Exhibit 10.12
EXECUTION COPY
SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
DATED AS OF MARCH 12, 2004
AMONG
BEACON ROOFING SUPPLY CANADA COMPANY
AS BORROWER,
GE CANADA FINANCE HOLDING COMPANY
AS AGENT AND AS LENDER, AND
THE FINANCIAL INSTITUTION(S) LISTED
ON THE SIGNATURE PAGES HEREOF,
AS LENDERS
SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
EXECUTION COPY
TABLE OF CONTENTS
Page
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SECTION 1. DEFINITIONS AND ACCOUNTING TERMS.........................................................1
1.1 CERTAIN DEFINED TERMS......................................................................1
SECTION 2. LOANS AND COLLATERAL.....................................................................2
2.1 LOANS......................................................................................2
2.2 INTEREST...................................................................................8
2.3 FEES......................................................................................11
2.4 PAYMENTS AND PREPAYMENTS..................................................................11
2.5 APPLICATION OF PREPAYMENT PROCEEDS........................................................13
2.6 TERM OF THIS AGREEMENT....................................................................13
2.7 STATEMENTS................................................................................13
2.8 GRANT OF SECURITY INTEREST................................................................13
2.9 YIELD PROTECTION..........................................................................14
2.10 TAXES.....................................................................................15
2.11 REQUIRED TERMINATION AND PREPAYMENT.......................................................16
2.12 OPTIONAL PREPAYMENT/REPLACEMENT OF LENDERS................................................17
2.13 COMPENSATION..............................................................................17
2.14 BOOKING OF BA RATE LOANS..................................................................18
2.15 ASSUMPTIONS CONCERNING FUNDING OF BA RATE LOANS...........................................18
SECTION 3. CONDITIONS TO LOANS.....................................................................18
SECTION 4. REPRESENTATIONS, WARRANTIES AND CERTAIN COVENANTS.......................................18
4.1 ORGANIZATION, POWERS, CAPITALIZATION......................................................18
4.2 AUTHORIZATION OF BORROWING, NO CONFLICT...................................................19
4.3 FINANCIAL CONDITION.......................................................................19
4.4 INDEBTEDNESS AND LIABILITIES..............................................................20
4.5 ACCOUNT WARRANTIES AND COVENANTS..........................................................20
4.6 NAMES AND LOCATIONS.......................................................................20
4.7 TITLE TO PROPERTIES; LIENS................................................................21
4.8 LITIGATION; ADVERSE FACTS.................................................................21
4.9 PAYMENT OF TAXES..........................................................................21
4.10 PERFORMANCE OF AGREEMENTS.................................................................22
4.11 EMPLOYEE PENSION AND BENEFIT PLANS........................................................22
4.12 INTELLECTUAL PROPERTY.....................................................................22
4.13 BROKER'S FEES.............................................................................23
4.14 ENVIRONMENTAL MATTERS.....................................................................23
4.15 SOLVENCY..................................................................................24
4.16 DISCLOSURE................................................................................24
4.17 INSURANCE.................................................................................24
4.18 COMPLIANCE WITH LAWS......................................................................25
4.19 BANK ACCOUNTS.............................................................................25
4.20 EMPLOYEE MATTERS..........................................................................25
4.21 GOVERNMENTAL REGULATION...................................................................26
4.22 ACCESS TO ACCOUNTANTS AND MANAGEMENT......................................................26
4.23 INSPECTION................................................................................26
4.24 COLLATERAL RECORDS........................................................................26
4.25 COLLECTION OF ACCOUNTS AND PAYMENTS.......................................................26
(i) SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
EXECUTION COPY
SECTION 5. REPORTING AND OTHER AFFIRMATIVE COVENANTS...............................................27
5.1 FINANCIAL STATEMENTS AND OTHER REPORTS....................................................27
5.2 ENDORSEMENT...............................................................................27
5.3 MAINTENANCE OF PROPERTIES.................................................................27
5.4 COMPLIANCE WITH LAWS......................................................................28
5.5 FURTHER ASSURANCES........................................................................28
5.6 MORTGAGES; TITLE INSURANCE AND TITLE OPINIONS; SURVEYS AND CERTIFICATES OF LOCATION.......28
5.7 USE OF PROCEEDS...........................................................................29
5.8 BAILEES...................................................................................29
5.9 THIRD PARTY INVENTORY.....................................................................29
5.10 ENVIRONMENTAL MATTERS.....................................................................29
5.11 CURRENCY RATE AGREEMENT...................................................................30
SECTION 6. FINANCIAL COVENANTS.....................................................................30
SECTION 7. NEGATIVE COVENANTS......................................................................31
7.1 INDEBTEDNESS AND LIABILITIES..............................................................31
7.2 CONTINGENT OBLIGATIONS....................................................................32
7.3 TRANSFERS, LIENS AND RELATED MATTERS......................................................33
7.4 INVESTMENTS AND LOANS.....................................................................34
7.5 RESTRICTED JUNIOR PAYMENTS................................................................34
7.6 RESTRICTION ON FUNDAMENTAL CHANGES........................................................36
7.7 CHANGES RELATING TO INDEBTEDNESS..........................................................37
7.8 TRANSACTIONS WITH AFFILIATES..............................................................37
7.9 CONDUCT OF BUSINESS.......................................................................37
7.10 TAX CONSOLIDATIONS........................................................................37
7.11 SUBSIDIARIES..............................................................................37
7.12 FISCAL YEAR; TAX DESIGNATION..............................................................37
7.13 PRESS RELEASE; PUBLIC OFFERING MATERIALS..................................................38
7.14 BANK ACCOUNTS.............................................................................38
7.15 HAZARDOUS MATERIALS.......................................................................38
7.16 SIGNA IMPRESS ACCOUNT.....................................................................38
SECTION 8. DEFAULT, RIGHTS AND REMEDIES............................................................38
8.1 EVENT OF DEFAULT..........................................................................38
8.2 SUSPENSION OF COMMITMENTS.................................................................42
8.3 ACCELERATION..............................................................................42
8.4 REMEDIES..................................................................................42
8.5 APPOINTMENT OF RECEIVER...................................................................43
8.6 COSTS OF ENFORCEMENT......................................................................43
8.7 APPOINTMENT OF ATTORNEY-IN-FACT...........................................................43
8.8 LIMITATION ON DUTY OF AGENT WITH RESPECT TO COLLATERAL....................................44
8.9 APPLICATION OF PROCEEDS...................................................................44
8.10 LICENSE OF INTELLECTUAL PROPERTY..........................................................44
8.11 WAIVERS; NON-EXCLUSIVE REMEDIES...........................................................45
SECTION 9. AGENT...................................................................................45
9.1 AGENT.....................................................................................45
9.2 NOTICE OF DEFAULT.........................................................................50
9.3 ACTION BY AGENT...........................................................................50
9.4 AMENDMENTS, WAIVERS AND CONSENTS..........................................................50
9.5 ASSIGNMENTS AND PARTICIPATIONS IN LOANS...................................................51
9.6 SET OFF AND SHARING OF PAYMENTS...........................................................53
9.7 DISBURSEMENT OF FUNDS.....................................................................54
(ii) SECOND AMENDED AND RESTATED
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EXECUTION COPY
9.8 SETTLEMENTS, PAYMENTS AND INFORMATION.....................................................54
9.9 DISCRETIONARY ADVANCES....................................................................56
SECTION 10. MISCELLANEOUS..........................................................................56
10.1 EXPENSES AND LEGAL FEES...................................................................56
10.2 INDEMNITY.................................................................................57
10.3 NOTICES...................................................................................58
10.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND CERTAIN AGREEMENTS.........................59
10.5 INDULGENCE NOT WAIVER.....................................................................59
10.6 MARSHALING; PAYMENTS SET ASIDE............................................................59
10.7 ENTIRE AGREEMENT..........................................................................60
10.8 SEVERABILITY..............................................................................60
10.9 LENDERS' OBLIGATIONS SEVERAL; INDEPENDENT NATURE OF LENDERS' RIGHTS.......................60
10.10 HEADINGS..................................................................................60
10.11 APPLICABLE LAW............................................................................60
10.12 SUCCESSORS AND ASSIGNS....................................................................60
10.13 NO FIDUCIARY RELATIONSHIP; NO DUTY; LIMITATION OF LIABILITIES.............................61
10.14 CONSENT TO JURISDICTION...................................................................61
10.15 WAIVER OF JURY TRIAL......................................................................62
10.16 WAIVER OF NOTICES.........................................................................62
10.17 JUDGMENT CURRENCY.........................................................................62
10.18 CONSTRUCTION..............................................................................63
10.19 COUNTERPARTS; EFFECTIVENESS...............................................................63
10.20 CONFIDENTIALITY...........................................................................63
SECTION 11. DEFINITIONS AND ACCOUNTING TERMS.......................................................63
11.1 CERTAIN DEFINED TERMS.....................................................................63
11.2 ACCOUNTING TERMS..........................................................................80
11.3 OTHER DEFINITIONAL PROVISIONS.............................................................81
SECTION 12. RESTATEMENT OF ORIGINAL LOAN AGREEMENT.................................................81
(iii) SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
EXECUTION COPY
INDEX OF DEFINED TERMS
Defined Term Defined in Section
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Accounting Changes Section 11.2
Accounts Section 11.1
Additional Mortgaged Property Section 11.1
Affected Lender Section 2.12
Affiliate Section 11.1
Agent Section 11.1
Agent's Account Section 11.1
Agreed Currency Section 10.17
Agreement Section 11.1
Asset Disposition Section 11.1
Assignment and Acceptance Agreement Section 11.1
BA Loans Section 11.1
BA Period Section 11.1
BA Rate Section 11.1
Bank Rate Section 11.1
Beacon Canada Holdings Section 11.1
Best Distributing Section 11.1
Best Purchase Agreements Section 11.1
Best Seller Notes Section 11.1
Best Subordination Agreement Section 11.1
Blocked Accounts Section 4.25
Borrower Recitals
Borrower Collateral Section 2.8
Borrowing Base Certificates Section 11.1
Business Day Section 11.1
Canadian Benefit Plans Section 11.1
Canadian Borrowing Base Section 2.1(A)
Canadian Borrowing Base Certificate Section 11.1
Canadian Dollars and C$ Section 11.1
Canadian GAAP Section 11.1
Canadian Pension Plans Section 11.1
Capital Expenditures Section 11.1
Capital Lease Section 11.1
Capitalization/Acquisition Documents Section 11.1
Cash Equivalents Section 11.1
CHS Section 11.1
CHS Indemnity Agreement Section 11.1
CIGNA Impress Account Section 11.1
Closing Date Section 11.1
Collateral Section 11.1
(i) SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
Defined Term Defined in Section
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Collecting Banks Section 4.25
Commitment(s) Section 11.1
Compliance Certificate Section 11.1
Consolidated Borrowing Base Section 2.1(A)
Consolidated Borrowing Base Certificate Section 11.1
Contingent Obligation Section 11.1
Credit Memoranda Reserve Section 2.1(A)
Currency Rate Agreement Section 5.10
Daily Interest Amount Section 9.8(A)(3)(c)
Daily Interest Rate Section 9.8(A)(3)(b)
Daily Loan Balance Section 9.8(A)(3)(a)
Default Section 11.1
Default Rate Section 2.2(A)
Defaulted Amount Section 11.1
Defaulting Lender Section 11.1
Dilution Reserve Section 2.1(A)
Discretionary Advances Section 9.9
Domestic Subsidiary Section 11.1
EBITDA Section 11.1
Eligible Accounts Section 2.1(B)
Eligible Assignee Section 11.1
Eligible Inventory Section 2.1(B)
Employee Benefit Plan Section 11.1
Environmental Claims Section 11.1
Environmental Laws Section 11.1
Environmental Liabilities Section 11.1
Environmental Permits Section 11.1
Equipment Section 11.1
Equity Documents Section 11.1
Equivalent Amount Section 11.1
ERISA Section 11.1
ERISA Affiliate Section 11.1
Event of Default Section 8.1
Excess Availability Section 11.1
Existing Agent Recitals
Existing Lenders Recitals
Existing Loan Agreement Recitals
First Agency Assignment Agreement Recitals
Fiscal Year Section 11.1
Fixed Charge Coverage Section 11.1
Fixed Charges Section 11.1
Funding Date Section 11.1
(ii) SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
Defined Term Defined in Section
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GE Capital Section 11.1
GE Canada Finance Recitals
Hazardous Material Section 11.1
Holdings Section 11.1
Holdings' Accountants Section 11.1
Indebtedness Section 11.1
Indemnified Liabilities Section 10.2
Indemnitees Section 10.2
Index Rate Section 11.1
Index Rate Loans Section 11.1
Insolvency Law Section 11.1
Intellectual Property Section 11.1
Intercreditor Agreement Section 11.1
Interest Expense Section 11.1
Interest Rate Section 2.2(A)
Interest Rate Agreement Section 11.1
Interest Ratio Section 9.8(A)(3)(d)
Interest Settlement Date Section 9.8(A)(4)
Inventory Section 11.1
Inventory Advance Rate Percentage Section 2.1(A)
Inventory Appraisal Section 2.1(A)
Investor Subordinated Notes Section 11.1
Investor Subordination Agreement Section 11.1
IRC Section 11.1
ITA Section 11.1
Lender(s) Recitals
Liabilities Section 11.1
Lien Section 11.1
Loan or Loans Section 11.1
Loan Documents Section 11.1
Loan Party Section 11.1
Loan Year Section 11.1
Material Adverse Effect Section 11.1
Maximum Revolving Loan Amount Section 2.1(A)
▇▇▇▇▇'▇ Section 11.1
Mortgage Section 11.1
Mortgage Policies Section 5.6(A)
Mortgaged Property Section 11.1
Net Proceeds Section 11.1
Notes Section 11.1
Notice of Conversion/Continuation Section 11.1
Notice of Borrowing Section 11.1
(iii) SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
Defined Term Defined in Section
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Obligations Section 11.1
Operating Cash Flow Section 11.1
Orderly Liquidation Value Section 2.1(A)
Original Agent Recitals
Original Obligations Recitals
Other Currency Section 10.17
Other Loan Party Collateral Section 11.1
Papillon Section 11.1
Permitted Acquisition Section 11.1
Permitted Encumbrances Section 11.1
Person Section 11.1
Personal Property Security Legislation Section 11.1
PPSA Section 11.1
Prior Claims Section 2.1(A)
Pro Forma Section 11.1
Pro Forma EBITDA Section 11.1
Pro Rata Share Section 11.1
Projections Section 11.1
Quality Section 11.1
Real Estate Section 11.1
Receiver Section 8.5
Register Section 9.5(E)
Related Fund Section 9.5(D)
Related Transactions Section 11.1
Related Transactions Documents Section 11.1
Release Section 11.1
Replacement Lender Section 2.12(A)
Requisite Lenders Section 11.1
Reserves Section 11.1
Restricted Junior Payment Section 11.1
Revolving Advance Section 11.1
Revolving Credit Exposure Section 11.1
Revolving Loan Section 11.1
Revolving Loan Commitment Section 11.1
Revolving Note Section 11.1
Seasonal Inventory Advance Rate Percentage Section 2.1(A)
RFC Section 11.1
Security Documents Section 11.1
Second Agency Assignment Agreement Recitals
Senior Indebtedness Section 11.1
Senior Subordinated Loan Documents Section 11.1
Senior Subordination Agreement Section 11.1
(iv) SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
Defined Term Defined in Section
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Settlement Date Section 9.8(A)(2)
Stated Rate Section 2.2(B)
Stockholder Notes Section 11.1
Subordinated Loan Documents Section 11.1
Subsidiary Section 11.1
Target Section 11.1
Tax Liabilities Section 2.10(A)
Termination Date Section 2.5
Unused Line Fee Margin Section 11.1
US Dollars or US$ Section 11.1
US Facility Agent Section 11.1
US Facility Lenders Section 11.1
US Facility Letter of Credit Obligations Section 11.1
US Facility Loan Agreement Section 11.1
US Facility Loan Documents Section 11.1
US Facility Revolving Loan Commitment Section 11.1
US Facility Revolving Loans Section 11.1
US Facility Term Loans Section 11.1
US GAAP Section 11.1
US Obligors Section 11.1
US Obligors Consolidating Borrowing Base Section 2.1(A)
US Obligors Consolidating Borrowing Base Certificate Section 11.1
West End Section 11.1
(v) SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
EXECUTION COPY
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
This SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
is dated as of March 12, 2004 and entered into among BEACON ROOFING SUPPLY
CANADA COMPANY, a Nova Scotia unlimited liability company ("Borrower"), the
financial institution(s) listed on the signature pages hereof, and their
respective successors and Eligible Assignees (each, individually, a "Lender",
and, collectively, "Lenders"), and GE CANADA FINANCE HOLDING COMPANY (in its
individual capacity, "GE Canada Finance"), for itself as a Lender and as Agent.
WHEREAS, Borrower, ▇▇▇▇▇▇ Financial Canada, Ltd. ("Original
Agent"), as agent and lender, and the other financial institutions party thereto
as lenders (together with Original Agent, the "Original Lenders") are parties to
that certain Amended and Restated Loan and Security Agreement dated as of June
8, 2001 (as in effect on the date hereof, the "Existing Loan Agreement")
pursuant to which the Original Lenders agreed to extend credit to the Borrower
pursuant to the terms and conditions thereof; and
WHEREAS, pursuant to an assignment agreement dated as of
January 30, 2004 (the "First Agency Assignment Agreement") between Original
Agent and ▇▇▇▇▇▇ Financial Canada Holding Company ("Existing Agent"), Original
Agent assigned all of its rights, duties and obligations as Agent under the
Existing Loan Agreement and the other Loan Documents to Existing Agent; and
WHEREAS, immediately prior to entering into this Agreement,
Existing Agent assigned all of its rights, duties and obligations as Agent under
the Existing Loan Agreement to Agent pursuant to that certain assignment
agreement dated as of the date hereof (the "Second Agency Assignment Agreement")
between Existing Agent and Agent; and
WHEREAS, the parties hereto desire to restate and to further
amend the provisions of the Existing Loan Agreement for the purposes of (i)
restating the terms of the Existing Obligations and the security interests
granted under the Existing Loan Agreement and (ii) providing funding for the
repayment of certain indebtedness of Borrower and for working capital and other
general corporate purposes.
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, Borrower, Agent and
Lenders agree as follows:
SECTION 1.
DEFINITIONS AND ACCOUNTING TERMS
1.1 CERTAIN DEFINED TERMS. The capitalized terms not otherwise
defined in this Agreement and the accounting terms used in this Agreement shall
have the meanings set forth in SECTION 11 of this Agreement.
SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
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SECTION 2.
LOANS AND COLLATERAL
2.1 LOANS.
(A) REVOLVING LOAN. Each Lender, severally, agrees to
lend to Borrower from time to time its Pro Rata Share of each Revolving Advance
under the Revolving Loan Commitment. The aggregate amount of the Revolving Loan
Commitment shall not exceed at any time C$15,000,000. Amounts borrowed under
this SUBSECTION 2.1(A) may be repaid and reborrowed at any time prior to the
earlier of (i) the termination of the Revolving Loan Commitment pursuant to
SUBSECTION 8.3 or (ii) the Termination Date. Except as otherwise provided
herein, no Lender shall have any obligation to make a Revolving Advance to the
extent such Revolving Advance would cause the Revolving Loan (after giving
effect to any immediate application of the proceeds thereof) to exceed the
Maximum Revolving Loan Amount. For the purpose of determining borrowing
availability hereunder on any date, the outstanding balance of the US Facility
Revolving Loans, the US Facility Letter of Credit Reserve and the US Obligors
Consolidating Borrowing Base shall be converted into the Equivalent Amount
thereof in Canadian Dollars (1) as of the date of the Canadian Borrowing Base
Certificate most recently required to be delivered to Agent hereunder or (2) in
light of currency exchange rate fluctuations, as of such date if Agent exercises
its discretion to make the determination as of such date.
"Canadian Borrowing Base" means, for Borrower, as of any date
of determination, an amount equal to the sum of (a) up to 85% of Borrower's
Eligible Accounts less Borrower's Dilution Reserve and less Borrower's Credit
Memoranda Reserve, plus (b) up to the Inventory Advance Rate Percentage (the
Seasonal Inventory Advance Rate Percentage during the period from January 1
through March 31 of each year) of Borrower's Eligible Inventory, and, less, in
each case, without duplication, Prior Claims and such other Reserves (excluding
Credit Memoranda Reserves and Dilution Reserves included in the definition
thereof) as Agent in its reasonable credit judgment may elect to establish with
prior or contemporaneous written notice to Borrower.
"Consolidated Borrowing Base" means, as of any date of
determination, an amount equal to the sum of the aggregate US Obligors
Consolidating Borrowing Base plus the Canadian Borrowing Base.
"Credit Memoranda Reserve" means, for Borrower as of any date
of determination, a reserve equal to the aggregate credits to account debtors
provided under credit memoranda issued by Borrower more than thirty (30) days
after the creation of the Accounts giving rise to such credits. The Credit
Memoranda Reserve for Borrower as of the Closing Date shall be in the amount set
forth for Borrower on SCHEDULE 2.1 hereto and shall thereafter be adjusted after
each field examination audit of the Borrower Collateral conducted by Agent or
any duly authorized representative of Agent.
"Dilution Reserve" means, for Borrower as of any date of
determination, a reserve for the amount by which the total dilution of
Borrower's Accounts exceeds five percent (5%); with dilution referring to all
actual and potential offsets to an Account of Borrower, including,
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without limitation, customer payment and/or volume discounts, write-offs, credit
memoranda, returns and allowances, and billing errors. The Dilution Reserve for
Borrower shall be adjusted after each field examination audit of the Borrower
Collateral conducted by Agent or any authorized representative designated by
Agent.
"Inventory Advance Rate Percentage" means, initially, 64.5%,
as such percentage may hereafter be adjusted in the manner set forth below;
PROVIDED, that the Inventory Advance Rate Percentage shall never exceed 64.5%.
"Maximum Revolving Loan Amount" means, as of any date of
determination, the lesser of (a) the Revolving Loan Commitments of all Lenders
and (b) the Consolidated Borrowing Base LESS the sum of (i) the outstanding
balance of the US Facility Revolving Loans and (ii) the US Facility Letter of
Credit Obligations.
"Prior Claims" means the aggregate of all amounts that are
secured by Liens created by applicable law (in contrast with Liens voluntarily
granted) which rank or are capable of ranking prior or PARI PASSU with Agent's
Liens against all or part of the Borrower Collateral; including for amounts
owing for employee source deductions and contributions, vacation pay, goods and
services taxes, sales taxes, realty taxes, business taxes, workers'
compensation, pension fund or plan obligations, overdue rents and Quebec
corporate taxes.
"Seasonal Inventory Advance Rate Percentage" means, initially,
69.5%, as such percentage may hereafter be adjusted in the manner set forth
below; PROVIDED, that the Seasonal Inventory Advance Rate Percentage shall never
exceed 69.5%.
With reasonable promptness following Agent's receipt of each
Inventory appraisal obtained pursuant to PARAGRAPH H of the Reporting Rider
(each such appraisal, an "Inventory Appraisal"), Agent shall determine the
aggregate net orderly liquidation value of all Inventory of Borrower as of the
date of such Inventory Appraisal, such determination to be made by Agent in good
faith based upon the net orderly liquidation values set forth in such Inventory
Appraisal (such aggregate net orderly liquidation value, the "Orderly
Liquidation Value"). Effective five (5) Business Days following delivery by
Agent to Borrower of written notice of such determination (and any resulting
adjustments to the Inventory Advance Rate Percentage and the Seasonal Inventory
Advance Rate Percentage):
(i) the Inventory Advance Rate Percentage shall be
adjusted (if necessary) by Agent to a percentage
equal to the lower of (x) 64.5% and (y) that
percentage which, when multiplied by the aggregate
Eligible Inventory of Borrower as of the date of such
Inventory Appraisal (determined at the lower of cost,
excluding intercompany charges or profits included in
cost, on a weighted average basis, or market),
results in an amount not exceeding 85% of the Orderly
Liquidation Value of all Eligible Inventory of
Borrower as of such date;
(ii) the Seasonal Inventory Advance Rate Percentage shall
be adjusted (if necessary) by Agent to a percentage
equal to the lower of (x) 69.5% and
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(y) that percentage which, when multiplied by the
aggregate Eligible Inventory of Borrower as of the
date of such Inventory Appraisal (determined at the
lower of cost, excluding intercompany charges or
profits included in cost, on a weighted average
basis, or market), results in an amount not exceeding
95% of the Orderly Liquidation Value of all Inventory
of Borrower as of such date.
All such adjustments to the Inventory Advance Rate Percentage
and the Seasonal Inventory Advance Rate Percentage made by Agent hereunder shall
be final and binding upon the Loan Parties and Lenders absent demonstrable error
by Agent.
"US Obligors Consolidating Borrowing Base" has the meaning
assigned to the term "Consolidating Borrowing Base" in the US Facility Loan
Agreement.
(B) ELIGIBLE COLLATERAL.
"Eligible Accounts" means, for Borrower as at any date of
determination, the aggregate of all Accounts of Borrower that Agent, in its
reasonable credit judgment, deems to be eligible for borrowing purposes. Without
limiting the generality of the foregoing, the Agent may determine that the
following Accounts are not Eligible Accounts:
(1) Accounts which, at the date of issuance of
the respective invoice therefor, were payable more than ninety (90) days after
the date of issuance;
(2) Accounts which remain unpaid for more than
the earlier of sixty (60) days after the due date specified in the original
invoice or one hundred twenty (120) days after invoice date;
(3) Accounts which are otherwise eligible with
respect to which the account debtor is owed a credit by Borrower, but only to
the extent of such credit;
(4) Accounts due from an account debtor whose
principal place of business is located outside the United States of America or
Canada (excluding the Northwest Territories and the Territory of Nunavut) unless
such Account is backed by a letter of credit, in form and substance acceptable
to Agent and issued or confirmed by a bank that is organized under the laws of
Canada or the United States of America or a state thereof, that is acceptable to
Agent; PROVIDED that such letter of credit has been delivered to Agent as
additional Borrower Collateral;
(5) Accounts due from an account debtor which
Agent, in the exercise of its reasonable credit judgment, has notified Borrower
does not have a satisfactory credit standing;
(6) Accounts which, together with all Accounts
of the US Obligors, exceed US$20,000 or the Equivalent Amount thereof in
Canadian Dollars in the aggregate and, with respect to which, the account debtor
is the federal government of Canada (Her Majesty in Right of Canada), the United
States of America, any province, state or municipality, or any
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department, agency or instrumentality thereof, unless Borrower has, with respect
to such Accounts, complied with THE FINANCIAL ADMINISTRATION ACT (Canada), the
FEDERAL ASSIGNMENT OF CLAIMS ACT OF 1940, as amended (31 U.S.C. Section 3727 et.
seq.) or any applicable statute or municipal ordinance of similar purpose and
effect;
(7) Accounts with respect to which the account
debtor is an Affiliate of Borrower or a director, officer, agent, shareholder or
employee of Borrower or any of its Affiliates;
(8) Accounts due from an account debtor if more
than fifty percent (50%) of the aggregate amount of Accounts of such account
debtor owing to one or more of Borrower and the US Obligors have at the time
remained unpaid for more than the earlier of sixty (60) days after due date or
one hundred twenty (120) days after the invoice date;
(9) Accounts with respect to which there is any
unresolved dispute with the respective account debtor (but only to the extent of
such dispute);
(10) Accounts evidenced by an "instrument" or
"chattel paper" (as defined in the PPSA) not in the possession of Agent, on
behalf of itself and Lenders;
(11) Accounts with respect to which Agent, on
behalf of itself and Lenders, does not have a valid and fully perfected security
interest (or the applicable equivalent thereof), subject only to, with respect
to priority, Prior Claims;
(12) Accounts subject to any Lien except those in
favour of Agent, on behalf of itself and Lenders, those in favour of US Facility
Agent, on behalf of itself and US Facility Lenders, and Prior Claims;
(13) Accounts with respect to which the account
debtor is the subject of any bankruptcy, reorganization or other insolvency
proceeding;
(14) Accounts due from an account debtor to the
extent that such Accounts exceed in the aggregate an amount equal to ten percent
(10%) of the aggregate of all Accounts of Borrower and the US Obligors at said
date;
(15) Accounts with respect to which the account
debtor's obligation to pay is conditional or subject to a repurchase obligation
or right to return or with respect to which the goods or services giving rise to
such Account have not been delivered (or performed, as applicable) and accepted
by such account debtor, including progress ▇▇▇▇▇▇▇▇, ▇▇▇▇ and hold sales,
guarantied sales, sale or return transactions, sales on approval or consignment
sales;
(16) Accounts with respect to which the account
debtor is located in any province or state denying creditors access to its
courts in the absence of a return and applicable notices of change or Notice of
Business Activities Report or other similar filing(s), unless Borrower is
qualified to transact business in such province or state;
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(17) Accounts with respect to which the account
debtor is a creditor of Borrower; PROVIDED, HOWEVER, that any such Account shall
only be ineligible as to that portion of such Account which is less than or
equal to the amount owed by Borrower to such Person; and
(18) that portion of Accounts which represents
taxes, service charges, late fees or similar charges.
"Eligible Inventory" means, for Borrower as at any date of
determination, the value (determined at the lower of cost, excluding
intercompany charges or profits included in cost, on a weighted average cost
basis, or market) of all Inventory owned by Borrower and located in Canada or
the United States of America that Agent, in its reasonable credit judgment,
deems to be eligible for borrowing purposes. Without limiting the generality of
the foregoing, Agent may determine that the following is not Eligible Inventory:
(1) work-in-process that is not readily
marketable in its current form;
(2) finished goods which do not meet the
specifications of the purchase order for such goods and which are not readily
saleable in their current form by Borrower in the ordinary course of business;
(3) Inventory which Agent determines, in the
exercise of its reasonable credit judgment, is unacceptable for borrowing
purposes due to age, quality, type, category and/or quantity, including, without
limitation, (a) Inventory on hand for more than twelve (12) months and (b)
Inventory purchased or otherwise acquired more than three (3) months prior to
any date of determination which is in excess of a twelve (12) month supply;
(4) packaging, shipping materials or supplies
consumed in the applicable Borrower's business;
(5) Inventory with respect to which Agent, on
behalf of itself and Lenders, does not have a valid and fully perfected security
interest (or the applicable equivalent thereof) subject only to, with respect to
priority, Prior Claims;
(6) Inventory with respect to which there exists
any Lien in favour of any Person other than Agent, on behalf of itself and
Lenders, and US Facility Agent, on behalf of itself and US Facility Lenders, and
excluding Prior Claims;
(7) Inventory produced in violation of the
United States FAIR LABOR STANDARDS ACT and subject to the so-called "hot goods"
provisions contained in Title 29 U.S.C. 215 (a)(i) or any replacement statute;
(8) Inventory located at any location other than
those identified pursuant to SUBSECTION 4.6;
(9) Inventory located at a vendor's location or
with a consignee;
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(10) Inventory located with a warehouseman,
bailee, processor or similar third party, unless such Person has executed a
waiver of interest satisfactory to Agent; and
(11) unless otherwise agreed by Agent, Inventory
in any location for which Agent has not received an agreement, in form and
substance acceptable to Agent, acknowledging Agent's rights and waiving its own
interest in such Inventory from each lessor and sublessor and each mortgagee of
such location.
(C) BORROWING MECHANICS. (1) BA Rate Loans made on any
Funding Date shall be in an aggregate minimum amount of C$2,500,000 and integral
multiples of C$500,000 in excess of such amount. (2) On any day when Borrower
desires a Revolving Advance under this SUBSECTION 2.1, Borrower shall give Agent
written or telephonic notice of the proposed borrowing by 1:00 p.m. Toronto time
on the Funding Date of an Index Rate Loan less than C$5,000,000 and written or
telephonic notice by 1:00 p.m. Toronto time one (1) Business Day prior to the
Funding Date of an Index Rate Loan equal to or greater than C$5,000,000, and
three (3) Business Days in advance of the funding date of a BA Rate Loan, which
notice shall specify the proposed Funding Date (which shall be a Business Day),
whether such Loans shall consist of Index Rate Loans or BA Rate Loans, and, for
BA Rate Loans, the BA Period applicable thereto. Any such telephonic notice
shall be confirmed with a Notice of Borrowing on the same day as such request.
