Exhibit 10
MAGNA ENTERTAINMENT CORP.
as Borrower
- and -
THE GUARANTORS SET FORTH
ON THE SIGNATURE PAGE HEREOF
as Guarantors
- and -
BANK OF MONTREAL, ACTING THROUGH ITS
CHICAGO LENDING OFFICE
as Lender
- and -
BANK OF MONTREAL, ACTING THROUGH ITS
CHICAGO LENDING OFFICE
as Agent
- and -
BMO NESBITT BURNS, A DIVISION OF BANK OF MONTREAL
as Arranger
- --------------------------------------------------------------------------------
CREDIT AGREEMENT
- --------------------------------------------------------------------------------
Dated as of May 1, 2002
TABLE OF CONTENTS
Page
ARTICLE 1.
INTERPRETATION
1.1. Definitions.................................................................... 2
1.2. Gender and Number.............................................................. 16
1.3. Certificate of the Agent as to Rates, etc...................................... 17
1.4. Invalidity, etc................................................................ 17
1.5. Headings, etc.................................................................. 17
1.6. Governing Law.................................................................. 17
1.7. Attornment..................................................................... 17
1.8. Judgment Currency.............................................................. 17
1.9. Waiver of Jury................................................................. 18
1.10. References..................................................................... 18
1.11. Currency....................................................................... 18
1.12. This Agreement to Govern....................................................... 18
1.13. Generally Accepted Accounting Principles....................................... 18
1.14. Determination of Amount of Loans............................................... 19
1.15. Computation of Time Periods.................................................... 19
1.16. Actions on Days Other Than Banking Days........................................ 19
1.17. Oral Instructions.............................................................. 19
1.18. Incorporation of Schedules..................................................... 19
ARTICLE 2.
CREDIT FACILITY
2.1. Establishment of Credit Facility............................................... 20
2.2. Revolving Nature of Operating Facility......................................... 20
2.3. Repayment under Credit Facility................................................ 20
2.4. Mandatory Repayment from Public Offerings...................................... 21
2.5. Voluntary Reduction in Aggregate Commitment.................................... 22
2.6. Extension of Credit Facility................................................... 22
2.7. Increase in Aggregate Commitment............................................... 23
ARTICLE 3.
GENERAL PROVISIONS RELATING TO THE CREDIT FACILITY
3.1. Advances....................................................................... 24
3.2. Selection of Interest Periods.................................................. 24
3.3. Rollover and Conversion........................................................ 24
3.4. Payments Generally............................................................. 25
3.5. Disturbance of Libor Market.................................................... 25
3.6. Change in Circumstances........................................................ 26
3.7. Illegality..................................................................... 27
3.8. Indemnity...................................................................... 27
3.9. Proceedings in Respect of Claims............................................... 29
3.10. Evidence of Indebtedness....................................................... 31
3.11. Several Obligations............................................................ 31
ARTICLE 4.
LETTERS OF CREDIT
4.1. Procedures Relating to Letters of Credit....................................... 31
4.2. Reimbursement.................................................................. 31
4.3. L/C Lender Not Liable.......................................................... 32
4.4. Letter of Credit Fees.......................................................... 33
4.5. Overdue Amounts................................................................ 33
4.6. Acceleration................................................................... 33
4.7. Conflict....................................................................... 33
ARTICLE 5.
INTEREST AND FEES
5.1. Interest Rates................................................................. 34
5.2. Calculation and Payment of Interest............................................ 34
5.3. Stand-by Fee................................................................... 34
5.4. Payment of Costs and Expenses.................................................. 34
5.5. Interest on Overdue Amounts.................................................... 35
ARTICLE 6.
REPRESENTATIONS AND WARRANTIES
6.1. Representations and Warranties................................................. 35
6.2. Survival of Representations and Warranties..................................... 41
ARTICLE 7.
COVENANTS
7.1. Affirmative Covenants.......................................................... 41
7.2. Negative Covenants............................................................. 46
7.3. Environmental Matters.......................................................... 47
ARTICLE 8.
CONDITIONS PRECEDENT
8.1. Conditions Precedent to Closing................................................ 49
8.2. Conditions Precedent to Advances............................................... 50
ARTICLE 9.
EVENTS OF DEFAULT AND REMEDIES
9.1. Events of Default.............................................................. 51
9.2. Remedies Upon Default.......................................................... 53
9.3. Distributions.................................................................. 54
ARTICLE 10.
GUARANTY
10.1. Guaranty....................................................................... 54
10.2. Guaranty Absolute.............................................................. 54
10.3. Waiver......................................................................... 55
ii
10.4. Continuing Guaranty; Assignments............................................... 55
10.5. Subrogation.................................................................... 56
ARTICLE 11.
THE AGENT AND THE ADMINISTRATION OF THE CREDIT FACILITY
11.1. Appointment and Authorization.................................................. 56
11.2. Duties and Obligations of Agent................................................ 57
11.3. Prompt Notice to the Lenders................................................... 58
11.4. Agent's Authority to Deal with Borrower........................................ 58
11.5. Dealings by Borrower with Agent................................................ 58
11.6. Independent Credit Decisions................................................... 58
11.7. Indemnification................................................................ 59
11.8. Successor Agent................................................................ 59
11.9. Action by and Consent of Lenders; Waiver and Amendments........................ 59
11.10. Funding of Advances............................................................ 60
11.11. Remittance of Payments......................................................... 61
11.12. Redistribution of Payments..................................................... 61
11.13. Notification of Default........................................................ 62
11.14. Taking and Enforcement of Remedies............................................. 62
11.15. Adjustments to Reflect Rateable Portions....................................... 63
11.16. No Partnership................................................................. 63
ARTICLE 12.
GENERAL
12.1. Reliance and Non-Merger........................................................ 63
12.2. Confidentiality................................................................ 63
12.3. No Set-Off by the Borrower..................................................... 64
12.4. Employment of Experts.......................................................... 64
12.5. Reliance by the Lenders........................................................ 64
12.6. Notices........................................................................ 64
12.7. Time........................................................................... 65
12.8. Further Assurances............................................................. 65
12.9. Assignment..................................................................... 65
12.10. Exchange of Information........................................................ 67
12.11. Counterparts................................................................... 67
12.12. Entire Agreement............................................................... 68
12.13. Liability of Arranger.......................................................... 68
iii
SCHEDULE 1.1.8
Applicable Margin and Stand-by Fee
SCHEDULE 1.1.18
Borrowing Notice
SCHEDULE 1.1.59
Lender's Commitments
SCHEDULE 7.1.13
Form of Compliance Certificate
SCHEDULE 12.9.4
Assignment and Assumption Agreement
iv
THIS AGREEMENT is dated as of May 1, 2002
AMONG:
MAGNA ENTERTAINMENT CORP., as Borrower
- and -
THE GUARANTORS SET FORTH ON THE SIGNATURE PAGE
HEREOF, as Guarantors
- and -
BANK OF MONTREAL, acting through its Chicago lending office, as Lender
- and -
BANK OF MONTREAL, acting through its Chicago lending office, as Agent
- and -
BMO NESBITT BURNS, a division of Bank of Montreal, as Arranger
RECITALS:
A. The Borrower has requested that the Lender make available a revolving
credit facility for the Borrower's general corporate purposes, including
for purposes of financing Permitted Acquisitions (as hereinafter defined),
Capital Expenditures (as hereinafter defined) and working capital needs.
B. The Guarantors have agreed to guarantee, on the terms and conditions herein
set forth, the due and punctual payment and performance by the Borrower of
its Obligations (as hereinafter defined).
C. The Lender has agreed to provide the Credit Facility (as hereinafter
defined) to the Borrower on the terms and conditions herein set forth.
NOW THEREFORE THIS AGREEMENT WITNESSES that, in consideration of the
covenants and agreements herein contained, the parties hereto agree as
follows:
ARTICLE 1.
INTERPRETATION
1.1. Definitions
For the purposes of this Agreement:
1.1.1. "Acquisition" means any transaction or series of transactions,
consummated after the Closing Date, by which the Borrower or any of its
Subsidiaries, directly or indirectly, by means of a take-over bid, tender
offer, amalgamation, merger, purchase of assets, purchase of shares or
otherwise (a) acquires any ongoing business or all or substantially all of
the assets of any Person engaged in any ongoing business, (b) acquires
beneficial ownership (as defined in Rule 13d-3 promulgated under the
Securities Exchange Act of 1934, as amended) of securities of a Person
engaged in any ongoing business representing more than 10% of the ordinary
voting power for the election of directors or other governing position if
the business and affairs of such Person are managed by a board of directors
or other governing body, or (c) acquires beneficial ownership (as defined
in Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as
amended) of more than 10% of the ownership interest in any Person engaged
in any ongoing business that is not managed by a board of directors or
other governing body;
1.1.2. "Advance" means any utilization of the Credit Facility by the
Borrower (other than by way of Rollover or Conversion of a Loan already
outstanding), whether by way of advance of a Base Rate Loan, Libor Loan or
L/C Loan;
1.1.3. "Affiliate" means, in respect of any corporation, any Person which,
directly or indirectly, controls or is controlled by or is under common
control with the corporation; and for the purpose of this definition,
"control" (including, with correlative meanings, the terms "controlled by"
and "under common control with") means the power to direct, or cause to be
directed, the management and policies of a corporation whether through the
ownership of voting shares, by contract or otherwise;
1.1.4. "Agent" means Bank of Montreal, in its capacity as administrative
agent hereunder or any successor agent as provided in section 11.8;
1.1.5. "Aggregate Commitment" means, at any time, $75,000,000, subject to
all permanent reductions effected from time to time pursuant to sections
2.4, 2.5 or 3.7, subject to any increase effected pursuant to section 2.7,
and inclusive of any L/C Loan outstanding pursuant to section 4.1;
1.1.6. "Agreement" means this agreement and the Disclosure Letter and all
schedules attached to this agreement or to the Disclosure Letter, in each
case as they may be amended or supplemented from time to time; the
expressions "hereof", "herein", "hereto", "hereunder", "hereby" and similar
expressions refer to this Agreement as a whole (including the Disclosure
Letter) and not to any particular article, section, schedule or other
portion hereof, and the expression "article" and "section" followed by a
number or by a number and letter, and "schedule" followed by a letter, mean
and refer to the specified article or section of or schedule to this
Agreement, as applicable, except as otherwise specifically provided herein;
1.1.7. "Applicable Law" means, in respect of any Person, property,
transaction or event, all applicable laws, statutes, rules, by-laws and
regulations, and all applicable official directives, orders, judgments and
decrees of Governmental Bodies but solely to the extent they have the
2
force of law (and, in the case of section 3.6 only, whether or not having
the force of law but otherwise binding on such Person or such Person's
property);
1.1.8. "Applicable Margin" means the margins expressed as a rate per annum
set forth in Schedule 1.1.8 corresponding to the ratio of (i) Total Funded
Debt less cash reflected on the Borrower's consolidated balance sheet to
(ii) EBITDA (measured on a rolling four quarter basis) as calculated on the
Closing Date and at the beginning of each Fiscal Quarter thereafter;
1.1.9. "Assignment Agreement" has the meaning attributed to such term in
section 12.9.4;
1.1.10. "Audited Financial Statements" means the audited consolidated
financial statements of the Borrower for the Fiscal Year ended December 31,
2001;
1.1.11. "Banking Day" means a day on which (i) for all purposes other than
in connection with a Libor Loan, banks are generally open for business in
each of Toronto, Ontario, New York, New York, Chicago, Illinois and Los
Angeles, California; and (ii) in connection with a Libor Loan, banks are
generally open for business and on which dealings in foreign currency and
exchange between banks may be carried on in each of Toronto, Ontario, New
York, New York, Chicago, Illinois, Los Angeles, California and London,
England and on which dealings in U.S. dollar deposits are transacted in the
London interbank market;
1.1.12. "Bank of Montreal" means Bank of Montreal, acting through its
Chicago lending office, or any other appropriate lending office in the
United States of America designated thereby;
1.1.13. "Base Rate" means, for any day, the annual rate of interest equal
to the greater of (i) the rate which the Agent establishes at its principal
office in Chicago, Illinois as the reference rate of interest in order to
determine interest rates it will charge on such day for commercial loans in
U.S. dollars made to its customers in the United States of America and
which it refers to as its "Base Rate", and (ii) the Federal Funds Effective
Rate on such day plus 1% per annum, such rate to be adjusted automatically
and without the necessity of any notice to the Borrower upon each change to
such rate;
1.1.14. "Base Rate Loan" means, at any time, any Loan which is outstanding
at such time and in respect of which interest is to be calculated based on
the Base Rate;
1.1.15. "BNS Filings" means the filings under the Uniform Commercial Code
recorded on March 7, 1994 against Gulfstream Park (evidencing a security
interest in all personal property of Gulfstream Park) in favour of The Bank
of Nova Scotia;
1.1.16. "Borrower" means Magna Entertainment Corp., a corporation existing
under the laws of Delaware, and its successors and permitted assigns;
1.1.17. "Borrowing Date" means any Banking Day on which an Advance is made,
or is to be made in accordance with a request of the Borrower;
1.1.18. "Borrowing Notice" means a notice substantially in the form of
Schedule 1.1.18;
1.1.19. "Branch of Account" means the Agent's main branch located at
Chicago, Illinois, or such other branch of the Agent located in the United
States of America as the Agent may designate in writing to the Borrower at
least 30 days prior to the redesignation of such Branch of Account;
3
1.1.20. "Capital Expenditures" means, for any period, those expenditures of
the Borrower or any Subsidiary made in connection with the purchase, lease,
license, acquisition, erection, development, improvement, maintenance or
construction of property of or by such Person (including any such property
acquired pursuant to a Capital Lease Obligation) or any other expenditures,
in all cases, which are required to be capitalized on the balance sheet of
the Borrower or such Subsidiary in accordance with GAAP;
1.1.21. "Capital Lease Obligations" means the obligations of the Borrower
or any Subsidiary to pay rent or other amounts under a lease of (or other
agreement conveying the right to use) real or personal property, which
obligations are required to be classified and accounted for as a capital
lease on a balance sheet of such Person under GAAP and, for purposes of
this Agreement, the amount of such obligations shall in each case be the
capitalized amount thereof, determined in accordance with GAAP;
1.1.22. "CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, including the rules and regulations
promulgated thereunder, as the same may be amended from time to time;
1.1.23. "Change in Control" means any event which results in Magna
International Inc., The Stronach Trust, Frank Stronach and any member of
his immediate family and their heirs and personal representatives in the
aggregate being the beneficial holder, directly or indirectly, of less than
51% of the votes attaching to all Voting Interests of the Borrower;
1.1.24. "Closing Date" means the date on which this Agreement is executed
and delivered by the parties hereto;
1.1.25. "Comerica Filings" means the filings under the Uniform Commercial
Code recorded on December 28, 1998 against MI Racing (evidencing a security
interest in all personal property of MI Racing) in favour of Comerica Bank;
1.1.26. "Company" means, collectively, the Borrower and all of its
Subsidiaries;
1.1.27. "Contingent Liabilities" at any time means the amount of all
indebtedness and liabilities, contingent or otherwise, of any other Person
at such time,
(a) guaranteed, directly or indirectly, in any manner by the Borrower or
any Subsidiary including, without limitation, (i) by procuring the
issue of letters of credit or other similar instruments for the benefit
of that other Person, (ii) by endorsement of bills of exchange
(otherwise than for collection or deposit in the ordinary course of
business), or (iii) by the other Person assigning debts of the Borrower
or any Subsidiary (whether or not represented by an instrument) with
recourse to the Borrower or any Subsidiary;
(b) in effect guaranteed, directly or indirectly, by the Borrower or any
Subsidiary through an agreement, contingent or otherwise:
(i) to purchase such indebtedness or liabilities or to advance or supply
funds for the payment or purchase of such indebtedness or
liabilities;
(ii) to purchase, sell or lease (as lessee or lessor) property,
products, materials or supplies or to purchase or sell services in
circumstances where the primary purpose of such agreement was to
provide funds to the debtor to enable the
4
debtor to make payment of such indebtedness or liabilities or to
provide goods or services to the debtor to enable it to satisfy
other liabilities, regardless of the delivery or non-delivery of
the property, products, materials or supplies or the provision or
non-provision of the services, including take or pay or throughput
agreements; or
(iii) to make any loan, advance, capital contribution to or other
investment in the other Person for the purpose of assuring a
minimum equity, asset base, working capital or other balance sheet
condition at any date or to provide funds for the payment of any
liability, dividend or return of capital; or
(c) secured by any Lien upon property owned by the Borrower or any
Subsidiary, even though neither the Borrower nor any Subsidiary has
assumed or become liable for the payment of such indebtedness or
liabilities, provided that, if neither the Borrower nor any Subsidiary
has assumed or become liable for such assumption, such indebtedness
shall be deemed to be an amount equal to the lesser of (A) the amount
of such indebtedness and liabilities and (B) the book value of such
property;
For purposes hereof, a Person shall not be deemed to have a Contingent
Liability if it is the co-maker of the primary obligation and shall have
one Contingent Liability if it has guaranteed the obligations of more than
one primary obligor with respect to the same primary obligation.
