Loan Agreement
by and among
CONGRESS FINANCIAL CORPORATION (CANADA)
as Lender
and
STATIA TERMINALS CANADA, INCORPORATED,
POINT ▇▇▇▇▇▇ MARINE SERVICES LIMITED
as Borrowers
Dated: November 27, 1996
TABLE OF CONTENTS
SECTION 1. DEFINITIONS
1.1 "Access Agreement"....................................... 2
1.2 "Accounts"............................................... 2
1.3 "Availability Reserves".................................. 2
1.4 "BIA".................................................... 2
1.5 "Blocked Accounts"....................................... 2
1.6 "Canadian Dollar Amount"................................. 2
1.7 "CCAA"................................................... 3
1.8 "Collateral"............................................. 3
1.9 "Congress US"............................................ 3
1.10 "Currency Exchange Convention"........................... 3
1.11 "Debentures"............................................. 3
1.12 "Eligible Accounts"...................................... 3
1.13 "Eligible Inventory"..................................... 5
1.15 "Equipment".............................................. 6
1.16 "Event of Default"....................................... 6
1.17 "Excess Availability".................................... 6
1.18 "Financing Agreements"................................... 6
1.19 "First Mortgage Notes"................................... 6
1.20 "GAAP"................................................... 7
1.21 "General Assignments of Accounts Receivable"............. 7
1.22 "General Security Agreement"............................. 7
1.23 "Hazardous Materials".................................... 7
1.24 "Hypothecs".............................................. 7
1.25 "Indenture".............................................. 7
1.26 "Information Certificate"................................ 8
1.27 "Inventory".............................................. 8
1.28 "Letter of Credit Accommodations"........................ 8
1.29 "Loans".................................................. 8
1.30 "Maximum Credit"......................................... 8
1.31 "Net Amount of Eligible Accounts"........................ 8
1.32 "Noteholder Collateral" ................................. 8
1.33 "Obligations"............................................ 8
1.34 "Obligor"................................................ 9
1.35 "Payment Account"........................................ 9
1.36 "Person" or "person"..................................... 9
1.37 "Personal Property Security Legislation"................. 9
1.38 "PPSA"................................................... 9
1.39 "Prime Rate"............................................. 9
1.40 "Priority Payables Reserve".............................. 9
1.41 "Records"................................................ 10
1.42 "Revolving Loans"........................................ 10
1.43 "Seven Seas"............................................. 10
1.44 "Statia N.V."............................................ 10
1.45 "Trustee"................................................ 10
1.46 "UCC".................................................... 10
1.47 "US Financing Agreements"................................ 10
1.48 "US Loan Agreement"...................................... 10
1.49 "Value".................................................. 11
SECTION 2. CREDIT FACILITIES
2.1 Revolving Loans........................................... 11
2.2 Letter of Credit Accommodations........................... 12
2.3 Availability Reserves..................................... 14
SECTION 3. INTEREST AND FEES
3.1 Interest.................................................. 15
3.2 Closing Fee............................................... 16
3.3 Servicing Fee............................................. 16
3.4 Unused Line Fee........................................... 16
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions Precedent to Initial Loans and Letter of
Credit Accommodations................................... 16
4.2 Conditions Precedent to All Loans and Letter
of Credit Accommodations................................ 18
SECTION 5. ......................................................... 19
SECTION 6. COLLECTION AND ADMINISTRATION
6.1 Borrowers' Loan Accounts.................................. 19
6.2 Statements................................................ 19
6.3 Collection of Accounts.................................... 19
6.4 Payments.................................................. 20
6.5 Authorization to Make Loans............................... 21
6.6 Use of Proceeds........................................... 22
SECTION 7. COLLATERAL REPORTING AND COVENANTS
7.1 Collateral Reporting...................................... 22
7.2 Accounts Covenants........................................ 23
7.3 Inventory Covenants....................................... 24
7.4 Equipment Covenants....................................... 25
7.5 Power of Attorney......................................... 25
7.6 Right to Cure............................................. 26
7.7 Access to Premises........................................ 27
SECTION 8. REPRESENTATIONS AND WARRANTIES
8.1 Corporate Existence, Power and Authority; Subsidiaries.... 27
8.2 Financial Statements; No Material Adverse Change.......... 27
8.3 Chief Executive Office; Collateral Locations.............. 28
8.4 Priority of Liens; Title to Properties.................... 28
8.5 Tax Returns............................................... 28
8.6 Litigation................................................ 28
8.7 Compliance with Other Agreements and Applicable Laws...... 29
8.8 Bank Accounts............................................. 29
8.9 Accuracy and Completeness of Information.................. 29
8.10 Environmental Compliance.................................. 30
8.11 Capitalization............................................ 30
8.12 Survival of Warranties; Cumulative........................ 31
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS
9.1 Maintenance of Existence.................................. 31
9.2 New Collateral Locations.................................. 31
9.3 Compliance with Laws, Regulations, Etc.................... 32
9.4 Payment of Taxes and Claims............................... 33
9.5 Insurance....................................................
9.6 Financial Statements and Other Information................ 34
9.7 Sale of Assets, Consolidation, Amalgamation, Dissolution,
Etc..................................................... 36
9.8 Encumbrances.............................................. 36
9.9 Indebtedness.............................................. 37
9.10 Loans, Investments, Guarantees, Etc....................... 37
9.11 Dividends and Redemptions................................. 38
9.12 Transactions with Affiliates.............................. 38
9.13 Additional Bank Accounts.................................. 38
9.14 Applications under the Companies' Creditors Arrangement
Act..................................................... 39
9.15 Intentionally Deleted..................................... 39
9.16 Costs and Expenses........................................ 39
9.17 Further Assurances........................................ 40
SECTION 10. EVENTS OF DEFAULT AND REMEDIES
10.1 Events of Default........................................ 41
10.2 Remedies................................................. 44
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS
AND CONSENTS; GOVERNING LAW
11.1 Governing Law; Choice of Forum; Service of Process;
Jury Trial Waiver...................................... 46
11.2 Waiver of Notices........................................ 47
11.3 Amendments and Waivers................................... 48
11.4 Waiver of Counterclaims.................................. 48
11.5 Indemnification.......................................... 48
SECTION 12. TERM OF AGREEMENT; MISCELLANEOUS
12.1 Term..................................................... 49
12.2 Notices.................................................. 50
12.3 Partial Invalidity....................................... 51
12.4 Successors............................................... 51
12.5 Joint and Several Liability.............................. 51
12.6 Suretyship Waivers and Consents.......................... 52
12.7 Entire Agreement......................................... 54
12.8 Headings................................................. 55
12.9 Judgment Currency........................................ 55
INDEX TO
EXHIBITS AND SCHEDULES
Exhibit A Information Certificate
Schedule 8.4 Existing Liens
Schedule 8.8 Bank Accounts
Schedule 8.10 Environmental Compliance
Schedule 8.11(a) Share Encumbrances
Schedule 9.9 Existing Indebtedness
Schedule 9.10 Existing Loans, Advances and Guarantees
LOAN AGREEMENT
This Loan Agreement dated November 27, 1996 is entered into by and between
Congress Financial Corporation (Canada), an Ontario corporation ("Lender") and
Statia Terminals Canada, Incorporated, a Nova Scotia corporation and Point
▇▇▇▇▇▇ Marine Services Limited, a Nova Scotia corporation (each a "Borrower" and
collectively, the "Borrowers").
W I T N E S S E T H:
WHEREAS, Borrowers have requested that Lender enter into certain financing
arrangements with Borrowers pursuant to which Lender may make loans and provide
other financial accommodations to Borrowers;
WHEREAS, Congress Financial Corporation (Florida) ("Congress US") has been
requested to enter into certain financing arrangements with Statia Terminals
N.V. ("Statia N.V.") in the United States of America pursuant to which Congress
US may make loans and provide other financial accommodations to Statia N.V.; and
WHEREAS, Lender is willing to make such loans and provide such financial
accommodations on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual conditions and agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. DEFINITIONS
All terms used herein which are defined in the PPSA shall have the
meanings given therein unless otherwise defined in this Agreement. All
references to the plural herein shall also mean the singular and to the singular
shall also mean the plural. All references to Borrowers and Lender pursuant to
the definitions set forth in the recitals hereto, or to any other person herein,
shall include their respective successors and assigns. The words "hereof",
"herein", "hereunder", "this Agreement" and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not any particular
provision of this Agreement and as this Agreement now exists or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced.
References herein to any statute or
any provision thereof include such statute or provision as amended, revised,
re-enacted, and/or consolidated from time to time and any successor statute
thereto. An Event of Default shall exist or continue or be continuing until such
Event of Default is waived in accordance with Section 11.3 or is cured in a
manner satisfactory to Lender. Any accounting term used herein unless otherwise
defined in this Agreement shall have the meanings customarily given to such term
in accordance with GAAP. Canadian Dollars and the sign "$" mean lawful money of
Canada. "US Dollars" and the sign "US$" mean lawful money of the United States
of America. For purposes of this Agreement, the following terms shall have the
respective meanings given to them below:
1.1 "Access Agreement" shall mean, collectively, that certain Access, Use
and Intercreditor Agreement, dated the date hereof, by and among Lender,
Congress US and Trustee and that certain Access, Use and Intercreditor
Agreement, dated the date hereof, by and between Lender and Trustee.
1.2 "Accounts" shall mean all present and future rights of a Borrower to
payment for goods sold or leased or for services rendered, which are not
evidenced by instruments or chattel paper, and whether or not earned by
performance.
1.3 "Availability Reserves" shall mean, as of any date of determination,
such amounts as Lender may from time to time establish and revise in good faith
reducing the amount of Revolving Loans and Letter of Credit Accommodations which
would otherwise be available to Borrowers under the lending formula(s) provided
for herein: (a) to reflect events, conditions, contingencies or risks which, as
determined by Lender in good faith, do or may affect either (i) the Collateral
or any other property which is security for the Obligations or its value, (ii)
the assets, business or prospects of either Borrower or any Obligor or (iii) the
security interests, charges, liens and other rights of Lender in the Collateral
(including the enforceability, perfection, protection and priority thereof) or
(b) to reflect Lender's good faith belief that any collateral report or
financial information furnished by or on behalf of either Borrower or any
Obligor to Lender is or may have been incomplete, inaccurate or misleading in
any material respect or (c) to reflect Lender's good faith estimate of the
amount of any Priority Payables Reserve, or (d) in respect of any state of facts
which Lender determines in good faith constitutes an Event of Default or may,
with notice or passage of time or both, constitute an Event of Default.
1.4 "BIA" shall mean the Bankruptcy and Insolvency Act (Canada).
1.5 "Blocked Accounts" shall have the meaning set forth in Section 6.3
hereof.
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1.6 "Canadian Dollar Amount" means, in respect of any amount, the sum of:
(a) such portion, if any, of such amount denominated in Canadian
Dollars; and
(b) to the extent that a portion of such amount is denominated in US
Dollars, the amount in Canadian Dollars calculated by Lender using the Currency
Exchange Convention in effect on the Business Day of determination.
1.7 "CCAA" shall mean the Companies' Creditors Arrangement Act (Canada).
1.8 "Collateral" shall mean, collectively, Collateral as such term is
defined in the General Security Agreement, Collateral as such term is defined in
the Debentures, Accounts as such term is defined in the General Assignments of
Accounts Receivable, and hypothecated claims as such term is defined in the
Hypothecs.
1.9 "Congress US" shall mean Congress Financial Corporation (Florida), a
Florida corporation, and its successors and assigns.
1.10 "Currency Exchange Convention" shall mean a procedure used by Lender
to value in Canadian Dollars (i) the obligations or assets of Borrowers or their
affiliates that are originally measured in US Dollars or (ii) any other amount
expressed in US Dollars herein by using the spot price for US Dollars provided
to Lender by Bank of Montreal for the preceding business day. In the event Bank
of Montreal no longer provides appropriate spot prices for US Dollars to Lender,
Lender shall obtain a US Dollar spot price from another Canadian bank selected
in good faith by Lender.
1.11 "Debentures" shall mean the debentures dated on or about the date
hereof granted by each Borrower in favour of Lender in respect of the
Obligations.
1.12 "Eligible Accounts" shall mean Accounts created by either Borrower
which are and continue to be acceptable to Lender based on the criteria set
forth below. In general, Accounts shall be Eligible Accounts if:
(a) such Accounts arise from the actual and bona fide sale and
delivery of goods by either Borrower or rendition of services by either Borrower
in the ordinary course of its business which transactions are completed in
accordance with the terms and provisions contained in any documents related
thereto;
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(b) such Accounts are not unpaid more than ninety (90) days after
the date of the original invoice for them;
(c) such Accounts comply with the terms and conditions contained in
Section 7.2(c) of this Agreement;
(d) such Accounts do not arise from sales which are on terms under
which payment by the account debtor is conditional or contingent;
(e) such Accounts do not consist of progress ▇▇▇▇▇▇▇▇, ▇▇▇▇ and hold
invoices or retainage invoices, except as to ▇▇▇▇ and hold invoices, if Lender
shall have received an agreement in writing from the account debtor, in form and
substance satisfactory to Lender, confirming the unconditional obligation of the
account debtor to take the goods related thereto and pay such invoice and except
as to progress ▇▇▇▇▇▇▇▇ to the extent that the applicable Borrower has performed
the services represented by the Account and the applicable Borrower has no
further obligations in respect thereof;
(f) the account debtor with respect to such Accounts has not
asserted a counterclaim, defense or dispute and does not have, and does not
engage in transactions which may give rise to, any right of setoff against such
Accounts (but the portion of the Accounts of such account debtor in excess of
the amount at any time and from time to time owned by Borrowers to such account
debtor or claimed owed by such account debtor may be deemed Eligible Accounts);
(g) there are no facts, events or occurrences which would impair the
validity, enforceability or collectability of such Accounts or reduce the amount
payable or delay payment thereunder;
(h) such Accounts are subject to the first priority and valid and
perfected (to the extent applicable) security interest, charge and lien of
Lender and any goods giving rise thereto are not, and were not at the time of
the sale thereof, subject to any liens except those permitted in this Agreement;
(i) neither the account debtor nor any officer or employee of the
account debtor with respect to such Accounts is an officer, employee or agent of
or affiliated with either Borrower directly or indirectly by virtue of family
membership, ownership, control, management or otherwise;
4
(j) there are no proceedings or actions which are threatened or
pending against the account debtors with respect to such Accounts which might
result in any material adverse change in any such account debtor's financial
condition;
(k) such Accounts of a single account debtor or its affiliates do
not constitute more than twenty (20%) percent of the aggregate amount of all
otherwise Eligible Accounts of the Borrowers under this Agreement and the
Eligible Accounts of Statia N.V. and Seven Seas under the US Loan Agreement (but
the portion of the Accounts not in excess of such percentage may be deemed
Eligible Accounts);
(l) such Accounts are not owed by an account debtor who has Accounts
unpaid more than ninety (90) days after the date of the original invoice for
them which constitute more than fifty (50%) percent of the total Accounts of
such account debtor;
(m) such Accounts are owed by account debtors whose total
indebtedness to Borrowers does not exceed the credit limit with respect to such
account debtors as mutually agreed upon by Lender and Borrowers from time to
time (but the portion of the Accounts not in excess of such credit limit may
still be deemed Eligible Accounts); and
(n) such Accounts are owed by account debtors deemed creditworthy at
all times by Lender, as reasonably determined by Lender.
General criteria for Eligible Accounts may be established and revised from time
to time by Lender in good faith. Any Accounts which are not Eligible Accounts
shall nevertheless be part of the Collateral.
1.13 "Eligible Inventory" shall mean Inventory consisting of oil, fuel and
related petroleum products which could be sold in the ordinary course of the
business of either Borrower ("finished goods") which are acceptable to Lender
based on the criteria set forth below. In general, Eligible Inventory shall not
include (a) work-in-process; (b) components which are not part of finished
goods; (c) spare parts for equipment; (d) packaging and shipping materials; (e)
supplies used or consumed in either Borrower's business; (f) Inventory at
premises other than those owned and controlled by a Borrower, including, without
limitation, Inventory stored in tanks owned or controlled by Persons other than
a Borrower or Inventory which is in transit to a Borrower, except if Lender
shall have received an agreement in writing from the person in possession of
such Inventory and/or the owner or operator of such premises in form and
substance satisfactory to Lender acknowledging Lender's first priority security
interest, lien and charge in the Inventory, waiving security interests, liens
and charges and claims by such person against the Inventory and permitting
Lender access to such Inventory
5
and the right to remain on the premises where such Inventory is located so as to
exercise Lender's rights and remedies and otherwise deal with the Collateral;
(g) Inventory subject to a security interest or lien in favour of any person
other than Lender except those permitted in this Agreement; (h) ▇▇▇▇ and hold
goods; (i) unserviceable, obsolete or slow moving Inventory; (j) Inventory which
is not subject to the first priority, valid and perfected (to the extent
applicable) security interest, lien and charge of Lender; (k) returned, damaged
and/or defective Inventory; (l) Inventory purchased or sold on consignment; and
(m) Inventory which is subject to any throughput contracts and storage
contracts. General criteria for Eligible Inventory may be established and
revised from time to time by Lender in good faith. Any Inventory which is not
Eligible Inventory shall nevertheless be part of the Collateral.