Neither Agent nor any Lender shall incur any liability to Borrower for acting
upon any telephonic notice or a Notice of Borrowing Agent believes in good faith
to have been given by a duly authorized officer or other person authorized to
borrow on behalf of Borrower or for otherwise acting in good faith under this
SUBSECTION 2.1(C). Neither Agent nor any Lender will be required to make any
Revolving Advance pursuant to any telephonic or written notice or a Notice of
Borrowing, unless all of the terms and conditions set forth in SECTION 3 and the
Conditions Rider have been satisfied and Agent has also received the most recent
Canadian Borrowing Base Certificate and Consolidated Borrowing Base Certificate
and all other documents required under SECTION 5 and the Reporting Rider by 1:00
p.m. Toronto time on the date of such funding request. Each Revolving Advance
shall be deposited by wire transfer in immediately available funds in such
account as Borrower may from time to time designate to Agent in writing. The
becoming due of any amount required to be paid under this Agreement or any of
the other Loan Documents as principal, accrued interest, fees, compensation or
any other amounts shall be deemed irrevocably to be an automatic request by
Borrower for a Revolving Advance, which shall be an Index Rate Loan on the due
date of, and in the amount required to pay (as set forth on Agent's books and
records), such principal, accrued interest, fees, compensation or any other
amounts.
(D) NOTES. Borrower shall execute and deliver to each
Lender, with appropriate insertions, a Note to evidence the Revolving Advances
made by such Lender. Such Note shall be in the principal amount of such Lenders
Pro Rata Share of the aggregate Revolving Loan Commitment. In the event of an
assignment under SUBSECTION 9.5, Borrower shall, upon surrender of the assigning
Lender's Note, issue new Notes to reflect the interest held by the assigning
Lender and its Eligible Assignee.
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(E) AVAILABILITY OF A LENDER'S PRO RATA SHARE.
(1) LENDER'S AMOUNTS AVAILABLE ON A FUNDING
DATE. Unless Agent receives written notice from a Lender on or prior to any
Funding Date that such Lender will not make available to Agent as and when
required such Lender's Pro Rata Share of any requested Revolving Advance, Agent
may assume that each Lender will make such amount available to Agent in
immediately available funds on the Funding Date and Agent may (but shall not be
so required), in reliance upon such assumption, make available to Borrower on
such date a corresponding amount.
(2) LENDER'S FAILURE TO FUND. A Defaulting
Lender shall pay interest to Agent at the Bank Rate on the Defaulted Amount from
the Business Day following the applicable Funding Date of such Defaulted Amount
until the date such Defaulted Amount is paid to Agent. A notice of Agent
submitted to any Lender with respect to amounts owing under this subsection
shall be conclusive, absent manifest error. If such amount is not paid when due
to Agent, Agent, at its option, may notify Borrower of such failure to fund and,
upon demand by Agent, Borrower shall pay the unpaid amount to Agent for Agent's
account, together with interest thereon for each day elapsed since the date of
such borrowing, at a rate per annum equal to the interest rate applicable at the
time to the Revolving Advance made by the other Lenders on such Funding Date.
The failure of any Lender to make available any portion of its Revolving Loan
Commitment on any Funding Date shall not relieve any other Lender of any
obligation hereunder to fund such Lender's Revolving Loan Commitment on such
Funding Date, but no Lender shall be responsible for the failure of any other
Lender to honour its Revolving Loan Commitment on any Funding Date.
(3) PAYMENTS TO A DEFAULTING LENDER. Agent shall
not be obligated to transfer to a Defaulting Lender any payment made by Borrower
to Agent or any amount otherwise received by Agent for application to the
Obligations nor shall a Defaulting Lender be entitled to the sharing of any
interest, fees or payments hereunder.
(4) DEFAULTING LENDER'S RIGHT TO VOTE. For
purposes of voting or consenting to matters with respect to (i) the Loan
Documents or (ii) any other matter concerning the Revolving Loan, a Defaulting
Lender shall be deemed not to be a "Lender" and such Lender's Revolving Loan
Commitment and outstanding Revolving Advances shall be deemed to be zero.
2.2 INTEREST.
(A) RATE OF INTEREST. From the date the Revolving
Advances are made and the date the other Obligations become due, the Revolving
Loan and the other Obligations shall bear interest (the "Interest Rate") at the
applicable rates set forth below:
(1) If an Index Rate Loan, then at the sum of
the Index Rate PLUS three quarters of one percent (0.75%).
(2) If a BA Rate Loan, then at the sum of the BA
Rate PLUS two percent (2.00%).
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Subject to the provisions of SUBSECTION 2.1(C), Borrower shall
designate to Agent whether a Loan shall be an Index Rate Loan or a BA Rate Loan
at the time a Notice of Borrowing is given pursuant to SUBSECTION 2.1(C). Such
designation may be changed from time to time pursuant to SUBSECTION 2.2(D). If
on any day a Loan or portion of any Loan is outstanding with respect to which
notice has not been delivered to Agent in accordance with the terms of this
Agreement specifying the basis for determining the rate of interest or if the BA
Rate has been specified and no BA Rate quote is available, then for that day
that Loan or portion thereof shall bear interest determined by reference to the
Index Rate.
After the occurrence and during the continuance of an Event of
Default, subject to applicable law (i) the Revolving Loan and all other
Obligations shall, at the election of Requisite Lenders, bear interest at a rate
per annum equal to (1) two percent (2%) plus (2) the applicable Interest Rate
(collectively, the "Default Rate"), (ii) each BA Rate Loan shall automatically
convert to an Index Rate Loan at the end of any applicable BA Period and (iii)
no Loans may be made or continued as, or converted to, BA Rate Loans.
(B) COMPUTATION AND PAYMENT OF INTEREST. Interest on the
Revolving Loan and all other Obligations shall be computed on the daily
principal balance on the basis of a three hundred and sixty-five (365) day year
for the actual number of days elapsed in the period during which it accrues. In
computing interest on any Loan, the date of funding of the Loan or the first day
of the BA Period applicable to such Loan or, with respect to an Index Rate Loan
being converted from a BA Loan, the date of conversion of such BA Rate Loan to
such Index Rate Loan, shall be included; and the date of payment of such Loan or
the expiration date of the BA Period applicable to such Loan, or with respect to
an Index Rate Loan being converted to a BA Rate Loan, the date of conversion of
such Index Rate Loan to such BA Rate Loan, shall be excluded; provided that if a
Revolving Advance is repaid on the same day on which it is made, one (1) day's
interest shall be charged on that Revolving Advance. Interest on Index Rate
Loans and all other Obligations other than BA Rate Loans shall be payable to
Agent for the benefit of Lenders monthly in arrears on the first day of each
month, on the date of any prepayment of Loans, and at maturity, whether by
acceleration or otherwise. Interest on BA Rate Loans shall be payable to Agent
for the benefit of Lenders on the last day of the applicable BA Period for such
BA Rate Loan, on the date of any prepayment of the Loans, and at maturity,
whether by acceleration or otherwise. For purposes of disclosure under the
INTEREST ACT (Canada), where interest or fees are calculated pursuant hereto at
a rate based upon a 365 day year (the "Stated Rate"), it is hereby agreed that
the rate or percentage of interest on a yearly basis is equivalent to such
Stated Rate multiplied by the actual number of days in the year divided by 365.
The parties agree that (i) the principle of deemed reinvestment of interest
shall not apply to any interest calculation under this Agreement or any of the
other Loan Documents and (ii) the rates of interest stipulated in this Agreement
are intended to be nominal rates and not effective rates or yields.
(C) LIMITATIONS ON INTEREST. If any provision of this
Agreement or any of the other Loan Documents would obligate any Loan Party to
make any payment of interest or other amount payable to any Lender in an amount
or calculated at a rate which would be prohibited by applicable law or would
result in a receipt by that Lender of interest at a criminal rate (as such terms
are construed under the CRIMINAL CODE (Canada)) then, notwithstanding such
provision, such amount or rate shall be deemed to have been adjusted with
retroactive effect to the
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maximum amount or rate of interest, as the case may be, as would not be so
prohibited by applicable law or so result in a receipt by that Lender of
interest at a criminal rate, such adjustment to be effected, to the extent
necessary, as follows: (a) firstly, by reducing the amount or rate of interest
required to be paid to that Lender under SUBSECTION 2.2(A); and (b) thereafter,
by reducing any fees, commissions, premiums and other amounts required to be
paid to the affected Lender which would constitute interest for purposes of
Section 347 of the CRIMINAL CODE (Canada). Notwithstanding the foregoing, and
after giving effect to all adjustments contemplated thereby, if any Lender shall
have received an amount in excess of the maximum permitted by that section of
the CRIMINAL CODE (Canada), then the applicable Loan Party shall be entitled, by
notice in writing to the affected Lender, to obtain reimbursement from that
Lender in an amount equal to such excess, and pending such reimbursement, such
amount shall be deemed to be an amount payable by that Lender to such Loan
Party. Any amount or rate of interest referred to in this SUBSECTION 2.2(C)
shall be determined in accordance with generally accepted actuarial practices
and principles as an effective annual rate of interest over the term that the
Revolving Loan remains outstanding on the assumption that any charges, fees or
expenses that fall within the meaning of "interest" (as defined in the CRIMINAL
CODE (Canada)) shall, if they relate to a specific period of time, be pro-rated
over that period of time and otherwise be pro-rated over the period from the
Closing Date to the Termination Date or, if all the Obligations are not
irrevocably repaid on such date, such later date on which all of the Obligations
of Borrower are irrevocably paid and, in the event of a dispute, a certificate
of a Fellow of the Canadian Institute of Actuaries appointed by Agent shall be
conclusive for the purposes of such determination.
(D) CONVERSION OR CONTINUATION. Subject to the other
provisions of this Agreement, Borrower shall have the option to (1) convert at
any time all or any part of outstanding Loans equal to C$2,500,000 and integral
multiples of C$250,000 in excess of that amount from Index Rate Loans to BA Rate
Loans or (2) upon the expiration of any BA Period applicable to a BA Rate Loan,
to (a) continue all or any portion of such BA Rate Loan equal to C$2,500,000 and
integral multiples of C$250,000 in excess of that amount as a BA Rate Loan or
(b) convert all or any portion of such BA Rate Loan to an Index Rate Loan. The
succeeding BA Period(s) of such continued or converted Loan commence on the last
day of the BA Period of the Loan to be continued or converted; provided that no
outstanding Loan may be continued as, or be converted into, a BA Rate Loan
having a BA Period of more than 30 days, when any Default has occurred and is
continuing; PROVIDED FURTHER, that no outstanding Loan may be continued as, or
be converted into, a BA Rate Loan, when any Event of Default has occurred and is
continuing.
Borrower shall deliver a Notice of Conversion/Continuation
with respect to any such conversion/continuation to Agent no later than 12:00
noon (Toronto time) at least three (3) Business Days in advance of the proposed
conversion/continuation date. The Notice of Conversion/Continuation with respect
to such conversion/continuation shall certify: (1) the proposed
conversion/continuation date (which shall be a Business Day); (2) the amount of
the Loan to be converted/continued; (3) the nature of the proposed
conversion/continuation; (4) in the case of conversion to, or a continuation of,
a BA Rate Loan, the requested BA Period; and (5) that no Default or Event of
Default has occurred and is continuing or would result from the proposed
conversion/continuation.
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In lieu of delivering a Notice of Conversion/Continuation with
respect to any such conversion/continuation, Borrower may give Agent telephonic
notice by the required time of any proposed conversion/continuation under this
SUBSECTION 2.2(D); provided that such notice shall be promptly confirmed in
writing by delivery of a Notice of Conversion/Continuation (in form and
substance described herein) with respect to such conversion/continuation to
Agent on or before the proposed conversion/continuation date.
Neither Agent nor any Lender shall incur any liability to
Borrower in acting upon any telephonic notice or a Notice of
Conversion/Continuation referred to above that Agent believes in good faith to
have been given by an officer or other person authorized to act on behalf of
Borrower or for otherwise acting in good faith under this SUBSECTION 2.2(D).
2.3 FEES.
(A) UNUSED LINE FEE. Borrower shall pay to Agent, for the
benefit of Lenders, a fee in an amount equal to the Revolving Loan Commitment
less the average daily balance of the Revolving Loan during the preceding month,
multiplied by the Unused Line Fee Margin per annum. Such fee to be calculated on
the basis of a three hundred sixty-five (365) day year for the actual number of
days elapsed and to be payable monthly in arrears on the first day of each month
following the Closing Date.
(B) AUDIT FEES. Borrower agrees to pay all fees and
expenses of the firm or individual(s) engaged by Agent to perform audits of
Borrower's operations. Notwithstanding the foregoing, if Agent uses its internal
auditors to perform any such audit, Borrower agrees to pay to Agent, for its own
account, an audit fee with respect to each such audit equal to US$750 per
internal auditor per day or any portion thereof, together with all out of pocket
expenses.
(C) OTHER FEES AND EXPENSES. Borrower shall pay to Agent,
for its own account, all charges for returned items and all other bank charges
incurred by Agent, as well as Agent's standard wire transfer charges for each
wire transfer made under this Agreement.
(D) FEE LETTER. Borrower shall pay to GE Canada Finance,
individually, the fees specified in that certain letter agreement dated as of
the Closing Date among Borrower, US Borrower, GE Capital and GE Canada Finance,
in the amounts and at the times specified therein.
2.4 PAYMENTS AND PREPAYMENTS.
(A) MANNER AND TIME OF PAYMENT. In its sole discretion,
Agent may elect to honour the automatic requests by Borrower for Revolving
Advances for all principal, interest, fees, compensation and any other amounts
due hereunder or under any of the other Loan Documents on their applicable due
dates pursuant to SUBSECTION 2.1(C), up to the Revolving Loan Commitment of all
Lenders, and the proceeds of each such Revolving Advance, if made, shall be
applied as a direct payment of the relevant Obligation. To the extent such
amounts exceed the Revolving Loan Commitment of all Lenders, or if Agent elects
to ▇▇▇▇ Borrower for any amount due hereunder or under any of the other Loan
Documents, such amount shall be immediately due and payable with interest
thereon as provided herein. All payments made by Borrower with
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respect to the Obligations shall be made in the currency in which such
Obligations are denominated and without deduction, defense, setoff or
counterclaim. All payments to Agent hereunder shall, unless otherwise directed
by Agent, be made to Agent's Account or in accordance with SUBSECTION 4.25, in
each case in immediately available funds. All payments remitted to Agent's
Account in immediately available funds shall be credited to the Obligations on
the Business Day received; PROVIDED, that, solely for the purpose of computing
interest, payments received in accordance with this sentence for application to
the Revolving Loan shall be applied to the Revolving Loan one (1) Business Day
following Agent's receipt thereof in immediately available funds. If Agent
receives a payment or proceeds of realization in a currency other than the
currency in which the Obligations are denominated, Agent may in its discretion
convert the amount received into the currency of the applicable Obligations and
such Obligations shall be reduced solely to the extent of the amount received
upon such conversion and applied to such Obligations.
(B) MANDATORY PREPAYMENTS.
(1) OVERADVANCE. At any time that the Revolving
Loan exceeds the Maximum Revolving Loan Amount, Borrower shall, immediately
repay the Revolving Loan to the extent necessary to reduce the aggregate
principal balance to an amount equal to or less than the Maximum Revolving Loan
Amount.
(2) PREPAYMENTS FROM PROCEEDS OF ASSET
DISPOSITIONS. Immediately upon receipt by Borrower or any of its Subsidiaries of
any Net Proceeds in excess of US$100,000 or the Equivalent Amount thereof in the
aggregate during any Fiscal Year, Borrower shall prepay the Obligations in an
amount equal to such proceeds. All such prepayments shall be applied to the
Loans in accordance with SUBSECTION 2.5; PROVIDED, HOWEVER, that if Borrower
reasonably expects the Net Proceeds of any Asset Disposition to be reinvested
within one hundred eighty (180) days to repair or replace such assets with like
assets, Borrower shall deliver the proceeds to Agent to be applied to the
Revolving Loan and Agent shall establish a reserve against available funds for
borrowing purposes under the Revolving Loan for such amount, until such time as
such proceeds have been re-borrowed or applied to other Obligations as set forth
herein. If as contemplated by the immediately preceding sentence, Borrower
elects to deliver such proceeds to Agent, Borrower may, so long as no Default or
Event of Default shall have occurred and be continuing, reborrow such proceeds
only for such repair or replacement.
(3) PREPAYMENTS FROM ISSUANCE OF SECURITIES.
Immediately upon the receipt by Borrower or any of its Subsidiaries of the
proceeds of the issuance of equity securities (other than (i) proceeds of the
issuance of equity securities to Borrower or any Subsidiary of Borrower and (ii)
proceeds of the issuance of equity securities to US Borrower or any Subsidiary
of US Borrower in an amount not to exceed C$3,000,000), Borrower shall prepay
the Revolving Loan in an amount equal to such proceeds, net of underwriting
discounts and commissions and other reasonable costs associated therewith;
provided that, such prepayment shall not permanently reduce the aggregate
Revolving Loan Commitment. All such prepayments shall be applied to the Loans in
accordance with SUBSECTION 2.5.
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(C) VOLUNTARY PREPAYMENTS AND REPAYMENTS. Borrower may,
at any time upon not less than three (3) Business Days prior notice to Agent,
terminate the Revolving Loan Commitment; PROVIDED, HOWEVER, the Revolving Loan
Commitment may not be terminated by Borrower until all Obligations are paid in
full and unless the US Facility Revolving Loan Commitment is contemporaneously
terminated in accordance with the US Facility Loan Agreement. Any prepayment of
the Obligations permitted in this SUBSECTION 2.4(C) shall be subject to the
payment of all fees set forth in SUBSECTION 2.3, and the payment of any amounts
owing pursuant to subsection 2.13 resulting from such prepayment. All such
prepayments shall be applied to the Loans in accordance with SUBSECTION 2.5.
(D) PAYMENTS ON BUSINESS DAYS. Whenever any payment to be
made hereunder shall be stated to be due on a day that is not a Business Day,
the payment may be made on the next succeeding Business Day and such extension
of time shall be included in the computation of the amount of interest or fees
due hereunder.
2.5 APPLICATION OF PREPAYMENT PROCEEDS.
With respect to the prepayments described in subsections
2.4(B) and 2.4(C), any such prepayment shall be applied first to Index Rate
Loans before application to BA Rate Loans, in each case in any manner which
minimizes any resulting BA Rate breakage fees.
2.6 TERM OF THIS AGREEMENT.
This Agreement shall be effective until the earliest of (a)
December 31, 2006, (b) the acceleration of all Obligations pursuant to
SUBSECTION 8.3 and (c) the date of termination of US Facility Lenders'
obligations to make the US Facility Revolving Loans or permit existing US
Facility Revolving Loans to remain outstanding (the "Termination Date"). The
Commitments shall terminate (unless earlier terminated pursuant to the terms
hereunder) upon the Termination Date and all Obligations shall become
immediately due and payable without notice or demand. Notwithstanding any
termination, until all Obligations (other than contingent indemnity obligations
to the extent no unsatisfied claim has been asserted) have been fully paid and
satisfied, Agent, on behalf of itself and Lenders, shall be entitled to retain
Liens upon all Collateral, and even after payment of all Obligations hereunder,
Borrower's obligation to indemnify Agent and each Lender in accordance with the
terms hereof shall continue.
2.7 STATEMENTS.
Agent shall render a monthly statement of account to Borrower
within twenty (20) days after the end of each month. Such statement of account
shall constitute an account stated unless Borrower makes written objection
thereto within thirty (30) days from the date such statement is mailed to
Borrower. Agent shall record in its books and records, including computer
records, (a) all Revolving Advances, interest charges and payments thereof, (b)
the charging and payment of all fees, costs and expenses and (c) all other
debits and credits pursuant to this Agreement. The balance in the loan accounts
shall constitute presumptive evidence, absent demonstrable error, of the
accuracy of the information contained therein; PROVIDED, HOWEVER, that any
failure by Agent to so record shall not limit or affect the Borrower's
obligation to pay.
2.8 GRANT OF SECURITY INTEREST.
To secure the payment and performance of the Borrower's
Obligations, including all renewals, extensions, restructurings and refinancings
of any or all of Borrower's Obligations, Borrower hereby grants to Agent, on
behalf of Agent and
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Lenders, a continuing security interest, lien, hypothec and mortgage in and to
all right, title and interest of Borrower in all of Borrower's personal and real
property, whether now owned or existing or hereafter acquired or arising and
regardless of where located (all being collectively referred to as the "Borrower
Collateral") including, without limitation, (A) Accounts, and all guarantees and
security therefor, and all goods and rights represented thereby or arising
therefrom, including the rights of stoppage in transit, replevin and
reclamation; (B) Inventory; (C) intangibles (as defined in the PPSA) including,
without limitation, all Intellectual Property; (D) documents of title (as
defined in the PPSA) or other receipts covering, evidencing or representing
goods; (E) instruments (as defined in the PPSA); (F) chattel paper (as defined
in the PPSA); (G) Equipment; (H) Mortgaged Property; (I) securities (as defined
in the PPSA) including, without limitation, certificated and uncertificated
securities, security accounts, security entitlements, commodity contracts and
commodity accounts; (J) all deposit accounts of Borrower maintained with any
bank or financial institution; (K) all cash and other money and property of
Borrower in the possession or under the control of Agent, any Lender or any
participant; (L) all books, records, ledger cards, files, correspondence,
computer programs, tapes, disks and related data processing software that at any
time evidence or contain information relating to any of the property described
above or are otherwise necessary or helpful in the collection thereof or
realization thereon; and (M) proceeds and products of all or any of the property
described above, including, without limitation, the proceeds of any insurance
policies covering any of the above described property. Notwithstanding the
foregoing, Borrower Collateral shall not include (a) the last day of the term of
any lease (but upon the enforcement of Agent's rights hereunder, Agent shall
stand possessed of such last day in trust to assign the same to any person
acquiring such term) or (b) any consumer goods (as defined in the PPSA).
2.9 YIELD PROTECTION.
(A) CAPITAL ADEQUACY AND OTHER ADJUSTMENTS. In the event
Agent or any Lender shall have determined that the adoption after the date
hereof of any law, treaty, governmental (or quasi-governmental) rule,
regulation, guideline or order regarding capital adequacy, reserve requirements
or similar requirements or compliance by Agent or such Lender or any corporation
controlling Agent or such Lender with any request or directive regarding capital
adequacy, reserve requirements or similar requirements (whether or not having
the force of law and whether or not failure to comply therewith would be
unlawful) from any central bank or governmental agency or body having
jurisdiction does or shall have the effect of increasing the amount of capital,
reserves or other funds required to be maintained by Agent or such Lender or any
corporation controlling Agent or such Lender and thereby reducing the rate of
return on Agent's or such Lender's or such corporation's capital as a
consequence of its obligations hereunder, then Borrower shall within fifteen
(15) days after notice and demand from such Lender (with a copy to Agent) or
Agent (together with the certificate referred to in the next sentence and with a
copy to Agent) pay to Agent, for the account of Agent or such Lender, as
applicable, additional amounts sufficient to compensate Agent or such Lender, as
applicable, for such reduction. A certificate as to the amount of such cost and
showing the basis of the computation of such cost submitted by Agent or such
Lender to Borrower shall, absent demonstrable error, be final, conclusive and
binding for all purposes.
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(B) INCREASED BA FUNDING COSTS. If, after the date
hereof, the introduction of, change in or interpretation of any law, rule,
regulation, treaty or directive would impose or increase reserve requirements
(other than as taken into account in the definition of BA Rate) or otherwise
increase the cost to any Lender of making or maintaining a BA Rate Loan, then
Borrower shall from time to time within fifteen (15) days after notice and
demand from such affected Lenders (together with the certificate referred to in
the next sentence and with a copy to Agent) pay to Agent, for the account of
such affected Lenders, additional amounts sufficient to compensate such Lenders
for such increased cost. A certificate as to the amount of such cost and showing
the basis of the computation of such cost submitted by such affected Lenders to
Borrower and Agent shall, absent demonstrable error, be final, conclusive and
binding for all purposes.
2.10 TAXES.
(A) NO DEDUCTIONS. Any and all payments or reimbursements
made hereunder shall be made free and clear of and without deduction for any and
all taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto (all such taxes, levies, imposts, deductions,
charges or withholdings and all liabilities with respect thereto referred to
herein as "Tax Liabilities"; excluding, however, net income taxes, or franchise
taxes imposed in lieu of net income taxes, to the extent imposed on the net
income of any Lender or Agent by the jurisdiction under the laws of which Agent
or such Lender is organized or is resident or carrying on business). If Borrower
shall be required by law to deduct any such Tax Liabilities from or in respect
of any sum payable hereunder or any other Loan Document to Agent or any Lender,
then (i) the sum payable hereunder shall be increased as may be necessary so
that after making all required withholdings and deductions (including
withholdings and deductions applicable to additional sums payable under this
SUBSECTION 2.10), Agent or such Lender receives an amount equal to the sum it
would have received had no such withholdings or deductions been made, (ii)
Borrower shall make such deductions and (iii) Borrower shall pay the full amount
deducted to the relevant taxing or other authority in accordance with applicable
law.
(B) CHANGES IN TAX LAWS. In the event that, subsequent to
the Closing Date, (i) any changes in any existing law, regulation, treaty or
directive or in the interpretation or application thereof, (ii) any new law,
regulation, treaty or directive enacted or any interpretation or application
thereof, or (iii) compliance by Agent or Lender with any request or directive
(whether or not having the force of law) from any governmental authority, agency
or instrumentality:
(1) does or shall subject Agent or any Lender to
any tax of any kind whatsoever or causes the withdrawal or
termination of a previously granted tax exemption with respect
to this Agreement, the other Loan Documents or any Revolving
Advances made hereunder, or change the basis of taxation of
payments to Agent or such Lender of principal, fees, interest
or any other amount payable hereunder (except for net income
taxes or franchise taxes imposed in lieu of net income taxes,
imposed generally by federal, provincial or local taxing
authorities with respect to interest or commitment or other
fees payable hereunder or changes in the rate of tax on the
overall net income of Agent or such Lender); or
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(2) does or shall impose on Agent or any Lender
any other condition or increased cost in connection with the
transactions contemplated hereby or participations herein;
and the result of any of the foregoing is to increase the cost to Agent or such
Lender of making or continuing any Revolving Advance hereunder or to reduce any
amount receivable hereunder, then, in any such case, Borrower shall promptly pay
to Agent or such Lender, upon its notice and demand, any additional amounts
necessary to compensate Agent or such Lender, on an after-tax basis, for such
additional cost or reduced amount receivable, as determined by Agent or such
Lender with respect to this Agreement or the other Loan Documents. If Agent or
any Lender becomes entitled to claim any additional amounts pursuant to this
subsection, it shall promptly notify Borrower of the event by reason of which
Agent or such Lender has become so entitled (with any such Lender concurrently
notifying Agent). A certificate as to any additional amounts payable pursuant to
the foregoing sentence submitted by Agent or any Lender to Borrower shall,
absent demonstrable error, be final, conclusive and binding for all purposes.
(C) Without prejudice to the survival of any agreement of
Borrower under this Agreement, the agreement and obligations of Borrower
contained in this SUBSECTION 2.10 shall survive the Termination Date.
(D) FOREIGN LENDERS. Each Lender, and the successors and
assignees of such Lender, organized under the laws of a jurisdiction outside of
Canada (each, a "Foreign Lender"), to whom payments to be made under this
Agreement or under the Notes may be exempt from Canadian withholding tax under
the law of the jurisdiction in which the relevant Lender is located or under any
tax treaty to which such jurisdiction is a party shall, at the time or times
prescribed by applicable law, provide to Borrower (with a copy to Agent) any
applicable form, certificate or document, in each case certifying as to such
Foreign Lender's entitlement to such exemption (a "CERTIFICATE OF EXEMPTION").
Prior to becoming a Lender under this Agreement and within fifteen (15) days
after a reasonable written request of Borrower or Agent from time to time
thereafter, each Foreign Lender that becomes a Lender under this Agreement shall
provide a Certificate of Exemption to Borrower and Agent; PROVIDED that no
Person who would otherwise be a Foreign Lender shall become a Lender hereunder
unless such Person is able to deliver a Certificate of Exception at the time it
becomes a Lender.
If a Foreign Lender is entitled to an exemption with respect
to payments to be made to such Foreign Lender under this Agreement and does not
provide a Certificate of Exemption to Borrower and Agent within the time periods
set forth in the preceding paragraph, Borrower shall withhold taxes from
payments to such Foreign Lender at the applicable statutory rates and Borrower
shall not be required to pay any additional amounts as a result of such
withholding; PROVIDED, HOWEVER, that all such withholding shall cease upon
delivery by such Foreign Lender of a Certificate of Exemption to Borrower and
Agent.
2.11 REQUIRED TERMINATION AND PREPAYMENT.
Notwithstanding anything to the contrary contained herein, if
the introduction of or any change in any law, rule, regulation, treaty or
directive (or any change in the interpretation
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thereof) shall make it unlawful, or any central bank or other Governmental
Authority shall assert that it is unlawful, for any Lender to agree to make or
to make or to continue to fund or maintain any Loan, then, unless that Lender is
able to make or to continue to fund or to maintain such Loan at another branch
or office of that Lender without, in that Lender's opinion, adversely affecting
it or its Loans or the income obtained therefrom, on notice thereof and demand
therefor by such Lender to Borrower through Agent, (i) the obligation of such
Lender to agree to make or to make or to continue to fund or maintain Loans
shall terminate and (ii) Borrower shall forthwith prepay in full all outstanding
Loans owing to such Lender, together with interest accrued thereon.
2.12 OPTIONAL PREPAYMENT/REPLACEMENT OF LENDERS. Within fifteen
(15) days after receipt by Borrower of (i) written notice and demand from any
Lender for payment of additional costs as provided in SUBSECTION 2.9 or
SUBSECTION 2.10 or (ii) written notice of any Lender's inability to make Loans
as provided in SUBSECTION 2.11 (any such Lender demanding such payment or having
such inability being referred to herein as an "Affected Lender"), Borrower may,
at its option notify Agent and such Affected Lender of its intention to take one
of the actions set forth herein in SUBPARAGRAPH (A) or (B) below, provided that,
in the case of an Affected Lender's inability to make Loans as provided in
SUBSECTION 2.11, Borrower's option is conditional upon the Affected Lender not
being required by law to terminate its Revolving Commitment hereunder prior to
the expiry of the ninety (90) day period contemplated in SUBPARAGRAPHS (A) and
(B) below:
(A) REPLACEMENT OF AN AFFECTED LENDER. Borrower may
obtain, at Borrower's expense, a replacement Lender ("Replacement Lender") for
an Affected Lender, which Replacement Lender shall be reasonably satisfactory to
Agent. In the event that Borrower obtains a Replacement Lender that will
purchase all outstanding Obligations owed to such Affected Lender and assume its
Revolving Loan Commitment hereunder within ninety (90) days following notice of
Borrower's intention to do so, the Affected Lender shall sell and assign its
Revolving Advances and Revolving Loan Commitment to such Replacement Lender in
accordance with the provisions of SUBSECTION 9.5; PROVIDED, HOWEVER, Borrower
has (i) reimbursed such Affected Lender for any administrative fee payable by
such Affected Lender to Agent pursuant to SUBSECTION 9.5 and, (ii) in any case
where such replacement occurs as the result of a demand for payment of certain
costs pursuant to SUBSECTION 2.9 or SUBSECTION 2.10, paid all increased costs
for which such Affected Lender is entitled to under SUBSECTION 2.9 or SUBSECTION
2.10 through the date of such sale and assignment; or
(B) PREPAYMENT OF AN AFFECTED LENDER. Borrower may prepay
in full all outstanding Obligations owed to an Affected Lender and terminate
such Affected Lender's Revolving Loan Commitment. Borrower shall, within ninety
(90) days following notice of its intention to do so, prepay in full all
outstanding Obligations owed to such Affected Lender, including such Affected
Lender's increased costs for which it is entitled to reimbursement under this
Agreement through the date of such prepayment, and terminate such Affected
Lender's Revolving Loan Commitment.
2.13 COMPENSATION.
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Borrower shall promptly compensate Agent for the benefit of
Lenders (Agent's calculation of such amounts shall, absent manifest error, be
conclusive and binding upon all parties hereto), for any losses, expenses and
liabilities including, without limitation, any loss (including interest paid)
sustained by such Lender in connection with the re-employment of such funds: (i)
if for any reason (other than a default by any Lender) a borrowing of any BA
Rate Loan does not occur on a date specified therefor in a Notice of Borrowing
or a telephonic request of borrowing by Borrower; (ii) if any prepayment of any
of its BA Rate Loans occurs on a date that is not the last day of an Interest
Period applicable to that Loan (regardless of the source of such prepayment and
whether voluntary, by acceleration or otherwise); (iii) if any prepayment of any
of its BA Rate Loans is not made on any date specified in a notice of prepayment
given by Borrower; or (iv) as a consequence of any other default by Borrower to
repay its BA Rate Loans when required by the terms of this Agreement; provided
that during the period while any such amounts have not been paid, Agent may, in
its sole discretion, (a) in accordance with subsection 2.4(A) and upon
contemporaneous notice to Borrower, elect to honor the automatic request by
Borrower for a Revolving Advance for such amount pursuant to SUBSECTION 2.1(C)
or (b) reserve an equal amount from amounts otherwise available to be borrowed
under the Revolving Loan.
