Private and Confidential LSI Saco Technologies Inc.
Exhibit
10.2
Canadian
Branch
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January
12, 2007
Private
and Confidential
LSI
Saco Technologies Inc.
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- ▇▇▇▇▇▇▇, ▇▇▇▇▇▇
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Attention: President
Dear
Sirs:
Fifth
Third Bank (the "Bank")
is
pleased to offer, subject to the terms and conditions set out in this Agreement,
the credit facility described below (the "Credit
Facility").
1. Standard
Definitions, Terms and Conditions:
Schedule
1
to this
Agreement sets out the standard definitions, terms and conditions ("Standard
Terms and Conditions")
which
apply to this Credit Facility. The Standard Terms and Conditions are
incorporated into and form part of this Agreement unless this Agreement
specifically states that one or more of the Standard Terms and Conditions
do not
apply or are modified.
2. Borrower:
LSI
Saco Technologies Inc. (the "Borrower").
3. Credit
Facility:
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(a)
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Amount
and Type: The
Bank makes a revolving demand facility in a principal amount of
up to
US$7,000,000 or the Canadian Dollar Equivalent amount thereof in
Canadian
Dollars (the "Maximum
Amount")
available to the Borrower by way of (i) US Base Rate Loans (in
US Dollars
only), (ii) Libor Loans (in US Dollars only), (iii) Canadian Prime
Loans
(in Canadian Dollars only), and (iv) FRT Loans (in Canadian Dollars
only).
No more then five (5) separate Libor Loans or FRT Loans may be
outstanding
at any one time.
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(b)
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Purpose:
The purpose of this Credit Facility is to finance the ongoing working
capital requirements of the
Borrower.
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(c)
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Availability:
This
Credit Facility is made available at the sole discretion of the
Bank and
the Bank may cancel or restrict availability of any unutilized
portion of
this Credit Facility at any time and from time to time without
notice or
demand.
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(d)
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Interest:
Advances under this Credit Facility shall bear interest at the
rates and
in respect of the particular types of Advances as set out in the
pricing
grid below. For greater certainty, the pricing set out below is
to be
adjusted quarterly based upon the rolling four quarter calculation
of the
consolidated Total Fund Indebtedness to EBITDA ratio of LSI Industries
Inc. (the “Guarantor”)
as defined and calculated from time to time in accordance with
the credit
agreement dated March 30, 2001 by and among LSI Industries Inc.,
as
borrower, the lenders described therein and PNC Bank, National
Association
as the Administrative Agent and the Syndication Agent (as the same
may be
amended, varied, supplemented, restated, renewed or replaced from
time to
time, (the “US
Credit Agreement”))
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Total
Funded Indebtedness to EBITDA
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Canadian
Prime Rate plus
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US
Base Rate
less
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LIBOR
&/or FTB Fixed Rate
plus
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<
1.00
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0
bps
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50
bps
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100
bps
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>
1.00x<1.50x
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25
bps
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25
bps
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150
bps
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>
1.50x
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50
bps
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0
bps
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175
bps
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(e)
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Repayment:
Notwithstanding compliance with the covenants, representations,
warranties
and all other terms and conditions of this Agreement and all other
Documents, and regardless of the maturities of any outstanding
instruments
or contracts, if any, Advances under this Credit Facility are repayable
on
demand and the Bank may terminate this Credit Facility at any time
and
from time to time, without notice or
demand.
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(f)
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Repayment
of Outstanding Amounts. Upon
demand or termination, the Borrower shall pay to the Bank all Advances
and
all other obligations outstanding under the Credit Facility and
the
Documents.
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(g)
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Bank
Accounts.
The Borrower shall establish (i) a current account with the Bank
for the
conduct of the Borrower’s day to day banking business in Canadian Dollars
(the “Canadian
Account”)
and (ii) a current account with the Bank for the conduct of the
Borrower’s
day to day banking business in US Dollars (the “US
Account”).
If the balance in either of the Canadian Account or the US Account,
as
applicable:
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(i)
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is
a credit, the Bank may apply, at any time in its discretion, the
amount of
such credit or part thereof, rounded as applicable to the nearest
Cdn$1,000
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or
US$1,000, as a repayment of Advances outstanding in the relevant
currency
under the Credit Facility, or
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(ii)
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is
a debit, the Bank may, subject to availability, make available
an Advance
by way of Canadian Prime Loan or US Base Rate Loan, as applicable,
under
the Credit Facility in an amount rounded as applicable to the nearest
Cdn$1,000 or US$1,000, as is required to place the Canadian Account
or the
US Account at not less than a zero balance. For the greater certainty
for
purposes of this Section 3(g), only Canadian Dollars may be credited
or
debited to the Canadian Account and only US Dollars may be credited
or
debited to the US Account.
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4. Advance:
Each use
of the Credit Facility is an "Advance" and all such usages outstanding at
any
time are "Advances".
The
Standard Terms and Conditions contain notice provisions and other relevant
conditions applicable to all Advances that must be complied with by the
Borrower.
5. Ancillary
Documents:
The
liability, indebtedness and obligations of the Borrower under the Credit
Facility and this Agreement shall be evidenced, governed and secured, as
applicable and without limitation, by the following documents:
(a) an
unlimited guarantee of the indebtedness of the Borrower to the Bank, executed
by
LSI Industries Inc.; and
(b) a
promissory note executed by the Borrower.
6. Conditions
Precedent:
In
addition to the conditions specified in the Standard Terms and Conditions
attached hereto as Schedule 1 and without limiting the discretion of the
Bank
pursuant to Section 3 hereof, the obligation of the Bank to make available
any
Advance (including the initial Advance) is subject to and conditional upon
each
of the conditions set out in Schedule 6 being satisfied on the applicable
Drawdown Date.
7. Representations
and Warranties:
In
addition to the representations and warranties specified in the Standard
Terms
and Conditions attached hereto as Schedule 1, the Borrower and the Guarantor,
as
applicable, makes the representations and warranties set out in
Schedule
7. All
representations and warranties shall be deemed to be continued repeated so
long
as any Advance remains outstanding and unpaid under or in connection with
this
Agreement or the Documents or so long as any commitment under this Agreement
remains in effect.
8. Reporting
Covenants:
Each of
the Borrower and the Guarantor covenants and agrees with the Bank, so long
as
any Advance remains outstanding under or in connection with this Agreement
or
the Documents or so long as any commitment under this Agreement remains in
effect, to provide, as applicable, the Bank with:
(a) quarterly
Compliance Certificate, substantially in the form of Schedule 8(a), within
45 days of each fiscal quarter end, certifying compliance with this Agreement
and the US Credit Agreement;
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(b) quarterly
unaudited financial statements for the Borrower within 45 days of the end
of the
each fiscal quarter for the Borrower;
(c) annual
complied financial statements for the Borrower, within 90 days of each fiscal
year end of the Borrower;
(d) quarterly
unaudited financial statements for the Guarantor within 45 days of the end
of
each fiscal quarter for the Guarantor;
(e) annual
audited financial statements for the Guarantor within 90 days of the fiscal
year
end of Guarantor; and
(f) such
other financial and operating statements and reports as and when the Bank
may
reasonably require from time to time.
9. General
Covenants:
In
addition to the standard covenants set out in the Standard Terms and Conditions,
the Borrower and each Guarantor, as applicable, covenants and agrees with
the
Bank, so long as any Advance remains outstanding under or in connection with
this Agreement or the Documents or so long as any commitment under this
Agreement remains in effect, that the Borrower and each Guarantor, as
applicable, will comply
with the covenants set out in Schedule
9.
10.
Financial
Covenants:
The
Borrower covenants and agrees with the Bank, so long as any Advance
remains
outstanding under or in connection with this Agreement or the Documents
or so
long as any commitment under this Agreement remains in effect
to
maintain the financial covenants specified in Schedule 10.
11. Events
of Default:
Without
limiting the right of the Bank to demand payment of the Credit Facility at
any
time and from time to time notwithstanding the compliance or non-compliance
by
the Borrower with any or all of the terms and conditions of the Documents,
upon
the occurrence of any of the Events of Default set out in the Standard Terms
and
Conditions or any of the events listed in Schedule 11, the Bank may accelerate
the payment of principal and interest under any committed term credit facility
hereunder, if any, and cancel any undrawn portion of any committed credit
facility hereunder, if any. For greater certainty, upon the occurrence of
an
Event of Default, the ability of the Borrower to obtain further Advances
under
any credit facility which is a term facility under this Agreement shall
immediately terminate and the Bank may, by written notice to the Borrower,
declare the Advances outstanding under any such credit facility to be
immediately due and payable. Upon receipt of such written notice, the Borrower
shall immediately pay to the Bank all Advances outstanding under any credit
facility which is a term facility under this Agreement and all other obligations
of the Borrower to the Bank in connection with any such credit facility under
this Agreement including, without limitation, an amount equal to the aggregate
of face amount of all Discount Notes, LCs and LGs which are unmatured or
unexpired, which amount shall be held by the Bank as security for the Borrower's
obligations to the Bank in respect of such instruments or contracts. The
Bank
may enforce its rights to realize upon its security and retain an amount
sufficient to secure the Bank for the Borrower's obligations to the Bank
in
respect of such contracts or instruments. Whether
or not any Default or Event of Default shall occur and be continuing, this
shall
in no way limit any right of the Bank under this Agreement to terminate or
demand payment of, or cancel or restrict the availability of any unutilized
portion of, any demand or other discretionary credit
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facility
made available under this Agreement. The Borrower and the Guarantor acknowledge
and agree that the Credit Facility provided to the Borrower hereunder is
a
demand credit facility and that the Bank may demand repayment at any time
notwithstanding the Borrower’s compliance or not with the provisions of this
Agreement and the Documents.