1.14 "Environmental Laws" shall mean with respect to any Person all
federal (United States of America and Canada), state, provincial, district,
local, municipal and foreign laws, statutes, rules, regulations, ordinances,
orders, directives, permits, licenses and consent decrees relating to health,
safety, hazardous, dangerous or toxic substances, waste or material, pollution
and environmental matters, as now or at any time hereafter in effect, applicable
to such Person and/or its business and facilities (whether or not owned by it),
including laws relating to emissions, discharges, releases or threatened
releases of pollutants, contamination, chemicals, or hazardous, toxic or
dangerous substances, materials or wastes into the environment (including,
without limitation, ambient air, surface water, ground water, land surface or
subsurface strata) or otherwise relating to the generation, manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, chemicals, or hazardous, toxic or
dangerous substances, materials or wastes.
1.15 "Equipment" shall mean all of each Borrower's now owned and hereafter
acquired equipment (exclusive of each Borrower's vehicles and computers),
machinery, fixtures, all attachments, accessions and property now or hereafter
affixed thereto or used in connection therewith, and substitutions and
replacements thereof, wherever located.
1.16 "Event of Default" shall mean the occurrence or existence of any
event or condition described in Section 10.1 hereof.
1.17 "Excess Availability" shall mean the Canadian Dollar Amount, as
determined by Lender, calculated at any time, equal to: (a) the lesser of: (i)
the gross amount of the Revolving Loans which would be available to Borrowers
pursuant to Section 2.1 from time to time if no Loans or Letters of Credit
Accommodations were outstanding and (ii) the Maximum Credit, minus (b) the sum
of: (i) the amount of all then outstanding and unpaid Obligations, plus (ii) the
aggregate amount of all trade payables of each Borrower which are more than
6
sixty (60) days past due as of such time (other than trade payables which such
Borrower is contesting in good faith).
1.18 "Financing Agreements" shall mean, collectively, this Agreement, the
General Security Agreement, the Debentures, the General Assignments of Accounts
Receivable, the Hypothecs, if any, and all notes, guarantees, security
agreements and other agreements, documents and instruments now or at any time
hereafter executed and/or delivered by either Borrower or any Obligor in
connection with this Agreement, as the same now exist or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced.
1.19 "First Mortgage Notes" shall mean the US$135,000,000 11 3/4% First
Mortgage Notes issued by Statia Terminals International N.V. and Statia
Terminals Canada, Incorporated.
1.20 "GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time as set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and pronouncements
of the Financial Accounting Standards Board which are applicable to the
circumstances as of the date of determination consistently applied, except that,
for purposes of Section 9.15 hereof, GAAP shall be determined on the basis of
such principles in effect on the date hereof and consistent with those used in
the preparation of the audited financial statements delivered to Lender prior to
the date hereof.
1.21 "General Assignments of Accounts Receivable" shall mean the general
assignments of accounts receivable dated on or about the date hereof given by
each Borrower in favour of Lender in respect of the Obligations.
1.22 "General Security Agreement" shall mean the general security
agreement dated on or about the date hereof given by Borrowers in favour of
Lender in respect of the Obligations.
1.23 "Hazardous Materials" shall mean any hazardous, toxic or dangerous
substances, materials and wastes, including, without limitation, hydrocarbons
(including naturally occurring or man-made petroleum and hydrocarbons),
flammable explosives, asbestos, urea formaldehyde insulation, radioactive
materials, biological substances, polychlorinated biphenyls, pesticides,
herbicides and any other kind and/or type of pollutants or contaminants
(including, without limitation, materials which include hazardous constituents),
sewage, sludge, industrial slag, solvents and/or any other similar substances,
materials, or wastes and including any other substances, materials or wastes
that are or become
7
regulated under any Environmental Law (including, without limitation any that
are or become classified as hazardous or toxic under any Environmental Law).
1.24 "Hypothecs" shall mean the hypothecs on a universality of claims in
form and substance satisfactory to Lender given by each Borrower in favour of
Lender if requested by Lender.
1.25 "Indenture" shall mean the Indenture, dated as of November 27, 1996,
by and among Statia Terminals International N.V. and Statia Terminals Canada,
Incorporated, as Issuers, Statia Terminals Corporation N.V., Statia Terminals
Delaware, Inc., Statia Terminals, Inc., Statia Terminals N.V., Saba Trustcompany
N.V., Bicen Development Corporation N.V., Statia Terminals Southwest, Inc., W.P.
Company, Inc., Seven Seas Steamship Company, Inc., Seven Seas Steamship Company
(Sint Eustatius) N.V., Point ▇▇▇▇▇▇ Marine Services Limited, Statia Laboratory
Services, N.V. and Statia Tugs N.V., as Subsidiary Guarantors, and Marine
Midland Bank, as Trustee.
1.26 "Information Certificate" shall mean the Information Certificate of
each Borrower constituting Exhibit A hereto containing material information with
respect to each such Borrower, its business and assets provided by or on behalf
of each such Borrower to Lender in connection with the preparation of this
Agreement and the other Financing Agreements and the financing arrangements
provided for herein.
1.27 "Inventory" shall mean all of each Borrower's now owned and hereafter
existing or acquired raw materials, work-in-process, finished goods and
semi-finished inventory or goods of any kind, nature or description, held for
sale, exchange or lease or furnished or to be furnished under a contract of
service or an exchange arrangement or used or consumed in the business or in
connection with the manufacturing, package, shipping, advertising, selling or
finishing of such goods, and all right, title and interest therein and thereto,
and the proceeds (including, without limitation, all proceeds of insurance with
respect thereto, including the proceeds of any applicable casualty insurance to
the extent relating thereto) and products of all of the foregoing, and all other
inventory of whatsoever kind or nature, wherever located.
1.28 "Letter of Credit Accommodations" shall mean the letters of credit,
merchandise purchase or other guarantees denominated in Canadian Dollars which
are from time to time either (a) issued or opened by Lender for the account of
either Borrower or any Obligor or (b) with respect to which Lender has agreed to
indemnify the issuer with respect to, or guaranteed to the issuer, the
performance by either Borrower of its obligations to such issuer.
8
1.29 "Loans" shall mean the Revolving Loans.
1.30 "Maximum Credit" shall mean, at any time, the Canadian Dollar Amount
equivalent to US $5,000,000.
1.31 "Net Amount of Eligible Accounts" shall mean the gross Canadian
Dollar Amount of Eligible Accounts less (a) sales, excise or similar taxes
included in the amount thereof and (b) returns, discounts, claims, credits and
allowances of any nature at any time issued, owing, granted, outstanding,
available or claimed with respect to such Eligible Accounts; provided that the
amounts deducted under clause (a) shall not duplicate items for which
Availability Reserves have been established by Lender.
1.32 "Noteholder Collateral" shall have the meaning as set forth in the
Access Agreement.
1.33 "Obligations" shall mean any and all Revolving Loans, Letter of
Credit Accommodations and all other obligations, liabilities and indebtedness of
every kind, nature and description owing by either Borrower to Lender and/or its
affiliates, including, without limitation, Congress US, including principal,
interest, charges, fees, costs and expenses, however evidenced, whether as
principal, surety, endorser, guarantor or otherwise, whether arising under this
Agreement or the other Financing Agreements, or the transactions arising
hereunder or thereunder, whether now existing or hereafter arising, whether
arising before, during or after the initial or any renewal term of this
Agreement or after the commencement of any proceeding with respect to either
Borrower under the BIA, the CCAA, or any similar statute in any jurisdiction
(including, without limitation, the payment of interest and other amounts which
would accrue and become due but for the commencement of such proceeding),
whether direct or indirect, absolute or contingent, joint or several, due or not
due, primary or secondary, liquidated or unliquidated, secured or unsecured, and
however acquired by Lender in connection with or arising under the Financing
Agreements or any of the transactions arising thereunder or related thereto.
1.34 "Obligor" shall mean any guarantor, endorser, acceptor, surety or
other person liable on or with respect to the Obligations or who is the owner of
any property which is security for the Obligations, other than a Borrower.
1.35 "Payment Account" shall have the meaning set forth in Section 6.3
hereof.
1.36 "Person" or "person" shall mean any individual, sole proprietorship,
partnership, corporation, business trust, unincorporated association, joint
stock corporation,
9
trust, joint venture or other entity or any government or any agency or
instrumentality or political subdivision thereof.
1.37 "Personal Property Security Legislation" shall mean the Assignment of
Book Debts Act (Nova Scotia), the Corporation Securities Registration Act (Nova
Scotia) and any comparable or successor legislation in the Province of Nova
Scotia or elsewhere which may apply to security interests, charges or liens
granted by either Borrower to Lender including, without limitation, the Personal
Property Security Act (Nova Scotia) when enacted.
1.38 "PPSA" shall mean the Personal Property Security Act (Ontario).
1.39 "Prime Rate" shall mean the rate from time to time publicly announced
by CoreStates Bank, N.A., or its successors, at its office in Philadelphia,
Pennsylvania, as its prime rate, whether or not such announced rate is the best
rate available at such bank.
1.40 "Priority Payables Reserve" shall mean, at any time, the full amount
of the liabilities at such time which have a trust imposed to provide for
payment or security interest, lien or charge ranking or capable of ranking
senior to or pari passu with security interests, liens or charges securing the
Obligations on any of the Collateral under federal, provincial, state, county,
municipal, or local law including, but not limited, to claims for unremitted and
accelerated rents, taxes (including, without limitation, any applicable excise
taxes or goods and services taxes), tariffs, customs and duty charges, import
assessments, wages, workers' compensation obligations, government royalties or
pension fund obligations, together with the aggregate value, determined in
accordance with GAAP, of all Eligible Inventory which Lender, acting reasonably,
considers may be or may become subject to a right of a supplier to recover
possession thereof under any federal or provincial law, where such supplier's
right may have priority over the security interests, liens or charges securing
the Obligations including, without limitation, Eligible Inventory subject to a
right of a supplier to repossess goods pursuant to Section 81.1 of the BIA.
1.41 "Records" shall mean all of each Borrower's present and future books
of account of every kind or nature, purchase and sale agreements, invoices,
ledger cards, bills of lading and other shipping evidence, statements,
correspondence, memoranda, credit files and other data relating to the
Collateral or any account debtor, together with the tapes, disks, diskettes and
other data and software storage media and devices, file cabinets or containers
in or on which the foregoing are stored (including any rights of either Borrower
with respect to the foregoing maintained with or by any other person).
10
1.42 "Revolving Loans" shall mean the loans denominated in Canadian
Dollars now or hereafter made by Lender to or for the benefit of either Borrower
on a revolving basis (involving advances, repayments and readvances) as set
forth in Section 2.1 hereof.
1.43 "Seven Seas" shall mean Seven Seas Steamship Company, Inc., and its
successors and assigns.
1.44 "Statia N.V." shall mean Statia Terminals N.V., a Netherland Antilles
corporation, and its successors and assigns.
1.45 "Trustee" shall mean Marine Midland Bank, as Trustee under the
Indenture.
1.46 "UCC" shall mean the Uniform Commercial Code.
1.47 "US Financing Agreements" shall mean the Financing Agreements as that
term is defined in the US Loan Agreement.
1.48 "US Loan Agreement" shall mean the Loan and Security Agreement of
even date between Statia N.V. and Congress US as the same now exists or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced.
1.49 "Value" shall mean the Canadian Dollar Amount, as determined by
Lender in good faith with respect to Inventory, equal to the lower of (a) cost
computed on an average cost method in accordance with GAAP or (b) market value.
SECTION 2. CREDIT FACILITIES
2.1 Revolving Loans.
(a) Subject to, and upon the terms and conditions contained herein,
Lender agrees to make Revolving Loans to Borrowers from time to time in amounts
requested by Borrowers up to the amount equal to the sum of:
(i) eighty (80%) percent of the Net Amount of Eligible
Accounts, plus
(ii) the lesser of: (A) the sum of fifty (50%) percent of the
Value of Eligible Inventory consisting of finished goods
11
and (B) the Canadian Dollar Amount equivalent to US
$1,000,000 less
(iii) any Availability Reserves.
(b) Lender may, in its discretion, from time to time, upon not less
than five (5) days prior notice to Borrowers, (i) reduce the lending formula
with respect to Eligible Accounts to the extent that Lender determines in good
faith that: (A) the dilution with respect to the Accounts for any period (based
on the ratio of (1) the aggregate amount of reductions in Accounts other than as
a result of payments in cash to (2) the aggregate amount of total sales) has
increased in any material respect or may be reasonably anticipated to increase
in any material respect above historical levels, or (B) the general
creditworthiness of account debtors has declined or (ii) reduce the lending
formula(s) with respect to Eligible Inventory to the extent that Lender
determines that: (A) the number of days of the turnover of the Inventory for any
period has changed from its historical pattern in any material respect or (B)
the liquidation value of the Eligible Inventory, or any category thereof, has
decreased, or (C) the nature and quality of the Inventory has deteriorated in
any material respect. In determining whether to reduce the lending formula(s),
Lender may consider events, conditions, contingencies or risks which are also
considered in determining Eligible Accounts, Eligible Inventory or in
establishing Availability Reserves.
(c) Except in Lender's discretion, the aggregate Canadian Dollar
amount of the Loans and the Letter of Credit Accommodations outstanding at any
time shall not exceed the Maximum Credit. In the event that the outstanding
amount of any component of the Loans, or the aggregate amount of the outstanding
Loans and Letter of Credit Accommodations, exceed the amounts available under
the lending formulas, the sublimits for Letter of Credit Accommodations set
forth in Section 2.2(d) or the Maximum Credit, as applicable, such event shall
not limit, waive or otherwise affect any rights of Lender in that circumstance
or on any future occasions and each Borrower shall, upon demand by Lender, which
may be made at any time or from time to time, immediately repay to Lender the
entire amount of any such excess(es) for which payment is demanded.
(d) For purposes only of applying the sublimit on Revolving Loans
based on Eligible Inventory pursuant to Section 2.1(a)(ii)(B), Lender may treat
the then undrawn amounts of outstanding Letter of Credit Accommodations for the
purpose of purchasing Eligible Inventory as Revolving Loans to the extent Lender
is in effect basing the issuance of the Letter of Credit Accommodations on the
Value of the Eligible Inventory being purchased with such Letter of Credit
Accommodations. In determining the actual amounts of such Letter of Credit
Accommodations to be so treated for purposes of the sublimit, the outstanding
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Revolving Loans and Availability Reserves shall be attributed first to any
components of the lending formulas in Section 2.1(a) that are not subject to
such sublimit, before being attributed to the components of the lending formulas
subject to such sublimit.
2.2 Letter of Credit Accommodations.
(a) Subject to, and upon the terms and conditions contained herein,
at the request of either Borrower, Lender agrees to provide or arrange for
Letter of Credit Accommodations for the account of such Borrower containing
terms and conditions acceptable to Lender and the issuer thereof. Any payments
made by Lender to any issuer thereof and/or related parties in connection with
the Letter of Credit Accommodations shall constitute additional Revolving Loans
to Borrowers pursuant to this Section 2.
(b) In addition to any administrative charges, fees or expenses
charged by any bank or issuer in connection with the Letter of Credit
Accommodations, each Borrower shall pay to Lender a letter of credit fee at a
rate equal to one and three quarters (1.75%) percent per annum on the daily
outstanding balance of the Letter of Credit Accommodations for the immediately
preceding month (or part thereof), payable in arrears as of the first day of
each succeeding month, except that each Borrower shall pay to Lender such letter
of credit fee, at Lender's option, without notice, at a rate equal to three and
three-quarters (3.75%) percent per annum on such daily outstanding balance for:
(i) the period from and after the date of termination or non-renewal hereof
until Lender has received full and final payment of all Obligations
(notwithstanding entry of a judgment against either Borrower) and (ii) the
period from and after the date of the occurrence of an Event of Default for so
long as such Event of Default is continuing as determined by Lender. Such letter
of credit fee shall be calculated on the basis of a three hundred sixty five
(365) day year and actual days elapsed and the obligation of each Borrower to
pay such fee shall survive the termination or non-renewal of this Agreement.
(c) No Letter of Credit Accommodations shall be available unless on
the date of the proposed issuance of any Letter of Credit Accommodations, the
Revolving Loans available to Borrowers (subject to the Maximum Credit and any
Availability Reserves) are equal to or greater than: (i) if the proposed Letter
of Credit Accommodation is for the purpose of purchasing Eligible Inventory, the
sum of (A) one hundred (100%) percent of the cost of such Eligible Inventory,
plus (B) freight, taxes, duty and other amounts which Lender estimates must be
paid in connection with such Inventory upon arrival and for delivery to one of
either Borrower's locations for Eligible Inventory within Canada and (ii) if the
proposed Letter of Credit Accommodation is for any other purpose, an amount
equal to one hundred (100%) percent of the face amount thereof and all other
commitments and obligations made or
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incurred by Lender with respect thereto. Effective on the issuance of each
Letter of Credit Accommodation, the amount of Revolving Loans which might
otherwise be available to Borrowers shall be reduced by the applicable amount
set forth in Section 2.2(c)(i) or Section 2.2(c)(ii).
