COMMERCIAL BANKING
PINE VALLEY COMMERCIAL BANKING CENTRE
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Telephone No: ▇▇▇-▇▇▇-▇▇▇▇
905-851-8209
July 27, ▇▇▇▇
▇▇▇▇▇▇▇ Power Contracting Limited
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ATTENTION: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Dear Sir:
The following Letter Agreement replaces the Demand Operating Facility Agreement
dated July 4, 2000 and the subsequent Amending Agreement dated October 11, 2000.
We are pleased to offer the Borrower the following credit facilities (the
"Facilities"), subject to the terms and conditions outlined below.
BORROWER: ONTARIO POWER CONTRACTING LIMITED (the "Borrower")
LENDER The Toronto-Dominion Bank (the "Bank"), through its
Pine Valley Commercial Banking Centre
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CREDIT LIMIT 1. The lesser of:
i) CDN$800,000, AND
ii) the TOTAL of 80% of the Receivable Value,
2. CDN$100,000
TYPE OF CREDIT
AND BORROWING
OPTIONS
1. Operating Loan available at the Borrower's option
by way of:
o Prime Rate Based Loans in CDN$ ("Prime Based
Loans")
o Letters of Credit in CDN$ or US$ (`L/Cs")
o Stand-by Letters of Guarantee in CDN$ ("L/Gs")
2. Tender Loan available by way of Prime Rate Based Loans
in CDN$ ("Prime Based Loans")
PURPOSE
1. To finance working capital.
2. To facilitate the bidding process on contracts.
TENOR 1.&2 Uncommitted
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TERM 1.&2 No term
AMORTIZATION 1.&2 N/A
INTEREST RATES
AND FEES Advances shall bear interest and fees as follows:
1. Operating Loan:
- Prime Based Loans: Prime Rate + 1.50% per annum
- L/Cs: As advised by the Bank at the time of issuance
of the L/C
- L/Gs: 2.00% per annum (minimum $150)
2. Tender Loan: 1/2 of Prime Rate per annum
Interest Payments will be made in accordance with Schedule
"A" attached hereto. Information on Interest Rate and Fee
Definitions, Interest Rate Calculations and Payment is set
out in the Schedule "A" attached hereto.
ARRANGEMENT
FEE N/A
ADMINISTRATION
FEE $100 per month.
RENEWAL FEE $3,500
DRAWDOWN 1. On a revolving basis. L/C's and/or L/Gs are limited to
an aggregate maximum of $100,000 and a 12-month term.
2. As required.
BUSINESS CREDIT
SERVICE The Borrower will have access to the Operating Loan
(Facility 1) via Loan Account Number ▇▇▇▇-▇▇▇▇▇▇▇-▇▇ (the
"Loan Account") up to the Credit Limit of Operating Loan by
withdrawing funds from the Borrower's Current Account Number
1466-0321583 (the "Current Account"). The Borrower agrees
that each advance from the Loan Account will be in an amount
equal to $10,000 (the "Transfer Amount") or a multiple
thereof. If the transfer amount is NIL, the Borrower agrees
that an advance from the Borrower's Loan Account may be in
an amount sufficient to cover the debits made to the Current
Account.
The Borrower agrees that:
a) all other overdraft privileges which have governed the
Borrower's Current Account are hereby canceled.
b) all outstanding overdraft amounts under any such other
agreements are now included in Indebtedness under this
Agreement.
The Bank may, but is not required to, automatically advance
the Transfer Amount or a multiple thereof or any other
amount from the Loan Amount to the Current Account in order
to cover the debits made to the Current account if the
amount in the Current Account is insufficient to cover the
debits. The Bank may, but is not required to, automatically
and without notice apply the funds in the Current Account
in the amounts equal to the Transfer Amount or any multiple
thereof or any other amount to replay the outstanding amount
in the Loan Account.
REPAYMENT: 1. On demand. If the Bank demands repayment, the
Borrower will pay to the Bank all amounts outstanding under
the Operating Loan, including without limitation, the amount
of all drawn and undrawn L/Gs and L/Cs.
2. Return of tender cheques.
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SECURITY The following security shall be provided, shall support all
present and future indebtedness and liability of the
Borrower and the grantor of the security to the Bank
including with limitation indebtedness and liability under
guarantees, foreign exchange contracts, cash management
products, and derivative contracts, shall be registered in
first position, and shall be on the Bank's standard form,
supported by resolutions and solicitor's opinion, all
acceptable to the Bank:
Facilities 1. & 2.