1.1.28. "Conversion" means, in respect of any Loan, the conversion of the
method for calculating interest or fees on such Loan from one method to
another, and includes a conversion to or from a Libor Loan;
1.1.29. "Conversion Date" means, in respect of any Loan, the Banking Day on
which a Conversion thereof is made;
1.1.30. "Core Line of Business" means the ownership or operation of
racetracks and pari-mutuel wagering activities, including (i) horse racing,
(ii) dog racing, (iii) off-track betting facilities, (iv) account wagering
and other gaming activities including, without limitation, slot machine and
video lottery terminals, (v) a racetrack and casino complex currently under
development in Austria, (vi) any food and beverage operations, sports bar
operations, technology services, entertainment, the ownership and
management of real estate and/or other activities, whether or not listed in
section 6.1.1, associated with or ancillary or related to (i), (ii), (iii),
(iv) and/or (v), above, including the ownership or operation of horse or
dog training and boarding centres, arenas and restaurants, and (vii) the
ownership and operation of two golf courses, one of which is located in
Aurora, Ontario and the second of which is located in Oberwaltersdorf,
Austria, and all operations related thereto;
1.1.31. "Credit Facility" means the revolving credit facility made
available to the Borrower by the Lenders pursuant to section 2.1;
1.1.32. "Default" means any event which, but for the lapse of time, giving
of notice or both, would constitute an Event of Default;
1.1.33. "Disclosure Letter" means the letter of even date herewith prepared
and signed by the Borrower and delivered to the Agent simultaneously with
the execution hereof;
5
1.1.34. "EBITDA" means, for any Person in any period, Net Income of such
Person for such period:
(a) increased by the sum of (without duplication) (i) income tax expense
for such period; (ii) interest expense for such period; (iii)
depreciation and amortization expense for such period; and (iv) non-
cash losses incurred during such period to the extent such amounts were
included in the calculation of Net Income for such period; and
(b) decreased by all cash payments during such period relating to losses
that were added back to Net Income under clause (a)(iv) above in
determining EBITDA in any prior period;
1.1.35. "Environmental Laws" means all Applicable Laws with respect to
environmental, public health or safety matters, including without
limitation, federal, state and local environmental statutes, regulations,
ordinances, codes and by-laws relating to the protection and conservation
of the environment (including the indoor environment);
1.1.36. "Environmental Orders" includes applicable orders, decisions or the
like rendered by any Governmental Body under or pursuant to any
Environmental Laws;
1.1.37. "Environmental Permits" includes all permits, certificates,
approvals and licences issued by and registrations with any Governmental
Body pursuant to or required under any Environmental Laws or Environmental
Orders;
1.1.38. "Environmental Reports" means the reports listed on Schedule 1.1.38
of the Disclosure Letter;
1.1.39. "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended;
1.1.40. "ERISA Affiliate" means (1) any corporation which is a member of
the same controlled group of corporations (within the meaning of section
414(b) of the Internal Revenue Code) as the Borrower; (2) any trade or
business (whether or not incorporated) which is under common control
(within the meaning of section 414(c) of the Internal Revenue Code) with
the Borrower; and (3) a member of the same affiliated service group (within
the meaning of section 414(m) of the Internal Revenue Code) as the
Borrower, any corporation described in clause (1) above or any trade or
business described in clause (2) above; or (4) any other Person which is
required to be aggregated with the Borrower pursuant to regulations
promulgated under section 414(o) of the Internal Revenue Code;
1.1.41. "Event of Default" has the meaning attributed to such term in
section 9.1;
1.1.42. "Excluded Taxes" means in relation to the Agent or any Lender, (a)
those Taxes which are imposed or levied on or measured by or determined by
reference to the overall net income, profits, gross receipts, net worth or
capital of the Agent or any Lender or any of its applicable lending
offices, and all franchise taxes, taxes on doing business or taxes measured
by capital or net worth imposed on the Agent or any Lender or any of its
applicable lending offices pursuant to the laws of the jurisdiction in
which the Agent or Lender, as applicable, is organized or resident or in
which the Agent's or Lender's principal office or applicable lending office
is located, and (b) without limiting the generality of the foregoing, all
franchise taxes, taxes on doing business or taxes measured by net income,
capital, profits, gross receipts or net worth imposed on the Agent or any
Lender or any of its applicable lending offices, whether collected by
6
withholding or otherwise, as a result of the Agent or such Lender (i)
carrying on a trade or business in the United States of America or having a
permanent establishment in the United States of America, (ii) being
organized under the laws of the United States of America or any political
subdivision thereof, (iii) being or being deemed to be resident in the
United States of America for income tax purposes, or (iv) not dealing at
arm's length (as defined for the purposes of the Internal Revenue Code)
with the Borrower, or which would not have been imposed had such Person
satisfied a relevant authority that such Person was not a person mentioned
in clause (i), (ii), (iii) or (iv) above;
1.1.43. "Federal Funds Effective Rate" means, for any day, the annual rate
of interest equal to the weighted average of the rates on overnight federal
funds transactions with members of the Federal Reserve System arranged by
federal funds brokers, as published for such day (or, if such day is not a
Banking Day, for the next preceding Banking Day) by the Federal Reserve
Bank of New York, or if such rate is not so published for any day which is
a Banking Day, the average of the quotations for such day on such
transactions received by the Agent from three United States of America
federal funds brokers of recognized standing selected by it;
1.1.44. "Fiscal Year" means the fiscal year of the Borrower, being January
1 to December 31;
1.1.45. "Fiscal Quarter" means a period of three consecutive months ending
on March 31, June 30, September 30 or December 31, as the case may be, of
each Fiscal Year;
1.1.46. "GAAP" means, at any time, accounting principles generally accepted
in the United States of America as recommended by the Financial Accounting
Standards Board, applied on a consistent basis;
1.1.47. "Fraudulent Transfer Laws" has the meaning attributed thereto in
section 10.1.3;
1.1.48. "Guaranteed Obligations" has the meaning attributed thereto in
section 10.1.1;
1.1.49. "Guarantors" means, collectively, the guarantors set forth on the
signature page hereof and any other Relevant Subsidiary (other than the
Santa Anita Subsidiaries) that executes and delivers a Guaranty and, in the
singular, any one of them;
1.1.50. "Guaranty" means the guaranty set forth in Article 10;
1.1.51. "Governmental Body" means any government, parliament, legislature,
or any regulatory authority, agency, commission or board of any government,
parliament or legislature, or any court or (without limitation to the
foregoing) any other law, regulation or rule-making entity (including,
without limitation, any central bank, fiscal or monetary authority or
authority regulating banks), having jurisdiction in the relevant
circumstances over a Person or such Person's property, or any Person acting
under the authority of any of the foregoing (including, without limitation,
any arbitrator and the Racing and Gambling Regulatory Authorities);
1.1.52. "Hazardous Substance" means any flammable explosives, radon,
radioactive materials, asbestos, urea formaldehyde foam insulation,
polychlorinated biphenyls, petroleum and petroleum products, methane,
hazardous materials, hazardous wastes, hazardous or toxic substances or
related materials as defined in CERCLA, the Hazardous Materials
Transportation Act, as amended (49 U.S.C. Sections 1801, et seq.), RCRA,
Articles 15 and 27 of the New York
7
State Environmental Conservation Law or any other applicable Environmental
Law and in the regulations adopted pursuant thereto;
1.1.53. "Interest Period" means, with respect to each Libor Loan, the
period selected by the Borrower in accordance with the provisions hereof
and being of a duration of one, two or three months or such other period as
the Agent (with the consent of all of the Lenders) may agree to from time
to time, commencing on the Borrowing Date, Rollover Date or Conversion Date
(as the case may be) of such Loan;
1.1.54. "Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended, including the regulations and published interpretations and
rulings thereunder;
1.1.55. "L/C Lender" means Bank of Montreal and its successors and
permitted assigns in such capacity;
1.1.56. "L/C Limit" means $15,000,000, as such amount is permanently
reduced from time to time pursuant to sections 2.4, 2.5 or 3.7 or increased
pursuant to section 2.7;
1.1.57. "L/C Loan" means any Letter of Credit issued under Article 4;
1.1.58. "Lenders" means, collectively, Bank of Montreal together with any
financial institutions which become parties hereto pursuant to section 12.9
and their respective successors and permitted assigns, and, in the
singular, any one of them;
1.1.59. "Lender's Commitment", means, with respect to each Lender, the
amount set forth opposite the name of such Lender in Schedule 1.1.59, in
each case subject to such Lender's Rateable Portion of all permanent
reductions effected from time to time pursuant to sections 2.4, 2.5 or 3.7
or such Lender's Rateable Portion of all increases effected from time to
time pursuant to section 2.7;
1.1.60. "Letter of Credit" means a letter of credit or letter of guaranty
issued by the L/C Lender in accordance with the provisions hereof;
1.1.61. "Letter of Credit Agreement" has the meaning attributed thereto in
section 4.7;
1.1.62. "Letter of Credit Fee" means, at any time, in respect of each
Letter of Credit, a fee payable in advance, in equal quarterly instalments,
calculated on the basis of the actual number of days in the year for the
period from the date of issue thereof to the Maturity Date thereof, at the
rate per annum, equal to the Applicable Margin for Libor Loans in effect at
the time the Letter of Credit is issued, such fee to be adjusted
automatically and without the necessity of any notice to the Borrower upon
each change to such fee;
1.1.63. "Libor" means, in respect of a particular Libor Loan and Interest
Period, the rate of interest per annum, calculated on the basis of a year
of 360 days, equal to the arithmetic mean, rounded upwards to the nearest
whole multiple of one-sixteenth of one percent (if already not such a
multiple), of the rates which appear on the Telerate Page 3750 on the Dow
Jones Telerate Service as of 11:00 a.m. (London time) on the day which is
two Banking Days prior to the first day of such Interest Period or, if such
rate is not available at such time, the arithmetic mean, rounded upwards to
the nearest whole multiple of one-sixteenth of one percent (if already not
such a multiple), of the interest rates, calculated on the basis of a year
of about 360 days, which, subject to section 3.5, the Agent has determined at
or about 11:00 a.m. (London time) on the day which is
8
two Banking Days prior to the first day of such Interest Period, as being the
rate at which the leading banks in the London interbank eurocurrency market
would offer the Agent for placing U.S. dollar deposits in an amount
approximately equal to the amount of the particular Libor Loan for
substantially the same number of days as such Interest Period for delivery on
the first day of such Interest Period;
1.1.64. "Libor Loan" means, at any time, any Loan which is outstanding at
such time in U.S. dollars and in respect of which interest is to be
calculated based on Libor;
1.1.65. "Lien" means any mortgage, lien, pledge, assignment, charge,
security interest, lease intended as security, title retention agreement,
statutory right reserved in any Governmental Body, registered lease of real
property, hypothec, levy, execution, seizure, attachment, garnishment or
other similar encumbrance;
1.1.66. "Loan" means, at any time, the principal amount of all Obligations
then outstanding under the Credit Facility pursuant to the same availment
option, and,
(a) in the case of a Libor Loan, pursuant to an Advance, Rollover or
Conversion made on the same date and having the same Maturity Date; and
(b) in the case of a Letter of Credit, relating to a single Letter of
Credit, in which event the amount of the Loan shall be deemed to be the
face amount of the Letter of Credit;
1.1.67. "Loan Documents" means this Agreement and each Letter of Credit
Agreement, and "Loan Document" means any one of them;
1.1.68. "Majority Lenders" means, at any time, the Lenders which are owed
principal amounts under the Credit Facility aggregating at least 51% of all
Loans outstanding under the Credit Facility or, if no Loans are then
outstanding under the Credit Facility, the Lenders having at least 51% of
the Aggregate Commitment at such time;
1.1.69. "Material Adverse Change" means any material adverse change in the
business, condition (financial or otherwise), operations, properties,
assets, liabilities or prospects of the Company, taken as a whole;
1.1.70. "Material Adverse Effect" means a material adverse effect on (a)
the business, condition (financial or otherwise), operations, properties,
assets, liabilities or prospects of the Company, taken as a whole, or (b)
the ability of the Borrower or any Guarantor to perform its Obligations
under any Loan Document to which it is or is to be a party;
1.1.71. "Material Authorization" means any approval, permit, licence or
similar authorization from, and any filing or registration with, any
Governmental Body required by the Borrower or any Material Subsidiary to
carry on its Core Line of Business as presently carried on by it
(including, without limitation, all environmental and other permits,
licenses and other authorizations required for the Borrower and each
Material Subsidiary to carry on its Core Line of Business in accordance
with Applicable Laws and further including, without limitation, all
licensing requirements of the Racing and Gambling Regulatory Authorities in
relation to the Borrower or any Material Subsidiary) in each jurisdiction
in which it does so where the failure to have such approval, permit,
licence, authorization, filing or registration could reasonably be expected
to have a Material Adverse Effect;
9
1.1.72. "Material Subsidiary" means, collectively, the Guarantors and the
Santa Anita Subsidiaries;
1.1.73. "Maturity Date" means the last day of an Interest Period or Letter
of Credit term (as applicable);
1.1.74. "Net Income" of a Person for any period means the consolidated net
income of such Person during such period after taxes, but before
extraordinary items and unusual items (provided that pro forma earnings
from Permitted Acquisitions incorporated in accordance with section 1.13
and net gains from sales of real estate held for sale or development and
excess racetrack lands shall be included), all as determined in accordance
with GAAP. In addition, there shall be included in Net Income all net
income of such Person on a consolidated basis from investments in
accordance with the equity method of accounting;
1.1.75. "Obligations" means all indebtedness (including any operating
account debit balances in favour of any Lender), liabilities and other
obligations of the Borrower and Guarantors to the Lenders or any of them
hereunder and of the Borrower and Guarantors under any other Loan Document