SECTION 3.
CONDITIONS TO LOANS
The obligations of Agent and each Lender to make Revolving
Advances on each Funding Date are subject to satisfaction of all of the terms
and conditions set forth in this Agreement and in the Conditions Rider attached
hereto, and the accuracy of all the representations and warranties of Borrower
and the other Loan Parties (as applicable) set forth herein and in the other
Loan Documents.
SECTION 4.
REPRESENTATIONS, WARRANTIES AND CERTAIN COVENANTS
To induce Agent and each Lender to enter into the Loan
Documents and to make and to continue to make Revolving Advances, Borrower
represents, warrants and covenants to Agent and each Lender that the following
statements are and (when deemed remade hereunder) will be true, correct and
complete and, unless specifically limited, shall remain so for so long as the
Revolving Loan Commitment shall be in effect and until payment in full of all
Obligations:
4.1 ORGANIZATION, POWERS, CAPITALIZATION.
(A) ORGANIZATION AND POWERS. Each of the Loan Parties is
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and qualified to do business in all jurisdictions
where such qualification is required except where failure to be so qualified
could not reasonably be expected to have a Material Adverse Effect. Each of the
Loan Parties has all requisite organizational power and authority to own and
operate its properties, to carry on its business as now conducted and proposed
to be conducted and to enter into each Loan Document.
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(B) CAPITALIZATION. As of the Closing Date, the
authorized share capital or capital stock of each of the Loan Parties and its
respective Subsidiaries is as set forth on SCHEDULE 4.1(B), including all
preemptive or other outstanding rights, options, warrants, conversion rights or
similar agreements or understandings for the purchase or acquisition from any
Loan Party of any shares of capital or other securities of any such entity. All
issued and outstanding shares of capital of each of US Borrower and its
Subsidiaries are duly authorized and validly issued, fully paid, nonassessable,
free and clear of all Liens other than those in favour of Agent for the benefit
of Agent and Lenders, and those in favour of US Facility Agent, for the benefit
of US Facility Agent and US Facility Lenders, and such shares were issued in
compliance with all applicable state, provincial, Canadian and US federal laws
concerning the issuance of securities. Borrower will promptly notify Lender of
any change in the ownership or corporate structure of any Loan Party that would
result in the occurrence of an Event of Default pursuant to SUBSECTION 8.1.
4.2 AUTHORIZATION OF BORROWING, NO CONFLICT. Each of the Loan
Parties has the organizational power and authority to incur the Obligations and
to grant security interests (or applicable equivalents) in the Collateral (in
which it has any right, title or interest). On the Closing Date, the execution,
delivery and performance of the Loan Documents by each Loan Party signatory
thereto will have been duly authorized by all necessary corporate and
shareholder action. The execution, delivery and performance by each Loan Party
of each Loan Document to which it is a party and the consummation of the
transactions contemplated by the Loan Documents by each Loan Party do not
contravene any applicable law, the constating documents, corporate charter or
bylaws or other organizational documents of any Loan Party or any agreement or
order by which any Loan Party or any Loan Party's property is bound. The Loan
Documents are the legally valid and binding obligations of the applicable Loan
Parties respectively, each enforceable against the Loan Parties, as applicable,
in accordance with their respective terms.
4.3 FINANCIAL CONDITION. All financial statements concerning the
Loan Parties which have been or will hereafter be furnished to Agent or any
Lender pursuant to this Agreement have been or will be prepared in accordance
with US GAAP consistently applied throughout the periods involved (except as
disclosed therein and, in the case of interim financial statements, except for
the absence of footnotes and non-material year-end adjustments) and do or will
present fairly in all material respects the financial condition of the entities
covered thereby as at the dates thereof and the results of their operations for
the periods then ended. The Pro Forma was prepared by US Borrower based on the
unaudited consolidated balance sheet of Holdings and its Subsidiaries dated
February 28, 2004.
The Projections delivered by Borrower will be prepared in light of the past
operations of the business of Holdings and its Subsidiaries, and such
Projections will represent the good faith estimate of Borrower and its senior
management concerning the reasonably expected course of the Loan Parties'
business as of the date such Projections are delivered; it being recognized that
the Projections (as they relate to future events) are not to be viewed as fact
and that actual results during the period or periods covered by the Projections
may differ by a material amount from the Projections.
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Since September 30, 2003, there have been no events or changes in facts or
circumstances affecting any Loan Party which, individually or in the aggregate,
have had or could reasonably be expected to have a Material Adverse Effect and
that have not been disclosed herein or in the attached Schedules.
4.4 INDEBTEDNESS AND LIABILITIES. As of the Closing Date, neither
Holdings nor any of its Subsidiaries has (a) any Indebtedness except as
reflected on the Pro Forma; or (b) any Liabilities other than as reflected on
the Pro Forma or as incurred in the ordinary course of business following the
date of the Pro Forma. Borrower shall promptly deliver copies of all notices
given or received by Holdings and any of its Subsidiaries with respect to
noncompliance with any term or condition related to any Indebtedness in an
amount exceeding US$100,000 or the Equivalent Amount thereof, and shall promptly
notify Agent of any potential or actual Event of Default with respect to any
such Indebtedness.
4.5 ACCOUNT WARRANTIES AND COVENANTS. Except as otherwise
disclosed to Agent in writing, as to each Account of Borrower (excluding
Accounts of Borrower and US Obligors in an aggregate amount not exceeding
US$100,000 or the Equivalent Amount thereof at any time) that, at the time of
its creation, the Account is a valid, bona fide account, representing an
undisputed indebtedness incurred by the named account debtor for goods actually
sold and delivered or for services completely rendered; there are no setoffs,
offsets or counterclaims, genuine or otherwise, against the Account; the Account
does not represent a sale to an Affiliate or a consignment, sale or return or a
▇▇▇▇ and hold transaction; no agreement exists permitting any deduction or
discount (other than the discount stated on the invoice); Borrower is the lawful
owner of the Account and has the right to assign the same to Agent, for the
benefit of Agent and Lenders; the Account is free of all Liens other than those
in favour of Agent, on behalf of itself and Lenders, and US Facility Agent, on
behalf of itself and the US Facility Lenders, and Prior Claims and the Account
is due and payable in accordance with its terms. Borrower shall, at its own
expense: (a) cause all invoices evidencing Accounts and all copies thereof to
bear a notice that such invoices are payable to the lockboxes established in
accordance with SUBSECTION 4.25 and (b) use its diligent efforts to assure
prompt payment of all amounts due or to become due under the Accounts. No
discounts, credits or allowances will be issued, granted or allowed by Borrower
to customers and no returns will be accepted without Agent's prior written
consent; PROVIDED, HOWEVER, until Agent notifies Borrower to the contrary,
Borrower may presume consent. Borrower will immediately notify Agent in the
event that a customer alleges any dispute or claim with respect to an Account or
of any other circumstances known to Borrower that may impair the validity or
collectibility of an Account. Agent shall have the right, at any time or times
hereafter, to verify the validity, amount or any other matter relating to an
Account, by mail, telephone or in person. After the occurrence of an Event of
Default and upon notice from Agent to Borrower, Borrower shall not, without the
prior consent of Agent, adjust, settle or compromise the amount or payment of
any Account, or release wholly or partly any customer or obligor thereof, or
allow any credit or discount thereon.
4.6 NAMES AND LOCATIONS. SCHEDULE 4.6 sets forth, as of the
Closing Date, all names, trade names, fictitious names and business names under
which each Loan Party currently conducts business or has at any time during the
past five years conducted business and the name of any entity which any Loan
Party has acquired in whole or in part or from whom any Loan
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Party has acquired a significant amount of assets within the past five years and
sets forth the location of each Loan Party's chief executive office, principal
place of business, domicile (within the meaning of the QUEBEC CIVIL CODE), the
location of each Loan Party's books and records, the location of all other
offices of each Loan Party and all locations of Collateral and any of the real
or personal property of any of the other Loan Parties, and such locations are
the applicable Loan Party's sole locations for its business and its real or
personal property. Borrower will give Agent at least thirty (30) days advance
written notice of: (a) any change of name or of any new trade name or fictitious
business name of any Loan Party, (b) change of chief executive office, principal
place of business, or domicile (within the meaning of the QUEBEC CIVIL CODE),
(c) any change in the location of such Person's books and records or personal or
real property, or (d) any new location for such Person's books and records or
other personal or real property.
4.7 TITLE TO PROPERTIES; LIENS. Borrower and each of its
Subsidiaries has good, sufficient and legal title to all of its respective
material properties and assets, in each case, free and clear of all Liens except
Permitted Encumbrances.
4.8 LITIGATION; ADVERSE FACTS. There are no judgments outstanding
against any Loan Party or affecting any property of any Loan Party nor is there
any action, charge, claim, demand, suit, proceeding, petition, governmental
investigation or arbitration now pending or, to the best knowledge of Borrower
after due inquiry, threatened against or affecting any Loan Party or any
property of any Loan Party (including without limitation any tort claim in
respect of asbestos products sold or distributed by any Loan Party) which could
reasonably be expected to result in any Material Adverse Effect. Promptly upon
any officer of any Loan Party obtaining knowledge of (a) the institution of any
material action, suit, proceeding, governmental investigation or arbitration
against or affecting any Loan Party or any property of any Loan Party not
previously disclosed by Borrower to Agent or (b) any material development in any
action, suit, proceeding, governmental investigation or arbitration at any time
pending against or affecting any Loan Party or any property of any Loan Party
which could reasonably be expected to have a Material Adverse Effect, Borrower
will promptly give notice thereof to Agent and provide such other information as
may be reasonably available to enable Agent and its counsel to evaluate such
matter.
4.9 PAYMENT OF TAXES. All material tax returns and reports of each
Loan Party required to be filed by any of them have been timely filed and are
complete and accurate in all material respects. All taxes, assessments, fees and
other governmental charges which are due and payable by each Loan Party have
been paid when due; PROVIDED that no such tax need be paid if the applicable
Loan Party is contesting same in good faith by appropriate proceedings promptly
instituted and diligently conducted, such Loan Party has established appropriate
reserves as shall be required in conformity with US GAAP and, if such taxes are
Prior Claims, the amount thereof has been reserved by Borrower in its
calculation of the Canadian Borrowing Base. As of the Closing Date, none of the
income tax returns of any Loan Party are under audit and Borrower shall promptly
notify Agent in the event that any Loan Party's tax returns become the subject
of an audit . No tax liens have been filed against any Loan Party. The charges,
accruals and reserves on the books of each Loan Party in respect of any taxes or
other governmental charges are in accordance with US GAAP. The federal tax
identification number of each Loan Party is set forth on SCHEDULE 4.9 hereto.
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4.10 PERFORMANCE OF AGREEMENTS. None of the Loan Parties and none
of their respective Subsidiaries is in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in any
material contractual obligation of any such Person, and no condition exists
that, with the giving of notice or the lapse of time or both, would constitute
such a default, in any case which could reasonably be expected to have a
Material Adverse Effect. Borrower shall promptly notify Agent of (a) the
occurrence of any material default or breach under any material contractual
obligation of any Loan Party, (b) the termination of any material contractual
obligation of any Loan Party in a manner adverse in any material respect to any
Loan Party, or (c) the material amendment or modification of any material
contractual obligation of any Loan Party, in a manner adverse in any material
respect to any Loan Party.
4.11 EMPLOYEE PENSION AND BENEFIT PLANS.
(A) Except as specifically disclosed in SCHEDULE 4.11,
each Canadian Pension Plan is duly registered under the ITA and all other
applicable laws which require registration and no event has occurred which is
reasonably likely to cause the loss of such registered status; all material
obligations of each Loan Party (including fiduciary, funding, investment and
administration obligations) required to be performed in connection with the
Canadian Pension Plans and the funding agreements therefor have been performed
in a timely fashion; there have been no improper withdrawals or applications of
the assets of the Canadian Pension Plans or the Canadian Benefit Plans; there
are no outstanding disputes concerning the assets of the Canadian Pension Plans
or the Canadian Benefit Plans; and each of the Canadian Pension Plans is fully
funded on a solvency basis (using actuarial methods and assumptions which are
consistent with the valuations last filed with the applicable governmental
authorities, agency or instrumentality and which are consistent with generally
accepted actuarial principles). Each Loan Party, after diligent inquiry, has
neither any knowledge, nor any grounds for believing, that any of the Canadian
Pension Plans or Canadian Benefit Plans are the subject of an investigation, any
other proceeding, an action or a claim. There exists no state of facts which
after notice or lapse of time or both could reasonably be expected to give rise
to any such proceeding, action or claim.
(B) Each Loan Party and each ERISA Affiliate, as the case
may be, is in compliance, and will continue to remain in compliance, in all
material respects with all applicable provisions of ERISA, the IRC and all other
applicable laws and the regulations and interpretations thereof with respect to
all Employee Benefit Plans. No material liability has been incurred by any Loan
Party or any ERISA Affiliate, as the case may be, which remains unsatisfied for
any funding obligation, taxes or penalties with respect to any Employee Benefit
Plan.
4.12 INTELLECTUAL PROPERTY.
Each Loan Party owns, is licensed to use or otherwise has the
right to use, all Intellectual Property used in or necessary for the conduct of
its business as currently conducted, and, as of the Closing Date, all patents,
trademarks, industrial designs and registered copyrights owned by any Loan Party
and all licenses in respect of Intellectual Property to which any Loan Party is
a party, are identified on SCHEDULE 4.12. All US or Canadian federally
registered Intellectual Property owned by any Loan Party is valid, subsisting
and enforceable and
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all filings necessary to maintain the effectiveness of such registrations have
been made, except where the failure to do so could not reasonably be expected to
have a Material Adverse Effect.
4.13 BROKER'S FEES. No broker's or finder's fee or commission will
be payable with respect to any of the transactions contemplated hereby.
4.14 ENVIRONMENTAL MATTERS. Except as set forth in SCHEDULE 4.14,
as of the Closing Date: (i) the Real Estate is free of contamination from any
Hazardous Material except for such contamination that could not reasonably be
expected to adversely impact the value or marketability of such Real Estate and
that could not reasonably be expected to result in Environmental Liabilities of
the Loan Parties or their Subsidiaries in excess of US$250,000 in the aggregate;
(ii) no Loan Party and no Subsidiary of a Loan Party has caused or suffered to
occur any Release of Hazardous Materials on, at, in, under, above, to, from or
about any of their Real Estate that could reasonably be expected to result in
Environmental Liabilities of the Loan Parties or their Subsidiaries in excess of
US$250,000 in the aggregate; (iii) the Loan Parties and their Subsidiaries are
and have been in compliance with all Environmental Laws, except for such
noncompliance that could not reasonably be expected to result in Environmental
Liabilities of the Loan Parties or their Subsidiaries in excess of US$250,000 in
the aggregate (iv) the Loan Parties and their Subsidiaries have obtained, and
are in compliance with, all Environmental Permits required by Environmental Laws
for the operations of their respective businesses as presently conducted or as
proposed to be conducted, except where the failure to so obtain or comply with
such Environmental Permits could not reasonably be expected to result in
Environmental Liabilities of the Loan Parties or their Subsidiaries in excess of
US$250,000 in the aggregate, and all such Environmental Permits are valid,
uncontested and in good standing; (v) no Loan Party and no Subsidiary of a Loan
Party is involved in operations or knows of any facts, circumstances or
conditions, including any Releases of Hazardous Materials, that are likely to
result in any Environmental Liabilities of such Loan Party or Subsidiary which
could reasonably be expected to be in excess of US$250,000 in the aggregate, and
no Loan Party or Subsidiary of a Loan Party has permitted any current or former
tenant or occupant of the Real Estate to engage in any such operations; (vi)
there is no Litigation arising under or related to any Environmental Laws,
Environmental Permits or Hazardous Material that seeks damages, penalties,
fines, costs or expenses in excess of US$250,000 in the aggregate or injunctive
relief against, or that alleges criminal misconduct by any Loan Party or any
Subsidiary of a Loan Party; (vii) no notice has been received by any Loan Party
or any Subsidiary of a Loan Party identifying any of them as a "potentially
responsible party" or requesting information under CERCLA or analogous state or
provincial statutes, and to the knowledge of the Loan Parties, there are no
facts, circumstances or conditions that may result in any of the Loan Parties or
their Subsidiaries being identified as a "potentially responsible party" under
CERCLA or analogous state or provincial statutes except for matters that could
not reasonably be expected to result in Environmental Liabilities of the Loan
Parties or their Subsidiaries in excess of US$250,000 in the aggregate; and
(viii) the Loan Parties have provided to Agent copies of all existing
environmental reports, reviews and audits known to the Loan Parties and all
written information known to the Loan Parties pertaining to actual or potential
Environmental Liabilities, in each case relating to any of the Loan Parties or
their Subsidiaries.
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(B) Borrower hereby acknowledges and agrees that (i) to
its knowledge, Agent is not now, and has not ever been, in control of any of the
Real Estate or affairs of any Loan Party or its Subsidiaries, and (ii) Agent
does not have the capacity through the provisions of the Loan Documents or
otherwise to influence any Loan Party's or its Subsidiaries' conduct with
respect to the ownership, operation or management of any of their Real Estate or
compliance with Environmental Laws or Environmental Permits.
4.15 SOLVENCY. Borrower and each of its Subsidiaries: (a) owns and
will own assets, the aggregate of which is, at a fair valuation, sufficient, or,
if disposed of at a fairly conducted sale under legal process, would be
sufficient to enable payment of all of their respective obligations, due and
arising due; (b) are paying their current obligations in the ordinary course of
business as they generally become due; and (c) are able to meet their respective
obligations as they generally become due. US Borrower and each of its Domestic
Subsidiaries: (a) owns and will own assets the fair saleable value of which on a
going concern basis are (i) greater than the total amount of its liabilities
(including contingent liabilities) and (ii) greater than the amount that will be
required to pay the probable liabilities of its then existing debts as they
become absolute and matured considering all financing alternatives and potential
asset sales reasonably available to it; (b) has capital that is not unreasonably
small in relation to its business as presently conducted or after giving effect
to any contemplated or undertaken transaction; and (c) does not intend to incur
and does not believe that it will incur debts beyond its ability to pay such
debts as they become due.
4.16 DISCLOSURE. No representation or warranty of any Loan Party
contained in this Agreement, the financial statements, the other Loan Documents,
or any other document, certificate or written statement furnished to Agent or
any Lender by or on behalf of any such Person for use in connection with the
Loan Documents contains any untrue statement of a material fact or omitted,
omits or will omit to state a material fact necessary in order to make the
statements contained herein or therein not misleading in light of the
circumstances in which the same were made. There is no material fact known to
any Loan Party that has had or could have a Material Adverse Effect and that has
not been disclosed herein or in such other documents, certificates and
statements furnished to Agent or any Lender for use in connection with the
transactions contemplated hereby.
4.17 INSURANCE. Each Loan Party maintains adequate insurance
policies for public liability, property damage, product liability, and business
interruption with respect to its business and properties and the business and
properties of its Subsidiaries against loss or damage of the kinds customarily
carried or maintained by corporations of established reputation engaged in
similar businesses and in amounts acceptable to Agent. Borrower shall cause
Agent to be named as loss payee on all insurance policies relating to any
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Collateral and shall cause Agent to be named as additional insured under all
liability policies of each Loan Party, in each case pursuant to appropriate
endorsements in form and substance satisfactory to Agent and shall, and shall
cause each other Loan Party to, collaterally assign to Agent, for itself and on
behalf of Lenders, as security for the payment of Obligations of the applicable
Loan Party all business interruption insurance of each Loan Party. No notice of
cancellation has been received with respect to such policies and each Loan Party
is in compliance with all conditions contained in such policies. Borrower shall
apply any proceeds received from any policies of insurance relating to any
Collateral to the Obligations as set forth in SUBSECTION 2.4. In the event
Borrower fails to provide Agent with evidence of the insurance coverage required
by this Agreement, Agent may, but is not required to, purchase insurance at
Borrower's expense to protect Agent's and the Lenders' interests in the
Collateral. This insurance may, but need not, protect each Loan Party's
interests. The coverage purchased by Agent may not pay any claim made by any
Loan Party or any claim that is made against any Loan Party in connection with
the Collateral. Borrower may later cancel any insurance purchased by Agent, but
only after providing Agent with evidence that the applicable Loan Party has
obtained insurance as required by this Agreement. If Agent purchases insurance
for the Collateral, Borrower will be responsible for the costs of that
insurance, including interest thereon and other charges imposed on Agent in
connection with the placement of the insurance, until the effective date of the
cancellation or expiration of the insurance, and such costs may be added to the
Obligations of Borrower. The costs of the insurance may be more than the cost of
insurance any Loan Party is able to obtain on its own.
4.18 COMPLIANCE WITH LAWS. No Loan Party is in violation of any
law, ordinance, rule, regulation, order, policy, guideline or other requirement
of any domestic or foreign government or any instrumentality or agency thereof,
having jurisdiction over the conduct of its business or the ownership of its
properties, including, without limitation, any Environmental Law, which
violation would subject any Loan Party or any of its Subsidiaries, or any of
their respective officers to criminal liability or have a Material Adverse
Effect and no such violation which could reasonably be expected to have a
Material Adverse Effect has been alleged.
4.19 BANK ACCOUNTS. SCHEDULE 4.19 sets forth the account numbers
and locations of all bank accounts of each Loan Party. Neither Borrower nor its
Subsidiaries shall establish any new bank accounts, or amend or terminate any
Blocked Account or lockbox agreement without Agent's prior written consent.
Neither Borrower nor any of its Subsidiaries will deposit or maintain in any
disbursement account or operating account amounts in excess of outstanding
cheques written on such account, payroll amounts and bank administration fees
coming due.
4.20 EMPLOYEE MATTERS. Except as set forth on SCHEDULE 4.20, (a) as
of the Closing Date, no Loan Party or Subsidiary of a Loan Party nor any of
their respective employees is subject to any collective bargaining agreement,
(b) as of the Closing Date, no petition for certification or union election is
pending with respect to the employees of any Loan Party or any of their
Subsidiaries and no union or collective bargaining unit has sought such
certification or recognition with respect to the employees of any Loan Party or
any of their Subsidiaries, (c) as of the Closing Date, there are no strikes,
slowdowns, work stoppages or controversies pending or, to the best knowledge of
any Loan Party after due inquiry, threatened between any Loan Party or any of
their Subsidiaries and its respective employees, other than employee grievances
arising in the ordinary course of business which would not reasonably be
expected to have, either individually or in the aggregate, a Material Adverse
Effect; (d) hours worked by and payment made to employees of each Loan Party and
each of their Subsidiaries comply in all material respects with the Fair Labor
Standards Act and each other federal, state, provincial, local or foreign law
applicable to such matters, and (e) each Loan Party has withheld all employee
withholdings and has made all employer contributions to be withheld and made by
it pursuant to applicable law on account of the Canada and Quebec Pension plans,
employment insurance and employee income taxes; all payments due from any Loan
Party for U.S. employee health and
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welfare insurance have been paid or accrued as a liability on the books of such
Loan Party. Except as set forth on SCHEDULE 4.20, as of the Closing Date,
neither Borrower nor any other Loan Party is party to an employment contract.
4.21 GOVERNMENTAL REGULATION. None of the Loan Parties is subject
to regulation under the United States PUBLIC UTILITY HOLDING COMPANY ACT OF
1935, FEDERAL POWER ACT or INVESTMENT COMPANY ACT OF 1940 or to any US or
Canadian federal, state or provincial statute or regulation limiting its ability
to incur indebtedness for borrowed money.
4.22 ACCESS TO ACCOUNTANTS AND MANAGEMENT. Borrower authorizes
Agent and Lenders to discuss the financial condition and financial statements of
the Loan Parties with Holdings' Accountants upon reasonable notice to Borrower
of its intention to do so, and authorizes Holdings' Accountants to respond to
all of Agent's inquiries. Agent and each Lender may, with the consent of Agent,
which will not be unreasonably denied, and upon prior notice (in the absence of
an Event of Default), confer with Loan Parties' management directly regarding
Loan Parties' business, operations and financial condition.
4.23 INSPECTION. Borrower shall permit Agent and any authorized
representatives designated by Agent and shall cause each other Loan Party to
permit such representatives to visit and inspect any of the properties of
Borrower or any other Loan Party, including their financial and accounting
records, and, in conjunction with such inspection, to make copies and take
extracts therefrom, and to discuss their affairs, finances and business with
their officers and Holdings' Accountants, upon prior notice (in the absence of
an Event of Default) and at such reasonable times during normal business hours
and as often as may be reasonably requested. Each Lender may, with the consent
of Agent, which will not be unreasonably denied, accompany Agent on any such
visit or inspection (at such Lender's expense in the absence of a continuing
Event of Default described in either of SUBSECTION 8.1(A) or 8.1(C) (as a result
of any breach of the Financial Covenants Rider)).
4.24 COLLATERAL RECORDS. Borrower shall keep, and cause each Loan
Party to keep, full and accurate books and records relating to the Collateral
and shall ▇▇▇▇ such books and records to indicate Agent's security interests and
other Liens thereon, for the benefit of Agent and Lenders.
4.25 COLLECTION OF ACCOUNTS AND PAYMENTS. As promptly as
practicable and, in any event, within 60 days following the Closing Date,
Borrower shall close or convert its operating accounts into depository or
disbursement accounts and establish lockboxes and blocked accounts
(collectively, "Blocked Accounts") in its name with such banks ("Collecting
Banks") as are acceptable to Agent (subject to irrevocable instructions
acceptable to Agent as hereinafter set forth) to which all account debtors of
Borrower shall directly remit all payments on Accounts of Borrower and in which
Borrower will immediately deposit all payments made for Inventory or other
payments constituting proceeds of Borrower Collateral in the identical form in
which such payment was made, whether by cash or cheque The Collecting Banks
shall acknowledge and agree, in a manner satisfactory to Agent, that all
payments made to the Blocked Accounts are the sole and exclusive property of
Agent, for its benefit and for the benefit of Lenders, and US Facility Agent,
for its benefit and for the benefit of US Lenders, and that the Collecting Banks
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have no right to setoff against the Blocked Accounts and that all such payments
received will be promptly transferred to Agent's Account. Borrower hereby agrees
that all payments made to such Blocked Accounts or otherwise received by Agent
and whether on the Accounts or as proceeds of other Collateral or otherwise will
be the sole and exclusive property of Agent, for the benefit of itself and
Lenders, and US Facility Agent, for its benefit and for the benefit of US
Lenders. Borrower shall irrevocably instruct each Collecting Bank to promptly
transfer all payments or deposits to the Blocked Accounts into Agent's Account.
If Borrower, or any if its Affiliates, employees, agents or other Person acting
for or in concert with Borrower, shall receive any money, cheques, notes, drafts
or any other payments relating to and/or proceeds of Accounts of Borrower or
other Borrower Collateral, Borrower shall cause such Person to hold such
instrument or funds in trust for Agent, and, immediately upon receipt thereof,
shall remit the same or cause the same to be remitted, in kind, to the Blocked
Accounts or to Agent at its address set forth in SUBSECTION 10.3 below.
Borrower may amend any one or more of the Schedules referred in this SECTION 4
(subject to prior notice to Agent, as applicable) and any representation,
warranty, or covenant contained herein which refers to any such Schedule shall
from and after the date of any such amendment refer to such Schedule as so
amended; PROVIDED HOWEVER, that in no event shall the amendment of any such
Schedule constitute a waiver by Agent and Lenders of any Default or Event of
Default that exists notwithstanding the amendment of such Schedule.
SECTION 5.
REPORTING AND OTHER AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, so long as the Revolving
Loan Commitment shall be in effect and until payment in full of all Obligations,
Borrower shall perform, and shall cause the other Loan Parties to perform, all
covenants in this SECTION 5 applicable to such Person.
5.1 FINANCIAL STATEMENTS AND OTHER REPORTS.
Borrower will deliver to Agent and each Lender (unless
specified to be delivered solely to Agent) the financial statements and other
reports contained in the Reporting Rider attached hereto.
5.2 ENDORSEMENT.
Borrower hereby constitutes and appoints Agent and all Persons
designated by Agent for that purpose as Borrower's true and lawful
attorney-in-fact, with power to endorse Borrower's name to any of the items of
payment or proceeds described in SUBSECTION 4.25 above and all proceeds of
Collateral that come into Agent's possession or under Agent's control. Both the
appointment of Agent as Borrower's attorney and Agent's rights and powers are
coupled with an interest and are irrevocable until payment in full and complete
performance of all of the Obligations (other than contingent indemnity
obligations to the extent no unsatisfied claim has been asserted).
5.3 MAINTENANCE OF PROPERTIES.
Each Loan Party will maintain or cause to be maintained in
good repair, working order and condition all material properties used in the
businesses of Loan Parties and their Subsidiaries and will make or cause to be
made all appropriate repairs, renewals and replacements thereof.
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5.4 COMPLIANCE WITH LAWS.
Each Loan Party will, and will cause its Subsidiaries to,
comply with the requirements of all applicable laws, rules, regulations and
orders of any governmental authority as now in effect and which may be imposed
in the future in all jurisdictions in which the Loan Parties or any of their
Subsidiaries is now doing business or may hereafter be doing business, other
than those laws the noncompliance with which would not have a Material Adverse
Effect.
5.5 FURTHER ASSURANCES.
Each Loan Party shall, and shall cause its Subsidiaries to,
from time to time, execute such guaranties, financing, financing change or
continuation statements, documents, security agreements, reports and other
documents or deliver to Agent such instruments, certificates of title,
mortgages, deeds of trust, deeds of hypothecs, or other documents as Agent at
any time may reasonably request to evidence, perfect, publish or otherwise
implement the guaranties and security for repayment of the Obligations provided
for in the Loan Documents. Without limiting the foregoing, Borrower shall, and
shall cause the other Loan Parties to, execute and file such financing,
financing change and continuation statements, or amendments thereto, and such
other instruments, documents or notices, as may be necessary or desirable, or as
Agent may request, in order to create, preserve and protect the security
interests, hypothecs or liens granted or purported to be granted hereby or
pursuant to any other Loan Document.
5.6 MORTGAGES; TITLE INSURANCE AND TITLE OPINIONS; SURVEYS AND
CERTIFICATES OF LOCATION.
(A) TITLE INSURANCE. On the Closing Date in respect of
the Mortgaged Property located in the United States (or within thirty (30) days
following delivery of any Mortgage with respect to any Additional Mortgaged
Property, regardless of where located), Borrower shall, except as otherwise
agreed by Agent, deliver or cause to be delivered to Agent ALTA lender's title
insurance policies or date down endorsement to any existing title insurance
policies issued by title insurers reasonably satisfactory to Agent (the
"Mortgage Policies") in form and substance and in amounts reasonably
satisfactory to Agent assuring Agent that the Mortgages are valid and
enforceable first priority mortgage liens (or the equivalent thereof under
applicable law) on the respective Mortgaged Property or Additional Mortgaged
Property, free and clear of all defects and encumbrances except Permitted
Encumbrances. The Mortgage Policies shall be in form and substance reasonably
satisfactory to Agent and shall include an endorsement insuring against the
effect of future advances under this Agreement, for mechanics' liens and for any
other matter that Agent may reasonably request.
(B) TITLE OPINIONS. On the Closing Date, Borrower shall
deliver or cause to be delivered to Agent an opinion of counsel acceptable to
Agent, acting reasonably, opining as to Borrower's good and marketable
registered freehold title to its Mortgaged Property, and that the Mortgages
granted by Borrower thereon are valid and enforceable published first ranking
hypothecs thereon free and clear of all defects and encumbrances except
Permitted Encumbrances.
(C) ADDITIONAL MORTGAGED PROPERTY. Borrower shall as
promptly as possible (and in any event within sixty (60) days after such
designation) deliver to Agent a fully executed
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Mortgage, in form and substance satisfactory to Agent, together with title
insurance policies and surveys or, in case of real property in the Province of
Quebec, certificates of location, on any Additional Mortgaged Property
designated by Agent.
