EXHIBIT 4.2
STERLING PULP CHEMICALS (SASK) LTD.
as Borrower
- and -
BANK OF MONTREAL
ROYAL BANK OF CANADA
CANADIAN WESTERN BANK
INSTESABCI CANADA
as Lenders
- and -
BANK OF MONTREAL
as Agent
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CREDIT AGREEMENT
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JULY 9, 2002
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TABLE OF CONTENTS
ARTICLE I - INTERPRETATION
1.01 Definitions................................................................................. 1
1.02 Accounting Principles....................................................................... 19
1.03 Currency References......................................................................... 19
1.04 References to Statutes...................................................................... 19
1.05 Extended Meanings........................................................................... 19
1.06 Schedules................................................................................... 20
ARTICLE II - FACILITY A
2.01 Establishment of Facility A................................................................. 22
2.02 Purpose..................................................................................... 22
2.03 Revolving Nature............................................................................ 22
2.04 Repayment/Maturity/Extension................................................................ 22
2.05 Availment Options........................................................................... 22
2.06 Interest and Fees........................................................................... 23
2.07 Facility A Limit............................................................................ 25
2.08 Cancellation of Unused Portion of Facility A................................................ 25
ARTICLE III - FACILITY B
3.01 Establishment of Facility B................................................................. 27
3.02 Purpose and Tranches........................................................................ 27
3.03 Non-Revolving Nature........................................................................ 28
3.04 Repayment/Maturity/Extension................................................................ 28
3.05 Availment Options........................................................................... 29
3.06 Interest and Fees........................................................................... 30
3.07 Fixed-Rate Term Loans....................................................................... 31
3.08 Voluntary Prepayments....................................................................... 32
ARTICLE IV - MASTERCARD FACILITY
4.01 Establishment of Facility................................................................... 33
4.02 Purpose of Facility......................................................................... 33
4.03 MasterCard Facility Limit................................................................... 33
4.04 Terms and Conditions........................................................................ 33
4.05 Repayment................................................................................... 33
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ARTICLE V - GENERAL CONDITIONS
5.01 Matters relating to Interest................................................................ 34
5.02 Notice Periods.............................................................................. 35
5.03 Procedures re Drawdowns, Rollovers, Conversions, Repayments................................. 36
5.04 Place of Advances, Repayments............................................................... 37
5.05 Evidence of Obligations (Noteless Advances)................................................. 37
5.06 Determination of Equivalent Amounts......................................................... 37
5.07 Maturity of Bankers' Acceptances and BA Equivalent Notes; Commitment to Purchase............ 38
5.08 Special Provisions Regarding Bankers' Acceptances........................................... 38
5.09 Special Provisions regarding BA Equivalent Notes............................................ 40
5.10 Special Provisions Regarding LIBOR Loans.................................................... 41
5.11 Withholding Tax Gross-Up.................................................................... 42
5.12 Indemnity re Service Agreements............................................................. 43
5.13 Breakage Costs.............................................................................. 43
ARTICLE VI - REPRESENTATIONS AND WARRANTIES
6.01 Representations and Warranties.............................................................. 44
6.02 Survival of Representations and Warranties.................................................. 51
ARTICLE VII - COVENANTS
7.01 Positive Covenants.......................................................................... 52
7.02 Negative Covenants.......................................................................... 54
7.03 Financial Covenants......................................................................... 58
7.04 Reporting Requirements...................................................................... 58
ARTICLE VIII - SECURITY
8.01 Security to be Provided by the Borrower..................................................... 60
8.02 Security to be Provided by Holdings......................................................... 60
8.03 Security to be Provided by Subsidiaries..................................................... 61
8.04 General Provisions re: Security and Opinions................................................ 61
8.05 Registration of Security.................................................................... 62
8.06 After-Acquired Property, Further Assurances................................................. 62
ARTICLE IX - CONDITIONS PRECEDENT FOR ADVANCES
9.01 Conditions Precedent to all Advances........................................................ 63
9.02 Additional Conditions Precedent to First Advance............................................ 63
9.03 Additional Conditions Precedent for Advances under Tranche B-2 and Tranche B-3.............. 66
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ARTICLE X - DEFAULT AND REMEDIES
10.01 Events of Default........................................................................... 68
10.02 Acceleration upon Event of Default; Additional Interest..................................... 71
10.03 Acceleration of Certain Contingent Obligations.............................................. 71
10.04 Combining Accounts, Set-Off................................................................. 71
10.05 Appropriation of Monies..................................................................... 72
10.06 No Further Advances......................................................................... 72
10.07 Garnishment and Notice of Statutory Liens................................................... 72
10.08 Judgment Currency........................................................................... 72
10.09 Remedies Cumulative......................................................................... 73
10.10 Performance of Covenants by Agent........................................................... 73
10.11 Insolvency Proceedings...................................................................... 73
ARTICLE XI - THE AGENT AND THE LENDERS
11.01 Additional Defined Terms.................................................................... 74
11.02 Failure of Lender to Fund................................................................... 74
11.03 Payments by Agent........................................................................... 75
11.04 Decision-Making............................................................................. 77
11.05 Security held by Agent...................................................................... 78
11.06 Priorities of Security...................................................................... 79
11.07 Appointment of Agent........................................................................ 79
11.08 Protection of Agent......................................................................... 79
11.09 Duties of Agent............................................................................. 81
11.10 Indemnification of Agent.................................................................... 82
11.11 Termination or Resignation of Agent......................................................... 83
11.12 Rights of Agent as a Lender................................................................. 83
11.13 Financial Information....................................................................... 83
11.14 Lenders' Independent Investigation.......................................................... 83
11.15 Legal Proceedings by Agent.................................................................. 84
11.16 Lenders' Obligations Several; No Partnership................................................ 84
11.17 Sharing of Information...................................................................... 84
11.18 Acknowledgement by Borrower................................................................. 84
11.19 Amendments to Article XI.................................................................... 84
11.20 Deliveries, etc............................................................................. 85
11.21 Agency Fee.................................................................................. 85
ARTICLE XII - CHANGE IN CIRCUMSTANCES
12.01 Illegality.................................................................................. 85
12.02 Increased Cost and Reduced Return........................................................... 85
12.03 Replacement of Claiming Lender.............................................................. 86
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ARTICLE XIII - GENERAL
13.01 Waiver...................................................................................... 87
13.02 Governing Law............................................................................... 87
13.03 Agent's Expenses............................................................................ 87
13.04 Indemnity................................................................................... 88
13.05 Interest on Unpaid Costs and Expenses....................................................... 88
13.06 Notice...................................................................................... 88
13.07 Severability................................................................................ 89
13.08 Further Assurances.......................................................................... 89
13.09 Time of the Essence......................................................................... 89
13.10 Assignment.................................................................................. 90
13.11 Entire Agreement............................................................................ 91
13.12 Inconsistencies with Security............................................................... 91
13.13 Execution by Fax and Counterparts........................................................... 91
13.14 Binding Effect.............................................................................. 91
13.15 Confidentiality............................................................................. 91
SCHEDULES:
Exhibit "A" - Lenders and Lenders' Commitments
Exhibit "B" - Drawdown Request
Exhibit "C" - Rollover Notice
Exhibit "D" - Conversion Notice
Exhibit "E" - Repayment Notice
Exhibit "F" - Borrowing Base Certificate
Exhibit "G" - Compliance Certificate
Exhibit "H" - Form of BA Equivalent Note
Exhibit "I" - Assignment Agreement
Schedule 6.01(a) - Exceptions to Representations re Corporate Matters
Schedule 6.01(b) - Companies' Information
Schedule 6.01(d) - Exceptions to Representations re Pending Corporate Changes
Schedule 6.01(j) - Specific Permitted Liens
Schedule 6.01(k) - Owned Properties (including a list of those which constitute
Material Owned Properties)
Schedule 6.01(l) - Leased Properties (including a list of those which constitute
Material Leased Properties)
Schedule 6.01(m) - Intellectual Property
Schedule 6.01(n) - Exceptions to Representations re Insurance Matters
Schedule 6.01(o) - Material Agreements
Schedule 6.01(r) - Litigation
Schedule 6.01(p) - Collective Agreements and Labour Disputes
Schedule 6.01(q) - Environmental Disclosure
Schedule 6.01(z) - Exceptions to Representations re Miscellaneous Matters
Schedule 10.01(o) - Key Officers and Employees
CREDIT AGREEMENT
This Agreement is made as of July 9, 2002 among:
STERLING PULP CHEMICALS (SASK) LTD.
as Borrower
OF THE FIRST PART
- and -
THE LENDERS FROM TIME TO TIME
PARTY TO THIS AGREEMENT
as Lenders
OF THE SECOND PART
- and -
BANK OF MONTREAL
as Agent
OF THE THIRD PART
For good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged by each party, the parties agree as follows:
ARTICLE I - INTERPRETATION
1.01 DEFINITIONS
In this Agreement, the following words and phrases shall have the meanings
set forth below:
"619220" means 619220 Saskatchewan Ltd., a corporation incorporated under
the laws of Saskatchewan, and its successors;
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"ACCELERATION DATE" means the earlier of: (i) the occurrence of an
Insolvency Default; and (ii) the delivery by the Agent to the Borrower of
written notice following the occurrence of an Event of Default other than
an Insolvency Default that all Obligations are immediately due and
payable;
"ADJUSTED PRIME RATE" means the greater of (i) the floating annual prime
rate of interest announced from time to time by BMO as its reference rate
then in effect for determining rates of interest on Canadian dollar
commercial loans to customers in Canada and (ii) the 30-day CDOR Rate plus
one percent (1%) per annum;
"ADVANCE" means an extension of credit by a Lender to the Borrower
pursuant to this Agreement, including for greater certainty an extension
of credit in the form of a Loan, an Overdraft, a Bankers' Acceptance, a BA
Equivalent Note or a Letter of Credit, or the extension of credit by BMO
under the MasterCard Facility or under a Service Agreement;
"AGENT" means BMO in its capacity as the agent hereunder, and its
successors in such capacity;
"AGREEMENT" means this credit agreement (including the exhibits and
schedules) as it may be amended, replaced or restated from time to time;
"APPLICABLE MARGIN" in the context of Facility A has the meaning ascribed
in section 2.06; and in the context of Facility B has the meaning ascribed
in section 3.06;
"ASSIGNMENT AGREEMENT" means an agreement in the form of Exhibit "I"
attached hereto;
"AVAILMENT OPTION" means a method of borrowing which is available to the
Borrower as provided herein;
"BA LENDER" means a Lender identified in Exhibit "A" attached hereto as a
Lender which will accept Bankers' Acceptances hereunder;
"BA EQUIVALENT NOTE" means a promissory note payable by the Borrower to a
Non-BA Lender in the form of Exhibit "H" attached hereto;
"BA EQUIVALENT NOTE LOAN" means an Advance in Canadian Dollars made by a
Non-BA Lender to the Borrower in respect of which the Borrower has issued
a BA Equivalent Note;
"BIA" means the Bankruptcy and Insolvency Act (Canada), as amended from
time to time;
"BMO" means Bank of Montreal;
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"BANKERS' ACCEPTANCE" means a ▇▇▇▇ of exchange or a blank non-interest
bearing depository ▇▇▇▇ as defined in the Depository Bills and Notes Act
(Canada) drawn by the Borrower and accepted by a BA Lender in respect of
which the Borrower becomes obligated to pay the face amount thereof to the
holder (which may be a third party or such BA Lender) upon maturity;
"BORROWER" means Sterling Pulp Chemicals (Sask) Ltd., a corporation
incorporated under the laws of Ontario, and its permitted successors and
assigns;
"BORROWING BASE CERTIFICATE" means a certificate delivered by the Borrower
to the Agent in the form of Exhibit "F";
"BUSINESS DAY" means:
(i) with respect to U.S. Dollar Loans, a day on which the main
branches of the Agent in Toronto and New York are both open
for normal banking business; and
(ii) for all other purposes, a day on which the main branch of the
Agent in Toronto is open for normal banking business;
but not including a Saturday or Sunday;
"CDOR RATE" means on any day the annual rate of interest which is the rate
determined as being the arithmetic average of the quotations of all
institutions listed in respect of the rate for Canadian Dollar denominated
bankers' acceptances for the relevant period displayed and identified as
such on the "Reuters Screen CDOR Page" (as defined in the International
Swap Dealer Association, Inc. definitions, as modified and amended from
time to time) as of 10:00 A.M. Toronto, Ontario local time on such day
and, if such day is not a Business Day, then on the immediately preceding
Business Day (as adjusted by the Agent after 10:00 A.M. Toronto, Ontario
local time to reflect any error in a posted rate of interest or in the
posted average annual rate of interest with notice of such adjustment in
reasonable detail evidencing the basis for such determination being
concurrently provided to the Borrower). If such rates are not available on
the Reuters Screen CDOR Page on any particular day, then the CDOR Rate on
that day shall be calculated as the arithmetic mean of the rates
applicable to Canadian Dollar denominated bankers' acceptances for the
relevant period publicly quoted for customers in Canada by those Lenders
which are banks listed in Schedule I of the Bank Act (Canada) as of 10:00
A.M. Toronto, Ontario local time on such day; or if such day is not a
Business Day, then on the immediately preceding Business Day;
"CFADS" means, in respect of any fiscal period, the EBITDA for such fiscal
period, less Distributions declared or paid by the Borrower in such fiscal
period, less Cash Taxes paid in such fiscal period, less Capital
Expenditures in such fiscal period (other than Capital Expenditures
financed by Permitted Funded Debt);
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"CANADIAN DOLLAR LOAN" means a loan made by a Lender to the Borrower in
Canadian Dollars, but excluding any Advance made by a Non-BA Lender
evidenced by a BA Equivalent Note;
"CANADIAN DOLLARS" or "$" or "CDN $" means the lawful money of Canada;
"CAPITAL EXPENDITURES" means expenditures made directly or indirectly by
the Companies which are considered to be in respect of the acquisition or
leasing of capital assets in accordance with GAAP, including the
acquisition or improvement of Land, plant, machinery or equipment, whether
fixed or removable;
"CASH TAXES" in respect of any fiscal period means amounts actually paid
by the Companies in such fiscal period in respect of income and capital
taxes;
"CHAPTER 11 DEBTOR" means a corporation that has filed for protection in
the Chapter 11 Proceedings, or is otherwise a debtor in the Chapter 11
Proceedings, but only for so long as such corporation continues to be a
debtor in the Chapter 11 Proceedings;
"CHAPTER 11 PROCEEDINGS" means the voluntary petitions for reorganization
filed under Chapter 11 of the U.S. Bankruptcy Code on July 16, 2001 by
Sterling Chemicals Holdings, Inc. and certain of its subsidiaries (but
excluding Holdings and the Companies) and all proceedings relating
thereto;
"COMMITMENT" means, in respect of any Lender, such Lender's commitment to
make Advances to the Borrower under all Credit Facilities, a Credit
Facility or a Tranche, as the context requires;
"COMPANIES" means the Borrower and all of its Subsidiaries from time to
time, including any Subsidiaries which carry on business in partnership
with each other; and "COMPANY" means any of the foregoing as the context
requires;
"COMPLIANCE CERTIFICATE" means a certificate delivered by the Borrower to
the Agent in the form of Exhibit "G";
"CONTROL" means, in respect of any Person, the power to direct or cause
the direction of management and policies of such Person, directly or
indirectly, through the ownership of voting securities, contract or
otherwise; and "CONTROLLED" has a corresponding meaning;
"CONVERSION" means the substitution of one Availment Option for another,
and does not constitute a fresh or new Advance;
"CONVERSION NOTICE" means a notice substantially in the form of Exhibit
"D" given by the Borrower to the Agent for the purposes of requesting a
Conversion;
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"CREDIT FACILITIES" means the credit facilities established hereunder
severally and not jointly by the Lenders for the Borrower; and "CREDIT
FACILITY" means any one of them as the context requires;
"DEFAULT" means an event which has occurred and which, with the giving of
notice or the lapse of time or both, would constitute an Event of Default;
"DISTRIBUTION" means any amount paid to or on behalf of the employees,
directors, officers or the shareholders of any Company or to any Related
Person thereto, by way of salary, bonus, commission, management fees,
directors' fees, dividends, redemption of shares or otherwise, and whether
payments are made to such Persons in their capacity as shareholders,
directors, officers, employees or creditors of any Company or otherwise,
or any other direct or indirect payment in respect of earnings or capital
of any Company; provided however that the payment of salaries, bonuses and
commissions to officers and other employees of a Company in the ordinary
course of business at levels not in excess of normal industry remuneration
from time to time shall not be considered a Distribution;
"DRAWDOWN REQUEST" means a notice in the form of Exhibit "B" given by the
Borrower to the Agent for the purpose of requesting an Advance;
"EBITDA" means, in respect of any fiscal period, the consolidated net
income of the Borrower in such fiscal period before deduction of the
following expenses: interest, income taxes, extraordinary items,
depreciation, amortization and all non-cash charges; all determined in
accordance with GAAP; provided that:
(i) in respect of each Company which has become a Subsidiary of
the Borrower in the immediately preceding twelve month period,
the determination of EBITDA shall include the net income of
such Company before deduction of interest, income taxes,
extraordinary items, depreciation, amortization and non-cash
charges as if such Company had been a Subsidiary of the
Borrower during such fiscal period, and all historical
expenses of a non-recurring nature incurred by such Company
during such period shall be added back;
(ii) in respect of each Company which has ceased to be a Subsidiary
of the Borrower in the immediately preceding twelve month
period, EBITDA shall be determined as if such Company had not
been a Subsidiary of the Borrower during such fiscal period;
and
(iii) if compliance with the financial covenants in section 7.03 is
dependent upon the treatment of any expense as an
extraordinary item under GAAP, the treatment of such expense
as an extraordinary item shall be subject to the Lenders'
approval;
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"ELIGIBLE ACCOUNTS RECEIVABLE" means accounts receivable of the Borrower
(in this definition, individually called an "account") which satisfy the
following eligibility criteria:
(i) the account arises from a bona fide outright sale of goods
which have been delivered by the Borrower to the account
debtor, or from the performance of services which have been
performed by the Borrower for the account debtor;
(ii) the account is subject to a valid, perfected security
interest held by the Agent pursuant to the Security and is
not subject to any other Lien except for Statutory Liens
affecting the Borrower which are not at the time overdue;
(iii) the account debtor is not a Company or a Related Person
thereto, unless otherwise approved in writing by the Agent on
behalf of the Lenders subject to such terms and conditions as
the Lenders may impose in their sole discretion;
(iv) the account is not in dispute or subject to any defence,
counterclaim or claim by the account debtor for credit,
set-off, allowance or adjustment; provided that if an account
is in dispute or subject to any defence, counterclaim or
claim by the account debtor for credit, set-off, allowance or
adjustment and the Agent receives evidence satisfactory to it
in its sole discretion that a portion of such account is not
in dispute or subject to any defence, counterclaim or claim
and the Agent is satisfied that such portion will be paid by
the account debtor when due, then such portion shall
constitute an Eligible Account Receivable;
(v) the Borrower does not have an obligation to hold any portion
of the account in trust or as agent for any other Person
(except pursuant to a Statutory Lien not at the time
overdue);
(vi) the account is not outstanding for more than ninety (90) days
from its invoice date (regardless of the date specified for
payment as set out in such invoice);
(vii) the account is not owing by an account debtor which is
insolvent or subject to any proceeding under Insolvency
Legislation; and
(viii) the account is not subject to undue credit risk in the
opinion of the Agent in its sole discretion;
"ELIGIBLE INVENTORY" means readily saleable finished goods inventory of
the Borrower which (i) a customer of the Borrower is contractually
obligated to purchase; (ii) is subject to a valid, perfected security
interest held by the Agent
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pursuant to the Security and is not subject to any other Lien except for
Statutory Liens affecting the Borrower which are not at the time overdue;
and (iii) is located upon an Owned Property, or upon a Leased Property in
respect of which a Landlord Agreement has been provided;
"EQUIVALENT AMOUNT" means, in relation to an amount in one currency, the
amount in another currency that could be purchased by the amount in the
first currency determined by reference to the applicable Exchange Rate at
the time of such determination;
"EVENT OF DEFAULT" is defined in section 10.01;
"EXCESS CASH FLOW" in respect of any Fiscal Year means the Borrower's
EBITDA in such Fiscal Year, less the following amounts paid or payable in
respect of such Fiscal Year (without duplication): (i) Cash Taxes; (ii)
Capital Expenditures to the extent not financed by Permitted Funded Debt;
(iii) interest and fees in respect of Funded Debt; and (iv) scheduled
principal payments and scheduled capital lease payments in respect of
Funded Debt (except the portion of any final payment due in respect of
Funded Debt which the Lenders consider to be a "balloon payment");
"EXCHANGE RATE" in connection with any amount of Canadian Dollars to be
converted into another currency pursuant to this Agreement for any reason,
or vice-versa, means the Agent's spot rate of exchange for converting
Canadian Dollars into such other currency or vice-versa, as the case may
be, quoted as the offering rate for wholesale transactions by the Agent at
approximately noon (Toronto time) on the effective date of such
conversion;
"FACILITY A" is defined in section 2.01;
"FACILITY A LIMIT" is defined in section 2.07;
"FACILITY A MATURITY DATE" means the date which is 364 days after the date
of this Agreement, or such extended date as may be agreed to by the
Lenders pursuant to section 2.04;
"FACILITY A MAXIMUM AMOUNT" means Eight Million Dollars ($8,000,000) or
such lesser amount as may result from a voluntary cancellation of an
unadvanced portion of Facility A by the Borrower pursuant to section 2.08;
"FACILITY B" is defined in section 3.01;
"FACILITY B LENDERS" means those Lenders listed in Exhibit "A" under the
heading "Facility B Commitments", and their respective successors and
permitted assigns; and "FACILITY B LENDER" means any of them as the
context requires;
"FACILITY B LIMIT" means Sixty Million Dollars ($60,000,000) or such
lesser amount as may result from a Prepayment under Facility B or the
voluntary
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cancellation of an unadvanced portion of Facility B by the Borrower
pursuant to section 3.08;
"FACILITY B MATURITY DATE" means the date which is five (5) years after
the date of this Agreement;
"FEDERAL FUNDS RATE" means, for any day, the weighted average (rounded
upwards, if necessary, to the next 1/100 of one percent) of the per annum
interest rates on overnight Federal Funds transactions with members of the
Federal Reserve System arranged by Federal Funds brokers as published in
respect of such day on the next succeeding Business Day by the Federal
Reserve Bank of New York or, if such rate is not so published for any day
that is a Business Day, the average (rounded upwards, if necessary, to the
next 1/100 of one percent) of the quotations for such day for such
transactions received by the Agent from three Federal Funds brokers of
recognized standing selected by it;
"FISCAL QUARTER" in respect of any Company means a fiscal quarter of such
Company, ending on the last days of September, December, March and June in
each year;
"FISCAL YEAR" in respect of any Company means a fiscal year of such
Company ending on the last day of September in each year;
"FIXED-RATE TERM LOAN" is defined in section 3.07;
"FUNDED DEBT" means the Outstanding Advances and any other obligations of
the Companies which are considered to constitute debt in accordance with
GAAP, including indebtedness for borrowed money, interest-bearing
liabilities, obligations secured by Purchase-Money Security Interests, and
the redemption price of any securities issued by the Companies having
attributes substantially similar to debt (such as securities which are
redeemable at the option of the holder); but excluding accounts payable
and other short term non-interest bearing liabilities, future income taxes
(both current and long-term);
"FUNDED DEBT SERVICE" means, at any time, (i) the aggregate amount of
interest and fees paid in respect of Funded Debt in respect of the
immediately preceding twelve (12) month period: plus (ii) the aggregate
amount of scheduled principal payments and scheduled capital lease
payments in respect of Funded Debt in the immediately preceding twelve
(12) month period (except the portion of any final payment due in respect
of Funded Debt which the Lenders consider to be a "balloon payment");
"GAAP" means generally accepted accounting principles in the United States