1. General Security Agreement with Director's Resolution
and Solicitor's Letter of Opinion
2. $750,000 Assignment of Sunlife Key Man Insurance on the
life of ▇▇▇▇▇▇ ▇▇▇▇▇▇
3. Assignment of Fire Insurance
4. Unlimited Guarantee of Advances signed by ▇▇▇▇▇▇ ▇▇▇▇▇▇
Anciliary Facility - same as Facilities 1.& 2. with the
following addition:
1. TD Visa Indemnity Agreement (Joint & Several Liability)
(TO BE OBTAINED)
All persons and entities required to provide a guarantee
shall be referred to in this Agreement individually as a
"Guarantor" and collectively as the "Guarantors";
All of the above security and guarantees shall be referred
to collectively in this Agreement as "Bank Security".
DISBURSEMENT
CONDITIONS The obligation of the Bank to make any loan hereunder is
subject to the Standard Disbursement Conditions contained in
Schedule "A" and the following additional drawdown
conditions:
Ancillary Facility
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1. Joint and several Liability Indemnity Agreement is to be
on hand for all existing and subsequent Visa cards prior
to any issuance of latter.
REPRESENTATIONS
AND WARRANTIES All representations and warranties shall be deemed to be
continually repeated so long as any amounts remain
outstanding and unpaid under this Agreement or so long as
any commitment under this Agreement remains in effect. The
Borrower makes the Standard Representations and Warranties
set out in Schedule "A".
POSITIVE
COVENANTS So long as any amounts remain outstanding and unpaid under
this Agreement or so long as any commitment under this
Agreement remains in effect, the Borrower will and will
ensure that its subsidiaries and each of the Guarantors will
observe the Standard Positive Covenants set out in Schedule
"A" and in addition will:
1. Provide signed Review Level financial statements within
120 days of fiscal year end.
2. Provide management prepared interim statements within 45
days of each quarter end.
3. Provide a construction program, satisfactory to the Bank,
within 45 days of each quarter end.
4. Provide signed aged accounts receivable, accounts payable
and holdback lists within 20 days of month end. Same are to
identify all related accounts receivable, lienable payables
and contra accounts. To be submitted together with a signed
compliance certificate.
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NEGATIVE
COVENANTS So long as any amounts remain outstanding and unpaid under
this Agreement or so long as any commitment under this
Agreement remains in effect, the Borrower will and will
ensure that is subsidiaries and each of the Guarantors will
observe the Standard Negative covenants set out in Schedule
"A". In addition the Borrower will not and will ensure that
its subsidiaries and each of the Guarantors will not:
1. Withdraw further funds from the Company.
Permitted Liens as referred to in Schedule "A" are:
a) Purchase Money Security interests, not to exceed at any
time:
i) for the Borrower and its Subsidiaries, $0.00 in the
aggregate;
ii) For the Guarantor(s), $0.00 in the aggregate;
iii) For each Guarantor, $0.00
FINANCIAL
COVENANTS The Borrower agrees at all times to:
1. Ensure that direct borrowings, plus L/Cs, plus L/Gs, do
not exceed 80% of accounts receivable, less over 90 day
accounts, related accounts, contra accounts, lienable
payables and holdbacks and accounts from Osler Paving
and 1212700 Ontario Ltd. Related accounts include, but
are not limited to, Century Brick, Rexdale brick and
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2. Maintain a minimum Effective Net Worth of $800,000, to
increase to $1,000,000 by June 30, 2001. Effective Net
worth is defined as shareholders' equity, plus amounts
owing to shareholders/related parties, less amounts
owing by shareholders/related parties, less related
receivables, inclusive of, but not limited to, Rexdale
Brick, Century Brick and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ Products Ltd.,
less intangibles (goodwill, organization expenses, etc.)
Accounts receivable from Osler Paving and 1212700
Ontario Ltd. are to be fully deducted from Effective Net
Worth. To be tested quarterly.
3. Maintain a maximum Total Debt to Effective Net Worth
Ratio of 4.0:1. Total Debt is defined as current
liabilities, plus long-term debt, less amounts owing to
shareholders/related parties, less deferred taxes.
Effective Net Worth is defined above. To be test
quarterly.
4. Maintain a minimum Current Ratio of 1.25:1. Current
Ratio is defined as current assets, less related
accounts receivable and receivables from Osler Paving
and 1212700 Ontario Ltd., less advances to
shareholders/related parties, divided by current
liabilities, less deferred taxes. To be tested
quarterly.
EVENTS OF
DEFAULT The Bank may accelerate the payment of principal and
interest under any committed credit facility hereunder and
cancel any undrawn portion of any committed credit facility
hereunder, at any time after the occurrence of any one of
the Standard Events of Default contained in Schedule "A"
attached hereto or after any one of the following additional
Events of Default:
a) If there shall occur a change in the ownership or
capital structure of the Borrower:
The Cross-Default Threshold as referred to in Schedule "A"
is:
i) For the Borrower: $0.00
ii) For any Guarantor: $0.00
ANCILLARY
FACILITIES In addition to the Facilities, the Bank has made available
to Borrower the following ancillary facilities (the
"Ancillary Facilities") which the Borrower agrees will not
be used for speculative purposes:
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1. TD Business Visa - Up to CDN$30,000
AVAILABILITY OF
OPERATING LOAN The Operating Loan is uncommitted, made available to the
Bank's Discretion, and is not automatically available upon
satisfaction of the terms and conditions, conditions
precedent, or financial tests set out herein.