(d) Except in Lender's discretion, (i) the amount of all outstanding
Letter of Credit Accommodations and all other commitments and obligations made
or incurred by Lender in connection therewith, shall not at any time exceed the
Canadian Dollar Amount equivalent to US$3,500,000. At any time an Event of
Default exists or has occurred and is continuing, upon Lender's request,
Borrowers will either furnish cash collateral to secure the reimbursement
obligations to the issuer in connection with any Letter of Credit Accommodations
or furnish cash collateral to Lender for the Letter of Credit Accommodations,
and in either case, the Revolving Loans otherwise available to Borrowers shall
not be reduced as provided in Section 2.2(c) to the extent of such cash
collateral.
(e) Each Borrower shall indemnify and hold Lender harmless from and
against any and all losses, claims, damages, liabilities, costs and expenses
which Lender may suffer or incur in connection with any Letter of Credit
Accommodations and any documents, drafts or acceptances relating thereto,
including, but not limited to, any losses, claims, damages, liabilities, costs
and expenses due to any action taken by any issuer or correspondent with respect
to any Letter of Credit Accommodation. Each Borrower assumes all risks with
respect to the acts or omissions of the drawer under or beneficiary of any
Letter of Credit Accommodation and for such purposes the drawer or beneficiary
shall be deemed such Borrower's agent. Each Borrower assumes all risks for, and
agrees to pay, all foreign, federal, provincial and local taxes, duties and
levies relating to any goods subject to any Letter of Credit Accommodations or
any documents, drafts or acceptances thereunder. Each Borrower hereby releases
and holds Lender harmless from and against any acts, waivers, errors, delays or
omissions, whether caused by either Borrower, by any issuer or correspondent or
otherwise with respect to or relating to any Letter of Credit Accommodation. The
provisions of this Section 2.2(e) shall survive the payment of Obligations and
the termination or non-renewal of this Agreement.
(f) Nothing contained herein shall be deemed or construed to grant
either Borrower any right or authority to pledge the credit of Lender in any
manner. Lender shall have no liability of any kind with respect to any Letter of
Credit Accommodation provided by an issuer other than Lender unless Lender has
duly executed and delivered to such issuer the application or a guarantee or
indemnification in writing with respect to such Letter of Credit Accommodation.
Each Borrower shall be bound by any interpretation made in good faith by Lender,
or any other issuer or correspondent under or in connection with any Letter of
Credit
14
Accommodation or any documents, drafts or acceptances thereunder,
notwithstanding that such interpretation may be inconsistent with any
instructions of either Borrower. Lender shall have the sole and exclusive right
and authority to, and Borrowers shall not: (i) at any time an Event of Default
exists or has occurred and is continuing, (A) approve or resolve any questions
of non-compliance of documents, (B) give any instructions as to acceptance or
rejection of any documents or goods or (C) execute any and all applications for
steamship or airway guaranties, indemnities or delivery orders, and (ii) at all
times, (A) grant any extensions of the maturity of, time of payment for, or time
of presentation of, any drafts, acceptances, or documents, and (B) agree to any
amendments, renewals, extensions, modifications, changes or cancellations of any
of the terms or conditions of any of the applications, Letter of Credit
Accommodations, or documents, drafts or acceptances thereunder or any letters of
credit included in the Collateral. Lender may take such actions either in its
own name or in either Borrower's name.
(g) Any rights, remedies, duties or obligations granted or
undertaken by either Borrower to any issuer or correspondent in any application
for any Letter of Credit Accommodation, or any other agreement in favour of any
issuer or correspondent relating to any Letter of Credit Accommodation, shall be
deemed to have been granted or undertaken by such Borrower to Lender. Any duties
or obligations undertaken by Lender to any issuer or correspondent in any
application for any Letter of Credit Accommodation, or any other agreement by
Lender in favour of any issuer or correspondent relating to any Letter of Credit
Accommodation, shall be deemed to have been undertaken by the applicable
Borrower to Lender and to apply in all respects to such Borrower and Lender
agrees that any such action taken shall be consistent with Lender's customary
practices with such issuers or correspondents with respect thereto.
2.3 Availability Reserves. All Revolving Loans otherwise available to
Borrowers pursuant to the lending formulas and subject to the Maximum Credit and
other applicable limits hereunder shall be subject to Lender's continuing right
to establish and revise Availability Reserves.
SECTION 3. INTEREST AND FEES
3.1 Interest.
(a) Borrowers shall pay to Lender interest on the outstanding
principal amount of the Loans at the rate of one-half (.50%) percent per annum
in excess of the Prime Rate, except that Borrowers shall pay to Lender interest,
at Lender's option, without notice, at the rate of two and one-half (2.50%)
percent per annum in excess of the Prime Rate: (i) on the
15
Loans for the period from and after the date of termination or non-renewal
hereof, or the date of the occurrence of an Event of Default, and for so long as
such Event of Default is continuing as determined by Lender and until such time
as Lender has received full and final payment of all Loans (notwithstanding
entry of any judgment against either Borrower) and (ii) on the Revolving Loans
at any time outstanding in excess of the amounts available to Borrowers under
Section 2 (whether or not such excess(es), arise or are made with or without
Lender's knowledge or consent and whether made before or after an Event of
Default). All interest accruing hereunder on and after the occurrence of any of
the events referred to in Sections 3.1(a)(i) or 3.1(a)(ii) above shall be
payable on demand.
(b) Interest shall be payable by Borrowers to Lender monthly in
arrears not later than the first day of each calendar month and shall be
calculated on the basis of a three hundred sixty (360) day year and actual days
elapsed. The interest rate shall increase or decrease by an amount equal to each
increase or decrease in the Prime Rate effective on the first day of the month
after any change in such Prime Rate is announced based on the Prime Rate in
effect on the last day of the month in which any such change occurs. In no event
shall charges constituting interest payable by either Borrower to Lender exceed
the maximum amount or the rate permitted under any applicable law or regulation,
and if any part or provision of this Agreement is in contravention of any such
law or regulation, such part or provision shall be deemed amended to conform
thereto.
(c) For purposes of disclosure under the Interest Act (Canada),
where interest is calculated pursuant hereto at a rate based upon a 360 day year
(the "First Rate"), it is hereby agreed that the rate or percentage of interest
on a yearly basis is equivalent to such First Rate multiplied by the actual
number of days in the year divided by 360.
(d) Notwithstanding the provisions of this Section 3 or any other
provision of this Agreement, in no event shall the aggregate "interest" (as that
term is defined in Section 347 of the Criminal Code (Canada)) exceed the
effective annual rate of interest on the "credit advanced" (as defined therein)
lawfully permitted under Section 347 of the Criminal Code (Canada). The
effective annual rate of interest shall be determined in accordance with
generally accepted actuarial practices and principles over the term of the
applicable Loan, and in the event of a dispute, a certificate of a Fellow of the
Canadian Institute of Actuaries appointed by Lender will be conclusive for the
purposes of such determination.
(e) A certificate of an authorized signing officer of Lender as to
each amount and/or each rate of interest payable hereunder from time to time
shall be conclusive evidence of such amount and of such rate, absent manifest
error.
16
(f) For greater certainty, whenever any amount is payable under this
Agreement or any Financing Agreement by a Borrower as interest or as a fee which
requires the calculation of an amount using a percentage per annum, each party
to this Agreement acknowledges and agrees that such amount shall be calculated
as of the date payment is due without application of the "deemed reinvestment
principle" or the "effective yield method". As an example, when interest is
calculated and payable monthly, the rate of interest payable per month is 1/12
of the stated rate of interest per annum.
3.2 Closing Fee. Borrowers shall pay to Lender as a closing fee the amount
of US$75,000, which shall be fully earned as of and payable on the date hereof.
3.3 Servicing Fee. Borrowers shall pay to Lender monthly a servicing fee
in an amount equal to US$1,000 in respect of Lender's services for each month
(or part thereof) while this Agreement remains in effect and for so long
thereafter as any of the Obligations are outstanding, which fee shall be fully
earned as of and payable in advance on the date hereof and on the first day of
each month hereafter.
3.4 Unused Line Fee. Borrowers shall pay to Lender monthly an unused line
fee at a rate equal to three-eights (.375%) percent per annum calculated upon
the amount by which the Canadian Dollar Amount equivalent to US $2,500,000
exceeds the average daily principal balance of the outstanding Revolving Loans
and Letter of Credit Accommodations under this Agreement during the immediately
preceding month (or part thereof) while this Agreement is in effect and for so
long thereafter as any of the Obligations are outstanding, which fee shall be
payable on the first day of each month in arrears.
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions Precedent to Initial Loans and Letter of Credit
Accommodations. Each of the following is a condition precedent to Lender making
the initial Loans and providing the initial Letter of Credit Accommodations
hereunder:
(a) Lender shall have received evidence (including, without
limitation, any subordinations or releases of any other charges, liens or
security interests in the Collateral required by Lender), in form and substance
satisfactory to Lender, that Lender has valid perfected (to the extent
applicable) and first priority security interests in, and charges and liens
upon, the Collateral and any other property which is intended to be security for
the Obligations or the liability of any Obligor in respect thereof, subject only
to the security interests, charges and liens permitted herein or in the other
Financing Agreements;
17
(b) all requisite corporate action and proceedings in connection
with this Agreement and the other Financing Agreements shall be satisfactory in
form and substance to Lender, and Lender shall have received all information and
copies of all documents, including, without limitation, records of requisite
corporate action and proceedings which Lender may have requested in connection
therewith, such documents where requested by Lender or its counsel to be
certified by appropriate corporate officers or governmental authorities;
(c) no material adverse change shall have occurred in the assets,
business or prospects of either Borrower since the date of Lender's latest field
examination and no change or event shall have occurred which would impair the
ability of either Borrower or any Obligor to perform its obligations hereunder
or under any of the other Financing Agreements to which it is a party or of
Lender to enforce the Obligations or realize upon the Collateral;
(d) Lender shall have completed a field review of the Records and
such other information with respect to the Collateral as Lender may require to
determine the amount of Revolving Loans available to Borrowers, the results of
which shall be satisfactory to Lender, not more than three (3) business days
prior to the date hereof;
(e) Lender shall have received, in form and substance satisfactory
to Lender, all consents, waivers, acknowledgments and other agreements from
third persons which Lender may deem necessary or desirable in order to permit,
protect and perfect its security interests in, and charges and liens upon, the
Collateral or to effectuate the provisions or purposes of this Agreement and the
other Financing Agreements, including, without limitation, acknowledgements by
lessors, mortgagees and warehousemen of Lender's security interests in, and
liens and charges upon, the Collateral, waivers by such persons of any security
interests, liens, charges or other claims by such persons to the Collateral and
agreements permitting Lender access to, and the right to remain on, the premises
to exercise its rights and remedies and otherwise deal with the Collateral;
(f) Borrowers shall have Excess Availability as determined by
Lender, as of the date hereof, in an amount equal to at least equal to the
Canadian Dollar Amount equivalent to US $500,000 after giving effect to the
initial Loans made or to be made and Letter of Credit Accommodations issued or
to be issued in connection with the initial transactions hereunder;
(g) Lender shall have received evidence of insurance and loss payee
endorsements required hereunder and under the other Financing Agreements, in
form and substance satisfactory to Lender, and certificates of insurance
policies and/or endorsements naming Lender as loss payee;
18
(h) Lender shall have received, in form and substance satisfactory
to Lender, such opinion letters of counsel to Borrowers and the Obligors with
respect to the Financing Agreements and such other matters as Lender may
request;
(i) the other Financing Agreements and all instruments and documents
hereunder and thereunder shall have been duly executed and delivered to Lender,
in form and substance satisfactory to Lender; and
(j) all conditions precedent to the making of loans under the US
Financing Agreements shall have been satisfied.
4.2 Conditions Precedent to All Loans and Letter of Credit Accommodations.
Each of the following is an additional condition precedent to Lender making
Loans and/or providing Letter of Credit Accommodations to Borrowers, including
the initial Loans and Letter of Credit Accommodations and any future Loans and
Letter of Credit Accommodations:
(a) all representations and warranties contained herein and in the
other Financing Agreements shall be true and correct in all material respects
with the same effect as though such representations and warranties had been made
on and as of the date of the making of each such Loan or providing each such
Letter of Credit Accommodation and after giving effect thereto;
(b) no Event of Default and no event or condition which, with notice
or passage of time or both, would constitute an Event of Default, shall exist or
have occurred and be continuing on and as of the date of the making of such Loan
or providing each such Letter of Credit Accommodation and after giving effect
thereto;
(c) Lender shall have received evidence, in form and substance
satisfactory to Lender, that (i) each Borrower has notified all account debtors
of the security interests, liens and charges of Lender in the Accounts and (ii)
each Borrower has placed appropriate notices acceptable to Lender on its
invoices and in its contracts entered into after the date hereof providing
notice of this financing; and
(d) no requirement of the Minister of National Revenue for payment
pursuant to Section 224, or any successor section, of the Income Tax Act
(Canada) or Section 317, or any successor section of the Excise Act (Canada) or
any comparable provision of similar legislation shall have been received by
Lender or any other Person in respect of either Borrower or otherwise issued in
respect of either Borrower.
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SECTION 5. INTENTIONALLY DELETED.
SECTION 6. COLLECTION AND ADMINISTRATION
6.1 Borrowers' Loan Accounts. Lender shall maintain one or more loan
account(s) on its books in which shall be recorded (a) all Loans, Letter of
Credit Accommodations and other Obligations and the Collateral, (b) all payments
made by or on behalf of Borrowers and (c) all other appropriate debits and
credits as provided in this Agreement, including, without limitation, fees,
charges, costs, expenses and interest. All entries in the loan account(s) shall
be made in accordance with Lender's customary practices as in effect from time
to time.
6.2 Statements. Lender shall render to Borrowers each month a statement
setting forth the balance in the Borrowers' loan account(s) maintained by Lender
for Borrowers pursuant to the provisions of this Agreement, including principal,
interest, fees, costs and expenses. Each such statement shall be subject to
subsequent adjustment by Lender but shall, absent manifest errors or omissions,
be considered correct and deemed accepted by Borrowers and conclusively binding
upon Borrowers as an account stated except to the extent that Lender receives a
written notice from Borrowers of any specific exceptions of Borrowers thereto
within thirty (30) days after the date such statement has been mailed by Lender.
Until such time as Lender shall have rendered to Borrowers a written statement
as provided above, the balance in Borrowers' loan account(s) shall be
presumptive evidence of the amounts due and owing to Lender by Borrowers.
6.3 Collection of Accounts.
(a) Borrowers shall establish and maintain, at its expense, blocked
accounts or lockboxes and related blocked accounts (in either case, "Blocked
Accounts"), as Lender may specify, and Lender may establish and maintain bank
accounts of Lender ("Payment Accounts") in each case with such banks as are
acceptable to Lender into which Borrowers shall, in accordance with Lender's
instructions, promptly deposit and direct its account debtors that remit
payments by electronic funds transfers to directly remit, all payments on
Accounts and all payments constituting proceeds of Inventory or other Collateral
in the identical form in which such payments are made, whether by cash, cheque
or other manner. The banks at which the Blocked Accounts are established shall
enter into an agreement, in form and substance satisfactory to Lender, providing
that all items received or deposited in the Blocked Accounts are the property of
Lender, that the depository bank has no charge or lien upon, or right to setoff
against the Blocked Accounts, the items received for deposit therein, or the
funds from time to time on deposit therein and that the depository bank will
wire, or otherwise
20
transfer, in immediately available funds, on a daily basis, all funds received
or deposited into the Blocked Accounts to the Payment Accounts or such other
bank account of Lender as Lender may from time to time designate for such
purpose. Borrowers agree that all payments made to such Blocked Accounts or
Payment Accounts or other funds received and collected by Lender, whether on the
Accounts or as proceeds of Inventory or other Collateral or otherwise shall be
the property of Lender.
(b) For purposes of calculating interest on the Obligations, such
payments or other funds received will be applied (conditional upon final
collection) to the Obligations one (1) business day following the date of
receipt of immediately available funds by Lender in the applicable Payment
Account. For purposes of calculating the amount of the Revolving Loans available
to Borrowers such payments will be applied (conditional upon final collection)
to the Obligations on the business day of receipt by Lender in the applicable
Payment Account, if such payments are received within sufficient time (in
accordance with Lender's usual and customary practices as in effect from time to
time) to credit Borrowers' loan account on such day, and if not, then on the
next business day.
(c) Each Borrower and all of its affiliates, subsidiaries,
shareholders, directors, employees or agents shall, acting as trustee for
Lender, receive, as the property of Lender, any monies, cheques, notes, drafts
or any other payment relating to and/or proceeds of Accounts or other Collateral
which come into their possession or under their control and immediately upon
receipt thereof, shall deposit or cause the same to be deposited in the Blocked
Accounts or the Payment Accounts, or remit the same or cause the same to be
remitted, in kind, to Lender. In no event shall the same be commingled with
Borrowers' own funds. Each Borrower agrees to reimburse Lender on demand for any
amounts owed or paid to any bank at which a Blocked Account or Payment Account
is established or any other bank or person involved in the transfer of funds to
or from the Blocked Accounts or the Payment Accounts arising out of Lender's
payments to or indemnification of such bank or person. The obligation of each
Borrower to reimburse Lender for such amounts pursuant to this Section 6.3 shall
survive the termination or non-renewal of this Agreement.
