COMMERCIAL BANKING CENTRE
1 CITY CENTRE DRIVE
SUITE 200
MISSISSAUGA, ONTARIO
L5B 1M2
March 31, 1998, as amended & restated as at November 30, 1998.
SMP Motor Products Ltd.
c/o Standard Motor Products, Inc.
37 - 18 Northern Blvd.
Long Island City
New York, N.Y.
11101 USA
Attention: Mr. Michael J. Bailey, Senior Vice President, Administration and
Finance & C.F.O.
Dear Sirs:
We, Canadian Imperial Bank of Commerce ("CIBC"), are pleased to establish the
following Credits for SMP Motor Products Ltd., the Borrower and Standard Motor
Products, Inc., the Guarantor, our Customer.
FACILITY A: COMMITTED INSTALLMENT LOAN
CREDIT LIMIT: CDN$20,000,000.
PURPOSE: Originally to finance capital expenditure for the EIS
Brake division in Canada.
AVAILABILITY AND RATE: A committed credit facility under which the Borrower may
at its option obtain on a non-revolving basis the
following:
(1) Canadian dollar loans. The Interest Rate is Prime
Rate plus 1.75% per year.
(2) U.S. dollar loans and overdrafts. The Interest
Rate is U.S. Base Rate plus 1.75% per year.
(3) Canadian dollar Bankers Acceptances (with terms to
maturity of 30 to 180 days). The stamping fee is
2.50% per year.
(4) U.S. dollar LIBOR loans. Interest is payable at
the LIBO Rate for the loan term (1 to 6 months),
plus 2.50% per year.
The above rates are based on loans to SMP Motor Products
Inc. and in the event that loans are made available to
any non-Canadian entity CIBC will be indemnified for any
reduction or loss of income resulting from the
application of applicable withholding tax.
RATE ADJUSTMENT: In the event that the unsecured term debt of
the Guarantor is rated investment grade as determined by
an external rating agency satisfactory to CIBC, then the
interest rate on all the borrowing options under the
Committed Facility A herein shall be reduced by 25 basis
points per year.
SCHEDULED PAYMENTS: Unless an Event of Default has occurred, the
Borrower will pay CIBC interest monthly in arrears, and
principal is repayable in accordance with the following
schedule:
On or before March 31, 1999 - CDN$10,000,000
On August 30, 2000 - CDN$ 2,000,000
On August 30, 2001 - CDN$ 2,000,000
On August 30, 2002 - CDN$ 6,000,000
EARLY PAYMENT UPON DEFAULT. If any Event of Default
occurs and is continuing, CIBC may cancel this Facility
A and declare all amounts then outstanding or accrued in
connection with this Facility A (including all amounts
which may be payable as a consequence of such
cancellation and declaration) to be immediately due and
payable, where upon those amounts shall be immediately
due and payable by the Customer to CIBC, without any
further requirement and proceed immediately to exercise
all or any of CIBC's rights under this Agreement or
other rights (whether by operation of law, contract or
otherwise).
FACILITY B: FOREIGN EXCHANGE
CREDIT LIMIT: US$500,000.
DESCRIPTION: The Borrower may, at our discretion, enter
into one or more spot, forward or other foreign exchange
rate transactions with us and/or CIBC Wood Gundy Inc.
Your ability to make use of this Foreign Exchange
Facility will depend upon your outstanding obligations
under such transactions, as determined by us. This is an
uncommitted demand Facility. CIBC may cancel this
Facility B and/or demand repayment of all amounts owing
under this Facility B at any time, for any reason or for
no reason, even if the Borrower is not in default
hereunder.
SECURITY
SECURITY: The following security is required:
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GUARANTEE: Guarantee and specific Postponement of Claim from
Standard Motor Products, Inc. in an amount that is
unlimited and supported by a negative pledge agreement,
a notification provision in the event of default under
its U.S. Bank Group Credit Agreement dated as at
November 30, 1998, a Directors' Resolution and Letter of
Opinion from the Guarantor's external legal counsel in
form satisfactory to CIBC counsel. The Guarantee is also
to include the provisions of the attached Schedule -
Standard Credit Terms.
