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Exhibit 4.2.1
CREDIT AGREEMENT
Dated as of November 28, 2001
between
NUMATICS LTD.
as Borrower
and
LASALLE BUSINESS CREDIT,
a division of
ABN AMRO BANK CANADA
as Lender
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TABLE OF CONTENTS
1. DEFINITIONS............................................................1
(a) General Definitions.................................................1
(b) Accounting Terms and Definitions...................................12
2. LOANS AND LETTERS OF CREDIT...........................................13
(a) Revolving Loans....................................................13
(b) Margin and Other Requirements: Revolving Loans.....................14
(c) Other Requirements.................................................15
(d) Loan Accounts......................................................15
(e) Letters of Credit..................................................15
3. INTEREST, FEES AND CHARGES............................................16
(a) Rates of Interest..................................................16
(b) Computation of Interest and Fees...................................16
(c) Maximum Interest...................................................16
(d) Closing Fee........................................................17
(e) Unused Line Fee....................................................17
(f) Examination and Appraisal Fees.....................................17
(g) Facilities Fee.....................................................17
(h) Capital Adequacy Charge............................................17
(i) Letter of Credit Fees..............................................18
4. LOAN ADMINISTRATION...................................................18
(a) Loan Requests......................................................18
(b) Letter of Credit Requests..........................................19
(c) Disbursement.......................................................19
5. SECURITY..............................................................19
6. COLLECTIONS...........................................................20
(a) Blocked Accounts and Lock Boxes....................................20
(b) Rights of ABN AMRO.................................................21
(c) Application of Collections.........................................22
(d) Dealings by ABN AMRO...............................................22
(e) Receipts by Borrower...............................................22
7. SCHEDULES AND REPORTS.................................................22
(a) Activity Reports...................................................22
(b) Borrowing Base Certificate.........................................23
(c) Inventory Reports..................................................23
(d) Financial Reports..................................................23
(e) Compliance Certificate.............................................24
(f) Authorized Officer.................................................24
2.
8. TERMINATION...........................................................24
(a) Survival of Security Interests, Liens, etc.........................24
(b) Prepayment.........................................................25
9. REPRESENTATIONS AND WARRANTIES........................................26
10. COVENANTS..........................................................31
11. CONDITIONS PRECEDENT...............................................38
(a) Closing Deliveries.................................................38
(b) Post Closing Deliveries............................................41
12. DEFAULT............................................................41
13. REMEDIES UPON AN EVENT OF DEFAULT..................................43
14. INDEMNIFICATION....................................................45
(a) General Indemnity..................................................45
(b) Environmental Indemnity............................................46
15. MISCELLANEOUS......................................................46
(a) Notices............................................................46
(b) Choice of Governing Law and Construction...........................47
(c) Forum Selection and Service Of Process.............................47
(d) Modification and Benefit of Agreement..............................47
(e) Headings of Subdivisions...........................................47
(f) Power of Attorney..................................................48
(g) Waiver of Jury Trial, Other Waivers, Confidentiality...............48
(h) Timing of Payments.................................................48
(i) Canadian Currency..................................................48
(j) Judgment Currency..................................................49
(k) Severability.......................................................49
(l) Conflicts..........................................................49
(m) Counterparts.......................................................49
(n) Commitment Letter Superseded.......................................49
SCHEDULES AND EXHIBITS
----------------------
Schedule A Authorized Officers
Schedule B Business and Collateral Locations
Schedule C Permitted Liens
Schedule 9(i) Actions and Proceedings
Section 9(l) Transactions With Affiliates
Schedule 9(q) Indebtedness
3.
Schedule 9(s) Affiliates, Joint Ventures and Partnerships
Schedule 9(w) Intellectual Property
Schedule 9(y) Environmental Matters
Schedule 11(a)(iii) Closing Documents List
Exhibit 2(d)(ii) Form of Revolving Promissory Note
Exhibit 4(a) Form of Notice of Borrowing
Exhibit 7(a) Form of Collateral Loan Report
Exhibit 7(b) Form of Borrowing Base Certificate
Exhibit 7(b)(ii) Form of Statutory Payables Report
Exhibit 7(d) Form of Financial Reporting Certificate
Exhibit 7(e) Form of Compliance Certificate
Exhibit 11(a)(ix) Form of Closing Certificate
CREDIT AGREEMENT dated as of November 28, 2001 between NUMATICS LTD., a
corporation existing under the federal laws of Canada (the "Borrower") and
LASALLE BUSINESS CREDIT, a division of ABN AMRO BANK CANADA, a Canadian
chartered bank (such bank herein referred to as "ABN AMRO"), with its head
office at Maritime Life Tower, 15th Floor, ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇
(▇▇▇▇▇▇▇), ▇▇▇ ▇▇▇.
RECITALS
WHEREAS, the Borrower desires that ABN AMRO extend certain loans, advances
and other financial accommodations to the Borrower in order to refinance certain
existing indebtedness, to provide for working capital and certain inter-company
loans, and the parties wish to provide for the terms and conditions upon which
such loans, advances and other financial accommodations shall be made;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged by the Borrower, the parties
hereto agree as follows:
1. DEFINITIONS
(a) General Definitions.
The following terms have the following meanings when used herein:
"Account", "Chattel Paper", "Document of Title", "Equipment", "Intangible",
"Goods", "Instrument", and "Inventory" shall have the respective meanings
assigned to such terms without initial capitals, as of the date of this
Agreement, in the Ontario Personal Property Security Act ("PPSA").
"Account Debtor" shall mean in respect of any Account the debtor obligated
to make payment thereof.
"ACS Lien" shall have the meaning ascribed thereto in the U.S. Loan
Agreement.
"Adjusted Net Worth" shall mean in respect of the Borrower, shareholders'
equity (including retained earnings but excluding any appraisal increments) less
the book value of all intangible assets (including, without limitation,
leasehold improvements, goodwill and transaction costs), prepaid expenses, and
amounts owing from Affiliates and other related Persons of the Borrower
(including officers and employees), all as determined by ABN AMRO on a
consistent basis, plus the amount of any debt subordinated to ABN AMRO on terms
and conditions acceptable to ABN AMRO in its sole judgment.
"Affiliate" shall mean any Person (i) which directly or indirectly through
one or more intermediaries controls, is controlled by, or is under common
control with, a Loan Party, (ii) which beneficially owns or holds five percent
(5%) or more of the voting control or equity
2.
interests of a Loan Party, or (iii) five percent (5%) or more of the voting
control or equity interests of which is beneficially owned or held by a Loan
Party.
"Agreement" shall mean this Credit Agreement as it may be amended,
supplemented, extended or restated from time to time.
"Authorized Officer" shall mean in respect of the Borrower each person
whose name appears on Schedule A hereto.
"Blocked Account" shall have the meaning ascribed thereto in subsection
6(a) hereof.
"Borrowers" shall mean collectively the Borrower and the German Borrower.
"Borrowing" shall mean a borrowing or advance of credit hereunder
consisting of any loans made to the Borrower on the same day by ABN AMRO.
"Borrowing Base" shall mean at any time the lesser of the amounts then
calculated as specified in subsections 2(b)(i) and (ii) hereof.
"Borrowing Base Certificate" shall have the meaning ascribed thereto in
subsection 7(b) hereof and shall be in substantially the form of Exhibit 7(b)
hereto.
"Business Day" shall mean any day other than a Saturday, Sunday, or such
other day as banks in Toronto, Ontario are authorized or required to be closed
for business.
"Canadian Dollars" or "Cdn. $" shall mean the lawful currency of Canada.
"Canadian Dollar Equivalent Amount" shall mean, on any given date, the
amount of Canadian Dollars which could be purchased with the relevant amount of
a currency at the then applicable Spot Rate at 11:00 a.m. Toronto time on such
date (and if such date is not a Business Day, on the preceding Business Day) for
the purchase of Canadian Dollars with such currency.
"Capital Adequacy Charge" shall have the meaning ascribed thereto in
subsection 3(h).
"Capital Adequacy Demand" shall have the meaning ascribed thereto in
subsection 3(h).
"Capital Expenditures" shall mean, with respect to any period, the
aggregate of all expenditures (whether paid in cash or accrued as liabilities
and including expenditures for capitalized lease obligations) by the Borrower
during such period that are required by GAAP to be included in or reflected by
the property, plant or equipment or similar fixed asset accounts (or in
intangible accounts subject to amortization) in the balance sheet of the
Borrower.
"Closing Certificate" shall have the meaning ascribed thereto in subsection
11(a)(ix) and shall be in substantially the form of Exhibit 11(a)(ix) hereto.
3.
"Closing Date" shall mean the date upon which the initial Revolving Loan is
made.
"Collateral" shall mean all of the undertaking, property and assets,
present and future, real and personal, of the Borrower, including that
specifically described in section 5 hereof and all other undertaking, property
and assets of any other Loan Party or any other Person now or hereafter pledged
to ABN AMRO to secure, either directly or indirectly, repayment of any of the
Liabilities including, for greater certainty, all present and future property
and assets of the German Borrower.
"Compliance Certificate" shall have the meaning ascribed thereto in
subsection 7(e).
"Contaminant" shall mean all Hazardous Materials and all those substances
which are regulated by or form the basis of liability under Environmental Laws
or any other material or substance which constitutes a material health, safety
or environmental hazard to any person or property.
"Default" shall mean any event, condition or default which with the giving
of notice, the lapse of time or both would be an Event of Default.
"DEM" shall mean the lawful currency of the Federal Republic of Germany.
"Dilution" shall mean, with respect to any Person for any period, the
percentage obtained by dividing: (a) the sum of non-cash credits against
Accounts of such Person for such period, plus pending or probable, but not yet
applied, non-cash credits against Accounts of such Person for such period as
determined by ABN AMRO, by (b) gross invoiced sales of such Person for such
period.
"EBITDA" shall mean, with respect to any period, net income after taxes for
such period (excluding any after-tax gains or losses on the sale of assets other
than Inventory and excluding other after-tax extraordinary gains or losses) plus
interest expense, income tax expense, depreciation and amortization for such
period, plus or minus any other non-cash charges or gains which have been
subtracted or added in calculating net income after taxes for such period.
"Eligible Account" shall mean an Account owing to the Borrower which is
acceptable to ABN AMRO in its sole discretion for lending purposes. ABN AMRO
shall, in general, consider an Account to be an Eligible Account if it meets,
and so long as it continues to meet, all of the following requirements:
(i) it is genuine and in all respects is what it purports to be;
(ii) it is owned by the Borrower and the Borrower has the right to subject
it to a security interest in favour of ABN AMRO;
4.
(iii) it arises from (A) the performance of services by the Borrower and
such services have been fully performed and acknowledged and accepted
by the Account Debtor thereunder; or (B) the sale of Goods by the
Borrower, and such Goods have been completed in accordance with the
Account Debtor's specifications (if any) and delivered to and accepted
by the Account Debtor, such Account Debtor has not refused to accept
and has not returned or offered to return any of the Goods, or has not
refused to accept any of the services, which are the subject of such
Account, and the Borrower has possession of, or has delivered to ABN
AMRO at ABN AMRO's request, shipping and delivery receipts evidencing
delivery of such Goods; for greater certainty, Accounts arising from
pre-▇▇▇▇▇▇▇▇ or progress ▇▇▇▇▇▇▇▇ shall not be Eligible Accounts;
(iv) it is evidenced by an invoice rendered to the Account Debtor
thereunder, is due and payable within a maximum of sixty (60) days
after the stated invoice date thereof and does not remain unpaid
ninety (90) days past the stated invoice date thereof; provided,
however, that if more than twenty-five percent (25%) of the aggregate
dollar amount of invoices owing by a particular Account Debtor to the
Borrower remain unpaid ninety (90) days past the respective stated
invoice dates thereof, then all Accounts owing to the Borrower by that
Account Debtor shall be deemed ineligible;
(v) it is not subject to any prior assignment, claim, lien, security
interest or encumbrance whatsoever, other than Permitted Liens;
(vi) it is a valid, legally enforceable and unconditional obligation of the
Account Debtor thereunder, and is not subject to setoff, counterclaim,
contra, deduction, credit, allowance or adjustment, or to any claim by
such Account Debtor denying liability thereunder in whole or in part
whether by reason of prepayment, previous credit or otherwise;
(vii) it does not arise out of a contract or order which fails in any
material respect to comply with the requirements of applicable law;
(viii) the Account Debtor thereunder is not a director, officer, employee
or agent of the Borrower, or a Subsidiary, Parent or Affiliate;
(ix) it is not an Account with respect to which the Account Debtor is (A)
the U.S. or any department, agency or instrumentality thereof, unless
the Borrower assigns its right to payment of such Account to ABN AMRO
pursuant to, and in full compliance with, the Assignment of Claims Act
of 1940, as amended, (B) Her Majesty the Queen in Right of Canada or
any department, agency or instrumentality thereof, unless the Borrower
grants to ABN AMRO by way of absolute assignment and as security, its
right to payment of such Account pursuant to, and in full compliance
with, and all other steps deemed necessary by ABN AMRO have been taken
under, the Financial Administration Act (R.S.C. 1985, c. F-11), as
amended, or (C) a
5.
Crown corporation, any other government or other governmental body if
such Account cannot be the object of a valid first ranking security
interest in favour of ABN AMRO without special formalities or
requirements, unless such formalities or requirements have been
performed to the full satisfaction of ABN AMRO;
(x) it is not an Account with respect to which the Account Debtor is
located in a state of the U.S., a province of Canada or in any other
country which requires the Borrower, as a precondition to commencing
or maintaining an action in its courts, either to (A) receive a
certificate of authority to do business and be in good standing
therein, (B) file a notice of business activities report or similar
report with its taxing authority, or (C) otherwise comply with any
other requirement of such state, province or country, unless (x) the
Borrower has taken the appropriate actions described in clauses (A),
(B) or (C), (y) the failure to take one of the actions described in
either clause (A), (B) or (C) may be cured retroactively by the
Borrower at its election, or (z) the Borrower has proven, to ABN
AMRO's satisfaction, that it is exempt from any such requirements
under any such state's, province's or country's laws;
(xi) it is an Account which arises out of a sale made in the ordinary
course of the Borrower's business;
(xii) the Account Debtor is a resident or citizen of, and is located or has
its chief executive office located within, (A) a state or province of
the U.S. or Canada in which the security interest of ABN AMRO is
properly registered and the Account is payable in the lawful money of
either the U.S. or Canada or (B) any other country, provided the
payment of such Account is secured by a letter of credit or insurance
supplied by an institution, and which is in form and substance and
otherwise, satisfactory to ABN AMRO in its sole discretion;
(xiii) it is not an Account with respect to which the Account Debtor's
obligation to pay is conditional upon the Account Debtor's approval of
the Goods or services or is otherwise subject to any repurchase
obligation or return right, as with sales made on a ▇▇▇▇-and-hold,
guaranteed sale, sale on approval, sale or return or consignment
basis;
(xiv) it is not an Account (A) with respect to which any representation or
warranty contained in this Agreement or any Security Agreement is
untrue or (B) which violates any of the covenants of the Borrower
contained in this Agreement or any Security Agreement;
(xv) it is not an Account which, when added to a particular Account
Debtor's other indebtedness to the Borrower, exceeds ten percent (10%)
of the aggregate of the Borrower's Accounts or a credit limit
determined by ABN AMRO in its sole discretion for that Account Debtor,
provided that,
6.
Accounts excluded from Eligible Accounts solely by reason of this
subparagraph (xv) shall be Eligible Accounts to the extent of such
limit; and
(xvi) it is not an Account with respect to which the prospect of payment or
performance by the Account Debtor is or will be impaired, as
determined by ABN AMRO in its sole discretion.