12. Acceptance:
This
offer is open for acceptance until the 15th day of January, 2007, after which
date it will be null and void, unless extended in writing by the
Bank.
Please
confirm your acceptance of this Agreement by signing the attached copy of
this
Agreement in the space provided below and returning it to the
undersigned.
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Yours
truly,
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Attention: Vice
President
Fax: ▇▇▇-▇▇▇-▇▇▇▇
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FIFTH
THIRD BANK
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By:_/s/▇▇▇▇▇▇▇ Pepper_____________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
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By:_/s/▇▇▇▇▇▇▇▇
Hynes______________
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Title: Vice President & Principal Officer
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The
undersigned acknowledges, accepts and agrees to the foregoing terms and
conditions set out in this Agreement, as Borrower, as of the 12th day of
January, 2007.
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Attention: President
Fax:
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LSI
SACO TECHNOLOGIES INC.
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By:_/s/▇▇▇▇▇▇
▇. Stowell__________
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Secretary and
Treasurer
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By:_/s/▇▇▇▇▇
▇. Ready_____________
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Name: ▇▇▇▇▇ ▇. Ready
Title: Vice
President
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I/We
have authority to bind the
corporation.
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The
undersigned acknowledges, accepts and confirms its agreement with the foregoing
terms and conditions set out in this Agreement, as Guarantor, as of the 12th
day
of January, 2007.
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By:
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/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title:
Vice President, Chief Executive Officer
and Treasurer
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By:
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/s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title:
Secretary
I/We
have authority to bind the
corporation
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Schedules
and Exhibits forming part of this Agreement:
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Schedule
1
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Standard
Definitions, Terms and Conditions
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Schedule
1 - Exhibit 1
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Notice
of Advance
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Schedule
1 - Exhibit 2
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Notice
of Conversion and Rollover
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Schedule
6
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Specific
Conditions Precedent
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Schedule
7
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Specific
Representations and Warranties
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Schedule
8(a)
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Compliance
Certificate
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Schedule
9
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Specific
Covenants
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Schedule
10
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Specific
Financial Covenants
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Schedule
11
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Specific
Events of Default
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SCHEDULE
1
STANDARD
DEFINITIONS, TERMS AND CONDITIONS
1. Definitions:
For the
purpose of this Agreement, the terms defined below shall have the indicated
meanings unless the context expressly or by necessary implication requires
otherwise:
"Agreement"
means
this letter loan agreement, including all attached Schedules and Exhibits
thereto and hereto, as the same may be amended, varied, supplemented, restated,
renewed or replaced at any time and from time to time;
"Applicable
Law"
means,
at any time, in respect of any Person, property, transaction or event, all
laws,
statutes, regulations, treaties, judgments and decrees applicable to that
Person, property, transaction or event (whether or not having the force of
law
with respect to regulatory matters applicable to the Bank) and all applicable
requirements, requests, official directives, consents, approvals,
authorizations, guidelines, decisions, rules, orders and policies of any
Governmental Authority having or purporting to have authority over such Person,
property, transaction or event;
"Basis
Point" and
"bp"
each
means one one-hundredth of one percent (.01%);
"Branch
of Account"
means
the branch of the Bank at which the Borrower's accounts are maintained. As
at
the date of this Agreement, the "Branch
of Account"
is the
Bank's branch at ▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇;
"Business
Day"
means a
day on which chartered banks are open for over-the-counter business in Toronto,
Ontario and Cincinnati, Ohio and excludes (a) Saturday, Sunday and any
other day which is a statutory holiday in Toronto, Ontario or Cincinnati,
Ohio,
and (b) in respect of Libor Loans, any other day on which transactions
cannot be carried out by and between banks in the London Interbank
Market;
"Canadian
Dollars"
and the
symbols "$"
and
"C$"
each
means lawful money of Canada;
"Canadian
Dollar Equivalent"
means
at any time on any date in relation to any amount in a currency other than
Canadian Dollars, the amount of Canadian Dollars required for the Borrower
to
purchase that amount of such other currency at the rate of exchange quoted
by
the Bank at or about 12:00 p.m. (noon) Toronto, Ontario time on such date,
including all premiums and costs of exchange;
"Canadian
Overdraft"
means
subject to the terms hereof, any draw by the Borrower by way of overdraft
on any
of its Canadian Dollar current accounts maintained with or through the Bank;
"Canadian
Prime Loans"
means
Canadian Prime Rate based loans, which for greater certainty includes loans
made
by way of Canadian Overdraft;
"Canadian
Prime Rate"
means,
in connection with Canadian Prime Loans, on any day, the greater of: (a)
the
variable annual rate of interest established and adjusted by Royal Bank of
Canada from time to time as being Royal Bank of Canada's reference rate then
in
effect for determining interest rates on Canadian Dollar denominated commercial
loans made by Royal
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Bank
of
Canada in Canada; and (b) the CDOR Rate in effect from time to time, plus
100
bps per annum. Any change in the Canadian Prime Rate shall be effective on
the
date the change becomes effective generally without the necessity for any
notice
to the Borrower;
"CDOR
Rate" means,
on
any day, the annual rate of interest which is the arithmetic average of the
"BA
1 month" rates applicable to Canadian Dollar banker's acceptances identified
as
such on the Reuters Screen CDOR Page at approximately 10:00 a.m. on such
day (as
adjusted by the Bank after 10:00 a.m. to reflect any error in any posted
rate or
in the posted average annual rate) or if such date is not a Business Day
then on
the immediately preceding Business Day. If the rate does not appear on the
Reuters Screen CDOR Page as contemplated above, then the CDOR Rate shall
be the
rate per annum quoted from time to time by the Bank as being its reference
rate
then in effect for determining fees on Canadian Dollar denominated bills
of
exchange accepted by the Bank;
"Contaminant"
includes, without limitation, any pollutant, dangerous substance, liquid
waste,
industrial waste, hazardous material, hazardous substance or contaminant
including any of the foregoing as defined in any Environmental Law;
"Contract
Period"
means
the period selected by the Borrower in accordance with the Standard Terms
and
Conditions commencing on the Drawdown Date, Issuance Date, Rollover Date
or
Conversion Date, as applicable, and expiring on a Business Day, in respect
of an
Advance during which the interest rate with respect to any Advance is
established in accordance with and subject to Section 4
of this
Schedule with respect to Libor Loans or Section 5 of this Schedule with respect
to FRT Loans;
"Conversion"
means
the conversion of an outstanding Advance, or a portion of an outstanding
Advance, into an alternate type of Advance in accordance with this Agreement;
"Conversion
Date"
means
the Business Day that the Borrower elects as the date on which a Conversion
is
to occur;
"Drawdown
Date"
means
any Business Day on which an Advance is made or is deemed to be
made;
"Default"
means
an event, circumstance or omission which is an Event of Default or which,
with
any or all of the giving of notice, lapse of time, or a failure to remedy
the
event, circumstance or omission within a period of time, would be an Event
of
Default;
"Documents"
means
this Agreement and all certificates, instruments, agreements and other documents
delivered, or to be delivered to the Bank under or in connection with this
Agreement and, when used in relation to any Person, "Documents"
means
the Documents executed and delivered by such Person;
"Environmental
Activity"
means
any activity, event or circumstance in respect of a Contaminant, including,
without limitation, its storage, use, holding, collection, purchase,
accumulation, assessment, generation, manufacture, construction, processing,
treatment, stabilization, disposition, handling or transportation, or its
Release into the natural environment, including movement through or in the
air,
soil, surface water or groundwater;
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"Environmental
Laws"
means
all Applicable Laws relating to the environment or occupational health and
safety, or any Environmental Activity;
"Excluded
Taxes" means,
in
relation to the Bank, any Taxes imposed on the net income or capital of the
Bank
by any Governmental Authority as a result of the Bank (a) carrying on a trade
or
business or having a permanent establishment in any jurisdiction or political
subdivision thereof, (b) being organized under the laws of such jurisdiction
or
any political subdivision thereof, or (c) being or being deemed to be resident
in such jurisdiction or political subdivision thereof;
"FRT
Loans"
means
FTB Fixed Rate term loans;
"FTB
Fixed Rate"
means,
with respect to each Contract Period applicable to an FRT Loan, the annual
fixed
rate of interest offered by the Bank and accepted by the Borrower for the