COVENANTS
COVENANTS: The Borrower, SMP Motor Products Ltd. will ensure that:
CURRENT RATIO: Current Ratio of the Borrower is not at
any time less than 1.5:1.
MINIMUM SHAREHOLDERS' EQUITY: Minimum Shareholders'
Equity of the Borrower is not at any time less than
$10,000,000. (Note: Inter-company advances are to be
included as equity).
NEGATIVE PLEDGE: There is no Lien on any of the present
or future assets of the Borrower and the Guarantor and
that the Borrower and the Guarantor shall not assign any
right to any income, without our prior consent (which
consent will not be unreasonably withheld), except as
permitted in the U.S. Bank Group Credit Agreement.
INCREASED COSTS, LOSSES, FOREGONE RETURN, ETC.: If CIBC
determines that any new legal requirement or official
regulatory directive or request (including, without
limitation, that calling for new or increased reserves,
special deposits, tax, capital or other allocation, but
excluding that solely imposing increased tax on CIBC's
general income) has or will have the direct or indirect
effect of:
(a) increasing the cost to CIBC of maintaining any
commitment or performing any obligation under this
Agreement;
(b) reducing any amount received or receivable by CIBC
or its effective return in connection with this
Agreement or on its capital; or
(c) causing CIBC to make any payment or to forgo any
return based on any amount received or receivable
by CIBC in connection with this Agreement;
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then the Borrower will pay to CIBC on demand such
additional amount or amounts as shall compensate CIBC
for any such cost, reduction, payment or foregone
return. Any certificate of CIBC as to any such
compensation shall, except for demonstrable error, be
conclusive and binding on the Borrower. In determining
such compensation, CIBC may use any commercially
reasonable method of averaging and attribution that it
considers applicable.
CROSS DEFAULT: All Facilities in this Agreement will
have the benefit of cross-default to all indebtedness of
the Guarantor in an amount exceeding US$2 million,
including but not limited to any outstanding
indebtedness under the U.S. Bank Group Credit Agreement;
the Insurance Companies' Note Agreements; the Clipper
Financing; and the Cooper Financing in respect of
non-payment of any indebtedness when due, or any default
under any of the financial covenants entered into with
other lenders during the period from the Closing date of
this Agreement until the Maturity Date or any extension
thereof of the U.S. Bank Group Credit Agreement provided
that (x) a failure by the Guarantor to comply with the
provisions of Article Vii of the U.S. Bank Group Credit
Agreement shall not constitute a default under the
Guarantee so long as the Bank Group has not (i)
accelerated the maturity of the indebtedness due under
the U.S. Bank Group Credit Agreement, or (ii) taken any
enforcement action against the Guarantor, or (iii)
terminated or reduced any of the Commitments (as defined
in the U.S. Bank Group Credit Agreement pursuant to
Article Vii of the U.S. Bank Group Credit Agreement), or
(iv) failed to make an advance requested under the U.S.
Bank Group Credit Agreement and (y) a default with
respect to the Insurance Companies' Note Agreements, the
Cooper Financing or the Clipper Financing shall not
constitute a default under the Guarantee unless the
Required Banks under the U.S. Bank Group Credit
Agreement have taken any of the actions set forth in (i)
through (iv) of the preceding clause.
ASSIGNMENT: CIBC reserves the right to syndicate,
participate, sell or assign its rights, benefits and
obligations under these facilities in whole or in part
to one or more persons with the consent of the Borrower
and Guarantor, such consent not to be unreasonably
withheld or delayed. No consent is required if an Event
of Default has occured and is continuing. The Borrower
and Guarantor agree to enter into such amended and/or
further documentation at the expense of CIBC (including
but not limited to a formal Credit Agreement) as
requested by CIBC in connection with such assignment.