"Eligible Inventory" shall mean Inventory of the Borrower which is
acceptable to ABN AMRO in its sole discretion. Without limiting ABN AMRO's
discretion, ABN AMRO shall, in general, consider Inventory to be Eligible
Inventory if it meets, and so long as it continues to meet, all of the following
requirements:
(i) it is finished goods inventory or raw material owned by the Borrower
and the Borrower has the right to subject it to a security interest in
favour of ABN AMRO;
(ii) it is located on the premises listed on Schedule B hereto or such
other premises from time to time accepted in writing by ABN AMRO;
(iii) it is not subject to any prior assignment, claim, lien, security
interest or encumbrance whatsoever, other than Permitted Liens, has
not given rise to an Account and is subject to a valid first ranking
security interest in favour of ABN AMRO which is properly perfected in
the province where such Inventory is located;
(iv) it is not work in process, parts, samples, display or slow moving
Inventory, and is held for sale or furnishing under contracts of
service; it is (except as ABN AMRO may otherwise consent in writing)
unspoiled and free from deficiencies which would, in ABN AMRO's sole
determination, affect its market value;
(v) it is not in transit (except as consented to in writing by ABN AMRO),
or stored with a bailee, consignee, warehouseman, processor or similar
party or located on any leased premises unless ABN AMRO has given its
prior written approval and the Borrower has caused any such bailee,
consignee, warehouseman, processor, similar party or lessor to issue
and deliver to ABN AMRO, in form and substance acceptable to ABN AMRO
in its absolute discretion, such financing statements, warehouse
receipts, waivers and other documents as ABN AMRO shall require;
(vi) ABN AMRO has determined, in accordance with its customary business
practices, that it is not unacceptable due to obsolescence, age, type,
category, quantity, expiry or other factors; for greater certainty any
packaging materials and any used or old, returned, damaged or
defective or spoiled Inventory, Inventory unfit for intended usage or
not readily
7.
saleable, and Inventory held or placed on consignment shall not be
acceptable as Eligible Inventory; and
(vii) it is not Inventory (A) with respect to which any of the
representations and warranties contained in this Agreement or any
Security Agreement are untrue or (B) which violates any of the
covenants of the Borrower contained in this Agreement or any Security
Agreement.
"Environmental Claims" shall mean any written notice of violation, claim,
deficiency, demand, abatement or other order or prosecution by any governmental
authority or any person for personal injury (including sickness, disease or
death), tangible or intangible property damage, damage to the environment,
nuisance, pollution, contamination or other adverse effects on the environment,
or for fines, penalties, convictions or deed or use restrictions, resulting from
or based upon (i) the existence, or the continuation of the existence, of a
Release (including, without limitation, sudden or non-sudden, accidental or
nonaccidental Releases), of, or exposure to, any Contaminant at, in, by or from
any of the properties of the Borrower or any Loan Party, (ii) the environmental
aspects of the transportation, storage, treatment or disposal of Contaminants in
connection with the operation of any of the properties of the Borrower or any
Loan Party or (iii) the violation, or alleged violation by Borrower or any Loan
Party, of any statutes, ordinances, orders, rules, regulations, permits or
licenses of or from any Governmental Authority, agency or court relating to
environmental matters connected with any of the properties of the Borrower or
any Loan Party, under any applicable Environmental Laws.
"Environmental Laws" includes, without limitation, the Environmental
Protection Act (Ontario), the Canadian Environmental Protection Act, the
Canadian Transportation of Dangerous Goods Act, the Ontario Water Resources Act,
the Dangerous Goods Transportation Act (Ontario), the Occupational Health and
Safety Act (Ontario), the Fisheries Act (Canada) and the Gasoline Handling Code
and Gasoline Handling Act (Ontario) and regulations thereunder, and laws and
regulations of any applicable jurisdiction respecting pesticides, fisheries
regulation and water resource management, as all of the aforesaid laws and
regulations have been and hereafter may be amended or supplemented, and any
related or analogous present or future federal, state, provincial or local
statutes, rules having the force of law, regulations, ordinances, licenses,
permits and interpretations having the force of law, orders of regulatory and
administrative bodies and guidelines in any applicable jurisdiction.
"Event of Default" shall have the meaning ascribed thereto in section 12
hereof.
"Excess Availability" shall mean, as of any date of determination by ABN
AMRO, the excess, if any, of (i) the Borrowing Base over (ii) the aggregate of
the outstanding Revolving Loans as of the close of business on such date. For
purposes of calculating Excess Availability and the amount of the Borrowing Base
relating thereto, ABN AMRO may, in the exercise of its sole discretion, and
without prejudice to its ability to establish other reserves as set out in this
Agreement, establish a reserve in an aggregate amount based on the Borrower's
outstanding debt which is not current (in accordance with its terms of payment
as verified by ABN AMRO) or which is past due as of such date of determination,
to the extent thereof.
8.
"Financial Reporting Certificate" shall mean a certificate in substantially
the form of Exhibit 7(d) hereto.
"Fiscal Quarter End" shall mean December 31, March 31, June 30 or September
30 in each year.
"GAAP" shall mean at any time generally accepted accounting principles and
policies as in effect at such time in Canada.
"German Borrower" shall mean Numatics GmbH, a German limited liability
company.
"German Documents" shall mean the promissory note made by the German
Borrower in favour of the Borrower in the principal amount of U.S. $2,250,000
dated November 28, 2001 and all security granted by the German Borrower to the
Borrower pursuant to or in respect thereof.
"Governmental Authority" shall mean any nation or government, any state,
province or other political subdivision thereof, any central bank (or similar
monetary or regulatory authority) thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, be any of the foregoing.
"Guarantors" shall mean collectively Numatics, Incorporated, a Michigan
corporation, Micro-Filtration, Inc., a Michigan corporation, Numation, Inc., a
Michigan corporation, Numatech, Inc., a Michigan corporation, Ultra Air
Products, Inc., a Michigan corporation, Microsmith, Inc., an Arizona corporation
and Empire Air Systems, Inc., a New York corporation.
"Hazardous Materials" shall mean any pollutant, contaminant, chemical, or
industrial or hazardous, toxic or dangerous goods, waste, substance or material,
defined or regulated as such in (or for purposes of) any Environmental Laws and
any other toxic, reactive, or flammable chemicals, including (without
limitation) any friable asbestos, any petroleum (including crude oil or any
fraction), any radioactive substance and any polychlorinated biphenyls;
provided, that in the event that any Environmental Law is amended so as to
broaden the meaning of any term defined thereby, such broader meaning shall
apply subsequent to the effective date of such amendment; and provided further
that, without limitation, to the extent that the applicable laws of any province
establish a meaning for "waste", "hazardous material," "hazardous substance,"
"hazardous waste," "solid waste" or "toxic substance" which is broader than that
specified in any federal Environmental Laws, such broader meaning shall apply in
the relevant province.
"Hedging Reserves" shall mean at any time a reserve (which is currently
calculated as a percentage, which percentage is currently 8%) in respect of the
nominal amount of all foreign exchange contracts (including without limitation
hedging, futures and option agreements) then outstanding between the Borrower
and ABN AMRO, as determined by ABN AMRO in its sole discretion. ABN AMRO
reserves the right to change the reserve percentage or
9.
the hedging reserve methodology (including a ▇▇▇▇ to market calculation method
or basis) at its sole discretion from time to time.
"Indemnified Party" shall have the meaning ascribed thereto in section 14
hereof.
"Letter of Credit Request" shall have the meaning ascribed thereto in
subsection 4(b) hereof.
"Letters of Credit" shall mean documentary or standby letters of credit
issued for the Borrower's account in accordance with the terms of subsection
2(e) hereof.
"L/C Liabilities" shall mean at any time the face amount of letters of
credit (if any) issued for the Borrower's account by ABN AMRO to the extent not
drawn down and if drawn down, not fully reimbursed to ABN AMRO.
"Liabilities" shall mean any and all present and future obligations,
liabilities and indebtedness of the Borrower to ABN AMRO or to any parent,
affiliate or subsidiary of ABN AMRO of any and every kind and nature, howsoever
created, arising or evidenced and howsoever owned, held or acquired, whether now
or hereafter existing, whether now due or to become due, whether primary,
secondary, direct, indirect, absolute, contingent or otherwise (including,
without limitation, obligations of performance), whether several, joint or joint
and several, and whether arising or existing under written or oral agreement or
by operation of law.
"Loan" or "Loans" shall mean any and all Revolving Loans made by ABN AMRO
pursuant to section 2 hereof and all other loans, advances and financial
accommodations made by ABN AMRO to or on behalf of the Borrower hereunder.
"Loan Party" shall mean each of the Borrowers and the Guarantors.
"Lock Box" shall have the meaning ascribed thereto in subsection 6(a)
hereof.
"London Property" shall mean the property municipally known as ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇.
"Material Adverse Effect" shall mean with respect to any Person, and with
respect to any event, act, condition or occurrence of whatever nature
(including, without limitation, a labour union strike or lockout and any adverse
determination in any litigation, arbitration or governmental investigation or
proceeding), whether singly or in conjunction with any other event or events,
act or acts, condition or conditions, occurrence or occurrences, whether or not
related, a material adverse change in, or a material adverse effect upon, any of
the business, property, assets, operations, condition (financial or otherwise)
or prospects of such Person.
"Maturity Date" shall mean the latest of the last day of the Original Term
or any Renewal Term applicable.
"Note" shall mean the Revolving Note.
10.
"Notice of Borrowing" shall have the meaning ascribed thereto in subsection
4(a) hereof.
"Original Term" shall have the meaning ascribed thereto in subsection 8(a)
hereof.
"Other Agreements" shall mean all agreements, instruments and documents
including, without limitation, guarantees, mortgages, hypothecs, trust deeds,
pledges, powers of attorney, consents, assignments, contracts, notices, security
agreements, leases, financing statements and all other writings heretofore, now
or from time to time hereafter executed by or on behalf of the Borrower or any
other Person (including any Loan Party) and delivered directly or indirectly to
ABN AMRO or to any parent, affiliate or subsidiary of ABN AMRO in connection
with the Liabilities or the transactions contemplated hereby, and includes, for
greater certainty, the German Documents.
"Parent" shall mean any Person now or at any time or times hereafter owning
or controlling (alone or with any other Person) at least a majority of the
issued and outstanding equity of a Loan Party and, if a Loan Party is a limited
partnership, the general partner of such Loan Party.
"Permitted Liens" shall mean (i) statutory liens of landlords, carriers,
warehousemen, mechanics, materialmen or suppliers incurred in the ordinary
course of business and securing amounts not yet due or declared to be due by the
claimant thereunder, (ii) liens or security interests in favour of ABN AMRO,
(iii) zoning restrictions and easements, rights of way, licenses, covenants and
other restrictions affecting the use of real property that do not individually
or in the aggregate have a material adverse effect on the ability of the owner
or user thereof to use such real property for its intended purpose in connection
with its business, (iv) liens and prior claims securing the payment of taxes or
other governmental charges not yet delinquent or being contested in good faith
and by appropriate proceedings, (v) liens securing a purchase money obligation
or liens incurred or deposits made in the ordinary course of business in
connection with capitalized leases for purchase of, and in each case applying
only to, Equipment permitted as Capital Expenditures under subsection
10(o)(iii), the documents relating to such liens to be in form and substance
acceptable to ABN AMRO, (vi) deposits to secure performance of bids, trade
contracts, leases and statutory obligations (to the extent not excepted
elsewhere herein); (vii) liens set forth on Schedule C or specifically permitted
by ABN AMRO in its sole discretion and in writing from time to time; (viii) any
lien arising out of the refinancing, extension, renewal or refunding of any
indebtedness secured by a lien permitted by any of the foregoing sections (i)
through (vii) inclusive; provided, that (A) such indebtedness is not secured by
any additional assets, and (B) the amount of such indebtedness is not increased,
(ix) pledges or deposits in connection with worker's compensation, unemployment
insurance and other social security legislation, (x) rights of setoff, banker's
lien and other similar rights arising solely by operation of law, (xi) the ACS
Lien and (xii) liens subordinated to the liens and security interests described
in (ii) above by agreements satisfactory in form and substance to ABN AMRO in
its absolute discretion.
"Person" shall mean any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation,
institution, entity, party or
11.
foreign or local government (whether federal, provincial, county, city,
municipal or otherwise), including, without limitation, any instrumentality,
division, agency, body or department thereof.
"Prime Rate" shall mean the floating annual rate of interest established
from time to time by ABN AMRO as the reference rate for determining interest
rates on commercial loans made in Canada in the lawful currency of Canada and
designated as its prime rate; provided that under no circumstances shall the
Prime Rate be less than the market bid rate determined by ABN AMRO as the
average of bid rates for 30 day Canadian dollar bankers' acceptances that appear
on the Reuters Screen CDOR Page at 10:00 a.m. (Toronto time) on the applicable
day plus one and one half percent (1.5%) per annum. The Prime Rate is not
intended to be the lowest or most favourable rate of ABN AMRO in effect at any
time. It shall vary from time to time as determined by ABN AMRO.
"Prime Rate Loan" shall mean a Loan in the lawful currency of Canada that
bears interest based on the Prime Rate.
"Prime Rate Revolving Loan" shall mean a Revolving Loan that is a Prime
Rate Loan.
"Release" shall mean any releasing, spilling, leaking, seepage, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
disposing or dumping, in each case as defined in Environmental Laws, and shall
include any threatened Release, as defined in Environmental Laws; provided, that
in the event that any Environmental Law is amended so as to broaden the meaning
of any term defined thereby, such broader meaning shall apply subsequent to the
effective date of such amendment.
"Renewal Term" shall have the meaning ascribed thereto in subsection 8(a)
hereof.
"Revolving Credit Commitment" shall mean at any time the Canadian Dollar
Equivalent Amount equal to Four Million U.S. Dollars (U.S. $4,000,000).
"Revolving Loans" shall have the meaning ascribed thereto in subsection
2(a) hereof.
"Revolving Note" shall mean the revolving promissory note executed by the
Borrower in favour of ABN AMRO pursuant to subsection 2(d)(ii) in substantially
the form of Exhibit 2(d)(ii) hereto.
"Security" shall have the meaning ascribed thereto in section 5 hereof.
"Security Agreement" shall mean any security agreement executed by the
Borrower or any other Loan Party from time to time regarding the pledge and
grant of mortgages, charges, assignments, hypothecs, pledges and security
interests to ABN AMRO of Collateral.
"Shareholder" shall mean Numatics, Incorporated.
12.
"Spot Rate" shall mean in respect of a currency, the rate determined by ABN
AMRO by reference to applicable currency markets to be the spot rate for the
purchase by ABN AMRO of such currency with another currency through its main
Toronto branch at approximately 11:00 a.m. (Toronto time) on the date as of
which the foreign exchange computation is made; provided that if at the time of
any such determination, no such spot rate can be reasonably quoted, ABN AMRO may
use any method as it deems applicable to determine such rate hereunder, and such
determination shall be conclusive absent manifest error.
"Statutory Payables Report" shall have the meaning ascribed thereto in
subsection 7(b)(ii).
"Subsidiary" shall mean any corporation of which more than fifty percent
(50%) of the outstanding capital stock having ordinary voting power to elect a
majority of the board of directors of such corporation (irrespective of whether
at the time stock of any other class of such corporation shall have or might
have voting power by reasoning of the happening of any contingency) is at the
time, directly or indirectly, owned by a Loan Party, or any partnership, joint
venture or limited liability company of which more than fifty percent (50%) of
the outstanding equity interests are at the time, directly or indirectly, owned
by a Loan Party or any limited partnership of which a Loan Party is a general
partner.
"Type" shall mean, with respect to any Loan, whether such Loan is a Prime
Rate Loan or a U.S. Prime Rate Loan.
"United States" or "U.S." shall mean the United States of America.
"United States Dollars" or "U.S. Dollars" or "U.S. $" shall mean the lawful
currency of the United States.
"U.S. Prime Rate" shall mean the Prime Rate as defined in the U.S. Loan
Agreement. The U.S. Prime Rate is not intended to be the lowest or most
favourable rate of LaSalle Business Credit, Inc. in effect at any time. It shall
vary from time to time as determined by Lasalle Business Credit, Inc.
"U.S. Prime Rate Loan" shall mean a Revolving Loan in U.S. Dollars that
bears interest based on the U.S. Prime Rate.
"U.S. Loan Agreement" shall mean the Loan and Security Agreement dated
concurrently herewith between LaSalle Business Credit, Inc. (as lender and as
collateral agent), Numatics, Incorporated and certain of its subsidiaries, as it
may be amended, restated, supplemented or otherwise modified from time to time.
(b) Accounting Terms and Definitions.
Unless otherwise defined or specified herein, all defined terms in
subsection 1(a) as used in this Agreement shall have the meanings set out in
such subsection, and all accounting terms used in this Agreement shall be
construed in accordance with GAAP, applied on a basis consistent in all material
respects with the financial statements delivered by the Borrower to
13.
