AMENDED AND RESTATED
▇▇▇▇▇▇ 1996 OPERATING CREDIT AGREEMENT
DATED FOR REFERENCE
JULY 15, 1996
(AMENDING AND RESTATING THE
OPERATING CREDIT AGREEMENT DATED
FOR REFERENCE AUGUST 15, 1994, AS AMENDED
BY A FIRST AMENDMENT TO OPERATING
CREDIT AGREEMENT DATED FOR
REFERENCE JUNE 30, 1995 AND
AN ACKNOWLEDGED LETTER OF AMENDMENT
DATED OCTOBER 19, 1995)
BETWEEN:
THE ▇▇▇▇▇▇ GROUP INC.
AND:
ROYAL BANK OF CANADA
TABLE OF CONTENTS
PAGE
Description of Parties 1
Recitals 1
PART I INTERPRETATION 1
Paragraph 1.1 Definitions 1
Paragraph 1.2 Applicable Law 23
Paragraph 1.3 Severability 23
Paragraph 1.4 Successors and Assigns 23
Paragraph 1.5 Included Words 23
Paragraph 1.6 Headings and Marginal References 23
Paragraph 1.7 Cross References 23
Paragraph 1.8 Use of Word "Including" 23
Paragraph 1.10 Expiration of Summary of Principal Terms
and Conditions 24
Paragraph 1.11 Currency 24
Paragraph 1.12 Payment Dates and Interest Calculation 24
Paragraph 1.13 Accounting Terms 24
Paragraph 1.14 Schedules 24
PART II REPRESENTATIONS AND WARRANTIES 25
PART III THE CREDIT FACILITY 27
Paragraph 3.1 Establishment of the Credit Facility 27
Paragraph 3.2 Nature of the Credit Facility 27
Paragraph 3.3 Currencies and Other Options Under the Credit Facility 27
Paragraph 3.4 Treasury Contracts 27
Paragraph 3.5 Interest on Advances Under the Credit Facility 28
Paragraph 3.6 Interest and Fee Rate Adjustments 28
Paragraph 3.7 Interest on Eurocurrency Advances Spanning
More Than One Applicable Interest Rate 29
Paragraph 3.8 Interest Act of Canada 29
Paragraph 3.9 Manner of Making Advances 29
Paragraph 3.10 Notice for Canadian Advances and U.S. Advances
Under the Credit Facility 30
Paragraph 3.11 Notice for Eurocurrency Advances Under the
Credit Facility 30
Paragraph 3.12 Eurocurrency Notice Particulars 30
Paragraph 3.13 Conversions of Borrowings 30
Paragraph 3.14 Payment of Interest on Eurocurrency Advances 31
Paragraph 3.15 Default Interest 32
Paragraph 3.16 Indemnity for Out-of-Pocket Expenses 32
Paragraph 3.17 Effective Time for Part III Notices 32
ii
Paragraph 3.18 Increased Costs 32
Paragraph 3.19 Borrower's Option on Receipt of Certificate 33
Paragraph 3.20 Increased Cost Limitation 34
Paragraph 3.21 Eurocurrency Funds Not Available 34
Paragraph 3.22 Payment of Compensation Amount 35
Paragraph 3.23 Borrower's Right to Revolve the Credit Facility 35
Paragraph 3.24 Repayment of Credit Facility 35
Paragraph 3.25 Currency of All Payments 35
Paragraph 3.26 Borrower's Right to Cancel Available Amount of
Credit Facility 36
Paragraph 3.27 Standby Fees 36
Paragraph 3.28 Standby Fees Waived 36
Paragraph 3.29 Evidence of Indebtedness 36
Paragraph 3.30 Substitute Basis of Borrowing for Eurocurrency
Advances 37
Paragraph 3.31 Illegality for Eurocurrency Advances 37
Paragraph 3.32 Agreement Letters of Credit and Guarantee Letters 38
Paragraph 3.33 Exchange Rate Fluctuations 39
Paragraph 3.34 Determination of Available Amount of the Credit
Facility 39
PART IV BANKERS' ACCEPTANCES 39
PART V SECURITY FOR BORROWINGS 42
PART VI CREDIT FACILITIES CONDITIONS PRECEDENT 42
Paragraph 6.1 Conditions Precedent to Initial Borrowings 42
Paragraph 6.2 Conditions Precedent to Subsequent Borrowings 45
PART VII COVENANTS OF THE BORROWER 45
Paragraph 7.1 Covenants 45
- Positive Covenants 45
- Negative Covenants 47
- Reporting Covenants 48
- Financial Covenants 49
PART VIII EVENTS OF DEFAULT 51
Paragraph 8.1 Definition of Event of Default 51
Paragraph 8.2 Remedies 53
Paragraph 8.3 Outstanding Guarantee Letters, Agreement
Letters of Credit, Etc., on Acceleration Debt 53
Paragraph 8.4 Remedies Cumulative 54
Paragraph 8.5 Waivers 54
iii
Paragraph 8.6 Application of Payments Following Acceleration 54
PART IX GENERAL 54
Paragraph 9.1 Waiver or Modification 54
Paragraph 9.2 Amendments and Waiver Procedures 55
Paragraph 9.3 Successors and Assigns 55
Paragraph 9.4 Time of the Essence 55
Paragraph 9.5 Further Assurances 55
Paragraph 9.6 Set-Off 55
Paragraph 9.7 Judgement Currency 56
Paragraph 9.8 Account Debit Authorization 56
Paragraph 9.9 Expenses 56
Paragraph 9.10 Survival of Representations and Warranties 56
Paragraph 9.11 Notice Procedure 57
Paragraph 9.12 Notice Received 57
Paragraph 9.13 Indemnity 57
Paragraph 9.14 Counterparts 57
Paragraph 9.15 Reasonable Consent or Approval of the Parties 57
Paragraph 9.16 Entire Agreement 57
Execution 58
Schedule A Interest and Fee Rates
Schedule B Outstanding Litigation
Schedule C Indebtedness Existing on March 31, 1996
Schedule D Officers' Compliance Certificate
THIS AMENDED AND RESTATED OPERATING CREDIT AGREEMENT entitled, "▇▇▇▇▇▇ 1996
OPERATING CREDIT AGREEMENT" is dated for reference July 15, 1996.
BETWEEN: THE ▇▇▇▇▇▇ GROUP INC., a British Columbia company having its head
office at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇ ▇▇▇
AND: ROYAL BANK OF CANADA, a Canadian chartered bank having its head
office in the City of ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ and a branch office
at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
W H E R E A S:
A. Royal, the Borrower and LGII entered into the Original Operating Credit
Agreement;
B. The Original Operating Credit Agreement was amended by a First Amendment
to Operating Credit Agreement dated for reference June 30, 1995 and an
acknowledged letter of amendment dated October 19, 1995;
C. LGII, as borrower, and the Borrower, as guarantor, entered into the 1996
Credit Agreement and became parties to the Collateral Trust Agreement pursuant
to which the lenders under the 1996 Credit Agreement became secured creditors
of LGII;
D. Royal became a secured party under the Collateral Trust Agreement in
respect of advances under the Original Operating Credit Agreement, as amended,
and has terminated and released all of those certain guarantees provided by
LGII, ▇▇▇▇▇▇ Financial Corporation and Neweol Finance B.V. in respect of the
Original Operating Credit Agreement, as amended;
E. Royal, the Borrower and LGII have agreed that the Original Operating
Credit Agreement, as amended, shall be amended and restated to set forth the
revised terms and conditions which are to govern the Credit Facility and which
release LGII as a party to the amended and restated Original Operating Credit
Agreement.
WITNESSETH THAT in consideration of the mutual covenants and agreements
hereinafter set forth, the parties hereto covenant and agree each with the
other as follows:
PART I
INTERPRETATION
1.1 DEFINITIONS
Where used in the Agreement, the following terms shall have the
following meanings:
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PART I
INTERPRETATION
1.1 DEFINITIONS
Where used in the Agreement, the following terms shall have the
following meanings:
a) "1996 CREDIT AGREEMENT" means the Credit Agreement dated as of
May 15, 1996 among LGII, as the borrower, TLGI, as a guarantor, the
lenders named therein, as the lenders, ▇▇▇▇▇▇▇, Sachs & Co., as
the documentation agent, and Bank of Montreal as letter of credit
issuer, swing line lender and agent, as amended, restated,
supplemented or otherwise modified;
b) "ACQUISITION" means any transaction, or any series of related
transactions, by which the Borrower or any of its Subsidiaries:
i) acquires any going business or all or substantially all of the
assets of any firm, corporation, limited liability company,
partnership or other Person, or (as applicable) any operation
or division thereof which constitutes a going business, whether
through purchase of assets, merger or otherwise, or
ii) directly or indirectly acquires (in one transaction or as the
most recent transaction in a series of transactions) at least a
majority (in number of votes) of the securities of a
corporation which have ordinary voting power for the election
of directors (other than securities having such power only by
reason of the happening of a contingency) or a majority (by
percentage or voting power) of the outstanding partnership
interests of a partnership, membership interests of a limited
liability company, or other ownership interests of any Person;
c) "ADDITIONAL AMOUNT" shall have the meaning ascribed thereto in
Section 3.18;
d) "ADJUSTED EBITDA" means at any time for the four-quarter period
then most recently ended the sum of:
i) EBITDA of the Borrower and LGII and the other Subsidiaries for
such four-quarter period determined on a consolidated basis,
plus
ii) EBITDA for such four-quarter period of all Persons acquired
by the Borrower, LGII or the other Subsidiaries during the
six-month period ending on the last day of such four-quarter
period (but only to the extent the Acquisitions of such Persons
constituted Permitted Acquisitions), less
iii) all amounts included in the foregoing Section (ii) to the
extent such amounts are included in the foregoing Section (i)
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provided that EBITDA of any such acquired Person shall be
determined on the basis of actual EBITDA for such acquired Person
as set forth in the financial statements of such acquired Person,
which financial statements shall be (x) audited for the portion of
such four-quarter period which falls within the most recently ended
fiscal year of such acquired Person ended prior to the date on
which such Person became a Subsidiary of the Borrower, LGII or
another Subsidiary and unaudited for the portion of such
four-quarter period which falls after the end of the most recently
ended fiscal year of such acquired Person ended prior to the date
on which such Person became a Subsidiary of the Borrower, LGII or
another Subsidiary if the total consideration payable in connection
with such Acquisition is in excess of US$25,000,000, and (y)
unaudited for such four-quarter period if the total consideration
payable in connection with such Acquisition is US$25,000,000 or
less;
e) "ADVANCES" means Canadian Advances, Eurocurrency Advances and
U.S. Advances;
f) "AFFILIATE" of any Person means any other Person directly or
indirectly controlling, controlled by or under common control with
such Person. A Person shall be deemed to control another Person if
the controlling Person owns 10% or more of any class of voting
securities (or other ownership interests) of the controlled Person
or possesses, directly or indirectly, the power to direct or cause
the direction of the management or policies of the controlled
Person, whether through ownership of stock by contract or
otherwise;
g) "AGREEMENT" means this amended and restated committed operating
credit agreement entitled, "▇▇▇▇▇▇ 1996 Operating Credit Agreement"
dated for reference July 15, 1996, as amended, restated, modified,
supplemented, extended or renewed from time to time;
h) "AGREEMENT LETTERS OF CREDIT" means letters of credit issued by
Royal pursuant to Section 3.32;
i) "ANNOUNCEMENT DATE" means the date on which any of the Rating
Agencies announces a rating change which will increase or decrease
the rates of interest, acceptance fees, standby fees and other fees
and amounts payable by the Borrower pursuant to the Agreement;
j) "BANKERS' ACCEPTANCES" means Drafts in multiples of not less than
$100,000 or US$100,000, as the case may be, Face Amount and
aggregating immediately following availment on any day at least
$500,000, or US$500,000, as the case may be, each for periods of
not less than one month nor more than one year (excluding in each
case days of grace) drawn by the Borrower (or, in the case of Jumbo
Bankers' Acceptances, drawn by Royal on behalf of the Borrower) in
Canadian Funds or U.S. Funds, as the case may be, and accepted as
provided in Part IV;
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k) "BANKING DAY" means a day which is both a Business Day and a day on
which dealings in U.S. Funds by and between banks in the London,
England interbank market may be conducted;
l) "BORROWER" means The ▇▇▇▇▇▇ Group Inc., its successors and
permitted assigns;
m) "BORROWER'S LINES OF BUSINESS" means the lines of business
conducted as of the date of the 1996 Credit Agreement by the
Borrower or LGII or any of their respective Subsidiaries and shall
include the making by the Borrower, LGII or any of their
Subsidiaries, from time to time, of equity and debt investments in,
or to, Persons which are engaged primarily in any one or more of
the funeral, funeral home, cemetery and funeral-related insurance
businesses;
n) "BORROWING" means a utilization by the Borrower of the Credit
Facility by way of Canadian Advances, U.S. Advances or Eurocurrency
Advances, and, if an advance has been made by Royal with respect to
Bankers' Acceptances, Agreement Letters of Credit and Guarantee
Letters, the utilization by the Borrower of Canadian Advances or
U.S. Advances, as the case may be, in respect of such Bankers'
Acceptances, Agreement Letters of Credit and Guarantee Letters and
"Borrowings" means the aggregate of such utilizations;
o) "BORROWING OPTION" means any of the borrowing options available to
the Borrower pursuant to Section 3.3;
p) "BRANCH OF ACCOUNT" means the account of the Borrower established
by and to be maintained at Royal's main branch in New Westminster,
British Columbia or elsewhere as may be agreed between the Borrower
and Royal;
q) "BREAKAGE COSTS" means any cost, liability or termination payment
incurred or owed to Royal as a result of the termination of a
Treasury Contract;
r) "BUSINESS DAY" means a day, excluding Saturday and Sunday, on which
banking institutions are open for business in ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇;
s) "CANADIAN ADVANCE" means any advance or conversion under the Credit
Facility requested by the Borrower in Canadian Funds and advanced
by Royal in Canadian Funds or determined as such pursuant to
Section 4.12;
t) "CANADIAN FUNDS" and "CDN$" means lawful currency of Canada;
u) "CAPITAL LEASE" of a Person means any lease of Property by such
Person as lessee which would be capitalized on a balance sheet of
such Person prepared in accordance with GAAP;
v) "CAPITALIZED LEASE OBLIGATIONS" of a Person means the amount of the
obligations of such Person under Capital Leases which would be
shown as a
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liability on a balance sheet of such Person prepared in accordance
with GAAP;
w) "CDOR RATE" means that annual rate of interest equal to the
average "BA 1 Month" interest rates for Canadian Funds bankers'
acceptances displayed and identified as such on the "Reuters
Screen CDOR Page" (as defined by International Swap Dealer
Association, Inc., as modified and amended from time to time) as
of 10:00 a.m. local time at Toronto, Ontario on any particular day
and, if such day is not a Business Day, then on the immediately
preceding Business Day (as adjusted by Royal after 10:00 a.m.