requested funds for a period of 30 days or such other period of time as the
Borrower and the Bank agree to in the circumstances (but maturing not later
than
the final date for payment of the subject FRT Loan(s), in any event);
"GAAP"
means
generally accepted accounting principles in effect from time to time in the
United States of America, applicable to the relevant Person, applied in a
consistent manner from period to period;
"Governmental
Approvals"
means,
with respect to any Person, all licenses, permits, consents, authorizations
and
approvals from any and all Governmental Authorities required for the conduct
of
that Person's business as presently conducted;
"Governmental
Authority"
means
any domestic or foreign governmental, legislative, or regulatory authority,
agency, commission, board or court, tribunal or other law, regulation or
rule
making entity having or purporting to have jurisdiction on behalf of any
nation,
province, state, territory, region, municipality or city;
"Guarantor(s)"
means
the Person or Persons who have or are to execute a guarantee or guarantees
of
the Obligations of the Borrower under or in connection with this Agreement
and
the Documents;
"Libor"
means,
with respect to each Contract Period applicable to a Libor Loan, the annual
rate
of interest (rounded upwards, if necessary, to the nearest whole multiple
of one
sixteenth of one percent (1/16th%), at which the Bank, in accordance with
its
normal practice, would be prepared to offer deposits of US Dollars to leading
banks in the London Interbank Market for delivery on the first day of each
such
Contract Period, for a period equal to each such Contract Period, such deposits
being in comparable amounts to be outstanding during such Contract Period,
at or
about 11:00 a.m. (London, England time) two Business Days prior to the relevant
Drawdown Date or Rollover Date;
"Libor
Interest Date"
means,
with respect to any Libor Loan, the last day of each Contract Period applicable
to the Libor Loan and, if the applicable Contract Period is longer than
3 months, the date falling every 3 months after the beginning of the
Contract Period and the last day of the Contract Period;
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"Libor
Loans"
means
Libor based loans in US Dollars;
"Lien"
means
any mortgage, charge, lien, hypothec or encumbrance, whether fixed or floating
on, or any security interest in, any property, whether real, personal or
mixed,
tangible or intangible, any pledge or hypothecation of any property, any
deposit
arrangement, priority, conditional sale agreement, other title retention
agreement or equipment trust, capital lease or other security arrangement
of any
kind;
"Obligations"
means
all loans, advances, debts, liabilities and obligations for the performance
of
covenants, tasks or duties or for the payment of monetary amounts (whether
or
not performance is then required or contingent, or whether or not those amounts
are liquidated or determinable) owing by the Borrower and/or any Guarantor
to
the Bank under any or all of the Documents and all covenants and duties
regarding those amounts, of any kind or nature, present or future, whether
or
not evidenced by any agreement or other instrument, owing under any or all
of
the Documents including all obligations owed by the Borrower to the Bank
under
the Credit Facilities;
"Overdraft"
means
Canadian Overdraft or US Overdraft, as applicable;
"Person"
includes an individual, a partnership, a joint venture, a trust, an
unincorporated organization, a company, a corporation, an association, a
government or any department or agency thereof, and any other incorporated
or
unincorporated entity of whatsoever nature or kind;
"Priority
Claims"
means
all amounts owing or required to be paid, where the failure to pay any such
amount could give rise to a claim pursuant to any Applicable Law or otherwise,
which ranks or is capable of ranking in priority to the Bank's Lien or otherwise
in priority to any claim by the Bank for repayment of any amounts owing under
or
in connection with this Agreement or the Documents;
"Release"
includes discharge, spray, inject, inoculate, abandon, deposit, spill, leak,
seep, pour, emit, empty, throw, dump, place and exhaust, and when used as
a noun
has a similar meaning;
"Rollover"
means
the rollover of an Advance by way of Libor Loan or FRT Loan for an additional
Contract Period under Section 4
or
Section 0
of this
Schedule, as applicable;
"Rollover
Date"
means
the Business Day on which a Rollover occurs;
"Subsidiary"
of a
Person means (a) any corporation of which the Person and/or any one of its
affiliates holds, directly or indirectly, other than by way of security only,
securities to which are attached more than 50% of the votes that may be cast
to
elect directors of such corporation, (b) any corporation of which the
Person and/or any one of its affiliates has, through operation of law or
otherwise, the ability to elect or cause the election of a majority of the
directors of such corporation, (c) any partnership, limited liability company,
unlimited liability company or joint venture in which such Person and/or
one or
more of its affiliates has, directly or indirectly, more than 50% of the
votes
that may be cast to elect the governing body of such entity or otherwise
control
its activity, and (d) any partnership, limited liability company, unlimited
liability company or joint venture in which such Person and/or one or more
of
its affiliates has, through
-5-
operation
of law or otherwise, the ability to elect or cause the election of a majority
of
the members of the governing body of such entity or otherwise control its
activity;
"Tax" and "Taxes"
include, at any time, all taxes, surtaxes, duties, levies, imposts, rates,
fees,
assessments, withholdings, dues and other charges of any nature imposed by
any
Governmental Authority (including income, capital (including large
corporations), withholding, consumption, sales, use, transfer, goods and
services or other value-added, excise, customs, anti-dumping, countervail,
net
worth, stamp, registration, franchise, payroll, employment, health, education,
business, school, property, local improvement, development, education
development and occupation taxes, surtaxes, duties, levies, imposts, rates,
fees, assessments, withholdings, dues and charges) together with all fines,
interest, penalties on or in respect of, or in lieu of or for non-collection
of,
those taxes, surtaxes, duties, levies, imposts, rates, fees, assessments,
withholdings, dues and other charges;
"US
Base Rate"
means
the variable annual rate of interest established and adjusted by the Bank
from
time to time as being its reference rate then in effect for determining interest
rates on US Dollar denominated commercial loans made by it in Canada. Any
change
in the US Base Rate shall be effective on the date the change becomes effective
generally without the necessity for any notice to the Borrower;
"US
Base Rate Loans"
means
US Base Rate based loans in US Dollars, which for greater certainty includes
loans made by way of US Overdraft;
"US
Dollar Equivalent"
means
at any time on any date in relation to any amount in a currency other than
US
Dollars, the amount of US Dollars required for the Borrower to purchase that
amount of such other currency at the rate of exchange quoted by the Bank
at or
about 12:00 p.m. (noon) Toronto, Ontario time on such date, including all
premiums and costs of exchange;
"US
Dollars"
and the
symbol "US$"
each
means lawful money of the United States of America; and
“US
Overdraft”
means
subject to the terms hereof, any draw by the Borrower by way of overdraft
on any
of its US Dollar current accounts maintained with or through the
Bank.
2. Representations
and Warranties:
If a
corporation, the Borrower and each Guarantor, as applicable, represents and
warrants, on each Drawdown Date, Rollover Date and Conversion Date,
that:
|
(a)
|
Corporate
Status.
It
(i) is a duly organized and validly existing corporation in good
standing
under the laws of the jurisdiction of its incorporation, (ii) has
the
power and authority to own its property and assets and to transact
the
business in which it is engaged and presently proposes to engage,
and
(iii) is duly qualified as a foreign corporation or an extra-provincial
corporation and is in good standing in each jurisdiction where
the
ownership, leasing or operation of its property or the conduct
of its
business requires such qualification except where the failure to
be
qualified would not materially affect its
business.
|
|
(b)
|
Power
and Authority.
It
has the corporate power to execute, deliver and perform the terms
and
provisions of each of the Documents to which it is a party and
has taken
all
|
-6-
|
necessary
action to authorize the execution, delivery and performance by
it of each
of such Documents. It has duly executed and delivered each of
the
Documents to which it is a party, and each such Document constitutes
its
legal, valid and binding obligation enforceable against it in
accordance
with its terms, subject to (i) applicable bankruptcy, reorganization,
moratorium or similar laws affecting creditors' generally, (ii)
the fact
that specific performance and injunctive relief may only be given
at the
discretion of the courts, and (iii) the equitable or statutory
powers of
the courts to stay proceedings before them and to stay the execution
of
judgments.
|
|
(c)
|
No
Violation.
Neither the execution, delivery or performance by it of the Documents
to
which it is a party, nor compliance by it with the terms and provisions
thereof, (i) will contravene any Applicable Law, (ii) will conflict
with
or result in any breach of any of the terms, covenants, conditions
or
provisions of, or constitute a default under, or result in the
creation or
imposition of (or the obligation to create or impose) any Lien
upon any of
its property or assets pursuant to the terms of any indenture,
mortgage,
deed of trust, credit agreement, loan agreement or any other agreement,
contract or instrument to which it is a party or by which it or
any of its
property or assets is bound or to which it may be subject, or (iii)
will
violate any provision of its constating
documents.
|
|
(d)
|
Governmental
Approvals.
Except as otherwise advised by the Borrower to the Bank in writing,
no
order, consent, certificate, approval, permit, license, authorization
or
validation of, or filing, recording or registration with or exemption
by
(except as have been obtained or made prior to the date hereof
or exist
and are in full force and effect) any Person (including any Governmental
Authority), is required to authorize, or is required in connection
with
(i) the execution, delivery and performance by it of any Document
to which
it is a party, or (ii) the legality, validity, binding effect or
enforceability with respect to it of any such
Document.
|
|
(e)
|
True
and Complete Disclosure.