ABN AMRO on or before the Closing Date. All accounting determinations for
purposes of determining compliance with the financial covenants contained in
subsection 10(o) shall be made in accordance with GAAP as in effect on the
Closing Date and applied on a basis consistent in all material respects with the
audited financial statements delivered to ABN AMRO by the Borrower on or before
the Closing Date. The financial statements required to be delivered hereunder
from and after the Closing Date, and all financial records, shall be maintained
in accordance with GAAP. If GAAP shall change from the basis used in preparing
the audited financial statements delivered to ABN AMRO by the Borrower on or
before the Closing Date, the certificates required to be delivered pursuant to
subsection 7(d) demonstrating compliance with the covenants contained herein
shall include, upon the request of ABN AMRO, calculations setting forth the
adjustments necessary to demonstrate how the Borrower is in compliance with the
financial covenants based upon GAAP as in effect on the Closing Date. References
herein to sections and subsections hereof shall include such sections and
subsections as amended or modified.
2. LOANS AND LETTERS OF CREDIT
Subject to the terms and conditions of this Agreement and the Other
Agreements, absent the existence of a Default or Event of Default:
(a) Revolving Loans.
Subject to the terms and conditions of this Agreement and the Other
Agreements, during the Original Term and any Renewal Term, ABN AMRO shall make
such revolving loans and advances (the "Revolving Loans") in whatever Type to or
for the account of the Borrower as the Borrower shall from time to time request,
in accordance with the terms hereof. Subject to the provisions hereof requiring
earlier repayment, all Revolving Loans shall be repaid in full upon the earlier
to occur of (i) the end of the term of this Agreement and (ii) their
acceleration pursuant to section 13 of this Agreement. If at any time the
outstanding aggregate principal balance of the Revolving Loans made to the
Borrower exceeds any limit expressed herein (whether or not such excess results
from any change in exchange rates between U.S. Dollars and Canadian Dollars),
the Borrower shall immediately, and without the necessity of a demand by ABN
AMRO, pay to ABN AMRO (or cause to be paid to ABN AMRO) such amount as may be
necessary to eliminate such excess, and ABN AMRO shall apply any such payment to
it against the outstanding principal balance of the Revolving Loans as it may
determine in its sole discretion. In particular, if at any time the sum of the
L/C Liabilities and the outstanding principal balance of the Loans, expressed as
the Canadian Dollar Equivalent Amount thereof, exceeds the Revolving Credit
Commitment or the amount of Revolving Loans, expressed as the Canadian Dollar
Equivalent Amount thereof, exceeds the amount of the Borrowing Base, the
Borrower shall immediately pay to ABN AMRO such amount as may be necessary to
eliminate such excess, and ABN AMRO shall apply such payment in such order as
ABN AMRO shall determine in its sole discretion. The Borrower hereby authorizes
ABN AMRO to charge any of the Borrower's accounts to make any payments, whether
of principal, interest or otherwise, required by this Agreement.
14.
The Borrower agrees that it shall not demand, direct, require or accept any
payment of principal pursuant to or in respect of the German Documents without
the prior written consent of ABN AMRO.
(b) Margin and Other Requirements: Revolving Loans.
ABN AMRO shall make Revolving Loans to the Borrower in U.S. Dollars by way
of U.S. Prime Rate Loans and/or in Canadian Dollars by way of Prime Rate Loans.
The Canadian Dollar Equivalent Amount of all such Revolving Loans outstanding at
any time shall not exceed the lesser of the following:
(i) the sum of the following amounts at such time expressed as the
Canadian Dollar Equivalent Amount thereof:
A. an amount in ABN AMRO's discretion up to eighty-five percent
(85%) of the face amount (not including any interest component)
of Eligible Accounts; plus
B. an amount in ABN AMRO's discretion up to (1) sixty percent (60%)
of the lower of cost or market value of Eligible Inventory at
locations that use a perpetual inventory accounting system or
that perform monthly physical counts and (2) forty percent (40%)
of the lower of cost or market value of other Eligible Inventory;
provided that the amount as calculated under this subsection
2(b)(i)B at any time shall not exceed a Canadian Dollar
Equivalent Amount at such time equal to Two Million U.S. Dollars
(U.S. $2,000,000) in the aggregate; minus
C. an amount not less than forty percent (40%) of outstanding
documentary L/C Liabilities relating to the purchase of Eligible
Inventory; minus
D. such reserve amount(s) as ABN AMRO elects to establish from time
to time in the exercise of its sole discretion including, without
limitation, reserves in respect of Dilution which equals or
exceeds five percent (5%) at any time, reserves for potential
preferential creditor items (including, without limitation, if
needed in ABN AMRO's sole discretion, amounts in respect of
suppliers' repossession rights pursuant to the Bankruptcy and
Insolvency Act (Canada) or similar suppliers' rights in Quebec
pursuant to the Quebec Civil Code); minus
E. the amount of Hedging Reserves; and minus
F. the L/C Liabilities (other than in respect of documentary Letters
of Credit for which provision is made in subsection 2(b)(i)C)
hereof; and
15.
(ii) the Revolving Credit Commitment minus the aggregate of all then
outstanding L/C Liabilities.
(c) Other Requirements.
Foreign Exchange Contracts. All foreign exchange contracts (including
hedging and futures contracts as well as option agreements) are available to the
Borrower only in ABN AMRO's absolute discretion, and shall not, in any case, be
for a term longer than twelve (12) months and the aggregate nominal value of all
such foreign exchange contracts shall not at any time exceed One Million U.S.
Dollars (U.S. $1,000,000) or the Canadian Dollar Equivalent Amount thereof.
(d) Loan Accounts.
(i) The accounts or records maintained by ABN AMRO shall be conclusive
evidence, absent manifest error, of the amount of the Loans made by
ABN AMRO to the Borrower, and the interest and payments thereon. Any
failure so to record or any error in doing so shall not, however,
limit or otherwise affect the obligation of the Borrower hereunder to
pay any amount owing with respect to the Loans.
(ii) The Borrower shall execute and deliver to ABN AMRO a Note in respect
of Revolving Loans.
(e) Letters of Credit.
Subject to the terms and conditions of this Agreement and the Other
Agreements, ABN AMRO shall, absent the existence of a Default, from time to time
issue or cause the issuance of, upon the Borrower's request, Letters of Credit
in Canadian Dollars; provided, that the aggregate amount of all outstanding L/C
Liabilities shall at no time exceed the lesser of:
(i) Four Hundred Thousand U.S. Dollars (U.S. $400,000) or the Canadian
Dollar Equivalent Amount thereof; and
(ii) the Revolving Credit Commitment, less the Canadian Dollar Equivalent
Amount of all then outstanding Revolving Loans,
and provided, further that such Letters of Credit shall be in form and substance
acceptable to ABN AMRO in its sole discretion, and shall not have an expiry date
more than 365 days from the date of issuance or beyond the term of this
Agreement. Documentary Letters of Credit shall be available only for the
purchase of Eligible Inventory. The Borrower's reimbursement obligation in
respect of the Letters of Credit shall automatically reduce, in accordance with
subsection 2(b), the amount which the Borrower may borrow based upon the
Revolving Credit Commitment. Any unreimbursed payment made by ABN AMRO to any
Person on account of any Letter of Credit shall constitute a Revolving Loan
hereunder, in the case of any unreimbursed payments in U.S. Dollars as a U.S.
Prime Rate Loan, and in the case of any unreimbursed payments in Canadian
Dollars as a Prime Rate Loan.
16.
3. INTEREST, FEES AND CHARGES
(a) Rates of Interest.
Interest accrued on all Loans shall be due and be paid by the Borrower on
the earliest of: (i) the last day of each month (for such month), computed
through the immediately preceding day; (ii) the date of acceleration following
the occurrence of an Event of Default in consequence of which ABN AMRO elects to
accelerate their maturity and payment; or (iii) termination of this Agreement
pursuant to section 8 hereof. Interest shall accrue on the principal amount of
the Revolving Loans made to the Borrower outstanding at the end of each day at a
fluctuating rate per annum equal to (A) one percent (1%) above the Prime Rate
(in the case of Prime Rate Loans), and (B) the U.S. Prime Rate (in the case of
U.S. Prime Rate Loans). The rate of interest payable on Prime Rate or U.S. Prime
Rate Loans shall increase or decrease by an amount equal to any increase or
decrease in the Prime Rate or U.S. Prime Rate, effective as of the opening of
business on the day that any such change in the Prime Rate or U.S. Prime Rate
occurs. Upon and following the occurrence of an Event of Default, and during the
continuation thereof, the principal amount of all Loans shall bear interest
payable on demand at a rate per annum equal to the rate of interest then in
effect under this subsection 3(a) plus two percent (2%) per annum.
(b) Computation of Interest and Fees.
Interest hereunder shall be determined daily, and calculated monthly not in
advance, both before and after default and judgment. In the case of U.S. Prime
Rate Loans, interest shall be computed on the actual number of days elapsed over
a year consisting of three hundred and sixty (360) days. In the case of Prime
Rate Loans, interest shall be computed on the actual number of days elapsed over
a year consisting of three hundred and sixty-five (365) days. For the purpose of
the Interest Act (Canada) only, the yearly rate of interest to which any rate
for a period less than a year is equivalent is such rate, divided by the number
of days in such period, and multiplied by the actual number of days in the year.
Notwithstanding any other provision hereof, all determinations and calculations
of interest rates and amounts hereunder by ABN AMRO shall be conclusive absent
(in the case of any calculation of an amount based on a particular rate)
manifest mathematical error in calculating such amount. For the purpose of
computing interest hereunder, all items of payment received by ABN AMRO shall be
deemed applied by ABN AMRO on account of the related Loan (subject to final
payment of such items) upon receipt by ABN AMRO of good funds in ABN AMRO's
account located in Toronto, Ontario.
(c) Maximum Interest.
It is the intent of the parties that the rate of interest and the other
charges under this Agreement shall be lawful; therefore, if for any reason the
interest or other charges payable under this Agreement are found by a court of
competent jurisdiction, in a final determination, to exceed the limit which ABN
AMRO may lawfully charge, then the obligation to pay interest and other charges
shall automatically be reduced to such limit and, if any amount in excess of
such limit shall have been paid, then such amount shall be refunded to the payor
thereof.
17.
(d) Closing Fee.
The Borrower shall pay to ABN AMRO a non-refundable closing fee of Forty
Thousand U.S. Dollars (U.S. $40,000) which is due on the Closing Date.
(e) Unused Line Fee.
The Borrower shall pay to ABN AMRO at the end of each month, in arrears, an
unused line fee equal to three-eighths percent (0.375%) per annum on the daily
average amount by which the Revolving Credit Commitment exceeds the sum of the
outstanding principal balance of the Revolving Loans and the L/C Liabilities,
all as defined in this Agreement and all expressed as the Canadian Dollar
Equivalent Amount. The unused line fee shall accrue from the Closing Date until
the Maturity Date.
(f) Examination and Appraisal Fees.
In addition to the costs and expenses described in subsection 10(p) hereof,
the Borrower shall pay to ABN AMRO an examination fee equal to its then current
examination fee (which is Seven Hundred Fifty U.S. Dollars (U.S. $750) per
person per day on the date hereof) for any audit, inspection or other activity
described in the first sentence of subsection 10(c) hereof and conducted or
undertaken before or after the date of this Agreement, plus all out-of-pocket
expenses incurred by ABN AMRO including, without limitation, travel expenses,
payable as incurred.
(g) Facilities Fee.
The Borrower shall pay to ABN AMRO a facilities fee equal to one-tenth of
one percent (0.10%) per annum of the Revolving Credit Commitment payable
quarterly, which fee shall be fully earned by ABN AMRO and payable on the date
that ABN AMRO makes its initial disbursement under this Agreement and on each
quarterly anniversary of the date hereof during the Original Term and any
Renewal Term.
(h) Capital Adequacy Charge.
If ABN AMRO shall have determined that the adoption of any law, rule or
regulation regarding capital adequacy, or any change therein or in the
interpretation or application thereof, or compliance by ABN AMRO with any
request or directive regarding capital adequacy (whether or not having the force
of law) from any central bank or governmental authority enacted after the
Closing Date, does or shall have the effect of reducing the rate of return on
ABN AMRO's capital as a consequence of its obligations hereunder to a level
below that which ABN AMRO could have achieved but for such adoption, change or
compliance (taking into consideration ABN AMRO's policies with respect to
capital adequacy) by a material amount, then from time to time, after submission
by ABN AMRO to the Borrower of a written demand therefor (the "Capital Adequacy
Demand") together with the certificate described below, the Borrower shall pay
to ABN AMRO such additional amount or amounts (the "Capital Adequacy Charge") as
will compensate ABN AMRO for such reduction in respect of its Loans hereunder. A
certificate of ABN AMRO claiming entitlement to payment as set forth above
18.
shall be conclusive in the absence of manifest error. Such certificate shall set
forth the nature of the occurrence giving rise to such reduction, the amount of
the Capital Adequacy Charge to be paid to ABN AMRO, and the method by which such
amount was determined. In determining such amount, ABN AMRO may use any
averaging and attribution method, applied on a non-discriminatory basis.
(i) Letter of Credit Fees.
The Borrower shall pay to ABN AMRO a Letter of Credit fee equal to three
percent (3%) per annum on the face amount of each documentary and standby Letter
of Credit issued for the account of the Borrower, which fee shall be payable
upon and as a condition of issuance thereof and shall be based on its term to
maturity; provided, however that such fees in respect of Letters of Credit shall
not be less than Two Hundred and Fifty U.S. Dollars (U.S. $250) per item. The
Borrower shall also pay to ABN AMRO its standard costs and expenses with respect
to standby and documentary Letters of Credit and shall also pay, on demand, the
normal and customary administrative charges for issuance, amendments,
negotiation, renewal or extension of any documentary Letters of Credit imposed
by any correspondent bank issuing such documentary Letters of Credit.
4. LOAN ADMINISTRATION
(a) Loan Requests.
A request for a Loan shall be made or shall be deemed to be made, each in
the following manner: (i) the Borrower shall give ABN AMRO same day notice, no
later than 12:00 noon (Toronto time) on such day, of its intention to borrow a
Prime Rate Loan or U.S. Prime Rate Loan, which notice shall be substantially in
the form of Exhibit 4(a) hereto (each a "Notice of Borrowing"), provided,
however, that no such request may be made at a time when there exists a Default
or an Event of Default; and (ii) the coming due of any amount required to be
paid under this Agreement or any Note, whether on account of interest or for any
other liability, shall be deemed irrevocably to be a request for a Prime Rate
Loan or U.S. Prime Rate Loan as applicable on the due date thereof in the amount
required to pay such interest or other liability. As an accommodation to the
Borrower, ABN AMRO may permit telephone requests for Loans and electronic
transmittal of instructions, authorizations, agreements or reports to ABN AMRO.
Unless the Borrower specifically directs ABN AMRO in writing not to accept or
act upon telephonic or electronic communications, ABN AMRO shall have no
liability to the Borrower for any loss or damage suffered as a result of ABN
AMRO's honouring of any requests, execution of any instructions, authorizations
or agreements or reliance on any reports communicated to it telephonically or
electronically and purporting to have been sent to ABN AMRO by the Borrower and
ABN AMRO shall have no duty to verify the origin of any such communication or
the authority of the Person sending it. Each Notice of Borrowing shall be
irrevocable by and binding on the Borrower. The Borrower, at its option, may
choose Prime Rate Loans or U.S. Prime Rate Loans for Revolving Loans.
19.
(b) Letter of Credit Requests.
Each Letter of Credit shall be issued upon the irrevocable written request
of the Borrower (each a "Letter of Credit Request") at least two (2) Business
Days prior to the proposed date of issuance. Each Letter of Credit Request shall
be sent by facsimile, confirmed immediately in writing, in the form of a Letter
of Credit application satisfactory to ABN AMRO in its absolute discretion, and
shall specify in form and detail satisfactory to ABN AMRO: (i) the proposed date
of issuance of the Letter of Credit (which shall be a Business Day); (ii) the
face amount of the Letter of Credit; (iii) the expiry date of the Letter of
Credit; (iv) the name and address of the beneficiary thereof. Each Letter of
Credit Request shall be accompanied by an application and indemnity in form and
substance satisfactory to ABN AMRO in its absolute discretion.
(c) Disbursement.
