Governmental Authority after the date of this Agreement, or (iii) compliance by any
Lender or the Issuing Bank (or, for purposes of Section 2.12(b), by any lending office of such
Lender or Issuing Bank or by such Lender’s or such Issuing Bank’s holding company, if any) with any
request, guideline or directive (whether or not having the force of law, but in the case of a
request, guideline or directive not having the force of law, being a request, guideline or
directive with which persons customarily comply) of any Governmental Authority made or issued after
the date of this Agreement.
“CIBC” means Canadian Imperial Bank of Commerce and its successors.
“CIBC ABL Reorganization” means a transaction or a series of transactions (including an
assignment transaction, a winding-up, an amalgamation or any other form of transaction or
series of transactions) under which the rights and obligations of CIBC Asset-Based Lending
Inc. under this Agreement and the other Loan Documents become the rights and obligations of CIBC.
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“CIBC ABL Reorganization Date” means the date on which a CIBC ABL Reorganization shall have
occurred.
“Collateral” means the property described in and subject to the Liens, privileges, priorities
and security interests purported to be created by any Security Document.
“Commitment” means, with respect to each Lender, the commitment(s) of such Lender to make
Loans hereunder as such commitment may be reduced from time to time pursuant to Sections 2.6 and/or
2.9, and as such commitments may be reduced or increased from time to time pursuant to assignments
by or to such Lender pursuant to Section 9.4. The initial amount(s) of each Lender’s Commitment(s)
are set forth on Schedule A, or in the Assignment and Assumption pursuant to which such Lender
shall have assumed its Commitment(s), as applicable. The initial aggregate amount of the
Commitments is Cdn.$10,000,000.
“Consolidated Net Income” means, for any period, the net income on a consolidated basis of the
Borrower and its consolidated Subsidiaries; provided, however, that Consolidated Net Income
shall not include or take into account:
| (i) | any net income of any Subsidiary which is subject to restrictions, directly or indirectly, on the payment of dividends or the making of distributions, directly or indirectly, to the Borrower, except that (A) subject to the exclusion contained in clauses (iii) and (iv) below, the Borrower’s equity in the net income of any such Subsidiary for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash that could have been distributed by such Subsidiary consistent with such restriction during such period to the Borrower or another Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution paid to another Subsidiary, to the limitation contained in this clause), and (B) the Borrower’s equity in a net loss of any such Subsidiary for such period shall be included in determining such Consolidated Net Income; |
| (iii) | any gain (or loss) realized upon the sale or other disposition of any assets of the Borrower or any Subsidiary (including pursuant to any sale-and-leaseback arrangement) which is not sold or otherwise disposed of in the ordinary course of business and any gain (or loss) realized upon the sale or other disposition of any capital stock of any Person; | ||
| (iv) | extraordinary gains or losses; |
| (v) | nonrecurring gains or losses, to the extent approved by the Agent in its Permitted Discretion; and | ||
| (vi) | the effect of a change in GAAP. |
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“Contract Period” means the term of any BA Equivalent Loan selected by the Borrower in
accordance with Section 2.3(a)(iv) commencing on the date of such BA Equivalent Loan and expiring
on a Business Day which shall be either one month, two months, or three months thereafter (or such
other terms as may be requested by the Borrower and approved by the Lenders advancing such BA
Equivalent Loan); provided that (i) subject to subparagraph (ii) below, each such period
shall be subject to such extensions or reductions as may be determined by the Agent to ensure that
each Contract Period will expire on a Business Day, and (ii) no Contract Period shall extend beyond
the Maturity Date.
“Control” means, in respect of a particular Person, the possession, directly or indirectly, of
the power to direct or cause the direction of the management or policies of such Person, whether
through the ability to exercise voting power, by contract or otherwise. “Controlling” and
“Controlled” have meanings correlative thereto.
“Cover” means, at any time, an amount equal to 105% of the aggregate amount of Bankers
Acceptances, Letter of Credit Exposure and F/X Exposure at such time and such amount shall be paid
by the Borrower to the Agent and retained by the Agent in a collateral account maintained by the
Agent at its Payment Office and collaterally assigned to the Agent as security until such time as
the applicable Bankers Acceptances, Letters of Credit or F/X Contracts shall have expired or
matured and Reimbursement Obligations, if any, with respect thereto shall have been fully
satisfied; provided that if any such Reimbursement Obligations are not satisfied when due
hereunder, the Agent may apply any or all amounts in such collateral account in satisfaction of any
or all such Reimbursement Obligations.
“Credit Party” means the Borrower, each Guarantor and any other Person which is a party to a
Loan Document (other than the Agent and the Lenders).
“Credit” means the Cdn.$10,000,000 revolving credit facility established pursuant to the
Commitments of the Lenders.
“DBRS” shall mean Dominion Bond Rating Service Limited, or its successor.
“Default” means any event or condition which constitutes an Event of Default or which, upon
notice, lapse of time or both, would, unless cured or waived, become an Event of Default.
“Defaulting Lender” means any Lender (as reasonably determined by the Agent) that (a) has
failed to fund any portion of the Loans, participations in Letters of Credit required to be funded
by it hereunder within one Business Day of the date required to be funded by it hereunder, (b) has
otherwise failed to pay over to the Agent or any other Lender any other amount required to be paid
by it hereunder within one Business Day of the date when due, (c) has failed, within three (3)
Business Days after request by the Agent, to confirm that it will comply with the terms of this
Agreement relating to its Commitments, provided that such Lender shall cease to be a
Defaulting Lender under this clause (c) upon the Agent’s receipt of such confirmation, or (d) has
been declared insolvent by any Governmental Authority pursuant to a court order or become the
subject of a bankruptcy or insolvency proceeding.
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“Discount Proceeds” means, for any Bankers Acceptance (or, as applicable, any BA Equivalent
Loan), an amount (rounded to the nearest whole cent, and with one-half of one cent being rounded
up) calculated on the applicable date of Borrowing by multiplying:
| (i) | the face amount of the Bankers Acceptance (or, as applicable, the undiscounted amount of the BA Equivalent Loan); by |
| (ii) | the quotient of one divided by the sum of one plus the product of: |
| (A) | the Discount Rate (expressed as a decimal) applicable to such Bankers Acceptance (or as applicable, such BA Equivalent Loan), multiplied by |
| (B) | a fraction, the numerator of which is the Contract Period of the Bankers Acceptance (or, as applicable, the BA Equivalent Loan) and the denominator of which is 365, |
with such quotient being rounded up or down to the nearest fifth decimal
place, and with .000005 being rounded up.
“Discount Rate” means, with respect to either a Bankers Acceptance for a particular Contract
Period being purchased by a Lender on any day or a BA Equivalent Loan being made by a Lender on any
day, (i) for any Lender which is a Schedule I chartered bank under the Bank Act (Canada), the CDOR
Rate on such day for such Contract Period; and (ii) for any other Lender, the lesser of
(a) the CDOR Rate on such day for such Contract Period, plus 0.10%, and
(b) the percentage discount rate quoted by such Lender as the percentage discount rate at
which such Lender would, in accordance with its normal practices, at or about 10:00 a.m. on such
date, be prepared to purchase bankers’ acceptances or make BA Equivalent Loans having a face amount
and term comparable to the face amount and term of such Bankers Acceptance or a BA Equivalent Loan,
as applicable.
“EBITDA” means, for the Credit Parties on a consolidated basis and for any period, without
duplication, an amount equal to the Consolidated Net Income for such period less any non-cash
income included in Consolidated Net Income, plus to the extent deducted from Consolidated Net
Income, Interest Expense, depreciation, depletion and impairment, amortization expense and income
tax expenses. For greater certainty, EBITDA for any period shall be determined after the payment
of all management and employee bonuses and non-arm’s length consulting fees for such period.
“EDC ” means Export Development Corporation (Canada) and its successors and assigns.
“Effective Date” means the date on which all of the conditions specified in Section 4.1 are
satisfied or waived in accordance with Section 9.2, as confirmed by the making of the first Loan
under this Agreement.
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“Eligible Account” means, at any time, the invoice amount (which shall be the Canadian $
Equivalent at such time of any amount denominated in U.S.$) owing on each Account of a Credit Party
(net of any credit balance, returns, trade discounts, contras, unapplied cash, unbilled amounts,
tax refunds that have not yet been received or retention or finance charges or any other dilutive
factors) which meet such standards of eligibility as the Agent shall establish from time to time in
its Permitted Discretion; provided that, in any event, no account shall be deemed an
Eligible Account unless each of the following statements is accurate and complete (and by including
such Account in any computation of the applicable Borrowing Base, the Borrower shall be deemed to
represent and warrant to the Agent, each Issuing Bank and the Lenders the accuracy and completeness
of such statements and the compliance of each such Account with each such other eligibility
standard established by the Agent):
(1) Such Account is a binding and valid obligation of the obligor thereon and is in full force
and effect;
(2) Such Account is evidenced by an invoice and is payable in either Canadian Dollars or U.S.
Dollars;
(3) Such Account is genuine as appearing on its face or as represented in the books and
records of the Borrower or the applicable Credit Party;
(4) Such Account is free from claims regarding rescission, cancellation or avoidance, whether
by operation of Applicable Law or otherwise;
(5) Payment of such Account is less than 90 days past the original invoice date thereof and
less than 60 days past the original due date thereof;
(6) Such Account is net of concessions, offset, deduction, contras, returns, chargebacks or
understandings with the obligor thereon that in any way could reasonably be expected to adversely
affect the payment of, or the amount of, such Account;
(7) The Agent on behalf of the Lenders, has a first-priority perfected Lien covering such
Account and such Account is, and at all times will be, free and clear of all other Liens other than
Permitted Liens;
(8) The obligor on such Account is not an Affiliate or a director, officer or employee of any
Credit Party;
(9) Such Account arose in the ordinary course of business of the Credit Party out of the sale
of goods or services by the Credit Party;
(10) Such Account is not payable by an obligor in respect of which 50% or more (by amount) of
the total aggregate Accounts owed to the Credit Party by such obligor or any of its Affiliates are
more than 90 days past the original invoice date thereof or more than 60 days past the original due
date thereof;
(11) All consents, licenses, approvals or authorizations of, or registrations or declarations
with, any Governmental Authority required to be obtained, effected or given in
connection with the execution, delivery and performance of such Account by each party obligated
thereunder, or in connection with the enforcement and collection thereof by the Agent, have been
duly obtained, effected or given and are in full force and effect;
- 12 -
(12) The obligor on such Account is not an individual, and is not the subject of any
bankruptcy or insolvency proceeding, does not have a trustee or receiver appointed for all or a
substantial part of its property, has not made an assignment for the benefit of creditors, admitted
its inability to pay its debts as they mature, suspended its business or initiated negotiations
regarding a compromise of its debt with its creditors, and the Agent, in its Permitted Discretion,
is otherwise satisfied with the credit standing of such obligor;
(13) The chief executive office of the obligor of such Account is located in the United States
of America or Canada and the obligor of such Account is organized and existing under the laws of
the United States of America or a state thereof or the federal laws of Canada, a province or
territory thereof, or if the obligor is not so organized and existing, such Account is covered
under letters of credit or export/import insurance provided by the EDC (or such other provider of
letters of credit or import/export insurance as shall be agreed to in writing by the Agent and with
security provided to the Agent in respect thereof (all to the satisfaction of the Agent) on terms
and in a manner reasonably satisfactory to the Agent;
(14) The obligor of such Account is not a Governmental Authority, if the enforceability or
effectiveness against such Governmental Authority of an assignment of such Account is subject to
any precondition which has not been fulfilled;
(15) In respect of an Account arising from the sale of goods, the subject goods have been
completed, sold and shipped, on a true sale basis on open account, or subject to contract, and not
on consignment, on approval, on a “sale or return” basis, or on a “xxxx and hold” or “pre-sale”
basis or subject to any other repurchase or return agreement; no material part of the subject goods
has been returned, rejected, lost or damaged; and such Account is not evidenced by chattel paper or
a promissory note or an instrument of any kind, unless such chattel paper, promissory note or other
instrument has been delivered to the Agent and is subject to a Lien under the Security Documents;
(16) Each of the representations and warranties set forth herein and in the Loan Documents
with respect to such Account is true and correct on such date;
(17) A cheque, promissory note, draft, trade acceptance or other instrument has not been
received with respect to such Account (or with respect to any other account due from the same
account debtor), presented for payment and returned uncollected for any reason;
(18) Such Account is not in respect of a volume rebate;
(19) Such Account is not a pre-billed account or an account arising from progress billing;
- 13 -
(20) The assignment (whether absolutely or by way of security) of such Account is not limited
or restricted by the terms of the contract evidencing or relating to such Account or, if
assignment of such Account is so restricted, such limitation or restriction has been complied with
and the laws of the jurisdiction(s) governing the validity of such assignment do not provide that
such limitation or restriction is ineffective as against the secured creditor with a security
interest therein; and
(21) Such Account is not an Account which the Agent, in the exercise of its good faith credit
discretion, has determined to be ineligible for any other reason, including the Agent’s
determination that the prospect of the collection of such Account is impaired or that the Account
may not be paid because of the account debtor’s inability to pay or any other reason as may be
customary either in the commercial lending industry or in the lending practices of the Agent.
provided that, if at any time the aggregate amount of all Eligible Accounts owed to a
Credit Party by a particular obligor or its Affiliates exceeds 10% of the aggregate amount of all
Eligible Accounts at such time owed to such Credit Party (determined without giving effect to any
reduction in Eligible Accounts pursuant to this proviso), then, unless the Accounts of such
obligors and its Affiliates are insured pursuant to credit insurance acceptable to the Agent which
has been assigned to the Agent in form acceptable to the Agent, the amount of such Accounts in
excess of 10% of such aggregate amount of all Eligible Accounts shall be excluded in determining
the aggregate amount of all Eligible Accounts at such time.
“Eligible Assignee” means (a) another Lender, (b) with respect to any Lender, any Affiliate of
that Lender, (c) any commercial bank having total assets of $25,000,000,000 or more, (d) any (i)
trust company, savings bank, savings and loan association or similar financial institution, or (ii)
insurance company engaged in the business of writing insurance which, in either case (A) has total
assets of $25,000,000,000 or more, (B) is engaged in the business of lending money and extending
credit under credit facilities substantially similar to those extended under this Agreement, (C) is
operationally and procedurally able to meet the obligations of a Lender hereunder to the same
degree as a commercial bank, and (e) any other financial institution (including a mutual fund or
other fund) having total assets of $25,000,000,000 or more which meets the requirements set forth
in subclauses (B) and (C) of clause (d) above.
“Eligible Inventory” means, at any time with respect to a Credit Party, all Inventory of such
Credit Party valued in Canadian Dollars on a lower of Standard Cost or market basis in accordance
with GAAP, with detailed calculations of lower of cost or market to occur on at least a monthly
basis, which meets such standards of eligibility as the Agent shall establish from time to time in
its Permitted Discretion; provided that, in any event, no Inventory shall be deemed
Eligible Inventory unless each of the following statements is accurate and complete (and by
including such Inventory in any computation of the applicable Borrowing Base, the Borrower shall be
deemed to represent and warrant to the Agent, each Issuing Bank and the Lenders the accuracy and
completeness of such statements and the compliance of such Inventory with each such other
eligibility standard established by the Agent):
(1) Such Inventory is in good condition, merchantable, meets all standards imposed by any
Governmental Authority having regulatory authority over it or its use and/or sale and is not
obsolete and is either currently usable or currently saleable in the normal course of business of a
Credit Party and does not include packaging materials;
- 14 -
(2) Such Inventory is
| (a) | in the possession of such Credit Party and located on real property owned or leased by such Credit Party within Canada or is in transit between such properties (provided that if such Inventory is located on real property leased by such Credit Party, the landlord of such real property shall have executed and delivered to the Agent a landlord waiver substantially in the form attached hereto as Exhibit G (or otherwise in form and substance satisfactory to the Agent), or the Agent shall have been advised that such Inventory is located on leased property and been given the opportunity to establish Availability Reserves in respect thereof), or |
| (b) | in the possession of a bailee within Canada and such bailee shall have executed and delivered to the Agent, a bailee letter substantially in the form attached hereto as Exhibit H (or otherwise in form and substance satisfactory to the Agent), or the Agent shall have been advised that such Inventory is in the possession of a bailee and been given the opportunity to establish Availability Reserves in respect thereof, or |
| (c) | in the possession of a consignee within Canada unless (A) the consignee shall have executed and delivered a waiver satisfactory to the Agent, (B) such Inventory is traceable and identifiable and not commingled with the consignee’s other inventory, (C) all necessary PPSA filings have been made against the consignee and (D) not more than an aggregate of $500,000 of the Eligible Inventory is comprised of such consigned Inventory; |
(3) Each of the representations and warranties set forth in the Loan Documents with respect to
such Inventory is true and correct on such date;
(4) The Agent on behalf of the Lenders, has a first-priority perfected Lien covering such
Inventory, and such Inventory is, and at all times will be, free and clear of all Liens other than
Permitted Liens;
(5) Such Inventory does not include goods (i) that are not owned by such Credit Party, (ii)
that are held by such Credit Party pursuant to a consignment agreement, or (iii) that are special
order goods or discontinued goods;
(6) Such Inventory is not subject to repossession under the BIA except to the extent the
applicable vendor has entered into an agreement with the Agent, in form and substance reasonably
satisfactory to the Agent, waiving its right to repossession;
(7) Such Inventory does not consist of store room materials, supplies, parts, samples,
prototypes, or packing and shipping materials;
(8) Such Inventory does not consist of goods that are discontinued, obsolete, expired,
slow-moving or returned, rejected or repossessed or used goods taken in trade;
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(9) Such Inventory is not evidenced by negotiable documents of title unless delivered to the
Agent with endorsements and insurance, as applicable, on all terms and conditions satisfactory to
the Agent;
(10) Such Inventory does not constitute Hazardous Materials;
(11) Such Inventory is covered by casualty insurance;
(12) Such Inventory is not Inventory which the Agent has determined in the exercise of its
Permitted Discretion that the Agent may not sell or otherwise dispose of in accordance with the
terms of the applicable Security Documents without infringing upon the rights of another Person or
violating any contract with any other Person; and(or otherwise in form and substance satisfactory
to the Agent);
(13) Such Inventory is not covered by a negotiable document of title, unless such document has
been delivered to Agent with all necessary endorsements, free and clear of all Liens except those
in favour of Agent on behalf of the Lenders; and
(14) Such Inventory is not Inventory which the Agent, in the exercise of its good faith credit
discretion, determines to be not acceptable for any other reasons, including those which are
customary either in the commercial lending industry or in the lending practices of the Agent.
“Environmental Laws” means all Applicable Laws relating in any way to the environment,
preservation or reclamation of natural resources, the generation, use, handling, collection,
treatment, storage, transportation, recovery, recycling, release, threatened release or disposal of
any Hazardous Material, or to health and safety matters.
“Environmental Liability” means any liability, contingent or otherwise (including any
liability for damages, costs of environmental remediation, fines, penalties or indemnities), of any
Credit Party directly or indirectly resulting from or based upon (a) violation of any Environmental
Laws, (b) the generation, use, handling, collection, treatment, storage, transportation, recovery,
recycling or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the
Release or threatened Release of any Hazardous Materials into the environment, or (e) any contract,
agreement or other consensual arrangement pursuant to which liability is assumed or imposed with
respect to any of the foregoing.
“Equity Securities” means, with respect to any Person, any and all shares, interests,
participations, rights in, or other equivalents (however designated and whether voting and
non-voting) of, such Person’s capital, whether outstanding on the date hereof or issued after the
date hereof, including any interest in a partnership, limited partnership or other similar Person
and any beneficial interest in a trust, and any and all rights, warrants, debt securities, options
or other rights exchangeable for or convertible into any of the foregoing.
“ETA” means Part IX of the Excise Tax Act (Canada) as amended from time to time (or any
successor statute).
“Event of Default” has the meaning set out in Section 7.1.
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“Excess Availability” means, as of any date, the remainder of (a) the Borrowing Base as of
such date, less (b) the aggregate outstanding balance of the Indebtedness of the Credit Parties
hereunder as of such date (including, without duplication, the aggregate Letter of Credit Exposure
and the aggregate F/X Exposure as of such date). Excess Availability shall always be determined on
the basis that all debts and obligations shall be current, and all accounts payable shall be
handled in the normal course of the Credit Parties’ business consistent with its past practices.
“Excluded Taxes” means, with respect to the Agent, any Lender or any other recipient (in this
definition, (a “recipient”) of any payment to be made by or on account of any obligation of the
Borrower hereunder, income or franchise Taxes imposed on (or measured by) such recipient’s taxable
income or capital Taxes imposed on (or measured by) such recipient’s taxable capital, in each case
by Canada, or by the jurisdiction under the Applicable Laws of which such recipient is organized or
in which its principal office is located.
“Exposure” means, with respect to any Lender at any time, the sum of the outstanding principal
amount of such Lender’s Revolving Loans and, without duplication, its Letter of Credit Exposure and
F/X Exposure at such time.
“Facility Fee” has the meaning ascribed thereto in the Commitment Letter.
“Federal Funds Effective Rate” means, for any day, the per annum rate equal to the weighted
average of the rates on overnight Federal funds transactions with members of the Federal Reserve
System of the United States of America arranged by Federal funds brokers, as published for such day
(or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve
Board of New York, or, if such rate is not so published for any day which is a Business Day, the
average of the quotations for such day on such transactions received by the Agent from three
Federal funds brokers of recognized standing selected by it.
“Financial Officer” means the chief financial officer, principal accounting officer, treasurer
or controller of the Borrower.
“Fiscal Quarter” means any fiscal quarter of the Borrower.
“Fiscal Year” means any fiscal year of the Borrower.
“Fixed Charge Coverage Ratio” means, as of the last day of any fiscal month, the ratio of (a)
without duplication, the sum of (i) EBITDA for the Rolling Period ended on that date minus
non-financed Capital Expenditures made by the Borrower during such Rolling Period to (b) the
sum of (i) Interest Expense of the Credit Party for such Rolling Period plus (ii)
the aggregate of all dividends, distributions and principal payments on Indebtedness made by the
Credit Party during such Rolling Period plus (iii) income taxes paid in cash or cash
equivalents by the Credit Party during such Rolling Period. For the purposes of calculating the
Fixed Charge Coverage Ratio, Interest Expense will be annualized each fiscal month until the
completion of twelve fiscal months.
“F/X Bank” means Canadian Imperial Bank of Commerce.
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“F/X Contract” means (i) before a CIBC ABL Reorganization Date, a currency exchange
transaction or agreement or any option with respect to any such transaction now existing or
hereafter entered into between the Borrower and the Agent or between the Borrower and the F/X Bank
with the assistance of the Agent in accordance with Section 2.19; or (ii) after a CIBC ABL
Reorganization Date, a currency exchange transaction or agreement or any option with respect to any
such transaction now existing or hereafter entered into between the Borrower and the F/X Bank in
accordance with Section 2.19A.
“F/X Contract Sub-Line” means the amount of the commitment by the Agent and the Lenders
hereunder, in an aggregate amount of up to but not exceeding U.S.$ 250,000 (or the Cdn. $
Equivalent thereof) to assist the Borrower in obtaining F/X Contracts from the F/X Bank pursuant to
Section 2.19 or, after a CIBC ABL Reorganization Date, pursuant to Section 2.19A.
“F/X Exposure” means, at any time, and subject to the F/X Contract Sub-Line, the sum of: (a)
the amount determined by the Agent (at its sole discretion with consideration given to any
determinations provided to the Agent by the F/X Bank) to be the credit risk associated with all
outstanding F/X Contracts, plus (b) the aggregate amount of all Reimbursement Obligations in
respect of all F/X Guarantees and/or F/X Contracts at such time. The F/X Exposure of any Lender at
any time shall be its Applicable Percentage of the total F/X Exposure at such time with the total
of all such F/X Exposure of all Lenders not to exceed the F/X Contract Sub-Line. Any F/X Exposure
denominated in any currency other than Canadian Dollars shall be the Cdn.$ Equivalent thereof.
“F/X Guarantee” means a letter of indemnity (which is acceptable to the F/X Bank and the
Agent) or such other form of guarantee or indemnity agreement which is acceptable to the F/X Bank
and the Agent, supporting F/X Contracts between the Borrower and the F/X Bank provided the maximum
principal amounts of all F/X Guarantees in aggregate do not exceed the F/X Contract Sub-Line.
“F/X Transaction” means any currency exchange transaction or agreement or any option with
respect to any such transaction or agreement entered into between the Borrower and any other
counterparty.
“GAAP” means at any particular time with respect to any Credit Party, generally accepted
accounting principles as in effect at such time in the United States, consistently applied;
provided, however, that, if employment of more than one principle shall be permissible at such time
in respect of a particular accounting matter, “GAAP” shall refer to the principle which is then
employed by the applicable Credit Party with the concurrence of its independent public or chartered
accountants, who are acceptable to the Agent provided further that, for the purposes of determining
compliance with the financial covenants herein, “GAAP” means GAAP as at the date hereof.
“Governmental Authority” means the Government of Canada, any other nation or any political
subdivision thereof, whether provincial, state, territorial or local, and any agency, authority,
instrumentality, regulatory body, court, central bank, fiscal or monetary authority or other
authority regulating financial institutions, and any other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to
any such government, including the Bank Committee on Banking Regulation and Supervisory
Practices of the Bank of International Settlements.
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“GST” means the goods and services tax and all other amounts payable under the ETA or any
similar legislation in any other jurisdiction of Canada, including QST and HST.
“Guarantee” of or by any Person (in this definition, the “guarantor”) means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation of any other Person (in this definition, the
“primary credit party”) in any manner, whether directly or indirectly, and including any obligation
of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or
supply funds for the purchase of) any security for the payment thereof (whether in the form of a
loan, advance, stock purchase, capital contribution or otherwise), (b) to purchase or lease
property, securities or services for the purpose of assuring the owner of such Indebtedness or
other obligation of the payment thereof, (c) to maintain working capital, equity capital solvency,
or any other balance sheet, income statement or other financial statement condition or liquidity of
the primary credit party so as to enable the primary credit party to pay such Indebtedness or other
obligation, (d) as an account party in respect of any letter of credit or letter of guarantee
issued to support such Indebtedness or other obligation, or (e) to purchase, sell or lease (as
lessor or lessee) property, or to purchase or sell services, primarily for the purpose of enabling
the debtor to make payment of such Indebtedness or to assure the holder of such Indebtedness
against loss.
“Guarantor” means each Person which has executed and delivered to the Agent, for the benefit
of the Lenders, a guarantee substantially in the form attached hereto as Exhibit C.
“Hazardous Materials” means any substance, product, liquid, waste, pollutant, chemical,
contaminant, insecticide, pesticide, gaseous or solid matter, organic or inorganic matter, fuel,
micro-organism, ray, odour, radiation, energy, vector, plasma, constituent or material which (a) is
or becomes listed, regulated or addressed under any Environmental Laws, or (b) is, or is deemed to
be, alone or in any combination, hazardous, hazardous waste, toxic, a pollutant, a deleterious
substance, a contaminant or a source of pollution or contamination under any Environmental Laws,
including, asbestos or asbestos-containing materials, petroleum and polychlorinated biphenyls,
including petroleum or petroleum distillates, polychlorinated biphenyls, radon gas, infectious or
medical wastes and all other substances or wastes of any nature regulated pursuant to any
Environmental Laws.
“HST” means all amounts payable as harmonized sales tax in the Provinces of British Columbia,
Ontario, Nova Scotia, Newfoundland and New Brunswick under the ETA.
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“Indebtedness” of any Person means, without duplication, (a) all obligations of such Person
for borrowed money or with respect to deposits or advances of any kind, (b) all obligations of such
Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such
Person upon which interest charges are customarily paid, (d) all obligations of such Person under
conditional sale or other title retention agreements relating to property acquired by such Person,
(e) all obligations of such Person in respect of the deferred purchase
price of property or services (excluding current accounts payable incurred in the ordinary
course of business), (f) all Indebtedness of others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property
owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed,
(g) all Guarantees by such Person of Indebtedness of others, (h) all Capital Lease Obligations of
such Person, (i) all obligations, contingent or otherwise, of such Person as an account party in
respect of letters of credit and letters of guarantee, (j) all obligations, contingent or
otherwise, of such Person in respect of bankers’ acceptances, (k) the net amount of obligations of
such Person (determined on a xxxx-to-market basis) on account of foreign exchange transactions or
interest rate swap transactions, and (l) all obligations of such Person to purchase, redeem,
retire, defease or otherwise acquire for value (other than for other Equity Securities) any Equity
Securities of such Person, valued, in the case of redeemable Equity Securities, at the greater of
voluntary or involuntary liquidation preference, plus accrued and unpaid dividends. The
Indebtedness of any Person shall include the Indebtedness of any other entity (including any
partnership in which such Person is a general or limited partner) to the extent such Person is
liable therefor as a result of such Person’s ownership interest in or other relationship with such
entity, except to the extent the terms of such Indebtedness provide that such Person is not liable
therefor.
“Indemnified Taxes” means all Taxes other than Excluded Taxes.
“Indemnitee” has the meaning set out in Section 9.3(b).
“Interest Expense” shall mean, for any period, the total interest expense of the Borrower and
its Subsidiaries on a consolidated basis, plus, to the extent not included in such total interest
expense, and to the extent incurred by the Borrower or any of its Subsidiaries, (i) interest
expense attributable to Capital Lease Obligations of the Borrower or its Subsidiaries, (ii)
amortization of debt discount or financing fees, (iii) capitalized interest, (iv) non-cash interest
expense, (v) commissions, discounts and other fees and charges owed with respect to letters of
credit and bankers’ acceptance financing, (vi) net costs associated with Swap Agreements (including
amortization of fees), (vii) standby fees , (viii) preferred stock dividends in respect of all
preferred stock issued by the Borrower or a Subsidiary and held by Persons other than the Borrower
or a Subsidiary, and (ix) interest actually paid by the Borrower or any Subsidiary on any
Indebtedness of any other Person.
“Interest Payment Date” means, in the case of any Canadian Prime Borrowing or Base Rate
Borrowing, the first Business Day of each month, and in the case of any LIBO Rate Borrowing, at the
end of any Interest Period.
“Interest Period” means, with respect to a LIBO Rate Borrowing, the period commencing on the
date of such Borrowing and ending on the numerically corresponding day in the calendar month that
is 30, 60 or 90 days thereafter, as the Borrower may elect; provided that (i) if any
Interest Period would end on a day other than a Business Day, such Interest Period shall be
extended to the immediately succeeding Business Day unless such next succeeding Business Day would
fall in the next calendar month, in which case such Interest Period shall end on the next preceding
Business Day, (ii) any Interest Period that commences on the last Business Day of a calendar month
(or on a day for which there is no numerically corresponding day in the last
calendar month of such Interest Period) shall end on the last Business Day of the last
calendar month of such Interest Period, (iii) no Interest Period shall extend beyond any date that
any principal payment or prepayment is scheduled to be due unless the aggregate principal amount of
(A) Canadian Prime Borrowings and Base Rate Borrowings and (B) BA Borrowings and LIBO Rate
Borrowings which have Interest Periods or Contract Periods which will expire on or before such
date, less the aggregate amount of any other principal payments or prepayments due during such
Interest Period, is equal to or in excess of the amount of such principal payment or prepayment,
and (iv) no Interest Period shall extend beyond the Maturity Date. For purposes hereof, the date
of a Borrowing initially shall be the date on which such Borrowing is made and, in the case of a
converted or continued Borrowing, thereafter shall be the effective date of the most recent
conversion or continuation of such Borrowing.
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“Inventory” means, in respect of each Credit Party, all of such Credit Party’s present and
hereafter acquired inventory (as defined in the PPSA) and including all merchandise, inventory and
goods, and all additions, substitutions and replacements thereof, wherever located, together with
all goods and materials used or usable in manufacturing, processing, packaging or shipping same in
all stages of production from raw materials through work in process to finished goods, and all
“stores” inventory or “operating and maintenance supplies” inventory, and all proceeds of any
thereof (of whatever sort).
“Investment” means, as applied to any Person (the “investor”), any direct or indirect purchase
or other acquisition by the investor of, or a beneficial interest in, Equity Securities of any
other Person, including any exchange of Equity Securities for Indebtedness, or any direct or
indirect loan, advance (other than advances to employees for moving and travel expenses, drawing
accounts and similar expenditures in the ordinary course of business) or capital contribution by
the investor to any other Person, including all Indebtedness and Accounts owing to the investor
from such other Person that did not arise from sales or services rendered to such other Person in
the ordinary course of the investor’s business, or any direct or indirect purchase or other
acquisition of bonds, notes, debentures or other debt securities of, any other Person. The amount
of any Investment shall be the original cost of such Investment plus the cost of all
additions thereto, without any adjustments for increases or decreases in value, or write-ups,
write-downs or write-offs with respect to such Investment minus any amounts (a) realized
upon the disposition of assets comprising an Investment (including the value of any liabilities
assumed by any Person other than the Borrower or any Credit Party in connection with such
disposition), (b) constituting repayments of Investments that are loans or advances or (c)
constituting cash returns of principal or capital thereon (including any dividend, redemption or
repurchase of equity that is accounted for, in accordance with GAAP, as a return of principal or
capital).
“Issuing Bank” means, prior to a CIBC ABL Reorganization Date, the bank issuing Letters of
Credit for the Borrower with the assistance of the Agent in accordance with Section 2.18, or, on or
after a CIBC ABL Reorganization Date, the bank issuing a Letter of Credit for the Borrower in
accordance with Section 2.18A.
“ITA” means the Income Tax Act (Canada) as amended from time to time (or any successor
statute).
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“Lender” means any Lender having a Commitment hereunder and/or a Revolving Loan outstanding
hereunder.
“Lender Affiliate” means, with respect to any Lender, an Affiliate of such Lender.
“Lenders” means the Persons listed as lenders on Schedule A (and includes their respective
successors) and any other Person that shall have become a party hereto pursuant to an Assignment
and Assumption, other than any such Person that ceases to be a party hereto pursuant to an
Assignment and Assumption.
“Letter of Credit” means, prior to a CIBC ABL Reorganization Date, a letter of credit issued
by the Issuing Bank for or on behalf of the Borrower with the assistance of the Agent in accordance
with Section 2.18; or, on or after a CIBC ABL Reorganization date, a letter of credit issued by
the Issuing Bank for or on behalf of the Borrower in accordance with Section 2.18A.
“Letter of Credit Exposure” means, at any time and subject to the Letter of Credit Sub-Line,
the sum of: (a) the aggregate face amount of all outstanding Letters of Credit at such time, plus
(b) the aggregate amount of all Reimbursement Obligations in respect of all Letter of Guarantees at
such time. The Letter of Credit Exposure of any Lender at any time shall be its Applicable
Percentage of the total Letter of Credit Exposure at such time with the total of all such Letter of
Credit Exposure of all Lenders not to exceed the Letter of Credit Sub-Line. Any Letter of Credit
Exposure denominated in U.S. Dollars shall be the Cdn.$ Equivalent thereof.
“Letter of Credit Guarantee” means the agreement for the substitution of applicants or such
other form of guarantee or indemnity agreement which is acceptable to the Issuing Bank and the
Agent, supporting the issuance of Letters of Credit by the Issuing Bank provided the aggregate
amount of all such Letters of Credit issued and to be issued shall not exceed the Letter of Credit
Sub-Line.
“Letter of Credit Sub-Line” means the amount of the commitment by the Agent and the Lenders
hereunder, in an aggregate amount up to but not exceeding $500,000, to assist the Borrower in
obtaining Letters of Credit.
“LIBO Rate” means, for any Interest Period, the rate for U.S. Dollar borrowings appearing on
Page 3750 of the Telerate Service or Page LIBOR01 of the Reuters Service (or on any successor or
substitute page of such Service, or any successor to or substitute for such Service providing rate
quotations comparable to those currently provided on such page of such Service, as determined by
the Agent from time to time for purposes of providing quotations of interest rates applicable to
U.S. Dollar deposits in the London interbank market) at approximately 11:00 a.m., London time, two
Business Days prior to the commencement of such Interest Period, as the rate for U.S. Dollar
deposits with a maturity comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then the “LIBO Rate” for such Interest Period shall be the
rate at which U.S. Dollar deposits of $5,000,000 and for a maturity comparable to such Interest
Period are offered by the principal London office of CIBC in immediately available funds in the
London interbank market at approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period.
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“LIBO Rate Borrowing” means a Borrowing comprised of one or more LIBO Rate Loans.
“LIBO Rate Loan” means a Loan denominated in U.S. Dollars made by the Lenders to the Borrower
hereunder pursuant to a drawdown, rollover or conversion of a Loan which bears interest at a rate
based upon the LIBO Rate.