The occurrence of an Event of Default is not a precondition
to the Bank's right to accelerate repayment and cancel the
availability of the Operating Loan.
SCHEDULE "A"
STANDARD TERMS
AND CONDITIONS Schedule "A" sets out the Standard Terms and Condition
("Standard Terms and Conditions") which apply to these
credit facilities. The Standard Terms and Conditions,
including the defined terms set out therein, form part of
this Agreement, unless this letter states specifically that
one or more of the Standard Terms and Conditions do not
apply or are modified.
We trust you will find these facilities helpful in meeting your ongoing
financing requirements. we ask that if you wish to accept this offer of
financing (which includes the Standard Terms and Conditions), please do so by
signing and returning the attached duplicate copy of this letter to the
undersigned. Please have the Guarantor(s) sign the letter below where
indicated. This offer will expire if not accepted in writing and received by
the bank on or before August 15, 2001.
Yours truly,
THE TORONTO-DOMINION BANK:
/s/ ▇▇▇▇▇ ▇▇▇▇▇ W195 /S/ ▇▇▇▇▇▇▇▇ ▇▇▇▇ U647
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▇▇▇▇▇ ▇▇▇▇▇ Signing ▇▇▇▇▇▇▇▇ ▇▇▇▇ Signing
Vice-President Commercial Banking No. Relationship Manager No.
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TO THE TORONTO-DOMINION BANK:
ONTARIO POWER CONTRACTING LIMITED hereby accepts the foregoing offer
this 9th day of August 2001.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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Signature Signature
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Print Name & Position Print Name & Position
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TO THE TORONTO-DOMINION BANK:
▇▇▇▇▇▇ ▇▇▇▇▇▇ hereby acknowledges and consents to the foregoing offer this 9th
day of August 2001 and agrees, without limiting the generality of the terms of
any guarantee signed by the undersigned, that if the Bank fails to insist upon
strict performance of observance of the terms and conditions of the letter set
out above (including the Standard Terms and Conditions) or of any other
agreement which now or may hereafter apply to one or more credit facilities,
waives or amends any such terms and conditions, or increases the amount of any
credit facility, such action shall not prejudice the Bank's rights under the
guarantee of the Borrower provided by the undersigned.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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Guarantor Signature
SCHEDULE A
STANDARD TERMS AND CONDITIONS
1. INTEREST RATE DEFINITIONS
Prime Rate means the rate of interest per annum (based on a 365/366 day year)
established and reported by the Bank to the Bank of Canada from time to time as
the reference rate of interest for determination of interest rates that the Bank
charges to customers of varying degrees of creditworthiness in Canada for
Canadian dollar loans made by it in Canada.
The Stamping Fee rate per annum is based on a 365/366 day year and the Stamping
Fee is calculated on the Face Amount of each B/A presented to the Bank for
acceptance.
LIBOR means the rate of interest per annum (based on a 360 day year) as
determined by the Bank (rounded upwards, if necessary to the nearest whole
multiple of 1/16th of 1%) at which the Bank may make available United States
dollars which are obtained by the Bank in the Interbank Euro Currency Market,
London, England at approximately 11:00 a.m. (Toronto time) on the second
Business Day before the first day of, and in an amount similar to, and for the
period similar to the interest period of, such advance.
USBR means the rate of interest per annum (based on a 365/366 day year)
established by the Bank from time to time as the reference rate of interest for
the determination of interest rates that the Bank charges to customers of
varying degrees of creditworthiness for US dollar loans made by it in Canada.
Any interest rate based on a period less than a year expressed as an annual
rate for the purposes of the Interest Act (Canada) is equivalent to such
determined rate multiplied by the actual number of days in the calendar year in
which the same is to be ascertained and divided by the number of days in the
period upon which it was based.
2. INTEREST CALCULATION AND PAYMENT
Interest on Prime Based Loans and USBR Loans is calculated daily and payable
monthly in arrears based on the number of days the subject loan is
outstanding.
The Stamping Fee is calculated based on the amount and the term of the B/A and
payable upon acceptance by the Bank of the B/A. The net proceeds received by
the Borrowers on a B/A advance will be equal to the Face Amount of the B/A
discounted at the Bank's then prevailing B/A discount rate for the specified
term of the B/A less the B/A Stamping Fee.
Interest on LIBOR Loans is calculated and payable on the earlier of contract
maturity or quarterly in arrears, for the number of days in the LIBOR interest
period.
L/C and L/G fees are payable at the time of issuance of the L/C or L/G.
Interest on Fixed Rate Loans is compounded monthly and payable monthly in
arrears unless otherwise noted.
