Exhibit 10.2.1
MAXXCOM INC., an Ontario corporation
MAXXCOM INC., a Delaware corporation
as Borrowers
- and -
THE GUARANTORS
- and -
THE BANK OF NOVA SCOTIA
as Lead Arranger, Book Runner, Administrative Agent,
and Lender
- and -
THE LENDERS
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SECOND AMENDED AND RESTATED CREDIT AGREEMENT
MADE AS OF THE 11th DAY OF JULY, 2001
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THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT is made as of the
11th day of July, 2001.
B E T W E E N:
MAXXCOM INC.
a corporation incorporated under the
laws of the Province of Ontario
("Maxxcom")
- and -
MAXXCOM INC.
a corporation incorporated under the
laws of the State of Delaware
("Maxxcom US")
AS BORROWERS
- AND -
MAXXCOM (NOVA SCOTIA) CORP.
MAXXCOM (USA) FINANCE COMPANY
MAXXCOM (USA) HOLDINGS INC.
1220777 ONTARIO LIMITED
NEWS CANADA INC.
1385544 ONTARIO LIMITED
MAXXCOM INTERACTIVE INC.
MACKENZIE MARKETING, INC.
MF+P ACQUISITION CO.
SMI ACQUISITION CO.
ACCENT ACQUISITION CO.
FMA ACQUISITION CO.
TC ACQUISITION INC.
ET ACQUISITION INC.
BZ ACQUISITION INC.
CDI ACQUISITION CO.
BRATSKEIR & COMPANY, INC.
CPB ACQUISITION INC.
AS GUARANTORS
- and -
THE BANK OF NOVA SCOTIA
a bank to which the Bank Act (Canada) applies,
in its capacity as administrative agent hereunder
AS ADMINISTRATIVE AGENT
- and -
THE BANK OF NOVA SCOTIA
a bank to which the Bank Act (Canada) applies,
in its capacity as a lender hereunder
- and -
CANADIAN IMPERIAL BANK OF COMMERCE
a bank to which the Bank Act (Canada) applies,
in its capacity as a lender hereunder
- and -
BANK OF MONTREAL
a bank to which the Bank Act (Canada) applies,
in its capacity as a lender hereunder
- and -
THE TORONTO-DOMINION BANK
a bank to which the Bank Act (Canada) applies,
in its capacity as a lender hereunder
- and -
ROYAL BANK OF CANADA
a bank to which the Bank Act (Canada) applies,
in its capacity as a lender hereunder
- and -
THE BANK OF NOVA SCOTIA
by its Atlanta Agency,
in its capacity as a lender hereunder
- and -
CIBC INC.
a financial institution incorporated under the laws of the State of Delaware,
in its capacity as a lender hereunder
- and -
BANK OF MONTREAL
by its Chicago branch,
in its capacity as a lender hereunder
- and -
TORONTO DOMINION (TEXAS), INC.
a corporation incorporated under the laws of Delaware,
in its capacity as a lender hereunder
- and -
ROYAL BANK OF CANADA
by its Grand Cayman (North America No. 1) Branch,
in its capacity as a lender hereunder
- and -
THE LENDERS
who from time to time become party hereto
AS LENDERS
RECITALS:
A. By letter agreement between The Bank of Nova Scotia and the Borrowers, The
Bank of Nova Scotia agreed to establish a credit facility in favour of the
Borrowers in the maximum amount of up to Cdn. $80,000,000 or the equivalent
thereof in U.S. Dollars which was formally documented by way of the credit
agreement dated as of 31 March 2000 between the Borrowers, certain of the
Guarantors party hereto, the Agent and the Lenders (the "Original Credit
Agreement").
B. The Original Credit Agreement was amended and restated pursuant to the
amended and restated credit agreement made as of 29 November, 2000 between the
Borrowers, certain of the Guarantors party hereto, the Agent and the Lenders
(the "First Amended and Restated Credit Agreement").
C. The First Amended and Restated Credit Agreement was further amended by a
first amendment agreement made as of 8 January 2001, a waiver agreement made as
of 9 March 2001 and a second amendment agreement made as of 29 May 2001.
D. The Borrowers have requested that the Lenders consent to the incurrence by
Maxxcom of certain subordinate indebtedness, make certain consequential changes
in relation thereto and make certain other amendments to the First Amended and
Restated Credit Agreement.
E. The Lenders have agreed to such requests and the parties are entering into
this Agreement to amend and restate the First Amended and Restated Credit
Agreement, as previously amended, on the terms and conditions set forth herein.
NOW THEREFORE in consideration of these premises and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, it is agreed that the First Amended and Restated Credit
Agreement, as previously amended, is hereby amended and restated so that, as
amended and restated, such agreement reads as follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.1 Certain Defined Terms
In this Agreement, unless something in the subject matter or context
is inconsistent therewith:
1.1.1 "Acquirecos" means MF + P Acquisition Co. (a Delaware corporation),
SMI Acquisition Co. (a Delaware corporation), Accent Acquisition Co.
(a Delaware corporation), FMA Acquisition Co. (a Delaware
corporation), TC Acquisition Inc. (a Delaware corporation), ET
Acquisition Inc. (a Delaware corporation), BZ Acquisition Inc. (a
Delaware corporation), CDI Acquisition Co. (a Delaware corporation),
CPB Acquisition Inc. (a Delaware corporation) and each other direct or
indirect Wholly-Owned Subsidiary of Maxxcom which is not an Opco and
which controls or acquires an Opco from time to time and "Acquireco"
means any one of them.
1.1.2 "Acquisition Certificate" means a certificate of Maxxcom delivered to
the Agent prior to the completion of a proposed Permitted Acquisition
(which, for greater certainty, shall not be required in relation to a
Permitted Acquisition under Sections 1.1.126(d) or (g) or a Permitted
Non-Conforming Acquisition); which shall contain:
(a) a detailed description of the proposed Permitted Acquisition
including, without limitation, the structure thereof, the purchase
price payable, the formula for, and anticipated amount of, Deferred
Purchase Price Obligations relating thereto and Earnout Amounts (if
any relating thereto), and the terms of all put/call arrangements,
shareholder agreements and employment agreements relating thereto;
(b) pro forma financial statements taking into account the anticipated
effect of the proposed Permitted Acquisition including any
indebtedness incurred or assumed in connection therewith which
demonstrates compliance with all financial covenants set forth in
Section 7.2, both before and after making the proposed Permitted
Acquisition, and with the funding availability requirement set forth
in the Mezz Debenture; and
(c) a detailed list of all Debt and Encumbrances relating to the entity or
assets proposed to be acquired and all Permitted Intercorporate Debt
and Intercorporate Security proposed to be entered into in relation
thereto.
1.1.3 "Acquisition Security" means the security referred to in Sections
3.1(e), (f), (g), (h) and (i).
1.1.4 "Advance" means an advance by the Lenders (or any of them) by way of
Prime Rate Advance, Base Rate Advance, LIBOR Advance, Bankers'
Acceptance or BA Equivalent Loan, an advance by the Issuing Lender by
way of L/C and an Advance by the Overdraft Lender by way of Overdraft
Availment including deemed Advances and conversions, renewals and
rollovers of existing Advances, and any reference relating to the
amount of Advances shall mean the sum of all outstanding Prime Rate
Advances, Base Rate Advances and LIBOR Advances, plus the face amount
of all outstanding Bankers' Acceptances, Notional Bankers' Acceptances
and L/Cs.
1.1.5 "Affiliate" of any specified Person means any other Person which,
directly or indirectly, is in control of, is controlled by or is under
common control with such specified Person (excluding any trustee
under, or any committee with responsibility for administering, any
Plan).
1.1.6 "Agent" means Scotiabank in its role as administrative agent for the
Lenders, as replaced from time to time in accordance with the
provisions of this Agreement.
1.1.7 "Agreement" means this Agreement and all schedules attached to this
Agreement, in each case, as amended, supplemented, restated or
replaced from time to time, and the expressions "hereof", "herein",
"hereto", "hereunder", "hereby" and similar expressions refer to this
Agreement as a whole and not to any particular article, section,
schedule or other portion hereof.
1.1.8 "Alternate Base Rate Canada" means, on any day, the greater of (a) 1/2
of 1% plus the Federal Funds Effective Rate on such day; and (b)
Scotiabank's Base Rate Canada on such day.
1.1.9 "American Entity" means each Restricted Party which is incorporated,
organized or otherwise formed under or governed by the laws of a State
of the United States of America.
1.1.10 "Applicable Law" means, in respect of any Person, property,
transaction, event or course of conduct, all applicable laws,
statutes, rules, by-laws, treaties, regulations, ordinances,
regulatory policies and all applicable official directives, orders,
judgments and decrees of or similar requirement made or issued by
Governmental Authorities (a) applicable to or binding upon that
Person; or (b) to which that Person or any of its Property is subject.
1.1.11 "arm's length", "non-arm's length" or "not at arm's length" shall have
the meanings as such concepts are construed within the Income Tax Act
(Canada).
1.1.12 "Assignment Agreement" means an agreement in the form of Schedule A to
this Agreement.
1.1.13 "Associate" means an "associate" as defined in the Business
Corporations Act (Ontario);
1.1.14 "BA Discount Proceeds" means:
(a) in respect of a Bankers' Acceptance purchased by a Schedule 1 BA
Lender, the amount calculated on the applicable Drawdown Date which is
(rounded to the nearest full cent, with one-half of one cent being
rounded up) equal to the face amount of such Bankers' Acceptance
multiplied by the price, where the price is calculated by dividing one
by the sum of one plus the product of the Schedule 1 BA Discount Rate
applicable thereto expressed as a decimal fraction, and a fraction,
the numerator of which is the term of such Bankers' Acceptance and the
denominator of which is 365, which calculated price shall be rounded
to the nearest multiple of 0.001%; and
(b) in respect of any Notional Bankers' Acceptance or any Bankers'
Acceptance purchased by a Schedule 2 BA Lender, as the case may be, an
amount calculated on the applicable Drawdown Date which is (rounded to
the nearest full cent, with one-half of one cent being rounded up)
equal to the face amount of such Notional Bankers' Acceptance or such
Bankers' Acceptance, as applicable, multiplied by the price, where the
price is calculated by dividing one by the sum of one plus the product
of the Schedule 2 BA Discount Rate applicable thereto expressed as a
decimal fraction, and a fraction, the numerator of which is the term
of the Notional Bankers' Acceptance or Bankers' Acceptance, as
applicable, and the denominator of which is 365, which calculated
price will be rounded to the nearest multiple of 0.001%.
1.1.15 "BA Equivalent Loan" has the meaning defined in Section 5.12(b).
1.1.16 "BA Lender" means any Lender which is a bank chartered under the Bank
Act (Canada) and which stamps and accepts Bankers' Acceptances.
1.1.17 "Bankers' Acceptance" means a depository xxxx as defined in the
Depository Xxxx and Notes Act (Canada) in Canadian Dollars that is in
the form of an order signed by Maxxcom and accepted by the Lender
pursuant to this Agreement or, for lenders not participating in
clearing services contemplated in that Act, a draft or xxxx of
exchange in Canadian Dollars that is drawn by Maxxcom and accepted by
a Lender pursuant to this Agreement. Orders that become depository
bills, drafts and bills of exchange are sometimes collectively
referred to in this Agreement as "drafts".
1.1.18 "Bankers' Acceptance Fee" means the amount calculated by multiplying
the face amount of each Bankers' Acceptance or Notional Bankers'
Acceptance by the applicable Bankers' Acceptance Fee specified in
Section 2.4, and then multiplying the result by a fraction, the
numerator of which is the duration of its term on the basis of the
actual number of days to elapse from and including the date of
acceptance of a Bankers' Acceptance or the making of a BA Equivalent
Loan by the applicable Lender up to but excluding the maturity date of
the Bankers' Acceptance or Notional Bankers' Acceptance, as
applicable, and the denominator of which is the number of days in the
calendar year in question.
1.1.19 "Base Rate Advance" means a Base Rate Canada Advance or a Base Rate
U.S. Advance, as applicable, and includes deemed Base Rate Canada
Advances and Base Rate U.S. Advances provided for in this Agreement.
1.1.20 "Base Rate Atlanta" means the variable rate of interest expressed as a
percentage per annum determined, announced and adjusted by the Agent
from time to time as a reference rate for commercial loans made by
Scotiabank in the United States of America in U.S. Dollars.
1.1.21 "Base Rate Canada" means the variable rate of interest expressed as a
percentage per annum determined, announced and adjusted by the Agent
from time to time as a reference rate for commercial loans made by
Scotiabank in Canada in U.S. Dollars.
1.1.22 "Base Rate Canada Advance" means an Advance in U.S. Dollars made to
Maxxcom based on the Alternate Base Rate Canada as provided for in
Sections 2.4 and 5.1 and includes deemed Base Rate Canada Advances
provided for in this Agreement.
1.1.23 "Base Rate U.S. Advance" means an Advance in U.S. Dollars made to
Maxxcom US based on the U.S. Alternate Base Rate as provided for in
Sections 2.4 and 5.1 and includes deemed Base Rate U.S. Advances
provided for in this Agreement.
1.1.24 "Borrowers" means Maxxcom and Maxxcom US and "Borrower" means either
of them.
1.1.25 "Branch of Account" means, with respect to Advances to Maxxcom, the
International Banking Division of Scotiabank located at 00 Xxxx Xxxxxx
Xxxx, 00xx Xxxxx, Xxxxxxx, Xxxxxxx X0X 0X0 and, with respect to
Advances to Maxxcom US, the Atlanta Agency of Scotiabank located at
Xxxxx 0000, 000 Xxxxxxxxx Xxxxxx X.X., Xxxxxxx, Xxxxxxx, 00000.
1.1.26 "Business Day" means a day of the year, other than a Saturday or
Sunday, on which the Agent is open for business at its executive
offices in Xxxxxxx, Xxxxxxx, at the Branch of Account, and at its
principal office in New York, New York, and, in respect of LIBOR
Advances, at its principal office in London, England and on which
transactions can be carried out in the London interbank market.
1.1.27 "Xxxxxxxx Note" means the promissory note dated as of 29 November 2000
made by Xxxxxxxx & Partners Communications Inc. in favour of Maxxcom.
1.1.28 "Xxxxxxxx Security" means a general security agreement dated as of 29
November 2000, substantially in the form of Schedule C, made by
Xxxxxxxx & Partners Communications Inc. in favour of Maxxcom creating
security interests in all of the present and future undertaking,
property and assets of Xxxxxxxx & Partners Communications Inc. and
securing amounts owing by Xxxxxxxx & Partners Communications Inc. to
Maxxcom under the Xxxxxxxx Note.
1.1.29 "Canadian Dollars", "Cdn. Dollars", "Cdn. $", "Dollars" and "$" mean
lawful currency of Canada.
1.1.30 "Canadian Plan" means a "pension plan" or "plan" subject to the
funding requirements of the Pension Benefits Act (Ontario) or
applicable pension benefits legislation in any other Canadian
jurisdiction and applicable to the employees resident in Canada of any
Restricted Party or any of their respective Subsidiaries.
1.1.31 "CanSubCos" means 1220777 Ontario Limited (an Ontario corporation),
News Canada Inc. (an Ontario corporation), 656712 Ontario Limited (an
Ontario corporation), Accumark Promotions Group Inc. (an Ontario
corporation), Xxxxxxx Xxxx Xxxxxx Xxxxxxx Inc. (an Ontario
corporation), Xxxxx Xxxxx Group Ltd. (an Ontario corporation), Cormark
XxxXxxx Communication Solutions (Canada) Inc. (an Ontario
corporation), Xxxxxx Xxxxxxx Communications Inc. (an Ontario
corporation), Veritas Communications Inc. (an Ontario corporation),
Integrated Healthcare Communications, Inc. (an Ontario corporation),
Northstar Research Partners Inc. (an Ontario corporation) 1385544
Ontario Limited (an Ontario corporation), Maxxcom Interactive Inc. (an
Ontario corporation) and each future direct or indirect Subsidiary of
Maxxcom or of any of the foregoing corporations incorporated under or
operating in any Canadian jurisdiction from time to time and
"CanSubCo"means any one of them.
1.1.32 "Capital Leases" means leases which are classified as such in
accordance with GAAP.
1.1.33 "Capital Stock" means all voting, or non-voting common shares,
preferred shares, membership interests or other equivalent equity
interests (howsoever designated) of capital stock of a body corporate,
preferred or common shares, membership interests or other interests in
a limited liability company (howsoever designated), limited or general
partnership interests in a partnership or any other analogous or
similar ownership interest in a person (howsoever designated).
1.1.34 "CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980 of the United States of America.
1.1.35 "Cessation Notice" means a notice given by the Agent to the Overdraft
Lender, on the instructions of the Majority Lenders as contemplated by
Section 9.9 (c)(vi), to the effect that an Event of Default has
occurred and is continuing and directing the Overdraft Lender not to
make further Overdraft Availments from and after the date thereof or
as otherwise set forth therein.
1.1.36 "Closing Date" means 11 July 2001 or such other day as the parties may
agree.
1.1.37 "Code" means the United States Internal Revenue Code of 1986 and the
regulations promulgated and rulings issued thereunder.
1.1.38 "Collateral" means cash, a bank draft or a letter of credit issued by
a Canadian chartered bank, all in a form satisfactory to the Agent,
acting reasonably.
1.1.39 "Combined Statements" means quarterly or annual, as the context
requires, consolidated financial statements reflecting the results of
Maxxcom and its Wholly-Owned Subsidiaries based upon the
unconsolidated financial statements of Maxxcom and the consolidated
financial statements of all such Wholly-Owned Subsidiaries from time
to time, each prepared in accordance with GAAP, excluding, for greater
certainty, the financial statements of all Non-wholly-owned
Subsidiaries which would otherwise be included.
1.1.40 "Commitment" means, in respect of each Lender from time to time, the
covenant to make Advances to the Borrowers in the maximum amount of
the Credit and, where the context requires, the maximum amount of
Advances which the Lender has covenanted to make.
1.1.41 "Consent to Pledge" means an instrument, in form and substance
satisfactory to the Lenders, acting reasonably, by which, inter alia,
certain Restricted Parties which are not a party to this Agreement
and/or their Shareholders from time to time consent to certain pledges
and assignments contemplated by this Agreement and "Consents to
Pledge" means all of them.
1.1.42 "Constating Documents" means:
(a) with respect to a corporation, its certificate and/or articles of
incorporation, amalgamation or continuance, charter, memorandum of
association, letters patent or other similar documents as amended from
time to time, and its by-laws;
(b) with respect to a partnership (including a limited partnership), the
partnership agreement pursuant to which it is constituted and all
declarations, statutory filings and/or registrations required to be
made to establish or maintain the existence of the partnership by
Applicable Law;
(c) with respect to a limited liability company, its certificate of
formation and, as applicable, its operating agreement, limited
liability company agreement or its membership agreement; and
(d) with respect to a Nova Scotia unlimited company, its memorandum and
articles of association.
1.1.43 "Contracts" means agreements, franchises, leases, easements,
servitudes, privileges and other rights acquired from persons other
than Governmental Authorities.
1.1.44 "Contributing Lender" has the meaning defined in Section 9.3(b).
1.1.45 "control", "controls" and "controlled" when used with respect to any
Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through ownership of voting
Capital Stock, by contract or otherwise;
1.1.46 "Controlling Interest" means with respect to any Person, that amount
of voting Capital Stock of such Person which is not less than 50.1% of
the aggregate voting Capital Stock of such Person and which carries
voting rights which, if exercised, would be sufficient to elect a
majority of the board of directors (or other analogous governing body)
of such Person.
1.1.47 "Controlled Group" means all members of a controlled group of
corporations or other business entities and all trades or businesses
(whether or not incorporated) under common control which, together
with a Borrower and any of its Subsidiaries, are treated as a single
employer under Section 414 of the Code;
1.1.48 "Credit" means the revolving term credit facility of up to Cdn.
$80,000,000 (or the equivalent thereof in U.S. Dollars) established by
the Lenders in favour of the Borrowers pursuant to Section 2.1.
1.1.49 "Credit Documents" means this Agreement, the Fee Agreement, the
Security, the Intercorporate Documents, the Restricted Party
Supplemental Agreements, the Consents to Pledge, the Subordinated
Shareholder Notes, the Mezz Inter-Creditor Agreement and all other
present and future documents relating to the Credit to which a
Restricted Party is party or subject including, without limitation,
all present and future documents relating to interest rate and/or
currency hedging arrangements provided by the Lenders, or any of them,
to a Borrower in connection with Advances under this Agreement.
1.1.50 "Credit Limit" has the meaning defined in Section 2.1.
1.1.51 "Debt" means, with respect to any Person at any time, the aggregate at
such time (without duplication) of the following amounts in relation
to such Person:
(a) indebtedness for money borrowed (including, without limitation, by way
of overdraft) or indebtedness represented by notes payable and drafts
accepted representing extensions of credit (including, without
limitation, Bankers' Acceptances);
(b) all obligations (whether or not with respect to the borrowing of
money) which are evidenced by bonds, debentures, notes, letters of
credit, letters of guarantee or other similar instruments or not so
evidenced but which would be considered to be indebtedness for
borrowed money in accordance with GAAP;
(c) all indebtedness upon which interest charges are customarily paid;
(d) any Capital Stock of that person (or of any Subsidiary of that person
that is not held by that person or by a Subsidiary of that person that
is wholly owned, directly or indirectly), which Capital Stock, by its
terms (or by the terms of any security into which it is convertible or
for which it is exchangeable at the option of the holder), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant
to a sinking fund obligation or otherwise, or is redeemable at the
option of the holder thereof, in whole or in part, on or prior to the
Maturity Date for cash or securities constituting Debt;
(e) obligations under Capital Leases, synthetic leases, Purchase Money
Arrangements, and Deferred Purchase Price Obligations (other than
Earnout Amounts or amounts satisfied by issuance of Capital Stock) and
all other indebtedness issued or assumed as full or partial payment
for property or services;
(f) the full amount of any contingent liability under any guarantee (other
than by endorsement of negotiable instruments for collection or
deposit in the ordinary course of business) in any manner of any part
or all of an obligation of another person of the type included in
items (a) through (e) above, including contingent liabilities in
respect of letters of credit, letters of guarantee and similar
instruments; and
(g) contingent liabilities in respect of performance bonds and surety
bonds, and any other guarantee or other contingent liability of any
part or all of an obligation of a person, in each case only to the
extent that the guarantee or other contingent liability is required by
GAAP to be treated as a liability on a balance sheet of the guarantor
or person contingently liable.
Notwithstanding the foregoing, obligations under Permitted
Intercorporate Debt, operating leases and trade payables, liabilities
accrued in the ordinary course of business which are not for borrowed
money, deposits received in the ordinary course of business, Earnout
Amounts and those amounts owing by a Restricted Party to its
Shareholders on account of accrued but unpaid dividends and management
fees permitted to be paid under this Agreement shall not constitute
Debt of any such Person.
1.1.52 "Defaulting Lender" has the meaning defined in Section 9.3(b).
1.1.53 "Deferred Purchase Price Obligations" means:
(a) any amount which is owed by a Restricted Party to any Person (or any
Affiliate of or successor to such Person) which is, in substance, an
amount owing on account of the unpaid portion of the purchase price
for (i) Capital Stock of a Restricted Party or an Unrestricted Party,
or (ii) assets comprising the business, or a portion thereof, of a
Restricted Party or an Unrestricted Party which, in either case, was
acquired from such Person or an Affiliate of such Person by a
Restricted Party including, without limitation, those obligations and
liabilities described in Part 1 of Schedule P; and
(b) all Earnout Amounts including, without limitation, those obligations
and liabilities described in Part 2 of Schedule P.
1.1.54 "Designated Account" means:
(a) in respect of any Advance to Maxxcom, the account or accounts
maintained by Maxxcom at a branch of the Overdraft Lender as Maxxcom
designates in its notice requesting an Advance; and
(b) in respect of any Advance to Maxxcom US, the account or accounts
maintained by Maxxcom US at Comerica Bank, 1 Detroit Centre, 000
Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx, 00000.
1.1.55 "Drawdown Date" means the date, which shall be a Business Day, of any
Advance.
1.1.56 "Due Date" has the meaning defined in Section 2.4.
1.1.57 "Earnout Amount" means any amount which is owed by a Restricted Party
to any Person (or any Affiliate of or successor to such Person), which
is (or, prior to a determination of the amount thereof, was) a
contingent obligation based on the financial performance of such
Restricted Party and which is, in substance, an amount owing on
account of the unpaid portion of the purchase price for (a) Capital
Stock of a Restricted Party or an Unrestricted Party, or (b) assets
comprising the business, or a portion thereof, of a Restricted Party
or an Unrestricted Party which, in either case, was acquired from such
Person or an Affiliate of such Person by a Restricted Party.
1.1.58 "Earnout Payment" means any payment (other than a payment satisfied by
issuance of Capital Stock) by a Restricted Party to any Person on
account of an Earnout Amount including, without limitation, all
payments to repurchase, redeem, retract, or otherwise reacquire, or
any other distribution whatsoever in respect of, Capital Stock issued
to any Person to whom an Earnout Amount is owed on account of such
Earnout Amount.
1.1.59 "EBITDA" means, with respect to any fiscal period and any Person, the
net income of such Person determined in accordance with GAAP for such
fiscal period plus or minus, to the extent deducted or added in
determining such net income, without duplication:
(a) income taxes paid or payable or refunds received or receivable in
respect of income taxes;
(b) interest paid or payable or received or receivable;
(c) extraordinary gains or losses;
(d) amortization, depreciation and other non-cash expenses; and
(e) goodwill charges net of income taxes.
For greater certainty, when calculating EBITDA:
(f) for the purposes of determining the Total Debt Ratio and the Senior
Debt Ratio only, the amount of any income received or receivable from
Non-wholly-owned Subsidiaries shall be excluded, other than Qualifying
Income, which Qualifying Income shall have the effect of increasing
EBITDA, if a positive number, and to the extent that Qualifying Income
is a negative number, EBITDA shall be decreased by such amount; and
(g) for all purposes of determining the Total Debt Ratio, the Senior Debt
Ratio and the Interest Coverage Ratio, there shall be excluded the
EBITDA which would otherwise be attributable to Accent Marketing
Services, L.L.C., the EBITDA which would otherwise be attributable to
any Restricted Party which has incurred Refinanced Intercorporate Debt
and the EBITDA which would otherwise be attributable to 656712 Ontario
Limited after 31 March 2001 until the time that its indebtedness to
The Toronto-Dominion Bank is replaced with Permitted Intercorporate
Debt.
1.1.60 "Eligible Assignee" means a bank, financial institution, finance
company or commercial lender acceptable to the Agent and to the
Issuing Lender and having a credit rating in relation to its long-term
indebtedness of not less than:
(a) A-, if assigned by Standard & Poor Investor Services, a division of
McGraw Hill Corporation, or its successor;
(b) A-3, if assigned by Xxxxx Investor Service, Inc., or its successor; or
(c) A (low), if assigned by Dominion Bond Rating Service Limited;
(which bank, financial institution, finance company or commercial lender
shall include, without limitation, a Subsidiary of any bank chartered
under and referred to in Schedule I of the Bank Act (Canada)) to which
a Lender proposes to assign all or a portion of its Commitment in
accordance with Sections 10.1 and 10.2 and in respect of which bank,
financial institution or commercial lender, and the provisions of
neither Sections 11.14 nor 11.15 will be triggered as a result of such
assignment; or if the provisions of Sections 11.14 or 11.15 would be
triggered as a result of such assignment, such bank, financial
institution or commercial lender has irrevocably waived its rights to
claim amounts from the Borrowers pursuant to such Sections as a result
of such assignment (but, for greater certainty, such waiver shall
extend only to amounts which would have been payable under applicable
laws and regulations as such laws and regulations existed at the time
of the assignment).
1.1.61 "Encumbrance" means any mortgage, debenture, pledge, hypothec, lien,
charge, assignment by way of security, consignment, lease,
hypothecation, security interest or other security agreement, trust,
or arrangement having the effect of granting security for the payment
or performance of any debt, liability or obligation, and
"Encumbrances", "Encumber" and "Encumbered" shall have corresponding
meanings.
1.1.62 "Environmental Laws" means, in any relevant jurisdiction, all
applicable federal, provincial, state, municipal or local statutes,
laws, by-laws, ordinances, codes, rules, regulations, orders
(including, without limitation, consent decrees and administrative
orders), legally enforceable guidelines and legally enforceable
requirements, and doctrines of common law, in each case, relating to
pollution or protection of the environment or human health, or
imposing liability or standards of conduct concerning any hazardous,
toxic or dangerous waste, substance or material including, without
limitation of the foregoing, Hazardous Materials, all as applicable in
the relevant jurisdiction and as amended or replaced from time to
time.
1.1.63 "ERISA" means the US Employee Retirement Income Security Act of 1974
and the regulations promulgated and rulings issued thereunder.
1.1.64 "Event of Default" means any of the events or circumstances described
in Section 8.1.
1.1.65 "Excess Cash Flow" means, in respect of any fiscal year of Maxxcom,
EBITDA for such fiscal year less the aggregate of all scheduled
quarterly principal repayments and voluntary permanent reductions of
the Credit made during such fiscal year, permitted capital
expenditures, permitted Earnout Payments and other permitted payments
on account of Deferred Purchase Price Obligations, permitted payments
on account of Permitted Acquisitions, Total Interest Expense, and
taxes actually made or paid in cash during such fiscal year and
changes in working capital.
1.1.66 "Exchange Rate" means, on any day, with respect to the exchange of any
of Canadian Dollars or U.S. Dollars or other currency (the "First
Currency") into the other of those currencies (the "Other Currency"),
the Spot Rate quoted by the Agent for purchases of the First Currency
with the Other Currency at noon (Toronto time) on such day, or if such
rate is not or has not yet been quoted on such day, such rate on the
last day on which it was quoted by the Agent except that, if the
Exchange Rate is required to determine the outstanding amount of
Advances for a purpose that does not involve the purchase of Canadian
Dollars or U.S. Dollars, the Exchange Rate shall be the noon Spot Rate
of the Bank of Canada on that day.
1.1.67 "Existing Indebtedness and Liability" means all of the outstanding
indebtedness, liabilities and obligations, whether direct or indirect,
absolute or contingent, of the Borrowers, or either of them, to the
Agent and the Lenders as at date of this Agreement arising under, or
in respect of, or referred to in the First Amended and Restated Credit
Agreement, and for greater certainty includes the aggregate principal
amount of all loans outstanding under the credit facility established
pursuant to the First Amended and Restated Credit Agreement all
accrued and unpaid interest thereon, all liabilities of the Borrowers,
or either of them, to the Agent and the Lenders pursuant to
indemnities granted by a Borrower with respect to bankers'
acceptances, letters of credit or letters of guarantee, all fees with
respect thereto, all other amounts owing by the Borrowers, or either
of them, to the Agent or the Lenders pursuant to the First Amended and
Restated Credit Agreement including, without limitation, all debts,
liabilities and obligations of the Borrowers, or either of them, under
or in connection with interest rate and currency hedging arrangements,
money transfer services, payroll services, foreign exchange, cash
management, money management and other facilities and services
established or provided by a Lender for a Borrower, in each case on
the date of this Agreement.
1.1.68 "F.R.S. Board" means the Board of Governors of the Federal Reserve
System of the United States or any successor thereto.
1.1.69 "Federal Funds Effective Rate" means, for any day, a fluctuating
interest rate per annum equal to, at such time, the weighted average
(rounded up to the nearest multiple of 0.0001%) of the interest rates
on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers as published for such
day (or, if such day is not a Business Day, for the next preceding
Business Day) by the Federal Reserve Bank of New York or, for any day
on which that rate is not published for that day by the Federal
Reserve Bank of New York, the average of the quotations for that day
for such transactions received by the Agent from three Federal Funds
brokers of recognized standing.
1.1.70 "Fee Agreement" means, collectively, the letter agreement dated 13
March 2000 and the letter agreement dated as of 29 November 2000, each
between Scotiabank and Maxxcom pursuant to which certain fees to be
paid to the Agent are established, as amended, supplemented, restated
or replaced from time to time.
1.1.71 "Financial Condition" means, with respect to a Person, its financial
condition, Property and business operations.
1.1.72 "Fincos" means Maxxcom (Nova Scotia) Corp. (a Nova Scotia unlimited
liability company) and Maxxcom (USA) Finance Company (a Delaware
corporation) and "Xxxxx"means either one of them.
1.1.73 "Follow-Up Merger" means the amalgamation or merger of a Restricted
Party which is not a Wholly-Owned Subsidiary of Maxxcom with a Person,
all of the Capital Stock of which has been acquired by such Restricted
Party, within 90 days after the acquisition and provided that the
Restricted Party is the corporation continuing from the amalgamation.
1.1.74 "Foreign Opcos" means Interfocus Group Limited, Interfocus Direct
Limited and Interfocus Network Limited and each other Person in which
a Controlling Interest is directly acquired by Maxxcom from time to
time or is indirectly acquired by Maxxcom from time to time in
accordance with Section 1.1.126(f), none of which is an Acquireco, a
CanSubco, a Xxxxx or an Opco and "Foreign Opco" means any one of them.
1.1.75 "Foreign Plans" means all pension or similar plans or arrangements of
any Foreign Opco.
1.1.76 "Fronting Fee" means the fee payable upon the issuance or renewal of
an L/C calculated in accordance with the Fee Agreement and Section
5.5.
1.1.77 "Generally Accepted Accounting Principles" or "GAAP" means generally
accepted accounting principles from time to time approved by the
Canadian Institute of Chartered Accountants or any successor
institute, including those set out in the Handbook of the Canadian
Institute of Chartered Accountants, consistently applied.
1.1.78 "Governmental Authority" means, when used with respect to any Person,
any government, parliament, legislature, regulatory authority, agency,
tribunal, department, commission, board, instrumentality, court,
arbitration, board, instrumentality, or arbitrator or other law,
regulation or rule making entity (including a Minster of the Crown,
any central bank, Superintendent of Financial Institutions or other
comparable authority or agency) having or purporting to have
jurisdiction on behalf of, or pursuant to the laws of, Canada or any
country in which such Person is incorporated, continued, amalgamated,
merged or otherwise created or established or in which such Person has
an undertaking, carries on business or holds property, or any
province, territory, state, municipality, district or political
subdivision of any such country or of any such province, territory or
state of such country.
1.1.79 "Guarantors" means Maxxcom US, Maxxcom (Nova Scotia) Corp., Maxxcom
(USA) Finance Company, Maxxcom (USA) Holdings Inc., 1220777 Ontario
Limited, News Canada Inc., 1385544 Ontario Limited, Maxxcom
Interactive Inc., Mackenzie Marketing, Inc., MF + P Acquisition Co.,
SMI Acquisition Co., Accent Acquisition Co., FMA Acquisition Co., TC
Acquisition Inc., ET Acquisition Inc., BZ Acquisition Inc., CDI
Acquisition Co., Bratskeir & Company, Inc., CPB Acquisition Inc. and
each other Wholly-Owned Subsidiary of Maxxcom from time to time and
"Guarantor" means any one of them.
1.1.80 "Hazardous Materials" means any substance that because of its
quantity, concentration or physical, chemical or infectious
characteristics, either individually or in combination with other
substances, is a threat to the environment, human health or other
living organisms and, without limiting the generality of the
foregoing, shall include any substance whether liquid, solid or gas
which is from time to time listed, defined, designated or classified
as hazardous, toxic, radioactive or dangerous, or as a contaminant,
pollutant, or waste under any applicable Environmental Laws.
1.1.81 "Increased Costs" has the meaning defined in Section 11.15.
1.1.82 "Intellectual Property" means all patents, trademarks, service marks,
trade names, copyrights, trade secrets and other similar rights and
any rights under any contract or Applicable Law, including, without
limitation, under the Patent Act (Canada), the Copyright Act (Canada)
and the Trade-Xxxx Act (Canada) and under any equivalent or analogous
statutes of the United States of America and any other foreign
jurisdiction which provides a right to any Restricted Party in either:
(a) ideas, formulae, algorithms, concepts, inventions or know-how
generally, including trade secret law, or (b) the expression or use of
such ideas, formulae, algorithms, concepts, inventions or know-how.
1.1.83 "Interbank Reference Rate" means the interest rate expressed as a
percentage per annum which is customarily used by the Agent when
calculating interest due by it or owing to it, in Canadian Dollars or
U.S. Dollars as applicable, arising from the correction of errors
between it and other Canadian chartered banks.
1.1.84 "Intercorporate Documents" means the Intercorporate Notes and the
Intercorporate Security required to be delivered from time to time.
1.1.85 "Intercorporate Notes" means all of the notes evidencing Permitted
Intercorporate Debt from time to time, substantially in the form of
Schedule B or in such other form as may be approved by the Agent in
its discretion including, without limitation, any combined form of
promissory note and security approved by the Agent, which shall have
attached thereto copies of the funding letters or other documents, if
any, evidencing the funding commitment and the amount thereof, and
includes the Targetcom Reimbursement Agreement, the Xxxxxxxx Note and
other agreements evidencing obligations owed by a Restricted Party to
another Restricted Party in the form approved by the Agent in its
discretion.
1.1.86 "Intercorporate Security" means a general security agreement, which
shall be first-ranking where granted by a Restricted Party which is
not a Guarantor, substantially in the form of Schedule C (or in such
other form as may be approved by the Agent in its discretion or in
such other form as may be required to create analogous security
interests in any relevant jurisdiction including, without limitation,
any combined form of promissory note and security approved by the
Agent) creating security interests in all of the present and future
undertaking, property and assets of a Restricted Party (the "grantor")
in favour of another Restricted Party (the "grantee") securing amounts
owing by the grantor to the grantee pursuant to an Intercorporate Note
and in respect of which registrations have been made in all relevant
jurisdictions and which has otherwise been perfected under Applicable
Law in all relevant jurisdictions and includes the Xxxxxxxx Security
and the Targetcom Reimbursement Agreement.
1.1.87 "Interest Coverage Ratio" means, at any time, the ratio calculated by
dividing (a) EBITDA for the previous four fiscal quarters ended
immediately prior to such time (or, if applicable, the four fiscal
quarters ending on the date of calculation) by (b) Total Interest
Expense at such time.
1.1.88 "Interest Payment Date" means the 22nd day of each calendar month or,
if such day is not a Business Day, the Business Day next following.
1.1.89 "Investment" means any advance, extension of credit, giving of
financial assistance or contribution of capital to any Person or any
purchase or other acquisition of the property, Capital Stock, notes,
debentures or other securities of, or any equity or ownership interest
in, any Person, whether effected in a single transaction or series of
transactions but, for greater certainty, is not intended to include
trade accounts receivable or similar advances or payments incurred in
the ordinary course of business, amounts deposited in bank accounts
and instruments of or guaranteed by a bank, trust company or
government.
1.1.90 "Issuing Lender" means Scotiabank, or such other Lender which has
agreed to issue L/Cs for the benefit of a Borrower.
1.1.91 "L/C" means a standby letter of credit, letter of guarantee or
commercial letter of credit in a form satisfactory to the Issuing
Lender, acting reasonably, which is issued by the Issuing Lender at
the request of a Borrower in favour of a third party to secure the
payment or performance of an obligation of a Borrower or another
Restricted Party to the third party.
1.1.92 "Lenders" means Scotiabank, Canadian Imperial Bank of Commerce, The
Toronto-Dominion Bank, Bank of Montreal, Royal Bank of Canada, their
respective affiliates party hereto from time to time, and the other
financial institutions that agree from time to time to become Lenders
in accordance with Article 10 and includes, where the context
requires, the Issuing Lender, the Overdraft Lender and all Swap
Lenders from time to time, and "Lender" means any one of the Lenders.
1.1.93 "Lender's Share of the Obligations" means, with respect to any Lender,
the Proportionate Share of Advances made by such Lender under the
Credit, together with the amount of all other Obligations owing to
such Lender including, without limitation of the foregoing, any
portion of Advances made by a Contributing Lender until otherwise
reimbursed therefor in accordance with the terms of this Agreement.
1.1.94 "LIBOR Advance" means an Advance made by way of loan in United States
Dollars on which interest is calculated with reference to the LIBO
Rate.
1.1.95 "LIBO Rate" means, for any LIBOR Period and LIBOR Advance, the average
of the interest rates expressed as a percentage per annum at which
deposits in U.S. Dollars are offered to the principal offices of the
Schedule 1 Reference Lenders in London, England in the London
interbank market at 11:00 a.m. (London time) 2 Business Days before
the first day of the LIBOR Period for a period equal to the LIBOR
Period and in an amount approximately equal to the amount of the LIBOR
Advance.
1.1.96 "LIBOR Period" means the period selected by a Borrower for a LIBOR
Advance or the period applicable to the LIBOR Advance, in either case,
as permitted hereunder.
1.1.97 "Majority Lenders" means a Lender or Lenders holding, in the
aggregate, a minimum of 66 2/3% of the aggregate outstanding amount of
the Commitments.
1.1.98 "Marketing Communication Services Business" means the advertising and
marketing services businesses including, without limitation, public
and government relations, corporate communications, research, direct
marketing, database management, trade shows and exhibitions, event
sponsorship, branding and corporate identity, strategic marketing
consulting, promotions and interactive services.
1.1.99 "Maturity Date" means March 31, 2005.
1.1.100 "Maxxcom" means Maxxcom Inc., an Ontario corporation.
1.1.101 "Maxxcom US" means Maxxcom Inc., a Delaware corporation (formerly CMS
US Holdings Inc.).
1.1.102 "Mezz Agent" means TD Capital, a division of The Toronto-Dominion
Bank, in its capacity as agent for the Mezz Holders.
1.1.103 "Mezz Credit Documents" means the Mezz Debenture, the Mezz Security,
the Subscription Agreement, the Warrant Agreement, the Warrants, the
Mezz Inter-Creditor Agreement and any other agreements, instruments
and documents delivered to the Mezz Agent or entered into by the Mezz
Agent from time to time in connection with such documents, in each
case as amended in accordance with the Mezz Inter-Creditor Agreement.
1.1.104 "Mezz Debenture" means the subordinated debenture dated 11 July 2001
in the original principal amount of Cdn. $40,000,000 issued by Maxxcom
in favour of TD Capital, a division of The Toronto-Dominion Bank, on
its own behalf and in its capacity as agent for the Mezz Holders, as
amended from time to time in accordance with the Mezz Inter-Creditor
Agreement.
1.1.105 "Mezz Holders" means the holders from time to time of all or a portion
of the principal amount of the Mezz Debenture.
1.1.106 "Mezz Inter-Creditor Agreement" means the inter-creditor agreement
made as of 11 July 2001 between the Agent, the Mezz Agent and certain
of the Restricted Parties, as amended, supplemented, restated or
replaced from time to time.
1.1.107 "Mezz Obligations" means all obligations of Maxxcom to the Mezz Agent
and/or the Mezz Holders under or in connection with the Mezz Debenture
and the other Mezz Credit Documents (other than the Warrants and the
Warrant Agreement) including, without limitation, all debts and
liabilities, present or future, direct or indirect, absolute or
contingent, matured or not, at any time owing by Maxxcom to the Mezz
Agent and/or the Mezz Holders or remaining unpaid by Maxxcom to the
Mezz Agent and/or the Mezz Holders under or in connection with the
Mezz Debenture and the other Mezz Credit Documents (other than the
Warrants and the Warrant Agreement), including, without limitation,
all losses, costs or expenses suffered or incurred by the Mezz Agent
and/or the Mezz Holders for which Maxxcom or another Restricted Party
is responsible under the Mezz Debenture and all interest, commissions,
legal and other costs, charges and expenses to be paid under or in
connection with the Mezz Debenture and the Mezz Credit Documents
(other than the Warrants and the Warrant Agreement).
1.1.108 "Mezz Security" means all security agreements, security interests and
guarantees granted or delivered by or on behalf of any Restricted
Party (or, as applicable, their respective predecessor entities) from
time to time to the Mezz Agent securing or intending to secure
(whether directly or indirectly) repayment of the Mezz Obligations in
accordance with the Mezz Inter-Creditor Agreement.
1.1.109 "Minority Shareholder" means, at any time, as the context requires:
(a) any Shareholder of a Restricted Party that is an employee,
officer, or director of a Restricted Party at such time;
(b) any Shareholder of a Restricted Party who, prior to such time,
was an employee, officer, or director of a Restricted Party;
(c) any individual who, at such time, is an employee, officer, or
director of a Restricted Party and immediately after such time
becomes a Shareholder of a Restricted Party; or
(d) any corporation controlled by such an employee, officer or
director of a Restricted Party, a trust established for the
benefit of such employee, officer or director or its immediate
family and the spouse of such employee, officer or director
which holds Capital Stock of a Restricted Party;
and "Minority Shareholders" means all of them.
1.1.110 "Net Proceeds of a Securities Issuance" means the net proceeds of all
debt and equity issuances made by any Restricted Party other than:
(a) any equity issuance made by a Restricted Party to a Minority
Shareholder; and
(b) any equity issuance made by a Restricted Party in satisfaction
of all or a portion of the purchase price in connection with a
Permitted Acquisition.
1.1.111 "Net Worth" means at any time in respect of any Person, the
shareholders' equity determined on a consolidated basis in accordance
with GAAP of such Person.
1.1.112 "Net Worth Base" shall, at 22 December 2000 be deemed to be Cdn.
$100,000,000, and thereafter shall be calculated as the aggregate of
Cdn. $100,000,000 plus:
(a) any additional equity contributed by the shareholders of Maxxcom
if and to the extent only that such additional equity
contributed gives rise to cash proceeds; and
(b) 50% of positive net income of Maxxcom on a consolidated basis in
each fiscal year of Maxxcom;
each calculated on a cumulative basis for the period from 22
December 2000 to the date of calculation.
1.1.113 "Non-Arm's Length Person" means any director, senior or executive
officer, Affiliate or Associate of either Borrower or any Restricted
Party or any other Person who does not deal at arm's length with
either Borrower or any of its Affiliates within the meaning of such
concept as used in the Income Tax Act (Canada).
1.1.114 "Non BA Lender" means a Lender which is not permitted by Applicable
Law or by customary market practices to stamp, for purposes of
subsequent sale, or accept, a Bankers' Acceptance.
1.1.115 "Non-wholly-owned Subsidiary" means any Subsidiary of a Restricted
Party which is not a Wholly-Owned Subsidiary and "Non-wholly-owned
Subsidiaries" means all of them.
1.1.116 "Notional Bankers' Acceptances" has the meaning defined in Section
5.12(b).
1.1.117 "Obligations" means all obligations of the Borrowers, or either of
them, to the Lenders, or any of them, or to the Agent under or in
connection with this Agreement, including but not limited to all debts
and liabilities, present or future, direct or indirect, absolute or
contingent, matured or not, at any time owing by either Borrower to
the Lenders, or any of them, or to the Agent in any currency or
remaining unpaid by either Borrower to the Lenders, or any of them, or
to the Agent in any currency under or in connection with this
Agreement, whether arising from dealings between the Lenders, or any
of them, or the Agent and the Borrowers, or either of them, or from
any other dealings or proceedings by which the Lenders, or any of
them, or the Agent may be or become in any manner whatever a creditor
of the Borrowers, or any of them, under or in connection with this
Agreement, and wherever incurred, and whether incurred by a Borrower
alone or jointly with another or others and whether as principal or
surety, including, without limitation, all present and future debts,
liabilities and obligations of either Borrower under or in connection
with any interest rate or currency hedging arrangements which are
established by the Lenders, or any of them, for either Borrower in
connection with Advances made to any Borrower under this Agreement,
all money transfer services, payroll services, foreign exchange, cash
management, money management and other facilities and services
established or provided by a Lender to either Borrower and all losses,
costs or expenses suffered or incurred by a Lender for which a
Borrower or a Restricted Party is responsible hereunder and all
interest, commissions, legal and other costs, charges and expenses to
be paid under or in connection with this Agreement.
1.1.118 "Opcos" means Mackenzie Marketing, Inc. (a Delaware corporation),
Colle & XxXxx, Inc. (a Minnesota corporation), Margeotes/Ferititta +
Partners LLC (a Delaware corporation), Source Marketing LLC (a New
York corporation), Accent Marketing Services, L.L.C. (a Delaware
corporation), Xxxxxxxx Xxxxxx Xxxxx LLC (a Delaware corporation),
Targetcom LLC (a Delaware corporation), E-Telligence LLC (a Delaware
corporation), Bang!Zoom LLC (a Delaware corporation), Pavlika Xxxxxxxx
Direct, LLC (a Delaware corporation), Bratskeir & Company, Inc. (a
Delaware corporation), e-Source Drive to Web Marketing LLC (a Delaware
corporation), Xxxxxxx Xxxxxx & Bogusky LLC (a Delaware corporation)
and each other Person in which a Controlling Interest is directly or
indirectly acquired by Maxxcom US from time to time which is not an
Acquireco and "Opco" means any one of them.
1.1.119 "Overdraft Availment" means any Advance made by the Overdraft Lender
pursuant to Section 5.25.
1.1.120 "Overdraft Availment Limit" means Cdn. $5,000,000 or the equivalent
thereof in U.S. Dollars.
1.1.121 "Overdraft Lender" means the Lender designated as such from time to
time by the Agent that has agreed to provide Overdraft Availments to
Maxxcom and, for the time being, means Scotiabank.
1.1.122 "PBGC" means the Pension Benefit Guaranty Corporation of the United
States and any entity succeeding to any or all of its functions under
ERISA.
1.1.123 "Pending Event of Default" means an event which would constitute an
Event of Default hereunder, alone or subject to giving of notice,
passing of time, failure to cure or any other condition subsequent.
1.1.124 "Pension Plan" means:
(a) a "pension plan", as such term is defined in Section 3(2) of
ERISA, which is subject to Title IV of ERISA (other than a
multi-employer plan as defined in Section 4001(a)(3) of ERISA),
and to which any Borrower or Restricted Party, or any
corporation, trade or business that is, along with any other
Person, a member of a Controlled Group, may reasonably be
expected to have liability, including any liability by reason of
having been a substantial employer within the meaning of Section
4063 of ERISA at any time during the preceding five years, or by
reason of being deemed to be a contributing sponsor under
Section 4069 of ERISA;
(b) a Canadian Plan; or
(c) a Foreign Plan.
1.1.125 "Permits" means licenses, authorizations, consents, certificates,
registrations, exemptions, permits and other approvals, each obtained
from or required by a Governmental Authority.
1.1.126 "Permitted Acquisition" means:
(a) the acquisition of all of the Capital Stock of a Person
principally and directly engaged in the Marketing Communications
Services Business (which, if the person is publiclytraded, is
not a hostile acquisition) by any Restricted Party, provided
however, that (other than in relation to a Permitted Acquisition
of a Foreign Opco described in with Section 1.1.126(f)) if such
acquiring Restricted Party is not Maxxcom or a Wholly-Owned
Subsidiary of Maxxcom, a Follow-Up Merger is undertaken in
accordance with the terms of this Agreement; or
(b) the acquisition of a Controlling Interest in the Capital Stock
of a Person principally engaged in the Marketing Communications
Services Business (which, if the person is publicly-traded, is
not a hostile acquisition) by Maxxcom or any Restricted Party
which is a Wholly-Owned Subsidiary of Maxxcom; or
(c) the acquisition of assets of a business in the Marketing
Communications Services Business by a Restricted Party which is
directly or indirectly controlled by Maxxcom; or
(d) Investments (which, if in the form of the acquisition of Capital
Stock, are minority Investments) in Persons made by Maxxcom
and/or any Wholly-Owned Subsidiary of Maxxcom which, in the
aggregate, do not exceed Cdn. $5,000,000 in any fiscal year of
Maxxcom;
(e) the acquisition of a Controlling Interest in the Capital Stock
of a Person principally and directly engaged in the Marketing
Communications Services Business (which, if the person is
publicly-traded, is not a hostile acquisition) by any Restricted
Party which is a start-up venture the aggregate consideration
for which, together with all such other start-up acquisitions,
does not exceed Cdn. $2,000,000 in any fiscal year of Maxxcom;
(f) the acquisition of a Controlling Interest in the Capital Stock
of a Person principally and directly engaged in the Marketing
Communications Services Business (which, if the person is
publicly-traded, is not a hostile acquisition) by Interfocus
Group Limited otherwise in accordance with this Agreement; or
(g) the acquisition of Capital Stock of a Restricted Party from a
Minority Shareholder pursuant to the applicable Restricted Party
Shareholder Agreement; which are otherwise made in compliance
with the provisions of this Agreement and, for greater certainty
and unless otherwise noted herein, includes Permitted
Non-Conforming Acquisitions.
1.1.127 "Permitted Encumbrances" means, with respect to any Person, the
following Encumbrances:
(a) liens for taxes, rates, assessments or other charges of
Governmental Authorities, or levies not yet due, or for which
instalments have been paid based on reasonable estimates pending
final assessments, or if due, the validity of which is being
contested diligently and in good faith by appropriate
proceedings by a Restricted Party and in respect of which such
Restricted Party has set aside on its books reserves which, in
accordance with GAAP, are adequate therefor;
(b) liens for any judgment rendered or claim filed against a
Restricted Party which such Restricted Party is contesting in
good faith and in respect of which such Restricted Party has set
aside on its books reserves which, in accordance with GAAP, are
adequate therefor and to the extent only that any such judgment
does not constitute an Event of Default;
(c) undetermined or inchoate liens, rights of distress and charges
incidental to current operations which have not at such time
been filed or exercised and of which none of the Lenders have
been given notice, or which relate to obligations not due or
payable, or, if due, the validity of which is being contested in
good faith by appropriate proceedings, provided that such
obligations due are not in excess of Cdn. $1,000,000 (or the
equivalent thereof in another currency) in the aggregate for all
Restricted Parties;
(d) reservations, limitations, provisos and conditions expressed in
any original grants from the Crown or other grants of real or
immoveable property, or interests therein, which do not
materially impair the use of the affected land for the purpose
for which it is used by a Restricted Party;
(e) licenses, easements, rights-of-way and rights in the nature of
easements (including, without limiting the generality of the
foregoing, licenses, easements, rights-of-way and rights in the
nature of easements for sidewalks, public ways, sewers, drains,
gas, steam and water mains or electric light and power, or
telephone and telegraph conduits, poles, wires and cables) which
will not materially impair the use of the affected land for the
purpose for which it is used by a Restricted Party;
(f) title defects or irregularities which are, in the opinion of the
Agent acting reasonably, of a minor nature and which in the
aggregate will not materially impair the use of the affected
property for the purpose for which it is used by a Restricted
Party, or affect its disposal by the Agent or any agent,
trustee, or receiver, appointed by the Agent, or otherwise;
(g) the right reserved to or vested in any municipality or
Governmental Authority by the terms of any lease, licence,
franchise, grant or permit acquired by a Restricted Party or by
any statutory provision to terminate any such lease, license,
franchise, grant or permit, or to require annual or other
payments as a condition to the continuance thereof;
(h) an Encumbrance resulting from the deposit of cash or securities
in connection with contracts, tenders or expropriation
proceedings, or to secure worker's compensation, unemployment
insurance, surety or appeal bonds, costs of litigation when
required by law, liens and claims incidental to current
construction, mechanics', warehousemen's, carriers' and other
similar liens, and public and statutory obligations;
(i) security given to a public utility or any municipality or
Governmental Authority when required by such utility or
authority in connection with the operations of a Restricted
Party in the ordinary course of its business;
(j) Encumbrances upon property acquired by a Restricted Party, or
assumed by a Restricted Party in connection with property
acquired by such Restricted Party, provided that (i) any such
Encumbrance extends to or covers only the property so acquired,
(ii) any such Encumbrance is created or assumed
contemporaneously with such acquisition to secure or provide for
the payment of all or part of the cost thereof or in connection
with the refinancing of an existing Purchase Money Arrangement,
and (iii) such Encumbrance does not, at the time of creation or
assumption thereof, secure indebtedness in an amount in excess
of the fair market value of the property so acquired (the
arrangements described above being referred to herein as
"Purchase Money Arrangements"), and in connection with Capital
Leases, provided however, that all Encumbrances permitted under
this Section 1.1.127(j) shall at no time secure indebtedness
outstanding in excess of Cdn. $5,000,000 in the aggregate;
(k) the Security;
(l) the Intercorporate Security;
(m) the Mezz Security;
(n) Encumbrances ranking pari passu with the Security made in favour
of a Lender by any of the Borrowers to secure the obligations of
the Borrowers to such Lender in connection with interest rate
and currency hedging arrangements relating to Advances under the
Credit or the principal indebtedness under the Mezz Debenture,
to the extent only that the aggregate notional amounts of all
such interest rate and currency hedging arrangements in favour
of one or more of the Lenders do not exceed Cdn. $80,000,000 in
the aggregate;
(o) Repurchase Encumbrances;
(p) Refinanced Intercorporate Encumbrances;
(q) the Encumbrances described in Schedule D; and
(r) other Encumbrances consented to in writing by the Majority
Lenders.
1.1.128 "Permitted Indebtedness" means at any time (and without
duplication) the following Debt:
(a) the Obligations;
(b) other debts, liabilities and obligations of any Restricted Party
under any Credit Document to which it is party;
(c) the Mezz Obligations;
(d) other debts, liabilities and obligations of any Restricted Party
under any Mezz Credit Document to which it is party;
(e) debts, liabilities and obligations secured by Permitted
Encumbrances;
(f) Permitted Subordinated Debt;
(g) Permitted Intercorporate Debt;
(h) Subordinated Shareholder Debt;
(i) Refinanced Intercorporate Debt;
(j) Unsecured Repurchase Indebtedness;
(k) Deferred Purchase Price Obligations;
(l) the indebtedness evidenced by a promissory note dated 14 March
1997 in the principal amount of Cdn. $500,000 made by 1220777
Ontario Limited to News Group Limited; and
(m) such other Debt as may be consented to in writing from time to
time by the Lenders in accordance with Section 9.9.
1.1.129 "Permitted Intercorporate Debt" means:
(a) in the case of any CanSubCo, indebtedness owed to Maxxcom;
(b) in the case of any Acquireco, indebtedness owed to Maxxcom, to
Maxxcom US, or to Maxxcom (USA) Holdings Inc.;
(c) in the case of any Opco, indebtedness owed to a Borrower, to
Maxxcom (USA) Holdings Inc. or to the Acquireco which is its
majority Shareholder;
(d) in the case of any Foreign Opco, indebtedness owed to Maxxcom or
Interfocus Group Limited;
(e) amounts owing by Maxxcom (USA) Holdings Inc. to Maxxcom (USA)
Finance Company, to Maxxcom US or to Maxxcom;
(f) amounts owing by Maxxcom (USA) Finance Company to Maxxcom (Nova
Scotia) Corp., to Maxxcom US, or Maxxcom;
(g) amounts owing by Maxxcom (Nova Scotia) Corp. to Maxxcom;
(h) amounts owing by Maxxcom US to Maxxcom (Nova Scotia) Corp. or to
Maxxcom;
(i) the Xxxxxxxx Note evidencing debt not in excess of Cdn.
$100,000;
(j) the Targetcom Reimbursement Agreement; and
(k) the loan in the amount of Cdn. $75,000 from Maxxcom to 656712
Ontario Limited;
if and to the extent that, in the case of any such indebtedness owed
by or to a Restricted Party which is not a Wholly-Owned Subsidiary
of Maxxcom (other than in the case of 656712 Ontario Limited), such
indebtedness is evidenced by an Intercorporate Note and secured by
first-ranking Intercorporate Security (or a combined form of
intercorporate note and security satisfactory to the Agent) all of
which has been assigned to the Agent for and on behalf of the
Lenders provided, however, that the Agent may, acting reasonably and
upon notice, require that indebtedness owing between Restricted
Parties which are Wholly-Owned Subsidiaries of Maxxcom be documented
by way of Intercorporate Note and secured by Intercorporate Security
(or a combined form of intercorporate note and security) which is
assigned to the Agent for and on behalf of the Lenders, and provided
further that a party incurring such indebtedness which is an
American Entity shall have satisfied the requirements of Section
6.1(ll) hereof at the time thereof.
1.1.130 "Permitted Minority Shareholder Loans" means:
(a) all indebtedness owing by a Minority Shareholder to a Restricted
Party existing as at 31 May 2001;
(b) all indebtedness incurred after 31 May 2001 which is owed by a
Minority Shareholder to a Restricted Party which is incurred by
the Minority Shareholder in connection with its acquisition of
Capital Stock of a Restricted Party, if:
(i) all such indebtedness is evidenced by a promissory
note in form and substance satisfactory to the
Agent, acting reasonably;
(ii) all such indebtedness is secured by a first pledge
of and a security interest in the Capital Stock so
acquired in form and substance satisfactory to the
Agent, acting reasonably, provided that if such
indebtedness is incurred from more than one
Restricted Party the ordering of their respective
pledges and security interests may rank
consecutively, provided that there are no prior or
intervening pledges or other interests in favour of
any party which is not one of such Restricted
Parties; and
(iii) all such notes and security are assigned as security
to the Agent on behalf of the Lenders;
provided however, that the aggregate of all such indebtedness owing to
all Restricted Parties incurred after 31 March 2000 shall at no time
exceed the equivalent of Cdn. $7,500,000; and,
(c) a loan by a Restricted Party to an employee of a Restricted
Party or a Minority Shareholder for relocation expenses or
housing costs in connection with the employment of such
individual, provided however, that the aggregate of all such
loans made to all such individuals may not exceed Cdn.
$2,000,000 or the equivalent thereof in other currencies at any
time.
1.1.131 "Permitted Non-Conforming Acquisition" means:
(a) the following acquisitions or Investments by a Restricted Party
which have been approved by the Majority Lenders on or prior to
the date hereof:
(i) the acquisition by Margeotes/Xxxxxxxx + Partners LLC of
35% of the membership interests of Pavlika Xxxxxxxx
Direct, LLC in exchange for the transfer by
Margeotes/Xxxxxxxx + Partners LLC of the assets
constituting its direct marketing business to Pavlika
Xxxxxxxx Direct, LLC;
(ii) the acquisition by Accent Marketing Services, L.L.C. of
40% of the membership interests in Mo' Better Marketing
LLC for a cash payment of U.S. $280,000;
(iii) the acquisition by Maxxcom of 315 common shares of 656712
Ontario Limited, being 35% of the issued and outstanding
shares of 656712 Ontario Limited (and the subsequent sale
of approximately 15% of the shares of 656712 Ontario
Limited to, or to the order of, the president of 656712
Ontario Limited), directly or indirectly, from Fraser
XxXxxxxx for aggregate cash consideration of Cdn.
$1,096,596 less the amount owing by Fraser XxXxxxxx to
656712 Ontario Limited and Maxxcom of Cdn. $91,459, Cdn.
$456,840 of which is payable on closing with the balance
to be payable in equal instalments of Cdn. $274,149 on
each of 1 January 2002 and 1 January 2003; and
(iv) the acquisition by Maxxcom of 22,652 common shares of
Xxxxxxx Xxxx Xxxxxx Xxxxxxx Inc. from the Minority
Shareholders thereof for aggregate consideration of
approximately Cdn. $2,309,000 payable in full on closing,
less the amount of Cdn. $23,852 owing by Xxxxxxx Xxxxxxx
to Maxxcom and the issuance of options to acquire up to
20% of the shares of Xxxxxxx Xxxx Xxxxxx Xxxxxxx Inc. to
the employees thereof; and
(b) other acquisitions or Investments by a Restricted Party
completed after the date hereof which have been approved by the
Majority Lenders.