(D) LEASEHOLDS. In the case of each leasehold
constituting Mortgaged Property or Additional Mortgaged Property, Agent shall
have received such estoppel letters, consents and waivers from the landlords and
non-disturbance agreements from any holders of mortgages, deeds of trust or
deeds of hypothec on such real property as may have been requested by Agent,
which letters shall be in form and substance satisfactory to Agent.
(E) SURVEYS AND CERTIFICATES OF LOCATION. On or before
the Closing Date (or within thirty (30) days following delivery of any Mortgage
with respect to Additional Mortgaged Property), Borrower shall, to the extent
necessary to obtain the Mortgage Policies, deliver or cause to be delivered to
Agent current surveys or certificates of location, as applicable, certified or
executed by a licensed surveyor, for all real property that is the subject of
the Mortgage Policies including Additional Mortgaged Property for which a
Mortgage Policy is issued. All such surveys and certificates of location or
equivalents thereof shall be sufficient to allow the issuer of the Mortgage
Policy to remove the general survey exception (or the applicable equivalent
thereof). For the purpose of the title opinions required under SUBSECTION
5.6(B), legal counsel may rely on the certificates of location relied on by such
counsel for the purpose of their title opinions delivered in connection with the
Original Credit Agreement, as supplemented by a certificate of an officer of
Borrower certifying that there have not been any changes to the legal
descriptions of the real properties to which such title opinions relate.
5.7 USE OF PROCEEDS. Borrower shall use the proceeds of all
Revolving Advances for proper business purposes (as described in the recitals to
this Agreement) consistent with all applicable laws, statutes, rules and
regulations.
5.8 BAILEES. If any Collateral is at any time in the possession or
control of any warehouseman, bailee or US Obligor's agents or processors, upon
the request of Agent, Borrower shall notify, or arrange the notification of,
such warehouseman, bailee, agent or processor of the security interests (or
applicable equivalents thereof) in favour of Agent, for the benefit of Agent and
Lenders, created hereby or the other Loan Documents, and shall instruct such
Person to hold all such Collateral for Agent's Account subject to Agent's
instructions.
5.9 THIRD PARTY INVENTORY. All inventory and products owned by
Persons other than a Loan Party and located on any premises owned, leased or
controlled by any Loan Party, shall be separately and conspicuously identified
as such and shall be segregated from such Loan Party's own Inventory located at
such premises.
5.10 ENVIRONMENTAL MATTERS.
Each Loan Party shall and shall cause each Person within its
control to: (a) conduct its operations and keep and maintain its Real Estate in
compliance with all Environmental Laws and Environmental Permits other than
noncompliance that would not reasonably be expected to have a Material Adverse
Effect; (b) implement any and all
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investigation, remediation, removal and response actions that are appropriate or
necessary to maintain the value and marketability of the Real Estate or to
otherwise comply with Environmental Laws and Environmental Permits pertaining to
the presence, generation, treatment, storage, use, disposal, transportation or
Release of any Hazardous Material on, at, in, under, above, to, from or about
any of its Real Estate, except, in each case, where the failure to do so could
not reasonably be expected to have a Material Adverse Effect; (c) notify Agent
promptly after such Loan Party or any Person within its control becomes aware of
any violation of Environmental Laws or Environmental Permits or any Release on,
at, in, under, above, to, from or about any Real Estate that is reasonably
likely to result in a Material Adverse Effect; and (d) promptly forward to Agent
a copy of any order, notice, request for information or any communication or
report received by such Loan Party or any Person within its control in
connection with any such violation, Release or order or any other matter
relating to any Environmental Laws or Environmental Permits that would
reasonably be expected to result in a Material Adverse Effect. If Agent at any
time has a reasonable basis to believe that there may be a violation of any
Environmental Laws or Environmental Permits by any Loan Party or any Person
under its control, or any Environmental Liability arising thereunder, or a
Release of Hazardous Materials on, at, in, under, above, to, from or about, any
of its Real Estate that, in each case, would reasonably be expected to have a
Material Adverse Effect, then each Loan Party and its Subsidiaries shall, upon
Agent's written request (i) cause the performance of such environmental audits
including subsurface sampling of soil and groundwater, and preparation of such
environmental reports, at Borrower's expense, as Agent may from time to time
reasonably request, which shall be conducted by reputable environmental
consulting firms reasonably acceptable to Agent and shall be in form and
substance reasonably acceptable to Agent, and (ii) permit Agent or its
representatives to have access to all Real Estate for the purpose of conducting
such environmental audits and testing as Agent reasonably deems appropriate,
including subsurface sampling of soil and groundwater. Borrower shall reimburse
Agent for the costs of such audits and tests and the same will constitute a part
of the Obligations secured hereunder.
5.11 CURRENCY RATE AGREEMENT. If Agent shall determine in its
reasonable credit judgment that Borrower and its Subsidiaries at any time
hereafter have a material currency exchange risk exposure relative to Borrower's
Obligations hereunder, then, within sixty (60) days after a request by Agent to
do so, Borrower shall enter into (and thereafter maintain) Currency Rate
Agreements to hedge such currency exchange exposure in a manner, and upon terms
and conditions, reasonably satisfactory to Agent.
"Currency Rate Agreement" means any currency rate swap
agreement, currency forward purchase contract or similar agreement or
arrangement designed to protect Borrower against fluctuations in currency
exchange rates entered into in accordance with this SUBSECTION 5.10.
SECTION 6.
FINANCIAL COVENANTS
Borrower covenants and agrees that so long as the Revolving
Loan Commitment remains in effect and until indefeasible payment in full of all
Obligations, Borrower and each other Loan Party shall comply with all covenants
contained in the Financial Covenants Rider.
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SECTION 7.
NEGATIVE COVENANTS
Borrower covenants and agrees that so long as the Revolving
Loan Commitment remains in effect and until indefeasible payment in full of all
Obligations, Borrower shall not and will not permit any other Loan Party (except
where indicated) to:
7.1 INDEBTEDNESS AND LIABILITIES.
Directly or indirectly create, incur, assume, guarantee, or
otherwise become or remain directly or indirectly liable, on a fixed or
contingent basis, with respect to any Indebtedness except:
(a) the Obligations;
(b) intercompany Indebtedness (i) outstanding on
the Closing Date and (ii) arising from loans made by US Borrower to its
Subsidiaries following the Closing Date to fund working capital requirements of
such Subsidiaries in the ordinary course of business and to fund Permitted
Acquisitions; PROVIDED, HOWEVER, that the aggregate outstanding principal amount
of intercompany loans from US Borrower to Beacon Canada Holdings and Borrower
shall not exceed an amount equal to the outstanding balance of such intercompany
loan as of the Closing Date (after giving effect to the Related Transactions on
the Closing Date) plus US$3,000,000 or the Equivalent Amount thereof in Canadian
Dollars at any time; PROVIDED, FURTHER, that upon the request of Agent at any
time, such Indebtedness shall be evidenced by promissory notes having terms
reasonably satisfactory to Agent, the sole originally executed counterparts of
which shall be delivered to US Facility Agent and shall be pledged to (i) US
Facility Agent, for the benefit of US Facility Agent and US Facility Lenders, as
security for the obligations under the US Facility Loan Documents and (ii)
Agent, for the benefit of Agent and Lenders, as security for the payee Loan
Party's Obligations;
(c) unsecured, subordinated Indebtedness of US
Borrower in the principal amount of US$16,032,000 (plus deferred interest
thereon in accordance with the terms of the Senior Subordinated Notes) pursuant
to the Senior Subordinated Loan Documents;
(d) [Intentionally Omitted];
(e) unsecured, subordinated Indebtedness of
Holdings pursuant to (i) the Investor Subordinated Notes outstanding on the
Closing Date in the aggregate principal amount of US$12,165,881, (ii) Investor
Subordinated Notes issued after the Closing Date to individuals who hereafter
become employees of the Loan Parties and who purchase such Investor Subordinated
Notes together with common stock of Holdings (which additional Investor
Subordinated Notes shall be in the form of the Investor Subordinated Notes
outstanding on the Closing Date) and (iii) Investor Subordinated Notes issued
after the Closing Date in connection with Permitted Acquisitions (including
Investor Subordinated Notes issued to stockholders of Holdings to provide funds
for Permitted Acquisitions) (which additional Investor Subordinated Notes shall
be in the form of the Investor Subordinated Notes outstanding on the Closing
Date);
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(f) unsecured, subordinated Indebtedness of
Holdings in the aggregate principal amount of US$7,000,000 pursuant to the Best
Seller Notes;
(g) [Intentionally Omitted];
(h) [Intentionally Omitted];
(i) [Intentionally Omitted];
(j) Indebtedness of US Borrower pursuant to the
US Facility Loan Documents;
(k) in the case of the Loan Parties, other than
Borrower and its Subsidiaries, Indebtedness permitted under the US Facility Loan
Agreement;
(l) unsecured, subordinated Indebtedness
evidenced by the Stockholder Notes;
(m) Indebtedness not to exceed US$8,000,000, or
the Equivalent Amount thereof, in the aggregate for all Loan Parties at any time
outstanding secured by purchase money Liens or incurred with respect to Capital
Leases;
(n) unsecured Indebtedness not to exceed
US$500,000, or the Equivalent Amount thereof, in the aggregate for all Loan
Parties at any time outstanding which is subordinated to the Obligations in a
manner satisfactory to Agent and Requisite Lenders;
(o) Indebtedness existing on the Closing Date
and identified on SCHEDULE 7.1; and
(p) unsecured Indebtedness of Holdings incurred
in connection with any Permitted Acquisition in an amount not to exceed ten
percent (10%) of the purchase price for such Permitted Acquisition; PROVIDED,
HOWEVER, that any such Indebtedness shall (i) have a maturity date no earlier
than ninety (90) days after the date set forth in clause (a) of the definition
of "Termination Date", (ii) shall be fully subordinated to the Obligations in a
manner satisfactory to Agent and (iii) be otherwise issued pursuant to terms and
conditions reasonably satisfactory to Agent.
Loan Parties will not, and will not permit the other Loan
Parties to, incur any Liabilities except for Indebtedness permitted herein and
trade payables and normal accruals in the ordinary course of business not yet
due and payable or with respect to which any Loan Party is contesting in good
faith the amount or validity thereof by appropriate proceedings and then only to
the extent that such Loan Party has established adequate reserves therefor under
US GAAP.
7.2 CONTINGENT OBLIGATIONS.
Directly or indirectly create or become or be liable with
respect to any Contingent Obligation (other than in respect of the Obligations)
except:
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(a) those resulting from Currency Rate
Agreements and Interest Rate Agreements entered into by Borrower with Agent's
prior written approval;
(b) those resulting from endorsement of
negotiable instruments for collection in the ordinary course of business;
(c) those existing on the Closing Date and
described in SCHEDULE 7.2 annexed hereto;
(d) those arising under indemnity agreements to
title insurers to cause such title insurers to issue to Agent mortgagee title
insurance policies;
(e) those arising with respect to customary
indemnification obligations incurred in connection with Asset Dispositions or
Permitted Acquisitions;
(f) those incurred in the ordinary course of
business with respect to surety and appeal bonds, performance and
return-of-money bonds and other similar obligations not exceeding at any time
outstanding US$100,000, or the Equivalent Amount thereof, in aggregate liability
for all Loan Parties;
(g) those incurred with respect to Indebtedness
permitted by CLAUSES (a), (c), (j) , (k), (l) and (m) of SUBSECTION 7.1, and
those with respect to the "put" obligations of Holdings under the Stock Purchase
Warrants issued pursuant to the Senior Subordinated Loan Agreement and the
"Prior Purchase Agreement" (as defined in the Senior Subordinated Loan
Agreement) provided that any guaranty of Indebtedness that is subordinated to
the Obligations shall be subordinated to the same extent that such Indebtedness
is subordinated to the Obligations, and any guaranty of the above-referenced
"put" obligations of Holdings shall be subordinated to the Obligations in
accordance with the Senior Subordination Agreement;
(h) in the cases of the Loan Parties, other than
Borrower and its Subsidiaries, those that are permitted under the US Facility
Loan Agreement; and
(i) any other Contingent Obligation not
expressly permitted by CLAUSES (a) through (h) above, so long as any such other
Contingent Obligations, in the aggregate at any time outstanding for all Loan
Parties, do not exceed US$250,000, or the Equivalent Amount thereof.
7.3 TRANSFERS, LIENS AND RELATED MATTERS.
(a) TRANSFERS. Sell, assign (by operation of law
or otherwise) or otherwise dispose of, or grant any option with respect to any
of the Collateral or the assets or property of any other Loan Party, except that
Borrower, US Borrower and its other Subsidiaries may (i) sell Inventory to
customers in the ordinary course of business and dispose of obsolete equipment
not used or useful in the business for fair value; and (ii) make Asset
Dispositions if all of the following conditions are met: (1) the aggregate
market value of assets sold or otherwise disposed of in any Fiscal Year does not
exceed US$500,000 or the Equivalent Amount thereof (for all such Loan Parties);
(2) the consideration received is at least equal to the fair market value
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of such assets; (3) at least 75% of the consideration received is cash; (4) the
net proceeds of such Asset Disposition are applied as required by SUBSECTION 2.4
or the US Facility Loan Agreement, as applicable; (5) after giving effect to the
sale or other disposition of the assets included within the Asset Disposition
and the repayment of the Obligations or the obligations under the US Facility
Loan Documents, as applicable, with the proceeds thereof, each Loan Party is in
compliance on a pro forma basis with the covenants set forth in the Financial
Covenants Rider recomputed for the most recently ended fiscal quarter or fiscal
month (as applicable) for which information is available and is in compliance
with all other terms and conditions contained in this Agreement; and (6) no
Default or Event of Default shall then exist or result from such sale or other
disposition.
(b) LIENS. Except for Permitted Encumbrances,
directly or indirectly create, incur, assume or permit to exist any Lien on or
with respect to any of the Collateral or the assets of any other Loan Party or
any proceeds, income or profits therefrom.
(c) NO NEGATIVE PLEDGES. Enter into or assume
any agreement (other than the Loan Documents, the US Facility Loan Documents and
the Senior Subordinated Loan Documents) prohibiting the creation or assumption
of any Lien upon the properties or assets of any Loan Party, whether now owned
or hereafter acquired.
(d) NO RESTRICTIONS ON SUBSIDIARY DISTRIBUTIONS.
Except as provided herein and in the US Facility Loan Documents and the Senior
Subordinated Loan Documents, directly or indirectly create or otherwise cause or
suffer to exist or become effective any consensual encumbrance or restriction of
any kind on the ability of any Subsidiary of Borrower to: (1) pay dividends or
make any other distribution on any of such Subsidiary's shares or capital stock
owned by Borrower or any Subsidiary of Borrower; (2) pay any indebtedness owed
to Borrower or any Subsidiary of Borrower; (3) make loans or advances to
Borrower or any Subsidiary of Borrower; or (4) transfer any of its property or
assets to Borrower or any Subsidiary of Borrower.
7.4 INVESTMENTS AND LOANS. Make or permit to exist investments in
or loans to any other Person, except: (a) Cash Equivalents; (b) intercompany
loans by US Borrower to its Subsidiaries to the extent permitted under
SUBSECTION 7.1; (c) loans and advances to employees for moving, entertainment,
travel and other similar expenses in the ordinary course of business in an
aggregate outstanding amount not in excess of US$200,000, or the Equivalent
Amount thereof, for all employees of all Loan Parties, at any time; (d)
promissory notes of employees issued to Holdings in consideration for shares of
capital stock of Holdings and Investor Subordinated Notes issued by Holdings to
such employees in an aggregate outstanding amount not exceeding US$500,000, or
the Equivalent Amount thereof, at any time; and (e) Permitted Acquisitions
consummated by US Obligors.
7.5 RESTRICTED JUNIOR PAYMENTS. Directly or indirectly declare,
order, pay, make or set apart any sum for any Restricted Junior Payment, except
that:
(a) Borrower may make payments and distributions
to Beacon Canada Holdings that are used by Beacon Canada Holdings to make
payments and distributions
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to US Borrower, the proceeds of which payments and distributions US Borrower
uses to make payments and distributions to Holdings in order that Holdings may
pay US federal and state income taxes then due and owing, franchise taxes and
other similar licensing expenses incurred in the ordinary course of business;
PROVIDED, that Borrower's aggregate contribution to taxes as a result of the
filing of a consolidated or combined return by Holdings shall not be greater,
nor the aggregate receipt of tax benefits less, than they would have been had
Borrower and its Subsidiaries not filed a consolidated or combined return with
Holdings;
(b) Subsidiaries of Borrower may make Restricted
Junior Payments to Borrower;
(c) US Borrower may, on the Closing Date, prepay
a portion of the outstanding Indebtedness under the Senior Subordinated Loan
Documents in an aggregate amount equal to US$22,411,238.75 (consisting of
principal in the aggregate amount of US$15,968,000, capitalized interest in the
aggregate amount of US$5,533,199 and accrued interest in the aggregate amount of
USD$910,039) and thereafter may make regularly scheduled cash interest payments
(and may accrue deferred interest) pursuant to the terms of the Senior
Subordinated Loan Documents as in effect on the date hereof, subject to the
subordination provisions set forth in the Senior Subordination Agreement;
(d) [Intentionally Omitted];
(e) US Borrower may make distributions to
Holdings to permit Holdings to make (and Holdings may make) scheduled payments
principal of, and of accrued and unpaid interest on the Best Seller Notes, in
each case on an unaccelerated basis, provided all of the following conditions
are satisfied:
(i) no Default or Event of Default
shall have occurred and be continuing or would arise as a result of such
distribution and payment; and
(ii) after giving effect to such
distribution and payment, each of the Loan Parties shall be in compliance on a
pro forma basis with all covenants and agreements set forth in the Financial
Covenants Rider (excluding PARAGRAPH A thereof) recomputed for the twelve month
period ending on the last day of the most recent fiscal quarter or fiscal month
(as applicable) for which Agent has received the monthly financial statements
required to be delivered pursuant to PARAGRAPH (A) to the Reporting Rider;
(f) US Borrower may make distributions to
Holdings to permit Holdings to redeem (and Holdings may redeem) shares of its
capital stock (or warrants or options to acquire any such shares) from employees
of US Borrower and its Subsidiaries upon the death or other termination of
employment of such employees, or to permit Holdings to pay interest or principal
in respect of any Stockholder Notes issued by Holdings to any such employees or
their executors or administrators in payment of all or any portion of such
redemption price, provided all of the following conditions are satisfied:
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(i) no Default or Event of Default
shall have occurred and be continuing or would arise as a result of such
distribution or redemption;
(ii) after giving effect to such
distribution and redemption, the Loan Parties shall be in compliance on a pro
forma basis with all covenants and agreements set forth in the Financial
Covenants Rider (excluding PARAGRAPH A thereof) recomputed for the twelve-month
period ending on the last day of the most recent fiscal quarter for which Agent
has received the monthly financial statements required to be delivered pursuant
to PARAGRAPH (A) of the Reporting Rider;
(iii) the aggregate amount of such
distributions permitted in any fiscal year of the US Borrower shall not exceed
US$500,000; and
(iv) after giving effect to such
distribution and payment and the making of any US Facility Revolving Loan to
fund such distribution, Excess Availability is at least US$7,500,000;
(g) [Intentionally Omitted];
(h) [Intentionally Omitted];
(i) US Borrower may make Restricted Junior
Payments to Holdings in an amount sufficient to permit Holdings to pay (and
Holdings may pay) regularly scheduled installments of accrued and unpaid
interest on Investor Subordinated Notes issued to, and held by, individuals who
are directors and employees of any Loan Party (excluding any partner, principal,
director or employee of Code ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ III, L.P., Code ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇ L.L.C., CHS Management III, L.P. or any holder of Senior Subordinated
Notes) in an amount not to exceed forty-four percent (44%) of the accrued and
unpaid interest on such Investor Subordinated Notes, so long as no Default or
Event of Default shall have occurred and be continuing or would result therefrom
and subject to the subordination provisions set forth in such Investor
Subordinated Notes or the Investor Subordination Agreement (as applicable);
(j) [Intentionally Omitted];
(k) Subsidiaries of the US Borrower, other than
Borrower and its Subsidiaries, may make Restricted Junior Payments permitted
under the US Facility Loan Agreement; and
(l) The Loan Parties may pay to CHS the
management fees and closing fee set forth on SCHEDULE 7.8 to the extent
permitted under SUBSECTION 7.8.
7.6 RESTRICTION ON FUNDAMENTAL CHANGES.
(a) Enter into any transaction of amalgamation,
merger or consolidation; (b) liquidate, wind-up or dissolve itself (or suffer
any liquidation or dissolution); (c) convey, sell, lease, sublease, transfer or
otherwise dispose of, in one transaction or a series of transactions, all or any
substantial part of its business or assets, or the capital stock or shares of
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any of its Subsidiaries, whether now owned or hereafter acquired; or (d) acquire
by purchase or otherwise all or any substantial part of the business or assets
of, or stock, shares or other beneficial ownership of, any Person, except
pursuant to a Permitted Acquisition.
7.7 CHANGES RELATING TO INDEBTEDNESS. Change or amend the terms of
any of its Indebtedness permitted by CLAUSES (b) through (p) of SUBSECTION 7.1
if the effect of such amendment is an attempt to: (a) increase the interest rate
on such Indebtedness; (b) change the dates upon which payments of principal of
or interest on such Indebtedness are due; (c) change any event of default or add
any covenant with respect to such Indebtedness; (d) change the payment
provisions of such Indebtedness; (e) change the subordination provisions
thereof; or (f) change or amend any other term if such change or amendment would
materially increase the obligations of the obligor or confer additional material
rights on the holder of such Indebtedness in a manner adverse to any Loan Party,
Agent or any Lender.
7.8 TRANSACTIONS WITH AFFILIATES. Directly or indirectly, enter
into or permit to exist any transaction (including the purchase, sale or
exchange of property or the rendering of any service) with any Affiliate or with
any officer, director or employee of any Loan Party, except (a) as set forth on
SCHEDULE 7.8, (b) for transactions in the ordinary course of and pursuant to the
reasonable requirements of the business of any Loan Party and upon fair and
reasonable terms which are fully disclosed to Agent and are no less favourable
to such Loan Party than would be obtained in a comparable arm's length
transaction with a Person that is not an Affiliate, (c) for payment of
reasonable compensation to officers and employees for services actually rendered
to such Loan Party and (d) for payment of outside directors' fees not to exceed
US$150,000 or the Equivalent Amount thereof in the aggregate for all Loan
Parties for any fiscal year of Borrower. Notwithstanding the foregoing, upon
written notice to Borrower from Agent or Requisite Lenders, no payments may be
made with respect to any items set forth on SCHEDULE 7.8 (other than reasonable
out-of-pocket expenses of CHS which are reimbursable by Borrower, as set forth
in the Management Agreement referred to in SCHEDULE 7.8) after the occurrence
and during the continuation of an Event of Default or if an Event of Default
would result therefrom, provided such items may continue to accrue following
such notice and be payable once such Event of Default has been cured or waived
or would not otherwise result from such payment.
7.9 CONDUCT OF BUSINESS. From and after the Closing Date, engage
in any business other than businesses of the type engaged in by such Loan Party
on the Closing Date.
7.10 TAX CONSOLIDATIONS. File or consent to the filing of any
consolidated income tax return with any Person other than the Loan Parties;
PROVIDED that the contribution of Borrower and its Subsidiaries with respect to
taxes as a result of the filing of a consolidated return with Holdings shall not
be greater, nor the receipt of tax benefits less, than they would have been had
Borrower and its Subsidiaries not filed a consolidated return with Holdings.
7.11 SUBSIDIARIES. Other than the Subsidiaries set forth on
SCHEDULE 7.11, establish, create or acquire any new Subsidiaries other than in
connection with a Permitted Acquisition.
7.12 FISCAL YEAR; TAX DESIGNATION. Change its Fiscal Year; or, in
the case of the Loan Parties other than Borrower, elect to be designated as an
entity other than a C corporation or, in
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the case of Borrower, elect to be designated as an entity other than an
unlimited liability company.
7.13 PRESS RELEASE; PUBLIC OFFERING MATERIALS. Borrower agrees that
none of it, the other Loan Parties or any of their respective Affiliates will in
the future issue any press releases or other public disclosure, including any
prospectus, proxy statement or other materials filed with any Governmental
Authority relating to a public offering of the Stock of any Loan Party or any of
its Subsidiaries, using the name of GE Canada Finance or GE Capital or its
Affiliates or referring to this Agreement, the other Loan Documents or the
Related Transactions Documents without at least two (2) Business Days' prior
notice to GE Canada Finance and without the prior written consent of GE Canada
Finance unless (and only to the extent that) such Loan Party or Affiliate is
required to do so under law and then, in any event, such Loan Party or Affiliate
will consult with GE Canada Finance before issuing such press release or other
public disclosure. Borrower consents to the publication by Agent or any Lender
of a tombstone or similar advertising material relating to the financing
transactions contemplated by this Agreement. Agent or such Lender shall provide
a draft of any such tombstone or similar advertising material to each Loan Party
for review and comment prior to the publication thereof. Agent reserves the
right to provide to industry trade organizations information necessary and
customary for inclusion in league table measurements.
7.14 BANK ACCOUNTS. In the case of Borrower and its Subsidiaries,
establish any new bank accounts, or attempt to amend or terminate any Blocked
Account or lockbox agreement without Agent's prior written consent.
7.15 HAZARDOUS MATERIALS. Borrower shall not and shall not cause or
permit any Loan Party or any of their respective Subsidiaries to cause or permit
a Release of any Hazardous Material on, at, in, under, above, to, from or about
any of the Real Estate where such Release would (a) violate in any respect, or
form the basis for any Environmental Liabilities by the Loan Parties or any of
their Subsidiaries under, any Environmental Laws or Environmental Permits or (b)
otherwise adversely impact the value or marketability of any of the Real Estate
or any of the Collateral, other than such violations, Environmental Liabilities
or adverse impact on value or marketability that could not reasonably be
expected, in either case, to have a Material Adverse Effect.
7.16 CIGNA IMPRESS ACCOUNT. Maintain more than US$125,000 on
deposit in the CIGNA Impress Account.
SECTION 8.
DEFAULT, RIGHTS AND REMEDIES
8.1 EVENT OF DEFAULT. "Event of Default" shall mean the occurrence
or existence of any one or more of the following (for each subsection a
different grace or cure period may be
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specified, if no grace or cure period is specified, such occurrence or existence
constitutes an immediate Event of Default):
(A) PAYMENT. (1) Failure to pay any payments of principal
of the Revolving Loan when due, or to repay the Revolving Loan to reduce its
balance to the Maximum Revolving Loan Amount or (2) failure to pay, within (5)
days after the due date, any interest on the Revolving Loan or any other amount
due (other than principal of the Revolving Loan) under this Agreement or any of
the other Loan Documents; or
(B) DEFAULT IN OTHER AGREEMENTS. (1) Failure of any Loan
Party to pay when due any principal or interest on any Indebtedness (other than
the Obligations) or (2) breach or default of any Loan Party with respect to any
Indebtedness (other than the Obligations); if such failure to pay, breach or
default entitles the holder to cause such Indebtedness having an individual
principal amount in excess of US$150,000, or the Equivalent Amount thereof or
having an aggregate principal amount in excess of US$250,000, or the Equivalent
Amount thereof, to become or be declared due prior to its stated maturity; or
(C) BREACH OF CERTAIN PROVISIONS. (1) Failure of any Loan
Party to perform or comply with any term or condition contained in PARAGRAPH (A)
or (B) of the Reporting Rider, that portion of SUBSECTION 4.17 relating to Loan
Parties' obligations to maintain insurance or SUBSECTION 5.1, or contained in
SECTION 7 or the Financial Covenants Rider; or (2) failure of any Loan Party to
perform or comply with any term or condition contained in PARAGRAPH (D), (E) or
(K) of the Reporting Rider and such failure is not remedied or waived within
five (5) Business Days (two (2) Business Days in the case of any term or
condition contained in PARAGRAPH (E) of the Reporting Rider to be performed on a
weekly basis) after the date such failure first occurs; or
(D) BREACH OF WARRANTY. Any representation, warranty,
certification or other statement made by any Loan Party in any Loan Document or
in any statement or certificate at any time given by such Person in writing
pursuant to or in connection with any Loan Document is false in any material
respect on the date made; or
(E) OTHER DEFAULTS UNDER LOAN DOCUMENTS. Borrower or any
other Loan Party defaults in the performance of or compliance with any term
contained in this Agreement, other than those otherwise set forth in this
SUBSECTION 8.1, or defaults in the performance of or compliance with any term
contained in any other Loan Document and such default is not remedied or waived
within fifteen (15) days after notice from Agent, as required, or Requisite
Lenders, to Borrower of such default; or
(F) CHANGE IN CONTROL. (1) CHS ceases to beneficially and
of record own and control, directly or indirectly, free and clear of all Liens,
at least fifty-one percent (51%) of the issued and outstanding shares of each
class of capital stock or other equity securities of Holdings entitled (without
regard to the occurrence of any contingency) to vote for the election of a
majority of the members of the board of directors of Holdings; or (2) Holdings
ceases to beneficially and of record own and control all of the issued and
outstanding capital stock or other equity securities of US Borrower free and
clear of all Liens other than Liens in favour of Agent and US Facility Agent; or
(3) US Borrower ceases to beneficially own and control, directly or
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indirectly, free and clear of all Liens other than Liens in favour of Agent and
US Facility Agent, 100% of the issued and outstanding shares of each class of
capital stock or other equity securities entitled (without regard to the
occurrence of any contingency) to vote for the election of a majority of the
members of the boards of directors of any Loan Party other than US Borrower and
Holdings; or (4) any "Change of Control" as defined in the Senior Subordinated
Loan Agreement shall occur; or
(G) INVOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.
(1) A court enters a decree or order for relief with respect to any Loan Party
in an involuntary case under any applicable Insolvency Law now or hereafter in
effect, which decree or order is not stayed or other similar relief is not
granted under any applicable law; or (2) the continuance of any of the following
events for forty-five (45) days unless dismissed, bonded or discharged: (a) an
involuntary case is commenced against any Loan Party, under any applicable
Insolvency Law now or hereafter in effect; or (b) a receiver, interim receiver,
receiver and manager, liquidator, sequestrator, trustee, monitor, custodian or
other Person having similar powers over any Loan Party, or over all or a
substantial part of their respective property, is appointed; or
(H) VOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.
