[CIBC LOGO] CANADIAN IMPERIAL BANK OF
COMMERCE
Commercial Banking Centre
2nd Floor, 10102 Jasper Avenue
Edmonton, AB T5J 1W5
Tel: (780) 420-3035
Fax: (780) 420-3099
June 21, 2004
Stantec Inc.
10160 - 112 Street
Edmonton, Alberta
T5K 2L6
Attention: Mr. Don Wilson, Vice President & CFO
Dear Sirs:
Re: Credit Facility
Canadian Imperial Bank of Commerce ("CIBC") is pleased to
establish the following credit facility in favour of Stantec Inc. (the
"Borrower").
TERM REVOLVING CREDIT
Credit Limit: (1) the lesser of
(a) $30,000,000 .
OR
(b) the sum of (i) 100% of Cash Balances,
and (ii) 80% of Receivable Value less
Priority Claims, and (iii) 40% of Work In
Progress Value, but in no event may the
amount in this clause (iii) exceed
$10,000,000 , less (iv) outstanding Letters
of Credit under the Letter of Credit
facility
The aggregate outstanding amount of Canadian dollar
loans, US dollar loans, standby L/Cs and B/As under
this Credit may not at any time exceed the limit of
this Credit set out above.
Purpose: All amounts obtained under this Credit are to be used
for general business purposes.
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Description and Rate: A revolving Credit, available as follows:
- Canadian dollar loans.
Interest on Canadian dollar loans will be
calculated at the Prime Rate.
- US dollar Base Rate loans.
Interest on US dollar Base Rate loans will
be calculated at the US Base Rate.
- US dollar LIBOR Loans.
Interest on LIBOR Loans will be calculated
at the LIBO Rate for each applicable LIBOR
Period plus 75 bps per annum.
- Canadian dollar B/As.
CIBC's stamping fee for B/As will be
calculated at 75 bps per annum.
Repayment: This Credit will terminate on July 30, 2005, and all
amounts under this Credit are repayable at such time.
CIBC may in its sole discretion, upon written request
by the Borrower given to CIBC not later than 60 days
prior to the termination date of this Credit then in
effect, extend such termination date for a period of
364 days from the date of such extension. If upon any
such request by the Borrower CIBC does not agree to
extend the termination date then in effect, then
notwithstanding the foregoing no additional amounts
may be obtained under this Credit, and this Credit
shall cease to be revolving, on and after the
termination date then in effect, and all amounts
under this Credit shall be repayable immediately.
Notwithstanding the foregoing, at any time that an
Event of Default is continuing all amounts under this
Credit are repayable immediately on demand by CIBC
and this Credit may be terminated in whole or in part
by CIBC.
The Borrower shall have the option to repay any
amount under this Credit at any time, provided that
LIBOR Loans may be repaid only at the end of a LIBOR
Period, fixed-rate loans may be repaid only at the
end of a fixed-rate interest period, and B/As may be
repaid only on their maturity.
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Standby Fee: A fee calculated at the rate of 10 bps per annum on
the undrawn portion of the Credit, payable monthly in
arrears.
5 YEAR TERM ACQUISITION CREDIT
Credit Limit: US $17,000,000
Purpose: All amounts under this Credit are to be used for
acquisition purposes.
Description and Rate: A revolving Credit, available as follows:
- Canadian dollar loans.
- US dollar Base Rate loans.
- US dollar LIBOR Loans.
- Canadian dollar B/As.
Incentive Pricing: The interest rates, stamping fees and standby fees
applicable under this Credit will vary as set out
below according to the ratio of Debt to EBITDA at the
end of each fiscal quarter. Each change in rates and
fees will be effective on the first day following the
expiry of the maximum period in which the Borrower is
permitted to deliver to CIBC its financial statements
as at the end of such fiscal quarter.
Prime Rate, US Base Rate, LIBO Rate, plus Stamping Fee Standby Fee
plus bps per plus bps per plus bps per (bps per (bps per
Ratio of Debt to EBITDA annum annum annum annum) annum)
- ---------------------------------- ------------ ------------- --------------- ------------ -----------
Less than or equal to 1.50 to 1.0 0 0 110 110 20
Greater than 1.50 to 1.0 but 25 25 135 135 25
less than 2.0 to 1.0
Less than or equal to 2.50 to 1.0 50 50 160 160 30
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Repayment: The limit of this Credit will revolve until July 30,
2005 at which time the Borrower shall begin to repay
any amount outstanding under this Credit over a 4
Year Term in 16 equal quarterly principal payments
plus interest.
Notwithstanding the foregoing, at any time that an
Event of Default is continuing all amounts under this
Credit are repayable immediately on demand by CIBC
and this Credit may be terminated in whole or in part
by CIBC.
The Borrower shall have the option to repay any
amount under this Credit at any time without penalty,
provided that LIBOR Loans may be repaid only at the
end of a LIBOR Period, fixed-rate loans may be repaid
only at the end of the applicable fixed-rate interest
period, and B/As may be repaid only on their
maturity.
4 YEAR REDUCING TERM INSTALMENT LOAN
Loan Amount: US $23,164,122
Purpose: This loan is a term out of the Acquisition Facility
balance as at September st 2004 .
Description and Rate: A 4 Year Reducing Term Credit, available as follows:
- Canadian dollar loans.
- US dollar Base Rate loans.
- US dollar LIBOR Loans.
- Canadian dollar B/As.
Incentive Pricing: The interest rates, stamping fees and standby fees
applicable under this Credit will vary as set out
below according to the ratio of Debt to EBITDA at the
end of each fiscal quarter. Each change in rates and
fees will be effective on the first day following the
expiry of the maximum period in which the Borrower is
permitted to deliver to CIBC its financial statements
as at the end of such fiscal quarter.
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Prime Rate, US Base Rate, LIBO Rate, Stamping Fee Standby Fee
plus bps per plus bps per plus bps per (bps per (bps per
Ratio of Debt to EBITDA annum annum annum annum) annum)
- ---------------------------------- ------------ ------------- ------------ ------------ -----------
Less than or equal to 1.50 to 1.0 0 0 110 110 20
Greater than 1.50 to 1.0 but 25 25 135 135 25
less than 2.0 to 1.0
Less than or equal to 2.50 to 1.0 50 50 160 160 30
Repayment: Regular quarterly payments of US$1,562,500 each,
together with accrued interest through to October 1,
2008
Notwithstanding the foregoing, at any time that an
Event of Default is continuing this Instalment Loan
is repayable immediately on demand by CIBC.
The Borrower shall have the option to repay any
principal amount of this loan at any time without
penalty, provided that LIBOR Loans may be repaid only
at the end of a LIBOR Period, fixed-rate loans may be
repaid only at the end of the applicable fixed-rate
interest period, and B/As may be repaid only on their
maturity. Such optional repayment shall be applied to
the instalments specified above in the reverse order
of their maturity.
CREDIT FOR DOCUMENTARY & STAND-BY LETTERS OF CREDIT
Credit Limit: $10,000,000
Purpose: All L/Cs are to be used for business purposes.
Fees: Fees for all L/Cs under this Credit will be
calculated at 0.90% per annum. In each case the
Borrower shall reimburse CIBC for its out of pocket
expenses relative to all L/Cs under this Credit.
Documentation: CIBC's standard L/C documentation is required.
Termination: This Credit may be terminated in whole or in part by
CIBC at any time.
Conditions: L/Cs under this Credit may not have terms to expiry
of more than 12 months.
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FOREIGN EXCHANGE HEDGING FACILITY
Credit limit: US$1,500,000
Purpose: The Borrower may do foreign exchange and interest
rate hedging with foreign exchange terms to expiry of
not more than twelve (12) months (unless approved by
CIBC on an exception basis) and swaps not to exceed
five (5) years.
Use of this facility will be subject to CIBC's usual
requirements for notice, forms and procedures, and
charges and fees.
SECURITY
The following security, which shall be in form and
substance satisfactory to CIBC, is required to secure
all present and future indebtedness and liabilities
of the Borrower to CIBC (including under any foreign
exchange contract or interest rate swap with CIBC).
- A General Security Agreement in the Lender's
standard form 6100 granting a first secured
interest on all of the Borrowers present and
after-acquired personal property, to be
registered in all jurisdictions in which the
company does business (currently Alberta,
BC, Saskatchewan, Manitoba, and Ontario)
- Guarantee and Postponement of Claim from
Stantec Consulting Inc. with respect to all
of the liabilities of the Borrower to CIBC,
secured by a General Security Agreement.
- Guarantee and Postponement of Claim from
Stantec Consulting Ltd. with respect to all
of the liabilities of the Borrower to CIBC,
secured by a General Security Agreement.
- Guarantee and Postponement of Claim from all
material individual subsidiary operating
entities with respect to all the liabilities
of the Borrower to CIBC, secured by General
Security Agreements, to ensure at least 90%
of the the Borrower's and its subsidiary's
accounts receivable are assigned to CIBC.
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- Acknowledged assignment of adequate fire and
other perils insurance on the property and
assets of the Borrower that are subject to
CIBC's security, with loss payable to CIBC.
- ISDA agreement.
- Multi-Party CCC Agreement.
CIBC acknowledges the current existence of each of
the above security items, with the exception of the
Guarantee and Postponement of Claim from all material
individual operating entities, which the Borrower
agrees to execute after execution of this agreement.
FINANCIAL COVENANTS
Covenants: The Borrower will ensure that:
Financial Covenants: - The Debt to EBITDA Ratio does not exceed
2.50 to 1.0 at any time.
- The EBITDAR to Debt Service Ratio is not
less than 1.35 to 1.0 at any time.
- Shareholders Equity must be greater than or
equal to 90% of the prior fiscal year ending
shareholder's equity plus 50% of the
positive cumulative net income earned during
the current fiscal year.
- The Current Ratio is not less than 1.25 to
1.0 at any time.
NEGATIVE COVENANTS
Capital Expenditures: The total capital expenditures of the Borrower and
its Subsidiaries for fixed or capital assets
(excluding new business acquisitions) in any fiscal
year, calculated in accordance with GAAP, do not
exceed C$25,000,000 without CIBC's prior consent.