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REPORTING REQUIREMENTS
REPORTING (1) Within 45 days of the end of each fiscal quarter,
REQUIREMENTS: financial statements for that fiscal quarter for the
Guarantor, Standard Motor Products Inc.
(2) Within 120 days of each fiscal year-end, audited
financial statements for that fiscal year for SMP Motor
Products Ltd.
(3) Within 90 days of each fiscal year-end, annual
financial statements for that fiscal year on an audited
basis for the Guarantor.
(4) Within 30 days after each fiscal year-end, a
business plan/forecast for the next fiscal year,
including month-by-month projected balance sheets,
income statements and cash flow projections for the
Guarantor.
OTHER PROVISIONS
OTHER: All fees including legal, out of pocket expenses
and disbursements incurred by CIBC in connection with
the preparation, negotiation or enforcement of this
Agreement are for the account of the Borrower.
CONDITIONS PRECEDENT: (i) The facilities herein are contingent upon CIBC's
claims under its Guarantee from the Guarantor ranking
pari passu in all respects with the Guarantor's
indebtedness under the U.S. Bank Group Credit Agreement
and to the Insurance Company Noteholders.
(ii) Closure of the U.S. Banking Group Credit Agreement.
(iii) The existence of no event of default (with
evidence satisfactory to CIBC of the receipt by the
Borrower of appropriate waivers, amendments and
consents) under any credit agreement, promissory note,
or other agreement (including without limitation, the
Insurance Companies' Note Agreements) related to
indebtedness for borrowed money or any material contract
or purchase agreement to which the Borrower is a party.
(iv) Such other terms and conditions as may be
reasonably required by CIBC or its counsel.
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FEES
LOAN ADMINISTRATION: $100. per month.
CALCULATIONS: The calculations made under the "Covenants" and
"Reporting Requirements" sections of this Agreement are
to be done on a consolidated basis.
DEFAULT INTEREST RATE: 2% per year above the applicable non-default rate stated
on page 1 of this Agreement. In connection with any
amounts in foreign currency, see "Foreign Currency
Conversion" in the Attached Schedule.
NEXT SCHEDULED
REVIEW DATE: November 30, 1999
STANDARD CREDIT TERMS: The attached Schedule - Standard Credit Terms forms part
of this Agreement.
Upon acceptance, this Agreement amends and restates the
existing credit agreement dated March 31, 1998, between you and CIBC.
Outstanding amounts (and security) under that Agreement will be covered by this
Agreement.
The parties agree that this Agreement may be executed by
fascimile Agreement and further agree that they will subsequently exchange
original copies.
Yours truly,
Canadian Imperial Bank of Commerce
by: by:
Jake Crough Robert Slaymaker
Director, Commercial Commercial
Banking
Lending Specialist
Phone no.: (905) 566 3706 Phone no.: (905) 566 3684
Fax no.: (905) 279 9284 Fax no.: (905) 279 9284
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SMP MOTOR PRODUCTS LTD.
Acknowledgement: The undersigned certifies that all information provided to CIBC
is true, and acknowledges receipt of a copy of this Agreement (including any
Schedules referred to above).
Accepted this day of , .
---------- ---------------------------- ------------
SMP MOTOR PRODUCTS LTD.
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
Accepted this day of , .
---------- ---------------------------- ------------
The Guarantor confirms that its guarantee in favour of CIBC remains in full
force and effect.
SMP MOTOR PRODUCTS LTD.(as Guarantor)
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
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CIBC LOGO
Form 6326-95/06
(WP51CRED)
SCHEDULE - STANDARD CREDIT TERMS
ARTICLE 1 - GENERAL
1.1 INTEREST RATE. You will pay interest on each Credit at nominal rates per
year equal to:
(a) for amounts above the Credit Limit of a Credit or a part of a Credit or
for amounts that are not paid when due, the Default Interest Rate, and
(b) for any other amounts, the rate specified in this Agreement.