1.1.132 "Permitted Payments" means:
(a) payments of the Obligations;
(b) payments in relation to the Mezz Obligations to the extent
permitted hereunder and under the Mezz Inter-Creditor Agreement;
(c) the payment of management fees, dividends and other
distributions in compliance with any applicable Restricted Party
Shareholder Agreement by: (i) any Opco to the Acquireco which is
its Shareholder; (ii) by any Opco which does not have an
Acquireco as its majority Shareholder, to Maxxcom (USA) Holdings
Inc. or to Maxxcom US; (iii) by any CanSubCo to the Restricted
Party which is its majority Shareholder or to Maxxcom; (iv) by
Maxxcom US to Maxxcom or to Maxxcom (Nova Scotia) Corp.; (v) by
either Xxxxx to the Restricted Party which is its Shareholder
(or, as applicable, other holder of its ownership interests) or
to Maxxcom, (vi) by Maxxcom (Nova Scotia) Corp. to Maxxcom,
(viii) by any Acquireco to the Restricted Party which is its
Shareholder or to Maxxcom and (ix) by any Foreign Opco to
Interfocus Group Limited, any other Restricted Party which is
its immediate parent, or Maxxcom;
(d) the payment by Maxxcom to MDC Corporation Inc. of fees in
relation to provision of administrative services and benefits by
MDC Corporation Inc. to Maxxcom not in excess, in the aggregate,
of Cdn. $120,000 in any fiscal year of Maxxcom at any time when
there has not occurred an Event of Default or a Pending Event of
Default which is continuing;
(e) the payment by Maxxcom to Nadal Financial Corporation or any
Affiliate thereof of fees pursuant to a management services
agreement in relation to provisions of certain financial
advisory services by Nadal Financial Corporation to Maxxcom not
in excess, in the aggregate, of Cdn. $300,000 in any fiscal year
of Maxxcom and the reimbursement of reasonable expenses incurred
by Nadal Financial Corporation or any Affiliate thereof incurred
in relation thereto at any time when there has not occurred an
Event of Default or a Pending Event of Default which is
continuing;
(f) the payment by Maxxcom of fees to MDC Corporation Inc. not in
excess of (i) for Maxxcom's fiscal year ending 31 December 2001,
the greater of Cdn. $60,000 and any amounts paid to MDC
Corporation Inc. during such fiscal year prior to the date
hereof; and (ii) for any other fiscal year, Cdn. $60,000 in
consideration of services provided by MDC Corporation Inc. to
Maxxcom as needed in connection with mergers and acquisitions
advisory and other services which are provided on arm's length
commercial terms and are approved by the corporate governance
committee of Maxxcom at any time when there has not occurred an
Event of Default or a Pending Event of Default which is
continuing;
(g) payments made by Maxxcom or another Restricted Party to Amadeus
Capital Corporation to reimburse it for amounts paid by Amadeus
Capital Corporation to its employee (and arm's length third
parties respecting his employment) currently acting in the role
of New York based Senior Vice President, Corporate Development
for Maxxcom;
(h) the payment of any Earnout Payment or other payment on account
of Deferred Purchase Price Obligations at any time when there
has not occurred an Event of Default or a Pending Event of
Default which is continuing;
(i) any payment to a Minority Shareholder of a Restricted Party by
way of bonus, overhead recovery, fees and/or dividends under and
in accordance with the applicable Restricted Party Shareholder
Agreement;
(j) prior to the occurrence of an Event of Default or a Pending
Event of Default which is continuing, payments in respect of
Permitted Indebtedness in accordance with the terms of the
agreements or documents creating or evidencing same;
(k) any payment on account of a Permitted Acquisition at any time
when there has not occurred an Event of Default or a Pending
Event of Default which is continuing;
(l) operating expenses and trade payables in the ordinary course of
business;
(m) capital expenditures permitted hereunder; and
(n) scheduled payments of interest on Permitted Subordinated Debt
(which, for greater certainty, does not include the Mezz
Obligations), provided the portion of the interest payable
thereon in cash does not exceed 8.0% per annum and provided no
such interest will be payable if any Pending Event of Default or
Event of Default has occurred and is continuing or would occur
as a result of the payment thereof (and subject to such other
limitations as may be specified in the agreements referred to in
clause (d) of the definition of Permitted Subordinated Debt).
1.1.133 "Permitted Subordinated Debt" means indebtedness for borrowed money
of Maxxcom to an arms' length (as that term is defined for the
purposes of the Income Tax Act (Canada)) person (which, for greater
certainty, may include a Lender not acting in its capacity as such),
provided that:
(a) no Encumbrance has been granted by any Restricted Party to
secure repayment of all or any portion of such indebtedness;
(b) the incurrence of such indebtedness does not result in a default
under or breach of any of the Credit Documents and such
indebtedness is incurred on terms that are not more favourable
to the lender thereof than the terms of the Credit (as
determined by the Majority Lenders);
(c) the scheduled repayment of any portion of the principal amount
of such indebtedness does not occur prior to the Maturity Date
(existing at the time of incurrence of such indebtedness); and
(d) such indebtedness is the subject of agreements satisfactory to
the Majority Lenders, acting reasonably, concerning its priority
of repayment and related matters, such agreements to be executed
and delivered by and between the Agent, on behalf of the
Lenders, and the arm's length person who is the lender of any
such indebtedness, prior to or concurrently with the creation of
such indebtedness.
1.1.134 "Person" or "person" means any individual, corporation, company,
limited liability company, partnership, unincorporated association,
trust, joint venture, estate or other judicial entity or any
Governmental Authority.
1.1.135 "Plan" means any Pension Plan or Welfare Plan.
1.1.136 "Prime Rate" means, on any day, the greater of:
(a) the average of the rates of interest expressed as a
percentage per annum announced by each Schedule 1 Reference
Lender on that day as its reference rate for commercial loans
made by it in Canada in Canadian Dollars; and
(b) the average rate for 30 day Canadian Dollar bankers'
acceptances that appears on the Reuters Screen CDOR Page at
10:00 a.m. Toronto time on that day, plus 0.75% per annum.
1.1.137 "Prime Rate Advance" means an Advance in Canadian Dollars bearing
interest based on the Prime Rate as provided for in Sections 2.4 and
5.1 and includes deemed Prime Rate Advances provided for in this
Agreement.
1.1.138 "Process Agent" has the meaning defined in Section 11.27.
1.1.139 "Property" means, with respect to any Person, all of its undertaking,
property and assets.
1.1.140 "Proportionate Share" means the percentage of the maximum amount of
the Credit which a Lender has agreed to advance to the Borrowers, on a
pro rata basis and as set forth in Schedule E to this Agreement, which
Schedule shall be amended and distributed to all parties by the Agent
from time to time as other Persons become Lenders.
1.1.141 "Purchase Money Arrangements" has the meaning defined in Section
1.1.127(j).
1.1.142 "Qualifying Income" means, at any time, the aggregate, without
duplication for Maxxcom's immediately preceding four fiscal quarters
(or, if applicable, for the four fiscal quarters ending on the date of
calculation), of all income received by the Borrowers and their
respective Wholly-Owned Subsidiaries in cash from any Restricted Party
which is not directly or indirectly wholly-owned by Maxxcom, whether
by way of dividend, management fees or otherwise, less the aggregate
of all amounts paid by either Borrower or their respective
Wholly-Owned Subsidiaries to a Restricted Party which is not directly
or indirectly wholly-owned by Maxxcom, whether by way of investment,
loan, or otherwise, in each case, other than by way of Permitted
Intercorporate Debt incurred during the same period (herein, the
"payments out"). Notwithstanding the foregoing, in determining
"Qualifying Income" for the fiscal quarter of Maxxcom ending on 31
December 2000 for all purposes of this Agreement, there shall be
excluded from the calculation of payments out for such period the
aggregate amount of Permitted Intercorporate Debt representing loans
made by a Borrower to a Restricted Party to enable such Restricted
Party to repay Debt to arm's length lenders to ensure compliance with
Section 4.1(k) of the First Amended and Restated Credit Agreement on
22 December 2000.
1.1.143 "Quarterly Reporting Certificate" means a certificate in the form of
Schedule F.
1.1.144 "Register" has the meaning defined in Section 10.2(c).
1.1.145 "Release" means any release, spill, discharge, leak, emission, escape,
injection, dumping, pumping, disposing or spreading in any manner
whatsoever of any Hazardous Material and includes, without limitation,
any "release" or "discharge" defined by any Environmental Law.
1.1.146 "Refinanced Intercorporate Debt" means indebtedness incurred by a
Restricted Party to replace its Permitted Intercorporate Debt in
circumstances where a demand or default has occurred in relation to
such Permitted Intercorporate Debt solely as a result of the
occurrence of an Event of Default and which does not exceed the amount
of credit made available under the funding letters or other documents
referred to in, and attached to, the Intercorporate Note evidencing
the Permitted Intercorporate Debt so replaced, or if there are no such
funding letters or other documents, the amount of the Permitted
Intercorporate Debt so replaced.
1.1.147 "Refinanced Intercorporate Encumbrances" means Encumbrances granted to
secure payment and performance of Refinanced Intercorporate Debt.
1.1.148 "Repurchase Encumbrance" means an Encumbrance over the Capital Stock
of, as applicable, Xxxxxx Xxxxxxx Communications Inc., Xxxxxxx Xxxx
Xxxxxx Xxxxxxx Inc., Xxxxx Xxxxx Group Ltd., Cormark XxxXxxx
Communication Solutions (Canada) Inc., Integrated Healthcare
Communications, Inc., Northstar Research Partners Inc. and Veritas
Communications Inc. which is acquired by Maxxcom from a Minority
Shareholder pursuant to an applicable Restricted Party Shareholder
Agreement and which secures only the unpaid purchase price of such
acquired Capital Stock.
1.1.149 "Restricted Parties" means, collectively, all of the Borrowers, the
Fincos, the CanSubCos, Maxxcom (USA) Holdings Inc., the Acquirecos,
the Opcos and the Foreign Opcos and, for greater certainty, excludes
all Unrestricted Parties and "Restricted Party" means any one of them.
1.1.150 "Restricted Party Supplemental Agreement" means an agreement, in form
and substance satisfactory to the Lenders, acting reasonably, by
which, inter alia, certain Restricted Parties which are not a party to
this Agreement from time to time acknowledge this Agreement and
"Restricted Party Supplemental Agreements" means all of them.
1.1.151 "Restricted Party Shareholder Agreements" means each of the
shareholder, operating, membership, limited liability or other similar
agreements described in Schedule G together with all shareholder,
operating, membership, limited liability or other similar agreements
between the Shareholders of all persons that become Restricted Parties
after the date of this Agreement together with, in each case, all
amendments, supplements, restatements and replacements thereof and
thereto made in accordance with this Agreement and "Restricted Party
Shareholder Agreement" means any one of them.
1.1.152 "Restricted Party Purchase Agreements" means each of the purchase or
similar agreements described in Schedule R together with all purchase
or similar agreements in relation to persons that become Restricted
Parties after the date of this Agreement and "Restricted Party
Purchase Agreement" means any one of them.
1.1.153 "Revolving Credit Sublimits" has the meaning defined in Section 2.1.
1.1.154 "Schedule 1 BA Discount Rate" means, in respect of any Bankers'
Acceptance accepted by a Schedule 1 BA Lender that rate determined by
the Agent as being the arithmetic average (rounded upwards to the
nearest multiple of 0.01%) of the discount rates, calculated on the
basis of a year of 365 days, for bankers' acceptances quoted by the
Schedule 1 BA Reference Lenders (or their respective affiliated
investment banks, as applicable) or any successor source from time to
time at or about 10:00 a.m. (Toronto time) on the applicable Drawdown
Date, having a comparable face amount and identical maturity date to
the face amount and maturity date of such Bankers' Acceptance.
1.1.155 "Schedule 1 BA Lender" means a BA Lender which is a bank chartered
under and referred to in Schedule I of the Bank Act (Canada).
1.1.156 "Schedule 1 BA Reference Lenders" means each of the BA Lenders which
are banks chartered under and referred to in Schedule I of the Bank
Act (Canada) which are Lenders.
1.1.157 "Schedule 1 Reference Lenders" means Scotiabank and any other Lenders
which are banks chartered under and referred to in Schedule I of the
Bank Act (Canada).
1.1.158 "Schedule 2 BA Discount Rate" means, in respect of a Bankers'
Acceptance purchased by a Schedule 2 BA Lender or a Notional Bankers'
Acceptance, the rate determined by the Agent as being the arithmetic
average (rounded upward to the nearest multiple of 0.01%) of the
discount rates, calculated on the basis of a year of 365 days, quoted
by the Schedule 2 BA Reference Lenders at or about 10:00 a.m. (Toronto
time) on the applicable Drawdown Date, for bankers' acceptances of the
Schedule 2 BA Reference Lenders having a comparable face amount and
identical maturity date to the face amount and maturity date of such
Bankers' Acceptance or Notional Bankers' Acceptance, as the case may
be, but not to exceed in any case the Schedule 1 BA Discount Rate plus
10 basis points per annum.
1.1.159 "Schedule 2 BA Lender" means a BA Lender which is a bank chartered
under and referred to in Schedule II of the Bank Act (Canada).
1.1.160 "Schedule 2 BA Reference Lenders" means the BA Lenders which are banks
chartered under and referred to in Schedule II of the Bank Act
(Canada) and which have been designated as such or deemed to be
Schedule 2 Reference Lenders hereunder.
1.1.161 "Schedule 2 Reference Lenders" means two Lenders as selected by the
Agent which are banks chartered under and referred to in Schedule II
of the Bank Act (Canada).
1.1.162 "Scotiabank" means The Bank of Nova Scotia, a bank to which the Bank
Act (Canada) applies.
1.1.163 "Security" means all the security agreements, security interests and
guarantees granted or delivered by or on behalf of any Restricted
Party (or, as applicable, their respective predecessor entities) from
time to time to the Lenders or the Agent on behalf of the Lenders
securing or intended to secure (whether directly or indirectly)
repayment of the Obligations, including, without limitation, the
Security and guarantees described in Sections 3.1 and 3.2.
1.1.164 "Senior Debt" means, at any time, the aggregate (without duplication)
of all amounts outstanding under the Credit and all other funded
indebtedness for borrowed money of a person, ranking, or capable of
ranking, senior to or pari passu with indebtedness under the Credit at
such time which, for greater certainty, includes such amounts for
Subsidiaries which are reflected in Maxxcom's consolidated financial
statements, but shall exclude Permitted Indebtedness of Accent
Marketing Services, L.L.C.
1.1.165 "Senior Debt Ratio" means, at any time, the ratio of (a) Senior Debt
at such time; to (b) EBITDA for the previous four fiscal quarters
ended immediately prior to such time (or, if applicable, the four
fiscal quarters ending on the date of calculation) calculated on the
basis of Combined Statements.
1.1.166 "Shareholder" means the holder or owner of any Capital Stock.
1.1.167 "Solvent" means, in respect of any American Entity at any time of
determination specified herein, that (i) such American Entity will not
have an unreasonably small capital base, (ii) such American Entity's
assets will exceed its liabilities, (iii) such American Entity will be
solvent, will be able to pay its liabilities as they mature, and (iv)
both the fair value and fair saleable value of the assets of such
American Entity exceeds the liabilities, respectively, of such
American Entity.
1.1.168 "Spot Rate" as at any date with respect to the conversion of an amount
in one currency (the "original currency") to another currency (the
"other currency") means the Agent's rate of exchange as of 11:00 a.m.
(local time) on the date for the purchase of such original currency
with such other currency (and if neither currency is Canadian Dollars,
purchasing Canadian Dollars first with such other currency and using
the Canadian Dollars purchased to purchase the original currency.
1.1.169 "Subordinated Shareholder Debt" means all unsecured loans which are
made by a Minority Shareholder to a Restricted Party to finance the
working capital requirements of such Restricted Party, which are
evidenced by a Subordinated Shareholder Note and which are
subordinated and postponed in all respects to the Obligations on terms
and conditions satisfactory to the Majority Lenders.
1.1.170 "Subordinated Shareholder Note" means a promissory note made by a
Restricted Party to a Minority Shareholder, containing subordination
provisions acceptable to the Majority Lenders (including, without
limitation of the foregoing, permitted reliance thereon by the
Lenders) and otherwise in form and substance satisfactory to the
Majority Lenders and acknowledged by the Minority Shareholder in whose
favour such promissory note is made and "Subordinated Shareholder
Notes" means all of them.
1.1.171 "Subscription Agreement" means the subscription agreement dated as of
11 July, 2001 between TD Capital, a division of The Toronto-Dominion
Bank and Maxxcom pursuant to which TD Capital subscribes for the Mezz
Debenture and the Warrants.
1.1.172 "Subsidiary" of any specified Person means any corporation,
association, partnership, limited liability company or other Person
which is a business entity of which more than 50% of the total voting
Capital Stock entitled (without regard to the occurrence of any
contingency) to vote in the election of the board of directors or
similar managing body thereof is at the time owned or controlled,
directly or indirectly, by such specified Person and, in the case of
Maxxcom, shall be deemed to include Xxxxxxx Xxxxxx & Bogusky LLC so
long as Maxxcom directly or indirectly maintains at least a 49% equity
interest therein.
1.1.173 "Successor Agent" has the meaning defined in Section 9.14.
1.1.174 "Swap Lender" means each of the Lenders which provides interest rate
and currency exchange hedging arrangements to a Borrower from time to
time which constitute Obligations hereunder.
1.1.175 "Targetcom Reimbursement Agreement" means an agreement in form and
substance satisfactory to the Agent evidencing the obligations of
Targetcom LLC to Maxxcom US in connection with an L/C to be issued for
the account of Maxxcom US to 000 Xxxxx Xxxxxxxx Xxx., LLC.
1.1.176 "Taxes" means all taxes, levies, imposts, stamp taxes, duties,
deductions, withholdings and similar impositions payable, levied,
collected, withheld or assessed as of the date of this Agreement or at
any time in the future, and "Tax" shall have a corresponding meaning.
1.1.177 "Total Debt" means, at any time, the aggregate (without duplication)
of all Debt of a person at such time.
1.1.178 "Total Debt Ratio" means, at any time, the ratio of (a) Total Debt at
such time (but excluding Permitted Indebtedness of Accent Marketing
Services, L.L.C.); to (b) EBITDA for the previous four fiscal quarters
ended immediately prior to such time (or, if applicable, for the four
fiscal quarters ending on the date of calculation) which, for the
purposes of calculating the covenants set forth in Sections 7.2(b) and
7.2(c), shall be calculated on the basis of Combined Statements, and
for all other purposes of this Agreement shall be calculated on a
consolidated basis in accordance with GAAP.
1.1.179 "Total Interest Expense" means, in respect of the Borrower on a
consolidated basis for any period, the aggregate amount (without
duplication) of:
(a) interest required to be paid in respect of Total Debt in such
period after taking into account all interest rate and
currency exchange agreements to which any Borrower is a party
(but, for greater certainty, excluding any gains or losses on
the unwinding of such agreements);
(b) all but the principal component of payments required to be
made in respect of obligations under Capital Leases and
Purchase Money Arrangements of the Restricted Parties on in
such period; and
(c) any other financing costs paid in cash by the Restricted
Parties in such period;
calculated on a consolidated basis for Maxxcom's immediately
preceding four fiscal quarters as at such time and for greater
certainty, Total Interest Expense as at the last day of a fiscal
quarter means the Total Interest Expense determined at such time for
the four fiscal quarters ending on such day.
1.1.180 "Unfunded Liability" means the amount (if any) by which the present
value of all vested and unvested accrued benefits under a single
employer plan exceeds the fair market value of assets allocable to
such benefits, all determined as of the then most recent valuation
date for such plan using customary actuarial assumptions for single
employer plan terminations.
1.1.181 "Unrestricted Parties" means each of Strategies International America
Inc. (a Delaware corporation), Studiotype Inc. (an Ontario
corporation), Xxxxxxxx & Partners Communications Inc. (an Ontario
corporation), Studio Pica Inc. (an Ontario corporation), Sable
Advertising Systems, Inc. (a Minnesota corporation), Northstar
Research Partners U.S.A. Inc. (a Delaware corporation) and Northstar
Research Limited (a UK company) for so long as such entity is not a
Wholly-Owned Subsidiary of Maxxcom and each other Person which, from
time to time, in compliance with this Agreement, is or becomes a
Non-whollyowned Subsidiary of a Restricted Party which itself is not
directly or indirectly whollyowned by Maxxcom for so long as such
Person is not a Wholly-Owned Subsidiary of Maxxcom provided that, for
greater certainty, the foregoing shall not include a Foreign Opco and
"Unrestricted Party" means any one of them.
1.1.182 "Unsecured Repurchase Indebtedness" means the unsecured indebtedness
incurred by a Restricted Party in respect of, as applicable, Accumark
Promotions Group Inc., Colle & XxXxx, Inc. and 656712 Ontario Limited
to a Minority Shareholder of such Restricted Party in connection with
the repurchase by the applicable Restricted Party of the Capital Stock
of such Minority Shareholder pursuant to an applicable Restricted
Party Shareholder Agreement.
1.1.183 "U.S. Alternate Base Rate" means, on any day, the greater of (a) 1/2
of 1% plus the Federal Funds Effective Rate on such day; and (b) the
Base Rate Atlanta on such day.
1.1.184 "U.S. Dollars" and "U.S. $" mean lawful money of the United States of
America.
1.1.185 "Warrant Agreement" means the warrant agreement dated as of 11 July,
2001 between Maxxcom and TD Capital, a division of The
Toronto-Dominion Bank.
1.1.186 "Warrants" means the warrants issued pursuant to the Warrant Agreement
from time to time.
1.1.187 "Welfare Plan" means a "welfare plan", as such term is defined in
Section 3(1) of ERISA; and any medical, health, hospitalization,
insurance or other employee benefit or welfare plan, agreement or
arrangement applicable to the employees resident in Canada of any
Restricted Party.
1.1.188 "Wholly-Owned Subsidiary" of a Person means any Subsidiary, all of the
outstanding Capital Stock of which, is at the time owned, directly or
indirectly, by such Person or by one or more Wholly-Owned Subsidiaries
of such Person, or by such Person and one or more Wholly-Owned
Subsidiaries of such Person.
ARTICLE 2
THE CREDIT
2.1 The Credit
(a) Upon and subject to the terms and conditions of this Agreement,
the Lenders agree to continue to provide a revolving term credit for the use of
the Borrowers in the amount of up to Cdn. $80,000,000 or the equivalent thereof
in U.S. Dollars (as reduced from time to time in accordance with this
Agreement, the "Credit Limit"). The principal amount of any Advance under the
Credit which is repaid may be reborrowed from time to time, subject to the
terms of this Agreement.
(b) Each of the Borrowers, the Guarantors, the Agent and the Lenders
acknowledge and confirm that the Existing Indebtedness and Liability shall be
governed by and subject to the provisions of this Agreement and that, from and
after the date hereof, the credit facility established by the Original Credit
Agreement shall be deemed to be established under and shall be governed by and
subject to the provisions of this Agreement.
(c) Notwithstanding the foregoing, the aggregate of Advances under the
Credit in favour of:
(i) Maxxcom may at no time exceed that amount (expressed in
Canadian Dollars) which is equal to 31.25% of the Credit
Limit at such time; and
(ii) Maxxcom US may at no time exceed that amount (expressed in
Canadian Dollars) which is equal to 68.75% of the Credit
Limit at such time;
(the limits referred to in paragraphs (i) and (ii) above are
collectively referred to herein as the "Revolving Credit Sublimits").
(d) Except as contemplated by this Section 2.1(d) in relation to
currency exchange rate fluctuations, the aggregate amount of Advances
outstanding may at no time exceed the Credit Limit at such time.
Notwithstanding the preceding sentence, if at any time the Canadian Dollar
equivalent of the aggregate Advances outstanding under the Revolving Credit
Sublimits exceeds that amount which is 105% of the Credit Limit at such time
solely as a result of fluctuations in currency exchange rates, the Revolving
Credit Sublimits shall, if possible, be reallocated by the Agent (subject to
the consent of the Majority Lenders, acting reasonably) such that no such
excess remains after such reallocation. In the event that it is not possible to
reallocate the Revolving Credit Sublimits such that no excess remains after
reallocation, the Borrowers shall, forthwith upon receipt of request therefore
from the Agent, repay an amount such that the Credit Limit is no longer
exceeded. Notwithstanding the foregoing, no Borrower shall be entitled to
receive any Advance (whether by way of rollover, conversion or otherwise) that
would result in the Credit Limit being exceeded immediately following the
making of the proposed Advance.
(e) In addition to the reallocations by the Agent contemplated in
Section 2.1(d), Maxxcom may, no more frequently than once in each of its fiscal
quarters (upon 10 Business Days prior written notice to the Agent), reallocate
or increase the maximum amount of each Revolving Credit Sublimit, provided
that:
(i) at no time may the aggregate of the Revolving Credit
Sublimits exceed the amount of the Credit Limit;
(ii) at no time may the Revolving Credit Sublimit relating to
Maxxcom be reduced below that amount (expressed in Canadian
Dollars) which is equal to 12.5% of the Credit Limit at such
time; and
(iii) no Event of Default or Pending Event of Default exists at the
time of or would arise as a result of such reallocation.
2.2 Use of the Credit
The Credit may be used from time to time for the general corporate
purposes of the Borrowers including, without limitation, the financing of
Permitted Acquisitions and the making of Permitted Payments.
2.3 Availment Options and Limits
The Credit may be used:
(a) by Maxxcom incurring overdrafts in its accounts with the
Overdraft Lender to a maximum aggregate amount of Cdn.
$5,000,000, or the equivalent thereof in U.S. Dollars, the
amount of the overdraft being deemed to be a Prime Rate
Advance, if in Canadian Dollars, or a Base Rate Canada Advance,
if in U.S. Dollars;
(b) by Maxxcom requesting Prime Rate Advances;
(c) by Maxxcom presenting drafts or bills of exchange to the BA
Lenders for acceptance as Bankers' Acceptances;
(d) by Maxxcom requesting BA Equivalent Loans from the Non BA
Lenders;
(e) by Maxxcom requesting that L/Cs in Canadian Dollars or U.S.
Dollars be issued by the Issuing Lender for the account of
Maxxcom not in excess, in the aggregate, of the equivalent of
Cdn. $2,000,000 at any time;
(f) by Maxxcom US requesting that L/Cs in U.S. Dollars be issued by
the Issuing Lender for the account of Maxxcom US not in excess,
in the aggregate, of U.S. $2,000,000 at any time;
(g) by Maxxcom or Maxxcom US requesting Base Rate Advances to be
made by the Lenders; or
(h) provided that LIBOR quotations are available to the Lenders in
the London interbank market, by Maxxcom or Maxxcom US
requesting LIBOR Advances to be made by the Lenders.
Notwithstanding the foregoing: (i) the aggregate of Advances by way of L/C
which are issued in the name of or for the benefit of any Restricted Party,
other than a Borrower, may at no time exceed Cdn. $1,500,000 or the equivalent
thereof in United States dollars provided however, that if such Restricted
Party is not a party to this Agreement, such Restricted Party has delivered
Intercorporate Documents satisfactory to the Agent, acting reasonably (ii)
Maxxcom may only request Advances hereunder from the Lenders which are
incorporated under the laws of Canada and not their Affiliates, Subsidiaries,
agencies or branches which are Lenders (herein, the "US Lenders"); and (iii)
Maxxcom US may only request Advances from the US Lenders.
2.4 Interest Rates, Bankers' Acceptance Fees and L/C Commissions
(a) Interest rates, Bankers' Acceptance Fees and L/C commissions in
respect of Advances under the Credit (except as otherwise noted herein) shall
vary according to the Total Debt Ratio, as follows:
- APPLICABLE MARGIN -
FOR:
(% per annum)
Prime Rate Bankers'
and Acceptance Fees
Base Rate LIBOR and
Total Debt Ratio Advances Advances L/C Commissions Standby Fees
---------------- -------- -------- --------------- ------------
greater than 3 to 1 2.00% 3.00% 3.00% 0.625%
greater than 2.5 to 1 but less than or 1.5% 2.5% 2.5% 0.625%
equal to 3 to 1
greater than 2 to 1 but less than or 1.25% 2.25% 2.25% 0.5%
equal to 2.5 to 1
greater than 1.5 to 1, but less than or 1.0% 2.0% 2.0% 0.50%
equal to 2.0 to 1
less than or equal to 1.5 to 1 0.75% 1.75% 1.75% 0.375%
All figures shown above represent per cent per annum and each such figure, when
applicable from time to time to Prime Rate Advances, Base Rate Advances and
LIBOR Advances, shall be referred to herein as the "Applicable Margin".
Interest on Prime Rate Advances shall be the Prime Rate plus the Applicable
Margin as set forth above. Interest on Base Rate Advances shall be, as
applicable, the Alternate Base Rate Canada or the U.S. Alternate Base Rate plus
the Applicable Margin as set forth above. Interest on LIBOR Advances shall be
the LIBO Rate for the applicable LIBOR Period plus the Applicable Margin as set
forth above. The Bankers' Acceptance Fee shall be as set forth above. The
interest payable on BA Equivalent Loans shall be determined as contemplated by
Section 5.12(b).
(b) Increases or decreases in the Applicable Margin, Bankers'
Acceptance Fees, L/C commissions, and/or the standby fees (collectively, the
"variable margins") resulting from a change in the Total Debt Ratio shall be
based on the applicable Quarterly Reporting Certificate. For Prime Rate
Advances, Base Rate Advances and LIBOR Advances, changes in the Applicable
Margin shall be effective as of 2 Business Days following the last day upon
which such Quarterly Reporting Certificate could be delivered on time (the "Due
Date"). For L/Cs, Advances by way of Bankers' Acceptances (including rollovers
of Bankers' Acceptances) or BA Equivalent Loans, changes in, as applicable, the
Applicable Margin, L/C commissions or the Bankers' Acceptance Fee shall be
effective on the Due Date and any amount owing by a Borrower to the Lenders, or
any amount owing by the Lenders to a Borrower, as the case may be, with respect
to L/Cs, Bankers' Acceptances or BA Equivalent Loans outstanding on a Due Date
shall be paid on the date of the Advance or rollover date, as the case may be,
next following the Due Date for the applicable Quarterly Reporting Certificate
or, if earlier, the Maturity Date. Should the Agent, acting reasonably,
determine that the calculation of the Total Debt Ratio in any Quarterly
Reporting Certificate is incorrect, the Borrowers and the Lenders agree that,
absent manifest error, the variable margins shall be adjusted in accordance
with the determination by the Agent, and the Borrowers shall pay the amount
owing commencing as of the date when the adjustment would otherwise be
effective in accordance with this Section.
(c) Notwithstanding the foregoing, the variable margins shall, until
31 March 2001 be based on the Total Debt Ratio as set forth above but shall in
no case be lower than the pricing tier labeled "greater than 2 to 1 but less
than or equal to 2.5 to 1".
2.5 L/C Commissions
Commissions payable with respect to the issuance or renewal of an L/C
shall vary according to the Total Debt Ratio in effect on the date of issuance
or renewal of such L/C as set forth in the chart in Section 2.4. Such
commission shall be payable upon the issuance or renewal of each L/C and shall
be subject to adjustment based on a change to the Applicable Margin set forth
in Section 2.4. Payment in respect of such adjustments shall be made on the
applicable Due Date.
2.6 Standby Fee
A standby fee on the average daily unused portion of the Credit shall
be calculated and payable quarterly in arrears on the last Business Day of each
fiscal quarter of Maxxcom during the term of this Agreement. Such standby fee
shall be expressed as a percentage per annum, shall vary in accordance with the
Total Debt Ratio as set forth in the chart in Section 2.4 and shall be
calculated for the actual number of days to elapse on the basis of a year of
365 or 366 days, as applicable.
2.7 Repayment
(a) The Credit Limit shall be permanently reduced on the last day of
each fiscal quarter of Maxxcom occurring after the Closing Date (each a
"Mandatory Reduction Date") by the applicable amounts specified below:
Mandatory Reduction Dates
Occurring from and including Amount of Reduction
---------------------------- -------------------
31 March 2000 to 31 March 2002 NIL
1 April 2002 to 31 March 2003 Cdn. $1,000,000
1 April 2003 to 31 March 2005 Cdn. $7,000,000
(b) From and after 22 December 2000, the Credit Limit shall also be
permanently reduced by 100% of the net proceeds arising from the sale of any
assets out of the ordinary course of business of a Restricted Party (other than
the net proceeds of the sale of any Capital Stock of a Restricted Party made in
accordance with either Section 7.4(h)(i) or Section 7.4(w)(ii)) to the extent
that such net proceeds are not reinvested in replacement assets or in a
Permitted Acquisition within 180 days of receipt thereof (any such date being
referred to herein as an "Asset Proceeds Reduction Date") and such net proceeds
are, during such 180 day period or until such reinvestment or Permitted
Acquisition is made, deposited with the Agent in an interest-bearing account
unless such net proceeds are, upon receipt thereof and at the option of the
Borrowers, applied in repayment of the Obligations.
(c) From and after 31 March 2002, the Credit Limit shall also be
permanently reduced by:
(i) 75% of Maxxcom's Excess Cash Flow in each fiscal year,
such reduction to take effect immediately following
the end of the first fiscal quarter after the last day
of such fiscal year (each an "XCF Reduction Date").
For greater certainty the first such XCF Reduction
Date shall occur on March 31, 2003; and
(ii) 100% of the net proceeds of all debt and equity issues
made by any Restricted Party (other than any share
issuance made in satisfaction of all or a portion of
the purchase price of a Permitted Acquisition or any
share issuance made to a Minority Shareholder from
time to time) (each, a "Securities Issuance") at any
time that the Total Debt Ratio is equal to or in
excess of 3.0 to 1.0 and 50% of the net proceeds of
all Securities Issuances at any time that the Total
Debt Ratio is less than 3.0 to 1.0.
(d) The Borrowers shall repay sufficient Advances outstanding under
the Credit on each Mandatory Reduction Date, XCF Reduction Date, Asset Proceeds
Reduction Date and date upon which the Net Proceeds of a Securities Issuance
are received such that the total Advances (including the face amount of all
Bankers' Acceptances and L/Cs) outstanding on such Mandatory Reduction Date,
XCF Reduction Date, Asset Proceeds Reduction Date or date upon which the Net
Proceeds of a Securities Issuance are received, as applicable, do not exceed
the Credit Limit as reduced on such date. Amounts of Excess Cash Flow, the net
proceeds of asset sales and the Net Proceeds of a Securities Issuance paid
shall be applied to reduce the outstanding balance of the Credit in inverse
order of maturity. All such payments shall be applied to reduce the Revolving
Credit Sublimits on a pro rata basis.
(e) All other amounts owing under or in connection with the Credit
shall be due and payable on the Maturity Date.
2.8 Prepayment
Subject to giving the notice required by Section 5.28, the Borrowers
may from time to time permanently reduce the maximum amount available under the
Credit or repay Advances outstanding under the Credit without penalty, in the
minimum amounts of, as applicable, Cdn. $3,000,000 or U.S. $3,000,000 or
integral multiples of Cdn. $500,000 or U.S. $500,000 upon 3 Business Days prior
written notice, except that a LIBOR Advance may not be paid prior to the end of
the applicable LIBOR Period unless the Lenders are indemnified for any losses
or expenses incurred as a result, including breakage costs, and no Bankers'
Acceptance or BA Equivalent Loan may be paid prior to its maturity date. Any
voluntary prepayments and reductions pursuant to this Section 2.8 shall, if so
requested by Maxxcom, be applied first to the quarterly payments required under
Section 2.7 at the end of the fiscal quarter in which the voluntary prepayment
is made (and shall reduce the mandatory payment required at the end of such
fiscal quarter) or, if no such request is made or if there exists any excess
after such requested application, shall be applied to reduce the scheduled
mandatory repayments of the Credit in inverse order of maturity.
2.9 Notice under the Income Tax Act (Canada)
Notwithstanding anything contained in this Agreement to the contrary,
if any Lender or the Agent receives notice under subsection 224(1.1) of the
Income Tax Act (Canada) or any successor provision thereto or any comparable
provision of any other taxing statute in respect of any Borrower, then so long
as such notice is effective, the Lenders shall not be obliged to make any
further Advances hereunder.
ARTICLE 3
SECURITY
3.1 Security
In form and substance satisfactory to the Lenders with all necessary
registrations, consents, acknowledgments as to priority and legal opinions, the
Agent shall receive the following (collectively, the "Security"):
(a) First-ranking security in favour of the Agent for and on behalf
of the Lenders on all present and future undertaking, property
and assets of:
(i) Maxxcom, Maxxcom (Nova Scotia) Corp., each CanSubCo
which is directly or indirectly wholly-owned by
Maxxcom and each other Wholly-Owned Subsidiary of
Maxxcom, in the form of general security agreement,
or, at the option of the Agent, a Cdn. $120,000,000
first fixed and floating charge debenture registered
against all owned real property and a general
assignment of book debts; and
(ii) Maxxcom US, Maxxcom (USA) Holdings Inc., Maxxcom
(USA) Finance Company, each Acquireco, each Opco
which is directly or indirectly whollyowned by
Maxxcom US and each other Wholly-Owned Subsidiary of
Maxxcom US, in the form of a general security
agreement;
each subject only to Permitted Encumbrances.
(b) Unconditional and, to the extent permitted by law, unlimited
guarantees made by:
(i) Maxxcom of the debts, liabilities and obligations of
Maxxcom US to the Lenders;
(ii) Maxxcom (Nova Scotia) Corp., each CanSubCo which is
directly or indirectly wholly-owned by Maxxcom and
each other Wholly-Owned Subsidiary of Maxxcom of the
debts, liabilities and obligations of Maxxcom (or
another wholly-owned CanSubCo) to the Lenders;
(iii) Maxxcom US of the debts, liabilities and obligations
of Maxxcom to the Lenders; and
(iv) Maxxcom (USA) Holdings Inc., Maxxcom (USA) Finance
Company, each Acquireco, each Opco which is directly
or indirectly wholly-owned by Maxxcom US and each
other Wholly-Owned Subsidiary of Maxxcom US of the
debts, liabilities and obligations of Maxxcom and
Maxxcom US to the Lenders.
(c) First-ranking hypothecations or pledges in favour of the
Agent for and on behalf of the Lenders by:
(i) the Borrowers and each directly or indirectly
wholly-owned Restricted Party of all of the issued
and outstanding Capital Stock of any other
Restricted Party owned by it together with a Consent
to Pledge by each such Restricted Party and the
other shareholders thereof (or, to the extent no
consent is required, a Restricted Party Supplemental
Agreement);
(ii) Maxxcom (USA) Holdings Inc. and Maxxcom US of all of
the issued and outstanding Capital Stock of
Cybersight Acquisition Co., Inc. owned by it;
(iii) Maxxcom of the Cdn. $700,000 secured convertible
debenture issued by XxxXxxx + Partners Inc. (an
Ontario corporation) and all security granted in
support thereof; and
(iv) each wholly-owned Restricted Party of all of the
issued and outstanding Capital Stock of any other
Person which is not a Restricted Party owned by it
together with a Consent to Pledge by each such
Person and the other shareholders thereof (or, to
the extent no consent is required, a Restricted
Party Supplemental Agreement).
(d) First-ranking assignments in favour of the Agent for and on
behalf of the Lenders of:
(i) all intercorporate indebtedness owing by one
Restricted Party (the "Debtor RP") to another
Restricted Party (the "Creditor RP") together with
all security granted by the Debtor RP to the
Creditor RP in support of such intercorporate
indebtedness including, without limitation, (A) all
Intercorporate Notes and all Intercorporate
Security, and (B) first-ranking hypothecations or
pledges by the Debtor RP in favour of the Creditor
RP of all issued and outstanding Capital Stock of
any other Restricted Party owned by the Debtor RP;
(ii) all Permitted Minority Shareholder Loans together
with all security granted in support thereof to the
extent required by the Agent; and
(iii) the right of any Restricted Party to receive any
payment, management fee or other distribution from
another Restricted Party whether arising under a
Restricted Party Shareholder Agreement or otherwise.
(e) With respect to Permitted Acquisitions (other than Permitted
Acquisitions contemplated by Sections 1.1.126(d), (e), (f)
and (g) and Permitted Non-Conforming Acquisitions), if the
person acquired is:
(i) directly or indirectly wholly-owned by Maxxcom
and/or any Restricted Party which is a Wholly-Owned
Subsidiary of Maxxcom, in addition to the Security
contemplated above in relation to Restricted Parties
existing as at the date hereof, first-ranking
security on all of the present and future Property
of each Person so acquired analogous to that
described in Section 3.1, an hypothecation or pledge
of all of the Capital Stock of such person and an
unlimited and unconditional guarantee (to the extent
permitted by law) by each such person of the debts,
liabilities and obligations of Maxxcom and Maxxcom
US to the Lenders; and
(ii) not directly or indirectly wholly-owned by Maxxcom
and/or any Restricted Party which is a Wholly-Owned
Subsidiary of Maxxcom, Security analogous to that
contemplated in Sections 3.1(c)(iv) and 3.1(d).
(f) With respect to Permitted Acquisitions referred to in Section
1.1.126(d), first-ranking hypothecations or pledges in favour
of the Agent for and on behalf of the Lenders by the
applicable Borrower or other directly or indirectly
wholly-owned Restricted Party of all of the issued and
outstanding Capital Stock, notes, debentures, other evidence
of indebtedness or other securities acquired or received by
it in relation to such Investment together with all security
or other rights granted in its favour in that connection.
(g) With respect to Permitted Acquisitions referred to in Section
1.1.126(f), the following agreements and instruments:
(i) unconditional and, to the extent permitted by law,
unlimited guarantees of the Obligations in favour of
the Agent for and on behalf of the Lenders made by
(A) each Foreign Opco acquired by Interfocus Group
Limited in accordance with Section 1.1.126(f) and
(B) each Subsidiary of any such Foreign Opco;
(ii) first-ranking security in favour of the Agent for
and on behalf of the Lenders on all present and
future undertaking, property and assets of (A) each
Foreign Opco acquired by Interfocus Group Limited in
accordance with Section 1.1.126(f) and (B) of each
Subsidiary of any such Foreign Opco; and
(iii) first-ranking hypothecations or pledges in favour of
the Agent for and on behalf of the Lenders by each
Foreign Opco acquired by Interfocus Group Limited of
all Capital Stock in each of each such Foreign
Opco's respective Subsidiaries;
(h) With respect to Permitted Non-Conforming Acquisitions, such
security as may reasonably be required by the Majority
Lenders in connection with their approval thereof.
(i) With respect to the acquisition by Maxxcom of its interest in
Interfocus Group Limited (and its indirect acquisition of
Interfocus Direct Limited and Interfocus Network Limited),
the following agreements and instruments:
(i) first-ranking hypothecations or pledges in favour of
the Agent for and on behalf of the Lenders by
Maxxcom of all of the issued and outstanding Capital
Stock of Interfocus Group Limited;
(ii) Restricted Party Supplemental Agreements by each of
Interfocus Group Limited, Interfocus Direct Limited
and Interfocus Network Limited;
(iii) first-ranking assignments in favour of the Agent for
and on behalf of the Lenders of (A) all
intercorporate indebtedness owing by Interfocus
Group Limited to Maxxcom, (B) all security granted
in support of such intercorporate indebtedness
including, without limitation, (w) all
Intercorporate Notes and all Intercorporate
Security, (x) first-ranking hypothecations or
pledges by Interfocus Group Limited of all of the
issued and outstanding Capital Stock of Interfocus
Direct Limited, (y) first-ranking hypothecations or
pledges by Interfocus Direct Limited of all of the
issued and outstanding Capital Stock of Interfocus
Network Limited and each of its other Subsidiaries,
and (z) firstranking hypothecations or pledges by
Interfocus Network Limited of all of the issued and
outstanding Capital Stock of each of its
Subsidiaries; and
(iv) guarantees by each of Interfocus Direct Limited and
Interfocus Network Limited of all intercorporate
indebtedness owing by Interfocus Group Limited to
Maxxcom supported, in each case, by a first ranking
security agreement covering the property, assets and
undertaking of each and a pledge of all of the
Capital Stock of any other Person owned by each;
(j) First-ranking assignments in favour of the Agent for and on
behalf of the Lenders by Maxxcom of key-man life insurance
policies of in relation to Xxxxx Xxxxxxx, Xxxxxx Xxxxxxxx,
Xxxxx Xxxxx and Xxxxxx Xxxxxxxxx, acknowledged, in each case
by the applicable insurer.
(k) Such other security as the Agent may reasonably require in its
discretion.
3.2 Additional Security, etc.
Upon request by the Agent, the Borrowers and the Restricted Parties
shall do all such further acts and execute and deliver all such further
documents and further assurances as may be necessary or desirable to: (a) grant
security, equivalent to the Security, in favour of Lenders that are not Lenders
at the date hereof or to a replacement Agent; (b) enable the Agent to register
the Security in jurisdictions where it is not registered in connection with the
closing of the transactions contemplated hereby; (c) register, file or record
all Security (or a notice or financing statement in respect thereof) in all
offices where such registration, filing or recoding is, in the opinion of the
Agent or its counsel, necessary or advisable to constitute, perfect and
maintain the Security as first-ranking Encumbrances of the Borrowers or other
Restricted Parties, as the case may be, within a reasonable time after the
request therefor by the Agent; or (d) with respect to Security executed and
delivered after the date hereof, enable the Agent to register the Security in
other jurisdictions where registration is necessary or desirable as determined
by the Agent, acting reasonably. In addition, upon an Unrestricted Party or a
non-wholly owned Restricted Party becoming a Wholly-Owned Subsidiary of Maxxcom
or another wholly-owned Restricted Party, such Restricted Party shall grant
security, equivalent to the Security, in favour of the Agent and the Lenders.
3.3 Acknowledgment re Mezz Inter-Creditor Agreement
Each of the Borrowers and the Guarantors acknowledge that they have
actual notice of the terms of the Mezz Inter-Creditor Agreement, consent to the
Mezz Inter-Creditor Agreement and the terms thereof and covenant with the Agent
and each of the Lenders that they will at all times during the continuance of
the Mezz Inter-Creditor Agreement comply and act in accordance with the terms,
provisions and intent of that agreement. Each of the Borrowers and the
Guarantors also acknowledge that the terms and conditions of the Mezz
Inter-Creditor Agreement are for the sole benefit of the Agent, the Lenders,
the Mezz Agent and the Mezz Holders and that nothing in that agreement shall be
construed as conferring any rights upon any of the Borrowers, the Guarantors,
any other Restricted Party or any third party.
To the extent that any of the Agent, the Lenders, the Mezz Agent and
the Mezz Holders (a "Payor") receives any monies, by realization on security or
otherwise, which it is required to pay over in whole or in part to the Agent or
another Lender pursuant to the terms of the Mezz Inter-Creditor Agreement, the
debts, liabilities and obligations of the Borrowers, the Guarantors and any
other Restricted Party to the Payor shall not be reduced and discharged by the
receipt of such monies (except to the extent such monies are subsequently paid
by the Agent to a Payor).
The terms of this Section shall survive the termination of this
Agreement and continue for the benefit of the Agent and the Lenders as long as
the Mezz Inter-Creditor Agreement remains in effect.
3.4 Release of News Canada Inc. Security
Any guarantees, general security agreements and other security
directly granted by News Canada Inc. to the Agent prior to completion of the
transaction by which Xxxx Xxxxxxx acquires up to 20% of the common shares of
News Canada Inc. shall be released by the Agent after completion of such
transaction, if requested to do so by Maxxcom, provided no Pending Event of
Default or Event of Default has occurred and is continuing.
ARTICLE 4
DISBURSEMENT CONDITIONS
4.1 Conditions Precedent to the Initial Advance
At or before the time of the making of the initial Advance hereunder
the Agent (for and on behalf of the Lenders) shall (unless otherwise noted
herein) have received the following material, each in full force and effect and
in form and substance satisfactory to the Lenders, acting reasonably:
(a) duly executed copies of this Agreement and the Security
referred to in Section 3.1, duly filed, registered or
recorded, as required;
(b) duly executed copies of the Restricted Party Supplemental
Agreements by each of Accumark Promotions Group Inc., Cormark
XxxXxxx Communication Solutions (Canada) Inc. (formerly
Cormark Communications Inc.), Colle & XxXxx, Inc., News
Canada Inc., Northstar Research Partners Inc., Xxxxx Xxxxx
Group Ltd., Interfocus Group Limited, Interfocus Direct
Limited and Interfocus Network Limited;
(c) duly executed copies of the Consents to Pledge for each of
Xxxxxx Xxxxxxx Communications Inc., Veritas Communications
Inc., Integrated Healthcare Communications, Inc.,
Margeotes/Xxxxxxxx + Partners LLC, Source Marketing LLC,
Accent Marketing Services, L.L.C., Xxxxxxxx Xxxxxx Xxxxx LLC,
Targetcom LLC, Etelligence LLC, Bang!Zoom LLC and e-Source
Drive to Web Marketing LLC;
(d) duly executed copies of the Intercorporate Notes and the
Intercorporate Security made by each of 1220777 Ontario
Limited, Accumark Promotions Group Inc., Xxxxx Xxxxx Group
Ltd., Cormark XxxXxxx Communication Solutions (Canada) Inc.
(formerly Cormark Communications Inc.), Xxxxxxxx & Partners
Communications Inc., Xxxxxx Xxxxxxx Communications Inc.,
Veritas Communications Inc., Integrated Healthcare
Communications, Inc., Colle & XxXxx, Inc., TC Acquisition
Inc., BZ Acquisition Inc., ET Acquisition Inc., CDI
Acquisition Inc., Mackenzie Marketing, Inc., BC Acquisition
Corp. (now Bratskeir & Company, Inc.), Xxxxxxx Xxxxxx &
Bogusky LLC, Bang!Zoom LLC, Pavlika Xxxxxxxx Direct, LLC, FMA
Acquisition Co. and Xxxxxxxx Xxxxxx Xxxxx LLC duly filed,
registered or recorded in all relevant jurisdictions;
(e) duly executed copies of the promissory notes made by each
Minority Shareholder in favour of the Restricted Party of
which it is a shareholder as are specified by the Agent,
acting reasonably, from time to time;
(f) an undertaking to discharge all security registrations in any
relevant jurisdiction disclosed by searches against
predecessors in interest to any Restricted Party which affect
the property, assets or undertaking of such Restricted Party
and which are not Permitted Encumbrances;
(g) certified copies of the Constating Documents of each
Restricted Party;
(h) payment of a work fee in relation to this Second Amended and
Restated Credit Agreement in the aggregate amount of Cdn.
$160,000 to be paid to the Agent for and on behalf of the
Lenders on the Closing Date;
(i) a duly executed copy of the Mezz Inter-Creditor Agreement;
(j) true copies of the Mezz Credit Documents, executed where
applicable;
(k) certified copies of the corporate proceedings taken by each
Restricted Party authorizing it to execute, deliver and
perform its obligations under any Credit Documents to which
it is a party, and approving the pledge of its Capital Stock,
where applicable;
(l) the pro forma consolidated financial statements of Maxxcom
for the fiscal periods ended 31 December 1998 and 31 December
1999 together with a compilation report thereon by BDO
Dunwoody and the unconsolidated financial statements of
Maxxcom and Maxxcom US for the fiscal periods ended 31
December 1998 and 31 December 1999 and for the fiscal quarter
of Maxxcom and Maxxcom US ended 31 March 2000;
(m) certificates of insurance or other evidence that the
covenants and conditions of the Credit Documents concerning
insurance coverage are being complied with;
(n) provision for the payment in full by Maxxcom of all
indebtedness owed to MDC Corporation Inc. from the proceeds
of the initial Advance;
(o) evidence of repayment of all intercorporate indebtedness owed
by Maxxcom and any other Restricted Party to MDC Corporation
Inc., or the conversion of all such intercorporate debt to
common equity of Maxxcom;
(p) evidence of cancellation and repayment of all Debt of all
Restricted Parties other than the Borrowers, other than
Permitted Indebtedness;
(q) completion of searches required to disclose Encumbrances in
all relevant jurisdictions against all Restricted Parties
(and their respective predecessor entities) and releases,
discharges and postponements (in registerable form, where
appropriate) of all such Encumbrances which are not Permitted
Encumbrances in all relevant jurisdictions including, without
limitation, all encumbrances in favour of MDC Corporation
Inc. against any Restricted Party, and any statements or
acknowledgments reasonably required by the Agent from holders
of Permitted Encumbrances;
(r) a certificate of an officer of each of the Restricted Parties
which are party to this Agreement regarding the accuracy of
the representations and warranties contained in this
Agreement and to the effect that no Event of Default or
Pending Event of Default has occurred;
(s) the opinion of Fogler, Xxxxxxxx LLP, Ontario counsel to the
Restricted Parties, as to matters of Ontario law, addressed
to the Agent, the Lenders and Xxxxxx Xxxxxx Gervais LLP, in
form and substance satisfactory to the Agent and its counsel,
acting reasonably;
(t) the opinions of counsel to the Restricted Parties in
Delaware, Minnesota, New York, Nova Scotia, England and all
other relevant jurisdictions addressed to the Agent, the
Lenders and Xxxxxx Xxxxxx Xxxxxxx LLP, in form and substance
satisfactory to the Agent and its counsel, acting reasonably;
(u) the opinion of Xxxxxx Xxxxxx Gervais LLP, in form and
substance satisfactory to the Agent, acting reasonably;
(v) payment of or provision for legal fees of Xxxxxx Xxxxxx
Gervais LLP and all local counsel; and
(w) such further and other documents as the Agent may reasonably
require.
In addition, the Lenders existing as of the Closing Date shall be
satisfied:
(x) with all tax matters relating to the spin-out of assets to
Maxxcom and the proposed ownership structure of the
Restricted Parties, having regard to the Security to be
delivered hereunder;
(y) with the capital structure of each of the Restricted Parties
including without limitation the terms and amounts of all
indebtedness and intercorporate indebtedness of each;
(z) with respect to the results of all due diligence
investigations relating to the Restricted Parties including,
without limitation, the terms and status of the Restricted
Party Shareholder Agreements, the Restricted Party Purchase
Agreements and the terms, conditions, and documentation
relating to all loans made by each Restricted Party to any
Minority Shareholder;
(aa) with the terms and conditions of the Mezz Credit Documents,
that the gross proceeds of the issuance of the Mezz Debenture
is not less than Cdn. $40,000,000 and that the Agent has
received the net proceeds of the issuance of the Mezz
Debenture to be applied in temporary reduction of the Credit;
and
(bb) on the Closing Date that there has not occurred an event or a
change of circumstances which has had, would have, or does
have a material adverse effect on the Financial Condition of
Maxxcom on a consolidated basis.
4.2 Conditions Precedent to all Advances
The obligation of the Lenders to make any Advance is subject to
the conditions precedent that:
(a) no Event of Default or Pending Event of Default has occurred
and is continuing on the Drawdown Date, or would result from
the Advance;
(b) the Agent has received timely notice of the Advance if any is
required under this Agreement;
(c) all other terms and conditions of this Agreement upon which a
Borrower may obtain an Advance are fulfilled; and
(d) the Agent has received such other documents, opinions,
consents, acknowledgments, acknowledgments and discharges
regarding Encumbrances and agreements necessary or incidental
to the foregoing or to this Agreement as the Agent may
reasonably request and as are contemplated by this Agreement
including, without limitation, such further Security as is
required to be delivered hereunder from time to time.
ARTICLE 5
ADVANCES
5.1 Prime Rate, Base Rate and LIBOR Advances
(a) Upon timely fulfilment of all applicable conditions and provisions
as set forth in this Agreement, the Agent, in accordance with the procedures
set forth in Section 5.3, will make the requested amount of a Prime Rate
Advance, Base Rate Advance or LIBOR Advance available to the applicable
Borrower on the Drawdown Date requested by such Borrower by crediting the
applicable Designated Account with such amount. Each Prime Rate Advance or Base
Rate Advance (other than a deemed Prime Rate Advance or Base Rate Advance or an
Overdraft Availment) shall be in a minimum amount of Cdn. $2,000,000 or U.S.
$2,000,000, respectively, and in an amount which is a whole multiple of Cdn.
$100,000 or U.S. $100,000, as applicable. Each LIBOR Advance shall be in an
aggregate minimum amount of U.S. $2,000,000 and in a whole multiple of U.S.
$100,000. The applicable Borrower shall pay interest to the Agent for the
account of the Lenders at the applicable Branch of Account on any such Advances
outstanding from time to time hereunder at the applicable rate of interest as
specified in Section 2.4 and calculated in accordance with this Section 5.1.
(b) Interest on Prime Rate Advances and Base Rate Advances shall be
payable monthly on each Interest Payment Date. Interest on LIBOR Advances shall
be payable on the last day of the LIBOR Period or, if the LIBOR Period is
longer than three months, on the day which is three months after the first day
of the LIBOR Period and on each day which is three months following the
previous interest payment date. All interest shall accrue from day to day and
shall be payable in arrears for the actual number of days elapsed from and
including the date of Advance or the previous date on which interest was
payable, as the case may be, to but excluding the following date on which
interest is payable or the end of the LIBOR Period, as the case may be, both
before and after maturity, default and judgment, with interest on overdue
interest at the same rate payable on demand. Overdue interest with respect to a
LIBOR Advance shall, upon the expiry of the LIBOR Period applicable to such
LIBOR Advance, bear interest, payable on demand, calculated at the rates
applicable to Base Rate Canada Advances or Base Rate U.S. Advances, as
applicable.
(c) Interest calculated with reference to the Prime Rate shall be
calculated monthly on the basis of a year of 365 or 366 days, as applicable.
Interest calculated on Base Rate Canada Advances shall be calculated monthly on
the basis of a year of 365 or 366 days, as applicable, and interest calculated
on Base Rate U.S. Advances shall be calculated monthly on the basis of a year
of 360 days. Interest calculated with reference to the LIBO Rate shall be
calculated monthly on the basis of a year of 360 days for a term equal to the
applicable LIBOR Period.
(d) Each rate of interest which is calculated with reference to a
period (the "deemed interest period") that is less than the actual number of
days in the calendar year of calculation is, for the purposes of the Interest
Act (Canada), equivalent to a rate based on a calendar year equal to such rate
of interest multiplied by the actual number of days in the calendar year of
calculation and divided by the number of days in the deemed interest period.
(e) Notwithstanding any other provisions of this Agreement or any
Credit Document, no Borrower shall be obliged to make any payments of interest
or other amounts payable to the Lenders, or any of them, hereunder or under any
Credit Document in excess of an amount or rate which would be prohibited by law
or would result in the receipt by the Lenders, or any of them, of interest at a
criminal rate (as the terms "interest" and "criminal rate" are defined under
the Criminal Code (Canada)) or which would contravene any local usury laws
which may be applicable to any Obligations of the applicable Borrower to the
Lenders, or any of them, under or in connection with this Agreement.
5.2 Evidence of Indebtedness
The indebtedness of any Borrower resulting from Prime Rate Advances,
BA Equivalent Loans, Base Rate Advances and LIBOR Advances made by the Lenders
shall be evidenced by account records maintained by the Agent, and by each
Lender concerning those Advances it has made. The Agent shall also maintain
records of the indebtedness of the applicable Borrower resulting from Advances
by way of Bankers' Acceptances, L/Cs and Overdraft Availments, and each Lender
shall also maintain records relating to Bankers' Acceptances that it has
accepted, the Issuing Lender shall maintain records relating to L/Cs it has
issued and the Overdraft Lender shall maintain records relating to all
Overdraft Availments it has made. The records maintained by each Lender shall
constitute, in the absence of manifest error, prima facie evidence of the
indebtedness of the applicable Borrower to that Lender in respect of Advances
it has made and all details relating thereto. The failure of the Agent or any
Lender to correctly record any such amount or date shall not, however,
adversely affect the obligation of a Borrower to pay amounts due hereunder to
the Lenders in accordance with this Agreement.
5.3 Co-ordination of Prime Rate, Base Rate and LIBOR Advances
Each Lender shall advance its Proportionate Share of each Prime Rate
Advance, Base Rate Advance (other than a deemed Prime Rate Advance, Base Rate
Advance or an Overdraft Availment) and LIBOR Advance in accordance with the
following provisions:
(a) the Agent shall advise each Lender of its receipt of a notice
from a Borrower pursuant to Section 5.28, on the day such
notice is received and shall, as soon as possible, advise
each Lender of such Lender's Proportionate Share of any
Advance requested by the notice and, as applicable, the Prime
Rate, Alternate Base Rate Canada, the U.S. Alternate Base
Rate, or the LIBO Rate applicable to such Advance;
(b) each Lender shall deliver or otherwise remit its
Proportionate Share of the Advance to the Agent not later
than 12:00 noon. (Toronto time) on the Drawdown Date;
(c) when the Agent determines that all the conditions precedent
to an Advance specified in this Agreement have been met, it
shall advance to the applicable Borrower the amount delivered
by each Lender by crediting the appropriate Designated
Account, but if the conditions precedent to the Advance are
not met by 2:30 p.m. (Toronto time) on the Drawdown Date, the
Agent shall return the funds to the Lenders or invest them in
an overnight investment as orally instructed by each Lender
until such time as the Advance is made; and
(d) if the Agent determines that a Lender's Proportionate Share
of an Advance would not be a whole multiple of Cdn. $100,000
or U.S. $100,000, as the case may be, the amount to be
advanced by that Lender may be increased or reduced by the
Agent in its sole discretion to the nearest whole multiple of
Cdn. $100,000 or U.S. $100,000, as the case may be.
5.4 Form of L/Cs and Maturity of L/Cs
(a) All L/Cs shall be issued by the Issuing Lender in accordance with
its customary practice, in form and substance satisfactory to the Issuing
Lender, and the applicable Borrower shall execute all such indemnity and/or
reimbursement agreements in connection therewith as the Issuing Lender
customarily requires, in form and substance satisfactory to the Issuing Lender.
(b) Each L/C shall have a term which is not more than 365 days after
its issuance date or renewal date, but no L/C may have an expiry date on a day
which is not a Business Day or which is after the Maturity Date. An L/C may be
renewed by the applicable Borrower subject to complying with the terms of this
Agreement applicable to an Advance by way of L/C.
5.5 Payment of L/C Commissions and the Fronting Fee
(a) Upon the issuance or renewal by the Issuing Lender of an L/C, the
Borrower for whose benefit or at whose request such L/C was issued or renewed
shall pay to the Agent at the applicable Branch of Account the commission
calculated at the rate specified in Section 2.4 upon the face amount of such
L/C on the basis of the actual number of days to elapse from and including the
date of its issuance or renewal, as applicable, up to but excluding its expiry
date calculated on the basis of a year of 365 or 366 days, as applicable. The
applicable Borrower shall be entitled to a refund of the unearned portion of
the commission for an L/C in the event of the cancellation and return thereof
to the Issuing Lender or the reduction of the face amount thereof (other than a
reduction resulting from a drawing on such L/C), which refund shall be payable
by the Agent to such Borrower following receipt thereof from the Lenders and
after such cancellation and return or reduction, as applicable, subject to
payment of a minimum fee in all cases of $100.
