1
Exhibit 10.16
Business Development Bank of Canada
BDC Banque de developpement du Canada
LOAN AGREEMENT
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THIS AGREEMENT dated ________ 1998.
BETWEEN:
TRANSCONTINENTAL GOURMET FOODS INC.
(the "Borrower")
OF THE FIRST PART
AND:
BUSINESS DEVELOPMENT BANK OF CANADA, with a branch at
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇
(the "Bank")
OF THE SECOND PART
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Loan Agreement - FLOATING
Rev. December, 1997
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CONTENTS
1. Interpretation 6. Other Payment Provisions 11. Financial Reporting
2. The Loan 7. Security 12. Inspections
3. Repayment Terms 8. Business and Assets 13. Default
4. Other Terms 9. Environment 14. Remedies and Powers
5. Prepayment 10. Insurance 15. General
The Borrower covenants and agrees with the Bank as follows:
1. INTERPRETATION
1.01 Definitions
"Application for Financing" means the form of application for the Loan
executed by the Borrower and dated prior to the Commitment Letter.
"Bank's Floating Base Rate" means the annual rate of interest announced by
the Bank from time to time as its operational rate then in effect for
determining the floating interest rates on Canadian dollar commercial and
industrial loans.
"Base Rate" means the annual rate of interest announced by the Bank from
time to time as its base rate applicable to each of the Bank's Fixed
Interest Rate Plans then in effect for determining the fixed interest
rates on Canadian dollar commercial and industrial loans.
"Commitment Letter" means the letter of offer of the Loan dated March 12,
1998 and subsequent modifications.
"Corresponding Fixed Interest Rate Plan" means in relation to the
prepayment of a fixed interest rate loan, the Fixed Interest Rate Plan
then being offered by the Bank to its customers equal to the number of
years, rounded to the nearest year (minimum of one year), from the date
the prepayment is received to the next scheduled Interest Adjustment Date
(or the Maturity Date if earlier).
"Fixed Interest Rate Plan" means at any time a fixed interest rate plan
offered by the Bank to its customers generally at such time and includes a
fixed interest rate plan providing for blended repayments.
"Floating Interest Rate Plan" means the floating interest rate plan set
out herein.
"Interest Adjustment Date" means the dates established in this agreement
for the adjustment or further adjustment of the interest rate.
"Loan" means the loan offered in the Commitment Letter in the amount of
$400,000.00.
"Loan Rate" means the floating interest rate applicable to this Loan which
is an annual rate 0.75% per annum above the Bank's Floating Base Rate
calculated as set out herein.
"Maturity Date" is January 23, 2003 on which date any monies then unpaid
will be due.
"Month of Loan Authorization" is March, 1998.
"Permitted Encumbrance" means financial or other charges permitted to rank
in priority to the Security under the terms of the Commitment Letter.
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"Security" means the security described in Schedule "A" attached and all
additions, replacements or modifications thereto.
1.02 Jurisdiction
This agreement will be governed by and construed in accordance with the
laws of the jurisdiction in which the branch of the Bank is located as
shown on the first page of this Agreement.
2. THE LOAN
The Bank agrees to lend to the Borrower and the Borrower agrees to borrow
from the Bank, the Loan pursuant to the Commitment Letter and the Borrower
agrees to give the Security to secure the Loan.
3. REPAYMENT TERMS
The Borrower will repay to the Bank at its head office in the City of
Montreal, in the Province of Quebec, or at such other place in Canada as
the Bank may in writing from time to time direct, the Loan with interest
thereon as follows:
PRINCIPAL AMOUNT $400,000.00
INTEREST RATE
The interest rate is the Loan Rate. The Loan Rate shall vary automatically
without notice to the Borrower upon change in the Bank's Floating Base
Rate. At the date of the Commitment Letter, the Bank's Floating Base Rate
was 8.500% per annum and the Loan Rate was therefore 9.250% per annum.