local time at Toronto, Ontario to reflect any error in a posted
rate of interest or in the posted average annual rate of
interest). If such rates are not available on the Reuters Screen
CDOR Page on any particular day, then the CDOR Rate on that day
shall be calculated as the arithmetic mean of the 30 day rates
applicable to Canadian Funds bankers' acceptances quoted by three
major Canadian Schedule I chartered banks as of 10:00 a.m. local
time at Toronto, Ontario on such day, or if such day is not a
Business Day, then on the immediately preceding Business Day. The
three major Canadian Schedule I chartered banks shall, unless the
Borrower and Royal otherwise agree, be Canadian Imperial Bank of
Commerce, Royal and The Toronto-Dominion Bank;
x) "CHARTER" means, as the context requires, the constating documents
of the Borrower, and includes any amendments thereto;
y) "CHIEF FINANCIAL OFFICER" means that person responsible for
reporting to the board of directors of the Borrower on the
financial condition and performance of the Borrower and its
Subsidiaries, or any person designated as such;
z) "CLASS B INVESTED AMOUNT" has the meaning specified in the Pooling
and Servicing Agreement dated as of November 15, 1994, among The
First National Bank of Atlanta, doing business as Wachovia Bank
Card Services, as seller, Wachovia Bank of Georgia, N.A., as
servicer and Banc One Columbus, N.A., as trustee;
aa) "CLOSING DATE" means July 31, 1996 or such earlier or later date
as the parties hereto may agree upon in writing;
ab) "COLLATERAL TRUST AGREEMENT" means the agreement named as such
dated as of May 15, 1996 among Bankers Trust Company, as trustee,
the Borrower, LGII and various other pledgors as amended or
modified and in effect from time to time;
ac) "COLLATERAL TRUST SECURITY" means the security afforded to Class A
Secured Parties (as defined in the Collateral Trust Agreement)
pursuant to the provisions of the Collateral Trust Agreement;
ad) "COMPENSATION AMOUNT" means an amount equal to any loss, expense
or costs incurred by Royal as a direct result of prepayment of a
Eurocurrency
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Advance, whether by way of repayment or conversion, prior to the
Eurocurrency Maturity Date, including any costs incurred in
maintaining or redeploying deposits obtained by Royal to fund such
Eurocurrency Advance;
ae) "CONSOLIDATED CAPITALIZATION" means at any time of determination,
the sum of:
i) the Consolidated Indebtedness of the Borrower at such time, and
ii) the Consolidated Net Worth of the Borrower at such time;
af) "CONSOLIDATED FIXED CHARGES" means, for any period, without
duplication, the sum of the amounts for such period of:
i) Consolidated Interest Charges, and
ii) the product of:
A. the aggregate amount of dividends and other distributions
paid or accrued during such period in respect of:
(1) preferred stock of the Borrower, LGII or any other
Subsidiary (but exclusive of preferred stock issued to
the Borrower or an Affiliate of the Borrower), and
(2) capital stock of the Borrower which is or may be
redeemable or convertible into debt prior to the
Maturity Date, and
B. for each such dividend or distribution, a multiplier, the
numerator of which is one and the denominator of which is
one minus the then current combined federal, provincial,
state and local statutory tax rate of the Borrower and its
Subsidiaries determined on a consolidated basis, such
multiplier to be expressed as a decimal, provided that the
multiplier in Section (ii)B. shall be deemed to be one if
such dividend or other distribution described in the
preceding Section (ii)A. is fully tax deductible;
ag) "CONSOLIDATED FIXED CHARGES COVERAGE RATIO" means, with respect to
a Transaction Date (hereinafter defined), the ratio of (x) EBITDA
for the full fiscal quarter immediately preceding the date of the
transaction ("TRANSACTION DATE") giving rise to the need to
calculate the Consolidated Fixed Charge Coverage Ratio (such full
fiscal quarter period being referred to herein as the "PRIOR
QUARTER") to (y) the amount of Consolidated Fixed Charges for the
Prior Quarter. In addition to and without limitation of the
foregoing, for purposes of this definition, "EBITDA" and
"Consolidated Fixed Charges" shall be calculated after giving
effect on a pro forma basis for the period of such calculation to,
without duplication, the incurrence of any Indebtedness of the
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Borrower or any of its Subsidiaries (and the application of the
net proceeds thereof) during the period commencing on the first
day of the Prior Quarter to and including the Transaction Date
("REFERENCE PERIOD"), including the incurrence of the Indebtedness
giving rise to the need to make such calculation (and the
application of the net proceeds thereof), as if such incurrence
(and application) occurred on the first day of the Reference
Period. Furthermore, in calculating Consolidated Fixed Charges for
purposes of determining the denominator (but not the numerator) of
Consolidated Fixed Charges Coverage Ratio:
i) interest on outstanding Indebtedness determined on a
fluctuating basis as at the Transaction Date and which will
continue to be so determined thereafter shall be deemed to have
accrued at a fixed rate per annum equal to the rate of interest
on such Indebtedness in effect on the Transaction Date, and
ii) interest on any Indebtedness which is actually incurred on the
Transaction Date and which may optionally be determined at an
interest rate based upon a factor of a prime, base, reference
or similar rate, a eurocurrency interbank offered rate, or
other rates, shall be deemed to have been in effect during the
Reference Period at the interest rate in effect on the
Transaction Date.
If the Borrower or any of its Subsidiaries directly or indirectly
guarantees Indebtedness of a third Person, this definition shall
give effect to the incurrence of such guaranteed Indebtedness as
if the Borrower or such Subsidiary had directly incurred or
otherwise assumed such guaranteed Indebtedness;
ah) "CONSOLIDATED INDEBTEDNESS" means, at any time of determination,
without duplication, all Indebtedness of the Borrower, LGII and
the Subsidiaries of the Borrower and LGII at such time determined
on a consolidated basis in accordance with GAAP (to the extent
GAAP is applicable thereto);
ai) "CONSOLIDATED INTEREST CHARGES" means, for any period, all
interest calculated on a consolidated basis (including the
interest component of Capitalized Lease Obligations and Synthetic
Lease Obligations), and all amortization of debt discount and
expense on all Indebtedness of the Borrower and LGII and their
respective Subsidiaries for such period;
aj) "CONSOLIDATED NET INCOME" for any period shall mean the gross
revenues of the Borrower and LGII and the other Subsidiaries for
such period less all expenses and other proper charges (including
taxes on income), determined on a consolidated basis after
eliminating earnings or losses attributable to outstanding
Minority Interests, but excluding in any event:
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i) any gains or losses on the sale or other disposition of Investments
or fixed or capital assets, and any taxes on such excluded gains
and any tax deductions or credits on account of any such excluded
losses;
ii) the proceeds of any life insurance policy;
iii) net earnings and losses of any Subsidiary accrued prior to the date
it became a Subsidiary;
iv) net earnings and losses of any corporation (other than a
Subsidiary) substantially all the assets of which have been
acquired in any manner by the Borrower or any Subsidiary, realized
by such corporation prior to the date of such acquisition;
v) net earnings and losses of any corporation (other than a
Subsidiary) with which the Borrower or a Subsidiary shall have
consolidated or which shall have merged into or amalgamated with
the Borrower or a Subsidiary prior to the date of such
consolidation, merger or amalgamation;
vi) net earnings of any business entity (other than a Subsidiary) in
which the Borrower or any Subsidiary has an ownership interest
unless such net earnings shall have actually been received by the
Borrower or such Subsidiary in the form of cash distributions;
vii) any portion of the net earnings of any Subsidiary which for any
reason is unavailable for payment of dividends to the Borrower or
any other Subsidiary;
viii) earnings resulting from any reappraisal, revaluation or write-up of
assets;
ix) any deferred or other credit representing any excess of the equity
in any Subsidiary at the date of the acquisition thereof over the
amount invested in such Subsidiary;
x) any gain or loss arising from the acquisition of any securities of
the Borrower or any Subsidiary;
xi) any reversal of any contingency reserve, except to the extent that
provision for such contingency reserve shall have been made from
income arising during such period, and
xii) any other unusual or extraordinary gain;
ak) "CONSOLIDATED NET WORTH" means, as of the date of any determination
thereof, the sum of the amount of the shareholders' equity of the
Borrower and LGII and the other Subsidiaries as would be shown on
the consolidated balance
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sheet of the Borrower and LGII and the other Subsidiaries determined on a
consolidated basis in accordance with GAAP, which in any event shall
include:
i) the MIPS Issue, and
ii) the amount of all preferred stock of the Borrower and LGII and
all Subsidiaries of the Borrower and LGII to the extent such
preferred stock is not redeemable at the option of the holder
for cash or indebtedness for any reason, and which shall exclude
the amount of all preferred stock of the Borrower and LGII and
all Subsidiaries of the Borrower and LGII to the extent such
preferred stock is redeemable at the option of the holder for
cash or indebtedness for any reason;
al) "CONSOLIDATED TANGIBLE NET WORTH" means, as of the date of any
determination thereof, as to any Person, the Consolidated Net
Worth of such Person, less the sum of the value, as set forth or
reflected on the most recent consolidated balance sheet of such
Person and its consolidated Subsidiaries, prepared in accordance
with GAAP, of:
i) any surplus resulting from any write-up of assets subsequent
to December 31, 1995;
ii) all assets which would be treated as intangible assets for balance
sheet presentation purposes under GAAP, including goodwill (whether
representing the excess of cost over book value of assets acquired,
or otherwise) trademarks, trade names, service marks, copyrights,
patents and technologies, names and reputations, covenants not to
compete, organization or developmental expenses, and unamortized
debt discount and expense;
iii) to the extent not included in Section (ii) of this definition, any
amount at which shares of capital stock of such Person and its
consolidated Subsidiaries appear as an asset on the balance sheet
of such Person and its consolidated Subsidiaries;
iv) loans or advances or proceeds of Letters of Credit provided to
stockholders, directors, officers or employees of such Person or its
Subsidiaries as contemplated by clause (d) of the definition of
"Consolidated Tangible Net Worth" set out in section 1.1 of the
1996 Credit Agreement, and
v) to the extent not included in Section (ii) of this definition,
deferred expenses;
am) "CONTINGENT OBLIGATION" of a Person means any agreement, undertaking
or arrangement by which such Person assumes, guarantees, endorses,
contingently agrees to purchase or provide funds for the payment of,
or otherwise becomes or is contingently liable upon, the obligation
or liability of any other Person, or agrees to maintain the net worth
or working capital or other financial
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condition of any other Person, or otherwise assures any creditor of
such other Person against loss, including, in the case of the
Borrower, the ▇. ▇▇▇▇▇ Guarantee, and any comfort letter, operating
agreement, take-or-pay contract or reimbursement obligation arising
pursuant to a Letter of Credit (including any Agreement Letter of
Credit), provided that notwithstanding the foregoing, the WLSP
Contingent Obligation shall not constitute a Contingent Obligation
of the Borrower, LGII or any other Subsidiary for any purpose under
the Agreement so long as the Class B Invested Amount at least equals
US$12,000,000;
an) "CORPORATE DISTRIBUTION" in respect of any company shall mean
i) dividends or other distributions on capital stock of the company
(except dividends or other distributions payable solely in shares of
capital stock), and
ii) the redemption, retirement or acquisition of such stock or of
warrants, rights or other options to purchase such stock (except
when solely in exchange for such stock);
ao) "CREDIT FACILITY" means the committed operating credit facility in the
principal amount of $50,000,000 Canadian Funds or Equivalent Amount in
U.S. Funds established by Royal in favour of the Borrower pursuant to
Section 3.1;
ap) "CURRENCIES" means Canadian Funds or U.S. Funds;
aq) "DEFAULT" means an event described as such in Article VIII of the
1996 Credit Agreement;
ar) "DRAFT" means a commercial draft of Royal in its prescribed form made by
the Borrower in accordance with the provisions of Part IV of the Agreement;
as) "DRAWDOWN DATE" means, with respect to a Eurocurrency Advance, a Banking
Day, and in all other respects, a Business Day, on which a Borrowing is
advanced to or converted by the Borrower or renewed by Royal;
at) "EBITDA" for any period shall mean the sum of Consolidated Net Income
during such period, plus (to the extent deducted in determining
Consolidated Net Income):
i) all provisions for any income or similar taxes paid or accrued by
the Borrower and LGII and the other Subsidiaries during such period;
ii) depreciation, depletion and amortization for such period;
iii) other non-cash charges, and
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iv) Consolidated Interest Charges of the Borrower and LGII and the
other Subsidiaries during such period determined in accordance with
GAAP,
provided that for the fourth quarter of 1995 for all purposes under the
Agreement, EBITDA of the Borrower, LGII and the other Subsidiaries on a
consolidated basis shall be deemed to be US$50,028,000;
au) "EQUITY PLACEMENT" means the offering by the Borrower during the first
calendar quarter of 1996 of common shares of the Borrower pursuant to
which not less than $150,000,000 of net proceeds was realized by the
Borrower;
av) "EQUIVALENT AMOUNT" means at any time on any date, the amount in
U.S. Funds or Canadian Funds, as the case may be, which would
result from the conversion of Canadian Funds to a given amount of
U.S. Funds or U.S. Funds to a given amount of Canadian Funds, as
the case may be, determined on the basis of the Spot Buying Rate.
If the date for determination of an Equivalent Amount is not a
Business Day, the applicable rate shall be the Spot Buying Rate
quoted for the immediately preceding Business Day;
aw) "EUROCURRENCY ADVANCE" means any advance, renewal or conversion
under the Credit Facility requested by the Borrower in or to
Eurocurrency Funds and advanced, renewed or made in Eurocurrency
Funds by Royal;
ax) "EUROCURRENCY FUNDS" mean U.S. Funds for which London Interbank
Offered Rates are quoted by leading banks in the London, England
interbank market;
ay) "EUROCURRENCY INTEREST PERIOD" means, with respect to a
Eurocurrency Advance, that period selected by the Borrower for a
Eurocurrency Advance to be outstanding, (if the Borrower fails to
select a period it shall be deemed to be for a period of one
month) which period shall be not less than one month nor more
than twelve months nor extend to a date later than the Maturity
Date, commencing with the Drawdown Date and ending on the
Eurocurrency Maturity Date;
az) "EUROCURRENCY MATURITY DATE" means the last day of a Eurocurrency
Interest Period;
ba) "EVENT OF DEFAULT" means any event set forth in Section 8.1 of the
Agreement;
bb) "FACE AMOUNT" means the amount at maturity for which a Bankers'
Acceptance is drawn;
bc) "FAIR VALUE" means the value of the relevant asset determined in
an arm's length transaction conducted in good faith between an
informed and willing buyer and an informed and willing seller
under no compulsion to buy;
bd) "FINANCIAL UNDERTAKING" means:
-12-
i) any repurchase obligation or liability of the Borrower or any of
its Subsidiaries with respect to accounts or notes receivable sold
by the Borrower or any of its Subsidiaries;
ii) any liability under any sale and leaseback transaction which does
not create a liability on the consolidated balance sheet of the
Borrower and its Subsidiaries;
iii) obligations arising with respect to any other transaction which is
the functional equivalent of or takes the place of borrowing but
which does not constitute a liability on the consolidated balance
sheets of the Borrower and its Subsidiaries, or
iv) net liabilities under any agreements, devices or arrangements
designed to protect at least one of the parties thereto from the
fluctuations of interest rates, exchange rates or forward rates
applicable to such party's assets, liabilities or exchange
transactions, including, but not limited to, interest rate exchange
agreements, forward currency exchange agreements, interest rate cap
or collar protection agreements, forward rate currency or interest
rate options;
be) "FIRST PREFERRED SERIES C RECEIPTS" means the 8,800,000 Convertible
First Preferred Shares Series C Receipts ($220,000,000) issued by the
Borrower pursuant to the terms of a prospectus dated December 21, 1995
each such Receipt at that time representing entitlement to 1/10 of a
6.00% Cumulative Redeemable Convertible First Preferred Share, Series C,
of the Borrower;
bf) "GAAP" means the generally accepted accounting principles as generally
applied by the Borrower as at December 31, 1995 and thereafter the
generally accepted accounting principles in effect from time to time
of the Canadian Institute of Chartered Accountants including those set
out in the Canadian Institute of Chartered Accountant's Handbook, as
the same are generally applicable to public companies in the same
industry in Canada until such time as the Borrower and LGII shall prepare
their respective books of record and account in accordance with generally
accepted accounting principles (U.S.A.) at which time and at all times
thereafter, GAAP shall mean generally accepted accounting principles
(U.S.A.);
bg) "G/L FEE" means the fee for Guarantee Letters charged by Royal as set
forth in Section 3.32(b);
bh) "GOVERNMENTAL APPROVAL" means any authorization, permit, approval, grant,
licence, consent, right, privilege, registration, filing, order,
commitment, judgement, direction, ordinance, decree or like instrument
or affirmation issued or granted by any Governmental Body;
bi) "GOVERNMENTAL BODY" means, as the context requires, any government,
parliament, legislature, regulatory authority, agency, tribunal,
department,
-13-
commission, board or court or other law, regulation or rule making entity
(including a Minister of the Crown) having or purporting to have
jurisdiction on behalf of the U.S.A., Mexico, Canada, or any other nation,
any state or province, a municipality, a region, a district, any
subdivision thereof or other lawful authority;
bj) "GUARANTEE LETTERS" means letters of guarantee issued by Royal pursuant
to Section 3.32;
bk) "INDEBTEDNESS" means, without duplication, a Person's:
i) obligations for borrowed money;
ii) obligations representing the deferred purchase price of Property or
services (other than accounts payable arising in the ordinary course
of such Person's business payable on terms customary in the trade);
iii) obligations, whether or not assumed, secured by Liens on or payable
out of the proceeds or production from Property now or hereafter
owned or acquired by such Person;
iv) obligations which are evidenced by notes, acceptances, or other
instruments (but exclusive of notes, bills and cheques presented in
the ordinary course of business by such Person to banks for
collection or deposit);
v) Capitalized Lease Obligations;
vi) Contingent Obligations;
vii) Financial Undertakings;
viii) Synthetic Lease Obligations;
ix) Securitization Obligations; and
x) obligations under or in connection with Letters of Credit
(including, with respect to the Borrower, any Agreement Letter
of Credit)
but excluding, in any event:
A. amounts payable by such Person in respect of covenants not to
compete, and
B. with reference to the Borrower, LGII and the other Subsidiaries,
all obligations of the Borrower, LGII and the other Subsidiaries
of the character referred to in this definition
-14-
to the extent owing to the Borrower, LGII or any other Subsidiary;
bl) "INTEREST DETERMINATION DATE" means, with respect to a Eurocurrency
Advance, a Banking Day which is the second immediately preceding Banking
Day prior to a Drawdown Date;
bm) "INTEREST COVERAGE RATIO" means that ratio determined by dividing EBITDA
for the most recently ended period of four consecutive fiscal quarters by
Consolidated Interest Charges for the most recently ended period of four
consecutive fiscal quarters;
bn) "Investment" of a Person means any loan, advance (other than commission,
travel and similar advances to officers and employees made in the ordinary
course of business), extension of credit (other than accounts receivable
arising in the ordinary course of business on terms customary in the
trade), deposit account or contribution of capital by such Person to any
other Person or any investment in, or purchase or other acquisition of,
the stock, partnership interests, notes, debentures or other securities
of any other Person made by such Person;
bo) "Judgement Currency" shall have the meaning ascribed thereto in
Section 9.7;
bp) "Jumbo Bankers' Acceptances" has the meaning set forth in Section 4.9;
bq) "L/C FEE" means the fee for Agreement Letters of Credit charged by Royal
as set forth in Section 3.32(b);
br) "LETTER OF CREDIT" means a letter of credit or similar instrument which
is issued upon the application of the Borrower or a Subsidiary or in
respect of which the Borrower or a Subsidiary is an account party or in
any way liable;
bs) "LGII" means ▇▇▇▇▇▇ Group International, Inc., a Delaware corporation,
and its successors;
bt) "LGII TREASURY CONTRACT" means any Treasury Contract made available to
LGII by Royal or arranged by Royal through the facilities of Royal's
Capital Markets, Treasury, Toronto, Ontario, Canada;
bu) "LIEN" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, security interest, deposit arrangement,
encumbrance or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including
the interest of a vendor or lessor under any conditional sale or other
title retention agreement);
bv) "LOAN DOCUMENTS" means the Collateral Trust Agreement and the instruments,
agreements, certificates, papers and other documents provided for or
contemplated therein;
-15
bw) "LONDON INTERBANK OFFERED RATE" means with respect to a particular
Eurocurrency Advance, the rate of interest (rounded up, if necessary,
to the nearest whole multiple of one sixteenth of one percent) at which
Royal, in accordance with its normal practice, would be prepared to offer
to leading banks in the London interbank market for delivery on the first
day of the particular Eurocurrency Interest Period and for a period equal
to such Eurocurrency Interest Period based on the number of days comprised
therein, deposits in U.S. Funds of comparable amounts to be outstanding
during such Eurocurrency Interest Period, at or prior to 9:00 a.m. local
time at Vancouver, British Columbia on the second Banking Day prior to
the Drawdown Date;
bx) "MATERIAL ADVERSE EFFECT" means a material adverse effect on:
i) the business, Property, financial condition, results of operations,
or prospects of the Borrower, LGII and the other Subsidiaries taken
as a whole;
ii) the ability of the Borrower to perform its obligations under the
Loan Documents, or
iii) the validity or enforceability of any of the Loan Documents or the
rights or remedies of Royal thereunder,
by) "MATURITY DATE" means July 15, 1999 or a date or dates later than such
date as may from time to time be established by the Borrower and Royal
as the date on which Borrowings together with interest, fees and any
other amounts due under the Agreement are to be repaid;
bz) "MEIP CREDIT AGREEMENT" means the agreement dated as of June 14, 1994
entitled, "1994 MEIP Credit Agreement" among the Borrower, LGII, ▇▇▇▇▇▇
Management Investment Corporation, as agent for LGII, the lenders which
are parties thereto and Wachovia Bank of Georgia, N.A., as agent for the
lenders, as amended, restated, supplemented or otherwise modified from
time to time;
ca) "MINORITY INTERESTS" means any shares of stock of any class of a
Subsidiary (other than directors' qualifying shares as required by law
or shares of stock having no right to vote or receive dividends) that
are not owned by the Borrower and/or one or more of its Subsidiaries.