(b) The Fronting Fee shall be calculated on the basis of the actual
number of days to elapse from and including the date of issuance or renewal, as
applicable, of an L/C to but excluding its expiry date calculated on the basis
of a year of 365 or 366 days, as applicable, and shall be paid to the Issuing
Lender on the date of issuance or renewal of such L/C and shall be
non-refundable in whole or in part.
5.6 Payment of L/Cs and Participation by Lenders in L/Cs
(a) Each Lender shall be deemed to have purchased, without recourse, a
participation from the Issuing Lender in each L/C issued by the Issuing Lender,
in each case in an amount equal to such Lender's Proportionate Share of each
such L/C. Without limiting the scope and nature of each Lender's participation
in each L/C issued by the Issuing Lender, to the extent that the Issuing Lender
has not been reimbursed by the relevant Borrower for any amount required to be
disbursed by the Issuing Lender under or in connection with an L/C, each Lender
shall pay to the Issuing Lender its Proportionate Share of such unreimbursed
amount. In the event that the Issuing Lender is required to disburse an amount
under an L/C, the Issuing Lender shall notify the Agent who shall in turn, as
soon as possible, notify the Lenders and each Lender shall forthwith deliver
its Proportionate Share of the amount of the payment by the Issuing Lender to
the Agent who will forthwith deliver all such amounts received from the Lenders
to the Issuing Lender. The obligation of each Lender to so reimburse the
Issuing Lender shall be absolute and unconditional as a primary obligor and not
as a surety and shall not be affected by the occurrence of a Pending Event of
Default, an Event of Default, an order or judgment restricting payment by the
Issuing Lender in accordance with the L/C or extending the Issuing Lender's
liability under an L/C beyond the expiration date stated therein or any other
occurrence or event of any nature or kind. Any such reimbursement shall not
relieve or otherwise impair the obligation of a Borrower to reimburse the
Issuing Lender for all amounts arising under or in connection with any L/C,
together with interest as provided for in this Agreement. Each Lender that has
reimbursed the Issuing Lender pursuant to this Section for its Proportionate
Share of any payment made by the Issuing Lender under an L/C shall thereupon
acquire a participation, to the extent of such reimbursement, in the claim of
the Issuing Lender against the applicable Borrower in respect of amounts owing
under or in connection with such L/C. In the event that a Lender fails to
reimburse the Issuing Lender under the terms provided in this Section, the
Issuing Lender shall also be entitled to recover from such Lender interest on
such amount, from and including the date on which such Lender was required to
provide payment to but excluding the date such payment is provided for by such
Lender at the rate of interest per annum which would otherwise be applicable at
such time to Prime Rate Advances, if the L/C is denominated in Canadian
Dollars, Base Rate Canada Advances, if the L/C is denominated in U.S. Dollars
and issued at the request of or for the benefit of Maxxcom, Base Rate U.S.
Advances, if the L/C is denominated in U.S. Dollars and issued at the request
of or for the benefit of Maxxcom US, in each case compounded monthly, and all
interest thereon, both before and after demand, default and judgment.
(b) The Borrower for whose account the relevant L/C was issued shall
provide for the payment to the Agent at the applicable Branch of Account of the
full amount of the relevant L/C on the earlier of the date on which the Agent,
on behalf of the Lenders, gives notice pursuant to Section 8.2 or the date on
which such Borrower is otherwise required to provide Collateral under Section
8.3, or the date on which the Issuing Lender makes a payment to the beneficiary
of the L/C, unless the amount paid by the Issuing Lender is less than the full
amount of the L/C, in which case only the amount paid by the Issuing Lender
need be provided for. The Agent on behalf of the Issuing Lender shall be
entitled to recover interest from the applicable Borrower upon any monies,
payment of which has not been provided for by such Borrower in accordance with
this Section, from and including the date on which such Borrower is required to
provide for payment to but excluding the date such payment at the rate of
interest per annum which would otherwise be applicable at such time to Prime
Rate Advances, if the L/C is denominated in Canadian Dollars, the Alternate
Base Rate Canada, if the L/C is denominated in U.S. Dollars and issued at the
request of or for the benefit of Maxxcom, the U.S. Alternate Base Rate, if the
L/C is denominated in U.S. Dollars and issued at the request of or for the
benefit of Maxxcom US, in each case compounded monthly, and all interest
thereon, both before and after demand, default and judgment is provided for by
the applicable Borrower. The Agent shall pay the applicable Borrower interest
on the Collateral deposited by such Borrower in accordance with Section 11.20.
(c) The obligation of a Borrower to reimburse the Agent on behalf of
the Issuing Lender for a payment to a beneficiary of an L/C shall survive the
termination of this Agreement and shall, except for matters arising from the
Issuing Lender's wilful misconduct or negligence, be absolute and unconditional
and shall not be reduced by a demand or other request for payment of the L/C (a
"Demand") paid or acted upon being invalid, insufficient, fraudulent or forged,
or be subject to any defence or be affected by any right of set-off,
counterclaim or recoupment which any Borrower or Restricted Party may now or
hereafter have against the beneficiary, the Issuing Lender, the Agent, and
other Lender or any other Person for any reason whatsoever, including the fact
that the Issuing Lender or its correspondents paid a Demand or Demands (if
applicable) aggregating up to the amount of the L/C notwithstanding any
contrary instructions from a Borrower or Restricted Party, as applicable, to
the Issuing Lender or the Agent or the occurrence of any event including, but
not limited to, the commencement of legal proceedings to prohibit payment by
the Issuing Lender of a Demand. Any action, inaction or omission taken or
suffered by the Issuing Lender or by the Issuing Lender's correspondents under
or in connection with an L/C or any Demand, if in good faith and in conformity
with foreign or Canadian laws, regulations or customs applicable thereto shall
be binding on each of the Borrowers, the Restricted Parties and their
respective Subsidiaries and shall not place the Agent, the Issuing Lender or
any of its correspondents under any resulting liability to the Borrowers, the
Restricted Parties and their respective Subsidiaries, or any of them. Without
limiting the generality of the foregoing, the Issuing Lender and its
correspondents may receive, accept, or pay as complying with the terms of any
L/C, any Demand otherwise in order which may be signed by, or issued to, any
administrator, executor, trustee in bankruptcy, receiver or other Person acting
as the representative of, or in place of, the beneficiary. Each of the
Borrowers and the Restricted Parties party to this Agreement covenants that, in
the absence of fraud on the part of the beneficiary of an L/C, it will not take
any steps, issue any instructions to the Issuing Lender or any of its
correspondents or institute any proceedings intended to derogate from the right
or ability of the Issuing Lender or its correspondents to honour or pay any
Demand.
5.7 Form of Bankers' Acceptances
(a) To facilitate the acceptance of Bankers' Acceptances hereunder,
Maxxcom shall from time to time as required by the Agent, provide the Agent
with an appropriate number of executed drafts drawn in blank by Maxxcom in the
form prescribed by each BA Lender. The Agent shall distribute such executed
drafts to the BA Lenders. Maxxcom may, at its option, execute any draft by the
facsimile signatures of any two authorized signing officers and Maxxcom and the
Agent and each of the BA Lenders are hereby authorized to accept or pay, as the
case may be, any draft of Maxxcom which purports to bear such facsimile
signatures notwithstanding that any such individual has ceased to be an
authorized signing officer of Maxxcom. Any such draft or Bankers' Acceptance
shall be as valid as if it were signed by an authorized signing officer of
Maxxcom at the date of issue of such Bankers' Acceptance. Any such draft or
Bankers' Acceptance may be dealt with by the Agent or any BA Lender to all
intents and purposes and shall bind Maxxcom as if duly signed in the signing
officer's own handwriting and issued by Maxxcom, and Maxxcom shall hold the
Agent and each BA Lender harmless and indemnified against all loss, costs,
damages and expenses arising out of the payment or negotiation of any such
draft or Bankers' Acceptance. No BA Lender shall be liable for its failure to
accept a Bankers' Acceptance as required hereunder if the cause of such failure
is, in whole or in part, due to the failure of a Maxxcom to provide executed
drafts to the Agent on a timely basis.
(b) The receipt by the Agent of a request for an Advance by way of
Bankers' Acceptances shall be each BA Lender's sufficient authority to
complete, and each BA Lender shall, subject to the terms and conditions of this
Agreement, complete the pre-signed forms of drafts in accordance with such
request and the advice of the Agent given pursuant to Section 5.12, and the
drafts so completed shall thereupon be deemed to have been presented for
acceptance.
5.8 Bankers' Acceptances - Schedule 1 BA Reference Lenders
(a) If the Commitment of any Schedule 1 BA Reference Lender terminates
(otherwise than on termination of the entire Commitment hereunder) or is fully
assigned pursuant to the provisions of this Agreement, that Lender shall
thereupon cease to be a Schedule 1 BA Reference Lender.
(b) If at any time any Schedule 1 BA Reference Lender is no longer a
BA Lender, the applicable Schedule 1 BA Discount Rate hereunder shall be
determined on the basis of the discount rate provided by or applicable to the
remaining Schedule 1 BA Reference Lenders.
(c) If only one Lender is a Schedule 1 BA Lender, that Schedule 1 BA
Lender shall be deemed to be the Schedule 1 BA Reference Lender and any
applicable Schedule 1 BA Discount Rate hereunder shall be determined on the
basis of the discount rate provided by or applicable to that Schedule 1 BA
Lender.
5.9 Bankers' Acceptances - Schedule 2 BA Reference Lenders
(a) If more than one Lender is a Schedule 2 BA Lender, Maxxcom and the
Agent shall each designate a different Schedule 2 BA Lender to be a Schedule 2
BA Reference Lender for the purposes of this Agreement.
(b) If the Commitment of any Schedule 2 BA Reference Lender terminates
(otherwise than on termination of the entire Commitment hereunder) or is fully
assigned pursuant to the provisions of this Agreement, that Lender shall
thereupon cease to be a Schedule 2 BA Reference Lender. In that event, the
Agent (if such Schedule 2 BA Reference Lender was originally designated by the
Agent) or Maxxcom, by notice to the Agent (if such Schedule 2 BA Reference
Lender was originally designated by Maxxcom), shall designate another Schedule
2 BA Lender as a Schedule 2 BA Reference Lender.
(c) If at any time any Schedule 2 BA Reference Lender is no longer a
BA Lender, the Person that originally designated that Schedule 2 BA Reference
Lender shall have the right to designate in a timely manner another Schedule 2
BA Lender as a Schedule 2 BA Reference Lender, failing which the applicable
Schedule 2 BA Discount Rate hereunder shall be determined on the basis of the
discount rate provided by the remaining Schedule 2 BA Reference Lender.
(d) If only one Lender is a Schedule 2 BA Lender, that Schedule 2 BA
Lender shall be deemed to be the Schedule 2 BA Reference Lender and any
applicable Schedule 2 BA Discount Rate hereunder shall be determined on the
basis of the discount rate provided by that Schedule 2 BA Lender. In the event
that no Lender is a Schedule 2 BA Lender, any applicable Schedule 2 BA Discount
Rate hereunder shall be determined on the basis of the Schedule 1 BA Discount
Rate.
5.10 Purchase of Bankers' Acceptances
Each BA Lender shall, on each Drawdown Date, purchase the Bankers'
Acceptances issued by Maxxcom and accepted by it on such Drawdown Date. Each
such BA Lender shall be entitled to hold, sell or further discount each such
Bankers' Acceptance.
5.11 Size and Maturity of Bankers' Acceptances and Rollovers
Each Advance of Bankers' Acceptances (which shall include Notional
Bankers' Acceptances, if applicable) shall be in an aggregate amount of not
less than Cdn. $2,000,000 and in a whole multiple of Cdn. $100,000 (which
minimum amounts may include BA Equivalent Loans, if applicable), and each
Bankers' Acceptance (and Notional Bankers' Acceptance, if applicable) shall be
in the amount of Cdn. $100,000 or whole multiples thereof. Each Bankers'
Acceptance (and Notional Bankers' Acceptance, if applicable) shall have a term
which is not less than 30 days nor more than 180 days after the date of
acceptance of the draft by a Lender, but no Bankers' Acceptance or BA
Equivalent Loan may mature on a date which is not a Business Day or on a date
which is later than the date on which the principal amount of the Credit is
required to be reduced (in whole or in part) if that would adversely affect the
applicable Borrower's ability to cause the reduction of the Credit. The face
amount at maturity of a Bankers' Acceptance or a Notional Bankers' Acceptance,
as the case may be, may be renewed as a Bankers' Acceptance or a BA Equivalent
Loan, as applicable, or converted into another form of Advance permitted by
this Agreement.
5.12 Co-ordination of BA Advances
Each Lender shall advance its Proportionate Share of each Advance by
way of Bankers' Acceptances in accordance with the provisions set forth below.
(a) The Agent, promptly following receipt of a notice from
Maxxcom pursuant to Section 5.28 requesting an Advance by way
of Bankers' Acceptances, shall advise each BA Lender of the
aggregate face amount of the Bankers' Acceptances to be
accepted and purchased by it, advise each Non BA Lender of
the face amount of its Notional Bankers' Acceptance, and
advise such Lenders of the Schedule 1 BA Discount Rate or the
Schedule 2 BA Discount Rate, as applicable. The aggregate
face amount of Bankers' Acceptances to be accepted and
purchased by each BA Lender, and the face amount of the
Notional Bankers' Acceptance of each Non BA Lender, shall be
determined by the Agent by reference to the respective
Commitments of the Lenders, except that, if the face amount
of a Bankers' Acceptance in the case of a BA Lender or the
face amount of the Notional Bankers' Acceptance used to
determine the amount of a BA Equivalent Loan in the case of a
Non BA Lender would not be Cdn. $100,000 or a whole multiple
thereof, the face amount shall be increased or reduced by the
Agent in its sole discretion to the nearest whole multiple of
Cdn. $100,000.
(b) Whenever Maxxcom requests an Advance that includes Bankers'
Acceptances, each Non BA Lender shall, in lieu of accepting
its pro rata amount of such Bankers' Acceptances, make
available to Maxxcom on the Drawdown Date a loan (a "BA
Equivalent Loan") in Canadian Dollars in an amount equal to
the Schedule 2 BA Discount Proceeds of the Bankers'
Acceptances (which Bankers' Acceptances are referred to
herein collectively as the "Notional Bankers' Acceptances")
such Non BA Lender would have been required to accept on the
Drawdown Date if it were a BA Lender. Each Non BA Lender
shall also be entitled to deduct from the BA Equivalent Loan
an amount equal to the Bankers' Acceptance Fee that would
have been applicable to a Notional Bankers' Acceptance had it
been a Bankers' Acceptance.
(c) Information concerning the term and maturity date (which
shall be identical for all BA Lenders in respect of any
particular Advance) for Bankers' Acceptances (and BA
Equivalent Loans, if applicable) shall be provided by Maxxcom
to the Agent in the notice required to be delivered under
Section 5.28.
(d) Each Lender shall transfer to the Agent at the Branch of
Account for value on each Drawdown Date immediately available
Canadian Dollars in an aggregate amount equal to the amount
of each BA Equivalent Loan (net of the applicable Bankers'
Acceptance Fee in respect of such BA Equivalent Loan) to be
made by it on such Drawdown Date, or the BA Discount Proceeds
of all Bankers' Acceptances accepted by it on such Drawdown
Date, net of the applicable Bankers' Acceptance Fee in
respect of such Bankers' Acceptances. Provided that no costs
in excess of costs associated with payment at the Branch of
Account would be incurred by Maxxcom or any of the Lenders,
the Agent may designate such other offices in Toronto as it
may see fit for the purposes referred to in the preceding
sentence. The Agent shall make such amounts received by it
from the Lenders as aforesaid available to Maxxcom by
depositing the same for value on the applicable Drawdown Date
to the applicable Designated Account.
5.13 Payment of Bankers' Acceptances
Maxxcom shall provide for the payment to the Agent at the Branch of
Account for the account of each applicable BA Lender of the full face amount of
each Bankers' Acceptance on the earlier of (a) its date of maturity; and (b)
the date on which the Agent, on behalf of the Lenders, gives notice pursuant to
Section 8.2 or the date on which Maxxcom is otherwise required to provide
Collateral under Section 8.3 (herein, the "notice date") . Providing that all
conditions to an Advance hereunder have been satisfied, Maxxcom shall be
entitled to satisfy its payment obligations under the foregoing clause (a) by
arranging for a rollover or a conversion of each such Bankers' Acceptance to
another form of Advance permitted under this Agreement. The BA Lenders shall be
entitled to recover interest from Maxxcom at a rate of interest per annum equal
to the rate applicable to Prime Rate Advances, compounded monthly, upon any
amount payment of which has not been provided for by Maxxcom in accordance with
this Section 5.13. Interest shall be calculated from and including, as
applicable, the notice date or the date of maturity of such Bankers' Acceptance
up to but excluding the date such payment, and all interest thereon, both
before and after demand, default and judgment, is provided for by Maxxcom.
5.14 Payment of BA Equivalent Loan
On the date of maturity of each BA Equivalent Loan, Maxxcom shall pay
to the Agent for the account of the applicable Non BA Lender, Canadian Dollars
in an amount equal to the full face amount of the Notional Bankers' Acceptance
relating to such BA Equivalent Loan in satisfaction of the principal amount of
such BA Equivalent Loan and all interest accrued thereon to the maturity date
thereof. Providing that all conditions to an Advance hereunder have been
satisfied, Maxxcom shall be entitled to satisfy its payment obligations under
this Section 5.14 by arranging for a rollover or a conversion of each such BA
Equivalent Loan to another form of Advance permitted under this Agreement. The
Non BA Lenders shall be entitled to recover interest from Maxxcom at a rate of
interest per annum equal to the rate applicable to Prime Rate Advances,
compounded monthly, upon any amount the payment of which has not been provided
for by Maxxcom in accordance with this Section 5.14. Interest is calculated
from and including the date of maturity of such BA Equivalent Loan up to but
excluding the date such payment and all interest thereon, both before and after
demand, default and judgment, is provided for by Maxxcom.
5.15 Deemed Advance
Any amount which a Lender pays to any third party on or after the date
of maturity of a Bankers' Acceptance in satisfaction thereof which has not been
provided for by Maxxcom in accordance with Section 5.13 or (without
duplication) any amount which is owing to a Lender in respect of a Bankers'
Acceptance or BA Equivalent Loan pursuant to Sections 5.13 or 5.14, as
applicable, on or after the date of maturity of such Bankers' Acceptance or BA
Equivalent Loan, as applicable, shall be deemed to be a Prime Rate Advance to
Maxxcom under this Agreement. Interest shall be payable on such Prime Rate
Advances in accordance with the terms hereof applicable to Prime Rate Advances.
5.16 Waiver
Maxxcom shall not claim from any BA Lender any days of grace for the
payment at maturity of any Bankers' Acceptance presented to and accepted or
purchased by such BA Lender pursuant to this Agreement. Maxxcom hereby waives
any defence to payment which might otherwise exist if for any reason a Bankers'
Acceptance shall be held by a BA Lender in its own right at the maturity
thereof, and the doctrine of merger shall not apply to any Bankers' Acceptance
that is at any time held by a Lender in its own right.
5.17 Degree of Care
Any executed drafts to be used as Bankers' Acceptances which are
delivered by Maxxcom to the Agent or a BA Lender shall be held in safekeeping
with the same degree of care as if they were the Agent's or such BA Lender's
property, and shall be kept at the place at which such drafts are ordinarily
held by such Lender.
5.18 Indemnity
In addition to payment of each Bankers' Acceptance issued by it in
accordance with the terms hereof, Maxxcom shall indemnify and hold the Lenders,
and each of them, harmless from any loss or expense with respect to any such
Bankers' Acceptance dealt with by any BA Lender except Maxxcom shall not be
obliged to indemnify a BA Lender for any loss or expense caused by the
negligence or wilful misconduct of that BA Lender.
5.19 Power of Attorney re Bankers' Acceptances
Maxxcom hereby appoints each of the BA Lenders (acting by an
authorized signing officer) as attorney of Maxxcom: (a) to sign for and on
behalf and in the name of Maxxcom as drawer and, if applicable, as endorser of
drafts drawn on a BA Lender to or to the order of CDS & Co (or other nominee
name of The Canadian Depositary for Securities Limited) or payable to or the
order of Maxxcom; (b) to fill in the amount, date and maturity date of each
such draft; and (c) to discount and/or deliver such drafts which have been
accepted by a BA Lender; provided that such acts in each case are to be
undertaken by a BA Lender in accordance with the instructions given to the
Agent by or on behalf of Maxxcom in accordance with this Section. The signature
of any authorized signatory of a BA Lender may be mechanically or
electronically reproduced in facsimile on drafts in accordance with this
Section and such facsimile signatures shall be binding and effective as if they
had been manually executed by such authorized signatory of a BA Lender.
Maxxcom, in each notice to the Agent requesting an Advance by way of Bankers'
Acceptances hereunder, shall include instructions to the BA Lenders as to
whether the Bankers' Acceptances to be accepted by the BA Lenders in connection
with the Advance requested are to be, as applicable, executed, completed,
endorsed, discounted and/or delivered by each such BA Lender on behalf of
Maxxcom. The instructions included in any such notice to the Agent shall be
deemed to constitute the authorization and instructions of Maxxcom to each BA
Lender to complete and endorse drafts in accordance therewith and the request
of each BA Lender to accept such drafts and deliver same against payment
therefore in accordance with the procedures herein. Notwithstanding the
foregoing, no BA Lender shall be obligated to accept any drafts except in
accordance with the provisions of this Agreement. Each BA Lender is hereby
authorized to act on behalf of Maxxcom upon and in compliance with instructions
communicated to the Agent as provided herein if the Agent reasonably believe
such instructions to be genuine.
5.20 Obligations Absolute
The obligations of Maxxcom with respect to Bankers' Acceptances under
this Agreement shall be unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement under all
circumstances, including, without limitation, the following circumstances:
(a) any lack of validity or enforceability of any draft accepted
by a BA Lender as a Bankers' Acceptance; or
(b) the existence of any claim, set-off, defence or other right
which Maxxcom may have at any time against the holder of a
Bankers' Acceptance, a Lender or any other Person, whether in
connection with this Agreement or otherwise.
5.21 Shortfall on Drawdowns, Rollovers, and Conversions
Maxxcom agrees that:
(a) the difference between the actual proceeds of a Bankers'
Acceptance or BA Equivalent Loan and the amount required to
pay a maturing Bankers' Acceptance or BA Equivalent Loan, if
a Bankers' Acceptance or Notional Bankers' Acceptance is
being rolled over; and
(b) the difference between the actual proceeds of a Bankers'
Acceptance or BA Equivalent Loan and the amount required to
repay any Advance which is being converted to a Bankers'
Acceptance or BA Equivalent Loan;
shall be funded and paid by Maxxcom from its own resources, by 11:00 a.m. on
the day of the Advance or may be advanced as a Prime Rate Advance if the amount
of the Credit is not exceeded as a result and Maxxcom is otherwise entitled to
an Advance under the Credit.
5.22 Circumstances Making Bankers' Acceptances Unavailable
If any BA Lender determines in good faith, which determination shall be final,
conclusive and binding upon Maxxcom, and notifies Maxxcom that, by reason of
circumstances affecting the money market, there is no market for Bankers'
Acceptances, then upon written notice by the Agent to Maxxcom:
(a) the right of Maxxcom to request an Advance by way of Bankers'
Acceptance from such BA Lender shall be suspended until such
BA Lender determines that the circumstances causing such
suspension no longer exist and such BA Lender so notifies the
Agent; and
(b) any notice of Advance by way of Bankers' Acceptance which is
outstanding shall, in the case of such BA Lender, be deemed
to be a request for a Prime Rate Advance.
At any time when (and for so long as) the right of Maxxcom to request Advances
by way of Bankers' Acceptances is suspended in accordance with the foregoing,
Maxxcom shall not have the right to request a BA Equivalent Loan.
5.23 LIBOR Periods
Each Borrower may select, by irrevocable prior written notice to the
Agent, LIBOR Periods of 1, 2, 3 or 6 months to apply to any particular LIBOR
Advance. LIBOR Periods of other lengths shall also be available at the
discretion of the Lenders from time to time. No LIBOR Period may end on a date
which is not a Business Day, or after the date on which the principal amount of
the Credit is required to be reduced (in whole or in part) if that would
adversely affect the applicable Borrower's ability to cause the reduction of
the Credit. Each Borrower shall select and give 3 days prior written notice to
the Agent of the LIBOR Period for a LIBOR Advance which shall commence upon the
making of the LIBOR Advance or at the expiry of any outstanding LIBOR Period
applicable to a LIBOR Advance that is being rolled over. If a Borrower fails to
select and give the Agent 3 days prior written notice of a LIBOR Period for a
LIBOR Advance in accordance with Section 5.28, the Lenders shall be deemed to
have made a Base Rate Canada Advance, in the case of Maxxcom, or a Base Rate
U.S. Advance, in the case of Maxxcom US, to such Borrower to replace the
maturing LIBOR Advance.
5.24 Termination of LIBOR Advances
If at any time a Lender determines (which determination shall be conclusive and
binding on the Borrowers) that:
(a) adequate and reasonable means do not exist for ascertaining,
as applicable, the LIBO Rate applicable to a LIBOR Advance;
(b) the LIBO Rate as applicable, does not adequately reflect the
effective cost to the Lender, on a reasonable basis, of
making or maintaining a LIBOR Advance; or
(c) it cannot readily obtain or retain funds in the London
interbank market in order to fund or maintain any LIBOR
Advance or cannot otherwise perform its obligations hereunder
with respect to any LIBOR Advance;
then such Lender shall provide written notice thereof to the Agent,
and the Agent shall promptly provide such written notice to Maxxcom,
whereupon:
-
(d) the right of any Borrowers to request LIBOR Advances from
that Lender, and any obligation of the Lender to make LIBOR
Advances shall be and remain suspended until such Lender
notifies the Agent, and the Agent notifies Maxxcom, that any
condition causing such determination no longer exists; and
(e) if the Lender is prevented from maintaining a LIBOR Advance,
the Borrowers shall, at their option, either repay the
applicable LIBOR Advance to that Lender or convert the
applicable LIBOR Advance into another form of Advance which
is permitted by this Agreement, and the Borrowers shall be
responsible for any loss or expense that the Lender incurs as
a result, including breakage costs, notwithstanding that such
repayment or conversion does not occur on the last day of a
LIBOR Period.
5.25 Overdraft Availments
There shall at all times be an Overdraft Lender. Upon presentation to
the Overdraft Lender of any cheque or other item drawn by Maxxcom on any of its
Canadian Dollar or U.S. Dollar current accounts at a branch of the Overdraft
Lender, which, when charged against the applicable account, creates or
increases an overdraft in that account, the Overdraft Lender shall pay the
cheque or other item provided that, after doing so:
(a) the aggregate amount of outstanding Overdraft Availments made
to Maxxcom does not exceed the Overdraft Availment Limit;
(b) the aggregate amount of the Overdraft Availments, together
with all other Advances under the Credit in favour of
Maxxcom, do not exceed the Revolving Credit Sublimit relating
to Maxxcom; and
(c) the aggregate amount of the Overdraft Availments, together
with all other Advances under the Credit, do not exceed the
Credit Limit.
Overdraft Availments to Maxxcom shall be deemed to be Prime Rate Advances if
made in Canadian Dollars and to be Base Rate Canada Advances if made in U.S.
Dollars. The Overdraft Lender shall not make any Overdraft Availment after it
has received a Cessation Notice, unless the Agent, on the instructions of the
Majority Lenders, subsequently notifies the Overdraft Lender that the Event of
Default for which the Cessation Notice was issued is no longer continuing and
that the Overdraft Lender shall resume making Overdraft Availments. The
Overdraft Lender shall not be required to make an Overdraft Availment at any
time an Event of Default or Pending Event of Default has occurred and is
continuing but may do so without prejudice to any of its rights hereunder
against any of the Restricted Parties or the Lenders. In the event that the
Overdraft Lender has opted to discontinue making Overdraft Availments, it shall
immediately notify Maxxcom and the Agent to such effect. The Overdraft Lender
shall, if such Event of Default or Pending Event of Default has been cured, and
no other Event of Default has occurred and is continuing, and subject to the
other provisions set forth in this Agreement, resume making Overdraft
Availments. If Maxxcom shall not have repaid an Overdraft Availment within 7
days of such Overdraft Availment being made, each Lender shall be deemed to
have purchased, without recourse, a participation from the Overdraft Lender in
the Overdraft Availments made by the Overdraft Lender outstanding at such time,
in each case in an amount equal to such Lender's Proportionate Share of the
aggregate amount of such outstanding Overdraft Availments, and otherwise upon
the terms and conditions set forth in Section 5.26.
5.26 Participation by the Lenders in Overdraft Availments
Upon receipt by the Overdraft Lender of a Cessation Notice or receipt
by the Agent of a notice from the Overdraft Lender that it has discontinued
making Overdraft Availments, each Lender shall be deemed to have purchased,
without recourse, a participation from the Overdraft Lender equal to such
Lender's Proportionate Share of the aggregate amount of all Overdraft
Availments made by the Overdraft Lender outstanding, less any amounts repaid to
the date of such Cessation Notice. All such unpaid Overdraft Availments shall
form part of the Obligations and shall be deemed to be an Advance made by each
Lender acquiring a participation therein. Without limiting the scope and nature
of each Lender's participation in the aggregate amount of outstanding Overdraft
Availments, each Lender shall, forthwith upon notice by the Agent, pay to the
Agent on behalf of the Overdraft Lender its Proportionate Share of such
aggregate amount. The obligation of each Lender to so pay to the Agent on
behalf of the Overdraft Lender shall be absolute and unconditional as a primary
obligor, and not as a surety, and shall not be affected by the occurrence of a
Pending Event of Default, an Event of Default or by any other occurrence or
event of any nature or kind. Any such payment shall in no way relieve or
otherwise impair the obligation of Maxxcom to repay any Overdraft Availment
together with interest as provided for in this Agreement. Each Lender that has
made a payment to the Agent on behalf of the Overdraft Lender pursuant to this
Section shall thereupon acquire a participation, to the extent of such payment,
in the claim of the Overdraft Lender against Maxxcom together with interest as
provided for in this Agreement. In the event that a Lender fails to reimburse
the Overdraft Lender under the terms provided in this Section, the Overdraft
Lender shall also be entitled to recover from such Lender interest on such
amount, from and including the date on which such Lender was required to
provide payment to but excluding the date such payment is provided for by such
Lender at the rate of interest per annum which would otherwise be applicable to
Prime Rate Advances, if the Overdraft Availment is denominated in Canadian
Dollars, or Base Rate Canada Advances, if the Overdraft Availment is
denominated in U.S. Dollars, compounded monthly, and all interest thereon, both
before and after demand, default and judgment.
5.27 Conversions
Subject to the other terms of this Agreement, a Borrower may from time
to time convert all or any part of the outstanding amount of any Advance into
another form of Advance permitted by this Agreement.
5.28 Notice of Advances and Payments
(a) Other than in respect of an Overdraft Availment, each
Borrower shall give the Agent irrevocable written notice, in
the form attached as Schedule H to this Agreement, of any
request for an Advance under the Credit. Each Borrower shall
also give the Agent irrevocable written notice of any
repayment (other than a mandatory repayment) or prepayment of
any Advance under the Credit.
(b) Such notice shall be given 2 Business Days prior to the date
of any Advance and 1 Business Day prior to the date of any
payment, except that notice shall be given three Business
Days prior to the date of (i) any proposed LIBOR Advance or
payment of LIBOR Advance; and (ii) any proposed Advance by
way of Bankers' Acceptances or payment of Bankers'
Acceptances. In addition, notice shall be given in respect of
an Advance by way of L/C on the third Business Day prior to
the date of the proposed Advance or at such earlier time as
the Issuing Lender may reasonably require so that it has
sufficient time to review the proposed form of L/C. Any
permanent reduction, as contemplated by Section 2.7, of the
Credit (other than a reduction resulting from a mandatory
repayment) shall only be effective on 3 Business Days notice.
(c) Each such notice shall be given not later than 11:00 a.m.
(Toronto time) on the date for notice. Payments (other than
those being made solely from the proceeds of rollovers and
conversions) must be made prior to 11:00 a.m. (Toronto time)
on the date for payment. If a notice or payment is not given
or made by those times, it shall be deemed to have been given
or made on the next Business Day, unless each Lender affected
by the late notice or payment agrees, in its sole discretion,
to accept a notice or payment at a later time as being
effective on the date it is given or made.
(d) Notices given under this Section 5.28 shall be irrevocable.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES
6.1 Representations and Warranties
Each of the Borrowers (on behalf of itself and each of its direct and
indirect Restricted Parties) and each Guarantor (on its own behalf only)
represents and warrants to the Lenders that:
(a) it is a duly incorporated and validly existing corporation
(or other body corporate) and has the requisite corporate (or
other analogous) power and authority to enter into and
perform its obligations under all Credit Documents to which
it is a party, to own its Property and to conduct the
business in which it is currently engaged;
(b) it holds all Permits required to enter into (as of the date
hereof) and to perform its obligations under all Credit
Documents to which it is a party other than Permits, the
absence of which does not materially and adversely affect the
Financial Condition (considered as a whole) of any such
Borrower or Restricted Party;
(c) it has good and marketable title to or a valid leasehold or
other interest in all property required to conduct the
business in which it is currently engaged;
(d) it does not own or lease any real property other than those
locations described in Schedule I;
(e) the entering into and the performance by it of the Credit
Documents to which it is a party have been duly authorized by
all necessary corporate (or other analogous) action on its
part, are not in violation of its Constating Documents or any
Applicable Law, and are not in violation of any Contract to
which it is a party, other than a violation of any Contracts
that would not, in the aggregate, have a material and adverse
effect on its ability to perform its obligations under any
Credit Document to which it is a party;
(f) neither its Constating Documents nor any shareholder
agreement to which it is a party (i) restrict the power of
its directors (or other analogous governing body) to borrow
money upon its credit, give a guarantee of the Obligations,
or encumber all or any of its Property now or hereafter
leased, owned or acquired to secure the Obligations or such
guarantee, other than such restrictions as described on
Schedule J, or (ii) restrict the power of its directors to
consent to any Security, all of which under both (i) and (ii)
will have been complied with as at, as applicable, the date
of delivery of any Security or the Closing Date in relation
to Credit Documents to which it is a party;
(g) the Credit Documents to which it is a party have been duly
executed and delivered and constitute legal, valid and
binding obligations enforceable against it in accordance with
their respective terms (subject to the effect of any
applicable bankruptcy, insolvency, reorganization,
liquidation or other similar law affecting creditors' rights
generally and the availability of equitable remedies);
(h) it is not liable for and has not incurred any Debt other than
Permitted Indebtedness;
(i) all loans and other financial assistance made to or in favour
of any Shareholder of any Restricted Party existing as at 31
May 2001 are described in Schedule K;
(j) except as described in Schedule K, there are no loans or
other financial assistance made to or in favour or of any
Shareholder of any Restricted Party other than Permitted
Minority Shareholder Loans;
(k) there is no litigation, arbitration or administrative
proceeding outstanding and, to its knowledge after having
made due inquiry, there are no such proceedings pending or
threatened against it which, in each case, could materially
and adversely affect its Financial Condition or its ability
to perform its obligations under the Credit Documents to
which it is a party, except as disclosed on Schedule L;
(l) no Event of Default or Pending Event of Default has occurred
and is continuing and no Event of Default or Pending Event of
Default (as defined in the Mezz Debenture) has occurred and
is continuing under the Mezz Debenture;
(m) it is not in violation of any term of its Constating
Documents and is not a party to any unanimous shareholder
agreement other than the shareholder, operating, membership,
limited liability and other agreements described in Schedule
G;
(n) it is not, to its knowledge after having made due inquiry, in
violation of any Contract, Permit or Applicable Law which is
material to its ability to own its Property or conduct its
business as presently conducted nor will its execution,
delivery and performance of any Credit Document to which it
is a party result in any such violation, except for
violations that would not have a material and adverse affect
on the Financial Condition of any Borrower or Restricted
Party;
(o) all of the financial statements which have been furnished to
the Lenders are complete and fairly present the financial
position of the Persons in respect of which they have been
prepared as of the dates referred to therein, and have been
prepared in accordance with GAAP, consistently applied;
(p) from and after the date on which the relevant Security is
delivered, the Lenders will have legal, valid and enforceable
prior ranking security upon its Property stated to be subject
to such Security, subject only to Permitted Encumbrances;
(q) its Property is not encumbered by any Encumbrance other than
a Permitted Encumbrance and it is not in default under any
such Permitted Encumbrances relating to its Property;
(r) its jurisdiction of incorporation, Property, places of
business and places from which accounts receivable are billed
are as set forth in Schedule M;
(s) as at the date hereof, its issued and outstanding Capital
Stock, and the ownership thereof, is as set forth in Schedule
N;
(t) all consents and authorizations which are necessary in
connection with the hypothecations and pledges of the Capital
Stock of the Borrowers and the Restricted Parties to the
Lenders pursuant to the Security, and the subsequent
transfers contemplated by such hypothecations and pledges,
have been obtained and are in full force and effect;
(u) each of the Restricted Parties owns or is licensed or
otherwise has the right to use all of the Intellectual
Property that is necessary for the operation of its business,
without conflict with the rights of any other Person except
for Intellectual Property the failure of which to own or be
licensed or otherwise have the right to use, individually or
in the aggregate, would not be reasonably likely to impair
the business of such Restricted Party or have a material
adverse effect on the Financial Condition of such Restricted
Party;
(v) all material Intellectual Property owned or used by any
Restricted Party is subsisting, valid and enforceable;
(w) there is no individual item of Intellectual Property the loss
of which would have a material adverse effect on the
Financial Condition of any Restricted Party;
(x) its business and assets are operated in compliance with
Environmental Laws, except to the extent that non-compliance
with Environmental Laws does not materially and adversely
affect the Financial Condition of any Restricted Party;
(y) none of the Restricted Parties or any of their respective
Subsidiaries has admitted (which admission remains in effect)
its inability to pay its debts generally, is in default, as
at the Closing Date, under any one or more agreements
relating to indebtedness, or at any time after Closing Date,
under any one or more agreements relating to indebtedness in
excess of Cdn. $50,000 (or its equivalent in any applicable
currency) the effect of which default is to accelerate or to
permit the acceleration of the maturity of the indebtedness
thereunder, is a bankrupt, or is subject to any proceeding
seeking liquidation, winding-up, rearrangement, relief from
creditors or the appointment of a receiver or trustee over
any material part of its Property;
(z) during the twelve-consecutive-month period prior to the date
of the execution and delivery of this Agreement and prior to
the date of any Advance hereunder, (i) no steps have been
taken to terminate any Pension Plan (wholly or in part) other
than pursuant to Section 4041(b) of ERISA, which, if as a
result of such termination, a Borrower, or a Restricted Party
could be required to make an additional contribution to the
Pension Plan in excess of U.S. $100,000, (ii) no contribution
failure has occurred with respect to any Pension Plan
sufficient to give rise to a lien or charge under Section
302(f) of ERISA or under any applicable pension benefits laws
of any Canadian jurisdiction, (iii) no condition exists or
event or transaction has occurred with respect to any Pension
Plan which might result in the incurrence by a Borrower or a
Restricted Party of any liability, fine or penalty in excess
of U.S. $100,000, and (iv) except as disclosed in the
financial statements required to be provided pursuant to this
Agreement or as otherwise disclosed in writing from time to
time to the Agent, no Borrower, or a Restricted Party has any
contingent liability with respect to any post-retirement
benefit under a Welfare Plan, other than liability for
continuation coverage described in Part 6 of Title I of
ERISA;
(aa) no Restricted Party or Subsidiary thereof is engaged in the
business of extending credit for the purpose of purchasing or
carrying margin stock, and no proceeds of any Advance will be
used for a purpose which violates, or would be inconsistent
with, F.R.S. Board Regulation T, U or X. Terms for which
meanings are provided in F.R.S. Board Regulation T, U or X or
any regulations substituted therefor, as from time to time in
effect, are used in this Section with such meanings;
(bb) (i) the only Canadian Plans and Foreign Plans are as set
forth in Schedule O hereto; (ii) each Canadian Plan and
Foreign Plan is in compliance in all material respects with
all applicable pension benefits and tax laws; (iii) all
contributions (including employee contributions made by
authorized payroll deductions) required to be made to the
appropriate funding agency in accordance with all applicable
laws and the terms of each Canadian Plan and Foreign Plan
have been made in accordance with all applicable laws and the
terms of, as applicable, each Canadian Plan and Foreign Plan;
(iv) all liabilities under each Canadian Plan and Foreign
Plan are fully funded, on a going concern and solvency basis,
in accordance with the terms of, as applicable, the Canadian
Plans and the Foreign Plans, the requirements of applicable
pension benefits laws and of applicable regulatory
authorities and the most recent actuarial report filed with
respect to the applicable Canadian Plan or Foreign Plan or ;
and (v) no event has occurred and no conditions exist with
respect to any Canadian Plan or Foreign Plan that has
resulted or could reasonably be expected to result in any
Canadian Plan or Foreign Plan having its registration revoked
or refused for the purposes of any applicable pension
benefits or tax laws or being placed under the administration
of any relevant pension benefits regulatory authority or
being required to pay any taxes or penalties under any
applicable pension benefits or tax laws, except for any
exceptions to clauses (i) through (v) above that,
individually or in the aggregate, could not reasonably be
expected to have a material adverse effect on the Financial
Condition of the applicable Restricted Party;
(cc) except as disclosed to the Agent in writing from time to
time, but excluding purchase orders issued by it or purchase
orders received by it in the ordinary course of business, it
is not a party to any material Contract and does not hold any
material Permits which require the consent of a third party
to the assignment of the rights and benefits thereunder
pursuant to the Security where the failure to obtain same
would result in the right or such third party to terminate
such material Contract or material Permit, save for those
consents which have been obtained and are in full force and
effect and provided to the Agent;
(dd) as at the date hereof, all Deferred Purchase Price
Obligations which are outstanding or which, on a contingent
basis, may become outstanding in the future, are described in
Schedule P;
(ee) other than (i) the joint and several obligations of Maxxcom
with each of Accent Acquisition Co., FMA Acquisition Co.,
Colle & XxXxx, Inc., TC Acquisition Inc., BZ Acquisition
Inc., ET Acquisition Inc., CDI Acquisition Co., Bratskeir &
Company, Inc., CPB Acquisition Inc. and Interfocus Group
Limited to pay the applicable Earnout Amount under the
applicable Restricted Party Purchase Agreement; (ii) the
obligation of Maxxcom to cause Mackenzie Marketing, Inc. to
pay the Earnout Amount under the related Restricted Party
Purchase Agreement; (iii) the obligation of Maxxcom to
purchase the "Earnout Shares" under the Xxxxxx Xxxxxxx
Communications Inc. Restricted Party Shareholder Agreement;
and (iv) the joint and several obligations of Maxxcom with a
Guarantor to pay the applicable Earnout Amount under a
Restricted Party Purchase Agreement entered into in
connection with a Permitted Acquisition (other than Permitted
Non-Conforming Acquisitions) effected after the date hereof
or otherwise consented to by the Majority Lenders, no
Restricted Party has guaranteed payment of any Deferred
Purchase Price Obligation or Earnout Payment of any other
Restricted Party;
(ff) as at the date hereof, Permitted Acquisitions made under
Sections 1.1.126(d) and (e) since 31 March 2000 are as set
forth in Schedule S;
(gg) each of the Borrowers and the Restricted Parties has (i) duly
filed on a timely basis all returns, elections and reports
required to be filed by it and has paid, collected and
remitted all material Taxes due and payable, collectible or
remittable by it, and (ii) made adequate provision for
material Taxes payable by it for the current period and any
previous period for which tax returns are not yet required to
be filed and there are no actions, proceedings or claims
pending or, to the knowledge of any Borrower or Restricted
Party threatened, against any Borrower or Restricted Party in
respect of material Taxes (it being agreed that, for purposes
of this paragraph, the amount of a Tax is material if it
equals or exceeds Cdn. $10,000 for any Borrower or Restricted
Party or the equivalent thereof in another currency);
(hh) each of the Borrowers and the Restricted Parties has (i)
withheld from each payment made to any of its past or present
employees, officers or directors, and to any nonresident of
the country in which it is resident, the amount of all
material Taxes and other deductions required to be withheld
therefrom and has paid the same to the proper tax or other
receiving officers within the time required under any
applicable legislation, and (ii) collected and remitted to
the appropriate tax authority when required by law to do so
all material amounts collectible and remittable in respect of
goods and services tax and similar provincial or state Taxes,
and has paid all such material amounts payable by it on
account of sales Taxes including goods and services and
value-added taxes (it being agreed that, for purposes of this
paragraph, the amount of a Tax is material if it equals or
exceeds Cdn. $10,000 or the equivalent thereof in another
currency);
(ii) each Intercorporate Note is a legal, valid, binding and
enforceable obligation of each party thereto, is not in
default, and no event or circumstance has occurred or exists
which impairs the right of any party thereto to claim rights
of set-off thereunder;
(jj) each Intercorporate Note is secured by Intercorporate
Security which has been duly perfected in all relevant
jurisdictions and is a legal, valid, binding and enforceable
obligation of each party thereto and is not in default;
(kk) other than Permitted Intercorporate Debt, there is no Debt
owing between or among any of the Restricted Parties;
(ll) there are no material accounts receivable owing to it from
any Governmental Authority;
(mm) on the Closing Date (or, in the case of any Person that
becomes a party to any Credit Document at any time other than
the Closing Date, on the date such Person becomes such a
party), and immediately prior to and after giving effect to
each Advance hereunder and the use of the proceeds thereof,
(i) each American Entity (other than Xxxxxxxx Xxxxxx Xxxxx
LLC) will not have an unreasonably small capital base, (ii)
each American Entity's assets (other than Xxxxxxxx Xxxxxx
Xxxxx LLC's) will exceed its liabilities, (iii) each American
Entity (other than Xxxxxxxx Xxxxxx Xxxxx LLC) will be
solvent, will be able to pay its liabilities as they mature,
and (iv) both the fair value and fair saleable value of the
assets of each American Entity (other than Xxxxxxxx Xxxxxx
Xxxxx LLC) exceeds the liabilities, respectively, of such
American Entity;
(nn) no Restricted Party is (i) an "investment company" within the
meaning of the U.S. Investment Company Act of 1940, or (ii)
subject to regulation under the U.S. Public Utility Holding
Company Act of 1935, the U.S. Federal Power Act, the U.S.
Interstate Commerce Act, any state public utilities code, or
any other Federal or state statute or regulation limiting its
ability to incur indebtedness;
(oo) as at the date hereof, there are no documents to which any
Borrower or Restricted Party is party relating to the Mezz
Obligations other than the Mezz Debenture, Subscription
Agreement, the Warrant Agreement, the Warrants and the Mezz
Security dated or as of the date hereof;
(pp) Maxxcom is a reporting issuer under the laws of each of the
provinces of Canada and is not in default of any requirements
related thereto; and
(qq) all agreements, arrangements or transactions between Maxxcom
or its Subsidiaries, on the one hand, and any of MDC
Corporation Inc., Xxxxx Xxxxx, Nadal Financial Corporation or
any Associate of, Affiliate of or other Person not at arm's
length (as such term is construed under the Income Tax Act
(Canada)) with MDC Corporation Inc., Xxxxx Xxxxx, Nadal
Financial Corporation, on the other hand, in existence at the
date hereof are set forth on Schedule T.
6.2 Survival of Representations and Warranties
The representations and warranties made in this Agreement and, in the
case the applicable Restricted Parties, in the Restricted Party Supplemental
Agreement or Consent to Pledge to which each such Restricted Party is a party,
shall survive the execution of this Agreement and all other Credit Documents
(including, without limitation, such Restricted Party Supplemental Agreements
or Consents to Pledge), such representations and warranties shall continue and,
in the case of Restricted Parties who are party to this Agreement, be deemed to
be repeated as of the date of each Advance (including any deemed Advance) and
as of each Interest Payment Date hereunder unless expressly stated to be made
as of a specific date, and the Lenders shall be deemed to have relied upon such
representations and warranties at each such time as a condition of making an
Advance hereunder or continuing to extend the Credit hereunder.
ARTICLE 7
COVENANTS AND CONDITIONS
7.1 Positive Covenants
During the term of this Agreement, each of the Borrowers and the
Guarantors shall (and each shall cause the Restricted Parties to), as
applicable:
(a) duly and punctually pay its Obligations, and the obligations
under its guarantee, as the case may be, at the times and
places and in the manner required by the terms thereof
including, without limitation of the foregoing, under the Fee
Agreement;
(b) at all reasonable times and from time to time upon reasonable
notice, permit representatives of the Agent and the Lenders
to inspect any of its Property and the Property of any
Restricted Party and to examine and take extracts from its
financial books, accounts and records, including but not
limited to accounts and records stored in computer data banks
and computer software systems, and to discuss its Financial
Condition and the Financial Condition of any other Restricted
Party with its senior officers and, following the occurrence
of a Pending Event of Default or Event of Default which is
continuing (in the presence of such of its representatives as
it may designate) its auditors, the reasonable out-of-pocket
expenses relating thereto shall be paid by the Borrowers,
provided that:
(i) the Lenders' exercise of their rights under this
paragraph does not unreasonably interfere with the
operations of the applicable Borrower or Restricted
Party, except that following the occurrence of an
Event of Default which is continuing, the Lenders
shall be permitted to exercise their rights under
this paragraph forthwith after notice;
(ii) the Lenders maintain the confidentiality of all
information they receive in accordance with usual
requirements of banker/customer confidentiality, and
not disclose or use it except for purposes of or
relating to this Agreement;
(iii) any representative of a Lender who is not an
employee of a Lender (other than Lenders' counsel
and their employees) has, prior to the occurrence of
a Pending Event of Default or an Event of Default
which is continuing, executed and delivered an
agreement in favour of the Restricted Parties and
the Lenders in form and substance acceptable to
Maxxcom, acting reasonably, to use any information
obtained as a result of any inspection or
examination on behalf of a Lender only for purposes
of or relating to this Agreement; and
(iv) the examination and inspection does not breach any
confidentiality provision of any Intellectual
Property or agreement relating to technological
aspects of the computer data banks and hardware and
software systems belonging to a Borrower or
Restricted Party, as reasonably demonstrated by such
Borrower or Restricted Party;
it being understood and agreed that following the occurrence
of a Pending Event of Default or an Event of Default which is
continuing, neither the Agent nor the Lenders shall be
required to obtain the consent of any Restricted Party prior
to the exercise of any of the rights provided for under this
Section 7.1(b);
(c) use and operate all of its facilities and Property in
compliance with all Environmental Laws, keep all material
Permits relating to environmental matters in effect and
remain in compliance therewith, and handle all Hazardous
Materials in compliance with all Environmental Laws;
(d) as soon as is reasonably possible, notify the Agent and
provide copies upon receipt, of all material claims,
complaints or notices to a Borrower, Restricted Party or any
of their respective Subsidiaries relating to the Release of
Hazardous Materials at facilities and Property owned or
occupied by it or its non-compliance with Environmental Laws;
(e) as soon as reasonably possible, notify the Agent upon
learning of the existence of Hazardous Materials contained
in, on or under any land occupied or controlled by it or any
of its Subsidiaries (including, without limitation, any soil,
surface water, groundwater or subsurface strata thereof)
other than any such circumstance previously disclosed to the
Agent, and the occurrence of any Release of Hazardous
Materials required to be reported to any Governmental
Authority on or from such land;
(f) with respect to any land owned, occupied or controlled by any
Restricted Party which is no longer being used in the
business of such Restricted Party, adhere to all requirements
of Environmental Law (including, without limitation, those
requirements relating to decommissioning) applicable in the
circumstances to such land;
(g) maintain its corporate or, as applicable, other analogous
existence and operate its business and assets in accordance
with sound business practice and in compliance with
applicable Requirements of Law, including but not limited to,
Environmental Laws, except to the extent that non-compliance
with such Requirements of Law or Environmental Laws, as the
case may be, does not materially and adversely affect its
Financial Condition (considered as a whole) or its ability to
perform its obligations under the Credit Documents to which
it is a party;
(h) cause each Person which becomes, directly or indirectly, a
Wholly-Owned Subsidiary of Maxxcom to deliver: (i) an
adoption agreement substantially in the form of Schedule Q by
which it becomes bound by the terms of this Agreement and the
Mezz Inter-Creditor Agreement; (ii) the Acquisition Security
applicable to it; and (iii) an officer's certificate to the
effect that such Person is not in breach of any of the
representations and warranties contained in Section 6.1,
other than those breaches which have been disclosed in
writing to the Agent and accepted in writing by the Majority
Lenders, acting reasonably;
(i) forthwith after the requirement arises that a Person executes
an adoption agreement as contemplated by paragraph (h) above:
(i) execute and deliver an officer's certificate to the
effect that no Event of Default or Pending Event of Default
has been caused by or as a result of the transactions by
which such Person is required to become bound by this
Agreement other than any Events of Default or Pending Events
of Default relating solely to such Person which have been
disclosed in writing to the Agent and, if applicable, waived
in writing by the Majority Lenders; and (ii) provide to the
Agent a revised version of Schedules G, I, J, K, L, M, N, O ,
P and S containing information relevant to such Person;
(j) keep insured with insurance companies or associations
reasonably believed by the Borrowers to be reputable, all
Property of a nature and of a character usually insured by
companies of established reputation engaged in a comparable
business to that in which it is engaged (herein, "prudent
businesses"), in amounts and against losses, including
property damage, public liability and business interruption,
to the extent that such Property is usually insured by
prudent businesses, or as the Majority Lenders may otherwise
reasonably require, and provide the Agent promptly with
evidence of such insurance as the Majority Lenders may from
time to time reasonably require;
(k) cause policies of insurance referred to above (in relation to
the Borrowers, the Guarantors and any Restricted Party who is
a party to this Agreement) to contain a provision that such
policies will not be amended in any manner or cancelled
without 30 days prior written notice being given to the Agent
on behalf of the Lenders by the issuers thereof, cause the
Agent, on behalf of the Lenders, to be named as a loss payee
with respect to property insurance and cause all of the
proceeds of insurance under such policies to be made payable
and to be paid to the Lenders as their interests may appear
to the extent of the Obligations, and additional insured on
all policies of public liability insurance;
(l) obtain, as and when required, all material Permits which may
be necessary to permit it to acquire, own, operate and
maintain its business and preserve and maintain all material
Permits and material Contracts, including those now held by
it, in good standing;
(m) pay all Taxes as the same shall become due and payable unless
such Taxes are being contested in good faith by appropriate
proceedings with appropriate reserves made with respect
thereto in accordance with GAAP, and make adequate provision
for Taxes payable by it for any current period and any
previous period within for which tax returns are not yet
required to be filed;
(n) withhold from each payment made to any of its past or present
employees, officers or directors, and to any non-resident of
the country in which it is resident, the amount of all Taxes
and other deductions required to be withheld therefrom and
pay the same to the proper tax or other receiving officers
within the time required under any applicable legislation in
any relevant jurisdiction;
(o) collect from all Persons the amount of all Taxes required to
be collected from them and remit the same to the proper tax
or other receiving officers within the time required under
any applicable legislation;
(p) forthwith notify the Agent of the occurrence of any default
under any of the Intercorporate Notes which either
individually or in the aggregate exceed Cdn. $10,000 (or the
equivalent thereof in any other currency) or any other
material breach or violation thereof or of any other
Intercorporate Document;
(q) forthwith notify the Agent of any Event of Default or any
Pending Event of Default;
(r) forthwith notify the Agent of any Event of Default or any
Pending Event of Default (as such terms are defined in the
Mezz Debenture) under the Mezz Debenture;
(s) forthwith notify the Agent of and take immediate steps to
cure all defaults under Permitted Encumbrances and diligently
prosecute same to completion in full;
(t) immediately upon becoming aware of the institution of any
steps by any Restricted Party or any applicable regulatory
authority or other Governmental Authority to terminate any
Pension Plan (wholly or in part) which, if as a result of
such termination, a Restricted Party could be required to
make an additional contribution to the Pension Plan in excess
of U.S. $100,000 (or the equivalent thereof in any other
currency), or the failure to make a required contribution to
any Pension Plan if such failure is sufficient to give rise
to a lien or charge under Section 302(f) of ERISA or under
any applicable pension benefits laws of any Canadian
jurisdiction, or the taking of any action with respect to a
Pension Plan which could reasonably be expected to result in
the requirement that any Restricted Party furnish a bond or
other security to the PBGC, such Pension Plan or any
applicable Governmental Authority in Canada, or the
occurrence of any event with respect to any Pension Plan
which could reasonably be expected to result in the
incurrence by any Borrower, Restricted Party or any of any of
their respective Subsidiaries of any material liability, fine
or penalty, or any increase in the contingent liability of
any Borrower, Restricted Party or any of their respective
Subsidiaries in excess of U.S. $100,000 (or the equivalent
thereof in any other currency) with respect to any
post-retirement Welfare Plan benefit, provide notice thereof
to the Agent and copies of all documentation relating
thereto;
(u) cause all withholdings or payments required to be made to a
Governmental Authority to be withheld or paid to the
appropriate Person at the times required to be so withheld or
paid;
(v) forthwith notify the Agent if any representation or warranty
made under any Credit Document was incorrect in any material
respect when given or deemed to be given;
(w) forthwith notify the Agent of any obligation to pay any
gross-up amount under Section 2.6 or any increased costs
under Section 2.10 of the Mezz Debenture;
(x) not less than 2 Business Days prior to the payment of any
Entitled Amounts (as such term is defined in the Mezz
Inter-Creditor Agreement), other than any Entitled Amounts
due and payable upon the closing of the transactions
contemplated by the Mezz Debenture, provide notice to the
Agent of the payment proposed to be made, together with
details thereof, and the joint certificate of the Borrowers
contemplated by the Mezz Inter-Creditor Agreement to the
effect that no Event of Default or Pending Event of Default
has occurred and that the payment proposed to be made will
not cause an Event of Default or Pending Event of Default;
(y) forthwith notify the Agent of any proposed amendment to any
of the Mezz Credit Documents (other than the Warrants and the
Warrant Agreement) prior to the execution thereof by any
Restricted Party, together with a copy of all the draft
documentation effecting same;
(z) forthwith give notice to the Agent of the occurrence of any
material litigation, dispute, arbitration, proceeding or
other circumstance affecting it, it being agreed that any
such litigation, dispute, arbitration proceeding or other
circumstance will be material if the amount claimed is in
excess of Cdn. $500,000 (or the equivalent thereof in another
currency) or, if determined adversely, it would have a
material adverse affect on the Financial Condition of any
Restricted Party or on the ability of any Restricted Party to
perform its obligations under the Credit Documents to which
it is a party;
(aa) in the case of the Borrowers, enter into interest rate
hedging arrangements on or prior to 22 December 2001, having
regard to prevailing market conditions, to ensure that the
interest rates relating to 100% of the principal amount of
the Mezz Debenture is fixed;
(bb) use its reasonable good faith efforts to forthwith cause
Pavlika Xxxxxxxx Direct LLC and all of its members to execute
and deliver a Consent to Pledge;
(cc) cause the Targetcom Reimbursement Agreement and related
Intercorporate Security to be delivered no later than 31
August 2001;
(dd) deliver a pledge of 85% of the shares of 656712 Ontario
Limited to be executed and delivered on or prior to 31 August
2001 and cause 656712 Ontario Limited to execute and deliver
a Restricted Party Supplemental Agreement and to replace its
indebtedness (other than any indebtedness secured by a
mortgage of its real property) with Permitted Intercorporate
Debt and deliver Intercorporate Documents in relation thereto
on or prior to 31 August 2001;
(ee) cause the Security referred to in Section 3.1(i) in relation
to Interfocus Group Limited (including, without limitation,
the guarantees by each of Interfocus Direct Limited and
Interfocus Network Limited and the security over their
respective Property in support of the Intercorporate Notes)
to be delivered forthwith after the completion of its
interest in Grange Advertising Limited;
(ff) cause the Security referred to in Section 3.1(g) in relation
to Grange Advertising Limited be delivered forthwith after
the completion of its acquisition of Grange Advertising
Limited; and
(gg) cause Xxxxxxx Xxxx Xxxxxx Xxxxxxx Inc. to deliver the
Security contemplated by Section 3.1 no later than 31 August
2001.
7.2 Financial Covenants
(a) At all times Maxxcom on a consolidated basis shall maintain an
Interest Coverage Ratio not less 3.0 to 1.0.
(b) For each time period set forth below, Maxxcom on a consolidated
basis shall maintain a Senior Debt Ratio of not more than the ratios set forth
below:
Period Ratio
------ -----
Up to and including 31 March 2002 3.0 to 1.0
From 1 April 2002 to 31 March 2003 2.5 to 1.0
Thereafter 2.0 to 1.0
(c) For each time period set forth below, Maxxcom on a consolidated
basis shall maintain a Total Debt Ratio of not more than the ratios set forth
below:
Period Ratio
------ -----
Up to and including 31 March 2002 4.0 to 1.0
From 1 April 2002 to 31 March 2003 3.5 to 1.0
Thereafter 3.0 to 1.0
(d) Maxxcom, on a consolidated basis, shall at all times maintain Net
Worth in excess of Net Worth Base.