Amalgamations, etc.: None of the Borrower and its Subsidiaries will enter
into any amalgamation or consolidation or merger or
liquidate, wind-up or dissolve itself (or permit any
liquidation, winding-up or dissolution or any
proceedings therefor) or continue itself under the
laws of any other
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statute or jurisdiction, except that, subject to the
Borrower and its Subsidiaries taking such action, and
executing and delivering to CIBC such agreements and
other documents as CIBC may require, acting
reasonably, to assure the continued validity,
enforceability and effectiveness of the Security and
the covenants, agreements and obligations of the
Borrower under the Credits, and provided that there
does not then exist any failure by the Borrower to
perform or observe any of its covenants in this
Agreement and no such failure would be created
thereby, any wholly-owned Subsidiary may be
amalgamated or consolidated or merged or liquidated,
wound-up or dissolved with or into the Borrower,
provided that the Borrower shall be the continuing
corporation, or with or into any one or more other
wholly-owned Subsidiaries.
Dispositions of Property: None of the Borrower and its Subsidiaries will sell,
transfer or otherwise dispose of, in one transaction
or a series of transactions, all or any material part
of its property, whether now owned or hereafter
acquired, except that each of the Borrower and
its Subsidiaries:
(i) may sell in the normal course of
its business for the purpose of
carrying on the same, for fair
market value, in accordance with
customary trade terms, any property
that would reasonably be considered
to be the subject matter of sales
by it in the normal course of its
business for the purpose of
carrying on the same; and
(ii) may sell, transfer or otherwise
dispose of any property that is
worn out or obsolete or of no
material value.
Restriction on None of the Borrower and its Subsidiaries will make
Investments & New any Investment or New Business Acquisition in excess
Business Acquisitions: of $15,000,000 without CIBC's prior consent.
Hostile Take-Overs: None of the Borrower and its Subsidiaries will use
any amount obtained by the Borrower under any of the
Credits to finance a bid for any securities of any
corporation in circumstances where the board of
directors of such corporation has recommended (or is
reasonably expected to recommend) rejection of
such bid.
Page 9
Transactions with Except as specifically permitted hereunder, none of
Affiliates: the Borrower and its Subsidiaries will enter into any
transaction, including the purchase, sale or exchange
of any property or the rendering of any services,
with any of its shareholders or with any of its
Affiliates, or with any of its or their directors or
officers, or enter into, assume or permit to exist
any employment, consulting or analogous agreement or
arrangement with any such shareholder or Affiliate or
with any of its directors or officers, except a
transaction or agreement or arrangement which is in
the ordinary course of business of the Borrower or
such Subsidiary and which is upon fair and reasonable
terms not less favourable to the Borrower or its
applicable Subsidiary than it would obtain in a
comparable arms-length transaction.
REPORTING REQUIREMENTS
Reporting Requirements: The Borrower will provide to CIBC:
- Within 120 days after the end of each fiscal
year, the audited consolidated financial
statements of the Borrower for such year,
prepared in accordance with GAAP.
- Within 60 days after the end of each fiscal
quarter, the unaudited consolidated
financial statements of the Borrower for
such quarter, prepared in accordance with
GAAP.
- Within 120 days after the end of each fiscal
year, a business plan/forecast for the
Borrower for its next fiscal year, including
operating and capital budgets.
- Within 30 days of each month, a Borrowing
Base Certificate is to be provided if
borrowing under the Term Revolving Credit is
in excess of $6,000,000. Borrowing Base
Certificate to include an aged accounts
receivable listing by region, and
work-in-progress and priority claims.
- Promptly after obtaining knowledge thereof,
particulars of any failure by any of the
Borrower and its Subsidiaries to perform or
observe any of its covenants or agreements
in favour of CIBC. Such other information
relative to the Borrower and
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its Subsidiaries, and any guarantor, as
CIBC may reasonably require.
FEES
Monitoring: Waived
Set-Up: Waived
Annual Fee: A fee of $25,000, payable in arrears on each
anniversary date of this letter.
OTHER PROVISIONS
Schedule A: The attached Schedule A, which contains certain
additional provisions applicable to the Credits, and
certain definitions, forms part of this Agreement.
Amendment to The following term(s) in the attached Schedule A are
Schedule A: redefined below:
"EBITDAR" means, in respect of any period, an amount
equal to: EBITDA plus triple net building operating
lease expenses.
"Debt Service Requirements" means (i) all permanent
principal payments in respect of Debt made or
required to be made during such period except for
payments on promissory notes due to vendors of
acquired businesses, (ii) Interest Expense for such
period, (iii) all dividends paid during such period
on all preferred shares of the Borrower, and (iv) all
triple net building operating lease expenses.
Notice of Borrowing: Whenever the Borrower desires to obtain any amount
under a Credit (other than by way of a permitted
overdraft), it will give to CIBC irrevocable prior
written notice as specified in Schedule A hereto.
Notice of Repayment: Whenever the Borrower desires to make one or more
repayments under one or more Credits in an aggregate
amount exceeding $10,000,000 (or the equivalent in
any other currency) on any day, it will give to CIBC
irrevocable prior written notice as specified in
Schedule A hereto.
Interest on Excess The interest rate applicable to any outstanding
Amounts: amount under a Credit which is in excess of the limit
of such
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Credit shall be the Interest Rate Applicable to
Credit Limit Excesses specified in Schedule A hereto.
Interest on Overdue Interest on overdue amounts is payable as specified
Amounts: in Schedule A hereto.
Interest Payment Dates: Except with respect to interest on amounts in
default, which is payable on demand, or as otherwise
specified herein or in Schedule A hereto, interest
and fees will be calculated and payable monthly in
arrears on such day in each month as CIBC requires.
Authorized Debits: The Borrower authorizes CIBC to debit its Operating
Account for any interest, fees or other amounts that
are payable by the Borrower to CIBC with respect to
the Credits, as and when such amounts are payable.
Communications: Any communication or notice to be given with respect
to the Credits may be effectively given by delivering
the same at the addresses set out on the signature
page hereof, or by sending the same by facsimile or
prepaid registered mail to the parties at such
addresses. Any notice so mailed will be deemed to
have been received on the tenth day next following
the mailing thereof, provided that postal service is
in normal operation during such time. Any facsimile
notice will be deemed to have been received on
transmission if sent on a Business Day and, if not,
on the next Business Day following transmission.
Either party may from time to time notify the other
party, in accordance with this section, of any change
of its address, which thereafter will be the address
of such party for all purposes of the Credits.
Replacements: This letter supersedes and replaces all prior
discussions, letters and agreements (if any)
describing the terms and conditions of any credit
facility established by CIBC in favour of the
Borrower.
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Please indicate your acceptance of the foregoing by signing
and returning to the undersigned prior to, August 31, 2004 the enclosed
duplicate copy of this letter.
Yours truly,
CANADIAN IMPERIAL BANK OF COMMERCE
By: /s/ Joan MacGillivray
---------------------------------------
Name: Joan MacGillivray
Title: Manager Commercial Credit
CIBC Commercial Banking
Commerce Place
10102 Jasper Ave.
Edmonton, AB
T5J 1W5
Fax (780) 420-3099
Accepted this 5 day of August, 2004.
Stantec Inc.
#200, 10160 1 112 Street
Edmonton, AB
T5K 2L6
Fax (780) 917-7330
By: /s/ Anthony P. Franceschini
---------------------------------------
name: Anthony P. Franceschini
Title: President & CEO
By: /s/ Donald W. Wilson
---------------------------------------
name: Donald W. Wilson
title: Vice President & CFO
SCHEDULE A - ADDITIONAL DEFINITIONS AND PROVISIONS
1. GENERAL
1.1 USE OF FUNDS, RETURNS. The Borrower will use the Credits only for the
purposes specified in this Agreement. The Borrower may not at any time exceed
the limit of any Credit, and CIBC may, without notice to the Borrower, return
any item that, if paid, would result in the limit of any Credit being exceeded.
If, on the other hand, CIBC in its sole discretion elects to pay any such item,
the Borrower will pay to CIBC immediately the amount by which the limit of the
applicable Credit has been exceeded.
1.2 NOTICE OF FAILURE. The Borrower will promptly notify CIBC of the
occurrence of any failure to perform or observe any of its covenants in this
Agreement.
1.3 CONFIDENTIALITY. The terms of this Agreement are confidential between
the Borrower and CIBC, and accordingly the Borrower will not disclose the
contents of this Agreement to anyone except its professional advisors.
1.4 APPLYING MONEY RECEIVED. At any time that the Borrower has failed
(beyond any period of grace permitted by CIBC) to perform or observe of any of
its covenants in this Agreement, all moneys received by CIBC from the Borrower
or from any Security may be applied on such parts of the Borrower's liabilities
to CIBC as CIBC may determine.
1.5 RIGHT OF SET-OFF. At any time that the Borrower has failed (beyond any
period of grace permitted by CIBC) to perform or observe any of its covenants in
this Agreement, CIBC is authorized at any time to set-off and apply any deposits
held by it and any other amounts owed by it to or for the credit of the Borrower
against any and all of the obligations of the Borrower with respect to the
Credits, irrespective of whether or not CIBC has made any demand and even though
any such obligations may not yet be due and payable.
1.6 REGISTRATION OF SECURITY. The Security will be registered or filed in
all jurisdictions and in all offices as CIBC considers necessary or advisable
from time to time to create, perfect or protect any Lien created thereby.
1.7 EXPENSES. The Borrower will reimburse CIBC for all reasonable fees
(including legal fees) and out-of-pocket expenses incurred in preparing and
registering any Security, in responding to requests from the Borrower for
waivers, amendments and other matters, and in enforcing CIBC's rights under this
Agreement or any Security.
1.8 FURTHER INFORMATION REQUIREMENTS. The Borrower will provide such
further information about its business and its Subsidiaries as is reasonably
requested by CIBC from time to time, and such information shall be in a form
acceptable to CIBC.