“Lien” means, (a) with respect to any asset, any mortgage, deed of trust, lien, pledge,
hypothec, hypothecation, encumbrance, charge, security interest, royalty interest, trust, deemed
trust, adverse claim, defect of title or right of set off in, on or of such asset, (b) the interest
of a vendor or a lessor under any conditional sale agreement, capital lease, title retention
agreement or consignment agreement (or any financing lease having substantially the same economic
effect as any of the foregoing) relating to any asset, (c) in the case of securities, any purchase
option, call or similar right of a third party with respect to such securities, (d) any netting
arrangement, defeasance arrangement or reciprocal fee arrangement, and (e) any other arrangement
having the effect of providing security.
“Loan” means any loan made by the Lenders to the Borrower pursuant to this Agreement.
“Loan Documents” means this Agreement, the Security Documents, the Blocked Account Agreement,
the Borrowing Requests, the Borrowing Base Reports, and any other document, instrument or agreement
(other than participation, agency or similar agreements among the Lenders or between any Lender and
any other bank or creditor with respect to any indebtedness or obligations of any Credit Party
hereunder or thereunder) now or hereafter entered into in connection with this Agreement (including
any F/X Contracts), as such documents, instruments or agreements may be amended, modified or
supplemented from time to time.
“Material Adverse Change” means any event, development or circumstance that has had or could
reasonably be expected to have a Material Adverse Effect.
“Material Adverse Effect” means a material adverse effect on (a) the business, assets,
operations, profitability, prospects or condition, financial or otherwise, of the Credit Parties,
or (b) the validity or enforceability of any of the Loan Documents, the priority of the Liens
created thereby or the rights and remedies of the Agent and the Lenders thereunder or (c) any
Material Contract, or (d) the value of the Collateral taken as a whole.
“Material Contract” means (a) the contracts, licences and agreements listed and described on
Schedule 3.18, and (b) any other contract, licence or agreement (i) to which any Credit Party is a
party or bound, (ii) which is material to, or necessary in, the operation of the business of any
Credit Party, and (iii) which a Credit Party cannot promptly replace by an alternative and
comparable contract with comparable commercial terms.
“Material Indebtedness” means any Indebtedness (other than the Loans) of any one or more of
the Credit Parties in an aggregate principal amount exceeding Cdn.$250,000.
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“Maturity Date” means the third anniversary of the Effective Date (or, if such third
anniversary is not a Business Day, the next Business Day thereafter).
“Obligations” means, with respect to any Credit Party, all obligations, liabilities and
Indebtedness of such Credit Party to the Agent, the Lenders or a Lender with respect to the
principal of and interest on the Loans and the payment or performance of all other obligations,
liabilities and Indebtedness of such Credit Party to the Agent, the Lenders or a Lender hereunder
or arising under or pursuant to any one or more of the other Loan Documents or with respect to the
Loans, including (i) all reimbursement and indemnity obligations of such Credit Party to the Agent,
the Lenders or a Lender hereunder or in connection with any Letter of Credit, Letter of Credit
Guarantee, F/X Contract, F/X Guarantee or otherwise, (ii) all interest (including all interest that
accrues after the commencement of any case or proceeding by or against a Credit Party under any
federal, provincial or state bankruptcy, insolvency, receivership or similar law, whether or not
allowed in such case or proceeding), and all charges, expenses, fees, legal fees, filing fees and
any other sums chargeable to such Credit Party hereunder, under another Loan Document, or under any
other agreement or instrument with the Agent, Lenders, F/X Bank or Issuing Bank, and (iii) all
obligations of such Credit Party to the Agent, a Lender, the Lenders or any of their respective
Affiliates in respect of any Cash Management Services.
“Out-of-Pocket Expenses” means all of the Agent’s reasonable present and future expenses
incurred relative to this Agreement or any other Loan Documents, whether incurred heretofore or
hereafter, which reasonable expenses shall include, without being limited to: the reasonable cost
of retaining external legal counsel, record searches, all costs and expenses incurred by the Agent
in opening bank accounts, depositing cheques, receiving and transferring funds, and wire transfer
charges, any charges imposed on the Agent due to returned items and “insufficient funds” of
deposited cheques and the Agent’s standard fees relating thereto, any amounts paid by, incurred by
or charged to, the Agent by the Issuing Bank under a Letter of Credit or a Letter of Credit
Guarantee, by the F/X Bank under an F/X Contract or F/X Guarantee or the reimbursement agreements
related thereto, applications for Letters of Credit , F/X Contracts or other like document which
pertain either directly or indirectly to such Letters of Credit or F/X Contracts and the Agent’s
standard fees relating to the Letters of Credit, F/X Contracts and any drafts thereunder,
reasonable travel, lodging and similar expenses of the Agent’s personnel (or any of its agents) in
connection with inspecting and monitoring the Collateral from time to time at reasonable intervals
hereunder, any applicable reasonable counsel fees and disbursements, fees and taxes relative to the
filing of financing statements, and all expenses, costs and fees set forth incurred by or imposed
on the Agent by reason of the exercise of any of its rights and remedies under this Agreement or
any of the other Loan Documents.
“Parent” means BlueLinx Corporation.
“Parent Credit Facility” means any credit facility extended to the Parent, including without
limitation the Xxxxx Fargo Facilities.
“Parent Credit Facility Lender” means any agent, on behalf of the lenders thereunder, or any
lender (in the case of a bilateral facility) under any Parent Credit Facility, including without
limitation Xxxxx Fargo.
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“Participant” has the meaning set out in Section 9.4.
“Payment Office” means the Agent’s office located at 207 Queen’s Quay West, Suite 705,
Toronto, Ontario, M5J 1A7, Attention: Chief Credit Officer (or such other office or individual as
the Agent may hereafter designate in writing to the other parties hereto).
“Pension Plan” means any pension or other employee benefit plan (including any plan subject to
the Pension Benefits Standards Act (British Columbia), as amended from time to time (or any
successor statute) in respect of which (i) is maintained by any Credit Party or Related Party, (ii)
any Credit Party or Related Party makes, has made or is required to make (at any time during the
five (5) calendar years preceding the date of this Agreement) contributions in respect of its
employees, or (iii) any other plan with respect to which any Credit Party or any Related Party has
incurred or may incur liability, including contingent liability either to such plan or to any
Person, administration or Governmental Authority.
“Permitted Discretion” means a determination made in good faith and in the exercise of
reasonable (from a perspective of a secured asset based lender) business judgment taking into
account the customary practices of the Agent.
“Permitted Investments” means:
| (a) | direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the Government of Canada or of any Canadian province (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the Government of Canada or of such Canadian province), in each case maturing within one year from the date of acquisition thereof; |
| (b) | investments in certificates of deposit, bankers’ acceptances and time deposits maturing within 180 days from the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, any Schedule I bank under the Bank Act (Canada). |
“Permitted Liens” means:
| (a) | Liens in favour of the Agent, for and on behalf of the Lenders for the obligations of the Borrower or any other Credit Party under or pursuant to the Loan Documents; |
| (b) | Liens granted by a Credit Party in favour of another Credit Party in order to secure any of its indebtedness to such other Credit Party, provided that such Liens are subject to assignment, subordination and postponement arrangements satisfactory to the Agent; |
| (c) | Purchase Money Liens securing Indebtedness and Liens to secure Capital Lease Obligations, in each case only to the extent permitted by Section 6.1(f); |
| (d) | Liens imposed by any Governmental Authority for Taxes not yet due and delinquent or which are being contested in good faith in compliance with Section 5.3, and, during such period during which such Liens are being so contested, such Liens shall not be executed on or enforced against any of the assets of any Credit Party; |
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| (e) | carrier’s, warehousemen’s, mechanics’, materialmen’s, repairmen’s, construction and other like Liens arising by operation of Applicable Law, arising in the ordinary course of business, which are not overdue for a period of more than 30 days or which are being contested in good faith and by appropriate proceedings, and, during such period during which such Liens are being so contested, such Liens shall not be executed on or enforced against any of the assets of any Credit Party, provided in each case that the applicable Credit Party shall have set aside on its books reserves deemed adequate therefor and not resulting in qualification by auditors; |
| (f) | statutory Liens incurred or pledges or deposits made under worker’s compensation, unemployment insurance and other social security legislation; |
| (g) | Liens or deposits to secure the performance of bids, tenders, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature (other than for borrowed money) incurred in the ordinary course of business |
| (h) | servitudes, easements, rights-of-way, restrictions and other similar encumbrances on real property imposed by Applicable Law or incurred in the ordinary course of business and encumbrances consisting of zoning or building restrictions, easements, licenses, restrictions on the use of property or minor imperfections in title thereto which, in the aggregate, are not material, and which do not in any case materially detract from the value of the property subject thereto or interfere with the ordinary conduct of the business of the Credit Parties; |
| (i) | Liens of or resulting from any judgment or award, the time for the appeal or petition for rehearing of which shall not have expired, or in respect of which the Credit Parties shall at any time in good faith be prosecuting an appeal or proceeding for review and in respect of which a stay of execution pending such appeal or proceeding for review shall have been secured; |
| (j) | undetermined or inchoate Liens and charges arising or potentially arising under statutory provisions which have not at the time been filed or registered in accordance with Applicable Law or of which written notice has not been duly given in accordance with Applicable Law or which although filed or registered, relate to obligations not due or delinquent; |
| (k) | the rights reserved to or vested in Governmental Authorities by statutory provisions or by the terms of leases, licenses, franchises, grants or permits, which affect any land, to terminate the leases, licenses, franchises, grants or permits or to require annual or other periodic payments as a condition of the continuance thereof; |
| (l) | securities to public utilities or to any municipalities or Governmental Authorities or other public authorities when required by such utilities, municipalities or Governmental Authorities or such other public authorities in connection with the supply of services or utilities to a Credit Party; |
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| (m) | Liens or covenants restricting or prohibiting access to or from lands abutting on controlled access highways or covenants affecting the use to which lands may be put; provided that, in the case of a Credit Party such Liens or covenants do not materially and adversely affect the use of such lands by the Credit Party; |
| (n) | Liens consisting of royalties payable with respect to any asset or property of a Credit Party existing as of the Effective Date; provided that the existence of any such Lien on any material property or asset of a Credit Party shall have been disclosed in writing to the Lenders prior to the Effective Date; |
| (o) | Liens securing reimbursement obligations relating to letters of credit issued pursuant to this Agreement, provided that the value of the collateral subject to any such Lien does not exceed the amount of the related reimbursement obligation; |
| (p) | statutory Liens incurred or pledges or deposits made in favour of a Governmental Authority to secure the performance of obligations of a Credit Party under Environmental Laws to which any assets of such Credit Party are subject, provided that such Liens have not become enforceable; |
| (q) | a Lien granted by a Credit Party to a landlord to secure the payment of arrears of rent in respect of leased properties in the Province of Quebec leased from such landlord, provided that such Lien is limited to the assets located at or about such leased properties; |
| (r) | any Lien existing on any property or asset prior to the acquisition thereof by a Credit Party or existing on any property or asset of any Person that becomes a Credit Party after the date hereof prior to the time such Person becomes a Credit Party; provided that (i) such Lien is not created in contemplation of or in connection with such acquisition or such Person becoming a Credit Party, as the case may be, (ii) such Lien shall not apply to any other property or assets of such Credit Party, and (iii) such Lien shall secure only those obligations which it secures on the date of such acquisition or the date such Person becomes a Credit Party, as the case may be; and |
| (s) | any extension, renewal or replacement of any of the foregoing; provided, however, that the Liens permitted hereunder shall not be extended to cover any additional Indebtedness of the Credit Parties or their property (other than a substitution of like property), except Liens in respect of Capital Lease Obligations and Purchase Money Liens as permitted by (c) above. |
“Person” includes any natural person, corporation, company, limited liability company,
unlimited liability company, trust, joint venture, association, incorporated organization,
partnership, Governmental Authority or other entity.
“PPSA” means the Personal Property Security Act (British Columbia), as amended from time to
time (or any successor statute) or similar legislation of any other jurisdiction the laws of which
are required by such legislation to be applied in connection with the issue, perfection,
enforcement, validity or effect of security interests.
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“Priority Payables” means, with respect to any Person, any amount payable by such Person which
is secured by a Lien which ranks or is capable of ranking prior to or pari passu with the Liens
created by the Security Documents in respect of any Eligible Accounts or Eligible Inventory,
including amounts owing for wages, vacation pay, severance pay, employee deductions, Wage Earner
Protection Program Act (Canada) obligations, sales tax, excise tax, Tax payable pursuant to the ETA
(net of GST input credits), income tax, workers compensation, government royalties, pension fund
obligations (including any pension deficit), Canadian Pension and other Pension Plan obligations,
real property tax and other statutory or other claims that have or may have priority over, or rank
pari passu with, such Liens created by the Security Documents.
“Property” means any interest in any kind of property or asset, whether real (including
chattels real), personal or mixed, movable or immovable, tangible or intangible.
“Purchase Money Lien” means a Lien taken or reserved in equipment to secure payment of all or
part of its purchase price, provided that such Lien (i) secures an amount not exceeding the
purchase price of such personal property, (ii) extends only to such personal property and its
proceeds, and (iii) is granted prior to or within 30 days after the purchase of such personal
property.
“QST” means the Quebec sales tax imposed pursuant to an Act respecting the Québec sales tax.
“Register” has the meaning set out in Section 9.4(c).
“Reimbursement Obligations” means, at any date, the sum of the outstanding obligations of the
Borrower to reimburse the Agent at such time to the extent that the Agent is obligated to reimburse
(a) the Issuing Bank at such time pursuant to any Letter of Credit Guarantee and (b) the F/X Bank
at such time pursuant to any F/X Guarantee.
“Related Parties” means, with respect to any Person, such Person’s Affiliates and the
respective directors, officers, employees, agents and advisors of such Person and of such Person’s
Affiliates.
“Release” is to be broadly interpreted and shall include an actual or potential discharge,
deposit, spill, leak, pumping, pouring, emission, emptying, injection, escape, leaching, seepage or
disposal of any Hazardous Materials which is or may be in breach of any Environmental Laws.
“Repayment Notice” means a notice in the form of Exhibit J;
“Required Lenders” means, at any time, Lenders having Commitments which represent, in the
aggregate, more than 50% of the aggregate amount of the Commitments of all the Lenders under the
Credit.
“Responsible Officer” means, with respect to any Person, the chairman, the president, any vice
president, the chief executive officer, the chief operating officer or the treasurer, and, in
respect of financial or accounting matters, any Financial Officer of such Person; unless
otherwise specified, all references herein to a Responsible Officer mean a Responsible Officer of
the Borrower.
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“Restricted Payment” shall mean, with respect to any Person, any payment by such Person (i) of
any dividends on any of its Equity Securities, (ii) on account of, or for the purpose of setting
apart any property for a sinking or other analogous fund for, the purchase, redemption, retirement
or other acquisition of any of its Equity Securities or any warrants, options or rights to acquire
any Equity Securities, or the making by such Person of any other distribution in respect of any of
its Equity Securities, (iii) of any principal of or interest or premium on or of any amount in
respect of a sinking or analogous fund or defeasance fund for any Indebtedness of such Person
ranking in right of payment subordinate to any liability of such Person under the Loan Documents,
(iv) of any principal of or interest or premium on or of any amount in respect of a sinking or
analogous fund or defeasance fund for any Indebtedness of such Person to a shareholder of such
Person or to an Affiliate of a shareholder of such Person, (v) in respect of an Investment, or (vi)
of any management, consulting or similar fee or any bonus payment or comparable payment, or by way
of gift or other gratuity, to any Affiliate of such Person or to any director or officer thereof.
“Revolving Loan” has the meaning set out in Section 2.1.
“Rolling Period” means, as at the end of any fiscal month, such fiscal month taken together
with the eleven immediately preceding fiscal months.
“Scheduled Capital Expenditures” means Capital Expenditures of the Borrower and the Credit
Parties permitted for any Fiscal Year pursuant to Section 6.14.
“Security Documents” means the agreements, documents or instruments described or referred to
in Section 4.1 and Section 5.11 (including, to the extent such Section describes an amendment, the
agreement, document or instrument amended thereby) and any and all other agreements, documents or
instruments now or hereafter executed and delivered by any Credit Party or any other Person as
security for the payment or performance of all or part of the obligations of the Borrower (or such
Credit Party or other Person) hereunder or under any other Loan Documents, as any of the foregoing
may have been, or may hereafter be, amended, modified or supplemented.
“Services Agreement” means the services agreement dated December 15, 2010 between the Borrower
and the Parent, as it may be amended, restated, supplemented or otherwise modified from time to
time.
“Settlement Date” means the date, which shall be weekly, or more frequently at the discretion
of the Agent upon the occurrence of an Event of Default or a continuing decline or increase of the
Loans, that the Agent and the Lenders shall settle among themselves so that (a) the Agent shall not
at any time have, as the agent for the Lenders, any money at risk, and (b) on such Settlement Date
each Lender shall be responsible for its pro rata amount of the Revolving Loan, calculated on the
basis of each of their Applicable Percentages in respect of the
outstanding Exposure as at such date, provided that each Settlement Date shall be a Business
Day.
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“Standard Cost” means the standard cost of Inventory determined in accordance with the
applicable Credit Party’s published GAAP compliant inventory policy, consistently applied, and
excludes any portion of cost representing intercompany profit or gain in the case of Inventory
acquired from an Affiliate of any Credit Party.
“Subsidiary” means, with respect to any Person (in this definition, the “parent”) at any date,
any other Person the accounts of which would be consolidated with those of the parent in the
parent’s consolidated financial statements if such financial statements were prepared in accordance
with GAAP as of such date, as well as any other Person (a) of which securities or other ownership
interests representing more than 50% of the equity or more than 50% of the ordinary voting power
or, in the case of a partnership, more than 50% of the general partnership interests are, as of
such date, owned, controlled or held, or (b) that is, as of such date, otherwise Controlled, in
each case by the parent or one or more Subsidiaries of the parent or by the parent and one or more
Subsidiaries of the parent.
“Swap Agreement” means any agreement with respect to any swap, forward, future or derivative
transaction or option or similar agreement involving, or settled by reference to, one or more
rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or
pricing indices or measures of economic, financial or pricing risk or value or any similar
transaction or any combination of these transactions.
“Swap Transaction” means any transaction or agreement entered into between the Borrower and
any other counterparty with respect to any swap, forward, future or derivative transaction or
agreement or option or similar agreement involving, or settled by reference to, one or more rates,
currencies, commodities, equity or debt instruments or securities, or economic, financial or
pricing indices or measures of economic, financial or pricing risk or value or any similar
transaction or any combination of these transactions.
“Taxes” means all taxes, charges, fees, levies, imposts and other assessments, including all
income, sales, use, goods and services, harmonized, value added, capital, capital gains,
alternative, franchise, net worth, branch transfer, land transfer, profits, withholding, payroll,
employer health, excise, stamp, documentary, real property and personal property taxes, and any
other taxes, customs duties, fees, assessments, or similar charges in the nature of a tax,
including Canada Pension Plan and provincial pension plan contributions, unemployment insurance
payments and workers’ compensation premiums, together with any instalments with respect thereto,
and any interest, fines and penalties with respect thereto, imposed by any Governmental Authority
(including federal, state, provincial, territorial, municipal and foreign Governmental
Authorities), and whether disputed or not.
“Transactions” means the execution, delivery and performance by the Borrower of this Agreement
and the other Loan Documents, the borrowing of Loans, the use of the proceeds thereof and the
issuance of Letters of Credit and the entering into of F/X Contracts hereunder.
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“Type”, when used in reference to any Loan or Borrowing, refers to whether the rate of
interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the
Canadian Prime Rate, the CDOR Rate, the Base Rate, the LIBO Rate, or is a Letter of Credit.
“UCC” means the Uniform Commercial Code as in effect from time to time for the applicable
State in question.
“U.S. Dollars” and “U.S.$” refer to lawful money of the United States of America.
“U.S.$ Equivalent” means, on any day, the amount of U.S. Dollars that the Agent could
purchase, in accordance with its normal practice, with a specified amount of Canadian Dollars based
on the spot rate at which U.S. Dollars are offered at the start of such day by CIBC in Xxxxxxx,
Xxxxxxx.
“Violation Notice” means any notice received by any Credit Party from any Governmental
Authority under any Environmental Law that the applicable Credit Party or any of its property and
assets is not in compliance with the requirements of any Environmental Law.
“Xxxxx Fargo” means Xxxxx Fargo Bank N.A. (as successor to Wachovia Bank, National
Association), as agent.
“Xxxxx Fargo Facilities” means the credit facilities established pursuant to the Amended and
Restated Loan and Security Agreement dated August 4, 2006 between Xxxxx Fargo, as agent, the
Parent, Bluelinx Florida LP, and Bluelinx Services Inc., as borrowers, Bluelinx Florida Holding No.
1 Inc., Bluelinx Florida Holding No. 2 Inc., BLX Texas Acquisition I LLC, and BLX Texas Acquisition
II LLC, as guarantors, and the financial institutions party thereto as lenders, as such agreement
may be amended, restated, supplemented or otherwise modified from time to time.
1.2 Classification of Loans and Borrowings For purposes of this Agreement, Loans may be
classified and referred to by Type (e.g., a “Canadian Prime Rate Loan”) and Borrowings also may be
classified and referred to by Type (e.g., a “Canadian Prime Rate Borrowing”).
1.3 Terms Generally The definitions of terms herein shall apply equally to the singular
and plural forms of the terms defined. Whenever the context may require, any pronoun shall include
the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and
“including” shall be deemed to be followed by the phrase “without limitation”. The word “will”
shall be construed to have the same meaning and effect as the word ‘shall”. The word “or” is
disjunctive; the word “and” is conjunctive. The word “shall” is mandatory; the word “may” is
permissive. The words “to the knowledge of” means, when modifying a representation, warranty or
other statement of any Person, that the fact or situation described therein is known by the Person
(or, in the case or a Person other than a natural Person, known by the Responsible Officer of that
Person) making the representation, warranty or other statement, or with the exercise of reasonable
due diligence under the circumstances (in accordance with the standard of what a reasonable Person
in similar circumstances would have done) would have been known by the Person (or, in the case of a
Person other than a natural Person, would have been known by such Responsible Officer of that
Person). Unless the context requires otherwise (a) any definition of
or reference to any agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended, supplemented or
otherwise modified (subject to any restrictions on such amendments, supplements or modifications
set forth herein), (b) any reference herein to any statute or any section thereof shall, unless
otherwise expressly stated, be deemed to be a reference to such statute or section as amended,
restated or re-enacted from time to time, (c) any reference herein to any Person shall be construed
to include such Person’s successors and permitted assigns, (d) the words “herein”, “hereof” and
“hereunder”, and words of similar import, shall be construed to refer to this Agreement in its
entirety and not to any particular provision hereof, (e) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and
Exhibits and Schedules to, this Agreement, and (f) the words “asset” and “property” shall be
construed to have the same meaning and effect and to refer to any and all tangible and intangible
assets and properties, including cash, securities, accounts and contract rights.
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1.4 Accounting Terms; GAAP Except as otherwise expressly provided herein, all terms of an
accounting or financial nature shall be construed in accordance with GAAP, as in effect from time
to time. All calculations of the components of the financial information for the purposes of
determining compliance with the financial ratios and financial covenants contained herein shall be
made on a basis consistent with GAAP in existence as at the date of this Agreement and used in the
preparation of the consolidated financial statements of the Borrower referred to in Section 5.1(a),
and all calculations with respect to inventory shall use the same method for inventory valuation as
used in the preparation of the Borrower’s financial statements on the date hereof. Upon the
adoption by the Borrower of International Financial Reporting Standards, or in the event of a
change in GAAP, the Borrower and the Agent shall negotiate in good faith to revise (if appropriate)
such ratios and covenants to give effect to the intention of the parties under this Agreement as at
the Effective Date, and any new ratio or covenant shall be subject to approval by the Required
Lenders. In the event that such negotiation is unsuccessful, all calculations thereafter made for
the purpose of determining compliance with the financial ratios and financial covenants contained
herein shall be made on a basis consistent with GAAP in existence as at the Effective Date.
1.5 Time All time references herein shall, unless otherwise specified, be references to
local time in Xxxxxxx, Xxxxxxx. Time is of the essence of this Agreement and the other Loan
Documents.
1.6 Permitted Liens Any reference in any of the Loan Documents to a Permitted Lien is not
intended to subordinate or postpone, and shall not be interpreted as subordinating or postponing,
or as any agreement to subordinate or postpone, any Lien created by any of the Loan Documents to
any Permitted Lien.
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1.7 Interpretation Clause (Québec) For purposes of any assets, liabilities or entities
located in the Province of Québec and for all other purposes pursuant to which the interpretation
or construction of this Agreement may be subject to the laws of the Province of Québec or a court
or tribunal exercising jurisdiction in the Province of Québec, (a) “personal property” shall be
deemed to include “movable property”, (b) “real property” shall be deemed to include “immovable
property”, (c) “tangible property” shall be deemed to include “corporeal property”,
(d) “intangible property” shall be deemed to include “incorporeal property”, (e) “security
interest”, “mortgage” and “lien” shall be deemed to include a “hypothec”, “prior claim” and a
resolutory clause, (f) all references to filing, registering or recording under the PPSA or UCC
shall be deemed to include publication under the Civil Code of Québec, (g) all references to
“perfection” of or “perfected” liens or security interest shall be deemed to include a reference to
an “opposable” or “set up” lien or security interest as against third parties, (h) any “right of
offset”, “right of setoff” or similar expression shall be deemed to include a “right of
compensation”, (i) “goods” shall be deemed to include “corporeal movable property” other than
chattel paper, documents of title, instruments, money and securities, (j) an “agent” shall be
deemed to include a “mandatary”, (k) “construction liens” shall be deemed to include “legal
hypothecs”; (l) “joint and several” shall be deemed to include solidary; (m) “gross negligence or
wilful misconduct” shall be deemed to be “intentional or gross fault”; (n) “beneficial ownership”
shall be deemed to include “ownership on behalf of another as mandatary”; (o) “servitude” shall be
deemed to include easement; (p) “priority” shall be deemed to include “prior claim”; (q) “survey”
shall be deemed to include “certificate of location and plan”; (r) “state” shall be deemed to
include “province”; (s) “fee simple title” shall be deemed to include “absolute ownership”. The
parties hereto confirm that it is their wish that this Agreement and any other document executed in
connection with the transactions contemplated herein be drawn up in the English language only and
that all other documents contemplated thereunder or relating thereto, including notices, may also
be drawn up in the English language only. Les parties aux présentes confirment que c’est leur
volonté que cette convention et les autres documents de crédit soient rédigés en langue anglaise
seulement et que tous les documents, y compris tous avis, envisages par cette convention et les
autres documents peuvent être rédigés en la langue anglaise seulement.
1.8 Currency Unless otherwise specified in this Agreement, all references to currency
(without further description) are to lawful money of Canada.
ARTICLE 2
THE CREDITS
THE CREDITS
2.1 Commitments Subject to the terms and conditions set forth herein, each Lender commits
to make Loans (each such Loan made under this Section 2.1, a “Revolving Loan”) to the Borrower from
time to time during the period commencing on the Effective Date and ending on the Maturity Date
(each such commitment, a “Commitment”) in an aggregate principal amount up to the amount set forth
beside such Lender’s name in Schedule A under the heading “Commitment”, provided that a
Lender shall not be required to extend further credit hereunder if any further extension of credit
made by such Lender as requested by the Borrower would result in (i) such Lender’s Exposure
exceeding such Lender’s Commitment, or (ii) the sum of the total Exposure exceeding either the
total Commitment or the Borrowing Base. Within the foregoing limits and subject to the terms and
conditions set forth herein, the Borrower may borrow, repay and reborrow Revolving Loans. In
addition, the Borrower may, on at least ten (10) days’ prior written notice to the Agent, from time
to time request a permanent increase in the Commitment in an aggregate principal amount of up to
$5,000,000, provided that (i) no increase in the Commitments shall be made if a Default or an Event
of Default shall have occurred and be continuing or would result after giving effect to such
increase, (ii) each such increase shall be in
a minimum principal amount of $1,000,000, (iii) the Borrower shall pay to the Agent, for the
account of the Lenders, a one-time fee in an amount equal to 0.5 % of the amount of each such
Commitment increase, (iv) the aggregate principal amount of all such Commitment increases shall not
exceed $5,000,000, and (v) no Lender shall be obligated to increase its Commitment. The pro rata
share of each Lender’s Commitment hereunder shall automatically increase as a result of any
permitted increase in the Commitment hereunder, and Schedule A shall be amended to reflect any such
permitted increase.
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2.2 Loans and Borrowings
(a) Each Revolving Loan shall be made as part of a Borrowing consisting of Revolving Loans
made by the Lenders rateably in accordance with their respective Commitments. The failure of any
Lender to make any Loan required to be made by it shall not relieve any other Lender of its
obligations hereunder; provided that the Commitments of the Lenders are several and no
Lender shall be responsible for any other Lender’s failure to make Loans as required.
(b) Subject to the Letter of Credit Sub-Line limitation, the F/X Contract Sub-Line limitation,
the Borrowing Base limitations and the other limitations on Loans and Borrowings as provided in
this Agreement, each Borrowing shall be comprised entirely of Canadian Prime Loans, Bankers
Acceptances, BA Equivalent Loans, Base Rate Loans, LIBO Rate Loans and/or the delivery of Letters
of Credit Guarantees or F/X Guarantees as the Borrower may request in accordance herewith. For
greater certainty, from and after a CIBC ABL Reorganization Date, Borrowing with respect to Letters
of Credit or F/X Contracts shall be governed by Sections 2.18A or 2.19A, as applicable, and not by
Sections 2.18 or 2.19.
(c) Each Lender may at its option make any LIBO Rate Loan by causing any domestic or foreign
branch or Affiliate of such Lender to make such Loan; provided that any exercise of such
option shall not result in any increased costs for the Borrower or affect the obligation of the
Borrower to repay such Loan in accordance with the terms of this Agreement. At the commencement of
each Interest Period for any LIBO Rate Borrowing, such Borrowing shall be in an aggregate amount
that is an integral multiple of $250,000 and not less than $500,000. At the commencement of each
Contract Period for any BA Borrowing, such Borrowing shall be in an aggregate amount that is an
integral multiple of $250,000 and not less than $500,000. Borrowings of more than one Type may be
outstanding at the same time; provided that there shall not at any time be more than a
total of five BA Borrowings or five LIBO Rate Borrowings outstanding.
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2.3 Requests for Borrowings
(a) The initial Borrowings hereunder on the Effective Date in respect of the Credit shall be
Canadian Prime Borrowings. Thereafter, to request a Borrowing, the Borrower shall notify the Agent
of such request by written Borrowing Request (i) in the case of a LIBO Rate Borrowing, not later
than 11:00 a.m., Toronto time, three Business Days before the date of the proposed Borrowing, (ii)
in the case of a BA Borrowing, not later than 11:00 a.m., Toronto time, two Business Days before
the date of the proposed Borrowing, or (iii) in the case of a Canadian Prime Borrowing or a Base
Rate Borrowing, not later than 12:00 p.m., Toronto time, on the date
of the proposed Borrowing; or (ii) in the case of the issuance of a Letter of Credit Guarantee
in accordance with Section 2.18 (or, after a CIBC ABL Reorganization Date, a Letter of Credit in
accordance with Section 2.18A) or the issuance of an F/X Guarantee in accordance with Section 2.19
(or, after a CIBC ABL Reorganization Date, the entry into an F/X Contract in accordance with
Section 2.19A), not later than 11:00 a.m., Toronto time, five (5) Business Days before the date of
the proposed Borrowing. The Agent and each Lender are entitled to rely and act upon any written
Borrowing Request given or purportedly given by the Borrower, and the Borrower hereby waives the
right to dispute the authenticity and validity of any such request or resulting transaction once
the Agent or any Lender has advanced funds or arranged for the issuance of a Letter a Credit
Guarantee based on such written Borrowing Request. Each such written Borrowing Request shall be
substantially in the form of Exhibit B and shall specify the following information:
| (i) | the aggregate amount of each requested Borrowing and the Type thereof; | ||
| (ii) | the date of such Borrowing, which shall be a Business Day; |
| (iii) | whether such Borrowing is to be a Canadian Prime Borrowing, a BA Borrowing, a Base Rate Borrowing, a LIBO Rate Borrowing, or the issuance of a Letter of Credit Guarantee in accordance with Section 2.18 (or, after a CIBC ABL Reorganization Date, a Letter of Credit in accordance with Section 2.18A) or the issuance of an F/X Guarantee in accordance with Section 2.19 (or, after a CIBC ABL Reorganization Date, the entry into an F/X Contract in accordance with Section 2.19A); |
| (iv) | in the case of a LIBO Rate Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term “Interest Period”, and in the case of a BA Borrowing, the initial Contract Period to be applicable thereto, which shall be a period contemplated by the definition of the term “Contract Period”; and |
| (v) | the location and number of the Borrower’s account to which funds are to be disbursed, which shall comply with the requirements of this Agreement. |
(b) If no election as to the Type of Borrowing is specified, then the requested Borrowing
shall be a Canadian Prime Borrowing (if denominated in Canadian Dollars) or a Base Rate Borrowing
(if denominated in U. S. Dollars). If no currency is specified, the Borrowing shall be denominated
in Canadian Dollars. If no Interest Period is specified with respect to any requested LIBO Rate
Borrowing, then the Borrower shall be deemed to have selected an Interest Period of a one month
duration. If no Contract Period is specified with respect to any requested BA Borrowing, then the
Borrower shall be deemed to have selected a Contract Period of a one month duration.
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(c) Each Borrowing initially shall be of the Type specified in the applicable Borrowing
Request. Thereafter, the Borrower may elect to convert a Borrowing to a different Type or to
continue such Borrowing and, in the case of (i) a LIBO Rate Borrowing, may elect a
new Interest Period therefor, or (ii) a BA Borrowing, may elect a new Contract Period
therefor, all as provided in this Section 2.3(c). The Borrower may elect different options with
respect to different portions of the affected Borrowing, in which case each such portion shall be
allocated ratably among the Lenders holding the Loans comprising such Borrowing in accordance with
their Applicable Percentage, and the Loans comprising each such portion shall be considered a
separate Borrowing. To make an election pursuant to this Section 2.3(c), the Borrower shall notify
the Agent of such election in the manner and by the time that a Borrowing Request would be required
under Section 2.3(a) if the Borrower were requesting a Borrowing of the Type resulting from such
election to be made on the effective date of such election. In addition to the information
specified in Section 2.3(a), each Borrowing Request shall specify the Borrowing to which such
request applies and, if different options are being elected with respect to different portions
thereof, the portions thereof to be allocated to each resulting Borrowing.
(d) In the absence of a timely and proper election with regard to (i) LIBO Rate Borrowings,
the Borrower shall be deemed to have elected to convert such LIBO Rate Borrowings to Base Rate
Borrowings on the last day of the Interest Period of the relevant LIBO Rate Borrowings, and (ii) BA
Borrowings, the Borrower shall be deemed to have elected to convert such BA Borrowings to Canadian
Prime Borrowings on the last day of the Contract Period of the relevant BA Borrowings.
(e) The Agent shall not incur any liability to the Borrower as a result of acting in
accordance with any notice or request referred to in this Section 2.3, which notice or request the
Agent believes in good faith to have been given by an officer duly authorized by the Borrower to
request Loans on its behalf or for otherwise acting in good faith under this Section 2.3, and the
crediting of Loans to the Borrower’s disbursement accounts, or transmittal to such Person or other
bank account as the Borrower shall direct, shall conclusively establish the obligation of the
Borrower to repay such Loans as provided herein. Nothing herein shall, however, release or be
deemed to release the Agent in respect of its gross negligence or wilful misconduct.
(f) Except to the extent otherwise permitted to the contrary hereunder, any Borrowing Request
made pursuant to in this Section 2.3 shall be irrevocable and the Borrower shall be bound to borrow
the funds requested therein in accordance therewith.
2.4 Funding of Borrowings
(a) Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof
by wire transfer of immediately available funds by 12:00 noon, Toronto time, to the account of the
Agent most recently designated by it for such purpose by notice to the Lenders. The Agent will
make such Loans available to the Borrower by promptly crediting the amounts so received, in like
funds, to an account of the Borrower and designated by the Borrower in the applicable Borrowing
Request. Prior to a CIBC ABL Reorganization Date, the Borrower shall satisfy Reimbursement
Obligations promptly as they arise by way of a request for a Loan and all Loans made hereunder to
satisfy Reimbursement Obligations: (i) in respect of any Letter of Credit Guarantee shall be
remitted by the Agent to the Issuing Bank in accordance with such Letter of Credit Guarantee
(unless the Issuing Bank has already been fully reimbursed directly by the Borrower in respect of
drawings under the Letter of Credit which is the subject of such Letter of Credit Guarantee), and
(ii) in respect of any F/X Guarantee shall be remitted by the Agent to
the F/X Bank in accordance with such F/X Guarantee (unless the F/X Bank has already been fully
reimbursed directly by the Borrower in respect of all such losses in respect of the F/X Contract
which is the subject of such F/X Guarantee). After a CIBC ABL Reorganization Date, the Borrower
shall satisfy Reimbursement Obligations promptly as they arise by way of a request for a Loan and
all Loans made hereunder to satisfy Reimbursement Obligations: (i) in respect of any Letter of
Credit shall be remitted by the Agent to the Issuing Bank in accordance with such Letter of Credit
(unless the Issuing Bank has already been fully reimbursed directly by the Borrower in respect of
drawings under the Letter of Credit), and (ii) in respect of any F/X Contract shall be remitted by
the Agent to the F/X Bank in accordance with such F/X Contract (unless the F/X Bank has already
been fully reimbursed directly by the Borrower in respect of all such losses in respect of the F/X
Contract).