(including any amendments or supplements thereto), whether actual or
contingent, direct or indirect, matured or not, now existing or arising
hereafter and includes, without limitation, all unpaid principal, interest,
fees and other amounts payable by the Borrower and Guarantors to the
Lenders hereunder or under any other Loan Document;
1.1.76. "Officer's Certificate" means, unless otherwise provided herein, in
respect of the Borrower, a certificate signed by any one of the Chair of
the Board, the President, the Chief Financial Officer, the Secretary or any
Vice President of the Borrower;
1.1.77. "Permitted Acquisition" means an Acquisition by the Borrower (i)
that has received approval of the board of directors of the Borrower, (ii)
that is within the Borrower's then current Core Line of Business, and (iii)
in the case of the Acquisition of a racetrack business either (a) the
acquired racetrack business is then in operation and generating positive
EBITDA from operations, or (b) the aggregate cash outlay for such
Acquisition does not exceed $10,000,000; or (c) if at the time of such
Acquisition the Borrower utilizes less than 25% of the net cash proceeds
from its first public markets transaction in 2002 for all Acquisitions made
in reliance on this proviso and the pro forma ratio of Total Funded Debt
(measured as at the end of the immediately preceding Fiscal Quarter based
on the consolidated financial statements of the Borrower) to EBITDA
(measured for the period comprising the immediately preceding Fiscal
Quarter and the three Fiscal Quarters immediately preceding such preceding
Fiscal Quarter on the consolidated financial statements of the Borrower) of
the Borrower (measured on a consolidated basis) shall not be greater than
2.50:1.00, in each case, calculated after giving effect to each such
Acquisition in accordance with section 7.1.17;
1.1.78. "Permitted Debt" means (i) the Credit Facility; (ii) unsecured
trade and other accounts payable incurred in the ordinary course of
business for the purpose of carrying on the same; (iii) the Santa Anita
Facility; (iv) indebtedness under interest rate or currency hedging
agreements entered into for the purpose of managing interest rate and
currency risks of the Borrower or any Material Subsidiary and not for
speculative purposes; (v) indebtedness of the Borrower to any of its
Material Subsidiaries or of any Material Subsidiary to the Borrower or any
other Material Subsidiary; (vi) indebtedness owing under, and not exceeding
the amounts permitted to be outstanding under and secured by, Permitted
Encumbrances and extensions, renewals or replacements of any Debt permitted
under this clause (vi) provided the principal amount of such indebtedness
thereunder or security therefor is not thereby increased beyond the
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original principal amount of such Debt; (vii) unsecured vendor-take-back
indebtedness not exceeding $50,000,000 in the aggregate; (viii) the
approximately $12 million of unsecured vendor-take-back indebtedness
outstanding on the date hereof; (ix) indebtedness in an aggregate amount
not exceeding $125,000,000, provided that such indebtedness is incurred or
assumed in connection with the acquisition of new assets (whether or not a
Permitted Acquisition), and, in each such case, the recourse of such
indebtedness is limited (either contractually or structurally) to the
assets being financed or acquired; (x) unsecured indebtedness in an
aggregate amount not exceeding $5,000,000; (xi) indebtedness of a
Subsidiary which becomes a Material Subsidiary after the date of this
Agreement; and (xii) indebtedness under letters of credit, performance
bonds and similar instruments in respect of land transfer tax claims, land
development charges, gaming permits and other obligations of the Borrower
or its Subsidiaries incurred in the ordinary course of business;
1.1.79. "Permitted Encumbrances" means:
(a) Liens for taxes, assessments or governmental charges or levies incurred
in the ordinary course of business that are not yet due and payable or
the validity of which is being actively and diligently contested in
good faith by the Borrower or a Subsidiary, as the case may be, in
respect of which the Borrower or a Subsidiary has established on its
books reserves considered by it to be adequate therefor, and for which
any enforcement proceedings, if commenced, have been stayed or for
which payment has been made in accordance with (g) below;
(b) rights reserved to or vested in any Governmental Body by the terms of
any lease, licence, franchise, grant or permit, or by any statutory
provision, to terminate the same, to take action which results in an
expropriation, or to require annual or other payments as a condition to
the continuance thereof;
(c) construction, mechanics', workers', repairers', carriers',
warehousemen's and materialmen's Liens and Liens in respect of vacation
pay, workers' compensation, social security, old age pension,
employment insurance or similar statutory obligations, provided the
obligations secured by such Liens are not yet due and payable and, in
the case of construction Liens, which have not yet been filed or for
which the Borrower or a Subsidiary has not received written notice of a
Lien or for which a construction lien has been filed and the Borrower
or a Subsidiary is contesting such Lien diligently and in good faith;
(d) Liens arising from court or arbitral proceedings which have been
commenced or are pending, provided that the claims secured thereby are
being contested in good faith by the Borrower or a Subsidiary; any
execution thereon has been stayed and continues to be stayed; and such
Liens do not materially impair the use of the property in the business
of the Borrower or the Subsidiary, as the case may be;
(e) good faith deposits made in the ordinary course of business to secure
the performance of bids, tenders, contracts (other than for the
repayment of borrowed money), leases, surety, customs, performance
bonds and other similar obligations;
(f) deposits to secure public or statutory obligations or in connection
with any matter giving rise to a Lien described in (c) above;
11
(g) deposits of cash or securities in connection with any appeal, review or
contestation of any Lien or any matter giving rise to a Lien described
in (a) or (d) above;
(h) minor title defects or irregularities, minor encroachments, zoning laws
and ordinances, easements, servitudes, party wall agreements, licences,
rights of way, restrictions that run with the land, leases, municipal
by-laws and regulations or other similar encumbrances or privileges in
respect of real property (including without limitation easements,
rights of way and agreements for sewers, trains, gas and water mains or
electric conduits, poles, wires and cable) which in the aggregate do
not materially impair the use of such property by the Borrower or a
Subsidiary, as the case may be, in the operation of its business, and
which are not violated in any material respect by existing or proposed
structures or land use;
(i) Purchase Money Security Interests incurred or assumed in connection
with clause (viii) of the definition of Permitted Debt with recourse
limited to the asset acquired or Capital Lease Obligation incurred, or
Liens in respect of personal property securing payment obligations up
to an aggregate annual amount of $1,000,000;
(j) security given by the Borrower or a Subsidiary to a public utility or
any Governmental Body, when required by such utility or Governmental
Body in connection with the operations of the Borrower or a Subsidiary,
as the case may be, in the ordinary course of its business, which
singly or in the aggregate do not materially impair the use of the
asset concerned in the operation of the business of the Borrower or the
Subsidiary, as the case may be;
(k) the reservation in any original grants from the Crown of any land or
interest therein and statutory exceptions to title;
(l) Liens granted by the Borrower to any Guarantor or by any Guarantor to
the Borrower or any other Guarantor;
(m) any Lien, other than a construction Lien, payment of which has been
provided for by deposit with the Agent on behalf of the Lenders of an
amount in cash, or the obtaining of a surety bond or letter of credit
satisfactory to the Lenders, sufficient in either case to pay or
discharge such Lien or upon other terms satisfactory to the Lenders;
(n) any Lien securing Permitted Debt, unless same is by definition
unsecured;
(o) the Santa Anita Security;
(p) assignments of insurance provided to landlords (or their mortgagees)
pursuant to the terms of any lease and Liens or rights reserved in or
exercised under any lease and any statutory or common law rights of
landlords for rent or compliance with the terms of such lease;
(q) rights and interests created by notice registered by any transportation
authority with respect to proposed roads or highways which do not
materially impair the use of real property owned or leased by the
Borrower or a Subsidiary in the operation of the business of the
Borrower or a Subsidiary;
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(r) the granting by the Borrower or a Subsidiary in the ordinary course of
its business of any lease, sub-lease, tenancy or right of occupancy to
any person in respect of real property owned or leased by the Borrower
or a Subsidiary;
(s) applicable municipal by-laws, development agreements, subdivision
agreements, site plan agreements, zoning laws and building restrictions
which do not in the aggregate materially adversely affect the current
use of the property affected thereby and provided that the same have
been complied with in all material respects;
(t) any attachment or judgment Lien not constituting an Event of Default;
(u) Liens existing on assets of any Person at the time such Person becomes
a Subsidiary, provided that (i) such Lien was not created in
contemplation of such Person becoming a Subsidiary, and (ii) such Lien
does not encumber any assets other than the assets subject to such Lien
at the time such Person becomes a Subsidiary;
(v) other Liens incidental to the conduct of the business or the ownership
of the assets of the Borrower or any Subsidiary that (i) were not
incurred in connection with borrowed money, (ii) do not in the
aggregate materially impair the use of the assets subject to the Lien
in the operation of such business and (iii) do not secure obligations
aggregating in excess of $1,000,000; and
(w) any other Lien which the Lenders approve in writing as a Permitted
Encumbrance;
1.1.80. "Person" means any individual, partnership, limited partnership,
limited liability company, joint venture, syndicate, sole proprietorship,
company or corporation with or without share capital, unincorporated
association, trust, trustee, executor, administrator or other legal or
personal representative, Governmental Body or any other legal entity;
1.1.81. "Plan" means an employee benefit plan defined in section 3(3) of
ERISA in respect of which the Borrower or any ERISA Affiliate is, or within
the immediately preceding six years was, an "employer" as defined in
section 3(5) of ERISA;
1.1.82. "Purchase Money Security Interest" means any Lien given, assumed or
arising by operation of law to provide or secure, or to provide the obligor
with funds to pay, the whole or any part of the consideration for the
acquisition of property where the principal amount of the obligation
secured by such Lien (i) is not in excess of the cost to the obligor of the
property encumbered thereby and (ii) is secured only by the property being
acquired by the obligor, and includes the renewal or refinancing of any
such Lien upon the same property provided that the indebtedness secured and
the security therefor are not increased thereby;
1.1.83. "Racing and Gambling Regulatory Authorities" means the racing and
gambling regulatory authorities in each state where the Borrower or any
Material Subsidiary maintain racetracks and/or carry on business, including
(without limitation) the California Horse Racing Board, the Division of
Pari-Mutual Wagering within the Florida Department of Business and
Professional Regulation, the Pennsylvania Harness Racing Commission and the
Nevada Gaming Commission;
1.1.84. "Rateable Portion" means in respect of each Lender at any time the
proportion that its Lender's Commitment at such time bears to the Aggregate
Commitment at such time;
13
1.1.85. "Real Property" has the meaning attributed thereto in section
6.1.9;
1.1.86. "Registration Statement" means the registration statement of the
Borrower dated November 15, 2001 on Form S-1 (No. 333-70520), as amended to
and including April 4, 2002, and related prospectuses for the registration
of securities of the Borrower under the Securities Act of 1933, as amended;
1.1.87. "Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System, in effect from time to time;
1.1.88. "Release" means any spill, deposit, disposal, addition, emission,
discharge, leak or other release;
1.1.89. "Relevant Subsidiary" means at any time, a Subsidiary of the
Borrower that is incorporated, existing and carries on business in the
United States of America (a) having assets with an aggregate net book value
in excess of 10% of the aggregate net book value of the total assets of the
Borrower, determined on a consolidated basis, including such Subsidiary (in
each case, determined as of the last day of the most recent fiscal quarter
of such Person), or (b) having EBITDA in excess of 10% of EBITDA of the
Borrower, determined on a consolidated basis, including such Subsidiary (in
each case, for the four consecutive Fiscal Quarters most recently ended),
in the case of each of (a) and (b), as shown in an Officer's Certificate
delivered pursuant to section 7.1.17 or (c) as may be designated by the
Borrower in its sole discretion as a Relevant Subsidiary by written notice
provided to the Agent (whether or not it is incorporated, existing and
carries on business in the United States of America); provided, however,
the Subsidiaries listed on Schedule 1.1.89 of the Disclosure Letter (and
their successors and assigns), for purposes hereof, shall each be deemed to
always be a Relevant Subsidiary, and provided further that MEC Holdings
(USA) Inc. shall not be a Relevant Subsidiary;
1.1.90. "Replacement Cost" means, with respect to any property or asset,
the cost of repairing, replacing or reinstating such property or asset with
materials of like kind and quality and for like occupancy (where
applicable) on the same or a similar site, in accordance with the
requirements of any applicable municipal by-laws and without deduction for
depreciation;
1.1.91. "Reportable Event" means any of the events described in section
4043 of ERISA;
1.1.92. "Restricted Payment" shall mean, with respect to any Person, any
payment by such Person (i) of any dividends on any of its equity
securities, (ii) on account of, or for the purpose of setting apart any
property for a sinking or other analogous fund for, the purchase,
redemption, retirement or other acquisition of any of its equity securities
or any warrants, options or rights to acquire any such shares, or the
making by such Person of any other distribution in respect of any of its
equity securities, (iii) of any principal of or interest or premium on or
of any amount in respect of a sinking or analogous fund or defeasance fund
for any indebtedness of such Person ranking in right of payment subordinate
to any liability of such Person under the Loan Documents, (iv) of any
principal of or interest or premium on or of any amount in respect of a
sinking or analogous fund or defeasance fund for any indebtedness of such
Person to a shareholder of such Person or to an Affiliate of a shareholder
of such Person, (v) of any management, consulting or similar fee or any
bonus payment or comparable payment, or by way of gift or other gratuity,
to any Affiliate of such Person or to any director or officer of any such
Affiliate, or (vi) any loan to any director, officer or employee of the