1.9 CONSENT TO RELEASE INFORMATION. CIBC may from time to time give any
credit or other information about the Borrower to, or receive such information
from, (i) any financial institution, credit reporting agency, rating agency or
credit bureau, (ii) any person, firm or corporation with
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whom the Borrower may have or proposes to have financial dealings, and (iii) any
person, firm or corporation in connection with any dealings the Borrower has or
proposes to have with CIBC. The Borrower agrees that CIBC may use that
information to establish and maintain the Borrower's relationship with CIBC and
to offer any services as permitted by law, including services and products
offered by CIBC's Subsidiaries when it is considered that this may be suitable
to the Borrower.
1.10 FURTHER ASSURANCES. The Borrower will from time to time promptly upon
request by CIBC do and execute all such acts and documents as may be reasonably
required by CIBC to give effect to the Credits and the Security, and to any
transfer pursuant to section 1.14 of this Schedule.
1.11 INSURANCE. The Borrower will maintain insurance on its assets and
property, in amounts and against risks as are customarily insured for by similar
companies, acting prudently, owning or operating similar property or business in
Canada, determined to be appropriate by CIBC acting prudently, and furnish to
CIBC, on written request, satisfactory evidence of the insurance carried.
1.12 ENVIRONMENTAL. The Borrower will carry on its business, and maintain
its assets and property in accordance with all applicable environmental laws and
regulations. If there is any release, deposit, discharge or disposal of
pollutants of any sort (collectively, a "Discharge") in connection with either
the Borrower's business or its property, and CIBC pays any fines or for any
clean-up suffers any loss or damage as a result of the Discharge, the Borrower
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 CIBC asks, the Borrower will defend any lawsuits,
investigations or prosecutions brought against CIBC or any of its directors,
officers, employees and agents in connection with any Discharge. The Borrower's
obligation under this section continues even after all Credits have been repaid
and this Agreement has terminated.
1.13 WAIVER. No delay on the part of CIBC in exercising any right or
privilege will operate as a waiver thereof, and no waiver of any failure or
default will operate as a waiver thereof unless made in writing and signed by an
authorized officer of CIBC, or will be applicable to any other failure or
default.
1.14 ASSIGNMENT. CIBC may assign, sell or participate (herein referred to as
a "transfer") all or any part of its rights and obligations under all or any of
the Credits to any third party, and the Borrower agrees to sign any documents
and take any actions that CIBC may reasonably require in connection with any
such transfer. Upon completion of the transfer, the third party will have the
same rights and obligations under this Agreement as if it were a party to it,
with respect to all rights and obligations included in the transfer. The
Borrower may not assign any of its rights or obligations under any of the
Credits.
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1.15 APPLICATION TO SUBSIDIARIES. The Borrower will ensure that each of its
Subsidiaries complies with sections 1.10, 1.11 and 1.12 of this Schedule, as if
the references to the Borrower therein were references to each such Subsidiary.
1.16 GOVERNING LAW. This Agreement shall be governed by the laws of Alberta,
and the Borrower submits itself to the jurisdiction of any competent federal or
provincial court in such jurisdiction.
1.17 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and all of such counterparts shall constitute the same agreement.
1.18 CERTAIN DEFINITIONS. In this Agreement the following terms have the
following meanings:
"Affiliate" means, with respect to any person, any other person who
directly or indirectly controls, is controlled by, or is under direct
or indirect common control with, such person, and includes any person
in like relation to an Affiliate. A person shall be deemed to control
another person if the first person possesses, directly or indirectly,
the power to direct or cause the direction of the management and
policies of the other person, whether through the ownership of voting
securities, by contract or otherwise.
"Agreement" means the attached letter agreement between CIBC and the
Borrower, including this Schedule and any other Schedules thereto, as
the same may be amended or supplemented from time to time.
"Business Day" means (i) with respect to any amount denominated in
Canadian dollars and all matters pertaining thereto, any day excluding
Saturday, Sunday and any day which is a legal holiday in Toronto,
Canada; (ii) with respect to any amount denominated in US dollars
(except as provided below) and all matters pertaining thereto, any day
excluding Saturday, Sunday or any day which is a legal holiday in New
York, U.S.A. or Toronto, Canada, and (iii) with respect to any LIBOR
Loan and all matters pertaining thereto, any day which is a day for
dealings by and between banks in US dollars in the London interbank
market, excluding Saturday, Sunday or any day which is a legal holiday
in London, England or New York, U.S.A. or Toronto, Canada.
"Compliance Certificate" means an Officer's Certificate stating, as of
the applicable date, (i) that the Borrower is not in default of the
observance or performance of any of its covenants in this Agreement (or
describing any default then existing), (ii) that all representations
and warranties contained in this Agreement are true and accurate as if
made on and as of such date (or describing any thereof that are not
then true and accurate), (iii) the particulars and calculation of all
financial covenants of the Borrower contained in this Agreement, and
(iv) where applicable, the amount and particulars of calculation of
Receivable Value, Priority Claims and work in progress value, and the
resulting maximum available amount and undrawn amount of any Credit, as
of such date.
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Unless otherwise prescribed by CIBC, a Compliance Certificate shall be
substantially in the form attached to this Schedule A.
"Event of Default" means any of the following events or circumstances:
(i) if the Borrower fails to pay any principal amount when due and
payable;
(ii) if the Borrower fails to pay any interest, fee or other amount
(except principal) when due and payable and such failure
continues for three Business Days or more;
(iii) if the Borrower defaults in the performance or observance of
any negative covenant contained in this Agreement;
(iv) if the Borrower defaults in the performance or observance of
any other term or covenant contained in this Agreement or the
Security and such default continues for 30 days or more after
the earlier of the date on which the Borrower first has actual
knowledge of such default and the date on which written notice
of such default is given to it by CIBC;
(v) if any representation or warranty contained in this Agreement
or the Security or in any certificate delivered to CIBC by or
on behalf of the Borrower is untrue in any material respect on
the date as of which it was made;
(vi) if there is outstanding any amount or amounts exceeding an
aggregate of $1,000,000 (or the equivalent amount in any other
currency) which any of the Borrower and its Subsidiaries has
failed to pay when due and payable, or if any amount or
amounts exceeding an aggregate of $1,000,000 (or the
equivalent amount in any other currency) may then be declared
to be due and payable by any of the Borrower and its
Subsidiaries prior to the stated maturity date thereof or
prior to the regularly scheduled date for payment thereof;
(vii) if it is or will become unlawful for any of the Borrower and
its Subsidiaries to perform or comply with any of its
obligations under this Agreement or the Security, or if any
obligation of any of the Borrower and its Subsidiaries under
this Agreement or the Security ceases to be its legal, valid,
binding and enforceable obligation, or if the enforceability
of this Agreement or any of the Security is disputed by any of
the Borrower and its Subsidiaries, or if any of the Security
ceases to constitute a Lien of the nature and priority
contemplated by this Agreement;
(viii) if any of the Borrower and its Subsidiaries commits an act of
bankruptcy under the Bankruptcy and Insolvency Act (Canada),
or institutes proceedings for its winding up, liquidation or
dissolution, or takes action to become a voluntary bankrupt,
or consents to the filing of a bankruptcy proceeding against
it, or files a
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petition or other proceeding seeking reorganization,
readjustment, arrangement, composition or similar relief under
any bankruptcy law or insolvency law or consents to the filing
of any such petition or other proceeding, or consents to the
appointment of a receiver, liquidator, trustee or assignee in
bankruptcy or insolvency of the whole or any material part of
its property, or makes an assignment for the benefit of
creditors, or publicly announces or admits in writing its
inability to pay its debts generally as they become due, or
suspends or threatens to suspend transaction of all or any
substantial part of its usual business, or any action is taken
by any of the Borrower and its Subsidiaries or any shareholder
of any of them in furtherance of any of the foregoing;
(ix) if proceedings are instituted in any court of competent
jurisdiction by any person (other than any of the Borrower and
its Subsidiaries or a shareholder of any of them) for the
winding up, liquidation or dissolution of any of the Borrower
and its Subsidiaries, or for any reorganization, readjustment,
arrangement, composition or similar relief with respect to any
of the Borrower and its Subsidiaries under any bankruptcy law
or any other applicable insolvency law, or for the appointment
of a receiver, liquidator, trustee or assignee in bankruptcy
or insolvency of the whole or any material part of the
property of any of the Borrower and its Subsidiaries, and at
any time thereafter such proceeding is not contested in good
faith, or if any order sought in any such proceeding is
granted;
(x) if an encumbrancer (including without limitation an execution
creditor) takes possession of any property of any of the
Borrower and its Subsidiaries which in the opinion of CIBC is
material;
(xi) if there exists for any period of three consecutive Business
Days one or more non-appealable judgements of a court of
competent jurisdiction against any of the Borrower and its
Subsidiaries for an aggregate amount exceeding $1,000,000 (or
the equivalent amount in any other currency) which has not
been satisfied in full (exclusive of any amount adequately
covered by insurance as to which the insurer has acknowledged
coverage);
(xii) if in the reasonable opinion of CIBC there has occurred any
event which has had a Material Adverse Effect; or
(xiii) if in the reasonable opinion of CIBC there is any change in
the effective control of the Borrower.
"GAAP" means those accounting principles which are recognized as being
generally accepted in Canada from time to time as set out in the
handbook published by the Canadian Institute of Chartered Accountants.
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"Inventory Value" means, at any time, the inventory of the Borrower and
its Subsidiaries (which shall not include any work-in-process for the
purpose of this definition) then existing, less any inventory that (i)
is not located in Canada, (ii) is not subject to the applicable duly
perfected Liens created by the Security, (iii) is subject to any Lien
other than as specifically permitted by CIBC, (iv) is located in or on
leased premises unless the applicable lessor has waived all Liens that
may at any time be held by such lessor in respect of any inventory, (v)
is obsolete or not readily saleable in the ordinary course of business,
all valued at the lower of cost and market on a first-in, first-out
basis, (vi) that has not been paid for in full and is subject to a
right of repossession by the seller thereof; or (vii) that is otherwise
excluded by CIBC in its reasonable discretion.