All factual information heretofore or contemporaneously furnished
by or on
behalf of it in writing to the Bank (including all information
contained
in the Documents) for purposes of or in connection with this Agreement
or
any transaction contemplated herein, is true and accurate in all
material
respects on the date as of which such information is dated or certified
and is not incomplete by omitting to state any fact necessary to
make such
information (taken as a whole) not misleading at such time in light
of the
circumstances under which such information was
provided.
|
|
(f)
|
Compliance
with Applicable Laws, etc.
It
(i) has obtained and is in compliance with all material Governmental
Approvals which are necessary for the conduct of its business as
presently
conducted and the use of its property and assets (both real and
personal),
each of which is in full force and effect, is a good, valid and
subsisting
approval which has not been surrendered, forfeited or become void
or
voidable and is unamended, and (ii) is in compliance with all Applicable
Laws in all material respects, including Environmental Laws in
all
material respects.
|
|
(g)
|
Representations
and Warranties in Other Documents.
All representations and warranties made by it in the Documents
other than
this Agreement are true and correct
in
|
-7-
all
material respects as of the time as of which such representations and warranties
were made.
3. Notice
of Borrowing:
All
Advances, other than Advances by way of Overdraft, require the delivery of
prior
notice. To request an Advance, the Borrower shall give to the Bank written
notice substantially in the form attached as Exhibit 1 to this Schedule,
indicating the amount of the requested Advance, at or before the time set
out
below opposite the type of Advance that the Borrower wishes to
request:
|
Type
of Advance
|
Time
of Notice
|
|
|
Canadian
Prime Loans and US Base Rate Loans less than $10 million
|
Before
11:00 a.m. one Business Day prior to the requested date of the
Advance.
|
|
|
Libor
Loans
|
Before
11:00 a.m. three Business Days prior to the requested date of the
Advance.
|
|
|
FRT
Loans
|
Before
11:00 a.m. five Business Days prior to the requested date of the
Advance
|
Each
notice given in respect of an Advance by way of Canadian Prime Loan, US Base
Rate Loan, Libor Loan and FRT Loan shall indicate the amount of the required
Advance and the date funds are required.
4. Libor
Loan Conditions:
The
following terms and conditions apply to Libor Loans:
|
(a)
|
Minimum
Advance.
Each Advance by way of Libor Loan shall be in a minimum aggregate
amount
of US$500,000 and larger whole multiples of US
$100,000.
|
|
(b)
|
Term.
Each Libor Loan shall have a Contract Period of one month (each
month
being a period of 30 days for purposes of this Section) or such
longer
period of time in whole months as the Borrower may request and
the Bank in
its sole discretion may agree, subject to availability. No Contract
Period
shall extend beyond the maturity date of the relevant Credit
Facility.
|
|
(c)
|
Rollover
of Libor Loans.
At
least three Business Days before the expiry of the Contract Period
of each
Libor Loan, the Borrower shall notify the Bank by irrevocable telephone
notice, followed by written confirmation on the same day in form
and
substance substantially in accordance with Exhibit 2, if it intends
to
enter into a new Contract Period with respect to the maturing Libor
Loan,
or repay the maturing Libor Loan. If the Borrower fails to provide
the
foregoing notice or make the required payment, then payment of
its
obligations to the Bank with respect to that maturing Libor Loan
shall be
funded with an Advance under a US Base Rate Loan in the amount
outstanding
under that Libor Loan.
|
-8-
|
(d)
|
Indemnity.
The Borrower shall indemnify and hold the Bank harmless against
any loss,
cost or expense (including without limitation, any loss incurred
by the
Bank in liquidating or redeploying deposits acquired to fund or
maintain
any Libor Loan) incurred by the Bank as a result of repayments,
prepayments, Conversions, Rollovers or cancellations of a Libor
Loan other
than on the last day of the Contract Period applicable to such
Libor Loan,
or failure to draw down a Libor Loan on the first day of the Contract
Period selected by the Borrower.
|
|
(e)
|
Substitute
Basis of Advance.
If, at any time during the term of this Agreement, the Bank acting
in good
faith determines (which determination is final, conclusive and
binding
upon the Borrower) that:
|
|
(i)
|
adequate
and fair means do not exist for ascertaining the rate of interest
on a
Libor Loan,
|
|
(ii)
|
the
making or the continuance of a Libor Loan has become impracticable
by
reason of circumstances which materially and adversely affect the
London
Interbank Market,
|
|
(iii)
|
deposits
in US Dollars are not available to the Bank in the London Interbank
Market
in sufficient amounts in the ordinary course of business for the
applicable Contract Period to make or maintain a Libor Loan during
such
Contract Period, or
|
|
(iv)
|
the
cost to the Bank of making or maintaining a Libor Loan does not
accurately
reflect the effective cost to the Bank thereof or the costs to
the Bank
are increased or the income receivable by the Bank is reduced in
respect
of a Libor Loan,
|
then
the
Bank shall promptly notify the Borrower of such determination and the Borrower
hereby instructs the Bank to repay the affected Libor Loan with the proceeds
of
a US Base Rate Loan in the amount of the Libor Loan to be drawn down on the
last
day of the then current Contract Period. The Bank shall not be required to
make
any further Libor Loans available under this Agreement so long as any of
the
circumstances referred to in this clause continue.
5. FRT
Loan Conditions:
The
following terms and conditions apply to FRT Loans:
|
(a)
|
Amount.
Each FRT Loan shall be in a minimum aggregate amount Cdn$500,000
and
larger whole multiples of Cdn$100,000.
|
|
(b)
|
Term.
Each FRT Loan shall be for a term of 30 days or such other period
of time
as may be agreed to by the Bank at its sole discretion and the
Borrower in
the circumstances, provided that the maturity date of any FRT Loan
issued
under any relevant term Credit Facility shall not extend beyond
the
maturity date of the relevant term Credit
Facility.
|
|
(c)
|
Repayment.
FRT Loans may not be repaid, prepaid, converted or rolled over
prior to
their maturity.
|
|
(d)
|
Rollover
of FRT Loans.
At
least seven (7) Business Days before the expiry of the Contract
Period of
each FRT Loan, the Borrower shall notify the Bank by
irrevocable
|
-9-
|
telephone
notice, followed by written confirmation on the same day in form
and
substance substantially in accordance with Exhibit 2, if it intends
to
enter into a new Contract Period with respect to the maturing
FRT Loan, or
repay the maturing FRT Loan. If the Borrower fails to provide
the
foregoing notice or make the required payment, then payment of
its
obligations to the Bank with respect to that maturing FRT Loan
shall be
funded with an Advance under a Canadian Prime Loan in the amount
outstanding under that FRT
Loan.
|
|
(e)
|
Indemnity.
The Borrower shall indemnify and hold the Bank harmless against
any loss,
cost or expense (including without limitation, any loss incurred
by the
Bank in liquidating or redeploying deposits acquired to fund or
maintain
any FRT Loan) incurred by the Bank as a result of repayments, prepayments,
Conversions, Rollovers or cancellations of a FRT Loan other than
on the
last day of the Contract Period applicable to such FRT Loan, or
failure to
draw down a FRT Loan on the first day of the Contract Period selected
by
the Borrower.
|
6. Conversion
Option and Conditions:
Subject
to this Agreement, the Borrower may, during the term of this Agreement,
effective on any Business Day, convert, in whole or in part, an outstanding
Advance into another type of Advance permitted under the relevant Credit
Facility upon giving written notice to the Bank in substantially the form
attached hereto as Exhibit 2, the notice period being that which would be
applicable to the type of Advance into which the outstanding Advance is to
be
converted under Section 3 of the Standard Terms and Conditions. Conversions
under this Agreement may only be made provided that:
|
(a)
|
Currency.
Notwithstanding any other term in this Agreement, no Advance denominated
in C$ may be converted into an Advance denominated in US$ and no
Advance
denominated in US$ may be converted into an Advance denominated
in
C$.
|
|
(b)
|
Amounts.
Each conversion into an Advance shall be for minimum aggregate
amounts and
whole multiples in excess thereof as are specified in respect of
that type
of Advance pursuant to this
Agreement.
|
|
(c)
|
Libor
Loans.
An
Advance by way of Libor Loan may be converted only on the last
day of the
relevant Contract Period; if less than all of the Libor Loan is
converted,
after the conversion not less than US$100,000 shall remain as a
Libor
Loan.
|
|
(d)
|
Other
Conditions.
A
conversion into an Advance by way of Libor Loan shall only be made
to the
extent that the conditions outlined in Section 4 of the Standard
Terms and
Conditions shall not exist on the relevant Conversion
Date.
|
|
(e)
|
No
Demands.
No
demand shall have been made and no Default or Event of Default
shall have
occurred and be continuing on the relevant Conversion Date or after
giving
effect to the conversion of the Advance to be made on the Conversion
Date.
|
|
(f)
|
No
Repayment.