1.2 VARIABLE INTEREST. Each variable interest rate provided for under this
Agreement will change automatically, without notice, whenever the Prime Rate or
the U.S. Base Rate, as the case may be, changes.
1.3 PAYMENT OF INTEREST. Interest is calculated on the daily balance of the
Credit at the end of each day. Interest is due once a month, unless the
Agreement states otherwise. Unless you have made other arrangements with us, we
will automatically debit your Operating Account for interest amounts owing. If
your Operating Account is in overdraft and you do not deposit to the account an
amount equal to the monthly interest payment, the effect is that we will be
charging interest on overdue interest (which is known as compounding). Unpaid
interest continues to compound whether or not we have demanded payment from you
or started a legal action, or get judgment, against you.
1.4 DEFAULT INTEREST. To determine whether Default Interest is to be charged,
the following rules apply:
(a) Default Interest will be charged on the amount that exceeds the Credit
Limit of any particular Credit.
(b) If there are several parts of a Credit, Default Interest will be
charged if the Credit Limit of a particular part is exceeded. For example, if
Credit A's limit is $250,000, and the limit of one part is $100,000 and the
limit of that part is exceeded by $25,000, Default Interest will be charged on
that $25,000 excess, even if the total amount outstanding under Credit A is less
than $250,000.
1.5 FEES. You will pay CIBC's fees for each Credit as out lined in the Letter.
You will also reimburse us for all reasonable fees (including legal fees) and
out-of-pocket expenses incurred in registering any security, and in enforcing
our rights under this Agreement or any security. We will automatically debit
your Operating Account for fee amounts owing.
1.6 OUR RIGHTS RE DEMAND CREDITS. At CIBC, we believe that the banker-customer
relationship is based on mutual trust and respect. It is important for us to
know all the relevant information (whether good or bad) about your business.
CIBC is itself a business. Managing risks and monitoring our customers' ability
to repay is critical to us. We can only continue to lend when we feel that we
are likely to be repaid. As a result, if you do something that jeopardizes that
relationship, or if we no longer feel that you are likely to repay all amounts
borrowed, we may have to act. We may decide to act, for example, because of
something you have done, information we receive about your business, or changes
to the economy that affect your business. Some of the actions that we may decide
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to take include requiring you to give us more financial information, negotiating
a change in the interest rate or fees, or asking you to get further accounting
assistance, put more cash into the business, provide more security, or produce a
satisfactory business plan. It is important to us that your business succeeds.
We may, however, at our discretion, demand immediate repayment of any
outstanding amounts under any demand Credit. We may also, at any time and for
any cause, cancel the unused portion of any demand Credit. Under normal
circumstances, however, we will give you 30 days' notice of any of these
actions.
1.7 PAYMENTS. If any payment is due on a day other than a Business Day, then the
payment is due on the next Business Day.
1.8 APPLYING MONEY RECEIVED. If you have not made payments as required by this
Agreement, or if you have failed to satisfy any term of this Agreement (or any
other agreement you have that relates to this Agreement), or at any time before
default but after we have given you appropriate notice, we may decide how to
apply any money that we receive. This means that we may choose which Credit to
apply the money against, or what mix of principal, interest, fees and overdue
amounts within any Credit will be paid.
1.9 INFORMATION REQUIREMENTS. We may from time to time reasonably require you to
provide further information about your business. We may require information from
you to be in a form acceptable to us.
1.10 INSURANCE. You will keep all your business assets and property insured (to
the full insurable value) against loss or damage by fire and all other risks
usual for property such as yours (plus for any other risks we may reasonably
require). If we ask, you will give us either the policies themselves or adequate
evidence of their existence. If your insurance coverage for any reason stops, we
may (but do not have to) insure the property. We will automatically debit your
Operating Account for these amounts. Finally, you will notify us immediately of
any material loss or damage to the property.