"Investment" means, with respect to any person, any direct or indirect
investment in or purchase or other acquisition of the securities of or
any equity interest in any other person, any loan or advance to, or
arrangement for the purpose of providing funds or credit to (excluding
extensions of trade credit in the ordinary course of business in
accordance with customary commercial terms), or capital contribution
to, any other person, or any purchase or other acquisition of all or
substantially all of the property of any other person.
"Lien" includes without limitation a mortgage, charge, lien, security
interest or encumbrance of any sort on any property or asset, and
includes conditional sales contracts, title retention agreements,
capital trusts and capital leases.
"Material Adverse Effect" means a material adverse effect on the
business, property, condition (financial or otherwise) or prospects of
the Borrower and its Subsidiaries, considered as a whole, or a material
adverse effect on the ability of any of the Borrower and its
Subsidiaries to perform its obligations under any of this Agreement and
the Security to which it is a party.
"Normal Course Lien" means, at any time, the following:
(i) Liens for taxes not overdue, or which are being contested if
adequate reserves with respect thereto are maintained by the
Borrower and its Subsidiaries in accordance with GAAP and the
enforcement of any related Lien is stayed;
(ii) undetermined or inchoate Liens arising in the ordinary course
of business which relate to obligations not overdue or a claim
for which has not been filed or registered pursuant to
applicable law;
(iii) carriers', warehousemens', mechanics', materialmens',
repairmens', construction or other similar Liens arising in
the ordinary course of business which relate to obligations
not overdue;
(iv) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business
which, in the aggregate, are not substantial in
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amount, and which do not in any case materially detract from
the value of the property subject thereto or interfere with
the ordinary conduct of the business of the Borrower or its
Subsidiaries;
(v) zoning and building by-laws and ordinances and municipal
by-laws and regulations so long as the same are complied with;
(vi) statutory Liens incurred or deposits made in the ordinary
course of business in connection with workers' compensation,
unemployment insurance and other social security legislation;
(vii) the reservations and exceptions contained in, or implied by
statute in, the original disposition from the Crown and grants
made by the Crown of interests so reserved or excepted;
(viii) Liens created by the Security; and
(ix) Liens in respect of which CIBC has given its specific written
consent.
"Officer's Certificate" means a certificate, in form satisfactory to
CIBC, signed by a senior officer of the Borrower.
"Operating Account" means Canadian dollar accounts no. 81-13017 and
87-05313 of the Borrower with CIBC, or US dollar account no. 02-45011
of the Borrower with CIBC, or any such other account as is agreed upon
by the Borrower and CIBC from time to time for the purposes
hereof.
"Priority Claims" means, at any time, any liability of any of the
Borrower and its Subsidiaries that ranks, in right of payment in any
circumstances, equal to or in priority to any liability of the Borrower
or such Subsidiary to CIBC, and may include unpaid wages, salaries and
commissions, unremitted source deductions for vacation pay, arrears of
rent, unpaid taxes, amounts owed in respect of worker's compensation,
amounts owed to unpaid vendors who have a right of repossession, and
amounts owing to creditors which may claim priority by statute or under
a Purchase Money Lien.
"Purchase Money Lien" means any Lien which secures a Purchase Money
Obligation permitted by this Agreement, provided that such Lien is
created not later than 30 days after such Purchase Money Obligation is
incurred and does not affect any asset other than the asset financed by
such Purchase Money Obligation.
"Purchase Money Obligation" means any Debt (including without
limitation a capitalized lease obligation) incurred or assumed to
finance all or any part of the acquisition price of any asset acquired
by any of the Borrower and its Subsidiaries or to finance all or any
part of the cost of any improvement to any asset of any of the Borrower
and its
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Subsidiaries, provided that such obligation is incurred or assumed
prior to or within 30 days after the acquisition of such asset or the
completion of such improvement and does not exceed the lesser of the
acquisition price payable by the Borrower or such Subsidiary for such
asset or improvement and the fair market value of such asset or
improvement; and includes any extension, renewal or refunding of any
such obligation so long as the principal amount thereof outstanding on
the date of such extension, renewal or refunding is not increased.
"Receivable Value" means, at any time, the receivables of the Borrower
and its Subsidiaries then existing, less any receivable that (i) is not
then subject to the applicable duly perfected Liens created by the
Security, (ii) is subject to any Lien other than as specifically
permitted by CIBC, (iii) is payable more than 30 days after the date of
shipment of the inventory or the provision of the service that created
such receivable, (iv) has been outstanding for 90 days or more, (v) is
subject to any offset or counterclaim by the applicable account debtor,
(vi) is owed by any person whose principal place of business is located
outside Canada or the United States of America, (vii) is payable in a
currency other than Canadian or US$, (viii) is owed by an Affiliate of
the Borrower or any employee, agent or representative of the Borrower
or of any such Affiliate, (ix) with respect to which a cheque, note,
draft or other payment instrument has not been honoured in accordance
with its terms, or (x) has been specifically identified by CIBC as an
excluded receivable for the purpose hereof or is owed by any person
that is insolvent or is otherwise doubtful of collection in the
reasonable opinion of CIBC.
"Security" means, collectively, all of the items of security held by
CIBC for the indebtedness and liabilities, or any part or parts
thereof, of the Borrower to CIBC.
"Subsidiary" of any person means any other person of which shares or
other equity units having ordinary voting power to elect a majority of
the board of directors or other individuals performing comparable
functions, or which are entitled to or represent more than 50% of the
owners' equity or capital or entitlement to profits, are owned
beneficially or controlled, directly or indirectly, by any one or more
of such first person and the Subsidiaries of such first person, and
shall include any other person in like relationship to a Subsidiary of
such first person.
2. INTEREST RATES; PAYMENTS; CALCULATIONS
2.1 INTEREST RATES. Interest is payable with respect to:
(i) excess amounts (provided that nothing herein shall be deemed to imply
that the Borrower is entitled to obtain any such excess amount, or that
the limit of a Credit is to be increased in any circumstance) above the
limit of a Credit or a part of a Credit, as described in section 2.4 of
this Schedule,
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(ii) amounts that are not paid when due, at the Interest Rate Applicable to
Credit Limit Excesses, and
(iii) any other amounts, at the rate specified in this Agreement.
2.2 VARIABLE INTEREST. Each variable interest rate provided for in this
Agreement will change automatically, without notice, whenever the Prime Rate or
the US Base Rate, as the case may be, changes.
2.3 PAYMENT OF INTEREST. Interest is calculated on the applicable balance
at the end of each day. Interest is payable in arrears once a month on the day
required by CIBC, unless otherwise specified in this Agreement.
2.4 INTEREST RATE APPLICABLE TO CREDIT LIMIT EXCESSES. To determine whether
the Interest Rate Applicable to Credit Limit Excesses is to be charged, the
following rules apply:
(a) The Interest Rate Applicable to Credit Limit Excesses will be charged
on the amount that exceeds the limit of any particular Credit.
(b) If there are several parts of a Credit, the Interest Rate Applicable to
Credit Limit Excesses will be charged if the limit of a particular part is
exceeded. For example, if Credit A's limit is $250,000, and the limit of one
part of Credit A is $100,000 and the limit of that part is exceeded by $25,000,
the Interest Rate Applicable to Credit Limit Excesses will be charged on that
$25,000 excess, even if the total amount outstanding under Credit A is less than
$250,000.
(c) To determine if the limit of a Credit has been exceeded, any amounts in
a currency other than the currency in which the limit is designated will be
converted into that currency, as described in section 2.11 of this Schedule.
2.5 INTEREST ON OVERDUE AMOUNTS. Except as otherwise specified herein, if
any principal is not paid when due, such overdue principal will bear interest
(as well after as before judgement), payable on demand, at the interest rate
applicable to such principal prior to default, and interest will be payable on
overdue interest (as well after as before judgement) at the same rate as is
applicable to the related principal. If any amount is not paid by the Borrower
when due and there is no interest otherwise applicable to such amount specified
herein, such overdue amount will bear interest (as well after as before
judgement), payable on demand, at a rate per annum equal at all times to the
Prime Rate plus 5% (in the case of any such amount payable in Canadian dollars)
or the US Base Rate plus 5% (in the case of any such amount payable in US
dollars) from the date of non-payment until paid in full.
2.6 REDUCTIONS OF LIMIT OF CREDITS. On or prior to each date on which the
limit of any Credit is reduced, the Borrower will repay such outstanding amounts
thereunder, if any, as are necessary so that, after giving effect to the
repayment, the total of all amounts outstanding under such Credit does not
exceed the limit as so reduced.
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2.7 PAYMENTS. If any payment is due on a day other than a Business Day,
such payment will be due on the next Business Day.
2.8 CIBC'S PRICING POLICY. The fees, interest rates and other charges for
the Borrower's banking arrangements with CIBC are dependent upon each other.
Accordingly, if the Borrower cancels or does not follow through with, in the
manner originally contemplated, any of these arrangements, CIBC reserves the
right to require payment by the Borrower of increased or added fees, interest
rates and charges as a condition of the continuation of the Borrower's banking
arrangements.
2.9 CALCULATIONS. The following terms apply to all calculations under the
Credits:
(a) CDOR, Federal Funds Rate, Bankers' Acceptance Yield, LIBO Rate, Prime
Rate and US Base Rate shall be determined by CIBC if and whenever such
determination is required for the purpose of this Agreement, and such
determination by CIBC shall be conclusive evidence of such rate.
(b) Except as provided in the next sentence, all interest and fees
hereunder shall be computed on the basis of the actual number of days
elapsed divided by 365. Interest on each LIBOR Loan shall be computed
on the basis of the actual number of days elapsed divided by 360. Any
such applicable interest rate, expressed as an annual rate of interest
for the purpose of the Interest Act (Canada), shall be equivalent to
such applicable interest rate multiplied by the actual number of days
in the calendar year in which the same is to be determined and divided
by 365 or 360, as the case may be.
(c) In calculating interest or fees payable hereunder for any period,
unless otherwise specifically stated, the first day of such period
shall be included and the last day of such period shall be excluded.