FIRST PAYMENT DATE
(a) INTEREST
The 23rd day of the month following the month of the first
disbursement of principal, unless this disbursement occurs after the
23rd day of the month in which case the first payment of interest is
required the 23rd day of the second month following the month of the
first disbursement.
(b) PRINCIPAL
The first payment date for principal is December 23, 1998.
AMOUNT OF EACH PERIODIC PAYMENT
(a) INTEREST
Interest is calculated monthly not in advance on the principal
outstanding from time to time commencing on the date of the first
disbursement of principal. Interest is paid monthly on the 23rd day
of each month commencing on the first payment date of interest above
and continuing until all amounts required to be paid under the Loan
are paid.
(b) PRINCIPAL
Principal is repaid in two consecutive monthly seasonal instalments
of $30,000.00 each (December to January) on the 23rd day of each
month commencing December 23, 1998, followed by two consecutive
monthly seasonal instalments of $35,000.00 (December to January) on
the 23rd day of each month commencing on December 23, 1999, followed
by four consecutive monthly seasonal instalments of $40,000 each
(December to January) on the 23rd day of each month starting on
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December 23, 2000, followed by two consecutive monthly seasonal
instalments of $55,000.00 each (December to January) on the 23rd day
of each month commencing on December 23, 2002, with the balance of
the principal and any other monies owing to be paid on the Maturity
Date.
4. OTHER TERMS
4.01 Switching Plans
The Borrower may, at any time, elect to change to any Fixed Interest Rate
Plan offered by the Bank at the time of such election upon giving the Bank
30 days written notice of such election and upon payment of the Bank's
standard switching fee then in effect and upon other terms and conditions
agreed upon with the Bank at the time.
4.02 Interest Adjustments
Any underlying conditions in the Commitment Letter allowing other
adjustments by the Bank to the Loan Rate, if any, apply to the Loan.
5. PREPAYMENT
5.01 Fixed Interest Rate Plan
If the Borrower is on a Fixed Interest Rate Plan, the following provisions
will apply:
The Borrower shall have the privilege of prepaying at any time, without
notice, the whole or any part of the outstanding principal upon payment of
the accrued interest, and any other sums due at the date of the prepayment
provided that an indemnity is paid to the Bank which is equal to:
(a) three months' interest on the principal prepaid, such interest to be
computed in the same manner and at the same rate as a monthly
instalment of interest herein would, at time of prepayment, be
calculated; and
(b) an interest differential charge which is only applicable if, on the
date prepayment is received, the Bank's Base Rate for the
Corresponding Fixed Interest Rate Plan is lower than the Base Rate
in effect when the Borrower either entered or renewed the Fixed
Interest Rate Plan being prepaid, whichever is the most recent. The
interest differential is the difference between these two rates. The
interest differential is multiplied by the principal that would have
been outstanding at the 23rd day of each month until the next
Interest Adjustment Date (or the maturity of the principal if
earlier). Then the present value of the amount or amounts obtained
by such multiplication is calculated by discounting such amount or
amounts using the Base Rate for the Corresponding Fixed Interest
Rate Plan as the discount factor. The total of the present values is
the interest differential charge.
PROVIDED THAT the said indemnity shall not exceed the amount chargeable
upon prepayment according to the terms of the Interest Act of Canada.
In the case of partial prepayment, the interest differential charge will
be reduced in the same proportion as the amount prepaid bears to the
principal outstanding at the time prepayment is received.
5.02 Floating Interest Rate Plan
If the Borrower is on the Floating Interest Rate Plan, the Borrower shall
have the privilege of prepaying at any time, without notice, the whole or
any part of the outstanding principal upon payment of the accrued
interest, and any other sums due at the date of prepayment provided that
an indemnity is paid to the Bank which is equal to three months' interest,
at the Loan Rate, on the amount prepaid.