1.11 ENVIRONMENTAL. You will carry on your business, and maintain your assets
and property, in accordance with all applicable environmental laws and
regulations. If (a) there is any release, deposit, discharge or disposal of
pollutants of any sort (collectively, a "Discharge") in connection with either
your business or your property, and we pay any fines or for any clean-up, or (b)
we suffer any loss or damage as a result of any Discharge, you will reimburse
CIBC, its directors, officers, employees and agents for any and all losses,
damages, fines, costs and other amounts (including amounts spent preparing any
necessary environmental assessment or other reports, or defending any lawsuits)
that result. If we ask, you will defend any lawsuits, investigations or
prosecutions brought against CIBC or any of its directors, officers, employees
and agents in connection with any Discharge. Your obligation to us under this
section continues even after all Credits have been repaid and this Agreement has
terminated.
1.12 CONSENT TO RELEASE INFORMATION. We may from time to time give any credit or
other information about you to, or receive such information from, (a) any
financial institution, credit reporting agency, rating agency or credit bureau,
(b) any person, firm or corporation with whom you may have or propose to have
financial dealings, and (c) any person, firm or corporation in connection with
any dealings you have or propose to have with us. You agree that we may use that
information to establish and maintain your relationship with us and to offer any
services as permitted by law, including services and products offered by our
subsidiaries when it is considered that this may be suitable to you.
1.13 OUR PRICING POLICY: Fees, interest rates and other charges for your banking
arrangements are dependent upon each other. If you decide to cancel any of these
arrangements, you will have to pay us any increased or added fees, interest
rates and charges we determine and notify you of. These increased or added
amounts are effective from the date of the changes that you make.
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1.14 PROOF OF DEBT. This Agreement provides the proof, between CIBC and you, of
the credit made available to you. There may be times when the type of Credit you
have requires you to sign additional documents. Throughout the time that we
provide you credit under this Agreement, our loan accounting records will
provide complete proof of all terms and conditions of your credit (such as
principal loan balances, interest calculations, and payment dates).
1.15 RENEWALS OF THIS AGREEMENT. This Agreement will remain in effect for your
Credits for as long as they remain unchanged. We have shown a Next Scheduled
Review Date in the Letter. If there are no changes to the Credits this Agreement
will continue to apply, and you will not need to sign anything further. If there
are any changes, we will provide you with either an amending agreement, or a new
replacement Letter, for you to sign.
1.16 CONFIDENTIALITY: The terms of this Agreement are confidential between you
and CIBC. You therefore agree not to disclose the contents of this Agreement to
anyone except your professional advisors.
1.17 PRE-CONDITIONS. You may use the Credits granted to you under this Agreement
only if:
(a) we have received properly signed copies of all documentation that we
may require in connection with the operation of your accounts and your ability
to borrow and give security;
(b) all the required security has been received and registered to our
satisfaction;
(c) any special provisions or conditions set forth in the Letter have been
complied with; and (d) if applicable, you have given us the required number of
days notice for a drawing under a Credit.
1.18 NOTICES. We may give you any notice in person or by telephone, or by letter
that is sent either by fax or by mail.
1.19 USE OF THE OPERATING LINE. You will use your Operating Line only for your
business operating cash needs. You are responsible for all debits from the
Operating Account that you have either initiated (such as cheques, loan
payments, pre-authorized debits, etc.) or authorized us to make. Payments are
made by making deposits to the Operating Account. You may not at any time exceed
the Credit Limit. We may, without notice to you, return any debit from the
Operating Account that, if paid, would result in the Credit Limit being
exceeded, unless you have made prior arrangements with us. If we pay any of
these debits, you must repay us immediately the amount by which the Credit Limit
is exceeded.