2.10 CIBC'S RECORDS. CIBC's loan accounting records will provide conclusive
evidence of all terms and conditions of the Credits such as principal loan
balances, interest calculations, and payment dates.
2.11 FOREIGN CURRENCY CONVERSION. If it is necessary for any purpose
relating to the Credits that an amount denominated in a currency other than
Canadian dollars be expressed in or equated to an amount of Canadian dollars
(such as, for example, to determine whether amounts denominated in US dollars
that are outstanding under a Credit which has a limit specified in Canadian
dollars exceed the limit of such Credit so as to make applicable the Interest
Rate Applicable to Credit Limit Excesses), the applicable amount of Canadian
dollars shall be determined by CIBC in accordance with its normal practice.
2.12 DEEMED RE-INVESTMENT PRINCIPLE. For the purpose of the Interest Act
(Canada) and any other purpose, the principle of deemed re-investment of
interest is not applicable to any calculation under this Agreement, and the
rates of interest and fees specified in this Agreement are intended to be
nominal rates and not effective rates or yields.
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2.13 CERTAIN DEFINITIONS. If and whenever required for the purpose of this
Agreement, the following terms have the following definitions:
"CDOR" means, for any day, the average of the annual discount rates for
bankers' acceptances denominated in Canadian dollars of certain banks
named in Schedule 1 to the Bank Act (Canada) for a specified term and
face amount that appears on the CDOR page of the Reuters Screen as of
10:00 a.m. on such day (or, if such day is not a Business Day, as of
10:00 a.m. on the next preceding Business Day).
"Federal Funds Rate" means, for any day, an annual interest rate equal
to the weighted average of the rates on overnight United States federal
funds transactions with members of the Federal Reserve System arranged
by United States federal funds brokers, as published for such day (or,
if such day is not a business day in New York, for the next preceding
business day in New York) by the Federal Reserve Bank of New York, or
for any such business day on which such rate is not so published, the
arithmetic average of the quotations for such day on such transactions
received by CIBC from three United States federal funds brokers of
recognized standing selected by it.
"Interest Rate Applicable to Credit Limit Excesses" means the annual
interest rate generally established by CIBC from time to time for the
purpose of calculating interest on overdrafts in accounts maintained
with CIBC in Canada.
"Prime Rate" means a fluctuating annual interest rate equal at all
times to the greater of (i) the reference rate of interest (however
designated) of CIBC for determining interest chargeable by it on loans
in Canadian dollars made in Canada and (ii) 3/4 of 1% per annum above
the CDOR for 30-day bankers' acceptances from time to time.
"US Base Rate" means a fluctuating annual interest rate equal at all
times to the greater of (i) the reference rate of interest (however
designated) of CIBC for determining interest chargeable by it on loans
in US dollars made in Canada, and (ii) 3/4 of 1% per annum above the
Federal Funds Rate from time to time.
3. NOTICE OF BORROWING; NOTICE OF REPAYMENT; OVERDRAFTS
3.1 NOTICE OF BORROWING. Whenever the Borrower desires to obtain any amount
under a Credit (other than a loan by way of a permitted overdraft), it will give
to CIBC irrevocable prior written notice (a "Notice of Borrowing") specifying
the Credit under which such amount is to be obtained and the particulars of such
amount including the term of any Bankers' Acceptances, the term of any LIBOR
Period, the particulars of all maturing Bankers' Acceptances in the case of a
rollover or conversion of Bankers' Acceptances, and the Business Day on which
such amount is to be obtained. No amount shall be obtained if the term thereof
or any LIBOR Period applicable thereto would mature beyond any scheduled
repayment or reduction date for the applicable Credit and all or any part of
such amount will be required to be repaid on such date. The amount
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to be obtained under any Credit at any time shall not exceed the undisbursed
amount of that Credit at such time. CIBC will not be obliged to make available
at any time LIBOR Loans in an aggregate amount less than US $1,000,000. A notice
requesting any loan in an amount exceeding $10,000,000 or US $10,000,000 (other
than a LIBOR Loan) must be given not later than 10:00 a.m. on the Business Day
preceding the applicable borrowing date; a notice requesting any Bankers'
Acceptances in an amount exceeding $10,000,000 must be given not later than
10:00 a.m. on the second Business Day preceding the applicable borrowing date;
and a notice requesting any LIBOR Loan must be given not later than 10:00 a.m.
on the third Business Day preceding the applicable borrowing date.
3.2 NOTICE OF REPAYMENT. Whenever the Borrower desires to make any
repayment or repayments under one or more of the Credits in an aggregate amount
exceeding $10,000,000 (or an equivalent amount in any other currency) on any
day, it will give to CIBC irrevocable written notice specifying the particulars
of such repayment not later than 10:00 a.m. on the Business Day preceding the
applicable repayment date.
3.3 OVERDRAFTS. If the Borrower is entitled under any Credit to obtain
loans in Canadian dollars or US dollars by way of overdraft, the debit balance
in the Borrower's applicable Operating Account from time to time will be deemed
to be a loan in Canadian dollars or US dollars, as the case may be, outstanding
to the Borrower under such Credit and bearing interest as set out in this
Agreement for loans in such currency under such Credit. If at any time the
Borrower is a party to a cash concentration arrangement with CIBC, the amount of
any overdraft from time to time in the Canadian dollar or US dollar
concentration account of the Borrower established pursuant to such arrangement
will also be deemed to be a loan in Canadian dollars or US dollars, as
applicable, outstanding to the Borrower under the applicable Credit and bearing
interest as set out above on the basis of the Prime Rate or the US Base Rate, as
the case may be.
4. INDEMNITIES
4.1 RESERVE INDEMNITY. If subsequent to the date of this Agreement any
change in or introduction of any applicable law, or compliance by CIBC with any
request or directive by any central bank, superintendent of financial
institutions or other comparable authority, shall subject CIBC to any tax with
respect to the Credits or change the basis of taxation of payments to CIBC of
any amount payable under the Credits (except for changes in the rate of tax on
the overall net income of CIBC), or impose any capital maintenance or capital
adequacy requirement, reserve requirement or similar requirement with respect to
the Credits, or impose on CIBC or the London interbank market (in the case of
any matter relating to any actual or requested LIBOR Loan), any other condition
or restriction, and the result of any of the foregoing is to increase the cost
to CIBC of making or maintaining the Credits or any amount thereunder or to
reduce any amount otherwise received by CIBC under the Credits, CIBC will
promptly notify the Borrower of such event and the Borrower will pay to CIBC
such additional amount calculated by CIBC as is necessary to compensate CIBC for
such additional cost or reduced amount received. A certificate of CIBC as to any
such additional amount payable to it and containing reasonable details of the
calculation thereof shall be conclusive evidence thereof.
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4.2 CURRENCY INDEMNITY. Interest and fees hereunder shall be payable in the
same currency as the principal to which they relate. Any payment on account of
an amount payable in a particular currency (the "proper currency") made to or
for the account of CIBC in a currency (the "other currency") other than the
proper currency, whether pursuant to a judgement or order of any court or
tribunal or otherwise and whether arising from the conversion of any amount
denominated in one currency into another currency for any purpose, shall
constitute a discharge of the Borrower's obligation only to the extent of the
amount of the proper currency which CIBC is able, in the normal course of its
business within one Business Day after receipt by it of such payment, to
purchase with the amount of the other currency so received. If the amount of the
proper currency which CIBC is able to purchase is less than the amount of the
proper currency due to CIBC, the Borrower shall indemnify and save CIBC harmless
from and against any loss or damage arising as a result of such deficiency.
4.3 TAX INDEMNITY. All payments by the Borrower under this Agreement shall
be made free and clear of, and without reduction for or on account of, any
present or future income, stamp or other taxes, levies, imposts, duties,
charges, fees, deductions or withholdings, other than taxes imposed on the
overall net income of CIBC or franchise taxes, taxes on doing business or taxes
measured by the capital or net worth of CIBC (collectively "Excluded Taxes"),
now or hereafter imposed, levied, collected, withheld or assessed by any country
or any political subdivision thereof (collectively "Taxes"); provided, however,
that if any Taxes are required to be withheld from any interest or other amount
payable to the CIBC hereunder, the amount so payable to the CIBC shall be
increased to the extent necessary to yield to CIBC, on a net basis after payment
of all Taxes and after payment of all Excluded Taxes imposed by any relevant
jurisdiction on any additional amounts payable under this section, interest or
any such other amount payable hereunder at the rate or in the amount specified
in this Agreement. The Borrower shall be fully liable and responsible for and
shall, promptly following receipt of a request from CIBC, pay to CIBC any and
all sales, goods and services taxes payable under the laws of Canada or any
political subdivision thereof with respect to any and all goods and services
made available hereunder to the Borrower by CIBC, and such taxes shall be
included in the definition of "Taxes" for all purposes hereof. Whenever any
Taxes are payable by the Borrower, as promptly as possible thereafter it shall
send to CIBC, a certified copy of an original official receipt showing payment
thereof. If the Borrower fails to pay any Taxes when due or fails to remit to
CIBC as aforesaid the required documentary evidence thereof, the Borrower shall
indemnify and save harmless CIBC from any incremental taxes, interest, penalties
or other liabilities that may become payable by CIBC or to which CIBC may be
subjected as a result of any such failure. A certificate of CIBC as to the
amount of any such taxes, interest or penalties and containing reasonable
details of the calculation thereof shall be prima facie evidence thereof.
4.4 DEFAULT INDEMNITY. The Borrower shall indemnify and save harmless CIBC
from all claims, demands, liabilities, damages, losses, costs, charges and
expenses, including any loss or expense arising from interest or fees payable by
CIBC to lenders of funds obtained by it in order to make or maintain any amount
under the Credits and any loss or expense incurred in
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liquidating or re-employing deposits from which such funds were obtained, which
may be incurred by CIBC as a consequence of (i) default by the Borrower in the
payment when due of any amount hereunder or the occurrence of any other default
relative to any of the Credits, (ii) default by the Borrower in obtaining any
amount after the Borrower has given notice hereunder that it desires to obtain
such amount, (iii) default by the Borrower in making any optional repayment of
any amount after the Borrower has given notice hereunder that it desires to make
such repayment, or (iv) the repayment by the Borrower of any LIBOR Loan
otherwise than on the expiration of any applicable LIBOR Period, or the
repayment of any loan on which interest is payable at a fixed annual rate
otherwise than on the expiration of the fixed interest rate period applicable
thereto, or the repayment of any other amount otherwise than on any specified
maturity date thereof. A certificate of CIBC as to any such loss or expense and
containing reasonable details of the calculation thereof shall be prima facie
evidence thereof.