6.4 Payments. All Obligations shall be payable to the Payment Account as
provided in Section 6.3 or such other place as Lender may designate from time to
time. Lender may apply payments received or collected from either Borrower or
for the account of either Borrower (including, without limitation, the monetary
proceeds of collections or of realization upon any Collateral) to such of the
Obligations, whether or not then due, in such order and manner as Lender
determines. To the extent Lender receives any payments or collections from or on
account of either Borrower in US Dollars, Lender shall convert the amount of any
such payments received or collected (including, without limitation, the monetary
proceeds of
21
collections or of realization upon any collateral) in US Dollars to Canadian
Dollars using the Currency Exchange Convention and such payments shall
constitute satisfaction of the Obligations only to the extent of the amounts so
converted. Payments and collections received in any currency other than US
Dollars or Canadian Dollars will be accepted and/or applied at the sole
discretion of Lender. At Lender's option, all principal, interest, fees, costs,
expenses and other charges provided for in this Agreement or the other Financing
Agreements may be charged directly to the loan account(s) of Borrowers. Each
Borrower shall make all payments to Lender on the Obligations free and clear of,
and without deduction or withholding for or on account of, any setoff,
counterclaim, defense, duties, taxes, levies, imposts, fees, deductions,
withholding, restrictions or conditions of any kind. If after receipt of any
payment of, or proceeds of Collateral applied to the payment of, any of the
Obligations, Lender is required to surrender or return such payment or proceeds
to any Person for any reason, then the Obligations intended to be satisfied by
such payment or proceeds shall be reinstated and continue and this Agreement
shall continue in full force and effect as if such payment or proceeds had not
been received by Lender. Each Borrower shall be liable to pay to Lender, and
does hereby indemnify and hold Lender harmless for the amount of any payments or
proceeds surrendered or returned. This Section 6.4 shall remain effective
notwithstanding any contrary action which may be taken by Lender in reliance
upon such payment or proceeds. This Section 6.4 shall survive the payment of the
Obligations and the termination or non-renewal of this Agreement. If, at any
time, there are no Obligations outstanding and Lender holds a credit balance,
Lender, if requested by Borrowers, shall remit such credit balance to Borrowers
as Borrowers may direct.
6.5 Authorization to Make Loans. Lender is authorized to make the Loans
and provide the Letter of Credit Accommodations based upon telephonic or other
instructions received from anyone purporting to be an officer of a Borrower or
other authorized person or, at the discretion of Lender, if such Loans are
necessary to satisfy any Obligations. All requests for Loans or Letter of Credit
Accommodations hereunder shall specify the date on which the requested advance
is to be made or Letter of Credit Accommodations established (which day shall be
a business day) and the amount of the requested Loan. Requests received after
11:00 a.m. Toronto time on any day shall be deemed to have been made as of the
opening of business on the immediately following business day. All Loans and
Letter of Credit Accommodations under this Agreement shall be conclusively
presumed to have been made to, and at the request of and for the benefit of,
Borrowers when deposited to the credit of Borrowers or otherwise disbursed or
established in accordance with the instructions of Borrowers or in accordance
with the terms and conditions of this Agreement.
6.6 Use of Proceeds. Borrowers shall use the initial proceeds of the Loans
provided by Lender to Borrowers hereunder only for: (a) payments to each of the
persons listed in the
22
disbursement direction letter furnished by Borrowers to Lender on or about the
date hereof and (b) costs, expenses and fees in connection with the preparation,
negotiation, execution and delivery of this Agreement and the other Financing
Agreements. All other Loans made or Letter of Credit Accommodations provided by
Lender to Borrowers pursuant to the provisions hereof shall be used by Borrowers
only for general operating, working capital and other proper corporate purposes
of Borrowers not otherwise prohibited by the terms hereof.
SECTION 7. COLLATERAL REPORTING AND COVENANTS
7.1 Collateral Reporting. Each Borrower shall provide Lender with the
following documents in a form satisfactory to Lender: (a) on a weekly basis, a
schedule of Accounts, credits issued and cash received together with a statement
of the aggregate outstanding and unpaid amount of all tariffs, import
assessments, customs and duty charges, goods and services taxes ("GST"),
provincial sales taxes ("PST") and other taxes (other than income taxes) due and
owing, except that, if Borrowers fail to maintain Excess Availability of the
Canadian Dollar Amount equivalent to US$1,000,000, then each Borrower shall
deliver a schedule of Accounts, credits issued and cash received together with a
statement of the aggregate outstanding and unpaid amount of all tariffs, import
assessments, customs and duty charges and GST, PST and other taxes (other than
income taxes) due and owing, on a daily basis; (b) on a weekly basis, inventory
reports by category, including cost, quantity and grades of such Borrower's
inventory, except that, if Borrowers fail to maintain Excess Availability of the
Canadian Dollar Amount equivalent to US$1,000,000, then each Borrower shall
deliver such inventory reports on a daily basis; (c) on a monthly basis or more
frequently as Lender may request, (i) perpetual inventory reports and (ii)
agings of accounts payable; (d) upon Lender's request, (i) copies of customer
statements and credit memos, remittance advices and reports, and copies of
deposit slips and bank statements, (ii) copies of shipping and delivery
documents, and (iii) copies of purchase orders, invoices and delivery documents
for Inventory acquired by either Borrower; (e) agings of accounts receivable on
a monthly basis or more frequently as Lender may request; and (f) such other
reports as to the Collateral as Lender shall request from time to time. If
either of Borrower's records or reports of the Collateral are prepared or
maintained by an accounting service, contractor, shipper or other agent, each
Borrower hereby irrevocably authorizes such service, contractor, shipper or
agent to deliver such records, reports, and related documents to Lender and to
follow Lender's instructions with respect to further services at any time that
an Event of Default exists or has occurred and is continuing.
23
7.2 Accounts Covenants.
(a) Each Borrower shall notify Lender promptly of: (i) any material
delay in such Borrower's performance of any of its obligations to any account
debtor or the assertion of any claims, offsets, defenses or counterclaims by any
account debtor, or any disputes with account debtors, or any settlement,
adjustment or compromise thereof, (ii) all material adverse information relating
to the financial condition of any account debtor known to such Borrower after
due investigation and (iii) any event or circumstance which, to such Borrower's
knowledge would cause Lender to consider any then existing Accounts as no longer
constituting Eligible Accounts. No credit, discount, allowance or extension or
agreement for any of the foregoing shall be granted to any account debtor
without Lender's consent, except in the ordinary course of a Borrower's business
in accordance with practices and policies previously disclosed in writing to
Lender. So long as no Event of Default exists or has occurred and is continuing,
neither Borrower shall settle, adjust or compromise any claim, offset,
counterclaim or dispute with any account debtor. At any time that an Event of
Default exists or has occurred and is continuing, Lender shall, at its option,
have the exclusive right to settle, adjust or compromise any claim, offset,
counterclaim or dispute with account debtors or grant any credits, discounts or
allowances.
(b) Each Borrower shall promptly report to Lender any return of
Inventory by any one account debtor. At any time that Inventory is returned,
reclaimed or repossessed, the Account (or portion thereof) which arose from the
sale of such returned, reclaimed or repossessed Inventory shall not be deemed an
Eligible Account. In the event any account debtor returns Inventory when an
Event of Default exists or has occurred and is continuing, each Borrower shall,
upon Lender's request, (i) hold the returned Inventory in trust for Lender, (ii)
segregate all returned Inventory from all of its other property, (iii) dispose
of the returned Inventory solely according to Lender's instructions, and (iv)
not issue any credits, discounts or allowances with respect thereto without
Lender's prior written consent.
(c) With respect to each Account: (i) the amounts shown on any
invoice delivered to Lender or schedule thereof delivered to Lender shall be
true and complete, (ii) no payments shall be made thereon except payments
immediately delivered to Lender pursuant to the terms of this Agreement, (iii)
no credit, discount, allowance or extension or agreement for any of the
foregoing shall be granted to any account debtor except as reported to Lender in
accordance with this Agreement and except for credits, discounts, allowances or
extension of terms made or given in the ordinary course of a Borrower's business
in accordance with practices and policies previously disclosed to Lender, (iv)
there shall be no setoffs, deductions, contras, defences, counterclaims or
disputes existing or asserted with respect thereto except as reported to Lender
in accordance with the terms of this Agreement, (v) none of the trans-
24
actions giving rise thereto will violate any applicable federal, provincial or
foreign laws or regulations, all documentation relating thereto will be legally
sufficient under such laws and regulations and all such documentation will be
legally enforceable in accordance with its terms.
(d) Lender shall have the right at any time or times, in Lender's
name or in the name of a nominee of Lender, to verify the validity, amount or
any other matter relating to any Account or other Collateral, by mail,
telephone, facsimile transmission or otherwise.
(e) Each Borrower shall deliver or cause to be delivered to Lender,
with appropriate endorsement and assignment, with full recourse to such
Borrower, all chattel paper and instruments which such Borrower now owns or may
at any time acquire immediately upon such Borrower's receipt thereof, except as
Lender may otherwise agree.
(f) Lender may, at any time or times that an Event of Default exists
or has occurred and is continuing, (i) notify any or all account debtors that
the Accounts have been assigned to Lender and that Lender has a security
interest therein and Lender may direct any or all accounts debtors to make
payment of Accounts directly to Lender, (ii) extend the time of payment of,
compromise, settle or adjust for cash, credit, return of merchandise or
otherwise, and upon any terms or conditions, any and all Accounts or other
obligations included in the Collateral and thereby discharge or release the
account debtor or any other party or parties in any way liable for payment
thereof without affecting any of the Obligations, (iii) demand, collect or
enforce payment of any Accounts or such other obligations, but without any duty
to do so, and Lender shall not be liable for its failure to collect or enforce
the payment thereof nor for the negligence of its agents or attorneys with
respect thereto and (iv) take whatever other action Lender may deem necessary or
desirable for the protection of its interests. At any time that an Event of
Default exists or has occurred and is continuing, at Lender's request, all
invoices and statements sent to any account debtor shall state that the Accounts
and such other obligations have been assigned to Lender and are payable directly
and only to Lender and each Borrower shall deliver to Lender such originals of
documents evidencing the sale and delivery of goods or the performance of
services giving rise to any Accounts as Lender may require.
7.3 Inventory Covenants. With respect to the Inventory: (a) each Borrower
shall at all times maintain inventory records reasonably satisfactory to Lender,
keeping correct and accurate records itemizing and describing the kind, type,
quality and quantity of Inventory, Borrower's cost therefor and daily
withdrawals therefrom and additions thereto; (b) each Borrower shall conduct a
physical count of the Inventory at least once each year, but at any time or
times as Lender may request on or after an Event of Default, and promptly
following such physical inventory shall supply Lender with a report in the form
and with such specificity
25
as may be reasonably satisfactory to Lender concerning such physical count; (c)
neither Borrower shall remove any Inventory from the locations set forth or
permitted herein, without the prior written consent of Lender, except for sales
of Inventory in the ordinary course of Borrower's business and except to move
Inventory directly from one location set forth or permitted herein to another
such location; (d) each Borrower shall deliver to Lender, at their expense,
reports prepared by third party surveyors, acceptable to Lender, with respect to
the quantity, grade, cost, etc. of such Borrower's inventory with such reports
to be prepared on a frequency consistent with historical practice, but in no
event less than once per month (or at such other intervals as Lender may request
from time to time), and which reports shall be delivered directly to Lender and
shall be in form, scope and methodology acceptable to Lender; (e) each Borrower
shall produce, use, store and maintain the Inventory, with all reasonable care
and caution and in accordance with applicable standards of any insurance and in
conformity with applicable laws; (f) each Borrower assumes all responsibility
and liability arising from or relating to the production, use, sale or other
disposition of the Inventory; (g) each Borrower shall not sell Inventory to any
customer on approval, or any other basis which entitles the customer to return
or may obligate a Borrower to repurchase such Inventory; and (h) each Borrower
shall keep the Inventory in good and marketable condition.
7.4 Equipment Covenants. With respect to the Equipment and subject to the
rights of the Trustee: (a) each Borrower shall keep the Equipment in good order,
repair, running and marketable condition (ordinary wear and tear excepted); (b)
each Borrower shall use the Equipment with all reasonable care and caution and
in accordance with applicable standards of any insurance and in conformity with
all applicable laws; (c) the Equipment is and shall be used in each Borrower's
business and not for personal, family, household or farming use; and (d) each
Borrower assumes all responsibility and liability arising from the use of the
Equipment. In addition to, and not in limitation of, the foregoing, each
Borrower shall keep in good order and repair all computers and computer hardware
and software (whether owned or licensed) in which any Records or other
Collateral are stored or maintained and, at any given time, Lender shall have
access to all such computers and computer hardware and software and all Records
and Collateral contained therein shall be accurate.
7.5 Power of Attorney. Each Borrower hereby irrevocably designates and
appoints Lender (and all persons designated by Lender) as such Borrower's true
and lawful attorney-in-fact, and authorizes Lender, in any Borrower's or
Lender's name, to: (a) at any time an Event of Default or event which with
notice or passage of time or both would constitute an Event of Default exists or
has occurred and is continuing (i) demand payment on Accounts or other proceeds
of Inventory or other Collateral, (ii) enforce payment of Accounts by legal
proceedings or otherwise, (iii) exercise all of such Borrower's rights and
remedies to collect any Account or other Collateral, (iv) sell or assign any
Account upon such terms, for such
26
amount and at such time or times as the Lender deems advisable, (v) settle,
adjust, compromise, extend or renew an Account, (vi) discharge and release any
Account, (vii) prepare, file and sign either Borrower's name on any proof of
claim in bankruptcy or other similar document against an account debtor, and
(viii) do all acts and things which are necessary, in Lender's determination, to
fulfil Borrowers' obligations under this Agreement and the other Financing
Agreements; (b) at any time after an Event of Default under Sections 10(a)(i),
(b), (e), (f), (g), (h) or (r) and during its continuation or in the event
Lender declares an Event of Default and demands payment of the Obligations
hereunder, to notify the post office authorities to change the address for
delivery of either Borrower's mail to an address designated by Lender, and to
receive and open all mail addressed to either Borrower, except that, Lender
shall use its best efforts to promptly forward to the applicable Borrower any
mail received by Lender which does not contain payments of Accounts or which
does not otherwise relate to the Collateral and to forward to the applicable
Borrower copies of any payments of Accounts or documents received and retained
by Lender; and (c) at any time to (i) take control in any manner of any item of
payment or proceeds thereof, (ii) have access to any lockbox or postal box into
which either Borrower's mail is deposited, (iii) endorse either Borrower's name
upon any items of payment relating to the Collateral or proceeds thereof and
deposit the same in the Lender's account for application to the Obligations,
(iv) endorse either Borrower's name upon any chattel paper, document,
instrument, invoice, or similar document or agreement relating to any Account or
any goods pertaining thereto or any other Collateral, (v) sign either Borrower's
name on any verification of Accounts and notices thereof to account debtors and
(vi) execute in either Borrower's name and file any PPSA, UCC or other financing
statements or amendments thereto and any other filings, notices or registrations
necessary or desirable under any applicable Personal Property Security
Legislation. Each Borrower hereby releases Lender and its officers, employees
and designees from any liabilities arising from any act or acts under this power
of attorney and in furtherance thereof, whether of omission or commission,
except as a result of Lender's own gross negligence or wilful misconduct as
determined pursuant to a final non-appealable order of a court of competent
jurisdiction.
7.6 Right to Cure. Lender may, at its option, (a) cure any default by
either Borrower under any agreement with a third party or pay or bond on appeal
any judgment entered against either Borrower to the extent that such default or
judgement relates to the Collateral, (b) discharge taxes, liens, security
interests, charges or other encumbrances at any time levied on or existing with
respect to the Collateral and (c) pay any amount, incur any expense or perform
any act which, in Lender's judgment, is necessary or appropriate to preserve,
protect, insure or maintain the Collateral and the rights of Lender with respect
thereto. Lender may add any amounts so expended to the Obligations and charge
either Borrower's account therefor, such amounts to be repayable by either
Borrower on demand. Lender shall be under no obligation to effect such cure,
payment or bonding and shall not, by doing so, be deemed to
27
have assumed any obligation or liability of either Borrower. Any payment made or
other action taken by Lender under this Section shall be without prejudice to
any right to assert an Event of Default hereunder and to proceed accordingly.