1.20 FOREIGN CURRENCY CONVERSION. If this Agreement includes foreign currency
Credits, then currency changes may affect whether either the Credit Limit of any
Credit or the Overall Credit Limit has been exceeded.
(a) See section 1.4 for the general rules on how Default Interest is
calculated.
(b) To determine the Overall Credit Limit, all foreign currency amounts are
converted to Canadian dollars, even if the Credit Limits of any particular
Credits are quoted directly in a foreign currency (such as U.S. dollars). No
matter how the Credit Limit of a particular Credit is quoted, therefore,
currency fluctuations can affect whether the Overall Credit Limit has been
exceeded. For example, if Credits X and Y have Credit Limits of C$100,000 and
US$50,000, respectively, with an Overall Credit Limit of C$175,000, if Credit X
is at C$90,000 and Credit Y is at US$45,000, Default Interest will be charged
only if, after converting the US dollar amount, the Overall Credit Limit is
exceeded.
(c) Whether the Credit Limit of a particular Credit has been exceeded will
depend on how the Credit Limit is quoted, as described below.
(d) If the Credit Limit is quoted as, for example, the U.S. dollar
equivalent of a Canadian dollar amount, daily exchange rate fluctuations may
affect whether that Credit Limit has been exceeded. If, on the other hand, the
Credit Limit is quoted in a foreign currency (for example, directly in US
dollars), whether that Credit Limit has been exceeded is determined by reference
only to the closing balance of that Credit in that currency.
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(e) For example, assume an outstanding balance of a Credit on a particular
day of US$200,000. If the Credit Limit is stated as "the US dollar equivalent of
C$275,000", then whether the Credit Limit of that Credit has been exceeded will
depend on the value of the Canadian dollar on that day. If the conversion
calculations determine that the outstanding balance is under the Credit Limit, a
drop in the value of the Canadian dollar the next day (without any change in the
balance) may have the effect of putting that Credit over its Credit Limit. If,
on the other hand, the Credit Limit is stated as "US$200,000", the Credit Limit
is not exceeded, and a drop in the value of the dollar the next day will not
change that (although the Overall Credit Limit may be affected).
(f) Conversion calculations are done on the closing daily balance of the
Credit. The conversion factor used is the mid-point between the buying and
selling rate offered by CIBC for that currency on the conversion date.
1.21 Instalment Loans. The following terms apply to each Instalment Loan.
(a) Non-revolving loans. Unless otherwise stated in the Letter, any
Instalment Loan is non-revolving. This means that any principal payment made
permanently reduces the available Loan Amount. Any payment we receive is applied
first to overdue interest, then to current interest owing, then to overdue
principal, then to any fees and charges owing, and finally to current principal.
(b) Floating Rate Instalment Loans. Floating Rate Instalment Loans may have
either (i) blended payments or (ii) payments of fixed principal amounts, plus
interest, as described below.
(i) BLENDED PAYMENTS. If you have a Floating Rate Loan that has blended
payments, the amount of your monthly payment is fixed for the term of the
loan, but the interest rate varies with changes in the Prime or U.S. Base
Rate (as the case may be). If the Prime or U.S. Base Rate during any month
is lower than what the rate was at the outset, you may end up paying off
the loan before the scheduled end date. If, however, the Prime or U.S. Base
Rate is higher than what it was at the outset, the amount of principal that
is paid off is reduced. As a result, you may end up still owing principal
at the end of the term because of these changes in the Prime or U.S. Base
Rate.
(ii) PAYMENTS OF PRINCIPAL PLUS INTEREST. If you have a Floating Rate Loan
that has regular principal payments, plus interest, the principal payment
amount of your Loan is due on each payment date specified in the Letter.
The interest payment is also due on the same date, but it is debited from
your Operating Account one or two banking days later. Although the
principal payment amount is fixed, your interest payment will usually be
different each month, for at least one and possibly more reasons, namely:
the reducing principal balance of your loan, the number of days in the
month, and changes to the Prime Rate or U.S. Base Rate (as the case may
be).