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5.03 Annual Privilege
In addition to the foregoing prepayment provisions, the Borrower shall
have the privilege of prepaying annually, on the 24th day of the Month of
Loan Authorization, an amount not exceeding 15% (non-cumulative from one
year to another) of the outstanding principal without indemnity.
5.04 General
Partial prepayments shall be applied regressively on the then last
maturing instalments of principal.
6. OTHER PAYMENT PROVISIONS
6.01 Payment Date
Although it is stated above that payments of principal and interest are to
be made on the 23rd day of the month, it is agreed that the Bank has the
right, exercisable at any time, to designate any other day of the month
for payments in place of the 23rd.
6.02 Interest Calculation
Interest at the rate provided by this Agreement is payable after as well
as before maturity both before and after default and both before and after
judgment.
6.03 Arrears of Interest
Arrears of interest bear interest at the rate from time to time chargeable
on principal compounded monthly calculated and paid at the same times and
in the same manner as interest on principal and is secured by the
Security.
6.04 Expenses and Fees
The Borrower covenants to pay on demand:
a) all legal fees and disbursements in respect of the Loan, the
preparation, issue and registration of the Security and all legal,
receiver's, bailiff's or other fees and disbursements in respect of
the enforcement or preservation of the Bank's rights and remedies
under the Loan, or the Security. In addition, the Borrower covenants
to pay the costs of any appraiser and any environmental investigator
engaged by the Bank to effect any inspection, appraisal,
investigation or environmental audit of the secured assets and the
cost of any environmental rehabilitation, removal, or repair
necessary to protect, preserve or remediate the secured assets,
including any cost, fine or penalty the Bank is obliged to incur by
reason of any statute, order or direction by competent authority.
The Borrower's obligations to indemnify the Bank under this
paragraph continue before and after default and notwithstanding
repayment of the Loan or discharge of any part or all of the
Security;
b) an allowance for the time, work and expense of the Bank or of any
agent, solicitor or servant of the Bank for any purpose herein
provided for and whether such time, work or expense is advanced or
incurred with the consent of the Borrower or otherwise; and
c) all fees from time to time chargeable by the Bank arising out of any
term of the Commitment Letter or any of the Security including
inspection, administration, discharge and returned cheque handling
fees.
6.05 Interest on Unpaid Amounts
Any amounts required to be paid herein, if not paid when due, will bear
interest until paid in the same manner as arrears of interest and are
secured by the Security.
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7. SECURITY
7.01 Form of Security
All Security shall be in form and substance satisfactory to the Bank and
its counsel and shall be in form sufficient for registration or filing
under all applicable laws.
7.02 Further Assurances
The Borrower shall, at its sole cost, execute and deliver or cause to be
executed and delivered to the Bank such further deeds or other instruments
of conveyance, assignment, transfer, mortgage, pledge, charge, guarantee
or acknowledgment or such additional instruments or other assurances as
the Bank may from time to time reasonably require to carry out the intent
of this Agreement.
7.03 Multiple Security
Notwithstanding anything else contained in any part of the Security, each
part is given as additional, concurrent and collateral security to the
remainder of the Security, and the Bank shall not be obliged to realize or
enforce its rights under any part of the Security before enforcing or
realizing on the remainder of the Security, but may enforce or realize on
any part of the Security as it sees fit, in whichever order it sees fit,
and may abstain from enforcing any part of the Security as it sees fit,
any rule of law or equity to the contrary notwithstanding.
8. BUSINESS AND ASSETS
8.01 Title to Assets
The Borrower has good and marketable title to its assets that are subject
to the Security, in each case free and clear of any encumbrance other than
Permitted Encumbrances.
8.02 Material Contracts
All material contracts to which the Borrower is a party or which affect
the Borrower's business or its assets that are subject to the Security are
not in default and will remain in good standing.
8.03 Claims and Litigation
There are no actions, suits, or claims pending or threatened against the
Borrower by any person or governmental authority which could, if an
adverse decision is made, affect the ability of the Borrower to perform
its obligations under this Agreement.