No
Conversion or Rollover shall constitute a repayment of any Advance
or a
new Advance.
|
|
(g)
|
Default.
Subject to the ability of the Bank to accelerate payment obligations
in
respect of a term Credit Facility upon the occurrence of an Event
of
Default, if a Default or Event of
|
-10
-
| Default has occurred and is continuing on the last day of a Contract Period, as regards a Libor Loan, in respect of an Advance by way of a Libor Loan, the Borrower shall be deemed to have converted the Advance into a US Base Rate Loan as of the last day of the applicable Contract Period. |
7. Calculation
and Payment of Interest And Fees:
|
(a)
|
Canadian
Prime Loans.
The Borrower shall pay to the Bank interest on each Canadian Prime
Loan,
monthly in arrears at the rates set out in this Agreement, on the
last
Business Day of each month. Such interest will be calculated monthly
and
will accrue daily on the basis of the actual number of days elapsed
and a
year of 365 or 366 days, as
applicable.
|
|
(b)
|
US
Base Rate Loans.
The Borrower shall pay to the Bank interest on each US Base Rate
Loan,
monthly in arrears at the rates set out in this Agreement, on the
last
Business Day of each month. Such interest will be calculated monthly
and
will accrue daily on the basis of the actual number of days elapsed
and a
year of 365 or 366 days, as applicable.
|
|
(c)
|
Libor
Loans. The
Borrower shall pay to the Bank interest on Libor Loans outstanding
to the
Bank at the rates set out in this Agreement.
Interest on each Libor Loan shall be payable on each Libor Interest
Date
applicable to the Libor Loan, for the period commencing from and
including
the first day of the Contract Period or the immediately preceding
Libor
Interest Date, as the case may be, applicable to the Libor Loan,
to but
excluding the first mentioned Libor Interest Date, and shall be
calculated
daily on the principal amount of each Libor Loan remaining unpaid
on the
basis of the actual number of days elapsed in a year of 360 days.
|
|
(d)
|
FRT
Loans.
The Borrower shall pay to the Bank interest on each FRT Loan monthly
in
arrears at the applicable interest rate set out in the Agreement
on the
last Business Day of each month or such other date as may be agreed
upon
between the Bank and the Borrower. Such interest will be calculated
monthly and will accrue daily on the basis of the actual number
of days
elapsed and a year of 365 or 366 days, as applicable.
|
|
(e)
|
Limits
on Interest.
The Borrower shall not be obligated to pay any interest, fees or
costs
under or in connection with this Agreement or the Documents in
excess of
what is permitted by Applicable Law. For purposes of the
Interest Act
(Canada), the annual rates of interest or fees to which the rates
calculated in accordance with this Agreement are equivalent, are
the rates
so calculated multiplied by the actual number of days in the calendar
year
in which such calculation is made and divided by 365 or 366, as
applicable.
|
8. Fees,
Payment and Rights:
|
(a)
|
Additional
Fees.
In
addition to the fees previously described in other provisions of
this
Agreement, the Borrower shall, at the discretion of the Bank, pay
to the
Bank a fee of $25.00 for each cheque of the Borrower which is honoured
by
the Bank, in its discretion, in excess of the authorized amount
of any
Credit Facility.
|
|
(b)
|
Consideration.
The fees collected by the Bank shall be its property as consideration
for
the time, effort and expense incurred by it in the review and
administration of documents and financial statements, and the Borrower
acknowledges and agrees that the
|
-11-
| determination of these costs is not feasible and that the fees set out in the Agreement represent a reasonable estimate of such costs. |
|
(c)
|
Discretionary
Advance.
Notwithstanding anything to the contrary contained in the Agreement,
the
Bank may, in its discretion, make an Advance under any applicable
Credit
Facility to pay any unpaid interest or fees which have become due
under
the terms of the Agreement.
|
|
(d)
|
Evidence
of Obligations.
The Borrower and each Guarantor acknowledges that the actual recording
of
the amount of any Advance or repayment thereof under the Credit
Facilities, and interest, fees and other amounts due in connection
with
the Credit Facilities, in an account of the Borrower maintained
by the
Bank shall constitute prima facie evidence of the Borrower's indebtedness,
liability and Obligations from time to time under and in connection
with
the Agreement and the Documents; provided that the obligation of
the
Borrower to pay or repay any indebtedness and liability in accordance
with
the terms and conditions of the Agreement shall not be affected
by the
failure of the Bank to make such recording. The Borrower also acknowledges
being indebted to the Bank for principal amounts shown as outstanding
from
time to time in the Bank's account records, and all accrued and
unpaid
interest in respect of such amounts, in accordance with the terms
and
conditions of this Agreement.
|
|
(e)
|
Absolute
Obligations.
The obligation of the Borrower and each Guarantor, as applicable,
to make
all payments under and in connection with the Agreement and the
Documents
shall be absolute and unconditional and shall not be limited or
affected
by any circumstance, including, without limitation: (i) any set-off,
compensation, counterclaim, recoupment, defence or other right
which the
Borrower or any Guarantor, as applicable, may have against the
Bank or any
other Persons for any reason whatsoever; or (ii) any insolvency,
bankruptcy, reorganization or similar proceedings by or against
the
Borrower or any Guarantor, as
applicable.
|
|
(f)
|
Set-Off.
In
addition to and not in limitation of any rights now or hereafter
available
to the Bank whether pursuant to Applicable Law or arising in the
Documents, the Bank is authorized, at any time and from time to
time, upon
delivery of written notice to the Borrower to set-off and appropriate
and
to apply any and all deposits (general and special) and any other
indebtedness at any time held by or owing by the Bank to or for
the credit
of the Borrower against and on account of the obligations and liabilities
of the Borrower to the Bank under or in connection with this Agreement
or
the Documents. The Bank agrees to provide written notice of the
exercise
of any of the rights under this section immediately after the exercise
of
such rights.
|
|
(g)
|
Cumulative
Rights.
The remedies, rights and powers of the Bank under this Agreement,
the
Documents and at law and in equity are cumulative and not alternative
and
are not in substitution for any other remedies, rights or powers
of the
Bank and no delay or omission in exercise of such remedy, right,
or power
shall exhaust such remedies, rights or powers or be construed as
a waiver
of any of them.
|
|
(h)
|
Overdue
Amounts.
Any amount that is not paid when due hereunder shall, unless interest
is
otherwise payable in respect thereof in accordance with the terms
of this
Agreement or the relevant instrument or contract governing same,
bear
interest until paid
|
-12
-
| at the rate of Canadian Prime Rate plus 2.0% per annum or, in the case of an amount denominated in US Dollars, at the rate of US Base Rate plus 2.0% per annum. |
|
(i)
|
Place
of Payment.
Amounts payable by the Borrower under or in connection with the
Agreement
and the Documents shall be paid at the Branch of Account in the
applicable
currency. Amounts due on a day other than a Business Day shall
be deemed
to be due on the Business Day next following such day. Any payment
delivered or made to the Bank by 1:00 local time at the Branch
of Account
shall be credited as of that date, but if made afterwards shall
be
credited as of the next Business Day. Interest and fees payable
under or
in connection with this Agreement and the Documents are payable
both
before and after any or all of Default, maturity date, demand and
judgement.
|
|
(j)
|
Taxes.
All
payments to be made by or on behalf of the Borrower or any Guarantor
under
or with respect to this Agreement or the Documents are to be made
free and
clear of and without deduction or withholding for, or on account
of, any
present or future Taxes, unless such deduction or withholding is
required
by Applicable Law. If the Borrower or any Guarantor is required
to deduct
or withhold any Taxes from any amount payable to the Bank (i) the
amount
payable shall be increased as may be necessary so that after making
all
required deductions or withholdings (including deductions and withholdings
applicable to, and taking into account all Taxes on, or arising
by reason
of the payment of, additional amounts under this clause), the Bank
receives and retains an amount equal to the amount that it would
have
received had no such deductions or withholdings been required,
(ii) the
Borrower and any Guarantor shall make such deductions or withholdings,
and
(iii) the Borrower and any Guarantor shall remit the full amount
deducted
or withheld to the relevant taxing authority in accordance with
Applicable
Laws. Notwithstanding the foregoing, neither the Borrower nor any
Guarantor shall be required to pay additional amounts in respect
of
Excluded Taxes.
|
|
(k)
|
Exchange
Rate Fluctuations.
If, for any reason, the amount of Advances outstanding under any
Credit
Facility, when converted to the US Dollar Equivalent, exceeds the
amount
available in US Dollars under such Credit Facility, the Borrower
shall
immediately repay such excess or shall secure such excess to the
satisfaction of the Bank.
|
9. Conditions
Precedent:
Without
limiting the discretion of the Bank pursuant to Section 3 of the Agreement,
the
obligation of the Bank to make available any Advance, Rollover or Conversion
is
subject to and conditional upon each of the conditions below being satisfied
on
or before the applicable Drawdown Date, Issuance Date, Rollover Date or
Conversion Date:
|
(a)
|
Execution.