- 36 -
(b) The Agent may, upon notice given by the Agent no later than 12:00 p.m. Toronto time on any
Settlement Date, request each Lender to make, and each Lender hereby agrees to make, a Revolving
Loan in an amount equal to such Lender’s Applicable Percentage (calculated with respect to the
aggregate Commitments then outstanding) of the aggregate amount of the Revolving Loans made by the
Agent from the preceding Settlement Date to the date of such notice. Each Lender’s obligation to
make the Revolving Loans and to make the settlements pursuant to this Section 2.4 shall not be
affected by any circumstance, including (i) any set-off, counterclaim, recoupment, defence or other
right which any such Lender or the Borrower may have against the Agent, the Borrower, any Lender or
any other Person for any reason whatsoever; (ii) any adverse change in the condition (financial or
otherwise) of the Borrower; or (iii) any other circumstance, happening or event whatsoever, whether
or not similar to any of the foregoing. Without limiting the liability and obligation of each
Lender to make such advances, the Borrower authorizes the Agent to charge the Borrower’s loan
account to the extent amounts received from the Lenders are not sufficient to repay in full the
amount of any such deficiency. To the extent that any Lender has failed to fund all such payments
and Revolving Loans, the Agent shall be entitled to set off the funding short-fall against that
Lender’s pro rata share of all payments received from the Borrower.
(c) The Agent, for the account of the Lenders, shall disburse all amounts to the Borrower and
shall handle all collections. It is understood that for purposes of advances to the Borrower and
for purposes of this Section 2.4, the Agent is using the funds of the Agent.
(d) Unless the Agent shall have been notified in writing by any Lender prior to any advance to
the Borrower that such Lender will not make the amount which would constitute its share of the
Borrowing on such date available to the Agent, the Agent may assume that such Lender shall make
such amount available to the Agent on a Settlement Date, and the Agent may, in reliance upon such
assumption, make available to the Borrower a corresponding amount. A certificate of the Agent
submitted to any Lender with respect to any amount owing under this Section 2.4 shall be
conclusive, absent manifest error. If such Lender’s share of such Borrowing is not in fact made
available to the Agent by such Lender on the Settlement Date, the Agent shall be entitled to
recover such amount with interest thereon at the rate per annum applicable to Revolving Loans
hereunder, on demand, from the Borrower without prejudice to any rights which the Agent may have
against such Lender hereunder. Nothing contained in this shall relieve any Lender which has failed
to make available its Applicable Percentage of any borrowing
hereunder from its obligation to do so in accordance with the terms hereof. Nothing contained
herein shall be deemed to obligate the Agent to make available to the Borrower the full amount of a
requested advance when the Agent has any notice (written or otherwise) that any of the Lenders will
not advance its Applicable Percentage thereof.
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(e) On the Settlement Date, the Agent and the Lenders shall each remit to the other, in
immediately available funds, all amounts necessary so as to ensure that, as of the Settlement Date,
the Lenders shall have their Applicable Percentage share of all outstanding Obligations.
(f) The Agent shall forward to each Lender, at the end of each fiscal month, a copy of the
account statement rendered by the Agent to the Borrower.
(g) The Agent shall, after receipt of any interest and fees earned under this Agreement,
promptly remit to the Lenders their Applicable Percentage of any (i) fees they are entitled to
receive, and (ii) interest computed at the rate and as provided for in this Agreement on all
outstanding amounts advanced by the Lenders on each Settlement Date, prior to adjustment, that are
subsequent to the last remittance by the Agent to the Lenders of such interest amounts.
2.5 Interest
(a) The Loans comprising each Canadian Prime Borrowing shall bear interest (computed on the
basis of the actual number of days elapsed over a year of 365 days or 366 days, as the case may be)
at a rate per annum equal to the Canadian Prime Rate plus the Applicable Margin from time to time
in effect. The Loans comprising each BA Borrowing shall bear interest (computed in advance on the
basis of the actual number of days in the relevant Contract Period over a year of 365 days or 366
days, as the case may be) at a rate per annum equal to the BA Rate plus the Applicable Margin from
time to time in effect. The Loans comprising each Base Rate Borrowing shall bear interest
(computed on the basis of the actual number of days elapsed over a year of 365 days at a rate per
annum equal to the Base Rate plus the Applicable Margin from time to time in effect. The Loans
comprising each LIBO Rate Borrowing shall bear interest (computed on the basis of the actual number
of days in the relevant Interest Period over a year of 360 days) at the LIBO Rate for the Interest
Period in effect for such LIBO Rate Borrowing plus the Applicable Margin. The Loans comprising
each BA Borrowing shall be subject to the Acceptance Fee which shall be payable as set out in
Section 2.11
(b) If a Default or an Event of Default has occurred and is continuing, all amounts
outstanding hereunder (including, without duplication, all Loans and all Letter of Credit Exposure
and F/X Exposure) shall bear interest, after as well as before judgment, at a rate per annum equal
to 2% plus the rate otherwise applicable to such Loan or, in the case of any amount not
constituting principal or interest on a Loan, at a rate equal to 2% plus the rate otherwise
applicable to, in the case of Canadian Dollar amounts, Canadian Prime Loans, or in the case of U.S.
Dollar amounts, Base Rate Loans.
(c) Accrued interest on each Loan shall be payable in arrears on the earlier of (i) each
applicable Interest Payment Date, and (ii) the date of termination of the Commitments. In
addition, in the event of any repayment or prepayment of any Loan, accrued interest on the
principal amount repaid or prepaid shall be payable on the date of such repayment or
prepayment.
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(d) All interest hereunder shall be payable for the actual number of days elapsed (including
the first day but excluding the last day). Any Loan that is repaid on the same day on which it is
made shall bear interest for one day. The applicable Canadian Prime Rate, Base Rate, LIBO Rate or
BA Rate shall be determined by the Agent, and such determination shall be conclusive absent
manifest error.
(e) For the purposes of the Interest Act (Canada) and disclosure thereunder, whenever any
interest or any fee to be paid hereunder or in connection herewith is to be calculated on the basis
of a 360-day or 365-day year, the yearly rate of interest to which the rate used in such
calculation is equivalent is the rate so used multiplied by the actual number of days in the
calendar year in which the same is to be ascertained and divided by 360 or 365, as applicable. The
rates of interest under this Agreement are nominal rates, and not effective rates or yields. The
principle of deemed reinvestment of interest does not apply to any interest calculation under this
Agreement.
(f) If any provision of this Agreement would oblige the Borrower to make any payment of
interest or other amount payable to any Lender in an amount or calculated at a rate which would be
prohibited by any Applicable Law or would result in a receipt by that Lender of “interest” at a
“criminal rate” (as such terms are construed under the Criminal Code (Canada)), then,
notwithstanding such provision, such amount or rate shall be deemed to have been adjusted with
retroactive effect to the maximum amount or rate of interest, as the case may be, as would not be
so prohibited by Applicable Law or so result in a receipt by that Lender of “interest” at a
“criminal rate”, such adjustment to be effected, to the extent necessary (but only to the extent
necessary), as follows:
| (i) | first, by reducing the amount or rate of interest required to be paid to the affected Lender under Section 2.5; and |
| (ii) | thereafter, by reducing any fees, commissions, costs, expenses, premiums and other amounts required to be paid to the affected Lender which would constitute interest for purposes of section 347 of the Criminal Code (Canada). |
2.6 Termination and Reduction of Commitments
(a) Unless previously terminated and subject to any earlier demand for payment upon the
occurrence of an Event of Default, the Commitments shall terminate on the Maturity Date.
(b) The Borrower may, upon five Business Days prior irrevocable written notice to the Agent,
permanently cancel the Commitments without penalty. The Agent shall promptly notify each Lender of
the receipt by the Agent of any such notice. Notwithstanding the termination of this Agreement,
until all Obligations are irrevocably and indefeasibly paid and performed in full, the Credit
Parties shall remain bound by the terms of this Agreement and under the Loan Documents and shall
not be relieved of any of their Obligations and the Agent
and Lenders shall retain all their rights and remedies hereunder and under the Loan Documents
(including, without limitation, in all then existing and after-arising Collateral). Pending a
final accounting, the Agent may withhold any balances in the Borrower’s loan account to cover all
of the Obligations, whether absolute or contingent, including cash reserves for any contingent
Obligations, including an amount equal to 105% of the face amount of any Letters of Credit
outstanding as of the effective date of termination of this Agreement.
- 39 -
(c) Unless the Commitments have been previously terminated, upon the occurrence of the
Maturity Date in respect of any Lender, the Commitment thereof shall be permanently reduced to an
amount equal to the amount of the Loans made by such Lender at such date and the Commitment shall
be permanently reduced by an amount equal to such reduction of such Commitment.
(d) Subject to the other terms and conditions of this Agreement and unless the Commitments
have been earlier terminated, the Commitments shall be available hereunder from the Effective Date
until the Maturity Date.
2.7 Repayment of Loans. The Borrower hereby unconditionally promises to pay to the Agent
for the account of each Lender the then unpaid principal amount of each Revolving Loan and all
other Obligations on the earlier of the Maturity Date and the date that the Commitment is
terminated pursuant to Section 2.6(b) or Section 7.1.
2.8 Evidence of Debt
(a) Each Lender shall maintain in accordance with its usual practice an account or accounts
evidencing the Indebtedness of the Borrower to such Lender resulting from each Borrowing made by
such Lender hereunder, including the amounts of principal and interest payable and paid to such
Lender from time to time hereunder.
(b) The Agent shall maintain accounts in which it shall record (i) the amount of each
Borrowing made hereunder, the Type thereof and, in the cases of BA Borrowings and LIBO Rate Loans,
the relevant Contract Period or Interest Period, applicable thereto, (ii) the amount of any
principal or interest due and payable or to become due and payable from the Borrower to each Lender
hereunder, and (iii) the amount of any sum received by the Agent hereunder for the account of the
Lenders and each Lender’s share thereof.
(c) The entries made in the accounts maintained pursuant to Sections 2.8(a) and (b) shall be
conclusive evidence (absent manifest error) of the existence and amounts of the obligations
recorded therein and shall be admissible in any action or proceeding arising therefrom;
provided that the failure of any Lender or the Agent to maintain such accounts or any error
therein shall not in any manner affect the obligation of the Borrower to repay the Borrowings in
accordance with the terms of this Agreement. In the event of a conflict between the records
maintained by the Agent and any Lender, the records maintained by the Agent shall govern.
- 40 -
2.9 Prepayments
(a) Mandatory Borrowing Base Prepayments. If at any time the aggregate Exposure of
all Lenders is in excess of (i) the Borrowing Base or (ii) the total Commitment, the Borrower shall
immediately pay to the Agent, for the account of the Lenders, the amount of such excess to be
applied (i) first, in satisfaction of all Reimbursement Obligations, if any, outstanding at such
time, (ii) second, as a prepayment of the Revolving Loans, and (iii) third, as Cover for any
remaining Bankers Acceptances, Letter of Credit Exposure and F/X Exposure in an amount of such
remaining excess.
(b) Application of Cover Amount. The amount of Cover required pursuant to Section
2.9(a)(iii) or following the occurrence and continuance of an Event of Default shall be paid by the
Borrower to the Agent and retained by the Agent in a collateral account maintained by the Agent at
its Payment Office and collaterally assigned to, or charged in favour of, the Agent as security
until such time as the applicable Letters of Credit and F/X Contracts shall have expired or matured
and Reimbursement Obligations, if any, with respect thereto shall have been fully satisfied;
provided that if any such Reimbursement Obligations are not satisfied when due hereunder, the Agent
may apply any or all amounts in such collateral account in satisfaction of any or all such
Reimbursement Obligations.
(c) Currency Fluctuations. If, at any time, the Canadian $
Equivalent of the Loans
made by any Lender to the Borrower under any Credit exceeds the Commitment of such Lender under
such Credit (any such excess being referred to in this Section as an “Excess Amount”), then the
Borrower will forthwith repay to the Agent, for the account of each applicable Lender, an amount
equal to the Excess Amount with respect to such Lender. The Agent shall request repayment of any
Excess Amount forthwith upon request therefor by any Lender, but the Agent is not otherwise
required to monitor Excess Amount levels or to request repayment thereof.
(d) Voluntary Prepayment. The Borrower may, upon delivery of a Repayment Notice to
the Agent (delivered in accordance with the notice periods applicable to delivery of a Borrowing
Request under Section 2.3(a)), prepay all or any part of a Canadian Prime Borrowing, or Base Rate
Borrowing, BA Borrowing or LIBO Rate Borrowing (provided that any such prepayment of part of a BA
Borrowing or a LIBO Rate Borrowing, and any BA Borrowing or LIBO Rate Borrowing not repaid by such
partial payment, shall be in amounts contemplated by Section 2.2(c)), provided that a BA Borrowing
or LIBO Rate Borrowing or part thereof may only be repaid on the last day of the Contract Period or
Interest Period, as the case may be. Each Repayment Notice delivered hereunder shall be
irrevocable. No prepayment under this Section 2.9(d) shall permanently reduce or terminate any of
the Commitments.
(e) Notice by Agent. Upon receipt of any prepayment or Repayment Notice pursuant to
this Section 2.9, the Agent shall promptly notify each applicable Lender of the contents thereof
and of such Lender’s Applicable Percentage of such prepayment. Each Repayment Notice provided by
the Borrower in respect of any permanent repayment or prepayment hereunder shall be in the form of
Exhibit J and shall be irrevocable at such time as the Agent or any Lender has commenced taking any
action pursuant to any such prepayment notice.
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2.10 Fees
(a) The Borrower shall pay to the Agent for the account of and distribution to each Lender
rateably in accordance with each such Lender’s Applicable Percentage, in Canadian Dollars, an
unused line fee (the “Unused Line Fee”) for the period commencing on the Effective Date to and
including the Maturity Date (or such earlier date as the Commitments shall have been terminated
entirely) computed at a rate of 0.25% per annum on the average daily excess amount of the aggregate
Commitments over the aggregate Exposure (but excluding, solely for the purpose of this Section
2.10, any F/X Exposure). The Unused Line Fees on the Commitments shall be calculated monthly in
arrears on the last Business Day of each calendar month (and on the date on which the Commitments
terminate) and each such calculated amount shall be payable on the first Business Day of the
immediately following calendar month (or on the date on which the Commitments terminate, as the
case may be). All Unused Line Fees shall be computed on the basis of a year of 365 or 366 days, as
the case may be, and shall be payable for the actual number of days elapsed (including the first
day but excluding the last day).
(b) Prior to a CIBC ABL Reorganization Date, the Borrower agrees to pay to the Agent for the
account of each Lender rateably in accordance with each Lender’s Applicable Percentage, a guarantee
fee (a “Letter of Credit Guarantee Fee”) with respect to the provision of Letter of Credit
Guarantees. After a CIBC ABL Reorganization Date, the Borrower agrees to pay to the Agent for the
account of each Lender rateably in accordance with each Lender’s Applicable Percentage, a fee (a
“Letter of Credit Fee”) with respect to the provision of Letter of Credit. Each Letter of Credit
Guarantee Fee and each Letter of Credit Fee shall accrue and be payable at the rate of 1.75% per
annum, in the case of documentary Letters of Credit or documentary Letters of Guarantee, or 2.50%
per annum, in the case of stand-by Letters of Credit and stand-by Letters of Guarantee, on the
average daily amount of the Letter of Credit Exposure during the period from and including the
Effective Date (or the date on which any Letter of Credit Exposure first exists to but excluding
the latter of: (i) the date of termination of the Commitments and (ii) the date on which there
ceases to be any Letter of Credit Exposure. All such Letter of Credit Guarantee Fees and Letter of
Credit Fee shall be calculated monthly in arrears on the last Business Day of each calendar month
(and on the date on which the Commitments terminate) and each such calculated amount shall be
payable on the first Business Day of the immediately following calendar month (or on the date on
which the Commitments terminate, as the case may be); provided that all Letter of Credit Guarantee
Fees and Letter of Credit Fees, together with all Standard Letter of Credit Fees (as defined
below), accruing after the date on which the Commitments terminate shall be payable on demand. All
Letter of Credit Guarantee Fees and Letter of Credit Fees payable pursuant to this Section 2.10(b)
shall be computed on the basis of a year of 365 or 366 days, as the case may be, and shall be
payable for the actual number of days elapsed (including the first day but excluding the last day).
The Borrower also agrees to pay to the Agent, for the account of the Issuing Bank, the Issuing
Bank’s standard fees (the “Standard Letter of Credit Fees”) with respect to the issuing,
administration, handling, amendment, renewal or extension of any Letter of Credit or processing of
drawings thereunder. Such standard fees shall be payable within 10 days after demand by the Agent
or the Issuing Bank.
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(c) The Borrower agrees to pay to the Agent, for its own account, on the Effective Date a loan
facility fee equal to 0.50% of the amount of the aggregate Commitments.
(d) The Borrower agrees to pay to the Agent, for its own account, on the Effective Date and on
the first Business Day of each calendar month thereafter a collateral management fee equal to
$1,500 per month, which the Borrower acknowledges and agrees shall be fully earned when paid.
(e) The Borrower agrees to pay to the Agent, for its own account, the Agent’s standard
charges, fees, costs and expenses for its field examinations, verifications and audits in an amount
equal to $1,200 per person per day plus such field examiner’s and auditor’s out-of-pocket expenses.
(f) The Borrower agrees to pay to the Agent, for its own account, fees payable in the amounts
and at the times separately agreed upon in writing between the Borrower and the Agent, if
applicable.
(g) All fees payable hereunder shall be paid on the dates due, in immediately available funds,
to the Agent, for its own account or for distribution to the Lenders or CIBC, as the case may be.
Fees paid shall not be refundable except in the case of manifest error in the calculation of any
fee payment.
2.11 BA Borrowings
(a) Subject to the terms and conditions of this Agreement, the Borrower may request a
Borrowing by presenting drafts for acceptance and purchase as Bankers Acceptances by the Lenders.
(b) No Contract Period with respect to a BA Borrowing shall extend beyond the Maturity Date.
The Borrower shall not be entitled to obtain or roll over any BA Borrowings at any time that a
Default or an Event of Default has occurred and is continuing.
(c) To facilitate availment of BA Borrowings, the Borrower hereby appoints each Lender as its
attorney to sign and endorse on its behalf (in accordance with a Borrowing Request relating to a BA
Borrowing), in handwriting or by facsimile or mechanical signature as and when deemed necessary by
such Lender, blank forms of Bankers Acceptances in the form requested by such Lender. In this
respect, it is each Lender’s responsibility to maintain an adequate supply of blank forms of
Bankers Acceptances for acceptance under this Agreement. The Borrower recognizes and agrees that
all Bankers Acceptances signed and/or endorsed by a Lender on behalf of the Borrower shall bind the
Borrower as fully and effectually as if signed in the handwriting of and duly issued by the proper
signing officers of the Borrower. Each Lender is hereby authorized (in accordance with a Borrowing
Request relating to a BA Borrowing) to issue such Bankers Acceptances endorsed in blank in such
face amounts as may be determined by such Lender; provided that the aggregate amount
thereof is equal to the aggregate amount of Bankers Acceptances required to be accepted and
purchased by such Lender. No Lender shall be liable for any damage, loss or other claim arising by
reason of any loss or improper use of any such instrument except the gross negligence or wilful
misconduct of the Lender or its officers,
employees, agents or representatives. Each Lender shall maintain a record with respect to
Bankers Acceptances (i) received by it in blank hereunder, (ii) voided by it for any reason, (iii)
accepted and purchased by it hereunder, and (iv) cancelled at their respective maturities. On
request by or on behalf of the Borrower, a Lender shall cancel all forms of Bankers Acceptances
which have been pre-signed or pre-endorsed on behalf of the Borrower and which are held by such
Lender and are not required to be issued in accordance with the Borrower’s irrevocable notice.
Alternatively, the Borrower agrees that, at the request of the Agent, the Borrower shall deliver to
the Agent a “depository note” which complies with the requirements of the Depository Bills and
Notes Act (Canada), and consents to the deposit of any such depository note in the book-based debt
clearance system maintained by the Canadian Depository for Securities.
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(d) Drafts of the Borrower to be accepted as Bankers Acceptances hereunder shall be signed as
set out in this Section 2.11. Notwithstanding that any person whose signature appears on any
Bankers Acceptances may no longer be an authorized signatory for any Lender or the Borrower at the
date of issuance of a Bankers Acceptances, such signature shall nevertheless be valid and
sufficient for all purposes as if such authority had remained in force at the time of such issuance
and any such Bankers Acceptances so signed shall be binding on the Borrower.
(e) Promptly following receipt of a Borrowing Request specifying a Borrowing by way of Bankers
Acceptances, the Agent shall so advise the Lenders and shall advise each Lender of the aggregate
face amount of the Bankers Acceptances to be accepted by it and the applicable Contract Period
(which shall be identical for all Lenders). The aggregate face amount of the Bankers Acceptances
to be accepted by the Lenders shall be in a minimum aggregate amount of Cdn.$500,000 and shall be a
whole multiple of Cdn.$250,000, and such face amount shall be in the Lenders’ pro rata portions of
such Borrowing, provided that the Agent may in its sole discretion increase or reduce any
Lender’s portion of such BA Borrowing to the nearest Cdn.$100,000 without reducing the overall
Commitments.
(f) Upon acceptance of a Bankers Acceptance by a Lender, such Lender shall purchase, or
arrange for the purchase of, each Bankers Acceptance from the Borrower at the Discount Rate for
such Lender applicable to such Bankers Acceptance accepted by it and provide to the Agent the
Discount Proceeds therefor for the account of the Borrower. The Acceptance Fee payable by the
Borrower to a Lender under Section 2.5 in respect of each Bankers Acceptance accepted by such
Lender shall be set off against the Discount Proceeds payable by such Lender under this Section
2.11.
(g) Each Lender may at any time and from time to time hold, sell, rediscount or otherwise
dispose of any or all Bankers Acceptances accepted and purchased by it.
(h) If a Lender is not a chartered bank under the Bank Act (Canada) or if a Lender notifies
the Agent in writing that it is otherwise unable to accept Bankers Acceptances, such Lender will,
instead of accepting and purchasing Bankers Acceptances, make a Loan (a “BA Equivalent
Loan”) to the Borrower in the amount and for the same term as the draft which such Lender would
otherwise have been required to accept and purchase hereunder. Each such Lender will provide to
the Agent the Discount Proceeds of such BA Equivalent Loan for the account of the Borrower. Each
such BA Equivalent Loan will bear interest at the same rate which would result if such Lender had
accepted (and been paid an Acceptance Fee) and
purchased (on a discounted basis) a Bankers Acceptance for the relevant Contract Period (it
being the intention of the parties that each such BA Equivalent Loan shall have the same economic
consequences for the Lenders and the Borrower as the Bankers Acceptance which such BA Equivalent
Loan replaces). All such interest shall be paid in advance on the date such BA Equivalent Loan is
made, and will be deducted from the principal amount of such BA Equivalent Loan in the same manner
in which the Discount Proceeds of a Bankers Acceptance would be deducted from the face amount of
the Bankers Acceptance. Subject to repayment requirements, on the last day of the relevant
Contract Period for such BA Equivalent Loan, the Borrower shall be entitled to convert each such BA
Equivalent Loan into another type of Loan, or to roll over each such BA Equivalent Loan into
another BA Equivalent Loan, all in accordance with the applicable provisions of this Agreement.
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(i) With respect to each BA Borrowing, at or before 10:00 a.m. two Business Days before the
last day of the Contract Period of such BA Borrowing, the Borrower shall notify the Agent by
irrevocable telephone notice, followed by a notice of rollover on the same day, if the Borrower
intends to issue Bankers Acceptances on such last day of the Contract Period to provide for the
payment of such maturing BA Borrowing. If the Borrower fails to notify the Agent of its intention
to issue Banker’s Acceptances on such last day of the Contract Period, the Borrower shall provide
payment to the Agent on behalf of the Lenders of an amount equal to the aggregate face amount of
such BA Borrowing on the last day of the Contract Period of thereof. If the Borrower fails to make
such payment, such maturing Bankers Acceptances shall be deemed to have been converted on the last
day of the Contract Period into a Canadian Prime Loan in an amount equal to the face amount of such
Bankers Acceptances.
(j) The Borrower waives presentment for payment and any other defence to payment of any
amounts due to a Lender in respect of a Bankers Acceptances accepted and purchased by it pursuant
to this Agreement which might exist solely by reason of such Bankers Acceptances being held, at the
maturity thereof, by such Lender in its own right, and the Borrower agrees not to claim any days of
grace if such Lender, as holder, sues the Borrower on the Bankers Acceptances for payment of the
amount payable by the Borrower thereunder. On the last day of the Contract Period of a Bankers
Acceptances, or such earlier date as may be required or permitted pursuant to the provisions of
this Agreement, the Borrower shall pay the Lender that has accepted and purchased such Bankers
Acceptances the full face amount of such Bankers Acceptances and, after such payment, the Borrower
shall have no further liability in respect of such Bankers Acceptances and such Lender shall be
entitled to all benefits of, and be responsible for all payments due to third parties under, such
Bankers Acceptances.
(k) If a Lender grants a participation in a portion of its rights under this Agreement to a
participant under Section 9.4(e), then, in respect of any BA Borrowing, a portion thereof may, at
the option of such Lender, be by way of Bankers Acceptance accepted by such Participant. In such
event, the Borrower shall upon request of the Agent or the Lender granting the participation
execute and deliver a form of Bankers Acceptance undertaking in favour of such Participant for
delivery to such participant.
(l) Except as required by any Lender upon the occurrence of an Event of Default, no BA
Borrowing may be repaid by the Borrower prior to the expiry date of the Contract Period applicable
to such BA Borrowing; provided, however, that the Borrower may defease any BA
Borrowing by depositing with the Agent an amount that is sufficient to repay such BA Borrowing
on the expiry date of the Contract Period applicable to such BA Borrowing.
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2.12 Increased Costs; Illegality; Alternate Rate of Interest
(a) If any Change in Law shall:
| (i) | impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender; or |
| (ii) | impose on any Lender or the Issuing Bank or the London interbank market any other condition affecting this Agreement (including the imposition on any Lender of, or any change to, any Indemnified Tax or other charge with respect to its LIBO Rate Loans or any Letter of Credit or participation therein, or its obligation to make LIBO Rate Loans or any Letter of Credit); |
and the result of any of the foregoing shall be to increase the cost to such Lender of making or
maintaining any Loan (or of maintaining its obligation to make any such Loan) or to increase the
cost to such Lender of participating in, issuing or maintaining any Letter of Credit or any Loan or
to reduce the amount of any sum received or receivable by such Lender hereunder (whether of
principal, interest or otherwise), then the Borrower will pay to such Lender, such additional
amount or amounts as will compensate such Lender, for such additional costs incurred or reduction
suffered.
(b) If any Lender determines that any Change in Law regarding capital requirements has or
would have the effect of reducing the rate of return on such Lender’s capital or on the capital of
such Lender’s holding company, if any, as a consequence of this Agreement or the Loans made by, or
participations in Letters of Credit held by such Lender, or the Letters of Credit issued by the
Issuing Bank, to a level below that which such Lender or such Lender’s holding company could have
achieved but for such Change in Law (taking into consideration such Lender’s policies and the
policies of such Lender’s holding company with respect to capital adequacy) and such Lender’s
desired return on capital, then from time to time the Borrower will pay to such Lender, such
additional amount or amounts as will compensate such Lender or such Lender’s holding company for
any such reduction suffered.
(c) A certificate of a Lender setting forth the amount or amounts necessary to compensate such
Lender as specified in Sections 2.12(a) or (b), together with a brief description of the Change of
Law, shall be delivered to the Borrower, and shall be conclusive absent manifest error. In
preparing any such certificate, a Lender shall be entitled to use averages and to make reasonable
estimates, and shall not be required to “match contracts” or to isolate particular transactions.
The Borrower shall pay such Lender the amount shown as due on any such certificate within 10 days
after receipt thereof.
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(d) Failure or delay on the part of any Lender to demand compensation pursuant to this Section
2.12 shall not constitute a waiver of such Lender’s right to demand such compensation.
(e) In the event that any Lender shall have determined (which determination shall be
reasonably exercised and shall, absent manifest error, be final, conclusive and binding upon all
parties) at any time that the current or reasonably expected foreign currency markets are unusually
unstable or that the making or continuance of any Loan denominated in a currency other than
Canadian Dollars has become unlawful or materially restricted as a result of compliance by such
Lender in good faith with any Applicable Law, or by any applicable guideline or order (whether or
not having the force of law and whether or not failure to comply therewith would be unlawful),
then, in any such event, such Lender shall give prompt notice (by telephone and confirmed in
writing) to the Borrower and to the Agent of such determination (which notice the Agent shall
promptly transmit to the other Lenders). Upon the giving of the notice to the Borrower referred to
in this Section 2.12(e), the Borrower’s right to request (by continuation, conversion or
otherwise), and such Lender’s obligation to make, Loans denominated in a currency other than
Canadian Dollars shall be immediately suspended, and thereafter any requested Borrowing of Loans
denominated in a currency other than Canadian Dollars shall, as to such Lender only, be deemed to
be a request for a Canadian Prime Loan, and if the affected Loan or Loans are then outstanding, the
Borrower shall immediately, or if permitted by Applicable Law, no later than the date permitted
thereby, upon at least one Business Day prior written notice to the Agent and the affected Lender,
convert each such Loan denominated in a currency other than Canadian Dollars into a Canadian Prime
Loan, provided that if more than one Lender is affected at any time, then all affected
Lenders must be treated the same pursuant to this Section 2.12(e).
(f) If prior to the commencement of any Interest Period for a LIBO Rate Borrowing:
| (i) | the Agent determines (which determination shall be conclusive absent manifest error) that adequate and reasonable means do not exist for ascertaining the LIBO Rate for such Interest Period; or |
| (ii) | the Agent is advised by the Required Lenders that the LIBO Rate for such Interest Period will not adequately and fairly reflect the cost to such Lenders of making or maintaining their Loans included in such Borrowing for such Interest Period; |
then the Agent shall give notice thereof to the Borrower and the Lenders by
telephone or telecopy as promptly as practicable thereafter and, until the Agent
notifies the Borrower and the Lenders that the circumstances giving rise to such
notice no longer exist, (i) any Interest Election Request that requests the
conversion of any Borrowing to, or continuation of any Borrowing as, a LIBO Rate
Borrowing shall be ineffective, and (ii) if any Borrowing Request requests a LIBO
Rate Borrowing, such Borrowing shall be made as a Base Rate Borrowing; provided
that (A) if the circumstances giving rise to such notice do not affect all the
Lenders, then requests by the Borrower for LIBO Rate Borrowings may be made to
Lenders that are not affected thereby, and (B) if the circumstances giving
rise to such notice affect only one Type of Borrowings, then the other Type of
Borrowings shall be permitted.
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2.13 Break Funding Payments. In the event of (a) the failure by the Borrower to borrow,
convert, continue or prepay any Loan on the date specified in any notice delivered by the Borrower
pursuant hereto, or (b) the payment or conversion of any principal of any BA Borrowing or LIBO Rate
Loan other than on the last day of a Contract Period or, as applicable, Interest Period applicable
thereto (including as a result of an Event of Default), or (c) the prepayment or conversion of any
BA Borrowing or LIBO Rate Loan other than on the last day of the Interest Period applicable
thereto, then, in any such event, the Borrower shall compensate each Lender for the loss, cost and
expense attributable to such event. A certificate of any Lender setting forth any amount or
amounts that such Lender is entitled to receive pursuant to this Section 2.13 shall be delivered to
the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender the
amount shown as due on any such certificate within 10 days after receipt thereof.
2.14 Taxes
(a) Any and all payments by or on account of any obligation of the Borrower hereunder shall be
made free and clear of and without deduction or withholding for any Indemnified Taxes;
provided that if the Borrower shall be required to deduct or withhold any Indemnified Taxes
from such payments, then (i) the sum payable shall be increased as necessary so that, after making
all required deductions or withholdings (including deductions or withholdings applicable to
additional sums payable under this Section 2.14), the Agent, or Lender (as the case may be)
receives an amount equal to the sum it would have received had no such deduction or withholding
been made, (ii) the Borrower shall make such deduction or withholding, and (iii) the Borrower shall
pay to the relevant Governmental Authority in accordance with Applicable Law the full amount
deducted or withheld.
(b) In addition to the payments by the Borrower required by 2.14(a), the Borrower shall pay
any and all present or future stamp or documentary Taxes or any other excise or property Taxes,
charges or similar levies arising from any payment made hereunder or from the execution, delivery
or enforcement of, or otherwise with respect to, this Agreement to the relevant Governmental
Authority in accordance with Applicable Law.
(c) The Borrower shall indemnify the Agent, and each Lender, within 10 days after written
demand therefor, for the full amount of any Indemnified Taxes paid by the Agent, such Lender, as
the case may be, on or with respect to any payment by or on account of any obligation of the
Borrower hereunder (including Indemnified Taxes imposed or asserted on or attributable to amounts
payable under this Section 2.14) and any penalties, interest and reasonable expenses arising
therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally
imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such
payment or liability delivered to the Borrower by a Lender, or by the Agent on its own behalf or on
behalf of a Lender, shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified Taxes by the Borrower to a
Governmental Authority, the Borrower shall deliver to the Agent the original or a certified
copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the
return reporting such payment or other evidence of such payment reasonably satisfactory to the
Agent.
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(e) If the Agent or a Lender determines, in its sole discretion, that it has received a refund
of any Taxes as to which it has been indemnified by the Borrower or with respect to which the
Borrower has paid additional amounts pursuant to this Section 2.14 and, in the Agent’s or such
Lender’s opinion, such refund amount is both reasonably identifiable and quantifiable by it without
involving it in an unacceptable administrative burden, it shall pay over such refund amount to the
Borrower (but only to the extent of indemnity payments made, or additional amounts paid, by the
Borrower under this Section 2.14 with respect to the Taxes giving rise to such refund, and only to
the extent that the Agent or Lender, as applicable, is satisfied that it may do so without
prejudice to its right, as against the relevant Governmental Authority, to retain such refund), net
of all out-of-pocket expenses of the Agent or such Lender and without interest (other than any
interest paid by the relevant Governmental Authority with respect to such refund); provided, that
the Borrower, upon the request of the Agent or such Lender, agrees to repay the amount paid over to
the Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental
Authority) to the Agent or such Lender if the Agent or such Lender is required to repay such refund
to such Governmental Authority. Nothing herein contained shall (i) interfere with the right of the
Agent or any Lender to arrange its affairs in whatever manner it thinks fit and, in particular, no
Lender shall be under any obligation to claim relief for tax purposes on its corporate profits or
otherwise, or to claim such relief in priority to any other claims, reliefs, credits or deductions
available to it, or (ii) require the Agent or any Lender to make available its tax returns (or any
other information relating to its Taxes which it deems confidential) to the Borrower or any other
Person.
2.15 Payments Generally; Pro Rata Treatment; Sharing of Set-offs
(a) The Borrower shall make each payment required to be made by it hereunder (whether of
principal, interest, fees or amounts payable in respect of Reimbursement Obligations, amounts
payable under any of Sections 2.12, 2.13 or 2.14, or amounts otherwise payable hereunder) prior to
12:00 noon, Toronto time, on the date when due, in immediately available funds, without set-off or
counterclaim. Any amounts received after such time on any date may, in the discretion of the
Agent, be deemed to have been received on the next succeeding Business Day for purposes of
calculating interest thereon. All such payments shall be made to the Agent at the Payment Office,
except that payments pursuant to any indemnities contained herein shall be made directly to the
Persons entitled thereto. The Agent shall distribute any such payments received by it for the
account of any other Person to the appropriate recipient promptly following receipt thereof. If
any payment hereunder shall be due on a day that is not a Business Day, the date for payment shall
be extended to the next succeeding Business Day, and, in the case of any payment accruing interest,
interest thereon shall be payable for the period of such extension, provided that, in the
case of any payment with respect to a LIBO Rate Loan, the date for payment shall be advanced to the
next preceding Business Day if the next succeeding Business Day is in a subsequent calendar month.
All payments under this Section 2.15 in respect of LIBO Rate Loans and Base Rate Loans shall be
made in U.S. Dollars. All other payments under this Section 2.15 shall be made in Canadian
Dollars. The Borrower hereby authorizes the
Agent to debit the Borrower’s loan account to effect any payment due to the Lenders or the
Agent pursuant to this Agreement. Any resulting overdraft in such account shall be payable by the
Borrower to the Agent in same day funds.