Borrower or of any Affiliate of the Borrower; provided that payments of
rent and payments for goods and services rendered in the ordinary course of
business shall not be Restricted Payments;
14
1.1.93. "Rollover" means, in respect of a Libor Loan, the continuation of
such Loan or any portion thereof for a succeeding Interest Period in
accordance with the provisions hereof;
1.1.94. "Rollover Date" means a Banking Day on which a Rollover of all or a
portion of the Loan is made;
1.1.95. "Santa Anita Facility" means (i) the term loan credit agreement
dated as of November 15, 1999 and (ii) the revolving credit agreement dated
as of November 1, 2001 between Los Angeles Turf Club, Incorporated and
Wells Fargo Bank, National Association, collectively having a principal
amount outstanding at any time of not greater than $85,000,000, and
includes any renewal or refinancing of any such facility provided the
indebtedness thereof or security therefor is not increased thereby;
1.1.96. "Santa Anita Security" means the security documents and guaranties
securing and supporting the Santa Anita Facility, and includes any
amendment or replacement of any such security or guaranty provided the
property subject thereto or security interest in relation thereto is not
increased;
1.1.97. "Santa Anita Subsidiaries" means, collectively, The Santa Anita
Companies, Inc. and Los Angeles Turf Club, Incorporated and, in the
singular, either one of them;
1.1.98. "Securities Acts" means both the Securities Act of 1933, as
amended, and the Securities Exchange Act of 1934, as amended, and the
respective rules and regulations promulgated thereunder;
1.1.99. "Securities Commission" means the Securities and Exchange
Commission of the United States of America, or other Governmental Body in
replacement thereof;
1.1.100. "Subsidiary" means, with respect to any Person at any time, any
Person of which at least a majority of the votes attaching to Voting
Interests are at the time, directly or indirectly, owned by such Person;
1.1.101. "Taxes" means all taxes of any kind or nature whatsoever
including, without limitation, income taxes, sales or value-added taxes,
goods and services or use taxes, levies, imposts, stamp taxes, royalties,
duties, and all fees, deductions, charges and withholdings imposed, levied,
collected, withheld or assessed as of the date hereof or at any time in the
future, by any Governmental Body of or within the United States of America
or any other jurisdiction whatsoever having power to tax, together with
penalties, fines, additions to tax and interest thereon;
1.1.102. "Termination Date" means the earlier of (i) 364 days from the
Closing Date, and (ii) April 30, 2003, or such earlier date as the entire
balance of the Loans under the Credit Facility may become due hereunder,
whether by acceleration or otherwise; or, in each case, such later date to
which the Credit Facility has been extended pursuant to section 2.6;
1.1.103. "Total Funded Debt" of any Person at any particular time means the
aggregate (without duplication) of the following amounts with respect to
such Person determined on a consolidated basis at such time:
15
(a) indebtedness for money borrowed and indebtedness represented by notes
payable and drafts accepted representing extensions of credit
(including, as regards any note or draft issued at a discount, the face
amount of such note or draft);
(b) all obligations (whether or not with respect to the borrowing of money)
which are evidenced by bonds, debentures, notes or other similar
instruments or not so evidenced but which would be considered to be
indebtedness for borrowed money in accordance with GAAP;
(c) all indebtedness for borrowed money upon which interest charges are
customarily paid;
(d) Capital Lease Obligations and all other indebtedness issued or assumed
as full or partial payment for property or services or by way of
capital contribution; and
(e) any Contingent Liability relating to an obligation of a type referred
to in (a) to (d) above,
including (without limitation) the aggregate of all Loans at such time; for
greater certainty, trade payables, expenses accrued in the ordinary course
of business, customer advance payments and deposits received in the
ordinary course of business shall not constitute funded debt;
1.1.104. "Total Interest Expense" of any Person for any period means the
aggregate amount of:
(a) interest (including amortization of original issue discount on any
indebtedness and stamping fees on bankers' acceptances);
(b) dividends on securities calculated on the basis of a fixed or floating
sum or percentage or by reference to a fixed or floating sum or
percentage; and
(c) all but the principal component of rental payments in respect of
Capital Lease Obligations,
accrued, whether paid or not, by such Person during such period, determined
on a consolidated basis in accordance with GAAP. For the purpose of this
definition, amounts payable under or receivable pursuant to interest rate
hedging arrangements (including interest swap arrangements) in respect of
which no default has occurred and is continuing shall, without duplication,
be taken into account in calculating Total Interest Expense;
1.1.105. "U.S. dollars" means lawful money of the United States of America;
and
1.1.106. "Voting Interests" means shares of capital stock issued by a
corporation (or other equivalent ownership interests in any other Person),
the holders of which are ordinarily, in the absence of contingencies,
entitled to vote for the election of directors (or persons performing
similar functions) of such Person, even if the right so to vote has been
suspended by the happening of such a contingency.
1.2. Gender and Number
Words importing the singular include the plural and vice versa and words
importing gender include all genders.
16
1.3. Certificate of the Agent as to Rates, etc.
A certificate of the Agent on behalf of the Lenders certifying the amount of
the Applicable Margin, the Letter of Credit Fee, the Base Rate, the Federal
Funds Effective Rate or Libor at any particular time in respect of any Loan
made or maintained or to be made or maintained by the Lenders or any of them
hereunder shall be prima facie evidence thereof. No provision hereof shall be
construed so as to require the Agent or any Lender to issue a certificate at
any particular time.
1.4. Invalidity, etc.
Each of the provisions contained in any Loan Document is distinct and
severable and a declaration of invalidity, illegality or unenforceability of
any such provision or part thereof by a court of competent jurisdiction shall
not affect the validity or enforceability of any other provision of such Loan
Document or of any other Loan Document. Without limiting the generality of the
foregoing, if any amounts on account of interest or fees or otherwise payable
by the Borrower or the Guarantors to the Agent or the Lenders hereunder exceed
the maximum amount recoverable under Applicable Law, the amounts so payable
hereunder shall be reduced to the maximum amount recoverable under Applicable
Law.
1.5. Headings, etc.
The division of a Loan Document into articles, sections and clauses, the
inclusion of a table of contents and the insertion of headings are for
convenience of reference only and shall not affect the construction or
interpretation of such Loan Document.
1.6. Governing Law
Except as otherwise specifically provided, the Loan Documents shall be
governed by and construed in accordance with the laws of the State of New
York.
1.7. Attornment
Each of the parties hereto irrevocably and unconditionally submits and
attorns, for itself and its property, to the non-exclusive jurisdiction of any
court of the State of New York or federal court of the United States of
America sitting in the County and State of New York, and any appellate court
therefrom for all matters arising out of or in connection with this Agreement
or any of the other Loan Documents to which it is a party, or for recognition
or enforcement of any judgment, and each of the parties hereto hereby
irrevocably and unconditionally agrees that all claims in respect of any such
action or proceeding may be heard in any such State of New York court or, to
the extent permitted by law, in such federal court. Each of the parties hereto
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law. Nothing in this Agreement shall affect
any right that any party may otherwise have to bring any action or proceeding
relating to this Agreement or any of the other Loan Documents in the courts of
any jurisdiction.
1.8. Judgment Currency
All amounts to be paid pursuant to this Agreement shall be payable when due
in U.S. dollars, in the full amount due, without deduction for any variation
in any rate of exchange (as defined below). Each party hereto hereby agrees to
indemnify the other parties hereto against any loss incurred by any of them as
a result of any judgment or order being given or made for the amount due
17
hereunder and such judgment or order being expressed and paid in a currency
(the "Judgment Currency") other than U.S. dollars and as a result of any
variation as between (a) the rate of exchange at which the amount in U.S.
dollars is converted into the Judgment Currency for the purpose of such
judgment or order and (b) the rate of exchange at which such party is then
able to purchase U.S. dollars with the amount of the Judgment Currency
actually received by it. The term "rate of exchange" shall include any
premiums and costs of exchange payable in connection with the purchase of, or
conversion into, the relevant currency with or from U.S. dollars.
1.9. Waiver of Jury
The Borrower, each Guarantor, the Agent, the Arranger and the Lenders
hereby irrevocably waive all right to trial by jury in any action, proceeding
or counterclaim (whether based in contract, tort or otherwise) arising out of
or relating to any of the Loan Documents, the transactions contemplated
hereby, the Advances or any actions by the Agent, the Arranger or any Lender
in the negotiation, administration, performance or enforcement thereof.
1.10. References
Except as otherwise specifically provided, reference in any Loan Document
to any contract, agreement or any other instrument (including, without
limitation, any other Loan Document) shall be deemed to include references to
the same as varied, amended, restated, supplemented or replaced from time to
time and reference in any Loan Document to any enactment, including without
limitation, any statute, law, by-law, regulation, ordinance or order, shall be
deemed to include references to such enactment as re-enacted, amended or
extended from time to time.
1.11. Currency
Except as otherwise specifically provided herein, all monetary amounts in
this Agreement are stated in U.S. dollars.
1.12. This Agreement to Govern
If there is any inconsistency between the terms of this Agreement and the
terms of any other Loan Document, or if any matter set forth in a Letter of
Credit Application or Letter of Credit is otherwise addressed herein, the
provisions hereof shall prevail.
1.13. Generally Accepted Accounting Principles
Except as otherwise specifically provided herein, all accounting terms
shall be applied and construed in accordance with GAAP (including, without
limitation, determining the amount of any Contingent Liability). For the
purpose of determining compliance with the financial covenants set forth in
section 7.1.18, unless expressly provided to the contrary or unless the Agent
(with the consent of the Majority Lenders) otherwise agrees at the request of
the Borrower, all computations shall be calculated on a consolidated basis,
and for the purposes of including the operating results from any Acquisition
on a pro forma basis for the financial covenants set out in section 7.1.18,
the Borrower shall include such operating results in determining compliance
with the financial covenants in good faith, making such adjustments,
assumptions and changes necessary to reflect differences in accounting
policies or principles which are permitted or required to be made to pro forma
financial statements pursuant to the Securities Acts, and the rules and
regulations promulgated thereunder, including Regulation S-X.
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1.14. Determination of Amount of Loans
For the purpose of determining the amount of Loans or any Loan at any time,
there shall be deemed to be outstanding and advanced in addition to amounts
outstanding and directly advanced, without duplication and without affecting
other provisions hereof regarding the basis for the calculation of interest or
fees, the maximum amount of all contingent liabilities of the Lenders pursuant
to Letters of Credit then outstanding.
1.15. Computation of Time Periods
Except as otherwise specifically provided herein, in the computation of a
period of time from a specified date to a later specified date, the word
"from" means "from and including" and the words "to" and "until" each mean "to
but excluding".
1.16. Actions on Days Other Than Banking Days
Except as otherwise specifically provided herein, where any payment is
required to be made or any other action is required to be taken on a
particular day and such day is not a Banking Day and, as a result, such
payment cannot be made or action cannot be taken on such day, then this
Agreement shall be deemed to provide that such payment shall be made or such
action shall be taken on the first Banking Day after such day and interest and
fees shall be calculated accordingly. If the payment of any amount is deferred
for any period under this section, then such period shall, unless otherwise
provided herein, be included for purposes of the computation of any interest
or fees payable hereunder.
1.17. Oral Instructions
Notwithstanding any other provision herein regarding the delivery of
notices, including Borrowing Notices, by the Borrower, the Agent shall in its
sole discretion be entitled to act upon the oral instructions of the Borrower,
or any Person reasonably believed by the Agent to be a Person authorized by
the Borrower to give instructions, regarding any request for an Advance,
Rollover, Conversion or issuance of Letters of Credit. All such oral
instructions shall be at the risk of the Borrower and must be confirmed in
writing by the Borrower on the same Banking Day as the verbal instruction is
given. The Agent shall not be responsible for any error or omission in such
instructions or in the performance thereof except in the case of gross
negligence, wilful misconduct, fraud or illegal acts by the Agent or any of
its officers, directors, employees, agents or representatives.
1.18. Incorporation of Schedules
The following schedules annexed hereto shall, for all purposes hereof, form
part of this Agreement:
Schedule 1.1.8 Applicable Margin and Stand-by Fee
Schedule 1.1.18 Borrowing Notice
Schedule 1.1.59 Lender's Commitments
Schedule 7.1.13 Form of Compliance Certificate
Schedule 12.9.4 Assignment and Assumption Agreement
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ARTICLE 2.
CREDIT FACILITY
2.1. Establishment of Credit Facility
2.1.1. Subject to the terms and conditions of this Agreement, the Lenders
hereby severally establish a revolving credit facility (the "Credit
Facility") in favour of the Borrower in accordance with their respective
Lender's Commitments.
2.1.2. The Credit Facility shall be available, at the option of the
Borrower, by way of Advances of: (i) Base Rate Loans in U.S. dollars; (ii)
Libor Loans in U.S. dollars; and (iii) Letters of Credit in U.S. dollars.
2.1.3. Notwithstanding any other provision of this Agreement, no Lender
shall be obligated to make its Rateable Portion of any Advance (and the
Borrower shall not request any Advance to be made) to the extent that on
any relevant Borrowing Date, after giving effect to any Advance requested:
(i) the aggregate principal amount of such Lender's Rateable Portion of all
Loans under the Credit Facility would exceed its Lender's Commitment at
such time; or (ii) the aggregate principal amount of all Loans under the
Credit Facility would exceed the Aggregate Commitment at such time.