The Borrower hereby irrevocably authorizes ABN AMRO to disburse the
proceeds of each Loan requested by the Borrower, or deemed to be requested by
the Borrower and to be disbursed or paid by ABN AMRO, as follows: (i) the
proceeds of each Loan requested under subsection 4(a)(i) and to be disbursed or
paid by ABN AMRO, shall be disbursed by ABN AMRO in Canadian Dollars or U.S.
Dollars as applicable in immediately available funds, in the case of the initial
borrowing, in accordance with the terms of the written disbursement letter from
the Borrower, and in the case of each subsequent borrowing, by wire transfer or
otherwise to such bank account as may be agreed upon by the Borrower and ABN
AMRO from time to time; and (ii) the proceeds of each Revolving Loan deemed
requested under subsection 4(a)(ii) shall be disbursed by ABN AMRO by way of
direct payment of the relevant interest or other liability.
5. SECURITY
Security. As security for the payment of all Liabilities and for the
payment or other satisfaction of all other indebtedness and liabilities of the
Borrower, the Borrower agrees to deliver or cause to be delivered to ABN AMRO
each of the following (collectively, the "Security"):
(a) Debenture and hypothec each in the principal amount of $10,000,000 in favour
of ABN AMRO by the Borrower charging all present and future property, assets and
undertaking of the Borrower, including without limitation the indebtedness and
security evidenced by the German Documents;
(b) Charge/mortgage of land in the principal amount of $10,000,000 in favour of
ABN AMRO by the Borrower (with debenture attached) and registered on title to
the London Property in respect of the charge of the Borrower's interest therein.
(c) Delivery agreement in favour of ABN AMRO by the Borrower in respect of its
debenture and charge/mortgage of land;
20.
(d) Security under Section 427 of the Bank Act from the Borrower in favour of
and in the forms provided by ABN AMRO including, without limitation, a notice of
intention, an agreement to give security, an application for credit and promise
to give security, etc. and a grant of security under section 427;
(e) Guarantee by each of the Guarantors in favour of ABN AMRO in respect of all
Liabilities;
(f) Security in form and substance satisfactory to ABN AMRO and in favour of ABN
AMRO or its agent by each of the Guarantors charging all present and future
property, assets and undertaking of each of the Guarantors;
(g) Assignment of insurance monies which may become payable in respect of the
property of the Borrower in favour of ABN AMRO; and
(h) such other security and supporting documents, certificates or instruments in
respect of the Borrower and the Guarantors (including third party postponement
and subordinations, landlord and mortgagee waivers) as may be required by ABN
AMRO from time to time.
6. COLLECTIONS
(a) Blocked Accounts and Lock Boxes.
Until a notice is received by the Borrower as provided hereinafter, the
Borrower shall collect and enforce all of its Accounts. In furtherance thereof,
the Borrower shall establish U.S. Dollar and Canadian Dollar accounts (each a
"Blocked Account") in ABN AMRO's name with a financial institution acceptable to
ABN AMRO, into which the Borrower will immediately deposit all payments received
by the Borrower (including all payments made for Inventory or services sold or
rendered by the Borrower), in the identical form in which such payments were
made, whether by cash or cheque. At and following such time as ABN AMRO, in its
sole discretion, so notifies the Borrower, the Borrower shall direct all of its
Account Debtors to make all payments on the Accounts directly to a post office
box (each a "Lock Box") with a financial institution acceptable to, and in the
name and under exclusive control of, ABN AMRO. All payments received in the Lock
Box shall be deposited in the Blocked Account. If the Borrower, any Affiliate or
Subsidiary, or any shareholder, officer, director, employee or agent of the
Borrower or any Affiliate or Subsidiary, or any other Person acting for or in
concert with the Borrower shall receive any monies, cheques, notes, drafts or
other payments relating to or as proceeds of Accounts or other Collateral, the
Borrower and each such Person shall receive all such items in trust for, and as
the sole and exclusive property of, ABN AMRO and, immediately upon receipt
thereof, shall remit the same (or cause the same to be remitted) in kind to the
appropriate Blocked Account. Each financial institution with which a Lock Box
and Blocked Account are established shall acknowledge and agree, in a manner
satisfactory to ABN AMRO, that the amounts on deposit in such Lock Box and
Blocked Account are the sole and exclusive property of ABN AMRO, that such
financial institution has no right to set off against such Lock Box or Blocked
Account or against any other account maintained by such financial institution
21.
into which the contents of such Blocked Account are transferred, and that such
financial institution shall wire, or otherwise transfer in immediately available
funds in a manner satisfactory to ABN AMRO, funds deposited in the Blocked
Account on a daily basis as such funds are collected. The Borrower agrees that
all payments made to each Blocked Account established by the Borrower or
otherwise received by ABN AMRO, whether in respect of the Accounts of the
Borrower or as proceeds of other Collateral of the Borrower or otherwise, will
be applied on account of the Liabilities of the Borrower in accordance with the
terms of this Agreement. The Borrower agrees to pay all fees, costs and expenses
which the Borrower incurs in connection with opening and maintaining a Lock Box
and Blocked Accounts. All of such fees, costs and expenses which remain unpaid
by the Borrower pursuant to any Lock Box or Blocked Account agreement with the
Borrower, to the extent same shall have been paid by ABN AMRO hereunder, shall
constitute Revolving Loans hereunder, shall be payable to ABN AMRO by the
Borrower upon demand, and, until paid, shall bear interest at the highest rate
then applicable to the Revolving Loans hereunder. All cheques, drafts,
instruments and other items of payment or proceeds of Collateral delivered to
ABN AMRO in kind shall be endorsed by the Borrower to ABN AMRO, and, if that
endorsement of any such item shall not be made for any reason, ABN AMRO is
hereby irrevocably authorized to endorse the same on the Borrower's behalf. For
the purpose of this paragraph, the Borrower irrevocably hereby makes,
constitutes and appoints ABN AMRO (and all Persons designated by ABN AMRO for
that purpose) as the Borrower's true and lawful attorney and agent-in-fact (i)
to endorse the Borrower's name upon said items of payment and/or proceeds of
Collateral of the Borrower and upon any Chattel Paper, document, instrument,
invoice or similar document or agreement relating to any Account of the Borrower
or goods pertaining thereto; (ii) to take control in any manner of any item of
payment or proceeds thereof; (iii) to have access to any lock box or postal box
into which any of the Borrower's mail is deposited; and (iv) open and process
all mail addressed to the Borrower and deposited therein; provided, however,
that ABN AMRO shall not exercise any such powers described in subparagraphs (i),
(ii) (except for routine Lock Box payments/proceeds or through any Blocked
Account), (iii) and (iv) unless and until an Event of Default has occurred.
(b) Rights of ABN AMRO.
ABN AMRO may, at any time after the occurrence of an Event of Default, and
from time to time thereafter, whether before or after notification to any
Account Debtor and whether before or after the maturity of any of the
Liabilities, (i) enforce collection of any of the Borrower's Accounts or
contract rights by suit or otherwise; (ii) exercise all of the Borrower's rights
and remedies with respect to proceedings brought to collect any Accounts; (iii)
surrender, release or exchange all or any part of any Accounts of the Borrower,
or compromise or extend or renew for any period (whether or not longer than the
original period) any indebtedness thereunder; (iv) sell or assign any Account of
the Borrower upon such terms, for such amount and at such time or times as ABN
AMRO deems advisable; (v) prepare, file and sign the Borrower's name on any
proof of claim in bankruptcy or other similar document against any Account
Debtor indebted on an Account of the Borrower; and (vi) do all other acts and
things which are necessary, in ABN AMRO's sole discretion, to fulfill the
Borrower's obligations under this Agreement and to allow ABN AMRO to collect the
Accounts. In addition to any other provision hereof, ABN AMRO may at any time on
or after the occurrence of an Event of Default, at the Borrower's expense,
notify any parties obligated on any of the Accounts of the
22.
Borrower to make payment directly to ABN AMRO of any amounts due or to become
due thereunder.
(c) Application of Collections.
ABN AMRO shall, upon receipt by ABN AMRO at its office in Toronto, Ontario
of cash or other immediately available funds from collections of items of
payment and proceeds of any Collateral, apply the whole or any part of such
collections or proceeds against the Liabilities in such order as ABN AMRO shall
determine in its sole discretion.
(d) Dealings by ABN AMRO.
In its sole credit judgment, without waiving or releasing any obligation,
liability or duty of the Borrower under this Agreement or the Other Agreements
or any Event of Default, at any time or times hereafter, ABN AMRO may (but shall
not be obligated to) pay, acquire or accept an assignment of any security
interest, lien, encumbrance or claim asserted by any Person in, upon or against
the Collateral. All sums paid by ABN AMRO in respect thereof and all costs, fees
and expenses (including, without limitation, legal fees and disbursements (on a
solicitor-client basis) for both inside and outside counsel, all court costs and
all other charges relating thereto) incurred by ABN AMRO shall constitute
Revolving Loans, payable by the Borrower to ABN AMRO on demand and, until paid,
shall bear interest at the highest rate then applicable to Revolving Loans
hereunder.
(e) Receipts by Borrower.
Immediately upon the Borrower's receipt of any portion of the Collateral
consisting of an agreement, Instrument, Document of Title or Chattel Paper, the
Borrower shall deliver the original thereof to ABN AMRO together with an
appropriate endorsement or other specific evidence of assignment thereof to ABN
AMRO (in form and substance acceptable to ABN AMRO). If an endorsement or
assignment of any such items shall not be made for any reason, ABN AMRO is
hereby irrevocably authorized, as the Borrower's attorney and agent-in-fact, to
endorse or assign the same on the Borrower's behalf.
7. SCHEDULES AND REPORTS
(a) Activity Reports.
The Borrower shall deliver to ABN AMRO prior to any Borrowing, and in any
event not less frequently than weekly (subject to more frequent reporting at the
discretion of ABN AMRO) by telefacsimile at an address and number advised by ABN
AMRO from time to time, a report, substantially in the form of Exhibit 7(a)
hereto, of the Borrower's invoice activity and details of credit memos and
credit notes issued by the Borrower, and a schedule showing cash receipts, all
for the previous week or lesser period.
23.
(b) Borrowing Base Certificate.
Within fifteen (15) days after the close of each calendar month, and at
such other times as may be requested by ABN AMRO from time to time hereafter,
the Borrower shall deliver to ABN AMRO a certificate for such month, which shall
include calculations of the Borrowing Base (excluding reserves but including
calculations of Eligible Accounts and Eligible Inventory) (a "Borrowing Base
Certificate"), and shall also deliver to ABN AMRO (and electronically to
Collateral Services Inc. in the case of accounts payable and Accounts trial
balances) (i) an aged trial balance of the Borrower's accounts payable as of the
end of such month, together with a listing of any cheques prepared but not sent
in respect of any accounts payable (ii) a report substantially in the form of
Exhibit 7(b)(ii) hereto in respect of all statutory payables coming due during
such month from the Borrower, identifying all such payables by type and amount
and indicating date of payment of each, such payables to include unemployment
insurance, Canada Pension Plan and income tax employee withholdings, goods and
services and retail sales taxes, and all other payables in respect of which any
statutory lien or trust arises (a "Statutory Payables Report"), and (iii) a
trial balance identifying by age each Account of the Borrower, a reconciliation
thereof to the above Borrowing Base calculations, and copies of the invoices
when requested by ABN AMRO (with evidence of shipment attached) pertaining to
each such Account, for the month (or other applicable period) immediately
preceding. At such times as may be requested by ABN AMRO from time to time
hereafter, the Borrower shall deliver to ABN AMRO; (x) copies of all account
statements received in respect of its chequing and any other accounts held with
any financial institution; (y) such additional schedules, certificates, reports
and information with respect to the Collateral as ABN AMRO may from time to time
require and (z) a collateral assignment of any or all items of Collateral. ABN
AMRO, through its officers, employees or agents, shall have the right, at any
time and from time to time in ABN AMRO's name, in the name of a nominee of ABN
AMRO or in the Borrower's name, to verify the validity, amount or any other
matter relating to any of the Borrower's Accounts, by mail, telephone, telegraph
or otherwise. The Borrower shall reimburse ABN AMRO, on demand, for all costs,
fees and expenses incurred by ABN AMRO in this regard.
(c) Inventory Reports.
Without limiting the generality of the foregoing, the Borrower shall
deliver to ABN AMRO, at least once a month within fifteen (15) days after the
close of each month (or more frequently when requested by ABN AMRO), a report
with respect to the Borrower's Inventory (including a warehouse month end stock
status report if applicable), including a reconciliation thereof to the above
Borrowing Base calculations, a reconciliation of any perpetual inventory report
to the general ledger and an inventory declaration in form and substance
satisfactory to ABN AMRO in its absolute discretion. The Borrower shall
immediately notify ABN AMRO of any event causing loss or depreciation in value
of the Borrower's Inventory.
(d) Financial Reports.
The Borrower agrees to deliver to ABN AMRO the following financial
information, all of which, as it relates to the Borrower, shall be prepared in
accordance with GAAP consistently applied: (i) no later than thirty (30) days
after the end of each calendar
24.
month (or in the case of information relating to the German Borrower, after each
Fiscal Quarter End), copies of internally prepared financial statements of each
of the Borrowers on a monthly (or quarterly, as respects the German Borrower)
and year-to-date basis with a comparison to the prior year and budget including,
without limitation, balance sheets and statements of income, retained earnings
and cash flow certified by the applicable chief financial officer and
accompanied by a Financial Reporting Certificate, (ii) as soon as practical and
in any event prior to the beginning of each of the Borrowers' fiscal years,
projected balance sheets, statements of income and cash flow for each of the
twelve (12) months during the then following fiscal year, which shall include
the assumptions used therein, together with appropriate supporting details as
reasonably requested by ABN AMRO; and in conjunction therewith, a letter signed
by the President or Chief Financial Officer (or other officer with comparable
duties and authority) of each of the Borrowers describing, comparing and
analyzing, in detail, all changes and developments between the anticipated
financial results included in such projections or budgets and the historical
financial statements of each of the Borrowers; and (iii) no later than ninety
(90) days after the end of the Borrowers' fiscal year, annual audited financial
statements of each of the Borrowers certified by independent chartered
accountants satisfactory to ABN AMRO, together with such accountants' report
thereon to management if such is made.
(e) Compliance Certificate.
The Borrower shall deliver to ABN AMRO no later than seven (7) days after
the last day of each month an officer's certificate from the Borrower
substantially in the form of Exhibit 7(e) hereto certifying that no notice of
non-compliance, violation or contravention has been received from any
Governmental Authority with respect to the activities carried on by the Borrower
or as to any other matter whatsoever or, in the case where such notice has been
received, written details of the non-compliance, violation or contravention, a
copy of the notice and a written action plan to remedy same (each a "Compliance
Certificate").
(f) Authorized Officer.
Unless otherwise provided for herein, all schedules, certificates, reports
and assignments and other items delivered by the Borrower to ABN AMRO hereunder
shall be executed by an Authorized Officer and shall be in such form and contain
such information as ABN AMRO shall request. The Borrower shall deliver from time
to time such other schedules and reports pertaining to the Collateral, and all
such other business or financial data and information, reports, appraisals and
projections, as ABN AMRO may reasonably request.
8. TERMINATION
(a) Survival of Security Interests, Liens, etc.
This Agreement shall be in effect from the date hereof until November 30,
2004 (the "Original Term") and shall automatically renew itself from year to
year thereafter (each such one year renewal being referred to herein as a
"Renewal Term") unless (i) the due date of the Liabilities is accelerated
pursuant to section 13 hereof; or (ii) ABN AMRO elects to terminate this
Agreement at the end of the Original Term or at the end of any Renewal Term by
25.
giving the Borrower written notice of such election at least ninety (90) days
prior to the end of the Original Term or the then current Renewal Term; or (iii)
the Borrower elects to terminate this Agreement at the end of the Original Term
or at the end of any Renewal Term by giving ABN AMRO written notice of such
election at least ninety (90) days prior to the end of the Original Term or the
then current Renewal Term and all of the Liabilities (as defined herein and in
the U.S. Loan Agreement) are paid in full on the last day of such term; or (iv)
the Borrower elects to terminate this Agreement, concurrently with the
termination of the U.S. Loan Agreement, upon written notice to ABN AMRO and all
Liabilities (as defined herein and in the U.S. Loan Agreement), including the
prepayment fee referred to below, are paid in full. If one or more of the events
specified in clauses (i), (ii), (iii) and (iv) occurs, then (1) ABN AMRO shall
not make any additional Loans on or after the date identified as the date on
which the Liabilities are to be repaid; and (2) this Agreement shall terminate
on the date thereafter that the Liabilities are paid in full. At such time as
the Borrower has repaid all of the Liabilities and this Agreement has
terminated, (A) the Borrower shall deliver to ABN AMRO a release, in form and
substance satisfactory to ABN AMRO, of all obligations and liabilities of ABN
AMRO and its officers, directors, employees, agents, parents, subsidiaries and
affiliates to the Borrower, and if the Borrower is obtaining new financing from
another lender, the Borrower shall deliver such lender's indemnification of ABN
AMRO, in form and substance satisfactory to ABN AMRO, for cheques which ABN AMRO
has credited to the Borrower's account held at ABN AMRO, but which subsequently
are dishonoured for any reason and (B) upon the Borrower's request and upon
receipt of the release and indemnification described in subparagraph (A) above,
ABN AMRO shall deliver to the Borrower a release in form and substance
satisfactory to ABN AMRO.