Interest is payable both before and after maturity or demand, default and
judgment.
Each payment under this Agreement shall be applied first in payment of costs nad
expenses, then interest and fees and the balance, if any, shall be applied in
reduction of principal.
For loans not secured by real property, all overdue amounts of principal and
interest shall bear interest from the date on which the same became due until
the date of payment at the All-In Rate plus 2% per annum.
3. DRAWDOWN PROVISIONS
PRIME BASED AND USBR LOANS
There is no minimum amount of drawdown by way of Prime Based Loans and USBR
Loans, except as stated in the section of the Agreement titled "Business Credit
Services Agreement," if that section of the Agreement has not been deleted. The
Borrower shall provide the Bank with 3 Business Day's notice of a requested
Prime Based Loan or USBR Loan over $1,000,000.
B/As
The Borrower shall advise the Bank of the requested term or maturity date for
B/As issued hereunder. The Bank shall have the discretion to restrict the term
or maturity dates of B/As. In no event shall the term of the B/A exceed the
Maturity Date. The minimum amount of a drawdown by way of B/As is $500,000 and
in multiples of $100,000 thereafter. The Borrower shall provide the Bank with 3
Business Day's notice of a requested B/A drawdown.
The Borrower shall pay to the Bank the final amount of the B/A at the maturity
date of the B/A.
LIBOR
The Borrower shall advise the Bank of the requested LIBOR contract maturity
period. The Bank shall have the discretion to restrict the LIBOR contract
maturity. In no event shall the term of the LIBOR contract exceed the Maturity
Date. The minimum amount of a drawdown by way of a LIBOR Loan is $1,000,000,
and shall be in multiples of $100,000 thereafter. The Borrower will provide the
Bank with 3 Business Day's notice of a requested LIBOR Loan.
L/C and/or L/G
The Bank shall have the discretion to restrict the maturity date of L/Gs or
L/Cs.
B/A -- PRIME CONVERSION
The Borrower will provide the Bank with at least 3 Business Day's notice of its
intention either to convert a B/A to a Prime Based Loan or vice versa, failing
which, the Bank may decline to accept such additional B/As or may charge
interest on the amount of Prime Based Loans resulting from maturity of B/As at
the rate of 115% of the rate applicable to Prime Based Loans for the 3 Business
Day period immediately following such maturity. Thereafter, the rate shall
revert to the rate applicable to Prime Based Loans.
4. PREPAYMENT
For Facilities available on a "revolving" basis, prepayment is not applicable.
For Facilities where the Tenor is described as "Committed" and Drawdown is not
on a revolving basis, when not in default, the Borrower may prepay all or any
part of the principal then outstanding upon payment of interest accrued to the
date of prepayment ("Prepayment Date") and prepayment charges equal to the
greater of:
(a) three months' interest on the amount of the prepayment using the interest
rate applicable to the loan facility being prepaid; and
(b) the interest Rate Differential. "Interest Rate Differential" means the
amount, by which (i) the total amount of interest the Bank would have
received on the amount prepaid had it not been prepaid but remained
outstanding to the Maturity Date exceeds (ii) the total amount of Interest
the Bank would receive on the amount prepaid on a Fixed Rate Loan made for
a term from the date of prepayment until the Maturity Date using the
interest rate applicable to a Fixed Rate Loan the Bank would make to a
borrower for a comparable facility on the Prepayment Date for a term
expiring on the Maturity Date.
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5. STANDARD DISBURSEMENT CONDITIONS
This obligation of the Bank to make any loan or advance hereunder at any time is
subject to the following conditions precedent:
a) The Bank shall have received the following documents which shall be in form
and substance satisfactory to the Bank:
i) A copy of a duly executed resolution of the Board of Directors of the
Borrower empowering the Borrower to enter into this Agreement;
ii) A copy of any necessary government approvals authorizing the Borrower
to enter into this Agreement;
iii) All of the Bank Security and supporting resolutions and solicitors'
letter of opinion required hereunder;
iv) The Borrower's compliance certificate certify compliance with all
terms and conditions hereunder; and;
v) All operation of account documentation;
b) The representations and warranties contained in this Agreement are correct.
c) No event has occurred and is continuing which constitutes an Event of Default
or would constitute an Event of Default, but for the requirement that notice be
given or time elapse or both.
d) The Bank has received the arrangement fee payable hereunder (if any) and the
Borrower has paid all legal and other expenses incurred by the Bank in
connection with the Agreement or the Bank Security.