2.1.4. The Credit Facility is to be used for general corporate purposes of
the Borrower and its Subsidiaries, including for purposes of financing
Permitted Acquisitions, Capital Expenditures and working capital needs.
2.1.5. At no time shall the aggregate amount of all Loans outstanding under
the Credit Facility exceed the Aggregate Commitment.
2.2. Revolving Nature of Operating Facility
The Borrower may, until the Termination Date, increase or decrease the
Obligations under the Credit Facility by making drawdowns, repayments and
further drawdowns up to the Aggregate Commitment from time to time. The
Aggregate Commitment and each of the Lender's Commitments shall be reduced to
nil on the Termination Date, and the Borrower shall repay to the Agent for the
account of the Lenders on the Termination Date all amounts then outstanding
under the Credit Facility.
2.3. Repayment under Credit Facility
The Borrower may from time to time (without premium or penalty) on any
Banking Day repay to the Agent for the account of the Lenders, Loans or
portions thereof under the Credit Facility, provided that any such repayment
(i) if Bank of Montreal is the only Lender hereunder (a) shall be in an amount
of at least $100,000 and any greater amount shall be an integral multiple of
$10,000 and (b) shall be effected on the same Banking Day on which notice in
writing is provided to the Agent if received prior to 12:00 noon (Chicago
time) or on the next succeeding Banking Day if not received by such time, in
either case, such notice, once given, shall be irrevocable and binding upon
the Borrower, or (ii) if Bank of Montreal is not the only Lender hereunder,
(x) shall be in an amount of at least $1,000,000 and any greater amount shall
be an integral multiple of $100,000, and (y) shall only be effected on at
least three Banking Days' notice in writing to the Agent which notice, once
given, shall be irrevocable and binding upon the Borrower, and (iii) any
repayment of a Libor Loan other than on the Maturity Date applicable thereto,
pursuant to either clause (i) or (ii) of this section 2.3, shall be subject to
the payment of the
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expenses payable pursuant to section 3.8. Any repayments made under this
section 2.3 shall not reduce any Lender's Commitment or the Aggregate
Commitment.
2.4. Mandatory Repayment from Public Offerings
2.4.1. Subject to section 2.4.2, all net cash proceeds (after giving effect
to underwriters' commissions, discounts and payment of offering-related
expenses, including (without limitation) underwriters' fees and expenses,
Securities Commission filing fees, stock exchange listing fees and fees and
disbursements of counsel to the Borrower and, if paid by the Borrower,
underwriters), up to the amount of all Obligations then outstanding, of
each public offering of debt or equity completed by the Borrower (excluding
the proceeds of the Borrower's first public markets transaction in 2002)
shall be paid to the Agent for the account of the Lenders for application
against such of the Obligation's outstanding under the Credit Facility as
shall reasonably be determined by the Borrower; provided, however, such
proceeds shall not be applied to any L/C Loans or, at the Borrower's
option, Libor Loans, until the Maturity Date applicable thereto and, until
such application, the proceeds allocated for such purpose shall be held by
the Agent for the account of the Lenders and invested on behalf of the
Borrower in an interest-bearing investment (or investments) as security for
the repayment of future indebtedness of the Borrower under such L/C Loan or
Libor Loan, with interest earned thereon, if any, to be paid to the
Borrower on repayment of such Loans. The amount of such application so made
shall be permanent and irrevocable and each Lender's Commitment shall be
reduced rateably.
2.4.2. On any Banking Day which is at least 45 days prior to the closing of
any such offering, the Borrower may in writing request the consent of the
Lenders for it to retain all or part of such proceeds in lieu of remitting
such proceeds to the Agent for the account of the Lenders otherwise
required pursuant to section 2.4.1. The decision of each Lender in this
regard shall be made in its sole discretion. The Agent shall forthwith
provide a copy of such request to each Lender. Each Lender shall notify the
Agent as to whether it consents to such request within 15 days of receipt
thereof. If any Lender does not provide such notice within such time, such
Lender shall be deemed to have not consented to such request. On the
earlier of (i) the Banking Day next following the date on which the Agent
is in receipt of notices from all Lenders; and (ii) the second Banking Day
following the last day for receipt by the Agent of such notices, the Agent
shall give written notice to the Borrower and each of the Lenders, with
respect to each Lender, whether such Lender has consented to the request.
If all the Lenders consent to any such request, the proceeds from the
offering in respect of which such request was made shall be retained by the
Borrower and not remitted to the Agent for the account of the Lenders. If
any Lender (for purposes of this section 2.4.2, each a "Non-Consenting
Lender") does not so consent (or is deemed to not so consent), the Borrower
may elect to have one or more substitute Lenders (arranged by the Borrower
at its expense) assume the Lender's Commitment of such Non-Consenting
Lender pursuant to section 12.9.4 (other than clause (a) thereof). Such
assignment shall be made without recourse to, warranty by (except as to
title) or expense to the assigning Lender except with respect to past acts
of such Lender. If the full amount of the Lender's Commitment of the Non-
Consenting Lender is not so assumed, the Borrower shall pay to the Agent
such Non-Consenting Lender's remaining Rateable Portion of the Borrower's
net cash proceeds referred to in section 2.4.1 for the account of the Non-
Consenting Lender, for application against the unassumed portion of the
Non-Consenting Lender's Rateable Portion of the Loans outstanding under the
Credit Facility; provided, however, such payment shall not be applied to
any L/C Loans or, at the Borrower's option, Libor Loans, until the Maturity
Date applicable thereto and, until such application, the proceeds allocated
for such purpose shall be held by the Agent for the account of the Lenders
and invested on behalf of the Borrower in an interest-bearing investment
(or investments) as security for the repayment of future indebtedness
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of the Borrower under such L/C Loan or Libor Loan, with interest earned
thereon, if any, to be paid to the Borrower on repayment of such Loans. The
amount of such application so made shall be permanent and irrevocable and
upon all such Loans outstanding having been prepaid in accordance with the
foregoing, the Lender's Commitment of such Non-Consenting Lender which has
not been assigned pursuant to section 12.9.4 shall be cancelled and reduced
by the amount of the principal prepayment hereunder (or commitment
reduction).
2.5. Voluntary Reduction in Aggregate Commitment
The Borrower shall have the right at any time and from time to time, by
giving at least two Banking Days' notice to the Agent which notice, once
given, shall be irrevocable and binding upon the Borrower, to reduce the then
applicable Aggregate Commitment to a lower amount which is not less than the
principal amount of all Obligations then outstanding under the Credit
Facility. Such notice shall specify the amount of the reduction, which shall
be in an integral multiple of $1,000,000. The amount of any such reduction so
made by the Borrower shall be permanent and irrevocable and each Lender's
Commitment shall be reduced rateably.
2.6. Extension of Credit Facility
On any Banking Day which is at least 60 days prior to the Termination Date,
the Borrower may request that the Termination Date be extended to the date
which is 364 days after the date on which its extension request delivered
hereunder is accepted by the Lenders pursuant to this section 2.6. The
decision of each Lender in this regard shall be made in its sole discretion.
The Agent shall forthwith provide a copy of such extension request to each
Lender. Each Lender shall notify the Agent as to whether it consents to the
extension request within 30 days of receipt of a copy from the Agent. If any
Lender does not provide such notice within such time, such Lender shall be
deemed to have refused such extension. On the earlier of (i) the Banking Day
next following the date on which the Agent is in receipt of notices from all
Lenders; and (ii) the second Banking Day following the last day for receipt by
the Agent of such notices, the Agent shall give written notice to the Borrower
and to each of the Lenders advising, with respect to each Lender, whether such
Lender has consented to the extension. If all of the Lenders consent to any
such request, the Termination Date shall be extended to the date which is 364
days thereafter. If any Lender (for purposes of this section 2.6, each a "Non-
Consenting Lender") elects not to so extend the Termination Date (or is deemed
to not so elect), the Borrower may elect to have one or more substitute
Lenders (arranged by the Borrower at its expense) assume the Lender's
Commitment of such Non-Consenting Lender pursuant to section 12.9.4 (other
than clause (a) thereof). Such assignment shall be made without recourse to,
warranty by (except as to title) or expense to the assigning Lender except
with respect to past acts of such Lender. If the full amount of the Lender's
Commitment of the Non-Consenting Lender is not so assumed, the Borrower may
elect to prepay the Non-Consenting Lender's Rateable Portion of the Loans
outstanding under the Credit Facility on, in respect of any (a) Base Rate
Loan, any day; (b) Libor Loans, the applicable Interest Period end dates or
such other date provided the Borrower pays all amounts payable in connection
with such prepayment pursuant to section 3.8; and (c) L/C Loans, the
applicable Maturity Dates. Upon all such Loans outstanding having been prepaid
in accordance with the foregoing, the Lender's Commitment of such Non-
Consenting Lender shall be cancelled and reduced to zero. If (x) the
Termination Date has been extended pursuant hereto, and (y) there remains any
Non-Consenting Lender whose Lender's Commitment has not been assumed or whose
Rateable Portion of the Loans outstanding under the Credit Facility have not
been prepaid, the Lender's Commitment of such Non-Consenting Lender shall be
cancelled and reduced to zero on the old Termination Date and such Non-
Consenting Lender's Rateable Portion of the Loans outstanding under the Credit
Facility, together with accrued interest, shall be repaid in full, in each
case, on the old Termination Date.
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2.7. Increase in Aggregate Commitment
On a Banking Day which is at least 60 days prior to the Termination Date,
the Borrower may request that the Aggregate Commitment be increased in an
amount of at least $10,000,000 and any greater amount shall be an integral
multiple of $1,000,000. The decision of each Lender in this regard shall be
made at its sole discretion. The Agent shall forthwith provide a copy of such
increase request to each Lender. Each Lender shall notify the Agent as to
whether it consents to the increase request within 15 days of receipt of a
copy from the Agent, the amount of such increase such consenting Lender agrees
to underwrite (up to its Rateable Portion) and, if such Lender is willing to
underwrite an amount in excess of its Rateable Portion of the requested
increase, the amount of such excess. If any Lender does not provide such
notice within such time, such Lender shall be deemed to have refused such
increase. On the earlier of (i) the Banking Day next following the date on
which the Agent is in receipt of notices from all Lenders; and (ii) the second
Banking Day following the last day for receipt by the Agent of such notices,
the Agent shall give written notice to the Borrower and to each of the Lenders
advising, with respect to each Lender, whether such Lender has consented to
the increase and the amount of such increase such consenting Lender has agreed
to underwrite. The Agent shall have the sole discretion to allocate to Lenders
willing to underwrite more than their Rateable Portion of the requested
increase any amounts that other Lenders are not willing to underwrite. If
Lenders consent to increase the Aggregate Commitment by the amount requested,
subject as hereinafter provided, the Aggregate Commitment shall be increased
by the amount set forth in the request in proportion to each Lender's Rateable
Portion if all Lenders agree to the full amount of the requested increase, or
otherwise in such proportion as may be determined by the Agent in its sole
discretion. Prior to any increase in the Aggregate Commitment becoming
effective, the parties hereto shall enter into an agreement amending the terms
of this Agreement (and any agreement delivered pursuant hereto) to give effect
to such increase and to incorporate such changes as the Lenders and Borrower
may agree. If the Borrower and all Lenders are unable to agree to such changes
(each disagreeable Lender for purposes of this section 2.7, a "Non-Consenting
Lender"), or if any Lender (for purposes of this section 2.7, each also a
"Non-Consenting Lender") does not consent (or is deemed to not so consent) to
the full amount of the increase request as aforesaid, the Borrower may elect
to have one or more substitute Lenders (arranged by the Borrower at its
expense) assume the Lender's Commitment of such Non-Consenting Lender pursuant
to section 12.9.4 (other than clause (a) thereof). Such assignment shall be
made without recourse to, warranty by (except as to title) or expense to the
assigning Lender except with respect to past acts of such Lender. If the full
amount of the Lender's Commitment of the Non-Consenting Lender is not so
assumed, the Borrower, at its option, shall either (a) withdraw its request
for such increase and pay all the Agent's and Lenders' reasonable costs and
expenses incurred to consider such request, or (b) pay to the Agent for the
account of the Non-Consenting Lender, in an amount equal to, and for
application against, the unassumed portion of the Non-Consenting Lender's
Rateable Portion of the Loans outstanding under the Credit Facility; provided,
however, such payment shall not be applied to any L/C Loans or, at the
Borrower's option, Libor Loans, until the Maturity Date applicable thereto
and, until such application, the proceeds allocated for such purpose shall be
held by the Agent for the account of the Lenders and invested on behalf of the
Borrower in an interest-bearing investment (or investments) as security for
the repayment of future indebtedness of the Borrower under such L/C Loan or
Libor Loan, with interest earned thereon, if any, to be paid to the Borrower
on repayment of such Loans. The amount of such prepayment so made shall be
permanent and irrevocable and upon all such Loans outstanding having been
prepaid in accordance with the foregoing, the Lender's Commitment of such Non-
Consenting Lender shall be cancelled and reduced to zero. The Borrower shall
not be entitled to make more than one request for an increase in the Aggregate
Commitment in any Fiscal Quarter and any request made but withdrawn after the
Agent provides the Lender with a copy of the request pursuant to clause (a) of
this section 2.7 shall constitute a request for such purposes.
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ARTICLE 3.
GENERAL PROVISIONS RELATING TO THE CREDIT FACILITY
3.1. Advances
3.1.1. Each request by the Borrower for an Advance under the Credit
Facility shall be made by the delivery of a duly completed and executed
Borrowing Notice to the Agent at its Branch of Account:
3.1.1.1. in the case of Advances by way of Base Rate Loans on any
proposed Borrowing Date, (i) if Bank of Montreal is the only Lender
hereunder and the amount of such Advance is less than $1,000,000, not
later than 10:00 a.m. (Chicago time) on such proposed Borrowing Date
(provided, if the Borrowing Notice is not received by Bank of Montreal
by such time, the Advance will be made on the next succeeding Banking
Day), or (ii) if the amount of such Advance is $1,000,000 or more, or if
Bank of Montreal is not the only Lender hereunder, not later than 10:00
a.m. (Chicago time) on the first Banking Day prior to the proposed
Borrowing Date; and
3.1.1.2. in the case of Advances by way of L/C Loans or Libor Loans, not
later than 10:00 a.m. (Chicago time) on the third Banking Day prior to
the proposed Borrowing Date.
3.1.2. Any notice in respect of a proposed Advance shall be irrevocable and
binding on the Borrower.