8.04 Conduct of Business
The Borrower will carry on its business in a proper business-like manner,
will keep proper books of account and records covering all it's business
and affairs, will maintain in good standing all necessary licences,
permits, approvals and consents and will comply with all laws, ordinances
and regulations applicable to it.
8.05 Reorganization
The Borrower agrees not to:
a) amalgamate, merge, consolidate or enter into any business
combination with any other person including, without limitation, a
joint venture partnership; or
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(b) make any investment or permit any of its subsidiaries to make any
investment in an affiliate;
without the prior written consent of the Bank.
8.06 Corporate Undertakings
Where the Borrower is a corporation, it shall not, without the Bank's
prior written consent:
(a) issue, purchase or redeem its shares;
(b) permit any of its shareholders to sell, transfer or dispose of its
shares;
(c) declare or pay any dividends on any of its issued shares;
(d) amend its capital structure.
8.07 Maintenance
The Borrower will keep and maintain all of its assets used in the conduct
of its business in good order, repair and condition, reasonable wear and
tear excepted.
8.08 Security and Liens
The Borrower will not give, grant, assume or permit to exist, any
encumbrance on any of its assets that are subject to the Security other
than Permitted Encumbrances.
8.09 Nature of Business
The Borrower will not:
(a) engage in any business or permit the use of its premises whether by
a tenant or other person for any purpose that would constitute an
ineligible activity under the Commitment Letter;
(b) change its name or the location of the assets that are subject to
the Security without the Bank's prior written consent;
(c) change the nature or type of its business without the Bank's prior
written consent;
(d) sell, transfer or dispose of the assets that are subject to the
Security, including without limitation, the licensing of any
intellectual property, without the Bank's prior written consent
except in the ordinary course of business.
8.10 Additional Covenants
The Borrower will observe and perform the additional covenants set forth
in Schedule "B" attached, if any.
9. ENVIRONMENT
The Borrower represents and agrees that:
(a) it operates and will continue to operate in conformity with all
environmental laws and will ensure its staff is trained as required
for that purpose;
(b) it has an environmental emergency response plan and all officers and
employees are familiar with that plan and their duties under it;
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(c) it possesses and will maintain all environmental licences, permits
and other governmental approvals as may be necessary for the conduct
of its business;
(d) its assets are and will remain free of environmental damage or
contamination;
(e) there has been no complaint, prosecution, investigation or
proceeding, environmental or otherwise, with respect to the
Borrower's business or assets;
(f) it will advise the Bank immediately upon becoming aware of any
environmental problem relating to its business or its assets that
are subject to the Security;
(g) it will provide the Bank with copies of all communications with
environmental officials and all environmental studies or assessments
prepared for the Borrower and it consents to the Bank contacting and
making enquiries of environmental officials or assessors;
(h) it will not install on or under any land mortgaged to the Bank
storage tanks for petroleum products or any hazardous substance
without the Bank's prior written consent and only upon full
compliance with the Bank's requirements and the standards and
requirements of all boards and governmental authorities having
jurisdiction over the Borrower's activities or assets.
10. INSURANCE
During the continuance of this Loan, the Borrower shall insure and keep
insured all assets pledged as security hereunder to their full insurable
value against loss or damage, however caused. The insurance policy(ies)
shall record the Bank as loss payee and contain the standard mortgage
clause as approved by the Insurance Bureau of Canada, or a mortgage
endorsement or a Breach of Warranty Clause, as appropriate. The Borrower
shall provide evidence of the insurance coverage and pertinent clauses to
the Bank, if and when requested.
If the Borrower does not maintain insurance as required, the Bank may
purchase insurance to protect its own interest and the premiums shall be
payable by the Borrower.
The Borrower shall notify the Bank of the occurrence of any damage or loss
and furnish any necessary proof to enable the Bank to obtain payment of
the insurance money.
Receipt of insurance proceeds by the Bank does not constitute a payment on
the Loan unless the Bank chooses to apply the funds to the Loan and any
release of insurance proceeds not so applied does not constitute a
readvance under the Loan.