(1) Any Loan Party commences a voluntary case or proceeding under any applicable
Insolvency Law now or hereafter in effect, or consents to the entry of an order
for relief in an involuntary case or proceeding or to the conversion of an
involuntary case or proceeding to a voluntary case or proceeding under any such
law or consents to the appointment of or taking possession by a receiver,
interim receiver, receiver and manager, trustee, monitor, custodian or other
similar Person for all or a substantial part of its property; or (2) any Loan
Party makes any assignment for the benefit of creditors; or (3) the board of
directors of any Loan Party adopts any resolution or otherwise authorizes action
to approve any of the actions referred to in this SUBSECTION 8.1(H); or
(I) LIENS. Any lien, levy or assessment is filed or
recorded with respect to or otherwise imposed upon all or any part of the
Collateral or the assets of US Borrower or any of its Subsidiaries by Canada
(Her Majesty in Right of Canada) or the United States or any department, agency
or instrumentality thereof or by any province, state, county, municipality or
other governmental agency (other than Permitted Encumbrances) and such lien,
levy or assessment is not stayed, vacated, paid or discharged within ten (10)
days; or
(J) JUDGMENT AND ATTACHMENTS. Any money judgment, writ or
warrant of execution or attachment, or similar process involving (1) an amount
in any individual case in excess of US$150,000, or the Equivalent Amount
thereof, or (2) an amount in the aggregate at any time in excess of US$250,000,
or the Equivalent Amount thereof (in either case not adequately covered by
insurance as to which the insurance company has acknowledged coverage) is
entered or filed against any Loan Party or any of their respective assets and
remains undischarged, unvacated, unbonded or unstayed for a period of thirty
(30) days, but in any event not later than five (5) days prior to the date of
any proposed sale thereunder; or
(K) DISSOLUTION. Any order, judgment or decree is entered
against any Loan Party decreeing the dissolution, winding-up or split up of such
Loan Party and such order
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remains undischarged or unstayed for a period in excess of fifteen (15) days,
but in any event not later than five (5) days prior to the date of any proposed
dissolution, winding-up or split up; or
(L) SOLVENCY. Any Loan Party ceases to be solvent (as
represented by the Loan Parties in SUBSECTION 4.15) or admits in writing its
present or prospective inability to pay its debts as they become due; or
(M) INJUNCTION. Any Loan Party is enjoined, restrained or
in any way prevented by the order of any court or any administrative or
regulatory agency from conducting all or any material part of its business and
such order continues for fifteen (15) days or more; or
(N) INVALIDITY OF LOAN DOCUMENTS. Any of the Loan
Documents for any reason, other than a partial or full release in accordance
with the terms thereof, ceases to be in full force and effect or is declared to
be null and void, or any Loan Party denies that it has any further liability
under any Loan Document to which it is party, or gives notice to such effect; or
(O) FAILURE OF SECURITY. Agent, on behalf of itself and
Lenders, does not have or ceases to have a valid and perfected first priority
security interest (or the applicable equivalent thereof) in the Collateral
(subject to Permitted Encumbrances), in each case, for any reason other than the
failure of Agent or any Lender to take any action within its control; or
(P) INCOME TAX ACT. A requirement from the Minister of
National Revenue for payment pursuant to Section 224 or any successor section of
the INCOME TAX ACT (Canada) or Section 317, or any successor section of the
EXCISE TAX ACT (Canada) or any comparable provision of similar legislation shall
have been received by Lender or any other Person in respect of Borrower or any
of its Subsidiaries or otherwise issued in respect of Borrower or any of its
Subsidiaries; or
(Q) DAMAGE, STRIKE, CASUALTY. Any material damage to, or
loss, theft or destruction of, any Collateral, whether or not insured, or any
strike, lockout, labour dispute, embargo, condemnation, act of God or public
enemy, or other casualty which causes, for more than fifteen (15) consecutive
days, the cessation or substantial curtailment of revenue producing activities
at any facility of US Borrower or any of its Subsidiaries if any such event or
circumstance could reasonably be expected to have a Material Adverse Effect; or
(R) LICENSES AND PERMITS. The loss, suspension or
revocation of, or failure to renew, any license or permit now held or hereafter
acquired by US Borrower or any of its Subsidiaries, if such loss, suspension,
revocation or failure to renew could reasonably be expected to have a Material
Adverse Effect; or
(S) FORFEITURE. There is filed against any Loan Party of
any civil or criminal action, suit or proceeding, which action, suit or
proceeding (1) is not dismissed within one hundred twenty (120) days; and (2)
could reasonably be expected to result in the confiscation or forfeiture of any
material portion of the Collateral; or
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(T) DEFAULT UNDER US FACILITY LOAN AGREEMENT. Any Event
of Default (as defined under the US Facility Loan Agreement) shall occur under
the US Facility Loan Agreement.
8.2 SUSPENSION OF COMMITMENTS. Upon the occurrence of any Default
or Event of Default, notwithstanding any grace period or right to cure, Agent
may, or upon demand by Requisite Lenders shall, without notice or demand,
immediately cease making additional Revolving Advances and the Revolving Loan
Commitment shall be suspended; PROVIDED, that in the case of a Default, if the
subject condition or event is waived or cured within any applicable grace or
cure period, the Revolving Loan Commitment shall be reinstated.
8.3 ACCELERATION. Upon the occurrence of any Event of Default
described in the foregoing SUBSECTIONS 8.1(G) or 8.1(H), all Obligations shall
automatically become immediately due and payable, without presentment, demand,
protest or other requirements of any kind, all of which are hereby expressly
waived by Borrower, and the Revolving Loan Commitment shall thereupon terminate.
Upon the occurrence and during the continuance of any other Event of Default,
Agent may and, upon demand by Requisite Lenders, shall, by written notice to
Borrower, declare all or any portion of the Obligations to be, and the same
shall forthwith become, immediately due and payable and the Revolving Loan
Commitment shall thereupon terminate.
8.4 REMEDIES. If any Event of Default shall have occurred and be
continuing, in addition to and not in limitation of any other rights or remedies
available to Agent and Lenders at law or in equity, Agent may, and shall upon
the request of Requisite Lenders, exercise in respect of the Collateral, in
addition to all other rights and remedies provided for herein or in the other
Loan Documents or otherwise available to it, all the rights and remedies of a
secured party on default under the Personal Property Security Legislation
(whether or not such Personal Property Security Legislation applies to the
affected Borrower Collateral) and may also (a) require Borrower to, and Borrower
hereby agrees that it will, at its expense and upon request of Agent forthwith,
assemble all or part of the Collateral as directed by Agent and make it
available to Agent at a place to be designated by Agent which is reasonably
convenient to both parties; (b) withdraw all cash in the Blocked Accounts and
apply such monies in payment of the Obligations in the manner provided in
SUBSECTION 8.7; and (c) without notice or demand or legal process, enter upon
any premises of Borrower and take possession of Collateral. All rights and
remedies may be exercised without notice to or consent by Borrower, except as
such notice or consent is expressly provided for hereunder or required by
applicable law. Borrower agrees that, to the extent notice of sale of the
Borrower Collateral or any part thereof shall be required by law, at least
fifteen (15) days notice to Borrower of the time and place of any public sale or
the time after which any private sale is to be made shall constitute reasonable
notification. At any sale of the Borrower Collateral (whether public or
private), if permitted by law, Agent or any Lender may bid (which bid may be, in
whole or in part, in the form of cancellation of indebtedness) for the purchase
of the Borrower Collateral or any portion thereof for the account of Agent or
such Lender. Agent shall not be obligated to make any sale of Borrower
Collateral regardless of notice of sale having been given. Borrower shall remain
liable for any deficiency. Agent may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was
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so adjourned. To the extent permitted by law, Borrower hereby specifically
waives all rights of redemption, stay or appraisal which it has or may have
under any law now existing or hereafter enacted. Agent shall not be required to
proceed against any Collateral but may proceed against any Loan Party directly.
8.5 APPOINTMENT OF RECEIVER. Agent and Lenders may appoint, remove
and reappoint any person or persons, including any employee or agent of Agent
and Lenders to be an interim receiver or receiver (the "Receiver") which terms
shall include a receiver and manager of, or agent for, all or any part of the
Borrower Collateral. Any such Receiver shall, as far as concerns responsibility
for his acts, be deemed to be the agent of Borrower and not of Agent or any
Lender, and Agent and Lenders shall not in any way by responsible for any
misconduct, negligence or non-feasance of such Receiver, its employees or
agents. Except as otherwise directed by Agent and Lenders, all money received by
such Receiver shall be received in trust for and paid to Agent for the benefit
of Lenders. Such Receiver shall have all of the powers and rights of Agent and
Lenders described in SUBSECTION 8.4. Agent may, either directly or through its
agents or nominees, exercise any or all powers and right of a Receiver.
8.6 COSTS OF ENFORCEMENT. Borrower shall pay all costs, charges
and expenses incurred by Agent, any Lender or any Receiver or any nominee or
agent of Agent or any Lender, whether directly or for services rendered
(including, without limitation, solicitor's costs on a solicitor and his own
client basis, auditor's costs, other legal expenses and Receiver remuneration)
in enforcing this Agreement or any other Loan Document and in enforcing or
collecting Obligations and all such expenses together with any money owing as a
result of any borrowing permitted hereby shall be a charge on the proceeds of
realization and shall be secured hereby.
8.7 APPOINTMENT OF ATTORNEY-IN-FACT. Borrower hereby constitutes
and appoints Agent as Borrower's attorney-in-fact with full authority in the
place and stead of Borrower and in the name of Borrower, Agent or otherwise,
from time to time in Agent's discretion while an Event of Default is continuing
to take any action and to execute any instrument that Agent may deem necessary
or advisable to accomplish the purposes of this Agreement, including: (a) to
ask, demand, collect, ▇▇▇ for, recover, compound, receive and give acquittance
and receipts for moneys due and to become due under or in respect of any of the
Collateral; (b) to adjust, settle or compromise the amount or payment of any
Account, or release wholly or partly any customer or Borrower thereunder or
allow any credit or discount thereon; (c) to receive, endorse, and collect any
drafts or other instruments, documents and chattel paper, in connection with
clause (a) above; (d) to file any claims or take any action or institute any
proceedings that Agent may deem necessary or desirable for the collection of or
to preserve the value of any of the Collateral or otherwise to enforce the
rights of Agent and Lenders with respect to any of the Collateral; and (e) to
sign and endorse any invoices, freight or express bills, bills of lading,
storage or warehouse receipts, assignments, verifications and notices in
connection with Accounts and other documents relating to the Collateral. The
appointment of Agent as Borrower's attorney and Agent's rights and powers are
coupled with an interest and are irrevocable until indefeasible payment in full
and complete performance of all of the Obligations and termination of the
Revolving Loan Commitment.
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8.8 LIMITATION ON DUTY OF AGENT WITH RESPECT TO COLLATERAL. Beyond
the safe custody thereof, Agent and each Lender shall have no duty with respect
to any Collateral in its possession or control (or in the possession or control
of any agent or bailee) or with respect to any income thereon or the
preservation of rights against prior parties or any other rights pertaining
thereto. Agent shall be deemed to have exercised reasonable care in the custody
and preservation of the Collateral in its possession if the Collateral is
accorded treatment substantially equal to that which Agent accords its own
property. Neither Agent nor any Lender shall be liable or responsible for any
loss or damage to any of the Collateral, or for any diminution in the value
thereof, by reason of the act or omission of any warehouseman, carrier,
forwarding agency, consignee, broker or other agent or bailee selected by
Borrower or selected by Agent in good faith.
8.9 APPLICATION OF PROCEEDS. Notwithstanding anything to the
contrary contained in this Agreement, upon the occurrence and during the
continuance of an Event of Default, (a) Borrower irrevocably waives the right to
direct the application of any and all payments at any time or times thereafter
received by Agent from or on behalf of Borrower, and Agent shall have the
continuing and exclusive right to apply and to reapply any and all payments
received at any time or times after the occurrence and during the continuance of
an Event of Default against the Obligations in such manner as Agent may deem
advisable notwithstanding any previous application by Agent and (b) subject to
the Intercreditor Agreement, in the absence of a specific determination by Agent
with respect thereto, the proceeds of any sale of, or other realization upon,
all or any part of the Collateral shall be applied: FIRST, to all fees, costs
and expenses incurred by or owing to Agent and then any Lender with respect to
this Agreement, the other Loan Documents or the Borrower Collateral; SECOND, to
accrued and unpaid interest on the Obligations (including any interest which but
for the provisions of any Insolvency Law would have accrued on such amounts);
THIRD, to the principal amounts of the Obligations outstanding (other than
Obligations owed to any Lender under an Interest Rate Agreement or Currency Rate
Agreement); and FOURTH, to any other Obligations or other obligations or
indebtedness of Borrower owing to Agent or any Lender under the Loan Documents
or any Interest Rate Agreement or Currency Rate Agreement. Any balance remaining
shall be delivered to the Borrower or to whomever may be lawfully entitled to
receive such balance or as a court of competent jurisdiction may direct.
8.10 LICENSE OF INTELLECTUAL PROPERTY. Borrower hereby assigns,
transfers and conveys to Agent, for the benefit of Agent and Lenders, effective
upon the occurrence of any Event of Default hereunder, the non-exclusive right
and license to use all Intellectual Property owned or used by Borrower, together
with any goodwill associated therewith, all to the extent necessary to enable
Agent to realize on the Collateral and any successor or assign to enjoy the
benefits of the Collateral (subject, in the case of trade-marks, to sufficient
rights of quality control and inspection in favour of the owner of such
trade-marks as is reasonably necessary to avoid the risk of invalidation of such
trade-marks). This right and license shall inure to the benefit of all
successors, assigns and transferees of Agent and its successors, assigns and
transferees, whether by voluntary conveyance, operation of law, assignment,
transfer, foreclosure, deed in lieu of foreclosure or otherwise. Such right and
license is granted free of charge. Insofar as the terms of any agreement
prohibit the assignment or sublicense of Borrower's rights under such contract,
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Borrower shall use its best efforts to obtain a consent to such assignment,
conveyance or sublicense to Agent from the other parties to such contract.
8.11 WAIVERS; NON-EXCLUSIVE REMEDIES. No failure on the part of
Agent or any Lender to exercise, and no delay in exercising and no course of
dealing with respect to, any right under this Agreement or the other Loan
Documents shall operate as a waiver thereof; nor shall any single or partial
exercise by Agent or any Lender of any right under this Agreement or any other
Loan Document preclude any other or further exercise thereof or the exercise of
any other right. The rights in this Agreement and the other Loan Documents are
cumulative and shall in no way limit any other remedies provided by law.
SECTION 9.
AGENT
9.1 AGENT.
(A) APPOINTMENT. Each Lender hereto and, upon obtaining
an interest in any Loan, any participant, transferee or other assignee of any
Lender irrevocably appoints, designates and authorizes GE Canada Finance as
Agent to take such actions or refrain from taking such action as its agent on
its behalf and to exercise such powers hereunder and under the other Loan
Documents as are delegated by the terms hereof and thereof, together with such
powers as are reasonably incidental thereto. Neither the Agent nor any of its
directors, officers, employees or agents shall be liable for any action so
taken. The provisions of this SUBSECTION 9.1 are solely for the benefit of Agent
and Lenders and no Loan Party shall have any rights as a third party beneficiary
of any of the provisions hereof. In performing its functions and duties under
this Agreement and the other Loan Documents, Agent shall act solely as agent of
Lenders and does not assume and shall not be deemed to have assumed any
obligation toward or relationship of agency or trust with or for any Loan Party.
Agent may perform any of its duties hereunder, or under the Loan Documents, by
or through its agents or employees. For the purposes of holding any security
granted by any Loan Party pursuant to the laws of the Province of Quebec, Agent
shall be the holder of an irrevocable power of attorney for all present and
future Lenders. By executing an Assignment and Acceptance Agreement, any future
Lender shall be deemed to ratify the power of attorney granted to Agent
hereunder. Lenders and each Loan Party agree that notwithstanding Section 32 of
"the Act respecting the Special Powers of Legal Persons (Quebec)", Agent may, as
the person holding the power of attorney of Lenders, acquire any debentures or
other title of indebtedness secured by any hypothec granted by any Loan Party to
Agent pursuant to the laws of the Province of Quebec.
(B) NATURE OF DUTIES. Agent shall have no duties,
obligations or responsibilities except those expressly set forth in this
Agreement or in the Loan Documents. The duties of Agent shall be mechanical and
administrative in nature. Agent shall not have by reason of this Agreement a
fiduciary, trust or agency relationship with or in respect of any Lender or any
Loan Party. Nothing in this Agreement or any of the Loan Documents, express or
implied, is intended to or shall be construed to impose upon Agent any
obligations in respect of this Agreement or any of the Loan Documents except as
expressly set forth herein or therein. Each Lender shall make its own appraisal
of the credit worthiness of the Loan Parties, and shall
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have independently taken whatever steps it considers necessary to evaluate the
financial condition and affairs of the Loan Parties, and 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 thereto (other than
as expressly required herein), whether coming into its possession before the
Closing Date or at any time or times thereafter. If Agent seeks the consent or
approval of any Lenders to the taking or refraining from taking any action
hereunder, then Agent shall send notice thereof to each Lender. Agent shall
promptly notify each Lender any time that the Requisite Lenders have instructed
Agent to act or refrain from acting pursuant hereto.
(C) RIGHTS, EXCULPATION, ETC. Neither Agent nor any of
its officers, directors, employees or agents shall be liable to any Lender for
any action taken or omitted by them hereunder or under any of the Loan
Documents, or in connection herewith or therewith, except that Agent shall be
liable to the extent of its own gross negligence or willful misconduct as
determined by a court of competent jurisdiction. Agent shall not be liable for
any apportionment or distribution of payments made by it in good faith and if
any such apportionment or distribution is subsequently determined to have been
made in error, the sole recourse of any Lender to whom payment was due but not
made, shall be to recover from other Lenders any payment in excess of the amount
to which they are determined to be entitled (and such other Lenders hereby agree
to return to such Lender any such erroneous payments received by them). In
performing its functions and duties hereunder, Agent shall exercise the same
care which it would in dealing with loans for its own account, but neither Agent
nor any of its agents or representatives shall be responsible to any Lender for
any recitals, statements, representations or warranties herein or for the
execution, effectiveness, genuineness, validity, enforceability, collectibility,
or sufficiency of this Agreement or any of the Loan Documents or the
transactions contemplated thereby, or for the financial condition of any Loan
Party. Agent shall not be required to make any inquiry concerning either the
performance or observance of any of the terms, provisions or conditions of this
Agreement or any of the Loan Documents or the financial condition of any Loan
Party, or the existence or possible existence of any Default or Event of
Default. Agent may at any time request instructions from Lenders with respect to
any actions or approvals which by the terms of this Agreement or of any of the
Loan Documents Agent is permitted or required to take or to grant, and if such
instructions are promptly requested, Agent shall be absolutely entitled to
refrain from taking any action or to withhold any approval and shall not be
under any liability whatsoever to any Person for refraining from any action or
withholding any approval under any of the Loan Documents until it shall have
received such instructions from Requisite Lenders or all or such other portion
of the Lenders as shall be prescribed by this Agreement. Without limiting the
foregoing, no Lender shall have any right of action whatsoever against Agent as
a result of Agent acting or refraining from acting under this Agreement or any
of the other Loan Documents in accordance with the instructions of Requisite
Lenders in the absence of an express requirement for a greater percentage of
Lender approval hereunder for such action.
(D) RELIANCE. Agent shall be under no duty to examine,
inquire into, or pass upon the validity, effectiveness or genuineness of this
Agreement, any other Loan Document, or any instrument, document or communication
furnished pursuant hereto or in connection herewith. Agent shall be entitled to
rely, and shall be fully protected in relying, upon any written or oral notices,
statements, certificates, orders or other documents or any telephone message or
other communication (including any writing, fax, telecopy or telegram) believed
by it in good
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faith to be genuine, valid, effective and correct and to have been signed, sent
or made by the proper Person, and with respect to all matters pertaining to this
Agreement or any of the Loan Documents and its duties hereunder or thereunder.
Agent shall be entitled to rely upon the advice of legal counsel, independent
accountants, and other experts selected by Agent in its sole discretion.
(E) INDEMNIFICATION. Each Lender, in proportion to its
Pro Rata Share, severally and not jointly, agrees to reimburse and indemnify
Agent for and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses (including, without
limitation, legal fees and expenses), advances or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against
Agent in any way relating to or arising out of this Agreement or any of the Loan
Documents or any action taken or omitted by Agent under this Agreement or any of
the Loan Documents, in proportion to each Lender's Pro Rata Share, but only to
the extent that any of the foregoing is not promptly reimbursed by Borrower;
PROVIDED, HOWEVER, no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses, advances or disbursements resulting from Agent's gross
negligence or willful misconduct as determined by a final non-appealable
judgment by a court of competent jurisdiction. If any indemnity furnished to
Agent for any purpose shall, in the opinion of Agent, be insufficient or become
impaired, Agent may call for additional indemnity and cease, or not commence, to
do the acts indemnified against, even if so directed by Lenders or Requisite
Lenders, until such additional indemnity is furnished. The obligations of
Lenders under this SUBSECTION 9.1(E) shall survive the payment in full of the
Obligations and the termination of this Agreement.
(F) GE CANADA FINANCE INDIVIDUALLY. With respect to its
Commitments and the Loans made by it, GE Canada Finance shall have and may
exercise the same rights and powers hereunder and is subject to the same
obligations and liabilities as and to the extent set forth herein for any other
Lender. The terms "Lenders" or "Requisite Lenders" or any similar terms shall,
unless the context clearly otherwise indicates, include GE Canada Finance in its
individual capacity as a Lender or one of the Requisite Lenders. GE Canada
Finance, either directly or through strategic affiliations, may lend money to,
acquire equity or other ownership interests in, provide advisory services to and
generally engage in any kind of banking, trust or other business with any Loan
Party as if it were not acting as Agent pursuant hereto and without any duty to
account therefor to Lenders. GE Canada Finance, either directly or through
strategic affiliations, may accept fees and other consideration from any Loan
Party for services in connection with this Agreement or otherwise without having
to account for the same to Lenders. Each Lender acknowledges that GE Capital, of
which GE Canada Finance is a Subsidiary, is the US Facility Agent and a US
Facility Lender and has purchased certain equity interests in, and subordinated
indebtedness of, Holdings and the potential conflict of interest of GE Canada
Finance as Agent and as a Lender, and GE Capital, as the US Facility Agent, a US
Facility Lender and a holder of an equity interest in, and subordinated
indebtedness of, Holdings and consents thereto.
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(G) SUCCESSOR AGENT.
(1) RESIGNATION. Agent may resign from the
performance of all its agency functions and duties hereunder at any time by
giving at least thirty (30) Business Days' prior written notice to Borrower and
the Lenders. Such resignation shall take effect upon the acceptance by a
successor Agent of appointment as provided below.
(2) APPOINTMENT OF SUCCESSOR. Upon any such
notice of resignation pursuant to clause (G)(1) above, Requisite Lenders shall
appoint a successor Agent which, unless an Event of Default has occurred and is
continuing, shall be reasonably acceptable to Borrower. If a successor Agent
shall not have been so appointed within said thirty (30) Business Day period,
the retiring Agent, upon notice to Borrower, shall then appoint a successor
Agent who shall serve as Agent until such time, if any, as Requisite Lenders
appoint a successor Agent as provided above.
(3) SUCCESSOR AGENT. Upon the acceptance of any
appointment as Agent under the Loan Documents by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations under the Loan
Documents. After any retiring Agent's resignation as Agent, the provisions of
this SECTION 9 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Agent.
(H) COLLATERAL MATTERS.
(1) RELEASE OF COLLATERAL. Lenders hereby
irrevocably authorize Agent, at its option and in its discretion, to release any
Lien granted to or held by Agent upon any Collateral (i) upon termination of the
Revolving Loan Commitment and upon payment and satisfaction of all Obligations
(other than contingent indemnification obligations to the extent no claims
giving rise thereto have been asserted); or (ii) constituting property being
sold or disposed of if Borrower certifies to Agent that the sale or disposition
is made in compliance with the provisions of this Agreement (and Agent may rely
in good faith conclusively on any such certificate, without further inquiry). In
addition, with the consent of Requisite Lenders, Agent may release Liens granted
to or held by Agent upon any Collateral having a book value of not greater than
ten percent (10%) of the total book value of all Collateral, as determined by
Agent, either in a single transaction or in a series of related transactions;
PROVIDED, HOWEVER, in no event will Agent, acting under the authority granted to
it pursuant to this sentence, release during any calendar year Liens granted to
or held by Agent upon any Collateral having a total book value in excess of
twenty percent (20%) of the total book value of all Collateral, as determined by
Agent.
(2) CONFIRMATION OF AUTHORITY; EXECUTION OF
RELEASES. Without in any manner limiting Agent's authority to act without any
specific or further authorization or consent by Lenders (as set forth in
SUBSECTION 9.1(H)(1) above), each Lender agrees to confirm in writing, upon
request by Agent or Borrower, the authority to release any Collateral conferred
upon Agent under clauses (i) and (ii) of SUBSECTION 9.1(H)(1). Upon receipt by
Agent of confirmation from the requisite percentage of Lenders (as set forth in
SUBSECTION 9.1(H)(1) above), if any, of Agent's authority to release any Liens
upon any Collateral, and upon at least ten (10) Business Days prior
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written request by Borrower, Agent shall, and is hereby irrevocably authorized
by Lenders to, execute such documents as may be necessary to evidence the
release of the Liens granted to Agent, for the benefit of Agent and Lenders,
upon such Collateral; PROVIDED, HOWEVER, that (i) Agent shall not be required to
execute any such document on terms which, in Agent's opinion, would expose Agent
to liability or create any obligation or entail any consequence other than the
release of such Liens without recourse or warranty, and (ii) such release shall
not in any manner discharge, affect or impair the Obligations or any Liens
granted to Agent on behalf of Agent and Lenders upon (or obligations of any Loan
Party, in respect of) all interests retained by any Loan Party, including,
without limitation, the proceeds of any sale, all of which shall continue to
constitute part of the property covered by this Agreement or the Loan Documents.
(3) ABSENCE OF DUTY. Agent shall have no
obligation whatsoever to any Lender or any other Person to assure that the
property covered by this Agreement or the Loan Documents exists or is owned by
any Loan Party or is cared for, protected or insured or has been encumbered or
that the Liens granted to Agent on behalf of Agent and Lenders herein or
pursuant hereto have been properly or sufficiently or lawfully created,
perfected, protected or enforced or are entitled to any particular priority, or
to exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to Agent in this Agreement or in any
of the other Loan Documents, it being understood and agreed that in respect of
the property covered by this Agreement or the other Loan Documents or any act,
omission or event related thereto, Agent may act in any manner it may deem
appropriate, in its discretion, given Agent's own interest in property covered
by this Agreement or the other Loan Documents as one of the Lenders and that
Agent shall have no duty or liability whatsoever to any of the other Lenders;
PROVIDED, HOWEVER, that Agent shall exercise the same care which it would in
dealing with loans for its own account.
(I) AGENCY FOR PERFECTION. Agent and each Lender hereby
appoint each other Lender as agent for the purpose of perfecting Agent's
security interest in assets which, in accordance with applicable law in any
applicable jurisdiction, can be perfected only by possession. Should any Lender
(other than Agent) obtain possession of any such assets, such Lender shall
notify Agent thereof, and, promptly upon Agent's request therefor, shall deliver
such assets to Agent or in accordance with Agent's instructions. Agent may file
such proofs of claim or documents as may be necessary or advisable in order to
have the claims of Agent and Lenders (including any claim for the reasonable
compensation, expenses, disbursements and advances of Agent and Lenders, their
respective agents, financial advisors and counsel), allowed in any judicial
proceedings relative to any of the Loan Parties, or any of their respective
creditors or property, and shall be entitled and empowered to collect, receive
and distribute any monies, securities or other property payable or deliverable
on any such claims. Any custodian in any judicial proceedings relative to any
Loan Party is hereby authorized by each Lender to make payments to Agent and, in
the event that Agent shall consent to the making of such payments directly to
Lenders, to pay to Agent any amount due for the reasonable compensation,
expenses, disbursements and advances of Agent, its agents, financial advisors
and legal counsel, and any other amounts due Agent. Nothing contained in this
Agreement or the other Loan Documents shall be deemed to authorize Agent to
authorize or consent to or accept or adopt on behalf of any Lender any plan of
reorganization, arrangement, adjustment or composition affecting the Loans,
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or the rights of any holder thereof, or to authorize Agent to vote in respect of
the claim of any Lender in any such proceeding, except as specifically permitted
herein.
(J) EXERCISE OF REMEDIES. Each Lender agrees that it will
not have any right individually to enforce or seek to enforce this Agreement or
any Loan Document or to realize upon any collateral security for the Loans,
unless instructed to do so by Agent, it being understood and agreed that such
rights and remedies may be exercised only by Agent.
9.2 NOTICE OF DEFAULT. Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default except with
respect to defaults in the payment of principal, interest and fees required to
be paid to Agent for the account of Lenders, unless Agent shall have received
written notice from a Lender or Borrower referring to this Agreement, describing
such Default or Event of Default and stating that such notice is a "notice of
default". Agent will notify each Lender of its receipt of any such notice.
9.3 ACTION BY AGENT. Agent shall take such action with respect to
any Default or Event of Default as may be requested by Requisite Lenders in
accordance with SECTION 8. Unless and until Agent has received any such request,
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to any Default or Event of Default as it shall
deem advisable or in the best interests of Lenders.
9.4 AMENDMENTS, WAIVERS AND CONSENTS.
(A) PERCENTAGE OF LENDERS REQUIRED. Except as otherwise
provided herein or in any of the other Loan Documents, no amendment,
modification, termination or waiver of any provision of this Agreement or any
other Loan Document, or consent to any departure by any Loan Party therefrom,
shall in any event be effective unless the same shall be in writing and signed
by Requisite Lenders (or, Agent, if expressly set forth herein or in any of the
other Loan Documents) and the applicable Loan Party; PROVIDED HOWEVER, no
amendment, modification, termination, waiver or consent shall be effective,
unless in writing and signed by all Lenders (excluding Defaulting Lenders) and
all US Facility Lenders (excluding "Defaulting Lenders", as such term is defined
in the US Facility Loan Agreement): (i) increase the Revolving Loan Commitment
or any Lender's Pro Rata Share of the Revolving Loan Commitment; (ii) reduce the
principal of or the rate of interest on any Loan or reduce the fees payable with
respect to any Loan; (iii) extend the Termination Date or the scheduled due date
for all or any portion of principal of the Loans or any interest or fees due
hereunder; (iv) amend the definitions of the term "Requisite Lenders" or the
percentage of Lenders which shall be required for Lenders to take any action
hereunder; (v) amend or waive this SUBSECTION 9.4 or the definitions of the
terms used in this SUBSECTION 9.4 insofar as the definitions affect the
substance of this SUBSECTION 9.4; (vi) increase the percentages contained in the
definition of Canadian Borrowing Base (or in the definition of Consolidating
Borrowing Base under the US Facility Loan Agreement) or amend the definitions of
the terms "Canadian Borrowing Base", "Consolidated Borrowing Base" or
"Consolidating Borrowing Base" (as defined under the US Facility Loan Agreement)
or the definitions of the terms used therein insofar as those terms affect the
substance of such terms; (vii) amend PARAGRAPH A of the Financial Covenants
Rider or the definitions of the terms used therein insofar as the definitions
affect the substance of such PARAGRAPH (A); (viii) release
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Collateral (except if the sale, disposition or release of such Collateral is
permitted under SUBSECTION 7.3 or SUBSECTION 9.1 or under any other Loan
Document); or (ix) amend the terms "Obligations" or the definitions of the terms
used therein insofar as those definitions affect the substance of such term; or
(x) consent to the assignment, delegation or other transfer by any Loan Party of
any of its rights and obligations under any Loan Document; PROVIDED, FURTHER,
that no amendment, modification, termination, waiver or consent affecting the
rights or duties of Agent under this SECTION 9 or under any Loan Document shall
in any event be effective, unless in writing and signed by Agent, in addition to
Lenders and other Persons (if any) required to take such action. Any amendment,
modification, termination, waiver or consent effected in accordance with this
SECTION 9 shall be binding upon each Lender or future Lender and, if signed by a
Loan Party, on such Loan Party.
(B) SPECIFIC PURPOSE OR INTENT. Each amendment,
modification, termination, waiver or consent shall be effective only in the
specific instance and for the specific purpose for which it was given. No
amendment, modification, termination, waiver or consent shall be required for
Agent to take additional Collateral.
(C) FAILURE TO GIVE CONSENT; REPLACEMENT OF
NON-CONSENTING LENDER. In the event Agent requests the consent of a Lender and
does not receive a written consent or denial thereof within ten (10) Business
Days after such Lender's receipt of such request, then such Lender will be
deemed to have denied the giving of such consent. If, in connection with any
proposed amendment, modification, termination or waiver of any of the provisions
of this Agreement requiring the consent or approval of all Lenders under this
SUBSECTION 9.4, the consent of Requisite Lenders is obtained but the consent of
one or more other Lenders whose consent is required is not obtained, then
Borrower shall have the right, so long as all such non-consenting Lenders are
either replaced or prepaid as described in clauses (A) or (B) below, to either
(A) replace the non-consenting Lenders with one or more Replacement Lenders
pursuant to SUBSECTION 2.12(A), as if such Lender were an Affected Lender
thereunder, but only so long as each such Replacement Lender consents to the
proposed amendment, modification, termination or waiver, or (B) prepay in full
the Obligations of the non-consenting Lenders and terminate the non-consenting
Lenders' Commitments pursuant to SUBSECTION 2.12(B), as if such Lender were an
Affected Lender thereunder.
Notwithstanding anything in this SUBSECTION 9.4, Agent and
Borrower, without the consent of either Requisite Lenders or all Lenders, may
execute amendments to this Agreement and the Loan Documents, which consist
solely of the making of typographical corrections.