3.1.3. If Bank of Montreal is the only Lender hereunder, all Advances
(other than Advances by way of Letters of Credit) shall be in an amount of
at least $100,000 and any greater amount shall be an integral multiple of
$10,000, otherwise such Advances shall be in an amount of at least
$1,000,000 and any greater amount shall be an integral multiple of
$100,000.
3.2. Selection of Interest Periods
Notwithstanding any other provision hereof:
3.2.1. the Borrower may not select any Interest Period in respect of a Loan
under the Credit Facility with a Maturity Date which is later than the
Termination Date; and
3.2.2. the number of Interest Periods in effect at any time shall not
exceed ten in the aggregate.
3.3. Rollover and Conversion
3.3.1. Subject to the terms and conditions of this Agreement and provided
that no declaration has been made by the Agent under section 9.2, the
Borrower may from time to time request that a Loan or any portion thereof
be rolled over or converted to another form of Loan in accordance with the
provisions hereof.
3.3.2. The Borrower shall repay to the Agent for the account of the Lenders
the full Libor Loan on the Maturity Date of the Interest Period applicable
thereto, in accordance with the provisions hereof governing repayment and
prepayment, unless such Loan shall be rolled over or converted to another
form of Loan on such Maturity Date in accordance with the provisions
hereof.
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3.3.3. Each request by the Borrower for a Rollover or Conversion shall be
made by the delivery of a duly completed and executed Borrowing Notice to
the Agent at the Branch of Account, and the provisions of section 3.1 shall
apply to the Rollover or Conversion as if such Rollover or Conversion were
an Advance, except that the Borrower shall not be required to make (and
shall not otherwise be deemed to have made, renewed or repeated) any
representation or warranty in connection with any Rollover or Conversion.
3.3.4. Each Rollover or Conversion of a Libor Loan shall be made effective
as of the Maturity Date of the Interest Period applicable thereto.
3.3.5. If the Borrower does not deliver a Borrowing Notice at or before the
time required by section 3.1.1 and, in the case of a Libor Loan, fails to
pay to the Agent for the account of the Lenders the principal amount
thereof on the Maturity Date of the relevant Interest Period, the Borrower
shall be deemed to have requested a Conversion of such Loan to a Base Rate
Loan, and all of the provisions hereof applicable to Base Rate Loans shall
apply thereto.
3.3.6. A Rollover or Conversion shall not constitute a repayment of the
relevant Loan but shall result in a change in the basis of calculation of
interest or fees (as the case may be) for such Loan, in accordance with the
provisions hereof.
3.4. Payments Generally
All payments in respect of the Credit Facility (in respect of principal,
interest, fees or otherwise) shall be made by the Borrower to the Agent no
later than 2:00 p.m. (Chicago time) on the due date thereof to the account
specified therefor by the Agent at its Branch of Account or to such other
accounts in the United States of America as may be specified by the Agent to
the Borrower from time to time. Any payments received after such time shall be
considered for all purposes as having been made on the next following Banking
Day unless the Agent otherwise agrees in writing. All payments shall be made
by way of immediately available funds.
3.5. Disturbance of Libor Market
Notwithstanding any other provision hereof, if at any time prior to the
commencement of an Interest Period in respect of any proposed Libor Loan, any
Lender determines in good faith (which determination shall be conclusive and
binding), and provides a certificate to the Agent with respect to such
determination, that with respect to such Libor Loan:
3.5.1. Libor will not adequately and fairly reflect the cost to such Lender
of funding such Libor Loan for the relevant Interest Period, or
3.5.2. deposits in U.S. dollars are not available to such Lender in the
London interbank market in sufficient amounts in the ordinary course of
business, or
3.5.3. by reason of circumstances affecting the London interbank market,
adequate and fair means do not exist for ascertaining Libor for the
relevant Interest Period;
then the Agent shall forthwith give notice of such determination to the
Borrower and each of the other Lenders, and from and after the date of
commencement of such Interest Period and for so long as such conditions shall
continue to exist, the Borrower shall not have the right to obtain such Libor
Loan from such Lender, and the Borrowing Notice received by the Agent in
respect of such Libor Loan shall, in
25
respect of the Rateable Portion of such Lender, be deemed to be a request of
the Borrower for a Base Rate Loan under the Credit Facility.
3.6. Change in Circumstances
If the introduction of or any change in any Applicable Law relating to any
Lenders, or any change in the interpretation or application thereof by any
Governmental Body or compliance by any Lenders with any request or direction
of any Governmental Body:
3.6.1. subjects such Lender to, or causes the withdrawal or termination of
a previously granted exemption with respect to, any Taxes or changes the
basis of taxation of payments due to such Lender or increases any existing
Taxes on payments of the Obligations (other than, in each case, Excluded
Taxes);
3.6.2. imposes, modifies or deems applicable any incremental reserve,
liquidity, cash margin, capital, special deposit, deposit insurance or
assessment, or any other regulatory or similar requirement against assets
held by, or deposits in or for the account of, or loans by, or any other
acquisition of funds for loans by, such Lender;
3.6.3. imposes any Taxes (other than Excluded Taxes) on reserves or deemed
reserves in respect of the undrawn portion of such Lender's Rateable
Portion of the Credit Facility;
3.6.4. imposes on such Lender or requires there to be maintained by such
Lender any capital adequacy or additional capital requirement (including,
without limitation, a requirement which affects such Lender's allocation of
capital resources to its obligations) in respect of such Lender's
obligations hereunder or imposes any other condition or requirement with
respect to the maintenance by such Lender of a contingent liability with
respect to any Letter of Credit issued by it hereunder; or
3.6.5. imposes on such Lender any other condition or requirement with
respect to this Agreement or the Credit Facility (other than Excluded
Taxes);
and such occurrence has the effect of:
3.6.6. increasing the cost to such Lender of agreeing to make or making,
maintaining or funding the Credit Facility, any Advance, any Loan or any
portion thereof;
3.6.7. reducing the amount of the Obligations;
3.6.8. directly or indirectly reducing the effective return to such Lender
under this Agreement or on its overall capital as a result of entering into
this Agreement or as a result of any of the transactions or obligations
contemplated by this Agreement (other than a reduction resulting from the
imposition of an Excluded Tax, including, without limitation a higher rate
of income tax or capital tax being imposed on such Lender's overall income
or assets); or
3.6.9. causing such Lender to make any payment or to forego any interest,
fees or other return on or calculated by reference to any sum received or
receivable by such Lender hereunder;
then such Lender shall, within 90 days of such Lender actually becoming aware
of such increased cost, provide notice thereof to the Agent (with such notice
being accompanied by a certificate of the Lender stating that the Lender is
entitled to claim an amount under this section 3.6 in accordance with the
terms
26
hereof, setting forth the amount necessary to compensate such Lender, a
detailed explanation of the circumstances giving rise to the request of
compensation and a description of the methodology used by the Lender
calculating such amounts), and the Agent shall in each case forthwith advise
the Borrower accordingly and provide a copy of such certificate to the
Borrower, and the Borrower shall, within 30 days of receipt of such
certificate from such Lender, pay to the Agent for the account of such Lender
additional amounts sufficient to fully compensate such Lender for the
increased cost set out in such certificate whether as a lump sum(s) or as an
increase in the Applicable Margin, as appropriate; provided, however, that a
Lender claiming additional amounts under this section 3.6 agrees to use
reasonable efforts (consistent with its legal and regulatory restrictions) to
designate a different applicable lending office if the making of such a
designation would avoid the need for, or materially reduce the amount of, such
increased cost that may thereafter accrue and would not, in the reasonable
judgment of such Lender, be otherwise commercially disadvantageous to such
Lender. If a Lender is not able to obviate its requirement for compensation
under this section 3.6 by designating a different applicable lending office,
the Borrower may elect within such 30-day period to have one or more
substitute Lenders (arranged by the Borrower at its expense) assume, and the
Lender shall promptly after receipt of notice of such election assign, its
rights and obligations under this Agreement and the other Loan Documents to
such other Person chosen by the Borrower in accordance with section 12.9.4
(other than clause (a) thereof) and provided that all principal, interest and
other amounts owing hereunder are paid in full to such Lender, and all of the
Lenders' costs and expenses are reimbursed for such assignment, if such
assignment would allow the Borrower, either at that time or in the reasonably
foreseeable future, to avoid having to pay such amounts. Such assignment shall
be made without recourse to, warranty by (except as to title) or expense to
the assigning Lender except with respect to past acts of such Lender. No claim
for compensation may be made by a Lender under this section 3.6 unless such
Lender is also claiming such compensation from a majority of its most
creditworthy customers with credit facilities and loans outstanding thereunder
similar to the Credit Facility and Loans outstanding hereunder against whom it
is entitled to make such claim. The above-referenced certificate as to the
amount of such increased cost, submitted to the Borrower by the Agent on
behalf of such Lender, shall be prima facie evidence of the amount of
compensation required to be paid hereunder by the Borrower to the Agent for
the account of such Lender.
3.7. Illegality
If the introduction of or change to any present or future Applicable Law,
or any change in the interpretation or application thereof by any Governmental
Body, shall make it unlawful for any Lender to make or maintain any Loan or
any relevant portion thereof or to give effect to its obligations in respect
of such Loan as contemplated hereby, such Lender may, by notice to the
Borrower and to the Agent, declare that its obligations hereunder in respect
of such Loan shall be terminated, and thereupon, subject as hereinafter
provided in this section 3.7, the Borrower shall prepay to such Lender
forthwith (or at the end of such period to which the Lender shall in its
discretion have agreed) all of the Obligations to such Lender in respect of
such Loan including all amounts payable in connection with such prepayment
pursuant to section 3.8. If there are any types of Loans hereunder that are
not so affected, the Borrower may by notice in writing to the Agent convert
the Loans which are affected into one of the types of Loans that are not so
affected. Any repayments made under this section 3.7 shall not reduce any
Lender's Commitment or Aggregate Commitment; provided, however, at its option,
the Borrower may permanently and irrevocably reduce or terminate (as the case
may be) the Lender's Commitment of any such Lender on the giving of such
notice (and, for greater certainty, no other Lender shall be responsible
therefor) and the Aggregate Commitment shall be reduced by the amount and at
the time of any prepayment so made.
3.8. Indemnity
3.8.1. The Borrower shall indemnify each of the Agent and the Lenders and
its officers, directors and employees (each, an "Indemnified Person") and
shall hold each of them harmless
27
from and against any and all losses, liabilities, damages, claims and
reasonable costs and out-of-pocket expenses (including reasonable legal
fees on a solicitor and his own client basis) (in each case, a "Claim")
that may be incurred by or asserted as a result of a claim by any third
party or awarded in favour of a third party against any of them, in each
case, arising out of, related to, or in connection with, or by reason of
(a) the transactions contemplated hereby, (b) any Acquisition undertaken by
the Borrower or any of its Subsidiaries, or (c) any Environmental Law,
including (i) the assertion of any Lien thereunder, (ii) the presence of
any Hazardous Substance affecting any Real Property or any adjacent real
estate, or (iii) the Release by the Borrower or a Subsidiary of any
Hazardous Substance into the environment. Notwithstanding the foregoing
provisions of this section 3.8.1, the Borrower shall not be obligated to
indemnify an Indemnified Person under this section 3.8.1 for any Claim to
the extent that such Claim is attributable to:
3.8.1.1. the gross negligence, fraud, wilful misconduct or wilful
illegal acts of any Indemnified Person;
3.8.1.2. the failure on the part of any Indemnified Person to perform
any of its material covenants or obligations contained in any Loan
Document to which it is a party, or a representation or warranty made by
any Indemnified Person under the Loan Documents to which it is a party
or in any certificate or other document delivered by any Indemnified
Person pursuant hereto or in connection with any Loan Document being
found to be false or incorrect in any material respect so as to make it
materially misleading when made;
3.8.1.3. any Claim of any Lender against any defaulting Lender or any
Claim of any Indemnified Person for expenses which such Indemnified
Person is obligated to bear hereunder;
3.8.1.4. any Claim to the extent arising from the act of offering,
selling, disposing or transferring by any Indemnified Person of all or
part of its interest in the Loan Documents, other than to the extent
resulting from the Borrower compelling such transfer to a substitute
Lender under sections 2.4, 2.6 or 2.7;
3.8.1.5. to the extent resulting from the failure of the Agent to
distribute, in accordance with the terms of any Loan Document, any
amounts received and to be distributed by it thereunder, to the extent
the Borrower has satisfied all of its obligations in connection
therewith; or
3.8.1.6. any Claim of the Agent arising from the act or process of
syndicating or selling interests in respect of any of the Loans or Loan
Documents, except to the extent such Claim arises from any information
provided or failed to be provided by the Borrower to any Indemnified
Person.
3.8.2. In addition to any other indemnity contained herein or in any other
Loan Document, the Borrower shall indemnify each Lender for all losses,
damages, liabilities and reasonable costs and out-of-pocket expenses
(including, without limitation, any such loss, damage, liability,
reasonable cost or out-of-pocket expense sustained by such Lender in
connection with the liquidation or re-employment in whole or in part of
deposits or funds borrowed or acquired by it to make its Rateable Portion
of any Libor Loan), which such Lender may sustain or incur: (i) if for any
reason a utilization does not occur on a date specified therefor in any
Borrowing Notice, (ii) if the Borrower fails to give any notice required to
be given by it hereunder, in the manner and at the time specified herein,
(iii) if for any reason any payment of any Libor Loan, or any portion
28
thereof, occurs on a date which is not a Maturity Date in respect thereof,
or (iv) as a consequence of any other default by the Borrower to repay any
Obligations when required by the terms of this Agreement; provided that
each Lender shall use its commercially reasonable efforts to mitigate its
loss, damage, liability, cost and expense attributable to such events and
the Borrower's obligation to make payments hereunder will be reduced by the
amount earned by each Lender in mitigating its loss, damage, liability,
cost or expense. A certificate of the relevant Lender setting forth the
amounts necessary to indemnify such Lender in respect of such losses,
damages, liabilities, reasonable costs or out-of-pocket expenses shall be
prima facie evidence of the amounts owing under this section 3.8.2.
3.8.3. The Borrower's obligations and indemnification under this section
3.8 shall survive the payment and satisfaction of all Obligations and the
termination of this Agreement. The Agent and the Lenders shall hold the
benefit of this indemnity in trust for those indemnified parties who are
not parties to this Agreement.