If any insurance proceeds become payable, the Bank may, in its absolute
discretion, apply such proceeds to the Loan and such other obligations of
the Borrower to it in whatever order or manner it sees fit and may release
such proceeds or part of them.
The Borrower hereby authorizes and directs the insurer under any policy of
insurance called for above to include the name of the Bank as a loss payee
in any cheque or draft which may be issued with respect to a claim
settlement under such insurance and the production by the Bank of a copy
of this agreement shall be the insurer's full and complete authority for
so doing.
11. FINANCIAL REPORTING
The Borrower shall deliver to the Bank its annual financial statements
within 90 days of its year end, interim statements one month after
statement date and shall deliver such other financial statements and
information more frequently as may be directed by the Bank from time to
time. All such statements shall accurately state the assets and
liabilities and income and expenses of the Borrower's business and such
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other information as the Bank may direct, including, if the Bank so
directs, the opinion of an independent, qualified auditor.
12. INSPECTIONS
The Bank may, by its officers or authorized agents, enter upon the
Borrower's premises at any time, from time to time, to inspect or to
appraise the Borrower's assets that are subject to the Security and to
inspect the books and records of the Borrower and make extracts therefrom.
The Borrower hereby authorizes its accountants, auditors and bookkeepers
to release to the Bank for inspection and copying any books and records of
the Borrower or relating to the Borrower which they may have in their
possession.
13. DEFAULT
13.01 Events of Default
The Borrower shall be in default under this Agreement in the event of a
default pursuant to any of the Security, or in any of the following
events:
(a) the Borrower makes default in the payment of the Loan or any money
secured by the Security, at the time and in the amounts provided; or
(b) the Borrower is in breach of any term, condition, obligation or
covenant to the Bank, or any representation or warranty to the Bank
is untrue, whether or not contained in the Security, the Commitment
Letter or this agreement; or
(c) the Borrower declares itself to be insolvent or admits in writing
its inability to pay its debts generally as they become due, or
makes an assignment for the benefit of its creditors, is declared
bankrupt, makes a proposal or otherwise takes advantage of
provisions for relief under the Bankruptcy and Insolvency Act, the
Companies Creditors' Arrangement Act or similar legislation in any
jurisdiction, or makes an authorized assignment; or
(d) a receiver, receiver and manager or receiver-manager of all or any
part of the Borrower's assets is appointed; or
(e) an order is made or an effective resolution is passed for winding up
the Borrower; or
(f) the Borrower ceases or threatens to cease to carry on all or a
substantial part of its business; or
(g) an order of execution against the Borrower's assets or any part
thereof remains unsatisfied for a period of 10 days; or
(h) the Bank in good faith believes and has commercially reasonable
grounds to believe that the prospect of payment or performance of
any of the Borrower's obligations is impaired or that the property
provided as security hereunder is in danger of loss, damage, misuse,
seizure or confiscation; or
(i) the lessor under any lease to the Borrower of any real or personal
property takes any steps to or threatens to terminate such lease, or
otherwise exercise any of its remedies under such lease as a result
of any default thereunder by the Borrower; or
(j) the Borrower causes or allows hazardous materials to be brought upon
any lands or premises occupied by the Borrower or incorporated into
any of its assets without the Bank's prior consent, or if the
Borrower causes, permits, or fails to remedy any environmental
contamination upon, in or
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under any of its lands or assets, or fails to comply with any
abatement or remediation order given by a responsible authority; or
(k) the Borrower is in default under any loan agreement or security
given by the Borrower to the Bank or to any other lender in relation
to any indebtedness other than the Loan or the Borrower accelerates
or permits the acceleration of the maturity of any material
indebtedness to any creditor other than the Bank; or
(l) any guarantor of the Loan makes default under any term of its
guarantee or under any term of any security given by the guarantor
in support of that guarantee; or
(m) the Borrower uses any moneys advanced to it by the Bank for any
purpose other than declared to and agreed upon by the Bank.