(b) Prepayment.
If, during the term of this Agreement, the Borrower prepays all of the
Liabilities from any source other than income from the ordinary course of
operations of the Borrower's or the German Borrower's business and this
Agreement is terminated, the Borrower agrees to pay to ABN AMRO, as a prepayment
fee, in addition to the payment of all other Liabilities, an amount equal to:
(i) two percent (2%) of the amount of the Revolving Credit Commitment if such
prepayment occurs two (2) years or more prior to the end of the Original Term,
(ii) one percent (1%) of the amount of the Revolving Credit Commitment if such
prepayment occurs less than two (2) years, but at least one (1) year prior to
the end of the Original Term, or (iii) one-half of one percent (0.50%) of the
amount of the Revolving Credit Commitment if such prepayment occurs less than
one (1) year prior to the end of the Original Term or any then current Renewal
Term. The Borrower and ABN AMRO acknowledge and agree that, as a direct and
proximate result of the termination of this Agreement under the aforesaid
circumstances, or prepayment otherwise, ABN AMRO will suffer a loss in an amount
which is difficult to calculate and determine with certainty and, therefore, as
a result of the Borrower's and ABN AMRO's reasonable endeavour to ascertain and
agree in advance to the amount necessary to compensate ABN AMRO for said loss,
the Borrower has agreed to pay the aforesaid prepayment and other fees set out
herein.
26.
9. REPRESENTATIONS AND WARRANTIES
The Borrower hereby makes the following representations, warranties and
covenants to ABN AMRO:
(a) the financial statements delivered or to be delivered by the Borrower to ABN
AMRO at or prior to the date of this Agreement and at all times subsequent
thereto accurately reflect in all material respects the financial condition of
the Borrower and each other Loan Party for which such statements are delivered,
and since the date of such financial statements delivered to ABN AMRO most
recently prior to the date of this Agreement, no event or condition has occurred
which has had, or is reasonably likely to have, a Material Adverse Effect with
respect to the Borrower individually or the other Loan Parties collectively;
(b) the office where the Borrower keeps its books, records and accounts (or
copies thereof) concerning the Collateral, the Borrower's principal place of
business and all other places of business, locations of Collateral and post
office boxes of the Borrower are as set forth in Schedule B hereto; the Borrower
shall promptly (but in no event less than ten (10) days prior thereto) advise
ABN AMRO in writing of the proposed opening of any new place of business, the
closing of any existing place of business, any change in the location of the
Borrower's books, records and accounts (or copies thereof) or the opening or
closing of any post office box of the Borrower;
(c) the Collateral, including without limitation the Borrower's Equipment is,
and shall be kept, or, in the case of vehicles, based, only at the addresses set
forth on Schedule B, and (in the case of the Borrower's Collateral) at other
locations within Ontario of which ABN AMRO has been advised by the Borrower in
writing;
(d) if any of the Collateral consists of Goods of a type normally used in more
than one province, whether or not actually so used, the Borrower shall
immediately give written notice to ABN AMRO of any use of any such Goods in any
province other than a province in which the Borrower has previously advised ABN
AMRO such Goods shall be used, and such Goods shall not, unless ABN AMRO shall
otherwise consent in writing, be used outside of Ontario, British Columbia or
Quebec;
(e) no security agreement, financing statement or analogous instrument exists or
shall exist with respect to any of the Collateral or any property or asset of
either of the Borrowers other than any security agreement, financing statement
or analogous instrument evidencing Permitted Liens;
(f) each Account or item of Inventory which the Borrower shall, expressly or by
implication, request ABN AMRO to classify as an Eligible Account or as Eligible
Inventory, respectively, shall, as of the time when such request is made,
conform in all respects to the requirements of such classification as set forth
in the respective definitions of Eligible Account and Eligible Inventory and as
otherwise established by ABN AMRO from time to time, and the Borrower shall
promptly notify ABN AMRO in writing if any such Eligible Account or Eligible
Inventory shall subsequently become ineligible;
27.
(g) each of the Loan Parties has good and marketable title to its property
charged directly or indirectly in favour of ABN AMRO and is and shall at all
times be the lawful owner of all of its property and assets now purportedly
owned or hereafter purportedly acquired by it, free from all liens, claims,
security interests and encumbrances whatsoever, whether voluntarily or
involuntarily created and whether or not perfected, other than the Permitted
Liens;
(h) the Borrower and each other Loan Party has the right and power and is duly
authorized and empowered to enter into, execute and deliver this Agreement and
the Other Agreements to which it is a party and perform its obligations
hereunder and thereunder as applicable; their execution, delivery and
performance of this Agreement and the Other Agreements does not and shall not
conflict with the provisions of any statute, regulation, ordinance or rule of
law, or any agreement, contract or other document which may now or hereafter be
binding on any of them, and their execution, delivery and performance of this
Agreement and the Other Agreements as applicable shall not result in the
imposition of any lien or other encumbrance upon any of their property under any
existing indenture, mortgage, deed of trust, loan or credit agreement or other
agreement or instrument by which any of them or any of their property may be
bound or affected;
(i) except as otherwise disclosed on Schedule 9(i), there are no actions or
proceedings which are pending or, to the best of the Borrower's knowledge,
threatened against either of the Borrowers that would have a Material Adverse
Effect with respect to either of them, and each of the Borrowers shall promptly
upon becoming aware of any such pending or threatened action or proceeding, give
written notice thereof to ABN AMRO;
(j) each of the Borrowers has obtained and shall maintain all licenses,
authorizations, approvals and permits required or desirable in their respective
businesses, and each of the Loan Parties is and shall remain in compliance in
all material respects with all applicable federal, provincial, local and foreign
statutes, orders, regulations, rules and ordinances (including, without
limitation, statutes, orders, regulations, rules and ordinances relating to
taxes, employer and employee contributions and similar items, securities,
employee retirement and welfare benefits, employee health and safety or
environmental matters), the failure to comply with which would have a Material
Adverse Effect with respect to the Borrower individually or the other Loan
Parties collectively, and there are no conditions with respect to such licenses,
authorizations, approvals and permits that materially affect or restrict the
transferability of such licenses, authorizations, approvals and permits;
(k) all written information now, heretofore or hereafter furnished by the
Borrower or any other Loan Party to ABN AMRO is and shall be true and correct in
all material respects as of the date with respect to which such information was
or is furnished (except for financial projections, which have been and shall be
prepared in good faith based upon reasonable assumptions);
(l) except as otherwise permitted hereby, neither of the Borrowers is
conducting, permitting or suffering to be conducted, nor shall it conduct,
permit or suffer to be conducted, any activities pursuant to or in connection
with which any of the Collateral is now, or will (while any Liabilities remain
outstanding) be owned by any Affiliate; the Borrower has not made any loans or
advances to any Affiliate or any other Person except for advances authorized
hereunder
28.
to employees, officers and directors of the Borrower for travel and other
expenses arising in the ordinary course of the Borrower's business, a loan of
One Million U.S. Dollars (U.S. $1,000,000) to the German Borrower and loans
permitted pursuant to subsection 10(f) hereof; except (i) for transactions by
the Borrower with other Loan Parties in respect of which aggregate amounts owing
to the Borrower and outstanding at any time do not exceed Seven Hundred Fifty
Thousand Canadian Dollars (Cdn. $750,000), and (ii) as set forth on Schedule
9(l) hereto or as otherwise permitted hereunder, neither of the Borrowers is
conducting, permitting or suffering to be conducted any transaction with any
Affiliate;
(m) the Borrower was formed by amalgamation under the Canada Business
Corporations Act on December 31, 1992. The Borrower shall notify ABN AMRO in
writing within ten (10) days of the change of its name or the use of any
tradenames or division names not previously disclosed to ABN AMRO in writing.
Each of the German Borrower and the Guarantors is a corporation duly
incorporated (or, in the case of the German Borrower, a limited liability
company duly formed) and subsisting under the laws of its governing
jurisdiction;
(n) with respect to each Borrower's Equipment: (i) subject to Permitted Liens,
such party has good and indefeasible and merchantable title to and ownership of
all Equipment; (ii) such party shall keep and maintain the Equipment in good
operating condition and repair and shall make all necessary replacements thereof
and renewals thereto so that the value and operating efficiency thereof shall at
all times be preserved and maintained, ordinary wear and tear excepted; (iii)
such party has not permitted and shall not permit any such items to become a
fixture to real estate unless such real estate is owned by such party and is
subject to a mortgage in favour of ABN AMRO, or an accession to other personal
property unless such personal property is subject to a lien and security
interest in favour of ABN AMRO that is subject only to Permitted Liens; and (iv)
the Borrower, immediately on demand by ABN AMRO, shall deliver or cause to be
delivered to ABN AMRO any and all evidence of ownership of, including, without
limitation, certificates of title and applications of title to, any of the
aforesaid Equipment;
(o) this Agreement and the Other Agreements to which the Borrower or another
Loan Party is a party are the legal, valid and binding obligations of the
Borrower or such Loan Party as applicable and are enforceable against the
Borrower or such Loan Party as applicable in accordance with their respective
terms, except to the extent that such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting the rights of creditors generally;
(p) the Borrower and each other Loan Party is solvent, is able to pay its debts
as they become due and has capital sufficient to carry on its business, now owns
property having a value both at fair valuation and at present fair saleable
value greater than the amount required to pay its debts, and will not be
rendered insolvent by the execution and delivery of this Agreement or any of the
Other Agreements or by completion of the transactions contemplated hereunder or
thereunder;
(q) neither of the Borrowers is now obligated, whether directly or indirectly,
for any loans (including shareholder loans) or other indebtedness or liability
(contingent or otherwise) other than (i) the Liabilities; (ii) indebtedness and
liabilities disclosed to ABN AMRO on Schedule 9(q); (iii) indebtedness and
liabilities secured by the ACS Lien; (iv) unsecured
29.
indebtedness to trade creditors arising in the ordinary course of business and
(v) unsecured indebtedness arising from the endorsement of drafts and other
instruments for collection, in the ordinary course of business. The Borrower is
not in arrears in payment of any amount to any supplier of Inventory or any
governmental body or agency including, without limitation, amounts owing or to
be remitted with respect to employee withholdings for income tax or Canada
Pension Plan, goods and services tax or provincial sales taxes;
(r) the Borrower does not own any margin securities, and none of the proceeds of
the Revolving Loans hereunder shall be used for the purpose of purchasing or
carrying any margin securities or for the purpose of reducing or retiring any
indebtedness which was originally incurred to purchase any margin securities;
(s) except as otherwise disclosed on Schedule 9(s), neither of the Borrowers has
any Subsidiary or Affiliate or divisions, nor is it engaged in any joint venture
or partnership with any other Person;
(t) each of the Borrower and each other Loan Party that is a corporation is duly
organized and in good standing in its country, province or state of
organization, has and shall at all times have in place a duly constituted board
of directors or single director overseeing its affairs, is not and shall not be
at any time subject to a unanimous shareholder agreement or declaration
affecting the powers of such director or directors, and is duly qualified and in
good standing in all provinces or states where the nature and extent of the
business transacted by it or the ownership of its assets makes such
qualification necessary, except for such other provinces or states in which the
failure to so qualify would not have a Material Adverse Effect with respect to
the Borrower, individually or the other Loan Parties collectively;
(u) except as disclosed in writing and acceptable to ABN AMRO, neither of the
Borrowers is in default under any contract, lease or commitment to which it is a
party or by which it is bound, nor does the Borrower know of any dispute
regarding any contract, lease or commitment which would have a Material Adverse
Effect with respect to the Borrower individually or the other Loan Parties
collectively;
(v) there are no controversies pending or threatened between either of the
Borrowers and any of its employees or any union representing any employees,
other than employee grievances arising in the ordinary course of business which
are not, in the aggregate, likely to have a Material Adverse Effect with respect
to it. Each of the Borrowers is in compliance in all material respects with all
state, federal, provincial and other local laws respecting employment and
employment terms, conditions and practices, except where the failure to so
comply would not have a Material Adverse Effect with respect to it;
(w) the Borrower and each other Loan Party possesses, and shall continue to
possess, adequate licenses, patents, patent applications, copyrights, service
marks, trademarks, trademark applications, tradestyles and tradenames to
continue to conduct its business as heretofore conducted by it, details of all
of which are described on Schedule 9(w);
(x) the Shareholder is the registered and beneficial owner of 100% of the issued
and outstanding shares in the capital of the Borrower, being 2,000,000 common
shares; NAC
30.
Beteiligungsgesellschaft mbH is the registered and beneficial owner of all of
the issued share capital of the German Borrower, in the nominal amount of DEM
506,400; the Shareholder is the registered and beneficial owner of all of the
issued share capital of NAC Beteiligungsgesellschaft mbH, in the nominal amount
of DEM 2,000,000; NAC Beteiligungsgesellschaft mbH carries on no operating
business and owns no substantial assets or property except for the said share
capital of the German Borrower and share capital of other companies;
(y) except as disclosed in Schedule 9(y) hereto: (i) the operations and
properties of each of the Borrowers comply with all applicable Environmental
Laws except for any non-compliance which would not have a Material Adverse
Effect with respect it; (ii) each of the Borrowers and all of their present
facilities or operations and properties, as well as to the knowledge of each of
the Borrowers their past facilities or operations and properties, are not
subject to any judicial proceeding or administrative proceeding or any
outstanding written order or agreement with any Governmental Authority or
private party respecting (a) any Environmental Law or; (b) any Environmental
Claim arising from the Release of a Contaminant into the environment; (ii) to
the best of the knowledge of each of the Borrowers, none of their operations or
properties is subject to any federal, provincial or state investigation
evaluating whether any remedial work is needed to respond to a Release of any
Contaminant into the environment in each case which would have a Material
Adverse Effect with respect to it; (iv) neither of the Borrowers nor any
predecessor thereof has, to the best of the knowledge of each of the Borrowers,
carried on on its past or present facilities or operations or properties, any
past or present treatment, storage, or disposal of a Hazardous Material, nor
have either of the Borrowers or any prior owner or operator on any of the
properties of either of the Borrowers reported a spill or Release of a
Contaminant into the environment in each case which would have a Material
Adverse Effect with respect to either of the Borrowers; (v) neither of the
Borrowers has been notified that it has any liability in connection with any
Release of any Contaminant into the environment in each case which would have a
Material Adverse Effect with respect to either of the Borrowers; (vi) none of
the operations or properties, past or present, of either of the Borrowers
involve the generation, transportation, treatment or disposal of Hazardous
Materials in violation of Environmental Laws in each case which would have a
Material Adverse Effect with respect to either of the Borrowers; (vii) neither
of the Borrowers has disposed of any Contaminant by placing it in or on the
ground or waters of any premises owned, leased or used by either of them and to
the knowledge of the Borrowers neither has any lessee, prior owner, prior
operator or occupant or other person in each case which would have a Material
Adverse Effect with respect to either of the Borrowers; (viii) no underground
storage tanks or surface impoundments are on any properties of either of the
Borrowers; and (ix) to the best of the knowledge of the Borrowers, no lien in
favour of any Governmental Authority for (A) any liability under any
Environmental Laws, or (B) damages arising from or costs incurred by such
Governmental Authority in response to a Release of a Contaminant into the
environment, has been filed or attached to the property of either of the
Borrowers;
(z) all employee pension benefit plans are registered under, and in compliance
with, all requirements of law, all payments, reports, returns and filings
required to be made thereunder have been made and there is no obligation on the
part of the Borrower under any such plan that is in arrears. All such plans have
been administered in accordance with their terms and the provisions of
applicable law. There are no unfunded liabilities under any such plans and,
31.
without limiting the generality of the foregoing, there is no going concern
unfunded actuarial liability, past service unfunded actuarial liability or
solvency deficiency.