6. STANDARD REPRESENTATIONS AND WARRANTIES
The Borrower hereby represents and warrants, which representations and
warranties shall be deemed to be continually repeated so long as any amounts
remain outstanding and unpaid under this Agreement or so long as any commitment
under this Agreement remains in effect, that:
a) The Borrower is a duly incorporated corporation, a limited partnership,
partnership, or sole proprietorship, duly organized, validly existing and
in good standing under the laws of the jurisdiction where the Branch/Centre
is located and each other jurisdiction where the Borrower has property or
assets or carries on business and the Borrower has adequate corporate power
and authority to carry on its business, own property, borrow monies and
enter into agreements therefore, execute and deliver the Agreement, the
Bank Security, and documents required hereunder, and observe and perform
the terms and provisions of this Agreement.
b) There are no laws, statutes or regulations applicable to or binding upon
the Borrower and no provisions in its charter documents or in any by-laws,
resolutions, contracts, agreements, or arrangements which would be
contravened, breached, violated as a result of the execution, delivery,
performance, observance, of any terms of this Agreement.
c) No Event of Default has occurred nor has any event occurred which, with the
passage of time or the giving of notice, would constitute an Event of
Default under this Agreement or which would constitute a default under any
other agreement.
d) There are no actions, suits or proceedings, including appeals or
applications for review, or any knowledge of pending actions, suits, or
proceedings against the Borrower and its subsidiaries, before any court or
administrative agency which would result in any material adverse change in
the property, assets, financial condition, business or operations of the
Borrower.
e) All material authorizations, approvals, consents, licenses, exemptions,
filings, registrations and other requirements of governmental, judicial and
public bodies and authorities required to carry on its business have been
or will be obtained or effected and are or will be in full force and
effect.
f) The financial statements and forecasts delivered to the Bank fairly present
the present financial position of the Borrower, and have been prepared by
the Borrower and its auditors in accordance with Canadian Generally
Accepted Accounting Principles consistently applied.
g) All of the remittances required to be made by the Borrower to the federal
government and all provincial and municipal governments have been made, are
currently up to date and there are no outstanding arrears. Without limiting
the foregoing, all employee source deductions (including Income taxes,
Employment Insurance and Canada Pension Plan), sales taxes (both provincial
and federal), corporate income taxes, corporate capital taxes, payroll
taxes and worker's compensation dues are currently paid and up to date.
7. STANDARD POSITIVE COVENANTS
So long as any amounts remain outstanding and unpaid under this Agreement or so
long as any commitment under this Agreement remains in effect, the Borrower
will, and will ensure that its subsidiaries and each of the Guarantors will:
a) Pay all amounts of principal, interest and fees on the dates, times and
place specified herein and under any other agreement between the Bank the
Borrower,
b) Advise the Bank of any change in the amount and the terms of any credit
arrangement made with other lenders or any action taken by another lender
to recover amounts outstanding with such other lender.
c) Advise promptly after the happening of any event which will result in a
material adverse change in the financial condition, business, operations,
or prospects of the Borrower or the occurrence of any Event of Default or
default under this Agreement or under any other agreement for borrowed
money.
d) Do all things necessary to maintain in good standing its corporate
existence and preserve and keep all material agreements, rights,
franchises, licenses, operations, contracts or other arrangements in full
force and effect.
e) Take all necessary actions to ensure that the Bank Security and its
obligations hereunder will rank ahead of all other indebtedness of and all
other security granted by the Borrower.
f) Pay all taxes, assessments and government charges unless such taxes,
assessments, or charges are being contested in good faith and appropriate
reserves shall be made with funds set aside in a separate trust fund.
g) Provide the Bank with information and financial data as it may request from
time to time.
h) Maintain property, plant and equipment in good repair and working
condition.
i) Inform the Bank of any actual or probable litigation and furnish the Bank
with copies of details of any litigation or other proceedings which might
affect the financial condition, business, operations, or prospects of the
Borrower.
j) Provide such additional security and documentation as may be required from
time to time by the Bank or its solicitors.
k) Continue to carry on the business currently being carried on by the
Borrower its subsidiaries and each of the Guarantors at the date hereof.
l) Maintain adequate insurance on all of its assets, undertakings, and
business risks.
m) Permit the Bank or its authorized representatives full and reasonable
access to its premises, business, financial and computer records and allow
the duplication or extraction of pertinent information therefrom.
8. STANDARD NEGATIVE COVENANTS
So long as any amounts remain outstanding and unpaid under this Agreement or so
long as any commitment under this Agreement remains in effect, the Borrower will
not and will ensure that its subsidiaries and each of the Guarantors will not:
a) Create, incur, assume, or suffer to exist, any mortgage, deed of trust,
pledge, lien, security interest, assignment, charge, or encumbrance
(including without limitation, any conditional sale, or other title
retention agreement, or finance lease) of any nature, upon or with respect
to any of its assets or undertakings, now owned or hereafter acquired,
except for those Permitted Liens, if any, set out in the Letter.
b) Create, incur, assume or suffer to exist any other indebtedness for
borrowed money (except for indebtedness resulting from Permitted Liens, if
any) or guarantee or act as surety or agree to indemnify the debts of any
other Person.
c) Merge or consolidate with any other Person, or acquire all or substantially
all of the shares, assets or business of any other Person.
d) Sell, lease, assign, transfer, convey or otherwise dispose of any of its
now owned or hereafter acquired assets (including, without limitation,
shares of stock and indebtedness of subsidiaries, receivables and leasehold
interests), except for inventory disposed of in the ordinary course of
business.
e) Terminate or enter into a surrender of any lease of any property mortgaged
under the Bank Security.
f) Cease to carry on the business currently being carried on by each of the
Borrower, its subsidiaries, and the Guarantors at the date hereof.
g) Permit any change of ownership or change in the capital structure of the
Borrower.