7.3 Reporting Requirements
During the term of this Agreement, there shall be delivered to the
Agent, in form satisfactory to the Lenders, acting reasonably:
(a) within 120 days after the end of each fiscal year of Maxxcom,
audited annual consolidated financial statements of Maxxcom
(and consolidation worksheets relating thereto) prepared in
accordance with GAAP, and annual unaudited Combined
Statements of Maxxcom, including in each case, without
limitation, a balance sheet, statement of income and retained
earnings and a statement of changes in financial position and
any information requested by the Agent, acting reasonably, in
relation to acquisitions or partnerships or other material
transactions proposed or entered into by the Borrowers or any
Restricted Party;
(b) as soon as practicable and in any event within 60 days of the
end of each of the fiscal quarters of Maxxcom, unaudited
quarterly consolidated financial statements of Maxxcom,
prepared in accordance with GAAP, and quarterly unaudited
Combined Statements of Maxxcom (and consolidation worksheets
relating thereto) including, without limitation, a balance
sheet, statement of income and retained earnings and a
statement of changes in financial position;
(c) concurrently with the delivery of the quarterly and annual
financial statements referred to in paragraphs (a) and (b)
above, an officer's certificate of Maxxcom in the form
annexed hereto as Schedule F indicating, inter alia, whether
an Event of Default or Pending Event of Default has occurred,
demonstrating compliance with the financial covenants in this
Agreement and annexing a worksheet showing the calculations
relating to such covenants, providing a detailed description
of all of the management fees, dividends, and other
distributions paid or declared by each of the Restricted
Parties during such fiscal quarter;
(d) concurrently with the delivery of its quarterly and annual
financial statements referred to in paragraphs (a) and (b)
above, a description of all interest rate and currency
hedging arrangements to which it is a party specifying all
relevant details including the notional amount of each such
arrangement, the maturity thereof and the Lender party
thereto;
(e) concurrently with the delivery of its annual financial
statements referred to in paragraph (a) above, a review
engagement report prepared by the auditors of Maxxcom
confirming the auditors' satisfaction with the calculation of
the financial covenants in this Agreement as at the fiscal
year end of Maxxcom, in such form as may be required by the
Agent, acting reasonably;
(f) copies of such other financial reporting as is delivered to
the Mezz Agent from time to time, delivered at the same time
as such material is delivered to the Mezz Agent;
(g) as soon as practicable and in any event no later than 30 days
after the end of each preceding fiscal year of Maxxcom, (a)
an annual budget and business plan approved by the board of
directors of Maxxcom for Maxxcom on a consolidated basis for
the fiscal year prepared on a quarterly basis, including, in
detail satisfactory to the Agent, acting reasonably,
financial projections for each of the Restricted Parties,
broken down showing each major operating segment thereof in
such form and with such detail as may be required by the
Agent, acting reasonably, together with a projection of its
income statement, estimates of proposed capital expenditures
(including Capital Leases and similar arrangements), cash
flows, income statements, and tax liabilities for such fiscal
year or as may reasonably be required by the Lenders, and (b)
a forecast of all Earnout Amounts anticipated to be payable
(for the full term of all such obligations), prepared on an
annual basis and approved by the board of directors of
Maxxcom, in such form and with such details as may be
required by the Agent, acting reasonably;
(h) copies of all continuous and material disclosure filings
required to be made with the Ontario Securities Commission,
the Toronto Stock Exchange, the Securities and Exchange
Commission and other similar regulatory authorities,
concurrently with the delivery thereof to the applicable
authority and copies of all material and information provided
to the Mezz Agent and/or the Mezz Holders to the extent not
otherwise provided to the Agent and the Lenders, not later
than the time such material is required to be provided to the
Mezz Agent or the Mezz Holders, as the case may be; and
(i) such additional financial or operating reports and other
information concerning the Financial Condition of any
Restricted Party or otherwise as the Agent may, from time to
time, reasonably require.
7.4 Negative Covenants
During the term of this Agreement, none of the Borrowers or the
Guarantors, as applicable, shall, or shall permit any Restricted Party to,
without the prior written consent of the Majority Lenders:
(a) create, cause, incur, assume or permit the existence of any
Encumbrance upon or in respect of any of their respective
Property, except for Permitted Encumbrances;
(b) create, incur or assume any Debt, or permit any Debt of any
kind to exist or remain outstanding, other than Permitted
Indebtedness;
(c) make or permit any amendments to or replacements of any of
the Intercorporate Documents, waive any breach thereof or
forebear in relation to any default thereunder or take or
permit any action (other than making payments thereunder) or
omit to take any action which would impair the rights of
set-off of the applicable Restricted Party thereunder;
(d) make any Investment in or acquisition of a Person other than
a Permitted Acquisition or an acquisition of Capital Stock of
a Restricted Party from a Minority Shareholder pursuant to
the applicable Restricted Party Shareholder Agreement
(herein, a "Minority Acquisition") or make a Permitted
Acquisition or a Minority Acquisition at any time:
(i) when there has occurred an Event of Default or
Pending Event of Default which is continuing;
(ii) when it has not provided an Acquisition Certificate
to the Agent at least 5 days prior to entering into
a definitive purchase agreement (or other legally
binding purchase obligation) in respect thereof,
provided that no Acquisition Certificate shall be
required in the case of a Permitted Acquisition (A)
under paragraphs (d) and (g) of the definition
thereof, and (B) which are Permitted Non-Conforming
Acquisitions described in Section 1.1.131(a);
(iii) when (if obligated to do so hereunder) it has not
executed and delivered the Acquisition Security or
demonstrated to the reasonable satisfaction of the
Agent that the Acquisition Security is available to
be provided concurrent with or immediately following
completion of the proposed Permitted Acquisition
and, if applicable, that any Follow-Up Merger can be
successfully completed;
(iv) when it has not obtained the consent of the Majority
Lenders (such consent not to be unreasonably
withheld) to the proposed Permitted Acquisition if
the consideration payable in satisfaction of the
purchase price for such acquisition (other than
consideration consisting of shares of Maxxcom or any
acquired entity issued on the closing of the
transaction) exceeds 10% of the book value of the
total consolidated assets of Maxxcom as at the date
of Maxxcom's most recently completed fiscal quarter;
(v) that the Investment or acquisition would not
otherwise be permitted to be made under the Mezz
Debenture; or
(vi) if, in the case of the acquisition of an American
Entity, such entity would not be Solvent after
giving effect to the acquisition and all related
transactions;
(e) notwithstanding Section 7.4(d) above, cause or permit Accent
Marketing Services, L.L.C. to make any Investment in or
acquisition of a Person, whether or not it would, but for
this provision, be a Permitted Acquisition, which is financed
other than through the use of the internally-generated funds
of Accent Marketing Services, L.L.C. or by use of its
Permitted Indebtedness;
(f) notwithstanding the provisions of paragraph (d) above, make
loans or provide any financial assistance whatsoever to any
Minority Shareholder other than Permitted Minority
Shareholder Loans, or forgive or otherwise fail to enforce
the terms of any Permitted Minority Shareholder Loans;
(g) except for Permitted Non-Conforming Acquisitions, at any time
purchase, redeem, retract, repurchase, convert or otherwise
acquire any of its share capital or share capital of another
Restricted Party other than:
(i) by making an Earnout Payment, to the extent any such
Earnout Payment is otherwise permitted hereunder;
(ii) by Maxxcom making a normal course issuer bid in an
aggregate amount not in excess of Cdn. $5,000,000 in
the fiscal year of Maxxcom ending 31 December 2001
and Cdn. $2,000,000 any other fiscal year of
Maxxcom; or
(iii) by purchasing or repurchasing the Capital Stock of a
Restricted Party owned by a Minority Shareholder,
which repurchase is otherwise in accordance with the
terms and conditions of the applicable Restricted
Party Shareholder Agreement, provided that no Event
of Default or Pending Event of Default has occurred
and is continuing at the time of such purchase or
repurchase or would be caused as a result of such
purchase or repurchase transactions;
(h) make any capital expenditures (determined as an aggregate
amount for all Restricted Parties in a fiscal year of
Maxxcom) in excess of Cdn. $7,000,000 in the fiscal year
ending December 31, 2001, and Cdn. $9,000,000 in each fiscal
year ending thereafter;
(i) sell, lease, alienate or otherwise dispose of (whether in a
single transaction or a series of transactions) any part of
its Property, the proceeds of disposition of which aggregate
in excess of Cdn. $500,000 (or the equivalent thereof in
other currencies) for all Restricted Parties (excluding any
Cybersight Disposition (as defined below)) in any fiscal year
of Maxxcom except:
(i) in respect of any disposition by Maxxcom US of its
interest in Cybersight Acquisition Co. Inc., and/or
Cybersight LLC (a "Cybersight Disposition") which is
specifically permitted hereunder;
(ii) in respect of the disposition by Margeotes/Xxxxxxxx
+ Partners LLC of the assets constituting its direct
marketing business to Pavlika Xxxxxxxx Direct, LLC
in exchange for a 35% membership interest in Pavlika
Xxxxxxxx Direct, LLC;
(iii) the sale of up to 20% of the Capital Stock of News
Canada Inc. to Xxxx Xxxxxxx;
(iv) a transfer of shares of a Restricted Party permitted
under Section 7.4(y); and
(v) the transfer of all of the shares of Xxxxx Xxxxx
Group Ltd. owned by Maxxcom to XxXxxxx Xxxxxxx
Communications Inc. and the subsequent winding-up
and transfer of all of the assets of XxXxxxx Xxxxxxx
Communications Inc. into and to Maxxcom;
(j) consolidate, amalgamate or merge with or wind-up into any
other Person (other than the winding-up of XxXxxxx Xxxxxxx
Communications Inc. into Maxxcom):
(i) unless such Person is primarily engaged in carrying
on the Marketing Communications Services Business;
(ii) at any time when there has occurred an Event of
Default or Pending Event of Default which is
continuing (other than a Follow-Up Merger) or if
such consolidation, amalgamation or merger would
result in the occurrence of a Pending Event of
Default or Event of Default hereunder;
(iii) unless prior written notice of such proposed
consolidation, amalgamation or merger has been
provided to the Agent together with such documents
and opinions of counsel as the Lenders may
reasonably request to ensure that the Security is
not adversely affected thereby; and
(iv) unless the surviving entity resulting from such
consolidation, amalgamation or merger is a
Restricted Party which has executed and delivered
all documentation reasonably required by the Agent
to become bound by the terms hereof and all other
documentation contemplated hereby including, without
limitation, Security and all notices or other
material required in connection with the perfection
of the Security;
(k) engage in any business other than the Marketing
Communications Services Business;
(l) pay, loan or permit any distribution of funds whatsoever to
any Unrestricted Party or to any Person in whom an Investment
is made other than by making a Permitted Acquisition made
under, as applicable, Sections 1.1.126(d) or (e) or a
Permitted Non-Conforming Acquisition;
(m) do or permit anything to adversely affect the ranking or
validity of the Security except by incurring a Permitted
Encumbrance;
(n) change its name or the location of its chief executive
office, its jurisdiction of organization or incorporation, or
move or acquire (whether in a single transaction or in a
series of transactions) any material assets or any tangible
assets having an aggregate value of Cdn. $1,500,000 or more
(herein, "aggregated assets") outside of a jurisdiction in
which the Security is registered without providing the Agent
with prior written notice thereof and promptly executing such
documents as the Agent might reasonably require to permit the
Agent on behalf of the Lenders to register the Security,
notices thereof or otherwise perfect the Security with
respect to the change in name, moved or acquired material
assets or aggregated assets;
(o) except as otherwise expressly permitted herein, make any cash
payments, distributions or expenditures of any nature or kind
other than Permitted Payments;
(p) enter into any agreement, arrangement or transaction with
Affiliates or other Non-Arm's Length Persons (other than with
another Restricted Party) other than (i) on terms and
conditions which would be offered to an arm's length party,
and (ii) with the approval of a committee of the board of
directors of Maxxcom consisting solely of independent
directors;
(q) enter into, except as set out in schedule T, or amend any
agreement, arrangement or transaction with MDC Corporation
Inc., Xxxxx Xxxxx, Nadal Financial Corporation or any
Associate of, Affiliate of or other Person (other than a
Borrower or a Guarantor) not at arm's length (as such term is
construed in the Income Tax Act (Canada) with MDC Corporation
Inc., Xxxxx Xxxxx or Nadal Financial Corporation, or amend
any such agreement, arrangement or transaction currently
existing, except pursuant to (and in accordance with the
terms of) Sections 7.4(b) and 7.4(o) and except for issuances
of Capital Stock of the Borrower and, for greater certainty,
except for purchases of Capital Stock of Maxxcom by any of
the above-noted Persons which are not purchases from
treasury;
(r) enter into, assign, revise, supplement, restate, replace or
terminate any material Contract or material Permit, except in
the ordinary course of business;
(s) enter into any interest rate or currency hedging arrangement
with any Person that is not a Lender, which is for
speculative purposes, or which has a term which extends
beyond the Maturity Date;
(t) change its fiscal year end from December 31 or change its
accounting practices and policies in any material respect,
except as required by GAAP;
(u) create, incur or suffer to exist any Debt with another
Restricted Party except Permitted Intercorporate Debt or
amend the terms of any Intercorporate Documents;
(v) enter into any arrangement whatsoever to finance or factor
its accounts receivable;
(w) other than in relation to Investments permitted under this
Agreement, own, or cause or permit any Restricted Party which
is not a Wholly-Owned Subsidiary of Maxxcom to own Capital
Stock of any Person (other than Capital Stock of any Person
owned by it as at 31 March 2000) unless, within 90 days of
the acquisition of such Capital Stock of any such Person, a
Follow-Up Merger is effected which, for greater certainty,
shall not be required in relation to:
(i) Interfocus Group Limited, Interfocus Direct Limited
and Interfocus Network Limited;
(ii) Firebrand Marketing and Sale Promotion Limited, a
wholly-owned Subsidiary of Interfocus Group Limited;
(iii) a Permitted Acquisition of a Foreign Opco described
in Section 1.1.126(f);
(iv) the 35% ownership interest of Margeotes/Xxxxxxxx +
Partners LLC in Pavlika Xxxxxxxx Direct, LLC; and
(v) the 40% interest of Accent Marketing Services,
L.L.C. in Mo' Better Marketing LLC;
(x) make, or permit to be made, any payment on account of
Deferred Purchase Price Obligations or any Earnout Payment at
any time that an Event of Default or Pending Event of Default
has occurred and is continuing;
(y) amend, vary, modify, replace or otherwise alter any
Restricted Party Shareholder Agreement in any manner that
could have the effect of restricting the declaration of
dividends, the payment of management fees or dividends or the
making of any other distribution whatsoever by any Restricted
Party to Maxxcom, Maxxcom US or any other Restricted Party or
further restricting the sale, transfer or other disposition
of shares in the Capital Stock of any Restricted Party by any
Borrower or Restricted Party or otherwise not in compliance
with the requirements of the Mezz Debenture or enter into or
acquiesce or otherwise become subject to any agreement,
arrangement or circumstance which could have the effect of
restricting the declaration of dividends, the payment of
management fees or dividends or the making of any other
distribution whatsoever by any Restricted Party to Maxxcom,
Maxxcom US or any other Restricted Party or further
restricting the sale, transfer or other disposition of shares
in the Capital Stock of any Restricted Party by any Borrower
or Restricted Party;
(z) amend, vary, modify, replace or otherwise alter any
Restricted Party Shareholder Agreement or Restricted Party
Purchase Agreement in any manner (i) that could have the
effect of increasing any Earnout Amount payable or other
amount payable to a Shareholder of that Restricted Party that
is not a Restricted Party or any other Person, or (ii) that
would permit the payment of an Earnout Amount, or any amount
on account thereof, prior to the completion of the financial
period in respect of which the Earnout Amount is calculated;
(aa) enter into any Restricted Party Shareholder Agreement or
Restricted Party Purchase Agreement which permits (or amend,
vary, modify, replace or otherwise alter any existing
Restricted Party Shareholder Agreement or Restricted Party
Purchase Agreement in a manner that would permit) the payment
of an Earnout Amount, or any amount on account thereof, prior
to the completion of the financial period in respect of which
such Earnout Amount is calculated (other than Section 10.3(a)
of the Restricted Party Shareholder Agreement in relation to
Xxxxxxx Xxxxxx & Bogusky LLC);
(bb) amend Section 10.3(a) of the Restricted Party Shareholder
Agreement in relation to Xxxxxxx Xxxxxx & Bogusky LLC or
exercise any rights under Section 10.3(a) of the Restricted
Party Shareholder Agreement in relation to Xxxxxxx Xxxxxx &
Bogusky LLC;
(cc) cause or consent to the issuance or transfer of any Capital
Stock of any Restricted Party which is not a directly or
indirectly Wholly-Owned Subsidiary of Maxxcom or cause or
consent to any similar transaction if the effect of such
issuance, transfer or other transaction would be that,
following completion thereof, Maxxcom no longer owns
(directly or indirectly) a Controlling Interest in such
Restricted Party;
(dd) in relation to Xxxxxxx Xxxxxx & Bogusky LLC prior to Maxxcom
directly or indirectly holding a Controlling Interest
therein, cause or consent to the issuance or transfer of the
Capital Stock of Xxxxxxx Xxxxxx & Bogusky LLC or cause or
consent to any similar transaction if the effect of such
issuance, transfer or other transaction would be that,
following completion thereof, Maxxcom no longer owns
(directly or indirectly) at least 49% of the Capital Stock of
Xxxxxxx Xxxxxx & Bogusky LLC;
(ee) notwithstanding the provisions of Section 1.1.116(c), lend
any amount to or cause or permit any Restricted Party to lend
any amount to Xxxxxxx Xxxxxx & Bogusky LLC or cause or permit
Xxxxxxx Xxxxxx & Bogusky LLC to incur Debt with or to any
Restricted Party in excess of U.S. $2,000,000 until such time
as Maxxcom directly or indirectly owns a Controlling Interest
in Xxxxxxx Xxxxxx & Bogusky LLC;
(ff) sell, transfer or otherwise dispose of any Capital Stock of
any Restricted Party owned by it, or (except in the case of
Maxxcom) issue any Capital Stock, other than:
(i) sales or issuances of Capital Stock of any
Restricted Party to a Minority Shareholder of such
Restricted Party provided that (a) immediately
following such sale or issuance, such Restricted
Party continues to be a Subsidiary of Maxxcom, (b)
where the Restricted Party was at the date thereof a
Wholly-Owned Subsidiary, and a Restricted Party
Shareholder Agreement is entered into between the
shareholders of the Restricted Party, then (A) such
Restricted Party Shareholder Agreement is in
compliance with the requirements relating to a
"Qualifying Shareholder Arrangement" as set forth in
the Mezz Debenture (B) any necessary Consent to
Pledge or Restricted Party Supplemental Agreement,
as the case may be, shall be executed by such
Minority Shareholder and any other Minority
Shareholder of such Restricted Party in respect of
the pledge by Maxxcom, Maxxcom US or the other
applicable Restricted Party of its interest in such
Restricted Party, and (c) where the Restricted Party
was not at the date thereof a Wholly-Owned
Subsidiary, the Minority Shareholder agrees to the
terms of the Restricted Party Shareholder Agreement
then in force relating to the Restricted Party
(including, if applicable, the terms of any call
rights either Borrower or their respective
Subsidiaries may have regarding the shares
transferred to the Minority Shareholder); or
(ii) sales or issuances of Capital Stock of a Restricted
Party to a vendor in connection with a Permitted
Acquisition made by such Restricted Party or a
Subsidiary thereof if immediately following such
sale, such Restricted Party continues to be a
Subsidiary of Maxxcom; if, in each case (other than
in relation to a Non-Conforming Permitted
Acquisition), the consideration for the sale of such
Capital Stock is not less than the original purchase
price thereof and, if immediately following such
sale, Maxxcom continues to directly or indirectly
control such Restricted Party;
(gg) permit any Restricted Party which is at any time a direct or
indirect Wholly-Owned Subsidiary of Maxxcom to become
non-wholly owned except as specifically permitted by this
Agreement;
(hh) create, incur or permit to exist any Debt to a Minority
Shareholder other than salaries and other payments related to
the employment of a Minority Shareholder incurred in the
ordinary course of business, indebtedness secured by a
Repurchase Encumbrance, dividends or other distributions
owing to a Minority Shareholder on account of the Capital
Stock of a Restricted Party held by such Minority Shareholder
contemplated by the applicable Restricted Party Shareholder
Agreement and Subordinated Shareholder Debt;
(ii) make or permit any amendment to any Subordinated Shareholder
Note or take, permit or acquiesce in any action which would
breach the terms thereof;
(jj) make, cause or permit any payment on, under or in respect of
any Subordinated Shareholder Note after the occurrence of an
Event of Default or a Pending Event of Default and during its
continuance;
(kk) allow the existence of any Unfunded Liability at any time;
(ll) make, permit or agree to any amendment, modification,
supplement, replacement or any other change to the terms and
conditions of the Mezz Obligations or any Mezz Credit
Document (other than the Warrants and the Warrant Agreement)
except in accordance with the Mezz Inter-Creditor Agreement;
(mm) make any payment of any Entitled Amounts (as such term is
defined in the Mezz Inter-Creditor Agreement) when it has not
delivered the notice and the accompanying certificate
referred to in Section 7.1(x); and
(nn) make or permit any payment whatsoever on account of principal
under the Mezz Debenture or purchase, repurchase, retract,
repay, prepay, acquire, redeem or otherwise retire for value
in any manner whatsoever or take any steps to exercise any
rights of legal or covenant defeasance under the Mezz
Debenture, any portion thereof or any Mezz Obligations or
permit any of the foregoing.
7.5 Restrictions in Mezz Debenture
Each of the Borrowers and the Guarantors acknowledges and agrees that
it will comply with all the terms and conditions of the Mezz Credit Documents
(except to the extent otherwise agreed by the Mezz Agent and/or the Mezz
Holders) and each of the Borrowers and the Guarantors further acknowledges and
agrees that any action, matter or thing by, on behalf of, or in relation to a
Borrower, Guarantor or other Restricted Party which would (but for this Section
7.5) be permitted under this Agreement, will not be permitted if (or to the
extent that) such action, matter or thing is not permitted under any Mezz
Credit Document.
7.6 Use of Insurance Proceeds
Prior to the occurrence of an Event of Default which is continuing,
all proceeds of insurance arising from loss of or damage to Property of any
Borrower, Guarantor or Restricted Party who is a party to this Agreement shall
be paid to the Agent on behalf of the Lenders on account of the Credit provided
that (a) if the applicable Borrower or Restricted Party decides to use the
proceeds of insurance to repair or replace the damaged or lost Property, then
such proceeds shall be paid to the applicable Borrower or Restricted Party (if
less than or equal to Cdn. $2,000,000 or the equivalent thereof in other
currencies) or held by an independent trustee acceptable to Maxxcom and the
Agent (if greater than Cdn. $2,000,000 or the equivalent thereof in other
currencies) and shall be used to diligently repair or replace such damaged or
lost Property within 90 days of the occurrence of the loss or damage provided
that, if such repair or replacement cannot reasonably be completed within 90
days, the same shall be undertaken as soon as possible and pursued with all
reasonable diligence thereafter; or (b) if the applicable Borrower or
Restricted Party decides not to use the proceeds of insurance to repair or
replace the damaged or lost Property, then the amount of the proceeds shall be
paid to the Agent (for and on behalf of the Lenders), shall be applied to
amounts outstanding under the Credit in inverse order of maturity and the
Credit Limit shall be permanently reduced by such amount. Following the
occurrence of an Event of Default which is continuing, all proceeds of
insurance arising from loss of or damage to Property of any Borrower or
Restricted Party who is a party to this Agreement shall be paid directly to the
Agent on behalf of the Lenders on account of the Credit, to be applied in the
discretion of the Majority Lenders.
ARTICLE 8
DEFAULT
8.1 Events of Default
Each of the following events shall constitute an Event of Default
under this Agreement:
(a) either Borrower fails to pay, whether by acceleration or
otherwise, any amount of principal hereunder when due; or
(b) either Borrower fails to pay any amount of interest, fees,
commissions or other Obligations (other than amounts on
account of principal) when due, and such failure continues
for 5 Business Days after the date of such default; or
(c) there occurs a breach of any of the financial covenants set
forth in Section 7.2 and, in the case of a breach of Section
7.2(d) only, such breach is not corrected within 30 days
after the occurrence thereof; or
(d) there occurs a breach of any term, condition, covenant or
undertaking contained in Section 7.4; or
(e) any Restricted Party makes any representation or warranty
under any Credit Document which is incorrect in any material
respect when made or deemed to be made; or
(f) any Restricted Party ceases or threatens to cease to carry on
its business, admits its inability to pay its debts generally
or otherwise acknowledges its insolvency in writing; or
(g) any Event of Default (as defined therein) occurs under the
Mezz Debenture; or
(h) any Restricted Party:
(i) permits any material default under one or more
agreements or instruments relating to indebtedness
in the aggregate amount of not less than $500,000;
or
(ii) permits any other event to occur and to continue
after any applicable grace period specified in such
agreements or instruments referred to in (i) above;
if the effect of such default or event is to accelerate, or
to permit the acceleration of, the maturity of such
indebtedness, whether or not acceleration actually occurs; or
(i) any Restricted Party:
(i) becomes a bankrupt (voluntarily or involuntarily);
(ii) makes an assignment for the benefit of creditors
generally; or
(iii) becomes subject to any proceeding seeking
liquidation, winding-up, rearrangement, arrangement,
adjustment, composition, relief from creditors or
the appointment of a receiver or trustee over, or
any judgment or order which has or is reasonably
likely to have a material and adverse effect on any
material part of its Property or analogous
proceeding in any jurisdiction, and, if involuntary,
any such proceeding or appointment is not contested
by bona fide action on the part of the applicable
Restricted Party and is not dismissed, stayed, or
withdrawn within 30 days of commencement thereof; or
(j) any Restricted Party denies, to any extent, its obligations
under any Credit Document to which it is party or claims any
Credit Document to which it is party to be invalid in whole
or in part; or
(k) any Credit Document is invalidated by any act or omission of
any Restricted Party or any Applicable Law or action by a
Governmental Authority and cannot be remedied within 10
Business Days to the full satisfaction of the Agent or is
determined to be invalid by a court or other judicial entity
and such determination has not been stayed pending appeal; or
(l) a final judgment not subject to further appeal (or settlement
in respect of any suit, claim or action) is issued against
(or made by) a Restricted Party under which such Restricted
Party has an obligation to pay an amount equal to or in
excess of Cdn. $1,000,000 (or the equivalent thereof in other
applicable currencies); or
(m) a writ of execution, garnishment or attachment or similar
process is issued or levied against a Restricted Party or its
Property relating to an amount claimed (or, if less, the
value of the Property subject thereto) in excess of Cdn.
$1,000,000 and such writ, execution, garnishment, attachment
or similar process is not released, bonded, satisfied,
discharged, vacated or stayed within 20 days after its entry,
commencement or levy; or
(n) there is a breach of any other provision of any of the Credit
Documents and such breach, if capable of being remedied, is
not remedied within 20 days after the Agent gives notice
thereof to Maxxcom or, if such breach is capable of being
remedied but not within such period, within such longer
period as is reasonably necessary, as determined by the
Majority Lenders, provided that the Borrowers are proceeding
with due diligence to remedy same and the extension of such
period is not disadvantageous to the Lenders, in their sole
determination; or
(o) to the extent, in the determination of the Lenders, not
satisfactorily covered by insurance, there occurs material
damage by fire or other hazard to the whole or any portion of
the Property of any of the Restricted Parties, if such damage
has a material adverse effect on the Financial Condition of
Maxxcom on a consolidated basis; or
(p) Maxxcom US ceases to be legally or in fact controlled by
Maxxcom; or
(q) MDC Corporation Inc. ceases to beneficially own, directly or
indirectly, 50% or more of the outstanding common shares of
Maxxcom, unless after the date hereof and prior to or
contemporaneously with any such occurrence the Borrower
issues common shares from treasury with aggregate cash
proceeds to Maxxcom of at least Cdn. $40,000,000; or
(r) if any Restricted Party which is a Wholly-Owned Subsidiary of
Maxxcom as at 31 March 2000 or, as applicable, as at the date
it becomes a Restricted Party, ceases to be a Wholly-Owned
Subsidiary of Maxxcom; or
(s) if any Restricted Party which is directly or indirectly
controlled by Maxxcom as at 31 March 2000 or, as applicable,
as at the date it becomes a Restricted Party, but which, at
such time, is not a Wholly-Owned Subsidiary of Maxxcom,
ceases to be directly or indirectly controlled by Maxxcom; or
(t) if any of the following events shall occur with respect to
any Pension Plan:
(i) the institution of any steps by any Restricted Party
or any member of its Controlled Group or any
applicable regulatory authority to terminate a
Pension Plan (wholly or in part) if, as a result of
such termination, any Restricted Party or any such
member is required to make an additional
contribution to such Pension Plan, or are required
to incur an additional liability or obligation to
such Pension Plan, equal to or in excess of Cdn.
$500,000 or the equivalent thereof in another
currency; or
(ii) a contribution failure occurs with respect to any
Pension Plan sufficient to give rise to a lien or
charge under section 302(f) of ERISA or under any
applicable pension benefits legislation in any other
jurisdiction; or
(u) there shall occur a material adverse change in the Financial
Condition or prospects of Maxxcom on a consolidated basis, in
the sole determination of the Majority Lenders, acting
reasonably.
8.2 Acceleration and Termination of Rights
(a) Upon the occurrence of an Event of Default which is continuing, no
Lender shall be under any further obligation to make Advances and the Majority
Lenders may instruct the Agent to give notice to Maxxcom (whereupon the Agent
shall give such notice), (i) declaring the Lenders' obligations to make
Advances to be terminated, whereupon the same shall forthwith terminate; (ii)
declaring the Obligations or any of them to be forthwith due and payable,
whereupon they shall become and be forthwith due and payable without
presentment, demand, protest or further notice of any kind whatsoever to any
Person (including, without limitation, any Restricted Party), all of which are
hereby expressly waived by the Restricted Parties which are party to this
Agreement to the fullest extent permitted by law; and/or (iii) demanding that
the Borrowers deposit forthwith with the Agent for the Lenders' benefit
Collateral equal to the aggregate of the face (or, if less, undrawn) amount of
all outstanding L/Cs and the full principal amount at maturity of all Bankers'
Acceptances then outstanding for the account of a Borrower.
(b) Notwithstanding Section 8.2(a), if any Restricted Party becomes a
bankrupt (voluntarily or involuntarily), or institutes any proceeding seeking
liquidation, rearrangement, relief of debtors or creditor or the appointment of
a receiver or trustee over any material part of its Property or any analogous
proceeding in any relevant jurisdiction, then without prejudice to the other
rights of the Lenders as a result of any such event, without any notice or
action of any kind by the Agent or the Lenders, and without presentment, demand
or protest of any nature or kind, the Lenders' obligation to make Advances
shall immediately terminate, the Obligations shall immediately become due and
payable and, to the extent permitted by law, the Borrowers shall be obligated
to deposit forthwith with the Agent for the Lenders' benefit Collateral equal
to the aggregate of the face amount of all outstanding L/Cs issued for the
benefit of or at the request of the Borrowers or either of them and the full
principal amount at maturity of all Bankers' Acceptances then outstanding for
Maxxcom's account.
8.3 Payment of Bankers' Acceptances and L/Cs
Immediately upon the occurrence of any event obligating the Borrower
to deposit Collateral with the Agent under Section 8.2, the Borrowers shall,
without necessity of further act or evidence be unconditionally obligated to
deposit forthwith with the Agent, for the benefit of the Issuing Lender and the
BA Lenders, respectively, Collateral equal to the aggregate of the face amount
of all outstanding L/Cs for the account of either Borrower and the full
principal amount at maturity of all Bankers' Acceptances then outstanding for
the account of Maxxcom and each Borrower hereby unconditionally promises and
agrees to deposit with the Agent immediately upon such demand Collateral in the
amount so demanded. Each of the Borrowers authorize the Lenders, and each of
them, to debit its accounts for the amount required to pay such L/Cs and to pay
such Bankers' Acceptances, notwithstanding that such Bankers' Acceptances may
be held by such Lenders, or any of them, in their own right at maturity.
Amounts paid to the Agent pursuant to such demands in respect of Bankers'
Acceptances and L/Cs, respectively, shall be applied against and thereby reduce
the Obligations pro rata among the Lenders, to the extent of the amounts paid
to the Agent in respect of Bankers' Acceptances and L/Cs, respectively, the
obligations of the Borrowers to pay amounts then or thereafter payable under
Bankers' Acceptances and L/Cs, respectively, at the times amounts become
payable thereunder. Each Borrower, as applicable, shall be entitled to receive
interest on cash provided and held as Collateral in accordance with Section
11.20 while the cash continues to be held as Collateral.
8.4 Remedies
Upon the occurrence of any event by which any of the Obligations
become due and payable under Section 8.2, the Security shall become immediately
enforceable and the Majority Lenders may instruct the Agent to take such action
or proceedings on behalf of the Lenders as the Majority Lenders in their sole
discretion deem expedient to enforce the same, all without any additional
notice, presentment, demand, protest of any kind whatsoever to any Person
(including, without limitation, any Restricted Party) or other formality, all
of which are hereby expressly waived by the Borrowers and the Restricted
Parties party to this Agreement to the fullest extent permitted by law. Any
proceeds of realization shall be applied to the Obligations and shall be
applied in such order or to such part of the Obligations as the Majority
Lenders may determine in their absolute discretion.
8.5 Saving
The Lenders shall not be under any obligation to any of the Restricted
Parties or any of their respective Subsidiaries or any other Person to realize
upon any collateral or enforce the Security or any part thereof or to allow any
of the collateral to be sold, dealt with or otherwise disposed of. Unless
otherwise provided by Applicable Law, the Lenders shall not be responsible or
liable to any of the Restricted Parties or any of their respective Subsidiaries
or any other Person for any loss or damage upon the realization or enforcement
of, the failure to realize or enforce the collateral or any part thereof or the
failure to allow any of the collateral to be sold, dealt with or otherwise
disposed of or for any act or omission on their respective parts or on the part
of any director, officer, agent, servant or adviser in connection with any of
the foregoing, except that a Lender may be responsible or liable for any loss
or damage arising from the wilful misconduct or negligence of that Lender or
its directors, officers, agents servants or advisors.
8.6 Perform Obligations
Upon the failure of any Restricted Party to perform any of its
covenants or agreements in any Credit Document to which it is a party, the
Majority Lenders may, but shall be under no obligation to, instruct the Agent
on behalf of the Lenders to perform any such covenants or agreements in any
manner deemed fit by the Majority Lenders without thereby waiving any rights to
enforce the Credit Documents. The reasonable expenses (including any reasonable
legal costs) paid by the Agent and/or the Lenders in respect of the foregoing
shall be for the account of the Borrowers and shall be secured by the Security.
8.7 Third Parties
No Person dealing with the Lenders or any agent of the Lenders
(including, without limitation, the Agent) shall be concerned to inquire
whether the Security has become enforceable, or whether the powers which the
Lenders are purporting to exercise have become exercisable, or whether any
Obligations remain outstanding upon the security thereof, or as to the
necessity or expediency of the stipulations and conditions subject to which any
sale shall be made, or otherwise as to the propriety or regularity of any sale
or other disposition or any other dealing with the collateral charged by such
Security or any part thereof.
8.8 Power of Attorney
Effective upon occurrence of an Event of Default, each of the
Borrowers and the Guarantors hereby constitutes and appoints any Vice-President
or more senior officer of the Agent its due and lawful attorney with full power
of substitution in its name and on its behalf, during the continuance of an
Event of Default, to enforce any right, title or interest of the Lenders in, to
or under the Security or any part thereof or any obligation to the Borrowers or
the Guarantors or remedy available to the Borrower or the Guarantors. This
appointment is irrevocable to the maximum extent permitted by Applicable Law.
8.9 Remedies Cumulative
The rights and remedies of the Lenders under the Credit Documents are
cumulative and are in addition to and not in substitution for any rights or
remedies provided by law or in equity. Any single or partial exercise by the
Lenders of any right or remedy for a default or breach of any term, covenant,
condition or agreement contained in any Credit Document shall not be deemed to
be a waiver of or to alter, affect, or prejudice any other right or remedy or
other rights or remedies to which the Lenders may be lawfully entitled for the
same default or breach, and any waiver by the Lenders of the strict observance,
performance or compliance with any term, covenant, condition or agreement
contained in any Credit Document, and any indulgence granted by the Lenders
shall be deemed not to be a waiver of any subsequent default.
8.10 Set-Off or Compensation
In addition to and not in limitation of any rights now or hereafter
granted under Applicable Law, if repayment is accelerated pursuant to Section
8.2, the Lenders, or any of them, may at any time and from time to time without
notice to any of the Restricted Parties which are party to this Agreement or
any of their respective Subsidiaries or any other Person (other than as
contemplated by Section 9.7), any notice being expressly waived by each of the
Borrowers and the Restricted Parties to the fullest extent permitted by law,
set-off and compensate and apply any and all deposits, general or special, time
or demand, provisional or final, matured or unmatured, and any other
indebtedness at any time owing by the Lenders, or any of them, to or for the
credit of or the account of any of the Restricted Parties which are party to
this Agreement against and on account of the Obligations notwithstanding that
any of them are contingent or unmatured.
ARTICLE 9
THE AGENT AND THE LENDERS
9.1 Authorization of Agent and Relationship
Each Lender hereby appoints Scotiabank as Agent and Scotiabank hereby
accepts such appointment. The appointment may only be terminated as expressly
provided in this Agreement. Each Lender hereby authorizes the Agent to take all
action on its behalf and to exercise such powers and perform such duties under
this Agreement as are expressly delegated to the Agent by its terms, together
with all powers reasonably incidental thereto. The Agent shall have only those
duties and responsibilities which are of a solely mechanical and administrative
nature or which are otherwise expressly specified in this Agreement, and it may
perform such duties by or through its agents or employees, but shall not by
reason of this Agreement have a fiduciary duty in respect of any Lender. As to
any matters not expressly provided for by this Agreement, the Agent is not
required to exercise any discretion or to take any action, but is required to
act or to refrain from acting (and is fully protected in so acting or
refraining from acting) upon the instructions of the Lenders or the Majority
Lenders, as the case may be. Those instructions shall be binding upon all
Lenders, but the Agent is not required to take any action which exposes the
Agent to personal liability or which is contrary to this Agreement or
Applicable Law.
9.2 Disclaimer of Agent
The Agent makes no representation or warranty, and assumes no
responsibility with respect to the due execution, legality, validity,
sufficiency, enforceability or collectability of this Agreement or any other
Credit Document. The Agent assumes no responsibility for the Financial
Condition of the Borrowers or the Restricted Parties or any of their respective
Subsidiaries, or for the performance of the obligations of the Borrowers or the
Restricted Parties under this Agreement or any other Credit Document. The Agent
assumes no responsibility with respect to the accuracy, authenticity, legality,
validity, sufficiency or enforceability of any documents, papers, materials or
other information furnished by the Borrowers, the Restricted Parties or any of
their respective Subsidiaries to the Agent on behalf of the Lenders. The Agent
shall not be required to ascertain or inquire as to the performance or
observance of any of the terms, conditions, provisions, covenants or agreements
contained herein or as to the use of the proceeds of the Credit or (unless the
officers or employees of the Agent acting in their capacity as officers or
employees on the Borrowers' accounts have actual knowledge thereof, or have
been notified thereof in writing by the Borrowers or a Lender) of the existence
or possible existence of any Event of Default or Pending Event of Default.
Neither the Agent nor any of its directors, officers, agents or employees shall
be liable for any action taken or omitted to be taken by it or them as Agent
under or in connection with the Agreement except for its or their own
negligence or wilful misconduct. With respect to its Commitment, Advances made
by Scotiabank (including Overdraft Availments made in its capacity as Overdraft
Lender and L/Cs issued by it in its capacity as Issuing Lender) and all amounts
payable with respect thereto, the Agent 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 and functions delegated to it as Agent hereunder.
9.3 Failure of Lender to Fund
(a) Unless the Agent has actual knowledge that a Lender has not made
or will not make available to the Agent for value on a Drawdown Date the
applicable amount required from such Lender pursuant to this Agreement, the
Agent shall be entitled to assume that such amount has been or will be received
from such Lender when so due and the Agent may (but shall not be obliged to),
in reliance upon such assumption, make available to a Borrower a corresponding
amount. If such amount is not in fact received by the Agent from such Lender on
such Drawdown Date and the Agent has made available a corresponding amount to a
Borrower on such Drawdown Date as aforesaid, such Lender shall pay to the Agent
on demand an amount equal to the product of the Interbank Reference Rate per
annum multiplied by the amount that should have been paid to the Agent by such
Lender on such Drawdown Date and was not, multiplied by a fraction, the
numerator of which is the number of days that have elapsed from and including
such Drawdown Date to but excluding the date on which the amount is received by
the Agent from such Lender and the denominator of which is 365 or 366, as
applicable. A certificate of the Agent containing details of the amount owing
by a Lender under this Section 9.3 shall be binding and conclusive in the
absence of manifest error. If any such amount is not in fact received by the
Agent from such Lender on such Drawdown Date, the Agent shall be entitled to
recover from the Borrowers on demand, the related amount made available by the
Agent to a Borrower as aforesaid together with interest thereon at the
applicable rate per annum payable by the applicable Borrower hereunder.
(b) Notwithstanding the provisions of Section 9.3(a), if any Lender
fails to make available to the Agent its Proportionate Share of any Advance
(such Lender being herein called the "Defaulting Lender"), the Agent shall
forthwith give notice of such failure by the Defaulting Lender to the
applicable Borrower and the other Lenders. The Agent shall then forthwith give
notice to the other Lenders that any Lender may make available to the Agent all
or any portion of the Defaulting Lender's Proportionate Share of such Advance
(but in no way shall any other Lender or the Agent be obliged to do so) in the
place of the Defaulting Lender. If more than one Lender gives notice that it is
prepared to make funds available in the place of a Defaulting Lender in such
circumstances and the aggregate of the funds which such Lenders (herein
collectively called the "Contributing Lenders" and individually called the
"Contributing Lender") are prepared to make available exceeds the amount of the
Advance which the Defaulting Lender failed to make, then each Contributing
Lender shall be deemed to have given notice that it is prepared to make
available its pro rata share of such Advance based on the Contributing Lenders'
relative commitments to advance in such circumstances. If any Contributing
Lender makes funds available in the place of a Defaulting Lender in such
circumstances, then the Defaulting Lender shall pay to any Contributing Lender
making the funds available in its place, forthwith on demand, any amount
advanced on its behalf together with interest thereon at the rate payable by
the applicable Borrower on such Advance from the date of contribution to the
date of payment, against payment by the Contributing Lender making the funds
available of all interest received in respect of the Advance from a Borrower.
The failure of any Lender to make available to the Agent its Proportionate
Share of any Advance as required herein shall not relieve any other Lender of
its obligations to make available to the Agent its Proportionate Share of any
Advance as required herein.
9.4 Payments by the Borrowers
(a) All payments made by or on behalf of a Borrower pursuant to this
Agreement shall be made to and received by the Agent on behalf of the Lenders
and shall be distributed by the Agent to the Lenders as soon as possible upon
receipt by the Agent. Subject to Sections 9.3, 9.4(b), 9.4 (c) and 9.5, the
Agent shall distribute:
(i) payments of interest on or in respect of Advances in
accordance with each Lender's Proportionate Share of
the Credit;
(ii) repayments and prepayments of principal of Advances
in accordance with each Lender's Proportionate Share
of the Credit; and
(iii) all other payments received by the Agent in
accordance with each Lender's Proportionate Share of
the Credit, provided however, that with respect to
proceeds of realization, each Lender shall receive
an amount calculated in accordance with its Lender's
Share of the Obligations but no Lender shall, in any
event, receive an amount in excess of the amounts
owing to it in respect of the Obligations.
(b) All payments made by or on behalf of a Borrower pursuant to this
Agreement with respect to any L/C shall be made to and received by the Agent.
Subject to Section 9.5, the Agent shall distribute all payments received by it
with respect to any L/C as follows:
(i) if the amount received by the Agent is an amount
reimbursing the Issuing Lender for amounts paid by
the Issuing Lender, payment shall be made to the
Issuing Lender, to the extent that the Issuing
Lender has not been previously reimbursed by such
Borrower or the Lenders or otherwise as provided for
herein, and to the extent that the Issuing Lender
has been previously reimbursed by the Lenders, to
such Lenders;
(ii) if the amount received by the Agent is an amount in
respect of an L/C commission or the Fronting Fee:
(A) payment shall be made firstly to the
Issuing Lender of an amount in respect of
the Fronting Fee to the extent not already
received, and
(B) payment shall be made thereafter to each
Lender of its Proportionate Share of the
amount of the L/C commission received less
the amount of any Fronting Fee owing to the
Issuing Lender with respect to such amount.
(c) All payments made by or on behalf of a Borrower pursuant to this
Agreement with respect to any Overdraft Availment shall be made to and received
by the Overdraft Lender. Subject to the foregoing and to Section 9.5, the Agent
shall distribute all payments received by it with respect to any Overdraft
Availment as follows:
(i) payments of interest relating to Overdraft
Availments prior to receipt by the Overdraft Lender
of a Cessation Notice (or receipt by the Agent of a
notice from the Overdraft Lender that it has
discontinued making Overdraft Availments), to the
Overdraft Lender;
(ii) payments of interest relating to Overdraft
Availments following receipt by the Overdraft Lender
of a Cessation Notice (or receipt by the Agent of a
notice from the Overdraft Lender that it has
discontinued making Overdraft Availments), to the
Lenders in accordance with each Lender's
Proportionate Share of the Overdraft Availment
assumed pursuant to Section 5.26;
(iii) repayments of principal relating to Overdraft
Availments prior to receipt by the Overdraft Lender
of a Cessation Notice (or receipt by the Agent of a
notice from the Overdraft Lender that it has
discontinued making Overdraft Availments), to the
Overdraft Lender; and
(iv) repayments of principal relating to Overdraft
Availments following receipt by the Overdraft Lender
of a Cessation Notice (or receipt by the Agent of a
notice from the Overdraft Lender that it has
discontinued making Overdraft Availments), to the
Lenders in accordance with each Lender's
Proportionate Share of the Overdraft Availment
assumed pursuant to Section 5.26.
(d) Subject to Section 9.5, if the Agent does not distribute a
Lender's share of a payment made by a Borrower to that Lender for value on the
day that payment is made or deemed to have been made to the Agent, the Agent
shall pay to the Lender on demand an amount equal to the product of the
Interbank Reference Rate per annum multiplied by the Lender's share of the
amount received by the Agent from such Borrower and not so distributed,
multiplied by a fraction, the numerator of which is the number of days that
have elapsed from and including the date of receipt of the payment by the Agent
to but excluding the date on which the payment is made by the Agent to such
Lender and the denominator of which is 365 or 366, as applicable.
9.5 Payments by Agent
(a) For greater certainty, the following provisions shall apply to any
and all payments made by the Agent to the Lenders hereunder:
(i) the Agent shall be under no obligation to make any
payment (whether in respect of principal, interest,
fees or otherwise) to any Lender until an amount in
respect of such payment has been received by the
Agent from the applicable Borrower;
(ii) if the Agent receives less than the full amount of
any payment of principal, interest, fees or other
amount owing by a Borrower under this Agreement, the
Agent shall have no obligation to remit to any
Lender any amount other than such Lender's
Proportionate Share of that amount which is actually
received by the Agent;
(iii) if any Lender advances more or less than its
Proportionate Share of any Advance, such Lender's
entitlement to any payment in respect of such
Advance shall be increased or reduced, as the case
may be, in proportion to the amount actually
advanced by such Lender including, for the avoidance
of any doubt, any amounts attributable to
contributions by a Lender as a Contributing Lender;
(iv) if a Lender's Proportionate Share of an Advance has
been advanced, or a Lender's Commitment has been
outstanding, for less than the full period to which
any payment by a Borrower relates, such Lender's
entitlement to such payment shall be reduced in
proportion to the length of time such Lender's
Proportionate Share of the or such Lender's
Commitment, as the case may be, has actually been
outstanding;
(v) the Agent shall forward all payments to a Lender to
the address of such Lender set forth next to its
name on the execution pages of this Agreement or as
set forth in the Assignment Agreement executed by
such Lender;
(vi) the Agent, acting reasonably and in good faith
shall, after consultation with the Lenders in the
case of any dispute, determine in all cases the
amount of all payments to which each Lender is
entitled and such determination shall, in the
absence of manifest error, be binding and
conclusive; and
(vii) upon request, the Agent shall deliver a statement
detailing any of the payments to the Lenders
referred to herein.
(b) Unless the Agent has actual knowledge that a Borrower has not made
or will not make a payment to the Agent for value on the date in respect of
which such Borrower has notified the Agent that the payment will be made or on
the date on which such payment is otherwise required to be made in accordance
with the provisions of this Agreement, the Agent shall be entitled to assume
that such payment has been or will be received from such Borrower when due and
the Agent may (but shall not be obliged to), in reliance upon such assumption,
pay the Lenders corresponding amounts. If the payment by such Borrower is in
fact not received by the Agent on the required date and the Agent has made
available corresponding amounts to the Lenders, the applicable Borrower shall,
without limiting its other obligations under this Agreement, indemnify the
Agent against any and all liabilities, obligations, losses, damages, penalties,
costs, expenses or disbursements of any kind or nature whatsoever that may be
imposed on or incurred by the Agent as a result and shall be secured by the
Security. A certificate of the Agent with respect to any amount owing by a
Borrower under this Section shall be conclusive evidence of the amount owing in
the absence of manifest error.
9.6 Apportionment of Standby Fees between Lenders
The standby fee calculated and collected pursuant to Section 2.6 shall
be paid by the Agent to each Lender on the basis of each Lender's Proportionate
Share of the average unused portion of the Credit, the amount payable to the
Overdraft Lender being reduced having regard to the Overdraft Availments made
by the Overdraft Lender for each applicable period.
9.7 Direct Receipts and Payments
The Lenders agree among themselves that, except as otherwise provided
for in this Agreement and except as necessary to adjust for Advances (including
Overdraft Availments) that are not in each Lender's Proportionate Share under
the Credit, all sums received by a Lender relating to this Agreement or by
virtue of the Security (other than in respect of Overdraft Availments prior to
the receipt by the Overdraft Lender of a Cessation Notice or receipt by the
Agent of a notice from the Overdraft Lender that it has discontinued making
Overdraft Availments), whether received by voluntary payment, by the exercise
of the right of set-off or compensation or by counterclaim, cross-action or as
proceeds of realization of any Security or otherwise, shall be shared by each
Lender in its Proportionate Share under the Credit and each Lender undertakes
to do all such things as may be reasonably required to give full effect to this
Section, including, without limitation, the purchase from other Lenders of such
Obligations or a portion thereof by the Lender who has received an amount in
excess of its Proportionate Share under the Credit as shall be necessary to
cause such purchasing Lender to share the excess amount rateably in its
Proportionate Share under the Credit with the other Lenders. If any sum which
is so shared is later recovered from the Lenders who originally received it,
the Lender shall restore its Proportionate Share of such sum to such Lenders,
without interest. If any Lender (a "Receiving Lender") shall obtain any payment
of moneys due under this Agreement as referred to above, the Receiving Lender
shall forthwith remit such payment to the Agent and, upon receipt, the Agent
shall distribute such payment in accordance with the provisions of Section 9.5.
Notwithstanding the foregoing or anything else in this Agreement, the Lenders
agree that all proceeds of realization shall be distributed to each Lender on
the basis of its Lender's Share of the Obligations and, subject to Section 9.5,
each Lender undertakes to do all such things as may be reasonably required to
give full effect to this provision.
9.8 Obligations Pari Passu
Each of the Lenders acknowledges and agrees that:
(a) all Obligations owed to a Swap Lender under or in connection
with interest rate and currency hedging arrangements made by
it to a Borrower in relation to Advances under this
Agreement; and
(b) all Obligations owed to a Lender under or in connection with
money transfer services, payroll services, cash management,
money management and other similar services provided by it to
a Restricted Party not in excess of Cdn. $2,500,00 or the
equivalent thereof in other currencies at any time;
shall be secured by the Security and shall rank pari passu with all other
Obligations owing to the Lenders, or any of them, hereunder, provided however,
that none of the Obligations described in paragraphs (a) or (b) above shall be
included in the commitments of any Lender for the purposes of determining the
weight of any vote, consent, approval or other authorization to be given by the
Majority Lenders under or in connection with this Agreement or any other Credit
Document.
9.9 Administration of the Credit
(a) Unless otherwise specified herein, the Agent shall perform the
following duties under this Agreement:
(i) prior to an Advance, ensure that all conditions
precedent to such Advance have been fulfilled in
accordance with the terms of this Agreement;
(ii) take delivery of each Lender's Proportionate Share
of an Advance and, if applicable, contributions of a
Contributing Lender, and make all Advances hereunder
in accordance with the procedures set forth in
Sections 5.3 and 5.12;
(iii) use reasonable efforts to collect promptly all sums
due and payable by the Borrowers pursuant to this
Agreement;
(iv) make all payments to the Lenders in accordance with
the provisions hereof;
(v) on behalf of each Lender, to execute and deliver
each of the documents constituting Security
hereunder requiring execution and delivery and to
accept delivery from the Restricted Parties of all
documents constituting Security hereunder;
(vi) hold the Security on behalf of the Lenders and take
all necessary steps to comply with registration
requirements so that the Security remains perfected
under applicable laws, but each Lender shall notify
the Agent of any circumstance that might affect the
perfection of the Security of which such Lender
becomes aware, provided that failure of such Lender
to so notify the Agent shall not affect that
Lender's rights under the Security or otherwise;
(vii) hold all legal documents relating to the Credit,
maintain complete and accurate records showing all
Advances made by the Lenders (other than Overdraft
Availments of which it has not been given notice and
details by the Overdraft Lender), all remittances
and payments made by the Borrowers to the Agent, all
remittances and payments made by the Agent to the
Lenders and all fees or any other sums received by
the Agent and, except for accounts, records and
documents relating to the fees payable under the Fee
Agreement, allow each Lender and their respective
advisors to examine such accounts, records and
documents at their own expense, and provide any
Lender, upon reasonable notice, with such copies
thereof as such Lender may reasonably require from
time to time at such Lender's expense;
(viii) except as otherwise specifically provided for in
this Agreement, promptly advise each Lender upon
receipt of each notice and deliver to each Lender,
promptly following receipt, all other written
communications furnished by the Borrowers or the
Restricted Parties to the Agent on behalf of the
Lenders pursuant to this Agreement, including,
without limitation, copies of financial reports and
certificates which are to be furnished to the Agent;
(ix) provide to each of the Lenders copies of this
Agreement, the Security and the other Credit
Documents except for the Fee Agreement;
(x) promptly provide to each Lender, upon request, an
up-to-date loan status report; and
(xi) upon learning of same, promptly advise each Lender
in writing of the occurrence of an Event of Default
or Pending Event of Default or the occurrence of any
event, condition or circumstance which would be
likely to have a material adverse effect on the
ability of any Borrower or Restricted Party to
comply with this Agreement or the Security or of any
material adverse information coming to the attention
of the Agent relative to the Security or of the
occurrence of any material adverse change in the
Financial Condition (considered as a whole) of a
Borrower, provided that, except as aforesaid, the
Agent shall be under no duty or obligation
whatsoever to provide any notice to the Lenders and
further provided that each Lender hereby agrees to
notify the Agent of any Event of Default or Pending
Event of Default of which it becomes aware.
(b) The Agent may take the following actions only if the prior
unanimous consent of the Lenders is obtained, unless otherwise specified
herein:
(i) amend, modify, discharge, terminate or waive any of
the terms of the Security or provide any consent
thereunder if such amendment, modification,
discharge, termination, waiver or consent would have
a material adverse effect on the Security or on the
rights of the Lenders thereunder;
(ii) amend, modify, discharge, terminate or waive any of
the terms of this Agreement or provide any consent
hereunder if such amendment, modification,
discharge, termination, waiver or consent would
increase the amount of the Credit, increase the
Proportionate Share of a Lender (which, for greater
certainty, shall not include adjustments to amounts
of Advances contemplated herein in the course of the
administration of the Credit or in relation to
Contributing Lenders), amend the purpose of the
Credit, reduce the interest rate applicable to the
Credit, reduce the fees payable with respect to the
Credit, extend any date fixed for payment of
principal or interest relating to the Credit or
extend the Maturity Date of the Credit;
(iii) amend Section 2.1 or any defined term used therein;
(iv) amend this Section 9.9(b) or any defined term used
herein; and
(v) amend the definition "Majority Lenders".
(c) Any act or action not specifically enumerated in Section 9.9(a) or
(b) above, including, without limitation, the following actions, may be taken
by the Agent only with the prior consent of the Majority Lenders:
(i) subject to Section 9.9(b), exercise any and all
rights of approval conferred upon the Lenders by
this Agreement;
(ii) give prompt and timely written notice to a Borrower
in respect of any amounts due or overdue under the
terms of this Agreement and of any other matter in
respect of which notice may be required, permitted,
necessary or desirable in accordance with or
pursuant to this Agreement;
(iii) amend, modify or waive any of the terms of this
Agreement (including waiver of an Event of Default
or Pending Event of Default) or of the Security or
provide any consent hereunder if and to the extent
that such action is not otherwise provided for in
this Section 9.9;
(iv) engage and consult a professional as permitted by
Section 9.10 (other than counsel which shall not
require the consent of the Lenders or any of them);
(v) declare an Event of Default or take action to
enforce performance of the Obligations of a Borrower
or Restricted Party and realize upon and/or enforce
the Security including the appointment of a
receiver, the exercise of powers of distress, lease
or sale given by the Security or by law and take
foreclosure proceedings and/or pursue any other
legal remedy necessary;
(vi) deliver a Cessation Notice to the Overdraft Lender
as contemplated by Section 5.26;
(vii) accelerate the amounts outstanding under the Credit;
and
(viii) pay insurance premiums, taxes and any other sums as
may be reasonably required to protect the interests
of the Lenders.
(d) Notwithstanding Sections 9.9(b) and (c), the Agent may, without
the consent of the Lenders, make amendments to the Credit Documents that are
for the sole purpose of curing any immaterial or administrative ambiguity,
defect or inconsistency. The Agent shall immediately notify the Lenders of any
such action. The Agent may also discharge any Security to the extent necessary
to allow any Restricted Party to complete any sale or other disposition of
Property permitted by this Agreement
(e) As between the Borrowers and the Restricted Parties, on the one
hand, and the Agent and the Lenders, on the other hand:
(i) all statements, certificates, consents and other
documents which the Agent delivers on behalf of the
Lenders or the Majority Lenders in accordance with
the terms of this Agreement shall be binding on each
of the Lenders, and no Restricted Party shall be
required to ascertain or confirm the authority of
the Agent in delivering such documents;
(ii) all certificates, statements, notices and other
documents which are delivered by a Restricted Party
to the Agent in accordance with this Agreement shall
be deemed to have been duly delivered by such
Restricted Party to each of the Lenders;
(iii) all payments which are delivered by a Borrower to
the Agent in accordance with this Agreement shall be
deemed to have been duly delivered by such Borrower
to each of the Lenders; and
(iv) unless an Event of Default or Pending Event of
Default has occurred and is continuing, Maxxcom's
consent to the appointment of any Successor Agent
must be obtained, but the Maxxcom's consent may not
be unreasonably withheld.
9.10 Rights of Agent
(a) In administering the Credit, the Agent may retain such solicitors,
counsel, auditors, engineers, environmental consultants and other experts and
agents as the Agent may select, in its sole discretion, acting reasonably and
in good faith after consultation with the Lenders.
(b) The Agent shall be entitled to rely on any communication,
instrument or document believed by it to be genuine and correct and to have
been signed by the proper individual or individuals, and shall be entitled to
rely and shall be protected in relying as to legal matters upon opinions of
independent legal advisors selected by it. The Agent may also assume that any
representation made by the Borrowers, the Restricted Parties and any of their
respective Subsidiaries is true and that no Event of Default, Pending Event of
Default or material adverse change in the Financial Condition of a Borrower, a
Restricted Parties or any of their respective Subsidiaries has occurred unless
the officers or employees of the Agent, acting in their capacity as officers or
employees responsible for the Borrowers' accounts have actual knowledge to the
contrary or have received notice to the contrary from any other party to this
Agreement.
(c) The Agent may, without any liability to account, accept deposits
from and lend money to and generally engage in any kind of banking or other
business with the Borrowers, the Restricted Parties and any of their respective
Subsidiaries, as if it were not the Agent.
(d) Except in its capacity as a Lender, the Agent shall not be
required to advance its own funds for any purpose, and in particular, shall not
be required to pay with its own funds insurance premiums, taxes or public
utility charges or the cost of repairs or maintenance with respect to the
assets which are the subject matter of the Security, nor shall it be required
to pay with its own funds the fees of solicitors, counsel, auditors, engineers,
environmental consultants and other experts or agents engaged by it as
permitted and contemplated hereby.
9.11 Acknowledgments, Representations and Covenants of Lenders
(a) It is acknowledged and agreed by each Lender that it has itself
been, and will continue to be, solely responsible for making its own
independent appraisal of and investigations into the Financial Condition,
creditworthiness, affairs, status and nature of the Borrowers, the Restricted
Parties and their respective Subsidiaries. Accordingly, each Lender confirms to
the Agent that it has not relied, and will not hereafter rely, on the Agent to
check or inquire on its behalf into the adequacy or completeness of any
information provided by the Borrowers, the Restricted Parties or any of their
respective Subsidiaries under or in connection with this Agreement or the
transactions herein contemplated (whether or not such information has been or
is hereafter distributed to such Lender by the Agent), or to assess or keep
under review on its behalf the Financial Condition, creditworthiness, affairs,
status or nature of the Borrowers, the Restricted Parties or any of their
respective Subsidiaries.
(b) Each Lender represents and warrants that it has the legal capacity
to enter into this Agreement pursuant to its Constating Documents and any
applicable legislation and that it has not violated its Constating Documents or
any applicable legislation by so doing.
(c) Each Lender agrees to indemnify the Agent (to the extent not
reimbursed by the Borrowers), rateably according to its Proportionate Share
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by, or asserted
against the Agent in any way relating to or arising out of the Credit Documents
or the transactions therein contemplated, provided that no Lender shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the Agent's negligence or wilful misconduct. Without limiting
the generality of the foregoing, each Lender agrees to reimburse the Agent
promptly upon demand for its Proportionate Share of reasonable out-of-pocket
expenses (including reasonable legal fees and disbursements) incurred by the
Agent in connection with the preservation of any rights of the Agent or the
Lenders under, or the enforcement of, or legal advice in respect of rights or
responsibilities under this Agreement, to the extent that the Agent is not
reimbursed for such expenses by the Borrowers. The obligation of the Lenders to
indemnify the Agent shall survive the termination of this Agreement.
(d) Each of the Lenders acknowledges and confirms that in the event
that the Agent does not receive payment in accordance with this Agreement, it
shall not be the obligation of the Agent to maintain the Credit in good
standing nor shall any Lender have recourse to the Agent in respect of any
amounts owing to such Lender under this Agreement.
(e) Each Lender acknowledges and agrees that its obligation to advance
its Proportionate Share of Advances in accordance with the terms of this
Agreement is independent and in no way related to the obligation of any other
Lender hereunder.
(f) Each Lender hereby acknowledges receipt of a copy of this
Agreement, the Security and each other Credit Document (other than the Fee
Agreement) and acknowledges that it is satisfied with the form and content of
all such documents.
(g) Except to the extent recovered by the Agent from a Borrower,
promptly following demand therefor, each Lender shall pay to the Agent an
amount equal to such Lender's Proportionate Share of any and all reasonable
costs, expenses, claims, losses and liabilities incurred by the Agent in
connection with this Agreement and the Security (including, without limitation,
the collection or enforcement thereof), except for those incurred by reason of
the Agent's negligence or willful misconduct.
9.12 Authorization of Mezz Inter-Creditor Agreement
Each of the Lenders hereby authorizes and directs the Agent to execute
and deliver the Mezz Inter-Creditor Agreement on its behalf and agrees that the
Mezz Inter-Creditor Agreement shall be binding on it as if it was a party
thereto.