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(b) If at any time insufficient funds are received by and available to the Agent to pay fully
all amounts of principal, interest, fees, amounts payable in respect of Reimbursement Obligations,
amounts payable under any of Sections 2.12, 2.13 or 2.14 and other amounts payable hereunder, any
available funds shall be applied (i) first, to pay any fees, indemnities or expense reimbursements
then due to the Agent from the Borrower, (ii) second, to pay any fees or expense reimbursements
then due to the Lenders from the Borrower, (iii) third, to pay interest due in respect of all
Revolving Loans, (iv) fourth, to pay or prepay principal of the Revolving Loans and unpaid
Reimbursement Obligations and (v) fifth, to the payment of any other Obligation due to the Agent or
any Lender by the Borrower, including amounts payable under any of Sections 2.12, 2.13 or 2.14 and
other amounts otherwise payable hereunder.
(c) If any Lender shall, by exercising any right of set-off or counterclaim or otherwise,
obtain payment in respect of any principal of or interest on or fees in respect of any of its
Revolving Loans or its share of Reimbursement Obligations resulting in such Lender receiving
payment of a greater proportion of the aggregate amount of any principal of or interest on or fees
in respect of any of its Revolving Loans or participations in Reimbursement Obligations than the
proportion to which it is entitled, then the Lender receiving such greater proportion shall
purchase (for cash at face value) participations in the Revolving Loans or participations in
Reimbursement Obligations owed to other Lenders (as the case may be) to the extent necessary so
that the benefit of all such payments shall be shared by the Lenders rateably taking into account
each of the Applicable Percentages in respect of each Lender; provided that (i) if any such
participations are purchased and all or any portion of the payment giving rise thereto is
recovered, such participations shall be rescinded and the purchase price restored to the extent of
such recovery, without interest, and (ii) this Section 2.15(c) shall not apply to any payment made
by the Borrower pursuant to and in accordance with the express terms of this Agreement or any
payment obtained by a Lender as consideration for the assignment of or sale of a participation in
any of its Loans or participations in Reimbursement Obligations to any assignee or participant,
other than to the Borrower or other Credit Party or any Affiliate thereof (as to which the
provisions of this paragraph shall apply). The Borrower consents to the foregoing and agrees, to
the extent it may effectively do so under Applicable Law, that any Lender acquiring a participation
pursuant to the foregoing arrangements may exercise against the Borrower rights of set-off and
counterclaim with respect to such participation as fully as if such Lender were a direct creditor
of the Borrower in the amount of such participation.
(d) Unless the Agent shall have received written notice from the Borrower prior to the date on
which any payment is due to the Agent for the account of the Lenders hereunder that the Borrower
will not make such payment, the Agent may assume that the Borrower has made such payment on such
date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders,
the amount due. In such event, if the Borrower has not in fact made such payment, then each of the
Lenders, severally agrees to repay to the Agent forthwith on demand the amount so distributed to
such Lender with interest thereon, for each day from and including the date such amount is
distributed to it to but excluding the date of payment to the
Agent, at the applicable rate for Canadian Prime Loans (if such amount is denominated in
Canadian Dollars) or the applicable rate for Base Rate Loans (if such amount is denominated in U.S.
Dollars).
- 50 -
(e) If any Lender shall fail to make any payment required to be made by it pursuant to Section
2.15(d), then the Agent may, in its discretion (notwithstanding any contrary provision hereof),
apply any amounts thereafter received by the Agent for the account of such Lender to satisfy such
Lender’s obligations under such Section 2.15(d) until all such unsatisfied obligations are fully
paid.
(f) Nothing in this Agreement shall be deemed to obligate any Lender to obtain the funds for
any Loan in any particular place or manner or to constitute a representation by any Lender that it
has obtained or will obtain the funds for any Loan in any particular place or manner.
2.16 Currency Indemnity. If, for the purposes of obtaining judgment in any court in any
jurisdiction with respect to this Agreement or any other Loan Document, it becomes necessary to
convert into a particular currency (the “Judgment Currency”) any amount due under this Agreement or
under any other Loan Document in any currency other than the Judgment Currency (the “Currency
Due”), then conversion shall be made at the rate of exchange prevailing on the Business Day before
the day on which judgment is given. For this purpose “rate of exchange” means the rate at which
the Agent is able, on the relevant date, to purchase the Currency Due with the Judgment Currency in
accordance with its normal practice at its head office in Xxxxxxx, Xxxxxxx. In the event that
there is a change in the rate of exchange prevailing between the Business Day before the day on
which the judgment is given and the date of receipt by the Agent of the amount due, the Borrower
will, on the date of receipt by the Agent, pay such additional amounts, if any, or be entitled to
receive reimbursement of such amount, if any, as may be necessary to ensure that the amount
received by the Agent on such date is the amount in the Judgment Currency which when converted at
the rate of exchange prevailing on the date of receipt by the Agent is the amount then due under
this Agreement or such other Loan Document in the Currency Due. If the amount of the Currency Due
which the Agent is so able to purchase is less than the amount of the Currency Due originally due
to it, the Borrower shall indemnify and save the Agent and the Lenders harmless from and against
all loss or damage arising as a result of such deficiency. This indemnity shall constitute an
obligation separate and independent from the other obligations contained in this Agreement and the
other Loan Documents, shall give rise to a separate and independent cause of action, shall apply
irrespective of any indulgence granted by the Agent from time to time and shall continue in full
force and effect notwithstanding any judgment or order for a liquidated sum in respect of an amount
due under this Agreement or any other Loan Document or under any judgment or order.
2.17 Collection of Accounts
(a) Each Credit Party shall, and shall cause each other Credit Party to, at its expense,
enforce, collect and receive all amounts owing on its Accounts in the ordinary course of its
business and any proceeds it so receives shall be subject to the terms hereof. Any proceeds
received by a Credit Party in respect of Accounts, and any cheques, cash, credit card sales and
receipts, notes or other instruments or property received by a Credit Party with respect to any
Collateral, shall be held by such Credit Party in trust or as mandatary for the Agent,
separate from such Credit Party’s own property and funds, and promptly turned over to the Agent
with proper assignments or endorsements by deposit to the Blocked Accounts.
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(b) Each Credit Party shall, and shall cause each other Credit Party to: (i) irrevocably
authorize and direct any bank which maintains any Credit Party’s initial receipt of cash, cheques
and other items to promptly wire transfer all available funds to a Blocked Account; and (ii) advise
all such banks of the Agent’s security interest in such funds. The Borrower shall, and shall cause
each other Credit Party to, provide the Agent with prior written notice of any and all deposit
accounts opened or to be opened subsequent to the Effective Date. All amounts received by the Agent
in payment of Accounts will be credited to the Blocked Account when the Agent is advised by its
bank of its receipt of “collected funds” at the Agent’s bank account in Toronto, Ontario on the
Business Day of such advise if advised no later than 12:00 noon, Toronto time, or on the next
succeeding Business Day if so advised after 12:00 noon, Toronto time. No cheques, drafts or other
instrument received by the Agent shall constitute final payment to the Agent unless and until such
instruments have actually been collected.
(c) After any Default or Event of Default that is continuing and upon the request of the
Agent, the Borrower shall, and shall cause each Credit Party to: (i) indicate on all of its
invoices that funds should be delivered to and deposited in a lock box or a Blocked Account, as
applicable; and (ii) direct all of its account debtors to deposit any and all proceeds of
Collateral into the lock boxes or the Blocked Accounts, as applicable.
(d) Each Credit Party shall, and shall cause each other Credit Party to, establish and
maintain, in its own respective name and at its expense, deposit accounts and lock boxes with such
banks as are acceptable to the Agent (the “Blocked Accounts”) into which the Borrower shall
promptly cause to be deposited: (i) all proceeds of Collateral received by any Credit Party,
including all amounts payable to any Credit Party from credit card issuers and credit card
processors, and (ii) all amounts on deposit in deposit accounts used by any Credit Party at each of
its locations, all as further provided in Section 2.17(b). The banks at which the Blocked Accounts
are established and the applicable Credit Parties shall enter into three-party agreements, in form
and substance satisfactory to the Agent (the “Blocked Account Agreements”), providing that, among
other things, all cash, cheques and items received or deposited in the Blocked Accounts are subject
to Liens in favour of the Agent, that the depository bank has no Lien upon, or right of set off
against, the Blocked Accounts and any cash, cheques, items, wires or other funds from time to time
on deposit therein, except as otherwise provided in the Blocked Account Agreements, and that on a
daily basis the depository bank will wire, or otherwise transfer, in immediately available funds,
all funds received or deposited into the Blocked Accounts to such bank account as the Agent may
from time to time designate for such purpose. The Borrower hereby confirms and agrees that all
amounts deposited in such Blocked Accounts and any other funds received and collected by the Agent,
whether as proceeds of Inventory or other Collateral or otherwise, shall be subject to the Liens in
favour of the Agent. Concurrently with the establishment by any Credit Party after the date hereof
of any bank account, such Credit Party shall provide the Agent with an amended Schedule 3.27
reflecting such new account.
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(e) The parties hereto hereby acknowledge, confirm and agree that the implementation of the
cash management arrangements is a contractual right provided to the Agent and the Lenders hereunder
in order for the Agent and the Lenders to manage and monitor their collateral position and not a
proceeding for enforcement or recovery of a claim, or pursuant to, or an enforcement of, any
security or remedies whatsoever, that the cash management arrangements contemplated herein are
critical to the structure of the lending arrangements contemplated herein, that the Lenders are
relying on the Borrower’s acknowledgement, confirmation and agreement with respect to such cash
management arrangements in making accommodations of credit available to the Borrower and in
particular that any accommodations of credit are being provided by the Lenders to the Borrower
strictly on the basis of a borrowing base calculation to fully support and collateralize any such
accommodations of credit hereunder.
(f) The parties hereto hereby acknowledge, confirm and agree that the Blocked Accounts will
not be activated unless the Borrower fails to maintain Excess Availability above $1,000,000 at any
time or a Default has occurred which has not been waived.
2.18 Letters of Credit Prior to a CIBC ABL Reorganization Date, in order to assist the
Borrower in establishing Letters of Credit with the Issuing Bank, the Borrower has requested the
Agent and the Agent has agreed to execute a Letter of Credit Guarantee subject to the following
terms and conditions:
(a) Within the limits of the Commitments and the Borrowing Base, and the other limitations
contained in this Agreement, the Agent shall assist the Borrower in obtaining Letters of Credit,
denominated in Canadian Dollars or U.S. Dollars, in an amount not to exceed the outstanding amount
of the Letter of Credit Sub-Line. The Agent’s assistance for amounts in excess of the limitation
set forth herein shall at all times and in all respects be in the Agent’s sole discretion. It is
understood that the term, form and purpose of each Letter of Credit and all documentation in
connection therewith, and any amendments, modifications or extensions thereof, must be mutually
acceptable to the Agent, the Issuing Bank and the Borrower. Any and all outstanding Letter of
Credit Guarantees shall be reserved dollar for dollar from the Borrowing Base as an Availability
Reserve. Upon the expiry of a Letter of Credit Guarantee, amounts reserved as an Availability
Reserve in respect of such Letter of Credit Guarantee, as the case may be, shall no longer be
reserved from the Borrowing Base as an Availability Reserve.
(b) The Agent shall have the right, without notice to the Borrower, to charge the Borrower’s
loan account with the amount of any and all indebtedness, liability or obligation of any kind
incurred by the Agent under the Letter of Credit Guarantees at the earlier of (a) payment by the
Agent under the Letter of Credit Guarantee; or (b) the occurrence and continuance of an Event of
Default, unless the Borrower has provided Cover to the Agent in an amount equal to the face amount
of such Letter of Credit Guarantees. Any amount so charged to the Borrower’s loan account shall be
deemed a Canadian Prime Rate Loan or a Base Rate Loan hereunder, depending on the currency of the
Borrower’s payment obligation thereunder, and shall incur interest at the rate provided in Section
2.5.
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(c) The Borrower unconditionally indemnifies the Agent and holds the Agent harmless from any
and all loss, claim or liability incurred by the Agent arising from any transactions or occurrences
relating to Letters of Credit established or opened for the Borrower’s
account, the collateral relating thereto and any drafts or acceptances thereunder, and all
Obligations thereunder, including any such loss or claim due to any errors, omissions, negligence,
misconduct or action taken by any Issuing Bank, other than for any such loss, claim or liability
arising out of the gross negligence or willful misconduct by the Agent under the Letter of Credit
Guarantee. This indemnity shall survive termination of this Agreement. The Borrower agrees that
any charges incurred by the Agent for the Borrower’s account from the Issuing Bank shall be
conclusive upon the Agent and may be charged to the Borrower’s loan account.
(d) The Agent shall not be responsible for: (a) the existence, character, quality, quantity,
condition, packing, value or delivery of the goods purporting to be represented by any documents;
(b) any difference or variation in the character, quality, quantity, condition, packing, value or
delivery of the goods from that expressed in the documents; (c) the validity, sufficiency or
genuineness of any documents or of any endorsements thereon, even if such documents should in fact
prove to be in any or all respects invalid, insufficient, fraudulent or forged; (d) the time,
place, manner or order in which shipment is made; partial or incomplete shipment, or failure or
omission to ship any or all of the goods referred to in the Letters of Credit or documents; (e) any
deviation from instructions; (f) delay, default, or fraud by the shipper and/or anyone else in
connection with the goods or the shipping thereof; or (g) any breach of contract between the
shipper or vendors and the Borrower.
(e) Each of the Credit Parties agrees that any action taken by the Agent, if taken in good
faith, or any action taken by any Issuing Bank, under or in connection with the Letters of Credit,
the Letter of Credit Guarantees, the drafts or acceptances, or the Collateral, shall be binding on
the Credit Parties and shall not result in any liability whatsoever of the Agent to any Credit
Party, except to the extent of gross negligence or wilful misconduct of the Agent. In furtherance
thereof, the Agent shall have the full right and authority to: (a) clear and resolve any questions
of non compliance of documents; (b) give any instructions as to acceptance or rejection of any
documents or goods; (c) execute any and all steamship or airways guarantees (and applications
therefor), indemnities or delivery orders; (d) grant any extensions of the maturity of, time of
payment for, or time of presentation of, any drafts, acceptances, or documents; and (e) agree to
any amendments, renewals, extensions, modifications, changes or cancellations of any of the terms
or conditions of any of the applications, Letters of Credit, drafts or acceptances or Letters of
Credit Guarantees; all in the Agent’s sole discretion. The Issuing Bank shall be entitled to
comply with and honor any and all such documents or instruments executed by or received solely from
the Agent, all without any consent from any Credit Party. In addition, without the Agent’s express
consent and endorsement in writing, each of the Credit Parties agrees: (a) not to (i) execute any
applications for steamship or airway guarantees, indemnities or delivery orders; (ii) grant any
extensions of the maturity of, time of payment for, or time of presentation of, any drafts,
acceptances or documents; or (iii) agree to any amendments, renewals, extensions, modifications,
changes or cancellations of any of the terms or conditions of any of the applications, Letters of
Credit, drafts or acceptances or Letters of Credit Guarantees; and (b) upon the occurrence and
during the continuance of an Event of Default, not to (i) clear and resolve any questions of non
compliance of documents, or (ii) give any instructions as to acceptances or rejection of any
documents or goods.
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(f) Each of the Credit Parties shall, and shall cause each other Credit Party to: (a) procure
any necessary import, export or other licenses or certificates for the import or handling of the
Collateral; (b) comply with all Applicable Law in regard to the shipment and importation of the
Collateral, or the financing thereof; and (c) deliver to the Agent any certificates in that regard
that the Agent may at any time request to be furnished. In connection herewith, the Borrower
warrants and represents that all shipments made under any such Letters of Credit are in accordance
with Applicable Law of the countries in which the shipments originate and terminate, and are not
prohibited by any such Applicable Law. Each of the Credit Parties assumes all risk, liability and
responsibility for, and agrees to pay and discharge, all present and future local, provincial,
state, federal or foreign Taxes, duties, or levies with respect to such Collateral. Any embargo,
restriction, laws, customs or regulations of any country, state, city, or other political
subdivision, where the Collateral is or may be located, or wherein payments are to be made, or
wherein drafts may be drawn, negotiated, accepted, or paid, shall be solely the Borrower’s risk,
liability and responsibility.
(g) Upon any payments made to the Issuing Bank under the Letter of Credit Guarantee, the Agent
shall acquire by subrogation, any rights, remedies, duties or obligations granted or undertaken by
the Borrower to the Issuing Bank in any application for Letters of Credit, any standing agreement
relating to Letters of Credit or otherwise, all of which shall be deemed to have been granted to
the Agent and apply in all respects to the Agent and shall be in addition to any rights, remedies,
duties or obligations contained herein.
(h) If any Event of Default shall occur and be continuing, on the Business Day that the
Borrower receives notice from the Agent or the Required Lenders demanding the deposit of Cover, the
Borrower shall deposit in an account with the Agent, in the name of the Agent and for the benefit
of the Lenders, an amount in cash equal to the Letter of Credit Exposure as of such date plus any
accrued and unpaid interest thereon. Such deposit shall be held by the Agent as collateral for the
payment and performance of the obligations of the Borrower under this Agreement. The Agent shall
have exclusive dominion and control, including the exclusive right of withdrawal, over such
account. Other than any interest earned on the investment of such deposits, which investments
shall be made at the option and sole discretion of the Agent and at the Borrower’s risk and
expense, such deposits shall not bear interest. Interest or profits, if any, on such investments
shall accumulate in such account. Moneys in such account shall be applied by the Agent to
reimburse the Issuing Bank for disbursements pursuant to Letters of Credit for which it has not
been reimbursed and, to the extent not so applied, shall be held for the satisfaction of the
reimbursement obligations of the Borrower for the Letter of Credit Exposure at such time or, if the
maturity of the Loans has been accelerated, be applied to satisfy other obligations of the Borrower
under this Agreement. If the Borrower is required to provide an amount of cash collateral
hereunder as a result of the occurrence of an Event of Default that is continuing, such amount (to
the extent not applied as aforesaid) shall be returned to the Borrower within three Business Days
after all Events of Default have been cured or waived.
(i) For greater certainty, all Obligations of the Credit Parties in respect of Letter of
Credit Guarantees continue notwithstanding the occurrence of a CIBC ABL Reorganization Date.
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2.18A Letters of Credit After a CIBC ABL Reorganization Date, all matters relating to the
issuance of new Letters of Credit shall be governed by this Section 2.18A:
(a) Within the limits of the Commitments and the Borrowing Base, and the other limitations
contained in this Agreement, the Borrower may obtain Letters of Credit from the Issuing Bank,
denominated in Canadian Dollars or U.S. Dollars, in an amount not to exceed the outstanding amount
of the Letter of Credit Sub-Line. The issuance of Letters of Credit for amounts in excess of the
limitation set forth herein shall at all times and in all respects be in the Agent’s sole
discretion. It is understood that the term, form and purpose of each Letter of Credit and all
documentation in connection therewith, and any amendments, modifications or extensions thereof,
must be mutually acceptable to the Agent, the Issuing Bank and the Borrower. Any and all
outstanding Letters of Credit shall be reserved dollar for dollar from the Borrowing Base as an
Availability Reserve. Upon the expiry of a Letter of Credit, amounts reserved as an Availability
Reserve in respect of such Letter of Credit shall no longer be reserved from the Borrowing Base as
an Availability Reserve. Each Letter of Credit shall expire at or prior to the close of business
on the earlier of (i) the date one year after the date of the issuance of such Letter of Credit
(or, in the case of any renewal or extension thereof, one year after such renewal or extension) and
(ii) the date that is five Business Days prior to the Maturity Date.
(b) By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing
the amount thereof) and without any further action on the part of the Issuing Bank or the Lenders,
the Issuing Bank hereby grants to each Lender, and each Lender hereby acquires from the Issuing
Bank, a participation in such Letter of Credit equal to such Lender’s Applicable Percentage of the
aggregate amount available to be drawn under such Letter of Credit. In consideration and in
furtherance of the foregoing, each Lender hereby absolutely and unconditionally agrees to pay to
the Agent, for the account of the Issuing Bank, such Lender’s Applicable Percentage of each
disbursement made by the Issuing Bank and not reimbursed by the Borrower on the date due, or of any
reimbursement payment required to be refunded to the Borrower for any reason. Each Lender
acknowledges and agrees that its obligation to acquire participations in respect of Letters of
Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever,
including any amendment, renewal or extension of any Letter of Credit or the occurrence and
continuance of a Default or reduction or termination of the Commitments, and that each such payment
shall be made without any offset, abatement, withholding or reduction whatsoever. If the Issuing
Bank shall make any disbursement in respect of a Letter of Credit, the Borrower shall reimburse
such disbursement by paying to the Agent an amount equal to such disbursement not later than 12:00
noon, on the date that such disbursement is made, if the Borrower shall have received notice of
such disbursement prior to 10:00 a.m., on such date, or, if such notice has not been received by
the Borrower prior to such time on such date, then not later than 12:00 noon, on (i) the Business
Day that the Borrower receives such notice, if such notice is received prior to 10:00 a.m., on the
day of receipt, or (ii) the Business Day immediately following the day that the Borrower received
such notice, if such notice is not received prior to such time on the day of receipt. In the
alternative, the Agent shall have the right, without notice to the Borrower, to charge the
Borrower’s loan account with the amount of any and all indebtedness, liability or obligation of any
kind incurred by the Issuing Bank or the Agent under any Letter of Credit at the earlier of (a)
payment by the Issuing Bank under any Letter of Credit; or (b) the occurrence and continuance of an
Event of Default, unless
the Borrower has provided Cover to the Agent in an amount equal to the face amount of all
Letters of Credit. Any amount so charged to the Borrower’s loan account shall be deemed a Canadian
Prime Rate Loan or a Base Rate Loan hereunder, depending on the currency of the Borrower’s payment
obligation thereunder, and shall incur interest at the rate provided in Section 2.5.
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(c) The Borrower unconditionally indemnifies the Agent and the Issuing Bank and holds the
Agent and the Issuing Bank harmless from any and all loss, claim or liability incurred by the
Issuing Bank or the Agent arising from any transactions or occurrences relating to Letters of
Credit established or opened for the Borrower’s account, the collateral relating thereto and any
drafts or acceptances thereunder, and all Obligations thereunder, including any such loss or claim
due to any errors, omissions, negligence, misconduct or action taken by the Issuing Bank, other
than for any such loss, claim or liability arising out of the gross negligence or willful
misconduct by the Agent under the Letter of Credit. This indemnity shall survive termination of
this Agreement. The Borrower agrees that any charges incurred by the Issuing Bank or the Agent in
respect of any Letter of Credit shall be for the Borrower’s account and may be charged to the
Borrower’s loan account.
(d) The Issuing Bank and the Agent shall not be responsible for: (a) the existence, character,
quality, quantity, condition, packing, value or delivery of the goods purporting to be represented
by any documents; (b) any difference or variation in the character, quality, quantity, condition,
packing, value or delivery of the goods from that expressed in the documents; (c) the validity,
sufficiency or genuineness of any documents or of any endorsements thereon, even if such documents
should in fact prove to be in any or all respects invalid, insufficient, fraudulent or forged; (d)
the time, place, manner or order in which shipment is made; partial or incomplete shipment, or
failure or omission to ship any or all of the goods referred to in the Letters of Credit or
documents; (e) any deviation from instructions; (f) delay, default, or fraud by the shipper and/or
anyone else in connection with the goods or the shipping thereof; or (g) any breach of contract
between the shipper or vendors and the Borrower.
(e) Each of the Credit Parties agrees that any action taken by the Issuing Bank or the Agent,
if taken in good faith, under or in connection with any Letter of Credit, the drafts or
acceptances, or the Collateral, shall be binding on the Credit Parties and shall not result in any
liability whatsoever of the Issuing Bank or the Agent to any Credit Party. In furtherance thereof,
the Issuing Bank shall have the full right and authority to: (a) clear and resolve any questions of
non compliance of documents; (b) give any instructions as to acceptance or rejection of any
documents or goods; (c) execute any and all steamship or airways guarantees (and applications
therefor), indemnities or delivery orders; (d) grant any extensions of the maturity of, time of
payment for, or time of presentation of, any drafts, acceptances, or documents; and (e) agree to
any amendments, renewals, extensions, modifications, changes or cancellations of any of the terms
or conditions of any of the applications, Letters of Credit, drafts or acceptances; all in the sole
discretion of the Issuing Bank. The Issuing Bank shall be entitled to comply with and honor any
and all such documents or instruments, all without any consent from any Credit Party. In addition,
without the Issuing Bank’s express consent and endorsement in writing, each of the Credit Parties
agrees: (a) not to (i) execute any applications for steamship or airway guarantees, indemnities or
delivery orders; (ii) grant any extensions of the maturity of, time of payment for,
or time of presentation of, any drafts, acceptances or documents; or (iii) agree to any
amendments, renewals, extensions, modifications, changes or cancellations of any of the terms or
conditions of any of the applications, Letters of Credit, drafts or acceptances or Letters of
Credit Guarantees; and (b) upon the occurrence and during the continuance of an Event of Default,
not to (i) clear and resolve any questions of non compliance of documents, or (ii) give any
instructions as to acceptances or rejection of any documents or goods.
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(f) Each of the Credit Parties shall, and shall cause each other Credit Party to: (a) procure
any necessary import, export or other licenses or certificates for the import or handling of the
Collateral; (b) comply with all Applicable Law in regard to the shipment and importation of the
Collateral, or the financing thereof; and (c) deliver to the Issuing Bank or the Agent any
certificates in that regard that the Agent may at any time request to be furnished. In connection
herewith, the Borrower warrants and represents that all shipments made under any such Letters of
Credit are in accordance with Applicable Law of the countries in which the shipments originate and
terminate, and are not prohibited by any such Applicable Law. Each of the Credit Parties assumes
all risk, liability and responsibility for, and agrees to pay and discharge, all present and future
local, provincial, state, federal or foreign Taxes, duties, or levies with respect to such
Collateral. Any embargo, restriction, laws, customs or regulations of any country, state, city, or
other political subdivision, where the Collateral is or may be located, or wherein payments are to
be made, or wherein drafts may be drawn, negotiated, accepted, or paid, shall be solely the
Borrower’s risk, liability and responsibility.
(g) The Issuing Bank may be replaced at any time by written agreement among the Borrower, the
Agent, the replaced Issuing Bank and the successor Issuing Bank. The Agent shall notify the
Lenders of any such replacement of the Issuing Bank. At the time any such replacement shall become
effective, the Borrower shall pay all unpaid fees accrued for the account of the replaced Issuing
Bank. From and after the effective date of any such replacement, (i) the successor Issuing Bank
shall have all the rights and obligations of the Issuing Bank under this Agreement with respect to
Letters of Credit to be issued thereafter, and (ii) references herein to the term “Issuing
Bank” shall be deemed to refer to such successor or to any previous Issuing Bank, or to such
successor and all previous Issuing Banks, as the context shall require. After the replacement of
an Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto and shall continue
to have all the rights and obligations of an Issuing Bank under this Agreement with respect to
Letters of Credit issued by it prior to such replacement, but shall not be required to issue
additional Letters of Credit.
(h) If any Event of Default shall occur and be continuing, on the Business Day that the
Borrower receives notice from the Agent or the Required Lenders demanding the deposit of Cover, the
Borrower shall deposit in an account with the Agent, in the name of the Agent and for the benefit
of the Lenders, an amount in cash equal to the Letter of Credit Exposure as of such date plus any
accrued and unpaid interest thereon. Such deposit shall be held by the Agent as collateral for the
payment and performance of the obligations of the Borrower under this Agreement. The Agent shall
have exclusive dominion and control, including the exclusive right of withdrawal, over such
account. Other than any interest earned on the investment of such deposits, which investments
shall be made at the option and sole discretion of the Agent and at the Borrower’s risk and
expense, such deposits shall not bear interest. Interest or profits, if any,
on such investments shall accumulate in such account. Moneys in such account shall be applied
by the Agent to reimburse the Issuing Bank for disbursements pursuant to Letters of Credit for
which it has not been reimbursed and, to the extent not so applied, shall be held for the
satisfaction of the reimbursement obligations of the Borrower for the Letter of Credit Exposure at
such time or, if the maturity of the Loans has been accelerated, be applied to satisfy other
obligations of the Borrower under this Agreement. If the Borrower is required to provide an amount
of cash collateral hereunder as a result of the occurrence of an Event of Default, such amount (to
the extent not applied as aforesaid) shall be returned to the Borrower within three Business Days
after all Events of Default have been cured or waived.
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2.19 F/X Contracts Prior to a CIBC ABL Reorganization Date, in order to assist the
Borrower in entering into F/X Contracts with the F/X Bank, the Borrower has requested the Agent to
execute an F/X Guarantee subject to the following terms and conditions:
(a) Within the limits of the Commitments and the Borrowing Base and the other limitations as
contained in this Agreement, the Agent shall assist the Borrower in obtaining F/X Contracts in an
amount such that the F/X Exposure does not to exceed the outstanding amount of the F/X Contract
Sub-Line. The Agent’s assistance for amounts in excess of the limitation set forth herein shall at
all times and in all respects be in the Agent’s sole discretion. The term, form and purpose of the
F/X Contract and all confirmations and other documentation in connection therewith, and any
amendments, modifications or extensions thereof, must be mutually acceptable to the Agent, the F/X
Bank and the Borrower. Any and all outstanding F/X Guarantees shall be reserved dollar for dollar
from the Borrowing Base as an Availability Reserve. Upon the expiry of an F/X Guarantee, amounts
reserved as an Availability Reserve in respect of such F/X Guarantee shall no longer be reserved
from the Borrowing Base as an Availability Reserve.
(b) The Agent shall have the right, without notice to the Borrower, to charge the Borrower’s
loan account with the amount of any and all indebtedness, liability or obligation of any kind
incurred by the Agent under any F/X Guarantee at such time which is the earlier of (a) payment by
the Agent under the F/X Guarantee; or (b) the occurrence and continuance of an Event of Default,
unless the Borrower has provided Cover to the Agent. Any amount charged to Borrower’s loan account
shall be deemed a Canadian Prime Loan or a Base Rate Loan hereunder, depending on the currency of
the Borrower’s payment obligation in respect of such F/X Guarantee thereunder, and shall incur
interest at the rate provided in Section 2.5.
(c) Each of the Credit Parties unconditionally indemnifies the Agent and holds the Agent
harmless from any and all loss, claim or liability incurred by the Agent arising from any
transactions or occurrences relating to F/X Contracts , the collateral relating thereto, and all
Obligations thereunder, including any such loss or claim due to any errors, omissions, negligence,
misconduct or action taken by the F/X Bank, other than for any such loss, claim or liability
arising out of the gross negligence or wilful misconduct of the Agent under the F/X Guarantee.
This indemnity shall survive termination of this Agreement. The Borrower agrees that any charges
incurred by the Agent for the Borrower’s account by the F/X Bank shall be conclusive on the Agent
and may be charged to the Borrower’s loan account.
- 59 -
(d) Each of the Credit Parties agrees that any action taken by the Agent, if taken in good
faith, or any action taken by the F/X Bank, under or in connection with the F/X Contracts, any F/X
Guarantee or the Collateral, shall be binding on the Credit Parties and shall not result in any
liability whatsoever of the Agent or any Lender to any Credit Party.
(e) Upon any payments made to the F/X Bank under any F/X Guarantee, the Agent shall acquire by
subrogation, any rights, remedies, duties or obligations granted or undertaken by the Borrower to
the F/X Bank in any application for F/X Contracts, any standing agreement relating to F/X Contracts
or otherwise, all of which shall be deemed to have been granted to the Agent and apply in all
respects to the Agent and shall be in addition to any rights, remedies, duties or obligations
contained herein. All rights, remedies, duties and obligations shall be secured automatically by
the Liens arising under the Security Documents.
(f) For greater certainty, all Obligations of the Credit Parties in respect of F/X Guarantees
continue notwithstanding the occurrence of a CIBC ABL Reorganization Date.
2.19A F/X Contracts After a CIBC ABL Reorganization Date, all matters relating to the
entry into F/X Contracts with the F/X Bank shall be governed by this Section 2.19A:
(a) Within the limits of the Commitments and the Borrowing Base and the other limitations as
contained in this Agreement, the Borrower may obtain F/X Contracts in an amount such that the F/X
Exposure does not to exceed the outstanding amount of the F/X Contract Sub-Line. The entry into
F/X Contracts for amounts in excess of the limitation set forth herein shall at all times and in
all respects be in the Agent’s sole discretion. The term, form and purpose of the F/X Contract and
all confirmations and other documentation in connection therewith, and any amendments,
modifications or extensions thereof, must be mutually acceptable to the Agent, the F/X Bank and the
Borrower. Any and all outstanding F/X Contracts shall be reserved dollar for dollar from the
Borrowing Base as an Availability Reserve. Upon the expiry of an F/X Contracts and payment in full
in respect thereof, amounts reserved as an Availability Reserve in respect of such F/X Guarantee
shall no longer be reserved from the Borrowing Base as an Availability Reserve.
(b) The Agent shall have the right, without notice to the Borrower, to charge the Borrower’s
loan account with the amount of any and all indebtedness, liability or obligation of any kind
incurred by the Agent or the F/X Bank under any F/X Contract at such time which is the earlier of
(a) payment by the Agent under the F/X Contract; or (b) the occurrence and continuance of an Event
of Default, unless the Borrower has provided Cover to the Agent. Any amount charged to Borrower’s
loan account shall be deemed a Canadian Prime Loan or a Base Rate Loan hereunder, depending on the
currency of the Borrower’s payment obligation in respect of such F/X Contract, and shall incur
interest at the rate provided in Section 2.5.
(c) Each of the Credit Parties unconditionally indemnifies the Agent and the F/X Bank and
holds the Agent harmless from any and all loss, claim or liability incurred by the Agent or the F/X
Bank arising from any transactions or occurrences relating to F/X Contracts , the collateral
relating thereto, and all Obligations thereunder, including any such loss or claim due to any
errors, omissions, negligence, misconduct or action taken by the F/X Bank, other than for any such
loss, claim or liability arising out of the gross negligence or wilful misconduct of the
Agent or the F/X Bank, as applicable. This indemnity shall survive termination of this
Agreement. The Borrower agrees that any charges incurred by the Agent or the F/X Bank, as
applicable, are for the Borrower’s account and may be charged to the Borrower’s loan account.
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(d) Each of the Credit Parties agrees that any action taken by the Agent, if taken in good
faith, or any action taken by the F/X Bank, under or in connection with the F/X Contracts or the
Collateral, shall be binding on the Credit Parties, and shall not result in any liability
whatsoever of the Agent or any Lender to any Credit Party, except in instances of gross negligence
or wilful misconduct on the part of the Agent.
(e) All rights, remedies, duties and obligations of the Credit Parties in respect of F/X
Contracts shall be secured automatically by the Liens arising under the Security Documents.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
REPRESENTATIONS AND WARRANTIES
In order to induce the Agent and the Lenders to enter into this Agreement, to make any Loans
hereunder and to issue any Letters of Credit hereunder, each Credit Party hereby represents and
warrants to the Agent and each Lender that each statement set forth in this Article 3 is true and
correct on the date hereof, and will be true and correct on the date of each Borrowing (except for
those statements which relate solely to an earlier date), on the date each Letter of Credit is
requested hereunder (except for those statements which relate solely to an earlier date) and on the
date each Letter of Credit is issued hereunder (except for those statements which relate solely to
an earlier date):
3.1 Organization; Powers. The Borrower and each other Credit Party is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its organization, has
all requisite power and authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be expected to result in a
Material Adverse Effect, is qualified to do business in, and is in good standing in, every
jurisdiction where such qualification is required.
3.2 Authorization; Enforceability The Transactions are within each Credit Party’s
corporate powers and have been duly authorized by all necessary corporate and, if required,
shareholder action. This Agreement and the other Loan Documents have been duly executed and
delivered by the Borrower and each other Credit Party thereto and constitute legal, valid and
binding obligations of the Borrower and each other Credit Party thereto, enforceable in accordance
with their terms, subject to applicable bankruptcy, insolvency, reorganisation, moratorium or other
Applicable Laws affecting creditors’ rights generally and subject to general principles of equity,
regardless of whether considered in a proceeding in equity or at law.
3.3 Governmental Approvals; No Conflicts The Transactions (a) do not require any consent
or approval of, registration or filing with, or any other action by, any Governmental Authority,
(b) will not violate any Applicable Law or the charter, by-laws or other organizational documents
of the Borrower or any other Credit Party or any order of any Governmental Authority, (c) will not
violate or result in a default under any indenture, agreement or other instrument binding upon the
Borrower or any other Credit Party or their respective assets, or give
rise to a right thereunder to require any payment to be made by the Borrower or any other Credit
Party, and (d) will not result in the creation or imposition of any Lien on any asset of the
Borrower or any other Credit Party, except for any Lien arising in favour of the Agent, for the
benefit of the Lenders, under the Loan Documents.