The Borrower and each of the other Loan Parties represents, warrants and
covenants to ABN AMRO that all representations, warranties and covenants of the
Borrower and of any other Loan Party contained in this Agreement or any of the
Other Agreements (whether appearing in sections 9 or 10 hereof or elsewhere)
shall be true at the time of the Borrower's execution of this Agreement, shall
survive the execution, delivery and acceptance hereof and thereof by the parties
hereto and thereto and the closing of the transactions described herein or
related hereto, shall remain true until the repayment in full of all of the
Liabilities and termination of this Agreement, and shall be remade by the
Borrower and each such Loan Party at the time each Revolving Loan is made
pursuant to this Agreement.
10. COVENANTS
Until payment or satisfaction in full of all Liabilities and termination of
this Agreement, unless the Borrower obtains ABN AMRO's prior written consent
waiving or modifying any of the Borrower's covenants hereunder in any specific
instance, the Borrower agrees as follows:
(a) each of the Borrowers shall at all times keep accurate and complete books,
records and accounts with respect to all of their business activities, in
accordance with sound accounting practices and GAAP consistently applied, and
shall keep such books, records and accounts, and any copies thereof, only at the
addresses indicated for such purpose on Schedule B; each of the Borrowers shall
maintain adequate licenses, patents, patent applications, copyrights, service
marks, trade marks, trade ▇▇▇▇ applications, trade styles and trade names to
continue its business as heretofore conducted by it or as hereafter conducted by
it;
(b) each of the Borrowers shall promptly advise ABN AMRO in writing of any
Material Adverse Effect in respect of it or the occurrence of any Default or
Event of Default;
(c) ABN AMRO, or any Persons designated by it, shall have the right, at any
reasonable times (including, without limitation, through audits scheduled within
forty-five (45) days after the Closing Date and thereafter quarterly and more
frequently during the continuance of a Default or Event of Default) to call at
the Borrower's and the German Borrower's places of business or at any warehouse
or storage facility where property or assets of such Loan Party are located at
any times, and, without hindrance or delay, to inspect the Collateral and to
inspect, check and make extracts from such Loan Party's books, records,
journals, orders, receipts and any correspondence and other data relating to its
business, the Collateral or any transactions between the parties hereto, and
shall have the right to make such verification concerning its business as ABN
AMRO may consider reasonable under the circumstances. Each of the Borrowers
shall furnish to ABN AMRO such information relevant to ABN AMRO's rights under
this Agreement (including without limitation information on sales, receivables,
collections, accounts payable and inventory aging) as ABN AMRO shall at any time
and from time to time request. Each of the Borrowers authorizes ABN AMRO to
discuss its affairs, finances and business with any of its officers or directors
or those of any Affiliate and with those employees
32.
with whom ABN AMRO has determined it to be necessary or desirable to converse,
and to discuss its financial condition with its independent public accountants.
Any such discussions shall be without liability to ABN AMRO or to such
accountants. The Borrower shall pay to or reimburse ABN AMRO for all fees,
costs, and out-of-pocket expenses incurred by ABN AMRO in the exercise of its
rights hereunder (in addition to the fees payable by the Borrower pursuant to
subsection 3(g) hereof in connection with ABN AMRO's examination of Borrower's
books and records and Collateral), including without limitation reimbursing ABN
AMRO on the last day of each month, in arrears, for the amount of sixty-five
U.S. Dollars (U.S. $65) in respect of a monitoring fee charged by Collateral
Services Inc., and all of such costs, fees and expenses shall constitute
Revolving Loans hereunder, shall be payable on demand and, until paid, shall
bear interest at the highest rate then applicable to Revolving Loans hereunder;
(d) (i) each of the Borrowers shall keep the Collateral properly housed and
shall keep the Collateral insured against such risks and in such
amounts as ABN AMRO may require and under policies in such form as
shall be satisfactory to ABN AMRO. Originals or certified copies of
such policies of insurance have been or shall be, within ninety (90)
days of the date hereof, delivered to ABN AMRO together with evidence
of payment of all premiums therefor, and shall contain, inter alia, an
endorsement, in form and substance acceptable to ABN AMRO, showing
loss under such insurance policies payable to ABN AMRO. Such
endorsement, the other terms of the said policies, or an independent
instrument furnished to ABN AMRO, shall provide that the insurance
company shall give ABN AMRO at least thirty (30) days written notice
before any such policy of insurance is materially altered or cancelled
and shall include a standard mortgage clause providing, inter alia,
that no act or omission, whether wilful or negligent, or default of
either of the Borrowers or any other Person shall affect the right of
ABN AMRO to recover under such policy of insurance in case of loss or
damage. Each of the Borrowers hereby directs all insurers under such
policies of insurance to pay all proceeds payable thereunder directly
to ABN AMRO. Each of the Borrowers irrevocably, makes, constitutes and
appoints ABN AMRO (and all officers, employees or agents designated by
ABN AMRO) as its true and lawful attorney (and agent-in-fact) for the
purpose of making, settling and adjusting claims under such policies
of insurance, endorsing its name on any cheque, draft, instrument or
other item of payment for the proceeds of such policies of insurance
and making all determinations and decisions with respect to such
policies of insurance; provided, however, that ABN AMRO shall exercise
such rights only upon and following the occurrence of an Event of
Default;
(ii) each of the Borrowers shall maintain, at its expense, such public
liability and third party property damage insurance and business
interruption insurance as is customary for Persons engaged in
businesses similar to that undertaken by it with such companies and in
such amounts, with such deductibles and under policies in such form as
shall be satisfactory to
33.
ABN AMRO. Originals or certified copies of such policies have been or
shall be, within ninety (90) days of the date hereof, delivered to ABN
AMRO together with evidence of payment of all premiums therefor; each
such policy shall contain an endorsement showing ABN AMRO as
additional insured thereunder and providing that the insurance company
shall give ABN AMRO at least thirty (30) days written notice before
any such policy shall be materially altered or cancelled;
(iii) if either of the Borrowers at any time or times hereafter shall fail
to obtain or maintain any of the policies of insurance required above
or to pay any premium in whole or in part relating thereto, then ABN
AMRO, without waiving or releasing any obligation or default
hereunder, may (but shall be under no obligation to) obtain and
maintain such policies of insurance and pay such premiums and take
such other actions with respect thereto as ABN AMRO deems advisable.
Such insurance, if obtained by ABN AMRO, may, but need not, protect
such Loan Party's interests or pay any claim made by or against such
Loan Party with respect to the Collateral. Such insurance may be more
expensive than the cost of insurance such Loan Party may be able to
obtain on its own and may be cancelled only upon such Loan Party
providing evidence that it has obtained the insurance as required
above. All sums disbursed by ABN AMRO in connection with any such
actions, including, without limitation, court costs, expenses, other
charges relating thereto and legal fees and disbursements (on a
solicitor-client basis), shall constitute Revolving Loans hereunder
and, until paid, shall bear interest at the highest rate then
applicable to Revolving Loans hereunder;
(e) neither of the Borrowers shall use the Collateral, or any part thereof, in
any unlawful business or for any unlawful purpose or use or maintain any of the
Collateral in any manner that does or could result in material damage to the
environment or a violation of any applicable Environmental Laws, or that does or
could result in an Environmental Claim; each of the Borrowers shall keep the
Collateral in good condition, repair and order, ordinary wear and tear excepted;
neither of the Borrowers shall permit the Collateral, or any part thereof, to be
levied upon under execution, attachment, writs of enforcement, distraint or
other legal process; neither of the Borrowers shall sell, lease, grant a
security interest in or otherwise encumber or dispose of any of the Collateral
except as expressly permitted by this Agreement and neither of the Borrowers
shall permit any liens or security interests (other than Permitted Liens) to
attach to the Collateral that could rank either in priority to, or pari passu to
the Security or any other direct or indirect interest of ABN AMRO therein; and
neither of the Borrowers shall secrete or abandon any of the Collateral, or
remove or permit removal of any of the Collateral from any of the locations
listed on Schedule B or in any written notice to ABN AMRO pursuant to section
9(d) hereof, except for the removal of Inventory sold in the ordinary course of
business as permitted herein;
(f) all monies and other property obtained by the Borrower from ABN AMRO
pursuant to this Agreement will be used solely to pay out existing indebtedness
to Bank One,
34.
Michigan, to lend U.S. $2,250,000 to the German Borrower pursuant to German
Documents in form and substance satisfactory to ABN AMRO, and for ongoing
operational requirements of the Borrower;
(g) each of the Borrowers shall, at the request of ABN AMRO, indicate on its
records concerning the Collateral a notation, in form satisfactory to ABN AMRO,
of the security interest of ABN AMRO, and shall not maintain duplicates or
copies of such records at any address other than its principal place of business
as advised in writing to ABN AMRO; provided, however, that each of the
Borrowers, in the ordinary course of its business, may furnish copies of such
records to its accountants, attorneys and other agents or advisors as it may
determine to be necessary or desirable, in the exercise of its commercially
reasonable judgment;
(h) each of the Borrowers shall file all required tax returns and pay all of its
taxes when due, including, without limitation, taxes imposed by federal, state,
provincial, municipal or other governmental agencies, and shall cause any liens
for taxes to be promptly released; provided, that each of the Borrowers shall
have the right to contest the payment of such taxes in good faith by appropriate
proceedings so long as (i) the amount so contested is shown on its financial
statements, (ii) the contesting of any such payment does not give rise to a lien
for taxes, (iii) upon the occurrence of an Event of Default, it keeps on deposit
with ABN AMRO (such deposit to be held without interest) an amount of money
which, in the sole judgment of ABN AMRO, is sufficient to pay such taxes and any
interest or penalties that may accrue thereon, and (iv) if it fails to prosecute
such contest with diligence, ABN AMRO may apply the money so deposited in
payment of such taxes. If either of the Borrowers fails to pay any such taxes
and in the absence of any such contest by it, ABN AMRO may (but shall be under
no obligation to) advance and pay any sums required to pay any such taxes and/or
to secure the release of any lien therefor, and any sums so advanced by ABN AMRO
shall constitute Revolving Loans hereunder, shall be payable by the Borrower to
ABN AMRO on demand, and, until paid, shall bear interest at the highest rate
then applicable to Revolving Loans hereunder;
(i) neither of the Borrowers shall, without the prior written consent of ABN
AMRO, (i) incur, create, assume or suffer to exist any indebtedness other than
(A) indebtedness arising under this Agreement, (B) unsecured indebtedness owing
in the ordinary course of business to its trade suppliers, (C) indebtedness
secured by Permitted Liens, and (D) any other indebtedness described in section
9(q)(ii) hereof; or (ii) assume, guarantee or endorse, or otherwise become
liable in connection with, the obligations of any Person, except by endorsement
of instruments for deposit or collection or similar transactions in the ordinary
course of business;
(j) neither of the Borrowers shall, without the prior written consent of ABN
AMRO, enter into any merger, amalgamation or consolidation, change or
effectively change its jurisdiction of incorporation, sell, lease or otherwise
dispose of all or substantially all of its assets or create any new Subsidiary
or Affiliate or issue any shares of, or warrants or other rights to receive or
purchase any shares of, any class of its stock, or enter into any transaction
outside the ordinary course of its business;
(k) neither of the Borrowers shall make any distribution of funds or property
and, without limitation, neither of the Borrowers shall (i) declare or pay any
bonus, dividend or other distribution (whether in cash or in kind) on, purchase,
redeem or retire any shares of any class of
35.
its stock or any other equity interest, or make any payment on account of, or
set apart assets for the repurchase, redemption, defeasance or retirement of,
any class of its stock or any other equity interest (provided that each of the
Borrowers may repurchase its shares pursuant to shareholder agreements and stock
option programs existing on the date of this Agreement to the extent required to
do so under such agreement or program, so long as no Event of Default has
occurred and is continuing); or (ii) make any optional payment or prepayment on
(other than optional payments or prepayments of indebtedness secured by the ACS
Lien, so long as no Default or Event of Default has occurred and is continuing)
or redemption (including without limitation by making payments to a sinking fund
or analogous fund) or repurchase of any indebtedness for borrowed money other
than or indebtedness of the Borrower pursuant to this Agreement, or as otherwise
permitted pursuant to this Agreement or (iii) except as permitted in (ii) above
and except for repayments of indebtedness in respect of transactions permitted
by section 9(l)(i), make any payment on or in respect of any indebtedness, or
any interest, fee or other payment, to any Parent, Subsidiary, Affiliate or
other related Person;
(l) neither of the Borrowers shall make any loans to, or investments in, any
Person, whether in cash, securities or other property of any kind, other than
investments that are direct obligations of Canada or the United States pledged
and delivered to ABN AMRO pursuant to documentation satisfactory to ABN AMRO in
its absolute discretion, and other than loans by the Borrower to the German
Borrower pursuant to the German Documents in form and substance satisfactory to
ABN AMRO which German Documents shall not be supplemented, amended or otherwise
modified without the prior written consent of ABN AMRO;
(m) neither of the Borrowers shall except with the prior written consent of ABN
AMRO, amend its organizational documents or change its fiscal year or enter into
a new line of business materially different from its current business;
(n) neither of the Borrowers will, except with the prior written consent of ABN
AMRO, pay any amount to any of its officers and/or directors in their capacities
as officers and directors by way of salary, bonus, commission, directors fees,
executive management compensation or otherwise in excess of (A) with respect to
base compensation, an amount that is reasonable and customary for officers
and/or directors with similar responsibility and experience of other companies
in the same industry as the Borrower, and (B) with respect to bonuses and other
indirect remuneration, amounts which are determined in accordance with the
Borrower's written objective compensation plan for the particular year;
(o) notwithstanding any other provision hereof, the Borrower shall maintain and
keep in full force and effect each of the financial covenants set forth below.
The calculation and determination of each such financial covenant, and all
accounting terms contained therein, shall be calculated and construed in
accordance with GAAP, applied on a basis consistent with the financial
statements of the Borrower delivered on or before the Closing Date:
(i) Adjusted Net Worth. The Borrower shall maintain Adjusted Net Worth in
an amount not less than (A) Four Million Three Hundred Thousand
Dollars (Cdn. $4,300,000) at all times from the date hereof through
December 30, 2002, (B) Four Million Nine Hundred Thousand Dollars
(Cdn. $4,900,000) at all times from and including December 31, 2002
36.
through December 30, 2003, and (C) Five Million Five Hundred Thousand
Dollars (Cdn. $5,500,000) at all times from and including December 31,
2003 and thereafter;
(ii) Interest Coverage Ratio. The Borrower shall maintain at all times a
ratio of (A) EBITDA (after deducting Capital Expenditures not
financed) to (B) interest expense, of not less than 1.50 to 1.00
measured at each Fiscal Quarter End commencing on December 31, 2001,
on a consolidated rolling twelve month basis;
(iii) Capital Expenditures. The Borrower shall not, during any fiscal year,
make Capital Expenditures in an aggregate amount of more than Seven
Hundred Fifty Thousand Canadian Dollars (Cdn. $750,000); and
(iv) Debt Service Coverage. The Borrower shall maintain at all times a
ratio of (A) net income after taxes (excluding any after-tax gains or
losses on the sale of assets and excluding other after-tax
extraordinary gains or losses) plus non-cash income tax expense, plus
depreciation and amortization and minus Capital Expenditures which
have not been financed, to (B) the principal payments of long term
debt (including capital leases) paid or payable, of not less than 1.25
to 1.00 measured at each Fiscal Quarter End, commencing on December
31, 2001, on a consolidated rolling twelve month basis;
(p) the Borrower shall reimburse ABN AMRO for all costs and expenses (including,
without limitation, reasonable legal fees and disbursements (on a
solicitor-client basis) for both in-house and outside counsel), relating to it
and incurred by ABN AMRO in connection with the documentation and consummation
of this transaction and any other transactions between the Borrower and ABN AMRO
including, without limitation, personal property security and other public
record searches, lien filings, express mail or similar express or messenger
delivery, appraisal costs, surveys, title insurance and environmental audit or
review costs, and in seeking to collect, protect or enforce any rights in or to
the Collateral or incurred by ABN AMRO in seeking to collect any Liabilities and
to administer and enforce any of ABN AMRO's rights under this Agreement;
provided that, prior to the occurrence of an Event of Default, the Borrower
shall not be required to reimburse ABN AMRO for costs and expenses (other than
legal expenses, costs and expenses in connection with ABN AMRO's field audits,
and those referred to in the next sentence) that, together with costs and
expenses to which the U.S. $25,000 limit in section 4(c)(iv) of the U.S. Loan
Agreement applies, exceed such limit in any year. The Borrower shall also pay
all normal service charges, costs and expenses with respect to accounts
maintained by ABN AMRO for the benefit of the Borrower and any additional
services requested by the Borrower from ABN AMRO. All such costs, expenses and
charges shall constitute Revolving Loans hereunder, shall be payable to ABN AMRO
on demand and, until paid, shall bear interest at the highest rate then
applicable to Revolving Loans hereunder;
(q) the Borrower shall maintain all banking relationships with a financial
institution acceptable to ABN AMRO in its discretion;
37.