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9. ENVIRONMENTAL
The Borrower represents and warrants (which representation and warranty shall
continue throughout the term of this Agreement) that the business of the
Borrower, its subsidiaries and each of the Guarantors is being operated in
compliance with applicable laws and regulations respecting the discharge,
omission, split or disposal of any hazardous materials and that any and all
enforcement actions in respect thereto have been clearly conveyed to the Bank.
The Borrower shall, at the request of the Bank from time to time, and at the
Borrower's expense, obtain and provide to the Bank an environmental audit or
inspection report of the property from auditors or inspectors acceptable to the
Bank.
The Borrower hereby indemnifies the Bank, its officers, directors, employees,
agents and shareholders, and agrees to hold each of them harmless from all loss,
claims, damages and expenses (including legal and audit expenses) which may be
suffered or incurred in connection with the indebtedness under this Agreement or
in connection with the Bank Security.
10. STANDARD EVENTS OF DEFAULT
The Bank may accelerate the payment of principal and interest under any
committed credit facility hereunder and cancel any undrawn portion of any
committed credit facility hereunder, at any time after the occurrence of any one
of the following Events of Default:
a) Non-payment of principal outstanding under this Agreement when due or
non-payment of interest or fees outstanding under this Agreement within 3
Business Days of when due.
b) If any representation, warranty or statement made hereunder or made in
connection with the execution and delivery of this Agreement or the Bank
Security is false or misleading at any time.
c) If there is a breach or non-performance or non-observance of any term or
condition of this Agreement or the Bank Security and, if such default is
capable to being remedied, the default continues unremedied for 5 Business
Days after the occurrence.
d) If the Borrower, any one of its subsidiaries, or, if any of the Guarantors
makes a general assignment for the benefit of creditors, files or presents
a petition, makes a proposal or commits any act of bankruptcy, or if any
action is taken for the winding up, liquidation or the appointment of a
liquidator, trustee in bankruptcy, custodian, curstor, sequestrator,
receiver or any other officer with similar powers or it a judgment or order
shall be entered by any court approving a petition for reorganization,
arrangement or composition of or in respect of the Borrower, any of its
subsidiaries, or any of the Guarantors or if the Borrower, any of its
subsidiaries, or any of the Guarantors is insolvent or declared bankrupt.
e) If there exists a voluntary or involuntary suspension of business of the
Borrower, any of its subsidiaries, or any of the Guarantors.
f) If action is taken by an encumbancer against the Borrower, any of its
subsidiaries, or any of the Guarantors to take possession of property or
enforce proceedings against any assets.
g) If any final judgment for the payment of monies is made against the
Borrower, any of its subsidiaries, or any of the Guarantors and it is not
discharged within 30 days from the imposition of such judgment.
h) If there exists an event, the effect of which with lapse of time or the
giving of notice, will constitute an event of default or a default under
any other agreement for borrowed money in excess the Cross Default
Threshold entered into by the Borrower, any of its subsidiaries, or any of
the Guarantors.
i) If the Bank Security is not enforceable or if any party to the Bank
Security shall dispute or deny any liability or any of its obligations
under the Bank Security.
j) If, in the Bank's determination, a material adverse change occurs in the
financial condition, business operations or prospects of the Borrower, any
of the Borrower's subsidiaries, or any of the Guarantors.
11. ACCELERATION
If the Bank accelerates the payment of principal and interest hereunder, the
Borrower shall immediately pay to the Bank all amounts outstanding hereunder,
including without limitation, the amount of unmatured B/As and LIBOR Loans and
the amount of all drawn and undrawn L/Gs and L/Cs. All cost to the Bank of
unwinding LIBOR Loans and all loss suffered by the Bank in re-employing amounts
repaid will be paid by the Borrower.
The Bank may demand the payment of principal and interest under the Operating
Loan (and any other uncommitted facility) hereunder and cancel any undrawn
portion of the Operating Loan (and any other uncommitted facility) hereunder, at
any time whether or not an Event of Default has occurred.
12. CURRENCY INDEMNITY
US$ loans must be repaid with US$ and CDN$ loans must be repaid with CDN$ and
the Borrower shall indemnify the Bank for any loss suffered by the Bank if US$
loans are repaid with CND$ or vice versa, whether such payment is made pursuant
to an order of a court or otherwise.