Default under this agreement or any of the Security constitutes default
under all of the Security and this agreement.
Any default or non-compliance with any terms of the Commitment Letter not
at variance with this agreement shall constitute an event of default under
this Agreement.
13.02 Consequences of Default
In the event of default hereunder, the Loan and any other money secured by
the Security shall, at the option of the Bank, immediately become due and
payable and the Security enforceable.
14. REMEDIES AND POWERS
14.01 Obligation to Advance
Neither the execution and delivery of this agreement or the Security nor
the advance of money thereunder binds the Bank to make any advance or
further advance of the Loan.
14.02 Dealings by the Bank
The Bank may grant extensions of time and other indulgences, take and give
up securities including the Security, accept compositions, grant releases
and discharges and otherwise deal with the Borrower, debtors of the
Borrower, sureties and others and with the Security or any other security
from time to time given to the Bank by the Borrower or any other person
all as the Bank may see fit without prejudice to any of the Borrower's
indebtedness, liabilities and obligations to the Bank or the Bank's right
to hold and realize on any security. The Borrower further agrees that it
shall not be released nor shall its liability be in any way reduced by
reason that the Bank has done or concurred in the doing of anything
whereby a surety would be released in whole or in part.
14.03 Remedies Cumulative
The Bank may in its sole discretion realize upon any security including
the Security held by it in any order or concurrently whether such security
is held by it at the date hereof or is provided at any time hereafter. No
realization or exercise by the Bank of any power or right hereunder or
under any security shall in any way prejudice any further realization or
exercise until all obligations are fully satisfied. All rights and
remedies of the Bank under this Agreement are cumulative and not in
substitution for its rights under the Security or at law.
14.04 Waiver
The Bank may at any time waive any default which may have occurred. No
such waiver shall extend to or affect any other default or the Bank's
rights or remedies in respect thereof.
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14.05 Appropriation
The Bank may, before or after default, appropriate any moneys received by
it from the Borrower or any other person, other than regular payments of
principal and interest, to payment of such of the obligations of the
Borrower hereunder or under any other agreement between the Bank and the
Borrower as the Bank in its sole discretion may see fit, and any such
appropriations may be changed or varied from time to time.
14.06 Non-Merger
Neither this agreement nor the Security shall operate so as to create any
merger or discharge of any warranties, obligations, covenants or
representations of the Borrower under the Application for Financing,
Commitment Letter, any amendment to them, or other document delivered by
or on behalf of the Borrower, all of which survive the execution and
delivery of the Security, the perfection of the Security interests created
thereby, and the advance of money by the Bank.
The taking of a judgment or judgments or any other action or dealing
whatsoever by the Bank in respect of any security from time to time given
to the Bank by the Borrower or any other person shall not operate as a
merger or release of any of the Borrower's indebtedness, liabilities or
obligations hereunder or in any way affect or prejudice the rights and
remedies of the Bank with respect to such indebtedness, liabilities and
obligations.
15. GENERAL
15.01 Conflicts with other Documents
Except for the Application for Financing, the Commitment Letter, the
Security and any other instrument delivered hereunder or pursuant hereto,
this Agreement constitutes the entire agreement between the Bank and the
Borrower with respect to the subject mailer hereof.
To the extent that any provision of the Application for Financing, the
Commitment Letter or any of the Security or any other instrument delivered
hereunder or pursuant hereto is inconsistent with or in conflict with the
provisions of this Agreement, the provisions of this Agreement shall
govern except for underlying conditions contained in the Commitment
Letter.
The underlying conditions contained in the Commitment Letter are
incorporated herein by reference, provided that in the event that any
underlying condition contained in the Commitment Letter is inconsistent or
in conflict with the provisions of this Agreement, other than Schedule "B"
hereto, if any, then the Commitment Letter shall govern as to that
underlying condition. In the event that any underlying condition contained
in the Commitment Letter is inconsistent with or in conflict with the
provisions of Schedule "B" to this Agreement, if any, then Schedule "B"
shall govern as to that underlying condition.