of America, as approved by the Financial Accounting Standards Board, as in
effect from time to time;
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"GOVERNMENTAL AUTHORITY" means any: (i) federal, provincial, state,
municipal, local or other governmental or public department, central bank,
court, commission, board, bureau, agency or instrumentality, domestic or
foreign; (ii) any subdivision or authority of any of the foregoing; or
(iii) any quasi-governmental, judicial or administrative body exercising
any regulatory, expropriation or taxing authority under or for the account
of any of the foregoing;
"GUARANTEE" means any agreement by which any Person assumes, guarantees,
endorses, contingently agrees to purchase or provide funds for the payment
of, or otherwise becomes liable upon, the obligation of any other Person,
or agrees to maintain the net worth or working capital or other financial
condition of any other Person or otherwise assures any creditor of such
Person against loss, and shall include any contingent liability under any
letter of credit or similar document or instrument;
"HAZARDOUS MATERIALS" means any contaminant, pollutant, waste or substance
that is likely to cause immediately or at some future time harm or
degradation to the surrounding environment or risk to human health; and
without restricting the generality of the foregoing, including any
pollutant, contaminant, waste, hazardous waste or dangerous goods that is
regulated by any Requirements of Environmental Law or that is designated,
classified, listed or defined as hazardous, toxic, radioactive or
dangerous or as a contaminant, pollutant or waste by any Requirements of
Environmental Law;
"HOLDINGS" means Sterling (Sask) Holdings Ltd., a corporation incorporated
under the laws of Ontario, and its permitted successors and assigns;
"INSOLVENCY DEFAULT" means an Event of Default described in paragraphs
10.01 (f), (g) or (h);
"INSOLVENCY LEGISLATION" means legislation in any applicable jurisdiction
relating to reorganization, arrangement, compromise or re-adjustment of
debt, dissolution or winding-up, or any similar legislation, and
specifically includes for greater certainty the BIA, the Companies'
Creditors Arrangement Act (Canada), the Winding-Up and Restructuring Act
(Canada) and the U.S. Bankruptcy Code;
"INTERIM FINANCIAL STATEMENTS" in respect of any Person means the
unaudited financial statements of such Person on a consolidated and
unconsolidated basis in respect of its most recently completed Fiscal
Quarter (and also on a year-to-date basis in respect of such Fiscal
Quarter and all previous Fiscal Quarters in the same Fiscal Year);
"INVESTMENT" means an investment made or held by a Person, directly or
indirectly, in another Person (whether such investment was made by the
first-mentioned Person in such other Person or was acquired from a third
party), including such investments in the form of common or preferred
shares, debt
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obligations, contributions of capital, partnership interests and
investments in joint ventures;
"LIBO RATE" means, with respect to each LIBOR Period pertaining to any
LIBOR Loan, the rate per annum determined by the Agent to be the
arithmetic mean (rounded to five decimal places) of the offered rates for
deposits in U.S. Dollars with a term comparable to such LIBOR Period that
appears on the display designated as Page 3750 on the Telerate System
Incorporated Service (or such other page as may replace such page on such
service) at approximately 11:00 a.m., London time, on the second full
LIBOR Business Day preceding the first day of such LIBOR Period; provided,
however, that if the said page is not available for any reason, the term
"LIBO Rate" shall mean, with respect to each LIBOR Period pertaining to
any LIBOR Loan, the average rate per annum equal to the rate (rounded to
five decimal places) quoted to the Agent by the Reference Lenders for
offered U.S. Dollar deposits at or about 11:00 a.m., London time, two (2)
LIBOR Business Days prior to the beginning of such LIBOR Period in the
London interbank deposit market where the Eurodollar and foreign currency
and exchange operations in respect of their respective LIBOR Loans are
then being conducted for delivery on the first day of such LIBOR Period
for the number of days comprised therein and in an amount comparable to
the amount of its LIBOR Loan to be outstanding during such LIBOR Period;
"LIBOR BUSINESS DAY" means a day on which the main branches of the Agent
in Toronto, New York and London, England are all open for normal banking
business, but not including a Saturday or Sunday;
"LIBOR LOAN" means an Advance made by a Lender to the Borrower by way of a
direct loan in U.S. Dollars, in respect of which such Borrower is obliged
to pay interest based upon the LIBO Rate;
"LIBOR MARKET" means the London interbank Eurodollar offering market;
"LIBOR PERIOD" means, in respect of a LIBOR Loan, the period commencing on
the date of the Advance of such LIBOR Loan and ending on the scheduled
maturity date of such LIBOR Loan;
"LAND" means real property (including a leasehold interest in land) and
all buildings, improvements, fixtures and plant situated thereon;
"LANDLORD AGREEMENT" means, in respect of any Leased Property leased by
the Borrower from a landlord, an agreement given by the landlord of such
Leased Property in favour of the Agent in form and substance satisfactory
to the Agent acting reasonably; provided that it shall be reasonable for
the Agent to require such agreement to contain provisions whereby such
landlord agrees to waive (or subordinate and defer the enforcement of) its
rights and remedies in respect of any assets owned by the Borrower located
on or affixed to such Leased Property and
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agrees to give written notice of and a reasonable opportunity to cure any
default before terminating the lease;
"LAWS" means all statutes, codes, ordinances, decrees, rules, regulations,
municipal by-laws, judicial or arbitral or administrative or ministerial
or departmental or regulatory judgments, orders, decisions, rulings or
awards, or any provisions of such laws, including general principles of
common and civil law and equity or policies or guidelines, to the extent
such policies or guidelines have the force of law, binding on the Person
referred to in the context in which such word is used; and "LAW" means any
of the foregoing;
"LEASED PROPERTIES" means all Land leased by the Companies from time to
time, specifically including as at the date of this Agreement the Land
described in Schedule 6.01(l) attached hereto;
"LENDERS" means the lenders identified in Exhibit "A" attached hereto and
any other Persons which may from time to time become lenders pursuant to
this Agreement; and their respective successors and permitted assigns; and
"LENDER" means any of them as the context requires;
"LETTER OF CREDIT" means a commercial letter of credit or stand-by letter
of guarantee issued by BMO under Facility A at the request of and on
behalf of the Borrower;
"LIEN" means: (i) a lien, charge, mortgage, pledge, security interest or
conditional sale agreement; (ii) an assignment, lease, consignment, trust
or deemed trust that secures payment or performance of an obligation;
(iii) a garnishment; (iv) a defect of title; (v) any other encumbrance of
any kind; and (vi) any commitment or agreement to enter into or grant any
of the foregoing;
"LOAN" means a Canadian Dollar Loan, a U.S. Dollar Loan or a LIBOR Loan;
"MASTERCARD FACILITY" is defined in section 4.01;
"MASTERCARD FACILITY LIMIT" means Five Hundred Thousand Dollars
($500,000);
"MATERIAL AGREEMENTS" means all agreements made between the Companies and
other Persons from time to time which if terminated would result, or would
have a reasonable likelihood of resulting, in an Event of Default or a
Material Adverse Change; specifically including, as at the date of this
Agreement, the agreements listed in Schedule 6.01(o);
"MATERIAL ADVERSE CHANGE" means a change which constitutes a material
adverse change in the business or financial condition of any Company, or
which would have a reasonable likelihood of resulting in an Event of
Default;
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"MATERIAL LEASED PROPERTIES" means those Leased Properties listed in
Schedule 6.01(l) attached hereto under the heading "Material Leased
Properties";
"MATERIAL OWNED PROPERTIES" means those Owned Properties listed in
Schedule 6.01(k) attached hereto under the heading "Material Owned
Properties" (and for greater certainty, specifically including the
Saskatoon Plant);
"MINOR TITLE DEFECTS" in respect of any parcel of Land means defects or
irregularities in the title to such Land which in the opinion of the Agent
in its sole discretion are of a minor nature and which, in the aggregate,
will not materially impair the use of such Land for the purposes for which
such Land is held by the owner thereof;
"NON-BA LENDER" means a Lender identified in Exhibit "A" attached hereto
as a Lender which will make BA Equivalent Note Loans in lieu of accepting
Bankers' Acceptances hereunder;
"OBCA" means the Business Corporations Act (Ontario) in effect on the date
of this Agreement, unless otherwise specified;
"OBLIGATIONS" means, at any time, all direct and indirect, contingent and
absolute obligations and liabilities of the Borrower to the Agent and the
Lenders (or if the context requires, to any one of them) under or in
connection with this Agreement and the Security (or if the context
requires, in respect of the Credit Facilities, any Credit Facility or any
Tranche) at such time, specifically including the Outstanding Advances,
all accrued and unpaid interest thereon, all obligations and liability
under all Service Agreements, and all fees, expenses and other amounts
payable pursuant to this Agreement and the Security;
"OUTSTANDING ADVANCES" means, at any time, the aggregate of the Borrower's
obligations to the Lenders (or if the context requires, to any Lender) in
respect of all Advances made under the Credit Facilities, any Credit
Facility or any Tranche (as the context requires) which have not been
repaid or satisfied at such time, determined as follows: (i) in the case
of Canadian Dollar Loans and Overdrafts in Canadian Dollars, the principal
amount thereof; (ii) in the case of Bankers' Acceptances, BA Equivalent
Notes and Letters of Credit, the face amount thereof; (iii) in the case of
U.S. Dollar Loans, Overdrafts in U.S. Dollars and LIBOR Loans, the
Equivalent Amount thereof in Canadian Dollars; (iv) in the case of the
MasterCard Facility, the liability of the Borrower thereunder at such time
determined in accordance with the provisions thereof; and (v) in the case
of Service Agreements, the liability of the Borrower thereunder at such
time determined in accordance with the provisions thereof;
"OVERDRAFT" means indebtedness of the Borrower to BMO arising in
connection with all amounts debited to all overdraft accounts established
by the Borrower with BMO (in Canadian Dollars or U.S. Dollars, as the case
may be), including
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without limitation all cheques, transfers, withdrawals, interest, costs,
charges and fees debited to such accounts;
"OWNED PROPERTIES" means all Land owned by the Companies from time to
time, specifically including as at the date of this Agreement the Land
described in Schedule 6.01(k) attached hereto;
"PERMITTED FUNDED DEBT" means, without duplication: (i) the Obligations;
(ii) indebtedness of the Borrower to the holder of each Bankers'
Acceptance and BA Equivalent Note (the Borrower's contingent obligation to
the Lender which accepted such Bankers' Acceptance or BA Equivalent Note
comprising part of the Obligations); and (iii) Funded Debt not in excess
of $250,000 secured by Purchase-Money Security Interests;
"PERMITTED LIENS" means:
(a) Statutory Liens not at the time overdue;
(b) Statutory Liens which may be overdue but the validity of which
is being contested in good faith and in respect of which
reserves satisfactory to the Agent and the Lenders in their
sole discretion have been established;
(c) Liens or rights of distress reserved in or exercisable under
any lease for rent not at the time overdue or for compliance
with the terms of such lease not at the time in default;
(d) any obligations or duties affecting any Land due to any public
utility or to any municipality or government, or to any
statutory or public authority, with respect to any franchise,
grant, licence or permit in good standing and any defects in
title to structures or other facilities arising solely from
the fact that such structures or facilities are constructed or
installed on Land under government permits, leases or other
grants in good standing; which obligations, duties and defects
in the aggregate do not materially impair the use of such
property, structures or facilities for the purpose for which
they are held;
(e) Liens incurred or deposits made in connection with contracts,
bids, tenders or expropriation proceedings, surety or appeal
bonds, costs of litigation when required by law, public and
statutory obligations, warehousemen's, carriers' and other
similar Liens and deposits;
(f) security given to a public utility or any municipality or
government or to any statutory or public authority to secure
obligations
-14-
incurred to such utility, municipality, government or other
authority in the ordinary course of business and not at the
time overdue;
(g) Liens and privileges arising out of judgments or awards in
respect of which: an appeal or proceeding for review has been
commenced; a stay of execution pending such appeal or
proceedings for review has been obtained; and reserves
satisfactory to the Agent and the Lenders in their sole
discretion have been established;
(h) any builder's, mechanic's, labourer's, materialman's statutory
or other similar Lien arising in the ordinary course of
business or out of the construction or improvement of any Land
or arising out of the furnishing of materials or supplies
therefor, provided that such Lien secures moneys not at the
time overdue (or if overdue, the validity of which is being
contested in good faith and in respect of which reserves
satisfactory to the Agent and the Lenders in their sole
discretion have been established), notice of such Lien has not
been given to the Agent or any Lender and such Lien has not
been registered against title to such Land;
(i) Minor Title Defects;
(j) Purchase-Money Security Interests incurred in connection with
the purchase or leasing of capital equipment, provided that
the amount secured thereby constitutes Permitted Funded Debt;
(k) the Specific Permitted Liens;
(l) the Security;
(m) any right or interest granted by or pursuant to an Act,
including an Act of the Parliament of Canada, that does not
have to be registered:
(i) to enter, go across or do things on Land, including an
easement or right of way, for the purposes specified in
the enactment;
(ii) to recover taxes, duties, liens, charges, rates or
assessments by proceedings with respect to Land;
(iii) to expropriate Land;
(iv) to restrict the use of Land; or
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(i) to control, regulate or restrict the subdivision of
Land;
(p) any public highway or right of way or other public easement,
however created, on, over or with respect to Land included in
the title to such Land;
(q) reservations, limitations, provisos and conditions in respect
of Land expressed in any original grants from the Crown which
do not in the opinion of the Agent materially affect the use
of such Land for the purpose for which it is used; and
(r) any consent, right of way or easement, however acquired,
whether before or after the coming into force of this
Agreement, with respect to Land situated outside the corporate
limits of an urban municipality, to construct and maintain a
pipeline on or under that Land pursuant to a program
established for the purpose of supplying natural or
manufactured gas to one or more persons residing in that area,
by:
(i) Saskatchewan Energy Corporation, a body corporate
incorporated pursuant to The Business Corporations Act
(Saskatchewan) on April 25, 1988;
(ii) Provincial Gas Limited, a body corporate incorporated
pursuant to The Business Corporations Act (Saskatchewan)
on March 30, 1988; or
(iii) SaskEnergy Incorporated continued pursuant to The
SaskEnergy Act (Saskatchewan);
provided that the use of the term "Permitted Liens" to describe the
foregoing Liens shall mean that such Liens are permitted to exist (whether
in priority to or subsequent in priority to the Security, as determined by
applicable law); and for greater certainty such Liens shall be entitled to
priority over the Security by virtue of being described in this Agreement
as "Permitted Liens";
"PERSON" includes an individual, corporation, partnership, trust,
unincorporated association, Governmental Authority or any combination of
the above;
"POTENTIAL STATUTORY PRIORITY AMOUNT" at any time means the amount of all
employee source deductions, goods and services tax and all other similar
amounts payable by the Borrower at such time which could result in a
Statutory Lien;
"PREPAYMENT" means a Repayment under Facility B which is not a scheduled
Repayment thereunder, specifically including for greater certainty a
voluntary Repayment under Facility B, a Repayment under Facility B
required pursuant to
-16-
paragraphs 3.04(e) or (f), and a Repayment under Facility B made as a
result of or in connection with the enforcement of the Security;
"PROPORTIONATE SHARE" means:
(i) in the context of any Lender's obligation to make Advances under all
Credit Facilities, such Lender's Commitment to make Advances under
all Credit Facilities divided by the aggregate amount of all
Lenders' Commitments to make Advances under all Credit Facilities;
(ii) in the context of any Lender's obligation to make Advances under a
Credit Facility, such Lender's Commitment to make Advances under
such Credit Facility divided by the aggregate amount of all Lenders'
Commitments to make Advances under such Credit Facility;
(iii) in the context of any Lender's entitlement to receive payments of
principal, interest or fees under all Credit Facilities, the
Outstanding Advances due to such Lender under all Credit Facilities
divided by the aggregate amount of the Outstanding Advances due to
all Lenders under all Credit Facilities; and
(iv) in the context of any Lender's entitlement to receive payments of
principal, interest or fees under a Credit Facility, the Outstanding
Advances due to such Lender under such Credit Facility divided by
the aggregate amount of the Outstanding Advances due to all Lenders
under such Credit Facility;
"PURCHASE-MONEY SECURITY INTEREST" means a lease of any property or asset
which in substance constitutes a security interest or a Lien on any
property or asset which is created, issued or assumed to secure the unpaid
purchase price thereof; provided that such Lien is restricted to such
property or asset and secures an amount not in excess of the purchase
price thereof;
"REFERENCE LENDERS" means BMO and at least one other Lender designated by
the Agent from time to time, so that there at least two "Reference
Lenders";
"RELATED PERSON" in relation to any Person means a subsidiary, affiliate,
associate or employee of such Person, or an associate of such employee
(the terms "subsidiary", "affiliate" and "associate" having the respective
meanings ascribed thereto in the OBCA);
"REPAYMENT" means a repayment by the Borrower on account of the
Outstanding Advances under all Credit Facilities, a Credit Facility or a
Tranche, as the context requires;
"REPAYMENT NOTICE" means a notice delivered by the Borrower to the Agent
committing it to make a Repayment, in the form of Exhibit "E";
-17-
"REQUIREMENTS OF ENVIRONMENTAL LAW" means: (i) obligations under common
law; (ii) requirements imposed by or pursuant to statutes, regulations and
by-laws whether presently or hereafter in force; (iii) requirements
announced by a Governmental Authority as having immediate effect (provided
that at the time of making such announcement the government also states
its intention of enacting legislation to confirm such requirements
retroactively); (iv) all directives, policies and guidelines issued or
relied upon by any Governmental Authority to the extent such directives
policies or guidelines have the force of law; (v) all permits, licenses,
certificates and approvals from Governmental Authorities which are
required in connection with air emissions, discharges to surface or
groundwater, noise emissions, solid or liquid waste disposal, the use,
generation, storage, transportation or disposal of Hazardous Materials
(specifically including those required in connection with the operation of
the Saskatoon Plant); and (vi) all requirements imposed under any
clean-up, compliance or other order made pursuant to any of the foregoing,
in each and every case relating to environmental, health or safety matters
including all such obligations and requirements which relate to (A) solid,
gaseous or liquid waste generation, handling, treatment, storage, disposal
or transportation and (B) exposure to Hazardous Materials;
"ROLLOVER" means the renewal of an Availment Option upon its maturity in
the same form;
"ROLLOVER NOTICE" means a notice substantially in the form of Exhibit "C"
given by the Borrower to the Agent for the purpose of requesting a
Rollover;
"SASKATOON PLANT" means the Land owned by the Borrower near Saskatoon,
Saskatchewan located in the NW 1/4 ▇▇▇ ▇▇, ▇ ▇/▇ ▇▇▇ ▇▇ and all that
portion of the road allowance which lies north of and adjacent to the said
North West Quarter Sec 23, and which lies to the left bank of the ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇, ▇▇▇ ▇, ▇▇▇; together with all buildings and
improvements located on or affixed to such Land from time to time; all
such Land, buildings and improvements being shown on a survey prepared by
Tri-City Surveys Ltd. dated June 11, 2002;
"SECURITY" means the security now held and required to be provided from
time to time by Holdings and the Companies (except 619220) pursuant to
Article VIII;
"SERVICE AGREEMENTS" means agreements made between any Company and BMO in
respect of cash management, payroll or other banking services, if BMO
assumes credit risk in connection therewith; as amended, replaced or
restated from time to time; and "SERVICE AGREEMENT" means any one of them
as required by the context;
"SPECIFIC PERMITTED LIENS" means the Liens described in Schedule 6.01(j)
(including the reservation of minerals in the Crown to the extent existing
as at the date of this Agreement, as described in such Schedule);
-18-
"STATUTORY LIENS" means Liens in respect of any property or assets of a
Company created by or arising pursuant to any applicable legislation in
favour of any Governmental Authority, including Liens arising in
connection with such Company's obligation to deduct and remit employee
source deductions and goods and services tax pursuant to the Income Tax
Act (Canada), the Excise Tax Act (Canada), the Canada Pension Plan
(Canada), the Employment Insurance Act (Canada) and any legislation
similar to or enacted in replacement of the foregoing from time to time;
"STERLING CHEMICALS, INC." means Sterling Chemicals, Inc., a Delaware
corporation, that, as of the date of this Agreement, indirectly owns 100%
of the outstanding capital stock of each of the Companies;
"STERLING CHEMICALS HOLDINGS, INC." means Sterling Chemicals Holdings,
Inc., a Delaware corporation, that, as of the date of this Agreement,
indirectly owns 100% of the outstanding capital stock of each of the
Companies;
"SUBSIDIARY" has the meaning ascribed thereto in the OBCA (and for greater
certainty includes a subsidiary of a subsidiary);
"TANGIBLE NET WORTH" at any time means the shareholders' equity of the
Companies at such time, less any value attributed to all licenses,
permits, patents, copyrights, trademarks, goodwill, organizational
expenses, product development costs, leasehold improvements and other
intangible assets (as such term is defined under GAAP), less any value
attributed to amounts payable by Related Persons (unless otherwise
specifically agreed in writing by the Lenders);
"TOTAL LIABILITIES" means, at any time, all direct and indirect
indebtedness, liabilities and obligations of the Companies at such time to
any Persons, specifically including Funded Debt, but excluding future
taxes (both current and long-term);
"TRANCHE" means, in respect of any Credit Facility, a designated portion
thereof which is subject to certain additional terms and conditions as
provided herein;
"TRANCHE B-1" is defined in section 3.02;
"TRANCHE B-2" is defined in section 3.02;
"TRANCHE B-3" is defined in section 3.02;
"U.S. BASE RATE" means the greater of (i) the floating annual rate of
interest established from time to time by BMO as the rate it will use to
determine rates of interest on U.S. dollar loans to its customers in
Canada and designated as its U.S. base rate, and (ii) the Federal Funds
Rate plus one percent (1%) per annum;
"U.S. DOLLAR LOAN" means an Advance made by a Lender to the Borrower by
way of a direct loan in U.S. Dollars;
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"U.S. DOLLARS" or "U.S.$" means the lawful money of the United States;
"WORKING CAPITAL RATIO" means current assets of the Companies divided by
current liabilities of the Companies, as such terms are defined under
GAAP, except that for the purposes of such determination current assets
shall not include any loans or other amounts due from any Related Person
(unless otherwise specifically agreed by the Lenders, such agreement to be
confirmed in writing by the Agent to the Borrower); and
"YEAREND FINANCIAL STATEMENTS" in respect of any Person means the audited
financial statements of such Person on a consolidated and unconsolidated
basis, including the notes thereto, in respect of its most recently
completed Fiscal Year.
1.02 ACCOUNTING PRINCIPLES
Unless otherwise provided herein, all financial terms used in this
Agreement shall be determined in accordance with GAAP. Where the character or
amount of any asset or liability or item of revenue or expense is required to be
determined, or any consolidation or other computation is required to be made for
the purpose of this Agreement, such determination or calculation shall be made
in accordance with GAAP applied on a consistent basis, unless otherwise
indicated. The Borrower shall have the right, exercisable by written notice to
the Agent at any time, to report its financial results in accordance with
generally accepted accounting principles in Canada as approved by the Canadian
Institute of Chartered Accountants in effect from time to time; and from and
after the receipt of such notice by the Agent all references in this Agreement
to "GAAP" shall be deemed to have been amended accordingly.
1.03 CURRENCY REFERENCES
All amounts referred to in this Agreement are in Canadian Dollars unless
otherwise noted.
1.04 REFERENCES TO STATUTES
Whenever in this Agreement reference is made to a statute or regulations
made pursuant to a statute, such reference shall, unless otherwise specified, be
deemed to include all amendments to such statute or regulations from time to
time and all statutes or regulations which may come into effect from time to
time substantially in replacement for the said statutes or regulations.
1.05 EXTENDED MEANINGS
Terms defined in the singular have the same meaning when used in the
plural, and vice-versa. When used in the context of a general statement followed
by a reference to one or more specific items or matters, the term "including"
shall mean "including, without limitation", and the term "includes" shall mean
"includes, without limitation". Any reference herein to the "sole discretion" of
a Person or group of Persons shall mean
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the sole and unfettered discretion of such Person or group of Persons, without
any obligation to act reasonably.
1.06 SCHEDULES
The following exhibits and schedules are attached to this Agreement and
incorporated herein by reference:
Exhibit "A" - Lenders and Lenders' Commitments
Exhibit "B" - Drawdown Request
Exhibit "C" - Rollover Notice
Exhibit "D" - Conversion Notice
Exhibit "E" - Repayment Notice
Exhibit "F" - Borrowing Base Certificate
Exhibit "G" - Compliance Certificate
Exhibit "H" - Form of BA Equivalent Note
Exhibit "I" - Assignment Agreement
Schedule 6.01(a) - Exceptions to Representations re Corporate Matters
Schedule 6.01(b) - Companies' Information
Schedule 6.01(d) - Exceptions to Representations re Pending Corporate Changes
Schedule 6.01(j) - Specific Permitted Liens
Schedule 6.01(k) - Owned Properties (including a list of those which constitute
Material Owned Properties)
Schedule 6.01(l) - Leased Properties (including a list of those which constitute
Material Leased Properties)
Schedule 6.01(m) - Intellectual Property
Schedule 6.01(n) - Exceptions to Representations re Insurance Matters
Schedule 6.01(o) - Material Agreements
Schedule 6.01(r) - Litigation
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Schedule 6.01(p) - Collective Agreements and Labour Disputes
Schedule 6.01(q) Environmental Disclosure
Schedule 6.01(z) - Exceptions to Representations re Miscellaneous Matters
Schedule 10.01(o) - Key Officers and Employees
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ARTICLE II - FACILITY A
2.01 ESTABLISHMENT OF FACILITY A
Subject to the terms and conditions in this Agreement, BMO hereby
establishes a revolving credit facility for the Borrower in the maximum
principal amount of Eight Million Dollars ($8,000,000) ("Facility A").
2.02 PURPOSE
Advances under Facility A shall be used for the following purposes: (i) to
assist the Borrower in financing the repayment of its indebtedness to ▇.▇.
▇▇▇▇▇▇ Bank Canada; and (ii) for day to day operating requirements of the
Borrower.
2.03 REVOLVING NATURE
Facility A shall be a revolving facility. For greater certainty, the
Borrower shall be entitled to repay all or any portion of the Outstanding
Advances under Facility A from time to time and obtain further Advances under
Facility A from time to time; provided that the principal amount of Outstanding
Advances at any time under Facility A shall not exceed the Facility A Limit at
such time.
2.04 REPAYMENT/MATURITY/EXTENSION
(a) The Obligations under Facility A shall become due and payable on the
earliest of: (i) the Acceleration Date; and (ii) the Facility A Maturity Date.