7.7 Access to Premises. From time to time as requested by Lender, at the
cost and expense of Borrowers, (a) Lender or its designee shall have complete
access to each Borrower's premises during normal business hours and after notice
to Borrower, or at any time and without notice to either Borrower if an Event of
Default exists or has occurred and is continuing, for the purposes of
inspecting, verifying and auditing the Collateral and all of each Borrower's
books and records, including, without limitation, the Records, and (b) each
Borrower shall promptly furnish to Lender such copies of such books and records
or extracts therefrom as Lender may request, and (c) use during normal business
hours such of each Borrower's personnel, equipment, supplies and premises as may
be reasonably necessary for the foregoing and if an Event of Default exists or
has occurred and is continuing for the collection of Accounts and realization of
other Collateral.
SECTION 8. REPRESENTATIONS AND WARRANTIES
Each Borrower hereby represents and warrants to Lender the following
(which shall survive the execution and delivery of this Agreement), the truth
and accuracy of which are a continuing condition of the making of Loans and
providing Letter of Credit Accommodations by Lender to Borrower:
8.1 Corporate Existence, Power and Authority; Subsidiaries. Each Borrower
is a corporation duly amalgamated or duly incorporated, as the case may be,
validly existing and duly organized under the laws of its jurisdiction of
incorporation and is duly qualified or registered as a foreign or
extra-provincial corporation in all provinces, states or other jurisdictions
where the nature and extent of the business transacted by it or the ownership of
assets makes such qualification necessary, except for those jurisdictions in
which the failure to so qualify would not have a material adverse effect on
either Borrower's financial condition, results of operation or business or the
rights of Lender in or to any of the Collateral. The execution, delivery and
performance of this Agreement, the other Financing Agreements and the
transactions contemplated hereunder and thereunder are all within each
Borrower's corporate powers, have been duly authorized and are not in
contravention of law or the terms of any Borrower's certificate of
incorporation, by-laws, or other organizational documentation, or any indenture,
agreement or undertaking to which a Borrower is a party or by which either
Borrower or its property are bound. This Agreement and the other Financing
Agreements constitute legal, valid and binding obligations of each Borrower
enforceable in accordance with
28
their respective terms. Neither Borrower has any subsidiaries except as set
forth on the Information Certificate.
8.2 Financial Statements; No Material Adverse Change. All financial
statements relating to Borrowers or its affiliates which have been or may
hereafter be delivered by Borrowers to Lender have been prepared in accordance
with GAAP and fairly present the financial condition and the results of
operation of Borrowers and their affiliates as at the dates and for the periods
set forth therein. Except as disclosed in any interim financial statements
furnished by Borrowers to Lender prior to the date of this Agreement, there has
been no material adverse change in the assets, liabilities, properties and
condition, financial or otherwise, of either Borrower, since the date of the
most recent audited financial statements furnished by Borrowers to Lender prior
to the date of this Agreement.
8.3 Chief Executive Office; Collateral Locations. The principal executive
office of each Borrower and each Borrower's Records concerning its Accounts are
located only at the address set forth below and its only other places of
business and the only other locations of Collateral, if any, are the addresses
set forth in the Information Certificate, subject to the right of each Borrower
to establish new locations in accordance with Section 9.2 below. The day-to-day
operations of each Borrower are managed in its jurisdiction of incorporation.
The Information Certificate correctly identifies any of such locations which are
not owned by either Borrower and sets forth the owners and/or operators thereof
and to the best of each Borrower's knowledge, the holders of any mortgages on
such locations.
8.4 Priority of Liens; Title to Properties. The security interests,
charges and liens granted to Lender under this Agreement and the other Financing
Agreements constitute valid and perfected (to the extent applicable) first
priority liens, charges and security interests in and upon the Collateral
subject only to the liens indicated on Schedule 8.4 hereto and the other liens
permitted under Section 9.8 hereof. Each Borrower has good and marketable title
to all of its properties and assets subject to no liens, mortgages, pledges,
security interests, hypothecs, encumbrances or charges of any kind, except those
granted to Lender and such others as are specifically listed on Schedule 8.4
hereto or permitted under Section 9.8 hereof.
8.5 Tax Returns. Each Borrower has filed, or caused to be filed, in a
timely manner all tax returns and all material reports and declarations which
are required to be filed by it, except as provided in the Information
Certificate or as previously disclosed in writing to Lender. All information in
such tax returns, reports and declarations is complete and accurate in all
material respects. Each Borrower has paid or caused to be paid all taxes due and
payable or claimed due and payable in any assessment received by it, except
taxes the validity of which are being contested in good faith by appropriate
proceedings diligently pursued and available
29
to a Borrower and with respect to which adequate reserves have been set aside on
its books. Adequate provision has been made for the payment of all accrued and
unpaid federal, provincial, municipal, local, foreign and other taxes whether or
not yet due and payable and whether or not disputed.
8.6 Litigation. Except as set forth on the Information Certificate, there
is no present investigation by any governmental agency pending, or to the best
of each Borrower's knowledge threatened, against or affecting either Borrower,
its assets or business and there is no action, suit, proceeding or claim by any
Person pending, or to the best of each Borrower's knowledge threatened, against
either Borrower or its assets or goodwill, or against or affecting any
transactions contemplated by this Agreement, which if adversely determined
against either Borrower would result in any material adverse change in the
assets, business or prospects of such Borrower or would impair the ability of
such Borrower to perform its obligations hereunder or under any of the other
Financing Agreements to which it is a party or of Lender to enforce any
Obligations or realize upon any Collateral.
8.7 Compliance with Other Agreements and Applicable Laws. Neither Borrower
is in default in any material respect under, or in violation in any material
respect of any of the terms of, any agreement, contract, instrument, lease or
other commitment to which it is a party or by which it or any of its assets are
bound and each Borrower is in compliance in all material respects with all
applicable provisions of laws, rules, regulations, licenses, permits, approvals
and orders of any foreign, federal, provincial or local governmental authority.
8.8 Bank Accounts. All of the deposit accounts, investment accounts or
other accounts in the name of or used by either Borrower maintained at any bank
or other financial institution are set forth on Schedule 8.8 hereto, subject to
the right of each Borrower to establish new accounts in accordance with Section
9.13 below.
8.9 Accuracy and Completeness of Information. All information furnished by
or on behalf of either Borrower in writing to Lender in connection with this
Agreement or any of the other Financing Agreements or any transaction
contemplated hereby or thereby, including, without limitation, all information
on the Information Certificate is true and correct in all material respects on
the date as of which such information is dated or certified and does not omit
any material fact necessary in order to make such information not misleading. No
event or circumstance has occurred which has had or could reasonably be expected
to have a material adverse affect on the business, assets or prospects of either
Borrower, which has not been fully and accurately disclosed to Lender in
writing.
30
8.10 Environmental Compliance.
(a) Except as set forth on Schedule 8.10 hereto, neither Borrower
has generated, used, stored, treated, transported, manufactured, handled,
produced or disposed of any Hazardous Materials, on or off its premises (whether
or not owned by it) in a manner which constitutes a material violation of any
applicable Environmental Law or any license, permit, certificate, approval or
similar authorization thereunder and the operations of each Borrower comply in
all material respects with all Environmental Laws and all licenses, permits,
certificates, approvals and similar authorizations thereunder.
(b) Except as set forth on Schedule 8.10 hereto, there has been no
material investigation, proceeding, order, directive, claim, citation or written
notice by any governmental authority or any other person nor is any pending or
to the best of each Borrower's knowledge threatened, with respect to any
non-compliance with or violation of the requirements of any Environmental Law by
either Borrower or the release, spill or discharge, threatened or actual, of any
Hazardous Material or the generation, use, storage, treatment, transportation,
manufacture, handling, production or disposal of any Hazardous Materials or any
other environmental, health or safety matter, which affects either Borrower or
their business, operations or assets or any properties at which any Borrower has
transported, stored or disposed of any Hazardous Materials.
(c) Except as set forth on Schedule 8.10 hereto, neither Borrower
has any material liability (contingent or otherwise) in connection with a
release, spill or discharge, threatened or actual, of any Hazardous Materials or
the generation, use, storage, treatment, transportation, manufacture, handling,
production or disposal of any Hazardous Materials.
(d) Except as set forth on Schedule 8.10 hereto, each Borrower has
all material licenses, permits, certificates, approvals or similar
authorizations required to be obtained or filed in connection with the
operations of such Borrower under any Environmental Law and all of such
licenses, permits, certificates, approvals or similar authorizations are valid
and in full force and effect.
8.11 Capitalization.
(a) All of the issued and outstanding shares of Statia Terminals
Canada, Incorporated are directly and beneficially owned and held by Statia
Terminals Corporation N.V. and all of the issued and outstanding shares of Point
▇▇▇▇▇▇ Marine Services Limited are directly and beneficially owned by Statia
Terminals Canada, Incorporated and all of such
31
shares have been duly authorized and are fully paid and non-assessable, free and
clear of all claims, liens, pledges and encumbrances of any kind, except as set
forth on Schedule 8.11(a) hereto.
(b) Each Borrower is solvent and will continue to be solvent after
the creation of the Obligations, the security interests, liens and charges of
Lender and the other transaction contemplated hereunder, is able to pay its
debts as they mature and has (and has reason to believe it will continue to
have) sufficient capital (and not unreasonably small capital) to carry on its
business and all businesses in which it is about to engage. The assets and
properties of each Borrower at a fair valuation and at their present fair
salable value are, and will be, greater than the Indebtedness of such Borrower,
and including subordinated and contingent liabilities computed at the amount
which, to the best of such Borrower's knowledge, represents an amount which can
reasonably be expected to become an actual or matured liability.
8.12 Survival of Warranties; Cumulative. All representations and
warranties contained in this Agreement or any of the other Financing Agreements
shall survive the execution and delivery of this Agreement and shall be deemed
to have been made again to Lender on the date of each additional borrowing or
other credit accommodation hereunder and shall be conclusively presumed to have
been relied on by Lender regardless of any investigation made or information
possessed by Lender. The representations and warranties set forth herein shall
be cumulative and in addition to any other representations or warranties which
Borrower shall now or hereafter give, or cause to be given, to Lender.
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS
9.1 Maintenance of Existence. Each Borrower shall at all times preserve,
renew and keep in full, force and effect its corporate existence and rights and
franchises with respect thereto and maintain in full force and effect all
permits, licenses, trademarks, tradenames, approvals, authorizations, leases and
contracts necessary to carry on the business as presently or proposed to be
conducted. Each Borrower shall give Lender thirty (30) days prior written notice
of any proposed change in its corporate name, which notice shall set forth the
new name and such Borrower shall deliver to Lender a certified copy of the
Articles of Amendment or analogous documents of such Borrower providing for the
name change certified by the appropriate government authority of the
jurisdiction of incorporation of such Borrower as soon as it is available.
9.2 New Collateral Locations. Each Borrower may open new locations within
Canada provided such Borrower (a) gives Lender thirty (30) days prior written
notice of the intended
32
opening of each such new location and (b) executes and delivers, or causes to be
executed and delivered, to Lender such agreements, documents, and instruments as
Lender may deem reasonably necessary or desirable to protect its interests in
the Collateral at such location, including, without limitation, PPSA and other
financing statements, any filings, notices or registrations necessary or
desirable under any applicable Personal Property Security Legislation and such
other evidence as Lender may require of the perfection, registration or
recording of Lender's first priority security interests, charges and liens where
required by Lender.
9.3 Compliance with Laws, Regulations, Etc.
(a) Each Borrower shall, at all times, comply in all material
respects with all laws, rules, regulations, licenses, permits, approvals and
orders applicable to it under applicable law (including, without limitation,
Environmental Laws and pension benefit legislation).
(b) Except with respect to any matter or event which would not have
a material adverse effect upon either Borrower or the conduct of its business,
each Borrower shall give both oral and written notice to Lender promptly upon
such Borrower's receipt of any notice of, or such Borrower otherwise obtaining
knowledge of, (i) the occurrence of any event involving the release, spill or
discharge of any Hazardous Material or (ii) any investigation, proceeding,
complaint, order, directive, claims, citation or notice with respect to: (A) any
non-compliance with or violation of any Environmental Law by such Borrower or
(B) the release, spill or discharge of any Hazardous Material or (C) the
generation, use, storage, treatment, transportation, manufacture, handling,
production or disposal of any Hazardous Materials or (D) any other
environmental, health or safety matter, which affects either Borrower or its
business, operations or assets or any properties at which either Borrower
transported, stored or disposed of any Hazardous Materials.
(c) Without limiting the generality of the foregoing, whenever
Lender reasonably determines that there is non-compliance, or any condition
which requires any action by or on behalf of either Borrower in order to avoid
any material non-compliance, with any Environmental Law, which non-compliance
could reasonably be expected to have a material adverse effect upon either
Borrower or the conduct of its business, the applicable Borrower shall, at
Lender's request and such Borrower's expense: (i) cause an independent
environmental engineer acceptable to Lender to conduct such tests of the site
where such Borrower's non-compliance or alleged non-compliance with such
Environmental Laws has occurred as to such non-compliance and prepare and
deliver to Lender a report as to such non-compliance setting forth the results
of such tests, a proposed plan for responding to any
33
environmental problems described therein, and an estimate of the costs thereof
and (ii) provide to Lender a supplemental report of such engineer whenever the
scope of such non-compliance, or such Borrower's response thereto or the
estimated costs thereof, shall change in any material respect.
(d) Each Borrower shall indemnify and hold harmless Lender, its
directors, officers, employees, agents, invitees, representatives, successors
and assigns, from and against any and all losses, claims, damages, liabilities,
costs, and expenses (including legal fees and expenses) directly or indirectly
arising out of or attributable to the use, generation, manufacture, production,
storage, release, threatened release, spill, discharge, disposal or presence of
a Hazardous Material, including, without limitation, the costs of any required
or necessary repair, cleanup or other remedial work with respect to any property
of either Borrower and the preparation and implementation of any closure,
remedial or other required plans. All representations, warranties, covenants and
indemnifications in this Section 9.3 shall survive the payment of the
Obligations and the termination or non-renewal of this Agreement.
9.4 Payment of Taxes and Claims.
(a) Each Borrower shall duly pay and discharge all taxes,
assessments, contributions and governmental charges upon or against it or its
properties or assets, except for taxes the validity of which are being contested
in good faith by appropriate proceedings diligently pursued and available to
such Borrower and with respect to which adequate reserves have been set aside on
its books. Each Borrower shall be liable for any tax or penalties imposed on
Lender as a result of the financing arrangements provided for herein and each
Borrower agrees to indemnify and hold Lender harmless with respect to the
foregoing, and to repay to Lender on demand the amount thereof, and until paid
by either Borrower such amount shall be added and deemed part of the Loans,
provided, that, nothing contained herein (including Section 6.4) shall be
construed to require either Borrower to pay any income taxes attributable to the
income of Lender from any amounts charged or paid hereunder to Lender. The
foregoing indemnity shall survive the payment of the Obligations and the
termination or non-renewal of this Agreement.
(b) Upon the request of Borrowers, Lender agrees to provide
Borrowers with appropriate forms, certificates, documents or other information
to the extent necessary to establish a complete exemption from, or reduction in,
any taxes with respect to payments made by Borrowers to Lender hereunder,
provided that, Lender determines, in its sole and absolute discretion, that the
same will not have an effect upon the conduct of Lender's business or would or
may cause Lender to suffer any legal, regulatory or economic prejudice or harm,
as determined by Lender or its counsel in its or their discretion. All costs and
expenses incurred
34
in connection with the foregoing shall be paid by Borrowers. Under no
circumstances shall Lender be required to disclose any of Lender's tax returns
or the tax returns of any affiliates or subsidiaries of Lender or to disclose
any other information (financial or otherwise) regarding the conduct of Lender's
business. In the event Lender elects not to cooperate with or otherwise provide
such forms, certificates, documents or other information to Borrowers, each
Borrower acknowledges and confirms that Lender shall have no liability
whatsoever to Borrowers, any Obligor or any of their respective affiliates or
subsidiaries.
9.5 Insurance. Each Borrower shall, at all times, maintain with
financially sound and reputable insurers insurance with respect to the
Collateral against loss or damage and all other insurance of the kinds and in
the amounts customarily insured against or carried by corporations of
established reputation engaged in the same or similar businesses and similarly
situated. Said policies of insurance shall be satisfactory to Lender as to form,
amount and insurer. Each Borrower shall furnish certificates, policies or
endorsements to Lender as Lender shall require as proof of such insurance, and,
if a Borrower fails to do so, Lender is authorized, but not required, to obtain
such insurance at the expense of Borrowers. All policies shall provide for at
least thirty (30) days prior written notice to Lender of any cancellation or
reduction of coverage and that Lender may act as attorney for each Borrower in
obtaining, and at any time an Event of Default exists or has occurred and is
continuing, adjusting, settling, amending and cancelling such insurance. Each
Borrower shall cause Lender to be named as a loss payee and an additional
insured (but without any liability for any premiums) under the insurance
policies related to the Inventory and all Records relating to Collateral and
each Borrower shall obtain non-contributory lender's loss payable endorsements
to such insurance policies related to the Inventory and all Records relating to
Collateral in form and substance satisfactory to Lender. Such lender's loss
payable endorsements shall specify that the proceeds of such insurance shall be
payable to Lender as its interests may appear and further specify that Lender
shall be paid regardless of any act or omission by either Borrower or any of its
affiliates. At its option, Lender may apply any insurance proceeds received by
Lender at any time to the cost of repairs or replacement of Collateral and/or to
payment of the Obligations, whether or not then due, in any order and in such
manner as Lender may determine or hold such proceeds as cash collateral for the
Obligations.