5. CONDITIONS PRECEDENT
5.1 CONDITIONS PRECEDENT TO THE INITIAL AMOUNT
CIBC shall not be obliged to make available the initial amount under
the Credits unless:
(a) CIBC shall have received the Security, which shall have been duly
registered and filed as required hereby
(b) CIBC shall have received such financial and other information relating
to the Borrower and its Subsidiaries, and any guarantor, as it shall
have reasonably requested.
(c) CIBC shall have received confirmation of all insurance maintained by
the Borrower and its Subsidiaries, and such insurance shall comply with
the requirements of this Agreement.
(d) The Borrower shall have paid to CIBC all fees and other amounts which
shall have become due and payable by it to CIBC on or prior to the
initial borrowing date.
(e) The following documents in form, substance and execution acceptable to
CIBC shall have been delivered to CIBC:
(i) a certified copy of the constating documents and by-laws of
each of the Borrower and its Subsidiaries, and of each
corporate guarantor, and of all corporate proceedings taken
and required to be taken by each of them to authorize the
execution and delivery of such of this Agreement and the
Security to which it is a party and the performance of the
transactions by it contemplated therein;
(ii) a certificate of incumbency for each of the Borrower and its
Subsidiaries, and for each corporate guarantor, setting forth
specimen signatures of the persons authorized to execute such
of this Agreement and the Security to which it is a party;
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(iii) such legal opinions addressed to CIBC relative to the
Borrower, this Agreement and the Security as CIBC may require;
and
(iv) such other documents relative to this Agreement and the
transactions contemplated herein as CIBC may reasonably
require.
5.2 CONDITIONS PRECEDENT TO ALL AMOUNTS
CIBC shall not be obliged to make available any amount under the
Credits unless:
(a) CIBC shall have received any applicable Notice of Borrowing.
(b) On the applicable borrowing date the Borrower shall not have failed to
observe or perform any of its covenants in this Agreement, and the
Borrower shall have delivered to CIBC, if so requested by CIBC, an
Officers' Certificate to such effect.
(c) The representations and warranties contained in this Agreement shall be
true on and as of the applicable borrowing date with the same effect as
if such representations and warranties had been made on and as of the
applicable borrowing date, and the Borrower shall have delivered to
CIBC, if so requested by CIBC, an Officers' Certificate to such effect.
(d) All other conditions specified herein, to the extent not previously
satisfied for any reason, other shall have been satisfied.
(e) In respect of any amount that would result in the aggregate amount
outstanding under the Credits being increased, there shall not have
occurred subsequent to the date of last annual financial statements of
the Borrower, in the opinion of CIBC, any event which (individually or
with any other events) has had, or which has a reasonable possibility
of having, a Material Adverse Effect.
6 REPRESENTATIONS AND WARRANTIES
6.1 REPRESENTATIONS AND WARRANTIES. To induce CIBC to establish and
maintain the Credits, the Borrower represents and warrants as follows:
(a) Each of the Borrower and its Subsidiaries has all necessary power and
authority to own its property, to carry on the business carried on by
it, to enter into and perform its obligations under such of this
Agreement and the Security to which it is a party, and in the case of
the Borrower to obtain amounts under the Credits. Each of the Borrower
and its Subsidiaries is in compliance with all applicable laws except
to the extent that the failure to comply therewith would not, in the
aggregate, have, or reasonably be expected to have, a Material Adverse
Effect.
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(b) The Borrower has taken all action necessary to be taken to authorize
the execution and delivery of and the performance of its obligations
under this Agreement and the Security, and the obtaining of amounts
under the Credits. Except as has been obtained and is in full force and
effect, no consent, waiver or authorization of, or filing with or
notice to, any person is required to be obtained in connection with the
execution and delivery of and the performance by each of the Borrower
and its Subsidiaries of its obligations under this Agreement and the
Security, or the obtaining by the Borrower of amounts under the
Credits. This Agreement and the Security have been duly executed and
delivered by each of the Borrower and its Subsidiaries as are parties
thereto, and constitute the legal, valid and binding obligation of each
of them enforceable in accordance with their terms.
(c) The execution and delivery by the Borrower and its Subsidiaries of this
Agreement and the Security and the performance by them of their
obligations thereunder, and the obtaining by the Borrower of amounts
under the Credits, will not conflict with or result in a breach of any
applicable law, and will not conflict with or result in a breach of or
constitute a default under, or permit the termination of, or cause any
material right of any of the Borrower and its Subsidiaries to be
adversely affected under, any of the provisions of its constating
documents or by-laws or any agreement, permit, instrument, judgement,
injunction or other contractual obligation to which it is a party or by
which it is bound, or result in the creation or imposition of any Lien
(other than the Security) upon any of its property or assets.
(d) Except as disclosed in writing by the Borrower to CIBC prior to the
date of this Agreement with specific reference to this paragraph or,
with respect to events occurring subsequent to the date of this
Agreement, as the Borrower has otherwise disclosed in writing to CIBC
with specific reference to this paragraph, there is no action, suit or
proceeding (whether or not purportedly on behalf of any of the Borrower
and its Subsidiaries) pending or, to the knowledge of the Borrower,
threatened, against or affecting any of its Borrower and its
Subsidiaries before any court or before or by any governmental
department, commission or agency, in Canada or elsewhere, or before any
arbitrator or board, that would have, or reasonably be expected to
have, a Material Adverse Effect, and none of the Borrower and its
Subsidiaries is in default with respect to any order or award of any
arbitrator or government department, commission or agency, that would
have, or reasonably be expected to have, a Material Adverse Effect.
(e) The Borrower has delivered to CIBC a true and complete copy of its most
recent financial statements, and such financial statements present
fairly the financial position of the Borrower, in accordance with GAAP,
as of the date thereof and for the fiscal period then ended. All
financial statements of the Borrower delivered by the Borrower to CIBC
after the date of this Agreement will present fairly the financial
position of the Borrower, in accordance with GAAP, as of the dates
thereof and for the fiscal periods then ended.
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(f) Since the date of the most recent financial statements of the Borrower
delivered to CIBC, there has occurred no event which (individually or
with any other events) has had, or which may reasonably be expected to
have, a Material Adverse Effect.
(g) The Borrower has not failed to observe or perform (beyond any period of
grace permitted by CIBC) any of its covenants in this Agreement.
(h) Except as disclosed in writing by the Borrower to CIBC prior to the
date of this Agreement with specific reference to this paragraph, to
the best knowledge of the Borrower, (i) the business carried on and the
property owned or used at any time by any of the Borrower and its
Subsidiaries and their respective predecessors (including the lands
owned or occupied by any of them and the waters on or under such lands)
have at all times been carried on, owned or used in compliance with all
environmental laws; (ii) none of the Borrower and its Subsidiaries is
subject to any proceeding alleging the violation of any environmental
law, and no part of its business or property is the subject of any
proceeding to evaluate whether remedial action is needed as a result of
the release from or presence of any hazardous substance on any lands
owned or occupied by it; (iii) there are no circumstances that could
reasonably be expected to give rise to any civil or criminal
proceedings or liability regarding the release from or presence of any
hazardous substance on any lands used in or related to the business or
property of any of the Borrower and its Subsidiaries or on any lands on
which any of the Borrower and its Subsidiaries has disposed or arranged
for the disposal of any materials arising from the business carried on
by it, or regarding the violation of any environmental law by any of
the Borrower and its Subsidiaries or by any other person for which it
is responsible; (iv) all hazardous substances disposed of, treated or
stored on lands owned or occupied by any of the Borrower and its
Subsidiaries have been disposed of, treated and stored in compliance
with all environmental laws; (v) there are no proceedings and there are
no circumstances or material facts which could give rise to any
proceeding in which it is or could be alleged that any of the Borrower
and its Subsidiaries is responsible for any domestic or foreign clean
up or remediation of lands contaminated by hazardous substances or for
any other remedial or corrective action under any environmental laws;
(vi) each of the Borrower and its Subsidiaries has maintained all
environmental and operating documents and records relating to its
business and property in the manner and for the time periods required
by any environmental laws and has never had conducted an environmental
audit of its business or property; and (vii) the Borrower is not aware
of any pending or proposed change to any environmental law which would
render illegal or materially adversely affect its business or property.
(i) No representation or warranty made by the Borrower herein or in any
other document furnished to CIBC from time to time contains or will
contain any untrue statement of a material fact or omits or will omit
to state any material fact necessary to make the statements herein or
therein, in light of the circumstances under which they are made, not
misleading. All projections and pro forma information delivered to CIBC
from time to time by the Borrower were prepared in good faith based on
assumptions believed by the
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Borrower to be reasonable at the time of delivery. There is no fact
known to the Borrower on the date of this Agreement which has had, or
which has a reasonable possibility of having, a Material Adverse
Effect.
6.2 SURVIVAL. All representations and warranties contained in this
Agreement shall survive the execution and delivery of this Agreement and the
obtaining of amounts under the Credits, and the delivery of each Notice of
Borrowing and the obtaining of any amount under any Credit shall constitute a
reaffirmation on and as of such delivery date and such borrowing date, in each
case by reference to the then-existing facts and circumstances, of all
representations and warranties contained in this Agreement.
7. FINANCIAL COVENANTS
7.1 CALCULATION. All financial covenants will be calculated including the
Borrower and its Subsidiaries on a consolidated basis, and each amount derived
from the Borrower's profit and loss statement shall be calculated as the total
of such amount during the Borrower's four most recently-completed fiscal
quarters (or, if agreed upon by CIBC in its sole discretion, during the
Borrower's most recently-completed fiscal year), as shown in the Borrower's most
recent financial statements delivered to CIBC.