The Documents completed and, where necessary, registered in form
and
manner satisfactory to the Bank, together with such certificates,
authorizations, resolutions and legal opinions as the Bank may
reasonably
require.
|
|
(b)
|
Reports.
Satisfactory banker's and/or other agency reports on the financial
position of the Borrower, any Guarantor and such customers of the
Borrower
as the Bank may specify from time to
time.
|
|
(c)
|
Default.
No
Default or Event of Default shall exist hereunder and no default
or event
of default shall exist under the US Credit
Agreement.
|
-13
-
|
(d)
|
Accuracy.
The
representations and warranties contained in this Agreement and
the
Documents shall be true and correct on each Drawdown Date, Issuance
Date,
Rollover Date or Conversion Date as if made on that
date.
|
|
(e)
|
Notice.
The Borrower shall have provided any notice required in respect
of an
Advance, Rollover or Conversion.
|
|
(f)
|
Documentation.
The Borrower executing and delivering to the Bank customary documentation
required by the Bank from time to time for purposes of extending
Advances
by way of FRT Loan.
|
|
(g)
|
Compliance.
Confirmation that the Borrower is in compliance with each of the
terms and
conditions of the Agreement.
|
10. Covenants:
The
Borrower covenants and agrees with the Bank, while this Agreement is in effect
or any Obligations are outstanding that it will, and it will cause its
Subsidiaries, as applicable, to:
|
(a)
|
Payment.
Pay all sums of money when due under or in connection with this
Agreement
or the Documents.
|
|
(b)
|
Status.
Maintain its corporate existence and
status.
|
|
(c)
|
Notice.
Without limitation to the demand nature of any Credit Facility,
give the
Bank prompt notice of any Default or Event of
Default.
|
|
(d)
|
Insurance.
Insure and keep insured all properties customarily insured by Persons
carrying on a similar business in similar locations, or owning
or
operating similar properties, against all
risks.
|
|
(e)
|
Taxes.
File all material income tax returns which are or will be required
to be
filed, to pay or make provision for payment of all Taxes (including
interest and penalties) which are or will become due and payable
and to
provide adequate reserves for the payment of any Tax the payment
of which
is being contested.
|
|
(f)
|
Property.
Cause its properties and assets to be maintained and operated in
good
working condition in accordance with industry practice, and permit
the
Bank or its agents to enter on and inspect each of its assets and
properties, including operating and manufacturing facilities as
the Bank
may require upon reasonable advance notice to the
Borrower.
|
|
(g)
|
Applicable
Laws.
Comply, in all material respects, with all Applicable Laws and
all
Government Approvals required in respect of its business, properties,
or
any activities or operations carried out thereon including health,
safety
and employment standards, labour codes and Environmental
Laws.
|
|
(h)
|
Rank.
Not do anything to adversely affect the ranking of its Obligations
to the
Bank.
|
|
(i)
|
No
Liens.
Not grant, create, assume or suffer to exist any Lien affecting
any of its
properties, assets or other rights without the prior written consent
of
the Bank which
|
-14
-
| consent shall not be unreasonably withheld, provided, however, that, notwithstanding the foregoing, in any fiscal year the Borrower may incur Liens securing an aggregate indebtedness not exceeding Cdn.$50,000 in connection with purchase money security interests and/or capital leases. |
|
(j)
|
No
Dispositions.
Not to sell, transfer, convey, lease or otherwise dispose of any
part of
its property or assets, outside of its normal course of business
without
the prior written consent of the Bank if the proceeds of any such
transaction are not completely used to repay the
Bank.
|
|
(k)
|
Corporate
Changes.
Not liquidate, dissolve or merge, amalgamate or consolidate with
any other
Person, without the prior written consent of the
Bank.
|
|
(l)
|
Indebtedness.
Not issue, create, incur, assume, permit to exist any indebtedness
other
than indebtedness under this Agreement and the Documents, trade
payables,
or guarantees or capital leases incurred in the ordinary course
of
business and in any event not exceeding $200,000 in aggregate,
without the
prior written consent of the Bank.
|
11. Events
of Default: Without
limiting the right of the Bank to demand payment of the Credit Facility at
any
time and from time to time notwithstanding the compliance or non-compliance
by
the Borrower with any or all of the terms and conditions of the Documents,
the
occurrence of any one or more of the following events shall constitute an
“Event
of Default” and the Bank may, without limitation, exercise any of its rights
pursuant to the Documents and/or Applicable Law:
|
(a)
|
Payment.
The non-payment when due of principal, interest, fee, or any other
amounts
due under this Agreement or the Documents and such default shall
continue
unremedied for a period of 5 Business Days after written
notice.
|
|
(b)
|
Breach.
The breach by the Borrower, any Guarantor or any Subsidiary of
the
Borrower, as applicable, of any material provision of this Agreement,
the
Documents or any other agreement with the Bank and such default
(other
than a default under paragraph (a) above) shall continue unremedied
for a
period of 30 Business Days after written
notice.
|
|
(c)
|
Other
Indebtedness. The
default by the Borrower, the Guarantor or any Subsidiary of the
Borrower
under any obligation or obligations to repay borrowed money, or
in the
performance or observance of any agreement or condition in respect
of such
borrowed money (beyond any applicable grace period), or demand
by any
creditor or creditors for payment of indebtedness payable on demand
where,
following such default or demand, indebtedness having an aggregate
principal amount in excess of $500,000 is due and payable or the
maturity
of such obligations is accelerated.
|
|
(d)
|
Representation.
If
any representation or warranty made herein or in any Document,
agreement
or certificate delivered pursuant hereto shall be false or inaccurate
in
any material respect and such default (other than a default under
paragraph (a)) above shall continue unremedied for a period of
30 Business
Days after written notice.
|
|
(e)
|
Involuntary
Proceeding.
If
(a) a petition shall be filed or an involuntary proceeding, case
or
proposal shall be commenced against the Borrower or the Guarantor
under
any
|
-15
-
| bankruptcy, insolvency, debt restructuring, reorganization, incorporation, readjustment of debt, dissolution, liquidation, winding up or similar law now or hereafter in effect, seeking the liquidation, reorganization, dissolution, winding-up composition or readjustment of debts of the Borrower or the Guarantor, the appointment of a trustee, receiver, receiver and manager, custodian, liquidator, administrator or the like for the Borrower or the Guarantor or all or any material part of the Borrower's assets or the Guarantor's assets, or any similar relief, and (b) such proceeding or petition shall continue undismissed for 60 days. |
|
(f)
|
Voluntary
Proceeding.
The commencement by the Borrower or any Guarantor of, or the making
of any
order for substantive relief against the Borrower or any Guarantor
in, any
bankruptcy, insolvency, debt restructuring, reorganization, incorporation,
readjustment of debt, dissolution, liquidation or other similar
proceedings (including without limitation proceedings under the
Bankruptcy
and Insolvency Act,
the Winding-Up
and Restructuring Act,
the Companies'
Creditors Arrangement Act,
the corporation statute under which the Borrower or any Guarantor
is
organized or other similar legislation) or proceedings for the
appointment
of an interim receiver, receiver, receiver manager, liquidator,
provisional liquidator, trustee in bankruptcy, sequestrator or
other like
official with respect to the Borrower or any Guarantor or all or
any
material part of the Borrower's assets or the Guarantor's
assets.
|
|
(g)
|
Seizure.
The seizure of all or any material part of the Borrower's assets
or the
Guarantor's assets by any creditor or creditor's representative,
including
without limitation, a privately appointed receiver or
sheriff.
|
|
(h)
|
Judgements.
Judgments are made against the Borrower, any Guarantor, any Subsidiary
of
the Borrower or any one of them in excess of $50,000 by any court
of
competent jurisdiction and either (i) a writ, execution or attachment
or
similar process is levied against the property of any of them in
respect
of such judgment, or (ii) the judgment is not actively and diligently
appealed and execution thereof stayed pending appeal within 30
days of the
rendering of the judgment, or (iii) the judgment is not paid or
otherwise
satisfied within 30 days of the rendering of the
judgment.
|
12. General:
The
following terms and conditions apply:
|
(a)
|
Successors
and Assigns.
This Agreement shall be binding upon and enure to the benefit of
the
parties and their respective successors and permitted assigns.
The Bank
may not assign all or part of its rights and obligations under
this
Agreement and the Documents to any Person without the prior written
consent of the Borrower. Notwithstanding the foregoing and for
greater
certainty, where a demand for payment, Default or an Event of Default
has
occurred, the consent of the Borrower shall not be required with
respect
to the assignment to any Person of all or any part of the rights
and
obligations of the Bank under this Agreement and the Documents.
The rights
and obligations of the Borrower and any Guarantor under this Agreement
and
the Documents may not be assigned without the prior written consent
of the
Bank. The Bank may disclose (with the consent of the Borrower in
circumstances where a demand for payment, Default or Event of Default
has
not occurred) to potential or actual assignees confidential information
regarding the Borrower and the Guarantor (including, any such information
provided by
|
-16
-
| the Borrower and/or the Guarantor to the Bank) and shall not be liable for any such disclosure. |
|
(b)
|
Expenses.