9.5 ASSIGNMENTS AND PARTICIPATIONS IN LOANS.
(A) ASSIGNMENTS. Each Lender may assign its rights and
delegate its obligations under this Agreement to an Eligible Assignee; PROVIDED,
HOWEVER, (1) such Lender (other than GE Canada Finance) shall first obtain the
written consent of Agent and Borrower, which consent, in either case, shall not
be unreasonably withheld; provided, that such consent of Borrower shall not be
required at any time that an Event of Default exists), (2) the Pro Rata Share of
the Revolving Loan Commitment being assigned shall in no event be less than the
lesser of (a) C$7,500,000, or (b) the entire amount of the Pro Rata Share of the
Revolving Loan Commitment
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of the assigning Lender, (3) (a) the parties to such assignment shall execute
and deliver to Agent for acceptance and recording a Assignment and Acceptance
Agreement together with (i) a processing and recording fee of US$3,500 or the
Equivalent Amount thereof payable by the assigning Lender to Agent and (ii) each
of the Notes originally delivered to the assigning Lender, and (4) if such
assignee is a non-resident of Canada for the purpose of the ITA (and, for
greater certainty, a Person who is deemed to be resident in Canada for the
purpose of the ITA or is deemed by subsection 212 (13.3) of the ITA to be
resident in Canada in respect of any amounts paid or credited under this
Agreement is not such a non-resident of Canada), then, notwithstanding
SUBSECTION 2.10, prior to the occurrence of an Event of Default that is
continuing, Borrower shall not be obligated to gross-up payments of interest and
fees payable hereunder to such assignee by the amounts of Canadian withholding
tax that may be exigible on such interest or fees as a result of the assignee
being a non-resident of Canada for the purpose of the ITA. The administrative
fee referred to in clause (3) of the preceding sentence shall not apply to an
assignment of a security interest in all or any portion of a Lender's rights
under this Agreement or the other Loan Documents, as described in PARAGRAPH
(D)(1) below. Upon receipt of all of the foregoing, Agent shall notify Borrower
of such assignment and Borrower shall comply with its obligations under the last
sentence of SUBSECTION 2.1(D). In the case of an assignment authorized under
this SUBSECTION 9.5, the assignee shall be considered to be a "Lender" hereunder
and Borrower hereby acknowledges and agrees that any assignment will give rise
to a direct obligation of the Borrower to the assignee. The assigning Lender
shall be relieved of its obligations to make Loans hereunder with respect to its
Pro Rata Share of the Revolving Loan Commitment or assigned portion thereof.
(B) PARTICIPATIONS. Each Lender may sell participations
in all or any part of its Pro Rata Share of the Revolving Loan Commitment made
by it to another Person; PROVIDED, HOWEVER, such Lender shall first obtain the
prior written consent of Agent, which consent shall not be unreasonably
withheld, and any such participation shall be in a minimum amount of
C$5,000,000. All amounts payable by Borrower hereunder shall be determined as if
that Lender had not sold such participation and the holder of any such
participation shall not be entitled to require such Lender to take or omit to
take any action hereunder except action directly effecting (1) any reduction in
the principal amount or an interest rate on any Loan in which such holder
participates; (2) any extension of the Termination Date or the date fixed for
any payment of interest or principal payable with respect to any Loan in which
such holder participates; and (3) any release of substantially all of the
Collateral. Borrower hereby acknowledges and agrees that the participant under
each participation shall for purposes of SUBSECTIONS 2.9, 2.10, 9.6 and 10.2 be
considered to be a "Lender"; provided, that no such participant shall be
entitled to receive any greater amount pursuant to such subsections from the
participating Lender would have been entitled to receive in respect of the
portion of such Revolving Loan or Revolving Loan Commitment in which such
participation was sold.
(C) NO RELIEF OF OBLIGATIONS; COOPERATION; ABILITY TO
MAKE BA RATE LOANS. Except as otherwise provided in SUBSECTION 9.5(A) no Lender
shall, as between Borrower and that Lender, be relieved of any of its
obligations hereunder as a result of any sale, assignment, transfer or
negotiation of, or granting of participation in, all or any part of the Loans or
other Obligations owed to such Lender. Each Lender may furnish any information
concerning the Loan Parties in the possession of that Lender from time to time
to Eligible Assignees and
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participants (including prospective assignees and participants), subject to the
provisions of SUBSECTION 10.20. Borrower agrees that it will use its diligent
efforts to assist and cooperate with Agent and any Lender in any manner
reasonably requested by Agent or such Lender to effect the sale of a
participation or an assignment described above, including, without limitation,
assistance in the preparation of appropriate disclosure documents or placement
memoranda. Notwithstanding anything contained in this Agreement to the contrary,
so long as the Requisite Lenders shall remain capable of making BA Rate Loans,
no Person shall become a Lender hereunder unless such Person shall also be
capable of making BA Rate Loans.
(D) SECURITY INTERESTS; ASSIGNMENT TO AFFILIATES.
Notwithstanding any other provision set forth in this Agreement, any Lender may
at any time following written notice to Agent (1) pledge the Obligations held by
it or create a security interest in all or any portion of its rights under this
Agreement or the other Loan Documents in favour of any Person; PROVIDED, HOWEVER
(a) no such pledge or grant of security interest to any Person shall release
such Lender from its obligations hereunder or under any other Loan Document and
(b) the acquisition of title to such Lender's Obligations pursuant to any
foreclosure or other exercise of remedies by such Person shall be subject to the
provisions of this Agreement and the other Loan Documents in all respects
including, without limitation, any consent required by SUBSECTION 9.5; and (2)
subject to complying with the provisions of SUBSECTION 9.5(A), assign all or any
portion of its funded loans to an Eligible Assignee which is a Subsidiary of
such Lender or its parent company, to one or more other Lenders, or to a Related
Fund. For purposes of this paragraph, a "Related Fund" shall mean, with respect
to any Lender, a fund or other investment vehicle that invests in commercial
loans and is managed by such Lender or by the same investment advisor that
manages such Lender or by an Affiliate of such investment advisor.
(E) RECORDING OF ASSIGNMENTS. Agent shall maintain at its
office in Toronto,
Ontario a copy of each Assignment and Acceptance Agreement
delivered to it and a register for the recordation of the names and addresses of
Lenders, and the commitments of, and principal amount of the Loans owing to each
Lender pursuant to the terms hereof from time to time (the "Register"). The
entries in the Register shall be presumptive evidence of the amounts due and
owing to Lenders in the absence of manifest error. Borrower, Agent and each
Lender may treat each Person whose name is recorded in the Register pursuant to
the terms hereof as a Lender hereunder for all purposes of this Agreement. The
Register shall be available for inspection by Borrower and any Lender, at any
reasonable time upon reasonable prior notice.
9.6 SET OFF AND SHARING OF PAYMENTS. In addition to any rights now
or hereafter granted under applicable law and not by way of limitation of any
such rights, upon the occurrence and during the continuance of any Event of
Default, each Lender is hereby authorized by Borrower at any time or from time
to time, with reasonably prompt subsequent notice to Borrower (any prior or
contemporaneous notice being hereby expressly waived) to set off and to
appropriate and to apply any and all (a) balances held by such Lender at any of
its offices for the account of Borrower or any of its Subsidiaries (regardless
of whether such balances are then due to Borrower or its Subsidiaries), and (b)
other property at any time held or owing by such Lender to or for the credit or
for the account of Borrower or any of its Subsidiaries, against and on account
of any of the Obligations; except that no Lender shall exercise any such right
without the prior written consent of Agent. Any Lender exercising its right to
set off shall purchase for cash
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(and the other Lenders shall sell) interests in each of such other Lender's Pro
Rata Share of the Obligations as would be necessary to cause all Lenders to
share the amount so set off with each other Lender in accordance with their
respective Pro Rata Shares. Borrower agrees, to the fullest extent permitted by
law, that any Lender may exercise its right to set off with respect to amounts
in excess of its Pro Rata Share of the Obligations and upon doing so shall
deliver such amount so set off to Agent for the benefit of Agent and all Lenders
in accordance with their Pro Rata Shares.
9.7 DISBURSEMENT OF FUNDS. Agent may, on behalf of Lenders,
disburse funds to Borrower for Loans requested. Each Lender shall reimburse
Agent on demand for all funds disbursed on its behalf by Agent, or if Agent so
requests, each Lender will remit to Agent its Pro Rata Share of any Loan or
Revolving Advance before Agent disburses same to Borrower. If Agent elects to
require that each Lender make funds available to Agent prior to a disbursement
by Agent to Borrower, Agent shall advise each Lender by telephone, telex, fax or
telecopy of the amount of such Lender's Pro Rata Share of the Loan requested by
Borrower no later than 1:00 p.m. Toronto time on the Funding Date applicable
thereto, and each such Lender shall pay Agent such Lender's Pro Rata Share of
such requested Loan, in same day funds, by wire transfer to Agent's Account on
such Funding Date. If any Lender fails to pay the amount of its Pro Rata Share
within one (1) Business Day after Agent's demand, Agent shall promptly notify
Borrower, and Borrower shall immediately repay such amount to Agent. Any
repayment required pursuant to this SUBSECTION 9.7 shall be without premium or
penalty. Nothing in this SUBSECTION 9.7 or elsewhere in this Agreement or the
other Loan Documents, including without limitation the provisions of SUBSECTION
9.8, shall be deemed to require Agent to advance funds on behalf of any Lender
or to relieve any Lender from its obligation to fulfill its commitments
hereunder or to prejudice any rights that Agent or Borrower may have against any
Lender as a result of any default by such Lender hereunder.
9.8 SETTLEMENTS, PAYMENTS AND INFORMATION.
(A) REVOLVING ADVANCES AND PAYMENTS; FEE PAYMENTS.
(1) FLUCTUATION OF REVOLVING LOAN BALANCE. The
Revolving Loan balance may fluctuate from day to day through Agent's
disbursement of funds to, and receipt of funds from, Borrower. In order to
minimize the frequency of transfers of funds between Agent and each Lender
notwithstanding terms to the contrary set forth in SECTION 2 and SUBSECTION 9.7,
Revolving Advances and repayments will be settled according to the procedures
described in this SUBSECTION 9.8. Notwithstanding these procedures, each
Lender's obligation to fund its portion of any advances made by Agent to
Borrower will commence on the date such advances are made by Agent. Such
payments will be made by such Lender without set-off, counterclaim or reduction
of any kind.
(2) SETTLEMENT DATES. Once each week for the
Revolving Loan or more frequently (including daily), if Agent so elects (each
such day being a "Settlement Date"), Agent will advise each Lender by telephone,
fax or telecopy of the amount of each such Lender's Pro Rata Share of the
Revolving Loan. In the event payments are necessary to adjust the amount of such
Lender's required Pro Rata Share of the Revolving Loan balance to such Lender's
actual
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Pro Rata Share of the Revolving Loan balance as of any Settlement Date, the
party from which such payment is due will pay the other, in same day funds, by
wire transfer to the other's account not later than 3:00 p.m. Toronto time on
the Business Day following the Settlement Date.
(3) SETTLEMENT DEFINITIONS. For purposes of this
SUBSECTION 9.8(A), the following terms and conditions will have the meanings
indicated:
(a) "Daily Loan Balance" means an
amount calculated as of the end of each calendar day by subtracting (i)
the cumulative principal amount paid by Agent to a Lender on a Loan
from the Closing Date through and including such calendar day, from
(ii) the cumulative principal amount on a Loan advanced by such Lender
to Agent on that Loan from the Closing Date through and including such
calendar day.
(b) "Daily Interest Rate" means an
amount calculated by dividing the interest rate payable to a Lender on
a Loan (as set forth in SUBSECTION 2.2) as of each calendar day by
three hundred sixty (360).
(c) "Daily Interest Amount" means an
amount calculated by multiplying the Daily Loan Balance of a Loan by
the associated Daily Interest Rate on that Loan.
(d) "Interest Ratio" means a number
calculated by dividing the total amount of the interest on a Loan
received by Agent with respect to the immediately preceding month by
the total amount of interest on that Loan due from Borrower during the
immediately preceding month.
(4) SETTLEMENT PAYMENTS. On the first Business
Day of each month ("Interest Settlement Date"), Agent will advise each Lender by
telephone, fax or telecopy of the amount of such Lender's share of interest and
fees on each of the Loans as of the end of the last day of the immediately
preceding month. Provided that such Lender has made all payments required to be
made by it under this Agreement, Agent will pay to such Lender, by wire transfer
to such Lender's account (as specified by such Lender on the signature page of
this Agreement or the applicable Assignment and Acceptance Agreement, as amended
by such Lender from time to time after the date hereof or in the applicable
Assignment and Acceptance Agreement) not later than 3:00 p.m. Toronto time on
the next Business Day following the Interest Settlement Date, such Lender's
share of interest and fees on each of the Loans. Such Lender's share of interest
on each Loan will be calculated for that Loan by adding together the Daily
Interest Amounts for each calendar day of the prior month for that Loan and
multiplying the total thereof by the Interest Ratio for that Loan. Such Lender's
share of the Unused Line Fee described in SUBSECTION 2.3(A) shall be an amount
equal to (a)(i) such Lender's average Revolving Loan Commitment during such
month, LESS such Lender's average Daily Loan Balance of the Revolving Loan for
the preceding month, MULTIPLIED by (b) the percentage required by SUBSECTION
2.3(A). Such Lender's share of all other fees paid to Agent for the benefit of
Lenders hereunder shall be paid and calculated based on such Lender's Commitment
with respect to the Loans on which such fees are associated. To the extent Agent
does not receive the total amount of any fee owing by Borrower under this
Agreement, each amount payable by Agent to a Lender under this SUBSECTION
9.8(A)(4)
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with respect to such fee shall be reduced on a pro rata basis. Any funds
disbursed or received by Agent pursuant to this Agreement, including, without
limitation, under SUBSECTIONS 9.7, 9.8(A)(1), and 9.9, prior to the Settlement
Date for such disbursement or payment shall be deemed advances or remittances by
GE Canada Finance, in its capacity as a Lender, for purposes of calculating
interest and fees pursuant to this SUBSECTION 9.8(A)(4).
(B) RETURN OF PAYMENTS.
(1) RECOVERY AFTER NON-RECEIPT OF EXPECTED
PAYMENT. If Agent pays an amount to a Lender under this Agreement in the belief
or expectation that a related payment has been or will be received by Agent from
Borrower and such related payment is not received by Agent, then Agent will be
entitled to recover such amount from such Lender without set-off, counterclaim
or deduction of any kind together with interest thereon, for each day from and
including the date such amount is made available by Agent to such Lender to but
excluding the date of repayment to Agent, at the greater of the Bank Rate and a
rate determined by Agent in accordance with banking industry rules on interbank
compensation.
(2) RECOVERY OF RETURNED PAYMENT. If Agent
determines at any time that any amount received by Agent under this Agreement
must be returned to Borrower or paid to any other Person pursuant to any
requirement of law, court order or otherwise, then, notwithstanding any other
term or condition of this Agreement, Agent will not be required to distribute
any portion thereof to any Lender. In addition, each Lender will repay to Agent
on demand any portion of such amount that Agent has distributed to such Lender,
together with interest at such rate, if any, as Agent is required to pay to
Borrower or such other Person, without set-off, counterclaim or deduction of any
kind.
9.9 DISCRETIONARY ADVANCES. Notwithstanding anything contained
herein to the contrary, Agent may, in its sole discretion make Revolving
Advances in an aggregate amount of not more than C$1,000,000 in excess of the
limitations set forth in the Canadian Borrowing Base for the purpose of
preserving or protecting the Collateral or the value thereof or for incurring
any costs associated with collection or enforcing rights or remedies against the
Collateral, or incurred in any action to enforce this Agreement or any other
Loan Document (such Revolving Advances, "Discretionary Advances"); PROVIDED,
that Agent shall not make additional Discretionary Advances at any time when the
Revolving Loan has exceeded the limitations set forth in the Consolidated
Borrowing Base for more than sixty (60) consecutive days (and, for the purposes
of this SECTION 9.9, the US Dollar amount of the Consolidated Borrowing Base
shall be converted into the Equivalent Amount in Canadian Dollars).
SECTION 10.
MISCELLANEOUS
10.1 EXPENSES AND LEGAL FEES. Whether or not the transactions
contemplated hereby shall be consummated, Borrower agrees to promptly pay all
reasonable fees, costs and expenses incurred in connection with any matters
contemplated by or arising out of this Agreement or the other Loan Documents
including the following, and all such fees, costs and expenses shall be part of
the Obligations, payable on demand and secured by the Collateral: (a) fees,
costs and
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expenses incurred by Agent (including legal fees and expenses, the allocated
costs of Agent's internal legal staff and fees of environmental consultants,
accountants and other professionals retained by Agent) incurred in connection
with the examination, review, due diligence investigation, documentation and
closing of the financing arrangements evidenced by the Loan Documents; (b) fees,
costs and expenses incurred by Agent (including legal fees and expenses, the
allocated costs of Agent's internal legal staff and fees of environmental
consultants, accountants and other professionals retained by Agent) incurred in
connection with the review, negotiation, preparation, documentation, execution,
syndication and administration of the Loan Documents, the Loans, and any
amendments, waivers, consents, forbearances and other modifications relating
thereto or any subordination or intercreditor agreements, including reasonable
documentation charges assessed by Agent for amendments, waivers, consents and
any other documentation prepared by Agent's internal legal staff; (c) fees,
costs and expenses (including legal fees and allocated costs of internal legal
staff) incurred by Agent or any Lender in creating, perfecting and maintaining
perfection of Liens in favour of Agent, on behalf of Agent and Lenders; (d)
fees, costs and expenses incurred by Agent in connection with forwarding to
Borrower the proceeds of Loans including Agent's or any Lenders' standard wire
transfer fee; (e) fees, costs, expenses and bank charges, including bank charges
for returned cheques, incurred by Agent or any Lender in establishing,
maintaining and handling lock box accounts, blocked accounts or other accounts
for collection of the Collateral; (f) fees, costs and expenses (including legal
fees and allocated costs of internal legal staff) of Agent or any Lender and
costs of settlement incurred in collecting upon or enforcing rights against the
Collateral or incurred in any action to enforce this Agreement or any of the
other Loan Documents or to collect any payments due from Borrower or any other
Loan Party under this Agreement or any other Loan Document or incurred in
connection with any refinancing or restructuring of the credit arrangements
provided under this Agreement, whether in the nature of a "workout" or in
connection with any insolvency or bankruptcy proceedings or otherwise.
10.2 INDEMNITY. In addition to the payment of expenses pursuant to
SUBSECTION 10.1, whether or not the transactions contemplated hereby shall be
consummated, Borrower agrees to indemnify, pay and hold Agent and each Lender,
and the officers, directors, employees, agents, consultants, auditors, persons
engaged by Agent or any Lender to evaluate or monitor the Collateral, affiliates
and legal counsel of Agent, Lender and such holders (collectively called the
"Indemnitees") harmless from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, claims, costs, expenses
and disbursements of any kind or nature whatsoever (including the fees and
disbursements of legal counsel for such Indemnitees in connection with any
investigative, administrative or judicial proceeding commenced or threatened,
whether or not such Indemnitee shall be designated a party thereto) that may be
imposed on, incurred by, or asserted against that Indemnitee, in any manner
relating to or arising out of this Agreement or any of the other Loan Documents,
the consummation of the transactions contemplated by this Agreement, the
statements contained in the commitment letters, if any, delivered by Agent or
any Lender, Agent's and each Lender's agreement to make the Loans hereunder, the
use or intended use of the proceeds of any of the Loans or the exercise of any
right or remedy hereunder or under the other Loan Documents (the "Indemnified
Liabilities"); PROVIDED, that Borrower shall have no obligation to an Indemnitee
hereunder with respect to Indemnified Liabilities arising from the gross
negligence or willful misconduct of that
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Indemnitee as determined by a final non-appealable judgment by a court of
competent jurisdiction.
10.3 NOTICES. Unless otherwise specifically provided herein, all
notices shall be in writing addressed to the respective party as set forth below
and may be personally served, faxed, telecopied or sent by overnight courier
service or United States mail (in the case where the sender's notice address is
in the United States of America) or Canadian mail (in the case where the
sender's notice address is in Canada) and shall be deemed to have been given:
(a) if delivered in person, when delivered; (b) if delivered by fax or telecopy,
on the date of transmission if transmitted on a Business Day before 4:00 p.m.
Toronto time or, if not, on the next succeeding Business Day; (c) if delivered
by overnight courier, two (2) days after delivery to such courier properly
addressed; or (d) if by mail, four (4) Business Days after deposit, with postage
prepaid and properly addressed.
If to Borrower: Beacon Roofing Supply Canada Company
▇▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attn: ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
Fax/Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to any Loan Party: Beacon Sales Acquisition, Inc.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇
Fax/Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Code ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ III, L.P.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax/Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Agent or to GE: GE CANADA FINANCE HOLDING COMPANY
Finance: ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attn: Account Manager - Corporate
Finance-Beacon
Fax/Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: GENERAL ELECTRIC CORPORATION
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
ATTN: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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With a copy to: GENERAL ELECTRIC CAPITAL CORPORATION
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
ATTN: Corporate Counsel -
Global Sponsor Finance
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and
GENERAL ELECTRIC CAPITAL CORPORATION
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
ATTN: Corporate Counsel -
Global Sponsor Finance
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to any Lender: Its address indicated on the signature page
hereto, in an Assignment and Acceptance
Agreement or in a notice to Agent and
Borrower or to such other address as the
party addressed shall have previously
designated by written notice to the serving
party, given in accordance with this
SUBSECTION 10.3.
10.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND CERTAIN
AGREEMENTS. All agreements, representations and warranties made herein shall
survive the execution and delivery of this Agreement and the making of the Loans
hereunder. Notwithstanding anything in this Agreement or implied by law to the
contrary, the agreements of Borrower, Agent and Lenders set forth in SUBSECTIONS
10.1, 10.2, 10.6, 10.11, 10.14 and 10.15 (Borrower's agreement to pay fees,
costs and expenses, Borrower's agreement to indemnify Indemnitees, the
reinstatement of Obligations, Liens, rights and remedies, the parties' agreement
as to choice of law and submission to jurisdiction, and Borrower's and Lenders'
waiver of a jury trial) shall survive the payment of the Loans and the
termination of this Agreement.
10.5 INDULGENCE NOT WAIVER. No failure or delay on the part of
Agent, any Lender or any holder of any Note in the exercise of any power, right
or privilege hereunder or under any Note shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence therein,
nor shall any single or partial exercise of any such power, right or privilege
preclude other or further exercise thereof or of any other right, power or
privilege.
10.6 MARSHALING; PAYMENTS SET ASIDE. Neither Agent nor any Lender
shall be under any obligation to marshal any assets in payment of any or all of
the Obligations. To the extent that any Loan Party makes a payment or payments
to Agent and/or any Lender or Agent and/or any Lender enforces its security
interests or exercises its rights of setoff, and such payment or
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payments or the proceeds of such enforcement or setoff or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to a trustee, receiver or any other party under any
bankruptcy, insolvency or reorganization law, state, provincial or federal law,
common law or equitable cause, then to the extent of such recovery, the
Obligations or part thereof originally intended to be satisfied, and all Liens,
rights and remedies therefor, shall be revived and continued in full force and
effect as if such payment had not been made or such enforcement or setoff had
not occurred.
10.7 ENTIRE AGREEMENT. This Agreement and the other Loan Documents
embody the entire agreement among the parties hereto and supersede all prior
commitments, agreements, representations, and understandings, whether written or
oral, relating to the subject matter hereof, and may not be contradicted or
varied by evidence of prior, contemporaneous, or subsequent oral agreements or
discussions of the parties hereto.
10.8 SEVERABILITY. The invalidity, illegality or unenforceability
in any jurisdiction of any provision in or obligation under this Agreement or
the other Loan Documents shall not affect or impair the validity, legality or
enforceability of the remaining provisions or obligations under this Agreement
or any of the other Loan Documents.
10.9 LENDERS' OBLIGATIONS SEVERAL; INDEPENDENT NATURE OF LENDERS'
RIGHTS. The obligation of each Lender hereunder is several and not joint and
neither Agent nor any Lender shall be responsible for the obligation or
Commitment of any other Lender hereunder. In the event that any Lender at any
time should fail to make a Loan as herein provided, the Lenders, or any of them,
at their sole option, may make the Loan that was to have been made by the Lender
so failing to make such Loan. Nothing contained in any Loan Document and no
action taken by Agent or any Lender pursuant hereto or thereto shall be deemed
to constitute Lenders to be a partnership, an association, a joint venture or
any other kind of entity. The amounts payable at any time hereunder to each
Lender shall be a separate and independent debt, and, provided Agent fails or
refuses to exercise any remedies against Borrower after receiving the direction
of the Requisite Lenders, each Lender shall be entitled to protect and enforce
its rights arising out of this Agreement and it shall not be necessary for any
other Lender to be joined as an additional party in any proceeding for such
purpose.
10.10 HEADINGS. Section and subsection headings in this Agreement
are included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose or be given any substantive effect.
10.11 APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE PROVINCE
OF
ONTARIO AND THE LAWS OF CANADA APPLICABLE THEREIN, WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES.
10.12 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns, PROVIDED, HOWEVER, Borrower shall not assign its rights or
obligations hereunder without the written consent of Lenders.
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10.13 NO FIDUCIARY RELATIONSHIP; NO DUTY; LIMITATION OF LIABILITIES.
(A) NO FIDUCIARY RELATIONSHIP. No provision in this
Agreement or in any of the other Loan Documents and no course of dealing between
the parties shall be deemed to create any fiduciary duty by Agent or any Lender
to Borrower.
(B) NO DUTY. All legal counsel, accountants, appraisers,
and other professional Persons and consultants retained by Agent or any Lender
shall have the right to act exclusively in the interest of Agent or such Lender
and shall have no duty of disclosure, duty of loyalty, duty of care, or other
duty or obligation of any type or nature whatsoever to Borrower or any of
Borrower's shareholders or any other Person.
(C) LIMITATION OF LIABILITIES. Neither Agent nor any
Lender, nor any affiliate, officer, director, shareholder, employee, legal
counsel, or agent of Agent or any Lender shall have any liability with respect
to, and Borrower hereby waives, releases, and agrees not to ▇▇▇ any of them
upon, any claim for any special, indirect, incidental, or consequential damages
suffered or incurred by Borrower in connection with, arising out of, or in any
way related to, this Agreement or any of the other Loan Documents, or any of the
transactions contemplated by this Agreement or any of the other Loan Documents.
Borrower hereby waives, releases, and agrees not to ▇▇▇ Agent or any Lender or
any of Agent's or any Lender's affiliates, officers, directors, employees,
counsel, or agents for punitive damages in respect of any claim in connection
with, arising out of, or in any way related to, this Agreement or any of the
other Loan Documents, or any of the transactions contemplated by this Agreement
or any of the transactions contemplated hereby.
10.14 CONSENT TO JURISDICTION. BORROWER HEREBY CONSENTS TO THE
NON-EXCLUSIVE JURISDICTION OF ANY COURT OF COMPETENT JURISDICTION LOCATED WITHIN
THE PROVINCE OF
ONTARIO AND IRREVOCABLY AGREES THAT, SUBJECT TO AGENT'S
ELECTION, ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE OTHER LOAN DOCUMENTS SHALL BE LITIGATED IN SUCH COURTS.
BORROWER EXPRESSLY SUBMITS AND CONSENTS TO THE JURISDICTION OF THE AFORESAID
COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS. TO THE EXTENT PERMITTED
BY LAW, BORROWER HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS AND
AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE UPON BORROWER BY CERTIFIED
OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO BORROWER, AT THE
ADDRESS SET FORTH IN THIS AGREEMENT AND SERVICE SO MADE SHALL BE COMPLETE TEN
(10) DAYS AFTER THE SAME HAS BEEN POSTED. IN ANY LITIGATION, TRIAL, ARBITRATION
OR OTHER DISPUTE RESOLUTION PROCEEDING RELATING TO THIS AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS, ALL DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS OF BORROWER
OR OF ITS AFFILIATES SHALL BE DEEMED TO BE EMPLOYEES OR MANAGING AGENTS OF
BORROWER FOR PURPOSES OF ALL APPLICABLE LAW OR COURT RULES REGARDING THE
PRODUCTION OF WITNESSES BY NOTICE FOR TESTIMONY (WHETHER IN A DEPOSITION, AT
TRIAL OR OTHERWISE). BORROWER AGREES THAT AGENT'S OR ANY LENDER'S
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COUNSEL IN ANY SUCH DISPUTE RESOLUTION PROCEEDING MAY EXAMINE ANY OF THESE
INDIVIDUALS AS IF UNDER CROSS-EXAMINATION AND THAT ANY DISCOVERY DEPOSITION OF
ANY OF THEM MAY BE USED IN THAT PROCEEDING AS IF IT WERE AN EVIDENCE DEPOSITION.
BORROWER IN ANY EVENT WILL USE ALL COMMERCIALLY REASONABLE EFFORTS TO PRODUCE IN
ANY SUCH DISPUTE RESOLUTION PROCEEDING, AT THE TIME AND IN THE MANNER REQUESTED
BY AGENT OR ANY LENDER, ALL PERSONS, DOCUMENTS (WHETHER IN TANGIBLE, ELECTRONIC
OR OTHER FORM) OR OTHER THINGS UNDER ITS CONTROL AND RELATING TO THE DISPUTE.
10.15 WAIVER OF JURY TRIAL. BORROWER, AGENT AND EACH LENDER HEREBY
WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
BORROWER, AGENT AND EACH LENDER ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL
INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS RELIED ON THE
WAIVER IN ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THAT
EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS.
BORROWER, AGENT AND EACH LENDER WARRANT AND REPRESENT THAT EACH HAS HAD THE
OPPORTUNITY OF REVIEWING THIS JURY WAIVER WITH LEGAL COUNSEL, AND THAT EACH
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS.
10.16 WAIVER OF NOTICES. Borrower hereby expressly waives demand,
presentment, protest and notice of protest and notice of dishonour with respect
to any and all instruments and commercial paper, included in or evidencing any
of the Obligations or the Collateral, and any and all other demands and notices
of any kind or nature whatsoever with respect to the Obligations, the Collateral
and this Agreement, except such as are expressly provided for herein. No notice
to or demand on Borrower or any Loan Party which Agent or any Lender may elect
to give shall entitle Borrower or any Loan Party to any other or further notice
or demand in the same, or other circumstances.
10.17 JUDGMENT CURRENCY. To the extent permitted by applicable law,
the obligations of each Loan Party in respect of any amount due under this
Agreement or any other Loan Document shall, notwithstanding any payment in any
other currency (the "Other Currency") (whether pursuant to a judgment or
otherwise), be discharged only to the extent of the amount in the currency in
which it is due (the "Agreed Currency") that Agent or any Lender may, in
accordance with normal banking procedures, purchase with the sum paid in the
Other Currency (after any premium and costs of exchange) on the Business Day
immediately after the day on which Agent or such Lender receives the payment. If
the amount in the Agreed Currency that may be so purchased for any reason falls
short of the amount originally due, the applicable Loan Party shall pay
additional amounts, in the Agreed Currency, as may be necessary to compensate
for the shortfall. Any obligation of the applicable Loan Party not discharged by
that payment shall, to the extent permitted by applicable law, be due as a
separate and independent obligation and, until discharged as provided in this
SUBSECTION 10.17, continue in full force and effect.
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10.18 CONSTRUCTION. Borrower, Agent and each Lender each acknowledge
that it has had the benefit of legal counsel of its own choice and has been
afforded an opportunity to review this Agreement and the other Loan Documents
with its legal counsel and that this Agreement and the other Loan Documents
shall be construed as if jointly drafted by Borrower, Agent and each Lender.
10.19 COUNTERPARTS; EFFECTIVENESS. This Agreement and any
amendments, waivers, consents, or supplements may be executed via telecopier or
facsimile transmission in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed and delivered
shall be deemed an original, but all of which counterparts together shall
constitute one and the same instrument. This Agreement shall become effective
upon the execution of a counterpart hereof by each of the parties hereto.
10.20 CONFIDENTIALITY. Agent and each Lender agree to exercise their
best efforts to keep confidential any non-public information delivered pursuant
to the Loan Documents and identified as such by Borrower and not to disclose
such information to Persons other than to: its respective affiliates, officers,
directors and employees; or its potential assignees or participants; or Persons
employed by or engaged by Agent, a Lender or a Lender's assignees or
participants including, without limitation, legal counsel, auditors,
professional consultants, rating agencies and portfolio management services; or
to US Facility Agent or any US Facility Lender. The confidentiality provisions
contained in this subsection shall not apply to disclosures (i) required to be
made by Agent or any Lender to any regulatory or governmental agency or pursuant
to legal process or (ii) consisting of general portfolio information that does
not identify any Loan Party. The obligations of Agent and Lenders under this
SUBSECTION 10.20 shall supersede and replace the obligations of Agent and
Lenders under any confidentiality agreement in respect of this financing
executed and delivered by Agent or any Lender prior to the date hereof. In no
event shall Agent or any Lender be obligated or required to return any materials
furnished by any Loan Party; PROVIDED, HOWEVER, each potential assignee or
participant shall be required to agree that if it does not become an assignee
(or participant) it shall return all materials furnished to it by any Loan Party
in connection herewith.
SECTION 11.