(b) Provided that no Default or Event of Default has occurred and is
continuing, the Borrower may request an extension of the Facility A Maturity
Date in effect at any time, by written notice to BMO given no later than ninety
(90) days prior to the Facility A Maturity Date then in effect. BMO may from
time to time in its sole discretion extend the Facility A Maturity Date for a
period not to exceed 364 days from the Facility A Maturity Date then in effect
(and for greater certainty any such extended date from time to time shall be the
"Facility A Maturity Date" for all purposes of this Agreement). BMO shall inform
the Borrower of its decision regarding such requested extension within sixty
(60) days after receipt of the said request.
2.05 AVAILMENT OPTIONS
Subject to the restrictions contained in this Article II and the
exceptions indicated below, the Borrower may receive Advances under Facility A
from BMO by any one or more of the following Availment Options (or any
combination thereof):
(i) Overdrafts in Canadian Dollars; or
-23-
(ii) Canadian Dollar Loans in minimum amounts of $500,000 and multiples
of $100,000; or
(iii) Bankers' Acceptances in minimum amounts of $500,000 and multiples of
$100,000; or
(iv) Overdrafts in U.S. Dollars; or (v) U.S. Dollar Loans in minimum
amounts of U.S.$500,000 and multiples of U.S.$100,000; or
(vi) LIBOR Loans in minimum amounts of U.S.$1,000,000 and multiples of
U.S.$100,000, with a LIBOR Period of 1, 2, 3 or 6 months, subject to
availability; or
(vii) Letters of Credit for purposes other than guaranteeing obligations
of third parties, in all major currencies offered by BMO, to a
maximum aggregate amount of $4,000,000, provided that the Borrower
has completed all documentation required by BMO in respect of each
Letter of Credit including BMO's standard form of application and
indemnity agreement;
provided that Bankers' Acceptances, LIBOR Loans and Letters of Credit will
not be issued with a maturity date later than the Facility A Maturity Date or
which in BMO's opinion in its sole discretion could result in the Facility A
Limit being exceeded at any time; except that in BMO's sole discretion a Letter
of Credit may be issued with a maturity date later than the Facility A Maturity
Date (or may contain a clause providing for automatic renewal in the absence of
notice by BMO to the beneficiary thereunder which if so renewed would result in
such Letter of Credit expiring after the Facility A Maturity Date) if at the
time of issuance thereof arrangements satisfactory to BMO in its sole discretion
are made to secure such Letter of Credit with cash collateral from and after the
Facility A Maturity Date. The Borrower may convert Outstanding Advances under
Facility A in the form of any above Availment Option into another form of
Availment Option, subject to and in accordance with the terms and conditions of
this Agreement (but for greater certainty, Bankers' Acceptances, LIBOR Loans and
Letters of Credit may not be converted into another Availment Option prior to
the maturity thereof).
2.06 INTEREST AND FEES
In respect of Advances under Facility A, the Borrower shall pay to BMO:
(a) interest on Overdrafts in Canadian Dollars and Canadian Dollar Loans
at the Adjusted Prime Rate plus the Applicable Margin per annum, payable monthly
in arrears on the last day of each and every month;
(b) in respect of each Bankers' Acceptance, a stamping fee equal to the
face amount of such Bankers' Acceptance, multiplied by the Applicable Margin,
multiplied by the number of days to maturity of the Bankers' Acceptance (but
excluding the day on
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which the Bankers' Acceptance matures), and divided by 365, payable at the time
of acceptance;
(c) interest on Overdrafts in U.S. Dollars and U.S. Dollar Loans at the
U.S. Base Rate plus the Applicable Margin per annum, payable monthly in arrears
on the last day of each and every month;
(d) interest on LIBOR Loans at the LIBO Rate plus the Applicable Margin
per annum calculated on the basis of a year of 360 days, payable in the manner
set out in paragraph 5.10(b);
(e) in respect of each Letter of Credit, an issuance fee equal to the face
amount of such Letter of Credit multiplied by one and one-quarter percent
(1.25%) with the product thereof further multiplied by the number of days to
expiry of the Letter of Credit and divided by 365, payable quarterly in advance
(for greater certainty, the first such quarterly payment to be made on the date
of issuance of such Letter of Credit and each quarterly payment thereafter to be
made on the date which is three months after the previous quarterly payment);
plus any renewal fees and other incidental fees which may be applicable from
time to time at BMO's usual rates;
(f) a standby fee equal to one-quarter of one percent (0.25%) per annum of
the amount, calculated on a daily basis, of the difference between (i) the
Facility A Maximum Amount and (ii) the Outstanding Advances under Facility A,
payable quarterly in arrears on the last day of each Fiscal Quarter.
With respect to any Availment Option under Facility A, "Applicable Margin"
means, in respect of any Fiscal Quarter, the percentage in the column relating
to such Availment Option in the following table which corresponds to the
condition described in the first column (determined in respect of the fiscal
period comprised of such Fiscal Quarter and the immediately preceding three
Fiscal Quarters; provided that until the Interim Financial Statements and
Compliance Certificate for the period ending June 30, 2002 are delivered by the
Borrower to the Agent in accordance with section 7.04(b), the Applicable Margin
for each Availment Option shall be the percentage in the column relating to such
Availment Option in the first row of such table.
-----------------------------------------------------------------------------------------------------------
Condition Applicable Margin for Applicable Margin for
Overdrafts, Canadian Dollar Bankers' Acceptances and
Loans and U.S. Dollar Loans LIBOR Loans under Facility
under Facility A A
-----------------------------------------------------------------------------------------------------------
(i) the ratio of Funded Debt to EBITDA is less 0.50% 1.75%
than 2.00:1; and
(ii) the ratio of CFADS to Funded Debt Service
is greater than 1.25:1
-----------------------------------------------------------------------------------------------------------
(i) the ratio of Funded Debt to EBITDA is 0.75% 2.00%
equal to or greater than 2.00:1; or
(ii) the ratio of CFADS to Funded Debt Service
is equal to or less than 1.25:1
-----------------------------------------------------------------------------------------------------------
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2.07 FACILITY A LIMIT
(a) In this Agreement, "Facility A Limit" means, at any time, an amount
equal to the lesser of: (A) the Facility A Maximum Amount; and (B) an amount
determined at such time as follows:
(i) 75% of the Eligible Accounts Receivable owing to the Borrower
by account debtors domiciled in Canada; plus
(ii) 60% of the Eligible Accounts Receivable owing to the Borrower
by account debtors domiciled in the United States; plus
(iii) the lesser of (x) $2,000,000 and (y) 50% of the value of the
Eligible Inventory (determined at the lower of cost and market
value); less
(iv) the Potential Statutory Priority Amount at
such time.
(b) The Facility A Limit shall be adjusted as at the date of each receipt
by the Agent of a Borrowing Base Certificate and shall remain in effect until
receipt by the Agent of a subsequent Borrowing Base Certificate; provided that
if the Agent does not receive a Borrowing Base Certificate on or before the date
required pursuant to paragraph 7.04(a), the Facility A Limit shall be reduced to
the lowest Facility A Limit in the preceding twelve (12) months or such lower
amount as may be estimated by the Agent, acting reasonably, to be the Facility A
Limit determined in accordance with the formula in paragraph 2.07(a), until such
time as a Borrowing Base Certificate is thereafter received by the Agent. BMO
shall have no obligation to make any portion of an Advance under Facility A to
the extent that after making such Advance the Obligations under Facility A would
exceed the Facility A Limit then in effect. If at any time the Obligations under
Facility A exceed the Facility A Limit then in effect, the Borrower shall within
two (2) Business Days of written or verbal notice by BMO pay to BMO the (c)
principal amount required to reduce the Obligations under Facility A to an
amount not greater than the Facility A Limit then in effect.
2.08 CANCELLATION OF UNUSED PORTION OF FACILITY A
The Borrower may from time to time upon two (2) Business Days' prior
written notice to the Agent, without penalty or fee, cancel any unadvanced
portion of Facility A,
-26-
in which event the Facility A Maximum Amount shall be reduced by the amount so
cancelled.
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ARTICLE III - FACILITY B
3.01 ESTABLISHMENT OF FACILITY B
Subject to the terms and conditions in this Agreement, each Facility B
Lender hereby establishes a non-revolving credit facility for the Borrower in
the maximum principal amount indicated opposite such Lender's name in Exhibit
"A" under the heading "Facility B Commitments". The said credit facilities are
established by the Facility B Lenders severally and not jointly, and are
hereinafter collectively referred to as "Facility B". Each Advance by a Facility
B Lender under Facility B shall be made by such Lender in its Proportionate
Share of Facility B.
3.02 PURPOSE AND TRANCHES
Advances under Facility B may be used by the Borrower for the following
purposes:
(a) upon the satisfaction of all applicable conditions precedent, a single
Advance (herein called "Tranche B-1") shall be made on or before thirty (30)
days after the date of this Agreement (unless extended in writing by the Agent
on behalf of the Lenders) not in excess of Forty Million Dollars ($40,000,000),
the proceeds of which shall be used by the Borrower to repay all indebtedness
and obligations due by the Borrower to ▇.▇. ▇▇▇▇▇▇ Bank Canada;
(b) upon the satisfaction of all applicable conditions precedent, a single
Advance (herein called "Tranche B-2") shall be made on or before September 30,
2003 not in excess of the amount of the Facility B Limit less the amount of the
Advance previously made under Tranche B-1, the proceeds of which shall be used
by the Borrower to make a Distribution to Holdings, or for such other purpose as
may be approved in writing by the Agent on behalf of the Lenders; and
(c) upon the satisfaction of all applicable conditions precedent, a single
Advance (herein called "Tranche B-3") shall be made on or before September 30,
2003 not in excess of the amount of the Facility B Limit less the amount of the
Advances previously made under Tranche B-1 and Tranche B-2, the proceeds of
which may be used by the Borrower to make a Distribution to Holdings, or for
such other purpose as may be approved in writing by the Agent on behalf of the
Lenders;
and for greater certainty, no further Advances will be permitted under
Facility B, and the unadvanced portion of Facility B shall be permanently
cancelled, after the earliest to occur of (i) September 30, 2003 and (ii) the
making of an Advance under Tranche B-3.
-28-
3.03 NON-REVOLVING NATURE
Facility B is a non-revolving facility. Any Repayment under Facility B may
not be reborrowed.
3.04 REPAYMENT/MATURITY/EXTENSION
(a) The Obligations under Facility B shall become due and payable on the
earliest of: (i) the Acceleration Date; and (ii) the Facility B Maturity Date.
(b) Prior to the Acceleration Date, the Borrower shall make Repayments to
the Agent in respect of the Outstanding Advances under Tranche B-1 in an amount
per month equal to the Advance made under Tranche B-1 divided by 120 (or such
lesser number as may be requested by the Borrower in writing at or before the
time of such Advance); such payments to be made on the last day of each and
every month, the first such monthly payment to be made on the last day of the
month following the month in which the Advance under Tranche B-1 is made. The
remaining balance of the Outstanding Advances under Tranche B-1 shall be paid on
the Facility B Maturity Date.
(c) Prior to the Acceleration Date, the Borrower shall make Repayments to
the Agent in respect of the Outstanding Advances under Tranche B-2 in an amount
per month equal to the Advance made under Tranche B-2 divided by 120 (or such
lesser number as may be requested by the Borrower in writing at or before the
time of such Advance); such payments to be made on the last day of each and
every month, the first such monthly payment to be made on the last day of the
month following the month in which the Advance under Tranche B-2 is made. The
remaining balance of the Outstanding Advances under Tranche B-2 shall be paid on
the Facility B Maturity Date.
(d) Prior to the Acceleration Date, the Borrower shall make Repayments to
the Agent in respect of the Outstanding Advances under Tranche B-3 in an amount
per month equal to the Advance made under Tranche B-3 divided by 120 (or such
lesser number as may be requested by the Borrower in writing at or before the
time of such Advance); such payments to be made on the last day of each and
every month, the first such monthly payment to be made on the last day of the
month following the month in which the Advance under Tranche B-3 is made. The
remaining balance of the Outstanding Advances under Tranche B-3 shall be paid on
the Facility B Maturity Date.
(e) In addition to the Repayments required under paragraphs 3.04(b), (c)
and (d), if at the end of the Fiscal Year ending September 30, 2003 or at the
end of any subsequent Fiscal Year the Outstanding Advances under Facility B as
at the end of such Fiscal Year are greater than Thirty Million Dollars
($30,000,000), then on or before the date required hereunder for the delivery of
the Yearend Financial Statements of the Companies for such Fiscal Year the
Borrower shall make a Repayment in an amount equal to the lesser of: (i)
forty-five percent (45%) of the Excess Cash Flow in such Fiscal Year and (ii)
such amount as will result in the reduction of the Outstanding Advances under
Facility B to $30,000,000.
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(f) In addition to the Repayments required under paragraphs 3.04(b), (c),
(d) and (e), if any Company receives proceeds from:
(i) a policy of insurance, except to the extent that such proceeds are
permitted to be retained by such Company as provided in paragraph
7.01(i); or
(ii) a transaction involving the sale, leasing or other disposition of
any individual asset or group of related assets (other than
inventory sold in the ordinary course of business) in one or a
series of related transactions, unless, within 90 days after such
disposition, the Borrower has either reinvested such proceeds in
similar assets or has entered into a binding commitment to do so
within a further period of 90 days;
then the Borrower will pay such proceeds (net of transaction expenses and
usual adjustments, if applicable) to the Agent as a Prepayment; such payment to
be made within three (3) Business Days after receipt of such proceeds in the
case of clause (i) above, and within 95 days from the date of the transaction in
the case of clause (ii) above.
(g) Provided that no Default or Event of Default has occurred and is
continuing, the Borrower may request an extension of the Facility B Maturity
Date in effect at any time, by written notice to the Agent on behalf of the
Facility B Lenders given no later than ninety (90) days prior to the Facility B
Maturity Date then in effect. Subject to obtaining the prior written consent of
all other Lenders, the Facility B Lenders may from time to time in their sole
discretion extend the Facility B Maturity Date (and for greater certainty any
such extended date from time to time shall be the "Facility B Maturity Date" for
all purposes of this Agreement). The Agent shall inform the Borrower of the
decision of the Facility B Lenders regarding such requested extension within
sixty (60) days after receipt of the said request.
3.05 AVAILMENT OPTIONS
Subject to the restrictions contained in this Article III and the
exceptions indicated below, the Borrower may receive Advances under Facility B
from the Facility B Lenders (subject to the restrictions set out below) by any
one or more of the following Availment Options (or any combination thereof):
(i) Canadian Dollar Loans in minimum amounts of $500,000 and multiples
of $100,000; or
(ii) Bankers' Acceptances from the BA Lenders in minimum amounts of
$500,000 and multiples of $100,000; or
(iii) BA Equivalent Note Loans from the Non-BA Lenders in minimum amounts
of $500,000 and multiples of $100,000; or
(iv) Fixed-Rate Term Loans in minimum amounts of $500,000 and multiples
of $100,000, subject to section 3.07;
-30-
provided that Bankers' Acceptances, BA Equivalent Note Loans and
Fixed-Rate Term Loans will not be issued with a maturity date later than the
Facility B Maturity Date or which could result in the Facility B Limit being
exceeded at any time. The Borrower may convert Outstanding Advances under
Facility B in the form of any above Availment Option into another said form of
Availment Option, subject to and in accordance with the terms and conditions of
this Agreement (but for greater certainty, Bankers' Acceptances, BA Equivalent
Note Loans and Fixed-Rate Term Loans may not be converted into another Availment
Option prior to the maturity thereof).
3.06 INTEREST AND FEES
In respect of Advances under Facility B, the Borrower receiving such
Advance shall pay to the Agent on behalf of the Facility B Lenders:
(a) interest on Canadian Dollar Loans at the Adjusted Prime Rate plus the
Applicable Margin per annum, payable monthly in arrears on the last day of each
and every month;
(b) in respect of each Bankers' Acceptance, a stamping fee equal to the
face amount of such Bankers' Acceptance, multiplied by the Applicable Margin,
multiplied by the number of days to maturity of the Bankers' Acceptance (but
excluding the day on which the Bankers' Acceptance matures), and divided by 365,
payable at the time of acceptance;
(c) in respect of each BA Equivalent Note, a stamping fee equal to the
face amount of such BA Equivalent Note, multiplied by the Applicable Margin,
multiplied by the number of days to maturity of the BA Equivalent Note (but
excluding the day on which the BA Equivalent Note matures), and divided by 365,
payable at the time of acceptance;
(d) interest on Fixed-Rate Term Loans at a rate determined pursuant to
section 3.07, payable monthly in arrears on the last day of each and every
month; and
(e) a standby fee equal to one-half of one percent (0.50%) per annum of
the amount, calculated on a daily basis, of the difference between (i) the
Facility B Limit and (ii) the Outstanding Advances under Facility B, payable
quarterly in arrears on the last day of each Fiscal Quarter.
With respect to any Availment Option under Facility B, "Applicable Margin"
means, in respect of any Fiscal Quarter, the percentage in the column relating
to such Availment Option in the following table which corresponds to the
condition described in the first column (determined in respect of the fiscal
period comprised of such Fiscal Quarter and the immediately preceding three
Fiscal Quarters); provided that until the Interim Financial Statements and
Compliance Certificate for the period ending June 30, 2002 are delivered by the
Borrower to the Agent in accordance with section 7.04(b), the Applicable Margin
for each Availment Option shall be the percentage in the column relating to such
Availment Option in the first row of such table.
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------------------------------------------------------------------------------------------------------------
Condition Applicable Margin Applicable Margin for Applicable Margin
for Canadian Dollar Bankers' Acceptances for Fixed-Rate Term
Loans under and BA Equivalent Loans under
Facility-B Notes under Facility B Facility B
------------------------------------------------------------------------------------------------------------
(i) the ratio of Funded Debt to 1.00% 2.25% 2.25%
EBITDA is less than 2.00:1; and
(ii) the ratio of CFADS to Funded
Debt Service is greater than 1.25:1
------------------------------------------------------------------------------------------------------------
(i) the ratio of Funded Debt to 1.25% 2.50% 2.50%
EBITDA is equal to or greater than
2.00:1; or
(ii) the ratio of CFADS to Funded
Debt Service is equal to or less
than 1.25:1
------------------------------------------------------------------------------------------------------------
3.07 FIXED-RATE TERM LOANS
The Borrower may at any time at its option request Advances under Facility
B from the Lenders, respectively, by way of Canadian Dollar Loans bearing
interest for a specified period at fixed rates, in the following manner (and
each such Canadian Dollar Loan made by a Lender is here called a "Fixed-Rate
Term Loan"). The Borrower may also at any time request the Conversion of all or
any part of the Outstanding Advances under an Availment Option other than
Fixed-Rate Term Loans (but in the case of Bankers' Acceptances and BA Equivalent
Note Loans, only upon the maturity thereof) to Fixed-Rate Term Loans in the same
manner. The Borrower shall deliver a written request to the Agent specifying the
aggregate principal amount of the Fixed-Rate Term Loans requested, the proposed
commencement date of such Fixed-Rate Term Loans (which may not be earlier than
five (5) Business Days after the date of delivery of such request), and the
proposed maturity date for such Fixed-Rate Term Loans (which may not be later
than the earlier of: (i) five (5) years from the said proposed commencement
date; and (ii) the Facility B Maturity Date then in effect). The Agent shall
promptly notify the Lenders of such request and the principal amount of the
Fixed-Rate Term Loan to be made by each Lender (which shall be approximately
equal to the aggregate amount of the said Fixed- Rate Term Loans requested by
the Borrower multiplied by such Lender's Proportionate Share of Facility B). At
least one (1) Business Day prior to the commencement date of such Fixed-Rate
Term Loans proposed by the Borrower, each Lender shall advise the
-32-
Agent whether it will make a Fixed-Rate Term Loan in the amount and for the
period requested, and if so, the interest rate which will apply to such
Fixed-Rate Term Loan (determined by such Lender as its cost of funds applicable
to the principal amount of such requested Fixed-Rate Term Loan for the period
requested, plus the Applicable Margin set out in section 3.06). If all Lenders
agree to make Fixed-Rate Term Loans in the aggregate principal amount requested
by the Borrower, on the day prior to the commencement date proposed by the
Borrower for such Fixed-Rate Term Loans the Agent shall advise the Borrower in
writing of the interest rate offered by each Lender in respect of the Fixed-Rate
Term Loan offered by it. On the same day the Borrower may by notice in writing
to the Agent accept the said offers made by all, but not less than all of the
Lenders. For greater certainty, Fixed-Rate Term Loans are available under
Facility B only if concurrently made by all Lenders in the manner described
above.
3.08 VOLUNTARY PREPAYMENTS
The Borrower may from time to time, upon forty-five (45) Business Days'
prior written notice to the Agent make a Prepayment in respect of any
Outstanding Advances under Facility B in a minimum amount and in multiples of
$1,000,000, provided that such Prepayment is not made, directly or indirectly,
from the proceeds of Funded Debt (unless a Prepayment is made in respect of all
Outstanding Advances under Facility B); and provided further that in respect of
any Prepayment of a Bankers' Acceptance, BA Equivalent Note Loan or a Fixed-Rate
Term Loan the Borrower shall concurrently pay all applicable breakage costs
pursuant to section 5.12 (but otherwise no penalty or fee shall be payable in
connection with such Prepayment). The Facility B Limit shall be automatically
and permanently reduced by the amount of any such Prepayment. The Borrower may
also from time to time upon forty-five (45) Business Days' prior written notice
to the Agent, cancel any unadvanced portion of Facility B, in which event the
Facility B Limit shall be reduced by the amount so cancelled. For greater
certainty, the forty-five (45) Business Day notice period required to cancel any
unadvanced portion of Facility B may run concurrently with the forty-five (45)
Business Day notice period required for a Prepayment of any Outstanding Advances
under Facility B.
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ARTICLE IV - MASTERCARD FACILITY
4.01 ESTABLISHMENT OF FACILITY
Subject to the terms and conditions in this Agreement, BMO hereby
establishes a credit facility for the Borrower in the maximum principal amount
of Five Hundred Thousand Dollars ($500,000.00) (the "Mastercard Facility"). BMO
shall not have the right to assign or grant a participation in the MasterCard
Facility in whole or in part to any other Person.
4.02 PURPOSE OF FACILITY
Advances under the MasterCard Facility shall be used by the Borrower for
general corporate purposes, including purchasing supplies and funding
miscellaneous business expenses incurred by officers and employees of the
Borrower.
4.03 MASTERCARD FACILITY LIMIT
The Outstanding Advances at any time under the MasterCard Facility shall
not exceed the MasterCard Facility Limit. BMO shall have no obligation to make
an Advance under the MasterCard Facility if after making such Advance the
Obligations under the MasterCard Facility would exceed the MasterCard Facility
Limit. If at any time the Obligations under the MasterCard Facility exceed the
MasterCard Facility Limit, the Borrower shall pay to BMO the principal amount
required to reduce the Obligations under the MasterCard Facility to an amount
not greater than the MasterCard Facility Limit, in accordance with the terms and
conditions contained in the MasterCard agreement referred to in section 4.04.
4.04 TERMS AND CONDITIONS
The Borrower may receive Advances under the MasterCard Facility by way of
debits through the use of corporate cards issued by BMO to officers and
employees of the Borrower at the Borrower's request upon the completion of a
MasterCard agreement and all other necessary documentation required by BMO.
4.05 REPAYMENT
The Obligations under the MasterCard Facility shall become due and payable
upon the earliest to occur of (i) the issuance by BMO of a demand for payment of
all Obligations of the Borrower under the MasterCard Facility; and (ii) the
Acceleration Date. Until such time, the Obligations under the MasterCard
Facility shall be payable monthly in accordance with the terms of the MasterCard
agreement made between the Borrower and BMO.
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ARTICLE V - GENERAL CONDITIONS
5.01 MATTERS RELATING TO INTEREST
(a) Unless otherwise indicated, interest on any outstanding principal
amount shall be calculated daily and shall be payable monthly in arrears on the
last day of each and every month. If the last day of a month is not a Business
Day, the interest payment due on such day shall be made on the next Business
Day, and interest shall continue to accrue on the said principal amount during
such stub period and shall also be paid on such next Business Day.
(Alternatively, in the Agent's discretion, acting reasonably, interest accruing
on the said principal amount during such stub period shall not be payable on
such next Business Day, but shall instead be payable on the last day of the
following month.) Interest shall accrue from and including the day upon which an
Advance is made or is deemed to have been made, and ending on but excluding the
day on which such Advance is repaid or satisfied. Any changes in the Adjusted
Prime Rate or U.S. Base Rate shall cause an immediate adjustment of the interest
rate applicable to Canadian Dollar Loans or U.S. Dollar Loans as the case may
be, from and after such change, without the necessity of any notice to the
Borrower.
(b) Unless otherwise stated, in this Agreement if reference is made to a
rate of interest, fee or other amount "per annum" or a similar expression is
used, such interest, fee or other amount shall be calculated on the basis of a
year of 365 or 366 days, as the case may be. If the amount of any interest, fee
or other amount is determined or expressed on the basis of a period of less than
one year of 365 or 366 days, as the case may be, the equivalent yearly rate is
equal to the rate so determined or expressed, divided by the number of days in
the said period, and multiplied by the actual number of days in that calendar
year.
(c) Notwithstanding any other provisions of this Agreement, if the amount
of any interest, premium, fees or other monies or any rate of interest
stipulated for, taken, reserved or extracted under this Agreement or the
Security would otherwise contravene the provisions of section 347 of the
Criminal Code (Canada), section 8 of the Interest Act (Canada) or any successor
or similar legislation, or would exceed the amounts which the Agent is legally
entitled to charge and receive under any law to which such compensation is
subject, then such amount or rate of interest shall be reduced to such maximum
amount as would not contravene such provision; and to the extent that any excess
has been charged or received the Agent shall apply such excess against the
Outstanding Advances and refund any further excess amount.