(r) neither of the Borrowers shall make any material change in the operation of
its business; except as contemplated in section 9(l); each of the Borrowers
shall purchase Inventory and services only from parties at arms-length to it,
its officers and directors and its direct or indirect shareholders; the Borrower
shall not settle or adjust any Account identified by it as an Eligible Account
or with respect to which the Account Debtor is an Affiliate without the consent
of ABN AMRO, provided that following the occurrence of an Event of Default, the
Borrower shall not settle or adjust any Account without the consent of ABN AMRO;
(s) each of the Borrowers shall conduct its business and occupy its premises in
full compliance with all Environmental Laws applicable to it, including, without
limitation, those relating to the Borrowers' generation, handling, use, storage,
and disposal of Hazardous Materials; each of the Borrowers shall take prompt and
appropriate action to respond to any non-compliance or alleged non-compliance
with any Environmental Laws and shall regularly report to ABN AMRO on such
non-compliance its response. Without limiting the generality of the foregoing,
whenever either of the Borrowers gives the notice to ABN AMRO contemplated by
subsection 10(t) it shall at ABN AMRO's request and at its expense:
(i) cause an independent environmental engineer acceptable to ABN AMRO to
conduct such tests of the site where its non-compliance or alleged
non-compliance with Environmental Laws has occurred and prepare and
deliver to ABN AMRO a report addressed to ABN AMRO and on which ABN
AMRO may rely without qualifications setting forth the results of such
tests, a proposed plan for responding to any environmental problems
described therein, and an estimate of the costs thereof; and
(ii) provide to ABN AMRO a supplemental report of such engineer whenever
the scope of the environmental problems, or its response thereto or
the estimated costs thereof shall change. Such reports shall also be
addressed to ABN AMRO and shall, as requested by ABN AMRO, set out the
results of such engineers' review of, inter alia:
A. its internal policies and procedures relating to environmental
regulatory compliance to ensure that all appropriate steps are
being taken by it or on its behalf to comply with all applicable
requirements of Environmental Laws;
B. progress of compliance deficiencies;
C. all other environmental audit reports which it or any predecessor
has commissioned in the normal conduct of its business; and
D. all environmental reports which have been commissioned by or made
available to it in connection with new acquisitions, and the
engineers' report and recommendations on results of tests
performed or samples taken by it during the course of its review,
irregularities or steps which may be taken to ensure continued
38.
compliance, as well as such other matters as it and/or ABN AMRO
may request from time to time;
(t) each of the Borrowers shall provide immediate written notice to ABN AMRO
after the happening of any of the following:
(i) the receipt of a notice of non-compliance, violation or contravention
from any Governmental Authority with respect to the activities carried
on by it or as to any other matter whatsoever;
(ii) there has been a spill or other Release of Hazardous Materials upon,
under or about or affecting any of the properties owned, operated,
leased or occupied by it in amounts that are required to be reported
under Environmental Laws, or Hazardous Materials at levels or in
amounts that are required to be reported, remedied or responded to
under Environmental Laws are detected on or in the soil or
groundwater;
(iii) it is or may be liable for any costs of cleaning up or otherwise
remedying a Release of Hazardous Materials;
(iv) any part of the properties owned, operated, managed, possessed, leased
or occupied by it or of which it otherwise has charge, management or
control, are subject to a lien, charge, mortgage or other type of
encumbrance under, or may be subject to any order, direction or other
administrative proceeding under, any Environmental Laws; or
(v) it undertakes any remedial work with respect to any Hazardous
Materials.
11. CONDITIONS PRECEDENT
(a) Closing Deliveries.
The obligation of ABN AMRO to fund the initial Loans and issue the initial
Letter of Credit (if any) is subject to the satisfaction or waiver on or before
the Closing Date of the following conditions precedent:
(i) Completion by ABN AMRO to its sole satisfaction of its review of the
management prepared interim financial statements (including individual
and consolidated balance sheets, cash flow statements and profit and
loss statements) as at September 30, 2001 with respect to the Borrower
and the German Borrower, and any other information and material
requested by ABN AMRO to ensure that, among other things, no changes
have occurred that would result in an amendment to any of the
financial forecasts and other information provided by the Borrower or
the German Borrower to ABN AMRO.
39.
(ii) No material adverse change in ABN AMRO's understanding of the facts
and information presented to it by the Borrower or any other Loan
Party or others on their behalf has occurred and no material
litigation or claims (in the sole judgment of ABN AMRO) with respect
to any aspect of Borrower's or any other Loan Party's business or
assets shall have occurred.
(iii) ABN AMRO shall have received, in form and substance satisfactory to
it in its absolute discretion, each of the security documents,
agreements, opinions, reports, approvals, consents, certificates and
other documents set forth on the closing document list attached hereto
as Schedule 11(a)(iii), including without limitation evidence that the
German Documents are in form and substance satisfactory to ABN AMRO,
and evidence of all registrations as required and confirmation of its
first priority (subject to Permitted Liens) lien, charge and security
interest in the Collateral.
(iv) Since December 31, 2000 (except as disclosed in the September 30,
2001, financial statements delivered to ABN AMRO) no event shall have
occurred which has had or could be expected to have a Material Adverse
Effect with respect to the Borrower individually or the other Loan
Parties collectively, as determined by ABN AMRO in its sole
discretion.
(v) ABN AMRO shall have received payment in full of all fees and expenses
payable to it by the Borrower, including, without limitation, legal
fees and expenses incurred by ABN AMRO in connection with this
Agreement and the consummation of the transactions contemplated
hereby, on or before the Closing Date.
(vi) ABN AMRO shall have determined that immediately after giving effect to
(A) the making of the initial Revolving Loans requested to be made on
the Closing Date, (B) the issuance of the initial Letter of Credit, if
any, on the Closing Date, and (C) the payment or reimbursement by the
Borrower of ABN AMRO for all closing costs and expenses incurred in
connection with the transactions contemplated hereby, on a pro forma
basis Excess Availability shall not be less than Seven Hundred
Seventy-Five Thousand Canadian Dollars (Cdn. $775,000).
(vii) ABN AMRO shall have received evidence of repayment of all of the
Borrower's and the German Borrower's indebtedness owing to creditors
other than indebtedness to unsecured trade creditors incurred in the
normal course of business and on normal payment terms and other than
indebtedness to those creditors which ABN AMRO has agreed may continue
as creditors of the Borrower or the German Borrower after the Closing
Date (which creditors include those holding Permitted Liens).
(viii) No request of the Minister of National Revenue for payment pursuant
to Section 224(1.1), or any successor section, of the Income Tax Act
40.
(Canada) shall have been received by ABN AMRO in respect of Borrower.
(ix) ABN AMRO shall have received a Borrowing Base Certificate as at
November 21, 2001, together with a certificate from an Authorized
Officer of the Borrower (the "Closing Certificate") pursuant to which
such Authorized Officer shall certify that: (A) in calculating the
Excess Availability described in clause (vi) above, the Borrower's
outstanding debt was (and is) current and not past due in any respect;
(B) all representations and warranties contained herein are true and
correct; (C) no Default or Event of Default has occurred and is
continuing; and (D) no event has occurred and is continuing that would
have a Material Adverse Effect with respect to the Borrower
individually or the other Loan Parties collectively.
(x) The Borrower and any other Loan Party shall have or cause to be
executed and delivered to ABN AMRO all documents which ABN AMRO
determines in its absolute discretion are necessary to consummate the
transactions contemplated hereby.
(xi) Completion of tax, lien, judgment and other searches and
investigations with respect to the Collateral and all security
provided by the Borrower and any other Loan Party, with results
satisfactory to ABN AMRO, and completion of a review to its
satisfaction of the management, creditworthiness, financial position,
systems and procedures of the Borrower.
(xii) ABN AMRO shall have received, reviewed and determined as satisfactory
all appraisals, all third party documentation (including landlord and
mortgagee waivers and debt and security subordinations and
postponements it may require) and all contracts entered or to be
entered into by or binding on the Borrower or any other Loan Party
(including all supply, service, purchase and rental contracts and all
collective agreements with employees or their union) as it may
consider material in its absolute discretion.
(xiii) Completion of final pre-closing collateral roll-forward, ineligibles
and Borrowing Base calculations to the satisfaction of ABN AMRO.
(xiv) Confirmation of completion of all transactions contemplated pursuant
to the U.S. Loan Agreement and the availability of the first advance
thereunder.
(xv) Without limiting the generality of subsection 11(a)(iii), ABN AMRO
shall have received a legal opinion from the Borrowers' and the
Guarantors' counsel, in form and substance satisfactory to ABN AMRO
and its counsel, opining with respect to, but not limited to, the
Borrower's
41.
and each Loan Party's incorporation and subsistence, the Borrower's
and each Loan Party's corporate power and capacity to enter into this
Agreement and the Other Agreements, the Borrower's and each Loan
Party's due authorization, execution and delivery and performance of
this Agreement and the Other Agreements, and the enforceability of
this Agreement and the Other Agreements against the Borrower and each
Loan Party, as applicable.
(b) Post Closing Deliveries.
After the Closing Date, the obligation of ABN AMRO to make any requested
Loan or issue any requested Letter of Credit is subject to the satisfaction of
the conditions precedent set forth in subsections 11(a)(ii), (iii), (iv),
(viii), (x) and (xii) above and also as set forth below. Each such request shall
constitute a representation and warranty that such conditions are satisfied:
(i) All representations and warranties contained in this Agreement and the
Other Agreements shall be true and correct in all material respects on
and as of the date of such request, as if then made, other than
representations and warranties that relate solely to an earlier date;
and
(ii) No Default or Event of Default shall have occurred, or would result
from the making of the requested Revolving Loan or issue of the
requested Letter of Credit, which has not been waived in writing by
ABN AMRO.
12. DEFAULT
The occurrence of any one or more of the following events shall constitute
an "Event of Default" hereunder:
(a) the failure of the Borrower or any other Loan Party to pay when due,
declared due, or demanded by ABN AMRO in accordance with the terms hereof or
thereof, any of the Liabilities;
(b) the failure of the Borrower or any other Loan Party to perform, keep or
observe any of the covenants, conditions, promises, agreements or obligations
(other than as described in subsection 12(a) above) of the Borrower or such Loan
Party under this Agreement or any of the Other Agreements; provided that, any
such failure by a Borrower with respect to a covenant under subparagraphs 9(b),
9(i), 9(j), 9(m), 10(a), 10(h) and 10(t)(i) of this Agreement shall not
constitute an Event of Default hereunder until the fifteenth (15th) day
following the occurrence thereof.
(c) (i) the making or furnishing by the Borrower or any other Loan Party or any
director, officer, employee or other representative thereof to ABN AMRO of any
representation, warranty, certificate, schedule, report or other communication
within or in connection with this Agreement or the Other Agreements or in
connection with any other agreement between the Borrower or such Loan Party and
ABN AMRO, which is untrue or misleading in any respect; or
42.
(ii) the failure of the Borrower or any other Loan Party to perform, keep or
observe any of the covenants, conditions, promises, or agreements of the
Borrower or such Loan Party under any other agreement with any Person if (A) in
the case of agreements relating to indebtedness for borrowed money in excess of
One Hundred Thousand Canadian Dollars (Cdn. $100,000) either individually or in
the aggregate such failure gives the holder of such indebtedness the right to
accelerate the maturity thereof, or (B) in the case of any agreement, such
failure could reasonably be expected to have a Material Adverse Effect with
respect to the Borrower individually or the other Loan Parties collectively;
(d) the creation (whether voluntary or involuntary) of, or any attempt to
create, any lien or other encumbrance upon any of the Collateral or any property
or assets of the Borrower or any other Loan Party, other than the Permitted
Liens, or the making or any attempt to make any levy, seizure or attachment
thereof or (except as permitted hereby) sale, lease or furnishing under a
contract of service of, any of the Collateral or any property or asset of the
Borrower or any other Loan Party, or the loss, theft, damage or destruction of
all or a substantial portion of the property and assets of the Borrower or a
Loan Party;
(e) the making of an assignment or proposal in bankruptcy by the Borrower or any
other Loan Party or the filing by the Borrower or any other Loan Party of notice
of its intention to make a proposal in bankruptcy or the commencement of any
proceedings in bankruptcy by or against the Borrower or any other Loan Party for
the liquidation or reorganization of the Borrower or any other Loan Party or
alleging that the Borrower or such Loan Party is insolvent or unable to pay its
debts as they mature or for the readjustment or arrangement of the Borrower's or
any other Loan Party's debts, whether under the Bankruptcy and Insolvency Act
(Canada), the Companies' Creditors Arrangement Act (Canada) or the United States
Federal Bankruptcy Reform Act or under any other law, whether state, provincial
or federal, now or hereafter existing for the relief of debtors, or the
commencement of any analogous statutory or non-statutory proceedings involving
the Borrower or any other Loan Party; provided, however, that if such
commencement of proceedings against the Borrower or such Loan Party is
involuntary, such action shall not constitute an Event of Default unless such
proceedings are not forthwith contested in good faith by the Borrower or such
Loan Party and dismissed within thirty (30) days after the commencement of such
proceedings;
(f) the appointment of a receiver or trustee for the Borrower or any other Loan
Party, for any of the Collateral or for any substantial part of the Borrower's
or any other Loan Party's assets or the institution of any proceedings for the
dissolution or winding up, or the full or partial liquidation, or (without the
consent of ABN AMRO) the merger, amalgamation or consolidation, of the Borrower
or any other Loan Party which is a corporation or a partnership; provided,
however, that if such appointment or commencement of proceedings against the
Borrower or such Loan Party is involuntary, such action shall not constitute an
Event of Default unless such appointment or proceeding has resulted in a seizure
or possession of any of the Borrower's or any other Loan Party's property or
assets by such receiver or trustee, or is not forthwith contested in good faith
by the Borrower or such Loan Party and revoked or dismissed within thirty (30)
days after the commencement of such proceedings;
43.
(g) the entry of one or more judgments or the issuance or registration of one or
more writs of enforcement or orders against the Borrower or any other Loan Party
which, or the Canadian Dollar Equivalent Amount of which, is individually or in
the aggregate in excess of Two Hundred Fifty Thousand U.S. Dollars (U.S.
$250,000) and which remains unsatisfied or undischarged and in effect for sixty
(60) days after such entry without a stay of enforcement or execution;
(h) the occurrence of a default or an event of default under, or the revocation
or termination of, the German Documents or any of them, or any agreement,
instrument or document executed and delivered by any Person to ABN AMRO pursuant
to which such Person has guaranteed to ABN AMRO the payment of all or any of the
Liabilities or has granted ABN AMRO a security interest in or lien upon some or
all of such Person's real and/or personal property to secure directly or
indirectly the payment of all or any of the Liabilities;
(i) the occurrence of an Event of Default under and as defined in the U.S. Loan
Agreement; or
(j) any material adverse change in the Collateral, operations, business,
property, assets, prospects, or condition, financial or otherwise, of the
Borrower or any other Loan Party, as determined by ABN AMRO in its reasonable
judgement or the occurrence of any event which could reasonably be expected to
have a Material Adverse Effect in respect of the Borrower individually or the
other Loan Parties collectively, or any change in ownership of, or pledge,
transfer, assignment or disposition of, or grant of security in, any shares of,
the Borrower or any other Loan Party not consented to in writing by ABN AMRO.