9.13 Collective Action of the Lenders
Each of the Lenders hereby acknowledges that to the extent permitted
by Applicable Law, the Security and the remedies provided under the Credit
Documents to the Lenders and/or to the Agent on behalf of the Lenders are for
the benefit of the Lenders collectively and acting together and not severally
and further acknowledges that its rights hereunder and under the Security are
to be exercised not severally, but by the Agent upon the decision of the
Majority Lenders or Lenders as required by this Agreement. Accordingly,
notwithstanding any of the provisions contained herein or in the Security each
of the Lenders hereby covenants and agrees that it shall not be entitled to
take any action hereunder or thereunder including, without limitation, 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 Majority
Lenders or Lenders, as required by this Agreement. Each of the Lenders hereby
further covenants and agrees that upon any such written agreement being given
by the Majority Lenders or Lenders, as applicable, it shall co-operate fully
with the Agent to the extent requested by the Agent. Notwithstanding the
foregoing, in the absence of instructions from the Lenders and where in the
sole opinion of the Agent, acting reasonably and in good faith, the exigencies
of the situation warrant such action, the Agent may (but shall not be required
to) without notice to or consent of the Lenders take such action on behalf of
the Lenders as it deems appropriate or desirable in the interest of the
Lenders, and it shall thereafter advise the Lenders of such action.
9.14 Successor Agent
Subject to the appointment and acceptance of a Successor Agent as
provided in this Section and obtaining the consent of Maxxcom thereto as
contemplated by Section 9.9(d)(iv), the Agent may resign at any time by giving
30 days written notice thereof to the Lenders and Maxxcom. Upon receipt of
notice by the Lenders of the resignation of the Agent, the Majority Lenders
may, within 21 days, appoint a successor from among the Lenders or, if no
Lender is willing to accept such an appointment, from among other banks to
which the Bank Act (Canada) applies and which have offices in Toronto, Ontario,
New York, New York and London, England (the "Successor Agent"). If no Successor
Agent has been so appointed and has accepted such appointment within 21 days
after the retiring Agent's giving of notice of resignation, then the retiring
Agent may, on behalf of the Lenders, appoint a Successor Agent. Upon the
acceptance of any appointment as Agent hereunder by a Successor Agent, the
retiring Agent shall pay the Successor Agent any unearned portion of any fee
paid to the Agent for acting as such, and the Successor Agent shall 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 further
duties and obligations as Agent under this Agreement and the other Credit
Documents. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Article shall continue to enure to its benefit and be
binding upon it as to any actions taken or omitted to be taken by it while it
was Agent hereunder.
9.15 Confidentiality
The Agent and each of the Lenders shall keep confidential all
information (not otherwise in the public domain) obtained in respect of the
Borrowers and the Restricted Parties except: (a) to the extent that such
disclosure is required by law or regulation in which case prior written notice
of such proposed disclosure shall be provided to Maxxcom, to the extent that it
is legally or practicably possible to do so; (b) to the extent disclosed to
potential assignees, participants or their respective successors of portions of
the Credit on a confidential basis; or (c) as are necessarily disclosed in
proceedings against any of the Borrowers or the Restricted Parties in
connection with the enforcement of any of their respective rights under a
Credit Document.
9.16 Provisions Operative Between Lenders and Agent Only
Except for the provisions of Sections 9.9(d), 9.11(b), 9.11(e),
9.11(f), 9.13, 9.14 and 9.15, the provisions of this Article relating to the
rights and obligations of the Lenders and the Agent inter se shall be operative
as between the Lenders and the Agent only, and none of the Borrowers, the
Restricted Parties or any of their respective Subsidiaries shall have any
rights or obligations under or be entitled to rely for any purpose upon such
provisions.
9.17 Payments, etc.
Notwithstanding any other provision of this Agreement, it is
understood and agreed that Maxxcom shall make all payments required to be made
by it under this Agreement to the Agent at the International Banking Division
of Scotiabank located at 00 Xxxx Xxxxxx Xxxx, 00xx Xxxxx, Xxxxxxx, Xxxxxxx X0X
0X0 and that Maxxcom US shall make all payments required to be made by it under
this Agreement to the Agent at the Atlanta Agency of Scotiabank located at
Xxxxx 0000, 000 Xxxxxxxxx Xxxxxx X.X., Xxxxxxx, Xxxxxxx, 00000.
9.18 Quebec Security, etc.
Each Lender hereby appoints the Agent as, and agrees that the Agent
shall act as, trustee of the security and the rights and benefits constituted
or to be constituted by any Security expressed as being governed by the laws of
the Province of Quebec and the Agent hereby declares that it shall hold such
security and such rights and benefits in trust for the benefit of the Lenders
subject to the terms of this Agreement.
ARTICLE 10
ADDITIONAL LENDERS, SUCCESSORS AND ASSIGNS
10.1 Successors and Assigns
(a) The Credit Documents to which each is a party shall be binding
upon and enure to the benefit of the Agent, each Lender, the Borrowers, the
Restricted Parties and their respective successors and permitted assigns,
except that none of the Borrowers or the applicable Restricted Parties shall
assign (or purport to assign) any rights or obligations with respect to this
Agreement or any of the other Credit Documents without the prior written
consent of all of the Lenders.
(b) The collective rights and obligations of the Lenders under this
Agreement are assignable in whole or in part (pro rata) in accordance with
Section 10.2: (i) prior to the occurrence of a Pending Event of Default or an
Event of Default which is continuing, with the consent of Maxxcom, such consent
not to be unreasonably withheld; and (ii) after the occurrence of a Pending
Event of Default or an Event of Default which is continuing, without the
consent of any Borrower or applicable Restricted Party (provided however, that
the Agent shall provide to Maxxcom all relevant details of any such assignment
as soon as practicable following the completion thereof); and (iii) at all
times with the consent of the Issuing Lender. Subject to the foregoing, any
Lender shall be entitled to assign in whole or in part its individual rights
and obligations hereunder in accordance with the provisions of Section 10.2 and
the other terms of this Agreement. For greater certainty, Maxxcom's consent
shall not be considered to be unreasonably withheld if withheld on the basis
that laws or regulations then exist which would be applicable to the proposed
assignee and which would trigger a Borrower's obligations under Sections 11.14
or 11.15 with respect to such proposed assignee. In addition, without any
consent of Maxxcom being required at any time, the Lenders shall be entitled to
permit other financial institutions to participate in the Credit in accordance
with the provisions of Section 10.3 and the other terms of this Agreement. Each
of the Borrowers and the Restricted Parties hereby consents to the disclosure
of any information relating to the Borrowers and the Restricted Parties to any
potential Lender or participant provided that the potential Lender or
participant agrees in writing to keep the information confidential.
(c) Each assignment shall be of a uniform, and not a varying,
percentage of all rights and obligations of the assignor(s) under or in respect
of the Credit. No assignment may result in the Commitment of any Lender or any
prospective assignee thereof determined as of the effective date of the
Assignment Agreement with respect to such assignment, being less than Cdn.
$5,000,000 (or the equivalent thereof in other currencies) unless the
Commitment of such Lender has been reduced to nil nor may the assignment be in
an amount less than Cdn. $5,000,000 unless it represents such Lender's entire
Commitment.
(d) Notwithstanding any other provisions of this Agreement, each
Lender agrees that it shall not assign or sell participations in any portion of
its rights and obligations under this Agreement including, without limitation,
any portion of its Commitment, to anyone other than an Eligible Assignee
(unless there shall have occurred an Event of Default which is continuing, in
which case a Lender may make any assignment or sell participations to any bank,
financial institution or commercial lender whether or not the provisions of
Sections 11.14 or 11.15 would be triggered) and each Lender shall in any event
give prior written notice of a proposed assignment (and, if relevant, any
related waiver) to the Agent and the Borrowers.
(e) A participation by a Lender of its interest (or any portion
thereof) hereunder or a payment by a participant to a Lender as a result of the
participation will not constitute a payment hereunder to the Lender or an
Advance to any Borrower. A payment made by an assignee to an assigning Lender
in order for the assignee to assume its Proportionate Share of Advances made by
the assigning Lender will reduce the Advances owing by the Borrowers to the
assigning Lender and will be deemed to be Advances by the assignee to the
respective Borrower as of the date that the payment is made, excluding in each
case the effect of any premium or discount.
10.2 Assignments
(a) Subject to Section 10.1 and the other terms of this Agreement, the
Lenders collectively or individually may assign to one or more Eligible
Assignees all or a portion of their respective rights and obligations under
this Agreement (including, without limitation, all or a portion of their
respective Commitments). The parties to each such assignment shall execute and
deliver an Assignment Agreement to the Agent, for its acknowledgment and
recording in the Register and shall pay a processing and recording fee of Cdn.
$2,500 to the Agent. After such execution, delivery, acknowledgment and
recording the assignee thereunder shall be a party to this Agreement and, to
the extent that rights and obligations hereunder have been assigned to it, have
the rights and obligations of a Lender hereunder, and the assigning Lender
thereunder shall, to the extent that rights and obligations hereunder have been
assigned by it pursuant to such Assignment Agreement, relinquish its rights and
be released from its obligations under this Agreement, other than obligations
in respect of which it is then in default, and, in the case of an Assignment
Agreement covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto.
(b) The agreements of an assignee contained in an Assignment Agreement
shall benefit the assigning Lender thereunder, and the other Lenders, the Agent
and the Borrowers in accordance with the terms of the Assignment Agreement and
this Agreement.
(c) The Agent shall maintain at its address referred to herein a copy
of each Assignment Agreement delivered to and acknowledged by it and a register
for recording the names and addresses of the Lenders and the Commitment under
the Credit of each Lender from time to time (the "Register"). The entries in
the Register shall be conclusive and binding for all purposes, absent manifest
error. The Borrowers, the Agent and each of the Lenders may treat each Person
whose name is recorded in the Register as a Lender hereunder for all purposes
of this Agreement, and need not recognize any Person as a Lender unless it is
recorded in the Register as a Lender. The Register shall be available for
inspection by Maxxcom or any Lender at any reasonable time and from time to
time upon reasonable prior notice.
(d) Upon its receipt of an Assignment Agreement executed by an
assigning Lender and an assignee and consented to (if applicable) by Maxxcom
and the Issuing Lender, the Agent shall, if the Assignment Agreement has been
completed and is in the required form with such immaterial changes as are
acceptable to the Agent:
(i) acknowledge the Assignment Agreement;
(ii) record the information contained therein in the
Register; and
(iii) give prompt notice thereof to the Borrowers and the
other Lenders, and provide them with an updated
version of Schedule E .
10.3 Participations
Subject to the provisions of Section 10.1, each Lender may sell
participations to one or more financial institutions or other Persons (other
than any Person who engages in a business competitive with that of a Borrower)
in or to all or portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its Commitment), but the
participant shall not become a Lender and:
(a) the Lender's obligations under this Agreement (including,
without limitation, its Commitment) shall remain unchanged;
(b) the Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations;
(c) the Restricted Parties, the Agent and the other Lenders shall
continue to deal solely and directly with the Lender in
connection with the Lender's rights and obligations under
this Agreement; and
(d) no participant shall have any right to approve any amendment
or waiver of any provision of this Agreement or any other
matter arising under or in connection with this Agreement, or
any consent to any departure by any Person therefrom.
Notwithstanding the foregoing, each such participant shall have the same
benefit, as if it were a Lender, with respect to the rights provided to the
Lenders in Section 11.15 (provided each Borrower shall have the corresponding
rights relating to such Lender participant under Section 11.17) and shall have
the right to be provided all information by the particular Lender relating to
the Borrowers, the Restricted Parties and their respective Financial Condition
which is required to be provided to any Lender.
ARTICLE 11
MISCELLANEOUS PROVISIONS
11.1 Headings and Table of Contents
The division of this Agreement into Articles, Sections, subsections,
paragraphs, subparagraphs and clauses and the insertion of headings are for the
convenience of reference only and shall not affect the construction or
interpretation of this Agreement. The terms "this Agreement", "hereof",
"hereunder" and similar expressions refer to this Agreement and not to any
particular Article, Section, Subsection, paragraph, subparagraph, clause or
other portion of this Agreement.
11.2 Accounting Terms
Each accounting term used in this Agreement, unless otherwise defined
herein or the context otherwise requires, has the meaning assigned to it under
GAAP.
11.3 Capitalized Terms
All capitalized terms used in any of the Credit Documents (other than
this Agreement) which are defined in this Agreement shall have the meanings
defined herein unless otherwise defined in the other document.
11.4 Statutory References
Each reference in this Agreement to any act, code, statute,
regulation, official interpretation, directive or other legislative enactment
of any Canadian, United States or other foreign jurisdiction (including any
political subdivision thereof) shall be construed so as to include such act,
code, statute, regulation, official interpretation, directive or enactment and
each amendment, reenactment, reissuance or replacement thereof made at or
before the time in question.
11.5 Severability
Any provision of this Agreement which is or becomes prohibited or
unenforceable in any relevant jurisdiction shall not invalidate or impair the
remaining provisions hereof which shall be deemed severable from such
prohibited or unenforceable provision and any such prohibition or
unenforceability in any such jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
11.6 Number, Gender and References to Agreements
Unless the context otherwise requires, words importing the singular
number shall include the plural and vice versa, words importing gender include
all genders and references to agreements and other contractual instruments
shall be deemed to include all present or future amendments, supplements,
restatements or replacements thereof or thereto.
11.7 Amendment, Supplement or Waiver
No amendment, supplement or waiver of any provision of any Credit
Document, nor any consent to any departure by any Restricted Party therefrom,
shall in any event be effective unless it is in writing, makes express
reference to the provision affected thereby and, subject to Section 11.11 is
signed by or on behalf of the parties to be bound thereby and then such waiver
or consent shall be effective only in the specific instance and for the
specific purpose for which given. No waiver or act or omission of the Agent,
the Lenders or the Majority Lenders, as applicable, shall extend to or be taken
in any manner whatsoever to affect any subsequent Event of Default or breach by
any Restricted Party, as the case may be, or otherwise of any provision of any
Credit Document or the rights resulting therefrom.
11.8 Governing Law
This Agreement shall be conclusively deemed to be made under, and
shall for all purposes be governed by and construed in accordance with, the
laws of the Province of Ontario and the laws of Canada applicable therein. Each
of the other Credit Documents, except for those which expressly provide
otherwise, shall be conclusively deemed to be made under, and shall for all
purposes be governed by and construed in accordance with, the laws of the
Province of Ontario and the laws of Canada applicable therein.
11.9 This Agreement to Govern
In the event of any conflict or inconsistency (including duplication
of subject matter) between the terms of this Agreement and the terms of any
other Credit Document (other than the Fee Agreement and any inter-creditor
agreement, which shall prevail as against this Agreement), the provisions of
this Agreement shall govern to the extent necessary to remove the conflict or
inconsistency unless a Credit Document specifically provides that one or more
terms thereof are to prevail over the terms of this Agreement.
In addition and without limitation of the foregoing, if and to the
extent that there is any conflict or inconsistency between the provisions of
this Agreement applicable to any Restricted Party which is not a Wholly-Owned
Subsidiary of Maxxcom and the provisions of the Restricted Party Supplemental
Agreement and/or Consent to Pledge applicable to such Restricted Party, the
provisions of this Agreement shall prevail to the extent necessary to remove
the conflict or inconsistency. In particular, and without limitation of the
foregoing in any manner whatsoever:
(a) no representation and warranty made in respect of any such
Restricted Party which is or becomes incorrect under this
Agreement shall be deemed to be waived or accepted by the
Agent or the Lenders (or any of them) under this Agreement on
the basis that the representation or warranty is not or would
not be incorrect under an applicable Restricted Party
Supplemental Agreement and/or Consent to Pledge and at no
time shall any of the Borrowers or Guarantors make an
assertion to such effect; and
(b) no breach of a provision of this Agreement in respect of any
such Restricted Party shall be deemed to be waived or
accepted by the Agent or the Lenders (or any of them) under
this Agreement on the basis that the that there has not been
a breach of any provision of the applicable Restricted Party
Supplemental Agreement and/or Consent to Pledge and at no
time shall any of the Borrowers or Guarantors make an
assertion to such effect.
11.10 Permitted Encumbrances
The designation of an Encumbrance as a Permitted Encumbrance is not,
and shall not be deemed or construed to be, an acknowledgment by the Lenders
that the Encumbrance shall have priority over the Security or that such
Encumbrance shall be permitted to have such priority.
11.11 Consent of Lenders, etc.
Any reference herein to an action taken by, a determination made by, a
consent given by or a requirement of the Agent or the Lenders shall, unless
otherwise specifically provided, mean and be read as an action taken by, a
determination made by, a consent given by or a requirement of such of the
Agent, the Majority Lenders or all of the Lenders as specified in Sections
9.9(a), (b), (c) or (d), as applicable, in the circumstances.
11.12 Currency
All payments made hereunder shall be made in the currency in respect
of which the obligation requiring such payment arose. Unless the context
otherwise requires, all amounts expressed in this Agreement in terms of money
shall refer to Canadian Dollars. Except as otherwise expressly provided in this
Agreement, wherever this Agreement contemplates or requires the calculation of
the equivalent in U.S. Dollars of an amount expressed in Canadian Dollars, or
vice versa, the calculation shall be made on the basis of the Exchange Rate at
the effective date of the calculation. References in this Agreement to amounts
in one currency shall be deemed to include equivalent amounts, as of the
relevant time, in other currencies.
11.13 Expenses and Indemnity
(a) All statements, reports, certificates, opinions, appraisals and
other documents or information required to be furnished to the Lenders, the
Agent, or any of them, by the Borrowers and the Restricted Parties under this
Agreement shall be supplied without cost to the Lenders, the Agent, or any of
them. The Borrowers and the Guarantors shall pay on demand:
(i) all reasonable out-of-pocket costs and expenses of
the Agent and the Lenders, or any of them,
(including, without limitation, the reasonable fees
and expenses of Lenders' counsel) incurred in
connection with the preparation, execution, delivery
or enforcement of the Credit Documents, any
transfer, assignment or participation of the Credit,
engineering reports and environmental audits and
studies as required by the Majority Lenders, acting
reasonably, and inspections and appraisals at
reasonable intervals; and
(ii) all reasonable out-of-pocket costs and expenses of
the Agent and the Lenders (including, without
limitation, reasonable fees and expenses of each
Lender's counsel) with respect to advice to the
Lenders, or any of them, following the occurrence of
an Event of Default which is continuing as to their
rights and responsibilities in connection with the
Credit and the Credit Documents and enforcement of
the Credit Documents including, without limitation,
security reviews.
(b) All such costs and expenses shall be payable whether or not an
Advance is made under this Agreement.
(c) The Borrowers and the Guarantors shall indemnify and hold harmless
the Lenders, the Agent, and their respective shareholders, officers, directors,
employees and agents (collectively, the "Indemnified Parties") and each of
them, against any and all claims, demands, actions, causes of action, suits,
costs, charges, liabilities, losses or expenses (including reasonable legal
fees and disbursements) which any Indemnified Party may pay, suffer, sustain or
incur as a consequence of, resulting from or relating to (i) any representation
or warranty made herein or in any other Credit Document by the Borrowers or the
Restricted Parties being incorrect in any material respect at the time it was
made or deemed to have been made, including, without limitation, any
representation or warranty relating to environmental matters; (ii) any default
by a Borrower in the payment of any sum due from it, including, but not limited
to, all sums (whether in respect of principal, interest, fees or any other
amount) paid or payable to lenders of funds borrowed by the Lenders, the Agent,
any other Indemnified Party or any of them, in order to fund the amount of any
such unpaid amount to the extent the Lenders are not reimbursed pursuant to any
other provisions of this Agreement; (iii) any failure of a Borrower to complete
any Advance after notice therefor has been given under this Agreement; (iv) the
extension of credit contemplated herein; (v) any actual or threatened
investigation, litigation or proceeding related to any Borrower or a Restricted
Party, whether or not any Indemnified Party is party thereto or any other
transaction to be financed by in whole or in part, directly or indirectly, with
the proceeds of any credit extended hereunder; (vi) any actual or threatened
investigation, litigation or proceeding related to any Release by any Borrower,
Restricted Party or any of their respective Subsidiaries of any Hazardous
Material; (vii) the presence on or under, or the Release from, any property
owned, occupied or operated by any Borrower, Restricted Party or any of their
respective Subsidiaries of any Hazardous Material (including, but not limited
to, any losses, liabilities, damages, injuries, costs, expenses or claims
asserted or arising under any Environmental Law) or a breach of any
Environmental Law, regardless of whether caused by, or within the control of,
such Borrower, Restricted Party or Subsidiary (except to the extent caused by
any of the Indemnified Parties); and (viii) any other default by a Borrower or
Restricted Party. A certificate of the Agent or other Indemnified Party which
has been provided to the Agent (which shall then be provided by the Agent to
Maxxcom) as to the amount of any such loss, expense or other indemnified
liability, incorporating reasonable supporting evidence, shall be prima facie
evidence as to the amount thereof, in the absence of manifest error. The
obligations and agreements in this Section shall survive the termination of
this Agreement and the repayment in full of the Obligations, and shall not be
reduced or impaired by any investigation made by or on behalf of any
Indemnified Party. Each Restricted Party which is party to or bound by this
Agreement from time to time hereby waives, releases and agrees not to make any
claim or bring any cost recovery action against, the Agent or any Lender under
CERCLA or any federal, provincial or state equivalent, or any similar law now
existing or hereafter enacted in any jurisdiction. To the extent that a Lender
or the Agent or any other Indemnified Party is held to be strictly liable under
any Environmental Law, the obligation of each Restricted Party which is party
to or bound by this Agreement from time to time to each Indemnified Party under
this indemnity shall likewise be to indemnify such Lender in full therefor
without regard to fault on the part of such Borrower, Restricted Party or
Subsidiary with respect to the violation or condition which results in
liability of such Indemnified Party. If and to the extent that the foregoing
undertaking may be unenforceable for any reason, each of the Restricted Parties
which is party to or bound by this Agreement from time to time hereby agrees to
make the maximum contribution to the payment and satisfaction of each of the
indemnified liabilities hereunder which is permissible under Applicable Law.
For the purposes of allocating the risk of the Borrowers and the Guarantors
hereunder, the Agent shall be deemed to act as agent for and on behalf of each
of the Indemnified Parties.
11.14 Manner of Payment and Taxes
(a) Any and all payments by a Restricted Party under any Credit
Document shall be made free and clear of, without deduction for, and on a fully
indemnified basis in respect of, any and all present or future Taxes, fees or
withholdings imposed by any taxing authority, but excluding:
(i) Taxes paid or payable by any Lender or required to
be withheld from a payment to any Lender or the
Agent solely as a result of the Lender or the Agent
being organized in or under the laws of, such Lender
or the Agent having a lending office in, or such
Lender otherwise being resident or carrying on
business (except by having executed and delivered
this Agreement or any other Credit Document or
having performed its obligations, rendered an
agreement or having accepted, realized upon, or
enforced any security thereunder) in a jurisdiction
other than that of the Borrower to which any such
Lender has extended credit hereunder.
(ii) Taxes on the net income or capital of a Lender.
In addition, the Borrowers shall, at their expense, cause to be prepared for
each of the Agent and the Lenders (by an accounting firm acceptable to the
Agent and the Lenders) and filed all tax returns and similar documentation
required under the law and shall cause there to be compliance with all other
related requirements of such laws, to the extent such tax returns, similar
documents and requirements arise as a result of making Advances or taking
security under this Agreement
(b) If a Borrower or a Restricted Party shall be required by law to
deduct any Taxes from or in respect of any or all payments under a Credit
Document to any Lender or the Agent, (i) the payment shall be increased by the
Borrower or Guarantor, as applicable, as may be necessary so that after making
all required deductions for such Taxes (including deductions applicable to any
additional sums payable under this Section 11.14) the net amount such Lender or
the Agent (as the case may be) actually receives (after Taxes) is an amount
equal to the sum it would have received had no such deductions for such Taxes
or other deduction been made, (ii) such Borrower or Guarantor, as applicable,
shall make such deductions, and (iii) such Borrower or Guarantor, as
applicable, shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with Applicable Law.
(c) Each Borrower and each Guarantor shall pay any present or future
stamp, documentary, excise, property or similar taxes, charges or levies that
arise from any payment made hereunder or from the execution, delivery or
registration, or, or otherwise with respect to, any Credit Document
(hereinafter referred to as "Other Taxes").
(d) Each Borrower and each Guarantor shall indemnify each Lender and
the Agent for the full amount of Taxes (other than Taxes on the net income or
capital of a Lender) and Other Taxes with respect to any and all payments
received by the Agent or such Lender under a Credit Document. Payment pursuant
to this indemnification shall be made promptly after the date such Lender or
the Agent (as the case may be) makes written demand therefor and shall be made
together with such additional amounts as are necessary in order that the net
amount received by the Agent or such Lender after taxes is equal to the amount
of the indemnity it would have received had no Taxes been payable, deducted or
withheld on such additional amount. Without limitation of the foregoing, each
Borrower and each Guarantor shall also indemnify each Lender and the Agent on
an after-tax basis for any additional taxes on income or net income that each
Lender and the Agent may be obligated to pay as the result of receipt of
additional amounts under this Section 11.14.
(e) Within 30 days after the date of any payment of Taxes, each
Borrower or Guarantor, as applicable, that has paid Taxes shall furnish to the
Agent, at its address referred to in Section 11.22, the original receipt of
payment thereof or a certified copy of such receipt.
(f) For purposes of this Section, the terms "United States" and
"United States person" shall have the meanings specified in Section 7701 of the
Code, and the term "U.S. Borrower" shall mean a Borrower that is a United
States person. With respect to an Obligation of a U.S. Borrower (which is
expressly described herein as such and which is not expressly described herein
as an obligation owed to a person who is not a U.S. Lender), each Lender that
is organized under the laws of a jurisdiction outside the United States shall,
on or prior to the date of its execution and delivery of the Credit Documents,
in the case of a Lender that is an original party to the Credit Documents or,
on the date of the Assignment Agreement pursuant to which it becomes a Lender,
in the case of each other Lender to a U.S. Borrower, and from time to time
thereafter if requested in writing by a U.S. Borrower or the Agent (but only so
long thereafter that such Lender remains lawfully able to do so), provide the
Agent and such Borrower with Internal Revenue Service form 1001, 4224 or (in
the case of a Lender that has certified in writing to the Agent that it is not
a "bank" within the meaning of Section 881(c)(3)(A) of the Code, a "10-percent
shareholder" of the U.S. Borrower within the meaning of Section 871(h)(3)(B) of
the Code, or a "controlled foreign corporation" related to the U.S. Borrower
within the meaning of Section 864(d)(4) of the Code) W-8ECI, as appropriate, or
any substitute or successor form prescribed by the Internal Revenue Service,
certifying respectively in the case of a Lender providing an Internal Revenue
Service form 1001, that such Lender is entitled to benefits under an income tax
treaty to which the United States is a party which treaty reduces the rate of
United States withholding tax on payments under the Credit Documents in the
case of a Lender providing an Internal Revenue Service form 4224, that the
income receivable pursuant to the Credit Documents is effectively connected
with the conduct of a trade or business in the United States in the case of a
Lender providing an Internal Revenue Service form W-8ECI, that the Lender is
for U.S. federal income tax purposes a foreign corporation, foreign
partnership, foreign trust or foreign estate. If any form or document referred
to in this subsection (f) requires the disclosure of information, other than
information necessary to compute the tax payable and information required on
the date hereof by Internal Revenue Service form 1001, 4224 or W-8ECI that such
Lender reasonably considers to be confidential, such Lender shall give notice
thereof to such Borrower and shall not be obligated to include in such form or
document such confidential information.
(g) Any Lender claiming any additional amounts payable pursuant to
this Section 11.14 shall use its best efforts (consistent with its internal
policy and legal and regulatory restrictions) to change the jurisdiction of its
Branch of Account if the making of such a change would avoid the need for, or
reduce the amount of, any such additional amounts that may thereafter accrue
and would not, in the sole discretion of such Lender, be otherwise
disadvantageous to such Lender.
11.15 Increased Costs, etc.
(a) If the introduction of or any change in or in the interpretation
of, or any change in its application to a Lender of any law or any regulation
or guideline from any central bank or other Governmental Authority (whether or
not having the force of law), including but not limited to any reserve or
special deposit requirement or any Tax (other than tax on a Lender's general
income or capital) or any capital requirement arising after the date hereof
(collectively, "Regulatory Changes"), has the effect, directly or indirectly,
of (i) increasing the cost to the Lenders or any of them of performing their
obligations hereunder; (ii) reducing any amount received or receivable by the
Lenders or any of them hereunder or their effective return hereunder or on
their capital; or (iii) causing the Lenders, or any of them, to make any
payment or to forego any return based on any amount received or receivable by
the Lenders, or any of them, hereunder (each, an "affected Lender"), then upon
demand from time to time by any affected Lender, the Borrowers shall pay such
amount as shall compensate each such Lender for any such cost, reduction,
payment or foregone return (collectively, "Increased Costs"). Following any
demand, each of the Borrowers shall compensate the affected Lender for all such
Increased Costs, provided however, that the Borrowers shall not be liable for
such Increased Costs to the extent arising prior to 60 days preceding such
demand unless the cause of such demand became known to the affected Lender
within 60 days of such demand and includes retroactive changes or effects
beyond the date 60 days prior to such demand. In the event that the Borrowers
(or either of them) choose to repay or cause to be repaid all amounts owing
hereunder, any prepayment penalty which would otherwise be applicable hereunder
shall be paid by the Borrowers together with all other amounts due hereunder.
The affected Lender shall provide to the Agent and the Agent shall provide to
the applicable Borrower a certificate in respect of the foregoing which
incorporates reasonable supporting evidence and any such certificate will be
prima facie evidence except for manifest error, provided that the Lenders
determine the amounts owing to them in good faith using any reasonable
averaging and attribution methods.
(b) After the date hereof, if any Lender shall have determined that
(i) the introduction of any Capital Adequacy Regulation, (ii) any change in any
Capital Adequacy Regulation, (iii) any change in the interpretation or
administration of any Capital Adequacy Regulation by any central bank or other
Governmental Authority charged with the interpretation or administration
thereof, or (iv) compliance by such Lender (or its Branch of Account) or any
Person controlling such Lender with any Capital Adequacy Regulation, affects or
would affect the amount of capital required or expected to be maintained by
such Lender or any Person controlling such Lender and (taking into
consideration such Lender's or such Person's policies with respect to capital
adequacy and such Lender's desired return on capital) determines that the
amount of such capital is increased as a consequence of any of its commitments,
Advances, Credit or obligations under this Agreement, then, upon demand of such
Lender (an "affected Lender") to the Borrowers through the Agent, the Borrowers
shall pay to such Lender, from time to time as specified by such Lender,
additional amounts sufficient to compensate such affected Lender for such
increase. For the purposes of this paragraph, "Capital Adequacy Regulation"
means any guideline, request or directive of any central bank or other
Governmental Authority, or any other law, rule or regulation, whether or not
having the force of law, in each case regarding capital adequacy of any bank or
of any Person controlling a bank.
11.16 Reserve Adjustment for LIBOR Advances by U.S. Lenders
Each Lender that incurs reserve requirements under FRB Regulation D,
as in effect from time to time, may require the Borrowers to pay,
contemporaneously with each payment of interest on the LIBOR Advances,
additional interest on the related LIBOR Advance of such Lender at a rate per
annum determined by such Lender up to but not exceeding the excess of (a) (i)
the applicable LIBO Rate divided by (ii) one minus the percentage (expressed as
a decimal) prescribed by the FRB for each relevant day for determining the
maximum reserve requirement for such Lender in respect of "eurocurrency
liabilities" over (b) the applicable LIBO Rate. Any Lender wishing to require
payment of such additional interest shall so notify the Agent and the Agent
shall notify the applicable Borrower, in which case such additional interest on
the LIBOR Advances of such Lender shall be payable to such Lender at the place
indicated in such notice with respect to each LIBOR Advance.
11.17 Replacement of Lenders
If a Lender (a "Subject Lender") makes a demand upon a Borrower
(through the Agent) pursuant to Section 11.14 or Section 11.15, such Borrower
may, upon not less than 20 Business Days (but in any event within 90 Business
Days) of receipt by such Borrower of such demand give notice (a "Replacement
Notice") in writing to the Agent and the Subject Lender of its intention to
replace the Subject Lender with a financial institution designated in such
Replacement Notice. In that event, the Subject Lender shall, if it is unwilling
or unable to remedy or waive the situation giving rise to the Replacement
Notice, assign all of its rights to such designated financial institution
pursuant to Section 10.2 for a purchase price equal to the outstanding
principal amount of all amounts together with accrued interest, fees and all
other amounts owing to the Subject Lender hereunder. Upon the replacement of a
Lender pursuant to this Section, the processing and recording fee payable to
the Agent pursuant to Section 10.2 shall be payable by such Borrower.
11.18 Illegality
Notwithstanding anything to the contrary herein contained, if any
change in or introduction of any legislation, law, order, regulation or treaty,
or any change in the interpretation or application thereof by reason of a
decision of any court, statutory board or commission, shall make it unlawful
for any Lender to make available or fund or maintain its participation in the
Credit or to give effect to its obligations as contemplated hereby, such Lender
may, by written notice thereof to the Borrowers through the Agent, declare that
each Lender's obligations affected thereby shall be terminated immediately. The
applicable Borrower may elect to convert such obligations hereunder to a form
of Advance which such Lender is able to maintain, prepay such Lender's
participation in the Credit and/or replace such Lender in accordance with
Section 11.17. The Borrowers shall be responsible for any loss or expense that
such Lender incurs as a result of any such prepayment, including breakage costs
in respect of LIBOR Advances.
11.19 No Prohibited Financial Assistance
Notwithstanding any provision of this Agreement which could be construed to
provide that the Borrower and Restricted Parties are jointly and severally
liable to the Lenders for the payment of any amount hereunder in a manner which
would constitute prohibited financial assistance, each of the Borrowers and
Restricted Parties shall only be liable to the Lenders for (a) Advances made to
it; (b) all interest, fees, indemnity amounts and other sums due hereunder
attributable directly to such Advances or to such Borrower or Restricted Party,
and (c) all amounts described in the foregoing clauses (a) and (b) which it has
guaranteed pursuant to any Credit Document.
11.20 Interest on Miscellaneous Amounts
(a) If either Borrower or any Restricted Party fails to pay any amount
payable hereunder (other than principal, interest thereon or interest upon
interest which is payable as otherwise provided in this Agreement) or under any
Credit Document on the due date, such Borrower or Restricted Party shall, on
demand, pay interest on such overdue amount to the Agent from and including
such due date up to but excluding the date of actual payment, both before and
after demand, default or judgment, at a rate of interest per annum in the case
of amounts denominated in Canadian Dollars, equal to the sum of the Prime Rate
plus 2.5% per annum; in the case of amounts denominated in U.S. Dollars, equal
to the sum of the Base Rate Canada plus 2.5% per annum, adjusted and compounded
monthly.
(b) If the Borrower deposits cash as Collateral pursuant to a
requirement under this Agreement, the Lender or Lenders holding the cash shall
pay the Borrower interest on the cash while it continues to be held as
Collateral at the rate offered by the relevant Lender from time to time for
deposits in the relevant currency of comparable size and term.
11.21 Currency Indemnity
In the event of a judgment or order being rendered by any court or
tribunal for the payment of any amounts owing to the Lenders under this
Agreement or the Credit Documents or for the payment of damages in respect of
any breach of this Agreement or the Credit Documents or under or in respect of
a judgment or order of another court or tribunal for the payment of such
amounts or damages, such judgment or order being expressed in a currency (the
"Judgment Currency") other than the currency payable hereunder or thereunder
(the "Agreed Currency"), the party against whom the judgment or order is made
shall indemnify and hold the Lenders harmless against any deficiency in terms
of the Agreed Currency in the amounts received by the Agent arising or
resulting from any variation as between (a) the Exchange Rate at which the
Agreed Currency is converted into the Judgment Currency for the purposes of
such judgment or order; and (b) the Exchange Rate at which the Agent is able to
purchase the Agreed Currency with the amount of the Judgment Currency actually
received by the Agent on the date of such receipt. The indemnity in this
Section shall constitute a separate and independent obligation from the other
obligations of each of the Borrowers hereunder and shall apply irrespective of
any indulgence granted by the Lenders.
11.22 Address for Notice
Notice to be given under the Credit Documents shall, except as
otherwise specifically provided, be in writing addressed to the party for whom
it is intended and a notice shall be personally delivered to an officer or
other responsible employee of the addressee or sent by telecopier to the
addresses set forth beside their respective signatures to this Agreement or
such other mailing or telecopier address as each party from time to time may
notify another as aforesaid. Unless the law deems a particular notice to be
received earlier, a notice shall not be deemed received until actual receipt
thereof by the other party.
11.23 Sharing of Information
Each of the Borrowers and the Guarantors agree that any information,
including confidential information, provided to (a) the Agent or the Lenders by
any of the Borrowers, the Guarantors or any other Restricted Party pursuant to
any Credit Document and not otherwise provided to any of the Mezz Agent or Mezz
Holders may be shared by the Agent or the Lenders with any of the Mezz Agent or
the Mezz Holders from time to time; and (b) the Mezz Agent or the Mezz Holders
by any of the Borrowers, the Guarantors or any other Restricted Party pursuant
to any Mezz Credit Documents and not otherwise provided to the Agent or the
Lenders may be shared by the Mezz Agent or any of the Mezz Holders with the
Agent and the Lenders from time to time.
11.24 Time of the Essence
Time shall be of the essence in this Agreement.
11.25 Further Assurances
Each of the Borrowers and the Restricted Parties shall, at the request
of the Agent on behalf of the Lenders do all such further acts and execute and
deliver all such further documents as may, in the reasonable opinion of the
Majority Lenders, be necessary or desirable in order to fully perform and carry
out the purpose and intent of the Credit Documents.
11.26 Waiver of Jury Trial
Each of the Agent, the Lenders, the Restricted Parties party hereto
and the Borrowers hereby knowingly, voluntarily and intentionally waives any
rights they may have to a trial by jury in respect of any litigation based
hereon, or arising out of, under, or in connection with, this Agreement or any
other Credit Document, or any course of conduct, course of dealing, statements
(whether oral or written) or actions of the Agent, the Lenders, the Restricted
Parties or the Borrowers in respect hereof. The Borrowers, the Restricted
Parties party hereto, the Lenders and the Agent each acknowledges and agrees
that it has received full and sufficient consideration for this provision and
that this provision is a material inducement for each of the parties to enter
into this Agreement.
11.27 Forum Selection and Consent to Jurisdiction
Any litigation based hereon, or arising out of, under, or in
connection with, this Agreement or any other Credit Document, or any course of
conduct, course of dealing, statements (whether oral or written) or actions of
the Agent, the Lenders, the Borrowers or the Restricted Parties party hereto in
respect hereof shall be brought and maintained, at the discretion of the Agent
on the instruction of the Majority Lenders, in the courts of the Province of
Ontario, the State of New York sitting in New York, New York or the U.S.
Federal Courts sitting in New York, New York; provided however, that any suit
seeking enforcement against any collateral or other property may be brought, at
the Agent's option, in the courts of any jurisdiction where such collateral or
other property may be found. Each Borrower and Restricted Party party hereto
hereby expressly and irrevocably submits to the non-exclusive jurisdiction of
the courts of the Province of Ontario, the State of New York sitting in New
York, New York and the U.S. Federal Courts sitting in New York, New York, for
the purpose of any such litigation as set forth above and irrevocably agrees to
be bound by any judgment rendered thereby in connection with such litigation.
Each of the Borrowers and the Restricted Parties party hereto hereby
irrevocably appoints CT Corporation System the "Process Agent"), with an office
on the date hereof at 000 Xxxxxx Xxxxxx, Xxx Xxxx, XX, 00000 as its agent to
receive, on such Borrower's and Restricted Party's behalf and on behalf of such
Borrower's and Restricted Party's property located in the United States of
America, service of copies of the summons and complaint and any other process
which may be served in any such action or proceeding in the State of New York.
Such service may be made by mailing or delivering a copy of such process to a
Borrower or Restricted Party in care of the Process Agent at the Process
Agent's above address, and each Borrower and Restricted Party hereby
irrevocably authorizes and directs the Process Agent to accept such service on
its behalf. Each Borrower and Restricted Party hereby irrevocably appoints
Fogler, Xxxxxxxx LLP with its office at Xxxxx 0000, X.X. Xxx 00, Xxxxx Xxxxx
Xxxxx, Xxxxxxx Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx X0X 0X0, as its agent to
receive, on such Borrower's or Restricted Party's behalf and on behalf of such
Borrower's and Restricted Party's property located in Ontario, service of
copies of the summons and complaint and any other process which may be served
in any such action or proceeding in the Province of Ontario. Such service may
be made by mailing or delivering a copy of such process to a Borrower or
Restricted Party in care of Fogler, Xxxxxxxx LLP at Fogler, Xxxxxxxx LLP above
address, and each Borrower and Restricted Party hereby irrevocably authorizes
and directs the Fogler, Xxxxxxxx LLP to accept such service on its behalf. As
an alternative method of service, each Borrower and Restricted Party further
irrevocably consents to the service of process by registered mail, postage
prepaid, or by personal service within either Canada or the United States of
America. Each Borrower and Restricted Party hereby expressly and irrevocably
waives, to the fullest extent permitted by law, any objection which it may have
or hereafter may have to the laying of venue of any such litigation brought in
any such court referred to above and any claim that any such litigation has
been brought in an inconvenient forum. To the extent that a Borrower or
Restricted Party has or hereafter may acquire any immunity from jurisdiction of
any court of from any legal process (whether through service or notice,
attachment prior to judgment, attachment in aid of execution or otherwise) with
respect to itself or its property, such Borrower or Restricted Party hereby
irrevocably waives such immunity in respect of its obligations under this
Agreement and the other Credit Documents. In addition, the Borrowers shall
cause a process agent to be appointed for each Foreign Opco in all relevant
jurisdiction upon request of the Agent to do so.
11.28 Term of Agreement
Except for provisions hereof which are stated to survive the
termination of this Agreement or the repayment in full of the Obligations, this
Agreement shall remain in full force and effect until the performance in full
of and indefeasible payment in full in cash of all of the Obligations and the
termination of the Credit.
11.29 Payments on Business Day
Whenever any payment or performance under the Credit Documents would
otherwise be due on a day other than a Business Day, such payment shall be made
on the following Business Day.
11.30 Entire Agreement
This Agreement (together with the other Credit Documents) constitutes
the entire agreement between the parties hereto and cancels and supersedes any
prior agreements, undertakings, declarations or representations, written or
verbal, in respect thereof.
11.31 Counterparts and Facsimile
This Agreement may be executed in any number of counterparts, each of
which when executed and delivered shall be deemed to be an original, and such
counterparts together shall constitute one and the same agreement. For the
purposes of this Section, the delivery of a facsimile copy of an executed
counterpart of this Agreement shall be deemed to be valid execution and
delivery of this Agreement, but the party delivering a facsimile copy shall
deliver an original copy of this Agreement as soon as possible after delivering
the facsimile copy.
[Balance of page intentionally left blank]
IN WITNESS OF WHICH, the parties have executed this Agreement.
Address for Notice
------------------
THE LENDERS
-----------
The Bank of Nova Scotia THE BANK OF NOVA SCOTIA
Scotia Capital
Bank Finance-Industrial Products
16th Floor By: __________________________
00 Xxxx Xxxxxx Xxxx X.X. Xxxxxx
Xxxxxxx, Xxxxxxx Managing Director
M5H 1H1
Attention: Managing Director By: __________________________
Telecopier No.: (000) 000-0000 X. X. XxXxx
Director
Canadian Imperial Bank of Commerce CANADIAN IMPERIAL BANK
BCE Place, 8th Floor OF COMMERCE
000 Xxx Xxxxxx
Xxxxxxx, Xxxxxxx By: __________________________
X0X 0X0 Name:
Title:
Attention: Vice President
Telecopier No.: (000) 000-0000 By: __________________________
Name:
Title:
Bank of Montreal BANK OF MONTREAL
Corporate & Investment Banking
First Canadian Place
23rd Floor By: __________________________
Toronto, Ontario X. Xxxxxx
M5X 1A1 Managing Director
Attention: Managing Director
Telecopier No.: (000) 000-0000
Royal Bank of Canada ROYAL BANK OF CANADA
00xx Xxxxx, Xxxxx Xxxxx
Xxxxx Bank Plaza
000 Xxx Xxxxxx By: __________________________
Toronto, Ontario Name:
X0X 0X0 Title:
Attention: Senior Manager
Telecopier No.: (000) 000-0000
The Toronto-Dominion Bank THE TORONTO-DOMINION BANK
00 Xxxx Xxxxxx Xxxx
0xx Xxxxx
Xxxxxxx-Xxxxxxxx Bank Tower By: __________________________
Toronto, Ontario X. Xxxx
M5K 1A2 Vice-President
Attention: Vice President
Telecopier No.: (000) 000-0000
The Bank of Nova Scotia THE BANK OF NOVA SCOTIA,
Suite 2200 by its Atlanta Agency
000 Xxxxxxxxx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx
00000 By: __________________________
X. Xxxxx
Attention: Senior Manager Senior Manager, Loan
Telecopier No.: (000) 000-0000 Operations
CIBC Inc. CIBC INC.
000 Xxxxxxxxx Xxxxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx By: __________________________
10017 X. X. Xxxxxx
Executive Director
Attention: Executive Director (CIBC World Markets
Telecopier No.: (000) 000-0000 Corp., as agent for
CIBC Inc.)
Bank of Montreal, by its Chicago branch BANK OF MONTREAL
Media, Telecom & Technology Group
Asset Portfolio Group
Investment & Corporate Banking By: __________________________
000 Xxxx Xxxxxx Name:
15th Floor Title:
Xxx Xxxx, Xxx Xxxx
00000
Attention: Managing Director
Telecopier No.: (000) 000-0000
Royal Bank of Canada, by its Grand ROYAL BANK OF CANADA, by
Cayman (North America No. 1) Branch its Grand Cayman (North
c/o New York Branch America No. 1) Branch
One Liberty Plaza
165 Broadway By: __________________________
New York, NY X. X. Xxxxxx
10006-1404 Senior Manager
Attention: Xx. Xxxxx Xxxxxxx
Telecopier No.: (000) 000-0000
with a copy to:
Royal Bank of Canada
Xxx Xxxxxxx Xxxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx
00000-0000
Attention: Xx. X. X. Xxxxxx
Telecopier No.: (000) 000-0000
Toronto Dominion (Texas), Inc. TORONTO DOMINION (TEXAS), INC.
000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxx
00000 By: __________________________
X. Xxxxx
Attention: Vice-President Vice-President
Telecopier No.: (000) 000-0000
THE BORROWERS
-------------
Maxxcom Inc. MAXXCOM INC., an Ontario
00X Xxxxxxxx Xxxxxx xxxxxxxxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0 By: __________________________
X. Xxxxxxxx
Attention: Chief Financial Officer Authorized Signing Officer
Telecopier No.: (000) 000-0000
Maxxcom Inc. MAXXCOM INC., a Delaware
c/o 00X Xxxxxxxx Xxxxxx corporation
Xxxxxxx, Xxxxxxx
X0X 0X0 By: __________________________
X. Xxxxxxxx
Attention: The President Authorized Signing Officer
Telecopier No.: (000) 000-0000
THE GUARANTORS
--------------
c/o Maxxcom Inc. MAXXCOM (NOVA SCOTIA) CORP.
00X Xxxxxxxx Xxxxxx XXXXXXX (XXX) FINANCE COMPANY
Toronto, Ontario MAXXCOM (USA) HOLDINGS INC.
M5R 2E3 1220777 ONTARIO LIMITED
NEWS CANADA INC.
Attention: Chief Financial 1385544 ONTARIO LIMITED
Officer MAXXCOM INTERACTIVE INC.
Telecopier No.: (000) 000-0000 MF+P ACQUISITION CO.
SMI ACQUISITION CO.
ACCENT ACQUISITION CO.
FMA ACQUISITION CO.
By: __________________________
X. Xxxxxxxx
Authorized Signing Officer
c/o Maxxcom Inc. MACKENZIE MARKETING, INC.
00X Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0 By: __________________________
X. Xxxxxx
Attention: Chief Financial Authorized Signing Officer
Officer
Telecopier No.: (000) 000-0000
c/o Maxxcom Inc. BRATSKEIR & COMPANY, INC.
00X Xxxxxxxx Xxxxxx CPB ACQUISITION INC.
Xxxxxxx, Xxxxxxx
X0X 0X0
By: __________________________
Attention: Chief Financial X. Xxxxxxx
Officer Authorized Signing Officer
Telecopier No.: (000) 000-0000
c/o Maxxcom Inc. TC ACQUISITION INC.
00X Xxxxxxxx Xxxxxx ET ACQUISITION INC.
Toronto, Ontario BZ ACQUISITION INC.
M5R 2E3 CDI ACQUISITION CO.
Attention: Chief Financial
Officer By: __________________________
Telecopier No.: (000) 000-0000 X. Xxxxxxx
Authorized Signing Officer
THE AGENT
The Bank of Nova Scotia THE BANK OF NOVA SCOTIA,
Scotia Capital as Administrative Agent
Bank Finance - Loan Syndications
00xx Xxxxx
00 Xxxx Xxxxxx Xxxx By: __________________________
Toronto, Xxxxxxx X.X. Xxxxxxxx
X0X 0X0 Director
Attention: Managing Director
Telecopier No.: (000) 000-0000
SCHEDULE A
FORM OF ASSIGNMENT AGREEMENT
The undersigned refer to the Second Amended and Restated Credit
Agreement made as of 11 July 2001 between Maxxcom Inc., as Borrowers, The Bank
of Nova Scotia, as Agent, the Lenders named therein and others (as amended,
supplemented, restated or replaced from time to time, the "Credit Agreement").
All capitalized terms used in this agreement and defined in the Credit
Agreement have the meanings defined in the Credit Agreement.
For value received, each "Assignor" and the "Assignee" named below
hereby agree as follows:
1. Each Assignor hereby sells and assigns, without recourse, to the Assignee,
and the Assignee hereby purchases and assumes from each Assignor, the
Proportionate Share specified on Appendix 1 attached to this Assignment
Agreement in and to each Assignor's rights and obligations under the Credit
Agreement.
2. Each Assignor represents and warrants that it is the legal and beneficial
owner of the interest being assigned by it hereunder, that such interest is
free and clear of any lien or security interest and that it is entitled to
enter into this Assignment Agreement; makes no representation or warranty,
other than as provided in this Assignment Agreement and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement or any other Credit Document; and makes no representation or warranty
and assumes no responsibility with respect to the Financial Condition of the
Borrowers or any Restricted Party or the performance or observance by the
Borrowers or any Restricted Party of any of the obligations under the Credit
Agreement or any other Credit Document.
3. The Assignee, for the benefit of the Agent and all Lenders from time to
time, including the Assignor, acknowledges receipt of any upfront fee payable
by the Assignor; confirms that it has received a copy of the Credit Agreement,
together with such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into this Assignment
Agreement; agrees that it will, independently and without reliance upon the
Agent, the Assignor or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Credit Agreement;
confirms that it is an Eligible Assignee; appoints and authorizes the Agent to
take such action on its behalf and to exercise such powers and discretion under
the Credit Agreement as are delegated to the Agent by the terms thereof,
together with such powers and discretion as are reasonably incidental thereto;
agrees that it will perform in accordance with their terms all of the
obligations that by the terms of the Credit Agreement are required to be
performed by it as a Lender; and specifies as its address for notice and
payments its office at the address set forth on Appendix 1 hereto.
4. Following the execution of this Assignment Agreement, it shall immediately
be delivered to the Agent, together with the processing and recording fee
specified in Section 10.2 of the Credit Agreement, and prior to an Event of
Default, approval by Maxxcom Inc. for recording by the Agent. The Assignee's
agreement to become a Lender, as constituted by this Assignment Agreement, is
irrevocable. The Assignee shall become a Lender, and shall be bound by the
obligations and entitled to the benefits in the Credit Agreement and the Mezz
Inter-Creditor Agreement, immediately upon this Assignment Agreement being
recorded by the Agent (the "Effective Date"). On the Effective Date, the
Assignee shall pay each Assignor an amount equal to the Assignee's
Proportionate Share of Prime Rate Advances and Base Rate Advances made by that
Assignor as of the Effective Date and shall become entitled to receive standby
fees in accordance with the Credit Agreement in respect of its Proportionate
Share of the aggregate amount of the Credit that has not been advanced by the
Lenders. The Assignee shall make further Advances to the Borrowers, beginning
on the first Drawdown Date that is at least 3 Business Days following the
Effective Date, as BA Equivalent Loans, Advances by way of Bankers' Acceptances
and LIBOR Advances made by each Assignor as they mature, until the Assignee has
made Advances in an amount equal to its Proportionate Share of the aggregate
Advances made by all Lenders under the Credit Agreement.
5. If Advances made by the Assignee to the Borrowers are for any reason less
than the Assignee's Proportionate Share of the aggregate Advances made by all
Lenders under the Credit Agreement, the Assignee shall, on demand, indemnify
each Assignor in respect of the principal amount of the corresponding Advances
made by that Assignor in excess of that Assignor's Proportionate Share. The
Advances by each Assignor in respect of which the Assignee is bound to
indemnify that Assignor are set out on Appendix 2 to this Assignment Agreement.
Each Assignor shall pay the Assignee indemnity fees during the period in which
the Assignee is obliged to indemnify the Assignor. The fee shall be in the
amount specified on Appendix 2 and shall be payable on the Effective Date in
respect of BA Equivalent Loans, Advances by way of Bankers' Acceptances and
LIBOR Advances.
6. This Assignment Agreement shall be governed by, and construed in accordance
with the laws of the Province of Ontario, Canada.
7. This Assignment Agreement may be executed in any number of counterparts and
by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together
shall constitute one and the same agreement. Delivery of an executed
counterpart of this Assignment Agreement by telecopier shall be effective as
delivery of a manually executed counterpart of this Assignment Agreement.
IN WITNESS WHEREOF, each Assignor and the Assignee have caused this
Assignment Agreement to be executed by their duly authorized officers as of the
dates specified below.
(First) Assignor: ________________________________
By: _____________________________
Name:
Title:
Dated: ____________________, 20__
(Second) Assignor:
By: _____________________________
Name:
Title:
Dated: ____________________, 20__
[Insert signatures of other Assignors as required]
Assignee: ________________________________
By: _____________________________
Name:
Title:
Dated: ____________________, 20__
Address:
___________________________________________
___________________________________________
___________________________________________
Acknowledged on __________20__ [Approved/Acknowledged] on ________20__
THE BANK OF NOVA SCOTIA, as Agent MAXXCOM INC.
By: ____________________________ By: ____________________________
Name: Name:
Title: Title:
By: ____________________________ By: ____________________________
Name: Name:
Title: Title:
MAXXCOM INC.
By: ____________________________
Name:
Title:
Effective Date: _________________
APPENDIX 1
TO
ASSIGNMENT AGREEMENT
Advances in respect of which the Assignee is to indemnify the Assignors, as of
the Effective Date:
[insert name of Assignor, if more than one]
Type of Advance Maturity Date of Advance Principal Amount of Advance
--------------- ------------------------ ---------------------------
Indemnity fee:
[repeat for additional Assignors, if more than one]
APPENDIX 2
TO
ASSIGNMENT AGREEMENT
Advances in respect of which the Assignee is to indemnify the Assignors, as of
the Effective Date:
[insert name of Assignor, if more than one]
Type of Advance Maturity Date of Advance Principal Amount of Advance
--------------- ------------------------ ---------------------------
Indemnity fee:
[repeat for additional Assignors, if more than one]
SCHEDULE B
FORM OF INTERCORPORATE NOTE
PROMISSORY NOTE
(Insert Name of Borrower)
Dated: As of [Insert Date]
To or to the order of: Maxxcom Inc.
00X Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxxxxx Xxxxxx,
President
(the "Lender")
RECITALS:
A. The Lender has extended credit facilities to and in favour of the
undersigned (the "Borrower") from time to time for the purposes of financing
the day to day operating requirements of the Borrower and for its general
corporate purposes and the Lender may at its option and in its sole discretion
agree to extend further credit facilities to the Borrower from time to time for
such purposes (collectively, the "Credit Facilities").
B. The Borrower is making this promissory note (the "Note") in favour of the
Lender to evidence its indebtedness under the Credit Facilities from time to
time and to set forth other terms and conditions in relation thereto. FOR VALUE
RECEIVED the Borrower hereby promises to pay, in accordance with the terms and
conditions hereof, to or to the order of the Lender at the office of the Lender
specified above or to such other address in respect of which the Borrower has
been notified by the Lender, the principal amount from time to time outstanding
under the Credit Facilities (the "Principal Amount") together with interest
thereon in the manner and at the rate specified in Section 3 and all other
amounts owing hereunder from time to time. Unless otherwise specified, all
payments received under this Note shall be applied firstly to the payment of
amounts payable under this Note other than the Principal Amount and secondly to
the payment of the Principal Amount.
This Note is a negotiable instrument.
The following are the terms and conditions of this Note:
1. Determination of Principal Amount/Making of Advances, etc.
----------------------------------------------------------
(a) The indebtedness of the Borrower under this Note from time to
time shall be determined by reference to the books, accounts and
records maintained by the Lender concerning advances made and
payments received in relation to the Credit Facilities. The
records maintained by the Lender shall constitute, in the
absence of manifest error, prima facie evidence of the
indebtedness of the Borrower to the Lender in respect of
advances under the Credit Facilities and all details in relation
thereto. The failure of the Lender to correctly record any such
amount or date shall not, however, adversely affect the
obligation of the Borrower to pay amounts due hereunder to the
Lender in accordance with the terms hereof. The Borrower shall
have the opportunity to dispute the Principal Amount outstanding
under this Note and any repayments in respect thereof as
evidenced by the books, accounts and records of the Lender by
providing documentary evidence to the contrary to the Lender.
(b) Advances of the Principal Amount shall be deemed conclusively to
have been made to and for the benefit of the Borrower when:
(i) deposited or credited to the account of the Borrower
as designated from time to time by the Borrower by
notice in writing thereof addressed to the Lender;
or
(ii) made in accordance with the instructions of any
senior officer of the Borrower as designated in
writing by the Borrower to the Lender as having the
authority to so instruct the Lender.
2. Payments, etc.
--------------
(a) Subject to section 4 hereof, the unpaid balance of the Principal
Amount under this Note, together with all accrued and unpaid
interest and other amounts payable under this Note, shall become
payable by the Borrower to the Lender on the date which is
thirty (30) days following the date upon which demand is made
therefor by the Lender to the Borrower.
(b) The Borrower shall have the right to pay the whole or any part
of the unpaid balance of the Principal Amount outstanding under
this Note from time to time, at any time, without bonus or
penalty upon one (1) business day's prior written notice to the
Lender and upon payment at such time of all accrued and unpaid
interest and other amounts payable under this Note.
(c) Any and all payments made under this Note shall be made without
set-off or counterclaim in respect of any amounts which may be
owing by the Lender to the Borrower under any other agreement
and shall be made free and clear of, without deduction for and
on a fully indemnified basis in respect of any and all present
and future taxes, fees or withholdings imposed by any taxing
authority other than in respect of taxes on the net income or
capital of the Lender ("Taxes").
(d) If the Borrower shall be required by law to deduct any Taxes
from or in respect of any or all payments under this Note to the
Lender, (a) the payment shall be increased by the Borrower as
may be necessary so that, after making all required deductions
for such Taxes, the net amount the Lender actually receives
(after Taxes) is an amount equal to the sum it would have
received had no such deductions for such Taxes or other
deduction been made, (b) the Borrower shall make such
deductions, and (c) the Borrower shall pay the full amount
deducted to the relevant taxation authority or other authority
in accordance with Applicable Law.
(e) The Borrower shall pay any present or future stamp, documentary,
excise, property or similar taxes, charges or levies that arise
from any payment made hereunder or from the execution, delivery
or registration with respect to this Note and/or any security or
instrument granted in connection herewith (hereinafter referred
to as "Other Taxes").
(f) The Borrower shall indemnify the Lender for the full amount of
Taxes and Other Taxes with respect to any and all payments
received by the Lender under this Note. Without limitation of
the foregoing, the Borrower shall also indemnify the Lender on
an after-tax basis for any additional taxes on income or net
income that the Lender may be obligated to pay as the result of
receipt of additional amounts under this paragraph (f) and
paragraph (d) above.
3. Interest Rate, etc.
-------------------
(a) Interest shall be payable upon the unpaid balance of the
Principal Amount outstanding under this Note from time to time
and any other amounts due and owing hereunder (including for
greater certainty, but without limitation, overdue interest)
from time to time at a variable rate of interest equal to ! per
cent (!%) per annum plus the rate of interest per annum publicly
quoted from time to time by The Bank of Nova Scotia as being its
prime rate for Canadian dollar commercial loans made in Canada,
that interest being calculated daily and payable monthly on the
last day of each calendar month, not in advance, both before and
after maturity or default and judgment on the amount outstanding
from day to day on the basis of a year of 365 or 366 days as
applicable.
(b) Each rate of interest which is calculated with reference to a
period (the "deemed interest period") that is less than the
actual number of days in the calendar year of calculation is,
for the purposes of the Interest Act (Canada), equivalent to a
rate based on a calendar year equal to such rate of interest
multiplied by the actual number of days in the calendar year of
calculation and divided by the number of days in the deemed
interest period.
4. Events of Default
-----------------
(a) Each of the following events or circumstances is an event of
default under this Note:
(i) the failure to pay or perform any obligations,
liabilities or indebtedness owed by the Borrower to the
Lender, whether under this Note or under any security
agreement granted by the Borrower to the Lender in
respect of the Note as and when due (whether due by
demand, maturity or by acceleration);
(ii) the insolvency of the Borrower or the appointment of a
receiver, manager, trustee, liquidator, for any of the
property of the Borrower or an assignment for the benefit
of the Borrower's creditors;
(iii) the institution of a proceeding in bankruptcy,
insolvency, winding-up, liquidation, arrangement or other
similar proceedings in any relevant jurisdiction against
the Borrower, whether voluntarily or involuntarily, or
the institution of proceedings by a Borrower to obtain
relief against its creditors;
(iv) the Borrower voluntarily or involuntarily ceases to carry
on business or suspends business operations for more than
30 days; and/or
(v) the Borrower fails to maintain, care for, preserve or
protect property covered by any security held by the
Lender.
(b) Notwithstanding any other provisions hereof, including for
greater certainty, section 2(a) hereof, upon the occurrence of
an event of default, the total amount of the Principal Amount
then outstanding under this Note together with any other amounts
payable under this Note shall become immediately due and payable
to the Lender without notice, demand or other formality, all of
which are hereby waived by the Borrower.
(c) For avoidance of doubt, following the expiry of the 30 day
period referred to in section 2(a) hereof following a demand for
payment, all amounts owing or accruing due under this Note shall
become immediately due and payable notwithstanding that no event
of default has occurred under this section 4.
(d) The Borrower shall pay all costs incurred by the Lender in
enforcing and collecting upon this Note and enforcing any
security granted in support hereof, including legal costs on a
solicitor and client basis.