15.02 Notice
Any demand or notice herein referred to may be effectively given by the
Bank by personal delivery thereof or by mailing such demand or notice by
prepaid post to the Borrower at the address set out above, or at such
other address as may be given in writing by the Borrower to the Bank.
Delivery by facsimile transmission is deemed to be personal service and is
deemed to be received on the next business day following transmission.
Delivery by prepaid mail is deemed to be received three business days
after mailing.
15.03 Severability
Any provision in this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such prohibition or unenforceability without invalidating the
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12
remaining provisions hereof or affecting the validity of enforceability of
such provision in any other jurisdiction.
15.04 Time of the Essence
Time is of the essence of this Agreement.
15.05 Multiple Borrowers
Whenever the term "Borrower" includes more than one party:
(a) all covenants, liabilities, and obligations entered into by or
imposed on the Borrower herein are deemed to be joint and several;
(b) each of the parties constituting the Borrower is, as between them, a
principal debtor in respect of the Loan and all monies payable under
the Security and notwithstanding any subsequent change in their
position inter se or notice thereof for all purposes of this
agreement shall remain a principal debtor and the Bank is not bound
by or obliged to recognize any such change or notice.
15.06 No Assignment
The Borrower may not assign any of its rights or obligations under this
Agreement, and no such purported assignment shall be effective, without
the prior written consent of the Bank, which consent may be arbitrarily
withheld.
15.07 Discharges
The Borrower shall pay a fee, to be fixed by the Bank, for the preparation
or execution of any full or partial release or discharge of any of the
Security, any Borrower, or any guarantor of the Loan.
15.08 Pre-incorporation Advances
In the event any of the Borrowers were not yet incorporated or did not
have legal status at the time of execution of the Commitment Letter or at
the time of any advance of principal under the Loan such Borrower ratifies
and approves all such actions, confirms that such advance was applied for
its benefit and assumes liability for such advance, such contract and any
expenditure made or cost incurred by the Bank hereunder.
15.09 Successors and Assigns
This agreement shall enure to the benefit of and be binding on the parties
hereto and their respective heirs, executors, successors and permitted
assigns as the case may be.
15.10 Captions
The division of this agreement into sections and the insertions of
headings are for convenience of reference only and do not affect the
interpretation of this Agreement.
15.11 Schedules
All schedules to this Agreement, together with all documents incorporated
by reference herein or therein, form an integral part of this Agreement.
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5.12 Interpretation
Whenever in this Agreement the singular or neuter pronoun is used the same
shall be respectively construed as the plural, masculine or feminine where
the context or the parties hereto require.
5.13 Counterparts
This Agreement may be executed in any number of counterparts and by
different persons in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
5.14 Receipt by the Borrower
The Borrower acknowledges receipt of an executed copy of this Agreement.
EXECUTION
IN WITNESS WHEREOF the Borrower has hereunto set his hand and seal or has
affixed its corporate seal duly attested by the hand(s) of its proper officer(s)
in that behalf, on the day and year first above written.
TRANSCONTINENTAL GOURMET FOODS INC.
Per: /s/
------------------------------------
(Authorized Signing Officer)
Per: /s/
------------------------------------
(Authorized Signing Officer)
Loan Agreement - FLOATING Page 13
Rev. December, 1997
14
SCHEDULE "A"
TO LOAN AGREEMENT
BETWEEN
TRANSCONTINENTAL GOURMET FOODS INC.
AS BORROWER
AND
BUSINESS DEVELOPMENT BANK OF CANADA
SECURITY
1. General Security Agreement dated _______________, 1998 between the
Borrower and the Bank.