DEFINITIONS AND ACCOUNTING TERMS
11.1 CERTAIN DEFINED TERMS. The following terms used in this
Agreement shall have the following meanings:
"Accounts" means all "accounts" (as defined in the PPSA),
accounts receivable, contract rights and general intangibles relating thereto,
notes, drafts and other forms of obligations owed to or owned by any Loan Party,
as applicable, arising or resulting from the sale of goods or the rendering of
services, whether or not earned by performance.
"Additional Mortgaged Property" means all real property owned
or leased by any Loan Party or any of its Subsidiaries in which after the
Closing Date Agent requires a mortgage (or the equivalent thereof under
applicable laws) to secure the Obligations.
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"Affiliate" means, with respect to any Person, any other
Person (other than Agent or any Lender): (a) directly or indirectly controlling,
controlled by, or under common control with, any such Person; (b) directly or
indirectly owning or holding ten percent (10%) or more of any equity interest in
such Person; or (c) ten percent (10%) or more of whose stock or other equity
interest having ordinary voting power for the election of directors or the power
to direct or cause the direction of management, is directly or indirectly owned
or held by such Person. For purposes of this definition, "control" (including
with correlative meanings, the terms "controlling", "controlled by" and "under
common control with") means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities or other equity interest, or
by contract or otherwise.
"Agent" means GE Canada Finance Holding Company in its
capacity as agent for the Lenders under the Loan Documents and any successor in
such capacity appointed pursuant to SUBSECTION 9.1(G).
"Agent's Account" means Transit No. 00002, Account No. ▇▇▇▇▇▇▇
at Royal Bank of Canada, Main Branch, Toronto,
Ontario, Reference: Canadian
Dollar Receipt Account re Beacon Roofing Supply Canada Company.
"Agreement" means this Second Amended and Restated Loan and
Security Agreement, as it may be amended, restated, supplemented or otherwise
modified from time to time.
"Asset Disposition" means the disposition, whether by sale,
lease, transfer, loss, damage, destruction, condemnation or otherwise, of any or
all of the assets of any Loan Party or any of its Subsidiaries other than sales
of Inventory in the ordinary course of business.
"Assignment and Acceptance Agreement" shall mean an Assignment
and Acceptance Agreement substantially in the form of EXHIBIT A.
"BA Period" means with respect to any BA Rate Loan bearing
interest at a rate based on the BA Rate, a period of thirty (30), sixty (60) or
ninety (90) days commencing on a Business Day selected by Borrower in the Notice
of Borrowing or Notice of Conversion/Continuation with respect to such BA Rate
Loan delivered to Agent in accordance with Paragraph 2.1(C) or Paragraph 2.2(D)
(as applicable), provided that the foregoing provision relating to BA Periods is
subject to the following:
(a) any BA Period that would otherwise extend beyond the
Commitment Termination Date shall end on the Business
Day immediately preceding such Commitment Termination
Date;
(b) Borrower shall select BA Periods so as not to require
a payment or prepayment on any BA Rate Loan during a
BA Period for such Revolving Loan; and
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(c) Borrower shall select BA Periods so there shall be no
more than five (5) separate BA Periods in effect at
any one time.
"BA Rate" means, with respect to any BA Rate Loan and
applicable BA Period, the annual rate of interest which is the average of the
"BA 1, 2 or 3 month or thirty (30), sixty (60) or ninety (90) day" rates, as
applicable, applicable to Canadian Dollar bankers' acceptances displayed and
identified as such on the "Reuters Monitor Screen Page CDOR" at approximately
11:00 a.m., Toronto time, on the date which is two (2) Business Days prior to
the first day of such BA Period or, if such display or service ceases to exist,
any other similar display and service designated by Agent in existence at the
relevant time (as adjusted by Agent after such time to reflect any error in a
posted rate or in the posted average rate of interest); provided, however, if no
such rates are then provided by Reuters or a similar service designated by
Agent, then the BA Rate at the relevant time shall be GE Canada Finance's cost
of funds at such time for loans of a similar amount and term, as certified by GE
Canada Finance, whose certification thereof shall be binding and conclusive for
all purposes hereof.
"BA Rate Loan" means a Loan denominated in Canadian Dollars
that bears interest at a rate based on the BA Rate.
"Bank Rate" means, as of any date of determination, the Bank
of Canada Rate quoted or published on such date in the Report on Business
section of THE GLOBE AND MAIL or such other daily Canadian nationally circulated
newspaper; provided, that if such rate is not so quoted or published on any date
of determination, then such rate most recently so quoted or published prior to
such date of determination shall constitute the "Bank Rate" on such date.
"Beacon Canada Holdings" means Beacon Canada, Inc., a Delaware
Corporation.
"Best Purchase Agreements" means (a) the Master Purchase
Agreement dated as of September 6, 2000 among Best Acquisition I LLC, the
Persons named therein as "Asset Sellers" and "Stock Targets", and the other
signatories thereto, (b) the Reorganization Agreement dated as of September 6,
2000 among Holdings, Best Distributing, Best Distributing of Wilmington, Inc.
and the other signatories thereto and (c) the letter agreement dated as of
September 6, 2000 entered into among the parties to the foregoing Master
Purchase Agreement and Reorganization Agreement.
"Best Distributing" means Best Distributing Co., a North
Carolina corporation.
"Best Seller Notes" means those Nonnegotiable Subordinated
Promissory Notes dated September 6, 2000 in the aggregate principal amount of
US$7,000,000 issued by Holdings to certain of the sellers under the terms of the
Best Purchase Agreements, as amended on the Closing Date.
"Best Subordination Agreement" means that Subordination and
Intercreditor Agreement dated as of September 6, 2000 among Best Distributing,
certain of the sellers under the Best Purchase Agreement, Agent, US Facility
Agent and the purchasers under the Senior Subordinated Loan Agreement, as
amended on the Closing Date.
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"Borrowing Base Certificates" means the US Obligors
Consolidating Borrowing Base Certificates, the Consolidated Borrowing Base
Certificate and the Canadian Borrowing Base Certificate.
"Business Day" means any day, excluding Saturday, Sunday and
any day which is a legal holiday under the laws of the Province of
Ontario or is
a day on which banking institutions located in the Province of
Ontario are
closed.
"Canadian Benefit Plans" means all material employee benefit
plans of any nature or kind whatsoever that are not Canadian Pension Plans and
are maintained or contributed to by any Loan Party which has employees in
Canada.
"Canadian Borrowing Base Certificate" means a certificate and
schedule duly executed by an officer of Borrower appropriately completed and in
substantially the form of EXHIBIT B.2.
"Canadian Dollars" and "C$" each means the lawful money of
Canada.
"Canadian GAAP" means generally accepted accounting principles
in Canada as set forth in the opinions and pronouncements of the relevant
Canadian public and private accountings boards and institutions that are
applicable to the circumstances as of the date of determination.
"Canadian Pension Plans" means each plan which is considered
to be a pension plan for the purposes of any applicable pension benefits
standards statute and/or regulation in Canada maintained or contributed to by a
Loan Party for its employees or former employees and does not include the Canada
Pension Plan or the Quebec Pension Plan which is maintained by the Government of
Canada or the Province of Quebec, respectively.
"Capital Expenditures" means all expenditures (including
deposits) for, or contracts for expenditures (excluding contracts for
expenditures under or with respect to Capital Leases, but including cash down
payments for assets acquired under Capital Leases) with respect to any fixed
assets or improvements, or for replacements, substitutions or additions thereto,
which have a useful life of more than one year, including the direct or indirect
acquisition of such assets by way of increased product or service charges,
offset items or otherwise.
"Capital Lease" means any lease of any property (whether real,
personal or mixed) that, in conformity with US GAAP, should be accounted for as
a capital lease.
"Capitalization/Acquisition Documents" means, collectively:
(a) any or all of the stock certificates, notes, debentures or other instruments
representing securities bought, sold or issued, or loans made, to facilitate the
consummation of the Related Transactions; (b) the indentures or other documents
pursuant to which such stock, notes, debentures or other instruments are issued
or to be issued; (c) each document governing the issuance of, or setting forth
the terms of, such stock, notes, debentures or other instruments; (d) any
stockholders, registration or intercreditor agreement among or between the
holders of such stock, notes,
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debentures or other instruments; (e) the Subordinated Loan Documents and (f) the
Equity Documents; but excluding all Loan Documents and all US Facility Loan
Documents.
"Cash Equivalents" means: (a) marketable direct obligations
issued or unconditionally guaranteed by the United States or Canadian Government
or issued by any agency thereof and backed by the full faith and credit of the
United States or Canada, in each case maturing within six (6) months from the
date of acquisition thereof; (b) commercial paper maturing no more than six (6)
months from the date issued and, at the time of acquisition, having a rating of
at least A-1 from Standard & Poor's Corporation or at least P-1 from ▇▇▇▇▇'▇
Investors Service, Inc.; and (c) certificates of deposit or bankers' acceptances
maturing within six (6) months from the date of issuance thereof issued by, or
overnight reverse repurchase agreements from, any commercial bank organized
under the laws of the United States of America, or any state thereof or the
District of Columbia, having combined capital and surplus of not less than
US$250,000,000 or organized under the laws of Canada and referenced in Schedule
I of the BANK ACT (Canada) and not subject to setoff rights in favour of such
bank.
"CHS" means Code, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ III, L.P., a Delaware
limited partnership.
"CIGNA Impress Account" means that certain Citibank Delaware
depository account number ▇▇▇▇▇▇▇▇, for the account of Beacon Roofing Supply
Company, Inc.
"Closing Date" means March 12, 2004.
"Collateral" means Borrower Collateral and Other Loan Party
Collateral.
"Commitment" or "Commitments" means the commitment or
commitments of Lenders to make Loans as set forth in SUBSECTION 2.1(A).
"Compliance Certificate" means a certificate duly executed on
behalf of Borrower by the chief executive officer or chief financial officer of
Borrower appropriately completed and in substantially the form of EXHIBIT C.
"Consolidated Borrowing Base Certificate" means a certificate
and schedule duly executed by an officer of Borrower appropriately completed and
in substantially the form of EXHIBIT B.1.
"Contingent Obligation", as applied to any Person, means any
direct or indirect liability of that Person: (i) with respect to any
Indebtedness, lease, dividend or other obligation of another Person if the
purpose or intent of the Person incurring such liability, or the effect thereof,
is to provide assurance to the obligee of such liability that such liability
will be paid or discharged, or that any agreements relating thereto will be
complied with, or that the holders of such liability will be protected (in whole
or in part) against loss with respect thereto; (ii) with respect to any letter
of credit issued for the account of that Person or as to which that Person is
otherwise liable for reimbursement of drawings; (iii) under any foreign exchange
contract, currency swap agreement, interest rate swap agreement or other similar
agreement or arrangement designed to alter the risks of that Person arising from
fluctuations in currency values
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or interest rates; (iv) to make take-or-pay or similar payments if required
regardless of nonperformance by any other party or parties to an agreement, or
(v) pursuant to any agreement to purchase, repurchase or otherwise acquire any
obligation or any property constituting security therefor, to provide funds for
the payment or discharge of such obligation or to maintain the solvency,
financial condition or any balance sheet item or level of income of another. The
amount of any Contingent Obligation shall be equal to the amount of the
obligation so guaranteed or otherwise supported or, if not a fixed and
determined amount, the maximum amount so guaranteed.
"Default" means a condition, act or event that, after notice
or lapse of time or both, would constitute an Event of Default if that
condition, act or event were not cured or removed within any applicable grace or
cure period.
"Defaulted Amount" means, with respect to any Lender at any
time, any amount required to be paid hereunder or under any other Loan Document
by such Lender to the Agent or any other Lender which has not been so paid.
"Defaulting Lender" means, at any time, any Lender that owes a
Defaulted Amount.
"Domestic Subsidiary" means any Subsidiary organized under the
laws of a jurisdiction within the United States and whose chief executive office
and principal places of business are located in the United States.
"EBITDA" means, for any period, without duplication, the total
of the following for Holdings and its Subsidiaries on a consolidated basis, each
calculated for such period: (1) net income determined in accordance with US
GAAP; PLUS, to the extent included in the calculation of net income, (2) the sum
of (a) income, capital and franchise taxes paid or accrued; (b) interest
expenses, net of interest income, paid or accrued; (c) amortization and
depreciation and (d) other non-cash charges (excluding accruals for cash
expenses made in the ordinary course of business); LESS, to the extent included
in the calculation of net income, (3) the sum of (a) the income of any Person
(other than the US Borrower and wholly-owned Subsidiaries of the US Borrower) in
which Holdings or a wholly-owned Subsidiary of Holdings has an ownership
interest except to the extent such income is received by the US Borrower or a
wholly-owned Subsidiary of the US Borrower in a cash distribution during such
period; (b) gains or losses from sales or other dispositions of assets (other
than Inventory in the normal course of business); and (c) extraordinary or
non-recurring gains, but not net of extraordinary or non-recurring "cash"
losses.
"Eligible Assignee" means (a) any Lender, any Affiliate of any
Lender and, with respect to any Lender that is an investment fund that invests
in commercial loans, any other investment fund that invests in commercial loans
and that is managed or advised by the same investment advisor as such Lender or
by an Affiliate of such investment advisor, and (b) any "accredited investor"
(as defined under
Ontario Securities Commission Rule 45-501 (as amended,
supplemented, replaced or otherwise modified from time to time)) which extends
credit or buys loans as one of its businesses, mutual fund, lease financing
company and commercial finance company which extends credit or buys loans as one
of its businesses and, in
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each case, which has a rating of BBB or higher from Standard & Poor's Ratings
Group or Dominion Bond Rating Service Limited or a rating of Baa2 or higher from
▇▇▇▇▇'▇ Investor Service, Inc. at the date that it becomes a Lender and which,
through its applicable lending office, is capable of lending to Borrower without
the imposition of any withholding or similar taxes; provided, that no Person
determined by Agent to be acting in the capacity of a vulture fund or distressed
debt purchaser shall be an Eligible Assignee and no Person or Affiliate of such
Person (other than a Person that is already a Lender) holding Subordinated Debt
or shares issued by any Loan Party shall be an Eligible Assignee.
"Employee Benefit Plan" means any employee benefit plan within
the meaning of Section 3(3) of ERISA which (a) is maintained for employees of
any Loan Party or any ERISA Affiliate or (b) has at any time within the
preceding 6 years been maintained for the employees of any Loan Party or any
current or former ERISA Affiliate.
"Environmental Claims" means claims, liabilities,
investigations, litigation, administrative proceedings, judgments or orders
relating to Hazardous Materials.
"Environmental Laws" means all applicable federal, provincial,
local and foreign laws, statutes, ordinances, codes, rules, standards,
orders-in-council, and regulations, now or hereafter in effect and, in each
case, as amended or supplemented from time to time, and any applicable judicial
or administrative interpretation thereof, including any applicable judicial or
administrative order, consent decree, order or judgment, imposing liability or
standards of conduct for or relating to the regulation and protection of human
health, safety, the environment and natural resources (including ambient air,
surface water, groundwater, wetlands, land surface or subsurface strata,
wildlife, aquatic species and vegetation).
"Environmental Liabilities" means, with respect to any Person,
all liabilities, obligations, responsibilities, response, remedial and removal
costs, investigation and feasibility study costs, capital costs, operation and
maintenance costs, losses, damages, punitive damages, property damages, natural
resource damages, consequential damages, treble damages, costs and expenses
(including all reasonable fees, disbursements and expenses of legal counsel,
experts and consultants), fines, penalties, sanctions and interest incurred as a
result of or related to any claim, suit, action, administrative order,
investigation, proceeding or demand by any Person, whether based in contract,
tort, implied or express warranty, strict liability, criminal or civil statute
or common law, including any arising under or related to any Environmental Laws,
Environmental Permits, or in connection with any Release or threatened Release
or presence of a Hazardous Material whether on, at, in, under, from or about or
in the vicinity of any real or personal property.
"Environmental Permits" means all permits, licenses,
authorizations, certificates, approvals or registrations required by any
Governmental Authority under any Environmental Laws.
"Equipment" means all "equipment" (as defined in the PPSA),
all furniture, furnishings, fixtures, machinery, motor vehicles, trucks,
trailers, vessels, aircraft and rolling stock and all parts thereof and all
additions and accessions thereto and replacements therefor.
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"Equity Documents" means (i) the Chief Executive Securities
Agreement dated as of August 21, 1997 by and among Holdings, CHS and ▇▇▇▇▇▇
▇▇▇▇▇, (ii) the Executive Securities Agreements among Holdings, CHS and certain
managers of the Loan Parties, (iii) the Amended and Restated Investor Securities
Agreement dated as of September 6, 2000 among Holdings, CHS and certain of
Holdings' other equity holders, (iv) the Warrants dated as of August 22, 1997
issued by Holdings to ▇▇▇▇▇▇ Financial, Inc. and Banc of America Commercial
Finance Corporation ("BofA") as assigned by BofA on June 8, 2001 to CHS and ▇▇▇▇
▇▇▇▇▇▇ and (v) the Warrantholders Rights Agreement dated as of August 21, 1997
among Holdings, ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ (as BofA's assignee), CHS and certain other
stockholders of Holdings to which Holdings is a party.
"Equivalent Amount" means, on any date of determination, with
respect to obligations or valuations denominated in one currency (the "first
currency"), the amount of another currency (the "second currency") which would
result from the conversion of the relevant amount of the first currency into the
second currency at the 12:00 noon (Toronto time) rate quoted on the Reuters'
Screen Page BOFC on such date, or if such date is not a Business Day, on the
Business Day immediately preceding such date of determination (or, if such
display or service ceases to exist, any other similar display and service
designated by Agent in existence at the relevant time).
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor statute and all rules and
regulations promulgated thereunder.
"ERISA Affiliate", as applied to any Loan Party, means any
Person who is a member of a group which is under common control with any Loan
Party, who together with any Loan Party is treated as a single employer within
the meaning of Section 414(b) and (c) of the IRC.
"Excess Availability" has the meaning assigned to it in the US
Facility Loan Agreement as of the Closing Date.
"Existing Obligations" means the "Obligations" of the Borrower
under the Existing Loan Agreement outstanding on the Closing Date.
"Fiscal Year" means each twelve (12) month period ending on
the last day of September in each year.
"Fixed Charge Coverage" means, for any period, Operating Cash
Flow divided by Fixed Charges.
"Fixed Charges" means, for any period, and each calculated for
such period (without duplication), (a) Interest Expense of Holdings and its
Subsidiaries; PLUS (b) scheduled payments of principal with respect to all
Indebtedness of Holdings and its Subsidiaries; PLUS (c) any provision for (to
the extent it is greater than zero) income, capital or franchise taxes
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included in the determination of net income, excluding any provision for
deferred taxes; PLUS (d) payment of deferred taxes accrued in any prior period.
"Funding Date" means the date of each funding of a Loan.
"Governmental Authority" means any nation or government, any
province, state or other political subdivision thereof, and any agency,
department or other entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.
"Hazardous Material" means any substance, material or waste
that is regulated by, or forms the basis of liability now or hereafter under,
any Environmental Laws, including any material or substance that is (a) defined
as a "solid waste", "hazardous waste", "hazardous material", "hazardous
substance", "dangerous goods", "extremely hazardous waste", "restricted
hazardous waste, "pollutant", "contaminant", "hazardous constituent", "special
waste", "toxic substance" or other similar term or phrase under any
Environmental Laws, or (b) petroleum or any fraction or by-product thereof,
asbestos, polychlorinated biphenyls (PCB's), or any radioactive substance.
"Holdings" means Beacon Roofing Supply, Inc., a Delaware
corporation.
"Holdings' Accountants" means the independent certified public
accountants selected by Holdings and its Subsidiaries and reasonably acceptable
to Agent, which selection shall not be modified during the term of this
Agreement without Agent's prior written consent.
"Indebtedness" as applied to any Person, means: (a) all
indebtedness for borrowed money; (b) that portion of obligations with respect to
capital leases that is properly classified as a liability on a balance sheet in
conformity with US GAAP; (c) any obligation under any lease (a "synthetic
lease") treated as an operating lease under US GAAP and as a loan or financing
for United States income tax purposes or creditors rights purposes; (d) notes
payable and drafts accepted representing extensions of credit whether or not
representing obligations for borrowed money; (e) any obligation owed for all or
any part of the deferred purchase price of property or services if the purchase
price is due more than six (6) months from the date that the obligation is
incurred or is evidenced by a note or similar written instrument; (f) "earnouts"
and similar payment obligations (including, without limitation, the Best
Earn-Out Obligations), which obligations shall, for purposes of determining
outstanding Indebtedness in connection with calculating Borrower's and the other
Loan Parties' compliance with the covenants contained in SECTION 7, be valued
based upon the amount thereof required to be recorded as a liability on a
balance sheet prepared in accordance with US GAAP; (g) all indebtedness secured
by any Lien on any property or asset owned or held by that Person regardless of
whether the indebtedness secured thereby shall have been assumed by that Person
or is nonrecourse to the credit of that Person and (h) obligations in respect of
letters of credit.
"Index Rate" means, on any day, a floating rate per annum
equal to the greater of (1) the annual rate of interest most recently quoted in
the "Report on Business" section of the Globe and Mail as being the current
"Canadian prime rate", "chartered bank prime rate" or words
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of similar description in effect and (2) the BA Rate in respect of a BA Period
of thirty (30) days commencing on the first Business Day of the calendar month
in which such date occurs plus 1.75% per annum. Each change in any interest rate
provided for in the Agreement based upon the Index Rate shall take effect at the
time of such change in the Index Rate. For greater certainty, no adjustment
shall be made to account for the difference between the number of days in a year
on which the rates referred to in this definition are based and the number of
days in a year on the basis of which interest is calculated in the Agreement.
"Index Rate Loan" means a Loan denominated in Canadian Dollars
bearing interest at a rate determined by reference to the Index Rate.
"Insolvency Law" means any of the BANKRUPTCY AND INSOLVENCY
ACT (Canada), the COMPANIES' CREDITORS ARRANGEMENT ACT (Canada) and TITLE 11 of
the United States Code entitled "Bankruptcy", each as amended from time to time,
and any other applicable bankruptcy, insolvency and other similar law now or
hereafter in effect and all rules and regulations promulgated thereunder.
"Intellectual Property" means all present and future designs
and registrations and applications therefor, patents, patent rights and
applications therefor, trademarks and registrations or applications therefor,
trade names, inventions, copyrights and all applications and registrations
therefor, software or computer programs, license rights, trade secrets, methods,
processes, know-how, drawings, specifications, descriptions, and all memoranda,
notes and records with respect to any research and development, whether now
owned or hereafter acquired, all goodwill associated with any of the foregoing,
and proceeds of all of the foregoing, including, without limitation, proceeds of
insurance policies thereon.
"Intercreditor Agreement" means the intercreditor agreement
dated as of the Closing Date among Agent, US Facility Agent, Lenders, US
Facility Lenders and the Loan Parties party thereto.
"Interest Expense" means, without duplication, for any period,
the following, for Holdings and its Subsidiaries each calculated for such
period: interest expenses deducted in the determination of net income (excluding
(i) the amortization of fees and costs with respect to the Related Transactions
which have been capitalized as transaction costs in accordance with the
provisions of SUBSECTION 11.2; and (ii) interest paid in kind).
"Interest Rate Agreement" means any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement or
similar agreement or arrangement designed to protect Borrower against any
fluctuations in interest rates entered into between Borrower and any Lender (or
an Affiliate of any Lender).
"Inventory" means all "inventory" (as defined in the PPSA),
including, without limitation, finished goods, raw materials, work in process
and other materials and supplies used or consumed in a Person's business, and
goods which are returned or repossessed.
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"Investor Subordinated Notes" "Investor Subordinated Notes"
means (i) those Junior Subordinated Promissory Notes issued by Holdings to its
stockholder prior to the Closing Date in an aggregate outstanding amount of
$12,165,881 as of the Closing Date, (ii) those additional Junior Subordinated
Promissory Notes that may hereafter be issued by Holdings to employees who
purchase such Junior Subordinated Promissory Notes together with common stock of
Holdings (which Junior Subordinated Promissory Notes shall be in the form of the
Investor Junior Subordinated Promissory Notes outstanding on the Closing Date);
and (iii) those additional Junior Subordinated Promissory Notes that may be
issued after the Closing Date in connection with Permitted Acquisitions
(including Junior Subordinated Promissory Notes issued to stockholders of
Holdings to provide funds for Permitted Acquisitions) (which Junior Subordinated
Promissory Notes shall be in the form of the Investor Junior Subordinated
Promissory Notes outstanding on the Closing Date).
"Investor Subordination Agreement" means the Subordination
Agreement dated as of September 6, 2000 among the holders of the Investor
Subordinated Notes issued on or prior to September 6, 2000, Holdings, Agent, US
Facility Agent and the purchasers under the Senior Subordinated Loan Agreement,
as amended on the Closing Date.
"IRC" means the Internal Revenue Code of 1986, as amended from
time to time and any successor statute and all rules and regulations promulgated
thereunder.
"ITA" means the INCOME TAX ACT (Canada) R.S.C., 1985, as
amended form time to time and any successor statute and all rules and
regulations promulgated thereunder.
"Liabilities" shall have the meaning given that term in
accordance with US GAAP and shall include Indebtedness.
"Lien" means any lien, claim, hypothec, mortgage, pledge,
security interest, charge or encumbrance of any kind, whether voluntary or
involuntary, (including any conditional sale or other title retention agreement,
any lease in the nature thereof and any agreement to give any security
interest).
"Loan" or "Loans" means an advance or advances under the
Revolving Loan Commitment.
"Loan Documents" means this Agreement, the Notes, the Security
Documents, the Intercreditor Agreement, each Interest Rate Agreement with a
Lender, each Currency Rate Agreement with a Lender pursuant to SUBSECTION 5.10,
the letter agreement referenced in SUBSECTION 2.3(D) and all other documents,
instruments and agreements executed by or on behalf of any Loan Party and
delivered concurrently herewith or at any time hereafter to or for Agent or any
Lender in connection with the Loans and any other transaction contemplated by
this Agreement, all as amended, restated, supplemented or modified from time to
time but excluding all Capitalization/Acquisition Documents.
"Loan Party" means each of Holdings, US Borrower, Borrower and
each other Subsidiary of US Borrower.
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"Loan Year" means each period of twelve (12) consecutive
months commencing on the Closing Date and on each anniversary thereof.
"Material Adverse Effect" means a material adverse effect upon
(a) the business, operations, prospects, properties, assets or condition
(financial or otherwise) of Holdings and its Subsidiaries taken as a whole or
(b) the ability of any Loan Party to perform its obligations under any Loan
Document to which it is a party or of Agent or any Lender to enforce or collect
any of the Obligations. In determining whether any individual event would result
in a Material Adverse Effect, notwithstanding that such event does not of itself
have such effect, a Material Adverse Effect shall be deemed to have occurred if
the cumulative effect of such event and all other then existing events would
result in a Material Adverse Effect.
"Moody's" means ▇▇▇▇▇'▇ Investor Services, Inc.
"Mortgage" means each of the mortgages, deeds of hypothec,
deeds of trust, leasehold mortgages, leasehold deeds of trust, collateral
assignments of leases or other real estate security documents or equivalents
delivered by any Loan Party to Agent, on behalf of Agent and Lenders, with
respect to Mortgaged Property or Additional Mortgaged Property, all in form and
substance satisfactory to Agent.
"Mortgaged Property" means the real property owned or leased
by Borrower, US Borrower or its Subsidiaries as described on SCHEDULE 11.1(A).
"Net Proceeds" means cash proceeds received by Borrower or any
of its Subsidiaries from any Asset Disposition (including insurance proceeds,
awards of condemnation, and payments under notes or other debt securities
received in connection with any Asset Disposition), net of (a) the costs of such
sale, lease, transfer or other disposition (including taxes attributable to such
sale, lease or transfer) and (b) amounts applied to repayment of Indebtedness
(other than the Obligations) secured by a Lien on the asset or property
disposed.
"Notes" means the Revolving Notes.
"Notice of Borrowing" means a notice duly executed by an
authorized representative of Borrower appropriately completed and in the form of
EXHIBIT D.
"Notice of Conversion/Continuation" means a notice duly
executed by an authorized representative of Borrower appropriately completed and
in the form of EXHIBIT F.
"Obligations" means all obligations, liabilities and
indebtedness of every nature of each Loan Party from time to time owed to Agent
or to any Lender under the Loan Documents (whether incurred before or after the
Termination Date), including the principal amount of all debts, claims and
indebtedness, accrued and unpaid interest and all fees, costs and expenses,
whether primary, secondary, direct, contingent, fixed or otherwise, heretofore,
now and/or from time to time hereafter owing, due or payable including, without
limitation, all interest, fees, costs and expenses accrued or incurred after the
filing of any petition under any bankruptcy or insolvency law.
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"Operating Cash Flow" means, for any period, (a) EBITDA; LESS
(b) unfinanced Capital Expenditures of US Borrower and its Subsidiaries.
"Other Loan Party Collateral" means all real and personal
property of each Loan Party, other than Borrower, and in which such Loan Party
purports to grant security interests and/or other Liens to Agent and/or Lenders
under the Security Documents.
"Papillon" means ▇▇▇▇▇▇▇▇ & Papillon, Ltee, a Quebec company.
"Permitted Acquisition" means an acquisition by any US Obligor
of all or substantially all of the assets or 100% of the equity securities of
any Person that engaged in the same (or substantially the same) line of business
as the US Obligors which has been approved in writing by the Requisite Lenders
in their sole and absolute discretion.
"Permitted Encumbrances" means the following types of Liens:
(a) Liens (other than Liens relating to Environmental Claims or ERISA) for
taxes, assessments or other governmental charges not yet due and payable; (b)
statutory Liens of landlords, carriers, warehousemen, mechanics, materialmen and
other similar liens imposed by law, which are incurred in the ordinary course of
business for sums not more than thirty (30) days delinquent; (c) Liens (other
than any Lien imposed by ERISA) incurred or deposits made in the ordinary course
of business in connection with workers' compensation, unemployment insurance and
other types of social security, statutory obligations, surety and appeal bonds,
bids, leases, government contracts, trade contracts, performance and
return-of-money bonds and other similar obligations (exclusive of obligations
for the payment of borrowed money); (d) deposits, in an aggregate amount not to
exceed US$250,000 or the Equivalent Amount thereof made in the ordinary course
of business to secure liability to insurance carriers; (e) easements,
rights-of-way, restrictions, and other similar charges or encumbrances not
interfering in any material respect with the ordinary conduct of the business of
any Loan Party or any of its Subsidiaries; (f) Liens on fixed assets for
purchase money obligations, PROVIDED that (i) the purchase of the asset subject
to any such Lien is permitted under PARAGRAPH (B) of the Financial Covenants
Rider, (ii) the Indebtedness secured by any such Lien is permitted under
SUBSECTION 7.1, (iii) such Lien encumbers only the asset so purchased and (iv)
the Indebtedness or other obligation secured by such Liens is incurred within
ninety (90) days after the purchase or lease of such asset; (g) Liens in favour
of Agent, on behalf of itself and Lenders, (h) Liens under the US Facility Loan
Documents in favour of US Facility Agent, for the benefit of US Facility Agent
and US Facility Lenders, and (i) Liens set forth on SCHEDULE 11.1(B).
"Person" means and includes natural persons, corporations,
limited partnerships, general partnerships, limited liability companies, limited
liability partnerships, joint stock companies, joint ventures, associations,
companies, trusts, banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, and governments and agencies and
political subdivisions thereof.
"Personal Property Security Legislation" means any applicable
personal property security legislation, as all such legislation now exists or
may from time to time hereafter be
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amended, modified, recodified, supplemented or replaced, together with all
rules, regulations and interpretations thereunder ore related thereto.
"PPSA" means the PERSONAL PROPERTY SECURITY ACT (
Ontario), as
such legislation now exists or may from time to time hereafter be amended,
modified, recodified, supplemented or replaced, together with all rules,
regulations and interpretations thereunder or related thereto. References to
sections of the PPSA shall be construed to also refer to any successor sections.
"Pro Forma" means the unaudited consolidated and consolidating
balance sheets of Holdings and its Subsidiaries prepared in accordance with US
GAAP as of the Closing Date after giving effect to the transactions contemplated
by this Agreement. The Pro Forma is attached hereto as SCHEDULE 11.1(C).
"Pro Forma EBITDA" has the meaning assigned to it in the US
Facility Loan Agreement.
"Pro Rata Share" means, with respect to a Lender's obligation
to make Revolving Advances and such Lender's right to receive payments of
interest and principal with respect thereto and the related unused line fee
described in SUBSECTION 2.3(A), and for all other purposes, the percentage
obtained by dividing (i) the Revolving Credit Exposure of such Lender by (ii)
the aggregate Revolving Credit Exposure of all Lenders.