Minority Interests shall be valued by valuing Minority Interests
constituting preferred stock at the voluntary or involuntary liquidating
value of such preferred stock, whichever is greater, and by valuing
Minority Interests constituting common stock at the book value of capital
and surplus applicable thereto adjusted, if necessary, to reflect any
changes from the book value of such common stock required by the
foregoing method of valuing Minority Interests in preferred stock;
cb) "MIPS ISSUE" means the 9.45% Cumulative Monthly Income Preferred
Securities, Series A issued by ▇▇▇▇▇▇ Group Capital, LP.;
-16-
cc) "NOTE AGREEMENTS" means the agreements dated for reference October 1, 1991,
September 1, 1993 and February 1, 1994 and the indenture dated March 20,
1996 and any and all other warrant agreements or note agreements entered
into from time to time by the Borrower or LGII or either of them, and the
relevant holders of the notes issued and sold thereunder, in each case as
may be amended, supplemented or other wise modified from time to time;
cd) "ORIGINAL OPERATING CREDIT AGREEMENT" means the operating credit agreement
for S30,000,000 or the Equivalent Amount in U.S. Funds dated for reference
August 15, 1994 among Royal, the Borrower and LGII;
ce) "▇. ▇▇▇▇▇ GUARANTEE" means the guarantee provided by the Borrower to
Royal guaranteeing the obligations to Royal of ▇. ▇▇▇▇▇ Funeral Chapels Ltd.
and any amendments, supplements or replacements thereof;
cf) "PERMITTED ACQUISITION" means any Acquisition (but only to the extent
such Acquisition does not involve lines of business which are outside the
Borrower's Lines of Business, unless the Acquisition of such lines which
are outside the Borrower's Lines of Business would, at the time of the
Acquisition and after giving effect thereto, be permitted as Investments
under Section 7.16 (o) of the 1996 Credit Agreement made by the Borrower,
LGII or any other Subsidiary from a willing seller or other willing
transferor where such Acquisition is not contested by such seller or
transferor at any time during the pendency of such Acquisition, provided
that:
i) either (x) the Borrower or LGII has in place before it executes any
binding agreement or other binding writing by which it agrees to
proceed with the Acquisition (whether or not subject to conditions)
sufficient funds which are committed and available (which may
include the availability of revolving loans under the 1996 Credit
Agreement {but only to the extent no Default or Unmatured Default,
[as defined in the 1996 Credit Agreement], would occur after then
giving effect to the borrowing necessary to fund such Acquisition}
and provided that for any third-party commitment such commitment is
otherwise permitted under the 1996 Credit Agreement), to fund the
full amount of the cash consideration for such Acquisition, or (y)
such agreement or other writing contains a condition to closing of
the Borrower or LGII based upon the ability of the Borrower or LGII
to raise funds for the Acquisition, and
ii) all contractual arrangements evidencing such Acquisition include
provisions subjecting the parties to arbitration except to the extent
the Board of Directors of the Borrower or LGII (or an authorized
subcommittee thereof, a majority of whose members consist of
directors who are not employees of the Borrower, LGII or any other
Subsidiary) shall either make an express determination to the
contrary or shall approve the Acquisition pursuant to valid action
which
-17-
expressly contemplates the absence of such an arbitration
provision in the contractual arrangements evidencing such
Acquisition;
cg) "PERMITTED ENCUMBRANCES" means:
i) liens for taxes, assessments or governmental charges or levies not
at the time due and delinquent or the validity of which is being
contested at the time by the Borrower or any of its Subsidiaries in
good faith provided that Royal is satisfied and has been provided
with such security as it may have required to ensure that such
contestation will involve no forfeiture of any property of the
Borrower or any of its Subsidiaries and provided further that if
the aggregate amount of such liens, assessments or charges is not
in excess of $50,000 Royal need not be so satisfied and security
need not be provided;
ii) the lien of any judgement rendered or claim filed against the
Borrower or any of its Subsidiaries which it shall be contesting in
good faith, provided that Royal is satisfied or security has been
provided to ensure that contestation will involve no forfeiture of
any of the property of the Borrower or any of its Subsidiaries and
provided further that if the aggregate amount of any such judgement
or claim is not in excess of $50,000, Royal need not be so
satisfied and security not be provided;
iii) undetermined or inchoate liens and charges, including construction
liens, liens incidental to current operations of the Borrower or
any of its Subsidiaries which have not at such time been filed
pursuant to law against the Borrower or any of its Subsidiaries or
which relate to obligations neither due nor delinquent;
iv) restrictions, including land use contracts and covenants,
easements, rights-of-way and mortgages thereof, servitudes,
undersurface rights or other similar rights in land granted to or
reserved by any Persons or minor defects or irregularities in
title, all of which in the aggregate do not, in the opinion of
Royal materially impair the usefulness of the property subject to
any such restriction, easement, right-of-way, servitude or other
similar rights in land to the Primary Business;
v) security given to a public utility or any Governmental Body in
connection with the operations of the Borrower or any of its
Subsidiaries in the ordinary course of their respective businesses;
vi) the reservations, limitations, provisos and conditions, if any,
expressed in any original grants from the Crown;
vii) Purchase Money Obligations;
viii) lease obligations entered into by the Borrower or any of its
Subsidiaries with arm's length third parties in respect of
machinery and
-18-
equipment (including motor vehicles, office equipment, photocopiers,
telephones and telecopier machines) used in the ordinary course of
business by the Borrower or any of its Subsidiaries, provided the
underlying financial obligations with respect thereto are not
capitalized as a liability by the Borrower or any of its
Subsidiaries in accordance with GAAP;
ix) the security agreement made as of June 14, 1994 by ▇▇▇▇▇▇
Management Investment Corporation as agent for LGII, and Wachovia
Bank of Georgia, N.A. in its capacity as agent for certain lenders,
granting a security interest in the 1994 Exchangeable Floating Rate
Debenture (No. 1) due July 15, 2001 in the principal amount of
US $127,670,000, and
x) the Collateral Trust Agreement;
ch) "PERMITTED RECEIVABLES SECURITIZATION" means any transaction (or series
of transactions) effected by the Borrower or LGII or any Subsidiary
of (x) the Borrower pursuant to which the Borrower, LGII or such Subsidiary
either sells or otherwise transfers (including sales or transfers using
one or more SPVs) or (y) grants a security interest in, assets of one or
more of the Borrower, LGII and the other Subsidiaries consisting of
Receivables and Receivables Related Assets provided that the aggregate
Securitization Obligations (without duplication) of the Borrower, LGII the
Subsidiaries and any such SPVs in connection with all Permitted
Receivables Securitizations shall not exceed US $100,000,000 at any time
outstanding;
ci) "PERSON" means any natural person, corporation, limited liability
company, firm, joint venture, partnership, association, enterprise, trust
or other entity or organization, or any government or political subdivision
or any agency, department or instrumentality thereof;
cj) "PRIMARY BUSINESS" means the primary business of the Borrower and its
Subsidiaries, or any one of them, as the context requires, taken as a
whole, namely the ownership and professional management and operation of
funeral homes, crematoria, cemeteries, ambulance services, flower shops
and other related businesses and services including the pre-need selling
of funeral, cemetery and crematorium services and the provision of
funeral services and insurance;
ck) "PRIME RATE" means the rate of interest per annum in effect from time
to time that is equal to the greater of:
i) the floating annual rate of interest announced from time to time by
Royal as its reference rate then in effect for determining interest
rates on Canadian dollar commercial loans in Canada by Royal in all
cases adjusting automatically on the effective date of any change
to such rate
-19-
without the necessity of any notice to the Borrower upon each
announced change to such rate, and
ii) the CDOR Rate plus 1.0% per annum;
cl) "PROPERTY" means any and all property of a Person whether real,
personal, tangible, intangible, or mixed, of such Person, or other
assets owned, leased or operated by such Person;
cm) "PURCHASE MONEY OBLIGATIONS" means:
i) any Lien existing and assumed at the time of acquisition by the
Borrower or any of its Subsidiaries on any property acquired from
arm's length third parties after the date hereof;
ii) any Lien on any property owned by the Borrower or any of its
Subsidiaries on the Closing Date or acquired by the Borrower or
any of its Subsidiaries from arm's length third parties after
the Closing Date to secure the whole or any part of the
purchase price of such property or monies borrowed to pay such
purchase price;
iii) any Lien in respect of any property acquired from arm's length
third parties by the Borrower or any of its Subsidiaries after
the Closing Date, and
iv) any extensions, renewals, replacements, substitutions or
refinancing of any Lien described in Section (i), Section (ii)
and Section (iii) above provided that the principal amount of
the indebtedness secured thereby outstanding on the date of
the extension, renewal, replacement, substitution or refinancing
is not increased to an amount greater than the amount outstanding
on the date the Lien was first granted or assumed on the
property;
provided that the aggregate of the amounts due under any Lien
referred to above
A. is secured only by the property so acquired and not by any
other assets and may be discharged or caused to be discharged
upon payment in full of the amount permitted to be secured
under Section (i) to Section (iv) inclusive above;
B. shall have been incurred or assumed within the limitations
provided in the Agreement, and
C. does not exceed at any time 7.5% of Consolidated Net Worth at
such time
-20-
and, in addition to the foregoing Liens, any Lien given to secure
Indebtedness of the Borrower, LGII or any Subsidiary of the Borrower
provided that the aggregate of the amounts due under any such Liens at
any time shall not exceed US$5,000,000 or the Equivalent Amount in
Canadian Funds;
cn) "RATING AGENCIES" means ▇▇▇▇▇'▇ Investors Service, Inc., Standard &
Poor's Rating Services, a division of ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc. and
Duff & ▇▇▇▇▇▇ Credit Rating Co.;
co) "RECEIVABLES" means all rights of the Borrower, LGII or any Subsidiary
to payments from Persons other than the Borrower and its Subsidiaries
(whether constituting accounts, chattel paper, instruments, general
intangibles or otherwise, and including the right to payment of any
interest or finance charges);
cp) "RECEIVABLES RELATED ASSETS" means:
i) any rights arising under the documentation governing or
relating to Receivables (including rights in respect of Liens
securing such Receivables and other credit support in respect
of such Receivables);
ii) any collections, recoveries and proceeds of such Receivables and
any lockboxes or accounts in which such proceeds are deposited;
iii) spread accounts and other similar accounts (and any amounts on
deposit therein) established in connection with a Permitted
Receivables Securitization;
iv) any warranty, indemnity, dilution and other intercompany claim
arising out of documents relating to a Permitted Receivables
Securitization, and
v) other assets which are customarily transferred or in respect of
which security interests are customarily granted in connection
with asset securitization transactions involving accounts
receivable;
cq) "REGULATORY AUTHORITY" means the Ontario Securities Commission, The
Toronto Stock Exchange, the British Columbia Securities Commission,
the United States Securities and Exchange Commission or any
successor agency to any of the foregoing or any other Canadian or
United States federal, state or provincial securities exchange or
securities trading system or any Canadian or United States national
stock exchange;
cr) "REPORT" means each financial statement, report, notice or proxy
statement sent by the Borrower or LGII to shareholders generally as a
matter of corporate governance including annual information forms and
10-K reports and each regular report, registration statement or
prospectus filed by the Borrower, LGII or any Subsidiary with any
Regulatory Authority if any such
-21-
regular report, registration statement or prospectus contains any
information about facts or events which has or would be capable of
having a material adverse effect on the Primary Business;
cs) "ROYAL" means Royal Bank of Canada, its successors and permitted
assigns;
ct) "SECURITIZATION OBLIGATIONS" of a Person means the outstanding
purchaser's investment or outstanding capital or other principal
equivalent that purchasers or other investors are entitled to
receive in respect of any securitization or other sale or
asset-backed financing of Receivables of such Person or its
Affiliates effected by such Person;
cu) "SPOT BUYING RATE" means the Bank of Canada noon rate for Canadian
Funds against U.S. Funds or U.S. Funds against Canadian Funds (as
quoted or published from time to time by the Bank of Canada), as the
case may be, on the relevant date of determination;
cv) "SPV" means a corporation, trust, partnership or other special
purpose Person established by the Borrower or its Subsidiaries or
any combination of them solely for the purpose of implementing a
Permitted Receivables Securitization;
cw) "SUBSIDIARY" of a Person means:
i) any corporation more than 50% of the outstanding securities having
ordinary voting power of which, or more than 50% of the economic
benefits associated with all outstanding securities of which,
shall at the time be owned or controlled, directly or indirectly,
by such Person or by one or more of its Subsidiaries or by such
Person and one or more of its Subsidiaries, or
ii) any partnership, association, limited liability company, joint
venture or similar business organization more than
50% of the ownership interests having ordinary voting power of
which, or more than 50% of the economic benefits associated with
all outstanding ownership interests of which, shall at the time
be so owned or controlled.