13. TAXATION ON PAYMENTS
All payments made by the Borrower to the Bank will be made free and clear of all
present and future taxes (excluding the Bank's income taxes), withholdings or
deductions of whatever nature. If these taxes, withholdings or deductions are
required by applicable law and are made, the Borrower, shall as a separate and
independent obligation, pay to the Bank all additional amounts as shall fully
indemnify the Bank from any such taxes, withholdings or deductions.
14. REPRESENTATION
No representation or warranty or other statement made by the Bank concerning any
of the credit facilities shall be binding on the Bank unless made by it in
writing as a specific amendment to this Agreement.
15. ADDED COST
If the introduction of or any change in any present or future law, regulation,
treaty, official or unofficial directive, or regulatory requirement (whether or
not having the force of law) or in the interpretation or application thereof,
relates to:
i) the imposition or exemption of taxation of payments due to the Bank or on
reserves or deemed reserves in respect of the undrawn portion of any
Facility or loan made available hereunder; or,
ii) any reserve, special deposit, regulatory or similar requirement against
assets, deposits, or loans or other acquisition of funds for loans by the
Bank; or,
iii) the amount of capital required or expected to be maintained by the Bank as
a result of the existence of the advances or the commitment made hereunder:
and the result of such occurrence is, in the sole determination of the Bank, to
increase the cost of the Bank or to reduce the income received or receivable by
the Bank hereunder, the Borrower shall, on demand by the Bank, pay to the Bank
that amount which the Bank estimates will compensate it for such additional cost
or reduction in income and the Bank's estimate shall be conclusive, absent
manifest error.
16. EXPENSES
The Borrower shall pay, within 5 Business Days following notification, all fees
and expenses (including but not limited to all legal fees) incurred by the Bank
in connection with the preparation, registration and ongoing administration of
this Agreement and the Bank Security and with the enforcement of the Bank's
rights and remedies under this Agreement or the Bank Security whether or not any
amounts are advanced under the Agreement. These fees and expenses shall include,
but not be limited, to all outside counsel fees and expenses and all in-house
legal fees and expenses, if in-house counsel are used, and all outside
professional advisory fees and expenses. The Borrower shall pay interest on
unpaid amounts due pursuant to this paragraph at the Prime Rate plus 2% per
annum.
17. NON WAIVER
Any failure by the Bank to object to or take action with respect to a breach of
this Agreement or any Bank Security or upon the occurrence of an Event of
Default shall not constitute a waiver of the Bank's right to take action at a
later date on that breach. No course of conduct by the Bank will give rise to
any reasonable expectation which is in any way inconsistent with the terms and
conditions of this Agreement and the Bank Security or the Bank's rights
thereunder.
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18. EVIDENCE OF INDEBTEDNESS
The Bank shall record on its records the amount of all loans made hereunder,
payments made in respect thereto, and all other amounts becoming due to the Bank
under this Agreement. The Bank's records constitute, in the absence of manifest
error, conclusive evidence of the indebtedness of the Borrower to the Bank
pursuant to this Agreement.
The Borrower will sign an Indemnity Agreement for all L/Cs and L/Gs issued by
the Bank.
19. OTHER AGREEMENTS
This Agreement replaces any previous letter agreements dealing specifically with
terms and conditions of the credit facilities described in the Letter,
Agreements relating to other credit facilities made available by the Bank
continue to apply for those other credit facilities.
20. ASSIGNMENT
The Bank may assign or grant participation in all or part of this Agreement or
in any loan made hereunder without notice to and without the Borrower's consent.
The Borrower may not assign or transfer all of any part of its rights or
obligations under this Agreement.
21. RELEASE OF INFORMATION
The Borrower hereby irrevocably authorizes and directs the Borrower's
accountant, (the "Accountant") to deliver all financial statements and other
financial information concerning the Borrower to the Bank and agrees that the
Bank and the Accountant may communicate directly with each other.
22. SET-OFF
In addition to and not in limitation of any rights now or hereafter granted
under applicable law, the Bank may at any time and from time to time without
notice to the Borrower or any other Person, any notice being expressly waived by
the Borrower, set-off and compensate and apply any and all deposits, general or
special, time or demand, provisional or final, matured or unmatured, in any
currency, and any other indebtedness at any time owing by the Bank, to or for
the credit or the account of the Borrower against and on account of the
indebtedness and liability under this Agreement notwithstanding that any of them
are contingent or unmatured or in a different currency than the indebtedness and
liability under this Agreement.
When applying a deposit in a different currency than the indebtedness and
liability under this Agreement to the indebtedness and liability under this
Agreement, the Bank will convert the deposit to the currency of the indebtedness
and liability under this Agreement using the Bank's noon spot rate of exchange
for the conversion of such currency.