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3.4 Financial Condition; No Material Adverse Effect
(a) The Borrower has furnished to the Lenders its consolidated balance sheets and statements
of income, retained earnings and changes in financial position as of and for the Fiscal Years ended
December 31, 2008, December 31, 2009 and December 31, 2010, and as of and for the fiscal month and
the portion of the Fiscal Year ended April 30, 2011. Such financial statements present fairly, in
all material respects, the consolidated financial position and results of operations and cash flows
of the Borrower as of such dates and for such periods in accordance with GAAP, subject to year end
audit adjustments and the absence of footnotes in the case of the monthly statements referred to
above.
(b) Since December 31, 2010, there has been no event, development or circumstance that has had
or could reasonably be expected to have a Material Adverse Effect.
(c) All information (including that disclosed in all financial statements) pertaining to the
Borrower and the other Credit Parties (other than projections) (in this Section 3.4(c), the
“Information”) that has been or will be made available to the Lenders, or the Agent by the Borrower
or any representative of the Borrower and the other Credit Parties, taken as a whole, is or will
be, when furnished, complete and correct in all material respects and does not or will not, when
furnished, contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements contained therein not materially misleading in light of
the circumstances under which such statements are made. The projections that have been or will be
made available to the Lenders, or the Agent by the Borrower or any representative of the Borrower
have been or will be prepared in good faith based upon reasonable assumptions.
(d) The Borrower has delivered to the Lenders its unaudited pro forma consolidated balance
sheet and statements of income as of December 31, 2010, prepared giving effect to the Transactions
as if they had occurred, with respect to such balance sheet, on such date and, with respect to such
other financial statements, on the first day of the 12-month period ending on such date. Such pro
forma financial statements have been prepared in good faith by the Borrower, are based on
assumptions which are believed by the Borrower on the date hereof and on the Effective Date to be
reasonable, are based on the best information available to the Borrower as of the date of delivery
thereof, accurately reflect all adjustments required to be made to give effect to the Transactions
and present fairly on a pro forma basis the estimated consolidated financial position of the
Borrower and its consolidated Subsidiaries as of such date and for such period, assuming that the
Transactions had actually occurred at such date or at the beginning of such period, as the case may
be.
3.5 Litigation There are no actions, suits, counterclaims or proceedings (including any
Tax-related matter) by any Person or investigation by any Governmental Authority pending against
or, to the knowledge of the Borrower, threatened in writing against or affecting the Borrower or
any of the other Credit Parties (i) as to which there is a reasonable possibility of an adverse
determination and that, if adversely determined, could reasonably be expected, individually or in
the aggregate, to result in a Material Adverse Effect, or (ii) that involve this Agreement, any
other Loan Document, or the Transactions.
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3.6 Compliance with Applicable Laws and Agreements The Borrower and each other Credit
Party is in compliance with all Applicable Laws applicable to it or its property and all
indentures, agreements and other instruments binding upon it or its property, except where the
failure to do so, individually or in the aggregate, could not reasonably be expected to result in a
Material Adverse Effect. Neither the Borrower nor any other Credit Party has violated or failed to
obtain any Authorization necessary to the ownership of any of its property or assets or the conduct
of its business, which violation or failure could reasonably be expected to have (in the event that
such a violation or failure were asserted by any Person through appropriate action) a Material
Adverse Effect.
3.7 Ownership As at the Effective Date, the registered and beneficial holder of all of the
Equity Securities of the Borrower is the Parent.
3.8 Taxes The Borrower and each other Credit Party has timely filed or caused to be filed
all Tax returns and reports required to have been filed and has paid or caused to be paid all Taxes
required to have been paid by it (including all instalments with respect to the current period) and
has made adequate provision for Taxes for the current period, except Taxes that are being contested
in good faith by appropriate proceedings and for which the Borrower or such other Credit Party, as
applicable, has set aside on its books adequate reserves.
3.9 Titles to Real Property The Borrower and each other Credit Party have indefeasible fee
simple title to their respective owned real properties (or in Quebec, immoveable properties), and
with respect to leased real properties, indefeasible title to the leasehold estate with respect
thereto, pursuant to valid and enforceable leases, free and clear of all Liens except Permitted
Liens.
3.10 Titles to Personal Property. The Borrower and each other Credit Party have title to
their respective owned personal property (or in Quebec, moveable properties), and with respect to
leased personal property, title to the leasehold estate with respect thereto, pursuant to valid and
enforceable leases, free and clear of all Liens except Permitted Liens.
3.11 Pension Plans. The Pension Plans are, with the exception of a supplemental retirement
plan for eligible employees, duly registered under the ITA and any other Applicable Laws which
require registration, have been administered in accordance with the ITA and such other Applicable
Laws and no event has occurred which could reasonably be expected to cause the loss of such
registered status, except to the extent that any failure to do so could not reasonably be expected
to have a Material Adverse Effect. All material obligations of the Borrower and each other Credit
Party (including fiduciary, funding, investment and administration obligations) required to be
performed in connection with the Pension Plans and the funding agreements therefor have been
performed on a timely basis, except to the extent that any failure to do so could not reasonably be
expected to have a Material Adverse Effect. There are no outstanding disputes concerning the
assets of the Pension Plans or any benefit plans. No promises of benefit improvements under the
Pension Plans or any benefit plans have been made except where such
improvement could not reasonably be expected to have a Material Adverse Effect. All contributions
or premiums required to be made or paid by the Borrower and each other Credit Party to the Pension
Plans or any benefit plans have been made on a timely basis in accordance with the terms of such
plans and all Applicable Laws. There have been no improper withdrawals or applications of the
assets of the Pension Plans or any benefit plans. As of the date hereof, each of the Pension Plans
is fully funded on a solvency basis and going concern basis (using actuarial methods and
assumptions which are consistent with the valuations last filed with the applicable Governmental
Authorities and which are consistent with GAAP).
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| (i) | For any Pension Plan or fund, and for any other employee benefit plan which is a defined contribution plan requiring the Borrower or any Subsidiary to contribute thereto, or to deduct from payments to any individual and pay such deductions into or to the credit of such Pension Plan or fund, all required employer contributions have been properly withheld by the Borrower or such Subsidiary and fully paid into the funding arrangements for the applicable Pension Plan or fund, |
| (ii) | for any Pension Plan or fund and for any other employee benefit plan which is a defined benefit plan (“Defined Benefit Plan”), in each case of the Borrower or any Subsidiary: (A) each such Pension Plan or fund or Defined Benefit Plan is fully funded on both a solvency basis and a going concern basis, (B) the most recent actuarial valuations in respect thereof are disclosed to the agent in writing, (C) no material changes have occurred since the date of such actuarial valuations which could reasonably be expected to materially adversely affect the conclusions of the actuary concerning the funding of any Defined Benefit Plan, and (D) all payments and contributions required to be remitted or paid to or in respect of each such Pension Plan or fund or Defined Benefit Plan, including special payments and any other payments in respect of any funding deficiencies or shortfalls, have been remitted or paid to or in respect of each such plan in a timely fashion, in accordance with the terms of the plan and all Applicable Law, and |
| (iii) | any assessments owed to the Pension Benefits Guarantee Fund established under the Pension Benefits Standards Act (British Columbia), or other assessments or payments required under similar legislation in any other jurisdiction, have been paid when due. |
None of the Borrower, or any Credit Party or any of their respective Affiliates is subject to the
United States Employee Retirement Income Security Act of 1974, as amended.
3.12 Disclosure The Borrower has disclosed to the Agent all agreements, instruments and
corporate or other restrictions to which it or any other Credit Party is subject, and all other
matters known to it, that, individually or in the aggregate, could reasonably be expected to result
in a Material Adverse Effect. None of the representations or warranties made by any Credit Party
in the Loan Documents as of the date such representations and warranties are made or deemed made,
and none of the statements contained in any exhibit, report, statement or
certificate furnished by or on behalf of any Credit Party in connection with the Loan Documents,
contains any untrue statement of a material fact or omits any material fact necessary to be stated
therein to make the statements made therein, in light of the circumstances under which they are
made, not misleading as of the time when made or delivered.
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3.13 Defaults Neither the Borrower nor any other Credit Party is in default nor has any
event or circumstance occurred which, but for the passage of time or the giving of notice, or both,
would constitute a default (in any respect that would have a Material Adverse Effect) under any
loan or credit agreement, indenture, mortgage, deed of trust, security agreement or other
instrument or agreement evidencing or pertaining to any Indebtedness of or Lien against the
Borrower or any other Credit Party, or under any material agreement or instrument to which the
Borrower or any other Credit Party is a party or by which the Borrower or any other Credit Party is
bound. No Default has occurred and is continuing.
3.14 Casualties; Taking of Properties Since December 31, 2010, neither the business nor
the properties of the Borrower or any other Credit Party have been affected in a manner that has
had, or could reasonably be expected to have, a Material Adverse Effect.
3.15 Subsidiaries and Jurisdictions As of the Effective Date, Schedule 3.15 correctly sets
forth the (i) names, (ii) form of legal entity, (iii) Equity Securities issued and outstanding,
(iv) Equity Securities owned by each Credit Party or a Subsidiary of such Credit Party (and
specifying such owner), and (v) jurisdictions of organization of all Credit Parties and their
Subsidiaries. Schedule 3.15 correctly sets out the jurisdictions in which each of the Credit
Parties carries on business, maintains its books and records or has tangible assets. Except as
described in Schedule 3.15, as of the Effective Date, the Credit Parties directly or indirectly do
not own any Equity Securities or debt security which is convertible, or exchangeable, for Equity
Securities of any other Person. Unless otherwise indicated in Schedule 3.15, as of the Effective
Date, all of the outstanding Equity Securities of each Credit Party is directly or indirectly owned
of record and beneficially by the Borrower, there are no outstanding options, warrants or other
rights to purchase Equity Securities of any such Credit Party, and all such Equity Securities so
owned are duly authorized, validly issued, fully paid and non-assessable, and were issued in
compliance with all applicable federal, provincial or foreign securities and other Applicable Laws,
and are free and clear of all Liens, except for Permitted Liens.
3.16 Insurance All policies of fire, liability, workers’ compensation, casualty, flood,
business interruption and other forms of insurance owned or held by the Borrower or any other
Credit Party are (a) sufficient for compliance with all requirements of Applicable Law and of all
agreements to which the Borrower or any other Credit Party is a party, (b) are valid, outstanding
and enforceable policies, (c) provide adequate insurance coverage in at least such amounts and
against at least such risks (but including in any event public liability) as are usually insured
against in the same general area by Persons engaged in the same or a similar business to the assets
and operations of the Borrower and each other Credit Party, (d) will not in any way be adversely
affected by, or terminate or lapse by reason of, the Transactions, and (e) are held in the name of
a Credit Party. All such material policies are in full force and effect, all premiums with respect
thereto have been paid in accordance with their respective terms, and no notice of cancellation or
termination has been received with respect to any such policy. Neither the Borrower nor any other
Credit Party maintains any formalized self-insurance program with
respect to its assets or operations or material risks with respect thereto. The certificate of
insurance delivered to the Agent pursuant to Section 4.1(f) contains an accurate and complete
description of all material policies of insurance owned or held by the Borrower and each other
Credit Party on the Effective Date.
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3.17 Solvency Neither the Borrower nor any other Credit Party is an “insolvent person”
within the meaning of the BIA.
3.18 Material Contracts Schedule 3.18 sets out all Material Contracts as of the Effective
Date. A true and complete copy of each Material Contract has been delivered to the Agent as of the
Effective Date. Each of the Material Contracts is in full force and effect. Neither the Borrower
nor any other Credit Party is in default under or in breach of any term or condition of any
Material Contract that would have, either individually or in the aggregate, a Material Adverse
Effect, nor is the Borrower or any other Credit Party aware of any material default under or
material breach of any term or condition of any Material Contract by any other party thereto. No
contract to which the Borrower or any other Credit Party is a party contains any material
provisions which impose burdensome or onerous obligations on the Borrower or such other Credit
Party which are inconsistent with prudent commercial activity by the Borrower or such other Credit
Party.
3.19 Environmental Matters
(a) Environmental Laws. Neither any property of the Borrower or any other Credit
Party nor the operations conducted thereon violate any applicable order of any court or
Governmental Authority or any Environmental Laws, which violation could reasonably be expected to
result in remedial obligations having a Material Adverse Effect, assuming disclosure to the
applicable Governmental Authority of all material relevant facts, conditions and circumstances, if
any, pertaining to the relevant property.
(b) Notices and Permits. All notices, permits, licenses or similar authorizations, if
any, required to be obtained or filed by the Borrower or any other Credit Party in connection with
the operation or use of any and all property of the Borrower or any other Credit Party, including
but not limited to past or present treatment, transportation, storage, disposal or Release of
Hazardous Materials into the environment, have been duly obtained or filed, except to the extent
the failure to obtain or file such notices, permits, licenses or similar authorizations could not
reasonably be expected to have a Material Adverse Effect, or which could not reasonably be expected
to result in remedial obligations having a Material Adverse Effect, assuming disclosure to the
applicable Governmental Authority of all material relevant facts, conditions and circumstances, if
any, pertaining to the relevant property.
(c) Hazardous Substances Carriers. All Hazardous Materials generated at any and all
property of the Borrower or any other Credit Party have been treated, transported, stored and
disposed of only in accordance with all Environmental Laws applicable to them, except to the extent
the failure to have such Hazardous Materials transported, treated or disposed by such carriers
could not reasonably be expected to have a Material Adverse Effect, and only at treatment, storage
and disposal facilities maintaining valid permits under applicable Environmental Laws, which
carriers and facilities have been and are, to the Borrower’s
knowledge, operating in compliance with such permits, except to the extent the failure to have
such Hazardous Materials treated, transported, stored or disposed at such facilities, or the
failure of such carriers or facilities to so operate, could not reasonably be expected to have a
Material Adverse Effect or which could not reasonably be expected to result in remedial obligations
having a Material Adverse Effect, assuming disclosure to the applicable Governmental Authority of
all material relevant facts, conditions and circumstances, if any, pertaining to the relevant
property.
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(d) Hazardous Materials Disposal. The Borrower and the other Credit Parties have
taken all reasonable steps necessary to determine and have determined that no Hazardous Materials
have been disposed of or otherwise released and there has been no threatened Release of any
Hazardous Materials on or to any property of the Borrower or any other Credit Party other than in
compliance with Environmental Laws, except to the extent the failure to do so could not reasonably
be expected to have a Material Adverse Effect or which could not reasonably be expected to result
in remedial obligations having a Material Adverse Effect, assuming disclosure to the applicable
Governmental Authority of all material relevant facts, conditions and circumstances, if any,
pertaining to the relevant property.
(e) No Contingent Liability. The Borrower and the other Credit Parties have no
material contingent liability in connection with any Release or threatened Release of any Hazardous
Materials into the environment other than such contingent liabilities at any one time and from time
to time which could reasonably be expected to exceed $250,000 and for which adequate reserves for
the payment thereof as required by GAAP have been provided, or which could reasonably be expected
to result in remedial obligations having a Material Adverse Effect, assuming disclosure to the
applicable Governmental Authority of all relevant facts, conditions and circumstances, if any,
pertaining to such Release or threatened Release.
3.20 Employee Matters Except as set forth on Schedule 3.20, as of the Effective Date, none
of the Borrower or any of the other Credit Parties, nor any of their respective employees, is
subject to any collective bargaining agreement. There are no strikes, slowdowns, work stoppages or
controversies pending or, to the best knowledge of the Borrower, threatened against the Borrower or
any other Credit Party, or their respective employees, which could reasonably be expected to have,
either individually or in the aggregate, a Material Adverse Effect. Except as set forth in
Schedule 3.20, as of the Effective Date, none of the Borrower nor any other Credit Party is subject
to an employment contract providing for a fixed term of employment or providing for special
payments on termination of employment. Each of the Borrower and the other Credit Parties has
withheld from each payment to each of their respective officers, directors and employees the amount
of all Taxes, including income tax, Canada pension plan, employment insurance and other payments
and deductions required to be withheld therefrom, and has paid the same to the proper taxation or
other receiving authority in accordance with Applicable Law. None of the Borrower nor any other
Credit Party is subject to any claim by or liability to any of their respective officers, directors
or employees for salary (including vacation pay) or benefits which would rank in whole or in part
pari passu with or prior to the Liens created by the Security Documents, other than Permitted Liens
to the extent reserved for as Priority Payables of any Credit Party.
3.21 Fiscal Year The Fiscal Year of each Credit Party is referenced in Schedule 3.21.
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3.22 Intellectual Property Rights The Borrower and each Credit Party is the registered and
beneficial owner of, with good and marketable title, free of all licenses, franchises and Liens
other than Permitted Liens, to all patents, patent applications, trade marks, trade xxxx
applications, trade names, service marks, copyrights, industrial designs, integrated circuit
topographies, or other rights with respect to the foregoing and other similar property, used in or
necessary for the present and planned future conduct of its business, without any conflict with the
rights of any other Person, other than for such conflicts as could not reasonably be expected to
have a Material Adverse Effect. There are no material patents, trade marks, trade names, service
marks, copyrights, industrial designs, integrated circuit topographies, and other similar rights
owned or licensed by the Borrower or any other Credit Party, and all rights of the Borrower and
each other Credit Party to the use of any patents, trade marks, trade names, service marks,
copyrights, industrial designs, integrated circuit topographies, or other similar rights
(collectively, the “Intellectual Property Rights”). No material claim has been asserted and is
pending by any Person with respect to the use by the Borrower or any other Credit Party of any
intellectual property or challenging or questioning the validity, enforceability or effectiveness
of any intellectual property necessary for the conduct of the business of the Borrower or any other
Credit Party. Except as could not reasonably be expected to have a Material Adverse Effect, (i)
the Borrower and each other Credit Party has the exclusive right to use the intellectual property
which the Borrower (or each other Credit Party) owns, (ii) all applications and registrations for
such intellectual property are current, and (iii) to the knowledge of the Borrower and the other
Credit Parties, the conduct of the Borrower’s and each other Credit Party’s business does not
infringe the intellectual property rights of any other Person.
3.23 Residency of Borrower for Tax Purposes Each of the Credit Parties is a resident of
Canada for tax purposes.
3.24 Restricted Payments No Restricted Payment has been declared, paid, or made upon or in
respect of Equity Securities of any Credit Party except as expressly permitted hereby.
3.25 Indebtedness None of the Credit Parties nor any of their Subsidiaries has any
Indebtedness except (a) the Obligations, (b) the Indebtedness set forth in the most recent
financial statements delivered to the Agent, or the notes thereto, (c) Tax obligations (including
deferred Taxes), trade payables and other contractual obligations arising in the ordinary course of
business as carried on by the Credit Parties and their Subsidiaries since the date of such
financial statements, and (d) Indebtedness created in accordance with Section 6.1.
3.26 Workers’ Compensation None of the Credit Parties has any unpaid workers’ compensation
or like obligations except as are being incurred, and paid on a current basis in the ordinary
course of business, and there are no proceedings, claims, actions, orders or investigations of any
Governmental Authority relating to workers’ compensation outstanding, pending or, to their
knowledge, threatened relating to them or any of their employees or former employees which could
reasonably be expected to have a Material Adverse Effect.
3.27 Bank Accounts Schedule 3.27 contains a complete and accurate list of all bank
accounts maintained by the Credit Parties with any bank or other financial institution as of the
Effective Date.
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3.28 Real Property and Leases Schedule 3.28 hereto is a correct and complete list of all
real property owned by each Credit Party, all leases and subleases of real property or personal
property by any Credit Party, as lessee or sublessee, and all leases and subleases of real property
or personal property by any Credit Party, as lessor or sublessor. Each of such leases and
subleases is valid and enforceable in accordance with its terms and is in full force and effect,
and no default by any party to any such lease or sublease exists.
3.29 Further Real Property Matters.
(a) Except as advised in writing to the Agent, no investigation or proceeding of any
Governmental Authority is pending in respect of real property owned by any of the Credit Parties.
No part of any such real property has been condemned, taken or expropriated by any Governmental
Authority, federal, state, provincial, municipal or any other competent authority which could
reasonably be expected to have a Material Adverse Effect.
(b) Except as advised in writing to the Agent, all present uses in respect of any real
property of the Credit Parties may lawfully be continued and all permitted uses are satisfactory
for the Credit Parties’ current and intended purposes; and
(c) No Inventory is located at any leased real property of the Credit Parties except as
indicated in Schedule 3.28.
3.30 Corporate Name; Prior Transactions None of the Credit Parties has during the five (5)
years preceding the Effective Date been known by or used any other corporate or business name, or
been a party to any amalgamation, merger or consolidation, or acquired all or substantially all of
the assets of any Person or acquired any of its or their Property out of the ordinary course of
business. There are no trade names or styles under which any Credit Party sells Inventory or
create Accounts or to which instruments in payment of Accounts may be made payable.
3.31 Brokers No broker or finder acting on behalf of any Credit Party or Affiliate thereof
brought about the obtaining, making or closing of the Commitments or the Loans, and no Credit Party
or Affiliate thereof has any obligation to any Person in respect of any finder’s or brokerage fees
in connection therewith.
3.32 Customer and Trade Relations As of the Effective Date, there exists no actual or, to
the knowledge of any Credit Party, threatened in writing of any termination or cancellation of, or
any material adverse modification or change in the business relationship of any Credit Party with
any customer or group of customers whose purchases during the preceding 12 months caused them to be
ranked among the ten largest customers of such Credit Party or the business relationship of any
Credit Party with any supplier material to its operations.
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ARTICLE 4
CONDITIONS
CONDITIONS
4.1 Effective Date The obligations of the Lenders to make Loans or provide a Letter of
Credit Guarantee or an F/X Guarantee (or, after a CIBC ABL Reorganization Date, to issue a
Letter of Credit or to enter into an F/X Contract) shall not become effective until the date on
which each of the following conditions is satisfied (or waived in accordance with Section 9.2):
(a) Credit Agreement. The Agent (or its counsel), each Lender, and the Issuing Bank
shall have received from each party hereto either (i) a counterpart of this Agreement signed on
behalf of each party hereto, or (ii) written evidence satisfactory to the Agent (which may include
facsimile transmission of a signed signature page of this Agreement) that each such party has
signed a counterpart of this Agreement.
(b) Legal Opinions. The Agent shall have received a favourable written opinion of
counsel to the Borrower and the Credit Parties, substantially in the form of Exhibit D, and
covering such other matters relating to the Borrower, the Credit Parties, this Agreement, the other
Loan Documents, or the Transactions as the Lenders shall reasonably request (together with copies
of all factual certificates and legal opinions delivered to such counsel in connection with such
opinion upon which counsel has relied). The Agent shall also have received favourable written
opinions of such special and local counsel as may be required by the Agent (together with copies of
all factual certificates and legal opinions delivered to such counsel in connection with such
opinion upon which such counsel has relied). The Borrower hereby requests each such counsel to
deliver such opinions and supporting materials. All opinions and certificates referred to in this
Section 4.1(b) shall be addressed to the Agent and the Lenders and dated the Effective Date.
(c) Corporate Certificates. The Agent shall have received:
| (i) | certified copies of the resolutions of the Board of Directors of the Borrower, and any other Credit Party which is a party to any Loan Document, dated as of the Effective Date, and approving, as appropriate, the Loans, this Agreement and the other Loan Documents, and all other documents, if any, to which the Borrower or such other Credit Party is a party and evidencing corporate authorization with respect to such documents; and |
| (ii) | a certificate of the secretary, an assistant secretary or treasurer of the Borrower, and any other Credit Party which is a party to any Loan Document, dated as of the Effective Date, and certifying (A) the name, title and true signature of each officer of such Person authorized to execute this Agreement and the other Loan Documents to which it is a party, (B) the name, title and true signature of each officer of such Person authorized to provide the certifications required pursuant to this Agreement, including certifications required pursuant to Section 5.1 and Borrowing Requests, and (C) that attached thereto is a true and complete copy of the articles of incorporation and bylaws of the Borrower, and any other Credit Party which is a party to any Loan Document, as amended to date, and a recent certificate of status, certificate of compliance, good standing certificate or analogous certificate. |
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(d) Closing Conditions Certificate. The Agent shall have received a certificate,
dated the Effective Date and signed by a Responsible Officer of the Borrower, confirming compliance
with the financial covenants set forth in Section 5.12 and with the conditions set forth in Section
4.2(a) and (b).
(e) Fees. The Agent and the Lenders shall have received all fees and other amounts
due and payable on or prior to the Effective Date, including, to the extent invoiced, reimbursement
or payment of all legal fees and other Out-of-Pocket Expenses required to be reimbursed or paid by
the Borrower hereunder or under any other Loan Document.
(f) Insurance. The Agent shall have received a certificate of insurance coverage,
naming CIBC Asset-Based Lending Inc., as agent, as first loss payee dated not more than 30 days
prior to the Effective Date, evidencing that the Borrower and the Credit Parties are carrying
insurance in accordance with Section 5.9 hereof.
(g) Inventory Control Systems; Appraisal; Field Audit; Opening Availability. The Agent
shall have reviewed and be satisfied with the Collateral, the inventory control systems, the books
and records and the reporting capability of the Credit Parties. The Agent shall have received
appraisals, completed by a reputable and independent appraisal firm at the expense of the Borrower,
determining the net orderly liquidation value of the Inventory of the Credit Parties. In addition,
the Agent shall have received the results of an updated field audit, and the Borrowing Base on the
Effective Date shall be sufficient in value, as determined by Agent, to provide Borrower with
Excess Availability, after giving effect to the extensions of credit to be made hereunder on the
Effective Date (on a pro forma basis, with trade payables being paid currently, and expenses and
liabilities being paid in the ordinary course of business and without acceleration of sales or
deterioration of working capital) of at least (i) $2,100,000 if the Access Agreement has been
delivered on or before the Effective Date or (ii) $1,600,000 if the Access Agreement has not been
delivered.
(h) No Cessation of Financing Market. There shall have not been occurred and be
continuing on the Effective Date any general banking moratorium or any practical cessation in the
bank or private debt financing markets, and there shall not have been introduced any material
governmental restrictions imposed on lending institutions, which materially affect the type of
lending transactions contemplated by this Agreement.
(i) Execution and Delivery of Documentation. The Borrower and any other Credit Party
which is a party to any Loan Document shall have duly authorized, executed and delivered all
documents, including Loan Documents, required hereunder, all in form and substance satisfactory to
the Agent, acting reasonably, and all of the Security Documents shall have been registered in all
offices in which, in the opinion of the Agent or its counsel, registration is necessary or of
advantage to preserve the priority of the Liens intended to be created thereby, and duplicate
copies of such Security Documents bearing or accompanied by appropriate endorsements or
certificates of registration shall have been delivered to the Agent. The Agent shall have received
and be satisfied with the results of all legal due diligence including without limitation personal
property, bankruptcy, execution and other searches conducted by the Agent and its counsel with
respect to the Borrower and any other Credit Party in all jurisdictions selected by the Agent and
its counsel. The Agent shall have received and be satisfied with all
estoppel letters, acknowledgements, waivers, subordinations, postponements, discharges,
priority agreements and inter-creditor and non-disturbance agreements as the Agent may reasonably
require to ensure its first priority, subject to Permitted Liens, over and unfettered access to,
the Collateral or, at the Permitted Discretion of the Agent, have implemented Availability Reserves
in connection therewith.
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(j) Security Documents. The Agent shall have received:
| (i) | a general security agreement executed by the Borrower in favour of the Agent, as agent for the Lenders, dated as of the Effective Date and in form and substance satisfactory to the Agent, constituting a first-priority Lien on all property from time to time of the Borrower, subject to no Liens except Permitted Liens; |
| (ii) | a collateral assignment of the Services Agreement executed by the Borrower and the Parent in favour of the Agent, as agent for the Lenders, dated as of the Effective Date and in form and substance satisfactory to the Agent; |
| (iii) | a debenture executed by the Borrower in favour of the Agent, as agent for the Lenders, in form and substance satisfactory to the Agent (the “Quebec Debenture”); |
| (iv) | as security for the Obligations, a pledge agreement in respect of the Quebec Debenture granted by the Borrower in favour of the Agent, as agent for the Lenders, in form and substance satisfactory to the Agent; and |
| (v) | as security for payment of the Quebec Debenture, a deed of hypothec granted by the Borrower in favour of CIBC Asset-Based Lending Inc., as fondé de pouvoir within the meaning of article 2692 of the Civil Code of Quebec, constituting a first ranking hypothec over the universality of the Borrower’s assets, present and future, movable and immobable, corporeal and incorporeal, the whole in form and substance satisfactory to CIBC Asset-Based Lending Inc., as fondé de pouvoir within the meaning of article 2692 of the Civil Code of Quebec; |
provided that if any of the foregoing documents are not suitable for use in any
jurisdiction, the Borrower shall provide to the Agent alternative document(s) with
substantially equivalent substantive effect and which are suitable for use in such
jurisdiction.
(k) Landlord Waivers; Bailee Letters. The Agent shall have received (i) executed
copies of a landlord waiver, in form and substance satisfactory to the Agent, acting reasonably,
from each landlord of Real Property where any Collateral of any of the Credit Parties is located
and (ii) bailee letters, in form and substance satisfactory to the Agent, from each bailee who is
in possession of any Collateral of any of the Credit Parties, or the Agent has been given the
opportunity to establish Availability Reserves acceptable to the Agent in respect of the
applicable Inventory.
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(l) Regulatory Approval; Consents; Waivers. The Agent and the Lenders shall be
satisfied, acting reasonably, that all material Authorizations required in connection with the
Transactions contemplated hereby have been obtained and are in full force and effect, and that all
consents and waivers required to consummate the Transactions have been obtained, to the extent that
consummation of the Transactions would otherwise be restricted or prohibited under the terms of any
Material Contract to which the Borrower or any other Credit Party is a party, or by which it is
bound, in each case without the imposition of any burdensome provisions.
(m) Delivery of Financial Statements. The Agent and the Lenders shall have received
and be satisfied with the financial statements described in Section 3.4(a) and unaudited
consolidated and consolidating balance sheets of the Borrower and its Subsidiaries (pro forma as
of the Effective Date).
(n) No Material Adverse Change. The Agent and the Lenders shall be satisfied that,
since December 31, 2010, there has not been a Material Adverse Change.
(o) Indebtedness. The Transactions contemplated in this Agreement and the other Loan
Documents shall not have caused any event or condition to occur which has resulted, or which will
result, in any Material Indebtedness becoming due prior to its scheduled maturity or that permits
(with or without the giving of notice, the lapse of time, or both) the holder or holders of any
Material Indebtedness or any trustee or agent on its or their behalf to cause any Material
Indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance
thereof, prior to its scheduled maturity, or which will result in the creation of any Liens under
any Indebtedness.
(p) Blocked Account/Cash Management Systems. The Agent shall have received evidence
satisfactory to the Agent that, as of the Effective Date, blocked account and cash management
systems complying with Section 2.17 have been established and are currently being maintained in the
manner set forth in such Section 2.17, and the Agent shall have received copies of duly executed
tri-party blocked account and other control agreements satisfactory to the Agent, acting
reasonably, with the banks and other Persons as required by Section 5.13.
(q) Material Contracts. The Agent and the Lenders shall be satisfied with the terms
and conditions of each of the Material Contracts.
(r) Cancellation of Existing Credit Lines. The Agent shall have received one or more
pay off letters, in form and substance satisfactory to the Agent, confirming that the Borrower
shall have repaid all amounts outstanding under its existing credit lines, and that all such
existing credit lines shall have been cancelled permanently.
(s) Capitalization Arrangement. The Lenders shall be satisfied with the capital
structure of the Borrower, that the Borrower is solvent, and that the Borrower has sufficient
working capital to pay its debts as they become due.
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(t) Background Checks. The Agent shall have received and be satisfied with the
results of the background checks conducted on the key senior management and principals of the
Credit Parties.
(u) Judgments/Litigation. The Agent shall be satisfied that there are no judgments
outstanding, and no legal or administrative proceedings (including in any court arbitrator or any
Governmental Authority) pending or threatened except as expressly permitted hereunder which could
reasonably be expected to give rise to a Material Adverse Effect.
(v) Compliance with Securities Legislation. The Agent shall have received and be
satisfied with evidence of the Credit Parties’ compliance with any disclosure requirements under
any applicable securities legislation, as applicable.
(w) KYC. Each of the Lenders will have received all documentation and other
information requested by it in connection with applicable “know your customer” bank policies and
AML Legislation.
(x) No Material Change to Information. No event, circumstance or development shall
have occurred which in the opinion of the Lenders is inconsistent in any material and adverse
respect with any information or other matter previously disclosed to the Lenders by or on behalf of
the Borrower, any of the Guarantors or any of their affiliates, representatives or advisors.
(y) Other Documentation. The Agent and the Lenders shall have received such other
documents and instruments as are customary for transactions of this type or as they may reasonably
request.
The obligations of the Lenders to make Loans or provide a Letter of Credit Guarantee hereunder
shall not become effective unless each of the foregoing conditions is satisfied (or waived pursuant
to Section 9.2) at or prior to 3:00 p.m., Toronto time, on August 12, 2011 (and, in the event such
conditions are not so satisfied or waived by such time, the Commitments shall terminate at such
time). The conditions set forth in Section 4.1 are for the exclusive benefit of the Lenders, and
may be waived by the Lenders in accordance with Section 9.2 at any time and from time to time, with
or without further conditions.
4.2 Each Credit Event The obligation of the Agent (on behalf of the Lenders) to make any
Loan or provide a Letter of Credit Guarantee or an F/X Guarantee (or, after a CIBC ABL
Reorganization Date, the obligation of the Issuing Bank to issue a Letter of Credit or the
obligation of the F/X Bank to enter into an F/X Contract) on the occasion of any Borrowing,
(including on the occasions of the initial Borrowings hereunder), is subject to the satisfaction of
the following conditions:
(a) the representations and warranties of the Borrower set forth in this Agreement shall be
true and correct on and as of the date of each such Borrowing (including the date of issuance,
amendment, renewal or extension of such Letter of Credit, as applicable) as if made on such date
(except where such representation or warranty refers to a different date);
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(b) at the time of and immediately after giving effect to such Borrowing (including the
issuance, amendment, renewal or extension of such Letter of Credit, as applicable), no Default or
Event of Default shall have occurred and be continuing; and
(c) the Agent shall have received a Borrowing Request in the manner and within the time period
required by Section 2.3; and
(d) except as may be otherwise agreed to from time to time by the Agent and the Borrower in
writing, after giving effect to the extension of credit requested to be made by the Borrower on
such date, the aggregate Exposure will not exceed the lesser of (i) the Commitments, or (ii) an
amount equal to the Borrowing Base.
Each Borrowing, including each issuance, amendment, renewal or extension of a Letter of Credit,
shall be deemed to constitute a representation and warranty by the Borrower on the date thereof as
to the accuracy of the matters specified in paragraphs (a) and (b) above. This requirement does
not apply on the conversion or rollover of an existing Borrowing provided that the
aggregate outstanding Borrowings will not be increased as a consequence thereof.