Unless otherwise expressly provided, all references in the Agreement
to a "Subsidiary" shall mean a Subsidiary of the Borrower;
cx) "SUFFICIENT COPIES" means three copies or such other reasonable
number of copies of reports, financial statements, certificates and
other material required to be delivered by the Borrower to Royal
pursuant to the Agreement as advised by Royal from time to time in
writing;
cy) "SYNTHETIC LEASE" of a Person means any lease of Property by such
Person as lessee which under GAAP would or may be treated as a true
operating lease
-22-
but which under tax law or commercial law is treated as secured
Indebtedness of such Person and not as a true lease;
cz) "SYNTHETIC LEASE OBLIGATIONS" of a Person means the aggregate funded
amount under all Synthetic Leases to which such Person is a party as
lessee;
da) "TREASURY CONTRACTS" means any agreement entered into by the Borrower
to control, fix or regulate currency exchange fluctuations or the rate
or rates of interest payable on borrowings and includes interest rate
swaps, interest rate agreements, caps, collars, floors, futures or
hedging agreements and other like money market facilities and any
combination thereof or options on any of the foregoing;
db) "TRUSTEE" means Bankers Trust Company or any successor duly appointed
under the Collateral Trust Agreement;
dc) "UNMATURED DEFAULT" means an event which but for the lapse of time
or the giving of notice, or both, would constitute a Default;
dd) "U.S.A." means the United States of America;
de) "U.S. ADVANCE" means any advance or conversion under the Credit
Facility requested by the Borrower in U.S. Funds and advanced by
Royal in U.S. Funds or determined as such pursuant to Section 4.12;
df) "U.S. BASE RATE" means the annual rate of interest announced from
time to time by Royal as its reference rate then in effect for
determining interest rates on United States dollar commercial loans
in Canada by Royal;
dg) "U.S. FUNDS" and "US$" means lawful currency of the U.S. in same day
immediately available funds, or, if such funds are not available, the
form of money of the U.S.A. that is customarily used in the
settlement of international banking transactions on the day
payment is due;
dh) "VOTING SHARES" means shares of any class entitled to vote in all
circumstances;
di) "WLSP CONTINGENT OBLIGATION" means the joint and several liability of
Neweol Finance B.V. to repay the US$160,273,742 Zero Coupon Note dated
November 1, 1994, executed by WLSP Investment Partners I, a
partnership formed under the laws of Switzerland, and payable to
Wachovia Bank of Georgia, N.A.;
dj) "WHOLLY-OWNED SUBSIDIARY" of a Person means:
i) any Subsidiary all of the outstanding voting securities of which
shall at the time be owned or controlled, directly or indirectly,
by such Person or one or more Wholly-Owned Subsidiaries of such
Person, or by such
-23-
Person and one or more Wholly-owned Subsidiaries of such Person,
or
ii) any partnership, association, joint venture or similar business
organization 100% of the ownership interests having ordinary
voting power of which shall at the time be so owned or controlled.
1.2 APPLICABLE LAW
The Agreement shall be construed in accordance with and governed by
the laws of the Province of British Columbia and the laws of Canada
applicable in that Province.
1.3 SEVERABILITY
If any one or more of the provisions contained in the Agreement is
invalid, illegal or unenforceable in any respect in any jurisdiction, the
validity, legality and enforceability of such provision shall not in any way
be affected or impaired thereby in any other jurisdiction and the validity,
legality and enforceability of the remaining provisions contained herein
shall not in any way be affected or impaired thereby.
1.4 SUCCESSORS AND ASSIGNS
The Agreement shall enure to the benefit of and be binding on each
of the parties to the Agreement and its respective successors and permitted
assigns.
1.5 INCLUDED WORDS
Wherever the singular or the masculine are used in the Agreement,
the same shall be deemed to include the plural or the feminine or vice versa
and a body politic or corporate where the context or the parties so require.
1.6 HEADINGS AND MARGINAL REFERENCES
The division of the Agreement into paragraphs and subparagraphs and
the insertion of headings are for convenience of reference only and shall not
affect the construction or interpretation of the Agreement.
1.7 CROSS REFERENCES
Unless otherwise stated, a reference in the Agreement to a numbered
or lettered paragraph, subparagraph or schedule refers to the paragraph,
subparagraph or schedule bearing that number or letter in the Agreement.
1.8 USE OF WORD "INCLUDING"
The word "including", when following any general term or statement,
is not to be construed as limiting the general term or statement to the
specific terms or matters set
-24-
forth immediately following such word or to similar items or matters, but
such general term or statement shall rather be construed as referring to all
items or matters that could reasonably fall within the broadest possible
scope thereof.
1.9 EXPIRATION OF SUMMARY OF
PRINCIPAL TERMS AND CONDITIONS
On the Closing Date, all of the terms and conditions of the "Summary
of Principal Terms and Conditions/Operating Credit Facility - Draft 8", dated
June 7, 1996 circulated to the Borrower and LGII by Royal in connection with
the development of the Credit Facility (except for any terms contained in the
summary requiring the payment of fees to Royal which terms shall remain in
full force and effect until such fees have been paid) shall be deemed to be
merged herein and to expire and shall thereafter have no force and effect.
1.10 CURRENCY
Unless otherwise specified all statements of, or reference to,
dollar amounts in the Agreement without currency specification shall mean
Canadian Funds.
1.11 PAYMENT DATES AND INTEREST CALCULATION
If the date for a payment to Royal of any sum owing hereunder or the
date of advance, renewal or conversion of any sum by Royal hereunder is not,
in the case of Eurocurrency Funds, a Banking Day, and, in all other cases, a
Business Day, such payment, advance, renewal or conversion, as the case may
be, shall, except in some circumstances as hereafter provided in respect of
Eurocurrency Funds, be due or made upon the next immediately succeeding
Banking Day or Business Day, as the case may be. In the case of Eurocurrency
Funds if the immediately succeeding Banking Day is in the next following
month, the date for payment, renewal or conversion shall be the next
immediately preceding Banking Day. Interest shall be payable for the day a
Canadian Advance, Eurocurrency Advance or U.S. Advance is made but not for
the day of any payment of the amount paid if payment is received by Royal
prior to 10:00 a.m. local time at Vancouver, British Columbia.
1.12 ACCOUNTING TERMS
Accounting terms which are not specifically defined herein shall
have the meaning accorded and shall be construed in accordance with GAAP
unless any change in GAAP shall alter the result of any financial covenant or
test or any other accounting determination to be computed or made hereunder
in which case the Borrower and Royal agree that such covenant, test or other
determination shall continue to be computed or made on the basis of GAAP as
in effect prior to such change.
1.13 SCHEDULES
The Schedules to the Agreement shall form an integral part of the
Agreement, and are as follows:
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Schedule A - Interest and Fee Rates
Schedule B - Outstanding Litigation
Schedule C - Indebtedness Existing on March 31, 1996
Schedule D - Officers' Compliance Certificate
PART II
REPRESENTATIONS AND WARRANTIES
2.1 The Borrower represents and warrants to Royal as set forth in this
Part II of the Agreement. All representations and warranties shall survive all
Borrowings and no investigation at any time made by or on behalf of Royal shall
diminish in any respect whatsoever its right to rely thereon.
2.2 The Borrower is a corporation, duly incorporated, validly existing,
in good standing with respect to the filing of annual returns under the laws
of the Province of British Columbia and is duly qualified, in good standing
and authorized to do business in all jurisdictions where the character of the
properties owned by it or the nature of the business transacted by it makes
such qualification necessary. The Borrower has all requisite corporate power
and authority to own its properties, has obtained or will obtain, all
material Government Approvals required at the date hereof, to carry on its
business as now conducted and proposed to be conducted and to enter into and
perform its obligations under the Agreement and all instruments and
agreements delivered pursuant hereto and thereto.
2.3 The Agreement and every instrument or agreement delivered pursuant
hereto or thereto has been duly and validly authorized by all requisite
actions by the Borrower and each of such documents has been duly executed by
the Borrower and when delivered will be a legal, valid and binding obligation
of the Borrower enforceable in accordance with its respective terms save as
enforcement may be limited by:
a) applicable bankruptcy, insolvency, moratorium, reorganization and
similar laws at the time in effect affecting the rights of creditors
generally;
b) equitable principles which may limit the availability of certain
remedies, including the remedy of specific performance, and
c) the inability of the courts of Canada to give judgement for payment in
foreign currencies.
2.4 The execution, delivery and performance of the Agreement by the
Borrower will not contravene any provision of any regulation, order or permit
applicable to it or cause a conflict with or contravention of its Charter or
cause a breach of or constitute a default under or require any consent under
any agreement or instrument to which it is party or by which it is bound
except such as have been obtained.
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2.5 Neither the Borrower nor any of its Subsidiaries is in default under
any agreement or instrument to which it is a party in any way which
materially adversely affects the Primary Business and there are no suits or
judicial proceedings or proceedings before any governmental commission, board
or other agency pending or to the knowledge of the Borrower threatened which
involve a significant risk of a judgement or liability which, if satisfied,
would have a materially adverse effect upon the financial position of the
Primary Business or the ability of the Borrower and its Subsidiaries to meet
their respective obligations under the Agreement and the Loan Documents, as
the case may be.
2.6 The Borrower has all leases, licences, permits and consents as are
essential for the due carrying on of its business in the manner in which it is
carried on and all such leases, licences, permits and consents are in full
force and effect and no proceedings relating thereto are pending or known to
the Borrower to be threatened in any way which materially adversely affects
the Primary Business.
2.7 Neither the Borrower nor any of its Subsidiaries is in default in any
way which materially adversely affects the Primary Business under any guarantee,
bond, debenture, note or other instrument evidencing any indebtedness or under
the terms of any instrument pursuant to which any of the foregoing has been
issued or made and delivered and to the knowledge of the Borrower there exists
no state of facts which, after notice or lapse of time or both or otherwise,
would constitute such a default in any way which materially adversely affects
the Primary Business.
2.8 The Borrower has disclosed to Royal in writing all facts known to it
which materially adversely affect, or to the knowledge of the Borrower so far
as it can now reasonably foresee, are likely to materially adversely affect the
Primary Business and the prospects, financial or otherwise, of the Primary
Business or the ability of the Borrower to perform its obligations under the
Agreement, or any agreements or instruments delivered pursuant hereto or
thereto.
2.9 All consents, approvals, authorizations, declarations,
registrations, filings, notices and other actions whatsoever required as at
the date hereof in connection with the execution and delivery by the Borrower
of the Agreement and all agreements or instruments delivered pursuant hereto
or thereto, and the consummation of the transactions contemplated hereby,
have been obtained, made or taken.
2.10 The Borrower has furnished Royal with its most recent audited
consolidated financial statements for the fiscal year ended December 31,
1995, all such financial statements have been prepared in accordance with
GAAP consistently applied during such period, except as stated therein or in
the notes thereto, the consolidated balance sheet as therein contained
presents fairly the financial position of the Borrower and its Subsidiaries
as at the date thereof, and each statement of earnings and retained earnings
therein contained presents fairly the results of the Borrower's operations
for the period indicated.
2.11 The Borrower has furnished Royal with its quarterly consolidated
unaudited financial statements for the fiscal quarter ended March 31, 1996 and
since that date (a) there has been no change in the financial condition of the
Borrower and its Subsidiaries as shown on the consolidated balance sheet of the
Borrower as at that date, other than in the
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ordinary course of business, and any such change in the ordinary course of
business has not been materially adverse to the Primary Business except as
disclosed to Royal, and (b) the Primary Business has not been materially
adversely affected as a result of any act or event including fire, explosion,
casualty, flood, drought, riot, storm, condemnation, act of God, accident,
labour trouble, expropriation or act of any Governmental Body.
2.12 Neither the financial statements referred to above nor any other
statement or report furnished to Royal by or on behalf of the Borrower in
connection with the negotiation or confirmation of the transactions contemplated
herein contain, as at the time such statements were furnished, any untrue
statement of a material fact or any omission of a material fact necessary to
make the statements contained therein not misleading, and all such statements
and reports, taken as a whole together with the Agreement do not contain any
untrue statement of material fact or omit a material fact necessary to make
the statements contained therein not misleading.
PART III
THE CREDIT FACILITY
3.1 ESTABLISHMENT OF THE CREDIT FACILITY
Relying on each of the representations and warranties set out in
Part II and subject to the terms and conditions set forth herein, Royal
agrees to make available to the Borrower the Credit Facility to be used by
the Borrower for its general corporate purposes.
3.2 NATURE OR THE CREDIT FACILITY
Unless terminated earlier pursuant to Section 8.2, the Credit
Facility shall be available to the Borrower up to the stated principal amount
on a continuing and revolving basis until the Maturity Date except for
cancellation of the available amount of the Credit Facility made available
pursuant to Section 8.2(b).
3.3 CURRENCIES AND OTHER OPTIONS UNDER THE CREDIT FACILITY
Subject to the provisions of the Agreement, the Borrower may, at its
option, utilize the Credit Facility by way of Canadian Advances, U.S.
Advances, Guarantee Letters, Agreement Letters of Credit or, if available,
Eurocurrency Advances or Bankers' Acceptances.
3.4 TREASURY CONTRACTS
The Borrower may request that Royal enter into Treasury Contracts
with the Borrower from time to time. Royal may decline such request or may
agree to enter into Treasury Contracts provided:
a) the Borrower agrees to the terms and conditions of the current
"International Swap Dealers Association, Inc.'s Interest Rate and
Currency Exchange Agreement" or such other similar or standard form
of agreement appropriate
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to the type of Treasury Contract requested by the Borrower as may be
required by Royal and accepted by the Borrower and enters into and
delivers such agreement to Royal;
b) the Borrower agrees that if there is any inconsistency at any time
between the terms of the Agreement and the terms of any Treasury
Contract, the terms of the Treasury Contract shall prevail.
3.5 INTEREST ON ADVANCES UNDER THE CREDIT FACILITY
The Borrower shall pay to Royal at the Branch of Account interest
on Advances from Royal at the rates determined by reference to the rates and
pricing formulas set forth in Schedule A. Interest shall be calculated and
paid as follows:
a) Canadian Advances shall bear interest in Canadian Funds which
interest shall accrue from day to day while such advances are
outstanding and shall be computed on the basis of a year of 365
days and for actual days elapsed and shall be payable and compounded
monthly in arrears on the 20th day of each month or such other date
as may be agreed to by the Borrower and Royal;
b) U.S. Advances shall bear interest in U.S. Funds which interest shall
accrue from day to day while such advances are outstanding and shall
be computed on the basis of a year of 365 days and for actual days
elapsed and shall be payable and compounded monthly in arrears on the
20th day of each month or such other date as may be agreed to by the
Borrower and Royal,
c) Eurocurrency Advances shall bear interest in U.S. Funds which
interest shall accrue from day to day while such advances are
outstanding and shall be computed on the basis of a year of 360 days
and for actual days elapsed and shall be payable as set forth in
Section 3.14.
3.6 INTEREST AND FEE RATE ADJUSTMENT
The adjustments to rates of interest and the acceptance fees
prescribed in Section 3.5 and Section 4.14 respectively resulting from
changes, if any, to the ratings by the Rating Agencies shall be effective and
payable from and including the Announcement Date. If an adjustment of
interest rates or acceptance fees is required because Royal or the Borrower
were not immediately aware of an announced change by a Rating Agency, such
adjustment shall be made by Royal and shall be retroactive to the
Announcement Date. The Borrower agrees to pay to Royal its due share of, and
Royal agrees to repay to the Borrower its due share of, any interest or fee
rate adjustments resulting from a retroactive adjustment of Rating Agency
ratings which shall be paid by Royal or the Borrower, as the case may be, on
or before the fifth day following Royal's calculation of and advice to the
Borrower of the amount owing.