5. No Obligation to Advance Principal Amount
-----------------------------------------
Nothing herein shall obligate the Lender to make advances or further
advances of the Principal Amount to the Borrower, whether or not
repayments of the Principal Amount have been made hereunder, it being
acknowledged by the Borrower that the credit facilities extended by
the Lender to the Borrower under this Note are of a non-revolving
nature and advances of the Principal Amount by the Lender to the
Borrower are within the sole discretion of the Lender.
6. Presentment, etc.
-----------------
The Borrower hereby waives presentment, notice of dishonour, notice of
protest, notice of non-payment and any other notice required by law to
be given to the Borrower on this Note in connection with the delivery,
acceptance, performance, default or enforcement of this Note and
agrees that no waiver of any term or condition of this Note by the
Lender or any other person shall affect or impair any other
obligations of the Borrower under this Note or, in respect of a
failure to act, be construed as being a waiver by the Lender or that
other person of its rights under this Note.
7. Usury Laws
----------
Where the rate of interest payable under this Note is found by a
competent court, governmental agency or other tribunal to exceed the
maximum rate of interest permitted by the laws of any applicable
jurisdiction or the rules or regulations of any appropriate regulatory
authority, then during the time that the rate of interest would exceed
the permissible limit, that part of each interest payment attributable
to the portion of the interest rate that exceeds the permissible limit
shall be deemed to be a prepayment of the Principal Amount.
8. Assignment, etc.
----------------
(a) The Borrower shall not be entitled to assign or transfer its
obligations under this Note without the prior written consent of
the Lender, which consent may be unreasonably withheld. The
Lender may, without the prior written consent of the Borrower
assign, transfer, negotiate, pledge or otherwise hypothecate
this Note, any of its rights hereunder or any part thereof and
any security granted in connection herewith and all rights and
remedies of the Lender in connection with the interest so
assigned shall be enforceable against the Borrower as the same
would have been by the Lender but for such assignment, transfer,
negotiation, pledge or hypothecation.
(b) The Borrower hereby:
(i) acknowledges that this Note and all security to be
granted in connection herewith has been or will be
assigned by the Lender to The Bank of Nova Scotia, as
agent for and on behalf of the lenders (the "Maxxcom
Syndicate Lenders") who are parties from time to time to
the amended and restated credit agreement made as of 29
November 2000 between Maxxcom Inc., an Ontario
corporation, and Maxxcom Inc., a Delaware corporation, as
borrowers, their respective wholly-owned subsidiaries, as
guarantors, The Bank of Nova Scotia, as agent (the
"Agent"), and the Maxxcom Syndicate Lenders (as amended,
supplemented, restated and replaced from time to time,
the "Credit Agreement");
(ii) consents to the assignment referred to in paragraph
(b)(i); and
(iii) acknowledges and agrees, without limitation of any other
provision of this Note, that the Agent may at any time
following the occurrence of a default under the Credit
Agreement exercise all rights of the Lender hereunder.
(c) The terms and provisions of this Note shall be binding upon
and enure to the benefit of the Borrower, the Lender and
their respective successors and permitted assigns.
9. Proper Law
----------
This Note is subject to the laws of the Province of Ontario and the
Borrower, the Lender and every holder of this Note consents to the
non-exclusive jurisdiction of the courts of Ontario in respect of all
proceedings arising under this Note.
10. Interpretation/General
----------------------
In this Note,
(a) a word importing the masculine, feminine or neuter gender
also includes members of the other genders;
(b) a word defined in or importing the singular number has the
same meaning when used in the plural number, and vice versa;
(c) a reference to any Act, bylaw, rule or regulation or to a
provision thereof shall be deemed to include a reference to
any Act, bylaw, rule or regulation or provision enacted in
substitution therefor or amendment thereof;
(d) the headings to each section are inserted for convenience of
reference only and do not form part of the Note;
(e) no amendment or waiver of this Note shall be binding unless
executed in writing by the party to be bound thereby. No
waiver of any provision of this Note shall constitute a
waiver of any other provision nor shall any waiver of any
provision of this Note constitute a continuing waiver unless
otherwise expressly provided; and
all references to the Lender shall be deemed to include the successors and
assigns of the Lender and any holder of this Note.
EXECUTED as of the date first above written
[INSERT NAME OF BORROWER]
Per: _________________________
Name:
Title:
I have the authority to bind the Corporation.
Address: [Insert Borrower's Address]
SCHEDULE C
FORM OF INTERCORPORATE SECURITY
GENERAL SECURITY AGREEMENT
THIS AGREEMENT made as of the [o] day of [o], [o].
BY:
[Insert Name of Debtor], a corporation incorporated under the
laws of ? and having its chief executive office at the [City
of Toronto], in the [Province of Ontario]
(the "Debtor")
IN FAVOUR OF:
Maxxcom Inc., a corporation incorporated under the laws of
Ontario
(the "Secured Party")
RECITALS:
A. The Debtor and the Secured Party have entered into a promissory note
dated [o] (the "Note") evidencing the credit facilities extended by the
Secured Party to the Debtor from time to time.
B. It is a condition precedent to any advance of such credit facilities
that the Debtor enter into this Agreement in favour of the Secured
Party.
NOW THEREFORE in consideration of the sum of $1.00 and for other good
and valuable consideration (the receipt and sufficiency of which are hereby
acknowledged), the Debtor agrees with the Secured Party as follows:
ARTICLE 1
INTERPRETATION
1.1 Definitions
-----------
In this Agreement:
(a) "Accessions" means Goods that are installed in or affixed to
other Goods;
(b) "Account" means any monetary obligation not evidenced by
Chattel Paper, an Instrument or a Security, whether or not it
has been earned by performance;
(c) "this Agreement", "hereto", "herein", "hereof", "hereby",
"hereunder" and any similar expressions refer to this
Agreement as it may be amended, supplemented, restated or
replaced from time to time, and not to any particular
Article, section or other portion hereof;
(d) "Applicable Law" means, at any time, with respect to any
Person, property, transaction or event, the common law and
all applicable laws, statutes, regulations, treaties,
judgments and decrees and, provided in each case they have
the force of law, all then applicable official directives,
requirements, orders and policies of any governmental
authorities made under such laws, by-laws, statutes and
regulations;
(e) "Business Day" means any day other than Saturday, Sunday or
any statutory holiday on which banks are generally open for
business in Toronto, Ontario;
(f) "Chattel Paper" means one or more than one writing that
evidences both a monetary obligation and a security interest
in or a lease of specific Goods;
(g) "Collateral" means all of the undertaking, property and
assets of the Debtor subject to, or intended to be subject
to, the Security Interest, and any reference to "Collateral"
shall be deemed to be a reference to "Collateral or any part
thereof" except where otherwise specifically provided;
(h) "Demand Date" means the date upon which payment under the
Note is due following demand therefor in accordance with
section 2(a) of the Note;
(i) "Document of Title" means any writing that purports to be
issued by or addressed to a bailee and purports to cover such
Goods in the bailee's possession as are identified or
fungible portions of an identified mass, and that in the
ordinary course of business is treated as establishing that
the Person in possession of it is entitled to receive, hold
and dispose of the documents and Goods it covers;
(j) "Equipment" means Goods that are not Inventory or consumer
goods (as such term is defined in the PPSA);
(k) "Event of Default" means any of the events or circumstances
set forth in section 4(a) of the Note;
(l) "GAAP" means generally accepted accounting principles from
time to time approved by the Canadian Institute of Chartered
Accountants or any successor institute including those set
out in the Handbook of the Canadian Institute of Chartered
Accountants, consistently applied;
(m) "Goods" means tangible personal property other than Chattel
Paper, Documents of Title, Instruments, Money and Securities,
and includes fixtures and improvements;
(n) "Instrument" means,
(i) a xxxx, note or cheque within the meaning of the
Bills of Exchange Act (Canada) or any other writing
that evidences a right to the payment of Money and
is of a type that in the ordinary course of business
is transferred by delivery with any necessary
endorsement or assignment, or
(ii) a letter of credit and an advice of credit if the
letter or advice states that it must be surrendered
upon claiming payment thereunder;
but does not include a writing that constitutes part of
Chattel Paper, a Document of Title or a Security;
(o) "Intangible" means all personal property, including choses in
action that is not Goods, Chattel Paper, Documents of Title,
Instruments, Money or Securities;
(p) "Inventory" means Goods that are held by a Person for sale or
lease or that have been leased or that are to be furnished or
have been furnished under a contract of service, or that are
raw materials, work in process or materials used or consumed
in a business or profession;
(q) "Lien" means any mortgage, pledge, charge, assignment,
security interest, hypothec, lien or other encumbrance,
including, without limitation, any agreement to give any of
the foregoing, or any conditional sale or other title
retention agreement;
(r) "Money" means a medium of exchange authorized or adopted by
the Parliament of Canada as part of the currency of Canada or
by a foreign government as part of its currency;
(s) "Obligations" means all indebtedness, liabilities or other
obligations of the Debtor to the Secured Party, under or in
respect of the Note and this Agreement, whether actual or
contingent, direct or indirect, matured or not, now existing
or hereafter arising;
(t) "Permitted Encumbrances" means the encumbrances described in
Schedule "A" hereto;
(u) "Person" means any individual, partnership, limited
partnership, joint venture, syndicate, sole proprietorship,
company or corporation with or without share capital,
unincorporated association, trust, trustee, executor,
administrator or other legal personal representative,
regulatory body or agency, government or governmental agency,
authority or entity however designated or constituted;
(v) "PPSA" means the Personal Property Security Act (Ontario), or
other jurisdictional equivalents as amended from time to
time, any and any Act substituted therefor and amendments
thereto;
(w) "Proceeds" means identifiable or traceable personal property
in any form derived directly or indirectly from any dealing
with property or the proceeds therefrom, and includes any
payment representing indemnity or compensation for loss of or
damage to property or proceeds therefrom;
(x) "Receiver" means any of a receiver, manager, receiver-manager
and receiver and manager;
(y) "Security" means a document that is,
(i) issued in bearer, order or registered form,
(ii) of a type commonly dealt in upon securities
exchanges or markets or commonly recognized in any
area in which it is issued or dealt in as a medium
for investment,
(iii) one of a class or series or by its terms is
divisible into a class or series of documents, and
(iv) evidence of a share, participation or other interest
in property or in an enterprise or is evidence of an
obligation of the issuer,
and includes an uncertificated security within the meaning of
Part VI (Investment Securities) of the Business Corporations
Act (Ontario); and
(y) "Security Interest" has the meaning attributed to such term
in Section 2.1.
1.2 Headings
--------
The inclusion of headings in this Agreement is for convenience of
reference only and shall not affect the construction or interpretation hereof.
1.3 References to Articles and Sections
-----------------------------------
Whenever in this Agreement a particular Article, section or other
portion thereof is referred to then, unless otherwise indicated, such reference
pertains to the particular Article, section or portion thereof contained
herein.
1.4 Currency
--------
Except where otherwise expressly provided, all amounts in this
Agreement are stated and shall be paid in Canadian currency.
1.5 Gender and Number
-----------------
In this Agreement, unless the context otherwise requires, words
importing the singular include the plural and vice versa and words importing
gender include all genders.
1.6 Invalidity of Provisions
------------------------
Each of the provisions contained in this Agreement is distinct and
severable and a declaration of invalidity or unenforceability of any such
provision or part thereof by a court of competent jurisdiction shall not affect
the validity or enforceability of any other provision hereof. To the extent
permitted by applicable law, the parties waive any provision of law which
renders any provision of this Agreement invalid or unenforceable in any
respect.
1.7 Amendment, Waiver
-----------------
No amendment or waiver of this Agreement shall be binding unless
executed in writing by the party to be bound thereby. No waiver of any
provision of this Agreement shall constitute a waiver of any other provision
nor shall any waiver of any provision of this Agreement constitute a continuing
waiver unless otherwise expressly provided.
1.8 Governing Law, Attornment
-------------------------
This Agreement shall be governed by and construed in accordance with
the laws of the Province of Ontario and the federal laws of Canada applicable
therein and the Corporation hereby irrevocably attorns to the non-exclusive
jurisdiction of the courts of Ontario.
ARTICLE 2
SECURITY INTEREST
2.1 Creation of Security Interest
-----------------------------
Subject to Sections 2.2 and 2.3 hereof, the Debtor hereby grants to
and creates in favour of the Secured Party a security interest (the "Security
Interest") in all of its present and future property, assets and undertaking
including, without limitation of the foregoing;
(a) all Goods (including without limitation all parts,
accessories, attachments, additions and Accessions to all
such Goods) whether or not such Goods are now or hereafter
become fixtures, all Accounts, all Chattel Paper, all
Documents of Title (whether negotiable or not), all
Instruments, all Intangibles, all Money and all Securities,
and all other personal property, if any, in each case now
owned or hereafter acquired by or on behalf of the Debtor or
in respect of which the Debtor now or hereafter has any
right, title or interest (including, without limitation, such
as may be returned to or repossessed by the Debtor);
(b) all renewals of, accretions to and substitutions for any of
the property described in Section 2.1(a); and
(c) all Proceeds (including Proceeds of Proceeds) of any of the
property described in Sections 2.1(a) and 2.1(b).
2.2 Exception for Last Day of Leases
--------------------------------
The Security Interest granted hereby does not and shall not extend to,
and Collateral shall not include, the last day of the term of any lease or
sub-lease, oral or written, or any agreement therefor, now held or hereafter
acquired by the Debtor, but upon the sale of the leasehold interest or any part
thereof the Debtor shall stand possessed of such last day in trust to assign
the same as the Secured Party shall direct.
2.3 Exception for Contractual Rights
--------------------------------
The Security Interest granted hereby does not and shall not extend to,
and Collateral shall not include, any agreement, right, franchise, license or
permit (the "contractual rights") to which the Debtor is a party or of which
the Debtor has the benefit, to the extent that the creation of the Security
Interest therein would permit any Person to terminate the contractual rights,
but the Debtor shall hold its interest therein in trust for the benefit of the
Secured Party and shall assign such contractual rights to the Secured Party
forthwith upon obtaining the consent of the other party thereto.
2.4 Attachment
----------
The attachment of the Security Interest has not been postponed and the
Security Interest shall attach to Collateral existing as at the date hereof,
upon execution of this Agreement and, in respect of Collateral acquired after
the date hereof, upon the Debtor acquiring rights in such Collateral.
ARTICLE 3
OBLIGATIONS SECURED
3.1 Obligations Secured
-------------------
The Security Interest granted hereby secures payment, performance and
satisfaction of the Obligations.
ARTICLE 4
CERTAIN AGREEMENTS OF THE DEBTOR
4.1 Restrictions on Dealing with Collateral
---------------------------------------
The Debtor agrees that it shall not, without the prior consent in
writing of the Secured Party:
(a) sell, assign, transfer, exchange or otherwise dispose of any
Goods or all or any material part of the Collateral as a
whole other than;
(i) Inventory in the ordinary course of business; and
(ii) Equipment which has become worn out, damaged or
otherwise unsuitable for its purpose, on condition
that the Debtor substitute for such Equipment
property of equal value free from all Liens. Such
substituted property shall become part of the
Collateral as soon as the Debtor acquires any
interest in it; or
(b) create, assume or suffer to exist any Lien upon the
Collateral, other than the Security Interest, except for
Permitted Encumbrances;
No provision hereof shall be construed as a subordination or postponement of
the Security Interest to or in favour of any Lien, whether or not such Lien is
permitted hereunder or otherwise.
4.2 Verification of Collateral
--------------------------
The Secured Party shall have the right at any time and from time to
time to verify the existence and state of the Collateral in any manner the
Secured Party may consider appropriate and the Debtor agrees to furnish all
assistance and information and to perform all such acts as the Secured Party
may reasonably request in connection therewith and for such purpose to grant to
the Secured Party or its agents access to all places where Collateral may be
located and to all premises occupied by the Debtor.
4.3 Expenses
--------
The Debtor shall pay to the Secured Party on demand all of the Secured
Party's reasonable costs, charges and expenses (including, without limitation,
legal fees on a solicitor and his own client basis) in connection with the
preparation, registration or amendment of this Agreement, the perfection or
preservation of the Security Interest, the enforcement by any means of any of
the provisions hereof or the exercise of any rights, powers or remedies
hereunder, including, without limitation, all such costs, charges and expenses
in connection with taking possession of Collateral, carrying on the Debtor's
business, collecting the Debtor's accounts and taking custody of, preserving,
repairing, processing, preparing for disposition and disposing of Collateral,
together with interest on such costs, charges and expenses from the dates
incurred to the date of payment at the interest rate being charged under the
Note.
4.4 Further Assurances
------------------
The Debtor shall at its own expense do, execute, acknowledge and
deliver or cause to be done, executed, acknowledged and delivered all such
further acts, deeds, mortgages, pledges, charges, assignments, security
agreements, hypothecs and assurances (including instruments supplemental or
ancillary thereto) and such financing statements as the Secured Party may from
time to time reasonably request to better assure and perfect its security on
the Collateral.
ARTICLE 5
COLLECTION OF DEBTS
5.1 Collection of Debts
-------------------
Following the Demand Date or upon the occurrence of an Event of
Default, the Secured Party may give notice of the Security Interest to any
Person obligated to pay any debt or liability constituting Collateral and may
also direct such Person to make all payments on account of any such debt or
liability to the Secured Party. The Debtor acknowledges that any payments
received by the Debtor from such Persons, whether before or after notification
of the Security Interest to such Persons and whether before or following the
Demand Date or the occurrence of an Event of Default, shall be received and
held by the Debtor in trust, or as agent in the Province of Quebec, for the
Secured Party and shall be turned over to the Secured Party upon request.
ARTICLE 6
REMEDIES
6.1 Appointment of Receiver
-----------------------
(a) Following the Demand Date or upon the occurrence of an Event
of Default, the Secured Party may appoint by instrument any
Person, whether an officer or an employee of the Secured
Party or not, to be a Receiver of Collateral and may remove
any Receiver so appointed and appoint another in place of
such Receiver in the same manner. Any such Receiver shall be
deemed the agent of the Debtor and not of the Secured Party
for the purposes of (i) carrying on and managing the business
and affairs of the Debtor, and (ii) establishing liability
for all acts or omissions of the Receiver while acting as
such, and the Secured Party shall not be in any way
responsible for any acts or omissions on the part of any such
Receiver, its officers, employees and agents. The Debtor
hereby irrevocably authorizes the Secured Party to give
instructions to the Receiver relating to the performance of
its duties. The Debtor hereby irrevocably waives any right it
may have now or in the future under any Applicable Law,
including, without limitation, the PPSA, to make application
to a court for the removal, replacement or discharge of the
Receiver or for directions on any matter relating to the
duties of the Receiver (unless such duties are not being
performed in accordance with Applicable Law or in respect of
the Receiver's accounts or remuneration or in respect of any
other matter.
(b) Subject to the provisions of the instrument appointing it and
Applicable Law any such Receiver shall have the power to take
possession of Collateral, to preserve Collateral or its value
in such manner as it considers appropriate, to carry on or
concur in carrying on all or any part of the business of the
Debtor and to sell, lease or otherwise dispose of or concur
in selling, leasing or otherwise disposing of Collateral in
such manner and on such terms as it considers to be
appropriate. To facilitate the foregoing powers, any such
Receiver may enter upon, use and occupy all premises owned or
occupied by the Debtor wherein Collateral may be situate to
the exclusion of all others to the extent permitted by law,
including the Debtor, maintain Collateral upon such premises,
borrow money on a secured or unsecured basis, incur
reasonable expenses in the exercise of the rights, powers and
remedies set out in this Agreement and use Collateral
directly in carrying on the Debtor's business or as security
for loans or advances to enable it to carry on the Debtor's
business or otherwise, as such Receiver shall, in its
discretion, determine. In addition, the Receiver shall have
the following rights, powers and remedies:
(i) to make payments to Persons having prior rights or
Liens on properties on which the Debtor may hold a
Lien and to Persons having prior rights or Liens on
the Collateral; and
(ii) to demand, commence, continue or defend proceedings
in the name of the Secured Party, or in the name of
the Debtor for the purpose of protecting, seizing,
collecting, realizing or obtaining possession of
payment of the Collateral and to give effectual
receipts and discharges therefor.
(b) Except as may be otherwise directed by the Secured Party, all
Proceeds received from time to time by such Receiver in
carrying out its appointment shall be received in trust, or
as agent in the Province of Quebec, for and paid over to the
Secured Party. Every such Receiver may, in the discretion of
the Secured Party, be vested with all or any of the rights
and powers of the Secured Party.
6.2 Exercise of Remedies by Secured Party
-------------------------------------
Following the Demand Date or upon the occurrence of an Event of
Default, the Secured Party may, either directly or through its agent or
nominees, exercise all the powers and rights available to a Receiver by virtue
of Section 6.1 or otherwise in accordance with Applicable Law. In addition to
the rights granted in this Agreement and in any other agreement now or
hereafter in effect between the Debtor and the Secured Party and in addition to
any other rights the Secured Party may have at law or in equity or otherwise,
the Secured Party shall have, both before and following the Demand Date or the
occurrence of an Event of Default, all rights and remedies of a secured party
under the PPSA.
6.3 Possession of Collateral
------------------------
The Debtor acknowledges that the Secured Party or any Receiver
appointed by it may take possession of Collateral wherever it may be located
and by any method permitted by law and the Debtor agrees upon request from the
Secured Party or any such Receiver to assemble and deliver possession of
Collateral at such place or places as directed.
6.4 Remedies Not Exclusive
----------------------
All rights, powers and remedies of the Secured Party under this
Agreement may be exercised separately or in combination and shall be in
addition to, and not in substitution for, any other security now or hereafter
held by the Secured Party and any other rights, powers and remedies of the
Secured Party however created or arising. No single or partial exercise by the
Secured Party of the rights, powers and remedies under this Agreement or under
any other security now or hereafter held by the Secured Party shall preclude
any other and further exercise of any other right, power or remedy pursuant to
this Agreement or any other security or at law, in equity or otherwise. The
Secured Party shall at all times have the right to proceed against Collateral
or any other security in such order and in such manner as it shall determine
without waiving any rights, powers or remedies which the Secured Party may have
with respect to this Agreement or any other security at law, in equity or
otherwise. No delay or omission by the Secured Party in exercising any right,
power or remedy hereunder or otherwise shall operate as a waiver thereof or of
any other right, power or remedy.
6.5 Debtor Liable for Deficiency
----------------------------
The Debtor shall remain liable to the Secured Party for any deficiency
after the proceeds of any sale, lease or disposition of Collateral are received
by the Secured Party.
6.6 Exclusion of Liability of Secured Party and Receiver
----------------------------------------------------
The Secured Party shall not, nor shall any Receiver appointed by it,
be liable for any failure to exercise its rights, powers or remedies arising
hereunder or otherwise, including, without limitation, any failure to take
possession of, collect, enforce, realize, sell, lease or otherwise dispose of,
preserve or protect the Collateral, to carry on all or any part of the business
of the Debtor relating to the Collateral or take any steps or proceedings for
any such purposes. Neither the Secured Party nor any Receiver appointed by the
Secured Party shall have any obligation to take any steps or proceedings to
preserve rights against prior parties to or in respect of the Collateral
including, without limitation, any Instrument, Chattel Paper or Securities,
whether or not in the Secured Party's or the Receiver's possession, and neither
the Secured Party nor any Receiver appointed by the Secured Party shall be
liable for failure to do so. Subject to the foregoing, the Secured Party shall
use reasonable care in the custody and preservation of the Collateral in its
possession.
6.7 Notice of Sale
--------------
Unless required by law, neither the Secured Party nor any Receiver
appointed by it shall be required to give the Debtor any notice of any exercise
of any remedy it may have, sale, lease or other disposition of the Collateral,
the date, time and place of any public sale of the Collateral or the date after
which any private disposition of the Collateral is to be made.
ARTICLE 7
APPLICATION OF PROCEEDS
7.1 Application of Proceeds
-----------------------
The proceeds arising from the enforcement of the Security Interest as
a result of the possession by the Secured Party of the Collateral or from any
sale or other disposition of, or realization of security on, the Collateral
(except following acceptance of the Collateral in satisfaction of the
Obligations) shall be applied by the Secured Party in such order as it may
determine (subject to Applicable Law, including the PPSA).
7.2 Monies Actually Received
------------------------
The Debtor shall be entitled to be credited only with the actual
Proceeds arising from the possession, sale, lease or other disposition of, or
realization of security on, the Collateral when received by the Secured Party
or the Receiver and such actual Proceeds shall mean all amounts indefeasibly
received in cash by the Secured Party or the Receiver upon such possession,
sale, lease or other disposition of, or realization of security on, the
Collateral.
ARTICLE 8
GENERAL
8.1 Power of Attorney
-----------------
To the extent permitted by Applicable Law, the Debtor hereby appoints
the Secured Party as the Debtor's attorney, with full power of substitution, in
the name and on behalf of the Debtor, to execute, deliver and do all such acts,
deeds, leases, documents, transfers, demands, conveyances, assignments,
contracts, assurances, consents, financing statements and things as the Debtor
has herein agreed to execute, deliver and do or as may be required by the
Secured Party or any Receiver to give effect to this Agreement or in the
exercise of any rights, powers or remedies hereby conferred on the Secured
Party, and generally to use the name of the Debtor in the exercise of all or
any of the rights, powers or remedies hereby conferred on the Secured Party.
This appointment, coupled with an interest, shall not be revoked by the
insolvency, bankruptcy, dissolution, liquidation or other termination of the
existence of the Debtor or for any other reason.
8.2 Set-Off
-------
The Secured Party may at any time and from time to time, without
notice to the Debtor or to any other Person, set-off, appropriate and apply any
and all deposits, general or special, matured or unmatured, held by or for the
benefit of the Debtor with the Secured Party, and any other indebtedness and
liability of the Secured Party to the Debtor, matured or unmatured, against and
on account of the Obligations when due, in such order of application as the
Secured Party may from time to time determine.
8.3 Dealings with Others
--------------------
The Secured Party may grant extensions of time and other indulgences,
take and give up security, accept compositions, make settlements, grant
releases and discharges and otherwise deal with the Debtor, debtors of the
Debtor, sureties and other Persons and with Collateral and other security as
the Secured Party sees fit, without prejudice to the liability of the Debtor to
the Secured Party or the rights, powers and remedies of the Secured Party under
this Agreement.
8.4 Perfection of Security
----------------------
The Debtor authorizes the Secured Party to register such financing
statements and other documents and do such acts, matters and things as the
Secured Party may consider appropriate to perfect and continue the Security
Interest, to protect and preserve the interest of the Secured Party in
Collateral and to realize upon the Security Interest. The Debtor further agrees
that, upon request by the Secured Party, it shall execute all financing
statements and other documents and do such acts, matters and things as the
Secured Party may consider appropriate to perfect and continue the Security
Interest, to protect and preserve the interest of the Secured Party in
Collateral and to realize upon the Security Interest.
8.5 Communication
-------------
Any notice or other communication, including a demand or a direction,
required or permitted to be given hereunder shall be in writing and shall be
given by prepaid first-class mail, by facsimile or other means of electronic
communications, or by hand-delivery as hereinafter provided. Any such notice or
other communication, if mailed by prepaid first-class mail, shall be deemed to
have been received on the fourth Business Day after the post-marked date
thereof or, if sent by facsimile or other means of electronic communication,
shall be deemed to have been received on the Business Day following the sending
or, if delivered by hand, shall be deemed to have been received at the time it
is delivered to the applicable address noted below. Notice of change of address
shall also be governed by this section. Notice and other communications shall
be addressed as follows:
(a) if to the Secured Party:
Maxxcom Inc.
00X Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Chief Financial Officer
Facsimile number: (000) 000-0000
with a copy to:
Fogler, Xxxxxxxx LLP
Barristers & Solicitors
Suite 4400, P.O. Box 95
Royal Trust Tower
Toronto-Dominion Centre
Toronto, Ontario
M5K 1G8
Attention: Xx. Xxxxx X. Xxxxxxxxx
Facsimile number: (000) 000-0000
(b) if to the Debtor:
[Insert name and address of Debtor]
Attention: [Insert Title of Contact Person]
Facsimile number: (?)?-?
Notwithstanding the foregoing, if the PPSA requires that a notice or
other communication be given in a specified manner, then any such notice or
communication shall be given in such manner.
8.6 Assignment
----------
(a) The Debtor shall not be entitled to assign or transfer its
obligations under this Agreement without the prior written
consent of the Secured Party, which consent may be
unreasonably withheld. The Secured Party may, without the
prior written consent of the Debtor assign, transfer,
negotiate, pledge or otherwise hypothecate this Agreement,
any of its rights hereunder or any part thereof and all
rights and remedies of the Secured Party in connection with
the interest so assigned shall be enforceable against the
Debtor as the same would have been by the Secured Party but
for such assignment, transfer, negotiation, pledge or
hypothecation.
(b) The Debtor hereby:
(i) acknowledges that this Agreement, the indebtedness
secured hereby and all other security to be granted in
connection herewith has been or will be assigned by
the Secured Party to The Bank of Nova Scotia, as agent
for and on behalf of the lenders (the "Maxxcom
Syndicate Lenders") who are parties from time to time
to the second amended and restated credit agreement
dated as of ! 2001 between Maxxcom Inc., an Ontario
corporation, and Maxxcom Inc., a Delaware corporation,
as borrowers, their respective wholly-owned
subsidiaries, as guarantors, The Bank of Nova Scotia,
as agent (the "Agent"), and the Maxxcom Syndicate
Lenders (as amended, supplemented, restated and
replaced from time to time, the "Credit Agreement");
(ii) consents to the assignment referred to in paragraph
(b)(i); and
(iii) acknowledges and agrees, without limitation of any
other provision of this Agreement, that the Agent may
at any time following the occurrence of a default
under the Credit Agreement exercise all rights of the
Secured Party hereunder.
8.7 Successors and Assigns
----------------------
The terms and provisions of this Agreement shall be binding upon and
enure to the benefit of the Debtor, the Secured Party and their respective
successors and permitted assigns.
8.8 Discharge
---------
Upon indefeasible payment and performance by the Debtor of the
Obligations secured hereby the Secured Party shall upon request in writing by
the Debtor deliver up this Agreement to the Debtor and shall at the expense of
the Debtor cancel and discharge the Security Interest and execute and deliver
to the Debtor such documents as shall be requisite to discharge the Security
Interest hereby constituted.
8.9 Copy Received
-------------
The Debtor hereby acknowledges receipt of a copy of this Agreement and
a copy of the financing statement registered under the PPSA in respect of the
Security Interest.
IN WITNESS WHEREOF the Debtor has executed this Agreement as of the
date first written above.
[INSERT NAME OF DEBTOR]
By: __________________________________
Name:
Title:
SCHEDULE "A"
PERMITTED ENCUMBRANCES
----------------------
(a) liens for taxes, rates, assessments or other of governmental bodies,
or levies not yet due, or for which instalments have been paid based
on reasonable estimates pending final assessments, or if due, the
validity of which is being contested diligently and in good faith by
appropriate proceedings by the Debtor and in respect of which the
Debtor has set aside on its books reserves which, in accordance with
GAAP, are adequate therefor;
(b) liens for any judgment rendered or claim filed against the Debtor
which the Debtor is contesting in good faith and in respect of which
the Debtor has set aside on its books reserves which, in accordance
with GAAP, are adequate therefor and to the extent only that any such
judgment does not or would not, if determined unfavourably for the
Debtor, constitute an Event of Default;
(c) undetermined or inchoate liens, rights of distress and charges
incidental to current operations which have not at such time been
filed or exercised and of which the Secured Party has not been given
notice, or which relate to obligations not due or payable, or, if due,
the validity of which is being contested in good faith by appropriate
proceedings, provided that such obligations due are not in excess of
Cdn.$10,000 (or the equivalent thereof in another currency);
(d) reservations, limitations, provisos and conditions expressed in any
original grants from the Crown or other grants of real or immoveable
property, or interests therein, which do not materially impair the use
of the affected land for the purpose for which it is used by the
Debtor;
(e) licenses, easements, rights-of-way and rights in the nature of
easements (including, without limiting the generality of the
foregoing, licenses, easements, rights-of-way and rights in the nature
of easements for sidewalks, public ways, sewers, drains, gas, steam
and water mains or electric light and power, or telephone and
telegraph conduits, poles, wires and cables) which will not materially
impair the use of the affected land for the purpose for which it is
used by the Debtor;
(f) title defects or irregularities which are, in the opinion of the
Secured Party acting reasonably, of a minor nature and which in the
aggregate will not materially impair the use of the affected property
for the purpose for which it is used by the Debtor, or affect its
disposal by the Secured Party and any agent, trustee, or receiver,
appointed by the Secured Party, or otherwise;
(g) the right reserved to or vested in any municipality or governmental or
other public authority by the terms of any lease, licence, franchise,
grant or permit acquired by the Debtor or by any statutory provision
to terminate any such lease, license, franchise, grant or permit, or
to require annual or other payments as a condition to the continuance
thereof;
(h) a lien, charge or encumbrance (an "Encumbrance") resulting from the
deposit of cash or securities in connection with contracts, tenders or
expropriation proceedings, or to secure worker's compensation,
unemployment insurance, surety or appeal bonds, costs of litigation
when required by law, liens and claims incidental to current
construction, mechanics', warehousemen's, carriers' and other similar
liens, and public and statutory obligations;
(i) security given to a public utility or any municipality or governmental
authority when required by such utility or authority in connection
with the operations of the Debtor in the ordinary course of its
business;
(j) Encumbrances upon property acquired by the Debtor, or assumed by the
Debtor in connection with property acquired by the Debtor, provided
that (i) any such Encumbrance extends to or covers only the property
so acquired, (ii) any such Encumbrance is created or assumed
contemporaneously with such acquisition to secure or provide for the
payment of all or part of the cost thereof or in connection with the
refinancing of an existing Encumbrance of a similar nature, and (iii)
such Encumbrance does not, at the time of creation or assumption
thereof, secure indebtedness in an amount in excess of the fair market
value of the property so acquired, provided however, that all such
Encumbrances permitted under this paragraph (j) shall at no time
secure indebtedness outstanding in excess of Cdn.$ ? in the aggregate;
(k) capital leases (as so classified in accordance with GAAP) incurred or
created in the ordinary course of business;
(l) the Security Interest; and
(m) the Encumbrances set forth on Exhibit 1.
EXHIBIT 1
[PARTICULARS OF PERMITTED ENCUMBRANCES TO BE INSERTED]
SCHEDULE D
PERMITTED ENCUMBRANCES
1. Cash collateral in the amount of US$83,500 lodged by
Margeotes/Xxxxxxxx + Partners LLC with Chase Manhattan Bank to secure
a letter of credit issued by Chase Manhattan Bank to 000 Xxxxxxxxx
Xxxxxx Associates
2. Cash collateral in the amount of Cdn. $40,000 lodged by Xxxxxx Xxxxxxx
Communications Inc. with The Royal Bank of Canada and subject to a
hypothec to secure a credit card facility established by The Royal
Bank of Canada in favour of Xxxxxx Xxxxxxx Communications Inc.
3. Encumbrances securing indebtedness of Accent Marketing Services,
L.L.C. to National City Bank of Kentucky in an aggregate principal
amount not in excess of US$8,000,000.
4. Hypothec against Xxxxxx Xxxxxxx Communications Inc. by La Societe en
Commandite in respect of the lease by Xxxxxx Xxxxxxx Communications
Inc. of the premises known municipally as 000 Xxxx-Xxxxxxxx Xxxxxxxxx
Xxxx, 00xx Xxxxx, Xxxxxxxx Xxxxxx, X0X 0X0.
5. Hypothec against Veritas Communications Inc. by Fonds de Placement
Immobolier Morguard in respect of the lease by Veritas Communications
Inc. of the premises known municipally as 1 rue Holiday, Tour Est,
Bureau 205, Pointe Claire, Quebec H9R 5N3.
6. First collateral mortgage dated 25 March 1999 made by 656712 Ontario
Limited in favour of The Toronto-Dominion Bank over the property know
municipally as 000 Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx in the face
principal amount of Cdn. $351,000.
7. Registration # 19990419 0951 1616 1652 under the Personal Property
Security Act (Ontario) against 656712 Ontario Limited in favour of The
Toronto-Dominion Bank until 31 August 2001.
8. Registration # 00000000 1413 43 2277 under the Personal Property
Security Act (Ontario) against 656712 Ontario Limited in favour of The
Toronto-Dominion Bank until 31 August 2001.
9. Registration # 00000000 1415 43 0783 under the Personal Property
Security Act (Ontario) against 656712 Ontario Limited in favour of The
Toronto-Dominion Bank until 31 August 2001.
SCHEDULE E
PROPORTIONATE SHARES OF LENDERS
Proportionate Share (%) Amount (Cdn.$)
The Bank of Nova Scotia 23.75% 19,000,000
Canadian Imperial Bank of
Commerce/CIBC Inc. 21.25% 17,000,000
Bank of Montreal 21.25% 17,000,000
Royal Bank of Canada 21.25% 17,000,000
The Toronto-Dominion Bank/
Toronto Dominion (Texas), Inc. 12.50% 10,000,000
-------------------------------------------
Total 100% $80,000,000
SCHEDULE F
FORM OF QUARTERLY REPORTING CERTIFICATE
TO: THE BANK OF NOVA SCOTIA (the "Agent")
PURSUANT TO Section 7.3(c) of the Second Amended and Restated Credit Agreement
made as of 11 July 2001 between Maxxcom Inc., an Ontario corporation and
Maxxcom Inc., a Delaware corporation, the Agent, the Lenders named therein and
others (as amended, supplemented, restated or replaced from time to time, the
"Credit Agreement"), the undersigned hereby certifies as follows:
1. As of the date hereof, no Event of Default or Pending Event of Default
has occurred and is continuing under the Credit Agreement.
2. The representations and warranties made in Section 6.1 of the Credit
Agreement, other than those expressly stated to be made as of a
specific date, are true on and as of the date hereof with the same
effect as if such representations and warranties had been made on and
as of the date hereof.
3. As of the end of the most recently completed fiscal quarter of
Maxxcom, which ended ___________, the Interest Coverage Ratio was not
less than 3.0 to 1.0.
4. As of the end of the most recently completed fiscal quarter of
Maxxcom, which ended ___________, the Senior Debt Ratio was not
greater than ______ to 1.
5. As of the end of the most recently completed fiscal quarter of
Maxxcom, which ended ___________, the Total Debt Ratio was not greater
than ______ to 1.
6. As at the end of the most recently completed fiscal quarter of
Maxxcom, which ended ___________, the Net Worth of Maxxcom was ______,
being in excess of the Net Worth Base which was ______.
7. Appendix A attached are the financial calculations evidencing
compliance with the covenants and other matters referred to in
Sections 3, 4, 5 and 6 above.
8. Appendix B attached is a list of management fees, dividends and other
distributions paid or declared by each of the Restricted Parties
during Maxxcom's most recently completed fiscal quarter, together with
a designation of which have been paid.
9. Appendix C attached is a list of the details of all Permitted
Intercorporate Debt existing as at the end of Maxxcom's most recently
completed fiscal quarter.
10. Appendix D attached is a list of the details of all payments made on
account of Deferred Purchase Price Obligations made during Maxxcom's
most recently completed fiscal quarter and a summary description of
the arrangements or other bases upon which any Deferred Purchase Price
Obligation may become payable in the future, to the extent that such
arrangements or other bases are known at such date.
11. Appendix E attached is a list containing details of the sales and
other dispositions of assets of the Restricted Parties resulting in
Asset Disposition Proceeds during Maxxcom's most recently completed
fiscal quarter.
12. Appendix F attached is a list containing details of the purchase of
all Capital Stock of any Restricted Party and all sales of Capital
Stock of any Restricted Party during Maxxcom's most recently completed
fiscal quarter.
13. Appendix G attached is a list containing details of all Permitted
Minority Shareholder Loans as at the end of Maxxcom's most recently
completed fiscal quarter.
14. Appendix H attached is a list containing details of all Subordinated
Shareholder Debt as at the end of Maxxcom's most recently completed
fiscal quarter.
15. Appendix I attached is a list containing details of all Permitted
Acquisitions under Sections 1.1.126(d) and (e) and all Permitted
Non-Conforming Acquisitions made during Maxxcom's most recently
completed fiscal quarter.
16. Appendix J attached sets forth a description of all interest rate and
currency exchange arrangements to which any Borrower is a party (which
shall include only the following information: swap identification
number, the Lender party thereto, notional amount, maturity date and
type of agreement).
17. Appendix K attached sets forth an updated versions of Schedules G, I,
J, K, L, M, N, O , P and S to the Credit Agreement (required in fourth
quarter only).
All capitalized terms used but not defined herein have the meanings defined in
the Credit Agreement.
DATED at Toronto, Ontario the ______ day of __________, 20__.
MAXXCOM INC., an Ontario corporation
By: _________________________________
Name:
Title:
By: _________________________________
Name:
Title:
SCHEDULE G
RESTRICTED PARTY SHAREHOLDER AGREEMENTS
Accent Marketing Services, L.L.C.
1. Second Amended and Restated Limited Liability Company Agreement dated
April 1, 2001 among AMS Holdings Inc., Xxx Xxxxxx, Xxxxxxx Xxxxxxx,
Xxxxx Xxxxxxxx, Xxx Xxxxx, Xxxxx Xxxxxxxxxx, Xxx Xxxxxxxx, Xxxxx
Xxxxxxxxx, Xxxxx Xxxxxx, Xxxxx Xxxx, Xxxxx Xxxxx, Xxxxx Xxxxxxxxxx and
Xxxx Xxxxxx, Maxxcom Inc., Accent Acquisition Co., MDC Corporation and
Accent Marketing Services, L.L.C..
Accumark Promotions Group Inc.
2. Shareholders' Agreement dated December 10, 1993 among MDC Corporation,
Xxxxxx Kightley, G. Kightley Group Inc., Xxxxx Xxxxxx, Xxxxxx Xxxxx,
Xxxxxxxx Xxxxx, Xxxxx Xxxxx and Accumark Promotions Group Inc., as
amended by a Shareholders' Amending Agreement dated August 1, 1995, a
Shareholders' Amending Agreement dated January 31, 1996, a
Shareholders' Amending Agreement dated July 31, 1996, an Agreement
dated December 2, 1998, an Amending Agreement dated December 21, 1998,
a Covenant and Agreement dated February 11, 1999, a Shareholders'
Amending Agreement dated March 30, 1999, an Assignment and Assumption
Agreement dated March 1, 2000, a Share Exchange Agreement dated March
23, 2000 and by a Shareholders' Amending Agreement dated March 23,
2000.
Xxxxxx Xxxxxxx Communications Inc.
3. Shareholders' Agreement dated December 6, 1999 among Maxxcom Inc., MDC
Corporation Inc., Xxxxxx Xxxxxx, Xxxxx Xxxxxxxxx, Xxxxxxx Xxxxxxxx,
Xxxxxx Xxxxxxxxxxx, Xxxxxx Xxxxxxxxxxx RRSP, Xxxxxx Xxxxxx, Xxxxxxx
Xxxxxx, Xxxxx Xxxxxxx, Miousse RRSP, Xxxxxxxx Xxxxxxx, Xxxxxx Xxxxxx,
Xxx Xxxxxxxx, Xxxxx Xxxxxxxx, Xxxxx Xxxxxxxxx and Xxxxxxxxx Xxxxxxxx,
Xxxxx Xxxxxxx, Tericon Corporation, Xxxxx Xxxxxx, Xxxxxxx Xxxxxxxxx,
Xxxxxxxxx Xxxxxxxxx, Doron Woticky, Xxxx Xxxxx, Xxx Xxxxxxx, Xxxxxxx
Xxxxx, Xxxx Xxxxxxxx, Xxxxxxx Xxxxxxx, Les Placements G4B inc.,
Pertinence inc. and Xxxxxx Xxxxxxx Communications Inc., as amended by
the Assignment and Assumption Agreement dated March 1, 2000 between
MDC Corporation Inc. and Maxxcom Inc., as amended by the Assumption
Agreement signed by Maxxcom Inc. and the Share Exchange Agreements
executed with each of the shareholders dated March 23, 2000, Share
Purchase Agreements and releases between Xxxxxxxx Xxxxxxxx and Xxxxxx
Xxxxxx dated April 21, 2000 as vendors and Maxxcom Inc. as purchaser
and the Agreement of Transferee to Be Bound by Unanimous Shareholders'
Agreement of Xxxx XxXxxxxx dated May 15, 2000 and Agreement of
Transferee to Be Bound by Unanimous Shareholders' Agreement of Xxxxx
Xxxxxxx dated November 29, 2000.
Xxxxxxx Xxxx Xxxxxx Xxxxxxx Inc.*
4. Unanimous Shareholders' Agreement dated January 1, 1997 among MDC
Communications Corporation, Esme Xxxxxxx, Xxxxxxx Xxxxxx, Xxxxxxx So,
Xxxxx Xxxxxxx and Xxxxxxx Xxxx Xxxxxx Xxxxxxx Inc., as amended by
Assignment and Assumption Agreement dated March 1, 2000 between MDC
Corporation Inc. and Maxxcom Inc., and Amending Agreement dated March
24, 2000.
*(Note: The foregoing agreement is to be terminated in connection with
the acquisition by Maxxcom Inc. of all of the common shares of Xxxxxxx
Xxxx Xxxxxx Xxxxxxx Inc. held by Xxxx Xxxxxxx, Xxxxx Xxxxxxx and
Xxxxxxx So which is currently expected to be completed prior to August
31, 2001)
Bang!Zoom LLC
5. Limited Liability Company Agreement dated June 30, 2000 among B-Z LLC,
BZ Acquisition Inc., Maxxcom Inc. and Bang!Zoom LLC, as amended by
Amendment No. 1 to the Limited Liability Company Agreement dated as of
November 29, 2000.
Xxxxx Xxxxx Group Ltd.
6. Amended and Restated Shareholders' Agreement dated March 31, 1999
among Xxxxx Xxxxxxx, Xxxxx Xxxxxxxxx and Xxxxx Xxxxx Group Ltd., as
amended by Amending Agreement dated October 1, 1999 among MDC
Corporation Inc., Xxxxx Xxxxxxxxx, Xxxxx Xxxxxxx, Xxxx Xxxxxx and
Xxxxx Xxxxx Group Ltd., as amended by the Assignment and Assumption
Agreement dated March 1, 2000 between MDC Corporation Inc. and Maxxcom
Inc. and the Assumption Agreement dated March 23, 2000 between MDC
Corporation Inc. and Maxxcom Inc. and the related Share Exchange
Agreements executed with each of the shareholders.
Colle & XxXxx, Inc.
7. Shareholders' Agreement dated March 31, 1999 among Colle & XxXxx,
Inc., Maxxcom Inc., MDC Communications Corporation, Xxxxx Xxxxxxx, Xxx
Xxxxxxxx, Xxx Xxxxxxxx, Xxxxxxx Xxxxxxxxx, Xxxxxxx Xxxxxxxxx, Xxxxxx
Xxxxx, Xxxx Xxxxxxxxx, Xxxxxxxxx Xxx, Xxxxx Xxxxxx, Xxxxx Xxxxx,
Xxxxxx Xxxxxxxxxx, Xxxxxxx Xxxx, Xxxxx Xxxxxxx, Xxxxxx Xxxxxxx, Xxxxx
Xxxx, Xxxxx XxXxxxx, Xxxxxxx XxXxxxx, Xxxxxxx O'Xxxxx Xxxxx, Xxxx
Xxxxx, Xxxxxxx Xxxxxxxxxx and Xxxxx Xxxxxx, as amended by the letter
agreement dated March 23, 2000, the Exchange Offer dated March 23,
2000 and the letter agreement dated April 28, 2000.
Cormark XxxXxxx Communication Solutions (Canada) Inc. (formerly Cormark
Communications Inc.)
8. Shareholders' Agreement dated December 31, 1993 among MDC Corporation,
Xxxxxxxx Xxxxxxxxx, 1050173 Ontario Inc., Xxxxxx X. Xxxxxxxxx,
Sandward Ltd., Xxxxxx Xxxxxxx and Cormark Communications Inc., as
amended by Amending Agreement dated March 10, 1995 among MDC
Corporation, Xxxxxxxx Xxxxxxxxx, 1050173 Ontario Inc., Xxxxxx
Xxxxxxxxx, Sandward Ltd., Xxxxxx Xxxxxxx, Xxxxxxx Xxxxxxxxxx and
Cormark Communications Inc., as amended by Amending Agreement dated
December 23, 1996 among MDC Communications Corporation, Xxxxxxxx
Xxxxxxxxx, 1050173 Ontario Inc., Xxxxxx Xxxxxxxxx, Sandward Ltd.,
Xxxxxx Xxxxxxx, Xxxxxxx Xxxxxxxxxx, Xxxxx Xxxxxxx and Cormark
Communications Inc., as amended by Amending Agreement dated January 1,
1997 among MDC Communications Corporation, Xxxxxxxx Xxxxxxxxx, Xxxxxx
Xxxxxxxxx, Xxxxxx Xxxxxxx, Xxxxxxx Xxxxxxxxxx, Xxxxx Xxxxxxx and
Cormark Communications Inc., as amended by Amending Agreement dated
January 1, 1998 among MDC Communications Corporation, Xxxxxxxx
Xxxxxxxxx, Xxxxxx Xxxxxxxxx, Xxxxxx Xxxxxxx, Xxxxxxx Xxxxxxxxxx, Xxxxx
Xxxxxxx and Cormark Communications Inc., as amended by Amending
Agreement dated July 1, 1998 among MDC Communications Corporation,
Xxxxxxxx Xxxxxxxxx, Xxxxxx Xxxxxxxxx, Xxxxxx Xxxxxxx, Xxxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxxx, Xxxxx Xxxxxxx and Cormark Communications
Inc., as amended by the Assignment and Assumption Agreement dated
March 1, 2000 between MDC Corporation Inc. and Maxxcom Inc., as
amended by the Share Exchange Agreement dated March 23, 2000 executed
by each of the shareholders and by Share Purchase Agreements and
related, agreements of settlement and release, authorizations and
consents and resignations, releases and indemnities between each of
Xxxxx Xxxxxxx dated Xxxxxxxxx 00, 0000, Xxxxxx Xxxxxxx dated August
17, 2000 and Xxxxx Xxxxxxx dated August 18, 2000 as vendors and
Maxxcom Inc. as purchaser.
Xxxxxxx Xxxxxx & Bogusky LLC
9. Amended and Restated Limited Liability Company Agreement dated January
8, 2001 among Crispin & Xxxxxx Advertising, Inc. d/b/a/ Xxxxxxx Xxxxxx
& Bogusky, a Florida corporation, Xxxxxxx Xxxxxx, Xxxx Xxxxxxx, Xxxx
Xxxxx, Xxxx Xxxxxxxxx, CPB Acquisition Inc., a Delaware corporation,
Maxxcom Inc., an Ontario corporation and Xxxxxxx Xxxxxx & Bogusky LLC,
a Delaware limited liability company.
E-Telligence LLC
10. Limited Liability Company Agreement dated June 30, 2000 among
E-Telligence Inc. (now E-Car, Inc.), ET Acquisition Inc., Maxxcom Inc.
and E-Telligence LLC, as amended by Amendment No. 1 to the Limited
Liability Company Agreement dated as of November 29, 2000.
Xxxxxxxx Xxxxxx Xxxxx LLC
11. Amended and Restated Operating Agreement dated November 30, 1999 among
Xxxxxxx Xxxxxx Xxxxxxxx, Xxxxxxx Xxxxx, FMA Acquisition Co., MDC
Corporation, Maxxcom Inc. and Xxxxxxxx Xxxxxx Associates LLC, as
amended by Amendment No. 1 to the Amended and Restated Operating
Agreement dated as of November 29, 2000.
Integrated Healthcare Communications, Inc.
12. Shareholders' Agreement dated January 6, 1998 among MDC Communications
Corporation, Xxxxxx Xxxxxxxx, Xxxxx Xxxxxxx and Integrated Healthcare
Communications, Inc., as amended by Amending Agreement between MDC
Communications Corporation, Xxxxx Xxxxxxx, Xxxxxx Hunealt and
Integrated Healthcare Communications, Inc., dated June 1, 1998, as
amended by the Assignment and Assumption Agreement dated March 1, 2000
between MDC Corporation Inc. and Maxxcom Inc., as amended by the
Assumption Agreement signed by Maxxcom Inc. and the Share Exchange
Agreements executed with each of the shareholders dated March 23,
2000.
Interfocus Group Limited
13. Shareholders and Option Agreement dated September 5, 2000 between
Sevco 1156 Limited, Xxxxxxx Xxxxxx and Maxxcom Inc., as amended by an
Agreement dated November 15, 2000 regarding the full repayment of the
outstanding loan owing by Interfocus to Maxxcom in the amount of GBP
5,334,685 in exchange for 5,334,685 C ordinary shares of GBP 1 each
credited as fully paid.
Margeotes/Xxxxxxxx + Partners LLC
14. Limited Liability Company Agreement dated July 31, 1998 among MF + P
Acquisition Co., Margeotes/Xxxxxxxx + Partners Inc., Xxxxxx Xxxxxxxx
and Margeotes/Xxxxxxxx + Partners LLC, as amended by Amendment No. 1
to the Limited Liability Company Agreement dated March 28, 2000 and
Amendment No. 2 to the Limited Liability Company Agreement dated
November 29, 2000..
Northstar Research Partners Inc.
15. Pre-Incorporation Agreement dated July 2, 1998 among MDC
Communications Corporation, Xxxxxxx Tile, Xxxxxxx Xxxxxx, Xxxxxxx
Xxxxx and Northstar Research Partners Inc. ("Northstar"), as amended
by the Assignment and Assumption Agreement dated March 1, 2000 between
MDC Corporation Inc. and Maxxcom Inc., as amended by the Amending
Agreement dated September 20, 2000 and as further amended by the
Amending Agreement made as of the 15th day of February, 2001 among
Maxxcom Inc., Xxxxxxx Tile, Xxxxxxx Xxxxxx, Xxxxxxx Xxxx, Xxxxx
Xxxxxxx-Xxxxxxxx and Northstar.
Pavlika Xxxxxxxx Direct, LLC
16. Limited Liability Company Agreement dated August 17, 2000 among
Xxxxxxxx Direct Inc., Xxxxxxx X. Xxxxxxxx, CDI Acquisition Co.,
Margeotes/Xxxxxxxx + Partners LLC, Pavlika Xxxxxxxx Direct, LLC.
656712 Ontario Limited*
17. Shareholders' Agreement among Maxxcom Inc., an Ontario corporation,
Xxxx Xxxxxx, M&A Xxxxxx Holdings Ltd. and 656712 Ontario Limited.
*(Note: The foregoing agreement is to be executed upon completion of
the purchase by Maxxcom Inc. of all of the common shares of 656712
Ontario Limited held by Fraser XxXxxxxx (including those shares
currently being held in trust on his behalf) and the acquisition of
135 common shares of 656712 Ontario Limited by Xxxx Xxxxxx which is
currently expected to be completed prior to August 31, 2001).
Source Marketing LLC
18. Operating Agreement dated October 15, 1998 among SMI Acquisition Co.,
Source Marketing Inc. (now Spruce Lake Inc.), Xxxxxx Xxxxxxxxx and
Source Marketing LLC, as amended by Amendment No. 1 to the Operating
Agreement dated January 1, 2000 and Amendment No. 2 to the Operating
Agreement dated November 29, 2000.
TargetCom LLC
19. Limited Liability Company Agreement dated June 30, 2000 among
TargetCom Inc. (now Comtar Inc.), TC Acquisition Inc., Maxxcom Inc.
and TargetCom LLC, as amended by Amendment No. 1 to the Limited
Liability Company Agreement dated as of November 29, 2000.
Veritas Communications Inc.
20. Amended and Restated Shareholders' Agreement dated November 19, 1998
among MDC Communications Corporation, Xxxxx X. Xxxxxxx, Xxxxxxxx
Xxxxxxx, Xxxxx XxXxxxxxxx, Xxxxxx Xxxx and Veritas Communications
Inc., as amended by the Assignment and Assumption Agreement dated
March 1, 2000 between MDC Corporation Inc. and Maxxcom Inc., as
amended by the Share Exchange Agreement dated March 23, 2000 executed
by each of the shareholders.
SCHEDULE H
FORM OF NOTICE OF ADVANCE
The Bank of Nova Scotia
c/o International Banking Division
00 Xxxx Xxxxxx Xxxx
00xx Xxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Mr. Xxxx Xxxx (Facsimile (000) 000-0000)
Dear Sirs/Mesdames:
We refer to the Second Amended and Restated Credit Agreement made as
of 11 July 2001 between Maxxcom Inc. and Maxxcom US, as borrowers, The Bank of
Nova Scotia, as Agent, the Lenders named therein and others (as amended,
supplemented, restated or replaced from time to time, the "Credit Agreement").
All capitalized terms used in this letter and defined in the Credit Agreement
have the meanings defined in the Credit Agreement.
Notice is hereby given pursuant to Section 5.27 the Credit Agreement
that [specify Maxxcom/Maxxcom US] hereby requests that:
(a) an Advance be made in the form of [specify kind of Advance(s)
and the applicable term and maturity date, in the case of a
LIBOR Advance or an Advance by way of Bankers' Acceptance];
(b) the aggregate principal amount of the Advance shall be
[insert amount and currency for each Advance requested];
(c) the Drawdown Date shall be [insert date]; and
(d) the proceeds of the Advance shall be deposited in [specify
Designated Account].
[Maxxcom Inc./ Maxxcom US] hereby confirms as follows:
(a) the representations and warranties made in Section 6.1 of the
Credit Agreement, other than those expressly stated to be
qualified or made as of a specific date, are true on and as
of the date hereof with the same effect as if such
representations and warranties had been made on and as of the
date hereof;
(b) no Pending Event of Default or Event of Default has occurred
and is continuing on the date hereof or will result from the
Advance(s) requested herein;
(c) Maxxcom Inc. will immediately notify you if it becomes aware
of the occurrence of any event which would mean that the
statements in the immediately preceding paragraphs (a) and
(b) would not be true if made on the Drawdown Date;
(d) all other conditions precedent set out in Section 4.1 and
[Section 4.2 in the case of the initial Advance
hereunder][and Section 10.2 in the case of an initial payment
or Advance by a new Lender], in each case, as applicable of
the Credit Agreement have been fulfilled.
[The Borrower hereby instructs, authorizes and directs each of the BA
Lenders, with respect to the Bankers' Acceptances to be accepted by it in
connection with the Advance requested herein, to execute, complete, and, as
applicable, endorse, discount and/or deliver each such Bankers' Acceptance for
and on behalf of the Borrower.]
DATED at [Toronto, Ontario] this ______ day of __________ 20__.
Yours truly,
[INSERT NAME OF PARTY REQUESTING
ADVANCE]
By: _________________________________
Name:
Title:
By: _________________________________
Name:
Title:
SCHEDULE I
OWNED AND LEASED REAL PROPERTY
----------------------------------------------- -------------------------------------- -------------------------------
RESTRICTED PARTY LOCATION OF LOCATION OF OWNED
LEASED PROPERTY PROPERTY
----------------------------------------------- -------------------------------------- -------------------------------
Maxxcom Inc. 00X Xxxxxxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
1220777 Ontario Limited 00X Xxxxxxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
News Canada Inc. 000 Xxxxx Xxxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx
X0X 0X0
656712 Ontario Limited None 000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx
Xxxxxx
Accumark Promotions Group Inc. 000 Xxxxxx Xxxx Xxxx Xxxx
Xxxxx 000 & 105
North York, Ontario
M3V 1O4
Xxxxxxx Xxxx Xxxxxx Xxxxxxx Inc. 000 Xxxxxxxx Xxxxxx Xxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx
X0X 0X0
Xxxxx Xxxxx Group Ltd. 0000 Xxxxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Cormark XxxXxxx Communication 000 Xxxx Xxxxxx Xxxx
Xxxxxxxxx (Xxxxxx) Inc. (formerly Suite 2A
Cormark Communications Inc.) Xxxxxx, Xxxxxxx
X0X 0X0
000 00xx Xxxxxx XX
Xxxxx 000
Xxxxxxx, Xxxxxxx
X0X 0X0
Xxxxxx Xxxxxxx Communications Inc. 00 Xxxxx Xxxxxxx Xxxxxx Xxxx
Xxxxx 000X & 400
Xxxxxxx, Xxxxxxx
X0X 0X0
0000 Xxxx. Xxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxx, Xxxxxx
X0X 0X0
000 Xxxx-Xxxxxxxx
Xxxxxxxxx Xxxx
00xx & 00xx Xxxxx
Xxxxxxxx, Xxxxxx
Veritas Communications Inc. 000 Xxxxxxxx Xxxxxx Xxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx
X0X 0X0
1 rue Holiday, Tour Est
Bureau 000
Xxxxxx Xxxxxx, Xxxxxx
X0X 0X0
Integrated Healthcare 000 Xxxxxxxx Xxxxxx X. None
Communications, Inc. Xxxxx 000
Xxxxxxx, Xxxxxxx
X0X 0X0
Northstar Research Partners Inc. 000 Xxx Xxxxxx Xxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx
X0X 0X0
Chrysler Building
0000 Xxxxxx Xxxxxx Xxxxx,
Xxxx 000
Xxxxxx, Xxxxxxxxxx
00000
Maxxcom Interactive Inc. None None
1385544 Ontario Limited None None
Maxxcom Inc. (US) None None
MF + P Acquisition Co. None None
Margeotes/Xxxxxxxx + Partners LLC 000 Xxxxxxxxx Xxxxxx None
0-0 Xxxxx
Xxx Xxxx, Xxx Xxxx
XXX, 00000
SMI Acquisition Co. None None
Source Marketing LLC 00 Xxxxxxx Xxxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx
XXX, 00000
Colle & XxXxx, Inc. 0000 Xxxxxxxxxx Xxxx Xxxx. 00000 X. Xxxxxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxxxx Fountain Hills, Arizona
XXX, 00000 XXX, 00000
Xxxx Xxxx Xxxxxxxx
Xxxxx 000
000 X Xxxxxx
Xxxxxxx, XX
XXX, 00000
Warehouse
0000 Xxxx 000xx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxx
XXX, 00000
0000 Xxxxx 00xx Xxxxxx
#000
Xxxxxxxx, Xxxxxxxxx
XXX, 00000-0000
000 Xxxx Xxxx XX
Xxxxx Xxxxxx, Xxxx
XXX, 00000
Accent Marketing Services, L.L.C. 000 X. Xxxx Xxxxxx Xxxx
Xxxxx 0000
Xxxxxxxxxx, Xxxxxxxx
XXX, 00000
Customer
Communications Center
000 Xxxx Xxxx Xxxxxxxxx
Xxxxx 0
Xxx Xxxxxx, Xxxxxxx
XXX, 00000
Customer
Communications Center
0000 X.X. 000xx Xxxxxxx
Xxxxxx Xxxx, Xxxxxxxx
XXX, 00000
Customer
Communications Center
0000 Xxxxxx Xxxxxxx,
Xxxx. #0
Xxxxxx Xxxxx, Xxxxxxx
XXX, 00000
Sales Xxxxxx
00000 Xxxxxxxxx Xx. X.
Xxxxxx, Xxxxxxxx
XXX
Customer
Communications Centre
0000 Xxxxx Xxxx Xxxx.
Xxxxxxxxxxx, Xxxxxxx
XXX, 00000
Accent Acquisition Co. None None
FMA Acquisition Co. None None
Xxxxxxxx Xxxxxx Xxxxx LLC 000 Xxxxxxxxx Xxxxxx Xxxx
Xxxxxx, Xxxxx 000.