(c) Prepayment. Unless otherwise agreed, the following terms apply to
prepayment of any Instalment Loan:
(i) FLOATING RATE INSTALMENT LOANS. You may prepay all or part of a
Floating Rate Instalment Loan (whether it is a Demand or a Committed Loan)
at any time without notice or penalty.
(ii) FIXED RATE INSTALMENT LOANS. You may prepay all or part of a Fixed
Rate Instalment Loan, on the following condition. You must pay us, on the
prepayment date, a prepayment fee equal to the interest rate differential
for the remainder of the term of the Loan, in accordance with the standard
formula used by CIBC in these situations.
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1.22 NOTICE OF DEFAULT. You will promptly notify us of the occurrence of any
event that is an Event of Default (or any that would be an Event of Default if
the only thing required is either notice being given or time elapsing, or both).
ARTICLE 2 - DEFINITIONS
2.1 Definitions. In this Agreement, the following terms have the following
meanings:
"BASE RATE LOAN" means a U.S. dollar loan on which interest is calculated by
reference to the U.S. Base Rate.
"BUSINESS DAY" means any day (other than a Saturday or a Sunday) that the CIBC
Branch/Centre is open for business.
"CIBC BRANCH/CENTRE" means the CIBC branch or banking centre noted on the first
page of this Agreement, as changed from time to time by agreement between the
parties.
"COMMITTED INSTALMENT LOAN" means an Instalment Loan that is payable in regular
instalments but is repayable in full only upon the occurrence of an Event of
Default. Such a Loan may be either at a fixed or a floating rate of interest.
"CREDIT" means any credit referred to in the Letter, and if there are two or
more parts to a Credit, "Credit" includes reference to each part.
"CREDIT LIMIT" of any Credit means the amount specified in the Letter as its
Credit Limit, and if there are two or more parts to a Credit, "Credit Limit"
includes reference to each such part.
"CURRENT ASSETS" are cash, accounts receivable, inventory and other assets that
are likely to be converted into cash, sold, exchanged or expended in the normal
course of business within one year or less, excluding amounts due from related
parties.
"CURRENT LIABILITIES" means debts that are or will become payable within one
year or one operating cycle, whichever is longer, excluding amounts due to
related parties, and which will require Current Assets to pay. They usually
include accounts payable, accrued expenses, deferred revenue and the current
portion of long-term debt.
"CURRENT RATIO" means the ratio of Current Assets to Current Liabilities.
"DEFAULT INTEREST RATE", unless otherwise defined in the Letter, means the
Standard Overdraft Rate.
"EVENT OF DEFAULT" means, in connection with any Committed Instalment Loan (even
if that Loan has not yet been drawn), the occurrence of any of the following
events (or the occurrence of any other event of default described in this
Agreement, in any of the security documents or in any other agreement or
document you have signed with us):
(1) You do not pay, when due, any amount that you are required to pay us under
this Agreement or otherwise, or you do not perform any of your other obligations
to us under this Agreement or otherwise.
(2) Any part of the security terminates or is no longer in effect, without our
prior written consent.
(3) You cease to carry on your business or any material part thereof in the
normal course, or it reasonably appears to us that that may happen.
(4) A representation that you have made (or deemed to have made) in this
Agreement or in any security agreement is incorrect or misleading in any
material respect.
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(5) (i) An actual or potential default or event of default occurs in connection
with any debt owed by you, with the result that the payment of the debt has
become, or is capable of becoming, accelerated, or (ii) you do not make a
payment when due in connection with any such debt. (This subsection (5),
however, applies only to amounts that we reasonably consider to be material.)
(6) If you are a corporation, there is, in our reasonable opinion, a change in
effective control of the corporation, or if you are a partnership, there is a
change in the partnership membership.