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3.7 INTEREST ON EUROCURRENCY ADVANCES SPANNING MORE THAN ONE APPLICABLE
INTEREST RATE
If the Borrower takes a Eurocurrency Advance before the date of an
increase or decrease in a percentage rate of interest to be added to the
London Interbank Offered Rate to be paid on Eurocurrency Advances which
Eurocurrency Advance matures after the date of the said increase or decrease
in the rate of interest, the rates of interest for the Eurocurrency Interest
Periods of the said Eurocurrency Advance shall be calculated by using the
interest rates applicable from time to time for the number of days the
Eurocurrency Advance is outstanding during the respective interest rate
periods.
3.8 INTEREST ACT OF CANADA
For the purpose of the Interest Act of Canada, the yearly rate of
interest to which interest calculated on the basis of a year of 360 or 365
days is equivalent, is the rate of interest determined as herein provided
multiplied by the number of days in such year divided by 360 or 365, as the
case may be.
3.9 MANNER OF MAKING ADVANCES
Advances under the Credit Facility (other than deemed advances in
relation to Bankers' Acceptances, Agreement Letters of Credit and Guarantee
Letters) shall be disbursed to the Borrower by Royal crediting the Branch of
Account or elsewhere as may be agreed to between the Borrower and Royal.
3.10 NOTICE FOR CANADIAN ADVANCES AND
U.S. ADVANCES UNDER THE CREDIT FACILITY
The Borrower shall give to Royal the following notices of its
intention to take a Canadian Advance or a U.S. Advance which advances must be
for the stated minimum amounts and multiples:
a) the Borrower may request from Royal Canadian Advances or U.S.
Advances in amounts of less than $10,000,000 or US$10,000,000 or
any lesser whole multiple of $100,000 or US$100,000, as the case may
be, on the requested Drawdown Date,
b) the Borrower may request from Royal Canadian Advances or U.S.
Advances in amounts of $10,000,000 or US$10,000,000 or any greater
whole multiple of $100,000 or US$100,000, as the case may be, on the
Business Day before the requested Drawdown Date,
and any such notice shall specify the amount of the requested Canadian
Advance or U.S. Advance, as the case may be, and the Drawdown Date and Royal
shall make the advance on the requested Drawdown Date, unless that date is
not a Business Day, in which case the requested Advance shall be made on the
next following Business Day.
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3.11 NOTICE FOR EUROCURRENCY
ADVANCES UNDER THE CREDIT FACILITY
The Borrower shall give the following prior irrevocable notice to
Royal before the time stipulated in Section 3.17 of its intention to take
Eurocurrency Advances:
a) for Eurocurrency Advances for aggregate amounts of less than
US$10,000,000 no notice prior to the Interest Determination
Date is required,
b) at least one Banking Day's notice prior to the Interest
Determination Date in the case of Eurocurrency Advances for
aggregate amounts of US$10,000,000 or more.
3.12 EUROCURRENCY NOTICE PARTICULARS
Each such notice under Section 3.11 shall specify:
a) the amount of each Eurocurrency Advance requested by the Borrower,
which shall be in minimum amounts of US$500,000;
b) the Drawdown Date, and
c) the Eurocurrency Interest Period for which the London Interbank
Offered Rate is to be applied.
Unless Royal is unable to make a Eurocurrency Advance because Eurocurrency
Funds are not available to it, it shall make the requested Eurocurrency
Advance in accordance with the notice requesting the same and shall advise
the Borrower on the Interest Determination Date of its London Interbank
Offered Rate.
3.13 CONVERSIONS OF BORROWINGS
The Borrower may upon giving notice to Royal of its intention to
effect a conversion, convert all or any portion of its Borrowings from one
Borrowing Option to another Borrowing Option, provided that:
a) Borrowings in Canadian Funds plus the Equivalent Amount in Canadian
Funds of Borrowings in U.S. Funds after a conversion do not exceed
the available amount under the Credit Facility;
b) a conversion involving Eurocurrency Funds is in a minimum amount
of US$500,000 and a conversion involving Bankers' Acceptances is in
a minimum amount of $500,000 or US$500,000, as the case may be, or
any greater amount in whole multiples of $100,000 or US$100,000, as
the case may be;
c) a Eurocurrency Advance may be converted only on its Eurocurrency
Maturity Date (unless Royal has agreed to a conversion prior to such
date and the Borrower has paid the Compensation Amount determined by
Royal and
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advised the Borrower) and if the Borrower fails to notify Royal as
to conversion or renewal of a maturing Eurocurrency Advance as
required hereunder it shall be deemed for all purposes to be a
U.S. Advance on its Eurocurrency Maturity Date;
d) the Borrower shall not be entitled to convert to Eurocurrency Funds
unless such Eurocurrency Funds are available in accordance with
Section 3.21;
e) any Bankers' Acceptance may be converted only on the maturity date
thereof and provided the Borrower gives Royal the same notice of
request for conversion as specified in Section 4.3;
f) the Borrower shall give to Royal notice for conversion of all or a
portion of its Borrowings, which notice shall be governed by the same
terms established for requests for advances under Section 3.10 and
Section 3.11, and shall specify:
i) the amount of Borrowings to be converted,
ii) the Drawdown Date, and
iii) the Borrowing Option sought by the Borrower and, if the Borrowing
Option is Eurocurrency Advances, the Eurocurrency Interest Period
together with the Drawdown Date, and, if the Borrowing Option is
Canadian Advances, whether the conversion is to Bankers'
Acceptances and if so, the number of days to maturity of the
Bankers' Acceptances;
g) if the conversion is from one currency to a different
currency, the Borrower shall have repaid or shall, at the time
of the conversion, contemporaneously repay to Royal the full amount
advanced under the Borrowing Option being converted. Any such
repayment shall be in the currency of the Advance being repaid.
Subject to the foregoing, including the availability of Eurocurrency Funds,
if the conversion request referred to in Section 3.13(f) specifies a
conversion into Eurocurrency Funds, Royal shall make the requested
Eurocurrency Advance in accordance with the conversion request.
3.14 PAYMENT OF INTEREST ON EUROCURRENCY ADVANCES
Interest on a Eurocurrency Advance for a Eurocurrency Interest
Period of three months or less shall be paid on the Eurocurrency Maturity
Date. If a Eurocurrency Interest Period exceeds three months, interest shall
be paid every three months (not in advance) during the Eurocurrency Interest
Period, until the Eurocurrency Maturity Date, upon which date the balance of
interest thereon shall be paid.
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3.15 DEFAULT INTEREST
Default interest shall be paid on all interest, fees and other
amounts payable hereunder which are overdue. Default interest with respect to
interest, fees and other amounts payable in Canadian Funds shall be at the
Prime Rate per annum and with respect to interest, fees and other amounts
payable in U.S. Funds shall be at the U.S. Base Rate per annum, as the case
may be. Default interest on overdue interest, fees and other amounts shall be
compounded monthly and shall be paid on demand both before and after
maturity, default and judgement. Default interest shall be computed from and
including the date interest, fees or any other amounts payable pursuant to the
Agreement become due and shall be paid for so long as such amount or amounts
remains unpaid.
3.16 INDEMNITY FOR OUT-OF-POCKET EXPENSES
The Borrower agrees to indemnify Royal against any out-of-pocket
loss or expense which it may sustain or incur as a consequence of the
Borrower's failure to effect, release, repay or prepay a Borrowing as
specified in any notice of Borrowing delivered by the Borrower pursuant to
the Agreement.
3.17 EFFECTIVE TIME FOR PART III NOTICES
For the purposes of Part III and Section 4.3, notices from the
Borrower to Royal must be received by Royal prior to 12:00 noon local time
at Vancouver, British Columbia in respect of all Borrowing Options other
than Eurocurrency Advances and prior to 10:00 am. local time at Vancouver,
British Columbia in respect of Eurocurrency Advances to be effective on the
date on which they are given. Notices received after that local time will
take effect from the next Banking Day or Business Day, as the case may be.
3.18 INCREASED COSTS
Subject to Section 3.20, if, after the Closing Date, the
implementation or introduction of or any change in any applicable law,
regulation, treaty, or official directive or regulatory requirement now or
hereafter in effect (whether or not having the force of law), or any change
in the interpretation or application thereof by any court or by any judicial
or governmental authority charged with the interpretation or administration
thereof, or if compliance by Royal with any request from any central bank or
other fiscal, monetary, or other authority (whether or not having the force
of law):
a) subjects Royal to any tax, changes the basis of taxation of payments
due to Royal or increases any existing tax, on payments of principal,
interest, or other amounts payable by the Borrower to Royal under the
Agreement (except for taxes on the overall net income of Royal
imposed by the jurisdiction in which it is incorporated or resident
or from which it is acting for the purposes of the Agreement,
including taxes on capital or other similar taxes);
b) imposes, modifies, or deems applicable any reserve, special
deposit, capital adequacy, regulatory, or similar requirement
(including a requirement which affects Royal's allocation of capital
resources) against assets or liabilities held
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by, or deposits in or for the account of, or loans by, or any
other acquisition of funds for loans or commitments to fund loans
or obligations concerning any Bankers' Acceptances accepted by
Royal, or
c) imposes on Royal any other condition with respect to the Agreement,
and the result of (a), (b) or (c) is, in the reasonable determination of
Royal acting in good faith, to increase the cost to Royal or to reduce the
income receivable by Royal in respect of a Borrowing or standby fees
payable, or to reduce the rate of return on the overall capital of Royal, the
Borrower shall, upon receipt of a certificate from Royal as described below
("Certificate"), pay to Royal that amount which compensates Royal for such
additional cost or reduction in income ("Additional Amount") from the date of
the Certificate. The Borrower will pay the Additional Amount to Royal on the
next following 20th day of the month or such other date as may be agreed to
by the Borrower and Royal and on the 20th day of each month or such other
date as may be agreed to by the Borrower and Royal thereafter until the
earlier of (a) the date on which the Additional Amount has been paid in full,
and (b) the date on which the Borrower has repaid and/or converted all
Borrowings with respect to which a Certificate has been delivered. Royal
shall deliver a Certificate to the Borrower which shall set forth the amount
of the Additional Amount and the basis for its calculation and will, in the
absence of manifest error, be conclusive evidence of the amount of the
Additional Amount. Royal will use its reasonable efforts to reduce the amount
of the Additional Amount payable hereunder provided that Royal will have no
obligation to expend its own funds, to suffer any economic hardship or to
take any action detrimental to its interest in connection therewith.
3.19 BORROWER'S OPTION ON RECEIPT OF CERTIFICATE
If Royal delivers the Certificate and the Borrower has paid the
Additional Amount required to be paid by the Certificate in accordance with
the Certificate, then, with respect to Canadian Advances or U.S. Advances, at
any time thereafter, and, with respect to Eurocurrency Advances or Bankers'
Acceptances, on the maturity thereof, and in all cases, with two Business
Days' prior written irrevocable notice to Royal, the Borrower may:
a) within 60 days, prepay in full without bonus or penalty all
Borrowings with respect to which a Certificate has been delivered,
interest, fees and other amounts payable hereunder provided:
i) each prepayment shall be in the same minimum amounts as
required for advance or acceptance of the currency or basis of
Borrowing being prepaid;
ii) all prepayments shall permanently reduce by a like amount, the
amount of the Credit Facility, determined in Canadian Funds
immediately following each prepayment, thereafter available for
Borrowings. The amount of each prepayment shall, for the
purpose of determining the amount of the Credit Facility
available for Borrowings, be calculated in Canadian Funds
regardless of the currency of the advance or basis of Borrowing;
iii) the Borrower may designate whether the prepayment is to be
applied to Canadian Advances, Eurocurrency Advances, U.S. Advances
or Bankers' Acceptances provided that:
A. prepayments may be applied to a Bankers' Acceptance only if
the prepayment is to be made on a date on which the Bankers'
Acceptance becomes due, and
B. prepayments may be applied to a Eurocurrency Advance only
if the prepayment is made on the Eurocurrency Maturity Date
for the Eurocurrency Advance prepaid or if the prepayment
is accompanied by the Compensation Amount determined by the
Royal of the subject Eurocurrency Advance and provided to
the Borrower at its request prior to any such prepayment;
b) convert those Borrowings with respect to which the Certificate has
been delivered to another basis of Borrowing in accordance with the
Agreement.
3.20 INCREASED COST LIMITATION
Royal agrees that:
a) the increased costs payable by the Borrower pursuant to Section 3.18
or Section 4.17 shall not include:
i) those resulting from any law, regulation, treaty, or official
directive or regulatory requirement or amendments thereto of
which Royal had knowledge prior to the Closing Date;
ii) any penalty or other charges payable by Royal due to its
failure to pay or delay in paying any amount required to be
paid by it referred to in Section 3.18(a) or Section 4.17;
b) it will not charge the Borrower for any increased costs payable by it
referred to in Section 3.18 or Section 4.17 if it is not at the same
time passing similar costs on to substantially all of its customers
to whom Royal is, by agreement, entitled to pass on such costs;
c) it will use all reasonable efforts to minimize amounts payable by
the Borrower hereunder including all reasonable efforts to obtain
refunds or credits.
3.21 EUROCURRENCY FUNDS NOT AVAILABLE
Eurocurrency Advances shall be made hereunder to the extent that
Eurocurrency Funds are readily and lawfully available to Royal on the dates
upon which the Borrower requests Eurocurrency Advances for the Eurocurrency
Interest Periods and in the amounts requested.
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3.22 PAYMENT OF COMPENSATION AMOUNT
If the Borrower prepays, repays or converts a Eurocurrency Advance or
if pursuant to Section 8.1 Royal converts a Eurocurrency Advance on a date
earlier than the Eurocurrency Maturity Date, the Borrower shall forthwith pay
to Royal the Compensation Amount.
3.23 BORROWER'S RIGHT TO REVOLVE THE CREDIT FACILITY
In addition to the Borrower's right to cancel the available amount of
the Credit Facility pursuant to Section 3.26 the Borrower may from time to
time reduce its Borrowings by making repayments to Royal which the Borrower
may re-borrow subject to the terms of the Agreement, provided that:
a) repayments and re-borrowings of Canadian Advances, U.S. Advances or
Eurocurrency Advances, as the case may be, shall be in the same
minimum amounts and whole multiples as prescribed for a Borrowing;
b) repayments and re-borrowings of Eurocurrency Advances may only be
made on the Eurocurrency Maturity Date of the Eurocurrency Advance
being repaid unless the Borrower pays the Compensation Amount as
contemplated in Section 3.22;
c) the Borrower gives Royal the same prior irrevocable notice prior to
a proposed repayment date that it is required to give pursuant to
Section 3.10 in relation to a requested Drawdown Date for taking a
Canadian Advance or U.S. Advance, as the case may be.
3.24 REPAYMENT OF CREDIT FACILITY
Subject to Section 8.2, the Borrower may utilize the Credit Facility
on a continuing basis until the Maturity Date on which date the Borrower
shall repay to Royal the whole of the outstanding amount of the Credit
Facility together with interest, fees and other amounts due hereunder to such
date including the Face Amounts of all Bankers' Acceptances and the amounts
of all Guarantee Letters, Agreement Letters of Credit or Eurocurrency
Advances issued pursuant to the Agreement which have not matured or expired.
3.25 CURRENCY OF ALL PAYMENTS
All repayments made by the Borrower pursuant to the Agreement shall
be made in the currency of the advance being repaid. The Borrower may
designate whether repayments are to be applied to Canadian Advances, U.S.
Advances, Eurocurrency Advances or Bankers' Acceptances. Repayments may be
applied to a Banker's Acceptance only to the extent that the repayment is to
be made on a date of which a Banker's Acceptance becomes due and is in an
amount equal to the amount of the Bankers' Acceptance then due. Repayments
may be applied to Eurocurrency Advances only:
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a) if such repayment is made on the Eurocurrency Maturity Date for the
Eurocurrency Advance repaid, or
b) if such repayment is made on a date other than the Eurocurrency
Maturity Date for the Eurocurrency Advance which is in effect being
prepaid, if the Borrower pays the Compensation Amount as provided in
Section 3.22.
3.26 BORROWER'S RIGHT TO CANCEL AVAILABLE AMOUNT OF CREDIT FACILITY
If the Borrower delivers to Royal three Business Days prior
irrevocable notice, the Borrower may cancel the available amount of the
Credit Facility or a portion thereof in minimum increments of $5,000,000 or
any greater amount in whole multiples of $100,000. Such cancellation shall be
effective on the later of the effective Business Day set out in such notice
and the third Business Day after such notice. Any such amount so cancelled
shall permanently reduce the available amount of the Credit Facility
thereafter available for Borrowings by a like amount.