The Borrower and each Guarantor agrees to pay on demand all fees
(including reasonable legal fees), costs and expenses incurred
by the Bank
in connection with the preparation, negotiation and documentation
of this
Agreement and the Documents and the operation or enforcement of
this
Agreement and the Documents.
|
|
(c)
|
Review.
The Bank may conduct periodic reviews of the affairs of the Borrower,
as
and when determined by the Bank, for the purpose of evaluating
the
financial condition of the Borrower. The Borrower shall make available
to
the Bank such financial statements and other information and documentation
as the Bank may reasonably require and shall do all things reasonably
necessary to facilitate such review by the
Bank.
|
|
(d)
|
Priority
Claims.
The Borrower hereby grants its consent (such grant to remain in
force as
long as this Agreement is in effect or any Advances are outstanding)
to
any Person having information relating to any Priority Claim arising
by
any Applicable Law or otherwise and including, without limitation,
claims
by or on behalf of any Governmental Authority to release such information
to the Bank at any time upon its written request for the purpose
of
assisting the Bank to evaluate the financial condition of the
Borrower.
|
|
(e)
|
Amendments
and Waivers.
No
amendment or waiver of any provision of this Agreements and the
Documents
will be effective unless it is in writing signed by the Borrower,
the
Guarantor and the Bank. No failure or delay, on the part of the
Bank, in
exercising any right or power hereunder or under any security document
shall operate as a waiver thereof.
|
|
(f)
|
Judgement
Currency.
If
for the purpose of obtaining judgement in any court in any jurisdiction
with respect to this Agreement or the Documents, it is necessary
to
convert into the currency of such jurisdiction (the "Judgement
Currency")
any amount due hereunder in any currency other than the Judgement
Currency, then conversion shall be made at the rate of exchange
prevailing
on the Business Day before the day on which judgement is given.
For this
purpose "rate of exchange" means the rate at which the Bank would,
on the
relevant date, be prepared to sell a similar amount of such currency
in
the Toronto foreign exchange market, against the Judgement Currency,
in
accordance with normal banking procedures. In the event that there
is a
change in the rate of exchange prevailing between the Business
Day before
the day on which judgement is given and the date of payment of
the amount
due, the Borrower will, on the date of payment, pay such additional
amounts as may be necessary to ensure that the amount paid on such
date is
the amount in the Judgement Currency which, when converted at the
rate of
exchange prevailing on the date of payment, is the amount then
due under
this Agreement in such other currency together with interest at
the
Canadian Prime Rate and expenses (including legal fees on a solicitor
and
client basis). Any additional amount due from the Borrower under
this
section will be due as a separate debt and shall not be affected
by
judgement being obtained for any other sums due under or in respect
of
this Agreement.
|
|
(g)
|
Whole
Agreement.
This Agreement, the Documents and any other written agreement delivered
pursuant to or referred to in this Agreement constitute the whole
and
entire
|
-17
-
| agreement between the parties in respect of the Credit Facilities. There are no verbal agreements, undertakings or representations in connection with the Credit Facilities. |
|
(h)
|
Joint
and Several.
Where more than one Person is liable as Borrower or Guarantor for
any
obligation under this Agreement or the Documents, then the liability
of
each such Person for such obligation is joint and several with
each other
such Person.
|
|
(i)
|
Visit.
Representatives of the Bank shall be entitled to attend at the
Borrower's
business premises and to view all financial and other records of
the
Borrower at any time, on reasonable
notice.
|
|
(j)
|
References.
Time shall be of the essence in all provisions of this Agreement.
Unless
otherwise expressly provided, all accounting terms used in this
Agreement
shall be interpreted, all financial information shall be prepared
and all
financial calculations shall be made in accordance with GAAP, consistently
applied. The division of this Agreement into sections and the insertion
of
headings are for convenience of reference only and are not to affect
the
construction or interpretation of this Agreement. Unless otherwise
specified, words importing the singular include the plural and
vice versa
and words importing gender include all genders. Unless otherwise
specified, references in this Agreement to Sections, Schedules
and
Exhibits are to sections of, schedules to and exhibits to, this
Agreement.
|
|
(k)
|
No
Merger.
This Agreement shall, on execution by the Borrower and each Guarantor,
replace all previous letter loan agreements from the Bank to the
Borrower
with respect to the Credit Facilities. Any existing loan to the
Borrower
shall be modified, not refinanced, without novation of the Borrower's
existing facilities or obligations, by virtue of the Agreement
unless
otherwise provided in the Agreement. The terms and conditions of
the
Agreement shall not be merged by and shall survive the execution
of the
Documents. In the event of a conflict between the terms of this
Agreement
and the terms of the Documents, the terms of this Agreement shall
prevail
to the extent of such conflict.
|
|
(l)
|
Disclosure
of Information.
The Bank shall, in accordance with and subject to Applicable Law,
maintain
the confidentiality of all of the Borrower’s and Guarantor’s confidential
information. When it is necessary for providing products and services
to
the Borrower or any Guarantor, the Borrower and each Guarantor,
as
applicable, consents to the Bank obtaining from any credit reporting
agency or from any Person any information (including personal information)
that the Bank may require at any time. The Borrower and each Guarantor,
as
applicable, also consent to the disclosure at any time by the Bank
any
information concerning the Borrower and any Guarantor to any credit
grantor, to any credit reporting agency, or to the Bank's subsidiaries
and
affiliates. If applicable, the Borrower also authorizes the Bank
to
release the information contemplated by any builder's lien or similar
legislation to all persons claiming a right to such information
under such
legislation. The Borrower and each Guarantor may refuse or withdraw
these
consents; however this may result in the Bank cancelling or withholding
products or services for which these consents are necessary. Unless
each
Guarantor advises the Bank otherwise, the Bank may use the each
Guarantor's social insurance number, if applicable, to help ensure
accurate credit enquiries.
|
-18
-
|
(m)
|
Increased
Costs.
The Borrower shall reimburse the Bank for any additional cost or
reduction
in income arising as a result of (i) the imposition of, or increase
in,
taxes on payments due to the Bank hereunder (other than taxes on
the
overall net income of the Bank), (ii) the imposition of, or increase
in,
any reserve or other similar requirement, (iii) the imposition
of, or
change in, any other condition affecting the Credit Facilities
imposed by
any Applicable Law or the interpretation
thereof.
|
|
(n)
|
Severability.
If
any provision of this Agreement is or becomes prohibited or unenforceable
in any jurisdiction, such prohibition or unenforceability shall
not
invalidate or render unenforceable the provision concerned in any
other
jurisdiction nor shall it invalidate, affect or impair any of the
remaining provisions.
|
|
(o)
|
Counterparts.
This Agreement and the Documents may be executed and delivered
in any
number of counterparts, each of which when executed and delivered
is an
original but all of which taken together constitute, as applicable,
one
and the same instrument.
|
|
(p)
|
|
(q)
|
Notice.
Unless otherwise specified, any notice or other communication required
or
permitted to be given to a party under this Agreement shall be
in writing
and may be delivered personally or sent by overnight delivery service
or
by facsimile, to the address or facsimile number of the party set
out
beside its name at the foot of this Agreement to the attention
of the
Person there indicated or to such other address, facsimile number
or other
Person's attention as the party may have specified by notice in
writing
given under this Section. Any notice or other communication shall
be
deemed to have been given: (i) if delivered personally, when
received; (ii) if sent by overnight delivery service, on the first
Business Day following the date of mailing; (iii) if sent by
facsimile, on the Business Day when the appropriate confirmation
of
receipt has been received if the confirmation of receipt has been
received
before 3:00 p.m. on that Business Day or, if the confirmation of
receipt has been received after 3:00 p.m. on that Business Day, on
the next succeeding Business Day; and (iv) if sent by facsimile on a
day which is not a Business Day, on the next succeeding Business
Day on
which confirmation of receipt has been received. If a notice has
been sent
by prepaid registered mail and before the fifth Business Day after
the
mailing there is a discontinuance or interruption of regular postal
service so that the notice cannot reasonably be expected to be
delivered
within 5 Business Days after the mailing, the notice will be deemed
to
have been given when it is actually
received.
|
|
(r)
|
Language.
The parties hereby confirm their express wish that this Agreement
and all
documents, agreements or notices directly or indirectly related
hereto be
drawn up in the English language. Les parties reconnaissent leur
volonté
expresse que le présent contrat ainsi que tous les documents, conventions
ou avis s’y rattachant directement ou indirectement soient rédigés en
langue anglaise.
|
EXHIBIT
1
NOTICE
OF ADVANCE
Date: _____________________
To: Fifth
Third Bank
Ladies
and Gentlemen:
The
undersigned LSI
Saco Technologies Inc.