23. MISCELLANEOUS
i) The Borrower has received a signed copy of this Agreement:
ii) If more than one Person, firm or corporation signs this Agreement as
the Borrower, each party is jointly and severally liable hereunder,
and the Bank may require payment of all amounts payable under this
Agreement from any one of them, or a portion from each, but the Bank
is released from any of its obligations by performing that obligation
to any one of them;
iii) Accounting terms will (to the extend not defined in this Agreement) be
interpreted in accordance with accounting principles established from
time to time by the Canadian institute of Chartered Accountants (or
any successor) consistently applied, and all financial statements and
information provided to the Bank will be prepared in accordance with
those principles:
iv) This Agreement is governed by the law of the Province or Territory
where the Branch/Centre is located.
v) Unless stated otherwise, all amounts referred to herein are in
Canadian dollars.
24. DEFINITIONS
Capitalized Terms used in this Agreement shall have the following meanings:
"All-in-Rate" means the greater of the Interest Rate that the Borrower pays for
Prime Based Loans (which for greater capacity includes the percent per annum
added to the Prime Rate) or the highest Fixed Rate paid for Fixed Rate Loans.
"Agreement" means the agreement between the Bank and the Borrower set out in the
Letter and this Schedule "A"--Standard Terms and Conditions.
"Business Day" means any day (other than a Saturday or Sunday) that the
Branch/Centre is open for business.
"Business Plan/Forecast" means, for any fiscal year, a business plan and
financial forecast in respect of the Borrower for such fiscal year, in form
reasonably acceptable to the Bank and certified by a senior
officer/representative of the Borrower.
"Branch/Centre" means The Toronto-Dominion Bank branch or banking centre noted
on the first page of the Letter, or such other branch or centre as may from time
to time be designated by the Bank.
"Face Amount" means, in respect of:
(i) a B/A, the amount payable to the holder thereof on its maturity;
(ii) a L/C or L/G, the maximum amount payable to the beneficiary specified
therein or any other Person to whom payments may be required to be
made pursuant to such L/C or L/G.
"Fixed Rate Loan" means any loan drawn down, converted or extended under a
Credit Facility at an interest rate which is fixed for a term, instead of
referenced to a variable rate such as the Prime Rate.
"Inventory Value" means, at any time of determination, the total value (based on
the lower of cost or market) of the Borrower's inventories that are subject to
the Bank Security (other than (i) those inventories supplied by trade creditors
who at that time have not been fully paid therefor and would have a right to
repossess all or part of such inventories if the Borrower were then either
bankrupt or in receivership, (ii) those inventories comprising work in process
and (iii) those inventories that the Bank may from time to time designate in its
sole discretion) minus the total amount of any claims, liens or encumbrances on
those inventories having or purporting to have priority over the Bank.
"Letter" means the letter from the Bank to the Borrower to which this Schedule
"A"--Standard Terms and Conditions is attached.
"Letter of Credit" or "L/C" means, unless specifically limited elsewhere in this
Agreement, a documentary letter of credit or similar instrument in form and
substance satisfactory to the Bank.
"Letter of Guarantee" or "L/G" means, unless specifically limited elsewhere in
this Agreement, a stand-by letter of guarantee or similar instrument in form and
substance satisfactory to the Bank.
"Person" includes any individual, sole proprietorship, corporation, partnership,
joint venture, trust, unincorporated association, association, institution,
entity, party, or government (whether national, federal, provincial, state,
municipal, city, county, or otherwise and including any instrumentality,
division, agency, body, or department thereof).
"Purchase Money Security Interest" means a security interest on an asset which
is granted to a lender or to the seller of such asset in order to secure the
purchase price of such asset or a loan incurred to acquire such asset, provided
that the amount secured by the security interest does not exceed the cost of the
asset and provided that the Borrower provides written notice to the Bank prior
to the creation of the security interest.
"Receivable Value" means, at any time of determination, the total value of those
of the Borrower's trade accounts receivable that are subject to the Bank
Security other than (i) those accounts then outstanding for 90 days, (ii) those
accounts owing by Persons, firms or corporations affiliated with the Borrower,
(iii) those accounts that the Bank may from time to time designate in its sole
discretion, (iv) those accounts subject to any claim, liens, or encumbrance
having or purporting to have priority over the Bank, (v) those accounts which
are subject to a claim of set-off by the obligor under such account, MINUS the
total amount of all claims, liens or encumbrances on those receivables having or
purporting to have priority over the Bank.
"Receivables/Inventory Summary" means a summary of the Customer's trade account
receivables and inventories, in form as the Bank may require and certified by a
senior officer/representative of the Borrower.
"US$ Equivalent" means, on any date, the equivalent amount in United States
Dollars after giving affect to a conversion of a specified amount of Canadian
Dollars to United States Dollars at the Bank's noon spot rate of exchange for
Canadian Dollars to United States Dollars established by the Bank for the day in
question.
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