3.27 STANDBY FEES
Subject to Section 3.28, the Borrower shall pay to Royal standby
fees on the amount of the Credit Facility not utilized by the Borrower. In
determining the amount of the Credit Facility not utilized by the Borrower,
advances of U.S. Funds shall be deemed to be the Equivalent Amount thereof in
Canadian Funds. The standby fee shall be paid in Canadian Funds calculated on
a daily basis and shall be at the rates for standby fees set forth in
Schedule A (computed on the basis of a year of 365 days) on the portion of
the Credit Facility determined in Canadian Funds not utilized, accruing from
and including the Closing Date. Standby fees shall be paid monthly, in
arrears, on the third Business Day after each month end.
3.28 STANDBY FEES WAIVED
If Royal elects not to make further advances pursuant to
Section 8.2(a) the Borrower shall cease to be obligated to pay standby fees
from the Business Day next following the effective date of such termination.
3.29 EVIDENCE OF INDEBTEDNESS
Royal shall open and maintain on its books at its Branch of Account,
accounts and records evidencing Borrowings and other amounts owing by the
Borrower to Royal under the Agreement. Royal shall record therein the amount
of each Borrowing made available by way of Canadian Advances, U.S. Advances
and Eurocurrency Advances and each payment of principal and interest on
account thereof and shall record Guarantee Letters, Agreement Letters of
Credit and Bankers' Acceptances issued, accepted, purchased and cancelled by
it and all other amounts becoming due to it under the Agreement including
interest, acceptance fees, standby fees, G/L Fees, L/C Fees and other fees
and amounts and all payments on account thereof. Such accounts and records
maintained by Royal shall constitute, in the absence of manifest error, PRIMA
FACIE evidence of the indebtedness of the Borrower to Royal pursuant to the
Agreement, the date Royal made
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each Borrowing available to the Borrower and the amounts the Borrower has
paid from time to time on account of principal and interest on the
Borrowings, acceptance fees, standby fees, G/L Fees, L/C Fees and other fees
and amounts payable pursuant to the Agreement and all other amounts owing
hereunder.
3.30 SUBSTITUTE BASIS OF BORROWING FOR EUROCURRENCY ADVANCES
If Royal determines, acting reasonably, (which determination shall
be final, conclusive, and binding upon the Borrower) that:
a) adequate and fair means do not exist for ascertaining the rate of
interest on a Eurocurrency Advance;
b) the cost to Royal of making, funding, or maintaining Eurocurrency
Advances does not accurately reflect the effective cost to it
thereof or that the costs to it are increased or the income
receivable by it is reduced in respect of a Eurocurrency Advance;
c) the making or the rollover of any Eurocurrency Advance or a
portion of any Eurocurrency Advance by it has become
impracticable by reason of circumstances which materially and
adversely affect the London interbank market, or
d) deposits in U.S. dollars are not available to it in the London
interbank market in sufficient amounts in the ordinary course
of business during the applicable Eurocurrency Interest Period
for it to make, fund, or maintain the Eurocurrency Advance
during such Eurocurrency Interest Period,
then Royal may promptly notify the Borrower in writing of such determination
setting forth the basis of its determination and Royal shall not thereafter
be obligated to provide such Eurocurrency Advance. The Borrower shall, within
ten days of receipt of notice of Royal's determination, notify Royal as to the
substitute basis of Borrowing available under the Agreement which it has
selected for such Eurocurrency Advance. If the Borrower has not so notified
Royal, such Eurocurrency Advance shall automatically be converted to a U.S.
Advance for all purposes under the Agreement at the Eurocurrency Maturity Date
or the Drawdown Date, as the case may be.
3.31 ILLEGALITY FOR EUROCURRENCY ADVANCES
If the introduction of or any change in applicable law, regulation,
treaty, or official directive, or regulatory requirement (whether or not
having the force of law), or the interpretation or application thereof by any
court or by any governmental or other authority or entity charged with the
administration thereof, or if a judicial decision is rendered, which now or
hereafter makes it unlawful, or prohibited for Royal (as determined by Royal
in its sole and absolute discretion, acting reasonably) to make, fund, or
maintain any Eurocurrency Advance or any portion thereof or to perform its
obligations with respect to Eurocurrency Advances under the Agreement, Royal
may, by written notice to the Borrower, suspend its obligations under the
Agreement with respect to such Eurocurrency Advance affected by
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such illegality or prohibition for the duration of the period of such
illegality or prohibition and the Borrower shall repay such Eurocurrency
Advance forthwith (or at the end of such period as Royal in its sole and
absolute discretion, acting reasonably, may determine), together with all
accrued but unpaid interest, fees, costs and Compensation Amount as may be
applicable to the date of payment or the Borrower may convert, without
novation, such Borrowings or a portion thereof together with accrued interest
to the date of conversion (or without such accrued interest if the Borrower
elects to pay the same to Royal) into such other Borrowing Options as the
Borrower may request by not more than two Banking Days notice to Royal. For
the period from the date of such notice until the Borrower elects to convert
to another Borrowing Option, the Borrowing affected by such illegality or
prohibition shall, if not repaid, be converted into a U.S. Advance.
3.32 AGREEMENT LETTERS OF CREDIT AND GUARANTEE LETTERS
Royal may permit the Borrower to utilize the Credit Facility to
obtain from it Agreement Letters of Credit and Guarantee Letters in Canadian
Funds or U.S. Funds, provided that:
a) if an Agreement Letter of Credit or Guarantee Letter is issued by
Royal for the account of the Borrower, the amount, determined in
Canadian Funds, of the face amount of such Agreement Letter of
Credit or Guarantee Letter shall, for the purpose of calculating
the available amount for use by the Borrower of the Credit
Facility, be deemed to be a utilization of the Credit Facility
for the amount of and for the term of such Agreement Letter
of Credit or Guarantee Letter;
b) the Borrower will pay to Royal a fee determined by reference to
the rates and pricing formula set forth in Schedule A calculated
on the face amount determined in Canadian Funds of each Agreement
Letter of Credit and Guarantee Letter calculated on the basis of
the number of days (with thirty days as the minimum number of days)
a particular Agreement Letter of Credit or Guarantee Letter will be
outstanding. G/L Fees and L/C Fees shall be paid in Canadian Funds
by the Borrower to Royal in advance of the issue thereof for the
first three months or less and thereafter every three months or such
lesser period;
c) the Borrower will execute and deliver to Royal its standard form
of application and agreement concerning Agreement Letters of Credit
and Guarantee Letters and the Borrower agrees to comply therewith
and be bound thereby. If any of the terms of Royal's standard form
of application and agreement conflict with the Agreement, the terms
of the Agreement shall prevail, and
d) all other reasonable out-of-pocket disbursements and costs
incurred by Royal in relation to the issuance of or payment
pursuant to any Agreement Letter of Credit or Guarantee Letter
issued on behalf of the Borrower shall be repaid to Royal by
advances under the Credit Facility if such funds are
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available thereunder and, if not available thereunder, shall be
repaid upon demand to the Borrower from Royal.
Royal shall pay on each Agreement Letter of Credit and Guarantee Letter in
accordance with its terms, whereupon the amount of such payment shall be
deemed for all purposes to be a Canadian Advance or U.S. Advance, as the case
may be. The Borrower acknowledges to Royal that Royal has the sole discretion
to refuse to make Agreement Letters of Credit and Guarantee Letters
available to the Borrower.
3.33 EXCHANGE RATE FLUCTUATIONS
If, due to exchange rate fluctuations or for any other reason,
Borrowings in Canadian Funds calculated by Royal on the first Business Day
of each month are in excess of the Credit Facility Royal may, if it wants
the Borrower to reduce such excess, forthwith advise the Borrower, requesting
a reduction of the excess. The Borrower shall, if so requested by Royal, within
three Business Days of such request, provide to Royal full cash collateral in
the amount of such excess or otherwise repay a portion of Borrowings from
Royal in an amount equal to or greater than such excess. The rate of exchange
to determine the amount of such excess shall be the Spot Buying Rate.
3.34 DETERMINATION OF AVAILABLE
AMOUNT OF THE CREDIT FACILITY
The available amount of the Credit Facility shall always be
determined in Canadian funds with Borrowings by way of Eurocurrency Advances
and U.S. Advances and amounts guaranteed in U.S. Funds by Guarantee Letters or
Agreement Letters of Credit denominated in U.S. Funds converted to Canadian
Funds by determining the Equivalent Amount of any such amounts.
PART IV
BANKERS' ACCEPTANCES
4.1 Subject to Section 4.3, and provided the Borrower has not been
notified by Royal by at least one Business Day preceding the proposed date
for issuance of a Bankers' Acceptance that, because general market conditions
have caused it to become impracticable to accept Drafts, it is no longer
accepting Drafts in the ordinary course of business, the Borrower may utilize
the Credit Facility by issuing Bankers' Acceptances. Each Bankers' Acceptance
accepted by Royal shall be deemed to be a utilization of the Credit Facility
for the term of such Bankers' Acceptance in an amount equal to the Face
Amount.
4.2 For the purposes of the Agreement, the Face Amount of a Bankers'
Acceptance shall be used when calculations are made to determine the amount
of Borrowings.
4.3 The Borrower shall give Royal the following irrevocable notice
prior to presenting its Drafts for acceptance:
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a) prior to 9:00 a.m. local time at Vancouver, British Columbia on
the Business Day of presentation for Bankers' Acceptances
aggregating less than Cdn$ or US$10,000,000;
b) prior to 9:00 a.m. local time at Vancouver, British Columbia two
Business Days immediately preceding the Business Day of
presentation for Bankers' Acceptances aggregating Cdn$ or
US$10,000,000 or more.
The Borrower shall also notify Royal by giving the same prior notice of the
method it proposes for payment of Bankers' Acceptances on maturity as set out
in Section 4.12.
4.4 The Borrower shall execute and deliver to Royal its form of
undertaking with respect to Bankers' Acceptances and, if applicable, Royal's
form of authorization and undertaking in respect of Jumbo Bankers'
Acceptances and, to the extent any such authorization or undertaking is not
inconsistent with the provisions of the Agreement, agrees to comply
therewith. All Drafts presented by the Borrower for acceptance pursuant to
Section 4.1 shall be drawn on Royal's prescribed form.
4.5 The Borrower shall execute and deliver to Royal a supply of Drafts
and Royal shall only deal with them in accordance herewith. Royal shall not
be responsible or liable for its failure to accept a Draft as required
hereunder if the cause of the failure is, in whole or in part, due to the
failure of the Borrower to provide such instruments to Royal on a timely
basis, nor shall Royal be liable for any damage, loss or other claim arising
by reason of any loss or improper use of such instrument except a loss or
improper use arising by reason of the negligence or wilful act of Royal.
Royal agrees to use its best efforts to advise the Borrower in a timely
manner when it requires additional executed Drafts.
4.6 In case any authorized signatory of the Borrower whose signatures
shall appear on the pre-signed Drafts shall cease to have such authority
before the creation of a Bankers' Acceptance with respect to such Draft, such
signature shall nevertheless be valid and sufficient for all purposes as if
such authority had remained in force at the time of such creation.
4.7 Royal will date the Drafts as required and shall, forthwith after
acceptance, deliver the stamped Draft to the Borrower or, in accordance with
the Borrower's instructions, to a person designated in writing by the
Borrower. Royal is under no obligation to purchase a Bankers' Acceptance for
its own account.
4.8 Drafts delivered by the Borrower to Royal to be held by it need only
be held in safekeeping with the same degree of care as if they were Royal's
property. If executed but incomplete Drafts are delivered to Royal, it may
complete the same on behalf of the Borrower and in accordance with its
instructions following a request from the Borrower to accept a Draft.
4.9 As an alternative to the Borrower providing a supply of Drafts to
Royal the Borrower may request that Royal draw Drafts on behalf of the
Borrower ("Jumbo Bankers' Acceptances"). If the Borrower has delivered to
Royal its forms of undertaking and authorization in respect of Jumbo Bankers'
Acceptances Royal may draw Drafts on behalf
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of the Borrower and complete such Drafts in accordance with the Borrower's
requests from time to time.
4.10 Each Bankers' Acceptance shall be issued and shall mature on a
Business Day.
4.11 If the Borrower fails to provide to Royal the notice required by
Section 4.3 or, having given notice of its intention to present a Draft for
acceptance or to convert from or to Bankers' Acceptances, fails to act in
accordance with such notice, then, Royal, in its discretion, may decline to
accept Bankers' Acceptances presented without notice.
4.12 Subject to the notice of method of payment of maturing Bankers'
Acceptances required by Section 4.3, the Borrower may provide for payment for
each Bankers' Acceptance issued by it by payment to Royal of the Face Amount
thereof by 10:00 a.m. local time at Vancouver, British Columbia on the
maturity date of the Bankers' Acceptance at Royal's Branch of Account. If the
Borrower fails to provide payment to Royal of an amount equal to the Face
Amount of a Bankers' Acceptance on its maturity, then Royal shall pay the
Face Amount of such Bankers' Acceptance which payment shall be determined for
all purposes to be a Canadian Advance if the Bankers' Acceptance was
denominated in Canadian Funds and a U.S. Advance if the Bankers' Acceptance
was denominated in U.S. Funds.
4.13 The Borrower shall not claim from Royal any days of grace for the
payment at maturity of any Bankers' Acceptances.
4.14 As an acceptance fee for the acceptance by Royal of the Borrower's
Drafts against the Credit Facility the Borrower shall pay in advance to Royal
at or prior to the time of such acceptance an acceptance fee at the rates set
forth in Schedule A calculated in relation to the Face Amount of each
Bankers' Acceptance and on the basis of the number of days from and including
the date of acceptance to and including the day immediately preceding the
date of maturity.
4.15 In the event of the acceptance by Royal of a Bankers' Acceptance
before the date of a change of the rates for acceptance fees as set forth in
Schedule A which Bankers' Acceptance matures or becomes due and payable after
such date, the acceptance fee shall be calculated by using the applicable
rates for Bankers' Acceptances for the number of days the Bankers' Acceptance
is outstanding during the fee period. Royal shall calculate the amount, if
any, of any adjustment to the rates of acceptance fees resulting from the
application of this Section 4.15 and shall advise the Borrower of the amount
of any such adjustment which shall be paid by it to Royal or by Royal to the
Borrower by debiting or crediting the account of a Borrower, as the case may
be.
4.16 Acceptance fees in respect of Bankers' Acceptances denominated in
Canadian Funds shall be payable in Canadian Funds computed on the basis of a
year of 365 days and in respect of Bankers' Acceptances denominated in U.S.
Funds shall be payable in U.S. Funds computed on the basis of a year of 360
days. Acceptance Fees shall be adjusted from time to time in accordance with
Section 3.6.
4.17 If at any time any reserve requirement in respect of Bankers'
Acceptances is imposed upon Royal by any Canadian governmental regulatory
authority which results in
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an increase in the net cost to Royal of maintaining the Bankers' Acceptances
outstanding, and Royal has not claimed an Additional Amount from the Borrower
pursuant to Section 3.18 in relation to outstanding Bankers' Acceptances, it
shall have the right, subject to Section 3.20, after giving notice to the
Borrower, to adjust the amount of the acceptance fee as necessary to
compensate it for such cost increase if it imposes a similar adjustment on
all acceptance fees then in effect with other borrowers, and the Borrower
shall pay to Royal at Royal's Branch of Account the amount of any such
adjustment upon receipt of written notice thereof from Royal, which notice
shall include details of Royal's calculations of the effect of such reserve
requirements on its acceptance fees. The Borrower shall have the right to
review the accuracy of such calculations.
4.18 No Banker's Acceptance shall mature on a date which is beyond the
Termination Date.
PART V
SECURITY FOR BORROWINGS
5.1 SECURITY FOR BORROWINGS
As general and continuing security for the performance of all
obligations of the Borrower hereunder and the prompt payment when due by the
Borrower of its Borrowings under the Credit Facility and interest thereon and
all other money for the time being and from time to time owing by the
Borrower hereunder including fees, Breakage Costs, standby fees and other
fees, default interest and the Borrower's guarantee of LGII's Breakage Costs,
the Borrower shall confirm to Royal the continued designation of the
Agreement as Class A Secured Indebtedness (as defined in the Collateral Trust
Agreement) pursuant to the Collateral Trust Agreement, and entry on Schedule
1 of the Collateral Trust Agreement and the continued validity and
enforceability of the Collateral Trust Security.