9.6 Financial Statements and Other Information.
(a) Each Borrower shall keep proper books and records in which true
and complete entries shall be made of all dealings or transactions of or in
relation to the Collateral and the business of each Borrower and its
subsidiaries in accordance with GAAP and Borrowers shall furnish or cause to be
furnished to Lender: (i) within twenty-five (25) days after the end of each
fiscal month, monthly unaudited consolidated financial statements and
35
unaudited consolidating financial statements (in each case only balance sheets
and statements of income and loss), all in reasonable detail, fairly presenting
the financial position and the results of the operations of each Borrower and
its subsidiaries as of the end of and through such fiscal month, (ii) within
forty-five (45) days after the end of each fiscal quarter, quarterly unaudited
consolidated financial statements for Borrower and its affiliates and
subsidiaries (including in each case, balance sheets, statements of income and
loss, and statements of cash flow) all in reasonable detail, fairly presenting
the financial position and the results of the operations of each Borrower and
its subsidiaries and affiliates as of the end of and through such fiscal quarter
and (iii) within ninety (90) days after the end of each fiscal year, audited
consolidated financial statements and audited consolidating financial statements
of each Borrower and its subsidiaries and its affiliates (including in each case
balance sheets, statements of income and loss, statements of cash flow and
statements of shareholders' equity), and the accompanying notes thereto, all in
reasonable detail, fairly presenting the financial position and the results of
the operations of each Borrower and its subsidiaries and its affiliates as of
the end of and for such fiscal year, together with the opinion of independent
chartered accountants, which accountants shall be an independent accounting firm
selected by Borrowers and reasonably acceptable to Lender, that such financial
statements have been prepared in accordance with GAAP, and present fairly the
results of operations and financial condition of Borrowers and their
subsidiaries and affiliates as of the end of and for the fiscal year then ended.
(b) Each Borrower shall promptly notify Lender in writing of the
details of (i) any loss, damage, investigation, action, suit, proceeding or
claim relating to the Collateral or any other property which is security for the
Obligations or which would result in any material adverse change in either
Borrower's business, properties, assets, goodwill or condition, financial or
otherwise and (ii) the occurrence of any Event of Default or event which, with
the passage of time or giving of notice or both, would constitute an Event of
Default.
(c) Each Borrower shall promptly after the sending or filing thereof
furnish or cause to be furnished to Lender all reports and registration
statements which any Borrower files with any Canadian securities commission or
securities exchange.
(d) Each Borrower shall furnish or cause to be furnished to Lender
such budgets, forecasts, projections and other information respecting the
Collateral and the business of such Borrower, as Lender may, from time to time,
reasonably request. Lender is hereby authorized to deliver a copy of any
financial statement or any other information relating to the business of either
Borrower to any court or other government agency or to any participant or
assignee or prospective participant or assignee. Each Borrower hereby
irrevocably authorizes and directs all accountants or auditors to deliver to
Lender, at Borrowers' expense, copies of
36
the financial statements of Borrowers and any reports or management letters
prepared by such accountants or auditors on behalf of Borrowers and to disclose
to Lender such information as they may have regarding the business of Borrowers.
Any documents, schedules, invoices or other papers delivered to Lender may be
destroyed or otherwise disposed of by Lender one (1) year after the same are
delivered to Lender, except as otherwise designated by Borrowers to Lender in
writing.
9.7 Sale of Assets, Consolidation, Amalgamation, Dissolution, Etc. Neither
Borrower shall, directly or indirectly, (a) amalgamate, merge into or with or
consolidate with any other Person or permit any other Person to amalgamate,
merge into or with or consolidate with it, without the prior written consent of
Lender, which consent shall not be unreasonably withheld, provided that, in
connection with any such proposed merger or consolidation, Borrower shall be the
surviving entity, or (b) sell, assign, lease, transfer, abandon or otherwise
dispose of any of its assets to any other Person (except for sales of Inventory
in the ordinary course of business and except for sales of assets (other than
Collateral) whereby the disposition thereof will not have an adverse effect upon
the Collateral or Lender's access thereto or will not have a material adverse
effect upon the conduct of the Borrower's business as presently conducted), or
(c) form or acquire any subsidiary except as permitted or not otherwise
prohibited under the Indenture and provided that Borrower provides Lender with
prior written notice thereof, or (d) wind up, liquidate or dissolve or (e) agree
to do any of the foregoing.
9.8 Encumbrances. Neither Borrower shall create, incur, assume or suffer
to exist any security interest, mortgage, pledge, lien, charge or other
encumbrance of any nature whatsoever on any of its assets or properties,
including, without limitation, the Collateral, except: (a) liens and security
interests of Lender; (b) liens securing the payment of taxes, either not yet
overdue or the validity of which are being contested in good faith by
appropriate proceedings diligently pursued and available to a Borrower and with
respect to which adequate reserves have been set aside on its books; (c)
non-consensual statutory liens (other than liens securing the payment of taxes)
arising in the ordinary course of a Borrower's business to the extent: (i) such
liens secure indebtedness which is not overdue or (ii) such liens secure
indebtedness relating to claims or liabilities which are fully insured and being
defended at the sole cost and expense and at the sole risk of the insurer or
being contested in good faith by appropriate proceedings diligently pursued and
available to a Borrower, in each case prior to the commencement of foreclosure
or other similar proceedings and with respect to which adequate reserves have
been set aside on its books; (d) zoning restrictions, easements, licenses,
covenants and other restrictions affecting the use of real property which do not
interfere in any material respect with the use of such real property or ordinary
conduct of the business of either Borrower as presently conducted thereon or
materially impair the value of the real property which may be subject thereto;
(e) purchase money security interests or liens in Equipment
37
(including capital leases) and purchase money mortgages on real estate so long
as such security interests and mortgages do not apply to any property of either
Borrower other than the Equipment or real estate so acquired, and the
indebtedness secured thereby does not exceed the cost of the Equipment or real
estate so acquired, as the case may be; (f) the security interests and liens set
forth on Schedule 8.4 hereto; (g) any security interests and liens granted in
favour of the Trustee under the Indenture (with such security interests, charges
and liens being subject to the Access Agreement); and (h) any security interests
and liens granted in favour of any person which are permitted or not otherwise
prohibited under the Indenture provided that such liens shall not attach to any
of the Collateral.
9.9 Indebtedness. Neither Borrower shall incur, create, assume, become or
be liable in any manner with respect to, or permit to exist, any obligations or
indebtedness, except (a) the Obligations; (b) trade obligations and normal
accruals in the ordinary course of business not yet due and payable, or with
respect to which a Borrower is contesting in good faith the amount or validity
thereof by appropriate proceedings diligently pursued and available to such
Borrower, and with respect to which adequate reserves have been set aside on its
books; (c) purchase money indebtedness (including capital leases) to the extent
not incurred or secured by liens (including capital leases) in violation of any
other provision of this Agreement; (d) indebtedness as permitted or not
otherwise prohibited under the Indenture (provided that, such indebtedness
(other than indebtedness due the Trustee or the noteholders under the Indenture
or "Additional Secured Indebtedness" as defined in the Indenture) is not secured
by Collateral); and (e) the indebtedness set forth on Schedule 9.9 hereto;
provided, that, (i) a Borrower may only make regularly scheduled payments of
principal and interest in respect of such indebtedness in accordance with the
terms of the agreement or instrument evidencing or giving rise to such
indebtedness as in effect on the date hereof, (ii) neither Borrower shall,
directly or indirectly, (A) amend, modify, alter or change the terms of such
indebtedness or any agreement, document or instrument related thereto as in
effect on the date hereof, or (B) redeem, retire, defease, purchase or otherwise
acquire (except as provided for below) such indebtedness, or set aside or
otherwise deposit or invest any sums for such purpose, and (iii) each Borrower
shall furnish to Lender all notices or demands in connection with such
indebtedness either received by such Borrower or on its behalf, promptly after
the receipt thereof, or sent by such Borrower or on its behalf, concurrently
with the sending thereof, as the case may be. Notwithstanding anything to the
contrary contained in this Section 9.9, each Borrower shall have the right to
repurchase or otherwise acquire any Securities (as defined in the Indenture),
provided that no Event of Default exists and, after giving effect to such
repurchase or acquisition, there shall exist Excess Availability hereunder and
under the US Loan Agreement in an aggregate amount of not less than the Canadian
Dollar Amount equivalent of US $2,000,000.
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9.10 Loans, Investments, Guarantees, Etc. Neither Borrower shall, directly
or indirectly, make any loans or advance money or property to any person, or
invest in (by capital contribution, dividend or otherwise) or purchase or
repurchase the shares or indebtedness or all or a substantial part of the assets
or property of any person, or guarantee, assume, endorse, or otherwise become
responsible for (directly or indirectly) the indebtedness, performance,
obligations or dividends of any Person or agree to do any of the foregoing,
except: (a) loans by Borrowers to Statia N.V. in an aggregate amount not to
exceed the Canadian Dollar Amount equivalent to US $5,000,000 in any fiscal year
of the Borrowers, provided that, in each instance and at the time any such loan
is to be made (i) no Event of Default shall exist or have occurred and be
continuing or result from such loan and (ii) Borrowers have Excess Availability,
as determined by Lender immediately after giving effect to the making such loans
of not less than the Canadian Dollar Amount equivalent to US$1,000,000; (b) the
endorsement of instruments for collection or deposit in the ordinary course of
business; (c) investments in: (i) short-term direct obligations of the Canadian
Government, (ii) negotiable certificates of deposit issued by any bank
satisfactory to Lender, payable to the order of either Borrower or to bearer and
delivered to Lender, and (iii) commercial paper rated A1 or P1; and (d) the
loans, advances and guarantees set forth on Schedule 9.10 hereto or as permitted
or not otherwise prohibited under Sections 4.03 and 4.12 of the Indenture;
provided, that, as to such loans, advances and guarantees, (i) neither Borrower
shall, directly or indirectly, (A) amend, modify, alter or change the terms of
such loans, advances or guarantees or any agreement, document or instrument
related thereto, including amending or modifying Sections 4.03 and 4.12 of the
Indenture as in effect on the date hereof, or (B) as to such guarantees, redeem,
retire, defease, purchase or otherwise acquire the obligations arising pursuant
to such guarantees, or set aside or otherwise deposit or invest any sums for
such purpose except to the extent expressly provided for in the Indenture
provided that, after giving effect thereto, the same shall not create an Event
of Default hereunder, and (ii) each Borrower shall furnish to Lender all notices
or demands in connection with such loans, advances or guarantees or other
indebtedness subject to such guarantees either received by such Borrower or on
its behalf, promptly after the receipt thereof, or sent by such Borrower or on
its behalf, concurrently with the sending thereof, as the case may be.
9.11 Dividends and Redemptions. Neither Borrower shall, directly or
indirectly, declare or pay any dividends on account of any shares of such
Borrower now or hereafter outstanding, or set aside or otherwise deposit or
invest any sums for such purpose, or redeem, retire, defease, purchase or
otherwise acquire any shares of any class (or set aside or otherwise deposit or
invest any sums for such purpose) for any consideration other than common shares
or apply or set apart any sum, or make any other distribution (by reduction of
capital or otherwise) in respect of any such shares or agree to do any of the
foregoing, except as permitted or not otherwise prohibited under Sections 4.03
and 4.12 of the Indenture, provided
39
that, after giving effect to any such dividend or redemption, no Event of
Default exists or would exist hereunder. Each Borrower further agrees that it
will not amend or modify Sections 4.03 and 4.12 of the Indenture as in effect on
the date hereof.
9.12 Transactions with Affiliates. Neither Borrower shall, directly or
indirectly, (a) purchase, acquire or lease any tangible property from, or sell,
transfer or lease any property to, any officer, director, agent or other person
affiliated with a Borrower, except in the ordinary course of and pursuant to the
reasonable requirements of a Borrower's business and upon fair and reasonable
terms no less favourable to such Borrower than such Borrower would obtain in a
comparable arm's length transaction with an unaffiliated person or (b) make any
payments of management, consulting or other fees for management or similar
services, or of any indebtedness owing to any officer, employee, shareholder,
director or other person affiliated with either Borrower, except (i) (A)
reasonable compensation to officers, employees and directors for services
rendered to such Borrower in the ordinary course of business and (B) payments to
EMT & Associates for consulting services pursuant to its consulting agreement
with Borrowers and payments to Statia Terminals, Inc. pursuant to its services
agreement with Borrowers and (ii) payments to ▇▇▇▇▇▇ ▇▇▇▇▇▇, Inc. as a
management fee, provided that, as of the date of such payment and after giving
effect thereto,, no Event of Default or act, condition or event which with
notice or passage of time or both would constitute an Event of Default shall
exist or have occurred and be continuing.
9.13 Additional Bank Accounts. At any time on or after the initial
borrowings hereunder, neither Borrower shall directly or indirectly, open,
establish or maintain any deposit account, investment account or any other
account with any bank or other financial institution, other than the Blocked
Accounts and the accounts set forth in Schedule 8.8 hereto, except: (a) as to
any new or additional Blocked Accounts and other such new or additional accounts
which contain any Collateral or proceeds thereof, with the prior written consent
of Lender and subject to such conditions thereto as Lender may establish; (b) as
to any accounts used by either Borrower to make payments of payroll, taxes or
other obligations to third parties, after prior written notice to Lender; and
(c) the Collateral Account (as defined in the Indenture).
9.14 Applications under the Companies' Creditors Arrangement Act.
Borrowers acknowledge that their business and financial relationships with
Lender are unique from its relationship with any other of its creditors. Each
Borrower agrees that it shall not file any plan of arrangement under the CCAA
("CCAA Plan") which provides for, or would permit directly or indirectly, Lender
to be classified with any other creditor of either Borrower for purposes of such
CCAA Plan or otherwise.
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9.15 Intentionally Deleted.
9.16 Costs and Expenses. Each Borrower shall pay to Lender on demand all
reasonable costs, expenses, filing fees and taxes paid or payable in connection
with the preparation, negotiation, execution, delivery, recording,
administration, collection, liquidation, enforcement and defense of the
Obligations, Lender's rights in the Collateral, this Agreement, the other
Financing Agreements and all other documents related hereto or thereto,
including any amendments, supplements or consents which may hereafter be
contemplated (whether or not executed) or entered into in respect hereof and
thereof, including, but not limited to: (a) all costs and expenses of filing or
recording (including PPSA and UCC financing statement and other similar filing,
registration and recording fees and taxes arising under applicable Personal
Property Security Legislation or otherwise, documentary taxes, intangibles taxes
and mortgage recording taxes and fees, if applicable); (b) all insurance
premiums, appraisal fees and search fees; (c) costs and expenses of remitting
loan proceeds, collecting cheques and other items of payment, and establishing
and maintaining the Blocked Accounts, if any, and the Payment Accounts, together
with Lender's customary charges and fees with respect thereto; (d) charges, fees
or expenses charged by any bank or issuer in connection with the Letter of
Credit Accommodations; (e) costs and expenses of preserving and protecting the
Collateral; (f) costs and expenses paid or incurred in connection with obtaining
payment of the Obligations, enforcing the security interests and liens of
Lender, selling or otherwise realizing upon the Collateral, and otherwise
enforcing the provisions of this Agreement and the other Financing Agreements or
defending any claims made or threatened against Lender arising out of the
transactions contemplated hereby and thereby (including, without limitation,
preparations for and consultations concerning any such matters); (g) all
out-of-pocket expenses and costs heretofore and from time to time hereafter
incurred by Lender during the course of periodic field examinations of the
Collateral and Borrowers' operations, plus a per diem charge at the rate of
US$600 per person per day for Lender's examiners in the field and office; and
(h) the fees and disbursements of counsel (including legal assistants) to Lender
in connection with any of the foregoing.
9.17 Further Assurances. At the request of Lender at any time and from
time to time, each Borrower shall, at its expense, duly execute and deliver, or
cause to be duly executed and delivered, such further agreements, documents and
instruments (including, without limitation, Hypothecs and a general security
agreement upon enactment of the Personal Property Security Act (Nova Scotia)),
and do or cause to be done such further acts as may be necessary or proper to
evidence, perfect, maintain and enforce the security interests, liens charges
and assignments and the priority thereof in the Collateral and to otherwise
effectuate the provisions or purposes of this Agreement or any of the other
Financing Agreements. Lender may at any time and from time to time request a
certificate from an officer of a Borrower representing that all
41
conditions precedent to the making of Loans and providing Letter of Credit
Accommodations contained herein are satisfied. In the event of such request by
Lender, Lender may, at its option, cease to make any further Loans or provide
any further Letter of Credit Accommodations until Lender has received such
certificate and, in addition, Lender has determined that such conditions are
satisfied. Where permitted by law, each Borrower hereby authorizes Lender to
execute and file one or more PPSA, UCC or other financing statements or notices
or other filings under the applicable Personal Property Security Legislation
signed only by Lender or Lender's representative.