2. Guarantee dated __________________, 1998 from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ in the amount
of $80,000.00
3. Guarantee dated __________________, 1998 from ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ in the
amount of $40,000.00
4. Guarantee dated _________________, 1998 from ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ in the
amount of $40,000.00
5. Guarantee dated ________________,1998 from ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ in the
amount of $40,000.00
6. Waiver of Distraint dated _____________________, 1998 between ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇ and T&R Construction and the Bank.
7. Priority Agreement dated __________________, 1998 between the Bank, The
Bank of Nova Scotia and the Borrower.
8. Insurance on assets, including boiler and machinery and "All-Risks" or
fire and extended coverage, recording the Bank as loss payee.
Loan Agreement - FLOATING
Rev. December, 1997
15
SCHEDULE "B"
TO LOAN AGREEMENT
BETWEEN
TRANSCONTINENTAL GOURMET FOODS INC.
AS BORROWER
AND
BUSINESS DEVELOPMENT BANK OF CANADA
ADDITIONAL COVENANTS OF THE BORROWER
1. The Borrower shall, at all times, maintain a long term, debt:equity ratio
of no more than 1.5:1. Long term debt includes all loans, leases and
debentures (including their current portion). Equity includes share
capital, retained earnings, shareholders loans less both intangible assets
and investments.
CONDITIONS
1. Audited financial statements as of February 28, 1998 show, in the Bank's
opinion, no material adverse change in the Borrower's financial position
since the internal financial statements dated February, 1998.
Loan Agreement - FLOATING
Rev. December, 1997
16
[LOGO]
BDC
Transcontinental Gourmet Foods Inc.
March 27, 1998
Page 2
STANDBY FEE DATE
Replace:
May 12, 1998
By:
October 12, 1998
All other terms and conditions remain the same.
It is understood and agreed that the agreement contained herein shall be binding
on the ensure to the benefit of yours and the Bank's successors and assigns.
Please sign and return the attached copy of this letter for our files.
Yours truly,
BUSINESS DEVELOPMENT BANK OF CANADA
Per: _____________________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Client Services Representative
Enclosure
And Transcontinental Gourmet Foods Inc., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇▇▇ hereby acknowledges that they read and understood the
foregoing letter agreement and consents to and agrees to be bound by the said
amendment.
Signed this 5th day of [ILLEGIBLE], 1998.
/s/ /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------- ----------------------------------------
Transcontinental Gourmet Foods Inc. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, (Guarantor)
/s/ ▇▇▇▇ ▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------- ----------------------------------------
▇▇▇▇ ▇▇▇▇▇, (Guarantor) ▇▇▇▇▇ ▇▇▇▇▇▇▇, (Guarantor)
/s/ ▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇ ▇▇▇▇▇▇▇▇ (Guarantor)
17
[Letterhead of BDC]
[LOGO]
BDC
March 27, 198
Transcontinental Gourmet Foods Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Dear Sirs:
Re: BDC Loan No. 358508-02-6
Further to letter of offer dated March 12, 1998, the Bank is agreeable to the
following amendments:
INTEREST RATE VARIANCE
Replace:
1.25%
By:
0.75%
SECURITY AND LEGAL DOCUMENTATION
Replace:
3. Guarantee of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ for $90,000.00, ▇▇▇▇ ▇▇▇▇▇ for $45,000, ▇▇▇▇▇
▇▇▇▇▇▇▇ for $30,000.00 and ▇▇▇ ▇▇▇▇▇▇▇▇ for $30,000.00. [The guarantors
agree that they are personally guaranteeing the payment of the commitment,
standby and legal fees as per the letter of Offer.]
By:
3. Guarantee of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ for $80,000.00, ▇▇▇▇ ▇▇▇▇▇ for $40,000, ▇▇▇▇▇
▇▇▇▇▇▇▇ for $40,000.00 and ▇▇▇ ▇▇▇▇▇▇▇▇ for $40,000.00. [The guarantors
agree that they are personally guaranteeing the payment of the commitment,
standby and legal fees as per the letter of Offer.]
.../2