(the
"Borrower")
refers
to the letter loan agreement dated as of January _____, 2007 (as the same
may be
amended, restated or replaced from time to time, (the "Agreement")),
among, inter
alia,
the
Borrower and Fifth Third Bank, as Bank. Capitalized terms used but not defined
herein have the meaning assigned to such terms in the Agreement. The Borrower
hereby notifies you, pursuant to the Agreement, of its request for the following
Advance:
|
1.
|
Credit Facility:
|
_______________________
|
|
2.
|
Amount and Currency:
|
_______________________
|
|
3.
|
Drawdown Date/Issuance Date:
|
_______________________
|
|
4.
|
Type of Loan
(Canadian Prime Loan, US Base Rate Loan, LIBOR Loan, FRT Loan) |
_______________________
|
|
5.
|
Contract Period
for LIBOR Loan or FRT Loan |
_______________________
|
The
undersigned hereby certifies that the following statements are true on the
date
hereof, and will be true on the Drawdown Date, immediately after the Advance
and
the application of the proceeds therefrom:
|
(a)
|
immediately
after such Advance, the sum in US Dollars of the aggregate outstanding
principal amount of all Advances outstanding from the Bank under
that
Credit Facility shall not exceed the maximum aggregate principal
amount
available under that Credit
Facility;
|
|
|
(b)
|
no Default or Event of Default
shall
have occurred and be continuing; and
|
|
(c)
|
the
representations and warranties of the Borrower and the Guarantor
contained
in the Credit Agreement are and will be accurate in all material
respects.
|
-2
-
|
Per:
|
LSI
SACO TECHNOLOGIES INC.
|
||
|
|
|||
| Name:
Title:
|
|||
|
Per:
|
|
||
| Name:
Title:
|
|||
EXHIBIT
2
NOTICE
OF CONVERSION AND ROLLOVER
Date: _____________________
To: Fifth
Third Bank
Ladies
and Gentlemen:
The
undersigned LSI
Saco Technologies Inc.
(the
"Borrower")
refers
to the letter loan agreement dated as of January _____, 2007 (as the same
may be
amended, restated or replaced from time to time, the "Agreement"),
among, inter
alia,
the
Borrower and Fifth Third Bank, as Bank. Capitalized terms used but not defined
herein have the meaning assigned to such terms in the Agreement. The Borrower
hereby notifies you, pursuant to the applicable provision of the Agreement,
of
the following:
|
1.
|
Group
of Advances (or portion thereof) to which notice applies
|
|
|
2.
|
Date
of Conversion or Rollover
|
|
|
3.
|
New
type of Advance [if
Advances are to be converted]
or
repayment
|
|
|
4.
|
Next
succeeding Contract Period [if
Advances are converted or rolled over to Libor Loans or FRT
Loans]
|
The
undersigned hereby certifies that the following statements are true on the
date
hereof, and will be true on the Rollover Date or Conversion Date, as applicable,
immediately after the Rollover or Conversion, as applicable, and the application
of the proceeds therefrom:
|
(a)
|
immediately
after such Rollover or Conversion, (i) the sum in US Dollars of
the
aggregate outstanding principal amount of all Advances outstanding
from
the Bank under that Credit Facility shall not exceed the maximum
aggregate
principal amount available under that Credit Facility and (ii)
no Advance
under any Credit Facility shall have a Contract Period that extends
beyond, if applicable, the maturity date of that Credit
Facility;
|
|
(b)
|
no Default or Event of Default shall have occurred and be continuing;
and
|
|
(c)
|
the
representations and warranties of the Borrower and the Guarantor
contained
in the Credit Agreement are and will be accurate in all material
respects.
|
|
Per:
|
LSI
SACO TECHNOLOGIES INC.
|
||
|
|
|||
| Name:
Title:
|
|||
|
Per:
|
|
||
| Name:
Title:
|
|||
SCHEDULE
6
to
the Agreement dated as of January _____, 2007, among, inter
alia,
LSI Saco
Technologies
Inc., as Borrower, and Fifth Third Bank, as the Bank.
SPECIFIC
CONDITIONS PRECEDENT
The
obligation of the Bank to make available any Advance is subject to and
conditional upon each of the conditions below being satisfied on or before
the
applicable Drawdown Date:
|
1.
|
receipt
from the Guarantor of a true and complete copy of the US Credit
Agreement,
together with all amendments thereto, including an amendment which
confirms the lenders consent to the Guarantor providing an unlimited
guarantee in favor of the Bank;
|
|
2.
|
the
Guarantor is in compliance with the terms and conditions of the
US Credit
Agreement and no Event of Default (as defined therein) has occurred
and is
continuing thereunder;
|
|
3.
|
a
certificate of the Borrower dated the closing date certifying [Note
to Draft: FTB US counsel to confirm if something similar is to
be obtained
from US Guarantor];
|
a)
that
its constating documents and the by-laws, which shall be attached thereto
or
referenced therein, as applicable, are complete and correct copies and are
in
full force and effect;
|
b)
all resolutions and all other authorizations necessary to authorize
the
execution and delivery of and the performance by it of its obligations
under this Agreement and the other Documents to which it is a party
and
all the transactions contemplated thereby have been taken and/or
completed; and
|
|
c)
all representations and warranties contained in this Agreement
are true
and correct as if made on the date of the
certificate.
|
|
4.
|
a
legal opinion from Canadian counsel to the Borrower and the Guarantor
in
form and substance satisfactory to the Bank and its counsel;
and
|
|
5.
|
a
legal opinion from United States counsel to the Guarantor in form
and
substance satisfactory to the Bank and its
counsel.
|
SCHEDULE
7
to
the Agreement dated as of January _____, 2007, among, inter
alia,
LSI Saco
Technologies
Inc., as Borrower, and Fifth Third Bank, as the Bank.
SPECIFIC
REPRESENTATIONS AND WARRANTIES
|
1.
|
The
Guarantor is in compliance with all terms and conditions of the
US Credit
Agreement and no Event of Default (as defined therein) has occurred
and is
continuing thereunder.
|
|
2.
|
The
Borrower is a wholly-owned subsidiary of the
Guarantor.
|
SCHEDULE
8(a)
to
the Agreement dated as of January ____, 2007, among, inter
alia,
LSI Saco Technologies
Inc.
as Borrower, and Fifth Third Bank, as the Bank.
COMPLIANCE
CERTIFICATE
I,
___________________________________, the [insert
title]
of LSI
Industries Inc. (the "Guarantor")
hereby
certify as of [insert
last day of fiscal quarter/fiscal year, as applicable]
on
behalf of each of the Borrower and the Guarantor as follows:
|
1.
|
I
am familiar with and have examined the provisions of the letter
loan
agreement (the "Agreement")
dated January ____, 2007, among, inter
alia,
LSI Saco Technologies Inc., as Borrower, LSI Industries Inc., as
Guarantor, and Fifth Third Bank and have made reasonable investigations
of
corporate records and inquiries of other officers and senior personnel
of
the Borrower and the Guarantor. Terms defined in the Agreement
have the
same meanings when used in this
certificate.
|
|
2.
|
The
representations and warranties contained in the Agreement are true
and
correct in all material respects.
|
|
3.
|
No
event or circumstance has occurred which constitutes or which,
with the
giving of notice, lapse of time, or both, would constitute a Default
or an
Event of Default under the Agreement and there is no reason to
believe
that during the next fiscal quarter of the Borrower and the Guarantor,
any
such event or circumstance will
occur.
|
|
4.
|
The
Guarantor is in compliance with all terms and conditions of the
US Credit
Agreement and no Event of Default (as defined therein) has occurred
and is
continuing thereunder and there is no reason to believe that during
the
next fiscal quarter of the Guarantor any Event of Default (as defined
therein) will occur under the US Credit
Agreement.
|
Dated
as
of this _____ day of _____________, 20___.
Per:
Name:
Title:
SCHEDULE
9
to
the Agreement dated as of January ____, 2007, among, inter
alia,
LSI Saco Technologies
Inc.
as Borrower, and Fifth Third Bank, as the Bank.
SPECIFIC
COVENANTS
While
any
amount owing under this Agreement or any of the other Documents remains unpaid,
or the Bank has any obligations under this Agreement or any of the other
Documents, the Guarantor covenants and agrees with the Bank that the Guarantor
will at all times remain in compliance with the terms and conditions of the
US
Credit Agreement unless such non-compliance is waived by the lenders or the
agent pursuant to the terms of the US Credit Agreement. The Guarantor will
immediately notify the Bank in writing in the event that (i) the Guarantor
or
any affiliated or related Person is required to provide security or other
collateral to the Lenders under and in connection with the US Credit Agreement,
or (ii) a default or an event of default occurs under or in connection with
the
US Credit Agreement unless such non-compliance is waived by the lenders or
the
agent pursuant to the terms of the US Credit Agreement.
SCHEDULE
10
to
the Agreement dated as of January ____, 2007, among, inter
alia,
LSI Saco Technologies
Inc.
as Borrower, and Fifth Third Bank, as the Bank.
FINANCIAL
COVENANTS
Not
Applicable
SCHEDULE
11
to
the Agreement dated as of January ____, 2007, among, inter
alia,
LSI Saco Technologies
Inc.
as Borrower, and Fifth Third Bank, as the Bank.
SPECIFIC
EVENTS OF DEFAULT
The
occurrence of a default or an event of default under the US Credit Agreement.