ARTICLE 5
AFFIRMATIVE COVENANTS
AFFIRMATIVE COVENANTS
From (and including) the Effective Date until the Commitments have expired or been terminated
and the principal of and interest on each Loan and all fees payable hereunder shall have been paid
in full and all Letters of Credit and Letter of Credit Guarantees, F/X Contracts and F/X Guarantees
shall have expired and been terminated and all Reimbursement Obligations have been satisfied by the
Borrower, the Borrower and each other Credit Party covenants and agrees with the Lenders that:
5.1 Financial Statements and Other Information The Borrower will furnish to the Agent and
each Lender:
(a) as soon as available and in any event within 90 days after the end of each Fiscal Year of
the Borrower, its consolidated balance sheet and related statements of income, retained earnings
and changes in financial position as of the end of and for such Fiscal Year, setting forth in each
case in comparative form the figures for the previous Fiscal Year, all prepared on a review
engagement basis by Ernst & Young LLP or other independent auditors of recognized national standing
(without a “going concern” or like qualification or exception and without any qualification or
exception as to the scope of such audit) to the effect that such consolidated financial statements
present fairly in all material respects the financial condition and results of operations of the
Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP consistently applied;
(b) as soon as available and in any event within 30 days after the end of each fiscal month,
its unaudited consolidated balance sheet and related statements of income, retained earnings and
changes in financial position as of the end of such month and the then elapsed portion of the
Fiscal Year which includes such fiscal month, setting forth in each case in comparative form the
figures for the corresponding period or periods of (or, in the case of the
balance sheet, as of the end of) the previous Fiscal Year, all certified by a Responsible
Officer as presenting fairly in all material respects the financial condition and results of
operations of the Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied, subject to normal year-end audit adjustments;
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(c) concurrently with the financial statements required pursuant to Sections 5.1(a) and (b)
above, a certificate of the Borrower, signed by a Responsible Officer in the form of Exhibit K;
(d) copies of each management letter issued to the Borrower by its auditors promptly following
consideration or review thereof by the Board of Directors of the Borrower, or any committee thereof
(together with any response thereto prepared by the Borrower);
(e) promptly after the same become publicly available, copies of all periodic and other
reports, proxy statements and other materials filed by the Borrower or any other Credit Party with
any securities commission, stock exchange or similar entity, and all materials distributed out of
the ordinary course by the Borrower to its shareholders and which relate to matters in which any
Lender or the Agent, in such capacities, can reasonably be expected to have an interest;
(f) promptly upon the request of the Agent, and in any event no less frequently than the tenth
Business Day of each fiscal month, (together with a copy of all or any part of the following
reports requested by any Lender in writing after the Effective Date), a Borrowing Base Report, as
of the last day of the immediately preceding fiscal month, accompanied by such supporting detail
and documentation as shall be requested by the Agent it is reasonable discretion including:
| (i) | an accounts receivable aging (including both summary and detail format) showing Accounts outstanding, aged from due date as follows: current, 1 to 30 days past due, 31 to 60 days past due, 61 to 90 days past due, and 91 days or more past due, accompanied by such supporting detail and documentation as shall be requested by the Agent in its reasonable discretion, including the ledger for disputed/legal accounts and the name and contact information of each account debtor but only, in the case of contact information only, during a field examination, if a Default or Event of Default has occurred or if, in the Agent’s reasonable discretion, a Default or an Event of Default is imminent; |
| (ii) | a calculation of the Accounts which would not meet the criteria of an Eligible Account Receivable; |
| (iii) | a copy of the internally generated month end cash receipts and collections electronically generated report; |
| (iv) | Borrower prepared reconciliation of the cash receipts electronically generated report to the Blocked Accounts following activation of the Blocked Accounts; |
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| (v) | a detailed, monthly, Inventory listing of the Borrower and each Credit Party by location, type and product group with a supporting perpetual Inventory report, in each case, accompanied by such supporting detail and documentation as shall be requested by the Agent in its reasonable discretion; such summaries and reports shall include the dollar value thereof both at cost, determined on a first-in, first out basis, and at fair market value; |
| (vi) | a calculation and report as to the Inventory which does not meet the definition of Eligible Inventory; and | ||
| (vii) | detailed monthly accounts payable aging. |
(g) weekly, on the second Business Day of each week for the prior week:
| (i) | a weekly Borrowing Base Report that reflects the Accounts and Inventory as at the last business day of the previous week together with a report of Priority Payables as at such date; |
| (ii) | a copy of the internally generated weekly sales electronically generated report and invoice register; |
| (iii) | a copy of the internally generated weekly credit memo electronically generated report (or sales electronically generated report if included there); |
| (iv) | a copy of the internally generated weekly debit memo electronically generated report (or the sales electronically generated report if included there); and |
| (v) | a copy of the internally generated weekly cash receipts and collections electronically generated report. |
(h) at the request of the Agent, monthly within 30 days of the last day of each fiscal month:
| (i) | a copy of the internally generated general ledger report as at the month end; |
| (ii) | Borrower prepared reconciliation of the cash receipts electronically generated report to the blocked depository account; |
| (iii) | a reconciliation of Accounts aging to the general ledger and to the financial statement as at the month end; |
| (iv) | a reconciliation of the monthly inventory perpetual listing to the general ledger and to the financial statement as at the month end; and |
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| (v) | copies of all material correspondence, actuarial valuation reports and other filings with any pension regulators or the applicable Governmental Authority to which such correspondence, reports and filings must be sent (including any filings furnished to the trustee under any Pension Plan and any valuation reports prepared by the Borrower’s actuary and confirming that all contributions to be made in respect of the Pension Plans have been made when due). |
(i) such other reports designating, identifying and describing the Accounts and Inventory as
required by the Agent and on a more frequent basis as the Agent may reasonably request in its
reasonable credit discretion;
(j) the results of each physical verification, if any, that the Borrower may have made, or
caused any other Person to have made on its behalf, of all or any portion of its Inventory, within
30 Business Days of completion of any such physical verification (and, if a Default or an Event of
Default has occurred and be continuing, the Borrower shall, upon the request of the Agent, conduct,
and deliver the results of, such physical verifications as the Agent may require);
(k) such appraisals of the assets of the Borrower and the Credit Parties as the Agent may
request at any time, such appraisals to be conducted at the expense of the Borrower by an appraiser
that is acceptable to the Agent, and shall be in scope, form and substance acceptable to the Agent;
provided that (i) if no Default or Event of Default has occurred during a Fiscal Year of the
Borrower and Excess Availability exceeds $1,000,000 at all times during such Fiscal Year, then the
Borrower will only be liable for the expense of up to one (1) such appraisals that are requested by
the Agent in such Fiscal Year and (ii) if no Default or Event of Default has occurred during a
Fiscal Year of the Borrower but Excess Availability is less than $1,000,000 at any time during such
Fiscal Year, then the Borrower will only be liable for the expense of up to two (2) such appraisals
that are requested by the Agent in such Fiscal Year;
(l) promptly after the Borrower learns of the receipt or occurrence of any of the following, a
certificate of the Borrower, signed by a Responsible Officer, specifying (i) any official notice of
any violation, possible violation, non-compliance or possible non-compliance, or claim made by any
Governmental Authority pertaining to all or any part of the properties of the Borrower or any other
Credit Party which could reasonably be expected to have a Material Adverse Effect, (ii) any event
which constitutes a Default or Event of Default, together with a detailed statement specifying the
nature thereof and the steps being taken to cure such Default or Event of Default, (iii) the
receipt of any notice from, or the taking of any other action by, the holder of any promissory
note, debenture or other evidence of Indebtedness of the Borrower or any other Credit Party in an
amount in excess of Cdn.$250,000 with respect to an actual or alleged default, together with a
detailed statement specifying the notice given or other action taken by such holder and the nature
of the claimed default and what action the Borrower or the relevant Subsidiary is taking or
proposes to take with respect thereto, (iv) any default or non-compliance of any party to any of
the Loan Documents with any of the terms and conditions thereof or any notice of termination or
other proceedings or actions which could reasonably be expected to adversely affect any of the Loan
Documents, (v) the creation, dissolution, merger or acquisition of any Subsidiary of the Borrower,
(vi) any event or condition not previously disclosed to the Agent, which violates any Environmental
Law and which could potentially, in
the Borrower’s reasonable judgment, have a Material Adverse Effect, (vii) any material
amendment to, termination of, or material default under a Material Contract or any execution of, or
material amendment to, termination of, or material default under, any material collective
bargaining agreement, and (viii) any other event, development or condition which may reasonably be
expected to have a Material Adverse Effect;
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(m) promptly after the occurrence thereof, notice of the institution of or any material
adverse development in any action, suit or proceeding or any governmental investigation or any
arbitration before any court or arbitrator or any Governmental Authority or official against the
Borrower or any other Credit Party or any of its or their Subsidiaries or any material property of
any thereof which could reasonably be expected to have a Material Adverse Effect;
(n) promptly after the filing thereof with any Governmental Authority (if requested by the
Agent), copies of each annual and other report (including applicable schedules and actuarial
reports) with respect to each Pension Plan of the Borrower or any other Credit Party or any trust
created thereunder;
(o) at the cost of the Borrower, a report or reports of an independent collateral field
examiner (which collateral field examiner may be the Agent or an Affiliate thereof) approved (i) by
the Borrower, whose approval shall not be unreasonably withheld, and (ii) by the Agent with respect
to the Eligible Accounts and Eligible Inventory components included in the Borrowing Base. The
Agent may (and, at the direction of the Required Lenders, shall) request such reports or additional
reports as it (or the Required Lenders) shall reasonably deem necessary; provided that (i) if no
Default or Event of Default has occurred during a Fiscal Year of the Borrower and Excess
Availability exceeds $1,000,000 at all times during such Fiscal Year, then the Borrower will only
be liable for the expense of up to two (2) such reports that are requested by the Agent in such
Fiscal Year and (ii) if no Default or Event of Default has occurred during a Fiscal Year of the
Borrower but Excess Availability is less than $1,000,000 at any time during such Fiscal Year, then
the Borrower will only be liable for the expense of up to three (3) such reports that are requested
by the Agent in such Fiscal Year;
(p) upon renewal of any insurance policy or upon request by the Agent, a copy of an insurance
certificate summarizing the terms of such policy, and upon request by the Agent, copies of the
applicable policies;
(q) on or before the earlier of the 10th day after approval by the Board of
Directors of the Borrower and the 30th day before each Fiscal Year end, an annual budget of the
Borrower and the other Credit Parties on a consolidated and consolidating basis (consolidating on
the basis of principal lines of business of the Borrower and the other Credit Parties), approved by
the Board of Directors of the Borrower, setting forth in reasonable detail and on a monthly basis
the projected revenues and expenses (including capital expenditures) of the Borrower for the
following Fiscal Year, it being recognized by the Lenders that projections as to future results are
not to be viewed as fact and that the actual results for the period or periods covered by such
projections may differ from the projected results; and
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(r) concurrently with any delivery of financial statements under Section 5.1(a) or (b) above,
a certificate of a Responsible Officer of the Borrower (i) stating whether any change in
GAAP or in the application thereof has occurred since the date of the financial statements
referred to in Section 5.1(a) and, if any such change has occurred, specifying the effect of such
change on the financial statements accompanying such certificate, (ii) identifying all its
Subsidiaries existing on the date of such certificate and indicating, for each such Subsidiary, and
whether such Subsidiary is a Guarantor and whether such Subsidiary was formed or acquired since the
end of the previous fiscal month and (iii) identifying any parcels of real property or improvements
thereto that have been acquired by any Credit Party since the end of the previous fiscal month.
5.2 Existence; Conduct of Business
(a) Each Credit Party will do or cause to be done all things necessary to preserve, renew and
keep in full force and effect its legal existence (subject only to Section 6.3).
(b) Each Credit Party will obtain, preserve, renew and keep in full force and effect any and
all rights, licenses, permits, privileges and franchises material to the conduct of its business.
5.3 Payment of Obligations Each Credit Party will pay its obligations, including Tax
liabilities, that, if not paid, could result in a Material Adverse Effect before the same shall
become delinquent or in default, except where (a) the validity or amount thereof is being contested
in good faith by appropriate proceedings, (b) the Borrower or such other Credit Party has set aside
on its books adequate reserves with respect thereto in accordance with GAAP, and (c) the failure to
make payment pending such contest could not reasonably be expected to result in a Material Adverse
Effect.
5.4 Maintenance of Properties Each Credit Party will keep and maintain all property
material to the conduct of its business in good working order and condition, ordinary wear and tear
excepted.
5.5 Books and Records; Inspection Rights Each Credit Party will keep proper books of
record and account in which full, true and correct entries are made of all dealings and
transactions in relation to its business and activities. Each Credit Party will permit any
representatives designated by the Agent or any Lender, upon 48 hours prior notice, to visit and
inspect its properties, to examine and make extracts from its books and records, and to discuss its
affairs, finances and condition with its officers and independent accountants, during business
hours (prior to an Event of Default that is continuing or any time thereafter) and as often as
reasonably requested. No such notice will be required if there is an Event of Default that has
occurred and is continuing.
5.6 Compliance with Applicable Laws and Material Contracts Each Credit Party will comply
with all Applicable Laws and orders of any Governmental Authority applicable to it or its property
and with all of its material contractual obligations, except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in a Material Adverse
Effect. No Credit Party shall modify, amend or alter its certificate or articles of incorporation
without 30 days prior written notice to the Agent in the case of a name change, change of
jurisdiction or any other change adverse to the Agent or the Lenders.
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5.7 Use of Proceeds and Letters of Credit The proceeds of the Revolving Loans will be used
for working capital and other general corporate purposes of the Borrower. Letters of Credit will
be issued only to support any activity of the Borrower or any other Credit Party that is in keeping
with the Borrower’s business and subject to the internal policies of the Issuing Bank.
5.8 Further Assurances Each Credit Party will cure promptly any defects in the execution
and delivery of the Loan Documents, including this Agreement. Upon request, each Credit Party
will, at its expense, as promptly as practical, execute and deliver to the Agent, all such other
and further documents, agreements and instruments in compliance with or performance of the
covenants and agreements of the Borrower or any other Credit Party in any of the Loan Documents,
including this Agreement, or to further evidence and more fully describe the Collateral, or to
correct any omissions in any of the Loan Documents, or more fully to state the security obligations
set out herein or in any of the Loan Documents, or to perfect, protect or preserve any Liens
created pursuant to any of the Loan Documents, or to make any recordings, to file any notices, or
obtain any consents, all as may be necessary or appropriate in connection therewith, in the
judgment of the Agent, acting reasonably.
5.9 Insurance Each Credit Party shall maintain insurance on its property and assets under
such policies of insurance, with such insurance companies, in such reasonable amounts and covering
such insurable risks as are at all times reasonably satisfactory to the Agent. All such policies
are subject to the rights of any holders of Permitted Liens holding claims senior to the Agent, to
be made payable to the Agent, to the extent required herein, in case of loss, under a standard non
contributory “mortgagee”, “lender” or “secured party” clause and are to contain such other
provisions as the Agent may require to fully protect the Agent’s interest in the property and
assets subject to the Liens in favour of the Agent and to any payments to be made under such
policies. All original policies (or true copies thereof) which relate to Collateral are to be
delivered to the Agent, with the loss payable endorsement in the Agent’s favour, and shall provide
for not less than thirty (30) days prior written notice to the Agent of the exercise of any right
of cancellation. Upon the occurrence and continuance of an Event of Default which is not waived in
writing by the Agent, the Agent shall, subject to the rights of any holders of Permitted Liens
holding claims senior to the Agent, have the sole right, in the name of the Agent, the Borrower or
any other applicable Credit Party, to file claims under any insurance policies, to receive, receipt
and give acquittance for any payments that may be payable thereunder, and to execute any and all
endorsements, receipts, releases, assignments, reassignments or other documents that may be
necessary to effect the collection, compromise or settlement of any claims under any such insurance
policies. If any part of the Collateral is lost or damaged by fire or other casualty and the
insurance proceeds for such loss or damage is less than or equal to $250,000, such insurance
proceeds shall be paid to the Borrower. Notwithstanding the foregoing, to the extent such
insurance proceeds are received by the Agent, the Agent shall promptly, and in any event within one
(1) Business Day of receipt, remit such insurance proceeds to the applicable Credit Party. If any
part of the Collateral is lost or damaged by fire or other casualty and the insurance proceeds for
such loss or damage is greater than $250,000, such insurance proceeds shall be paid to the
Borrower, and provided that the applicable Credit Party has sufficient business interruption
insurance to replace the lost profits of any of its facilities, the Borrower may irrevocably elect
(by delivering written notice to the Agent) to replace,
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repair or restore such Collateral to
substantially the equivalent condition prior to such fire or other casualty as set forth herein. If such election is not made by the Borrower, insurance proceeds
shall be used by the Borrower to repay outstanding Revolving Loans. Notwithstanding the foregoing,
to the extent that such insurance proceeds are received by the Agent, the Agent shall promptly, and
in any event within one (1) Business Day of receipt, remit such insurance proceeds to the Borrower
to be applied in accordance with this Section 5.9. If the Borrower does not, or cannot, elect to
use the insurance proceeds as set forth above, or if the Agent believes that the applicable Credit
Party will not be able to timely replace, repair or restore such Collateral to substantially the
equivalent condition prior to such fire or other casualty, the Agent may, subject to the rights of
any holders of Permitted Liens holding claims senior to the Agent in respect of such insurance
proceeds, (i) if no Event of Default has occurred and is continuing, apply the insurance proceeds
to the payment of any Revolving Loans until paid in full and (b) if an Event of Default has
occurred and is continuing, apply the insurance proceeds to the Obligations in such manner and in
such order as the Agent may reasonably elect. Upon the occurrence and during the continuance of an
Event of Default, all insurance proceeds in respect of any Collateral shall be paid to the Agent.
The Agent may apply such insurance proceeds to the Obligations in such manner as it may deem
advisable in its sole discretion. In the event the Borrower fails to provide the Agent with timely
evidence, acceptable to the Agent, of the maintenance of insurance coverage required pursuant to
this Section 5.9, or in the event that any Credit Party fails to maintain such insurance, the Agent
may purchase or otherwise arrange for such insurance, but at the Borrower’s expense and without any
responsibility on the Agent’s part for: (i) obtaining the insurance; (ii) the solvency of the
insurance companies; (iii) the adequacy of the coverage; or (iv) the collection of claims. The
insurance acquired by the Agent may, but need not, protect the Borrower’s or any other Credit
Party’s interest in the Collateral, and therefore such insurance may not pay claims which the
Borrower may have with respect to the Collateral or pay any claim which may be made against the
Borrower in connection with the Collateral. In the event the Agent purchases, obtains or acquires
insurance covering all or any portion of the Collateral, the Borrower shall be responsible for all
of the applicable costs of such insurance, including premiums, interest (at the applicable interest
rate for Revolving Loans set forth in Section 2.5), fees and any other charges with respect
thereto, until the effective date of the cancellation or the expiration of such insurance. The
Agent may charge all of such premiums, fees, costs, interest and other charges to the Borrower’s
loan account. The Borrower hereby acknowledges that the costs of the premiums of any insurance
acquired by the Agent may exceed the costs of insurance which the Borrower may be able to purchase
on its own. In the event that the Agent purchases such insurance, the Agent will promptly, and in
any event within fifteen (15) days, notify the Borrower of said purchase.
5.10 Operation and Maintenance of Property Each Credit Party will, manage and operate its
business or cause its business to be managed and operated (i) in accordance with prudent industry
practice in all material respects and in compliance in all material respects with the terms and
provisions of all applicable licenses, leases, contracts and agreements, and (ii) in compliance
with all Applicable Laws of the jurisdiction in which such businesses are carried on, and all
Applicable Laws of every other Governmental Authority from time to time constituted to regulate the
ownership, management and operation of such businesses, except where a failure to so manage and
operate would not have a Material Adverse Effect.
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5.11 Additional Subsidiaries; Additional Liens If, at any time on or after the Effective
Date, the Borrower or any other Credit Party creates or acquires an additional Subsidiary or in
some other fashion becomes the holder of any Equity Securities of a new Subsidiary, then to the
extent permitted by Applicable Law, the Borrower and the other Credit Parties will cause such new
Subsidiary to immediately execute and deliver to the Agent a guarantee, and security agreements,
hypothecs and other security-related documents covering such new Subsidiary’s Inventory, Accounts
and other Collateral, all in form and substance satisfactory to the Agent, acting reasonably. In
addition, if at any time on or after the Effective Date, the Borrower or any other Credit Party has
Inventory, Accounts or other Collateral located in any jurisdiction in which the Agent does not
hold duly perfected security in respect of the Inventory, Accounts or other Collateral of such
Credit Party in such jurisdiction, the applicable Credit Party shall give notice to the Agent of
those facts. If the Agent, acting reasonably, determines that it is practical to perfect security
in such jurisdiction, the applicable Credit Party shall promptly execute all such security
agreements, hypothecs and other security-related documents covering such Credit Party’s Inventory,
Accounts or other Collateral in such jurisdiction, all in form and substance satisfactory to the
Agent, acting reasonably, and shall take all such action as may reasonably be required to ensure
that the Liens in favour of the Agent in respect of the Inventory, Accounts or other Collateral of
such Credit Party located in such jurisdiction are duly perfected. In connection with the
execution and delivery of any guarantee, security agreement, intellectual property security
agreements, hypothecs or related document pursuant to this Section, the Borrower and each other
Credit Party will cause to be delivered to the Agent such corporate resolutions, certificates,
legal opinions and such other related documents and registrations as shall be reasonably requested
by the Agent and consistent with the relevant forms and types thereof delivered on the Effective
Date or as shall be otherwise reasonably acceptable to the Agent. Each guarantee, security
agreement, intellectual property security agreements, hypothecs and other documents delivered
pursuant to this Section shall be deemed to be a Security Document from and after the date of
execution thereof. For greater certainty, the Credit Parties acknowledge that, to the extent that
Collateral is located in a jurisdiction in which the Agent does not hold duly perfected security in
such Collateral in such jurisdiction, such Collateral is not eligible for inclusion in the
Borrowing Base. Approval of the Required Lenders is required to include an additional Subsidiary
in the Borrowing Base.
5.12 Adjusted Tangible Net Worth Covenant The Borrower will, at all times maintain the
Adjusted Tangible Net Worth of the Borrower and its Subsidiaries at a level not less than
$3,868,000, being 85% of the Adjusted Tangible Net Worth of the Borrower and its Subsidiaries on
the Effective Date. Adjusted Tangible Net Worth of the Borrower and its Subsidiaries on the
Effective Date shall be determined on the Effective Date by the Borrower in a manner acceptable to
the Agent. The Borrower’s compliance with this Section 5.12 shall be tested monthly.
5.13 Post Closing Undertakings Borrower will ensure that all post closing undertakings as
set forth in Schedule 5.13 (collectively, the “Undertakings”) have been satisfied within the time
periods set forth therein and any failure to satisfy any of the Undertakings within the applicable
time periods shall constitute an Event of Default.
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5.14 Environmental Laws Each of the Borrower and the other Credit Parties will conduct its
business in compliance in all material respects with all Environmental Laws applicable to it or
them, including those relating to the Credit Parties’ generation, handling, use, storage and
disposal of Hazardous Materials. Each of the Borrower and the other Credit Parties will take
prompt and appropriate action to respond to any non-compliance or alleged non-compliance with
Environmental Laws and the Borrower shall regularly report to the Agent on such response. Without
limiting the generality of the foregoing, whenever any Credit Party gives notice to the Agent
pursuant to Section 5.1(l)(vi) and the Agent so requests, the Credit Parties shall, at the
applicable Credit Party’s expense:
(a) cause an independent environmental engineer acceptable to the Agent in its reasonable
discretion to conduct such tests of the site where the non-compliance or alleged non-compliance
with Environmental Laws has occurred, and prepare and deliver to the Agent a report setting forth
the results of such tests, a proposed plan for responding to any environmental problems described
therein, and an estimate of the costs thereof;
(b) provide to the Agent a supplemental report of such engineer whenever the scope of the
environmental problem, or the Credit Party’s, and any other Person’s response thereto or the
estimated costs thereof, shall change. Such reports shall also be addressed to the Agent and the
Lenders and shall, as requested by the Agent, set out the results of such engineers’ review of,
among other things:
| (i) | the internal policies and procedures of the Credit Parties relating to environmental regulatory compliance to ensure that all appropriate steps are being taken by or on behalf of the Credit Parties to comply in all material respects with all applicable requirements of Environmental Laws; |
| (ii) | the progress of compliance satisfaction, capital expenditures required to effect remedial steps and compliance deficiencies; |
| (iii) | all other environmental audit reports which the Credit Parties or any predecessor has commissioned in the normal conduct of its business which relate to the subject matter of such notice; and |
| (iv) | all environmental reports which have been commissioned by or made available to a Credit Party in connection with new acquisitions, and the engineers’ report and recommendations on results of tests performed or samples taken by it during the course of its review, irregularities or steps which may be taken to ensure continued compliance, as well as such other matters as the Borrower and/or the Agent may reasonably request from time to time. |
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5.15 Landlords’ Agreement, Mortgagee Agreements, Bailee Letters and Real Estate Purchases
Each Credit Party shall use commercially reasonable efforts to obtain a landlord’s agreement,
mortgagee agreement or bailee letter, as applicable, from the lessor of each leased property,
mortgagee of owned property or bailee with respect to any warehouse, processor or converter
facility or other location where Collateral is stored or located, which agreement or letter shall
contain a waiver or subordination of all Liens or claims that the landlord, mortgagee or bailee may
assert against the Collateral at that location, and shall otherwise be reasonably
satisfactory in form and substance to the Agent. With respect to such locations or warehouse space
leased or owned as of the Effective Date and thereafter, if the Agent has not received a landlord
or mortgagee agreement or bailee letter as of the Effective Date (or, if later, as of the date such
location is acquired or leased), Borrower’s Eligible Inventory at that location shall, in the
Agent’s discretion, be excluded from the Borrowing Base or be subject to such Reserves as may be
established by Agent in its reasonable credit judgment. After the Effective Date, no real property
or warehouse space shall be leased or acquired (which is subject to a mortgage) by any Credit Party
and no Inventory shall be shipped to a processor or converter under arrangements established after
the Effective Date without the prior written consent of the Agent (provided that no consent shall
be required where a landlord consent waiver substantially in the form attached hereto as Exhibit G
or otherwise in form and substance satisfactory to the Agent, acting reasonably, has been provided
in respect of the applicable location or Availability Reserves acceptable to the Agent have been
established in respect of such Inventory) or, unless and until a satisfactory landlord agreement,
mortgagee agreement or bailee letter, as appropriate, shall first have been obtained with respect
to such location. Each Credit Party shall timely and fully pay and perform its obligations under
all leases and other agreements with respect to each leased location or public warehouse where any
Collateral is or may be located.
5.16 Canadian Pension Plans The Borrower will administer the Canadian Pension Plans in
accordance with the requirements of the applicable pension plan texts, funding agreements, any
other documents governing the Canadian Pension Plans, the ITA and applicable federal or provincial
pension benefits legislation except for any non-compliance which would not reasonably be expected
to have a Material Adverse Effect. The Borrower shall, and shall cause its Subsidiaries to,
promptly provide the Agent with any documentation relating to any of the Canadian Pension Plans as
the Agent may request. The Borrower shall, and shall cause its Subsidiaries to, notify the Agent
within thirty (30) days of: (i) a material increase in the obligations, liabilities and
indebtedness of any of the Canadian Pension Plans; and (ii) commencing payment of contributions to
a Canadian Pension Plan to which the Borrowers had not previously been contributing.
5.17 Collateral Monitoring and Review Upon the request of the Agent, after 48 hours (prior
to the occurrence of an Event of Default that is continuing) notice and during normal business
hours, the Borrower will permit the Agent or professionals (including, consultants, accountants,
and/or appraisers) retained by the Agent to conduct appraisals, commercial finance examinations and
other evaluations, including, of (i) the Credit Parties’ practices in the computation of the
Borrowing Base, and (ii) the assets included in the Borrower Base and financial information such
as, but not limited to, sales, gross margins, payables, accruals and reserves, related to the
calculation of the Borrowing Base. In connection with any inventory appraisal and commercial
finance examination relating to the computation of the Borrowing Base, the Borrower shall make such
adjustments to the calculation of the Borrowing Base as the Agent shall reasonably require in its
Permitted Discretion based upon the terms of this Agreement and the results of such inventory
appraisal and commercial finance examination.
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5.18 Physical Inventories The Borrower will cause physical inventories and periodic cycle
counts to be undertaken, at the expense of the Credit Parties, in each case consistent with past
practices (but in no event less frequently than one physical inventory per Fiscal Year), conducted
by such inventory takers and following such methodology as is consistent with the immediately
preceding inventory or as otherwise may be satisfactory to the Agent in its Permitted Discretion.
The Agent, at the expense of the Credit Parties, may participate in and/or observe each scheduled
physical count of Inventory which is undertaking on behalf of any Credit Party. The Credit
Parties, within thirty (30) days following the completion of any such inventory, shall provide the
Agent with a reconciliation of the results of such inventory (as well as of any other physical
inventory or cycle counts undertaken by a Credit Party) and shall post such results to the Credit
Parties’ stock ledgers and general ledgers, as applicable.
5.19 Application under the CCAA The Borrower acknowledges that its business and financial
relationships with the Agent and the Lenders are unique from its relationship with any other of its
creditors. The Borrower agrees that it shall not file any plan of arrangement under the Companies’
Creditors Arrangement Act (the “CCAA Plan”) which provides for, or would permit, directly or
indirectly, the Agent or the Lenders to be classified in the same class with any other creditor of
the Credit Parties for purposes of such CCAA Plan.
ARTICLE 6
NEGATIVE COVENANTS
NEGATIVE COVENANTS
From (and including) the Effective Date until the Commitments have expired or been terminated
and the principal of and interest on each Loan and all fees payable hereunder shall have been paid
in full and all Letters of Credit, Letter of Credit Guarantees and Reimbursement Obligations have
been satisfied by the Borrower, the Borrower and each Credit Party covenants and agrees with the
Lenders that:
6.1 Indebtedness No Credit Party will create, incur, assume or permit to exist any
Indebtedness, except:
(a) any Indebtedness created hereunder;
(b) any Indebtedness of one Credit Party to another Credit Party;
(c) any Indebtedness of a Credit Party to the Parent that is subordinated and postponed on
terms satisfactory to the Agent;
(d) any Guarantee by a Credit Party of Indebtedness of any other Credit Party;
(e) any Indebtedness of the Credit Parties incurred under Purchase Money Liens or Capital
Lease Obligations in an aggregate amount not exceeding Cdn. $500,000 for all Credit Parties;
(f) any Indebtedness of any Person that becomes a Credit Party after the date hereof,
provided that (i) such Indebtedness exists at the time such Person becomes a Credit Party
and is not created in contemplation of or in connection with such Person becoming a Credit Party,
and (ii) the aggregate principal amount of Indebtedness permitted by this clause (f) shall not
exceed Cdn. $500,000 at any time outstanding;
(g) any Indebtedness in respect of trade letters of credit or Letters of Credit; and
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(h) any Indebtedness in respect of Swap Agreements entered into in compliance with Section
6.5, provided that the aggregate notional amounts under all such Swap Agreements shall not
exceed $2,000,000.
6.2 Liens No Credit Party will, and no Credit Party will permit any Credit Party to,
create, incur, assume or permit to exist any Lien on any property or asset now owned or hereafter
acquired by any Credit Party or assign or sell any income or revenues (including Accounts of the
Credit Parties) or rights in respect of any thereof, except Permitted Liens.
6.3 Fundamental Changes.
(a) No Credit Party will merge into or amalgamate or consolidate with any other Person, or
permit any other Person to merge into or amalgamate or consolidate with it, or sell, transfer,
lease or otherwise dispose of (in one transaction or in a series of transactions) all or
substantially all of its assets, or all or any of the Equity Securities of any of its Subsidiaries
(in each case, whether now owned or hereafter acquired), or liquidate or dissolve without the prior
written consent of the Agent, not to be unreasonably withheld.
(b) No Credit Party will engage to any material extent in any material business other than
businesses of the type conducted by the Credit Party on the date of execution of this Agreement and
businesses reasonably related thereto.
6.4 Investments, Loans, Advances, Guarantees and Acquisitions Each Credit Party will not
purchase, hold or acquire (including pursuant to any amalgamation with any Person that was not a
Credit Party prior to such amalgamation) any Equity Securities, evidences of indebtedness or other
securities (including any option, warrant or other right to acquire any of the foregoing) of, make
or permit to exist any loans or advances to, Guarantee any obligations of, or make or permit to
exist any Investment or any other interest in, any other Person, or purchase or otherwise acquire
(in one transaction or a series of transactions) any assets of any other Person or otherwise make
an Acquisition, except:
(a) Investments by a Credit Party in the Equity Securities of any other Credit Party;
(b) loans or advances made by one Credit Party to any other Credit Party;
(c) Guarantees constituting Indebtedness permitted by Section 6.1; and
(d) Permitted Investments.
6.5 Swap Transactions No Credit Party will enter into any Swap Transaction or engage in
any transactions in respect thereof, except (i) Swap Transactions entered into by the Borrower to
hedge or mitigate risks to which the Borrower or any other Credit Party has actual exposure (other
than those in respect of Equity Securities), (ii) Swap Transactions entered into in order to
effectively cap, collar or exchange interest rates (from fixed to floating rates, from one floating
rate to another floating rate or otherwise) with respect to any interest-bearing liability or
investment of the Borrower or any other Credit Party, and (iii) F/X Contracts entered into pursuant
to Section 2.19 or Section 2.19A, as applicable.
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6.6 Restricted Payments No Credit Party will declare, pay or make, or agree to pay or
make, directly or indirectly, any Restricted Payment, except
(a) the Borrower may declare and pay dividends with respect to its Equity Securities payable
solely in additional Equity Securities, provided that no Default or Event of Default has occurred
and is continuing or would result therefrom;
(b) any Credit Party (other than the Borrower) may declare and pay dividends to the Borrower
or any other Credit Party (other than the Borrower) and any Credit Party (other than the Borrower)
may redeem or repurchase its own Equity Securities, provided that no Default or Event of Default
has occurred and is continuing or would result therefrom;
(c) the Borrower may make Restricted Payments pursuant to and in accordance with stock option
plans, profit sharing plans and/or other benefit plans for management or employees of the Borrower
and the other Credit Parties, provided that the aggregate amount of cash payments made by
the Borrower and the other Credit Parties in any Fiscal Year pursuant to all such stock option
plans, profit sharing plans and other compensation benefit plans shall not exceed Cdn.$ 250,000 and
no Default or Event of Default has occurred and is continuing or would result therefrom;
(d) the Borrower may declare and pay dividends to the Parent (the “Parent Dividends”),
provided that:
| (i) | the aggregate amount of Parent Dividend paid by the Borrower must not exceed 100% of the Borrower’s annual Consolidated Net Income in any Fiscal Year; |
| (ii) | Excess Availability must be equal to or higher than $1,000,000 for sixty days prior to the payment of any Parent Dividends and for sixty days thereafter; |
| (iii) | the Fixed Charge Coverage Ratio, calculated on a pro-forma trailing twelve month basis taking into account the payment of the Parent Dividends, must be equal to or higher than 1.0:1; and |
| (iv) | no Default or Event of Default has occurred and is continuing or would result from payment of the Parent Dividend; and |
(e) the Borrower may declare and pay a dividend of $1,349,000 on the Effective Date, provided
that no Default or Event of Default has occurred and is continuing or would result therefrom.
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6.7 Transactions with Affiliates No Credit Party will sell, lease or otherwise transfer
any property or assets to, or purchase, lease or otherwise acquire any property or assets from, or
otherwise engage in any other transactions with, any of its Affiliates, except (a) in the ordinary
course of business at prices and on terms and conditions not less favourable to the Credit Party
than could be obtained on an arm’s-length basis from unrelated third parties, (b) transactions
between or among the Credit Parties not involving any other Affiliate, and (c) any Restricted
Payment permitted by Section 6.6. The foregoing restrictions shall not apply to: (i) the payment
of reasonable and customary fees to directors of the Credit Party, (ii) any other transaction with
any employee, officer or director of a Credit Party pursuant to employee profit sharing and/or
benefit plans and compensation and non-competition arrangements in amounts customary for
corporations similarly situated to the Credit Party and entered into in the ordinary course of
business and approved by the board of directors of the Credit Party, or (iii) any reimbursement of
reasonable out-of-pocket costs incurred by an Affiliate of the Credit Party on behalf of or for the
account of the Credit Party.
6.8 Repayment of Debt No Credit Party will repay, prepay, redeem, repurchase, defease or
otherwise make any payment on account of any Indebtedness for borrowed money except for (a) payment
on account of Indebtedness owing to the Agent or the Lenders under this Agreement, (b) any payment
consented to in writing by the Required Lenders, and (c) payment on account of Indebtedness for
borrowed money permitted by Section 6.1, the repayment of which is not restricted by Section 6.6.
6.9 Restrictive Agreements No Credit Party will directly or indirectly, enter into, incur
or permit to exist any agreement or other arrangement that prohibits, restricts or imposes any
condition upon (a) the ability of the Borrower or any Subsidiary to create, incur or permit to
exist any Lien upon any of its property or assets, (b) the ability of a Credit Party to pay
dividends or other distributions with respect to any Equity Securities or with respect to, or
measured by, its profits or to make or repay loans or advances to the Borrower or any other Credit
Party or to provide a Guarantee of any Indebtedness of the Borrower or any other Credit Party, (c)
the ability of the Borrower or any other Credit Party to make any loan or advance to the Borrower
or any of the other Credit Parties, or (d) the ability of the Borrower or any other Credit Party to
sell, lease or transfer any of its property to the Borrower or any other Credit Party;
provided that (i) the foregoing shall not apply to restrictions and conditions imposed by
Applicable Law or by this Agreement, (ii) the foregoing shall not apply to customary restrictions
and conditions contained in agreements relating to the sale of a Subsidiary of the Borrower pending
such sale, provided such restrictions and conditions apply only to the Subsidiary of the
Borrower that is to be sold and such sale is permitted hereunder, (iii) clause (a) of the foregoing
shall not apply to restrictions or conditions imposed by any agreement relating to secured
Indebtedness permitted by this Agreement if such restrictions or conditions apply only to the
property or assets securing such Indebtedness, and (iv) clause (a) of the foregoing shall not apply
to customary provisions in leases and other ordinary course contracts restricting the assignment
thereof.
6.10 Sales and Leasebacks No Credit Party will enter into any arrangement, directly or
indirectly, with any Person whereby the Credit Party shall sell or transfer any property, whether
now owned or hereafter acquired, and whereby the Credit Party shall then or thereafter rent or
lease as lessee such property or any part thereof or other property which the Credit Party intends
to use for substantially the same purpose or purposes as the property sold or transferred.