7.2 CERTAIN DEFINITIONS. In this Agreement the following terms have the
following meanings:
"Current Assets" means assets that would be shown as current assets on
a consolidated balance sheet of the Borrower prepared in accordance
with GAAP, and would include such assets as 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, but shall exclude for the purpose of this definition all
amounts due from Affiliates.
"Current Liabilities" means liabilities that would be shown as current
liabilities on a consolidated balance sheet of the Borrower prepared in
accordance with GAAP, and would include such liabilities as Debt that
is or will become payable within one year or one operating cycle,
whichever is longer, accounts payable, accrued expenses and deferred
revenue.
"Current Ratio" means the ratio of Current Assets to Current
Liabilities.
"Debt" means, with respect to any person, (i) an obligation of such
person for borrowed money, (ii) an obligation of such person evidenced
by a note, bond, debenture or other similar instrument, (iii) an
obligation of such person for the deferred purchase price of property
or services, excluding trade payables and other accrued current
liabilities incurred in the ordinary course of business in accordance
with customary commercial
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terms, (iv) a capitalized lease obligation of such person, (v) a
guarantee, indemnity, or financial support obligation of such person,
determined in accordance with GAAP, (vi) an obligation of such person
or of any other person secured by a Lien on any property of such
person, even though such person has not otherwise assumed or become
liable for the payment of such obligation, (vii) an obligation arising
in connection with an acceptance facility or letter of credit issued
for the account of such person, or (viii) a share in the capital of
such person that is redeemable by such person either at a fixed time or
on demand by the holder of such share (valued at the maximum purchase
price at which such person may be required to redeem, repurchase or
otherwise acquire such share), less any cash held by such person.
"Debt to EBITDA Ratio" means the ratio of all Debt of the Borrower and
its Subsidiaries on a consolidated basis, to EBITDA.
"EBITDAR to Debt Service Ratio" means the ratio of EBITDAR to Debt
Service Requirements.
"EBITDA" means, for any period, Net Income for such period plus all
amounts deducted in the calculation thereof on account of Interest
Expense, income taxes, depreciation and amortization.
"Intangible" includes without limitation such personal property as
goodwill; copyrights, patents and trademarks; franchises; licences,
leases; research and development costs; and deferred development costs.
"Interest Expense" means, for any period, the aggregate amount accrued
(whether or not payable or paid) during such period in accordance with
GAAP on account of (i) interest expense including amortization of debt
discount and debt issuance costs, capitalized interest, standby fees,
commissions, discounts and other fees and charges owed with respect to
letters of credit and bankers' acceptances and (ii) the interest
expense components of all capitalized lease obligations.
"Net Income" means, for any period, the consolidated net income (loss)
of the Borrower for such period, calculated in accordance with GAAP
[before extraordinary items] [but excluding (i) the income (or loss) of
any person accrued prior to the date it becomes a Subsidiary of the
Borrower or is amalgamated with or consolidated into the Borrower or
into any of its Subsidiaries or such person's property is acquired by
the Borrower or any of its Subsidiaries, and (ii) any after-tax gains
(but not pre-tax losses) attributable to dispositions of property out
of the ordinary course of business].
"Postponed Debt" means any Debt for borrowed money of any of the
Borrower and its Subsidiaries that is incurred at such time as no
failure by the Borrower to perform or observe any of its covenants in
this Agreement is continuing or would be created by the incurrence
thereof (to be evidenced by pro forma financial statements delivered to
CIBC)
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and which has the following attributes: (i) no principal thereof is
repayable so long as any amount is owed by the Borrower to CIBC (or
until such earlier date as CIBC may agree upon in writing), (ii) no
covenant with respect to such Debt is more onerous than or in addition
to the covenants specified herein, and (iii) all rights of the holder
of such Debt are postponed and subordinated to all rights of CIBC under
or in respect of the Credits pursuant to a subordination agreement
containing payment and non-payment default standstills and other
provisions satisfactory in form and substance to CIBC.
"Shareholders' Equity" means the amount which would, in accordance with
GAAP, then be included as shareholders' equity on a consolidated
balance sheet of the Borrower, excluding any portion of shareholders'
equity that is represented by the cumulative translation account.
"Tangible Net Worth" means Shareholders' Equity less all amounts that
would be included on a consolidated balance sheet of the Borrower as
amounts owed by any Affiliate of the Borrower or as Intangibles.
"Total Liabilities to Tangible Net Worth Ratio" means the ratio of all
amounts that would be included as liabilities on a consolidated balance
sheet of the Borrower, to Tangible Net Worth.
"Working Capital" means the excess of Current Assets over Current
Liabilities.
8. BANKERS' ACCEPTANCES
8.1 POWER OF ATTORNEY. To facilitate the issuance of Bankers' Acceptances
under the Credits, the Borrower appoints CIBC to execute, endorse and deliver on
behalf of the Borrower drafts in the form or forms prescribed by CIBC for
bankers' acceptances denominated in Canadian dollars (each such executed draft
which has not yet been accepted by CIBC is referred to herein as a "Draft").
Each Bankers' Acceptance executed and delivered by CIBC on behalf of the
Borrower as provided herein shall be binding upon the Borrower as if it had been
executed and delivered by a duly authorized officer or officers of the Borrower.
8.2 DRAFTS. Notwithstanding the above section, the Borrower will from time
to time provide to CIBC if so required by CIBC an appropriate number of Drafts
drawn by the Borrower upon CIBC and payable and endorsed as specified by CIBC.
The dates, maturity dates and face amounts of all Drafts delivered by the
Borrower shall be left blank, to be completed by CIBC as required. All such
Drafts shall be held by CIBC subject to the same degree of care as if they were
such Lender's own property. CIBC will, upon written request by the Borrower,
advise the Borrower of the number and designations, if any, of the Drafts of the
Borrower then held by it. CIBC shall not be liable for its failure to accept a
Draft as required hereby if the cause of such failure is, in whole or in part,
due to the failure of the Borrower to provide appropriate Drafts to CIBC on a
timely basis.
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8.3 TERM AND AMOUNT. The term of all Bankers' Acceptances issued pursuant
to any Notice of Borrowing must be identical. Each Bankers' Acceptance shall be
in a face amount of $100,000 or any whole multiple thereof, and the aggregate
face amount of Bankers' Acceptances issued pursuant to any Notice of Borrowing
must not be less than $1,000,000. Each Bankers' Acceptance will be dated the
date on which it is issued, and will be for a term of one, two, three or six
months or such other period as may be agreed to by CIBC.
8.4 CALCULATION OF FEE. The fee for any Bankers' Acceptance will be
calculated, at the rate specified, on the basis of the face amount and term of
such Bankers' Acceptance.
8.5 PAYMENT OF FEE. Upon acceptance of a Draft the Borrower will pay to
CIBC the related fee specified in this Agreement, and to facilitate payment CIBC
will be entitled to deduct and retain for its own account the amount of such fee
from the amount to be paid by CIBC to the Borrower as the purchase price for the
resulting Bankers' Acceptance.
8.6 PURCHASE BY CIBC. Each Bankers' Acceptance will be purchased by CIBC
for a price which produces a yield thereon equal to the Bankers' Acceptance
Yield then in effect. Such price will be credited by CIBC to the applicable
Operating Account.
8.7 NO MARKET. If CIBC determines in good faith, which determination will
be conclusive and binding on the Borrower, and so notifies the Borrower, that
there does not exist at the applicable time a normal market in Canada for the
purchase and sale of bankers' acceptances, then notwithstanding any other
provision hereof any obligation of CIBC to purchase Bankers' Acceptances will be
suspended until CIBC determines that such market does exist and gives notice
thereof to the Borrower, and any Notice of Borrowing requesting Bankers'
Acceptances will be deemed to be a Notice of Borrowing requesting Loans in
Canadian dollars in a similar aggregate principal amount.
8.8 PAYMENT ON MATURITY. On the maturity of each Bankers' Acceptance the
Borrower will pay to CIBC, for the account of the holder of such Bankers'
Acceptance, Canadian dollars in an amount equal to the face amount of such
Bankers' Acceptance. The obligation of the Borrower to make such payment is
absolute and unconditional, and will not be prejudiced by the fact that the
holder of any such Bankers' Acceptance is CIBC. No days of grace may be claimed
by the Borrower for the payment at maturity of any Bankers' Acceptance. If the
Borrower does not make such payment, the amount of such payment shall be deemed
to be a loan in Canadian dollars made to the Borrower by CIBC and payable on
demand. The Borrower hereby confirms the application of the proceeds of such
loan in payment of the liability of the Borrower with respect to the related
Bankers' Acceptance.
8.9 CASH COLLATERALIZATION. If any Bankers' Acceptance is outstanding at
any time that an Event of Default occurs, the Borrower will forthwith upon
demand by CIBC pay to CIBC, for the account of the holder of such Bankers'
Acceptance, Canadian dollars in an amount equal to the face amount thereof. Such
funds shall be held by CIBC for payment of the liability of the Borrower in
respect of such Bankers' Acceptance on the maturity thereof.
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8.10 SIGNATURES ON DRAFTS. The signature of any duly authorized officer of
the Borrower on a Draft may be mechanically reproduced in facsimile, and all
Drafts bearing such facsimile signature shall be binding upon the Borrower as if
they had been manually signed by such officer, notwithstanding that such person
whose manual or facsimile signature appears on such Draft may no longer hold
office at the date thereof or at the date of acceptance of such Draft by CIBC or
at any time thereafter.
8.11 UNDISBURSED CREDIT. For the purpose of calculating the undisbursed
amount of any Credit and for any other relevant provision of this Agreement, the
amount constituted by any Bankers' Acceptance shall be the face amount thereof.
8.12 CERTAIN DEFINITIONS. In this Agreement the following terms shall have
the following meanings:
"Bankers' Acceptance" or "B/A" means a Draft which has been accepted by
CIBC pursuant to a Credit.