(d) Any change in the Applicable Margin in respect of any Availment Option
under Facility A or Facility B shall be determined by the Agent based upon the
information contained in the most recent Compliance Certificate received by the
Agent, and shall take effect commencing on the fifth day following receipt of
such Compliance Certificate by the Agent. The parties agree to make all
necessary adjustments in this
-35-
regard, including adjustments retroactive to such effective date. If the Agent
does not receive a Compliance Certificate on the date required pursuant to
paragraph 7.04(b), the Applicable Margin in respect of each Availment Option
under Facility A shall be as set out in the second row of the chart in section
2.06, and the Applicable Margin in respect of each Availment Option under
Facility B shall be as set out in the second row of the chart in section 3.06,
and each such Applicable Margin shall remain in effect until the fifth day
following receipt by the Agent of the required Compliance Certificate.
5.02 NOTICE PERIODS
(a) The Borrower shall provide written notice to the Agent (or to BMO, in
the case of Facility A) in respect of Advances, Rollovers, Conversions and
Repayments to the extent set out below:
(i) no notice is required for Advances and Repayments in respect of
Overdrafts under Facility A;
(ii) no notice is required for Advances and Repayments under the
MasterCard Facility;
(iii) notice is required for each voluntary Prepayment under Facility B in
accordance with section 3.08;
(iv) except as provided in clauses (i), (ii) and (iii) above, one (1)
Business Day's notice is required before 10:00 a.m. Toronto time in
respect of any Advance, Rollover, Conversion or voluntary Repayment
in Canadian Dollars if the amount is equal to or less than
CDN$10,000,000, or in respect of any Advance, Rollover, Conversion
or voluntary Repayment in U.S. Dollars if the amount is equal to or
less than U.S$10,000,000;
(v) except as provided in clauses (i), (ii) and (iii) above, two (2)
Business Days' notice is required before 10:00 a.m. Toronto time in
respect of any Advance, Rollover, Conversion or voluntary Repayment
in Canadian Dollars if the amount is greater than CDN$10,000,000, or
in respect of any Advance, Rollover, Conversion or voluntary
Repayment in U.S. Dollars if the amount is greater than
U.S$10,000,000;
(vi) notwithstanding the foregoing, if an Advance, Rollover, Conversion
or voluntary Repayment relates to a LIBOR Loan, three (3) Business
Days' notice is required before 10:00 a.m. Toronto time; and
(vii) notwithstanding the foregoing, if the Advance relates to the
issuance of a Letter of Credit, three (3) Business Days' notice is
required before 10:00 a.m. Toronto time.
(b) Notice of any Advance, Rollover, Conversion or voluntary Repayment
referred to in paragraph (a) above shall be given in the form of a Drawdown
Request,
-36-
Rollover Notice, Conversion Notice or Repayment Notice, as the case may be,
attached hereto as Exhibits. All such notices in respect of Facility A shall be
given to BMO at its address set out in Exhibit "A"; and all other notices shall
be given to the Agent at its address set out in section 13.06.
(c) If notice is not provided as contemplated herein with respect to the
maturity of any Bankers' Acceptance, BA Equivalent Note Loan or LIBOR Loan, the
Lender in question may convert such Bankers' Acceptance, BA Equivalent Note Loan
or LIBOR Loan upon its maturity into a Canadian Dollar Loan or a U.S. Dollar
Loan.
(d) Any conversion from one form of Availment Option to another shall be
subject to satisfaction of all of the terms and conditions applicable to the
form of the new Availment Option as herein provided.
5.03 PROCEDURES RE DRAWDOWNS, ROLLOVERS, CONVERSIONS, REPAYMENTS
(a) Upon receipt of a Drawdown Request under any Credit Facility, the
Agent shall promptly notify each Lender under such Credit Facility of the
contents thereof and such Lender's Proportionate Share of the Advance. Such
Drawdown Request shall not thereafter be revocable.
(b) Each Advance shall be made by the applicable Lenders to the Agent at
its address referred to in section 13.06; provided that the Agent may designate
other addresses by notice in writing to the Lenders from time to time. Each
Lender shall make available its Proportionate Share of each said Advance to the
Agent. Unless the Agent determines that any condition of the Advance has not
been satisfied or waived, the Agent shall make the funds so received from the
Lenders available to the Borrower, or as the Borrower shall direct, by 3:00 p.m.
(Toronto time) on the requested date of the Advance. No Lender shall be
responsible for any other Lender's obligation to make available its
Proportionate Share of the said Advance.
(c) If the Borrower requests an Advance under any Credit Facility by way
of Bankers' Acceptances, each Lender under such Credit Facility shall, on the
date of the said requested Advance, accept a Bankers' Acceptance (or in the case
of a Non-BA Lender, make a BA Equivalent Note Loan) in an amount equal to its
Proportionate Share of the requested Advance. Each Advance requested by the
Borrower by way of Bankers' Acceptances shall be in an amount such that each
said Lender will issue a Bankers' Acceptance (or issue a BA Equivalent Note) in
a multiple of $100,000.00. The Borrower agrees to deliver in favour of each
Lender such other agreements and documentation as such Lender may reasonably
require (not inconsistent with this Agreement) in respect of such Lender's
requirements for the acceptance of Bankers' Acceptances or the issuance of BA
Equivalent Notes.
(d) All payments of principal (including voluntary and mandatory
Repayments), interest and other amounts by the Borrower to the Agent in respect
of the Outstanding Advances under a Credit Facility shall be paid by the Agent
to the Lenders in accordance with their respective Proportionate Shares of the
Outstanding Advances under such
-37-
Credit Facility; except that stamping fees in respect of Bankers' Acceptances
and BA Equivalent Notes shall be remitted by the Agent to the respective Lenders
who issued or accepted such Bankers' Acceptances and BA Equivalent Notes. For
greater certainty, the Proportionate Share of each Facility B Lender in respect
of Advances and Repayments under Facility B shall be determined with respect to
the aggregate amount of the Outstanding Advances under Facility B and not the
Outstanding Advances under any Tranche thereof; and similarly all Rollovers and
Conversions under Facility B shall be based on the aggregate amount of the
Outstanding Advances under Facility B and not the Outstanding Advances under any
Tranche thereof.
(e) Any Prepayment under this Agreement (whether or not voluntarily made
by the Borrower) shall be applied against the Borrower's obligations to make
Repayments under paragraphs 3.04(b), (c) and (d) in reverse chronological order.
5.04 PLACE OF ADVANCES, REPAYMENTS
(a) All payments of principal, interest and other amounts to be made by
the Borrower pursuant to this Agreement (other than payments in respect of
Service Agreements, which are payable directly to BMO) shall be made to the
Agent's address noted in section 13.06 or to such other address as the Agent may
direct in writing from time to time. All payments received by the Agent on a
Business Day before 2:00 p.m. (Toronto time) shall be treated as having been
received by the Agent on that day; payments made after such time on a Business
Day shall be treated as having been received by the Agent on the next Business
Day.
(b) Whenever any payment shall be due on a day which is not a Business
Day, the date for payment thereof shall be extended to the next succeeding
Business Day.
5.05 EVIDENCE OF OBLIGATIONS (NOTELESS ADVANCES)
The Agent may, but shall not be obliged to, request the Borrower to
execute and deliver from time to time such promissory notes as may be required
in order to evidence its obligations to the respective Lenders under this
Agreement. Each Lender shall open and maintain, in accordance with its usual
practice, an account or accounts evidencing the Borrower' obligations to it
hereunder, and the information entered in such accounts shall be deemed to be
prima facie correct.
5.06 DETERMINATION OF EQUIVALENT AMOUNTS
Whenever it is necessary or desirable at any time to determine the
Equivalent Amount in Canadian Dollars of an amount expressed in U.S. Dollars, or
vice-versa (specifically including for greater certainty the determination of
whether the Outstanding Advances under any Credit Facility exceed the limit
applicable to such Credit Facility and determining each Lender's Proportionate
Share of any Repayment on any date), the Equivalent Amount shall be determined
by reference to the Exchange Rate on the date of such determination.
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5.07 MATURITY OF BANKERS' ACCEPTANCES AND BA EQUIVALENT NOTES; COMMITMENT TO
PURCHASE
(a) Each Bankers' Acceptance and each BA Equivalent Note shall have a
maturity of 30, 60, 90 or 180 days.
(b) Each BA Lender which is a bank listed in Schedule I of the Bank Act
(Canada) agrees to purchase its own Bankers' Acceptances upon the issuance
thereof at a discount from the face amount thereof calculated at the CDOR Rate
for the relevant period in effect on the issuance date thereof.
(c) Each BA Lender which is a bank listed in Schedule II or Schedule III
of the Bank Act (Canada) agrees to purchase its own Bankers' Acceptances upon
the issuance thereof at a discount from the face amount thereof calculated using
a rate not in excess of the CDOR Rate for the relevant period in effect on the
issuance date thereof plus up to one-tenth of one percent (0.10%).
(d) Each Non-BA Lender agrees to purchase BA Equivalent Notes issued by it
hereunder at a discount from the face amount thereof calculated using a rate not
in excess of the CDOR Rate for the relevant period in effect on the issuance
date thereof.
5.08 SPECIAL PROVISIONS REGARDING BANKERS' ACCEPTANCES
The following provisions are applicable to Bankers' Acceptances issued by
the Borrower and accepted by any BA Lender hereunder:
Payment of Bankers' Acceptances
(a) The Borrower agrees to provide for each Bankers' Acceptance by payment
of the face amount thereof to the Agent on behalf of the BA Lender on the
maturity of the Bankers' Acceptance or, prior to such maturity, on the
Acceleration Date; and the Agent shall remit the said amount to such BA Lender
and such BA Lender shall in turn remit such amount to the holder of the Bankers'
Acceptance. If the Borrower fails to provide for the payment of the Bankers'
Acceptance accordingly, any amount not so paid shall be immediately payable by
the Borrower to the Agent on behalf of the BA Lender together with interest on
such amount calculated daily and payable monthly at the rate and in the manner
applicable to Canadian Dollar Loans under the Credit Facility under which such
Bankers' Acceptance was issued. The Borrower agrees not to claim any days of
grace for the payment at maturity of any Bankers' Acceptance and agrees to
indemnify and save harmless the BA Lender in connection with all payments made
by the BA Lender (or by the Agent on its behalf) pursuant to Bankers'
Acceptances accepted by the BA Lender, together with all reasonable costs and
expenses incurred by the BA Lender in this regard. The Borrower hereby waives
any defences to payment which might otherwise exist if for any reason a Bankers'
Acceptance is held by the BA Lender for its own account at maturity.
Availability of Bankers' Acceptances
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(b) If at any time and from time to time the BA Lender determines, acting
reasonably, that there no longer exists a market for Bankers' Acceptances for
the term requested by the Borrower, or at all, the BA Lender shall provide
written notice thereof to the Agent and the other Lenders (which notice shall
include the basis for such determination in reasonable detail, to the extent
known to the BA Lender), and the Agent shall promptly forward such written
notice to the Borrower. In such event: (i) the BA Lender shall not be obliged to
accept Bankers' Acceptances; (ii) the other Lenders may, but shall not be
obliged to issue Bankers' Acceptances or BA Equivalent Notes (as the case may
be) if requested to do so by the Borrower (the Borrower reserving its rights to
receive Advances under other Availment Options as provided herein); and (iii) if
the other Lenders decide to issue Bankers' Acceptances and BA Equivalent Notes,
the said BA Lender shall make a Canadian Dollar Loan in the amount of the
Bankers Acceptance it would have otherwise been required to issue; provided
that, the said BA Lender's obligations to accept Bankers' Acceptances shall be
reinstated immediately upon the Agent notifying the Borrower that the applicable
market for Bankers' Acceptances exists again.
Power of Attorney
(c) The Borrower hereby appoints each BA Lender which issues Bankers'
Acceptances hereunder as its true and lawful attorney to complete and issue
Bankers' Acceptances on behalf of the Borrower in accordance with written,
verbal or facsimile transmitted instructions provided by the Borrower's
authorized signing officers to the Agent on behalf of such BA Lender. The
Borrower hereby ratifies all that its said attorney may do by virtue hereof. In
the event the Borrower shall deliver verbal or facsimile transmitted
instructions to the Agent in accordance with this Agreement, the Borrower
acknowledges that such instructions acted upon by the Agent and any BA Lender
will, in the absence of negligence or wilful misconduct, be conclusively deemed
to be valid instructions, whether or not authorized by the Borrower or whether
or not accurately transmitted. The Borrower agrees to indemnify and hold
harmless the Agent and the BA Lenders and their respective directors, officers
and employees from and against any charges, complaints, costs, damages,
expenses, losses or liabilities of any kind or nature which they may incur,
sustain or suffer, arising from or by reason of acting, or failing to act, as
the case may be, on any such verbal or facsimile transmitted instructions or on
this power of attorney, except to the extent caused by the negligence or wilful
misconduct of the Agent or any BA Lender. The Borrower hereby agrees that each
Bankers' Acceptance completed and issued and accepted in accordance with this
section 5.08 by any Vice-President or Senior Manager of any BA Lender (or any
other employee of such BA Lender designated by any such officer as his or her
substitute) on behalf of the Borrower is a valid, binding and negotiable
instrument of the Borrower as drawer and endorser. The Borrower agrees that each
BA Lender's accounts and records will constitute prima facie evidence of the
execution and delivery by the Borrower of Bankers' Acceptances. This power of
attorney shall continue in force until written notice of revocation has been
served upon the Agent by the Borrower at the Agent's address set out in section
13.06.
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5.09 SPECIAL PROVISIONS REGARDING BA EQUIVALENT NOTES
Each Non-BA Lender will not accept Bankers' Acceptances hereunder, and
shall instead from time to time make BA Equivalent Note Loans to the Borrower.
Each BA Equivalent Note Loan shall be evidenced by a non-interest bearing
promissory note payable by the Borrower to the Non-BA Lender substantially in
the form of Schedule "H" attached hereto, which will be purchased by the Non-BA
Lender. Each BA Equivalent Note shall be negotiable by the Non-BA Lender without
notice to or the consent of the Borrower, and the holder thereof shall be
entitled to enforce such BA Equivalent Note against the Borrower free of any
equities, defences or rights of set-off that may exist between the Borrower and
the Non-BA Lender. In this Agreement, all references to a BA Equivalent Note
shall mean the loan evidenced thereby if required by the context; and all
references to the "issuance" of a BA Equivalent Note by a Non-BA Lender and
similar expressions shall mean the making of a BA Equivalent Note Loan by the
Non-BA Lender to the Borrower evidenced by a BA Equivalent Note. The following
provisions are applicable to each BA Equivalent Note Loan made by a Non-BA
Lender to the Borrower hereunder:
Payment of BA Equivalent Notes
(a) The Borrower agrees to provide for each BA Equivalent Note by payment
of the face amount thereof to the Agent on behalf of the Non-BA Lender on the
maturity of the BA Equivalent Note or, prior to such maturity, on the
Acceleration Date; and the Agent shall remit the said amount to such Non-BA
Lender and such Non-BA Lender shall in turn remit such amount to the holder of
the BA Equivalent Note. If the Borrower fails to provide for the payment of the
BA Equivalent Note accordingly, any amount not so paid shall be immediately
payable by the Borrower to the Agent on behalf of the Non-BA Lender together
with interest on such amount calculated daily and payable monthly at the rate
and in the manner applicable to Canadian Dollar Loans under the Credit Facility
under which such BA Equivalent Note was issued. The Borrower agrees not to claim
any days of grace for the payment at maturity of any BA Equivalent Note and
agrees to indemnify and save harmless the Non-BA Lender in connection with all
payments made by the Non-BA Lender (or by the Agent on its behalf) pursuant to
BA Equivalent Notes accepted by the Non-BA Lender, together with all reasonable
costs and expenses incurred by the Non-BA Lender in this regard. The Borrower
hereby waives any defences to payment which might otherwise exist if for any
reason a BA Equivalent Note is held by the Non-BA Lender for its own account at
maturity.
Availability of BA Equivalent Notes
(b) If at any time and from time to time the Non-BA Lender determines,
acting reasonably, that there no longer exists a market for the sale of BA
Equivalent Notes for the term requested by the Borrower, or at all, the Non-BA
Lender shall provide written notice thereof to the Agent and the other Lenders
(which notice shall include the basis for such determination in reasonable
detail, to the extent known to the Non-BA Lender), and the Agent shall promptly
forward such written notice to the Borrower. In such event: (i) the Non-BA
Lender shall not be obliged to make BA Equivalent Note Loans to the
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Borrower; (ii) the other Lenders may, but shall not be obliged to issue Bankers'
Acceptances or BA Equivalent Notes (as the case may be) if requested to do so by
the Borrower (the Borrower reserving its rights to receive Advances under other
Availment Options as provided herein); and (iii) if the other Lenders decide to
issue Bankers' Acceptances and BA Equivalent Notes, the Non-BA Lender shall make
a Canadian Dollar Loan in the amount of the BA Equivalent Note it would have
otherwise been required to issue; provided that, the said Non-BA Lender's
obligations to make BA Equivalent Note Loans to the Borrower shall be reinstated
immediately upon the Agent notifying the Borrower that the applicable market for
the sale of BA Equivalent Notes exists again.
Power of Attorney
(c) The Borrower hereby appoints the Non-BA Lender as its true and lawful
attorney to complete BA Equivalent Notes on behalf of the Borrower in accordance
with written, verbal or facsimile transmitted instructions delivered by the
Borrower to the Agent by the Borrower's authorized signing officers. The
Borrower hereby ratifies all that its said attorney may do by virtue hereof. In
the event the Borrower shall deliver verbal or facsimile transmitted
instructions to the Agent in accordance with this Agreement the Borrower
acknowledges that such instructions acted upon by the Agent and the Non-BA
Lender will, in the absence of negligence or wilful misconduct, be conclusively
deemed to be valid instructions, whether or not authorized by the Borrower or
whether or not accurately transmitted. The Borrower agrees to indemnify and hold
harmless the Agent and the Non-BA Lender, its directors, officers and employees
from and against any charges, complaints, costs, damages, expenses, losses or
liabilities of any kind or nature which the Agent and the Non-BA Lender, and
their respective directors, officers or employees may incur, sustain or suffer,
arising from or by reason of the Agent or the Non-BA Lender, or their respective
directors, officers or employees acting, or failing to act, as the case may be,
on any verbal or facsimile transmitted instructions or on this power of attorney
except to the extent caused by the negligence or wilful misconduct of the Agent
or any Non-BA Lender. The Borrower hereby agrees that each BA Equivalent Note
completed by any Vice-President or Senior Manager of the Non-BA Lender (or any
other employee of the Non-BA Lender designated by any such officer as his or her
substitute) on behalf of the Borrower is a valid, binding and negotiable
instrument of the Borrower as drawer and endorser. The Borrower agrees that the
Non-BA Lender's accounts and records will constitute prima facie evidence of the
execution and delivery by the Borrower of BA Equivalent Notes. This power of
attorney shall continue in force until written notice of revocation has been
served upon the Non-BA Lender by the Borrower at the Non-BA Lender's address
provided in section 13.06.
5.10 SPECIAL PROVISIONS REGARDING LIBOR LOANS
The following provisions are applicable to LIBOR Loans made by any Lender
to the Borrower:
Drawdown Procedures
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(a) Upon receipt by the Agent from the Borrower of a Drawdown Request,
Conversion Notice or Rollover Notice in respect of a LIBOR Loan, the Agent will
forthwith advise the Borrower of the LIBO Rate, such rate to be determined as at
approximately 11:00 a.m. Toronto time, two (2) LIBOR Business Days before the
commencement of the LIBOR Period for such LIBOR Loan. If the Agent determines
that Eurodollar deposits for the relevant amount and LIBOR Period requested by
the Borrower are not being or will not be offered to the Agent in the LIBOR
Market or if for any other reason the Agent is unable to determine the
applicable LIBO Rate or if for any reason the LIBOR Period requested by the
Borrower is not reasonably available to the Agent, then the Agent shall notify
the Borrower of the foregoing and the Lenders shall not be obliged to make the
requested LIBOR Loan; and if such determination takes place after the Lenders
have already made Advances in the expectation that such Advances will constitute
a LIBOR Loan for the LIBOR Period requested, the Agent may by written notice to
the Borrower require the Borrower to select another LIBOR Period or convert the
said LIBOR Loan into a U.S. Dollar Loan.
Interest Payment Dates
(b) Interest in respect of any LIBOR Loan shall be calculated on the basis
of a year of 360 days. Interest in respect of any LIBOR Loan with a LIBOR Period
of between 30 and 90 days (inclusive) shall be payable at the time the principal
amount of such LIBOR Loan is payable. Interest in respect of any LIBOR Loan with
a LIBOR Period longer than 90 days shall be payable in arrears every 90 days
commencing on the 90th day following the commencement of such LIBOR Period, and
also at the time the principal amount of such LIBOR Loan is payable.
Laws Applicable to LIBOR Loans
(c) The Borrower acknowledges that the ability of the Lenders to maintain
or provide any LIBOR Loan and/or to charge interest on any LIBOR Loan at a LIBO
Rate is and will be subject to any statute, law, regulation, rule or direction
by any Governmental Authority having jurisdiction which may prohibit or restrict
or limit such loans and/or such interest. The Borrower agrees that the Lenders
shall have the right to comply with any such requirements and, if the Agent
acting reasonably determines it to be necessary as a result of such requirement
and provides at least ten (10) Business Days' written notice to the Borrower
which sets out in reasonable detail the basis of its determination, the Agent
may convert any LIBOR Loan to a U.S. Dollar Loan or require immediate repayment
of all LIBOR Loans, including accrued interest thereon and all applicable
breakage costs pursuant to section 5.12; provided that, the Agent's right to so
convert LIBOR Loans or require immediate repayment of LIBOR Loans shall be
immediately terminated upon the Agent notifying the Borrower that the condition
causing such prohibition, restriction or limit no longer exists.
5.11 WITHHOLDING TAX GROSS-UP
Except as otherwise required by law, each payment by the Borrower to the
Lenders hereunder shall be made without withholding for or on account of any
present or
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future taxes imposed by or within the jurisdiction in which the Borrower is
domiciled, any jurisdiction from which the Borrower makes any payment or any
other jurisdiction, or (in each case) any political subdivision or taxing
authority thereof or therein (other than taxes in respect of the net income,
assets or capital of any Lender). If any such withholding is required by law,
the Borrower shall make the withholding, pay the amount withheld to the
appropriate Governmental Authority before penalties attach thereto or interest
accrues thereon and forthwith pay to the Lenders such additional amount as may
be necessary to ensure that the net amount actually received by them (after
payment of such taxes including any taxes on such additional amount paid) is
equal to the amount which they would have received if no amounts had been
withheld.
5.12 INDEMNITY RE SERVICE AGREEMENTS
In respect of any Service Agreement which may be entered into between BMO
and a Company other than the Borrower, the Borrower hereby agrees to indemnify
BMO against any and all liabilities, obligations, losses, damages, penalties,
costs, expenses or disbursements of any kind or nature whatsoever that may be
imposed on or incurred by BMO arising from or in connection with any failure by
such Company to observe and perform all of its obligations thereunder. The said
obligation of the Borrower to indemnify BMO shall comprise part of the
Obligations hereunder.
5.13 BREAKAGE COSTS
If any Advance made by a Lender in the form of a Bankers' Acceptance,
LIBOR Loan or Fixed-Rate Term Loan is repaid or converted prior to the scheduled
maturity date thereof (whether as a result of Prepayment, acceleration or
otherwise), the Borrower agrees to pay to the Agent upon demand all losses,
damages, costs and expenses which such Lender has incurred or may incur as a
result of such Repayment or Conversion prior to the said scheduled maturity
date, as determined by such Lender in accordance with its usual practice;
provided that the Agent shall provide the Borrower with a written certificate
showing in reasonable detail the basis for such claim, which certificate shall
be deemed to be correct absent manifest error.
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ARTICLE VI - REPRESENTATIONS AND WARRANTIES
6.01 REPRESENTATIONS AND WARRANTIES
The Borrower hereby represents and warrants to the Agent and the Lenders
as follows:
(a) Corporate Status - Each Company has been duly incorporated and
organized and is validly subsisting and in good standing under the laws of its
jurisdiction of incorporation, has the power to own or lease its property and to
carry on its business as now conducted by it, except as disclosed in Schedule
6.01(a); is conducting its business in material compliance with all applicable
rules, laws and regulations of each jurisdiction in which it carries on business
and holds all material licenses, registrations and qualifications to do business
and is in good standing in each jurisdiction in which the nature of the business
conducted by it or the property owned or leased by it make such qualification
necessary; and all such licenses, registrations and qualifications are valid and
subsisting and in good standing.
(b) Corporate Information - Schedule 6.01(b) contains a true and complete
list of the Companies, indicating in respect of each of them its corporate
history (including all prior names and predecessor corporations), issued and
outstanding shares in its capital stock, jurisdiction of incorporation,
registered or head office, principal place of business, locations at which it
has places of business; and all jurisdictions in which it owns material assets.