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6.11 Pension Plan Compliance No Credit Party will (a) terminate any Pension Plan in a
manner, or take any other action with respect to any Pension Plan, which could reasonably be
expected to result in any material liability of any Credit Party, (b) 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 Credit Party is required to pay as contributions thereto, except where the
failure to make such payments could not reasonably be expected to have a Material Adverse Effect,
(c) permit to exist any material accumulated funding deficiency, whether or not waived, with
respect to any Pension Plan, (d) contribute to or assume an obligation to contribute to any
“multi-employer pension plan” as such term is defined in the Pension Benefits Standards Act
(British Columbia) or any Pension Plan not disclosed to the Agent on the Effective Date, (e)
acquire an interest in any Person if such Person sponsors, maintains or contributes to, or at any
time in the six-year period preceding such acquisition has sponsored, maintained, or contributed to
any Pension Plan; (f) permit, or allow any other Credit Party to permit, the actuarial present
value of the benefit liabilities (computed on an accumulated benefit obligation basis in accordance
with GAAP) under all Pension Plans in the aggregate to exceed the current value of the assets of
all Pension Plans in the aggregate that are allocable to such benefit liabilities, in each case
only to the extent such liabilities and assets relate to benefits to be paid to employees of the
Credit Parties.
6.12 Sale or Discount of Receivables No Credit Party will discount or sell (with or
without recourse) any of its Accounts.
6.13 Unconditional Purchase Obligations No Credit Party will enter into or be a party to,
any material contract for the purchase of materials, supplies or other property or services, if
such contract requires that payment be made by it regardless of whether or not delivery of such
materials, supplies or other property or services is ever made, provided that this Section 6.13
shall not restrict the ability of any Credit Party to enter into any such contract in the ordinary
course of its business to the extent that the materials, supplies or other property or services
which are the subject matter of such contract are reasonably expected to be used by the applicable
Credit Party in the ordinary course of its business.
6.14 Capital Expenditures No Credit Party will make Capital Expenditures in any period for
the Credit Parties on a consolidated basis in excess of 120% of the budgeted Capital Expenditures
for such period, as set forth in the most recent capital expenditure budget delivered to and
approved by the Agent, acting reasonably.
6.15 No Amendments to Material Contracts No Credit Party will amend, modify or terminate
(or waive any provision of or provide any consent under), any Material Contract in a manner which
may reasonably be expected to have a Material Adverse Effect.
6.16 Location of Assets No Credit Party will change its chief executive office, the
location of its books and records or the location of its assets from the locations set forth in
Schedule 3.15 without providing prior written notice to the Agent.
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ARTICLE 7
EVENTS OF DEFAULT
EVENTS OF DEFAULT
7.1 Events of Default It shall constitute an event of default (“Event of Default”) if any
one or more of the following shall occur:
(a) the Borrower shall fail to pay any principal of any Loan or any reimbursement obligation
in respect of any Letter of Credit when and as the same shall become due and payable, whether at
the due date thereof or at a date fixed for prepayment thereof or otherwise;
(b) the Borrower shall fail to pay any interest on any Loan or any fee or any other amount
(other than an amount referred to in clause (a) above) payable under this Agreement, within three
Business Days after the same shall become due and payable;
(c) any representation or warranty made or deemed made by or on behalf of any Credit Party in
or in connection with any Loan Document or any amendment or modification thereof or waiver
thereunder, or in any report, certificate, financial statement or other document furnished pursuant
to or in connection with any Loan Document or any amendment or modification thereof or waiver
thereunder, shall prove to have been incorrect when made or deemed to be made;
(d) any Credit Party shall fail to observe or perform any covenant, condition or agreement
contained in Section 5.1(l)(ii) (notices of Defaults or Events of Default), 5.2(a), 5.7, 5.12 or in
Article 6 (or in any comparable provision of any other Loan Document) and in the case of Section
6.2 only, such failure has not been remedied within 10 Business Days;
(e) any Credit Party shall fail to observe or perform any covenant, condition or agreement
contained in this Agreement (other than those specified in clauses (a), (b) or (d) above) or any
other Loan Document, and such failure shall continue unremedied for a period of 30 days after
notice thereof from the Agent to the Borrower (which notice will be given at the request of any
Lender);
(f) any Credit Party shall fail to make any payment whether of principal or interest, and
regardless of amount, in respect of any Material Indebtedness, when and as the same shall become
due and payable within three Business Days after same shall become due and payable;
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(g) any event or condition occurs that results in any Material Indebtedness becoming due prior
to its scheduled maturity or that enables or permits (with or without the giving of notice, the
lapse of time or both) the holder or holders of any Material Indebtedness or any trustee or agent
on its or their behalf to cause any Material Indebtedness to become due, or to require the
prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity;
provided that this Section 7.1(g) shall not apply to secured Indebtedness that becomes due
as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness
so long as the proceeds of such sale or transfer are sufficient to, and are applied to, reduce such
secured Indebtedness to nil;
(h) any event of default occurs in respect of any Parent Credit Facility or any Material
Contract;
(i) Parent terminates or ceases to perform the Services Agreement, unless the Borrower can
demonstrate to the Agent’s satisfaction, acting reasonably, that it or a third party acceptable to
the Agent, acting reasonably, can otherwise perform the services addressed in the Services
Agreement;
(j) any Credit Party:
| (i) | becomes insolvent, or generally does not or becomes unable to pay its debts or meet its liabilities as the same become due, or admits in writing its inability to pay its debts generally, or declares any general moratorium on its indebtedness, or proposes a compromise or arrangement between it and any class of its creditors; |
| (ii) | commits an act of bankruptcy under the BIA, or makes an assignment of its property for the general benefit of its creditors under the BIA, or makes a proposal (or files a notice of its intention to do so) under the BIA; |
| (iii) | institutes any proceeding seeking to adjudicate it an insolvent, or seeking liquidation, dissolution, winding-up, reorganization, compromise, arrangement, adjustment, protection, moratorium, relief, stay of proceedings of creditors generally (or any class of creditors), or composition of it or its debts or any other relief, under any federal, provincial or foreign Applicable Law now or hereafter in effect relating to bankruptcy, winding-up, insolvency, reorganization, receivership, plans of arrangement or relief or protection of debtors (including the BIA, the Companies’ Creditors Arrangement Act (Canada), the United States Bankruptcy Code and any applicable corporations legislation) or at common law or in equity, or files an answer admitting the material allegations of a petition filed against it in any such proceeding; |
| (iv) | applies for the appointment of, or the taking of possession by, a receiver, interim receiver, receiver/manager, sequestrator, conservator, custodian, administrator, trustee, liquidator or other similar official for it or any substantial part of its property; or |
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| (v) | threatens to do any of the foregoing, or takes any action, corporate or otherwise, to approve, effect, consent to or authorize any of the actions described in this Section 7.1(j) or in Section 7.1(k), or otherwise acts in furtherance thereof or fails to act in a timely and appropriate manner in defense thereof, |
(k) any petition is filed, application made or other proceeding instituted against or in
respect of any Credit Party:
| (i) | seeking to adjudicate it an insolvent; | ||
| (ii) | seeking a receiving order against it under the BIA; |
| (iii) | seeking liquidation, dissolution, winding-up, reorganization, compromise, arrangement, adjustment, protection, moratorium, relief, stay of proceedings of creditors generally (or any class of creditors), or composition of it or its debts or any other relief under any federal, provincial or foreign Applicable Law now or hereafter in effect relating to bankruptcy, winding-up, insolvency, reorganization, receivership, plans of arrangement or relief or protection of debtors (including the BIA, the Companies’ Creditors Arrangement Act (Canada) or the United States Bankruptcy Code and any applicable corporations legislation) or at common law or in equity; or |
| (iv) | seeking the entry of an order for relief or the appointment of, or the taking of possession by, a receiver, interim receiver, receiver/manager, sequestrator, conservator, custodian, administrator, trustee, liquidator or other similar official for it or any substantial part of its property; |
and such petition, application or proceeding continues undismissed, or unstayed and in effect, for
a period of 30 days after the institution thereof, provided that if an order, decree or
judgment is granted or entered (whether or not entered or subject to appeal) against the Credit
Party thereunder in the interim, such grace period will cease to apply, and provided
further that if the Credit Party files an answer admitting the material allegations of a
petition filed against it in any such proceeding, such grace period will cease to apply;
(l) any other event occurs which, under the Applicable Laws of any applicable jurisdiction,
has an effect which is comparable to any of the events referred to in either of Sections 7.1(j) or
(k);
(m) one or more judgments for the payment of money in a cumulative amount in excess of
Cdn.$250,000 (or its then equivalent in any other currency) in the aggregate is rendered against
the Borrower, any other Credit Party or any combination thereof and the Borrower or the other
Credit Party has not (i) provided for its discharge in accordance with its terms within 30 days
from the date of entry thereof, or (ii) procured a stay of execution thereof within 30 days from
the date of entry thereof and within such period, or such longer period during which execution of
such judgment has not been stayed, appealed such judgment and
caused the execution thereof to be stayed during such appeal, provided that if
enforcement and/or realization proceedings are lawfully commenced in respect thereof in the
interim, such grace period will cease to apply;
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(n) any property of any Credit Party having a fair market value in excess of Cdn.$250,000 (or
its then equivalent in any other currency) in the aggregate is seized (including by way of
execution, attachment, garnishment, levy or distraint), or any Lien thereon securing Indebtedness
in excess of Cdn.$250,000 (or its then equivalent in any other currency) is enforced, or such
property has become subject to any charging order or equitable execution of a Governmental
Authority, or any writ of execution or distress warrant exists in respect of the Borrower, any
other Credit Party or the property of any of them, or any sheriff or other Person becomes lawfully
entitled by operation of law or otherwise to seize or distrain upon such property and in any case
such seizure, enforcement, execution, attachment, garnishment, distraint, charging order or
equitable execution, or other seizure or right, continues in effect and is not released or
discharged for more than 45 days or such longer period during which entitlement to the use of such
property continues with the Credit Party (as the case may be), and the Credit Party (as the case
may be) is contesting the same in good faith and by appropriate proceedings, provided that
if the property is removed from the use of the Credit Party (as the case may be), or is sold, in
the interim, such grace period will cease to apply;
(o) one or more final judgments, not involving the payment of money and not otherwise
specified in this Section 7.1(o), has been rendered against any Credit Party, the result of which
could reasonably be expected to result in a Material Adverse Effect, so long as the Credit Party
(as the case may be) has not (i) provided for its discharge in accordance with its terms within 30
days from the date of entry thereof, or (ii) procured a stay of execution thereof within 30 days
from the date of entry thereof and within such period, or such longer period during which execution
of such judgment has been stayed, appealed such judgment and caused the execution thereof to be
stayed during such appeal, provided that if enforcement and/or realization proceedings are
lawfully commenced in respect thereof in the interim, such grace period will cease to apply;
(p) this Agreement, any other Loan Document or any material obligation or other provision
hereof or thereof at any time for any reason terminates or ceases to be in full force and effect
and a legally valid, binding and enforceable obligation of any Credit Party, is declared to be void
or voidable or is repudiated, or the validity, binding effect, legality or enforceability hereof or
thereof is at any time contested by any Credit Party, or any Credit Party denies that it has any or
any further liability or obligation hereunder or thereunder or any action or proceeding is
commenced to enjoin or restrain the performance or observance by any Credit Party of any material
terms hereof or thereof or to question the validity or enforceability hereof or thereof, or at any
time it is unlawful or impossible for any Credit Party to perform any of its material obligations
hereunder or thereunder;
(q) any Lien purported to be created by any Security Document shall cease to be, or shall be
asserted by any Credit Party not to be, a valid, perfected, first priority (except as otherwise
expressly provided in this Agreement or such Security Document) Lien in Collateral with a fair
market value or book value (whichever is greater) in excess, individually or in the aggregate, of
$250,000;
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(r) a Material Adverse Change shall occur;
(s) a Change in Control shall occur;
(t) if any Credit Party or any of its Subsidiaries violates any Environmental Law which
results in an Action Request, Violation Notice or other notice or control order or cancellation of
any license or certificate or approval, that results in any disruption of any Credit Party’s
business or that could reasonably be expected to have a Material Adverse Effect;
(u) any event or condition shall occur or exist with respect to a Pension Plan that could, in
the Lenders’ good faith judgment, subject any Credit Party to any tax, penalty or other liabilities
under Applicable Laws which could reasonably be expected to give rise to a Material Adverse Effect;
then, and in every such event, and at any time thereafter during the continuance of such event or
any other such event, the Agent may, and at the request of the Required Lenders shall, by notice to
the Borrower, take any or all of the following actions, at the same or different times: (i)
terminate the Commitments, and thereupon the Commitments shall terminate immediately, (ii) declare
the Loans then outstanding to be due and payable in whole (or in part, in which case any principal
not so declared to be due and payable may thereafter be declared to be due and payable), and
thereupon the principal of the Loans so declared to be due and payable, together with accrued
interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall become
due and payable immediately, without presentment, demand, protest or other notice of any kind
except as set forth earlier in this paragraph, all of which are hereby waived by the Borrower,
(iii) apply any amounts outstanding to the credit of the Borrower to repayment of all amounts
outstanding under this Agreement, and (iv) declare any or all of the Security Documents to be
immediately enforceable.
7.2 Remedies.
(a) If an Event of Default has occurred and is continuing, the Agent may, in its discretion,
and shall, at the direction of the Required Lenders, do one or more of the following at any time or
times and in any order, without notice to or demand on the Borrower: (i) reduce the Commitments, or
the advance rates against Eligible Accounts and/or Eligible Inventory used in computing the
Borrowing Base, or reduce one or more of the other elements used in computing the Borrowing Base;
(ii) restrict the amount of or refuse to make Revolving Loans; (iii) restrict or refuse to provide
Letters of Credit, Letter of Credit Guarantees, F/X Contracts and F/X Guarantees; (iv) terminate
the Commitments; (v) declare any or all Obligations to be immediately due and payable; and (vi)
pursue its other rights and remedies under the Loan Documents and applicable law and equity.
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(b) If an Event of Default has occurred and is continuing and without limiting any rights or
remedies arising under the Security Documents, (i) the Agent shall have for the benefit of the
Lenders, in addition to all other rights of the Agent and the Lenders, the rights and remedies of a
secured party under applicable law (including, as applicable, the PPSA, Civil Code of Quebec and
the UCC) in the jurisdiction where the Collateral is located and all rights and remedies provided
for in the Loan Documents; (ii) the Agent may, at any time, take possession
of the Collateral and keep it on the Borrower’s or any Guarantor’s premises, at no cost to the
Agent or any Lender, or remove any part of it to such other place or places as the Agent may
desire, or the Borrower or any Guarantor shall, upon the Agent’s demand, at the Borrower’s cost,
assemble the Collateral and make it available to the Agent at a place convenient to the Agent; and
(iii) the Agent may sell and deliver any Collateral at public or private sales, for cash, upon
credit or otherwise, at such prices and upon such terms as the Agent deems advisable, in its sole
discretion, and may postpone or adjourn any sale of the Collateral by an announcement at the time
and place of sale or of such postponed or adjourned sale without giving a new notice of sale.
Without in any way requiring notice to be given in the following manner, the Borrower and each of
the Guarantors agree that any notice by the Agent of sale, disposition or other intended action
hereunder or in connection herewith, whether required by the PPSA, Civil Code of Quebec and the UCC
or otherwise, shall constitute reasonable notice to the Borrower and Guarantors if such notice is
mailed by registered or certified mail, return receipt requested, postage prepaid, or is delivered
personally against receipt, at least fifteen (15) days prior to such action to the Borrower’s
address specified in or pursuant to Section 9.1. If any Collateral is sold on terms other than
payment in full at the time of sale, no credit shall be given against the Obligations until the
Agent or the Lenders receive payment, and if the buyer defaults in payment, the Agent may resell
the Collateral without further notice to the Borrower or any Guarantor. If the Agent seeks to take
possession of all or any portion of the Collateral by judicial process, the Borrower and each of
the Guarantors irrevocably waives: (A) the posting of any bond, surety or security with respect
thereto which might otherwise be required; (B) any demand for possession prior to the commencement
of any suit or action to recover the Collateral; and (C) any requirement that the Agent retain
possession and not dispose of any Collateral until after trial or final judgment. The Borrower and
each of the Guarantors agree that the Agent and Lenders have no obligation to preserve rights to
the Collateral or marshal any Collateral for the benefit of any Person. The Agent is hereby
granted a license or other right to use, without charge, all of the Borrower’s and each Guarantor’s
Property, whether or not constituting Collateral, including its real estate, Equipment and
Intellectual Property Rights (including labels, patents, copyrights, name, trade secrets, trade
names, trademarks, and advertising matter, or any similar property), in completing production of,
advertising or selling any Collateral, and the Borrower’s and Guarantors’ rights under all licenses
and all franchise agreements shall inure to the Agent’s benefit for such purpose. The proceeds of
sale shall be applied first to all expenses of sale, including legal fees, and then to the
Obligations. The Agent will return any excess to the Borrower and Guarantors and the Borrower
shall remain liable for any deficiency.
(c) If an Event of Default has occurred and is continuing, to the maximum extent permitted by
law, the Borrower and each of the Guarantors hereby waive all rights to notice and hearing prior to
the exercise by the Agent of the Agent’s rights to repossess the Collateral without judicial
process or to reply, attach or levy upon the Collateral without notice or hearing.
ARTICLE 8
THE AGENT
THE AGENT
8.1 Appointment of Agent Each Lender hereby designates CIBC Asset-Based Lending Inc. as
Agent to act as herein specified and as specified in the other Loan Documents. Each Lender hereby
irrevocably authorizes the Agent to take such action on its behalf under the provisions of
the Loan Documents and to exercise such powers and to perform such duties thereunder as are
specifically delegated to or required of the Agent by the terms thereof and such other powers as
are reasonably incidental thereto. The Agent may perform any of its duties hereunder by or through
its agents or employees.
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8.2 Limitation of Duties of Agent The Agent shall have no duties or responsibilities
except those expressly set forth with respect to the Agent in this Agreement and as specified in
the other Loan Documents. Neither the Agent nor any of its Related Parties shall be liable for any
action taken or omitted by it hereunder or in connection herewith, unless caused by its or their
gross negligence or willful misconduct. The duties of the Agent shall be mechanical and
administrative in nature; the Agent shall not have, by reason of this Agreement or the other Loan
Documents, a fiduciary relationship in respect of any Lender. Nothing in this Agreement or the
other Loan Documents, expressed or implied, is intended to or shall be so construed as to impose
upon the Agent any obligations in respect of this Agreement except as expressly set forth herein.
The Agent shall be under no duty to take any discretionary action permitted to be taken by it
pursuant to this Agreement or the other Loan Documents unless it is requested in writing to do so
by the Required Lenders.
8.3 Lack of Reliance on the Agent.
(a) Independent Investigation. Independently, and without reliance upon the Agent,
each Lender, to the extent it deems appropriate, has made and shall continue to make (i) its own
independent investigation of the financial condition and affairs of the Borrower or any other
Credit Party in connection with the taking or not taking of any action in connection herewith, and
(ii) its own appraisal of the creditworthiness of the Borrower or any other Credit Party, and,
except as expressly provided in this Agreement and the other Loan Documents, the Agent shall have
no duty or responsibility, either initially or on a continuing basis, to provide any Lender with
any credit or other information with respect thereto, whether coming into its possession before the
consummation of the Transactions or at any time or times thereafter.
(b) Agent Not Responsible. The Agent shall not be responsible to any Lender for any
recitals, statements, information, representations or warranties herein or in any document,
certificate or other writing delivered in connection herewith or for the execution, effectiveness,
genuineness, validity, enforceability, collectability, priority or sufficiency of this Agreement or
the other Loan Documents or the financial condition of the Borrower and any of the other Credit
Parties or be required to make any inquiry concerning either the performance or observance of any
of the terms, provisions or conditions of this Agreement or the other Loan Documents, or the
financial condition of the Borrower and any of the other Credit Parties, or the existence or
possible existence of any Default or Event of Default.
8.4 Certain Rights of the Agent If the Agent shall request instructions from the Lenders
or the Required Lenders (as the case may be) with respect to any act or action (including the
failure to act) in connection with this Agreement or the other Loan Documents, the Agent shall be
entitled to refrain from such act or taking such action unless and until the Agent shall have
received written instructions from the Lenders or the Required Lenders, as applicable, and the
Agent shall not incur liability to any Person by reason of so refraining. Without limiting the
foregoing, no Lender shall have any right of action whatsoever against the Agent as a result of
the Agent acting or refraining from acting under this Agreement and the other Loan Documents in
accordance with the instructions of the Required Lenders, or, to the extent required by Section
9.2, all of the Lenders.
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8.5 Reliance by Agent The Agent shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, statement, certificate, telex, teletype or
facsimile message, electronic mail, cablegram, radiogram, order or other documentary
teletransmission or telephone message believed by it to be genuine and correct and to have been
signed, sent or made by the proper Person. The Agent may consult with legal counsel (including
counsel for the Borrower), independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken by it in good faith in accordance
with the advice of such counsel, accountants or experts.
8.6 Indemnification of Agent To the extent the Agent is not reimbursed and indemnified by
the Borrower, each Lender will reimburse and indemnify the Agent, in proportion to its aggregate
Applicable Percentage, for and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses (including reasonable counsel fees and
disbursements) or disbursements of any kind or nature whatsoever which may be imposed on, incurred
by or asserted against the Agent in performing its duties hereunder, in any way relating to or
arising out of this Agreement or any other Loan Document; provided that no Lender shall be
liable to the Agent for any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from the Agent’s gross
negligence (it being acknowledged that ordinary negligence does not necessarily constitute gross
negligence) or willful misconduct.
8.7 The Agent in its Individual Capacity With respect to its obligations under this
Agreement and the Loans made by it, CIBC Asset-Based Lending Inc., in its capacity as a Lender
hereunder, shall have the same rights and powers hereunder as any other Lender and may exercise the
same as though it were not performing the duties, if any, specified herein; and the terms
“Lenders”, “Required Lenders”, and any similar terms shall, unless the context clearly otherwise
indicates, include CIBC Asset-Based Lending Inc., in its capacity as a Lender hereunder. The Agent
may accept deposits from, lend money to, and generally engage in any kind of banking, trust,
financial advisory or other business with the Borrower or any affiliate of the Borrower as if it
were not performing the duties, if any, specified herein, and may accept fees and other
consideration from the Borrower for services in connection with this Agreement and otherwise
without having to account for the same to the Lenders.
8.8 May Treat Lender as Owner The Borrower and the Agent may deem and treat each Lender as
the owner of the Loans recorded on the Register maintained pursuant to Section 9.4(c) for all
purposes hereof until a written notice of the assignment or transfer thereof shall have been filed
with the Agent. Any request, authority or consent of any Person who at the time of making such
request or giving such authority or consent is the owner of a Loan shall be conclusive and binding
on any subsequent owner, transferee or assignee of such Loan.
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8.9 Successor Agent.
(a) Agent Resignation. The Agent may resign at any time by giving written notice
thereof to the Lenders, the Issuing Bank and the Borrower. Upon any such resignation, the Required
Lenders shall have the right, upon five Business Days’ notice to the Borrower, to appoint a
successor Agent, subject to the approval of the Borrower, such approval not to be unreasonably
withheld, provided that the Borrower’s consent shall not be required with respect to the
appointment of CIBC as Agent in connection with a CIBC ABL Reorganization. If no successor Agent
shall have been so appointed by the Required Lenders, and shall have accepted such appointment,
within 30 days after the retiring Agent’s giving of notice of resignation, then, upon five Business
Days’ notice to the Borrower, the retiring Agent may, on behalf of the Lenders, appoint a successor
Agent (subject to approval of the Borrower, such approval not to be unreasonably withheld), which
shall be a financial institution organized under the laws of Canada having a combined capital and
surplus of at least Cdn.$100,000,000 or having a parent company with combined capital and surplus
of at least Cdn.$100,000,000; provided that if the Agent shall notify the Borrower and the Lenders
that no qualifying Person has accepted such appointment, then such resignation shall nonetheless
become effective in accordance with such notice and (1) the retiring Agent shall be discharged from
its duties and obligations hereunder and under the other Loan Documents (except that in the case of
any security held by the Agent on behalf of the Lenders under any of the Loan Documents, the
retiring Agent shall continue to hold such security until such time as a successor Agent is
appointed) and (2) all payments, communications and determinations provided to or to be made by, to
or though the Agent shall instead be made by or to each Lender directly, until such time as the
Required Lenders appoint a successor Agent, as provided for above in the preceding paragraph.
(b) Rights, Powers, etc. Upon the acceptance of any appointment as Agent hereunder by
a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations under this Agreement. After any retiring Agent’s
resignation or removal hereunder as Agent, the provisions of this Article 8 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent under this
Agreement.
8.10 No Independent Legal Action by Lenders No Lender may take any independent legal
action to enforce any obligation of the Borrower hereunder. Each Lender hereby acknowledges that,
to the extent permitted by Applicable Law, the Security Documents and the remedies provided
thereunder to the Lenders are for the benefit of the Lenders collectively and acting together and
not severally, and further acknowledges that each Lender’s rights hereunder and under the Security
Documents are to be exercised collectively, not severally, by the Agent upon the decision of the
Required Lenders. Accordingly, notwithstanding any of the provisions contained herein or in the
Security Documents, each of the Lenders hereby covenants and agrees that it shall not be entitled
to take any action hereunder or thereunder, including any declaration of default hereunder or
thereunder, but that any such action shall be taken only by the Agent with the prior written
agreement of the Required Lenders, provided that, notwithstanding the foregoing, in the
absence of instructions from the Lenders (or the Required Lenders) and where in the sole opinion of
the Agent the exigencies of the situation so warrant such action, the Agent may without notice to
or consent of the Lenders (or the Required Lenders) take such action on behalf
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of the Lenders as it
deems appropriate or desirable in the interests of the Lenders. Each Lender hereby further covenants and agrees that upon any such written consent being given by the
Required Lenders, it shall co-operate fully with the Agent to the extent requested by the Agent,
and each Lender further covenants and agrees that all proceeds from the realization of or under the
Security Documents, to the extent permitted by Applicable Law, are held for the benefit of all of
the Lenders and shall be shared among the Lenders rateably in accordance with this Agreement, and
each Lender acknowledges that all costs of any such realization (including all amounts for which
the Agent is required to be indemnified under the provisions hereof) shall be shared among the
Lenders rateably in accordance with this Agreement. Each Lender covenants and agrees to do all
acts and things and to make, execute and deliver all agreements and other instruments, so as to
fully carry out the intent and purpose of this Section and each Lender hereby covenants and agrees
that it shall not seek, take, accept or receive any security for any of the obligations and
liabilities of the Borrower hereunder or under the other Loan Documents, or any other document,
instrument, writing or agreement ancillary hereto or thereto, other than such security as is
provided hereunder or thereunder, and that it shall not enter into any agreement with any of the
parties hereto or thereto relating in any manner whatsoever to the Credit(s), unless all of the
Lenders shall at the same time obtain the benefit of any such security or agreement, as the case
may be.
8.11 Notice of Default The Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default, unless the Agent shall have received written notice
from a Lender or the Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a “notice of default”. The Agent will notify the Lenders
of its receipt of any such notice. Subject to Section 8.4, the Agent shall take such action with
respect to such Default or Event of Default as may be requested by the Required Lenders in
accordance with this Agreement in pursuing any rights or remedies under the Loan Documents or at
law or in equity; provided, however, that unless and until the Agent has received any such request,
the Agent may (but shall not be obligated to) take such action, or refrain from taking such action,
with respect to such Default or Event of Default as it shall deem advisable.
8.12 Agency for Perfection Each Lender hereby appoints each other Lender as agent for the
purpose of perfecting the Lenders’ security interest in assets which can be perfected only by
possession. Should any Lender (other than the Agent) obtain possession of any such Collateral,
such Lender shall notify the Agent thereof, and, promptly upon the Agent’s request therefor, shall
deliver such Collateral to the Agent or in accordance with the Agent’s instructions.
8.13 Payments by Agent to Lenders All payments to be made by the Agent to the Lenders
shall be made by bank wire transfer or internal transfer of immediately available funds to each
Lender pursuant to wire transfer instructions delivered in writing to the Agent on or prior to the
Effective Date (or if such Lender is an assignee, on the applicable Assignment and Transfer), or
pursuant to such other wire transfer instructions as each party may designate for itself by written
notice to the Agent. Concurrently with each such payment, the Agent shall identify whether such
payment (or any portion thereof) represents principal, premium or interest on the Revolving Loans
or otherwise.
8.14 Concerning the Collateral and the Related Loan Documents Each Lender authorizes and
directs the Agent to enter into this Agreement and the other Loan Documents for the rateable
benefit and obligation of the Agent and the Lenders. Each Lender agrees that any action taken
by the Agent or Required Lenders, as applicable, in accordance with the terms of this Agreement or
the other Loan Documents, and the exercise by the Agent or the Required Lenders, as applicable, of
their respective powers set forth therein or herein, together with such other powers that are
reasonably incidental thereto, shall be binding upon all of the Lenders.
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8.15 Field Audit and Examination Reports; Disclaimer by Lenders By signing this Agreement,
each Lender:
(a) is deemed to have requested that the Agent furnish such Lender, promptly after it becomes
available, a copy of each field audit or examination report (each a “Report” and collectively,
“Reports”) prepared by the Agent;
(b) expressly agrees and acknowledges that the Agent (i) makes no representation or warranty
as to the accuracy of any Report, or (ii) shall not be liable for any information contained in any
Report;
(c) expressly agrees and acknowledges that the Reports are not comprehensive audits or
examinations, that the Agent or other party performing any audit or examination will inspect only
specific information regarding the Borrower and/or Guarantors and will rely significantly upon the
Borrower’s and Guarantor’s books and records, as well as on representations of the Borrower’s and
Guarantor’s personnel;
(d) agrees to keep all Reports confidential and strictly for its internal use, and not to
distribute, except to its participants, or use any Report in any other manner; and
(e) without limiting the generality of any other indemnification provision contained in this
Agreement, agrees: (i) to hold the Agent and any such other Lender preparing a Report harmless
from any action the indemnifying Lender may take or conclusion the indemnifying Lender may reach or
draw from any Report in connection with any loans or other credit accommodations that the
indemnifying Lender has made or may make to the Borrower, or the indemnifying Lender’s
participation in, or the indemnifying Lender’s purchase of, a loan or loans of the Borrower; and
(ii) to pay and protect, and indemnify, defend and hold the Agent and any such other Lender
preparing a Report harmless from and against, the claims, actions, proceedings, damages, costs,
expenses and other amounts (including counsel’s costs) incurred by the Agent and any such other
Lender preparing a Report as the direct or indirect result of any third parties who might obtain
all or part of any Report through the indemnifying Lender.
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8.16 Quebec Security For greater certainty, and without limiting the powers of the Agent
or any other Person acting as an agent or mandatary for the Agent hereunder or under any of the
other Loan Documents, the Borrower hereby acknowledges that, for purposes of holding any security
granted by the Borrower or any Subsidiary or other Credit Party on property pursuant to the laws of
the Province of Quebec to secure obligations of the Borrower or any Subsidiary or other Credit
Party under any bond or debenture, CIBC Asset-Based Lending Inc. shall be the holder of an
irrevocable power of attorney (fondé de pouvoir) (within the meaning of the Civil Code of Quebec)
for all present and future Lenders and Issuing Banks and in particular for all present and future
holders of any such bond or debenture. Each Lender and Issuing Bank hereby irrevocably
constitutes, to the extent necessary, CIBC Asset-Based Lending Inc. as the holder of
an irrevocable power of attorney (fondé de pouvoir) (within the meaning of Article 2692 of the
Civil Code of Quebec) in order to hold security granted by the Borrower or any Subsidiary or other
Credit Party in the Province of Quebec to secure the obligations of the Borrower or any Subsidiary
or other Credit Party under any bond or debenture. Each assignee of a Lender or Issuing Bank shall
be deemed to have confirmed and ratified the constitution of CIBC Asset-Based Lending Inc. as the
holder of such irrevocable power of attorney (fondé de pouvoir) by execution of an Assignment and
Assumption or any other document pursuant to which they become a party to this Agreement.
Notwithstanding the provisions of section 32 of the An Act respecting the special powers of legal
persons (Quebec), CIBC Asset-Based Lending Inc. may acquire and be the holder of any bond or
debenture. The Borrower hereby acknowledges that such bond or debenture constitutes a title of
indebtedness, as such term is used in Article 2692 of the Civil Code of Quebec. The execution by
CIBC Asset-Based Lending Inc. as fondé de pouvoir of any deeds of hypothec or other documents prior
to the date hereof is hereby ratified and confirmed. Each Lender and Issuing Bank also agree that
the Agent may hold any bond or debenture issued by the Borrower, any Subsidiary or other Credit
Party, including as named bondholder or debentureholder or as pledge on their behalf in accordance
with Article 2705 of the Civil Code of Quebec. CIBC Asset-Based Lending Inc. acting as fondé de
pouvoir shall have the same rights, powers, immunities, indemnities and exclusions from liability
as are prescribed in favour of the Agent in this Agreement, which shall apply mutatis mutandis to
CIBC Asset-Based Lending Inc. acting as fondé de pouvoir. Without limitation, the provisions of
this Section 8.16 shall apply mutatis mutandis to the resignation and appointment of a successor to
CIBC Asset-Based Lending Inc. acting as fondé de pouvoir.
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ARTICLE 9
MISCELLANEOUS
MISCELLANEOUS
9.1 Notices (a) Except in the case of notices and other communications expressly permitted
to be given by telephone (and subject to paragraph (b) below), all notices and other communications
provided for herein shall be in writing and shall be delivered by hand or overnight courier
service, mailed by certified or registered mail or sent by facsimile in each case to the addressee,
as follows:
| (i) | if to the Borrower or any other Credit Party: |
Xxxxx 000-0000 Xxxxxxx Xxxxxx
Xxxxxxxxx, XX X0X0X0
Attention: Operations Manager
Fax: (000) 000-0000
Xxxxxxxxx, XX X0X0X0
Attention: Operations Manager
Fax: (000) 000-0000
With a copy to:
BlueLinx Corporation
0000 Xxxxxxxx Xxxxxxx
Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxx, Senior Counsel
Fax: 000.000.0000
0000 Xxxxxxxx Xxxxxxx
Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxx, Senior Counsel
Fax: 000.000.0000
| (ii) | if to the Agent: |
CIBC ASSET-BASED LENDING INC., as Agent
207 Queen’s Quay West, Suite 705
Toronto, Ontario M5J 1A7
Attention: Team Leader, Portfolio Management
Facsimile: (000) 000-0000
207 Queen’s Quay West, Suite 705
Toronto, Ontario M5J 1A7
Attention: Team Leader, Portfolio Management
Facsimile: (000) 000-0000
(iii) if to any Lender or any Issuing Bank, to it at its address (or facsimile number) set
forth opposite its name in the execution page(s) of this Agreement or the applicable Assignment and
Assumption Agreement, as the case may be.
(b) Any notice received by the Borrower from the Agent shall be deemed also to have been
received by each other Credit Party. Any notice received by the Agent from the Borrower shall be
deemed to have been received by each Lender. Notices and other communications to the Lenders
hereunder may be delivered or furnished by electronic communications pursuant to procedures
approved by the Agent. The Agent or the Borrower may, in its discretion, agree to accept notices
and other communication to it hereunder by electronic communications pursuant to procedures
approved by it; provided that approval of such procedures may be limited to particular
notices or communications.
(c) Any party hereto may change its address or facsimile number for notices and other
communications hereunder by notice to the other parties hereto. All notices and other
communications given to any party hereto in accordance with the provisions of this Agreement shall
be deemed to have been given on the date of receipt.
9.2 Waivers; Amendments.
(a) No failure or delay by the Agent or any Lender in exercising any right or power hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any
other or further exercise thereof or the exercise of any other right or power. The
rights and remedies of the Agent and the Lenders hereunder are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of
this Agreement or consent to any departure by the Borrower therefrom shall in any event be
effective unless the same shall be permitted by Section 9.2(b), and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which given. Without
limiting the generality of the foregoing, the making of a Loan or issuance of a Letter of Credit
shall not be construed as a waiver of any Default, regardless of whether the Agent or any Lender
may have had notice or knowledge of such Default at the time.