"Projections" means Holdings' forecasted consolidated and
consolidating: (a) balance sheets; (b) profit and loss statements; (c) cash flow
statements; and (d) capitalization statements, all prepared on a division by
division and Subsidiary by Subsidiary basis consistent with Borrower's
historical financial statements and based upon good faith estimates and
assumptions by Borrower believed to be reasonable at the time made, together
with appropriate supporting details and a statement of underlying assumptions.
"Quality" means Quality Roofing Supply Company, Inc., a
Delaware corporation.
"Real Estate" means all real property owned, leased, subleased
or used by Borrower or any other Loan Party.
"Related Transactions" means the execution and delivery of the
Related Transactions Documents entered into in connection with those Related
Transactions consummated on the Closing Date, the funding of all Loans on the
Closing Date, the repayment of a portion of the Indebtedness pursuant to the
Senior Subordinated Loan Documents which is to be paid in full on the Closing
Date, and the payment of all fees, costs and expenses associated with all of the
foregoing.
"Related Transactions Documents" means the Loan Documents, the
Subordinated Loan Documents, the Capitalization/Acquisition Documents and all
other agreements, instruments and documents executed or delivered in connection
with the Related Transactions.
"Release" means any release, threatened release, spill,
emission, leaking, pumping, pouring, emitting, emptying, escape, injection,
deposit, disposal, discharge, dispersal,
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dumping, leaching or migration of Hazardous Material in the indoor or outdoor
environment, including the movement of Hazardous Material through or in the air,
soil, surface water, ground water or property.
"Requisite Lenders" means Lenders (including, for purposes
hereof, US Facility Lenders and excluding (i) Defaulting Lenders hereunder and
(ii) "Defaulting Lenders" as defined in the US Facility Loan Agreement) having
(together with their Affiliates) (a) more than 50% of the sum of (i) the
Equivalent Amount in US Dollars of the Revolving Loan Commitment PLUS (ii) the
US Facility Revolving Loan Commitment and the aggregate outstanding principal
balance of the US Facility Term Loans of all US Facility Lenders (that are not
"Defaulting Lenders", as defined in the US Facility Loan Agreement) or (b) if
the Revolving Loan Commitment has been terminated, more than 50% of the sum of
(i) the Equivalent Amount in US Dollars of the aggregate outstanding principal
balance of the Loans of all Lenders that are not Defaulting Lenders PLUS (ii)
the aggregate outstanding principal balance of the US Facility Revolving Loans
and the US Facility Term Loans of all US Facility Lenders (that are not
"Defaulting Lenders", as defined in the US Facility Loan Agreement); provided
that, in each case, Requisite Lenders shall at all times consist of at least
three Lenders.
"Reserves" means, with respect to the Canadian Borrowing Base
(a) the Credit Memoranda Reserve and the Dilution Reserve and (b) reserves
against Eligible Accounts, Eligible Inventory or the Canadian Borrowing Base
that Agent may, in its reasonable credit judgment, establish from time to time,
with prior or contemporaneous notice to Borrower.
"Restricted Junior Payment" means: (a) any dividend or other
distribution, direct or indirect, on account of any shares of any class of stock
or other equity securities, or ownership interest in, any Loan Party now or
hereafter outstanding, except a dividend payable solely with shares of the class
of stock on which such dividend is declared; (b) any redemption, conversion,
exchange, retirement, sinking fund or similar payment, purchase or other
acquisition for value, direct or indirect, of any shares of any class of stock
or other equity security of, or ownership interest in, any Loan Party now or
hereafter outstanding, or the issuance of a notice of any intention to do any of
the foregoing; (c) any payment or prepayment of interest on, principal of,
premium, if any, redemption, conversion, exchange, purchase, retirement,
defeasance, sinking fund or similar payment with respect to, any Indebtedness
subordinated to the Obligations including, without limitation, the Indebtedness
incurred pursuant to the Subordinated Loan Documents, or the issuance of a
notice of any intention to do any of the foregoing; (d) any payment made to
retire, or to obtain the surrender of, any outstanding warrants, options or
other rights to acquire shares of any class of stock or other equity security
of, or ownership interest in, any Loan Party now or hereafter outstanding; and
(e) any payment by Borrower or any of its Subsidiaries of any management,
consulting or similar fees to any Affiliate, whether pursuant to a management
agreement or otherwise.
"Revolving Advance" means each advance made by Lender(s) under
the Revolving Loan Commitment pursuant to SUBSECTION 2.1(A).
"Revolving Credit Exposure" means, with respect to any Lender
as of any date of determination, (a) prior to the termination of the Revolving
Loan Commitment, such Lender's
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Revolving Loan Commitment and (b) after termination of the Revolving Loan
Commitment, the aggregate outstanding principal amount of the Revolving Loan
held by such Lender.
"Revolving Loan" means the outstanding balance of all
Revolving Advances and any amounts added to the principal balance of the
Revolving Loan pursuant to this Agreement.
"Revolving Loan Commitment" means (a) as to any Lender, the
commitment of such Lender to make Revolving Advances pursuant to SUBSECTION
2.1(A) in the aggregate amount set forth on the signature page of this Agreement
below such Lender's signature or in the most recent Assignment and Acceptance
Agreement, if any, executed by such Lender and (b) as to all Lenders, the
aggregate commitment of all Lenders to make Revolving Advances.
"Revolving Note" means each promissory note of Borrower, in
form and substance reasonably acceptable to Agent, issued to evidence the
Revolving Loan Commitments.
"RFC" means The Roof Centre, Inc., a Delaware corporation.
"Security Documents" means all instruments, documents and
agreements executed by or on behalf of any Person to guaranty or provide
collateral security with respect to the Obligations, including, without
limitation, each guaranty of the Obligations, each security agreement, pledge
agreement, mortgage, debenture, deed of trust and deed of hypothec and all
instruments, documents and agreements executed pursuant to the terms of the
foregoing.
"Senior Indebtedness" means the aggregate outstanding
principal balance of all Indebtedness of Holdings and its Subsidiaries on a
consolidated basis, but excluding Indebtedness evidenced by the Best Seller
Notes, the Investor Subordinated Notes, the Stockholder Notes, the Senior
Subordinated Loan Documents, and excluding any other Indebtedness which, by its
express terms is subordinated to the Obligations on a basis satisfactory to
Agent.
"Senior Subordinated Loan Documents" means the Second Amended
and Restated Note and Warrant Purchase Agreement dated as of the Closing Date
(the "Senior Subordinated Loan Agreement") among Holdings, US Borrower and the
"Purchasers" named therein, the Subordinated Promissory Notes in the aggregate
initial principal amount of US$12,000,000 issued thereunder and the Subordinated
Promissory Notes in the aggregate initial principal amount of US$20,000,000
issued under the "Prior Purchase Agreement" (as defined in the Senior
Subordinated Loan Agreement) (collectively, the "Senior Subordinated Notes") and
all other documents, instruments and agreements executed pursuant to the terms
of the Senior Subordinated Loan Agreement.
"Senior Subordination Agreement" means the Subordination and
Intercreditor Agreement dated as of June 8, 2001 among Holdings, the US
Borrower, the Purchasers under the Senior Subordinated Loan Agreement, Agent and
US Facility Agent, as amended on the Closing Date.
"Stockholder Notes" means promissory notes issued by Holdings
to former employees or the estate or personal representative of deceased
employees of the US Borrower
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and its Subsidiaries in payment of all or a portion of the redemption price for
Investor Subordinated Notes and shares of Holdings' common stock redeemed from
such Persons, which notes are fully subordinated to Holdings' guaranty of the
Obligations in a manner satisfactory to the Agent and payable only after the
Obligations have been paid in full or as otherwise permitted by this Agreement.
"Subordinated Loan Documents" means the Best Seller Notes, the
Best Subordination Agreement, the Investor Subordinated Notes, the Investor
Subordination Agreement, the Senior Subordination Agreement and the Senior
Subordinated Loan Documents.
"Subsidiary" means, with respect to any Person, any
corporation, association or other business entity of which more than fifty
percent (50%) of the total voting power of shares of stock (or equivalent
ownership or controlling interest) entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more of the other subsidiaries of that Person or a combination
thereof.
"Target" has the meaning assigned to it in the US Facility
Loan Agreement.
"Unused Line Fee Margin" means with respect to any month (or
portion thereof) for which the unused line fee under SECTION 2.3 is being
calculated, a per annum rate equal to (a) three-eighths of one percent (0.375%)
if the sum of (i) the average daily balance of the Revolving Loan (expressed in
US Dollars) for such period plus (ii) the average daily balance of the US
Facility Revolving Loan for such period plus (iii) the average daily balance of
the US Facility Letter of Credit Obligations for such period, is less than
US$60,000,000 and (b) one-quarter of one percent (0.25%) if the sum of (i) the
average daily balance of the Revolving Loan (expressed in US Dollars) for such
period plus (ii) the average daily balance of the US Facility Revolving Loan for
such period, is equal to or greater than US$60,000,000. "US Dollars" and "US$"
each means the lawful money of the United States of America.
"US Facility Agent" means General Electric Capital
Corporation, as agent under the US Facility Loan Documents.
"US Facility Lenders" means the lenders party to the US
Facility Loan Agreement.
"US Facility Letter of Credit Obligations" has the meaning
assigned to the term "Letter of Credit Obligations" under the US Facility Loan
Agreement.
"US Facility Loan Agreement" means the Second Amended and
Restated Loan and Security Agreement dated as of the Closing Date among Beacon
Canada Holdings, Best Distributing, Quality, RFC, West End, US Borrower, US
Facility Agent, US Facility Lenders, GECC Capital Markets Group Inc., as lead
arranger, and Fleet Capital Corporation, as syndication agent.
"US Facility Loan Documents" means the US Facility Loan
Agreement and the other "Loan Documents" as defined therein.
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"US Facility Revolving Loan Commitment" means the "Revolving
Loan Commitment" as defined under the US Facility Loan Agreement.
"US Facility Revolving Loans" means the "Loans" as defined
under the US Facility Loan Agreement.
"US Facility Term Loans" means the "Term Loans", as defined in
the US Facility Loan Agreement.
"US GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board that are applicable
to the circumstances as of the date of determination.
"US Obligors" means US Borrower and its Domestic Subsidiaries
that are party to the US Facility Loan Agreement.
"US Obligors Consolidating Borrowing Base Certificate" has the
meaning assigned to the term "Consolidating Borrowing Base Certificate" in the
US Facility Loan Agreement.
"West End" means West End Lumber Company, Inc., a Delaware
corporation.
11.2 ACCOUNTING TERMS For purposes of this Agreement, all
accounting terms not otherwise defined herein (for example by reference to
Canadian GAAP) shall have the meanings assigned to such terms in conformity with
US GAAP. Financial statements and other information furnished to Agent or any
Lender pursuant to SUBSECTION 5.1 shall be prepared in accordance with US GAAP
(as in effect at the time of such preparation) on a consistent basis. In the
event any "Accounting Changes" (as defined below) shall occur and such changes
affect financial covenants, standards or terms in this Agreement, then Borrower
and Lenders agree to enter into negotiations in order to amend such provisions
of this Agreement so as to equitably reflect such Accounting Changes with the
desired result that the criteria for evaluating the financial condition of
Borrower shall be the same after such Accounting Changes as if such Accounting
Changes had not been made, and until such time as such an amendment shall have
been executed and delivered by Borrower and Requisite Lenders, (A) all financial
covenants, standards and terms in this Agreement shall be calculated and/or
construed as if such Accounting Changes had not been made, and (B) Borrower
shall prepare footnotes to each Compliance Certificate and the financial
statements required to be delivered hereunder that show the differences between
the certificate or financial statements delivered (which reflect such Accounting
Changes) and the basis for calculating financial covenant compliance (without
reflecting such Accounting Changes). "Accounting Changes" means: (a) changes in
accounting principles required by US GAAP and implemented by Holdings; (b)
changes in accounting principles recommended by Holdings' Accountants; and (c)
changes in carrying value of Holdings' or any of its Subsidiaries' assets,
liabilities or equity accounts resulting from (i) the application of purchase
accounting principles (A.P.B. 16 and/or 17 and EITF 88-16 and FASB 109) to the
Related Transactions or (ii) any other adjustments that, in each case, were
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applicable to, but not included in, the Pro Forma. All such adjustments
resulting from expenditures made subsequent to the Closing Date (including, but
not limited to, capitalization of costs and expenses or payment of pre-Closing
Date liabilities) shall be treated as expenses in the period the expenditures
are made and deducted as part of the calculation of EBITDA in such period.
11.3 OTHER DEFINITIONAL PROVISIONS. References to "Sections",
"subsections", "Riders", "Exhibits", "Schedules" and "Addendums" shall be to
Sections, subsections, Riders, Exhibits, Schedules and Addendums, respectively,
of this Agreement unless otherwise specifically provided. Any of the terms
defined in SUBSECTION 11.1 may, unless the context otherwise requires, be used
in the singular or the plural depending on the reference. In this Agreement,
words importing any gender include the other genders; the words "including",
"includes" and "include" shall be deemed to be followed by the words "without
limitation"; references to agreements and other contractual instruments shall be
deemed to include subsequent amendments, assignments, and other modifications
thereto, but only to the extent such amendments, assignments and other
modifications are not prohibited by the terms of this Agreement or any other
Loan Document; references to Persons include their respective permitted
successors and assigns or, in the case of governmental Persons, Persons
succeeding to the relevant functions of such Persons; and all references to
statutes and related regulations shall include any amendments of same and any
successor statutes and regulations.
SECTION 12.
RESTATEMENT OF ORIGINAL LOAN AGREEMENT
The parties hereto agree that on the Closing Date, the
following transactions shall be deemed to occur automatically, without further
action by any party hereto:
(a) The Existing Loan Agreement shall be deemed
to be amended and restated in its entirety in the form of this
Agreement;
(b) All Existing Obligations shall, to the
extent not repaid on the Closing Date, be deemed to be Obligations
outstanding hereunder;
(c) the guaranties and Liens in favour of the
Agent for the benefit of the Existing Lenders securing payment of the Existing
Obligations shall remain in full force and effect with respect to the
Obligations; and
(d) all references in the other Loan Documents
to the Existing Loan Agreement shall be deemed to refer to this Agreement
without further amendment to such other Loan Documents.
The parties acknowledge and agree that this Agreement and the
other Loan Documents do not constitute a novation, payment and reborrowing or
termination of the Existing Obligations and that all such Existing Obligations
are in all respects continued and outstanding as Obligations under this
Agreement and the Notes with only the terms being modified from and after the
effective date of this Agreement as provided in this Agreement, the Notes and
the other
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Loan Documents. After giving effect to this Agreement, the aggregate outstanding
principal balances of each Lender's Loans on the Closing Date is as set forth on
SCHEDULE 12 hereto.
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Witness the due execution hereof by the respective duly
authorized officers of the undersigned as of the date first written above.
BEACON ROOFING SUPPLY CANADA COMPANY
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Title: VP
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GE CANADA FINANCE HOLDING
COMPANY, as Agent and as a Lender
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------
Title: Duly Authorized Signatory
----------------------------
Revolving Loan Commitment: C$15,000,000
Address:
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attn: Account Manager - Corporate Finance Beacon
Fax/Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
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EXHIBITS
A. Assignment and Acceptance Agreement
B-1 Consolidated Borrowing Base Certificate
B-2 Canadian Borrowing Base Certificate
C. Compliance Certificate
D. Notice of Borrowing
E. Inventory Report
F. Notice of Conversion/Continuation
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SCHEDULES
2.1 Initial Credit Memoranda Reserve
3 List of Closing Documents
4.1(B) Capitalization of Loan Parties
4.6 Business and Trade Names (Present and Past Five Years); Locations of
Principal Places of Business, Chief Executive Offices, Domiciles, Books
and Records and Collateral
4.9 Federal Tax Identification Number for each Loan Party
4.11 Employee Pension and Benefit Plans
4.12 Intellectual Property
4.19 Bank Accounts
4.20 Employee Matters
7.1 Indebtedness
7.2 Contingent Obligations
7.8 Transactions and Affiliates
7.11 Subsidiaries
11.1(A) Mortgaged Property
11.1(B) Other Liens
11.1(C) Pro Forma
12 Outstanding Obligations
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RIDERS
A. Conditions Rider
B. Reporting Rider
C. Financial Covenants Rider
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CONDITIONS RIDER
This Conditions Rider is attached to and made a part of that certain
Second Amended and Restated Loan and Security Agreement dated as of March 12,
2004 and entered into between Beacon Roofing Supply Canada Company, Agent and
Lenders.
(A) CLOSING DELIVERIES. Agent shall have received, in form and
substance satisfactory to Agent and Lenders, all documents, instruments and
information identified on SCHEDULE 3 and all other agreements, notes,
certificates, orders, authorizations, financing statements, mortgages and other
documents which Agent may at any time reasonably request, and all of the
conditions to the effectiveness of the US Facility Loan Agreement shall have
been satisfied.
(B) SECURITY INTERESTS. Agent shall have received satisfactory
evidence that all security interests and liens granted to Agent for the benefit
of Agent and Lenders pursuant to this Agreement or the other Loan Documents have
been duly perfected and constitute first priority liens on the Collateral,
subject only to Permitted Encumbrances.
(C) CLOSING DATE AVAILABILITY UNDER US FACILITY LOAN AGREEMENT.
After giving effect to the consummation of the transactions contemplated
hereunder and the transactions contemplated under the US Facility Loan Agreement
on the Closing Date and the payment by Borrower and US Borrower, as applicable,
of all costs, fees and expenses relating thereto, (i) the Maximum Revolving Loan
Amount on the Closing Date shall exceed the Revolving Loan by at least
C$3,000,000, (ii) the outstanding balance of the US Facility Revolving Loan
shall not exceed US$65,000,000 (including US Facility Letter of Credit
Obligations), (iii) total Indebtedness of Holdings and its Subsidiaries on a
consolidated basis shall not exceed US$154,220,000 and (iv) the ratio of Total
Indebtedness of Holdings and its Subsidiaries on a consolidated basis to EBITDA
shall not exceed 3.94.
(D) REPRESENTATIONS AND WARRANTIES. The representations and
warranties contained herein and in the Loan Documents shall be true, correct and
complete in all material respects on and as of that Funding Date to the same
extent as though made on and as of that date, except for any representation or
warranty limited by its terms to a specific date and taking into account any
amendments to the Schedules or Exhibits as a result of any disclosures made by
Borrower to Agent after the Closing Date and approved by Agent.
(E) FEES. With respect to the Revolving Advance to be made on the
Closing Date, Borrower shall have paid all fees due to Agent or any Lender and
payable on the Closing Date.
(F) NO DEFAULT. No event shall have occurred and be continuing or
would result from funding a Revolving Advance requested by Borrower that would
constitute an Event of Default or a Default.
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(G) PERFORMANCE OF AGREEMENTS. Each Loan Party shall have
performed in all material respects all agreements and satisfied all conditions
which any Loan Document provides shall be performed by it on or before that
Funding Date.
(H) NO PROHIBITION. No order, judgment or decree of any court,
arbitrator or governmental authority shall purport to enjoin or restrain Agent
or any Lender from making any Loans.
(I) NO LITIGATION. There shall not be pending or, to the knowledge
of Borrower, threatened, any material action, charge, claim, demand, suit,
proceeding, petition, governmental investigation or arbitration by, against or
affecting any Loan Party or any of its Subsidiaries (including, without
limitation, any tort claims in respect of asbestos products sold or distributed
by any Loan Party) or any property of any Loan Party or any of its Subsidiaries
that has not been disclosed to Agent by Borrower in writing, and there shall
have occurred no development in any such action, charge, claim, demand, suit,
proceeding, petition, governmental investigation or arbitration that, in the
opinion of Agent, would reasonably be expected to have a Material Adverse
Effect.
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REPORTING RIDER
This Reporting Rider is attached and made a part of that certain
Second Amended and Restated Loan and Security Agreement, dated as of March 12,
2004 and entered into between Beacon Roofing Supply Canada Company, Agent and
Lenders.
(A) MONTHLY FINANCIALS. As soon as available and, in any event,
within thirty (30) days after the end of each month, Borrower will deliver to
Agent and Lenders (1) the consolidated and consolidating balance sheets of
Holdings and its Subsidiaries as at the end of such month and the related
consolidated and consolidating statements of income, stockholders' equity and
cash flow for such month and for the period from the beginning of the then
current Fiscal Year to the end of such month, and (2) a schedule of the
outstanding Indebtedness for borrowed money of Holdings and its Subsidiaries
describing in reasonable detail each such debt issue or loan outstanding and the
principal amount and amount of accrued and unpaid interest with respect to each
such debt issue or loan.
(B) YEAR-END FINANCIALS. As soon as available and, in any event,
within ninety (90) days after the end of each Fiscal Year, Borrower will deliver
to Agent and Lenders: (1) the consolidated and consolidating balance sheets of
Holdings and its Subsidiaries as at the end of such Fiscal Year and the related
consolidated and consolidating statements of income, stockholders' equity and
cash flow for such Fiscal Year; (2) a schedule of the outstanding Indebtedness
of Holdings and its Subsidiaries describing in reasonable detail each such debt
issue or loan outstanding and the principal amount and amount of accrued and
unpaid interest with respect to each such debt issue or loan; and (3) a report
with respect to the financial statements from Holdings' Accountants, which
report shall be unqualified as to going concern and scope of audit of Holdings
and its Subsidiaries and shall state that (a) such consolidated financial
statements present fairly the consolidated financial position of Holdings and
its Subsidiaries as at the dates indicated and the results of their operations
and cash flow for the periods indicated in conformity with US GAAP applied on a
basis consistent with prior years and (b) that the examination by Holdings'
Accountants in connection with such consolidated financial statements has been
made in accordance with generally accepted auditing standards; and (4) copies of
the consolidating financial statements of Holdings and its Subsidiaries,
including (a) consolidating balance sheets of Holdings and its Subsidiaries as
at the end of such Fiscal Year showing intercompany eliminations and (b) related
consolidating statements of income of Holdings and its Subsidiaries showing
intercompany eliminations.
(C) ACCOUNTANTS' CERTIFICATION AND REPORTS. Together with each
delivery of consolidated and consolidating financial statements of Holdings and
its Subsidiaries pursuant to PARAGRAPH (B) above, Borrower will deliver to Agent
and Lenders a written statement by Holdings' Accountants (1) stating that their
examination has included a review of the terms of this Agreement as same relate
to accounting matters and (2) stating whether, in connection with their
examination, any condition or event that constitutes a Default or an Event of
Default has come to their attention and, if such a condition or event has come
to their attention, specifying the nature and period of existence thereof.
Promptly upon receipt thereof, Borrower will deliver to Agent and Lenders copies
of all significant reports submitted to Holdings by Holdings' Accountants in
connection with each annual, interim or special audit of the financial
statements
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of Holdings made by Holdings' Accountants, including the comment letter
submitted by Holdings' Accountants to management in connection with their annual
audit.
(D) COMPLIANCE CERTIFICATE. (i) Together with the delivery of each
set of financial statements referenced in PARAGRAPHS (A) and (B) above, Borrower
will deliver to Agent and Lenders a Compliance Certificate, together with (in
the case of financial statements delivered for any period ending on the last day
of a fiscal quarter) copies of the calculations and work-up employed to
determine the applicable Loan Parties' compliance or noncompliance with those
financial covenants set forth in the Financial Covenants Rider.
(E) CANADIAN AND CONSOLIDATED BORROWING BASE CERTIFICATES,
REGISTERS AND JOURNALS. On the Closing Date and thereafter, within five (5)
Business Days after the last day of each month (provided that (a) at any time
during the months of January, February and March when the sum of the outstanding
Revolving Loan, plus the outstanding US Facility Revolving Loan, plus the
outstanding US Facility Letter of Credit Obligations, exceeds the Consolidated
Borrowing Base (calculated without giving effect to the Seasonal Inventory
Advance Rate Percentage) and (b) at all times when EXCESS AVAILABILITY is less
than US$15,000,000, such delivery shall also be made on each Monday following
the end of the prior week), Borrower shall deliver to Agent for the last
Business Day of such period: (1) a Canadian Borrowing Base Certificate updated
to reflect the most recent sales and collections of Borrower, together with a
Consolidated Borrowing Base Certificate setting forth the Consolidated Borrowing
Base; (2) an invoice register or sales journal (or a similar summary report
satisfactory to Agent) describing all sales of the Borrower, in form and
substance satisfactory to Agent, and, if Agent so requests, copies of invoices
evidencing such sales and proofs of delivery relating thereto; (3) a cash
receipts journal (or a similar summary report satisfactory to Agent); (4) a
credit memo journal (or a similar summary report satisfactory to Agent); and (5)
an adjustment journal (or a similar summary report satisfactory to Agent),
setting forth all adjustments to Borrower's accounts receivable. Borrower shall
cause US Borrower to deliver to Agent copies of all deliveries required under
PARAGRAPH (F) of the Reporting Rider to the US Facility Loan Agreement,
contemporaneously with providing such deliveries to US Facility Agent
(including, without limitation, a copy of the US Obligors Consolidating
Borrowing Base Certificate).
(F) INVENTORY REPORTS AND LISTINGS AND AGINGS. On the Closing Date
and within five (5) Business Days after the last day of each month and from time
to time upon the request of Agent, Borrower will deliver to Agent: (1) an aged
trial balance of all then existing Accounts; and (2) an Inventory Report duly
executed by an officer of Borrower and substantially in the form of EXHIBIT E as
of the last day of such period. As soon as available and in any event within
five (5) Business Days after the last day of each month, and from time to time
upon the request of Agent, Borrower will deliver to Agent: (1) an aged trial
balance of all then existing accounts payable; and (2) a detailed inventory
listing and cover summary report. All such reports shall be in form and
substance satisfactory to Agent and, unless otherwise directed by Agent, may be
transmitted to Agent pursuant to an electronic transmitting reporting system.
Borrower shall cause US Borrower to deliver to Agent copies of all deliveries
required under PARAGRAPH (F) of the Reporting Rider to the US Facility Loan
Agreement, contemporaneously with providing such deliveries to US Facility
Agent.
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(G) MANAGEMENT REPORT. Together with each delivery of financial
statements of Holdings and its Subsidiaries pursuant to PARAGRAPHS (A) and (C)
above, Borrower will deliver to Agent and Lenders a management report: (1)
describing the operations and financial condition of Holdings and its
Subsidiaries for the month then ended and the portion of the current Fiscal Year
then elapsed; (2) setting forth in comparative form the corresponding figures
for the corresponding periods of the previous Fiscal Year and the corresponding
figures from the most recent Projections for the current Fiscal Year delivered
to Lenders pursuant to PARAGRAPH (K) below; and (3) discussing the reasons for
any significant variations. The information above shall be presented in
reasonable detail and shall be certified on behalf of Borrower by the chief
financial officer of Borrower to the effect that such information fairly
presents in all material respects the results of operations and financial
condition of Holdings and its Subsidiaries as at the dates and for the periods
indicated.
(H) APPRAISALS. From time to time, upon the request of Agent,
Borrower will obtain and deliver to Agent, at Borrower's expense, appraisal
reports in form and substance and from appraisers satisfactory to Agent, stating
the then current fair market and orderly liquidation values of all or any
portion of the Collateral; PROVIDED, HOWEVER, so long as no Default or Event of
Default is continuing, Agent shall not request an appraisal as to any particular
category of Collateral to be performed more than once every Loan Year at
Borrower's expense. Without limiting the generality of the foregoing, Agent
shall request and Borrower will obtain and deliver to Agent, at least once every
Loan Year, an appraisal report stating the then current orderly liquidation
value of US Obligors' and Borrower's Inventory.
(I) GOVERNMENT NOTICES. Borrower will deliver to Agent and Lenders
promptly after receipt copies of all notices, requests, subpoenas, inquiries or
other writings received from any governmental agency concerning any Canadian
Pension Plan, Canadian Benefit Plan or Employee Benefit Plan, the violation or
alleged violation of any Environmental Laws, the storage, use or disposal of any
Hazardous Material, the violation or alleged violation of the United States FAIR
LABOR STANDARDS ACT or any Loan Party's payment or non-payment of any taxes
including any tax audit.
(J) EVENTS OF DEFAULT, ETC. Promptly upon any officer of Borrower
obtaining knowledge of any of the following events or conditions, Borrower shall
deliver to Agent copies of all notices given or received by any Loan Party with
respect to any such event or condition and a certificate on behalf of Borrower,
signed on behalf of Borrower by Borrower's chief executive officer, specifying
the nature and period of existence of such condition or event and what action
such Loan Party has taken, is taking and proposes to take with respect thereto:
(1) any condition or event that constitutes an Event of Default or Default; (2)
any notice of default that any Person has given to any Loan Party or any other
action taken with respect to a claimed default; or (3) any Material Adverse
Effect or (4) any default or event of default with respect to any Indebtedness
of Holdings or any of its Subsidiaries.
(K) PROJECTIONS. As soon as available and in any event no later
than forty-five (45) days after the end of Holdings' Fiscal Year, Borrower will
deliver to Agent and Lenders consolidated and consolidating Projections of
Holdings and its Subsidiaries for the forthcoming Fiscal Year, month by month.
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(L) OTHER INFORMATION. With reasonable promptness, Borrower will
deliver such other information and data as Agent or Lenders may reasonably
request from time to time.
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FINANCIAL COVENANTS RIDER
This Financial Covenants Rider is attached and made a part of that
certain Second Amended and Restated Loan and Security Agreement, dated as of
March 12, 2004 and entered into among Beacon Roofing Supply Canada Company,
Agent and Lenders.
(A) EXCESS AVAILABILITY. Excess Availability shall be maintained
at all times in an amount of at least US$5,000,000.
(B) CAPITAL EXPENDITURE LIMITS. The aggregate amount of all
Capital Expenditures of US Borrower and its Subsidiaries, Capital Leases with
respect to fixed assets of US Borrower and its Subsidiaries (which shall be
considered to be expended in full on the date such Capital Lease is entered
into) and other contracts with respect to fixed assets initially capitalized on
US Borrower's or any Subsidiary's balance sheet prepared in accordance with US
GAAP (which shall be considered to be expended in full on the date such contract
is entered into) (excluding, in each case, expenditures for trade-ins and
replacement of assets to the extent funded with casualty insurance proceeds and
excluding the purchase price allocated to fixed assets acquired in connection
with a Permitted Acquisition) will not exceed US$8,500,000 in any Fiscal Year.
Fifty percent (50%) of the amount set forth above not made in any Fiscal Year
may be carried over for one year only to the next Fiscal Year; PROVIDED,
HOWEVER, any carried-over amount will be deemed used only after all otherwise
permitted amounts for that Fiscal Year have been used.
(C) FIXED CHARGE COVERAGE. Fixed Charge Coverage for each twelve
(12) month period ending as of any date set forth below shall not be less than
the ratio set forth below for such date:
DATE RATIO
---- -----
March 31, 2004 1.10
June 30, 2004 1.10
September 30, 2004 1.10
December 31, 2004 1.05
March 31, 2005 1.05
June 30, 2005 and the last day of each fiscal
quarter thereafter 1.10
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(D) SENIOR INDEBTEDNESS TO EBITDA. The ratio of Senior
Indebtedness calculated as of any date set forth below to EBITDA for the twelve
(12) month period ending on such date shall not be greater than the ratio set
forth below for such date:
DATE RATIO
---- -----
March 31, 2004 2.60
June 30, 2004 2.50
September 30, 2004 2.30
December 31, 2004 2.50
March 31, 2005 2.40
June 30, 2005, and the last day of each fiscal
quarter thereafter 2.00
The aggregate balances of the Revolving Loan and the US Facility
Revolving Loans included in Senior Indebtedness as of any date of determination
shall be equal to the average balance of the Revolving Loan and the US Facility
Revolving Loans, respectively, for such date and the last day of the two
immediately preceding months.
With respect to each Target acquired by US Borrower during any such
twelve month period, EBITDA shall be adjusted by an amount equal to the Pro
Forma EBITDA of such Target for the portion of such twelve (12) month period
which precedes the acquisition of such Target by US Borrower.
(E) LEASE LIMITS. No Loan Party or any of its Subsidiaries will,
directly or indirectly, become or remain liable in any way, whether directly or
by assignment or as a guarantor or other surety, for the obligations of the
lessee under any operating lease, synthetic lease or similar off-balance sheet
financing, if the aggregate amount of all rents (or substantially equivalent
payments) paid by the Loan Parties and their Subsidiaries under all such leases
would exceed US$11,000,000, or the Equivalent Amount thereof, in any fiscal year
of Borrower.