(c) Ownership of Companies - Holdings is the registered and beneficial
owner of all the issued and outstanding shares in the capital stock of each of
its Subsidiaries, including the Borrower; and the Borrower is the registered and
beneficial owner of all the issued and outstanding shares in the capital stock
of each of its Subsidiaries; and all of the foregoing shares are free and clear
of all Liens, except Liens in favour of ▇.▇. ▇▇▇▇▇▇ Bank Canada which will be
released and terminated upon the making of the first Advance hereunder.
(d) No Pending Corporate Changes - As at the date of this Agreement, no
Person has any agreement or option or any right or privilege (whether by law,
pre-emptive or contractual) capable of becoming an agreement, including
convertible securities, warrants or convertible obligations of any nature, for
the purchase of any properties or assets of any Company out of the ordinary
course of business or for the purchase, subscription, allotment or issuance of
any debt or equity securities of any Company. Attached as Schedule 6.01(d) is a
description of certain potential transactions of which the Borrower is aware as
at the date of this Agreement, but the Borrower acknowledges that the disclosure
of such potential transactions to the Lenders shall not derogate from or
otherwise affect any other provisions of this Agreement, specifically including
paragraphs 7.02(h) and 10.01(o).
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(e) No Conflicting Agreements - Neither the execution and delivery by the
Borrower of this Agreement and the performance by the Borrower of its
obligations under this Agreement, nor the execution and delivery by the
Companies of the Security and the performance by the Companies' of their
respective obligations under the Security, conflict with, result in a breach of,
or constitute a default under the charter documents or by-laws of any Company,
or any Material Agreement to which it is a party or is otherwise bound, and does
not require the consent or approval of any Person which has not been provided or
obtained.
(f) No Conflict with Charter Documents - There are no provisions in the
charter documents or by-laws of any Company or in any unanimous shareholder
agreement affecting any of them which restrict or limit its powers to borrow
money, issue debt obligations, guarantee the payment or performance of the
obligations of others, or encumber all or any of its property, now owned or
subsequently acquired.
(g) Power and Authority - The Borrower has the capacity, full power, legal
right and authority to borrow from the Lenders and to enter into and perform its
obligations under this Agreement and the Security; and each of its Subsidiaries
has the capacity, full power, legal right and authority to guarantee the
obligations of the Borrower and to enter into and perform its obligations under
the Security required to be provided by it hereunder.
(h) Authorization of Documents - The execution and delivery of this
Agreement by the Borrower, the execution and delivery of the Security required
to be provided hereunder by each Company, and the performance of the Companies'
respective obligations herein and therein, have been duly authorized by all
necessary corporate action.
(i) Validity - This Agreement constitutes a legal, valid and binding
obligation of the Borrower, enforceable in accordance with the terms and
provisions hereof, subject to laws of general application affecting creditors'
rights and the discretion of the court in awarding equitable remedies.
(j) Ownership of Assets; Specific Permitted Liens - Each Company owns,
possesses and has a good and marketable title to its undertaking, property and
assets (including any Land owned by it) free and clear of any and all Liens
except for Permitted Liens (and Liens to be released and discharged with the
proceeds of the first Advance hereunder); and no Company has any commitment or
obligation (contingent or otherwise) to grant any Liens except for Permitted
Liens. Schedule 6.01(j) attached hereto contains a true and complete list of the
Specific Permitted Liens in existence as at the date of this Agreement which
affect the Companies or their properties and assets. No event has occurred which
constitutes, or which with the giving of notice, lapse of time or both would
constitute, a material default by any Company under any said Specific Permitted
Lien. The Borrower's ownership rights in respect of the Land on which the
Saskatoon Plant is situated include all mineral rights (specifically including
the right to extract salt), except to the extent described in Schedule 6.01(j).
Based on a report prepared by the Borrower's consultant, the Borrower
expects that at the current rate of
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extraction it will be able to continue to extract salt from the Land on which
the Saskatoon Plant is situated in quantities required by the Borrower to
continue its operations as presently conducted for at least one hundred (100)
years from the date of this Agreement.
(k) Owned Properties - Schedule 6.01(k) attached hereto contains a true
and complete list of the Owned Properties as at the date of this Agreement.
(l) Leased Properties - Schedule 6.01(l) attached hereto contains a true
and complete list of the Leased Properties as at the date of this Agreement.
(m) Intellectual Property - The Companies possess all licenses,
franchises, permits, registrations, patents, patent applications, trademarks,
trademark applications, trade names, trade name rights, service marks, service
▇▇▇▇ rights, copyrights and other forms of intellectual property which are
material to the conduct of their businesses as now conducted and as presently
proposed to be conducted, each of which is in good standing in all material
respects; and each such Company owns and possesses or has the right to use such
intellectual property and, to the best of the Borrower's knowledge, is not in
violation of any valid rights of others with respect thereto. The Companies do
not directly or indirectly use or rely upon any patents, trademarks, trade
names, trade name rights, service marks, service ▇▇▇▇ rights, copyrights or
other forms of intellectual property owned or controlled by any Chapter 11
Debtors, except for the use of "Sterling" in the corporate name of any
applicable Company and the use by such applicable Company of the stylized "s"
trademark. Attached hereto as Schedule 6.01(m) is a list of all material
registrations, patents, patent applications, trademarks, trademark applications,
trade names, trade name rights, service marks, service ▇▇▇▇ rights and
copyrights which, as at the date of this Agreement, are owned by the Companies
or in respect of which the Companies hold rights under licences.
(n) Insurance - Each Company has placed insurance, including property,
boiler and machinery, business interruption and liability insurance, in
appropriate amounts and for appropriate risks as would be considered prudent for
similar businesses, the current particulars of which have been provided to the
Agent in writing, including in respect of each policy the risks covered and
exclusions, limits of coverage, deductible amounts, replacement cost provisions,
co-insurance provisions (if any) and all other particulars. Except as disclosed
in Schedule 6.01(n) attached hereto, in the last three years no insurance policy
has been cancelled and no insurer has refused to renew any insurance coverage.
(o) Material Agreements - Schedule 6.01(o) attached hereto contains a true
and complete list of all Material Agreements to which any of the Companies is a
party as at the date of this Agreement and a description of the nature of each
said Material Agreement. Each said Material Agreement is in good standing and in
full force and effect; and neither the Borrower nor, to the best of the
Borrower's knowledge, any of the other parties thereto, is in material breach of
any of the terms or conditions contained therein.
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(p) Labour Agreements - Except as disclosed in Schedule 6.01(p), on the
date of this Agreement none of the Companies has any contracts with any labour
union or employee association nor made commitments to or conducted negotiations
with any labour union or employee association with respect to any future
agreements, and none of the Companies is aware of any current attempts to
organize or establish any such labour union or employee association. The
Companies have experienced no work stoppages or strikes (legal or otherwise) in
the three (3) years preceeding the date of this Agreement. The collective
agreements to which the Borrower is a party are in full force and effect and the
Borrower is in compliance with all of its obligations thereunder.
(q) Environmental Matters - Except to the extent disclosed in Schedule
6.01(q) attached hereto:
(i) Each Company has complied in all material respects with, and its
business, operations, assets, equipment, Owned Properties and Leased
Properties and other buildings and improvements located thereon are
in compliance in all material respects with all applicable
Requirements of Environmental Law, specifically including all
applicable Requirements of Environmental Law concerning the storage
and handling of Hazardous Materials.
(ii) Each Company has been issued all material permits, licenses,
certificates and approvals from Governmental Authorities which are
required in connection with (i) air emissions; (ii) discharges to
surface or groundwater; (iii) noise emissions; (iv) solid or liquid
waste disposal; (v) the use, generation, storage, transportation or
disposal of Hazardous Materials; and (vi) all other applicable
Requirements of Environmental Law.
(iii) The Borrower has been the registered and beneficial owner of, and
the only Person in possession and occupation of, the Saskatoon Plant
since July 10, 1997. During the said period of the Borrower's
ownership and possession of the Saskatoon Plant there has been no
material emission, spill, release, or discharge by the Borrower or
any other Person into or upon (i) the air; (ii) soils, or any
improvements located thereon; (iii) surface water or groundwater; or
(iv) the sewer, septic system or waste treatment, storage or
disposal system servicing the premises, of any Hazardous Materials
at or from the Saskatoon Plant; and during such period the Borrower
has not received any complaint, order, directive, claim, citation,
or notice from any Governmental Authority or any other Person with
respect to (i) air emissions; (ii) spills, releases, or discharges
to soils or improvements located thereon, surface water, groundwater
or the sewer, septic system or waste treatment, storage or disposal
systems servicing the Saskatoon Plant or any other Land owned or
leased by the Companies or upon which they carry on business; (iii)
noise emissions; (iv) solid or liquid waste disposal; (v) the use,
generation, storage, transportation, or disposal of Hazardous
Materials; or (vi) other applicable
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Requirements of Environmental Law affecting the Companies or their
businesses, operations, assets, equipment, property, leaseholds, or
other facilities.
(iv) To the Borrower's knowledge after due enquiry, there are no legal or
administrative proceedings, investigations or claims now threatened
or pending against any Company with respect to the presence on or
under, or the discharge, emission, spill, radiation or disposal into
or upon any Land, the atmosphere, or any watercourse or body of
water, of any Hazardous Material; nor, to the Borrower's knowledge
after due enquiry, is any Governmental Authority asserting or
threatening to assert any such claim; and, to the Borrower's
knowledge after due enquiry, there is no factual basis for any such
proceedings, investigations or claims.
(v) To the Borrower's knowledge after due enquiry, the Companies have no
material indebtedness, obligation or liability, absolute or
contingent, matured or not matured, with respect to the storage,
treatment, cleanup or disposal of any Hazardous Materials (including
without limitation any such indebtedness, obligation, or liability
under any applicable Requirements of Environmental Law regarding
such storage, treatment, cleanup or disposal).
(vi) The covenants, warranties, representations and indemnities provided
by Saskatoon Chemicals Ltd. in favour of the Borrower contained in
Article XII of the Asset Purchase Agreement made as of the 21st day
of May, 1997, as amended on June 17, 1997, between such parties, and
the Guarantee Agreement dated as of July 10, 1997 given by
Weyerhaeuser Canada Ltd. in favour of the Borrower, are in full
force and effect, unamended; and there are no matters in dispute
between the parties thereunder.
(vii) The covenants, warranties, representations and indemnities given in
favour of the Borrower by each of CIC Industrial Interests Inc. and
Her Majesty the Queen In Right of Saskatchewan which are contained
in the Agreement made as of the 10th day of July, 1997 between such
parties are in full force and effect, unamended; and there are no
matters in dispute thereunder between the Borrower and such other
parties.
(r) No Litigation - There are no actions, suits or proceedings pending or,
to the Borrower's knowledge after due enquiry, threatened against any Company in
any court or before or by any federal, provincial, municipal or other
Governmental Authority except as disclosed in Schedule 6.01(r) attached hereto.
(s) No Default - No Event of Default or Default has occurred and is
continuing.
(t) Financial Statements - The Yearend Financial Statements and the
Interim Financial Statements of each Company in respect of its most recently
completed Fiscal
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Year and its most recently completed Fiscal Quarter, respectively, have been
prepared in accordance with GAAP on a basis which is consistent with the
previous fiscal period, and present fairly:
(i) its assets and liabilities (whether accrued, absolute, contingent or
otherwise) and financial condition as at the dates therein
specified;
(ii) its sales, earnings and results of its operations during the periods
covered thereby; and
(iii) in the case of the Yearend Financial Statements, its changes in
financial position;
and since the dates of the said Yearend Financial Statements and Interim
Financial Statements, as the case may be, no liabilities have been incurred by
the Companies except in the ordinary course of business and no Material Adverse
Change has occurred.
(u) Financial and Other Information - All financial and other information
provided by or in respect of the Companies to the Agent or the Lenders in
writing was true, correct and complete in all material respects when provided;
and such information (as it relates to the dates specified therein), remains
true, correct and complete in all material respects on the date of this
Agreement. No information, exhibit, or report furnished by the Borrower to the
Agent or the Lenders in connection with the negotiation of this Agreement
contains any material misstatement of fact or omits to state a material fact or
any fact necessary to make the statement contained therein not materially
misleading.
(v) No Guarantees - No Guarantees (except Guarantees in favour of ▇.▇.
▇▇▇▇▇▇ Bank Canada, which will be released and terminated upon the making of the
first Advance hereunder) have been granted by any Company (other than Guarantees
which comprise part of the Security).
(w) Tax Returns - Each Company has duly and timely filed all tax returns
required to be filed by it, and has paid all taxes which are due and payable by
it. Each Company has also paid all other taxes, charges, penalties and interest
due and payable under or in respect of all assessments and re-assessments of
which it has received written notice. To the Borrower's knowledge after due
enquiry there are no actions, suits, proceedings, investigations or claims now
threatened or pending against any Company in respect of taxes, governmental
charges or assessments or any matters under discussion with any Governmental
Authority relating to taxes, governmental charges or assessments asserted by any
such Governmental Authority.
(x) Statutory Liens - Each Company has remitted on a timely basis all
amounts required to have been withheld and remitted (including withholdings from
employee wages and salaries relating to income tax, employment insurance and
Canada Pension Plan contributions), goods and services tax and all other amounts
which if not paid when
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due could result in the creation of a Statutory Lien against any of its
property, except for Permitted Liens.
(y) Other Information - The businesses carried on by the Companies and
their respective properties are not affected by any fire, explosion, accident,
strike, lockout or other labor dispute, drought, storm, hail, earthquake,
embargo, act of God or other casualty (whether or not covered by insurance),
materially adversely affecting such businesses or properties.
(z) Miscellaneous - Except to the extent disclosed in Schedule 6.01(z)
attached hereto:
(i) the Borrower and each of its Subsidiaries is, and after giving
effect to the transactions contemplated hereby and the incurrence
of the Obligations will be and will continue to be, solvent, able
to pay their debts as they become due, and have sufficient capital
to carry on their business and all businesses in which they are
about to engage;
(ii) no member of the board of directors of the Borrower or any of its
Subsidiaries serves on the board of directors of any Chapter 11
Debtor;
(iii) none of the officers of the Borrower or any of its Subsidiaries
serves as an officer of any Chapter 11 Debtor;
(iv) none of the personnel employed by the Borrower or any of its
Subsidiaries is also employed by any Chapter 11 Debtor;
(v) neither the Borrower nor any Subsidiary of the Borrower holds
itself out to be, or is listed or designated as, a branch, agent,
department or division of any Person, including any Chapter 11
Debtor;
(vi) neither the Borrower nor any Subsidiary of the Borrower has any
place of business in the United States;
(vii) neither the Borrower nor any Subsidiary of the Borrower has
guaranteed any indebtedness or obligations of any Chapter 11
Debtor, nor is there a Lien upon any assets of the Borrower or any
Subsidiary of the Borrower which collateralizes or otherwise
supports any indebtedness or obligations of any Chapter 11 Debtor;
(viii) neither the Borrower nor any Subsidiary of the Borrower is a party
to any contract with a Related Person, except for contracts of the
nature permitted by paragraph 7.02(j); and
(ix) neither the Borrower nor any Subsidiary of the Borrower has any
intention of filing any motion or initiating any proceeding (or
consenting to any such motion or proceeding filed or initiated by
any other Person) whereby the Borrower or any of its Subsidiaries
would become a debtor in the
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Chapter 11 Proceedings or any other proceedings under the U.S.
Bankruptcy Code.
6.02 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The Borrower acknowledges that the Agent and the Lenders are relying upon
the foregoing representations and warranties in connection with the
establishment and continuation of the Credit Facilities and the entering into of
any Service Agreements with the Borrower. Notwithstanding any investigations
which may be made by the Agent or the Lenders, the said representations and
warranties shall survive the execution and delivery of this Agreement and the
making of any Advances from time to time hereunder, until full and final payment
and satisfaction of the Obligations.
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ARTICLE VII - COVENANTS
7.01 POSITIVE COVENANTS
The Borrower hereby covenants and agrees with the Agent and the Lenders
that it will, and will cause each of its respective Subsidiaries to:
(a) Prompt Payment - in the case of the Borrower, punctually pay all
principal, interest and other amounts due hereunder at the times and in the
manner specified herein;
(b) Preservation of Corporate Existence - maintain its corporate existence
in good standing, preserve its material rights, powers, licences, privileges,
franchises and goodwill, exercise any rights of renewal or extensions of any
leases, licences, concessions, franchises or any other rights whatsoever which
are material to the conduct of its business, maintain all material
qualifications to carry on business in each jurisdiction in which such
qualifications are required, and carry on and conduct its business in a proper
and efficient manner so as to protect its property and the earnings, income,
rents and profits of its business; and to continue to carry on its business and
not materially change the nature of its business from that being carried on at
the date of this Agreement;
(c) Compliance with Laws - comply in all material respects with all
applicable Laws (specifically including, for greater certainty, all applicable
Requirements of Environmental Law) and obtain and maintain in good standing all
material leases, licences, permits and approvals from any and all Governmental
Authorities required in respect of its business and operations;
(d) Payment of Taxes, etc. - pay when due all rents, taxes, rates, levies,
assessments and governmental charges, fees and dues lawfully levied, assessed or
imposed in respect of its property which are material to the conduct of its
business, and deliver to the Agent upon request receipts evidencing such
payments; except for rents, taxes, rates, levies, assessments and governmental
charges, fees or dues in respect of which an appeal or review proceeding has
been commenced, a stay of execution pending such appeal or review proceeding has
been obtained, reserves reasonably required by the Agent and the Lenders have
been established; and the amounts in question do not in the aggregate materially
detract from the ability of such Company to carry on its business and to perform
and satisfy all of its obligations hereunder;
(e) Maintain Records - maintain adequate books, accounts and records in
accordance with GAAP;
(f) Maintenance of Properties - keep its property and assets in good
repair and working condition, ordinary wear and tear excepted;
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(g) Inspection - permit the Agent and its employees and agents, during
normal business hours and upon at least one (1) Business Days' prior verbal or
written notice, to enter upon and inspect its properties, assets, books and
records from time to time and make copies of and abstracts from such books and
records, and discuss its affairs, finances and accounts with any of its officers
and directors; and it will also permit the Agent and its employees and agents,
without prior notice to or obtaining the consent of the Borrower, to discuss its
affairs, finances and accounts from time to time with its independent
accountant. After the occurrence and during the continuation of an Event of
Default, or if the Agent is of the opinion, acting reasonably, that a
significant adverse change has occurred and is continuing in respect of the
environmental condition of any Owned Property or Leased Property from the date
of this Agreement, then:
(i) the Agent and its agents may upon at least two (2) Business
Days' prior verbal or written notice conduct environmental investigations
of the Borrower's properties and assets from time to time to the extent
considered by the Agent, acting reasonably, to be necessary in the
circumstances; and the Agent agrees that if requested by the Borrower it
will promptly provide the Borrower with copies of any and all reports
prepared relating to any such investigation; and
(ii) the Borrower will execute and deliver all reasonable consents
and further assurances by it as may be necessary or desirable in order for
the Agent and its agents to obtain information from Governmental
Authorities and other third parties with respect to environmental matters
relating to such Owned Property or Leased Property;
provided that, in each case:
(A) the Agent and Lenders shall maintain the confidentiality of all
information received from such investigations, discussions and examinations to
the extent provided in section 13.15; and
(B) any representative of the Agent (other than employees of the
Agent and counsel to the Agent) has executed and delivered an agreement in
favour of the Borrower to use such information only for the purposes of this
Agreement and in accordance with the same standards set out in section 13.15.
(h) Liens - maintain all of its property, assets and undertaking free of
all Liens whatsoever, except for Permitted Liens;
(i) Insurance Coverage - obtain from financially responsible insurance
companies and maintain liability insurance, all-risks property insurance on a
replacement cost basis (less a reasonable deductible not to exceed amounts
customary in the industry for similarly situated businesses and properties), and
insurance in respect of such other risks as the Agent may reasonably require
from time to time; all of which policies of insurance shall be in such amounts
as may be reasonably required by the Agent and the Lenders and shall include a
standard mortgage clause approved by the Insurance Bureau of Canada; and the
interest of the Agent shall be noted on such policies (except liability
insurance policies) as first mortgagee and loss payee; and the Agent shall be
named as an additional insured under such liability insurance
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policies; and the Agent shall be provided with certificates of insurance and
certified copies of such policies from time to time upon request, provided that:
(i) any insured claim, judgment, settlement or money compromise and any
insured expenses associated with its defence or investigation payable by
commercial general liability insurance shall be paid first to any Person
entitled to payment of such unpaid insured claim, judgment, settlement or
money compromise and entitled to payment of such unpaid insured expenses
and thereafter to the applicable Company; and
(ii) if insurance proceeds are payable in respect of loss of or damage to
property owned by a Company as a result of any one or a series of related
occurrences, such proceeds are not in excess of two million five hundred
thousand dollars ($2,500,000), and no Event of Default has occurred and is
continuing, then the Agent and the Lenders shall consent to the payment of
such proceeds directly to such Company, provided that such Company has
confirmed in writing to the Agent and the Lenders that it will use such
proceeds to repair or replace such property (or that that such property
has already been repaired or replaced and the proceeds will reimburse the
Company for payments it made for such purpose); but nothing herein shall
affect the rights of any Person holding a Permitted Lien in respect of
such property which has priority over the Security;
(j) Perform Obligations - fulfil all covenants and obligations required to
be performed by it under this Agreement, the Security and any other agreement or
undertaking now or hereafter made between it and the Lenders or the Agent;
(k) Notice of Certain Events - provide prompt notice to the Agent of the
occurrence of any Default or Event of Default or any event or development
(specifically including any litigation) which constitutes a Material Adverse
Change;
(l) Further Assurances - provide the Agent and the Lenders with such
further Security, information, financial data, documentation and other
assurances as the Agent and the Lenders may reasonably require from time to
time, not inconsistent with the terms of this Agreement, to ensure the ongoing
compliance by the Borrower with the terms and conditions of this Agreement; and
(m) Bank Accounts and Service Agreements - maintain all of its bank
accounts and Service Agreements with BMO, provided that the services offered by
BMO in connection therewith and the costs of such services, are not materially
different from those available to the Borrower from other Canadian financial
institutions.
7.02 NEGATIVE COVENANTS
The Borrower hereby covenants and agrees with the Agent and the Lenders
that it will not, and will ensure that each of its Subsidiaries does not,
without the prior written
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consent of the Agent on behalf of the Lenders (which consent may be withheld in
the sole discretion of the Agent and the Lenders):
(a) Funded Debt - create, incur or assume any Funded Debt, except
Permitted Funded Debt;
(b) Liens - grant or suffer to exist any Lien in respect of any of its
property, except Permitted Liens;
(c) Disposition of Assets - directly or indirectly sell or otherwise
dispose of any of its assets except in the ordinary course of its business or
except if immaterial to its business (and for greater certainty, a sale and
leaseback transaction shall not be considered a disposition of assets in the
ordinary course of business);
(d) Guarantees - become obligated under Guarantees (other than Guarantees
which comprise part of the Security);
(e) Investments - make or acquire any Investments, except for:
(i) investments in Subsidiaries, if the Agent and the Lenders in
their sole discretion consent thereto in writing, and provided
that such Subsidiary shall have provided all Security required
to be provided by it pursuant to section 8.03;
(ii) investments in direct obligations of Canada or the United
States of America, including Canadian or United States of
America federal, provincial or state obligations, with
maturities of one year or less from the date of acquisition of
the investment, provided that if required by the Agent, the
Borrower shall provide such additional items of Security as
the Agent may require in order that such investments shall be
specifically pledged to the Agent; and
(iii) investments in certificates of deposit of maturities less than
one year, issued by BMO;
(f) Capital Expenditures - make or incur Capital Expenditures in excess of
the following amounts (in respect of all Companies in the aggregate): (i)
$5,000,000 in the Fiscal Year ending September 30, 2002; and (ii) in each
subsequent Fiscal Year, $5,000,000 plus an amount, if positive, equal to
$5,000,000 less the Capital Expenditures incurred by all Companies in the
aggregate in the immediately preceding Fiscal Year;
(g) Distributions - make any Distributions, except that the following
Distributions may be made if both before and immediately after each such
Distribution no Event of Default has occurred and is continuing (and no Company
may declare or enter into a commitment to make a Distribution unless such
Distribution would be permitted as set out below):
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(i) each Subsidiary of the Borrower may make Distributions to the
Borrower; and
(ii) the Borrower may make Distributions to Holdings after the date of
this Agreement not in excess of the aggregate amount of thirty
million dollars ($30,000,000);
(h) Corporate Changes - enter into any transaction whereby all or
substantially all of its undertaking, property and assets would become the
property of any other Person, whether by way of reconstruction, reorganization,
recapitalization, consolidation, amalgamation, merger, transfer, sale or
otherwise, without the prior written consent of the Lenders in their sole
discretion (but the Lenders hereby confirm that a change of Control of the
Borrower which does not constitute an Event of Default pursuant to paragraph
10.01(o) herein shall be permitted), except that a Company may amalgamate with
any corporation incorporated under the laws of Canada or a province thereof
which is, directly or indirectly, a wholly-owned subsidiary of Sterling
Chemicals, Inc. provided that such corporation is not a debtor in the Chapter 11
Proceedings and is not subject to any court order made in the Chapter 11
Proceedings which imposes or purports to impose any obligations or restrictions
on such corporation, and provided that the Lenders are satisfied in their
absolute discretion with the financial position (including contingent
liabilities) of the amalgamated corporation and the Agent shall receive, on the
date of such amalgamation, such additional security and guarantees from the
amalgamated corporation or other Persons, not inconsistent with this Agreement,
together with legal opinions in respect thereof, as it may require;
(i) Fiscal Year - change its Fiscal Year (which for greater certainty
presently ends on September 30 in each year);
(j) Dealing with Related Persons - enter into any contract with any
Related Person for the sale, purchase, lease or other dealing in any property or
services, except as follows:
(i) the Companies may from time to time sell products to Sterling Pulp
Chemicals, Ltd. (which term in this paragraph (j) includes any
successor corporation) and buy products from Sterling Pulp
Chemicals, Ltd. in the ordinary course of business as presently
conducted; provided that all such products are bought or sold at
prices which would be applicable to arm's-length purchases or sales
of similar products; and provided further that the aggregate of all
amounts owing by Sterling Pulp Chemicals, Ltd. to the Companies in
respect of all such products sold by the Companies to Sterling Pulp
Chemicals, Ltd. may not exceed $2,000,000 at any time;
(ii) for so long as administrative and management services are shared
between the Borrower and Sterling Pulp Chemicals, Ltd., the Borrower
may be a party to an agreement with Sterling Pulp Chemicals, Ltd.
whereby the Borrower shall contribute up to $500,000 per year in
respect of expenses relating to such services, which said amount may
be increased from time
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to time in order to reflect the Borrower's share of any reasonable
increase in the cost of such services or any expansion in the scope
of such services received by the Borrower, any such increase in cost
being subject to the prior written consent of the Lenders acting
reasonably; and
(iii) contracts on commercially reasonable terms with individuals who are
associates of Related Persons of the Companies, including without
limitation employment and consulting contracts, provided that such
contracts are not prohibited by any other applicable provisions of
this Agreement.