PART VI
CREDIT FACILITY CONDITIONS PRECEDENT
6.1 CONDITIONS PRECEDENT TO INITIAL BORROWINGS
Royal shall not be obliged to make an initial advance of the Credit
Facility or to accept an initial Draft presented by the Borrower pursuant to
Part IV, whichever shall first occur unless, on the Closing Date, all
representations and warranties contained in Part II are true and correct, no
Event of Default has occurred and is continuing and on each of the following
conditions being satisfied:
a) the execution by the Borrower and delivery to Royal or
confirmation of the prior execution and delivery and continued
efficacy of the Collateral Trust Security and the completion of
all such registrations, recordings and filings of or with respect
to the Loan Documents and the delivery of all such documents
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as in the opinion of counsel to Royal are necessary or
appropriate to render effective the security intended to be
created thereby and to preserve and protect the rights of
Royal thereunder;
b) delivery by the Borrower to Royal of the following:
i) duly executed copies of the Agreement together with all
documents which the Borrower has covenanted to deliver under
the Agreement and any other documents or instruments as in
the opinion of counsel to Royal are reasonably necessary or
appropriate to render effective the Agreement;
ii) a certificate of good standing of the Borrower;
iii) a certified copy of a resolution or resolutions of the board
of directors of the Borrower authorizing the Borrower to
execute, deliver and perform its obligations under the
Agreement and the instruments, agreements, certificates,
papers and other documents contemplated therein and the
manner in which and by whom the foregoing documents are to be
executed and delivered;
iv) an incumbency certificate of the Borrower setting forth the
names of its directors and officers and specimen signatures
of the individuals who sign the Agreement and the
instruments, agreements, certificates, papers and other
documents provided for or contemplated therein;
v) a certificate of a responsible officer of the Borrower, to
the effect that, on the Closing Date, no Event of Default has
occurred which is continuing;
vi) a favourable opinion of counsel for the Borrower (in form and
content satisfactory to the solicitors for Royal) to the
effect that:
A. the Borrower validly exists as a company under the
British Columbia Companies Act and is, according to
the records of the Registrar of Companies for the
Province of British Columbia, in good standing with
respect to the filing of its annual returns;
B. the Borrower has the corporate power and capacity to
borrow money in the manner contemplated by the
Agreement and to enter into, observe and perform the
terms and obligations on its part to be observed and
performed under the Agreement;
C. the Borrower has duly authorized, executed and
delivered the Agreement, the Agreement constitutes a
valid and binding obligation of the Borrower and is
enforceable against the
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Borrower in accordance with its terms, save as
enforcement may be limited by:
(1) applicable bankruptcy, insolvency, moratorium,
reorganization and similar laws at the time in
effect affecting the rights of creditors
generally;
(2) equitable principles which may limit the
availability of certain remedies, including the
remedy of specific performance;
(3) the inability of the courts of Canada to give
judgement for payment in foreign currencies or
for payment of the additional amounts referred to
in Section 9.7;
(4) such other appropriate qualifications as counsel
for Royal will accept, and
D. so far as they are aware in their capacity as counsel
for the Borrower in respect of this transaction, there
are no actions, proceedings or investigations pending
or threatened which question the validity of the
Agreement,
and, in addition, dealing with such other matters
incidental to the transactions contemplated by the
Agreement and the Loan Documents as Royal may reasonably
and properly require;
vii) except as set forth on Schedule B, there is no litigation,
arbitration, governmental investigation, proceeding or
inquiry pending or, to the knowledge of any of the officers
of the Borrower or LGII, threatened against or affecting the
Borrower or any other Subsidiary which could have a
Material Adverse Effect, or for which there is reasonable
likelihood that the Borrower or any Subsidiary would make a
payment, whether in settlement or otherwise, in excess of
US$50,000,000 and that other than any liability incident to
such litigation, arbitration or proceedings, none of the
Borrower or any other Subsidiary has any material
contingent liabilities not provided for or disclosed in the
financial statements;
viii) an opinion of Messrs. Bull, Housser & ▇▇▇▇▇▇, counsel for
Royal (in form and content satisfactory to Royal but
subject to the usual assumptions and qualifications) to the
effect that the Agreement has been executed by the Borrower
and delivered to Royal;
ix) an undertaking of the Borrower, in form and content
satisfactory to Royal and its solicitors, to repay or cause
to be repaid by September 15, 1996 all indebtedness to
Royal of 3144569 Canada Inc. and Paperman & Sons Inc.
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6.2 CONDITIONS PRECEDENT TO SUBSEQUENT BORROWINGS
It shall be a condition of each Borrowing that the representations
and warranties contained in Part II shall be true on and as of the date of
each Borrowing and that Royal is satisfied that there has been no material
adverse change in the financial condition or operation of the Borrower. The
Borrower will, upon request of Royal, deliver to Royal a certificate or
certificates of an officer on behalf of the Borrower to that effect.
PART VII
COVENANTS OF THE BORROWER
7.1 The Borrower covenants and agrees with Royal as follows:
POSITIVE COVENANTS
a) that it will duly and punctually pay or cause to be paid all
amounts required to be paid by it to Royal pursuant to the
Agreement, including principal, interest, fees for Bankers'
Acceptances, standby fees, Breakage Costs, fees for Treasury
Contracts, G/L Fees and L/C Fees and any other amounts on the
day, at the place, in the Currencies and in the manner set forth
herein;
b) that it will duly observe and perform or cause to be observed and
performed each and all of the covenants and agreements required
by it to be performed and observed as set forth in the Agreement;
c) that it will, and it will cause each of its Subsidiaries, to at
all times keep adequately insured by reputable insurers all
assets and property in a manner and for amounts consistent with
its current practices, and shall duly and punctually pay all
premiums and other sums of money for maintaining such insurance;
d) that it will give to Royal prompt notice of any Event of Default
or any event that with notice or elapse of time may be an Event
of Default;
e) that it will, and it will cause each of its Subsidiaries to, file
all material tax returns including income tax returns,
corporation capital tax returns and other tax filings in all
required jurisdictions;
f) that it will, and it will cause each of its Subsidiaries to, pay
all material taxes (except taxes in dispute which are being
contested in good faith) including any interest and penalties and
to pay or make adequate reserves for the ultimate payment of any
tax payment which is being contested;
g) that it will, and it will cause each of its Subsidiaries to,
actively and diligently contest or cause to be contested in good
faith, by appropriate and timely proceedings, or effect a timely
and provident settlement of any action, suit,
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litigation or other proceeding the result of which could be
expected to have a material adverse effect on the financial
condition or operations of the Primary Business;
h) that it will give to Royal prompt notice of any event of default
under the Note Agreements or under the 1996 Credit Agreement;
i) that it will, and it will cause each of its Subsidiaries to,
observe and comply at all times with the provisions of all
applicable laws, regulations, bylaws, ordinances and orders of any
Governmental Body dealing in relation to its respective business
with pollution of the environment, toxic and hazardous materials
and waste and other environmental hazards, except in cases where
the failure to observe or comply will not materially adversely
affect the Primary Business, and, from time to time, upon
reasonable request by Royal, will provide to Royal evidence
satisfactory to Royal acting reasonably of such observance and
compliance. The Borrower shall also provide to Royal notice of any
material investigations, control orders, stop orders, injunctions,
prosecutions or other regulatory procedures and lawsuits by any
Governmental Body relating to pollution of the environment;
j) that it will permit from time to time, as reasonably requested by
Royal, any Person designated by Royal to examine (upon reasonable
notice having been given) its books and financial records and will
cause the Chief Financial Officer, or such other senior officer as
may be appropriate, to discuss and explain, as the case may be, any
of its affairs, finances and accounts and to provide such other
information pertaining to its business as the said representative
may reasonably require;
k) that it will, and it will cause each of its Subsidiaries to, comply
in all material respects with all laws, rules, regulations, orders,
writs, judgements, injunctions, decrees or awards to which it may
be subject;
l) that it will, and it will cause each of its Subsidiaries to,
maintain in full force and effect all leases, licences, permits,
consents and regulatory approvals necessary for the due carrying on
of their respective businesses except that, in the case of any
Subsidiary, the failure to maintain such leases, licences, permits,
consents and regulatory approvals could not, when taken together
with all similar failures by such Subsidiary and each other
Subsidiary, reasonably be expected to have a Material Adverse
Effect;
m) that it will comply and it will cause LGII and each of their
respective Subsidiaries to comply in all material respects with
those provisions of Article III of the Collateral Trust Agreement
which govern the granting and maintenance of the first priority
security interest in favour of the Trustee for the equal and
ratable benefit of all Senior Secured Parties (as defined in the
Collateral Trust Agreement);
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n) that it will, and it will cause each of its Subsidiaries to carry
on and conduct its respective business in substantially the same
manner and in substantially the same fields of enterprise as
conducted on the Closing Date and to do all things necessary to
remain duly incorporated, validly existing and in good standing as
a domestic corporation in its jurisdiction of incorporation and to
maintain all requisite authority to conduct its business in each
jurisdiction in which its business requires it to be so authorized;
NEGATIVE COVENANTS
o) that it will not, without the prior written consent of Royal, nor
will it permit any of its Subsidiaries to, merge, amalgamate, enter
into any corporate reorganization or otherwise modify its
respective corporate structure in any way which would materially
adversely affect the asset base or cash flow of the Primary
Business;
p) that it will not, nor will it permit any of its Subsidiaries to
make any Acquisition of any Person other than a Permitted
Acquisition;
q) that it will not, nor will it permit any of its Subsidiaries to
create, incur or suffer to exist any Indebtedness; except:
i) normal day to day trade credit arrangements;
ii) Borrowings and guarantees under the Agreement, Agreement
Letters of Credit, Guarantee Letters, Bankers' Acceptances
and utilization of the facilities availed under the 1996
Credit Agreement;
iii) Indebtedness existing as of the close of business on March
31, 1996 set out in Schedule C;
iv) Indebtedness secured by Permitted Encumbrances;
v) additional indebtedness permitted under the 1996 Credit
Agreement which may include but is not limited to:
A. the proforma Consolidated Fixed Charges Coverage Ratio of at
least equal to 2.25:1 as provided therein, if applicable;
B. any additional indebtedness of any Subsidiaries, other than
LGII, provided such additional indebtedness does not exceed
10.0% of Consolidated Net Worth, and
C. subject to giving pro forma effect thereto, any additional
indebtedness of the Borrower or any of its Subsidiaries,
provided that Consolidated Indebtedness does not, after
including any such indebtedness, exceed 60.0% of Consolidated
Capitalization;
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r) that it will not without the prior written consent of Royal, nor
will it permit any of its Subsidiaries to, grant, create, assume,
suffer or permit any Lien on any of its respective assets or
operations except for Permitted Encumbrances, Liens granted by the
Borrower or any Subsidiary in favour of the Borrower or any
Subsidiary, as the case may be, Liens arising in connection with
any sale of accounts receivable or other comparable financial
assets permitted under the 1996 Credit Agreement, and Liens
permitted under Section 7.18(a) of the 1996 Credit Agreement;
s) that it will not, nor will it permit any of its Subsidiaries (other
than an SPV in connection with a Permitted Receivables
Securitization), to enter into any agreement or other arrangement
under the terms of which the Borrower or any Subsidiary (other than
any such SPV) would be restricted from performing its respective
obligations under the Collateral Trust Agreement, the 1996 Credit
Agreement, the Agreement or any other loan document to which it is
a party;
t) that it will not, nor will it permit any of its Subsidiaries to
create, incur or suffer to exist obligations to make payments in
respect of covenants not to compete, determined in the aggregate
for LGII and all Subsidiaries, and payable during any one fiscal
year, except as permitted under the 1996 Credit Agreement;
u) that it will not, nor will it permit any Subsidiary to either
declare, make or incur any liability to make any Corporate
Distribution, except as permitted under the 1996 Credit Agreement;
v) that it will not, nor will it permit any Subsidiary to make or
suffer to exist any investment or commitment except as permitted
under the 1996 Credit Agreement;
w) that it will not, nor will it permit any of its Subsidiaries to
lease, sell, or otherwise dispose of Property, except as permitted
under the 1996 Credit Agreement;
x) that it will not, nor will it permit LGII without the consent of
Royal, to amend or consent to any amendment of any of the
provisions of the 1996 Credit Agreement or the Collateral Trust
Agreement specifically cross referenced, directly or indirectly, in
the Agreement;
y) that it will not, without the consent of Royal, amend in any
material way the 1996 Credit Agreement or the Collateral Trust
Agreement;
REPORTING COVENANTS
z) that it will, and it will cause each of its Subsidiaries, to at all
times keep or cause to be kept proper books of account and that it
will furnish to Royal within 120 days after the close of each
fiscal year Sufficient Copies of its
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annual consolidated audited financial statements which shall
contain no material qualifications as to the scope of their
examination except as to the furnishing of information to them,
and, except for the year end fiscal quarter, within 60 days of the
close of each fiscal quarter Sufficient Copies of each of:
i) its quarterly consolidated unaudited financial statements
including a balance sheet and a statement of profit and loss;
ii) quarterly consolidated unaudited financial statements for the
Canadian operations of the Borrower;
iii) quarterly consolidated unaudited financial statements for the
U.S.A. operations of the Borrower, and
iv) that it will, and it will cause LGII to, contemporaneously
with the filing or registering of any Report by it or LGII or
any of their respective Subsidiaries with any Regulatory
Authority, send or cause to be sent Sufficient Copies of each
Report to Royal;
aa) that it will deliver to Royal within 60 days of the end of each
fiscal quarter (except for its last fiscal quarter in which case
within 120 days of the end of such fiscal quarter) a compliance
certificate signed by its Chief Financial Officer and in
substantially the same form attached as Schedule D which sets forth
the calculations of the amounts and ratios comprised in the
financial covenants set out in Section 7.1(ac) to Section 7.1(ag),
inclusive. The certificate shall also certify to the best of the
Chief Financial Officer's knowledge after diligent inquiry as at
the quarter end referred to in the certificate that, except as
disclosed, no Event of Default has occurred nor has any event
occurred which with the giving of notice or the passage of time or
both would constitute an Event of Default, and the covenants
contained in the Agreement have not been breached and that no
facts exist which would reasonably be expected to result in a
breach of such covenants during the next fiscal quarter of the
Borrower;
ab) that it will, and it will cause LGII to deliver to Royal
contemporaneously with delivery to the Lenders pursuant to the 1996
Credit Agreement, Sufficient Copies of all summaries, lists, copies
of notices or claims and other relevant documents required to be
provided by the Borrower or LGII, as the case may be, to the Lenders
pursuant to Sections 7.1(h), 7.1(k), 7.1(m) and 7.1(n) of the 1996
Credit Agreement;
Financial Covenants
ac) that it will maintain at all times a Consolidated Net Worth
(excluding the cumulative effect of currency translation
adjustments) of at least the sum of:
i) Consolidated Net Worth (excluding the cumulative effect of
currency translation adjustments) as of December 31, 1995,
plus
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ii) the net proceeds to the Borrower from consummation of the Equity
Placement and the issuance by the Borrower from time to time of
preferred stock in exchange for the First Preferred Series C
Receipts pursuant to the terms thereof, plus
iii) the sum of 50% of Consolidated Net Income for each fiscal
quarter ended after January 1, 1996 (but only to the extent that,
in the case of any such fiscal quarter, Consolidated Net Income
for such fiscal quarter is at least $1.00), plus
iv) 66-2/3% of the aggregate amount of the net cash proceeds
received by the Borrower and Subsidiaries from the
issuance or sale on and after January 1, 1996 (other than sales or
issuance to the Borrower or any other Subsidiary and other than
pursuant to the Equity Placement or in connection with the
issuance by the Borrower from time to time of preferred stock in
exchange for the First Preferred Series C Receipts pursuant to the
terms thereof) of capital stock of the Borrower or Indebtedness of
the Borrower or any other Subsidiary which has been converted into
capital stock of the Borrower;
ad) that it will maintain at all times a Consolidated Tangible Net Worth
of at least $150,000,000 (excluding the cumulative effect of
currency translation adjustments);
ae) that it will not permit the ratio of Consolidated Indebtedness
to Consolidated Capitalization at any time to exceed 0.60 to 1.00;
af) that it will maintain, at all times:
i) an Interest Coverage Ratio of not less than 2.75 to 1.00, and
ii) a ratio of EBITDA for the most recently ended fiscal quarter
to Consolidated Interest Charges for such fiscal quarter of not
less than 1.50 to 1.00;
ag) that it will not permit the ratio of Consolidated Indebtedness to
Adjusted EBITDA, for the most recently ended period of four
consecutive fiscal quarters, to be greater than:
i) 5.50 to 1.00, at any time through to and including December
31, 1996, or
ii) 5.00 to 1.00, at any time after December 31, 1996.