SECTION 10. EVENTS OF DEFAULT AND REMEDIES
10.1 Events of Default. The occurrence or existence of any one or more of
the following events are referred to herein individually as an "Event of
Default", and collectively as "Events of Default":
(a) (i) Either Borrower fails to pay any of the Obligations within
three (3) days after the same becomes due and payable or (ii) either Borrower or
any Obligor fails to perform any of the terms, covenants, conditions or
provisions contained in this Agreement or any of the other Financing Agreements
other than as described in Section 10.1(a)(i) and such failure shall continue
for ten (10) days; provided, that, such ten (10) day period shall not apply in
the case of: (A) any failure to observe any such term, covenant, condition or
provision which is not capable of being cured at all or within such ten (10) day
period or which has been the subject of a prior failure within a six (6) month
period or (B) an intentional breach by either Borrower or any Obligor of any
such term, covenant, condition or provision, or (C) the failure to observe or
perform any of the covenants or provisions contained in Section 9.2, 9.7, 9.8
(with respect to Collateral only), 9.9, 9.10, 9.11 or 9.12 of this Agreement or
any covenants or agreements covering substantially the same matter as such
sections in any of the other Financing Agreements;
(b) any representation, warranty or statement of fact made by either
Borrower to Lender in this Agreement, the other Financing Agreements or any
other agreement, schedule, confirmatory assignment or otherwise shall when made
or deemed made be false or misleading in any material respect;
(c) any Obligor revokes, terminates or fails to perform any of the
terms, covenants, conditions or provisions of any guarantee, endorsement or
other agreement of such party in favour of Lender;
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(d) any judgment for the payment of money is rendered against either
Borrower or any Obligor in excess of the Canadian Dollar Amount equivalent to
US$ 500,000 in any one case or in excess of the Canadian Dollar Amount
equivalent to US$1,000,000 in the aggregate and shall remain undischarged or
unvacated for a period in excess of thirty (30) days or execution shall at any
time not be effectively stayed, or any injunction, attachment, garnishment or
execution involving the Collateral, a substantial portion of either Borrower's
or any Obligor's assets, or any other property owned by either Borrower or
Obligor materially necessary for the conduct of either Borrower's or any
Obligor's respective businesses is rendered against either Borrower or any
Obligor or any of such assets;
(e) any Obligor (being a natural person or a general partner of an
Obligor which is a partnership) dies or either Borrower or any Obligor, which is
a partnership or corporation, dissolves or suspends or discontinues doing
business;
(f) either Borrower or any Obligor becomes insolvent (however
defined or evidenced under the laws of Canada, the United States of America, the
Netherlands, Antilles or otherwise), makes an assignment for the benefit of
creditors, makes or sends notice of a bulk transfer or sale calls a meeting of
its creditors or principal creditors, or a trustee, receiver or liquidator is
appointed or assigned under the laws of Canada, the United States of America,
the Netherlands, Antilles or any other applicable law with respect to any of the
Collateral or all or substantially all of the assets of either Borrower or any
Obligor;
(g) a petition, case or proceeding under the bankruptcy or
insolvency laws of Canada, the United States of America, the Netherlands
Antilles (including, without limitation, the Netherlands Antilles Bankruptcy
Decree) or any similar federal, state, provincial or foreign law for the relief
of creditors now or hereafter in effect or under any insolvency, arrangement,
reorganization, moratorium, receivership, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction now or hereafter in effect
(whether at law or in equity) is filed or commenced against either Borrower or
any Obligor or all or any substantial part of its properties and such petition
or application is not dismissed within thirty (30) days after the date of its
filing or either Borrower or any Obligor shall file any answer admitting or not
contesting such petition or application or indicates its consent to,
acquiescence in or approval of, any such action or proceeding or the relief
requested is granted sooner;
(h) a petition, case or proceeding under the bankruptcy or
insolvency laws of Canada, the United States of America, the Netherlands
Antilles (including, without limitation, the Netherlands Antilles Bankruptcy
Decree) or federal, state, provincial or foreign law for the relief of creditors
now or hereafter in effect or under any insolvency, arrangement, reorganization,
moratorium, receivership, readjustment of debt, dissolution or liquidation law
43
or statute of any jurisdiction now or hereafter in effect (whether at a law or
equity) is filed or commenced by either Borrower or any Obligor for all or any
part of its property including, without limitation, if either Borrower or any
Obligor shall:
(i) apply for or consent to the appointment of a receiver,
trustee or liquidator of it or of all or a substantial part of its
property and assets;
(ii) be unable, or admit in writing its inability, to pay its
debts as they mature, or commit any other act of bankruptcy;
(iii) make a general assignment for the benefit of creditors;
(iv) file a voluntary petition or assignment in bankruptcy or
a proposal seeking a reorganization, compromise, moratorium or
arrangement with its creditors;
(v) take advantage of any insolvency or other similar law
pertaining to arrangements, moratoriums, compromises or
reorganizations, or admit the material allegations of a petition or
application filed in respect of it in any bankruptcy, reorganization
or insolvency proceeding; or
(vi) take any corporate action for the purpose of effecting
any of the foregoing;
(i) any default by either Borrower or any Obligor under any
agreement, document or instrument relating to any indebtedness for borrowed
money owing to any person other than Lender, or any capitalized lease
obligations, contingent indebtedness in connection with any guarantee, letter of
credit, indemnity or similar type of instrument in favour of any person other
than Lender, in any case in an amount in excess of the Canadian Dollar Amount
equivalent to US$1,000,000, which default continues for more than the applicable
cure period, if any, with respect thereto, or any default by either Borrower or
any Obligor under any material contract, lease, license or other obligation to
any person other than Lender, which default continues for more than the
applicable cure period, if any, with respect thereto;
(j) any change in the ownership of either Borrower;
(k) the indictment or threatened indictment of either Borrower or
any Obligor under any criminal statute, or commencement or threatened
commencement of criminal or civil proceedings against either Borrower or any
Obligor, pursuant to which statute or
44
proceedings the penalties or remedies sought or available include forfeiture of
any of the property of either Borrower or such Obligor;
(l) there shall be a material adverse change in the business, assets
or prospects of either Borrower or any Obligor after the date hereof;
(m) there shall be an event of default under the US Loan Agreement
or any of the US Financing Agreements;
(n) there shall be an event of default under the Indenture;
(o) the termination by US Lender or Statia N.V. of those certain
financing arrangements arising under or in connection with the US Loan
Agreement;
(p) there shall be an event of default under any of the other
Financing Agreements;
(q) a requirement from the Minister of National Revenue for payment
pursuant to Section 224 or any successor section of the Income Tax Act (Canada)
or Section 317, or any successor section or any other Person in respect of
either Borrower of the Excise Tax Act (Canada) or any comparable provision of
similar legislation shall have been received by Lender or any other Person in
respect of either Borrower or otherwise issued in respect of either Borrower; or
(r) the Trustee breaches, or otherwise fails to comply with, any of
the terms or provisions of the Access Agreement.
10.2 Remedies.
(a) At any time an Event of Default exists or has occurred and is
continuing, Lender shall have all rights and remedies provided in this
Agreement, the other Financing Agreements, the PPSA, the applicable Personal
Property Security Legislation and other applicable law, all of which rights and
remedies may be exercised without notice to or consent by either Borrower or any
Obligor, except as such notice or consent is expressly provided for hereunder or
required by applicable law. All rights, remedies and powers granted to Lender
hereunder, under any of the other Financing Agreements, the PPSA, the applicable
Personal Property Security Legislation or other applicable law, are cumulative,
not exclusive and enforceable, in Lender's discretion, alternatively,
successively, or concurrently on any one or more occasions, and shall include,
without limitation, the right to apply to a court of equity for
45
an injunction to restrain a breach or threatened breach by either Borrower of
this Agreement or any of the other Financing Agreements. Lender may, at any time
or times, proceed directly against either Borrower or any Obligor to collect the
Obligations without prior recourse to the Collateral.
(b) Without limiting the foregoing, at any time an Event of Default
exists or has occurred and is continuing, Lender may, in its discretion and
without limitation, (i) accelerate the payment of all Obligations and demand
immediate payment thereof to Lender (provided, that, upon the occurrence of any
Event of Default described in Sections 10.1(g) and 10.1(h), all Obligations
shall automatically become immediately due and payable), (ii) with or without
judicial process or the aid or assistance of others, enter upon any premises on
or in which any of the Collateral may be located and take possession of the
Collateral or complete processing, manufacturing and repair of all or any
portion of the Collateral, (iii) require each Borrower, at Borrowers' expense,
to assemble and make available to Lender any part or all of the Collateral at
any place and time designated by Lender, (iv) collect, foreclose, receive,
appropriate, setoff and realize upon any and all Collateral, (v) remove any or
all of the Collateral from any premises on or in which the same may be located
for the purpose of effecting the sale, foreclosure or other disposition thereof
or for any other purpose, (vi) sell, lease, transfer, assign, deliver or
otherwise dispose of any and all Collateral (including, without limitation,
entering into contracts with respect thereto, public or private sales at any
exchange, broker's board, at any office of Lender or elsewhere) at such prices
or terms as Lender may deem reasonable, for cash, upon credit or for future
delivery, with the Lender having the right to purchase the whole or any part of
the Collateral at any such public sale, all of the foregoing being free from any
right or equity of redemption of either Borrower, which right or equity of
redemption is hereby expressly waived and released by each Borrower, and/or
(vii) terminate this Agreement. If any of the Collateral is sold or leased by
Lender upon credit terms or for future delivery, the Obligations shall not be
reduced as a result thereof until payment therefor is finally collected by
Lender. If notice of disposition of Collateral is required by law, five (5) days
prior notice by Lender to Borrowers designating the time and place of any public
sale or the time after which any private sale or other intended disposition of
Collateral is to be made, shall be deemed to be reasonable notice thereof and
Borrowers waive any other notice. In the event Lender institutes an action to
recover any Collateral or seeks recovery of any Collateral by way of prejudgment
remedy, each Borrower waive the posting of any bond which might otherwise be
required.
(c) Lender may apply the cash proceeds of Collateral actually
received by Lender from any sale, lease, foreclosure or other disposition of the
Collateral to payment of the Obligations, in whole or in part and in such order
as Lender may elect, whether or not then
46
due. Each Borrower shall remain liable to Lender for the payment of any
deficiency with interest at the highest rate provided for herein.
(d) Without limiting the foregoing, upon the occurrence of an Event
of Default or an event which with notice or passage of time or both would
constitute an Event of Default, Lender may, at its option, without notice, (i)
cease making Loans or arranging Letter of Credit Accommodations or reduce the
lending formulas or amounts of Revolving Loans and Letter of Credit
Accommodations available to Borrowers and/or (ii) terminate any provision of
this Agreement providing for any future Loans or Letter of Credit Accommodations
to be made by Lender to Borrowers.
(e) Lender may appoint, remove and reappoint any person or persons,
including an employee or agent of Lender to be a receiver (the "Receiver") which
term shall include a receiver and manager of, or agent for, all or any part of
the Collateral. Any such Receiver shall, as far as concerns responsibility for
his acts, be deemed to be the agent of Borrowers and not of Lender, and Lender
shall not in any way be responsible for any misconduct, negligence or
non-feasance of such Receiver, his employees or agents. Except as otherwise
directed by Lender, all money received by such Receiver shall be received in
trust for and paid to Lender. Such Receiver shall have all of the powers and
rights of Lender described in this Section 10.2. Lender may, either directly or
through its agents or nominees, exercise any or all powers and rights of a
Receiver.
(f) Borrowers shall pay all costs, charges and expenses incurred by
Lender or any Receiver or any nominee or agent of Lender, whether directly or
for services rendered (including, without limitation, solicitor's costs on a
solicitor and his own client basis, auditor's costs, other legal expenses and
Receiver remuneration) in enforcing this Agreement or any other Financing
Agreement and in enforcing or collecting Obligations and all such expenses shall
be a charge on the proceeds of realization and shall be secured hereby.
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW
11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial
Waiver.
(a) The validity, interpretation and enforcement of this Agreement
and the other Financing Agreements and any dispute arising out of the
relationship between the parties hereto, whether in contract, tort, equity or
otherwise, shall be governed by the laws of the Province of Ontario and the
federal laws of Canada applicable therein.
47
(b) Each Borrower and Lender irrevocably consent and submit to the
non-exclusive jurisdiction of the Ontario Court (General Division), the Supreme
Court of the State of New York and the United States District Court for the
Southern District of New York and waive any objection based on venue or forum
non conveniens with respect to any action instituted therein arising under this
Agreement or any of the other Financing Agreements or in any way connected with
or related or incidental to the dealings of the parties hereto in respect of
this Agreement or any of the other Financing Agreements or the transactions
related hereto or thereto, in each case whether now existing or hereafter
arising, and whether in contract, tort, equity or otherwise, and agree that any
dispute with respect to any such matters shall be heard only in the courts
described above (except that Lender shall have the right to bring any action or
proceeding against either Borrower or its property in the courts of any other
jurisdiction which Lender deems necessary or appropriate in order to realize on
the Collateral or to otherwise enforce its rights against either Borrower or its
property).
(c) To the extent permitted by law, each Borrower hereby waives
personal service of any and all process upon it and consents that all such
service of process may be made by registered mail (return receipt requested)
directed to its address set forth on the signature pages hereof and service so
made shall be deemed to be completed five (5) days after the same shall have
been so deposited in the Canadian mails, or, at Lender's option, by service upon
such Borrower in any other manner provided under the rules of any such courts.
Within thirty (30) days after such service, such Borrower shall appear in answer
to such process, failing which such Borrower shall be deemed in default and
judgment may be entered by Lender against such Borrower for the amount of the
claim and other relief requested.
(d) EACH BORROWER AND LENDER EACH HEREBY WAIVES ANY RIGHT TO TRIAL
BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS
AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR (ii) IN ANY WAY CONNECTED
WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT
OF THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE TRANSACTIONS
RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. EACH BORROWER AND
LENDER EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT EITHER
BORROWER OR LENDER MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT
WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE
WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
48
(e) Lender shall not have any liability to any Borrower (whether in
tort, contract, equity or otherwise) for losses suffered by either Borrower in
connection with, arising out of, or in any way related to the transactions or
relationships contemplated by this Agreement or any other Financing Agreement,
or any act, omission or event occurring in connection herewith, unless it is
determined by a final and non-appealable judgment or court order binding on
Lender, that the losses were the result of acts or omissions constituting gross
negligence or willful misconduct. In any such litigation, Lender shall be
entitled to the benefit of the rebuttable presumption that it acted in good
faith and with the exercise of ordinary care in the performance by it of the
terms of this Agreement or any other Financing Agreement.
(f) Each Borrower waives the posting of any bond otherwise required
of Lender in connection with any judicial process or proceeding to obtain
possession of, replevy, attach or levy upon the Collateral or other security for
the Obligations, to enforce any judgment or other court order entered in favour
of Lender, or to enforce by specific performance, temporary restraining order,
preliminary or permanent injunction, this Agreement or any other Financing
Agreement.
11.2 Waiver of Notices. Each Borrower hereby expressly waives demand,
presentment, protest and notice of protest and notice of dishonour with respect
to any and all instruments and commercial paper, included in or evidencing any
of the Obligations or the Collateral, and any and all other demands and notices
of any kind or nature whatsoever with respect to the Obligations, the Collateral
and this Agreement, except such as are expressly provided for herein. No notice
to or demand on either Borrower which Lender may elect to give shall entitle
either Borrower to any other or further notice or demand in the same, similar or
other circumstances.
11.3 Amendments and Waivers. Neither this Agreement nor any provision
hereof shall be amended, modified, waived or discharged orally or by course of
conduct, but only by a written agreement signed by an authorized officer of
Lender. Lender shall not, by any act, delay, omission or otherwise be deemed to
have expressly or impliedly waived any of its rights, powers and/or remedies
unless such waiver shall be in writing and signed by an authorized officer of
Lender. Any such waiver shall be enforceable only to the extent specifically set
forth therein. A waiver by Lender of any right, power and/or remedy on any one
occasion shall not be construed as a bar to or waiver of any such right, power
and/or remedy which Lender would otherwise have on any future occasion, whether
similar in kind or otherwise.
11.4 Waiver of Counterclaims. Each Borrower waives all rights to interpose
any claims, deductions, setoffs or counterclaims of any nature (other then
compulsory
49
counterclaims) in any action or proceeding with respect to this Agreement, the
Obligations, the Collateral or any matter arising therefrom or relating hereto
or thereto.
11.5 Indemnification. Each Borrower shall indemnify and hold Lender, and
its directors, agents, employees and counsel, harmless from and against any and
all losses, claims, damages, liabilities, costs or expenses imposed on, incurred
by or asserted against any of them in connection with any litigation,
investigation, claim or proceeding commenced or threatened related to the
negotiation, preparation, execution, delivery, enforcement, performance or
administration of this Agreement, any other Financing Agreements, or any
undertaking or proceeding related to any of the transactions contemplated hereby
or any act, omission, event or transaction related or attendant thereto,
including, without limitation, amounts paid in settlement, court costs, and the
fees and expenses of counsel. To the extent that the undertaking to indemnify,
pay and hold harmless set forth in this Section may be unenforceable because it
violates any law or public policy, each Borrower shall pay the maximum portion
which it is permitted to pay under applicable law to Lender in satisfaction of
indemnified matters under this Section. The foregoing indemnity shall survive
the payment of the Obligations and the termination or non-renewal of this
Agreement.