(k) Payments on Funded Debt - make any payment of principal or interest in
respect of Funded Debt (other than such payments in respect of the Obligations),
unless both before and after any such payment no Event of Default shall have
occurred and be continuing and the making of such payment shall not create an
Event of Default;
(l) Hedging Agreements - except with the prior written consent of the
Lenders in their sole discretion, enter into or be a party to any interest rate
or currency hedging agreement (such as but not limited to interest rate or
currency swaps and option agreements); or
(m) Miscellaneous - do any of the following:
(i) except for individuals listed on Schedule 6.01(z) and for any
replacements thereof, allow any individual who is an officer of any
Chapter 11 Debtor to also be an officer of the Borrower;
(ii) employ any individual who is also employed by, or performs services
for any Chapter 11 Debtor;
(iii) permit the co-mingling or intermingling of any funds of the Borrower
or any of its Subsidiaries with the funds or monies of any Chapter
11 Debtor;
(iv) guarantee any indebtedness or obligations of any Chapter 11 Debtor,
or provide a Lien upon any of its assets to collateralize or
otherwise support any indebtedness or obligations of any Chapter 11
Debtor;
(v) establish a place of business in the United States; or
(vi) consent to or otherwise directly or indirectly participate or
acquiesce in any proceeding whereby the Borrower or any of its
Subsidiaries would become a Chapter 11 Debtor; and for greater
certainty the Borrower agrees that if at any time it or any of its
Subsidiaries decides to commence any proceedings under insolvency
legislation (including for greater certainty an assignment in
bankruptcy or a proceeding involving protection from its creditors),
it will commence such proceedings only in Canada.
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7.03 FINANCIAL COVENANTS
The Borrower agrees to maintain, on a consolidated basis, the financial
ratios and amounts listed below:
(a) at the end of each Fiscal Quarter, the Working Capital Ratio shall not
be less than 1.50 to 1;
(b) at the end of each Fiscal Year, the ratio of Total Liabilities to
Tangible Net Worth shall not be greater than 2.50 to 1; provided that if an
Advance is made under Tranche B-2 prior to September 30, 2002, this covenant
shall not be required to be satisfied in respect of the Fiscal Year ending
September 30, 2002;
(c) at the end of each Fiscal Quarter, the ratio of (i) Funded Debt at the
end of such Fiscal Quarter to (ii) EBITDA in respect of such Fiscal Quarter and
the three preceding Fiscal Quarters shall not be greater than 2.50 to 1; and
(d) at the end of each Fiscal Quarter, the ratio of (i) CFADS in respect
of such Fiscal Quarter and the three preceding Fiscal Quarters to (ii) Funded
Debt Service in respect of such Fiscal Quarter and the three preceding Fiscal
Quarters shall not be less than 1.20 to 1.
7.04 REPORTING REQUIREMENTS
The Borrower shall deliver or cause to be delivered to the Agent (or to
BMO, if so specified) the following financial and other information at the times
indicated below:
(a) a Borrowing Base Certificate to BMO as at the end of each month in the
form of Exhibit "F" attached hereto, certified by the Chief Financial Officer or
other senior officer of the Borrower acceptable to the Agent; by no later than
the 25th day after the end of such month;
(b) the Interim Financial Statements of Holdings and each of the Companies
by the 45th day after the end of each of the Borrower's Fiscal Quarters
(specifically including the last Fiscal Quarter in each year), accompanied by a
Compliance Certificate certified by the Chief Financial Officer of the Borrower
or other senior officer of the Borrower acceptable to the Agent in the form of
Exhibit "G" attached hereto which shall evidence compliance with all financial
ratios and amounts set out in section 7.03 herein in respect of such Fiscal
Quarter and shall include an analysis of any material variances in the
Borrower's financial results in such Fiscal Quarter from the projections
contained in the Borrower's business plan presented to the Agent on behalf of
the Lenders (and without limiting the generality of the foregoing, any variance
greater than 10% and which is also greater than $500,000 shall be deemed to be
material);
(c) the annual audited Yearend Financial Statements of Holdings and each
of the Companies by the 110th day after the end of each Fiscal Year accompanied
by a Compliance Certificate certified by the Chief Financial Officer of the
Borrower or other
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senior officer of the Borrower acceptable to the Agent in the form of Exhibit
"G" attached hereto which shall evidence compliance with all financial ratios
and amounts set out in section 7.03 herein in respect of such Fiscal Year and
shall include an analysis of any material variances in the Borrower's financial
results in such Fiscal Year from the projections contained in the Borrower's
business plan presented to the Agent on behalf of the Lenders (and without
limiting the generality of the foregoing, any variance greater than 10% and
which is also greater than $500,000 shall be deemed to be material);
(d) the annual financial budget for the Companies on a consolidated and
non-consolidated basis in respect of the subsequent Fiscal Year on or before 30
days prior to the end of the Fiscal Year, which shall disclose all material
assumptions utilized and shall include the following items set out on a
quarterly basis: balance sheet, income statement, cashflow statement, Capital
Expenditures (specifically including capital leases), operating leases and tax
liabilities; and
(e) such additional information and documents as the Lenders or the Agent
may reasonably require from time to time, not inconsistent with the terms of
this Agreement, to ensure the ongoing compliance by the Borrower with the terms
and conditions of this Agreement, in form reasonably acceptable to the Lenders
and the Agent.
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ARTICLE VIII - SECURITY
8.01 SECURITY TO BE PROVIDED BY THE BORROWER
The Borrower agrees to provide in favour of the Agent for the benefit of
the Lenders the security listed below as continuing security for the payment and
performance of the Obligations:
(a) a general security agreement creating a first charge against all
assets of the Borrower, subject only to Permitted Liens;
(b) a general assignment of accounts receivable creating a first charge
against all accounts receivable of the Borrower, subject only to Permitted
Liens;
(c) security agreements creating a first charge against, and an assignment
as security in respect of, the Borrower's rights to and interest in intellectual
property, specifically including all intellectual property listed in Schedule
6.01(m), subject only to Permitted Liens;
(d) debentures, collateral mortgages or other forms of security required
by the Agent to create a first charge over all Land in which the Borrower has an
interest (each such charge being in the principal amount of $100,000,000),
subject only to Permitted Liens;
(e) a Landlord Agreement in respect of each Material Leased Property;
(f) an environmental indemnity agreement;
(g) an assignment as security of the Borrower's interest in policies of
insurance, to the extent provided in paragraph 7.01(i); and
(h) such other security, not inconsistent with the terms of this
Agreement, as may be reasonably required by the Agent from time to time.
8.02 SECURITY TO BE PROVIDED BY HOLDINGS
As a condition precedent to the first Advance hereunder, the following
shall be provided by Holdings to the Agent on behalf of the Lenders: (i) an
unlimited guarantee in respect of the Obligations; and (ii) the security listed
below as continuing security for the obligations of Holdings to the Lenders and
the Agent under such guarantee:
(a) a general security agreement creating a first charge against all
assets of Holdings, subject only to Permitted Liens;
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(b) a pledge agreement creating a first charge over all of the issued and
outstanding shares in the capital of the Borrower, which shall provide that
after the occurrence and during the continuation of an Event of Default Holdings
may not exercise any voting rights attached to such shares without the consent
of the Lenders in their sole discretion (such consent to be evidenced by written
notice provided to the Borrower by the Agent), but otherwise Holdings may
exercise all voting rights attached to the said shares except that such voting
rights may not be exercised to authorize or consent to any act by the Borrower
which would contravene any terms and conditions of this Agreement;
(c) an assignment as security of Holdings' interest in policies of
insurance, to the extent provided in paragraph 7.01(i); and
(d) such other security, not inconsistent with the terms of this
Agreement, as may be reasonably required by the Agent from time to time.
8.03 SECURITY TO BE PROVIDED BY SUBSIDIARIES
The Borrower shall cause each of its Subsidiaries, except 619220, to
provide to the Agent on behalf of the Lenders: (i) a guarantee in respect of the
Obligations (each such guarantee to be in an unlimited amount if permitted under
applicable Law, otherwise such guarantee shall be limited to the maximum amount
which will not contravene applicable Law); and (ii) the security listed below as
continuing security for the obligations of such Subsidiary to the Lenders and
the Agent under such guarantee:
(a) a general security agreement creating a first charge over all assets
of such Subsidiary, subject only to Permitted Liens;
(b) an assignment as security of such Subsidiary's interest in policies of
insurance, to the extent provided in paragraph 7.01(i); and
(c) such other security as may reasonably be required by the Agent from
time to time.
Such guarantees and security shall be provided concurrently with the
execution and delivery of this Agreement by those Subsidiaries in existence on
the date of this Agreement (except 619220); and the Borrower shall cause any
corporation which becomes a Subsidiary after the date of this Agreement to
provide such guarantee and security within thirty (30) days after the date of
becoming a Subsidiary.
8.04 GENERAL PROVISIONS RE: SECURITY AND OPINIONS
In this Agreement, "Security" means all guarantees, security agreements,
mortgages, debentures and other documents mentioned in this Article VIII and all
other documents and agreements delivered by Holdings and the Companies to the
Agent for the benefit of the Lenders from time to time as security for the
payment and performance of the Obligations, and the security interests,
assignments and Liens constituted by the
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foregoing. The Security shall be in form and substance satisfactory to the Agent
and its counsel and the Lenders in their sole discretion. The Agent may require
that any item of Security be governed by the laws of the jurisdiction where the
property subject to such item of Security is located.
8.05 REGISTRATION OF SECURITY
The Security shall be registered where necessary or desirable to record
and perfect the charges contained therein as may be determined by the Agent in
its sole discretion; provided that the Agent may, in its sole discretion and
without consultation with or notice to the Lenders, determine whether the
Security shall be registered against title to any Land in which any Company has
a leasehold interest.
8.06 AFTER-ACQUIRED PROPERTY, FURTHER ASSURANCES
The Borrower shall execute and deliver from time to time, and cause each
of the Subsidiaries to execute and deliver from time to time, all such further
documents and assurances as may be reasonably required by the Agent for the
benefit of the Lenders from time to time in order to provide the Security
contemplated hereunder, specifically including: supplemental or additional
security agreements, assignments and pledge agreements which shall include lists
of specific assets to be subject to the security interests required hereunder.
With respect to provisions in the Security which require the Borrower to use
commercially reasonable efforts to obtain any necessary consents from third
parties to the charging and assignment in favour of the Agent of any lease,
agreement, right, licence or permit, the Borrower shall not be required to
obtain such consents unless and until requested in writing by the Agent, acting
reasonably.
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ARTICLE IX - CONDITIONS PRECEDENT FOR ADVANCES
9.01 CONDITIONS PRECEDENT TO ALL ADVANCES
The Lenders shall have no obligation to make any Advance to the Borrower
under any Credit Facility, unless at the time of making each such Advance the
following terms and conditions shall have been satisfied:
(a) the representations and warranties in Article VI shall continue to be
true and correct in all material respects as if made on the date of such Advance
(unless expressly stated in Article VI to have been made as of a specific,
earlier date), subject to modifications communicated by the Borrower to the
Agent on behalf of the Lenders in writing and accepted by the Lenders in their
sole discretion and subject to changes expressly permitted to be made pursuant
to the terms of this Agreement and disclosed, if required, to the Agent;
(b) no Default or Event of Default shall have occurred, nor shall the
making of the Advance result in the occurrence of any Default or Event of
Default;
(c) the Borrower shall have given a Drawdown Request to the Agent (or BMO,
as the case may be) in accordance with the notice requirements provided herein
(except in respect of Advances in the form of Overdrafts under Facility A and
Advances under the MasterCard Facility);
(d) in connection with any Advance under Facility A, the Borrower shall
have provided a Borrowing Base Certificate which is current to the extent
required by paragraph 7.04(a);
(e) the Borrower shall have complied in all material respects with all
other obligations imposed upon it pursuant to this Agreement;
(f) since the date of the most recent Interim Financial Statements
delivered to the Agent, no change shall have occurred which in the reasonable
opinion of the Lenders constitutes a Material Adverse Change;
(g) no third party demand or garnishment order for payment to any
Governmental Authority shall have been received by the Agent or any Lender in
respect of any Company.
9.02 ADDITIONAL CONDITIONS PRECEDENT TO FIRST ADVANCE
The Lenders shall have no obligation to make the first Advance under any
Credit Facility unless at the time of making such Advance the following terms
and conditions shall have been satisfied:
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(a) the conditions precedent in section 9.01 shall have been satisfied;
(b) the Security required to be provided at such time shall have been
executed and delivered and all registrations necessary or desirable in
connection therewith shall have been made, and any other documentation required
by the Agent or any Lender (not inconsistent with the terms of this Agreement)
shall have been executed and delivered, all in form and substance satisfactory
to the Agent in its sole discretion;
(c) up-to-date building location surveys in respect of each Material Owned
Property shall have been provided to the Agent disclosing no material concerns
and no matters which would be inconsistent with the representations and
warranties contained herein;
(d) the Lenders shall have conducted all due diligence, including site
visits, in respect of the Borrower which they may consider necessary or
desirable, and the results of such due diligence shall be satisfactory to them
in their sole discretion; and without limiting the generality of the foregoing
such due diligence shall include a review of the Borrower's operations,
financial matters, internal controls and hedging practices, and a review of the
1997 agreement of purchase and sale between the Borrower and Weyerhaeuser Ltd.;
(e) with respect to environmental matters:
(i) the Agent and the Lenders shall have reviewed and be satisfied with
the phase II environmental site assessment and baseline
investigation prepared for the Borrower by ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
Engineers dated November 30, 1997;
(ii) the Agent and the Lenders shall have received and be satisfied with
the terms and conditions of the environmental indemnity agreement
provided by Saskatoon Chemicals Ltd. and guaranteed by Weyerhaeuser
Ltd. referred to in clause 6.01(q)(vi);
(iii) the Agent and the Lenders shall have received and be satisfied with
reports from independent firms considered satisfactory to the Agent
and the Lenders in their sole discretion confirming that the
liability of Saskatoon Chemicals Ltd. and Weyerhaeuser Ltd. under
the environmental indemnity and guarantee thereof referred to in
clause 6.01(q)(vi) (including the estimated remediation costs
relating to remediation of the riverbank), will not in the aggregate
exceed Two Million Five Hundred Thousand Dollars ($2,500,000); and
(iv) the Agent and the Lenders shall have received and be satisfied with
the terms and conditions of the agreement made among the Borrower,
CIC Industrial Interests Inc. and Her Majesty The Queen In Right of
Saskatchewan referred to in paragraph 6.01(q);
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(f) the Lenders shall have received and be satisfied with the most recent
Interim Financial Statements and Yearend Financial Statements for Holdings and
the Companies;
(g) the Agent shall have received particulars of all Liens intended to
remain outstanding as Permitted Liens, specifically including the assets
encumbered thereby, the amounts due thereunder, and confirmation by the Borrower
(and if requested by the Agent, also by the other party thereto) that the terms
thereof are being complied with;
(h) the Agent and the Lenders shall have received information satisfactory
to them in their sole discretion concerning the status of the litigation
disclosed in Schedule 6.01(r) herein;
(i) the Agent (and any Lender, if requested by such Lender) shall have
received copies of all Material Agreements and certificates of insurance
policies relating to the Companies, the terms and conditions of which shall be
satisfactory to the Agent and such Lenders in their sole discretion;
(j) the Agent and the Lenders shall have received credit reports in
respect of customers considered by them to be material customers of the Borrower
(specifically including Biolab, Inc. and Cleartech Industries Inc.), which
credit reports shall be satisfactory to the Agent and the Lenders in their sole
discretion;
(k) the Agent and the Lenders shall have received evidence satisfactory to
them in their sole discretion that: the assets and cashflow of Holdings and the
Companies are free from any claim, interest, priority or security interest
arising from or in connection with the Chapter 11 Proceedings; the Chapter 11
Proceedings presently have no impact, directly or indirectly, on the Credit
Facilities or the Security or the ability of Holdings and the Companies to
observe and perform their respective obligations thereunder; and there is no
material risk that any of the foregoing may occur; and without limiting the
generality of the foregoing such evidence shall include an opinion of the U.S.
counsel acting for the Chapter 11 Debtors to the effect that the execution and
delivery by the Borrower of this Agreement, the performance by the Borrower of
its obligations hereunder and the compliance by the Borrower and Holdings with
the terms and provisions hereof and thereof: (i) are not prohibited by the
existing orders of the Court in the Chapter 11 Proceedings; and (ii) do not
contravene or create an event of default under the financing agreements
pertaining to the indebtedness of the Chapter 11 Debtors in effect as at the
date of this Agreement;
(l) the Agent shall have received a certificate of status, certificate of
compliance or similar certificate for Holdings and each Company issued by its
governing jurisdiction and each other jurisdiction in which it carries on
business or holds any material assets;
(m) the Agent shall have received officers' certificates in respect of
Holdings and each Company and a certified copy of resolutions of its sole
shareholder authorizing the execution and delivery of this Agreement and the
Security required to be provided by it at such time (to the extent that Holdings
or such Company is a signatory thereto) and the
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performance of its obligations thereunder and such related matters as the Agent
and its counsel may reasonably require;
(n) the Agent shall have received opinions of the solicitors for Holdings
and each Company, addressed to the Lenders, the Agent and the Agent's counsel,
with respect to such Company's corporate status and authorized and issued
capital, the due authorization, execution and enforceability of the Credit
Agreement and the Security to which it is a party, the registration of the
Security, the results of all applicable searches and title to the Owned
Properties; all such opinions to be in form and substance satisfactory to the
Agent and the Lenders in their sole discretion;
(o) the Agent shall have received opinions of its solicitors, addressed to
the Lenders and the Agent, with respect to the enforceability of the Credit
Agreement and the Security (except to the extent any item of Security is
governed by the laws of Saskatchewan), in form and substance satisfactory to the
Agent and the Lenders in their sole discretion;
(p) any necessary governmental, regulatory and third party approvals
necessary or desirable in connection with this Agreement and the transactions
contemplated therein shall have been given unconditionally and without
containing any onerous terms; and
(q) arrangements satisfactory to the Agent and the Lenders in their sole
discretion shall have been made to repay all indebtedness and liabilities
(specifically including contingent liabilities) owing by the Borrower to ▇.▇.
▇▇▇▇▇▇ Bank Canada from the proceeds of the first Advance and ▇.▇. ▇▇▇▇▇▇ Bank
Canada shall have provided an undertaking, in form and substance satisfactory to
the Agent and the Lenders in their sole discretion to release and discharge all
of the security it holds in respect of the Companies and Holdings;
(r) a Borrowing Base Certificate shall have been provided in respect of
the month immediately preceding the date of the first Advance (whether or not an
Advance under Facility A will be made on such date); and
(s) a Compliance Certificate shall have been provided with respect to the
Fiscal Quarter ended March 31, 2002 which evidences the Borrower's compliance
with all financial ratios and covenants under this Agreement, provided that the
Funded Debt in such Compliance Certificate shall be adjusted to include the
amount of the first Advance and to deduct the amount of the Borrower's
indebtedness to ▇.▇. ▇▇▇▇▇▇ Bank Canada.
9.03 ADDITIONAL CONDITIONS PRECEDENT FOR ADVANCES UNDER TRANCHE B-2 AND TRANCHE
B-3
The Facility B Lenders shall have no obligation to make any Advance under
Tranche B-2 or Tranche B-3 unless at the time of making each such Advance the
following terms and conditions shall have been satisfied:
(a) the conditions precedent in section 9.01 shall have been satisfied;
and
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(b) concurrently with such Advance the Agent and the Lenders shall be
satisfied that the use of the proceeds of the said Advance does not contravene
the OBCA in effect as at the date of such Advance, or subject the Borrower to
any material risk from its creditors or other Persons.
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ARTICLE X - DEFAULT AND REMEDIES
10.01 EVENTS OF DEFAULT
The occurrence of any one or more of the following events, after the
expiry of any applicable cure period set out below, shall constitute an event of
default under this Agreement (an "Event of Default"):
(a) the Borrower fails to pay any principal amount when due under this
Agreement; or the Borrower fails to pay any interest due under this Agreement
within three (3) Business Days after the due date thereof; or the Borrower fails
to pay any amount under the Security, any Service Agreement or any other
agreement made between it and any Lender in respect of which there is a
specified payment date within three (3) Business Days' after such specified
payment date;
(b) the Borrower fails to pay any amount, other than an amount referred to
in paragraph (a) above, payable by the Borrower under this Agreement, the
Security, any Service Agreement or any other agreement made between it and any
Lender within three (3) Business Days after written notice by the Agent that
such amount is due and payable;
(c) any representation, warranty or statement made to the Agent or any
Lender (herein or in any term sheet, certificate, questionnaire or other
document) is incorrect in any material respect on the date on which such
representation, warranty or statement was made, or subsequently becomes
incorrect in any material respect; provided that if such representation,
warranty or statement is capable of being corrected within thirty (30) days, the
Borrower diligently attempts to take all such action as may be necessary in
order that such representation, warranty or statement will become correct and
diligently keeps the Agent informed of its efforts in this regard, and such
representation, warranty or statement is correct by not later than the expiry of
such thirty (30) day period, then the incorrectness of such representation,
warranty or statement shall not constitute an Event of Default;
(d) the Borrower fails to perform or comply with any of its covenants or
obligations contained in this Agreement (other than those set out in paragraphs
(a), (b) and (c) above) or Holdings or any Company fails to perform or comply
with any of its covenants or obligations in any other agreement or undertaking
made between it and the Lenders (including the Security), in each case,
following receipt of notice of such non-compliance from the Agent; provided that
if such non-compliance is capable of remedy within thirty (30) days, Holdings,
the Borrower or such Company diligently attempts to remedy such non-compliance
and diligently keeps the Agent informed of its efforts in this regard, and such
non-compliance is remedied within such thirty (30) day period, then such
non-compliance shall not constitute an Event of Default;
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(e) Holdings or any Company defaults under one or more agreements or
instruments relating to its Funded Debt (other than the Obligations) or permits
any other event to occur and to continue without being waived or cured after any
applicable grace period specified in such agreements or instruments, if the
effect of one or more of such events is to accelerate, or to permit the
acceleration of, the date on which Funded Debt (other than the Obligations) in
an aggregate amount of $250,000 or more becomes due (whether or not such
acceleration actually occurs) or Holdings or any Company fails to pay any Funded
Debt (other than the Obligations) in an aggregate principal amount of $250,000
when due; provided that if any such default is waived by the holders of such
Funded Debt or a trustee, if any, for such holders, then such event or
occurrence hereunder will not be an Event of Default;
(f) Holdings or any Company ceases to carry on its business; or commits an
act of bankruptcy or becomes insolvent (as such terms are used in the BIA); or
makes an assignment for the benefit of creditors, files a petition in
bankruptcy, makes a proposal or commences a proceeding under Insolvency
Legislation; or petitions or applies to any tribunal for, or consents to, the
appointment of any receiver, trustee or similar liquidator in respect of all or
a substantial part of its property; or admits the material allegations of a
petition or application filed with respect to it in any proceeding commenced in
respect of it under Insolvency Legislation; or takes any corporate action for
the purpose of effecting any of the foregoing;
(g) any proceeding or filing is commenced against Holdings or any Company
seeking to have an order for relief entered against it as debtor or to
adjudicate it a bankrupt or insolvent, or seeking liquidation, winding-up,
reorganization, arrangement, adjustment or composition of it or its debts under
any Insolvency Legislation, or seeking appointment of a receiver, trustee,
custodian or other similar official for it or any of its property or assets;
unless (i) Holdings or such Company (as the case may be) is diligently defending
such proceeding in good faith and on reasonable grounds as determined by the
Agent and the Lenders acting reasonably, and (ii) such proceeding does not in
the reasonable opinion of the Agent and the Lenders materially adversely affect
the ability of Holdings or such Company (as the case may be) to carry on its
business and to perform and satisfy all of its obligations hereunder;
(h) Holdings or any Company is adjudicated insolvent or bankrupt; or an
order, judgment or decree is entered by any court of competent jurisdiction
approving a petition seeking reorganization, compromise or arrangement of
Holdings or any Company, or appointing a receiver, trustee or liquidator of
Holdings or any Company or of all or a substantial part of its property and
assets, unless (i) such order, judgment or decree has been stayed (either by
appropriate proceedings or by operation of law) and is being diligently
contested by Holdings or such Company in good faith and on reasonable grounds as
determined by the Agent and the Lenders acting reasonably, and (ii) such
proceeding does not in the reasonable opinion of the Agent and the Lenders
materially adversely affect the ability of Holdings or such Company (as the case
may be) to carry on its business and to perform and satisfy all of its
obligations hereunder;
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(i) Holdings or any Company is added as a debtor to the Chapter 11
Proceedings; or any court order is made in the Chapter 11 Proceedings which
imposes any obligations or restrictions on or in respect of Holdings or any
Company or otherwise adversely affects the ability of Holdings or any Company to
carry on its business and to perform and satisfy all of its obligations
hereunder; provided however that a court order made in the Chapter 11
Proceedings authorizing or approving the acquisition of Control of the Borrower
by the holders of the 12 3/8% senior secured notes of Sterling Chemicals, Inc.