Xxxxxxx, Xxxxxxx
XXX, 00000
Maxxcom (Nova Scotia) Corp. None None
Maxxcom (USA) Finance Company None None
Maxxcom (USA) Holdings Inc. None None
TC Acquisition Inc. None None
ET Acquisition Inc. None None
BZ Acquisition Inc. None None
TargetCom LLC 000 Xxxxx Xxxxxxxx Xxxx
Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxxx
XXX, 60611
Suite 200
0000 Xxxxx X'Xxxxxx
Xxxxxxxxx
Xxxxxx, Xxxxx
XXX, 00000
E-Telligence LLC 00000 Xxxxx Xxxxxxxxx Xxxx
Xxxxx 000
Xx. Xxxxx, XX XXX, 00000
Bang!Zoom LLC 0000 00xx Xxxxxx None
Suites 22 & 24
Xxx Xxxxxxxxx, XX
XXX, 00000
CDI Acquisition Co. None None
Pavlika Xxxxxxxx Direct, LLC 00 Xxxx 00xx Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx
XXX, 00000-0000
Mackenzie Marketing, Inc. 000 X. Xxxxxxx 000 Xxxx
Xxxxx 000
Xxxxxxxxxxx, XX
XXX, 00000
Interfocus Group Limited Xxxxxx Xxxxxx Xxxx
Xxxxxx, X0 0XX
Xxxxxxx
Bratskeir & Company, Inc. 000 Xxxx Xxxxxx Xxxxx Xxxx
Xxx Xxxx, Xxx Xxxx
XXX, 00000
e-Source Drive to Web Marketing 00 Xxxxxxx Xxxxxx None
LLC Xxxxxxxx, Xxxxxxxxxxx
XXX, 00000
CPB Acquisition Inc. None None
Xxxxxxx Xxxxxx & Bogusky LLC 0000 Xxxxx Xxxxxxxx Xxxxx Xxxx
Xxxxx, Xxxxxxx
XXX, 00000
SCHEDULE J
RESTRICTIONS CREATED BY
SHAREHOLDER AGREEMENTS AND CONSTATING DOCUMENTS
As used herein, the term "Shareholders' Agreement", "Company
Agreement", "Operating Agreement" or "Shareholders' and Option
Agreement" as applicable to each of the following entities is defined
in Schedules G and T of the Credit Agreement.
1. Accent Marketing Services, L.L.C. ("Accent L.L.C.")
Restriction created by the Company Agreement wherein Section
4.1(a)(ii) provides that, except to the extent otherwise provided in
the Company Agreement, the powers of Accent L.L.C. shall be exercised
by and under the authority of, and the business and affairs of Accent
L.L.C. shall be managed under the direction of the Managers of Accent
L.L.C.. Notwithstanding the foregoing, or any other provisions of the
Company Agreement to the contrary, so long as both AMS Holdings, Inc.
and Accent Acquisition Co. own Membership Interests, the entering into
any business other than, or any transaction outside, the normal
business activities of Accent L.L.C. and related activities shall
require the mutual agreement of Accent Acquisition Co. and AMS
Holdings, Inc., whether at a meeting of the Members at which a quorum
is present, or by the written consent thereof.
2. Accumark Promotions Group ("Accumark")
Restrictions created by the Shareholders' Agreement wherein section
3.9 provides that unless otherwise resolved by the Board of Directors
of Accumark, all contracts and documents binding the Corporation in
respect of: (i) matters not in the ordinary course of Business; or
(ii) matters in the ordinary course of Business and involving a series
of amounts payable to the same party over a period of six months in
excess of $500,000 shall require the signature of one of the Maxxcom
appointees together with the signatures of any two of the class A
shareholders.
Under section 4.5 of the Shareholders' Agreement, the Board of
Directors of Accumark shall determine whether borrowings are required
by the Accumark, from whom such borrowings will be obtained, and the
terms and conditions of such borrowing.
3. Xxxxxxx Xxxx Xxxxxx Xxxxxxx Inc. ("ACLC")*
Restrictions created by the Shareholders' Agreement wherein section
4.1(k) requires the approval of holders of not less than 90% of the
total number of Common Shares cast at a meeting of Shareholders in
order for ACLC to: (i) loan to, or guarantee obligations of, a third
party; (ii) increase the indebtedness of ACLC beyond $500,000; (iii)
effect transactions with non-arm's length parties except in the
ordinary course of business; or (iv) create an encumbrance on the
assets of ACLC except in the ordinary course of business.
*(Note: This restriction will cease to be of any further effect
following the termination of the Shareholders' Agreement in connection
with the acquisition by Maxxcom Inc. of all of the common shares of
ACLC held by Xxxx Xxxxxxx, Xxxxx Xxxxxxx and Xxxxxxx So which is
currently expected to be completed prior to August 31, 2001).
4. Xxxxxx Xxxxxxx Communications Inc. ("Xxxxxx Xxxxxxx")
Restrictions created by the Shareholders' Agreement wherein Section
4.13 provides, inter alia, that, notwithstanding the general
provisions of Sections 4.8 and 4.10 of the Shareholders' Agreement,
any decision of the Board of Directors of Xxxxxx Xxxxxxx regarding:
(i) the incurrence whether absolutely or contingently of indebtedness
for borrowed money whether directly or by indirect financing
arrangements except in the ordinary course of business; (ii) the
lending of money in excess of $10,000 by Xxxxxx Xxxxxxx or the
incurrence of any guarantee or indemnity obligations including,
without limitation, to or for the benefit of any Shareholder; (iii)
any material contract, agreement or other transaction which is not in
the ordinary course of the business with an obligation or liability to
any Shareholder or any Person not at arm's length with him which
directly or indirectly provides to such Person any benefit or
advantage whether or not greater than Fair Market Value; (iv) any
material change to the Business; (v) any material contract, agreement,
obligation, liability or other transaction which is not in the
ordinary course of establishing or carrying on the Business shall
require the affirmative vote of all the directors of Xxxxxx Xxxxxxx
and, if decided by the Shareholders shall require the approval of not
less than sixty-nine percent (69%) and with respect to items (i) and
(iv) of this paragraph shall require sixty-nine percent (69%) of the
votes attaching to all voting shares represented in person or by proxy
at a Shareholders' meeting duly called and held.
5. Bang!Zoom LLC
Restriction created by the Company Agreement wherein Section 4.1
provides that, except to the extent otherwise provided for in the
Company Agreement, the powers of Bang!-Zoom LLC shall be exercised by
and under the authority of, and the business and affairs of Bang!-Zoom
LLC shall be managed under, the direction of the Managers of
Bang!-Zoom LLC. Notwithstanding the foregoing or any other provisions
of the Company Agreement to the contrary, as long as B-Z LLC and BZ
Acquisition Inc. own Membership Interests, the entering into any
business other than, or any transaction outside, the normal business
activities of Bang!-Zoom LLC and related activities as well as any
decisions regarding borrowing by Bang!-Zoom LLC and/or the encumbering
of the assets of Bang!-Zoom LLC, shall require the mutual agreement of
B-Z LLC and BZ Acquisition Inc. whether at a meeting of the Members at
which a quorum is present, or by the written consent thereof.
6. Xxxxx Xxxxx Group Ltd. ("Xxxxx Xxxxx")
Restriction created by the Shareholders' Agreement wherein section
4.1(g) provides that all contracts and documents binding Xxxxx Xxxxx
not entered into in the ordinary course of business and which have not
been approved in the annual capital and operating budget or by
specific resolution of the Board of Directors and involving amounts,
expenditures or commitments, or a series of payments, expenditures or
commitments to the same party, in excess of $10,000 shall require the
signature of the President or Treasurer of Xxxxx Xxxxx together with
the President or Chief Financial Officer of Maxxcom.
7. Colle & XxXxx, Inc. ("Colle & XxXxx")
Restrictions created by the Shareholders' Agreement wherein section
3.2. provides that, unless otherwise authorized by a resolution of the
Board of Directors, no officer or employee of Colle & XxXxx shall have
the authority to enter into any agreement, contract or commitment
relating to any matters not in the ordinary course of business. Under
section 3.4.3 of the Shareholders' Agreement, the Board of Directors
shall determine whether borrowings are required by Colle & XxXxx, from
whom such borrowings will be obtained and the terms and conditions of
such borrowing.
8. Cormark XxxXxxx Communication Solutions (Canada) Inc. (formerly
Cormark Communications Inc. ("Cormark")
Restrictions created by the Shareholders' Agreement wherein sections
4.12(f) and (o) require the consent of Maxxcom and the consent of all
other Shareholders of Cormark (represented by a majority of votes cast
by such Shareholders) in order to incur any indebtedness, obligation
or liability by Cormark, other than in the ordinary course of business
and in order to grant any guarantee.
9. Xxxxxxx Xxxxxx & Bogusky LLC
Restrictions created by the Company Agreement wherein Section 4.1 and
Subsection 4.1(xvi) provide that, except to the extent otherwise
provided for in the Company Agreement, the powers of Xxxxxxx Xxxxxx &
Bogusky LLC shall be exercised by and under the authority of, and the
business and affairs of Xxxxxxx Xxxxxx & Bogusky LLC shall be managed
under, the direction of the Managers of Xxxxxxx Xxxxxx & Bogusky LLC.
Notwithstanding the foregoing or any other provisions of the Company
Agreement to the contrary, as long as Crispin & Xxxxxx Advertising,
Inc. and CPB Acquisition Inc. own Membership Interests the entering
into any business other than, or any transaction outside, the normal
business activities of Xxxxxxx Xxxxxx & Bogusky LLC and related
activities, as well as the creation of or the modification of any
borrowing or other encumbrance by Xxxxxxx Xxxxxx & Bogusky LLC or of
any of the terms of any of the following financial arrangements: any
security interest on any of Xxxxxxx Xxxxxx & Bogusky LLC's assets
(other than purchase money security interests involving capital
expenditures or commitments which are not in excess of $50,000 per
expenditure or commitment or aggregating more than $200,000 during any
calendar year, except to the extent additional expenditures are
provided for in Xxxxxxx Xxxxxx & Bogusky LLC's approved capital
expenditure budget;), or any guarantee by Xxxxxxx Xxxxxx & Bogusky LLC
of the obligations of any Person; shall require the mutual agreement
of Crispin & Xxxxxx Advertising, Inc. and CPB Acquisition Inc. Such
agreement may be obtained by a vote at a meeting of the Members at
which CPB Acquisition Inc. and Crispin & Xxxxxx Advertising, Inc. are
present or by the unanimous written consent of Crispin & Xxxxxx
Advertising, Inc. and CPB Acquisition Inc.
10. E-Telligence LLC
Restrictions created by the Company Agreement wherein Section 4.1
provides that, except to the extent otherwise provided for in the
Company Agreement, the powers of E-Telligence LLC shall be exercised
by and under the authority of, and the business and affairs of
Etelligence LLC shall be managed under, the direction of the Managers
of E-Telligence LLC. Notwithstanding the foregoing or any other
provisions of the Company Agreement to the contrary, as long as
E-Telligence, Inc. and ET Acquisition Inc. own Membership Interests,
the entering into any business other than, or any transaction outside,
the normal business activities of E-Telligence LLC and related
activities, as well as any decisions regarding borrowing by
E-Telligence LLC and/or the encumbering of the assets of E-Telligence
LLC, shall require the mutual agreement of E-Telligence, Inc.(now
E-Car, Inc.) and ET Acquisition Inc. whether at a meeting of the
Members at which a quorum is present, or by the written consent
thereof.
11. Xxxxxxxx Xxxxxx Xxxxx LLC ("FME LLC")
Restriction created by the Operating Agreement wherein Section 4.1
provides that, except to the extent otherwise provided for in the
Operating Agreement, the powers of FME LLC shall be exercised by and
under the authority of, and the business and affairs of FME LLC shall
be managed under, the direction of the Managers of FME LLC.
Notwithstanding the foregoing or any other provisions of the Operating
Agreement to the contrary, as long as Xxxxxxx Xxxxxx Xxxxxxxx and/or
Xxxxxxx Xxxxx, on the one hand, and FMA Acquisition Co., on the other
hand, own Membership Interests, the entering into any business other
than, or any transaction outside, the normal business activities of
FME LLC and related activities as well as any decisions regarding
borrowing by FME LLC and/or the encumbering of the assets of FME LLC,
shall require the mutual agreement of Xxxxxxx Xxxxxx Xxxxxxxx and
Xxxxxxx Xxxxx (or such of them that own Membership Interests) on the
one hand, and FMA Acquisition Co. on the other hand, whether at a
meeting of the members at which a quorum is present, or by the written
consent thereof.
12. Integrated Healthcare Communications, Inc. ("IHC")
Restrictions created by the Shareholders' Agreement wherein section
4.11 provides that unless otherwise resolved by the Board of Directors
of IHC, all contracts and documents binding IHC in respect of (i)
matters not in the ordinary course of business; or (ii) matters in the
ordinary course of business and involving a series of amounts payable
to the same party over a period of six months in excess of $100,000
shall require the signature of one of the Maxxcom appointees together
with the signature of any one of the individual Shareholders.
Under section 5.5 of the Shareholders' Agreement, the Board of
Directors of IHC shall determine whether borrowings are required by
IHC, from whom such borrowings will be obtained and the terms and
conditions of such borrowing.
13. Interfocus Group Limited ("Interfocus")
Restriction created by the Shareholders' and Option Agreement among
Sevco 1156 Limited, Xxxxxxx Xxxxxx and Maxxcom Inc., wherein Part
II(3) of Schedule 4 provides that none of the following matters shall
be undertaken without the prior written consent of Maxxcom: (i) the
entry by Interfocus or any Subsidiary of any new mortgage, loan or
borrowing facility or the variation of the terms of any such
financing; (ii) the giving of any guarantee (other than in relation to
the supply of goods or services in the normal course of trading) or
the creation or issue of any debenture, mortgage, charge or other
security (other than liens arising in the course of trading).
14. Margeotes/Xxxxxxxx + Partners LLC ("MF+P LLC")
Restriction created by the Company Agreement wherein Section 4.1
provides that, except to the extent otherwise provided for in the
Company Agreement, the powers of MF+P LLC shall be exercised by and
under the authority of, and the business and affairs of MF+P LLC shall
be managed under, the direction of the Managers of MF+P LLC.
Notwithstanding the foregoing or any other provisions of the Company
Agreement to the contrary, so long as both Margeotes/Xxxxxxxx +
Partners Inc. and MF+P Acquisition Co. own Membership Interests, the
entering into any business other than, or any transaction outside, the
normal business activities of MF+P LLC and related activities as well
as any decisions regarding borrowing by MF+P LLC and/or the
encumbering of the assets of MF+P LLC, shall require the unanimous
vote of all of the holders of Membership Interests, whether at a
meeting of the Members at which a quorum is present, or by written
consent.
15. Northstar Research Partners Inc. ("Northstar")
Restrictions created by Schedule A to pre-incorporation agreement (the
"Pre-Incorporation Agreement") dated July 2, 1998, as amended, among
MDC Communications Corporation (whose interest was subsequently
assigned to Maxxcom Inc. as of March 1, 2000), Xxxxxxx Tile, Xxxxxxx
Xxxxxx, Xxxxxxx Xxxxx and Northstar wherein Section 4.12 provides that
no decisions of the Board of Directors or the Shareholders of
Northstar with respect to the following matters shall be made without
the consent of a majority of the Shareholders other than Maxxcom: (i)
the establishment of any loan facilities; (ii) a loan to, or the
guarantee of obligations of, a third party; and (iii) the encumbrance
of any of the assets of Northstar except in the ordinary course of
business.
16. Pavlika Xxxxxxxx Direct, LLC ("PCD LLC")
Restrictions created by the Company Agreement wherein Section 4.1
provides that, except to the extent otherwise provided for in the
Company Agreement, the powers of PCD LLC shall be exercised by and
under the authority of, and the business and affairs of PCD LLC shall
be managed under, the direction of the Managers of PCD LLC.
Notwithstanding the foregoing or any other provisions of the Company
Agreement to the contrary, as long as Xxxxxxxx Direct Inc. and CDI
Acquisition Co. own Membership Interests, the entering into any
business other than, or any transaction outside, the normal business
activities of PCD LLC and related activities shall require the mutual
agreement of Xxxxxxxx Direct Inc. and CDI Acquisition Co. whether at a
meeting of the Members at which a quorum is present, or by written
consent of the Members.
17. Source Marketing LLC ("Source LLC")
Restriction created by the Operating Agreement wherein Section 4.1(a)
provides that, except to the extent otherwise provided in the
Operating Agreement, the powers of Source LLC shall be exercised by
and under the authority of, and the business and affairs of Source LLC
shall be managed under the direction of the Managers of Source LLC.
Notwithstanding the foregoing or any other provisions of the Operating
Agreement to the contrary, as long as both Source Marketing, Inc. (now
Spruce Lake Inc.) and SMI Acquisition Co. own Membership Interests,
the entering into any business other than, or any transaction outside,
the normal business activities of Source LLC and related activities as
well as any decisions regarding borrowing by Source LLC and/or the
encumbering of the assets of Source LLC, shall require the unanimous
vote of all of the holders of Membership Interests, whether at a
meeting of the Members at which a quorum is present or by the written
consent.
18. TargetCom LLC
Restrictions created by the Company Agreement wherein Section 4.1
provides that, except to the extent otherwise provided for in the
Company Agreement, the powers of TargetCom LLC shall be exercised by
and under the authority of, and the business and affairs of TargetCom
LLC shall be managed under, the direction of the Managers of TargetCom
LLC. Notwithstanding the foregoing or any other provisions of the
Company Agreement to the contrary, as long as TargetCom Inc. (now
Comtar Inc.) and/or TC Acquisition Inc. owns Membership Interests, the
entering into any business other than, or any transaction outside the
normal business activities of TargetCom LLC and related activities, as
well as any decisions regarding borrowing by TargetCom LLC and/or the
encumbering of the assets of TargetCom LLC, shall require the mutual
agreement of TargetCom Inc. (now Comtar Inc.) and TC Acquisition Inc.
whether at a meeting of the Members at which a quorum is present, or
by the written consent of the Members.
19. Veritas Communications Inc. ("Veritas")
Restriction created by Shareholders' Agreement wherein section 4.10
provides that, unless otherwise resolved by the Board of Directors,
all contracts and documents binding Veritas in respect of matters not
in the ordinary course of business shall require the signature of one
of the Maxxcom appointees together with the signature of Xxxxxxxx
Xxxxxxx.
Under section 5.5 of the Shareholders' Agreement, the Board of
Directors shall determine whether borrowings are required by Veritas,
from whom such borrowings will be obtained and the terms and
conditions of such borrowing.
20. 656712 Ontario Limited (Strategies International)*
Restriction created by the Shareholders' Agreement wherein section
4.11 provides that, unless otherwise resolved by the Board of
Directors, all contracts and documents binding Strategies
International in respect of: (i) matters not in the ordinary course of
business; (ii) matters in the ordinary course of business and
involving a series of amounts payable to the same party over a period
of six months in excess of $100,000; or (iii) an amount in excess of
$50,000 or a series of amounts over a six month period in excess of
$100,000 being paid to a person who does not deal at arm's length with
any of the shareholders of Strategies International shall require the
signature of one of the Maxxcom appointees together with the signature
of any one of the individual Shareholders of Strategies International
(other than Maxxcom).
*(Note: The foregoing reflects the provisions of the Shareholders'
Agreement to be entered into among Maxxcom Inc., Xxxx Xxxxxx, M&A
Xxxxxx Holdings Limited and Strategies International in connection
with the acquisition by Xxxx Xxxxxx of 135 common shares of Strategies
International which is currently expected to be completed prior to
August 31, 2001).
SCHEDULE K
LOANS AND FINANCIAL ASSISTANCE TO SHAREHOLDERS1
(As of 31/05/01)
--------------------------------------------- ------------------------------- ----------------------------------------
LOAN MADE BY: LOAN MADE TO: AMOUNT:
--------------------------------------------- ------------------------------- --------------- ----- ------------------
Xxxxxxx Xxxx Xxxxxx Xxxxxxx Inc. Xxxxx Xxxxxxx Cdn $ 23,852.002
Xxxxxxxx Xxxxxx Xxxxx LLC Xxxxxxx Xxxxxx Xxxxxxxx US $ 126,263.99
Xxxxxxx Xxxxx US $ 90,000.00
Cormark XxxXxxx Xxxxxxxx Xxxxxxxxx Cdn $ 96,927.79
Communication Solutions Xxxxx Xxxxxxx Cdn $ 115,539.29
(Canada) Inc. (formerly, Cormark
Communications Inc.)
MF + P Acquisition Co. Xxxxxx Xxxxxxxx US $ 149,838.00
Maxxcom Inc. (an Ontario X. Xxxxxx Cdn $ 140,302.76
corporation) X. Xxxxxxxxx Cdn $ 98,349.20
X. Xxxxxxxxx Cdn $ 84,602.95
Xxxxx Xxxxxx Cdn $ 135,982.79
Xxxxx Xxxxxx Cdn $ 23,061.00
Xxxx XxXxxxxx Cdn $ 69,932.42
X. Xxxxxxx Cdn $ 27,724.23
S. Tile Cdn $ 100,000.00
Xxxxx Xxxxxxx Cdn $ 114,844.00
Xxxxxxx Xxxxx Cdn $ 18,449.00
Xxxx Xxxxxxxx Cdn $ 2,739.66
Xxxx Xxxxxxxx Cdn $ 9,224.00
Xxxxxxxxx Xxxxxxxxx Cdn $ 18,449.00
Xxx Xxxxxxx Cdn $ 18,449.00
Xxxx Xxxxx Cdn $ 13,837.00
Doron Woticky Cdn $ 45,887.33
Doron Woticky Cdn. $ 13,837.00
Xxxx Xxxxxx Cdn. $ 137,187.003
Maxxcom Inc.(US) Minority Shareholders of US $ 824,650.09
Colle & XxXxx, Inc.
1. Unless otherwise indicated, amounts listed on this table include the
principal amount of each Shareholder promissory note plus accrued
interest thereon as of 31/05/01.
2. The ou tstanding indebted ness of Ste ve Con over to A mbro xx Xxxx L
inton Ca rroll Inc. ("A CLC") is to be repa id as part of the
transaction whereby Maxxcom Inc. will acquire all of the common shares
of ACLC held by Xxxx Xxxxxxx, Xxxxx Xxxxxxx and Xxxxxxx S o (expected
to be completed prior to Au gust 31, 2001).
3. Reflects amount that will be owing from Xxxx Xxxxxx to Maxxcom Inc. in
connection with his acquisition of 135 comm on shares of 656712 O
ntario Limited (expected to be completed prior to Au gust 31, 2001).
SCHEDULE L
OUTSTANDING, PENDING OR THREATENED
LITIGATION, ARBITRATION OR ADMINISTRATIVE PROCEEDINGS
1. Veritas Communications Inc. and Xx. Xxxxxxx Xxxxxxx
---------------------------------------------------
Xx. Xxxxxxx Xxxxxxx ("Xxxxxxx") has taken the position that his
employment with Veritas Communications Inc. ("Veritas") was terminated
without cause. Xxxxxxx further claims that the employment agreement
with Veritas to which he was a party is not enforceable as it was
signed without the benefit of independent legal advice.
Xxxxxxx is seeking six months' salary in lieu of notice, the sum of
$3,000 representing car allowance for six months, his share of the
company profits for 1997, his share of the company profits throughout
a period of six months and payment of legal expenses in the sum of
$1,000.
Counsel to Veritas has taken the position that the employment
agreement is enforceable and has offered eight weeks' salary on a
gratuitous basis to settle this matter at this time.
The matter has remained dormant since counsel to Veritas' reply to
Xxxxxxx'x counsel dated January 6, 1998. Veritas expects the matter to
remain dormant.
2. Xxxxxx Xxxxxxx Communications Inc. and Xxxxxxx Xxxxxxx
------------------------------------------------------
This matter involves the termination of Xxxxxxx Xxxxxxx ("Xxxxxxx") by
Xxxxxx Xxxxxxx Communications Inc. ("Xxxxxx Xxxxxxx") effective June
10, 2000 with the following terms and conditions:
(a) Xxxxxxx will continue to be employed by Xxxxxx Xxxxxxx until
June 10, 2000 and will continue to be entitled to receive his
regular compensation and benefits;
(b) after the cessation of Xxxxxxx'x employment on June 10, 2000,
Xxxxxx Xxxxxxx will continue to pay his regular salary for a
maximum period of fifteen months, calculated on the basis of
twelve months for past service with Xxxxxxx Xxxxxx Xxxxxxxxx
and three months for his service with LBJ.FRB Communications
Inc. and Xxxxxx Xxxxxxx;
(c) Xxxxxxx has not taken his full entitlement to vacation. Once
this vacation has been quantified, he is to take his vacation
prior to June 10, 2000; and
(d) payments shall be paid in a tax advantageous manner subject
to the requirements of the law.
Counsel to Xxxxxx Xxxxxxx has now been contacted by Xxxxxxx'x
solicitor, X.X. Xxxxxxx, Q.C. of Xxxxx Xxxxxxx Xxxxxx. Xxxxxxx is
disputing the amount of entitlement to which he is entitled and is
seeking twenty-two months notice payable in a lump sum rather than the
fifteen months Xxxxxx Xxxxxxx intends to pay.
A payment has been made to Xxxxxxx in connection with Xxxxxx Xxxxxxx'x
interpretation of the employment contract. The payment which was
accepted by Xxxxxxx and cashed, was for 15 months severance. The
payment and acceptance was transacted in June of 2000. Xxxxxxx did not
sign a release. During the negotiation period Xxxxxxx disagreed with
the determined severance period seeking an additional 9 months. There
have been no further developments in this matter.
3. Xxxxxx Xxxxxxx Communications Inc. and Xxxxx Xxxxxxx
----------------------------------------------------
Xxxxx Xxxxxxx ("Xxxxxxx") received notice of the termination of her
employment with Xxxxxx Xxxxxxx Communications Inc. ("Xxxxxx Xxxxxxx")
as of December 6, 1999. Xxxxxxx received continued salary payments
until April 5, 2000, together with benefits for a period of four
months with the exception of short term disability, long term
disability and life insurance. Xxxxxxx is also entitled to receive a
payment for unused vacation days for the 1999 year.
Xxxxxxx is seeking notice of six months which will take her up to the
date of June, 2000 and at which time she will make an application to
collect employment insurance benefits.
By letter dated December 23, 1999 addressed to Xxxxxxx' solicitor Xxxx
Xxxxxxxx of Xxxxxxx, Xxxxxxxx & Xxxxxxxx (since changed to Xxxxxxx
Xxxxxxx) it was confirmed that Xxxxxx Xxxxxxx would continue to pay
Xxxxxxx her salary and benefits for a period of four months from
December 6, 1999 and upon receipt of a draft letter of reference for
review. Xxxxxx Xxxxxxx would provide Xxxxxxx with a letter of
reference as well.
Xxxxxxx won a motion for summary judgement on November 14, 2000. The
issue determined under the judgement was what the entitlement should
be with respect to termination due to the fact that her position had
become redundant. She had been offered and paid four months severance
by Xxxxxx Xxxxxxx but she sought payment for six months. Xxxxxxx was
successful in her motion and a judgment was issued in her favour on
November 15, 2000. Xx. Xxxxxxx was awarded $12,706.67 plus fees and
disbursements of $7,815.40.
4. Interfocus Group Limited RE: Val de Loire
-----------------------------------------
This case revolves around a publicity campaign that Interfocus Group
Limited ("Interfocus") ran for the Loire Valley Wine Producing Board
("Loire") for 1997. Interfocus claimed that they were owed the sum of
(pound)72,833.56. Constant & Constant acting for Interfocus Group
Limited, obtained an opinion from Counsel which stated that there were
some fundamental problems with the claim. These related to Interfocus'
calculations based on a fixed exchange rate that Counsel considered
was wrong under English law. Counsel put the maximum amount of the
Interfocus claim against Loire at (pound)35,000. Therefore the maximum
amount that Interfocus would be able to recover is approximately
(pound)35,000 and this reduced amount is subject to potential defences
and counterclaim.
Subsequent to this advice, Constant & Constant undertook some
investigations, through their Paris Office, into the status and
financial standing of the potential defendants. Loire is a purely
bureaucratic organization. It appears that they have no assets and
even if Interfocus were successful collection would be unlikely.
As a result of the foregoing advice and investigations, Interfocus has
abandoned the potential claim as the litigation costs and the amount
potentially recoverable were outweighed by the probability of recovery
from Loire. Interfocus wrote off the receivable prior to its year end
in December, 2000.
5. Interfocus Group Limited and Xxx Xxxxx
--------------------------------------
There is ongoing correspondence with Xxx Xxxxx (a former director of
Interfocus Group Limited) regarding deductions made from his final pay
in respect of salary advances previously made to him. The advances
were in an amount of approximately (pound)5,000. Xxx Xxxxx was due
gross commission of (pound)25,000 from which Interfocus deducted tax
and national insurance at basic rates. Xxx Xxxxx is disputing the
deduction of salary advances from the amount paid to him. The matter
has not been resolved to date.
6. Interfocus Group Limited and PAYE Investigation
-----------------------------------------------
The subsidiaries of Interfocus Group Limited were subject to a
periodic investigation under the PAYE authorities during 1999.
Management of Interfocus estimated that the liability in respect of
the audit would be approximately (pound)65,000. Since August 31, 2000,
accrued liabilities within the balance sheet for Interfocus have
included a provision of (pound)85,000 for this potential liability.
The assessment was finalized at the beginning of 2001 and Interfocus
paid (pound)65,000 to Inland Revenue on February 28, 2001. The
remaining (pound)20,000 accrual will remain on the books of Interfocus
as there may still be interest owing in respect of the claim (although
such interest is not expected to approach the (pound)20,000 level).
7. Veritas Communications Inc. and Xxxxxxx Xxxxx
---------------------------------------------
Xxxxxxx Xxxxx was employed with Veritas and was terminated from her
employment on October 4, 2000. Although the parties appear to have
agreed in principle to a payment of six months severance (equal to
$32,500) Veritas has not made the severance payment.
This matter was settled in December, 2000 on the basis of an
additional payment to Xx. Xxxxx of $20,750 (i.e. $53,250 in the
aggregate) less taxes.
8. News Canada Inc. and Xxxxxx Xxxxxx
----------------------------------
On or about September 15, 2000, Xx Xxxxxx'x employment was terminated
by News Canada Inc. ("News Canada"). In a letter dated September 29,
2000, Xx. Xxxxxx alleged that she had been sexually harassed by other
staff at News Canada and requested compensation for the distress and
anxiety she experienced as a result of the alleged harassment.
Following receipt of Xx. Xxxxxxx letter, News Canada commenced an
internal investigation conducted through a third party and it was
determined that but for one incident involving an e-mail, there was no
truth to the allegations raised by Xx. Xxxxxx. The results of this
investigation were communicated in writing to Xx. Xxxxxx. The
solicitors for Xx. Xxxxxx are demanding two months' severance and
outstanding commissions.
9. Crispin & Xxxxxx Advertising, Inc. and XxxXxxxxx.xxx
----------------------------------------------------
Crispin & Xxxxxx Advertising, Inc. has filed a law suit against
XxxXxxxxx.xxx seeking damages in the aggregate amount of U.S.$285,000
for failure to meet financial obligations in accordance with the
agreement between the two parties dated August 1, 2000. Legal counsel
to Crispin & Xxxxxx Advertising, Inc. has advised that XxxXxxxxx.xxx
may file a counterclaim alleging breach of contract for failure on the
part of Crispin & Xxxxxx Advertising, Inc. to provide services in
accordance with the agreement. As of June 15th, 2001, no such
counterclaim had been filed. Counsel for Xxxxxxx Xxxxxx & Bogusky LLC
has advised that Joe Xxxxxx.xxx is in the process of filing for
bankruptcy protection in the United States. Accordingly, Xxxxxxx
Xxxxxx & Bogusky LLC have decided to not pursue this matter.
SCHEDULE M
JURISDICTION OF INCORPORATION
PROPERTY, PLACES OF BUSINESS/LOCATION OF REGISTERED OFFICE AND
PLACES FROM WHICH ACCOUNTS RECEIVABLE ARE BILLED
---------------------------------------- ------------------------------ ----------------------------------------------
JURISDICTION OF PLACE(S) OF BUSINESS/
RESTRICTED PARTY INCORPORATION LOCATION OF REGISTERED
OFFICE
---------------------------------------- ------------------------------ ----------------------------------------------
Maxxcom Inc. Ontario 00X Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx
Xxxxxx, X0X 0X0
1220777 Ontario Limited Ontario 00X Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx
Xxxxxx, X0X 0X0
Xxxx Xxxxxx Inc. Ontario 000 Xxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx
656712 Ontario Limited Ontario 000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx
Accumark Promotions Group Ontario 000 Xxxxxx Xxxx Xxxx
Inc. Xxxxx 000 & 000
Xxxxx Xxxx, Xxxxxxx
Xxxxxx, X0X 1O4
Xxxxxxx Xxxx Xxxxxx Xxxxxxx Ontario 000 Xxxxxxxx Xxxxxx Xxxx
Inc. Xxxxx 000
Xxxxxxx, Xxxxxxx
Xxxxxx, X0X 0X0
Xxxxx Xxxxx Group Ltd. Ontario 0000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx
Xxxxxx, X0X 0X0
Cormark XxxXxxx Ontario 000 Xxxx Xxxxxx
Xxxxxxxxxxxxx Xxxxxxxxx Xxxxx 0X
(Xxxxxx) Inc. (formerly, London, Ontario
Xxxxxxx Xxxxxxxxxxxxxx Xxxxxx, X0X 0X0
Inc.)
Xxxxxx Xxxxxxx Ontario Head Office
Communications Inc. 00 Xxxxx Xxxxxxx Xxxxxx
Xxxxx 000X & 400
Toronto, Ontario
0000 Xxxx. Xxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxx, Xxxxxx
000 Xxxx-Xxxxxxxx Xxxxxxxxx
Xxxx
16th & 00xx Xxxxx
Xxxxxxxx, Xxxxxx
Veritas Communications Inc. Ontario Head Xxxxxx
000 Xxxxxxxx Xxxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx
1 rue Holiday, Tour Est,
Bureau 000
Xxxxxx Xxxxxx, Xxxxxx
Integrated Healthcare Ontario 000 Xxxxxxxx Xxxxxx Xxxx
Communications, Inc. Xxxxx 000
Xxxxxxx, Xxxxxxx
Xxxxxx, X0X 0X0
Northstar Research Partners Ontario 000 Xxx Xxxxxx
Xxx. Xxxxx 0000
Xxxxxxx, Xxxxxxx
Chrysler Building
0000 Xxxxxx Xxxxxx Xxxxx,
Xxxx 000
Xxxxxx, Xxxxxxxxxx
XXX, 00000
Maxxcom Interactive Inc. Ontario 00 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
1385544 Ontario Limited Ontario 00X Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Maxxcom Inc. (US) Delaware Registered Office
Corporation Service Company
0000 Xxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx
Colle & XxXxx, Inc. Minnesota Head Xxxxxx
0000 Xxxxxxxxxx
Xxxx Xxxx.
Xxxxxxxxxxx, Xxxxxxxxx 00000
Xxxx Xxxx Xxxxxxxx
Xxxxx 000
000 X Xxxxxx
Xxxxxxx, XX 00000
Warehouse
0000 Xxxx 000xx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxx
00000
00000 X. Xxxxxxxxx Xxxx
Xxxxxxxx Xxxxx, Xxxxxxx
XXX, 00000
0000 Xxxxx 00xx Xxxxxx, #000
Xxxxxxxx, Xxxxxxxxx
XXX, 00000-0000
000 Xxxx Xxxx XX
Xxxxx Xxxxxx, Xxxx
00000
MF + P Acquisition Co. Delaware Registered Office
Corporation Service Company
0000 Xxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx
Margeotes/Xxxxxxxx + Partners Delaware 000 Xxxxxxxxx Xxxxxx, 4-6 Floor
LLC New York, New York
SMI Acquisition Co. Delaware Registered Office
The Corporation Trust Company
0000 Xxxxxx Xxxxxx
Xxxx xx Xxxxxxxxxx, Xxxxxx of
New Castle
Delaware
Source Marketing LLC New York 00 Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx
XXX, 00000
Accent Acquisition Co. Delaware Registered Office
United Corporate Services, Inc.
00 Xxxx Xxxxx Xxxxxx
Xxxx xx Xxxxx, Xxxxxx of Kent
Delaware
XXX, 00000
Accent Marketing Services, Delaware Head Office
L.L.C. 000 X. Xxxx Xxxxxx
Xxxxx 0000,
Xxxxxxxxxx, Xxxxxxxx
00000
Customer Communications Center
000 Xxxx Xxxx Xxxxxxxxx
Xxxxx 0
Xxx Xxxxxx, Xxxxxxx 00000
Customer Communications Center
0000 X.X. 000xx Xxxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Customer Communications Center
0000 Xxxxxx Xxxxxxx, Xxxx. #0
Xxxxxx Xxxxx, Xxxxxxx 00000
Sales Xxxxxx
00000 Xxxxxxxxx Xx. X.
Xxxxxx, Xxxxxxxx
Customer Communications Centre
0000 Xxxxx Xxxx Xxxx.
Xxxxxxxxxxx, Xxxxxxx 00000
Customer Location
0000 Xxxxxxxx Xxxx
Xxxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxxx
Mo' Better Marketing LLC
(40% membership interest)
000 Xxxx Xxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx
00000
FMA Acquisition Co. Delaware Registered Office
United Corporate Services, Inc.
00 Xxxx Xxxxx Xxxxxx
Xxxx xx Xxxxx, Xxxxxx of Kent
Delaware
19901
Xxxxxxxx Xxxxxx Xxxxx LLC Delaware 000 Xxxxxxxxx Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx
00000
Maxxcom (Nova Scotia) Corp. Nova Scotia Registered Xxxxxx
0000-0000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxx Xxxxxx
X0X 0X0
Maxxcom (USA) Finance Delaware Registered Office
Company Corporation Service Company
0000 Xxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx
Maxxcom (USA) Holdings Inc. Delaware Registered Office
Corporation Service Company
0000 Xxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx
TC Acquisition Inc. Delaware Registered Office
Corporation Service Company
0000 Xxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx
ET Acquisition Inc. Delaware Registered Office
Corporation Service Company
0000 Xxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx
BZ Acquisition Inc. Delaware Registered Office
Corporation Service Company
0000 Xxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx
Targetcom LLC Delaware 000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx
00000
Xxxxxxxx Square d/b/a VANTAS
Suite 200
0000 Xxxxx X'Xxxxxx Xxxxxxxxx
Xxxxxx, Xxxxx
00000
E-Telligence LLC Delaware 00000 Xxxxx Xxxxxxxxx
Xxxxx 000
Xx.
Xxxxx,
XX
00000
Bang!Zoom LLC Delaware 0000 00xx Xxxxxx
Xxxxxx 00 & 00
Xxx Xxxxxxxxx, XX
00000-0000
Mackenzie Marketing, Inc. Delaware 000 X. Xxxxxxx 000
Xxxxx 000
Xxxxxxxxxxx, XX
00000
CDI Acquisition Co. Delaware Registered Office
Corporation Service Company
0000 Xxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx
Pavlika Xxxxxxxx Direct, LLC Delaware 00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx
00000
Interfocus Group Limited England & Wales Xxxxxxxxxx Xxxxx
Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxx
X0 0XX
Bratskeir & Company, Inc. Delaware 000 Xxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx
00000
e-Source Drive to Web Delaware 00 Xxxxxxx Xxxxxx
Marketing LLC Xxxxxxxx, Xxxxxxxxxxx
XXX, 00000
CPB Acquisition Inc. Delaware Registered Office
c/o
National Registered Agents, Inc.
0 Xxxx Xxxxxxxxxx Xxxxxx
Xxxxx, Xxxxxxxx
XXX, 00000
Xxxxxxx Xxxxxx & Bogusky LLC Delaware 0000 Xxxxx Xxxxxxxx Xxxxx
Xxxxx, Xxxxxxx
XXX, 00000
Accounts receivable are billed from the head office of each of the Restricted
Parties referred to above.
SCHEDULE N
CAPITAL STRUCTURE
------------------------------------------ ------------------------------------- -------------------------------------
NUMBER OF SHARES
SHAREHOLDER or OWNED or PERCENT
RESTRICTED PARTY MEMBER INTEREST
------------------------------------------ ------------------------------------- -------------------------------------
Maxxcom Inc. Public Shareholders 6898022
MDC Corporation Inc. 18800001
1220777 Ontario Limited Maxxcom Inc. 1 Common Share
News Canada Inc. 1220777 Ontario Limited 140 Common Shares
656712 Ontario Limited1 Maxxcom Inc. 675 Common Shares
Fraser XxXxxxxx 225 Common Shares
Accumark Promotions Group Inc. Xxxxxx Xxxxx 2,268 Class A Shares, 522
Class C Shares
Xxxxxxxx Xxxxx 607 Class A Shares, 1,643
Class C Shares
Xxxxx Xxxxxx 5,040 Class A Shares
Xxxxx Xxxxx 647 Class A Shares, 4,393
Class C Shares
Xxxxx Xxxxxx 5,040 Class C Shares
Maxxcom Inc. 560 Class A Shares, 200
Class B Shares, 1,680
Class C Shares
Xxxxxxx Xxxx Xxxxxx Xxxxxxx Xxxx Xxxxxxx 10,899 Common Shares
Inc.2
Xxxxx Xxxxxxx 8,000 Common Shares
Maxxcom Inc. 77,348 Common Shares
Xxxxxxx So 3,753 Common Shares
Xxxxx Xxxxx Group Ltd. Fogler, Xxxxxxxx in trust for 800 Class B Voting
Xxxxx Xxxxxxxxx Shares
Xxxxx Xxxxxxxxx 1,000 Class B Voting
Shares
Fogler, Xxxxxxxx in trust for 950 Class B Voting
Xxxx Xxxxxx Shares
Xxxxx Xxxxxxx 450 Class B Voting
Shares
Maxxcom Inc. 6,800 Class B Voting
Shares
Cormark XxxXxxx Maxxcom Inc. 8,780 Common Shares
Communication Solutions
(Canada) Inc. (formerly Cormark Xxxxxxxx Xxxxxxxxx 990 Common Shares
Communications Inc.)
Xxxxx Xxxxxxx 230 Common Shares
Xxxxxx Xxxxxxx Communications Xxxxx Xxxxxx 465,803 Class A Common
Inc. Shares
Xxxxxxx Xxxxx 372,638 Class A Common
Shares
Xxxx Xxxxx 279,479 Class A Common
Shares
Doron Woticky 310,383 Class A Common
Shares
Xxxx Xxxxxxxx 186,319 Class A Common
Shares
Xxx Xxxxxxx 372,638 Class A Common
Shares
Xxxx XxXxxxxx 56,126 Class A Common
Shares
Xxxxxxxxx Xxxxxxxxx 371,571 Class A Common
Shares
Xxxxx Xxxxxxx 2,233,578 Class A
Common Shares
Maxxcom Inc. 8,890,365 Class A
Common Shares
501 Class B Special
Shares
1385544 Ontario Limited 2,180,104 Class A
Common Shares
Xxxxx Xxxxxxxxx 227,850 Class A Common
Shares
Xxxxxx Xxxxxxxxxxx 371,151 Class A Common
Shares
Financiere Banque Nationale 251,840 Class A Common
in trust for Xxxxxx Shares
Xxxxxxxxxxx
Xxxxxx Xxxxxx 33,675 Class A Common
Shares
Xxxxxx Xxxxxx 277,753 Class A Common
Shares
Les Placements G4B inc. 1,481,822 Class A
Common Shares
Xxx Xxxxxxxx 111,929 Class A Common
Shares
Xxxxx Xxxxxxxx 11,225 Class A Common
Shares
Pertinence inc. 451,563 Class A Common
Shares
Courtage a escompte Banque 72,754 Class A Common
Nationale in trust for Serge Shares
Miousse
Le Financiere Banque 55,965 Class A Common
Nationale in trust for Jacques Shares
Xxxxxx
Xxxxx Xxxxxxxxx 205,166 Class A Common
Shares
Tericon Corporation 1,357,329 Class A
Common Shares
Xxxxxxxxxx Xxxxxxxx 145,926 Class A Common
Shares
Xxxxxxx Xxxxxx 161 Class A Common
Shares
Xxxxx Xxxxxxx 209 Class A Common
Shares
Xxxxxxx Xxxxxxx 499 Class B Special
shares
Veritas Communications Inc. Xxxxx Xxxxxxx 252 Common Shares
Xxxxxxxx Xxxxxxx 110 Common Shares
Maxxcom Inc. 638 Common Shares
Integrated Healthcare Xxxxx Xxxxxxx 9 Common Shares
Communications, Inc.
Xxxxxx Xxxxxxxx 30 Common Shares
Maxxcom Inc. 61 Common Shares
Northstar Research Partners Inc. Xxxxxxx Xxxxx 250 Common Shares
3,125 Class B Shares
Xxxxxxx Xxxxxx 250 Common Shares
3,125 Class B Shares
Maxxcom Inc. 846 Common Shares
90,000 Class A Shares
Xxxxxxx Tile 300 Common Shares
3,750 Class B Shares
Xxxxx Xxxxxxx-Xxxxxxxx 42 Common Shares
500 Class B Shares
Maxxcom Interactive Inc. Maxxcom Inc. 1 Common Share
1385544 Ontario Limited Maxxcom Inc. 1 Common Share
Les Placements G4B inc. 417,730 Preferred "A"
Shares
417,730 Preferred "B"
Shares
835,459 Preferred "C"
Shares
Pertinence inc. 127,296 Preferred "D"
Shares
127,296 Preferred "E"
Shares
254,593 Preferred "F"
Shares
Maxxcom Inc. (US) Maxxcom Inc. (Ontario) 85 Common Stock
Maxxcom (Nova Scotia) 15 Common Stock
Corp.
MF + P Acquisition Co. Maxxcom (USA) Holdings 219 Common Stock
Inc.
SMI Acquisition Co. Maxxcom (USA) Holdings 350 Common Stock
Inc.
Colle & XxXxx, Inc. Xxxxxxx Xxxxxxxxx 1,110 Class B Shares
Xxxx Xxxxxxxxx 1,000 Class B Shares
Xxxxxxxxx Xxx 2,221 Class B Shares
Xxxxxxx Xxxx 1,500 Class B Shares
Xxxxxxx XxXxxxx 1,943 Class B Shares
Xxxxx Xxxxxx 1,500 Class B Shares
Xxxxx Xxxxxxx 1,750 Class B Shares
Xxx Xxxxxxxx 2,000 Class B Shares
Xxxxxx Xxxxx 1,943 Class B Shares
Xxxxx Xxxxx 2,221 Class B Shares
Xxxxxx Xxxxxxxxxx 1,000 Class B Shares
Xxxxx Xxxxxxx 833 Class B Shares
Xxxxxx Xxxxxxx 5,374 Class B Shares
Xxxxx XxXxxxx 1,500 Class B Shares
Xxxx Xxxxxx 4,000 Class B Shares
Xxxx Xxxxxx 2,000 Class B Shares
Maxxcom (USA) Holdings, 267,710 Class A Shares
Inc. 35,032 Class B Shares
Accent Acquisition Co. Maxxcom (USA) Holdings 204 Common Stock
Inc.
FMA Acquisition Co. Maxxcom (USA) Holdings 320 Common Stock
Inc.
Maxxcom (Nova Scotia) Corp. Maxxcom Inc. 15,000 Common Shares
Maxxcom (USA) Finance Maxxcom Inc. (US) 850 Common Stock
Company
Maxxcom (Nova Scotia) 150 Common Stock
Corp. 300,000 Series A
redeemable Preferred
Stock
Maxxcom (USA) Holdings Inc. Maxxcom Inc. (US) 100 Common Stock
Margeotes/Xxxxxxxx + Partners MF + P Acquisition Co. 80%
LLC
Margeotes/Xxxxxxxx Partners 20%
Inc.
Source Marketing LLC SMI Acquisition Co. 81.50%
Spruce Lake Inc. 18.50%
Accent Marketing Services, Accent Acquisition Co. 50.1%
L.L.C.
AMS Holdings Inc. 41.80%
Xxx Xxxxxx 0.57%
Xxxxxxx Xxxxxxx 0.20%
Xxxxx Xxxxxxxx 0.03%
Xxx Xxxxx 0.08%
Xxxxx Xxxxxxxxxx 0.04%
Xxx Xxxxxxxx 0.08%
Xxxxx Xxxxxxxxx 1.30%
Xxxxx Xxxxxx 1.30%
Xxxxxxxxxxx Xxxx 1.15%
Xxxxx Xxxxx 1.30%
Xxxxx Xxxxxxxxxx 1.60%
Xxxx Xxxxxx 0.45%
Xxxxxxxx Xxxxxx Xxxxx LLC FMA Acquisition Co. 70%
Xxxxxxx Xxxxxx Xxxxxxxx 15%
Xxxxxxx Xxxxx 15%
TC Acquisition Inc. Maxxcom (USA) Holdings 1 Common Stock
Inc.
ET Acquisition Inc. Maxxcom (USA) Holdings 1 Common Stock
Inc.
BZ Acquisition Inc. Maxxcom (USA) Holdings 1 Common Stock
Inc.
TargetCom LLC TC Acquisition Inc. 80%
Comtar Inc. 20%
E-Telligence LLC ET Acquisition Inc. 50.1%
E-Car, Inc. 49.9%
Bang!Zoom LLC BZ Acquisition Inc. 50.1%
B-Z LLC 49.9%
Mackenzie Marketing, Inc. Maxxcom (USA) Holdings 100 Common Stock
Inc.
CDI Acquisition Co. Maxxcom (USA) Holdings 1 Common Stock
Inc.
Pavlika Xxxxxxxx Direct, LLC CDI Acquisition Co. 52%
Margeotes/Xxxxxxxx + Partners 35%
LLC
Xxxxxxxx Direct Inc. 13%
Interfocus Group Limited Xxxxxxx Xxxxxx 40,000 "A" ordinary
shares
Maxxcom Inc. 60,000 "B" ordinary
shares
5,334,685 "C" ordinary
shares
Bratskeir & Company, Inc. Maxxcom (USA) Holdings, 100 Common Stock
Inc.
eSource Drive to Web Marketing SMI Acquisition Co. 50.1%
LLC
Xxxxxx Xxxxxxxxx 34.9%
Xxxx Xxxxx 7.5%
Xxxx Xxxxxxx 7.5%
CPB Acquisition Inc. Maxxcom (USA) Holdings 100 shares of Common
Inc. Stock
Xxxxxxx Xxxxxx & Bogusky LLC CPB Acquisition Inc. 49.00%
Crispin & Xxxxxx 50.00%
Advertising, Inc.
Xxxxxxx Xxxxxx 0.36%
Xxxx Xxxxxxx 0.27%
Xxxx Xxxxx 0.27%
Xxxx Xxxxxxxxx 0.10%
1. Maxxcom Inc. is currently holding 225 common shares of 656712 Ontario
Limited in trust for Fraser XxXxxxxx (90 shares), Xxxx Xxxxxx (90
shares) and Lo uise Gimb lett (45 share s) pursua nt to a verb al
agreem ent to transfer these shares originally reached between the
parties as of June 1, 1997 Maxxcom is in the process of terminating
the employment of Xxxxxx Xxxxxxxx, who will forego her entitlement to
the common shares held in trust on her behalf as part of the
termination settlement. Maxxcom and the p arties have agreed th at Max
xcom will acquir e all of the common shares held by Fraser XxXxxxxx
(including those held in trust) and that Xxxx Xxxxxx will acquire an
aggreg ate of 135 common share s (consisting of the shar es held in
tru st for hims elf and L ouise Xxx xxxxx). These transactions are
expected to be completed prior to August 31, 2001.
2. Reflects current capital structure of Xxxxxxx Xxxx Xxxxxx Xxxxxxx Inc.
("ACLC"). Maxxcom is in the process of finalizing an agreement with
the minority shareholders of ACLC pursuant to which Maxxcom will
acquire all of the common shares held by Xxxx Xxxxxxx, Xxxxx Xxxxxxx
and Xxxxxxx So and AC LC will become a wholly-owned subsidiary of
Maxxcom. This transaction is expected to be completed prior to August
31, 2001.
SCHEDULE O
PENSION PLANS
I. Canadian Plans
--------------
Nil
II. Foreign Plans
-------------
Interfocus Network Limited ("Interfocus")
Interfocus does not maintain company-directed pension plans, but does
contribute to several group/individual pension plans as follows:
1. Plan involving eight (8) employees of Interfocus under the
administration of Scottish Life Assurance Company. Under this
plan, employees may direct contributions and the Interfocus
contribution is equal to five percent (5%) of each employee's
salary.
2. Personal pension plan maintained by Xxxxxxx X. Xxxxxx with
Wintertheur Life Self-Invested Personal Pension Plan.
Interfocus makes a monthly contribution to this plan in the
amount of (pound)1, 530.
3. Personal pension plans involving five (5) employees of the
former Osprey London Limited ("Osprey") maintained with
various plan administrators. Osprey contributes from 5% to
10% of the subject employee's salary (depending upon
employee) to such plans.
SCHEDULE P
DEFERRED PURCHASE PRICE OBLIGATIONS
Deferred Purchase Price Obligations of Restricted Parties
(all amounts expressed in Cdn. $)
Part 1: Non-Contingent Deferred Purchase Price Obligations:
----------------------- -------------------------- --------------------------- ---------------------------- -----------------------
Company: Payable after May 31, Payable after December Payable after December 31, Fiscal 2004
2001 31, 2001 2002
----------------------- -------------------------- --------------------------- ---------------------------- -----------------------
Colle & XxXxx, Inc. US$329,5371 plus US$283,9071 plus interest. None. None.
interest.
----------------------- -------------------------- --------------------------- ---------------------------- -----------------------
Cormark XxxXxxx C$119,635 plus interest. C$119,635 plus interest. C$69,787 plus interest. None.
Communication
Solutions (Canada)
Inc. (formerly,
Cormark
Communications Inc.)
----------------------- -------------------------- --------------------------- ---------------------------- -----------------------
Xxxxxxxx Xxxxxx Ewing US$35,815 plus interest. US$35,815 plus interest. None. None.
LLC
----------------------- -------------------------- --------------------------- ---------------------------- -----------------------
Interfocus Group None. Due to Xxxx International Due to Xxxx International None.
Limited (the "Xxxx Limited by Interfocus Limited by Interfocus
Payment") Group Limited: Group Limited:
(pound)400,000. (pound)400,000.
----------------------- -------------------------- --------------------------- ---------------------------- -----------------------
656712 Ontario C$456,841 plus interest. C$274,149 plus interest. C$274,149 plus interest. None.
Liimted9
----------------------- -------------------------- --------------------------- ---------------------------- -----------------------
Part 2: Contingent Deferred Purchase Price Obligations:
-------------------- --------------------------- ---------------------------- -------------------------- -------------
Company: Payable after May 31, 2001 Payable after December 31, Payable after December Fiscal 2004
2001 31, 2002
-------------------- --------------------------- ---------------------------- -------------------------- -------------
Accent Marketing None. An amount equal to An amount equal to None.
Services, L.L.C. US$4,181,667: US$4,181,667:
1) increased, if the 1) increased, if the
Company earns more Company earns more
than US$7,500,000 of than US$9,600,000 of
PBT during calendar PBT during calendar
year 2001, by (PBT of year 2002, by (PBT
calendar 2001 - of calendar 2002 -
US$7,500,000) *0.501 / US$9,600,000) *0.501
3 * 6. / 3 * 6.
2) decreased, if the 2) decreased, if the
Company earns less Company earns less
than US$7,500,000 of than US$9,600,000 of
PBT during calendar PBT during calendar
year 2001, by the year 2002, by the
amount of: amount of:
(US$7,500,000 - PBT of (US$9,600,000 - PBT
calendar 2001) * 0.501 of calendar 2002) *
/ 3 * 6. 0.501 / 3 * 6.
-------------------- --------------------------- ---------------------------- -------------------------- -------------
Xxxxxx Xxxxxxx For Class A Preferred For Class B Preferred For Class C Preferred None
Communications Shares of Shares of Shares of
Inc.2 Acquisitionco: Acquisitionco: Acquisitionco:
1) if EBITDA for the 1) if EBITDA for the $1,670,918 + 4.75 *
fiscal year ended fiscal year ended [(2000 + 2001 + 2002
December 31, 2000 is December 31, 2000 is EBITDA)/3 -
less than $3,900,000, less than $3,900,000, 3,900,000] *
a nominal amount; and a nominal amount; and 3,738,982/20,775,322
- [Amounts paid for
2) if EBITDA for the 2) if EBITDA for the Class A and Class B
fiscal year ended fiscal year ended Preferred Shares of
December 31, 2001 is December 31, 2001 is Acquisitionco + 4.75
equal to or greater equal to or greater * [3,900,000 -(2000
than $3,900,000, an than $3,900,000, an EBITDA + 2001 EBITDA
amount equal to amount equal to + 2002 EBITDA)/3] *
$417,730 + accrued $417,730 + accrued 3,738,982/20,775,322]
interest thereon + interest plus + 50% * Plus accrued interest.
50% * 4.75 * (2000 4.75 *
EBITDA -3,900,000) * For Class F Preferred
3,783,982/20,775,322 [(2000 EBITDA + 2001 Shares of
EBITDA)/2 -3,900,000] Acquisitionco:
For Class D Preferred * 3,783,982/20,775,322.
Shares of $509,186 + 4.75 * [(2000
Acquisitionco: + 2001 + 2002
For Class E Preferred EBITDA)/3 -
1) if EBITDA for the Shares of 3,900,000] *
fiscal year ended Acquisitionco: 1,337,271/20,775,322
December 31, 2000 is - [Amounts paid for
less than $3,900,000, 1) if EBITDA for the Class A and Class B
a nominal amount; and fiscal year ended Preferred Shares of
December 31, 2000 is Acquisitionco + 4.75
2) if EBITDA for the less than $3,900,000, *
fiscal year ended a nominal amount; and [3,900,000 - (2000
December 31, 2001 is EBITDA + 2001 EBITDA
equal to or greater 2) if EBITDA for the + 2002 EBITDA)/3] *
than $3,900,000, an fiscal year ended 1,337,271/20,775,322]
amount equal to December 31, 2001 is Plus accrued interest.
$127,296 + accrued equal to or greater
interest + 50% * 4.75 than $3,900,000, an $34,558 + accrued
* (2000 EBITDA amount equal to interest - [amounts
-3,900,000) * $127,296 + accrued paid for 2001 and
1,337,271/20,775,322 interest + 50% * 4.75 * 2000 + 4.75 *
[(2000 EBITDA + 2001 3,900,000 -(2000
$8,639 + accrued EBITDA)/2 - 3,900,000] EBITDA + 2001 EBITDA
interest + 50% * 4.75 * 1,337,271/20,775,322 + 2002 EBITDA)/3 *
* (2000 EBITDA - 37,625/20,775,322]
3,900,000) * $8,639 + accrued + 4.75 * [(2000 EBITDA +
37,625/20,775,322 interest + 50% * 4.75 2001 EBITDA +2002
* EBITDA)/3 -
[(2000 EBITDA + 2001 3,900,00] *
EBITDA)/2 - 3,900,000] 37,625/20,775,322
*
37,625/20,775,322
-------------------- --------------------------- ---------------------------- -------------------------- -------------
(Part 2 continued)
-------------------- --------------------------- -------------------------- -------------------------------- ---------
Company: Payable after May 31, 2001 Payable after December Payable after December 31, 2002 Fiscal
31, 2001 2004
-------------------- --------------------------- -------------------------- -------------------------------- ---------
Bang!Zoom LLC First contingent payment Second contingent Third contingent payment None.
("FCP") equal to: {AM payment ("SCP") equal ("TCP") equal to: {AM *
* (2000 PBT) * 70% * to: {AM * {(2000 PBT {(2000 PBT + 2001 PBT +
50.1%} -{CP}.3 + 2001 PBT} / 2) * 2002 PBT} / 3) * 50.1%} -
80% * 50.1%} - {CP + {CP + FCP + SCP}.3
FCP}.3
-------------------- --------------------------- -------------------------- -------------------------------- ---------
Bratskeir & None. Second contingent Third contingent payment None.
Company, Inc. payment ("SCP") equal ("TCP"): {AM * {(2000 EBIT
to: {7.00 * {(2000 + 2001 EBIT + 2002 EBIT} /
EBIT + 2001 EBIT} / 3)} - {CP + FCP + SCP}.4
2) * 66 2/3%} - {CP +
FCP}.4
-------------------- --------------------------- -------------------------- -------------------------------- ---------
Colle & XxXxx, Inc. None. Last contingent payment None. None.
("LCP") equal to:
US$32.03 per common
share reduced by (but
not below zero) the
sum of:
i) FCP * 1.1236 {where FCP
wasUS$2,693,630};
ii) SCP * 1.06; and iii) 6*
(average PBT for
calendar year's 1999,
2000 and 2001 -
US$4,250,000)* 1.191 /
334,637.
-------------------- --------------------------- -------------------------- -------------------------------- ---------
E-Telligence LLC First contingent payment Second contingent Third contingent payment None.
("FCP") equal to: {AM payment ("SCP") equal ("TCP") equal to: {AM *
* (2000 PBT) * 70% * to: {AM * {(2000 PBT {(2000 PBT + 2001 PBT +
50.1%} - {CP}.3 + 2001 PBT} / 2) * 2002 PBT} / 3) * 50.1%} -
80% * 50.1%} - {CP + {CP + FCP + SCP}.3
FCP}.3
-------------------- --------------------------- -------------------------- -------------------------------- ---------
Xxxxxxxx Xxxxxx None. Second contingent Third contingent payment None.
Xxxxx payment ("SCP") of (TCP") of US$2,320,000
LLC US$1,546,666 less FCP -FCP - SCP:
provided that no
amount is payable if increased (if Average Earnings
(i) aggregate over 2000, 2001 and 2002
Earnings during 2000 exceed US$1,200,000) by
and 2001 are less (Average Earnings -
than US$2,400,000; or US$1,200,000) * 0.70 * 5.5;
(ii) average fees and
commissions received decreased (if Average Earnings
from RTM Inc. during over 2000, 2001 and 2002
2000 and 2001 are is less than US$1,200,000)
less than by (US$1,200,000-Average
US$4,500,000. Earnings) * 0.70 * 5.5.
-------------------- --------------------------- -------------------------- -------------------------------- ---------
Xxxxxxxx Xxxxxx None. None. Contingent Payment ("CP") None.