(7) We believe, in good faith and upon commercially reasonable grounds, that all
or part of the property subject to any of the security is or is about to be
placed in jeopardy or that a material adverse change in your business operations
or financial affairs has occurred.
(8) The holder of a Lien takes possession of all or part of your property; or a
distress, execution or other similar process is levied against any such
property.
(9) You (i) become insolvent; (ii) are unable generally to pay your debts as
they become due; (iii) make a proposal in bankruptcy, or file a notice of
intention to make such a proposal; (iv) make an assignment in bankruptcy; (v)
bring a court action to have yourself declared insolvent or bankrupt; or someone
else brings an action for such a declaration; or (vi) you default in payment or
breach any other obligation to any of your other creditors.
(10) If you are a corporation, (i) you are dissolved; (ii) your shareholders or
members pass a resolution for your winding-up or liquidation; (iii) someone goes
to court seeking your winding-up or liquidation, or the appointment of an
administrator, conservator, receiver, trustee, custodian or other similar
official for you or for all or substantially all your assets; or (iv) you seek
protection under any statute offering relief against the company's creditors.
"FIXED RATE INSTALMENT LOAN" means an Instalment Loan that is also a Fixed Rate
Loan.
"FIXED RATE LOAN" means any loan drawn down, converted or extended under a
Credit at an interest rate which was fixed for a term, instead of referenced to
a variable rate such as the Prime Rate or U.S. Base Rate, at the time of such
drawdown, conversion or extension. For purposes of certainty, a Fixed Rate Loan
includes a LIBOR Loan.
"FLOATING RATE INSTALMENT LOAN" means either an Instalment Loan that is either a
Prime Rate Loan or a Base Rate Loan.
"INSTALMENT LOAN" means a loan that is repayable either in fixed instalments of
principal, plus interest, or in blended instalments of both principal and
interest. A Demand Instalment Loan is repayable on demand. A Committed
Instalment Loan is repayable only upon the occurrence of an Event of Default.
"LETTER" means the letter agreement between you and CIBC to which this Schedule
and any other Schedules are attached.
"LIEN" includes a mortgage, charge, lien, security interest or encumbrance of
any sort on an asset, and includes conditional sales contracts, title retention
agreements, capital trusts and capital leases.
"MINIMUM SHAREHOLDERS' EQUITY" means the total Shareholders' Equity, minus (a)
amounts due from/investments in related parties, and the value of all
Intangibles, plus (b) all Postponed Debt.
"NORMAL COURSE LIEN" means a Lien that (a) arises by operation of law or in the
ordinary course of business as a result of owning any such asset (but does not
include a Lien given to another creditor to secure debts owed to that creditor)
and (b), taken together with all other Normal Course Liens, does not materially
affect the value of the asset or its use in the business.
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"OPERATING ACCOUNT" means the account that you normally use for the day-to-day
cash needs of your business, and may be either or both of a Canadian dollar and
a U.S. dollar account.
"POSTPONED DEBT" means any debt owed by you that has been formally postponed to
CIBC.
"PRIME RATE" means the variable reference rate of interest per year declared by
CIBC from time to time to be its prime rate for Canadian dollar loans made by
CIBC in Canada.
"PRIME RATE LOAN" means a Canadian dollar loan on which interest is calculated
by reference to Prime Rate.
"PURCHASE MONEY LIEN" means a Lien incurred in the ordinary course of business
only to secure the purchase price of an asset, or to secure debt used only the
finance the purchase of the asset.
"SHAREHOLDERS' EQUITY" means paid-in capital, retained earnings and attributed
or contributed surplus.
"STANDARD OVERDRAFT RATE" means the variable reference interest rate per year
declared by CIBC from time to time to be its standard overdraft rate on
overdrafts in Canadian or U.S. dollar accounts maintained with CIBC in Canada.
"U.S. BASE RATE" means the variable reference interest rate per year as declared
by CIBC from time to time to be its base rate for U.S. dollar loans made by CIBC
in Canada.
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