pursuant to the joint plan of reorganization filed in the Chapter 11 Proceedings
on May 14, 2002 shall not constitute an Event of Default pursuant to this
paragraph (i);
(j) any Person takes possession of any property of Holdings or any Company
that is material to its financial condition, business or operations by way of or
in contemplation of enforcement of security, or a distress or execution or
similar process is levied or enforced against any such property, unless (i)
Holdings or such Company is diligently pursuing all necessary proceedings to
recover such property or to stay or dismiss such process in good faith and on
reasonable grounds as determined by the Agent and the Lenders acting reasonably,
and (ii) in the reasonable opinion of the Agent and the Lenders the taking of
possession of such property by such Person does not materially adversely affect
the ability of Holdings or such Company (as the case may be) to carry on its
business and to perform and satisfy all of its obligations hereunder;
(k) a final judgment or decree for the payment of money for an amount
exceeding $1,000,000 shall have been obtained or entered against Holdings or any
Company and shall remain unpaid, unbonded or undischarged for thirty (30) days
from the date such judgment or decree was payable;
(l) any document constituting part of the Security shall for any reason
cease to be in full force and effect or shall be declared in a final judgment of
a court of competent jurisdiction to be null and void; or Holdings or any
Company contests the validity or enforceability thereof or denies it has any
further liability or obligation thereunder; or any document (other than a
Guarantee) constituting part of the Security shall for any reason fail to create
a valid and perfected first priority security interest, subject to Permitted
Liens, in and to the property purported to be subject thereto, unless such
failure is capable of remedy within thirty (30) days, Holdings, the Borrower or
such Company diligently attempts to remedy such failure and diligently informs
the Agent of its efforts in this regard, and the failure is remedied within such
thirty (30) day period, then the failure shall not constitute an Event of
Default;
(m) any Governmental Authority shall take any action or proceeding to
condemn, seize or appropriate any property of Holdings or any Company that is
material to its financial condition, business or operations;
(n) a change occurs which in the reasonable opinion of the Lenders
constitutes a Material Adverse Change; or
(o) a change occurs in the Control of the Borrower without the prior
written consent of the Lenders, such consent not to be unreasonably withheld or
delayed;
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provided that the Lenders hereby consent to the acquisition of Control of the
Borrower by the holders of the 12 3/8% senior secured notes of Sterling
Chemicals, Inc. pursuant to the joint plan of reorganization filed in the
Chapter 11 Proceedings on May 14, 2002 (as such plan may be amended in any
respect which does not involve Control of the Borrower being acquired by any
other Person), provided that none of the officers or employees of the Borrower
listed in Schedule 10.01(o) is terminated or requested to resign as a result of
or in connection with such change in Control of the Borrower.
10.02 ACCELERATION UPON EVENT OF DEFAULT; ADDITIONAL INTEREST
Upon the occurrence of an Insolvency Default, all obligations of the
Borrower to the Agent and the Lenders shall become immediately due and payable,
without the necessity of any demand upon or notice to the Borrower by the Agent.
Upon the occurrence of any Event of Default other than an Insolvency Default,
the Agent may by written notice to the Borrower declare all Obligations to be
immediately due and payable. From and during the occurrence of an Event of
Default, both before and after the Acceleration Date, all Outstanding Advances
shall bear interest at the rates otherwise applicable plus 2% per annum in order
to compensate the Lenders for the additional risk.
10.03 ACCELERATION OF CERTAIN CONTINGENT OBLIGATIONS
Upon the occurrence of an Event of Default, any Lender which has issued a
Bankers' Acceptance, BA Equivalent Note, LIBOR Loan, Fixed-Rate Term Loan or
Letter of Credit with the Borrower or entered into a Service Agreement with a
Company may make a Canadian Dollar Loan or U.S. Dollar Loan to the Borrower in
an amount equal to the face amount of such Bankers' Acceptance, BA Equivalent
Note, LIBOR Loan, Fixed-Rate Term Loan or Letter of Credit, or such Company's
liability under such Service Agreement, as the case may be; and the proceeds of
any such Loan shall be held by such Lender and used to satisfy the Lenders'
obligations under the said Bankers' Acceptance, BA Equivalent Note, LIBOR Loan,
Fixed-Rate Term Loan, Letter of Credit or Service Agreement as such becomes due.
Any such Loan made in respect of a Bankers' Acceptance, BA Equivalent Note,
LIBOR Loan, Fixed-Rate Term Loan or Letter of Credit shall bear interest at the
rate and in the manner applicable to Canadian Dollar Loans under the Credit
Facility under which such Bankers' Acceptance, BA Equivalent Note, LIBOR Loan,
Fixed-Rate Term Loan or Letter of Credit was issued. Any such Loan made in
respect of a Service Agreement shall bear interest at the rate and in the manner
applicable to Canadian Dollar Loans under the Credit Facility which provides for
the highest interest rate at such time.
10.04 COMBINING ACCOUNTS, SET-OFF
Upon the occurrence and during the continuation of an Event of Default, in
addition to and not in limitation of any rights now or hereafter granted under
applicable law, a Lender may without notice to any Company at any time and from
time to time:
(a) combine, consolidate or merge any or all of the deposits or other
accounts maintained with such Lender by such Company (whether term, notice,
demand or
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otherwise and whether matured or unmatured) and such Company's obligations to
such Lender hereunder; and
(b) set off, apply or transfer any or all sums standing to the credit of
any such deposits or accounts in or towards the satisfaction of the said
obligations.
10.05 APPROPRIATION OF MONIES
The Agent (subject to obtaining the unanimous consent of the Lenders in
their sole discretion) may from time to time after an Event of Default
appropriate any proceeds of realization of the Security against any portion or
portions of the Obligations, and the Borrower may not require any different
appropriation. The taking of a judgment or any other action or dealing
whatsoever by the Lenders in respect of the Security shall not operate as a
merger of any of the Obligations hereunder or in any way affect or prejudice the
rights, remedies and powers which the Lenders may have, and the foreclosure,
surrender, cancellation or any other dealing with any Security or the said
obligations shall not release or affect the liability of the Borrower or any
other Person in respect of the remaining portion of the Obligations.
10.06 NO FURTHER ADVANCES
Upon the occurrence and during the continuation of a Default, the Lenders
shall not be obliged to make any further Advances.
10.07 GARNISHMENT AND NOTICE OF STATUTORY LIENS
If any Lender receives a garnishment notice, notice or claim in respect of
a Statutory Lien or a demand for payment or other notice of similar effect by an
applicable Governmental Authority in respect of Holdings or any Company, then
unless and until such notice is withdrawn in writing, the Lenders shall not be
obliged to provide any further Advances hereunder.
10.08 JUDGMENT CURRENCY
If for the purposes of obtaining judgment in any court in any jurisdiction
with respect to this Agreement it becomes necessary for a Lender to convert into
the currency of such jurisdiction (in this section called the "Judgment
Currency") any amount due to the Lender by the Borrower hereunder in any
currency other than the Judgment Currency, then conversion shall be made at the
Exchange Rate prevailing on the Business Day before the day on which judgment is
given. In the event that there is a change in the Exchange Rate prevailing
between the Business Day before the day on which the judgment is given and the
date of payment of the amount due, the Borrower will, on the date of payment,
pay such additional amounts (if any) or be entitled to receive reimbursement of
such amount, if any, as may be necessary to ensure that the amount paid on such
date is the amount in the Judgment Currency which when converted at the Exchange
Rate prevailing on the date of payment is the amount then due under this
Agreement in such other currency. Any additional amount due by the Borrower
under
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this section will be due as a separate debt and shall not be affected by
judgment being obtained for any other sums due under or in respect of this
Agreement.
10.09 REMEDIES CUMULATIVE
All of the rights and remedies granted to the Lenders in this Agreement,
and any other documents or instruments in existence between the parties or
contemplated hereby, and any other rights and remedies available to the Lenders
at law or in equity, shall be cumulative. The exercise or failure to exercise
any of the said remedies shall not constitute a waiver or release thereof or of
any other right or remedy, and shall be non-exclusive.
10.10 PERFORMANCE OF COVENANTS BY AGENT
If the Borrower fails to perform any covenant or obligation to be
performed by it pursuant to this Agreement, the Agent may in its sole discretion
perform any of the said obligations but shall be under no obligation to do so;
and any amounts expended or advanced by the Agent for such purpose shall be
payable by the Borrower upon demand together with interest at the highest rate
then applicable to the Credit Facilities.
10.11 INSOLVENCY PROCEEDINGS
If Holdings or any Company intends to take the benefit of any Insolvency
Legislation, including making an assignment for the general benefit of
creditors, making a proposal or filing a notice of intention to make a proposal
under Insolvency Legislation, the Borrower covenants and agrees to provide the
Agent with five Business Days' prior written notice before any of the
aforementioned proceedings are commenced. As soon as possible prior to the
commencement of any such proceedings, the Borrower shall provide to the Agent
copies of all relevant filing materials, including copies of draft court orders,
plans of compromise, proposals and notices of intention. During this notice
period the Agent may, in its sole discretion, elect to exercise any and all
rights and remedies which may be available to it at that time as set out in this
Agreement.
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ARTICLE XI - THE AGENT AND THE LENDERS
11.01 ADDITIONAL DEFINED TERMS
In this Agreement, the following words and phrases shall have the meanings
set forth below:
"COLLATERAL" means all property, assets and undertaking of the Companies
encumbered by the Security, all Guarantees contemplated by the Security,
and all property, assets and undertaking encumbered by the Security in
support of such Guarantees; together with all proceeds of the foregoing;;
"DOCUMENTS" means this Agreement, the Security and any other documents,
agreements or certificates delivered or contemplated to be delivered
pursuant to or in connection with any of the foregoing; and "DOCUMENT"
means any one of the foregoing;
"MAJORITY OF THE LENDERS" means, at any time, two (2) or more Lenders
which in the aggregate have issued Commitments hereunder representing
two-thirds (66.67%) or more of the total amount of credit available under
the Credit Facilities;
"PROCEEDS OF REALIZATION", in respect of the Security or any portion
thereof, means all amounts received by the Agent and any Lender in
connection with:
(a) any realization thereof, whether occurring as a result of
enforcement or otherwise;
(b) any sale, expropriation, loss or damage or other disposition
of the Collateral or any portion thereof; or
(c) the dissolution, liquidation, bankruptcy or winding-up of the
Borrower or any of its Subsidiaries which has provided
Security or a Guarantee in respect of the Borrower, as the
case may be, or any other distribution of such assets to
creditors;
and all other amounts which are expressly deemed to constitute "Proceeds
of Realization" in this Agreement.
11.02 FAILURE OF LENDER TO FUND
Unless the Agent has actual knowledge that a Lender has not made or will
not make available to the Agent for value on the date requested for an Advance
by the Borrower under a Credit Facility (a "Drawdown Date") such Lender's
Proportionate
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Share of such Advance requested, the Agent shall be entitled to assume that such
amount has been or will be received from such Lender when so due and the Agent
may (but shall not be obliged to), in reliance upon such assumption, make
available to the Borrower a corresponding amount. If such amount is not in fact
received by the Agent from such Lender on such Drawdown Date and the Agent has
made available a corresponding amount to the Borrower on such Drawdown Date as
aforesaid, such Lender shall pay to the Agent on demand an amount equal to the
product of (i) the interest rate per annum applicable to the Advance multiplied
by (ii) the amount that should have been paid to the Agent by such Lender on
such Drawdown Date and was not, multiplied by (iii) a fraction, the numerator of
which is the number of days that have elapsed from and including such Drawdown
Date to but excluding the date on which the amount is received by the Agent from
such Lender and the denominator of which is 365. A certificate of the Agent
containing details of the amount owing by a Lender under this section shall be
deemed to be prima facie correct. If any such amount is not in fact received by
the Agent from such Lender on such Drawdown Date , the Agent shall be entitled
to recover from the Borrower, on demand, the related amount made available by
the Agent to the Borrower as aforesaid together with interest thereon at the
applicable rate per annum payable by the Borrower hereunder (but for greater
certainty, without prejudice to any claim which the Borrower might have against
such Lender as a result of such Lender not having made its Proportionate Share
of such Advance).
11.03 PAYMENTS BY AGENT
(a) The following provisions shall apply to any and all payments made by
the Agent to the Lenders hereunder:
(i) the Agent shall be under no obligation to make any payment (whether
in respect of principal, interest, fees or otherwise) to any Lender
until an amount in respect of such payment has been received by the
Agent from the Borrower;
(ii) if the Agent receives a payment of principal, interest, fees or
other amount owing by the Borrower under a Credit Facility which is
less than the full amount of any such payment due, the Agent shall
have no obligation to remit to each Lender any amount other than
such Lender's Proportionate Share of the amount actually received by
the Agent;
(iii) if any Lender has advanced more or less than its Proportionate Share
of its Commitment under a Credit Facility, such Lender's entitlement
to such payment shall be increased or reduced, as the case may be,
in proportion to the amount actually advanced by such Lender;
(iv) if a Lender's Proportionate Share of an Advance under a Credit
Facility has been advanced for less than the full period to which
any payment by the Borrower relates, such Lender's entitlement to
receive a portion of any payment of interest or fees shall be
reduced in proportion to the length of time such Lender's
Proportionate Share has actually been outstanding
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(unless such Lender has paid all interest required to have been
paid by it to the Agent pursuant to section 11.02);
(v) the Agent acting reasonably and in good faith shall, after
consultation with the Lenders in the case of any dispute, determine
in all cases the amount of all payments to which each Lender is
entitled and such determination shall be deemed to be prima facie
correct;
(vi) upon request, the Agent shall deliver a statement detailing any of
the payments to the Lenders referred to herein;
(vii) all payments by the Agent to a Lender hereunder shall be made to
such Lender at its address set out herein unless notice to the
contrary is received by the Agent from such Lender; and
(viii) if the Agent has received a payment from the Borrower on a Business
Day (not later than the time required for the receipt of such
payment as set out in this Agreement) and fails to remit such
payment to any Lender entitled to receive its Proportionate Share
of such payment on such Business Day, the Agent agrees to pay
interest on such late payment at the same rate and in the same
manner as set out in section 11.02.
(b) Unless the Agent has actual knowledge that the Borrower has not made
or will not make a payment to the Agent in respect of a Credit Facility for
value on the date in respect of which the Borrower has notified the Agent in
writing that the payment will be made, the Agent shall be entitled to assume
that such payment has been or will be received from the Borrower when due and
the Agent may (but shall not be obliged to), in reliance upon such assumption,
pay to each Lender its Proportionate Share of the payment expected from the
Borrower. If the Agent has made such payments to the Lenders and the expected
payment from the Borrower is in fact not received by the Agent on the required
date, then each Lender which has received any such payment agrees to refund such
payment to the Agent immediately upon request, and the Borrower shall, without
limiting its other obligations under this Agreement, indemnify the Agent against
any and all liabilities, obligations, losses (other than loss of profit),
damages, penalties, costs, expenses or disbursements of any kind or nature
whatsoever that may be imposed on or incurred by the Agent as a result of having
made such payments to the Lenders, except for those arising from the Agent's
negligence or wilful misconduct. A certificate of the Agent with respect to any
amount owing by the Borrower under this section shall be deemed to be prima
facie correct.
(c) The Borrower hereby irrevocably authorizes the Agent to debit any
account maintained by the Borrower with the Agent in order to make payments to
the Lenders as contemplated herein. The Agent agrees to provide written notice
to the Borrower of each such debit in reasonable detail. The Borrower shall be
deemed to have agreed to each such debit unless the Borrower objects in writing
to such debit within thirty (30) days after receipt of such written notice from
the Agent.
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11.04 DECISION-MAKING
(a) Any amendments to this Agreement relating to Facility A, the
MasterCard Facility or any Service Agreement shall be effective if made in
writing between BMO and the Borrower, and any such amendment shall be final and
binding upon all the Lenders. BMO agrees to provide a copy of any such amendment
to the Agent and the other Lenders promptly after the execution thereof. Any
actions to be taken or decisions to be made by BMO relating to Facility A
(specifically including with respect to the Facility A Maturity Date, the
Facility A Maximum Amount and the Facility A Limit), the MasterCard Facility or
any Service Agreement shall be made by BMO. Notwithstanding the foregoing,
however, BMO will not enter into any amendment to this Agreement relating to
Facility A or the MasterCard Facility which increases the aggregate amount of
credit available under such Credit Facilities to an amount in excess of Ten
Million Dollars ($10,000,000) without the prior written consent of all other
Lenders.
(b) Any amendment to this Agreement relating to the following shall be
effective only if agreed between the Borrower and the Lenders acting
unanimously:
(i) interest rates and fees in respect of Facility B;
(ii) the Facility B Limit;
(iii) the Facility B Maturity Date;
(iv) Repayments required to be made under Facility B;
(v) paragraph 7.02(e);
(vi) clause 7.02(g)(ii);
(vii) any provision of the Credit Agreement relating to the Security;
(viii) paragraph 9.02(k); and
(ix) section 11.04.
(c) Except for the matters described in paragraphs (a) and (b) above, any
amendment to this Agreement shall be effective if made between the Borrower and
a Majority of the Lenders (such amendment having been approved by a Majority of
the Lenders pursuant to paragraph 11.09(j)); and any such amendment shall be
final and binding upon all the Lenders.
(d) Any action to be taken or decision to be made by the Lenders pursuant
to the Credit Agreement relating to the following matters shall be effective
only if agreed between the Borrower and the Lenders acting unanimously:
(i) any Investment pursuant to paragraph 7.02(e);
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(ii) any Distribution, except Distributions permitted to be made pursuant
to clause 7.02(g)(ii); and
(iii) any release of the Security or any portion thereof, except that the
Agent may from time to time without notice to or the consent of the
Lenders execute and deliver partial releases of the Security from
time to time in respect of any item of Collateral to the extent
expressly permitted in this Agreement, whether or not the Borrower
may have an obligation to apply the net proceeds thereof as a
Repayment.
(e) Except for the matters described in paragraphs (c) and (d) above, any
action to be taken or decision to be made by the Lenders pursuant to the Credit
Agreement (specifically including for greater certainty the issuance of a demand
for payment of the Obligations or the provision of any waiver in respect of a
breach of any covenant, other than a breach of the covenants contained in
clauses 7.02(e)(i) and 7.02(g)(ii)) shall be effective if approved by a Majority
of the Lenders pursuant to paragraph 11.09(j); and any such decision or action
shall be final and binding upon all the Lenders.
11.05 SECURITY HELD BY AGENT
Except to the extent provided in section 11.06, the Security shall be
granted in favour of and held by the Agent for and on behalf of the Lenders in
accordance with the provisions of this Agreement. The Agent shall, in accordance
with its usual practices in effect from time to time, take all steps required to
perfect and maintain such Security, including: taking possession of the share
certificates representing the shares required to be pledged hereunder; filing
renewals and change notices in respect of such Security; and ensuring that the
name of the Agent is noted as loss payee or mortgagee on all property insurance
policies covering assets subject to the Security. If the Agent becomes aware of
any matter concerning the Security which it considers to be material, it shall
promptly inform the Lenders. The Agent shall comply with all instructions
provided by the Lenders in connection with the enforcement or release of the
Security which it holds. The Agent agrees to permit each Lender to review and
make photocopies of the original documents comprising the Security from time to
time upon reasonable notice. Each of the Lenders acknowledges that to the extent
permitted by applicable law, the Security and the remedies provided under the
Documents to the Lenders are for the benefit of the Lenders collectively and
acting together and not severally, and further acknowledges that its rights
hereunder and under the Security are to be exercised not severally, but by the
Agent upon the decision of the Majority of the Lenders. Accordingly,
notwithstanding any of the provisions contained herein or in the Security each
Lender covenants and agrees that it shall not be entitled to take any action
hereunder or thereunder including, without limitation, any declaration of
default hereunder or thereunder but that any such action shall be taken only by
the Agent with the prior written agreement of the Majority of the Lenders.
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11.06 PRIORITIES OF SECURITY
Notwithstanding any other provision of this Agreement, the Proceeds of
Realization of the Security or any portion thereof shall be distributed in the
following order:
(i) firstly, in payment of all reasonable costs and expenses incurred by
the Agent and the Lenders in connection with such realization,
including legal, accounting and receivers' fees and disbursements;
(ii) secondly, against the Obligations, each Lender being entitled to
receive a portion of such Proceeds of Realization determined by
reference to the amount of the Obligations due to such Lender
divided by the aggregate amount of the Obligations due to all
Lenders; and
(iii) thirdly, if all obligations of the Borrower listed above have been
paid and satisfied in full, any surplus Proceeds of Realization
shall be paid in accordance with applicable law.
11.07 APPOINTMENT OF AGENT
Subject to section 11.11, each Lender hereby irrevocably appoints the
Agent to act as its agent in connection with this Agreement, and irrevocably
authorizes the Agent to exercise such rights, powers and discretions as are
delegated to it pursuant to this Agreement together with all such rights, powers
and discretions as are incidental hereto or thereto. The Agent hereby accepts
such appointment and agrees to be bound by the provisions of this Agreement for
so long as it is an Agent hereunder. The Agent shall have only those duties and
responsibilities which are expressly specified in this Agreement, and it may
perform such duties by or through its agent or employees. It is expressly agreed
that the Agent is not a fiduciary of any Lender nor shall it owe any fiduciary
duties to any Lender. Any Person to whom the Agent may delegate duties or
responsibilities as permitted hereunder shall enjoy and be bound by the same
benefits, rights, protections and obligations as those provided to the Agent or
to which the Agent is subject under this Agreement, mutatis mutandis.
11.08 PROTECTION OF AGENT
(a) Unless and until instructed by a Majority of the Lenders, the Agent
shall not be bound to inquire as to:
(i) whether any representation made by the Borrower in or in connection
with any Document is true;
(ii) the occurrence or otherwise of any Event of Default or Default;
(iii) the performance by the Borrower of its obligations under any
Document;
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(iv) any breach of or default by the Borrower or any Related Person under
its obligations under any Document; or
(v) the use or application by the Borrower of any of the proceeds of the
Credit Facilities.
The Agent shall report the results of any such enquiry to the Lenders, but
shall have no obligation to take any action in connection therewith unless
otherwise instructed by a Majority of the Lenders as provided herein.
(b) Unless the Agent has actual knowledge or actual notice to the
contrary, it may assume that:
(i) any representation made by any Company in or in connection with any
Document is true;
(ii) no Event of Default or Default has occurred; and
(iii) the Borrower is not in breach of or in default under, its
obligations under any Document.
(c) Unless the Agent has actual knowledge or actual notice to the
contrary, it may assume that each Lender's address is that set out herein until
it has received from such Lender a notice designating some other office of such
Lender as its address and act upon any such notice until the same is superseded
by a further such notice.
(d) The Agent may engage and pay for the advice or services of any
lawyers, accountants or other experts whose advice or services may to it seem
necessary, expedient or desirable and rely upon any advice so obtained.
(e) Unless the Agent has actual knowledge or actual notice to the
contrary, the Agent may rely as to matters of fact which might reasonably be
expected to be within the knowledge of any Company upon a statement contained in
any Document.
(f) Unless the Agent has actual knowledge or actual notice to the
contrary, the Agent may rely upon any communication or document believed by it
to be genuine.
(g) The Agent may refrain from exercising any right, power or discretion
vested in it under this Agreement unless and until instructed by a Majority of
the Lenders as to whether or not such right, power or discretion is to be
exercised and, if it is to be exercised, as to the manner in which it should be
exercised.
(h) The Agent may refrain from exercising any right, power or discretion
vested in it which would or might in its opinion in its sole discretion be
contrary to any law of any jurisdiction or any directive or otherwise render it
liable to any Person, and may do anything which is in its opinion in its sole
discretion necessary to comply with any such law or directive.
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(i) The Agent may delegate to such other Person, such duties and
responsibilities of the Agent hereunder as it shall determine to be appropriate
in respect of dealings with or relating to the Borrower or any other Person.
(j) The Agent may refrain from acting in accordance with any instructions
of a Majority of the Lenders to begin any legal action or proceeding arising out
of or in connection with this Agreement or take any steps to enforce or realize
upon any Security, until it shall have received such security as it may
reasonably require (whether by way of payment in advance or otherwise) against
all costs, claims, expenses (including legal fees) and liabilities which it will
or may expend or incur in complying with such instruction.