Xxxxx equal to:
LLC (re: XxXxxx {Multiple *
Communications, (PFPBT for 2001+PFPBT for 2002)}
Inc.) ------------------------------
2
(DP+MAP)5
-------------------- --------------------------- -------------------------- -------------------------------- ---------
Integrated None. None. None. None.
Healthcare
Communications,
Inc.
-------------------- --------------------------- -------------------------- -------------------------------- ---------
(Part 2 continued)
-------------------- -------------------------- --------------------------- -------------------------------- ----------
Company: Payable after May 31, Payable after December Payable after December 31, 2002 Fiscal
2001 31, 2001 2004
-------------------- -------------------------- --------------------------- -------------------------------- ----------
Interfocus Group (pound)2,500,000 but reduced None. {A * B * 60% - C} where, None.
Limited (pound)3 for every(pound)1
that 2000 EBITDA is less "A" is the average
than(pound)2,500,000.6 consolidated EBITDA over
2000, 2001 and 2002;
"B" is determined by
the average growth in
EBITDA over the same
period but, in any event,"
B" shall be between 6.75
and 9.00.
"C" is the amounts paid for
Maxxcom's shares to date,
including the Xxxx Payment
in Part 1 and the Osprey
Payment below but excluding
the tangible net worth
payment.
-------------------- -------------------------- --------------------------- -------------------------------- ----------
Interfocus Group Due to Osprey None. None. None.
Limited (the Communications by
"Osprey Interfocus Group Limited:
Payment")
i) (pound)210,000 within
14 days of end of
month in which
cumulative Gross
Profit earned from
the former clients of
Osprey London exceeds
(pound)1,200,000
during the 12 months
from September 1,
2000.
ii) A further
(pound)240,000 within
14 days of end of
month in which
cumulative Gross
Profit earned from
the former clients of
Osprey London exceeds
(pound)1,500,000
during the 12 months
from September 1,
2000.
iii) Eighty percent of the
Gross Profit earned
from the former
clients of Osprey
London during the 12
months from September
1, 2000 less the sum
of (pound)750,000 and
the above two
contingent payments.
All contingent
payments noted herein
plus (pound)750,000
shall not exceed
(pound)2,000,000.
-------------------- -------------------------- --------------------------- -------------------------------- ----------
(Part 2 continued)
-------------------- ------------------------- --------------------------- ----------------------------- -----------------------
Company: Payable after May 31, Payable after December Payable after December 31, Fiscal 2004
2001 31, 2001 2002
-------------------- ------------------------- --------------------------- ----------------------------- -----------------------
Mackenzie None. None. Final payment equal to: None.
Marketing, (Multiple * average EBIT
Inc. over 2000, 2001 and
2002) - CP - FIP.
-------------------- ------------------------- --------------------------- ----------------------------- -----------------------
News Canada Inc. None. None. None. Contingent promissory
note, dated March
14, 1997, of
$500,000 (plus
interest since
March 14, 1997)
payable by 1220777
Ontario Limited to
News Group Limited
within 30 days of
the Finalized
Assessment Date
subject to
deduction for tax
assessments and
costs.8
-------------------- ------------------------- --------------------------- ----------------------------- -----------------------
Pavlika Chinnici First contingent Second contingent payment Third contingent payment None.
Direct, LLC payment ("FCP") ("SCP") equal to: ("TCP") equal to: {AM *
equal to: {6.00 * {6.00 * 2001 PBT * 65% {(2001 PBT + 2002 PBT) /
(2000 PBT) * 50% * * AP * 75%} - {CP + 2} * 65% * AP} - {CP +
80%} - {CP}.3 FCP}.3 FCP + SCP}.3
-------------------- ------------------------- --------------------------- ----------------------------- -----------------------
Source Marketing None. US$2,940,000 less: (x) $200,000 contingent on None.
LLC prior contingent Xxxxxx Xxxxxxxxx'x
payments made in continued employment.
respect of 1999 and
2000 and (y) amount
equal to 5.25 *
(US$1,800,000 -
average PBT over 1999,
2000 and 2001) (plus
interest at 8% p.a.
since October 15,
1998); plus
Additional contingent payment of
2/3 * 5.25 * (1999 PBT + 2000
PBT + 2001 PBT -
US$5,400,000) / 3 * 0.8156 +
US$100,000.
$200,000 contingent on
Xxxxxx Xxxxxxxxx'x continued
employment.
-------------------- ------------------------- --------------------------- ----------------------------- -----------------------
TargetCom LLC First contingent Second contingent payment Third contingent payment None.
payment ("FCP") ("SCP") equal to: {AM ("TCP") equal to: {AM *
equal to: {AM * * {(2000 PBT + 2001 {(2000 PBT + 2001 PBT +
(2000 PBT) * 70% * PBT} / 2) * 80% * 80%} 2002 PBT} / 3) * 80%} -
80%} - {CP}.3 - {CP + FCP}.3 {CP + FCP + SCP}.3
-------------------- ------------------------- --------------------------- ----------------------------- -----------------------
Xxxxxxx Xxxxxx & First Contingent Second Contingent Payment Third Contingent Payment None.
Bogusky LLC Payment ("FCP") ("SCP") equal to: ("TCP") equal to:
equal to US$500,000
in cash if PBT for {{{49%x(7.5x(70%x(2000PBT {{{49%x(AM x
calendar year 2000 +2001PBT/2)))}- (2000PBT+2001PBT
is US$2,500,000 or (CP+FCP)}- RDP}.3 +2002PBT/3))} -
more, it being (CP+FCP+SCP)} - RDP}.3
agreed that if 2000
PBT is less than
US$2,500,000, the
FCP shall be zero.
-------------------- ------------------------- --------------------------- ----------------------------- -----------------------
(Notes and definitions for Part 1 and Part 2)
1 This amount includes US$200,000 per year in respect of Sable Advertising
Systems Inc.
2 Substantially all of the Earnout Payments take the form of a Maxxcom Inc.
obligation to purchase Class A, B, C, D, E and F Preferred Shares (the
"Earnout Shares") of 1385544 Ontario Limited ("Acquisitionco"), a
Wholly-Owned Subsidiary of Maxxcom which issued the Earnout Shares in
consideration of the purchase of common shares of Xxxxxx Xxxxxxx
Communications Inc.
3 80% of the payments are payable in cash and the balance is payable in
Maxxcom Inc. shares.
4 75% of the payments are payable in cash and the balance is payable in
Maxxcom Inc. shares.
5 35% (plus the amount, if any, by which the CP exceeds US$4.7 million) of
the payment is payable in Maxxcom shares and the balance is payable in
cash.
6 7.5% of the payment to be made shall be settled with Maxxcom Inc. shares.
7 75% of the payment to be made shall be settled with Maxxcom Inc. shares.
8 This payment date, if any, is likely sometime after March 14, 2004.
9 All non-contingent deferred purchase price obligations payable in respect
of 656712 Ontario Limited ("Strategies") are conditional upon the
completion of the acquisition by Maxxcom Inc. of the common shares of
Strategies held by Fraser XxXxxxxx (including those shares held in trust
on his behalf). This transaction is expected to be completed prior to July
31, 2001.
Glossary of Terms: The following terms have the following meanings each as
defined in the applicable purchase agreement:
- "AM" means "Applicable Multiple".
- "AP" means "Applicable Percentage".
- Average Earnings.
- "CP" means "Closing Payment".
- "DP" means Down Payment paid at Closing of transaction
- "MAP" means XxXxxx additional payment of US$650,000 payable on January 2,
2002 to be satisfied through the issuance of shares of Maxxcom Inc.
- Earnings.
- "PBT" means "Profit Before Tax".
- "RDP" means "Residual Downpayment"
- "EBIT" means "Earnings Before Interest and Taxes".
- "EBITDA" means "Earnings Before Interest, Taxes, Depreciation and
Amortization".
- "PFPBT for 2001" means Proforma Profit Before Tax for 2001
- "PFPBT for 2002" means Proforma Profit Before Tax for 2002
- Multiple.
- Mathematical symbols:
o "-" means subtract or minus;
o "+" means add or plus;
o "*" means multiply or times;
o "%" means percent.
o "/" means divide by; and
o "=" means equals or equal to.
SCHEDULE Q
ADOPTION AGREEMENT
SUPPLEMENT TO CREDIT AGREEMENT
THIS AGREEMENT supplements the Second Amended and Restated Credit Agreement
dated as of 11 July 2001 (as amended, supplemented, restated and replaced from
time to time, the "Credit Agreement") between Maxxcom Inc. and Maxxcom US, as
borrowers, The Bank of Nova Scotia, as Agent, the Lenders named therein and
others.
RECITALS:
A. Capitalized terms used and not defined in this Agreement have the
meanings defined in the Credit Agreement.
B. The Credit Agreement contemplates that further Persons shall become
Restricted Parties in certain circumstances.
C. [o] (the "New Subsidiary"), as a Wholly-Owned Subsidiary of Maxxcom, is
required by the Credit Agreement to become a Guarantor and a
Restricted Party and to adopt the Credit Agreement.
D. The New Subsidiary has delivered the documents listed on Schedule A to
this adoption agreement, which form part of the Security, an opinion
of its counsel and other resolutions and ancillary documents required
by the Agent.
THEREFORE, for value received, and intending to be legally bound by this
Agreement, the parties agree as follows:
1. The New Subsidiary hereby acknowledges and agrees to the terms of the
Credit Agreement and the Mezz Inter-Creditor Agreement and agrees to
be bound by all obligations of a Guarantor and of a Restricted Party
as if it had been an original signatory thereto and to execute all
documentation and take such further action as is necessary to give
effect thereto.
2. The Agent, on behalf of the Lenders, acknowledges that the New
Subsidiary shall be a Guarantor and a Restricted Party as of the date
of this Agreement.
IN WITNESS OF WHICH, the undersigned have executed this Agreement as of [o].
THE BANK OF NOVA SCOTIA, as Agent
By: ________________________________
Name:
Title:
[New Subsidiary]
By: ________________________________
Name:
Title:
[Note: Schedule A to be attached to list Security]
SCHEDULE R
RESTRICTED PARTY PURCHASE AGREEMENTS
1) ACCENT MARKETING SERVICES, L.L.C.
Membership Interest Purchase Agreement by and among MDC Corporation
Inc. ("MDC"), Maxxcom Inc. ("Maxxcom"), Accent Acquisition Co. (the
"Purchaser"), AMS Holdings, Inc. (the "S-Corp"), Xxx Xxxxxx
("Xxxxxx"), Xxxxxxx Xxxxxxx ("Xxxxxxx"), Xxxxx Xxxxxxxx ("Xxxxxxxx"),
Xxx Xxxxx ("Xxxxx"), Xxxxx Xxxxxxxxxx ("Xxxxxxxxxx") and Xxx Xxxxxxxx
("Doligale")( together with Hansen, Robbins, Xxxxxxxx, Xxxxx and
Schwertley, collectively referred to herein as the "Principals" and
individually as a "Principal") dated as of October 31, 1999.
2) ACCUMARK PROMOTIONS GROUP INC.
a) Share Purchase Agreement by and between MDC Corporation (the
"Purchaser"), G. Kightley Group Inc. ("Kightley"), Edworth
Holdings Inc. ("Kightley Holdco"), Xxxxxx Kightley ("Xxxxxx
Kightley"), Xxxxx Xxxxxx ("Xxxxxx"), X. Xxxxxx Promotions
(Canada) Ltd. ("Xxxxxx Promotions"), Xxxxxx Xxxxx and
Xxxxxxxx Xxxxx (collectively "Green"), Green Group Marketing
Ltd. ("Green Group"), X. Xxxxx Group Inc. ("Xxxxx Group"),
Xxxxxx Xxxxxxxx ("Beneteau") and Beneteau & Associates Inc.
("Beneteau & Associates") dated as of November 24, 1993;
b) On April 17, 2000 Maxxcom acquired the shares of Xxxxxx
Kightley in Accumark Promotions Group via his termination as
per Maxxcom's right under the Shareholders' Agreement;
c) Share Exchange Agreement by and between Xxx Xxxxx ("X.
Xxxxx") and Maxxcom Inc. dated March 23, 2000;
d) Share Exchange Agreement by and between Xxxxxxxx Xxxxx ("X.
Xxxxx") and Maxxcom Inc. dated March 23, 2000;
e) Share Exchange Agreement by and between Xxxxx Xxxxx ("Xxxxx")
and Maxxcom Inc. dated March 23, 2000;
f) Share Exchange Agreement by and between Xxxxx Xxxxxx
("Xxxxxx") and Maxxcom Inc. dated March 23, 2000;
g) Share Exchange Agreement by and between Xxxxx Xxxxxx
("Xxxxxx") and Maxxcom Inc. dated March 23, 2000;
3) XXXXXX XXXXXXX COMMUNICATIONS INC.
a) Share Purchase Agreement by and between MDC Corporation (the
"Purchaser") and Xxxxxxx X. Xxxxxxxxxxxx ("Xxxxxxxxxxxx") and
Xxxxx X. Xxxxxxx ("Xxxxxxx") (Xxxxxxxxxxxx and Xxxxxxx
collectively referred to as the "Vendors") dated July 31,
1992;
b) Release of Xxxxxxx X. Xxxxxxxxxxxx ("Billinghurst") to MDC
Communications Corporation ("MDC") evidencing purchase of 499
Common Shares in the capital of LBJ Advertising Limited from
Billinghurst by MDC dated February 28, 1997. Terms of this
acquisition are set out in the Share Purchase Agreement dated
July 31, 1992;
c) Direction of MDC Communications Corporation ("MDC") to Xxxxx
Xxxxxxx ("Xxxxxxx") evidencing the sale of 249 Common Shares
in the capital of LBJ Advertising Limited by MDC to Xxxxxxx
dated February 28, 1997;
d) Share Purchase Agreement by and between MDC Communications
Corporation ( the "Purchaser") and Xxxxxxx Xxxxxxxxx
("Xxxxxxxxx") and Doron Woticky ("Woticky") and Xxxx Xxxxx
("Xxxxx") and Xxx Xxxxxx ("Xxxxxx") and Xxxx Xxxxxxxx
("Xxxxxxxx") and Xxxxxxx Xxxxxxx ("Xxxxxxx") and Xxxxx Xxxxxx
("Xxxxxx") and Xxxxxxx Xxxxxx ("Xxxxxxx Xxxxxx")(Xxxxxxxxx,
Woticky, Kovar, Hebert, Laudadio, Freeman, Xxxxxx and Xxxxxxx
Xxxxxx collectively referred to as the "Vendors") dated June
6, 1997;
e) Share Purchase Agreement by and between MDC Communications
Corporation ( the "Vendor") and Xxxxx Xxxxxxx ("Xxxxxxx") and
Xxxxxxx Xxxxxxxxx ("Xxxxxxxxx") and Xxxxx Woticky ("Woticky")
and Xxxx Xxxxx ("Xxxxx") and Xxx Xxxxxx ("Xxxxxx") and
Xxxxxxx Xxxxx ("Xxxxx") and Xxxx Xxxxxxxx ("Xxxxxxxx") and
Xxxxx Xxxxxx ("Xxxxxx") (Johnson, Battaglia, Woticky, Kovar,
Hebert, Brott, Laudadio, and Xxxxxx collectively referred to
as the "Purchasers") dated June 6, 1997;
f) Share Purchase Agreement by and between LBJoFRB
Communications Inc. ("LBJoFRB") and MDC Corporation Inc.
("MDC") and Maxxcom Inc.("Maxxcom") and 1385544 Ontario
Limited ("Maxxcom Acquisition Co.") and Xxxxx Xxxxxxx
("Xxxxxxx") and Tericon Corporation ("Xxxxxxx Holdco") and
The Persons Listed on Schedules 1A, 1B and 1C, being all of
the shareholders of Xxxxxx & Associes Inc. immediately before
the completion of the transactions contemplated by this
agreement ("Xxxxxx Shareholders") and The Persons Listed on
Schedule 2 being the principal shareholders of Xxxxxx &
Associes Inc. immediately before the completion of the
transactions contemplated by this agreement ("Principal
Xxxxxx Shareholders") and The Persons Listed on Schedule 4
being all of the shareholders of LBJoFRB (other than Maxxcom
and Xxxxxxx) immediately before the completion of the
transactions contemplated by this agreement ("LBJoFRB
Management") dated as of December 6, 1999;
g) Share Exchange Agreement by and between Xxxxx Xxxxxx
("Xxxxxx") and Maxxcom Inc. dated March 23, 2000;
h) Share Exchange Agreement by and between Xxxxxxx Xxxxx
("Xxxxx") and Maxxcom Inc. dated March 23, 2000;
i) Share Exchange Agreement by and between Xxxx Xxxxx ("Xxxxx")
and Maxxcom dated March 23, 2000;
j) Share Exchange Agreement by and between Xxxx Xxxxxxxx
("Xxxxxxxx") and Maxxcom Inc. dated March 23, 2000;
k) Share Exchange Agreement by and between Xxx Xxxxxxx
("Xxxxxxx") and Maxxcom Inc. dated March 23, 2000;
l) Share Exchange Agreement by and between Xxxxxxxxx Xxxxxxxxx
("Xxxxxxxxx") and Maxxcom Inc. dated March 23, 2000;
m) Share Exchange Agreement by and between Xxxxx Xxxxxxx
("Xxxxxxx") and Maxxcom Inc. dated March 23, 2000;
n) Share Purchase Agreement by and between Maxxcom Inc. (the
"Purchaser") and Xxxxxx Xxxxxx ("Vendor") dated as of April
21, 2000;
o) Share Purchase Agreement by and between Maxxcom Inc. (the
"Purchaser") and Xxxxxxxx Xxxxxxxx ("Vendor") dated as of
April 21, 2000;
p) Share Purchase Agreement by and between Those Parties Listed
on Schedule "A" Hereto ( Maxxcom Inc., Tericon Inc. Xxxxx
Xxxxxxx, Les Placements G4B Inc., Xxxxxx XxxXxxxxxxx, Xxxxx
Xxxxxx, Pertinence Inc., Xxx Xxxxxx, Xxxxxxx Xxxxx, Xxxx
Xxxxx, Xxxxxx Xxxxxx, Xxxx Xxxxxxxx, Xxxxxxxxx Xxxxxxxx,
Xxxxx Xxxxxxx, Xxxx XxXxxxxx, Xxxxxxx Xxxxxx, Xxxxxx Xxxxxx,
Xxxxx Xxxxxxxx, 1385544 Ontario Limited and MDC
Corporation)(collectively the "Purchaser") and Xxxxxxxx
Xxxxxxx ("Vendor") dated as of August 1, 2000;
q) Share Purchase Agreement by and between Xxxxxx Xxxxxxx
Communications Inc. (the "Purchaser") and Maxxcom Inc.
(the"Vendor") dated April 21, 2000;
r) Share Pledge Agreement by and between Maxxcom Inc.
(the"Holder") and Xxxx XxXxxxxx (the"Debtor") dated May 15,
2000.
4) XXXXXXX XXXX XXXXXX XXXXXX INC.
a) Share Purchase Agreement by and between MDC Corporation (the
"Purchaser") and Xxxxxx Xxxxxxx ("Xxxxxxx") and Xxxx Xxxx
("Xxxx") and Xxxxxxx Xxxxxx ("Xxxxxx") (Xxxxxxx, Xxxx and
Xxxxxx collectively referred to as the "Vendors") dated
December 1, 1991;
b) Share Purchase Agreement by and between Xxxxxx Xxxxxxx
("Xxxxxxx") and Xxxx Xxxx ("Xxxx") and Xxxxxx Xxxx ("Xxxxxx")
and Xxxxxxx Xxxxxx ("Xxxxxx") and Xxxxxxx Xxxxxx ("Xxxxxxx")
(collectively the "Vendors") and MDC Corporation (the
"Purchaser") dated January 31, 1995;
c) Share Purchase Agreement by and between Xxxxxx Xxxxxxxx
("Kingston") and Xxxxx Xxxxxxxx ("Xxxxx") and MDC
Corporation, (the "Purchaser") dated January 31, 1995;
d) Share Purchase Agreement by and between Xxxxxx Xxxxxxx
("Xxxxxxx") and Xxxx Xxxx ("Xxxx") and Xxxxxx Xxxx ("Xxxx")
(collectively the "Vendors") and MDC Communications
Corporation (the "Purchaser") dated June 24, 1996;
e) Subscription Agreement from Xxxx Xxxxxxx to purchase an
aggregate of 11,112 common shares in the capital of Xxxxxxx
Xxxx Xxxxxx Xxxxxxx Inc. dated as of October 23, 1996;
f) Share Purchase Agreement by and between MDC Communications
Inc. (the "Vendor") and Xxxx Xxxxxxx (the "Purchaser") dated
as of January 2, 1998;
g) Share Purchase Agreement by and between MDC Communications
Inc. (the "Vendor") and Xxxxx Xxxxxxx (the "Purchaser") dated
as of January 2, 1998;
h) Consent letter of Xxxxxxx Xxxx Xxxxxx Xxxxxxx ("ACLC") (per
Esme Xxxxxxx, Xxxxxxx Xxxxxx, Xxxxxxx So and Xxxxx Xxxxxxx)
evidencing consent to the acquisition by Maxxcom Inc. of all
of MDC Corporation Inc.'s common shares in the issued and
outstanding capital of ACLC dated March 22, 2000;
i) Share Purchase Agreement by and between Maxxcom Inc.
("Maxxcom") and Xxxxxxx Xxxxxx ("Xxxxxx") and MDC Corporation
Inc. ("MDC") dated as of March 24, 2000.
j) Share Purchase Agreement by and between Maxxcom (as
Purchaser) and Xxxx Xxxxxxx (as Vendor) made as of the 1st
day of April, 2001. (Note: This agreement has not yet been
finalized or executed. The agreement is expected to be
completed prior to August 31, 2001.)
k) Share Purchase Agreement by and between Maxxcom (as
Purchaser) and Xxxxx Xxxxxxx (as Vendor) made as of the 1st
day of April, 2001. (Note: This agreement has not yet been
finalized or executed. The agreement is expected to be
completed prior to August 31, 2001.)
l) Share Purchase Agreement by and between Maxxcom (Purchaser)
and Xxxxxxx So (Vendor) made as of the 1st day of April,
2001. (Note: This agreement has not yet been finalized or
executed. The agreement is expected to be completed prior to
August 31, 2001.)
5) BRATSKEIR & COMPANY, INC.
Asset Purchase Agreement by and between BC Acquisition Corp. (the
"Buyer"), Maxxcom Inc. ("Maxxcom"), Bratskier & Company, Inc.(the
"Company"), Xxxxxxx Bratskier (the "Principal"), Xxxxxx Bratskier and
Xxxxxxx Xxxxx dated as of September 18, 2000;
6) BANG!ZOOM LLC
Membership Interest Purchase Agreement by and between B-Z LLC, (the
"Seller"), Targetcom Inc. (the"S-Corp"), Xxxxxxx Xxxxxxxx
("Xxxxxxxx"), Xxxxx Xxxxx ("Xxxxx"; together with S-Corp and Xxxxxxxx,
collectively referred to herein as the "Principals" and individually
as the "Principal"), Maxxcom Inc. ("Maxxcom") and BZ Acquisition
Inc.(the "Purchaser") dated as of the June 30, 2000, as amended by
Amendment No. 1 to Membership Interest Purchase Agreement dated
November 29, 2000;
7) XXXXX XXXXX GROUP LTD.
a) Share Purchase Agreement by and between Xxxxx X. Xxxxx
("Xxxxx"), Xxxxx Xxxxxx, ("Xxxxxx"), Xxxxxx Xxxxxx ("Xxxxxx";
Xxxxx, Xxxxxx and Xxxxxx hereinafter collectively referred to
as the "Vendors"), MDC Production Services Limited, (the
"Purchaser") dated as of February 1, 1989;
b) Share Purchase Agreement by and between Xxxxx X. Xxxxx and
Xxxxx Landenheim ("Landenheim") and Xxxxxxxx Xxxxxx
("Xxxxxx")(Landenheim and Xxxxxx collectively referred to as
the "Purchasers") and MDC Corporation Inc. ("MDC") dated
January 1, 1993;
c) Share Purchase Agreement by and between MDC Corporation (the
"Purchaser") and Xxxxxxxx Xxxxxx (the"Vendor") dated March
31, 1999;
d) Share Purchase Agreement by and between MDC Corporation (the
"Purchaser") and Xxxxx Landenheim ("Vendor") dated March 31,
1999;
e) Share Purchase Agreement by and between MDC Corporation (the
"Purchaser") and Xxxx Xxxxxx ("Vendor") dated October 1,
1999;
f) Assumption Agreement Provided to Xxxxx Xxxxx Group Ltd.,
Landenheim, Xxxxxx and Xxxxxx from Maxxcom Inc. and MDC
Corporation dated March 23, 2000;
g) Share Exchange Agreement by and between Xxxxx Landenheim
("Landenheim") and Maxxcom Inc. dated March 23, 2000;
h) Share Exchange Agreement by and between Xxxx Xxxxxx
("Xxxxxx") and Maxxcom Inc. dated March 23, 2000;
i) Share Exchange Agreement by and between Xxxxx Xxxxxx
("Xxxxxx") and Maxxcom Inc. dated March 23, 2000.
8) COLLE & XxXXX, INC.
a) Agreement and Plan of Merger by and between MDC
Communications Corporation ("MDC"), CMI Acquisition Co.
("MergerSub"), and Colle & XxXxx, Inc. (the "Company") dated
as of March 24, 1999, as amended by Memorandum of Amendment
to Agreement and Plan of Merger dated March 31, 1999
(collectively the "Merger Agreement");
b) Share Purchase Agreement by and between Colle & XxXxx, Inc.
(the"Purchaser") and Sable Advertising Systems, Inc.
("Sable") and Taps Marketing Specialties, Inc. ("Taps")(Sable
and Taps collectively referred to as the "Vendors") dated
August 31, 1999;
c) Letter Amending Agreement by and between MDC Corporation Inc.
and Colle & XxXxx, Inc. amending the Merger Agreement so as
to evidence how the activities of Xxxxx TMC Inc. will be
reflected within the calculations of "PBT" dated March 23,
2000;
d) Letter Amending Agreement by and between MDC Corporation Inc.
and Colle & XxXxx, Inc. amending the Merger Agreement so as
to evidence how the activities of Xxxxxxxxx & Xxxxxxx Inc.
will be reflected within the calculations of "PBT" dated
April 28, 2000;
e) Share Exchange Agreement by and between Xxxxxxx Xxxxxxxxx
("Xxxxxxxxx") and Maxxcom dated March 23, 2000;
f) Share Exchange Agreement by and between Xxxx Xxxxxxxxx
("Fagerwick") and Maxxcom dated March 23, 2000;
g) Share Exchange Agreement by and between Xxxxxxxxx Xxx ("Xxx")
and Maxxcom dated March 23, 2000;
h) Share Exchange Agreement by and between Xxxxx Xxxxxx
("Xxxxxx") and Maxxcom dated March 23, 2000;
i) Share Exchange Agreement by and between Xxxxxxx Xxxx ("Xxxx")
and Maxxcom dated March 23, 2000;
j) Share Exchange Agreement by and between Xxxxxxx XxXxxxx
("XxXxxxx") and Maxxcom dated March 23, 2000;
k) Share Exchange Agreement by and between Siobhan O'Xxxxx Xxxxx
("Xxxxx") and Maxxcom dated March 23, 2000;
l) Share Exchange Agreement by and between Xxxx Xxxxx ("Xxxxx")
and Maxxcom dated March 23, 2000;
m) Share Exchange Agreement by and between J. Xxxxx Xxxxxx
("Xxxxxx") and Maxxcom dated March 23, 2000;
n) Share Exchange Agreement by and between Xxx Xxxxxxxx
("Xxxxxxxx") and Maxxcom dated March 23, 2000;
o) Share Exchange Agreement by and between Xxxxx Xxxxxxx
("Xxxxxxx") and Maxxcom dated March 23, 2000;
p) Share Exchange Agreement by and between Xxx Xxxxxxxx
("Xxxxxxxx") and Maxxcom dated March 23, 2000;
q) Share Exchange Agreement by and between Xxxxx Xxxxx ("Cuddy")
and Maxxcom dated March 23, 2000;
r) Share Exchange Agreement by and between Xxxxx Xxxxx ("Xxxxx")
and Maxxcom dated March 23, 2000;
s) Share Exchange Agreement by and between Xxxxxx Xxxxxxxxxx
("Xxxxxxxxxx") and Maxxcom dated March 23, 2000;
t) Share Exchange Agreement by and between Xxxxx Xxxxxxx ("X.
Xxxxxxx") and Maxxcom dated March 23, 2000;
u) Share Exchange Agreement by and between Xxxxx XxXxxxx
("XxXxxxx") and Maxxcom dated March 23, 2000;
v) Share Exchange Agreement by and between Xxxxxx Xxxxxxx
("Xxxxxxx") and Maxxcom dated March 23, 2000;
w) Stock Purchase Agreement dated March 23, 2000 by and between
Colle & XxXxx, Inc. and Xxxxx Xxxxx;
x) Asset Purchase Agreement dated April 28, 2000 by and among
Xxxxxxxxx & Xxxxxxx Inc. and a wholly owned subsidiary of
Colle & XxXxx, Inc., Xxxxxxxxx & Xxxxxxx, Xxxxxxx Xxxxxxx,
and Xxxxxxx Xxxxxxxxx.
y) Asset Purchase Agreement made and entered into as of 1
September, 2000 by and among Colle & XxXxx, Inc. December 17,
2000, The Sandcastle Group, Inc., Xxxx X. Xxxxxxx and G.
Xxxxx Xxxxxxxxx.
z) Acquisition by Maxxcom Inc. (Delaware) as of April 1, 2001 of
1,200 shares of Class B common stock of Colle & XxXxx, Inc.
(formerly held by Xxx Xxxxxxxx and Xxxx Xxxxx) pursuant to
the provisions of the Colle & XxXxx, Inc. Shareholders'
Agreement.
9) XXXXXXX XXXXXX & BOGUSKY LLC
Membership Interest Purchase Agreement by and among CPB Acquisition
Inc., a Delaware corporation (the "Purchaser"), Maxxcom Inc., an
Ontario Corporation, Crispin & Xxxxxx Advertising, Inc. d/b/a/ Xxxxxxx
Xxxxxx & Bogusky, a Florida corporation, Xxxxxxx Xxxxxx, Xxxx Xxxxxxx,
Xxxx Xxxxx and Xxxx Xxxxxxxxx dated January 8, 2001.
10) CORMARK XXXXXXX COMMUNICATION SOLUTIONS (CANADA) INC.
(formerly Cormark Communications Inc.)
a) Share purchase Agreement by and between MDC Corporation
(the"Purchaser"), Adtec Investments Inc.("Adtec"), Xxxxxxx X.
Xxxxxxxxxx ("AAJ"), 829953 Ontario Ltd. ("829953"), Sandward
Inc. ("Sandward"), Xxxxxxxx Xxxxxxxxx ("Xxxxxxxxx"), Xxxx X.
Xxxxxxxxxx ("Jonckheere"), Xxxxxx X. Xxxxxxxxx ("Xxxxxxxxx")
and Xxxxxx Xxxxxxx ("Xxxxxxx") dated December 31, 1993;
b) Share Purchase Agreement by and between Cormark
Communications Inc. ( the "Purchaser") and Xxxxx Xxxxxxxx
("Xxxxxxxx") and Xxxxxx XxxXxxxxxx ("XxxXxxxxxx") and Xxxx
Xxxxxxxxx ("Xxxxxxxxx")(Campbell, MacEachern, and Xxxxxxxxx
collectively referred to as the "Vendors") dated December 31,
1998;
c) Share Exchange Agreement by and between Xxxxxxxx Xxxxxxxxx
("Xxxxxxxxx") and Maxxcom dated March 23, 2000;
d) Share Exchange Agreement by and between Xxxxxx Xxxxxxx
("Xxxxxxx") and Maxxcom dated March 23, 2000;
e) Share Exchange Agreement by and between Xxxxxxx Xxxxxxxxxx
("Ditchfield") and Maxxcom dated March 23, 2000;
f) Share Exchange Agreement by and between Xxxxx Xxxxxxx
("Beamish") and Maxxcom dated March 23, 2000;
g) Share Exchange Agreement by and between Xxxxx Xxxxxxx
("Porchak") and Maxxcom dated March 23, 2000;
h) Share Exchange Agreement by and between Xxxxx Xxxxxxx
("Kington") and Maxxcom dated March 23, 2000;
i) Purchase and Sale Agreement by and between Maxxcom Inc. (the
"Purchaser") and Xxxxx Xxxxxxx (the "Vendor") dated September
20, 2000;
j) Purchase and Sale Agreement by and between Maxxcom Inc. (the
"Purchaser") and Xxxxxx Xxxxxxx (the "Vendor") dated August
17, 2000;
k) Purchase and Sale Agreement by and between Maxxcom Inc. (the
"Purchaser") and Xxxxx Xxxxxxx (the "Vendor") dated August
18, 2000.
11) E-TELLIGENCE LLC
Membership Interest Purchase Agreement by and between E-Telligence,
Inc. (now E-Car, Inc.)(the "S-Corp"), Xxx Xxxxxx ("Xxxxxx"), Xxxxx
Xxxxx ("Xxxxx" together with Xxxxxx, collectively referred to herein
as the "Principals" and individually as a "Principal"), Maxxcom Inc.
("Maxxcom") and ET Acquisition Inc. (the "Purchaser") dated as of June
30, 2000, as amended by Amendment No. 1 to Membership Interest
Purchase Agreement dated November 29, 2000.
12) XXXXXXXX XXXXXX XXXXX LLC
Membership Interest Purchase Agreement by and between Xxxxxxxx Xxxxxx
Associates, Inc. (now known as FMA Holdings, Inc. ) ("S-Corp"),
Xxxxxxx Xxxxxx Xxxxxxxx ("Xxxxxxxx"), Xxxxxxx Xxxxx ("Xxxxx"), MDC
Corporation Inc. ("MDC"), Maxxcom Inc. ("Maxxcom")and FMA Acquisition
Co.(the "Purchaser") dated as of November 30, 1999, as amended by
Amendment No. 1 to Membership Interest Purchase Agreement dated
November 29, 2000.
13) INTEGRATED HEALTHCARE COMMUNICATIONS, INC.
a) Share Purchase Agreement by and between MDC Communications
Corporation (hereinafter referred to as "MDC") and Xxxxx
Xxxxxxx (hereinafter referred to as "Xxxxxxx") and Xxxxxx
Xxxxxxxx ( hereinafter referred to as "Huneault") and Xxxxx
Profiti ( hereinafter referred to as "Profiti") dated as of
January 6, 1998;
b) Share Exchange Agreement by and between Xxxxx Xxxxxxx
("Johnson") and Maxxcom dated March 23, 2000.
14) INTERFOCUS GROUP LIMITED
a) Subscription and Purchase Agreement by and between Sevco 1156
Limited (the "Company"), Maxxcom Inc, ("Maxxcom") and Mathew
Hooper (the "Covenantor") dated as of September 5, 2000;
b) Agreement regarding the full repayment of the outstanding
loan owing by Interfocus Group Limited to Maxxcom in the
amount of GBP 5,334,685 in exchange for 5,334,685 C ordinary
shares of GBP 1 each credited as fully paid dated November
15, 2000.
15) MACKENZIE MARKETING, INC.
Asset Purchase Agreement by and between Maxxcom Inc. ("Maxxcom"),
Mackenzie Acquisition Inc.(the "Purchaser"), Mackenzie Marketing, Inc.
(the"Company"), Andrew Mackenzie ("A. Mackenzie") and Julie Mackenzie
("J. Mackenzie"; together with A. Mackenzie, the "Shareholders" and
individually a "Shareholder") dated as of July 31, 2000.
16) MARGEOTES/FERTITTA + PARTNERS LLC
Membership Interest Purchase Agreement by and between
Margeotes/Fertitta + Partners Inc. (the"Seller"), and MF&P Acquisition
Co.(the "Purchaser") dated as of April 1, 1998, as amended by (i) two
letter agreements, each dated July 31, 1998, between the Purchaser and
the Seller, (ii) Amendment No. 1 to Membership Interest Purchase
Agreement dated March 28, 2000, (iii) Amendment No. 2 to Membership
Interest Purchase Agreement dated November 29, 2000, and (iv) Letter
Agreement by and among George Fertitta, Margeotes/Fertitta + Partners,
LLC, and Maxxcom Inc. regarding the acquisition of Bratskeir &
Company, Inc., dated September 22, 2000.
17) PAVLIKA CHINNICI DIRECT LLC
Membership Interest Purchase Agreement by and between CDI Acquisition
Co. (the "Purchaser"), Chinnici Direct Inc.("S-Corp"), Maxxcom Inc.
("Maxxcom") and Michael J. Chinnici ("Chinnici" or the "Principal")
dated as of August 17, 2000.
18) SOURCE MARKETING LLC
Membership Interest Purchase Agreement by and between Source
Marketing, Inc.( now known as Spruce Lake Inc. ) (the "Seller") and
SMI Acquisition Co. (the "Purchaser") dated as of October 15, 1998, as
amended by Amendment No. 1 to Membership Interest Purchase Agreement
dated January 1, 2000, and Amendment No. 2 to Membership Interest
Purchase Agreement dated November 29, 2000.
19) TARGETCOM LLC
Membership Interest Purchase Agreement by and between TargetCom Inc.
(now Comtar Inc.) (the "S-Corp") Jay Miller ("Miller"), Jay Miller as
trustee under the Jay Miller Declaration of Trust Agreement dated
December 30, 1993 (the "Trust"), Nora Ligurotis ("Ligurotis"), Maxxcom
Inc. ("Maxxcom") and TC Acquisition Inc.(the "Purchaser") dated as of
June 30, 2000, as amended by Amendment No. 1 to Membership Interest
Purchase Agreement dated November 29, 2000.
20) VERITAS COMMUNICATIONS INC.
a) Share Purchase Agreement by and between Terry M. Johnson (the
"Vendor") and Sheila Gies ( the "Purchaser") dated as of
January 1, 1996;
b) Share Purchase Agreement by and between Terry M. Johnson (the
"Vendor") and Jennifer Spencer ( the "Purchaser") dated as of
January 1, 1996;
c) Share Purchase Agreement by and between Terry M. Johnson (the
"Vendor") and David McLaughlin ( the "Purchaser") dated as of
January 1, 1996;
d) Share Purchase Agreement by and between Maxxcom Inc. ( the
"Purchaser")and David McLaughlin (the "Vendor") dated as of
November 1, 1999;
e) Share Exchange Agreement by and between Terry Johnson
("Johnson") and Maxxcom dated March 23, 2000;
f) Share Exchange Agreement by and between Sheila Gies ("Gies")
and Maxxcom dated March 23, 2000;
g) Share Exchange Agreement by and between Jennifer Spencer
("Spencer") and Maxxcom dated March 23, 2000;
h) Share Purchase Agreement dated as of February 14, 2001
between Maxxcom (the "Purchaser") and Sheila Gies (the
"Vendor").
21) 656712 ONTARIO LIMITED ( O/A STRATEGIES INTERNATIONAL)
a) Share Purchase Agreement by and between MDC Corporation, (the
"Purchaser"), Fraser McCarthy ("McCarthy"), Michael Bricker
("Bricker") and Keith Clarridge ("Clarridge")( Each of
McCarthy, Bricker, and Clarridge being hereinafter
collectively referred to as the "Vendors") dated as of
January 1, 1992;
b) Release of Keith Clarridge ("Clarridge") to 656712 Ontario
Limited, C.O.B. Strategies International ("Strategies")
evidencing purchase of 225 shares in the capital of
Strategies from Clarridge by MDC Communications Corporation
in trust for other Minority Shareholders of Strategies dated
December 18, 1996. Terms of this acquisition are set out in
the Share Purchase Agreement dated January 1, 1992.
c) Share Purchase Agreement made as of the 1st day of January,
2001 between Maxxcom Inc. (as Purchaser) and Fraser McCarthy
(as Vendor). (Note: This agreement has not yet been finalized
or executed. The agreement is expected to be completed prior
to August 31, 2001.)
d) Share Purchase Agreement made as of the 1st day of January,
2001 between M&A Berube Holdings Limited (as Purchaser) and
Maxxcom Inc. (as Vendor) relating to the purchase of 135
common shares of 656712 Ontario Limited. (Note: This
agreement has not yet been finalized or executed. The
agreement is expected to be completed prior to August 31,
2001.)
22) NEWS CANADA INC.
a) Share Purchase Agreement by and between MDC Communications
Corporation ("MDC"), 1220777 Ontario Limited, (the
"Purchaser"), News Group Limited, (the"Vendor"), Paul Aunger
("Aunger"), News Canada Inc. (the "Corporation") dated as of
March 14, 1997.
SCHEDULE S
CERTAIN PERMITTED ACQUISITIONS SINCE 31 MARCH 2000
1. On April 28, 2000, Colle & McVoy, Inc. acquired the assets and ongoing
business of Wernimont & Paullus Inc. Subsequently, the acquired
business was amalgamated with Colle & McVoy, Inc.
2. On June 30, 2000, Maxxcom acquired through Maxxcom (USA) Holdings Inc.
and its wholly-owned subsidiary TC Acquisition Inc., an 80% membership
interest in TargetCom LLC.
3. On June 30, 2000, Maxxcom acquired through Maxxcom (USA) Holdings Inc.
and its wholly-owned subsidiary ET Acquisition Inc., a 50.1%
membership interest in E-Telligence LLC.
4. On June 30, 2000, Maxxcom acquired through Maxxcom (USA) Holdings Inc.
and its wholly-owned subsidiary BZ Acquisition Inc., a 50.1%
membership interest in Bang!Zoom LLC.
5. On July 31, 2000 Maxxcom acquired 100% of the assets of Mackenzie
Marketing, Inc.
6. On August 17, 2000, Maxxcom acquired through Maxxcom (USA) Holdings
Inc. and its wholly-owned subsidiary CDI Acquisition Co., a 52%
membership interest in Pavlika Chinnici Direct, LLC and
Margeotes/Fertitta + Partners LLC acquired a 35% interest in Pavlika
Chinnici Direct, LLC.
7. On September 1, 2000, Colle & McVoy, Inc. acquired the assets of
Sandcastle Group.
8. On September 5, 2000, Maxxcom acquired a 60% interest in the capital
of Interfocus Group Limited (formerly Sevco 1156 Limited), which owns
100% of the shares of Interfocus Direct Limited, which in turn owns
100% of the shares of Interfocus Network Limited.
9. On September 18, 2000, Maxxcom acquired through Maxxcom (USA) Holdings
Inc. and its wholly-owned subsidiary BC Acquisition Corp., all of the
assets of Bratskier & Company, Inc.
10. On May 8, 2001, Accent Marketing Services L.L.C. acquired a 40%
membership interest in Mo' Better Marketing LLC.
11. On June 15, 2001, Fletcher Martin Ewing LLC acquired 100% of the
assets of McCool Communications, Inc.
SCHEDULE T
AGREEMENTS, ARRANGEMENTS AND TRANSACTIONS
WITH MDC CORPORATION INC. ET AL
1. Administrative services provided by MDC Corporation Inc. to Maxxcom
from time to time, not in excess of Cdn. $120,000 in any fiscal year
of Maxxcom
2. Management Services Agreement dated as of January 1, 2000 among
Maxxcom, Nadal Financial Corporation and Miles S. Nadal respecting
financial advisory services by Nadal Financial Corporation to Maxxcom,
as detailed in Section 1.1.132(e) of this Agreement in the definition
of "Permitted Payments"
3. Merger and acquisition advisory, investment banking and other similar
services provided by MDC Corporation Inc. to Maxxcom from time to
time, as detailed in Section 1.1.132(f) of this Agreement in the
definition of "Permitted Payments"
4. Payments made to Amadeus Capital Corporation to reimburse it for
amounts paid by it to its employee, and to arm's length third parties
respecting his employment, currently acting in the role of New York
base Senior Vice President, Corporate Development for Maxxcom
5. Miles Nadal has obtained, and will obtain from time to time, stock
options under Maxxcom's Stock Option Plan for officers, directors,
employees and consultants
6. Subsidiaries of Maxxcom provide services to MDC Corporation Inc. in
the ordinary course of business from time to time with respect to
advertising, investor relations and the like
TABLE OF CONTENTS
Section Description Page
------- ----------- ----
ARTICLE 1 - DEFINITIONS AND INTERPRETATION
1.1 Certain Defined Terms ....................................................4
1.1.1 "Acquirecos" ...........................................................4
1.1.2 "Acquisition Certificate" ..............................................4
1.1.3 "Acquisition Security" .................................................5
1.1.4 "Advance" ..............................................................5
1.1.5 "Affiliate".............................................................5
1.1.6 "Agent" ................................................................5
1.1.7 "Agreement" ............................................................5
1.1.8 "Alternate Base Rate Canada"............................................5
1.1.9 "American Entity" ......................................................6
1.1.10 "Applicable Law" ......................................................6
1.1.11 "arm's length", "non-arm's length" or "not at arm's length" ...........6
1.1.12 "Assignment Agreement".................................................6
1.1.13 "Associate" ...........................................................6
1.1.14 "BA Discount Proceeds".................................................6
1.1.15 "BA Equivalent Loan" ..................................................6
1.1.16 "BA Lender" ...........................................................6
1.1.17 "Bankers' Acceptance" .................................................7
1.1.18 "Bankers' Acceptance Fee"..............................................7
1.1.19 "Base Rate Advance" ...................................................7
1.1.20 "Base Rate Atlanta" ...................................................7
1.1.21 "Base Rate Canada".....................................................7
1.1.22 "Base Rate Canada Advance" ............................................7
1.1.23 "Base Rate U.S. Advance" ..............................................7
1.1.24 "Borrowers" ...........................................................7
1.1.25 "Branch of Account"....................................................7
1.1.26 "Business Day" ........................................................8
1.1.27 "Campbell Note" .......................................................8
1.1.28 "Campbell Security" ...................................................8
1.1.29 "Canadian Dollars", "Cdn. Dollars", "Cdn. $", "Dollars" and "$" .......8
1.1.30 "Canadian Plan" .......................................................8
1.1.31 "CanSubCos" ...........................................................8
1.1.32 "Capital Leases" ......................................................8
1.1.33 "Capital Stock" .......................................................8
1.1.34 "CERCLA" ..............................................................9
1.1.35 "Cessation Notice" ....................................................9
1.1.36 "Closing Date".........................................................9
1.1.37 "Code".................................................................9
1.1.38 "Collateral" ..........................................................9
1.1.39 "Combined Statements"..................................................9
1.1.40 "Commitment"...........................................................9
1.1.41 "Consent to Pledge" ...................................................9
1.1.42 "Constating Documents" ................................................9
1.1.43 "Contracts" ..........................................................10
1.1.44 "Contributing Lender".................................................10
1.1.45 "control", "controls" and "controlled" ...............................10
1.1.46 "Controlling Interest"................................................10
1.1.47 "Controlled Group" ...................................................10
1.1.48 "Credit" .............................................................10
1.1.49 "Credit Documents" ...................................................10
1.1.50 "Credit Limit"........................................................10
1.1.51 "Debt" ...............................................................11
1.1.52 "Defaulting Lender" ..................................................12
1.1.53 "Deferred Purchase Price Obligations" ................................12
1.1.54 "Designated Account"..................................................12
1.1.55 "Drawdown Date" ......................................................12
1.1.56 "Due Date" ...........................................................12
1.1.57 "Earnout Amount" .....................................................12
1.1.58 "Earnout Payment" ....................................................12
1.1.59 "EBITDA"..............................................................13
1.1.60 "Eligible Assignee"...................................................13
1.1.61 "Encumbrance" ........................................................14
1.1.62 "Environmental Laws" .................................................14
1.1.63 "ERISA" ..............................................................14
1.1.64 "Event of Default" ...................................................14
1.1.65 "Excess Cash Flow" ...................................................14
1.1.66 "Exchange Rate" ......................................................14
1.1.67 "Existing Indebtedness and Liability" ................................15
1.1.68 "F.R.S. Board"........................................................15
1.1.69 "Federal Funds Effective Rate" .......................................15
1.1.70 "Fee Agreement" ......................................................15
1.1.71 "Financial Condition" ................................................15
1.1.72 "Fincos"..............................................................15
1.1.73 "Follow-Up Merger" ...................................................16
1.1.74 "Foreign Opcos".......................................................16
1.1.75 "Foreign Plans" ......................................................16
1.1.76 "Fronting Fee" .......................................................16
1.1.77 "Generally Accepted Accounting Principles" or "GAAP" .................16
1.1.78 "Governmental Authority" .............................................16
1.1.79 "Guarantors" .........................................................16
1.1.80 "Hazardous Materials".................................................17
1.1.81 "Increased Costs" ....................................................17
1.1.82 "Intellectual Property" ..............................................17
1.1.83 "Interbank Reference Rate" ...........................................17
1.1.84 "Intercorporate Documents"............................................17
1.1.85 "Intercorporate Notes" ...............................................17
1.1.86 "Intercorporate Security" ............................................17
1.1.87 "Interest Coverage Ratio".............................................18
1.1.88 "Interest Payment Date" ..............................................18
1.1.89 "Investment"..........................................................18
1.1.90 "Issuing Lender" .....................................................18
1.1.91 "L/C" ................................................................18
1.1.92 "Lenders".............................................................18
1.1.93 "Lender's Share of the Obligations"...................................18
1.1.94 "LIBOR Advance" ......................................................18
1.1.95 "LIBO Rate"...........................................................19
1.1.96 "LIBOR Period" .......................................................19
1.1.97 "Majority Lenders"....................................................19
1.1.98 "Marketing Communication Services Business"...........................19
1.1.99 "Maturity Date" ......................................................19
1.1.100 "Maxxcom" ...........................................................19
1.1.101 "Maxxcom US" ........................................................19
1.1.102 "Mezz Agent".........................................................19
1.1.103 "Mezz Credit Documents" .............................................19
1.1.104 "Mezz Debenture" ....................................................19
1.1.105 "Mezz Holders" ......................................................19
1.1.106 "Mezz Inter-Creditor Agreement" .....................................20
1.1.107 "Mezz Obligations"...................................................20
1.1.108 "Mezz Security"......................................................20
1.1.109 "Minority Shareholder" ..............................................20
1.1.110 "Net Proceeds of a Securities Issuance"..............................20
1.1.111 "Net Worth" .........................................................21
1.1.112 "Net Worth Base" ....................................................21
1.1.113 "Non-Arm's Length Person" ...........................................21
1.1.114 "Non BA Lender" .....................................................21
1.1.115 "Non-wholly-owned Subsidiary"........................................21
1.1.116 "Notional Bankers' Acceptances" .....................................21
1.1.117 "Obligations" .......................................................21
1.1.118 "Opcos" .............................................................22
1.1.119 "Overdraft Availment" ...............................................22
1.1.120 "Overdraft Availment Limit" .........................................22
1.1.121 "Overdraft Lender" ..................................................22
1.1.122 "PBGC" ..............................................................22
1.1.123 "Pending Event of Default" ..........................................22
1.1.124 "Pension Plan" ......................................................22
1.1.125 "Permits" ...........................................................23
1.1.126 "Permitted Acquisition" .............................................23
1.1.127 "Permitted Encumbrances" ............................................24
1.1.128 "Permitted Indebtedness" ............................................26
1.1.129 "Permitted Intercorporate Debt" .....................................27
1.1.130 "Permitted Minority Shareholder Loans" ..............................28
1.1.131 "Permitted Non-Conforming Acquisition" ..............................28
1.1.132 "Permitted Payments" ................................................29
1.1.133 "Permitted Subordinated Debt" .......................................31
1.1.134 "Person" or "person" ................................................31
1.1.135 "Plan" ..............................................................31
1.1.136 "Prime Rate" ........................................................31
1.1.137 "Prime Rate Advance" ................................................32
1.1.138 "Process Agent" .....................................................32
1.1.139 "Property" ..........................................................32
1.1.140 "Proportionate Share"................................................32
1.1.141 "Purchase Money Arrangements" .......................................32
1.1.142 "Qualifying Income" .................................................32
1.1.143 "Quarterly Reporting Certificate" ...................................32
1.1.144 "Register"...........................................................32
1.1.145 "Release" ...........................................................33
1.1.146 "Refinanced Intercorporate Debt" ....................................33
1.1.147 "Refinanced Intercorporate Encumbrances" ............................33
1.1.148 "Repurchase Encumbrance" ............................................33
1.1.149 "Restricted Parties" ................................................33
1.1.150 "Restricted Party Supplemental Agreement" ...........................33
1.1.151 "Restricted Party Shareholder Agreements" ...........................33
1.1.152 "Restricted Party Purchase Agreements" ..............................34
1.1.153 "Revolving Credit Sublimits" ........................................34
1.1.154 "Schedule 1 BA Discount Rate" .......................................34
1.1.155 "Schedule 1 BA Lender" ..............................................34
1.1.156 "Schedule 1 BA Reference Lenders"....................................34
1.1.157 "Schedule 1 Reference Lenders" ......................................34
1.1.158 "Schedule 2 BA Discount Rate" .......................................34
1.1.159 "Schedule 2 BA Lender" ..............................................34
1.1.160 "Schedule 2 BA Reference Lenders" ...................................34
1.1.161 "Schedule 2 Reference Lenders" ......................................35
1.1.162 "Scotiabank" ........................................................35
1.1.163 "Security" ..........................................................35
1.1.164 "Senior Debt" .......................................................35
1.1.165 "Senior Debt Ratio" .................................................35
1.1.166 "Shareholder"........................................................35
1.1.167 "Solvent"............................................................35
1.1.168 "Spot Rate" .........................................................35
1.1.169 "Subordinated Shareholder Debt" .....................................35
1.1.170 "Subordinated Shareholder Note" .....................................36
1.1.171 "Subscription Agreement".............................................36
1.1.172 "Subsidiary" ........................................................36
1.1.173 "Successor Agent" ...................................................36
1.1.174 "Swap Lender" .......................................................36
1.1.175 "Targetcom Reimbursement Agreement" .................................36
1.1.176 "Taxes" .............................................................36
1.1.177 "Total Debt" ........................................................36
1.1.178 "Total Debt Ratio"...................................................36
1.1.179 "Total Interest Expense".............................................37
1.1.180 "Unfunded Liability" ................................................37
1.1.181 "Unrestricted Parties"...............................................37
1.1.182 "Unsecured Repurchase Indebtedness"..................................37
1.1.183 "U.S. Alternate Base Rate" ..........................................38
1.1.184 "U.S. Dollars" and "U.S. $" .........................................38
1.1.185 "Warrant Agreement"..................................................38
1.1.186 "Warrants" ..........................................................38
1.1.187 "Welfare Plan" ......................................................38
1.1.188 "Wholly-Owned Subsidiary" ...........................................38
ARTICLE 2 - THE CREDIT
2.1 The Credit ..............................................................38
2.2 Use of the Credit .......................................................39
2.3 Availment Options and Limits ............................................39
2.4 Interest Rates, Bankers' Acceptance Fees and L/C Commissions ............40
2.5 L/C Commissions .........................................................42
2.6 Standby Fee .............................................................42
2.7 Repayment ...............................................................42
2.8 Prepayment ..............................................................43
2.9 Notice under the Income Tax Act (Canada) ................................44
ARTICLE 3 - SECURITY
3.1 Security ................................................................44
3.2 Additional Security, etc.................................................48
3.3 Acknowledgment re Mezz Inter-Creditor Agreement .........................48
3.4 Release of News Canada Inc. Security ....................................48
ARTICLE 4 - DISBURSEMENT CONDITIONS
4.1 Conditions Precedent to the Initial Advance .............................49
4.2 Conditions Precedent to all Advances ....................................52
ARTICLE 5 - ADVANCES
5.1 Prime Rate, Base Rate and LIBOR Advances ................................52
5.2 Evidence of Indebtedness ................................................53
5.3 Co-ordination of Prime Rate, Base Rate and LIBOR Advances ...............54
5.4 Form of L/Cs and Maturity of L/Cs .......................................54
5.5 Payment of L/C Commissions and the Fronting Fee .........................55
5.6 Payment of L/Cs and Participation by Lenders in L/Cs ....................55
5.7 Form of Bankers' Acceptances ............................................57
5.8 Bankers' Acceptances - Schedule 1 BA Reference Lenders ..................57
5.9 Bankers' Acceptances - Schedule 2 BA Reference Lenders ..................58
5.10 Purchase of Bankers' Acceptances .......................................58
5.11 Size and Maturity of Bankers' Acceptances and Rollovers ................59
5.12 Co-ordination of BA Advances ...........................................59
5.13 Payment of Bankers' Acceptances ........................................60
5.14 Payment of BA Equivalent Loan ..........................................60
5.15 Deemed Advance .........................................................61
5.16 Waiver .................................................................61
5.17 Degree of Care .........................................................61
5.18 Indemnity ..............................................................61
5.19 Power of Attorney re Bankers' Acceptances ..............................62
5.20 Obligations Absolute ...................................................62
5.21 Shortfall on Drawdowns, Rollovers, and Conversions .....................62
5.22 Circumstances Making Bankers' Acceptances Unavailable ..................63
5.23 LIBOR Periods ..........................................................63
5.24 Termination of LIBOR Advances ..........................................64
5.25 Overdraft Availments ...................................................64
5.26 Participation by the Lenders in Overdraft Availments ...................65
5.27 Conversions ............................................................66
5.28 Notice of Advances and Payments ........................................66
ARTICLE 6 - REPRESENTATIONS AND WARRANTIES
6.1 Representations and Warranties ..........................................67
6.2 Survival of Representations and Warranties ..............................73
ARTICLE 7 - COVENANTS AND CONDITIONS
7.1 Positive Covenants ......................................................73
7.2 Financial Covenants .....................................................79
7.3 Reporting Requirements ..................................................79
7.4 Negative Covenants.......................................................81
7.5 Restrictions in Mezz Debenture ..........................................89
7.6 Use of Insurance Proceeds ...............................................89
ARTICLE 8 - DEFAULT
8.1 Events of Default .......................................................89
8.2 Acceleration and Termination of Rights...................................92
8.3 Payment of Bankers' Acceptances and L/Cs ................................93
8.4 Remedies ................................................................93
8.5 Saving ..................................................................94
8.6 Perform Obligations .....................................................94
8.7 Third Parties ...........................................................94
8.8 Power of Attorney........................................................94
8.9 Remedies Cumulative .....................................................95
8.10 Set-Off or Compensation ................................................95
ARTICLE 9 - THE AGENT AND THE LENDERS
9.1 Authorization of Agent and Relationship .................................95
9.2 Disclaimer of Agent .....................................................96
9.3 Failure of Lender to Fund ...............................................96
9.4 Payments by the Borrowers ...............................................97
9.5 Payments by Agent .......................................................99
9.6 Apportionment of Standby Fees between Lenders ..........................100
9.7 Direct Receipts and Payments ...........................................100
9.8 Obligations Pari Passu..................................................101
9.9 Administration of the Credit ...........................................101
9.10 Rights of Agent .......................................................105
9.11 Acknowledgments, Representations and Covenants of Lenders .............106
9.12 Authorization of Mezz Inter-Creditor Agreement ........................107
9.13 Collective Action of the Lenders.......................................107
9.14 Successor Agent........................................................107
9.15 Confidentiality........................................................108
9.16 Provisions Operative Between Lenders and Agent Only ...................108
9.17 Payments, etc..........................................................108
9.18 Quebec Security, etc...................................................108
ARTICLE 10 - ADDITIONAL LENDERS, SUCCESSORS AND ASSIGNS
10.1 Successors and Assigns ................................................109
10.2 Assignments............................................................110
10.3 Participations ........................................................111
ARTICLE 11 - MISCELLANEOUS PROVISIONS
11.1 Headings and Table of Contents ........................................111
11.2 Accounting Terms ......................................................112
11.3 Capitalized Terms......................................................112
11.4 Statutory References ..................................................112
11.5 Severability...........................................................112
11.6 Number, Gender and References to Agreements ...........................112
11.7 Amendment, Supplement or Waiver .......................................112
11.8 Governing Law..........................................................113
11.9 This Agreement to Govern ..............................................113
11.10 Permitted Encumbrances ...............................................113
11.11 Consent of Lenders, etc. .............................................114
11.12 Currency .............................................................114
11.13 Expenses and Indemnity ...............................................114
11.14 Manner of Payment and Taxes ..........................................116
11.15 Increased Costs, etc. ................................................118
11.16 Reserve Adjustment for LIBOR Advances by U.S. Lenders ................119
11.17 Replacement of Lenders ...............................................119
11.18 Illegality ...........................................................119
11.19 No Prohibited Financial Assistance ...................................120
11.20 Interest on Miscellaneous Amounts ....................................120
11.21 Currency Indemnity ...................................................120
11.22 Address for Notice ...................................................121
11.23 Sharing of Information................................................121
11.24 Time of the Essence ..................................................121
11.25 Further Assurances ...................................................121
11.26 Waiver of Jury Trial .................................................121
11.27 Forum Selection and Consent to Jurisdiction ..........................122
11.28 Term of Agreement ....................................................123
11.29 Payments on Business Day .............................................123
11.30 Entire Agreement .....................................................123
11.31 Counterparts and Facsimile............................................123
SCHEDULE A - FORM OF ASSIGNMENT AGREEMENT
SCHEDULE B - FORM OF INTERCORPORATE NOTE
SCHEDULE C - FORM OF INTERCORPORATE SECURITY
GENERAL SECURITY AGREEMENT
SCHEDULE D - PERMITTED ENCUMBRANCES
SCHEDULE E - PROPORTIONATE SHARES OF LENDERS
SCHEDULE F - FORM OF QUARTERLY REPORTING CERTIFICATE
SCHEDULE G - RESTRICTED PARTY SHAREHOLDER AGREEMENTS
SCHEDULE H - FORM OF NOTICE OF ADVANCE
SCHEDULE I - OWNED AND LEASED REAL PROPERTY
SCHEDULE J - RESTRICTIONS CREATED BY SHAREHOLDER AGREEMENTS AND
CONSTATING DOCUMENTS
SCHEDULE K - LOANS AND FINANCIAL ASSISTANCE TO
SHAREHOLDERS (AS OF 31/05/01)
SCHEDULE L - OUTSTANDING, PENDING OR THREATENED LITIGATION,
ARBITRATION OR ADMINISTRATIVE PROCEEDINGS
SCHEDULE M - JURISDICTION OF INCORPORATION PROPERTY, PLACES OF
BUSINESS/LOCATION OF REGISTERED OFFICE AND PLACES
FROM WHICH ACCOUNTS RECEIVABLE ARE BILLED
SCHEDULE N - CAPITAL STRUCTURE
SCHEDULE O - PENSION PLANS
SCHEDULE P - DEFERRED PURCHASE PRICE OBLIGATIONS
SCHEDULE Q - ADOPTION AGREEMENT
SCHEDULE R - RESTRICTED PARTY PURCHASE AGREEMENTS
SCHEDULE S - CERTAIN PERMITTED ACQUISITIONS SINCE 31 MARCH 2000
SCHEDULE T - AGREEMENTS, ARRANGEMENTS AND TRANSACTIONS
WITH MDC CORPORATION INC. ET AL