"Bankers Acceptance Yield" means, with respect to any Bankers'
Acceptance to be purchased by CIBC at any time, the annual yield
resulting from the price at which CIBC is offering to purchase at such
time bankers' acceptances accepted by it having a term identical to
such Bankers' Acceptance and in a comparable face amount to the
Bankers' Acceptances to be purchased by CIBC from the Borrower at such
time.
"face amount" means, with respect to any Bankers' Acceptance, the
principal amount thereof payable on the maturity thereof.
9. LETTERS OF CREDIT
9.1 PAYMENT OF FEE. Upon issuance of a Letter of Credit, the Borrower will
pay to CIBC the related fee specified in this Agreement.
9.2 REIMBURSEMENT. The Borrower will pay to CIBC on demand, in the currency
of the applicable Letter of Credit, an amount equal to any amount paid or
required to be paid by CIBC pursuant thereto (including pursuant to an L/C
Acceptance created thereunder). The obligation of the Borrower to make such
payment is absolute and unconditional. If the Borrower does not make such
payment, the amount of such payment shall be deemed to be a loan in the amount
and currency of such payment, made to the Borrower by CIBC under the applicable
Credit and payable on demand. The Borrower hereby confirms the application of
the proceeds of such loan in payment of the aforesaid liability of the Borrower
with respect to the related Letter of Credit.
9.3 CASH COLLATERALIZATION. If any Letter of Credit is outstanding at any
time that the Borrower has failed to perform or observe (beyond any period of
grace permitted by CIBC) any of its covenants in this Agreement, the Borrower
will forthwith pay to CIBC, in the currency of such Letter of Credit, funds in
an amount equal to the total maximum actual and contingent liability of CIBC
pursuant thereto. Such funds will be held by CIBC for payment of the liability
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of the Borrower in respect of such Letter of Credit, and any excess thereof will
be applied to any other liabilities of the Borrower pursuant to the Credits or
will be returned to the Borrower at such time as no such liabilities exist or
may arise.
9.4 UNDISBURSED CREDIT. For the purpose of calculating the undisbursed
amount of any Credit and for any other relevant provision of this Agreement, the
amount constituted by any Letter of Credit shall be the total maximum actual and
contingent liability of CIBC pursuant thereto.
9.5 DEFINITIONS. In this Agreement, the following terms shall have the
following meanings:
"Letter of Credit" or "L/C" means a documentary or standby letter of
credit, a letter of guarantee or a similar instrument, in form and
substance satisfactory to CIBC.
"L/C Acceptance" means an outstanding bill of exchange drawn by the
beneficiary of a documentary L/C and which CIBC has accepted and is
therefore obligated to pay at maturity.
10. INSTALMENT LOANS
10.1 INSTALMENT LOANS. The following terms apply to each Instalment Loan:
(a) NON-REVOLVING LOANS. Unless otherwise stated in this Agreement, any
Instalment Loan is non-revolving. This means that any principal repayment is not
available to be re-borrowed, and permanently reduces the amount of such
Instalment Loan.
(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 a Floating Rate Instalment Loan has
blended payments, the amount of the monthly payments is fixed for the
term of such Loan, but the interest rate will vary with changes in the
Prime Rate on the US Base Rate (as the case may be). If the Prime Rate
or the US Base Rate during any month is lower than it was at the
outset, a larger portion of the monthly payment will be allocated to
principal and as a result such Loan may be repaid prior to its original
maturity. If, however, the Prime Rate or the US Base Rate is higher
than it was at the outset, the amount of principal that is repaid will
be reduced, and as a result there may remain principal outstanding on
the original maturity date.
(ii) PAYMENTS OF PRINCIPAL PLUS INTEREST. If a Floating Rate
Instalment Loan has specified principal payments, in addition to
interest, such principal payments are due on each specified payment
date. The interest payment is also due on the same date, and will
usually be a different amount each month due to the reducing balance of
the Loan, the number of days in the month, and changes in the Prime
Rate or the US Base Rate (as the case may be) during the month and from
month to month.
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(c) PREPAYMENT. Unless otherwise specified in this Agreement:
(i) all or part of a Floating Rate Instalment Loan may be prepaid
at any time without penalty; and
(ii) all (but not part) of a Fixed Rate Instalment Loan may be
prepaid provided that the Borrower also pays to CIBC, on the prepayment
date, any amount determined by CIBC pursuant to clause 4.4(iv) of this
Schedule.
(d) DEMAND OF FIXED RATE INSTALMENT LOANS. Upon demand for payment of a
Fixed Rate Instalment Loan the Borrower will pay to CIBC the prepayment fee
specified in clause 10.1(c)(ii) above.
(e) CERTAIN DEFINITIONS. In this Agreement the following terms have the
following meanings:
"Fixed Rate Instalment Loan" means an Instalment Loan with respect to
which interest is payable at a fixed annual rate of interest (as
opposed to being payable on the basis of the Prime Rate or the US Base
Rate).
"Floating Rate Instalment Loan" means an Instalment Loan with respect
to which interest is payable on the basis of the Prime Rate or the US
Base Rate.
"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, and that (notwithstanding any such
specified instalments) is repayable on demand by CIBC at any time if so
specified in this Agreement.
11. LIBO RATES AND LIBOR LOANS
11.1 SELECTION OF LIBOR PERIODS. The Borrower shall select the term of each
LIBOR Period with respect to each LIBOR Loan made or to be made available to it
by telephone notice (to be confirmed the same day in writing) or facsimile
received by CIBC not later than 10:00 a.m. on the third Business Day prior to
the commencement of such LIBOR Period. The first LIBOR Period for each LIBOR
Loan will commence on (and include) the date of advance of such LIBOR Loan, and
each LIBOR Period occurring thereafter for such LIBOR Loan will commence on (and
include) the last day of the immediately preceding LIBOR Period for such LIBO
Loan. In each case, a LIBOR Period will end on the day in the last calendar
month included therein that numerically corresponds to the first day of such
LIBOR Period. Notwithstanding the foregoing: (i) if CIBC has not received due
notice of renewal of the LIBOR Period with respect to any outstanding LIBOR Loan
in accordance with the first sentence of this section, such LIBOR Loan will be
automatically converted on the expiry of such existing LIBOR Period to a Loan
bearing interest on the basis of the US Base Rate; (ii) any LIBOR Period that
begins on the last Business Day in a calendar month, or on a day for which there
is no numerically corresponding day in the calendar month in which such LIBOR
Period would
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otherwise end, will end on the last Business Day in the calendar month in which
such LIBOR Period would otherwise end; (iii) if any LIBOR Period would otherwise
end on a day that is not a Business Day, such LIBOR Period will end on the next
Business Day; provided, however, that if such next Business Day falls in the
next calendar month, such LIBOR Period will end on the preceding Business Day;
(iv) all LIBOR Periods in effect at any time must end on not more than five
different days; and (v) if, on the day that the Borrower delivers a Notice of
Borrowing or otherwise notifies CIBC of the selection of a LIBOR Period with
respect to any LIBOR Loan made or to be made to the Borrower, or on the day that
any such LIBOR Period is to become effective, there exists any failure by the
Borrower (beyond any period of grace permitted by CIBC) to perform or observe
any of its covenants in this Agreement, then, at the option of CIBC, in the case
of any Loan then outstanding as a LIBOR Loan, on the last day of the LIBOR
Period then applicable thereto the interest thereon shall cease to be calculated
hereunder on the basis of a LIBO Rate and shall commence to be calculated
hereunder on the basis of the US Base Rate, and in the case of any LIBOR Loan to
be made hereunder, the applicable Notice of Borrowing shall be deemed to request
instead a Loan in US dollars in the same amount bearing interest on the basis of
the US Base Rate.
11.2 FAILURE OF THE LIBO RATE. If at any time CIBC determines (which
determination shall be conclusive and binding) that by reason of circumstances
affecting the London interbank market or any other relevant financial market or
the position of CIBC therein (i) adequate and reasonable means do not exist for
ascertaining the LIBO Rate to be applicable during any LIBOR Period, or (ii) the
LIBO Rate does not adequately reflect the effective cost to CIBC of the funds to
be used by it to make or continue the applicable Loan for any LIBOR Period, or
(iii) US dollars in the amount of the applicable Loan are not readily available
to CIBC for the applicable LIBOR Period in the London interbank market, then
CIBC shall give notice thereof (by telephone to be confirmed the same day in
writing) or by facsimile to the Borrower. On the last day of the LIBOR Period
then applicable thereto, the interest on each Loan then outstanding from CIBC as
a LIBOR Loan shall cease to be calculated hereunder on the basis of a LIBO Rate
and shall commence to be calculated hereunder on the basis of the US Base Rate.
Any Notice of Borrowing which has been delivered to CIBC requesting a LIBOR Loan
on a day on or subsequent to such notification date will be deemed to request
instead a Loan in US dollars in the same amount bearing interest on the basis of
the US Base Rate. The Borrower will not be entitled to obtain any LIBOR Loan
from CIBC so long as any such condition shall continue to exist, and any Loan
that would otherwise have been made by CIBC as a LIBOR Loan shall instead be
made by CIBC as a Loan in US dollars bearing interest on the basis of the US
Base Rate.
11.3 INTEREST PAYMENT DATES. Interest on each LIBOR Loan is payable on the
last day of each LIBOR Period applicable thereto and also, with respect to each
LIBOR Period of a term longer than three months, at the end of each three-month
period included therein.
11.4 CERTAIN DEFINITIONS. In this Agreement the following terms have the
following definitions:
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"LIBO Rate" means, with respect to each LIBOR Period for each LIBOR
Loan, an annual interest rate equal to the rate at which CIBC is
offered deposits of US dollars by leading banks in the London interbank
market as of 11:00 a.m. (London time) on the second Business Day prior
to the commencement of such LIBOR Period, for delivery on the first day
of such LIBOR Period for a period equal to the number of months
comprised therein and in an amount equal to the amount of such LIBOR
Loan.
"LIBOR Loan" means any loan with respect to which interest is
calculated hereunder for the time being on the basis of the LIBO Rate.
"LIBOR Period" means, from time to time with respect to a LIBOR Loan,
the applicable interest period of one, two, three or six months, as
selected in accordance with the provisions hereof.