(k) The Agent shall not be bound to disclose to any Person any information
relating to the Borrower or any Related Person if such disclosure would or might
in its opinion in its sole discretion constitute a breach of any law or
regulation or be otherwise actionable at the suit of any Person.
(l) The Agent shall not accept any responsibility for the accuracy and/or
completeness of any information supplied in connection herewith or for the
legality, validity, effectiveness, adequacy or enforceability of any Document
and the Agent shall not be under any liability to any Lender as a result of
taking or omitting to take any action in relation to any Document save in the
case of the Agent's negligence or wilful misconduct.
11.09 DUTIES OF AGENT
The Agent shall:
(a) provide to each Lender copies of all financial information
received from the Borrower promptly after receipt thereof, and
copies of any Drawdown Requests, Conversion Notices, Rollover
Notices, Repayment Notices and other notices received by the
Agent from the Borrower upon request by any Lender;
(b) promptly advise each Lender of Advances required to be made by
it hereunder and disburse all Repayments to the Lenders
hereunder in accordance with the terms of this Agreement;
(c) promptly notify each Lender of the occurrence of any Event of
Default or any Default by the Borrower in the due performance
of its obligations under this Agreement or the Security and of
which the Agent has actual knowledge or actual notice;
(d) each time the Borrower requests the prior written consent of a
Majority of the Lenders, use its best efforts to obtain and
communicate to the Borrower the response of a Majority of the
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Lenders in a reasonably prompt and timely manner having due
regard to the nature and circumstances of the request;
(e) give written notice to the Borrower in respect of any other
matter in respect of which notice is required in accordance
with or pursuant to this Agreement, promptly or promptly after
receiving the consent of the Majority of Lenders, if required
under the terms of this Agreement;
(f) except as otherwise provided in this Agreement, act in
accordance with any instructions given to it by a Majority of
the Lenders;
(g) at the time of engaging any agent, receiver, receiver-manager,
consultant, monitor or other party in connection with the
Security or the enforcement thereof, obtain the agreement of
such party to comply with the applicable terms of this
Agreement in carrying out any such enforcement activities and
dealing with any Proceeds of Realization;
(h) if so instructed by a Majority of the Lenders, refrain from
exercising any right, power or discretion vested in it under
this Agreement or any document incidental thereto;
(i) account for any monies received by it in connection with this
Agreement, the Security and any other agreement delivered in
connection herewith or therewith; and
(j) call a meeting of the Lenders at any time not earlier than
five (5) days and not later than thirty (30) days after
receipt of a written request for a meeting provided by any
Lender; provided that the above notice requirements may be
waived by the unanimous agreement of the Lenders; and provided
further that any instrument executed by all of the Lenders
(which may be in counterparts) shall have the same effect as
if passed by the Lenders at a duly called meeting.
11.10 INDEMNIFICATION OF AGENT
Each Lender shall on demand by the Agent indemnify the Agent in accordance
with each such Lender's Proportionate Share of all Credit Facilities, against
any and all costs, claims, reasonable expenses (including legal fees) and
liabilities which the Agent may incur (and which have not been reimbursed by the
Borrower) to the extent required hereunder, otherwise than by reason of its own
negligence or wilful misconduct, in acting in its capacity as the Agent under
this Agreement, the Security or any other Document.
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11.11 TERMINATION OR RESIGNATION OF AGENT
(a) A Majority of the Lenders may terminate the Agent's appointment
hereunder upon giving the Agent 90 days' prior written notice to such effect.
(b) The Agent may resign its appointment hereunder at any time upon giving
90 days' prior written notice to each Lender, without giving any reason
therefor.
(c) In the event of any such termination or resignation, a Majority of the
Lenders shall appoint a successor Agent acceptable to the Borrower (whose
consent may not be unreasonably withheld). Within a reasonable time after the
appointment of the successor Agent, the retiring Agent shall assign the Security
to the successor Agent. Upon such assignment the retiring Agent shall be
discharged from any further obligation hereunder but shall remain entitled to
the benefit of the provisions of this Article XI; and the Agent's successor and
each of the other parties hereto shall have the same rights and obligations
among themselves as they would have had if such successor originally had been a
party hereto as the Agent. If a Person ceases to be the Agent and a successor
Agent is not appointed within such 90 day period, upon the expiry of such period
such Person shall receive no further compensation for acting as Agent and shall
be released from all obligations as Agent except that until a successor Agent is
appointed such Person shall passively hold the Security as Agent for the Lenders
without taking any action to preserve, renew, maintain or enforce the Security;
and its sole remaining obligation shall be to assign the Security to its
successor if and when a successor Agent is appointed.
11.12 RIGHTS OF AGENT AS A LENDER
The Agent in its capacity as a Lender shall have the same rights and
powers under the Documents as any other Lender, and it may exercise such rights
and powers as though it were not performing the duties and functions delegated
to it as the Agent hereunder. Without limiting the generality of the foregoing,
the Agent in its capacity as a Lender may retain for its own benefit any fee or
other sum receivable by it for its own account, and may accept deposits from,
lend money to, provide any advisory or other services to or engage in any kind
of banking or other business with any Company.
11.13 FINANCIAL INFORMATION
The Agent shall have no duty or responsibility either initially or on a
continuing basis to provide any Lender with any credit or other information with
respect to the financial condition and affairs of any Company, except to the
extent expressly set out herein.
11.14 LENDERS' INDEPENDENT INVESTIGATION
Each of the Lenders represents and warrants to the Agent and BMO that it
has made its own independent investigation of the financial condition and
affairs of the Companies in connection with the establishment of credit for the
Borrower, and that it has not relied on any information provided to it by the
Agent or BMO in connection
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therewith, and each represents and warrants to the Agent that it shall continue
to make its own appraisal of the creditworthiness of the Companies from time to
time.
11.15 LEGAL PROCEEDINGS BY AGENT
The Agent shall not be obligated to take any legal proceedings against the
Borrower or any other Person for the recovery of any amount due under this
Agreement or the Security, unless instructed to do so by a Majority of the
Lenders. No Lender shall bring legal proceedings against the Borrower or any
other Person hereunder under any Security or under any other Documents or in
connection herewith or therewith, or exercise any right arising hereunder or
thereunder or in connection herewith or therewith over the property and assets
of the Borrower or any other Person, without the prior written consent of a
Majority of the Lenders.
11.16 LENDERS' OBLIGATIONS SEVERAL; NO PARTNERSHIP
The obligations of each Lender under this Agreement are several. The
failure of any Lender to carry out its obligations hereunder shall not relieve
the other Lenders of any of their respective obligations hereunder. No Lender
shall be responsible for the obligations of any other Lender hereunder. Neither
the entering into of this Agreement nor the completion of any transactions
contemplated herein shall constitute the Lenders a partnership.
11.17 SHARING OF INFORMATION
The Agent and the Lenders may share among themselves any information they
may have from time to time concerning the Companies whether or not such
information is confidential; but shall have no obligation to do so (except for
any obligations of the Agent to provide information as required in this
Agreement).
11.18 ACKNOWLEDGEMENT BY BORROWER
The Borrower hereby acknowledges notice of the terms of the provisions of
this Article XI and agrees to be bound hereby to the extent of its obligations
hereunder, and further agrees not make any payments, take any action or omit to
take any action which would result in the non-compliance by any Lender with its
obligations hereunder.
11.19 AMENDMENTS TO ARTICLE XI
The Agent and the Lenders may amend any provision in this Article XI
without prior notice to or the consent of the Borrower, and the Agent shall
provide a copy of any such amendment to the Borrower reasonably promptly
thereafter; provided however if any such amendment would adversely affect any
rights, entitlements, obligations or liabilities of the Borrower (other than in
a de minimus manner), such amendment shall not be effective until the Borrower
provides its written consent thereto, such consent not to be unreasonably
withheld or arbitrarily delayed.
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11.20 DELIVERIES, ETC.
As between the Companies and Holdings, on the one hand, and the Agent and
the Lenders, on the other hand:
(a) all statements, certificates, consents and other documents which the
Agent purports to deliver to a Company or to Holdings on behalf of the Lenders
shall be binding on each of the Lenders, and none of the Companies nor Holdings
shall be required to ascertain or confirm the authority of the Agent in
delivering such documents;
(b) all certificates, statements, notices and other documents which are
delivered by a Company or Holdings to the Agent in accordance with this
Agreement shall be deemed to have been duly delivered to each of the Lenders;
and
(c) all payments which are delivered by the Borrower to the Agent in
accordance with this Agreement shall be deemed to have been duly delivered to
each of the Lenders.
11.21 AGENCY FEE
The Borrower agrees to pay the Agent an annual agency fee in such amount
as may be agreed in writing from time to time between the Borrower and the
Agent, payable in advance on the date of this Agreement and annually on each
anniversary date thereafter during the term of this Agreement.
ARTICLE XII - CHANGE IN CIRCUMSTANCES
12.01 ILLEGALITY
If, on or after the date of this Agreement, the adoption of any applicable
law, rule or regulation, or any change in any applicable law, rule or
regulation, or any change in the interpretation or administration thereof by any
Governmental Authority charged with the interpretation or administration
thereof, or compliance by any Lender with any request or directive (whether or
not having the force of law) of any such Governmental Authority shall make it
unlawful or impossible for any Lender to make, maintain or fund its Commitment
hereunder and such Lender shall so notify the Agent, the Agent shall forthwith
give one (1) Business Days' written notice thereof to the other Lenders and the
Borrower which includes in reasonable detail the basis for its determination,
whereupon, subject to section 12.03, until such Lender notifies the Borrower and
the Agent that the circumstances giving rise to such suspension no longer exist,
the obligation of such Lender to make Advances hereunder shall be suspended.
12.02 INCREASED COST AND REDUCED RETURN
If there is a change in or adoption of any law, regulation, order, rule,
request or directive affecting any Lender (whether or not having the force of
law but of a kind which is intended to be complied with by banks or financial
institutions generally and
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which is being complied with by the Lender) or in the interpretation thereof by
any Governmental Authority charged with the administration thereof, and as a
result:
(i) the Lender incurs a cost (which it would not otherwise have
incurred) or becomes liable to make a payment (calculated with
reference to the amount outstanding or available under Facility A)
with respect to continuing to provide or maintain its Proportionate
Share of Facility A for the Borrower hereunder (other than a tax
such as a capital or franchise tax or a tax imposed on the net
income, assets or capital of the Lender);
(ii) any reserve, special deposit or similar requirement is imposed or
increased with respect to the Outstanding Advances increasing the
cost thereof to the Lender; or
(iii) the Lender suffers or will suffer a reduction in the rate of return
on its overall capital (other than a reduction by reason of any
increase in the taxes referred to in (i) above) as a result of the
amount of the capital that the Lender is required to maintain being
increased or of any change in the manner in which the Lender is
required to allocate its resources;
then the Borrower shall, within 15 days after receipt of written notice
from the Lender (with a copy to the Agent), pay to the Lender such amount as
will compensate the Lender for and will indemnify the Lender against such
increases in cost or reductions of rate of return (to the extent not already
reflected in any other rate or fee hereunder), accruing from and after the date
of receipt of such notice.
Each Lender will promptly notify the Borrower and the Agent of any event
of which it has knowledge, occurring after the date of this Agreement, which
will entitle such Lender to compensation pursuant to this section. A certificate
of any Lender (together with such further information as the Borrower may
reasonably request) claiming compensation under this section and setting forth
the additional amount or amounts to be paid to it hereunder shall be deemed to
be prima facie correct. In determining such amount, such Lender may use any
reasonable averaging and attribution methods. Notwithstanding the foregoing, the
Lender shall be entitled to claim compensation from the Borrower pursuant to
this section only to the extent that the Lender is also claiming compensation on
a similar basis from other borrowers (if any) for whom the Lender has
established similar credit facilities.
12.03 REPLACEMENT OF CLAIMING LENDER
Subject to no Event of Default having occurred and continuing, if any
Lender (a "Claiming Lender") makes any demand for payment under sections 12.02,
or gives notice that the provisions of section 5.10(b), 5.11(c), 5.12 or 12.01
have or will become applicable to it, then, provided no other Lender makes any
such demand or gives such notice by the date which is 20 days after any such
demand or notice is made by a Claiming Lender, the Borrower may request that the
Claiming Lender assign in accordance with section 13.10 to one or more banks or
financial institutions to be
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designated by the Borrower all (but not less than all) of such Lender's
Commitment and the Advances owing to it no later than 30 days following such
request by the Borrower. Such Lender shall consummate such assignment to a bank
or financial institution if such bank or financial institution (a) shall not,
upon such assignment becoming effective, make any demand for payment under
sections 12.02, or give notice that the provisions of section 5.10(b), 5.11(c),
5.12 or 12.01 have or will become applicable to it, and (b) complying with the
requirements of section 13.10; provided, however, that each such replacement
Lender shall be satisfactory to the remaining Lenders and the Agent, acting
reasonably. No such replacement of a Lender shall be considered a Repayment of
any Advance held by such Claiming Lender. The Agent and the Lenders shall have
no obligation to assist the Borrower in finding any potential lender to replace
a Claiming Lender pursuant to this section.
ARTICLE XIII - GENERAL
13.01 WAIVER
The failure or delay by the Agent or any Lender in exercising any right or
privilege with respect to the non-compliance with any provisions of this
Agreement by the Borrower and any course of action on the part of the Agent or
any Lender, shall not operate as a waiver of any rights of the Agent or any
Lender unless made in writing by the Agent or such Lender. Any such waiver shall
be effective only in the specific instance and for the purpose for which it is
given and shall not constitute a waiver of any other rights and remedies of the
Agent or any Lender with respect to any other or future non-compliance.
13.02 GOVERNING LAW
This Agreement shall be interpreted in accordance with the laws of the
Province of Ontario. Without prejudice to the right of the Agent to commence any
proceedings with respect to this Agreement in any other proper jurisdiction, the
parties hereby attorn and submit to the jurisdiction of the courts of the
Province of Ontario.
13.03 AGENT'S EXPENSES
Whether or not the transactions contemplated by this Agreement are
completed or any Advance has been made, the Borrower agrees to pay on demand by
the Agent all expenses incurred by it or any Lender, including reasonable legal
expenses and other direct out-of-pocket expenses, in connection with this
Agreement, the Security and all documents contemplated hereby and all due
diligence, including: the preparation, administration or interpretation of such
documents, the protection and enforcement of the rights of the Agent and the
Lenders provided for thereby, the enforcement of the Security, and the
preparation of any waivers, partial discharges and similar matters which may be
required. If the Borrower has not paid any such expenses within 30 days after
the sending of a written request from the Agent, the Borrower hereby authorizes
the Agent to
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debit the Borrower's account in order to pay any such expenses; provided that,
the Agent shall concurrently provide written notice in reasonable detail of any
such debit to the Borrower; and the debiting of such account shall not
constitute an agreement by the Borrower that such amount was owed by the
Borrower. For greater certainty, the expenses referred to in this section are in
addition to the fees and expenses referred to in any other written agreements
made among the Borrower, the Agent and the Lenders from time to time relating to
the Credit Facilities.
13.04 INDEMNITY
In addition to any other liability of the Borrower hereunder, the Borrower
agrees to indemnify and save harmless the Agent and the Lenders from and against
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever
(collectively, "Losses") which may be imposed on, incurred by or asserted
against them which relate or arise out of or result from any failure by the
Borrower to satisfy its obligations hereunder when due or fulfil any of its
other obligations hereunder including any costs or expenses incurred by reason
of the liquidation or re-employment in whole or in part of deposits or other
funds required by the Agent or any Lender to fund or maintain the Credit
Facilities as a result of the Borrower's failure to take any required action on
the date required hereunder or specified by the Borrower in any notice given
hereunder, specifically including for greater certainty the failure of the
Borrower to satisfy any conditions precedent to be performed by it in connection
with any Advance requested hereunder after having issued a Drawdown Request
requesting such Advance, except to the extent that such Losses are caused by the
negligence or wilful misconduct of the Agent or any Lender.
13.05 INTEREST ON UNPAID COSTS AND EXPENSES
If the Borrower fails to pay when due any amount in respect of costs or
expenses or any other amount required to be paid by it hereunder (other than
principal or interest on any Advance), it shall pay interest on such unpaid
amount from the time such amount is due until paid at the rate equal to the
highest rate of interest then applicable under the Credit Facilities.
13.06 NOTICE
Without prejudice to any other method of giving notice, all communications
provided for or permitted hereunder shall be in writing and delivered to the
addressee by prepaid private courier or sent by telecopy or other direct written
electronic means, to the applicable address and to the attention of the officer
of the addressee as follows:
(a) to the Borrower:
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
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Attention: General Counsel
telecopier no. (▇▇▇) ▇▇▇-▇▇▇▇
(b) to the Agent:
Bank of Montreal
Global Distribution Services
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇
Attention: Manager, Global Distribution Services
telecopier no. (▇▇▇) ▇▇▇-▇▇▇▇
(c) to any Lender, at its addressed noted on Exhibit "A" attached hereto.
Any communication transmitted by prepaid private courier shall be deemed
to have been validly and effectively given or delivered on the Business Day
after which it is submitted for delivery. Any communication transmitted by
telecopy or other direct written electronic means shall be deemed to have been
validly and effectively given or delivered on the day on which it is
transmitted, if transmitted on a Business Day on or before 5:00 p.m. (local time
of the intended recipient), and otherwise on the next following Business Day.
Any party may change its address for service by notice given in the foregoing
manner.
13.07 SEVERABILITY
Any provision of this Agreement which is illegal, prohibited or
unenforceable in any jurisdiction, in whole or in part, shall not invalidate the
remaining provisions hereof; and any such illegality, prohibition or
unenforceability in any such jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
13.08 FURTHER ASSURANCES
The Borrower shall, at its expense, promptly execute and deliver or cause
to be executed and delivered to the Agent upon request, acting reasonably, from
time to time all such other and further documents, agreements, opinions,
certificates and instruments in compliance with this Agreement, or if necessary
or desirable to more fully record or evidence the obligations intended to be
entered into herein, or to make any recording, file any notice or obtain any
consent.
13.09 TIME OF THE ESSENCE
Time shall be of the essence of this Agreement.
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13.10 ASSIGNMENT
(a) If an Event of Default has occurred and is continuing, any Lender may
assign all or any portion of its rights and obligations under this Agreement
from time to time to any other Person without notice to or obtaining the prior
written consent of the Borrower.
(b) If no Event of Default has occurred and is continuing, any Lender may
assign all or any portion of its rights and obligations under this Agreement
from time to time to any assignee which is a financial institution (which term
as used in this Agreement specifically includes a bank, trust company or life
insurance company) subject to obtaining the prior written consent of the
Borrower, not to be unreasonably withheld (and for greater certainty the Lenders
acknowledge that it shall be reasonable for the Borrower to withhold its consent
to any assignment if the Borrower would thereby be required to pay additional
amounts pursuant to sections 5.10 or 12.02 hereof); provided that each
assignment is in a minimum amount of $5,000,000.
(c) If a Lender assigns all or any portion of its rights and obligations
under this Agreement to an assignee in accordance with the provisions of this
section 13.10, and if such assignee executes and delivers to the Borrower, the
Agent and all other Lenders a written agreement to assume and be bound by all or
the assigned portion of such Lender's obligations to the Borrower and to the
other Lenders and the Agent hereunder, then immediately upon the said delivery
of such agreement the Lender's said obligations hereunder shall automatically be
released to the extent so assumed by such assignee.
(d) Any assignment by a Lender of all or any portion of its rights and
obligations pursuant to this Agreement shall be substantially in the form of the
Assignment Agreement attached hereto as Exhibit "I".
(e) The Borrower may not assign any of its rights or obligations under
this Agreement without the prior written consent of the Lenders and the Agent,
in their sole discretion.
(f) The Borrower and the Lenders acknowledge that the Agent is entitled to
charge a processing and recording fee of $3,500 to any assignee in connection
with each assignment hereunder. The Borrower agrees to co-operate fully with the
Agent in connection with any assignment in compliance with this section 13.10,
and agrees to execute and deliver from time to time in favour of the Agent and
any such assignee such documents and assurances as may be reasonably required to
effect the foregoing.
(g) Each Lender agrees that if it shall, by exercising any right of
set-off or counterclaim or otherwise, receive a payment on account of principal
or interest due to such Lender under a Credit Facility which is greater than the
proportion received by any other Lender(s) on account of principal or interest
due to such Lender(s) under such Credit Facility, the Lender receiving such
proportionately greater payment shall purchase such participations in the
Outstanding Advances held by the other Lender(s) under such Credit Facility, and
such other adjustments shall be made, as may be required so that the Outstanding
Advances under such Credit Facility shall at all times be held by the Lenders
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in accordance with their respective Proportionate Shares under such Credit
Facility; provided that nothing in this section shall impair the right of any
Lender to exercise any right of set-off or counterclaim it may have and to apply
the amount subject to such exercise to the payment of any other indebtedness or
liability of the Borrower. The Borrower agrees, to the fullest extent it may
effectively do so under applicable law, that any holder of a participation
interest in any Outstanding Advances, whether or not acquired pursuant to the
foregoing arrangements, may exercise rights of set-off or counterclaim and other
rights with respect to such participation as fully as if such holder of a
participation were a direct creditor of the Borrower in the amount of such
participation.
13.11 ENTIRE AGREEMENT
This Agreement and any other documents or instruments contemplated herein
or therein shall constitute the entire agreement and understanding among the
Borrower, the Lenders and the Agent relating to the subject-matter hereof.
Without limiting the foregoing, the term sheet dated April 26, 2002 between BMO
and the Borrower is superseded by this Agreement and is hereby terminated. No
provision of this Agreement, or any other document or instrument in existence
among the parties may be modified, waived or terminated except by an instrument
in writing executed by the party against whom such modification, waiver or
termination is sought to be enforced.
13.12 INCONSISTENCIES WITH SECURITY
To the extent that there is any inconsistency between a provision of this
Agreement and a provision of any document constituting part of the Security, the
provision of this Agreement shall govern.
13.13 EXECUTION BY FAX AND COUNTERPARTS
This Agreement may be executed in several counterparts, each of which,
when so executed, shall be deemed to be an original and which counterparts
together shall constitute one and the same Agreement. This Agreement may be
executed by facsimile, and any signature contained hereon by facsimile shall be
deemed to be equivalent to an original signature for all purposes.
13.14 BINDING EFFECT
This Agreement shall be binding upon and shall enure to the benefit of the
parties and their respective successors and permitted assigns; "successors"
includes any corporation resulting from the amalgamation of any party with any
other corporation.
13.15 CONFIDENTIALITY
The Agent and each Lender agree that all documentation and other
information made available by the Companies to it under or in connection with
this Agreement shall (except to the extent such documentation or other
information is publicly available or
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hereafter becomes publicly available other than by action of the Agent or such
Lender, or was theretofore known or hereinafter becomes known to the Agent or
such Lender independently of any disclosure by the Companies) be held in
confidence by the Agent and such Lender and used solely in the evaluation,
administration and enforcement of the Advances and all matters related to this
Agreement and the Security and the transactions contemplated hereby and thereby,
and in the prosecution of defence of legal proceedings arising in connection
herewith and therewith; provided that the Agent or Lenders may disclose
documentation and information to any other Lender or any affiliates thereof.
Notwithstanding the foregoing, nothing contained herein shall be construed to
prevent the Agent or any Lender from (a) making disclosure of any information
(i) if required to do so by applicable law or regulation, (ii) to any
Governmental Authority having or claiming to have authority to regulate or
oversee any aspect of such Person's business in connection with the exercise of
such authority or claimed authority and that compels or requires such Person to
disclose such information, (iii) pursuant to any subpoena or if otherwise
compelled in connection with any litigation or administrative proceeding, (iv)
to any prospective assignee of all or any portion of a Lender's rights and
obligations hereunder provided that such prospective assignee executes and
delivers to the Borrower a confidentiality agreement in form and substance
acceptable to the Borrower, acting reasonably, or (v) to the extent that the
Agent or any Lender or its counsel deems necessary or appropriate, acting
reasonably, to effect or preserve its Security or to enforce any remedy provided
in this Agreement or the Security or otherwise available by law; or (b) making,
on a confidential basis, such disclosures as the Agent or any Lender reasonably
deems necessary or appropriate to its legal counsel, accountants or other
advisers, agents or representatives (including outside auditors). If the Agent
or any Lender is compelled to disclose such confidential information in a
proceeding requesting such disclosure or otherwise pursuant to law or
regulation, such Agent or Lender shall (i) only disclose such information as it
is compelled or otherwise legally required to disclose, and (ii) use reasonable
commercial efforts to obtain assurance from the Governmental Authority receiving
such information that it will keep such information confidential (provided that
any costs incurred by the Agent relating to such efforts shall be for the
account of the Borrower and shall comprise part of the Obligations).
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IN WITNESS WHEREOF this Agreement has been executed, sealed and
delivered by the parties hereto under the hands of their proper officers duly
authorized in that behalf.
BANK OF MONTREAL, AS A LENDER BANK OF MONTREAL, AS AGENT
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇ ▇▇▇▇▇▇▇
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By: By:
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ROYAL BANK OF CANADA CANADIAN WESTERN BANK
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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By: /s/ ▇▇▇ ▇▇▇▇▇▇ By:
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STERLING PULP CHEMICALS (SASK) LTD. INTESABCI CANADA
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
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By: By:
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