13. REMEDIES UPON AN EVENT OF DEFAULT
(a) Upon the occurrence of a Default or Event of Default, ABN AMRO shall have no
further obligation to make or extend any Loan hereunder, to issue or cause to be
issued any Letter of Credit hereunder or to grant any other financial
accommodation to the Borrower.
(b) Upon the occurrence of an Event of Default described in subsection 12(e)
hereof, all of the Liabilities shall immediately and automatically become due
and payable, without notice of any kind, and upon the occurrence of any other
Event of Default, any or all of the Liabilities may, at the option of ABN AMRO,
and without demand, notice or legal process of any kind, be declared, and
immediately shall become, due and payable. Upon either occurrence, ABN AMRO may,
in addition to any other right or remedy which it may have at law or in equity,
proceed to realize its security hereunder and to enforce its rights by:
(i) entry;
(ii) the appointment by instrument in writing of a receiver or receivers of
the Collateral or any part thereof (which receiver or receivers may be
any person or persons, whether an officer or officers or employee or
employees of ABN AMRO or not and ABN AMRO may remove any
44.
receiver or receivers so appointed and appoint another or others in
his or their stead);
(iii) proceedings in any court of competent jurisdiction for the
appointment of a receiver or receivers or for sale of the Collateral
or any part thereof; or
(iv) any other action, suit, remedy or proceeding authorized or permitted
hereby or by law or by equity.
In addition, ABN AMRO may file such proofs of claim and other documents as
may be necessary or advisable in order to have its claim lodged in any
bankruptcy, winding-up or other judicial proceedings.
(c) Any receiver or receivers so appointed shall have power to:
(i) take possession of and to use the Collateral of any part thereof;
(ii) carry on the business of the Borrower or any other Loan Party
(including, but not limited to, the taking or defending of any actions
or legal proceedings, and the doing or refraining from doing all other
things as to the receiver may seem necessary or desirable in
connection with the business, operations and affairs of the Borrower
or any other Loan Party);
(iii) borrow money required for the maintenance, preservation or protection
of the Collateral or any part thereof or the carrying on of the
business of the Borrower or any other Loan Party;
(iv) further charge the Collateral in priority to the security interests of
this Agreement as security for money so borrowed; and
(v) sell, lease or otherwise dispose of the whole or any part of the
Collateral on such terms and conditions and in such manner as the
receiver shall determine.
ABN AMRO shall not be responsible for any actions or errors of omission by
the receiver or receivers in exercising any such powers.
In addition, ABN AMRO may enter upon, use, occupy and possess the
Collateral or any part thereof, free from all encumbrances, liens and charges,
except for Permitted Liens, without hindrance, interruption or denial of the
same by the Borrower or any other Loan Party or by any other person or persons
save only a landlord pursuant to its rights of reversion under any lease of real
property on expiry of its term, and may lease or sell the whole or any part or
parts of the Collateral. Any sale hereunder may be made by public auction, by
public tender or by private contract, with or without notice and with or without
advertising and without any other formality (except as required by law), all of
which are hereby waived by the Borrower. Such sale shall be on such terms and
conditions as to credit or otherwise and as to upset or reserve bid
45.
or price as to ABN AMRO in its sole discretion may seem advantageous. Such sale
may take place whether or not ABN AMRO has taken possession of the Collateral.
No remedy for the realization of the security interests granted pursuant
hereto or pursuant to any security held by ABN AMRO or for the enforcement of
the rights of ABN AMRO shall be exclusive of or dependent on any other such
remedy, but any one or more of such remedies may from time to time be exercised
independently or in combination. The term "receiver" as used in this Agreement
includes a receiver and manager.
At ABN AMRO's request, the Borrower shall, at the Borrower's expense,
assemble the Collateral and make it available to ABN AMRO at one or more places
to be designated by ABN AMRO. The Borrower recognizes that if the Borrower fails
to perform, observe or discharge any of its Liabilities under this Agreement or
the Other Agreements, no remedy at law will provide adequate relief to ABN AMRO,
and the Borrower agrees that ABN AMRO shall be entitled to temporary and
permanent injunctive relief in any such case without the necessity of proving
actual damages. Any notification of intended disposition of any of the
Collateral required by law will be deemed reasonably and properly given if given
at least fifteen (15) calendar days before such disposition. Any proceeds of any
disposition by ABN AMRO of any of the Collateral may be applied by ABN AMRO to
the payment of expenses and any borrowings in connection with the Collateral and
its realization including, without limitation, legal fees and disbursements (on
a solicitor-client basis) of both in-house and outside counsel and any balance
of such proceeds may be applied by ABN AMRO toward the payment of such of the
Liabilities, and in such order of application, as ABN AMRO may from time to time
elect or re-elect.
14. INDEMNIFICATION
(a) General Indemnity.
The Borrower agrees to defend (with counsel satisfactory to ABN AMRO),
protect, indemnify and hold harmless ABN AMRO, each affiliate or subsidiary of
ABN AMRO, and each of their respective officers, directors, employees, attorneys
and agents (each an "Indemnified Party") from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs, expenses and disbursements of any kind or nature (including,
without limitation, the disbursements and the fees (on a solicitor-client basis)
of internal and external counsel for each Indemnified Party in connection with
any investigative, administrative or judicial proceeding, whether or not the
Indemnified Party shall be designated a party thereto), which may be imposed on,
incurred by, or asserted against, any Indemnified Party (whether direct,
indirect or consequential and whether based on any federal, state or local laws
or regulations including, without limitation, securities, environmental and
commercial laws and regulations, under common law or in equity, or based on
contract or otherwise) in any manner relating to or arising out of this
Agreement or any Other Agreement, or any act, event or transaction related or
attendant to any of the foregoing, the making and the management of the Loans or
the use or intended use of the proceeds of the Loans. To the extent that the
undertaking to indemnify set forth in the preceding sentence may be
unenforceable because it is violative of any law or public policy, the Borrower
shall satisfy such undertaking to the maximum extent
46.
permitted by applicable law. Any liability, obligation, loss, damage, penalty,
cost or expense covered by this indemnity shall be paid to each Indemnified
Party on demand, and, failing prompt payment, shall, together with interest
thereon at the highest rate then applicable to Revolving Loans hereunder from
the date incurred by each Indemnified Party until paid by the Borrower, be added
to the Liabilities of the Borrower and be secured by the Collateral. The
provisions of this section 14 shall survive the satisfaction and payment of the
other Liabilities and the termination of this Agreement. (b) Environmental
Indemnity.
Without limiting the generality of subsection 14(a), the Borrower shall at
all times indemnify and hold harmless the Indemnified Parties from and against
any and all liabilities and costs suffered or incurred by such Indemnified
Parties including, without limitation, any and all orders, directions, suits,
actions, proceedings, claims, settlements, damages, losses, liabilities, costs
and expenses (including, without limitation, legal fees and disbursements on a
solicitor-client basis, litigation costs and any costs of settlement), with
respect to: (i) any actual or threatened Release of Hazardous Materials or the
presence of any Hazardous Materials affecting any of the properties of the
Borrower or any other Loan Party, whether or not the same originates or emanates
from any such properties or any contiguous property, including any loss of value
of any such properties as a result of any of the foregoing; (ii) any costs of
remedial, preventative or similar action which may be imposed by any
Governmental Authority on the Borrower or any other Loan Party, including
without limitation, any prosecution initiated or threatened with respect to
non-compliance with Environmental Laws, (iii) any costs of remedial,
preventative or similar action incurred by any Governmental Authority or any
costs incurred by any other person or damages from injury to, destruction of, or
loss of natural resources, including costs of assessing such injury, destruction
or loss incurred pursuant to any Environmental Laws; (iv) liability for personal
injury or property damage arising under any statutory, common law, tort, breach
of statutory duty, riparian rights, strict liability or any other doctrine or
theory, including, without limitation, damages assessed for the maintenance of a
public or private nuisance, trespass or for the carrying on an abnormally
dangerous activity at or near any of the properties of the Borrower or any other
Loan Party; (v) any environmental liabilities and costs affecting any of the
properties of the Borrower or any other Loan Party within the jurisdiction of
any Governmental Authority; and/or (vi) any other environmental liabilities and
costs.
15. MISCELLANEOUS
(a) Notices.
All written notices and other written communications with respect to this
Agreement or any of the Other Agreements shall be sent by ordinary or registered
mail, by telecopy or delivered in person, and in the case of ABN AMRO shall be
sent to it at Maritime Life Tower, 15th Floor, P.O. Box 114, ▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ Attention: Vice President, Asset Based
Lending, (if by telecopy to telecopy number 416-367-7943) and in the case of the
Borrower or any other Loan Party shall be sent to or in care of the Borrower at
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇, Attention: President (if by
47.
telecopy to telecopy no. 519-452-1231). The notice or other communication so
sent shall be deemed to be received on the day of personal delivery or telecopy,
or if mailed, three days following the date of such mailing.
(b) Choice of Governing Law and Construction.
Except as expressly set forth therein, this Agreement and the Other
Agreements shall be governed and controlled by the laws of the Province of
Ontario and the laws of Canada applicable therein as to interpretation,
enforcement, validity, construction, effect, and in all other respects,
including, without limitation, the legality of the interest rate and other
charges, but excluding perfection of the security interests in the Collateral,
which shall be governed and controlled by the laws of the relevant jurisdiction.
(c) Forum Selection and Service Of Process.
To induce ABN AMRO to accept this Agreement, the Borrower, for itself and
the other Loan Parties, irrevocably: (i) agrees that, subject to ABN AMRO's sole
and absolute election, all actions or proceedings in any way, manner or respect,
arising out of or from or related to this agreement, the other agreements or the
collateral shall be litigated in courts having situs within the city of Toronto,
Province of Ontario; (ii) consents and submits to the jurisdiction of any local,
provincial or federal courts located within said city and province; and (iii)
hereby waives any right it may have to transfer or change the venue of any
litigation brought by ABN AMRO in accordance with this paragraph.
(d) Modification and Benefit of Agreement
This Agreement shall be binding upon the Borrower, the other Loan Parties
and ABN AMRO and their respective successors and assigns and shall enure to the
benefit of the Borrower and ABN AMRO and their respective successors and
assigns. This Agreement and the Other Agreements may not be modified, altered or
amended except by an agreement in writing signed by the Borrower and/or the
other Loan Parties as applicable and ABN AMRO. The Borrower may not sell, assign
or transfer this Agreement, or the Other Agreements or any portion thereof
including, without limitation, any right, title, interest, remedies, powers or
duties thereunder. The Borrower, for itself and the other Loan Parties, hereby
consents to ABN AMRO's sale, assignment, transfer or other disposition, at any
time and from time to time hereafter without notice, of this Agreement, or the
Other Agreements, or of any portion thereof, or participation therein including,
without limitation, ABN AMRO's right, title, interest, remedies, powers and/or
duties thereunder. The Borrower agrees that it shall execute and deliver such
documents as ABN AMRO may request in connection with any such sale, assignment,
transfer or other disposition.
(e) Headings of Subdivisions.
The headings of subdivisions in this Agreement are for convenience of
reference only, and shall not govern the interpretation of any of the provisions
of this Agreement.
48.
(f) Power of Attorney.
The Borrower, for itself and the other Loan Parties, acknowledges and
agrees that its appointment of ABN AMRO as its attorney and agent-in-fact for
the purposes specified in this Agreement is an appointment coupled with an
interest and shall be irrevocable until all of the Liabilities are paid in full
and this Agreement is terminated.
(g) Waiver of Jury Trial, Other Waivers, Confidentiality.
ABN AMRO and the Borrower (for itself and the other Loan Parties) hereby
waive all rights to trial by jury in any action or proceeding which pertains
directly or indirectly to this Agreement, any of the Other Agreements, the
liabilities, the collateral or any alleged tortious conduct or which, in any
way, directly or indirectly, arises out of or relates to the relationship
between the Borrower and ABN AMRO. In no event shall ABN AMRO be liable for lost
profits or other special or consequential damages. The Borrower (for itself and
the other Loan Parties) hereby waives all rights to notice and hearing of any
kind prior to the exercise by ABN AMRO of its rights to repossess the Collateral
without judicial process or to replevy, attach or levy upon such Collateral
without prior notice or hearing, and hereby waives demand, presentment, protest
and notice of nonpayment, and further waives the benefit of all valuation,
appraisal and exemption laws. ABN AMRO's failure, at any time or times
hereafter, to require strict performance of any provision of this Agreement or
any of the Other Agreements shall not waive, affect or diminish any right of ABN
AMRO thereafter to demand strict compliance and performance therewith. Any
suspension or waiver by ABN AMRO of an Event of Default under this Agreement or
any default under any of the Other Agreements shall not suspend, waive or affect
any other Event of Default under this Agreement or any other default under any
of the Other Agreements, whether the same is prior or subsequent thereto and
whether of the same or of a different kind or character. No delay on the part of
ABN AMRO in the exercise of any right or remedy under this Agreement or any
Other Agreement shall preclude other or further exercise thereof or the exercise
of any right or remedy. None of the undertakings, agreements, warranties,
covenants and representations contained in this Agreement or any of the Other
Agreements and no Event of Default under this Agreement or default under any of
the Other Agreements shall be deemed to have been suspended or waived by ABN
AMRO unless such suspension or waiver is in writing, signed by two duly
authorized officers of ABN AMRO and directed to the Borrower specifying such
suspension or waiver.
(h) Timing of Payments.
Any payment required to be made by the Borrower to ABN AMRO hereunder or
under any security shall be made in the currency in respect of which the
obligation requiring such payment arose. Any payment received by ABN AMRO after
3:00 p.m. (Toronto time) on a Business Day, or on any day that is not a Business
Day, shall be credited to the account of the Borrower as applicable on the next
following Business Day.
(i) Canadian Currency.
All dollar amounts specified herein are in Canadian Dollars unless
otherwise indicated.
49.
(j) Judgment Currency.
If in the recovery by ABN AMRO of any amount owing hereunder in any
currency, judgment can only be obtained in another currency and because of
changes in the exchange rate of such currencies between the date of judgment and
payment in full of the amount of such judgment, the amount of recovery under the
judgment differs from the full amount owing hereunder, the Borrower shall pay
any such shortfall to ABN AMRO; such shortfall can be claimed by ABN AMRO
against the Borrower as an alternative or additional cause of action and any
surplus received by ABN AMRO will be repaid to the Borrower.
(k) Severability.
In the event any provision of this Agreement is for any reason held by a
court of competent jurisdiction to be invalid, illegal or unenforceable, such
invalidity, illegality or unenforceability shall not affect any other provision
hereof, and this Agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein.
(l) Conflicts.
In the event there occurs any conflict or inconsistency between any
provision of this Agreement and any provision of the Other Agreements, the
provision of this Agreement shall govern.
(m) Counterparts.
This Agreement and any amendments, waivers, consents, acknowledgements or
supplements may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which, when so executed and
delivered, shall be deemed an original, but all of which counterparts together
shall constitute but one agreement.
(n) Commitment Letter Superseded.
For greater certainty, the provisions of this Agreement supersede the
related provisions in the commitment letter dated November 19, 2001 from LaSalle
Business Credit, Inc. to the Shareholder.
50.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date set out on the first page hereof.
NUMATICS LTD.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
ABN AMRO BANK CANADA
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: V.P., Asset Based Lending
By:
------------------------------------
Name:
Title:
51.
TO: ABN AMRO BANK CANADA
Each of the undersigned hereby acknowledges and consents to the provisions
of the foregoing credit agreement, confirms any covenant, representation or
warranty in any way relating to it and confirms the continuing nature thereof,
and covenants and agrees to abide by all covenants and agreements of the
Borrower to cause any action or thing to be done by it and all covenants and
agreements otherwise relating to it.
NUMATICS GmbH
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: General Manager
NUMATICS, INCORPORATED
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman, President and Chief
Executive Officer
MICRO-FILTRATION, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman and Chief
Executive Officer
NUMATION, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman and Chief
Executive Officer
NUMATECH, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman and Chief
Executive Officer
ULTRA AIR PRODUCTS, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman and Chief
Executive Officer
52.
MICROSMITH, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman and Chief
Executive Officer
EMPIRE AIR SYSTEMS, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Authorized Signatory