3.9. Proceedings in Respect of Claims
3.9.1. If a Claim is made against an Indemnified Person as to which the
Borrower may have an indemnification obligation under section 3.8.1, such
Indemnified Person shall notify the Borrower of the Claim; provided that
the failure to provide such notice promptly shall not release the Borrower
from any of its obligations to indemnify unless (and only to the extent)
such failure shall prevent the Borrower from contesting, or materially and
adversely affects the ability of the Borrower to conduct a contest of, such
Claim.
3.9.2. The Indemnified Person shall be entitled, in its discretion, to
require the Borrower to prosecute, at the Borrower's own cost and expense,
the entire defence of such Indemnified Person against any Claim by a third
party for which such Indemnified Person is indemnified under section 3.8.1.
In addition, upon delivery by the Borrower to such Indemnified Person of a
written acknowledgement of the Borrower's obligations to indemnify such
Indemnified Person in accordance with the terms of this Agreement in
respect of such Claim, the Borrower shall be entitled, at its own expense,
to participate in, and, to the extent that the Borrower desires, to assume
and control the defence thereof through its own counsel (who shall be
subject to the reasonable approval of the Indemnified Person); provided,
however, that if the Borrower is controlling any proceedings, the Borrower
shall keep such Indemnified Person fully apprised of the status of such
proceedings and shall provide such Indemnified Person with all information
with respect to such proceedings as such Indemnified Person shall
reasonably request. The Borrower must indicate its election to assume such
defence by written notice to the Indemnified Person within 30 days
following receipt of Indemnified Person's notice of the Claim, or in the
case of a third party Claim which requires a shorter time for response then
within such shorter period as specified in the Indemnified Person's notice
of Claim, provided that such Indemnified Person has given the Borrower
notice thereof. The Indemnified Person may participate at its own expense
and with its own counsel (provided that all Indemnified Parties shall use
the same counsel) in any proceeding conducted by the Borrower in accordance
with the foregoing; provided the Borrower shall in any event remain liable
hereunder in respect of the Claim. The Borrower shall not be entitled to
assume and control (but may, at its own expense, participate in) the
defence of any such Claim if and to the extent that:
3.9.2.1. in the reasonable opinion of such Indemnified Person acting in
good faith,
29
3.9.2.1.1. such proceeding involves any risk of imposition of
criminal liability on such Indemnified Person; or
3.9.2.1.2. such proceeding involves any risk of impairment to the
reputation of the Indemnified Person in any material respect; or
3.9.2.1.3. the control of such action, suit or proceeding would
involve an actual or potential conflict of interest, such that it is
advisable for such Indemnified Person to be represented by separate
counsel; or
3.9.2.2. such proceeding involves Claims not fully indemnified by the
Borrower which the Borrower and the Indemnified Person have been unable
to sever from the indemnified Claim(s).
Notwithstanding the first paragraph of this Section 3.9.2, in any of the
circumstances set out in Sections 3.9.2.1 or 3.9.2.2, the Indemnified
Person shall be entitled to assume the defence of such Claim with counsel
selected by it (provided that all Indemnified Parties shall use the same
counsel) and the reasonable fees and out-of-pocket expenses of such counsel
shall be borne by the Borrower; provided, that the Borrower shall in any
event remain liable hereunder in respect of the indemnified Claim.
3.9.3. Except in the circumstances described in section 3.9.2.1.3, the
Borrower may enter into any settlement or other compromise with respect to
any Claim in respect of which it has an indemnity payment obligation under
section 3.8.1 without the prior written consent of the Indemnified Person,
except in the case of a settlement involving an admission of liability of
such Indemnified Person, in which case the prior written consent of the
Indemnified Person shall be obtained, provided that if such Indemnified
Person withholds its consent to such settlement and the required admission
of liability of such Indemnified Person is not in favour of a Governmental
Body other than a court, would not give rise to the imposition of any
penalty or sanction against the Indemnified Person by any Governmental
Body, is not in respect of any criminal liability and would not otherwise
impair the reputation of the Indemnified Person in any material respect,
the maximum amount of liability of the Borrower to the Indemnified Person
with respect to such Claim shall not exceed the amount of the proposed
settlement rejected by such Indemnified Person. Unless an Event of Default
shall have occurred and be continuing, no Indemnified Person shall enter
into any settlement or other compromise with respect to any Claim for which
the Borrower has in writing agreed to fully indemnify under section 3.8.1
without the prior written consent of the Borrower, which consent may be
withheld in the Borrower's sole discretion, unless such Indemnified Person
waives its right to be indemnified under section 3.8.1, with respect to
such Claim.
3.9.4. Each Indemnified Person shall supply the Borrower with such
information and documents reasonably requested by the Borrower as are
necessary or advisable for the Borrower to participate in any action, suit
or proceeding to the extent permitted above, and the Borrower shall
reimburse the Indemnified Person for the reasonable costs and out-of-pocket
expenses of supplying such information and documents, all within a
reasonable period of time following the Borrower's request therefor.
3.9.5. Upon payment in full of any Claim pursuant to section 3.8.1 to or on
behalf of an Indemnified Person, the Borrower, without any further action,
shall be subrogated to any and all claims that such Indemnified Person may
have relating thereto (other than claims in respect of insurance policies
maintained by such Indemnified Person at its own expense). Each Indemnified
30
Person agrees, at the Borrower's reasonable request and expense, to give
such further assurances or agreements and to otherwise cooperate with the
Borrower to enable the Borrower to vigorously pursue such claims.
3.9.6. Any amount payable to an Indemnified Person pursuant to section 3.8
shall be paid to such Indemnified Person within 30 days of the receipt (or
deemed receipt) by the Borrower of a written request therefor from such
Indemnified Person, accompanied by a written statement describing in
reasonable detail the basis for such indemnity and the computation of the
amount so payable; provided that payment of an indemnity in respect of a
third party Claim need not be made until payment is due, whether by
compromise, settlement, court proceedings, arbitration or otherwise, from
the Indemnified Person in respect of such third party Claim.
3.10. Evidence of Indebtedness
The Agent shall maintain and keep, at its Branch of Account, accounts showing
the amount of all Loans advanced by each of the Lenders, from time to time and
the dates thereof and the interest, fees and other charges accrued thereon or
applicable thereto from time to time, and all payments of principal (including
prepayments), interest and fees and other payments made by the Borrower to the
Agent from time to time under the Credit Facility. Such accounts maintained by
the Agent on behalf of itself and each of the Lenders shall be prima facie
evidence of the matters recorded therein.
3.11. Several Obligations
The obligations of each Lender under this Agreement are several. No Lender
shall be responsible for any failure or alleged failure on the part of any
other Lender to duly perform its obligations under the terms of this Agreement
or any Loan Document, nor shall the obligations of the Borrower to any Lender
be diminished or affected by any failure or alleged failure on the part of any
other Lender to duly perform its obligations under the terms of this Agreement
or any Loan Document.
ARTICLE 4.
LETTERS OF CREDIT
4.1. Procedures Relating to Letters of Credit
4.1.1. Each Letter of Credit shall be issued by the L/C Lender in its name
as an L/C Loan.
4.1.2. Notwithstanding any other provision hereof, the Borrower may not
request the issuance of any Letter of Credit having a term which would
extend beyond the Termination Date.
4.1.3. At no time shall the aggregate amount of all Letters of Credit
outstanding under the Credit Facility exceed the L/C Limit.
4.2. Reimbursement
4.2.1. The Borrower unconditionally and irrevocably authorizes the L/C
Lender to pay the amount of any demand made on the L/C Lender under and in
accordance with the terms of any Letter of Credit on request without
requiring proof of the Borrower's agreement that the amount so demanded was
due and notwithstanding that the Borrower may dispute the validity of any
such demand or payment.
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4.2.2. The Borrower shall reimburse the L/C Lender on request for any
amounts paid by it from time to time as contemplated by section 4.2.1 and,
without limiting the foregoing, the Borrower shall indemnify and save the
L/C Lender harmless on demand from and against any and all other losses
(including lost profits), costs, damages, expenses, claims, demands or
liabilities which it may suffer or incur arising in any manner whatsoever
in connection with the making of any such payments as contemplated by
section 4.2.1 (including, without limitation, in connection with
proceedings to restrain the L/C Lender from making, or to compel the L/C
Lender to make, any such payment).
4.3. L/C Lender Not Liable
4.3.1. The L/C Lender shall not have any responsibility or liability for,
or duty to inquire into, the authorization, execution, signature,
endorsement, correctness, genuineness or legal effect of any certificate or
other document presented to the L/C Lender pursuant to any Letter of Credit
other than to ensure that any request for payment under a Letter of Credit
is in compliance with the terms thereof and the Borrower fully and
unconditionally assumes all risks with respect to the same and, without
limiting the generality of the foregoing, all risks of the acts or
omissions of any beneficiary of any Letter of Credit with respect to the
use by any beneficiary of any Letter of Credit provided the L/C Lender
complied with the terms of such Letter of Credit. The L/C Lender shall not
be responsible:
4.3.1.1. for the validity of certificates or other documents delivered
under or in connection with any Letter of Credit that appear on their
face to be in order, even if such certificates or other documents should
in fact prove to be invalid, fraudulent or forged provided the L/C
Lender complied with the terms of such Letter of Credit;
4.3.1.2. for errors, omissions, interruptions or delays in transmission
or delivery of any messages by mail, cable, telegraph, telefax or
otherwise, whether or not they are in code;
4.3.1.3. for errors in translation or for errors in interpretation of
technical terms or for errors in the calculation of amounts demanded
under any Letter of Credit;
4.3.1.4. for any failure or inability of the L/C Lender or any other
Person to make payment under any Letter of Credit as a result of any
Applicable Law or by reason of any control or restriction rightfully or
wrongfully exercised by any Person asserting or exercising governmental
or paramount powers; or
4.3.1.5. for any other consequences arising in respect of a failure by
the L/C Lender to honour a Letter of Credit due to causes beyond the
control of the L/C Lender;
and none of the above shall affect or impair any of the rights or powers of
the Lenders hereunder or the obligations of the Borrower under section
4.2.2. In furtherance and not in limitation of the foregoing provisions, it
is agreed that any payment made by the L/C Lender in good faith under and
in accordance with the terms of a Letter of Credit shall be binding upon
the Borrower and shall not result in any liability of the Agent or any of
the Lenders to the Borrower and shall not lessen the obligations of the
Borrower under section 4.2.2.
4.3.2. Notwithstanding the provisions of this section 4.3, the Borrower
shall not be responsible for, and the L/C Lender shall not be relieved of
responsibility for, any wilful
32
misconduct, gross negligence, fraud or illegal acts of the L/C Lender or
the failure of the L/C Lender to comply with the terms of a Letter of
Credit.
4.4. Letter of Credit Fees
The Borrower shall pay the Letter of Credit Fee to the L/C Lender in
advance in equal quarterly instalments for the period from and including the
date of issuance of the Letter of Credit to and including the stated expiry
date thereof, on an amount equal to the stated amount of the Letter of Credit,
with the first such payment due and payable on the date of issuance of the
applicable Letter of Credit. If the Letter of Credit is drawn, in whole or in
part, is withdrawn or otherwise ceases to have effect (other than due to an
Event of Default) prior to its stated expiry date, the L/C Lender shall
reimburse the Borrower for any overpaid Letter of Credit Fee within 30 days of
such occurrence. If an Event of Default has occurred and is continuing at the
time of such early expiry, the amount of such overpaid Letter of Credit Fee
shall be paid by the L/C Lender to the Agent to be applied thereby in
accordance with section 9.3.
4.5. Overdue Amounts
Without limiting any other provision of this Agreement, if the Borrower
shall fail to reimburse the L/C Lender in respect of any payments made by the
L/C Lender under a Letter of Credit as contemplated in section 4.2.2, the L/C
Lender may at any time thereafter notify the Agent (which shall thereupon
deliver a similar notice to each of the Lenders which has a Lender's
Commitment) of such failure and such notification shall be deemed to have been
delivery of a Borrowing Notice in the amount of such payments on and subject
to the terms hereof. Each Lender that has a Lender's Commitment shall
forthwith credit the account of the L/C Lender with such Lender's Rateable
Portion of such payments, the amount of such payments shall be deemed to
constitute a Base Rate Loan made by the Lenders under the Credit Facility and
which is outstanding, and, without limiting the terms and conditions
applicable to such Base Rate Loan, shall be due and payable when a Base Rate
Loan is due and payable in accordance with the provisions hereof.
4.6. Acceleration
Upon the Agent making a declaration under section 9.2, the maximum amount
of the contingent liability of the L/C Lender under any Letter of Credit which
is then outstanding shall immediately become due and payable notwithstanding
that the L/C Lender has not at such date been required to make payment under
any such Letter of Credit. Any such amount deposited with the L/C Lender shall
be held by the L/C Lender and invested on behalf of the Borrower in an
interest-bearing investment (or investments) as security for the repayment of
future indebtedness of the Borrower to the L/C Lender in respect of Letters of
Credit which are drawn down pending the expiry of all outstanding Letters of
Credit.
4.7. Conflict
Each Letter of Credit shall be subject to the L/C Lender's customary letter
of credit terms and procedures from time to time in effect and shall be in a
form acceptable to the L/C Lender. The Borrower shall execute and deliver such
standard form applications, agreements, indemnities, bonds and other
assurances as the L/C Lender may reasonably require from time to time with
respect to Letters of Credit (each, a "Letter of Credit Agreement"). A Letter
of Credit shall in no event contain provisions requiring the L/C Lender to
satisfy itself, prior to payment thereunder, as to any conditions for a
drawing thereunder other than the presentation of prescribed documents. If the
provisions set forth in the L/C Lender's customary letter of credit
documentation set forth terms beyond or inconsistent with that set
33
forth herein, the provisions of this Agreement in respect thereof shall
prevail. Notwithstanding the foregoing, if there is any inconsistency between
the terms of a Letter of Credit Agreement, this Agreement and the Uniform
Customs and Practice for Documentary Credits as most recently published by the
International Chamber of Commerce (the "ICP") or The International Standby
Practices as most recently approved by the International Chamber of Commerce
Banking Commission (the "ISP"), then the terms of the UCP or ISP, as
applicable, shall prevail to the extent of the inconsistency.
ARTICLE 5.
INTEREST AND FEES
5.1. Interest Rates
5.1.1. Base Rate Loans shall bear interest at the Base Rate plus the
Applicable Margin.