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(b) Neither this Agreement nor any other Loan Document (or any provision hereof or thereof)
may be waived, amended or modified except pursuant to an agreement or agreements in writing entered
into by the Borrower and the Required Lenders or by the Borrower and the Agent with the consent of
the Required Lenders (and for greater certainty, any such waiver, amendment or modification shall
not require any consent or other agreement of any Credit Party other than the Borrower,
notwithstanding that any such Credit Party may be a party to this Agreement or any other Loan
Document); provided that no such agreement shall:
| (i) | increase the amount or extend the expiry date of any Commitment of any Lender; |
| (ii) | reduce the principal amount of any Loan or reduce the rate of interest or any fee applicable to any Loan; |
| (iii) | postpone the scheduled date of payment of the principal amount of any Loan, or any interest thereon, or any fees payable in respect thereof, or reduce the amount of, waive or excuse any such payment, or postpone the scheduled date of expiration of any Commitment; |
| (iv) | change any aspect of this Agreement in a manner that would alter the pro rata sharing of payments required herein; |
| (v) | change any of the provisions of this Section 9.2 or the definition of “Required Lenders” or any other provision hereof specifying the number or percentage of Lenders required to waive, amend or modify any rights hereunder or make any determination or grant any consent hereunder; | ||
| (vi) | waive any Event of Default under Section 7.1(j), (k) or (l); or |
| (vii) | release the Borrower or any other Credit Party from any material obligations under the Security Documents and other instruments contemplated by this Agreement, release or discharge any of the Liens arising under the Security Documents, permit the creation of any Liens, other than Permitted Liens, on any of the assets subject to the Liens arising under the Security Documents, lower the priority of any Lien arising under any of the Security Documents, or lower the priority of any payment obligation of the Borrower or any other Credit Party under any of the Loan Documents; |
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in each case without the prior written consent of each Lender; or, in the case of the matters
referred to in clauses (i), (ii), (iii) and (iv), without the prior written consent of each Lender
directly affected thereby and provided further that no such agreement shall amend, modify
or otherwise affect the rights or duties of the Agent hereunder, without the prior written consent
of the Agent. For greater certainty, the Agent may release and discharge the Liens constituted by
the Security Documents to the extent necessary to enable the Borrower to complete any asset sale
which is not prohibited by this Agreement or the other Loan Documents.
9.3 Expenses; Indemnity; Damage Waiver.
(a) The Borrower shall pay (i) all reasonable Out-of-Pocket Expenses incurred by the Agent and
its Affiliates, including the reasonable fees, charges and disbursements of counsel for the Agent
and all applicable Taxes, in connection with the syndication of the credit facilities provided for
herein and the preparation and administration of this Agreement and the other Loan Documents, (ii)
all reasonable Out-of-Pocket Expenses incurred by the Agent and its Affiliates, including the
reasonable fees, charges and disbursements of counsel for the Agent and applicable Taxes, in
connection with any amendments, modifications or waivers of the provisions hereof or of any of the
other Loan Documents, (whether or not the transactions contemplated hereby or thereby shall be
consummated), and (iii) all Out-of-Pocket Expenses incurred by the Agent or any Lender, including
the fees, charges and disbursements of any counsel for the Agent or any Lender and all applicable
Taxes, in connection with the enforcement or protection of their rights in connection with this
Agreement, including its rights under this Section, or in connection with the Loans made hereunder,
including all such Out-of-Pocket Expenses incurred during any workout, restructuring or
negotiations in respect of such Loans.
(b) Each Credit Party shall indemnify the Agent and each Lender, as well as each Related Party
and each assignee of any of the foregoing Persons (each such Person and each such assignee being
called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses,
claims, cost recovery actions, damages, expenses and liabilities of whatsoever nature or kind (a
“Claim”) and all Out-of-Pocket Expenses and all applicable Taxes to which any Indemnitee may become
subject arising out of or in connection with (i) the execution or delivery of the Loan Documents or
any agreement or instrument contemplated thereby, the performance by the parties thereto of their
respective obligations thereunder, and the consummation of the Transactions or any other
transactions thereunder, (ii) any Loan, Letter of Credit or F/X Contract or any actual or proposed
use of the proceeds therefrom, including any refusal by the Issuing Bank to honour a demand for
payment under a Letter of Credit if the documents presented in connection with such demand do not
strictly comply with the terms of such Letter of Credit, (iii) any actual or alleged presence or
release of Hazardous Materials on or from any property owned or operated by the Borrower or any
other Credit Party, or any Environmental Liability related in any way to the Borrower or any other
Credit Party, (iv) any actual or prospective claim, litigation, investigation or proceeding
relating to any of the foregoing, whether based on contract, tort or any other theory and
regardless of whether any Indemnitee is a party thereto, (v) any other aspect of this Agreement and
the other Loan Documents, or (vi) the enforcement of any Indemnitee’s rights hereunder and any
related investigation, defence, preparation of defence, litigation and enquiries; provided
that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses,
claims,
damages, liabilities or related expenses are determined by a court of competent jurisdiction
by final and nonappealable judgment to have resulted from the gross negligence (it being
acknowledged that ordinary negligence does not necessarily constitute gross negligence) or wilful
misconduct of or material breach of this Agreement by such Indemnitee.
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(c) To the extent that the Borrower fails to pay any amount required to be paid under Sections
9.3(a) or (b), each Lender severally agrees to pay to the Agent such Lender’s Applicable Percentage
(determined as of the time that the applicable unreimbursed expense or indemnity payment is sought)
of such unpaid amount; provided that the unreimbursed expense or indemnified loss, claim,
damage, liability or related expense, as the case may be, was incurred by or asserted against the
Agent, in its capacity as such.
(d) The Credit Parties shall not assert, and hereby waive (to the fullest extent permitted by
Applicable Law), any claim against any Indemnitee, on any theory of liability, for special,
indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out
of, in connection with, or as a result of, any Loan Document, or any agreement or instrument
contemplated thereby, the Transactions, any Loan or Letter of Credit or the use of the proceeds
thereof.
(e) Any inspection of any property of the Borrower or any other Credit Party made by or
through the Agent or any Lender is for purposes of administration of the Credits only, and neither
the Borrower nor any other Credit Party is entitled to rely upon the same (whether or not such
inspections are at the expense of the Borrower).
(f) By accepting or approving anything required to be observed, performed, fulfilled or given
to the Agent or the Lenders pursuant to the Loan Documents, neither the Agent nor the Lenders shall
be deemed to have warranted or represented the sufficiency, legality, effectiveness or legal effect
of the same, or of any term, provision or condition thereof, and such acceptance or approval
thereof shall not constitute a warranty or representation to anyone with respect thereto by the
Agent or the Lenders.
(g) The relationship between the Borrower and the Agent and the Lenders is, and shall at all
times remain, solely that of borrower and lenders. Neither the Agent nor the Lenders shall under
any circumstance be construed to be partners or joint venturers of the Borrower or its Affiliates.
Neither the Agent nor the Lenders shall under any circumstance be deemed to be in a relationship of
confidence or trust or a fiduciary relationship with the Borrower or its Affiliates, or to owe any
fiduciary duty to the Borrower or its Affiliates. Neither the Agent nor the Lenders undertake or
assume any responsibility or duty to the Borrower or its Affiliates to select, review, inspect,
supervise, pass judgment upon or inform the Borrower or its Affiliates of any matter in connection
with their property or the operations of the Borrower or its Affiliates. The Borrower and its
Affiliates and all shareholders and all direct and indirect shareholders of the Credit Parties
shall rely entirely upon their own judgment with respect to such matters, and any review,
inspection, supervision, exercise of judgment or supply of information undertaken or assumed by the
Agent or the Lenders in connection with such matters is solely for the protection of the Agent and
the Lenders, and neither the Borrower nor any other Person is entitled to rely thereon.
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(h) The Agent and the Lenders shall not be responsible or liable to any Person for any loss,
damage, liability or claim of any kind relating to injury or death to Persons or damage to Property
caused by the actions, inaction or negligence of the Borrower or any other Credit Party and/or
their Affiliates and/or any Shareholder and/or any direct or indirect shareholder of any Credit
Party; each Credit Party hereby indemnifies and holds the Agent and the Lenders harmless from any
such loss, damage, liability or claim.
(i) This Agreement is made for the purpose of defining and setting forth certain obligations,
rights and duties of the Borrower, the Agent and the Lenders in connection with the Loans, and is
made for the sole benefit of the Borrower, each other Credit Party, the Agent and the Lenders, and
the Agent’s and each Lender’s successors and assigns. Except as provided in Sections 9.3(a) or (b)
and 9.4, no other Person shall have any rights of any nature hereunder or by reason hereof.
(j) All amounts due under this Section 9.3 shall be payable not later than five Business Days
after written demand therefor.
9.4 Successors and Assigns.
(a) The provisions of this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns permitted hereby, except that (i) the
Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without
the prior written consent of each Lender (and any attempted assignment or transfer by the Borrower
without such consent shall be null and void), and (ii) no Lender may assign or otherwise transfer
its rights or obligations hereunder except in accordance with this Section. Nothing in this
Agreement, expressed or implied, shall be construed to confer upon any Person (other than the
parties hereto, their respective successors and assigns permitted hereby and, to the extent
expressly contemplated hereby, the Related Parties of each of the Agent and the Lenders) any legal
or equitable right, remedy or claim under or by reason of this Agreement.
(b) Any Lender may assign to one or more Persons all or a portion of its rights and
obligations under this Agreement and the other Loan Documents (including all or a portion of its
Commitments and the Loans at the time owing to it); provided that (i) except in the case of
an assignment of any Commitment to an assignee that is a Lender with a Commitment immediately prior
to giving effect to such assignment, each of the Agent and the Borrower must give its prior written
consent to such assignment (which consent shall not be unreasonably withheld or delayed) by the
Borrower; and provided further that (ii) notwithstanding clause (i) immediately
above, the Borrower’s consent shall not be required with respect to any assignment made at any time
after the occurrence and during the continuance of an Event of Default, or in connection with any
assignment by a Lender to an Affiliate of such Lender, (iii) except in the case of an assignment to
a Lender or a Lender Affiliate or an assignment of the entire remaining amount of the assigning
Lender’s Commitment, the amount of the Commitment of the assigning Lender subject to each such
assignment (determined as of the date on which the Assignment and Assumption relating to such
assignment is delivered to the Agent) shall not be less than Cdn.$1,000,000 (or, in the case of a
U.S. Dollar-denominated Commitment, the U.S. $ Equivalent of Cdn.$1,000,000), unless each of the
Borrower and the Agent otherwise consent in writing and the amount held by each Lender after each
such assignment shall not be less than
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Canadian $1,000,000 (or, in the case of a U.S. Dollar-denominated Commitment, the U.S. $
Equivalent of Cdn.$1,000,000), unless each of the Borrower and the Agent otherwise consent in
writing, (iv) each partial assignment in respect of a Commitment and the related Loans shall be
made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations
under this Agreement in respect of such Commitment and the related Loans, (v) the parties to each
assignment shall execute and deliver to the Agent an Assignment and Assumption, together with
(except in the case of an assignment to a Lender or a Lender Affiliate) a processing and
recordation fee of Cdn.$3,500, payable by the assigning Lender, and (vi) the assignee, if it shall
not be a Lender, shall deliver to the Agent an Administrative Questionnaire. The Agent shall
provide the Borrower and each Lender with written notice of any change in (or new) address of a
Lender disclosed in an Administrative Questionnaire. Subject to acceptance and recording thereof
pursuant to Section 9.4(d), from and after the effective date specified in each Assignment and
Assumption, the assignee thereunder shall be a party hereto and, to the extent of the interest
assigned by such Assignment and Assumption, shall have all of the rights and obligations of a
Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Assumption, be released from its obligations under this
Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s
rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall
continue to be entitled to the benefits of Sections 2.12, 2.13, and 2.14 and 9.3). Any assignment
or transfer by a Lender of rights or obligations under this Agreement that does not comply with
this Section 9.4 shall be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with Section 9.4(e).
(c) The Agent, acting for this purpose as an agent of the Borrower, shall maintain at one of
its offices in Toronto, Ontario a copy of each Assignment and Assumption delivered to it and a
register for the recordation of the names and addresses of the Lenders, and the Commitment of, and
principal amount of the Loans and the amount of the Reimbursement Obligations owing to, each Lender
pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall
be conclusive, and the Borrower, the Agent, and the Lenders may treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of
this Agreement. The Register shall be available for inspection by the Borrower and any Lender at
any reasonable time and from time to time upon reasonable prior notice.
(d) Upon its receipt of a duly completed Assignment and Assumption executed by an assigning
Lender and an assignee, the assignee’s completed Administrative Questionnaire (unless the assignee
shall already be a Lender hereunder), the processing and recordation fee referred to in Section
9.4(b) and any written consent to such assignment required by Section 9.4(b), the Agent shall
accept such Assignment and Assumption and record the information contained therein in the Register.
No assignment shall be effective for purposes of this Agreement unless it has been recorded in the
Register as provided in this Section 9.4(d).
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(e) Any Lender may, without notice to the Borrower or the consent of the Borrower or the
Agent, sell participations to one or more Persons (a “Participant”) in all or a portion of such
Lender’s rights and obligations under this Agreement and the other Loan Documents (including all or
a portion of its Commitment and the Loans owing to it); provided that (i) such
Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of such obligations, and
(iii) the Borrower, the Agent, and the other Lenders shall continue to deal solely and directly
with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any
agreement or instrument pursuant to which a Lender sells such a participation shall provide that
such Lender shall retain the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; provided that such agreement or
instrument may provide that such Lender will not, without the consent of the Participant, agree to
any amendment, modification or waiver described in the first proviso to Section 9.2(b) that affects
such Participant. Subject to Section 9.4(f), the Borrower agrees that each Participant shall be
entitled to the benefits of Sections 2.12, 2.13 and 2.14 to the same extent as if it were a Lender
and had acquired its interest by assignment pursuant to this Section 9.4(e). To the extent
permitted by Applicable Law, each Participant also shall be entitled to the benefits of Section 9.8
as though it were a Lender, provided that such Participant agrees to be subject to Section
2.15(c) as though it were a Lender.
(f) A Participant shall not be entitled to receive any greater payment under Section 2.13 or
2.14 than the applicable Lender would have been entitled to receive with respect to the
participation sold to such Participant, unless the sale of the participation to such Participant is
made with the Borrower’s prior written consent.
(g) Any Lender may at any time pledge or assign a security interest in all or any portion of
its rights under this Agreement to secure obligations of such Lender, including any pledge or
assignment to secure obligations to a Federal Reserve Bank, and Section 9.4 shall not apply to any
such pledge or assignment of a security interest; provided that no such pledge or
assignment of a security interest shall release a Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto.
9.5 Survival All covenants, agreements, representations and warranties made by the
Borrower herein and in the certificates or other instruments delivered in connection with or
pursuant to this Agreement shall be considered to have been relied upon by the other parties hereto
and shall survive the execution and delivery of this Agreement and the making of any Loans and
issuance of any Letters of Credit, regardless of any investigation made by any such other party or
on its behalf and notwithstanding that the Agent or any Lender may have had notice or knowledge of
any Default or incorrect representation or warranty at the time any credit is extended hereunder,
and shall continue in full force and effect as long as the principal of or any accrued interest on
any Loan or any fee or any other amount payable under this Agreement is outstanding and unpaid or
any Letter of Credit is outstanding and so long as the Commitments have not expired or terminated.
Sections 2.12, 2.13, 2.14 and 9.3 and Article 8 shall survive and remain in full force and effect,
regardless of the consummation of the Transactions, the repayment of the Loans, the expiration or
termination of the Letters of Credit and the Commitments or the termination of this Agreement or
any provision hereof.
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9.6 Counterparts; Integration; Effectiveness This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a single contract.
This Agreement, the other Loan Documents and any separate letter agreements with respect to
fees payable to the Agent, constitute the entire contract among the parties relating to the subject
matter hereof and supersede any and all previous agreements and understandings, oral or written,
relating to the subject matter hereof. Except as provided in Section 4.1, this Agreement shall
become effective when it shall have been executed by the Agent and when the Agent shall have
received counterparts hereof which, when taken together, bear the signatures of each of the other
parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Delivery of an executed original counterpart of a
signature page of this Agreement by facsimile or other electronically scanned method of delivery
shall be as effective as delivery of a manually executed original counterpart of this Agreement.
9.7 Severability Any provision of this Agreement held to be invalid, illegal or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such invalidity, illegality or unenforceability without affecting the validity, legality and
enforceability of the remaining provisions hereof, and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other jurisdiction.
9.8 Right of Set-Off If an Event of Default shall have occurred and be continuing, each
Lender and each of its Affiliates is hereby authorized at any time and from time to time, to the
fullest extent permitted by Applicable Law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other obligations at any time
owing by such Lender or Affiliate to or for the credit or the account of any Credit Party against
any of and all of the obligations of the Borrower now or hereafter existing under this Agreement
held by such Lender, irrespective of whether or not such Lender shall have made any demand under
this Agreement and although such obligations may be unmatured. The rights of each Lender under
this Section are in addition to other rights and remedies (including other rights of set off) which
such Lender may have.
9.9 Governing Law; Jurisdiction; Consent to Service of Process.
(a) This Agreement shall be construed in accordance with and governed by the Laws of the
Province of British Columbia.
(b) The Borrower hereby irrevocably and unconditionally submits, for itself and its property,
to the non-exclusive jurisdiction of the Courts of the Province of British Columbia, and any
appellate court thereof, in any action or proceeding arising out of or relating to this Agreement,
or any other Loan Document or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such
action or proceeding may be heard and determined in British Columbia. Each of the parties hereto
agrees that a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner provided by
Applicable Law. Nothing in this Agreement shall affect any right that the Agent or any Lender may
otherwise have to bring any action or proceeding relating to this Agreement or any other Loan
Document against the Borrower or its properties in the courts of any other jurisdiction.
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(c) The Borrower hereby irrevocably and unconditionally waives, to the fullest extent it may
legally and effectively do so, any objection which it may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or relating to this Agreement
in any court referred to in this Section 9.9. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by Applicable Law, any forum non conveniens defence to the
maintenance of such action or proceeding in any such court.
(d) Each party to this Agreement irrevocably consents to service of process in the manner
provided for notices in Section 9.1. Nothing in this Agreement will affect the right of any party
to this Agreement to serve process in any other manner permitted by Applicable Law.
9.10 WAIVER OF JURY TRIAL EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT, OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION,
SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.
9.11 Headings Article and Section headings and the Table of Contents used herein are for
convenience of reference only, are not part of this Agreement and shall not affect the construction
of, or be taken into consideration in interpreting, this Agreement.
9.12 Confidentiality Each of the Agent and each Lender agrees to maintain the
confidentiality of the Information (as defined below), except that Information may be disclosed (a)
to each of their, and each of their Affiliates’, directors, officers, employees, agents and
advisors, including accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the extent requested by
any rating agency, regulatory authority or other Governmental Authority, or their legal counsel,
(c) to the extent required by applicable laws or regulations or by any subpoena or similar legal
process, (d) to any other party to this Agreement or to any Parent Facility Lender, (e) in
connection with the exercise of any remedies under any Loan Document or any suit, action or
proceeding relating to any Loan Document or the enforcement of rights thereunder, (f) subject to an
agreement containing provisions substantially the same as those of this Section, to (i) any actual
or prospective assignee of or Participant (or such assignee’s or Participant’s advisors) in any of
its rights or obligations under this Agreement, or (ii) any actual or prospective counterparty (or
its advisors) to any swap or derivative transaction relating to the Borrower and its obligations,
(g) any financial institution (other than as otherwise identified in this Section 9.12), credit
reporting agency or credit bureau, (h) any Person with whom the Borrower or any other Credit Party
may have or proposes to have financial dealings, or (i) with the consent of the Borrower . For
greater certainty, the Borrower and each of the Credit Parties acknowledges that from time to time
as a result of the ownership of the Agent by Canadian
- 111 -
Imperial
Bank of Commerce (“CIBC”), the Borrower or any other Credit Party may request the Agent to facilitate the
provision of certain financial services offered by CIBC (the “CIBC Services”). In such
circumstances, CIBC policies and procedures (“CIBC’s Policies”) will apply in respect of all
transactions undertaken by CIBC in connection with the provision of the CIBC Services, including
any required due diligence investigation and related business approval processes conducted in
respect of the Borrower and the other Credit Parties. In such circumstances, it may be prudent,
necessary or cost effective for the Agent to provide to CIBC information regarding the Borrower or
any other Credit Party that is in the possession or control of the Agent solely for the purpose of
facilitating compliance with CIBC’s Policies. The Borrower and each of the Credit Parties consents
to the disclosure of Information by the Agent to CIBC for the purpose of facilitating compliance
with CIBC’s Policies. For the purposes of this Section, “Information” means all information
received from the Borrower or any Credit Party relating to the Borrower, any of the Credit Parties,
or their respective businesses, other than Information that is (i) is or becomes publicly available
other than as a result of a breach of this Section, (ii) any such information that is or becomes
available to the Agent, the Issuing Bank, any Lender or CIBC on a non-confidential basis prior to
disclosure by the Borrower, or (iii) was already in the possession of the Agent, the Issuing Bank,
or any Lender or CIBC prior to its disclosure by the Borrower or any other Credit Party; or (iv)
marked “non-confidential” (or such other words or expression having the same or similar meaning by
the Borrower or any other Credit Party. Any Person required to maintain the confidentiality of
Information as provided in this Section shall be considered to have complied with its obligation to
do so if such Person has exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information, acting prudently.
9.13 Press Releases and Related Materials Each Credit Party agrees that neither it nor its
Affiliates will in the future issue any press releases or other public disclosure using the name of
the Agent or any of the Lenders or referring to this Agreement, or the other Loan Documents without
at least two (2) Business Days’ prior notice to the Agent or the applicable Lender unless (and only
to the extent that) such Credit Party or Affiliate is required to do so under law and then, in any
event, such Credit Party or Affiliate will consult with the Agent or the applicable Lender before
issuing such press release or other public disclosure. Each Credit Party consents to the
publication by the Agent or any Lender of advertising material relating to the financing
transactions contemplated by this Agreement using its name, product photographs, logo or trademark.
The Agent reserves the right to provide to industry trade organizations information necessary
and customary for inclusion in league table measurements. Notwithstanding the foregoing, the
parties confirm that the Parent shall not be bound by the provisions of this Section 9.13.
9.14 Anti-Money Laundering Legislation.
(a) The Borrower acknowledges that, pursuant to the Proceeds of Crime (Money Laundering) and
Terrorist Financing Act (Canada) and other applicable anti-money laundering, anti-terrorist
financing, government sanction and “know your client” Laws (collectively, including any guidelines
or orders thereunder, “AML Legislation”), the Lenders and the Agent may be required to
obtain, verify and record information regarding the Borrower, its directors, authorized signing
officers, direct or indirect shareholders or other Persons in control of the
Borrower, and the transactions contemplated hereby. The Borrower shall promptly provide all
such information, including supporting documentation and other evidence, as may be reasonably
requested by any Lender or the Agent, or any prospective assignee or participant of a Lender or the
Agent, in order to comply with any applicable AML Legislation, whether now or hereafter in
existence.
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(b) If the Agent has ascertained the identity of the Borrower or any authorized signatories of
the Borrower for the purposes of applicable AML Legislation, then the Agent:
| (i) | shall be deemed to have done so as an agent for each Lender, and this Agreement shall constitute a “written agreement” in such regard between each Lender and the Agent within the meaning of applicable AML Legislation; and |
| (ii) | shall provide to each Lender copies of all information obtained in such regard without any representation or warranty as to its accuracy or completeness. |
Notwithstanding the preceding sentence and except as may otherwise be agreed in writing, each of
the Lenders agrees that the Agent has no obligation to ascertain the identity of the Borrower or
any authorized signatories of the Borrower on behalf of any Lender, or to confirm the completeness
or accuracy of any information it obtains from the Borrower or any such authorized signatory in
doing so.
9.15 Defaulting Lenders.
(a) If a Lender becomes a Defaulting Lender, then, in addition to the rights and remedies that
may be available to the Agent and the other Lenders or any other party at law or in equity, and not
an limitation thereof, (i) such Defaulting Lender’s right to participate in the administration of,
or decision-making rights related to, the Obligations in respect of Required Lender votes, this
Agreement or the other Loan Documents shall be suspended during the pendency of such failure or
refusal, (ii) a Defaulting Lender shall be deemed to have permanently (unless reinstated as set
forth below) assigned, without further consideration, any and all payments due to it from the
Credit Parties, whether on account of outstanding Loans, interest, fees or otherwise, to the
remaining non-Defaulting Lenders for application to, and reduction of, their proportionate shares
of all outstanding Obligations until, as a result of application of such assigned payments the
Lenders’ respective Applicable Percentages of all outstanding Obligations shall have returned to
those in effect immediately prior to such delinquency and without giving effect to the non-payment
causing such delinquency, or (ii) at the option of the Agent, any amount payable to such Defaulting
Lender hereunder (whether on account of principal, interest, fees or otherwise) shall, in lieu of
being distributed to such Defaulting Lender, be retained by the Agent as cash collateral for, and
applied by the Agent to, defaulted and future funding obligations of the Defaulting Lender in
respect of any Loan or existing or future participating interest in any Letter of Credit. The
Defaulting Lender’s decision-making and participation rights and rights to payments as set forth in
clauses (i) and (ii) hereinabove shall be restored only upon (a) the payment by the Defaulting
Lender of its Applicable Percentage of any Obligations, any participation obligation, or expenses
as to
whether it is delinquent, together with interest thereon at a rate equal to the Canadian Prime
Rate (for Canadian Dollar amounts) or the Base Rate (for US Dollar amounts) from time to time in
effect from the date when originally due until the date upon which any such amounts are actually
paid and (b) receipt by the Agent and the Borrower of a certification by such Defaulting Lender of
its ability and intent to comply with the provisions of this Agreement going forward.
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(b) The non-Defaulting Lenders shall also have the right, but not the obligation, in their
respective, sole and absolute discretion, to cause the termination and assignment, without any
further action by the Defaulting Lender for no cash consideration (pro rata, based
on the respective Commitments of those Lenders electing to exercise such right), of the Defaulting
Lender’s Commitment to fund future advances. Upon any such purchase of the Commitment of any
Defaulting Lender, the Defaulting Lender’s share in future extensions of Credit and its rights
under the Loan Documents with respect thereto (but not with respect to then outstanding Obligations
owed to the Defaulting Lender) shall terminate on the date of purchase, and the Defaulting Lender
shall promptly execute all documents reasonably requested to surrender and transfer such interest,
including, if so requested, an Assignment and Assumption.
(c) Each Defaulting Lender shall indemnify the Agent and each non-Defaulting Lender from and
against any and all loss, damage or expenses, including reasonable legal fees and funds advanced by
the Agent or by any non-Defaulting Lender, on account of a Defaulting Lenders’ failure to timely
fund its Applicable Percentage of a Loan or to otherwise perform its obligations under the Loan
Documents.
9.16 No Strict Construction The parties hereto have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly by the parties
hereto and no presumption or burden of proof shall arise favouring or disfavouring any party by
virtue of the authorship of any provisions of this Agreement.
9.17 Paramountcy In the event of any inconsistency between the provisions of this
Agreement and the provisions of any other Loan Document, the provisions of this Agreement shall
prevail.
9.18 LIMITATION OF LIABILITY NO CLAIM MAY BE MADE BY THE BORROWER, ANY GUARANTOR, ANY
LENDER OR OTHER PERSON AGAINST THE AGENT, ANY LENDER, OR THE AFFILIATES, DIRECTORS, OFFICERS,
EMPLOYEES, OR AGENTS OF ANY OF THEM FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES IN
RESPECT OF ANY CLAIM FOR BREACH OF CONTRACT OR ANY OTHER THEORY OF LIABILITY ARISING OUT OF OR
RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY ACT,
OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH, AND THE BORROWER, EACH GUARANTOR, EACH LENDER
AND THE AGENT HEREBY WAIVES, RELEASES AND AGREES NOT TO XXX UPON ANY CLAIM FOR SUCH DAMAGES,
WHETHER OR NOT ACCRUED AND WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST IN ITS FAVOUR.
- 114 -
9.19 Language The parties herein have expressly requested that this Agreement and all
related documents be drawn up in the English language. À la demande expresse des parties aux
présentes, cette convention et tout document y afférent ont été rédigés en langue anglaise.
[Balance of page left blank; signature pages follow]
- 115 -
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their
respective authorized officers as of the day and year first above written.
| Address: | BLUELINX BUILDING PRODUCTS CANADA LTD. | |||||
| Attention: | ||||||
Facsimile No.:
|
By: | /s/ H. Xxxxxxx Xxxxxxx
|
||||
| Title: Treasurer | ||||||
| SIGNATURE PAGE TO CREDIT AGREEMENT DATED AS OF AUGUST 12, 2011 BETWEEN CIBC ASSET-BASED LENDING INC., AS AGENT AND BLUELINX BUILDING PRODUCTS CANADA LTD. |
S-1
| Address: | CIBC ASSET-BASED LENDING INC., as Agent and as Lender | |||||
| Attention: | ||||||
Facsimile No.:
|
By: | /s/ Xxxxxx Xxxxxx
|
||||
| Title: Authorized Signatory | ||||||
| By: | /s/ Xxxxxx Xxxxxx
|
|||||
| Title: Authorized Signatory | ||||||
| SIGNATURE PAGE TO CREDIT AGREEMENT DATED AS OF AUGUST 12, 2011 BETWEEN CIBC ASSET-BASED LENDING INC., AS AGENT AND BLUELINX BUILDING PRODUCTS CANADA LTD. |
S-2
TABLE OF CONTENTS
| Page | ||||
ARTICLE 1 DEFINITIONS |
1 | |||
1.1 Defined Terms |
1 | |||
1.2 Classification of Loans and Borrowings |
31 | |||
1.3 Terms Generally |
31 | |||
1.4 Accounting Terms; GAAP |
32 | |||
1.5 Time |
32 | |||
1.6 Permitted Liens |
32 | |||
1.7 Interpretation Clause (Québec) |
33 | |||
1.8 Currency |
33 | |||
ARTICLE 2 THE CREDITS |
33 | |||
2.1 Commitments |
33 | |||
2.2 Loans and Borrowings |
34 | |||
2.3 Requests for Borrowings |
35 | |||
2.4 Funding of Borrowings |
36 | |||
2.5 Interest |
38 | |||
2.6 Termination and Reduction of Commitments |
39 | |||
2.7 Repayment of Loans |
40 | |||
2.8 Evidence of Debt |
40 | |||
2.9 Prepayments |
41 | |||
2.10 Fees |
42 | |||
2.11 BA Borrowings |
43 | |||
2.12 Increased Costs; Illegality; Alternate Rate of Interest |
46 | |||
2.13 Break Funding Payments |
48 | |||
2.14 Taxes |
48 | |||
2.15
Payments Generally; Pro Rata Treatment; Sharing of Set-offs |
49 | |||
2.16 Currency Indemnity |
51 | |||
2.17 Collection of Accounts |
51 | |||
2.18 Letters of Credit |
53 | |||
2.18A
Letters of Credit |
56 | |||
2.19 F/X Contracts |
59 | |||
2.19A
F/X Contracts |
60 | |||
TABLE OF CONTENTS
(continued)
(continued)
| Page | ||||
ARTICLE 3 REPRESENTATIONS AND WARRANTIES |
61 | |||
3.1 Organization; Powers |
61 | |||
3.2 Authorization; Enforceability |
61 | |||
3.3 Governmental Approvals; No Conflicts |
61 | |||
3.4 Financial Condition; No Material Adverse Effect |
62 | |||
3.5 Litigation |
62 | |||
3.6 Compliance with Applicable Laws and Agreements |
63 | |||
3.7 Ownership |
63 | |||
3.8 Taxes |
63 | |||
3.9 Titles to Real Property |
63 | |||
3.10 Titles to Personal Property |
63 | |||
3.11 Pension Plans |
63 | |||
3.12 Disclosure |
64 | |||
3.13 Defaults |
65 | |||
3.14 Casualties; Taking of Properties |
65 | |||
3.15 Subsidiaries and Jurisdictions |
65 | |||
3.16 Insurance |
65 | |||
3.17 Solvency |
66 | |||
3.18 Material Contracts |
66 | |||
3.19 Environmental Matters |
66 | |||
3.20 Employee Matters |
67 | |||
3.21 Fiscal Year |
67 | |||
3.22 Intellectual Property Rights |
68 | |||
3.23 Residency of Borrower for Tax Purposes |
68 | |||
3.24 Restricted Payments |
68 | |||
3.25 Indebtedness |
68 | |||
3.26 Workers’ Compensation |
68 | |||
3.27 Bank Accounts |
68 | |||
3.28 Real Property and Leases |
69 | |||
3.29 Further Real Property Matters |
69 | |||
3.30 Corporate Name; Prior Transactions |
69 | |||
3.31 Brokers |
69 | |||
3.32 Customer and Trade Relations |
69 | |||
TABLE OF CONTENTS
(continued)
(continued)
| Page | ||||
ARTICLE 4 CONDITIONS |
70 | |||
4.1 Effective Date |
70 | |||
4.2 Each Credit Event |
74 | |||
ARTICLE 5 AFFIRMATIVE COVENANTS |
75 | |||
5.1 Financial Statements and Other Information |
75 | |||
5.2 Existence; Conduct of Business |
80 | |||
5.3 Payment of Obligations |
80 | |||
5.4 Maintenance of Properties |
80 | |||
5.5 Books and Records; Inspection Rights |
80 | |||
5.6 Compliance with Applicable Laws and Material Contracts |
80 | |||
5.7 Use of Proceeds and Letters of Credit |
81 | |||
5.8 Further Assurances |
81 | |||
5.9 Insurance |
81 | |||
5.10 Operation and Maintenance of Property |
82 | |||
5.11 Additional Subsidiaries; Additional Liens |
83 | |||
5.12 Adjusted Tangible Net Worth Covenant |
83 | |||
5.13 Post Closing Undertakings |
83 | |||
5.14 Environmental Laws |
84 | |||
5.15 Landlords’ Agreement, Mortgagee Agreements, Bailee Letters and Real
Estate Purchases |
85 | |||
5.16 Canadian Pension Plans |
85 | |||
5.17 Collateral Monitoring and Review |
85 | |||
5.18 Physical Inventories |
86 | |||
5.19 Application under the CCAA |
86 | |||
TABLE OF CONTENTS
(continued)
(continued)
| Page | ||||
ARTICLE 6 NEGATIVE COVENANTS |
86 | |||
6.1 Indebtedness |
86 | |||
6.2 Liens |
87 | |||
6.3 Fundamental Changes |
87 | |||
6.4 Investments, Loans, Advances, Guarantees and Acquisitions |
87 | |||
6.5 Swap Transactions |
87 | |||
6.6 Restricted Payments |
88 | |||
6.7 Transactions with Affiliates |
89 | |||
6.8 Repayment of Debt |
89 | |||
6.9 Restrictive Agreements |
89 | |||
6.10 Sales and Leasebacks |
89 | |||
6.11 Pension Plan Compliance |
90 | |||
6.12 Sale or Discount of Receivables |
90 | |||
6.13 Unconditional Purchase Obligations |
90 | |||
6.14 Capital Expenditures |
90 | |||
6.15 No Amendments to Material Contracts |
90 | |||
6.16 Location of Assets |
90 | |||
ARTICLE 7 EVENTS OF DEFAULT |
91 | |||
7.1 Events of Default |
91 | |||
7.2 Remedies |
95 | |||
ARTICLE 8 THE AGENT |
96 | |||
8.1 Appointment of Agent |
96 | |||
8.2 Limitation of Duties of Agent |
97 | |||
8.3 Lack of Reliance on the Agent |
97 | |||
8.4 Certain Rights of the Agent |
97 | |||
8.5 Reliance by Agent |
98 | |||
8.6 Indemnification of Agent |
98 | |||
8.7 The Agent in its Individual Capacity |
98 | |||
8.8 May Treat Lender as Owner |
98 | |||
8.9 Successor Agent |
99 | |||
8.10 No Independent Legal Action by Lenders |
99 | |||
8.11 Notice of Default |
100 | |||
8.12 Agency for Perfection |
100 | |||
8.13 Payments by Agent to Lenders |
100 | |||
8.14 Concerning the Collateral and the Related Loan Documents |
100 | |||
8.15 Field Audit and Examination Reports; Disclaimer by Lenders |
101 | |||
8.16 Quebec Security |
102 | |||
TABLE OF CONTENTS
(continued)
(continued)
| Page | ||||
ARTICLE 9 MISCELLANEOUS |
103 | |||
9.1 Notices |
103 | |||
9.2 Waivers; Amendments |
103 | |||
9.3 Expenses; Indemnity; Damage Waiver |
105 | |||
9.4 Successors and Assigns |
107 | |||
9.5 Survival |
109 | |||
9.6 Counterparts; Integration; Effectiveness |
110 | |||
9.7 Severability |
110 | |||
9.8 Right
of Set-Off |
110 | |||
9.9 Governing Law; Jurisdiction; Consent to Service of Process |
110 | |||
9.10 WAIVER OF JURY TRIAL |
111 | |||
9.11 Headings |
111 | |||
9.12 Confidentiality |
111 | |||
9.13 Press Releases and Related Materials |
112 | |||
9.14 Anti-Money Laundering Legislation |
112 | |||
9.15 Defaulting Lenders |
113 | |||
9.16 No Strict Construction |
114 | |||
9.17 Paramountcy |
114 | |||
9.18 LIMITATION OF LIABILITY |
114 | |||
9.19 Language |
115 | |||