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PART VIII
EVENTS OF DEFAULT
8.1 DEFINITION OF EVENT OF DEFAULT
The occurrence of any one or more of the following events
constitutes an Event of Default hereunder:
a) if the Borrower makes default in any payment of principal when
the same becomes due under the Agreement and such default shall
have continued for three Business Days after notice has been
given by Royal to the Borrower;
b) if the Borrower makes default in any payment of interest, G/L Fees,
L/C Fees, fees, Compensation Amount, Additional Amount or like
payments when the same become due under the Agreement and such
default shall have continued for a period of five days after notice
has been given by Royal to the Borrower,
c) if the Borrower makes, suffers or permits a default in observing
or performing any covenant or condition of the Agreement, any
Treasury Contract or any other agreement with Royal and such
default shall have continued for a period of ten days after notice
in writing has been given by Royal to the Borrower specifying such
default;
d) if there is a default by the Borrower or any of its Subsidiaries
which results in the acceleration of payment by the Borrower or
any of its Subsidiaries of Indebtedness in excess of US$5,000,000
or the Equivalent Amount in Canadian Funds or concerning its
performance or the performance of any of its Subsidiaries of other
covenants or conditions of Indebtedness in excess of US$5,OOO,OOO
or the Equivalent Amount in Canadian Funds which results in
demand or the acceleration of maturity of such Indebtedness;
e) if any representation, warranty or statement made by the Borrower
herein or in any certificate furnished in connection with or
pursuant to the Agreement shall prove to be or to have been
incorrect on the date as of which it was made in any respect
materially adverse to Royal, in Royal's discretion;
f) if an order be made or an effective resolution be passed for the
winding-up of the Borrower or any of its Subsidiaries (other than
a Subsidiary of the Borrower which does not materially adversely
affect the Primary Business) or if the Borrower or any of its
Subsidiaries on its own behalf shall make an assignment for the
benefit of its creditors or if the Borrower or any of its
Subsidiaries shall be declared bankrupt or if a custodian or
receiver be appointed under any bankruptcy act or code or if a
compromise or arrangement is proposed by the Borrower or any of
its Subsidiaries to creditors or any class of creditors, or if a
receiver, receiver-manager or other officer with like powers
shall be appointed, or if an encumbrancer shall take possession
of the property of the Borrower or any of its Subsidiaries or any
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part thereof (in all of such cases other than a Subsidiary of
the Borrower which does not materially adversely affect the
Primary Business), which is, in the opinion of Royal, material
to the Primary Business or if a distress or execution or any
similar process be levied or enforced against a substantial or
essential part of such property and remain unsatisfied for a
period of thirty days, unless such distress, execution or
similar process is in good faith disputed by the Borrower or
any such Subsidiary and, if so required by Royal, the Borrower
or any such Subsidiary gives adequate security to Royal to pay
in full the amount claimed;
g) if a writ of execution, attachment or similar process has been
issued or levied against all, or a substantial portion of, the
property of the Borrower in connection with any judgement
against the Borrower in any amount which materially
affects the property of the Borrower, and no application has
been brought to stay such writ of execution, attachment or
similar process which application has, in the reasonable
opinion of Royal, a reasonable chance of success;
h) if there is an event of default under any of the Note Agreements,
the 1996 Credit Agreement or under the MEIP Credit Agreement
which results in the acceleration of the maturity of any of
the Notes or acceleration of the indebtedness owing under
the 1996 Credit Agreement or under the MEIP Credit Agreement
and any such acceleration shall not have been rescinded or
annulled in accordance with the provisions of the applicable
Note Agreement, the 1996 Credit Agreement or the MEIP Credit
Agreement, as the case may be;
i) if the Collateral Trust Agreement shall fail to remain in
full force or effect, or any action shall be taken to
discontinue or to assert the invalidity or unenforceability of
the Collateral Trust Agreement, or any pledgor thereunder shall
fail to perform its obligations under or otherwise comply with
any of the terms or provisions of the Collateral Trust
Agreement, or any pledgor thereunder shall deny that it has any
further liability under the Collateral Trust Agreement, or
shall give notice to such effect, or any portion of the shares
of stock pledged, or security interests granted, pursuant to
the Collateral Trust Agreement shall cease to be validly
perfected in favour of the Trustee for the benefit of the
secured parties under the Collateral Trust Agreement, or
(except as otherwise provided in the Collateral Trust Agreement
and except to the extent such pledged shares represent Minority
Interests and excepting shares of Subsidiaries in respect of
which acquisition conditions or requirements have not been
completed) such pledged shares shall fail to represent 100% of
the outstanding shares of stock of the Subsidiaries whose
shares of stock are subject to the Collateral Trust Agreement.
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8.2 REMEDIES
Upon the occurrence of any Event of Default and at any time
thereafter, provided the Event of Default has not been waived by Royal or the
Borrower has not theretofore remedied all outstanding Events of Default
within the prescribed time period, Royal may, by notice to the Borrower:
a) terminate its obligations hereunder to make any further advances or
conversions under the Credit Facility or to accept Drafts of the
Borrower or to enter into Treasury Contracts;
b) declare Borrowings under the Credit Facility, interest, fees, costs
including Breakage Costs and any other moneys owing to it under the
Agreement by the Borrower, including amounts owing or liabilities
in respect of Bankers' Acceptances which have not yet matured and
Agreement Letters of Credit and Guarantee Letters, to be
immediately due and payable on the date which is twenty Business
Days after Royal delivers such notice to the Borrower, or, that
earlier date on or after delivery of such notice when Royal
determines that the Loan Documents or the Primary Business may be
materially prejudiced, endangered or adversely affected
("Acceleration Date") and such monies and liabilities shall
forthwith become due and payable on the Acceleration Date without
presentment, demand, protest or other notice of any kind to the
Borrower, all of which are hereby expressly waived;
c) enforce all rights and remedies granted under the Loan Documents
provided however that any such enforcement shall not be commenced
until on or after the Acceleration Date;
d) convert any portion of the Credit Facility denominated in
Eurocurrency Funds together with unpaid interest thereon, into U.S.
Funds or Canadian Funds;
e) terminate any Treasury Contracts in accordance with their
respective terms.
The Borrower expressly acknowledges and agrees that the date which is twenty
Business Days after Royal delivers such notice to the Borrower affords and will
afford a reasonable period of time to make payment of the outstanding balance
advanced under the Credit Facility, interest, fees, Breakage Costs, costs and
other monies owing by the Borrower under the Agreement. Royal acknowledges and
agrees that interest, if any, earned or received by it as a result of the
redeployment or other application of monies paid by the Borrower pursuant to a
demand made under Section 8.2(b) in respect of Banker's' Acceptances, Guarantee
Letters or Agreement Letters of Credit which have not yet matured shall be
credited or otherwise applied for the benefit of the Borrower.
8.3 OUTSTANDING GUARANTEE LETTERS, AGREEMENT LETTERS OF CREDIT, ETC., ON
ACCELERATION DATE
If there are Guarantee Letters, Agreement Letters of Credit or
Bankers' Acceptances outstanding on the Acceleration Date the Borrower shall
at such time deposit
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(at interest to be credited to the Borrower at the Royal's rate for term
deposits appropriate to the currency, amount and terms of any such Guarantee
Letters, Agreement Letters of Credit or Bankers' Acceptances, as the case may
be,) in cash collateral accounts to be opened and maintained by Royal amounts in
Canadian Funds, U.S. Funds or both, as the case may be, equal to the aggregate
of the Face Amounts of all such unmatured Bankers' Acceptances and the amount of
the Guarantee Letters or Agreement Letters of Credit, as the case may be.
Amounts held in such cash collateral accounts shall be applied by Royal to the
payment of maturing Bankers' Acceptances and payment obligations, if any,
pursuant to Guarantee Letters and Agreement Letters of Credit, as the case may
be, and any balances in such accounts shall be applied to repay other
obligations of the Borrower in accordance with the provisions of the Agent.
8.4 REMEDIES CUMULATIVE
No remedy conferred on Royal is intended to be exclusive. Each and
every remedy shall be cumulative and shall be in addition to every other remedy
given hereunder or now or hereafter existing at law or equity or by statute or
otherwise. The exercise or commencement of exercise by Royal of any one or more
of such remedies shall not preclude the simultaneous or later exercise by Royal
of any or all other such remedies.
8.5 WAIVERS
Royal may, by written instrument at any time and from time to time
waive any breach by the Borrower of any of the covenants or Events of Default
herein. No course of dealing between the Borrower and Royal nor any delay in
exercising any rights hereunder or under any of the Loan Documents shall operate
as a waiver of any rights of Royal.
8.6 APPLICATION OF PAYMENTS FOLLOWING ACCELERATION
After any acceleration of payment of Borrowings pursuant to the
Agreement, Royal may apply any monies received by it towards repayment of
Borrowings under the Credit Facility as it deems appropriate.
PART IX
GENERAL
9.1 WAIVER OR MODIFICATION
No failure or delay on the part of Royal in exercising any right,
power or privilege hereunder shall impair such right, power or privilege or
operate as a waiver thereof nor shall any single or partial exercise of such
right, power or privilege preclude any further exercise thereof or the exercise
of any other right, power or privilege hereunder. The rights and remedies herein
provided are cumulative and not exclusive of any rights and remedies provided by
law.
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9.2 AMENDMENT AND WAIVER PROCEDURES
No amendment, modification or waiver of any condition of the
Agreement or consent to any departure by the Borrower therefrom shall, in any
event, be effective unless the same shall be in writing signed by Royal. No
notice to or demand on the Borrower shall by reason thereof entitle the Borrower
to any other or further notice or demand in similar or other circumstances
unless specifically provided for in the Agreement.
9.3 SUCCESSORS AND ASSIGNS
The Agreement shall be binding upon and enure to the benefit of the
Borrower and Royal and their respective successors and permitted assigns. The
Borrower shall not, without the prior written consent of Royal, assign any
rights or obligations with respect to the Agreement, the Loan Documents, any
Bankers' Acceptances, Guarantee Letters, Agreement Letters of Credit or any
other agreement or document contemplated under the Agreement.
9.4 TIME OF THE ESSENCE
Time shall be of the essence hereof.
9.5 FURTHER ASSURANCES
The Borrower will do, execute and deliver, or will cause to be done,
executed and delivered, all such further acts, documents (including
certificates, declarations, affidavits, reports and opinions) and things as
Royal may reasonably require for the purpose of giving effect to the Agreement.
9.6 SET-OFF
In addition to any rights now or hereafter granted under applicable
law and not by way of limitation of any such rights Royal is authorized at
any time or from time to time without notice to the Borrower or to any other
Person, any such notice being expressly waived by the Borrower, to set-off,
compensate and to appropriate and to apply any and all deposits, matured or
unmatured, general or special, held for or in the name of the Borrower and
any other indebtedness or liability at any time owing or payable by Royal to
or for the credit of or the account of the Borrower against and on account of
the obligations and liabilities of the Borrower due and payable to Royal
under the Agreement including all claims of any nature or description arising
out of or connected with the Agreement, irrespective of currency and whether
or not Royal has made any demand under the Agreement and although these
obligations, liabilities or claims of the Borrower are contingent or
unmatured. Royal and the Borrower acknowledge and agree that this paragraph
is not intended to create and shall not be construed as creating and does not
create a security interest in any Property of the Borrower.
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9.7 JUDGEMENT CURRENCY
If for the purposes of obtaining judgement in any court in any
jurisdiction or for any other purpose hereunder it becomes necessary to convert
into the currency of such jurisdiction ("Judgement Currency") any amount due
hereunder in any currency other than the Judgement Currency, then such
conversion shall be made at the rate of exchange prevailing on the Business Day
before the day on which judgement is given. For such purpose "rate of exchange"
means the spot rate at which Royal, on the relevant date at or about 1200 hours
Toronto, Ontario local time, would be prepared to sell a similar amount of such
currency in Toronto, Ontario against the Judgement Currency. In the event that
there is a change in the rate of exchange prevailing between the Business Day
before the day on which the judgement is given and the date of payment of the
amount due, the Borrower shall, on the date of payment, pay such additional
amounts (if any) as may be necessary to ensure that the amount paid on such
date is the amount in the Judgement Currency which, when converted at the rate
of exchange prevailing on the date of payment, is the amount then due under the
Agreement in such other currency. Any additional amount due from the Borrower
under this paragraph shall be due as a separate debt and shall not be affected
by judgement being obtained for any other sums due under or in respect of the
Agreement.
9.8 ACCOUNT DEBIT AUTHORIZATION
The Borrower authorizes and directs Royal to automatically debit,
by mechanical, electronic or manual means, the bank accounts of the Borrower
maintained with Royal for all amounts payable under the Agreement, including but
not limited to the repayment of principal and the payment of interest, fees and
all charges for the keeping of such bank accounts.
9.9 EXPENSES
All statements, certificates, opinions and other documents or
information required to be furnished to Royal by the Borrower under the
Agreement shall be supplied by the Borrower without cost to Royal. In
addition, the Borrower agrees to pay promptly to Royal on demand, all
reasonable legal fees and other reasonable expenses which are incurred from
time to time by Royal in respect of the documentation, preparation,
registration, negotiation, execution and administration of the Agreement and
Loan Documents (including any value added, goods and services, business
transfer tax or other similar taxes payable in connection with the execution,
delivery or enforcement of the Agreement and Loan Documents) provided
pursuant to the Agreement, and all expenses which are incurred from time to
time by Royal in respect of the enforcement of the Agreement and Loan
Documents.
9.10 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The representations and warranties made in Part II shall survive the
execution and delivery of the Agreement, the Loan Documents and the Closing
Date and continue in full force and effect until the full payment and
satisfaction of all monies due hereunder.
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9.11 NOTICE PROCEDURE
Any demand, request, notice or consent to be given under the
Agreement shall be in writing and shall be given by delivering or faxing the
same (and if faxed will be effective if immediately followed by delivery of such
written demand, request, notice or consent) addressed as indicated opposite the
names of the signatories on the signature pages of the Agreement. Any party
hereto may by notice given in the manner provided herein change its address for
notice under the Agreement.
9.12 NOTICE RECEIVED
Any such demand, request, notice or consent sent as aforesaid shall
be deemed to have been received by the party to whom it is addressed upon
delivery, if delivered, or if such date of delivery is not a Business Day on the
next following Business Day, and the next Business Day following transmission if
sent by telecopy.
9.13 INDEMNITY
The Borrower hereby indemnifies and holds harmless Royal from all
losses, damages, reasonable expenses and liabilities sustained or incurred by
Royal as a result of any default hereunder by the Borrower or any written
misrepresentation in connection herewith.
9.14 COUNTERPARTS
The Agreement may be executed in any number of counterparts with the
same effect as if all parties had all signed the same document. All counterparts
will be construed together and will constitute one and the same agreement.
9.15 REASONABLE CONSENT OR APPROVAL OF THE PARTIES
The parties hereto acknowledge and confirm that:
a) where any of them is required to exercise its discretion or grant
its approval or consent pursuant to a provision in the Agreement,
it shall act reasonably in the exercise of its discretion and will
not unreasonably withhold or delay the granting of its approval or
consent, and
b) the Borrower may rely on any consent, approval, calculation or
determination provided to it by Royal pursuant to the Agreement.
9.16 ENTIRE AGREEMENT
Save as provided herein and in the instruments and documents
contemplated or provided for hereunder, the Agreement contains the whole
agreement between the parties with respect to the Credit Facility and there are
no other terms, conditions, representations or warranties with respect thereto
except as contained herein.
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IN WITNESS WHEREOF the parties hereto have caused the
Agreement to be duly executed on July 31, 1996.
THE CORPORATE SEAL of THE ) The ▇▇▇▇▇▇ Group Inc.
▇▇▇▇▇▇ GROUP INC. was hereunto ) ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
affixed in the presence of: ) ▇▇▇▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇
) Attn. Vice-President,
) Finance
__________________________ ) with a copy to Vice-President, Law
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ) (at the above address)
) Tel: (▇▇▇) ▇▇▇-▇▇▇▇
) Fax: (▇▇▇) ▇▇▇-▇▇▇▇ C/S
)
)
)
)
)
ROYAL BANK OF CANADA )
)
By:_______________________ )
▇▇▇▇▇▇ ▇. Derbyshire ) Royal Bank of Canada
Senior Account Manager ) Corporate Banking
) Multinational
) 36th Floor
) ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
By:______________________ ) Vancouver, B.C.
▇▇▇▇▇▇▇ ▇▇▇▇▇ ) V6E 3S5
Account Manager ) Tel: (▇▇▇) ▇▇▇-▇▇▇▇
) Fax: (▇▇▇) ▇▇▇-▇▇▇▇
)
)
)