SECTION 12. TERM OF AGREEMENT; MISCELLANEOUS
12.1 Term.
(a) This Agreement and the other Financing Agreements shall become
effective as of the date set forth on the first page hereof and shall continue
in full force and effect for a term ending on the date three (3) years from the
date hereof (the "Renewal Date"), and from year to year thereafter, unless
sooner terminated pursuant to the terms hereof. Lender may terminate this
Agreement and the other Financing Agreements effective on the Renewal Date or on
the anniversary of the Renewal Date in any year by giving Borrowers at least
sixty (60) days prior written notice, and Borrowers may terminate this Agreement
at any time by giving Lender at least sixty (60) days prior written notice;
provided, that, this Agreement, all other Financing Agreements and the US
Financing Agreements must be terminated simultaneously. Upon the effective date
of termination or non-renewal of the Financing Agreements, Borrowers shall pay
to Lender, in full, all outstanding and unpaid Obligations together with all
amounts payable under pursuant to the terms of Section 12.1(c) hereof and shall
furnish cash collateral to Lender in such amounts as Lender determines are
reasonably necessary to secure Lender from loss, cost, damage or expense,
including legal fees and expenses, in connection with any contingent
Obligations, including issued and outstanding Letter of Credit Accommodations
and cheques or other payments provisionally credited to the Obligations
50
and/or as to which Lender has not yet received final and indefeasible payment.
Such cash collateral shall be remitted by wire transfer in Canadian Dollars to
such bank account of Lender, as Lender may, in its discretion, designate in
writing to Borrowers for such purpose. Interest shall be due until and including
the next business day, if the amounts so paid by Borrowers to the bank account
designated by Lender are received in such bank account later than 12:00 noon,
Toronto time.
(b) No termination of this Agreement or the other Financing
Agreements shall relieve or discharge any Borrower of its respective duties,
obligations and covenants under this Agreement or the other Financing Agreements
until all Obligations have been fully and finally discharged and paid, and
Lender's continuing security interest, lien and charge in the Collateral and the
rights and remedies of Lender hereunder, under the other Financing Agreements
and applicable law, shall remain in effect until all such Obligations have been
fully and finally discharged and paid.
(c) If for any reason this Agreement is terminated prior to the end
of the initial term in view of the impracticality and extreme difficulty of
ascertaining actual damages and by mutual agreement of the parties as to a
reasonable calculation of Lender's lost profits as a result thereof, Borrowers
agree to pay to Lender, upon the effective date of such termination, an early
termination fee in the amount set forth below if such termination is effective
in the period indicated:
Amount Period
------ ------
(i) 3.0% of Maximum Credit From the date hereof to and
including November 26, 1997
(ii) 2.0% of Maximum Credit From November 27, 1997 to and
including November 26, 1998
(iii) 1.0% of Maximum Credit From November 27, 1998 to and
including November 26, 1999
Such early termination fee shall be presumed to be the amount of damages
sustained by Lender as a result of such early termination and each Borrower
agrees that it is reasonable under the circumstances currently existing. In
addition, Lender shall be entitled to such early termination fee upon the
occurrence of any Event of Default described in Sections 10.1(g) and 10.1(h)
hereof, even if Lender does not exercise its rights to terminate this Agreement,
but elects, at its option, to provide financing to Borrowers or permit the use
of cash collateral
51
during the course of insolvency or bankruptcy proceedings. The early termination
fee provided for in this Section 12.1 shall be deemed included in the
Obligations.
(d) Notwithstanding anything to the contrary contained herein, if
Borrowers request Lender to consent to an amalgamation, merger or consolidation
as required under Section 9.7(a) of this Agreement (the "Merger") and Lender
advises Borrowers in writing that Lender does not consent to such Merger, then
Borrowers shall have the right to terminate this Agreement upon not less than
ten (10) days prior written notice to Lender and Lender agrees to waive the
early termination fee which would otherwise be required to be paid hereunder,
provided that (i) such termination occurs within ninety (90) days after Lender
notifies Borrowers that it will not consent to the Merger and (ii) the Merger in
fact occurs effective as of the termination date of this Agreement. If either of
the conditions of this Section 12.1(d)(i) and (ii) are not complied with by
Borrowers then Borrowers shall pay Lender the early termination fee as provided
for in Section 12(c) in connection with the termination of this Agreement.
12.2 Notices. All notices, requests and demands hereunder shall be in
writing and (a) made to Lender and Congress US at the addresses set forth below
and to Borrowers at their principal executive office set forth below, or to such
other address as either party may designate by written notice to the other in
accordance with this provision, and (b) deemed to have been given or made: if
delivered in person, immediately upon delivery; if by facsimile transmission,
immediately upon sending and upon confirmation of receipt; if by nationally
recognized overnight courier service with instructions to deliver the next
business day, one (1) business day after sending; and if by registered mail,
return receipt requested, five (5) days after mailing.
12.3 Partial Invalidity. If any provision of this Agreement is held to be
invalid or unenforceable, such invalidity or unenforceability shall not
invalidate this Agreement as a whole, but this Agreement shall be construed as
though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.
12.4 Successors. This Agreement, the other Financing Agreements and any
other document referred to herein or therein shall be binding upon and inure to
the benefit of and be enforceable by Lender, each Borrower and their respective
successors and assigns, except that neither Borrower may assign its rights under
this Agreement, the other Financing Agreements and any other document referred
to herein or therein without the prior written consent of Lender. Lender may,
after notice to Borrowers, assign its rights and delegate its obligations under
this Agreement and the other Financing Agreements and further may assign, or
sell
52
participations in, all or any part of the Loans, the Letter of Credit
Accommodations or any other interest herein to another financial institution or
other person, in which event, the assignee or participant shall have, to the
extent of such assignment or participation, the same rights and benefits as it
would have if it were the Lender hereunder, except as otherwise provided by the
terms of such assignment or participation, provided further that if Lender
assigns all of its rights and interests hereunder and as of the date of such
assignment, no Event of Default exists and is continuing, the Borrowers or the
Obligor, as the case may be, shall not be obligated to pay additional amounts
pursuant to the second sentence of Section 9.4(a) to the extent that such
amounts exceed the amounts that would have otherwise been payable to the
assignor had such assignor not made such assignment or transfer, except that,
the foregoing provisions shall not apply in the event that Lender assigned its
rights and interests hereunder after the occurrence of an Event of Default and
during its continuance.
12.5 Joint and Several Liability. All Loans made hereunder are made to or
for the benefit of each of the Borrowers. The Borrowers are jointly and
severally, directly and primarily liable for the full and indefeasible payment
when due and performance of all Obligations and for the prompt and full payment
and performance of all of the promises, covenants, representations, and
warranties made or undertaken by each Borrower under the Financing Agreements
and each Borrower agrees that such liability is independent of the duties,
obligations, and liabilities of each of the joint and several Borrowers. In
furtherance of the foregoing, each Borrower jointly and severally, absolutely
and unconditionally guaranties to Lender and agrees to be liable for the full
and indefeasible payment and performance when due of all the Obligations. This
guarantee is a continuing guarantee, shall not be terminated while any of the
Obligations is outstanding, and shall apply to all Obligations whenever arising.
12.6 Suretyship Waivers and Consents.
(a) Each Borrower acknowledges that the obligations of such Borrower
(the "Guarantor Borrower") undertaken herein might be construed to consist, at
least in part, of the guarantee of obligations (the "Guaranteed Obligations") of
persons other than such Borrower (including the other Borrower) and, in full
recognition of that fact, the Guarantor Borrower consents and agrees that Lender
may, at any time and from time to time, with respect to the Guaranteed
Obligations, without notice or demand, (except as provided in and in accordance
with the terms of this Agreement), whether before or after any actual or
purported termination, repudiation or revocation of this Agreement by either
Borrower, and without affecting the enforceability or continuing effectiveness
hereof as to the Guarantor Borrower: (i) increase, extend, or otherwise change
the time for payment or the terms of the Guaranteed Obligations or any part
thereof; (ii) supplement, restate, modify, amend, increase, decrease, or waive,
or
53
enter into or give any agreement, approval or consent with respect to, the
Guaranteed Obligations or any part thereof, or any of the Financing Agreements
or any additional security or guarantees, or any condition, covenant, default,
remedy, right, representation, or term thereof or thereunder; (iii) accept new
or additional instruments, documents, or agreements in exchange for or relative
to any of the Financing Agreements or the Guaranteed Obligations or any part
thereof; (iv) accept partial payments on the Guaranteed Obligations; (v) receive
and hold additional security or guarantees for the Guaranteed Obligations or any
part thereof; (vi) release, reconvey, terminate, waive, abandon, fail to
perfect, subordinate, exchange, substitute, transfer, or enforce any Collateral,
security or guarantees, and apply any Collateral or security and direct the
order or manner of sale thereof as Lender in its sole and absolute discretion
may determine; (vii) release any person from any personal liability with respect
to the Guaranteed Obligations or any part thereof; (viii) settle, release on
terms satisfactory to Lender or by operation of applicable laws or otherwise
liquidate or enforce any Guaranteed Obligations and any Collateral or security
therefor or guarantee thereof in any manner, consent to the transfer of any
Collateral or security and bid and purchase at any sale; or (ix) consent to the
merger, change, or any other restructuring or termination of the corporate or
partnership existence of either Borrower, and any corresponding restructuring of
the Guaranteed Obligations, and any such merger, change, restructuring, or
termination shall not affect the liability of the Guarantor Borrower or the
continuing effectiveness hereof, or the enforceability hereof with respect to
all or any part of the Guaranteed Obligations.
(b) Lender may enforce this Agreement independently as to each
Borrower and independently of any other remedy or security Lender at any time
may have or hold in connection with the Obligations, and it shall not be
necessary for Lender to marshal assets in favour of either Borrower or any
Obligor or to proceed upon or against or exhaust any Collateral or security or
remedy before proceeding to enforce this Agreement. Each Borrower expressly
waives any right to require Lender to marshal assets in favor of either Borrower
or any guarantor of the Obligations or to proceed against the other Borrower,
and agrees that Lender may proceed against Borrowers or any Collateral in such
order as Lender shall determine in its sole an absolute discretion.
(c) Lender may file a separate action or actions against either
Borrower, whether such action is brought or prosecuted with respect to any
security or against any guarantor of the Obligations, or whether any other
person is joined in any such action or actions. Each Borrower agrees that Lender
and each Borrower and any affiliate of either Borrower may deal with each other
in connection with the Obligations or otherwise, or alter any contracts or
agreements now or hereafter existing between any of them, in any manner
whatsoever, all without in any way altering or affecting the continuing
enforceability of this Agreement. Each Borrower, as a joint and several Borrower
hereunder, expressly waives the
54
benefit of any statute of limitations affecting its joint and several liability
hereunder (but not its primary liability) or the enforcement of the Obligations
or any rights of Lender created or granted herein.
(d) Lender's rights hereunder shall be reinstated and revived, and
the enforceability of this Agreement shall continue, with respect to any amount
at any time paid on account of the Obligations which thereafter shall be
required to be restored or returned by Lender, all as though such amount had not
been paid. The rights of Lender created or granted herein and the enforceability
of this Agreement at all times shall remain effective to cover the full amount
of all the Obligations even though the Obligations, including any part thereof
or any Collateral, other security or guarantee therefor, may be or hereafter may
become invalid or otherwise unenforceable as against either Borrower and whether
or not either Borrower shall have any personal liability with respect thereto.
(e) Each Borrower expressly waives any and all defenses now or
hereafter arising or asserted by reason of (i) any disability or other defense
of the other Borrower with respect to the Obligations; (ii) the unenforceability
or invalidity of any security or guaranty for the Obligations or the lack of
perfection or continuing perfection or failure of priority of any security for
the Obligations; (iii) the cessation for any cause whatsoever of the liability
of either Borrower (other than by reason of the full payment and performance of
all Obligations); (iv) any failure of Lender to marshal assets in favour of any
Borrower; (v) any failure of Lender to give notice to either Borrower of sale or
other disposition of Collateral of another Borrower or any defect in any notice
that may be given in connection with any such sale or disposition of Collateral
of either Borrower securing the Obligations; (vi) any failure of Lender to
comply with applicable law in connection with the sale or other disposition of
any Collateral or other security of either Borrower, for any Obligation,
including any failure of Lender to conduct a commercially reasonable sale or
other disposition of any Collateral or other security of either Borrower for any
Obligation; (vii) any act or omission of Lender or others that directly or
indirectly results in or aids the discharge or release of either Borrower or any
security or guaranty therefor by operation of law or otherwise; (viii) any law
which provides that the obligation of a surety or guarantor must neither be
larger in amount nor in other respects more burdensome than that of the
principal or which reduces a surety's or guarantor's obligation in proportion to
the principal obligation; (ix) any failure of Lender to file or enforce a claim
in any bankruptcy or other proceeding with respect to either Borrower; (x) the
avoidance of any lien or security interest in assets of either Borrower in
favour of Lender for any reason; or (xi) any action taken by Lender that is
authorized by this section or any other provision of any Financing Agreement.
Until such time, if any, as all of the Obligations have been indefeasibly paid
and performed in full and no portion of any commitment of Lender to Borrowers
under any Financing Agreement remains in effect, each Borrower's indebtedness,
55
claims and rights of subrogation, contribution, reimbursement, or indemnity
against the other Borrower shall be fully and completely subordinated to the
indefeasible repayment in full of the Obligations, and each Borrower expressly
waives until such indefeasible payment any right to enforce any remedy that it
now has or hereafter may have against any other Person and waives the benefit
of, or any right to participate in, any Collateral now or hereafter held by
Lender.
(f) To the fullest extent permitted by applicable law, each Borrower
expressly waives and agrees not to assert, any and all defenses in its favour
based upon an election of remedies by Lender which destroys, diminishes, or
affects such Borrower's subrogation rights against the other Borrower, or
against any Obligor, and/or (except as explicitly provided for herein) any
rights to proceed against the other Borrower, or any other party liable to
Lender, for reimbursement, contribution, indemnity, or otherwise.
(g) Each Borrower warrants and agrees that each of the waivers and
consents set forth herein are made after consultation with legal counsel and
with full knowledge of their significance and consequences, with the
understanding that events giving rise to any defense or right waived may
diminish, destroy, or otherwise adversely affect rights which Borrowers
otherwise may have against each other, Lender, or others, or against Collateral,
and that, under the circumstances, the waivers and consents herein given are
reasonable and not contrary to public policy or law. If any of the waivers or
consents herein are determined to be contrary to any applicable law or public
policy, such waivers and consents shall be effective to the maximum extent
permitted by law.
12.7 Entire Agreement. This Agreement, the other Financing Agreements, any
supplements hereto or thereto, and any instruments or documents delivered or to
be delivered in connection herewith or therewith represents the entire agreement
and understanding concerning the subject matter hereof and thereof between the
parties hereto, and supersede all other prior agreements, understandings,
negotiations and discussions, representations, warranties, commitments,
proposals, offers and contracts concerning the subject matter hereof, whether
oral or written.
12.8 Headings. The division of this Agreement into Sections and the
insertion of headings and a table of contents are for convenience of reference
only and shall not affect the construction or interpretation of this Agreement.
12.9 Judgment Currency. To the extent permitted by applicable law, the
obligations of each Borrower in respect of any amount due under this Agreement
shall, notwithstanding any payment in any other currency (the "Other Currency")
(whether pursuant to a judgment or
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otherwise), be discharged only to the extent of the amount in the currency in
which it is due (the "Agreed Currency") that Lender may, in accordance with
normal banking procedures, purchase with the sum paid in the Other Currency
(after any premium and costs of exchange) on the Business Day immediately after
the day on which Lender receives the payment. If the amount in the Agreed
Currency that may be so purchased for any reason falls short of the amount
originally due, each Borrower shall pay all additional amounts, in the Agreed
Currency, as may be necessary to compensate for the shortfall. Any obligation of
Borrowers not discharged by that payment shall, to the extent permitted by
applicable law, be due as a separate and independent obligation and, until
discharged as provided in this Section, continue in full force and effect.
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IN WITNESS WHEREOF, Lender and Borrower have caused these presents to be
duly executed as of the day and year first above written.
================================================================================
LENDER BORROWERS
------ ---------
CONGRESS FINANCIAL STATIA TERMINALS CANADA,
CORPORATION (CANADA) INCORPORATED
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------- ----------------------------
Title: Senior Vice President Title: President
-------------------------- --------------------------
Address: Principal Executive Office:
-------- ---------------------------
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ Port Hawkesbury
CANADA ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇
Address for Congress US: POINT ▇▇▇▇▇▇ MARINE SERVICES
------------------------ LIMITED
Congress Financial Corporation
1133 Avenue of the Americas By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
New York, New York 10036 ----------------------------
Title: Vice President
--------------------------
Principal Executive Office:
---------------------------
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇
================================================================================
================================================================================
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