5.1.2. Libor Loans shall bear interest at Libor plus the Applicable Margin.
5.2. Calculation and Payment of Interest
5.2.1. Interest on Base Rate Loans shall accrue from day to day, both
before and after default, demand, maturity and judgment, shall be
calculated on the basis of the actual number of days elapsed and on the
basis of a year of 365 or 366 days, as the case may be, and shall be
payable to the Agent for the account of the Lenders in U.S. dollars in
arrears on the first Banking Day of each month. For greater certainty,
where the rate applicable to a Base Rate Loan is changed, interest shall be
charged for the day on which such change is effective on the basis of the
new rate.
5.2.2. Interest on Libor Loans shall accrue from day to day, both before
and after default, demand, maturity and judgement, shall be calculated on
the basis of the actual number of days elapsed and on the basis of a year
of 360 days, and shall be payable to the Agent for the account of the
Lenders, in arrears on the last day of the relevant Interest Period.
5.3. Stand-by Fee
The Borrower shall pay to the Agent for the account of the Lenders on the
third Banking Day following the end of each Fiscal Quarter, in arrears, a
stand-by fee on the amount, if any, by which the Aggregate Commitment exceeds
the amount of the Loans outstanding under the Credit Facility on each day in
such Fiscal Quarter equal to the rate per annum set out in Schedule 1.1.8
corresponding to the ratio of Total Funded Debt to EBITDA as calculated at the
beginning of such Fiscal Quarter (and based on a year of 365 or 366 days, as
the case may be).
5.4. Payment of Costs and Expenses
Whether or not the Borrower takes advantage of the Credit Facility, the
Borrower shall pay to the Agent, for itself and, if applicable, each of the
Lenders, on demand the following costs and expenses:
5.4.1. all reasonable costs and out-of-pocket expenses of the Agent in
connection with the preparation, negotiation and execution of the Loan
Documents, any actual or proposed amendment or modification hereof or
thereof or any waiver hereunder or thereunder and all
34
instruments supplemental or ancillary thereto and all reasonable documented
due diligence expenses incurred in connection therewith;
5.4.2. all reasonable costs and expenses of the Agent in connection with
obtaining advice as to the rights and responsibilities of the Agent and any
of the Lenders under the Loan Documents; and
5.4.3. all reasonable costs and expenses of the Agent and Lenders in
connection with the defence, establishment, protection or enforcement of
any of the rights or remedies of the Agent or any of the Lenders under the
Loan Documents including, without limitation, all costs and expenses of
establishing the validity and enforceability of, or of collection of
amounts owing under, any of the Loan Documents and all reasonable costs and
expenses of any receiver or receiver-manager appointed by the Agent or any
of the Lenders or by a court in connection with the enforcement of the Loan
Documents;
including, without limitation, all of the reasonable fees and disbursements of
counsel to the Agent, the Lenders and any such receiver or receiver-manager,
on a solicitor and his own client basis, incurred in connection therewith, and
all proper and reasonable compensation paid to any counsel, accountant or
other expert retained or employed by the Agent pursuant hereto and including
all sales, goods and services or value-added taxes payable by any of them on
all such costs, expenses and compensation.
5.5. Interest on Overdue Amounts
If any Obligations are not paid when due or an Event of Default has
occurred and is continuing, all amounts owing or deemed to be owing hereunder,
whether in respect of principal, interest, fees, expenses or otherwise, both
before and after judgment, and in the case of expenses from the dates such
expenses are invoiced to the Borrower, shall bear interest at a rate per annum
determined on a daily basis that is equal to the Base Rate plus (in each case)
2% per annum, in each case calculated on the basis of the actual number of
days elapsed in a year of 365 days or 366 days, as the case may be. Such
interest shall accrue from day to day, be payable in arrears on demand and
shall be compounded monthly on the last Banking Day of each calendar month.
ARTICLE 6.
REPRESENTATIONS AND WARRANTIES
6.1. Representations and Warranties
The Borrower represents and warrants to the Agent on behalf of the Lenders
as follows:
6.1.1. Incorporation and Status. Each of the Borrower and the Material
Subsidiaries is duly incorporated and validly existing under the laws of
its jurisdiction of incorporation and has the corporate power and capacity
to own its properties and assets and to carry on its business as presently
carried on by it or as contemplated hereunder to be carried on by it. As of
the date of this Agreement, the Borrower does not carry on any material
business other than its ownership of the Subsidiaries and the other
investments set out in section 6.1.26. As of the date hereof, none of the
Material Subsidiaries carries on any business other than the Core Line of
Business and other than the ownership or operation of casinos, hotels,
resorts, card clubs, sports bars, restaurants and theatres, all of which
activities are associated with or ancillary or related to the Core Line of
Business, and the ownership and management of a portfolio of real estate
properties held for
35
development or sale. As of the date hereof the Borrower and each Material
Subsidiary holds all Material Authorizations, all of which are in good
standing;
6.1.2. Power and Capacity. Each of the Borrower and the Guarantors has the
corporate power and capacity to enter into each of the Loan Documents to
which it is a party and to do all acts and things as are required or
contemplated hereunder or thereunder to be done, observed and performed by
it;
6.1.3. Due Authorization. Each of the Borrower and the Guarantors has taken
all necessary corporate action to authorize the execution, delivery and
performance of each of the Loan Documents to which it is a party;
6.1.4. Registration Statement. At the date thereof, the Registration
Statement complies in all material respects with the applicable provisions
of the Securities Acts and does not contain an untrue statement of a
material fact and does not omit to state any material fact required to be
stated therein or necessary in order to make the statements therein not
misleading in light of the circumstances under which they were made;
6.1.5. No Unanimous Shareholder Agreement. There is no unanimous
shareholder agreement with respect to any Material Subsidiary that is not
directly or indirectly wholly-owned by the Borrower which restricts, in
whole or in part, the powers of the directors of the Material Subsidiary to
manage or supervise the business and affairs of the Material Subsidiary;
6.1.6. No Contravention. The execution and delivery of each of the Loan
Documents and the performance by each of the Borrower and the Guarantors of
its obligations thereunder (i) do not and will not contravene, breach or
result in any default under (a) the articles, by-laws, constating documents
or other organizational documents of the Borrower or any Guarantor, (b) any
Material Authorization or Applicable Law, or (c) any material mortgage,
lease, agreement or other legally binding instrument to which the Borrower
or a Material Subsidiary is, as of the date of this Agreement, a party or
by which the Borrower or Material Subsidiary or any of its properties or
assets are, as of the date of this Agreement, bound, (ii) will not oblige
the Borrower or any Material Subsidiary to grant any Lien to any Person
other than the Lenders, and (iii) will not result in or permit the
acceleration of the maturity of any material indebtedness, liability or
obligation of the Borrower or any Material Subsidiary under any mortgage,
lease, agreement or other legally binding instrument of or affecting the
Borrower or any Material Subsidiary;
6.1.7. No Consents Required. Other than filings with the Securities
Commission, no Material Authorization is required in connection with the
execution, delivery or performance of any of the Loan Documents by the
Borrower or any Guarantor;
6.1.8. Enforceability. Each of the Loan Documents constitutes, or upon
execution and delivery will constitute, a valid and binding obligation of
the Borrower and each Guarantor which is a party to it enforceable against
it in accordance with its terms, subject only to the qualifications set out
in the opinion of Borrower's counsel delivered pursuant to section 8.1.4.5;
6.1.9. Title. Subject only to Permitted Encumbrances and except as
otherwise disclosed in writing by the Borrower to the Agent, the Borrower
and (where applicable) each Material Subsidiary is the absolute beneficial
owner of and has good and marketable title in fee simple to, or has a good
and marketable leasehold interest to, all of the real property, in each
case, necessary to permit the operation of its Core Line of Business in the
ordinary course where the failure to so own or lease such real property
could reasonably be expected to have a Material Adverse Effect
36
(collectively, the "Real Property"). As of the date hereof, Schedule 6.1.9
of the Disclosure Letter contains an accurate and complete list of the
municipal addresses of all Real Property owned or leased by the Borrower
and each Material Subsidiary. As of the date hereof, the Borrower and
(where applicable) each Material Subsidiary is the beneficial owner, lessee
or licensee, as the case may be, of all of its other real and personal
property and has good title thereto, or other applicable interest therein,
free and clear of any Liens other than Permitted Encumbrances, in each
case, necessary to permit the operation of its Core Line of Business in the
ordinary course where the failure to have any such interest in such
property could reasonably be expected to have a Material Adverse Effect;
6.1.10. Zoning and Other Matters Relating to Real Property. All buildings
and other structures located on the Real Property and the operation and
maintenance thereof, as now operated and maintained, are in compliance, in
all material respects, with all Applicable Laws relating to zoning and land
use; none of such buildings or other structures encroaches upon any land
not owned or leased by the Borrower or a Material Subsidiary; there are no
restrictive covenants or Applicable Laws which in any way restrict or
prohibit the use of such Real Property, buildings or structures for the
purposes for which they are presently being used; there are no
expropriation or similar proceedings, actual or threatened, of which the
Borrower or any Material Subsidiary has received notice against any of such
Real Property or any part thereof, in all cases, where the existence and
continuance of any such non-compliance, encroachment, restriction or
proceeding could reasonably be expected to have a Material Adverse Effect;
6.1.11. Financial Statements.
6.1.11.1. The Audited Financial Statements have been prepared in
accordance with GAAP and present fairly the financial position and
results of operations of the Borrower and its Subsidiaries on a
consolidated basis as of the dates indicated and for the periods
specified;
6.1.11.2. The pro forma financial information, including the notes
thereto, included in the Registration Statement have been prepared in
accordance with applicable requirements of the Securities Acts. The
assumptions used in preparing such pro forma financial statements
provide a reasonable basis for presenting the significant effects
directly attributable to the transactions or events described therein,
the related pro forma adjustments give appropriate effect to those
assumptions, and the pro forma columns therein reflect a proper
application of those adjustments to the corresponding historical
financial statement amounts;
6.1.12. Non-Arm's Length Transactions. Except as described in the
Registration Statement, or as set forth in Schedule 6.1.12 of the
Disclosure Letter or as disclosed in writing by the Borrower to the Agent,
since the date of the last financial statements delivered to the Agent,
neither the Borrower nor any of its Material Subsidiaries has entered into
any transaction or agreement with any Affiliate which is not the Borrower
or a Material Subsidiary;
6.1.13. No Litigation. Except as described in the Registration Statement,
or as set forth in Schedule 6.1.13 of the Disclosure Letter or as disclosed
in writing by the Borrower to the Agent, there is no: court,
administrative, regulatory or similar proceeding (whether civil, quasi-
criminal, or criminal); arbitration or other dispute settlement procedure;
investigation or enquiry by any Governmental Body; or any similar matter or
proceeding (collectively "proceedings") against or involving the Borrower
or any Material Subsidiary (whether in progress or threatened) which, if
determined adversely to the Borrower or Material Subsidiary, could
reasonably be expected to
37
have a Material Adverse Effect or which purports to affect the legality,
validity and enforceability of any Loan Document; to the Borrower's
knowledge, no such proceedings are threatened or contemplated by any
Governmental Body or other Person; and, to the Borrower's knowledge, no
event has occurred which could reasonably be expected to give rise to any
such proceedings and, as of the date hereof, there is no judgment, decree,
injunction, rule, award or order of any Governmental Body outstanding
against the Borrower or any of its Material Subsidiaries which has had, or
could reasonably be expected to have, a Material Adverse Effect;
6.1.14. No Default. Except as described in the Registration Statement,
neither the Borrower nor any Material Subsidiary is in default or breach
under any Applicable Law or under any material agreement, commitment or
obligation or under the terms and conditions relating to any Material
Authorizations which could reasonably be expected to have a Material
Adverse Effect and, except as disclosed in writing by the Borrower to the
Agent, there exists no state of facts which, after notice or the passage of
time or both, would constitute such a default or breach; and, as of the
date hereof, there are no proceedings in progress, pending or threatened
which could reasonably be expected to result in the revocation,
cancellation, suspension or any adverse modification of any Material
Authorization;
6.1.15. Books and Records. The Borrower and each of its Subsidiaries (i)
makes and keeps accurate books and records and (ii) maintains internal
accounting controls that provide reasonable assurance that (A) transactions
are executed in accordance with management's authorization, and (B)
transactions are recorded as necessary to permit preparation of its
financial statements and to maintain accountability for its assets;
6.1.16. No Labour Disturbance. Except as disclosed in the Registration
Statement or as disclosed in writing by the Borrower to the Agent, no
labour disturbance by the employees of the Company or by any horse owners
or trainers exists or, to the knowledge of the Company, is imminent, in
each case, that could reasonably be expected to have a Material Adverse
Effect;
6.1.17. Taxes. Except as would not reasonably be expected to have a
Material Adverse Effect, the Borrower and its Material Subsidiaries have
accurately prepared and timely filed all federal, state, provincial and
other tax returns that are required to be filed by them and have paid or
made provision for the payment of all Taxes except those Taxes that are
being disputed in good faith by appropriate proceedings for which the
Borrower or any Material Subsidiary has established on its books reserves
considered by it to be adequate therefor, and including, without
limitation, all Taxes that the Borrower or any Material Subsidiary is
obligated to withhold from amounts owing to employees, creditors and third
parties, with respect to the periods covered by such tax returns (whether
or not such amounts are shown as due on any tax return). No deficiency
assessment with respect to a proposed adjustment of the Borrower's or any
Material Subsidiary's federal, state, provincial or other Taxes is pending
or, to the knowledge of the Borrower or any Material Subsidiary,
threatened. As of the date hereof, there is no tax Lien, whether imposed by
any federal, state, provincial or other taxing authority, outstanding
against the assets, properties or business of the Borrower or any Material
Subsidiary other than Permitted Encumbrances;
6.1.18. Material Subsidiaries. Schedule 6.1.18 of the Disclosure Letter
sets out an accurate and complete list of the name and jurisdiction of
incorporation of each Material Subsidiary of the Borrower as of the date of
this Agreement. As of the date of this Agreement, except as disclosed in
writing by the Borrower to the Agent on or prior to the date of this
Agreement, no Person has any agreement, right or option to acquire any
shares or securities convertible into or other rights to acquire, shares in
the capital stock of any Material Subsidiary. Other than MEC Holdings
38
(USA) Inc., the Borrower has no Subsidiary (other than Subsidiaries
existing on the date hereof whose registered and principal office is
located outside the United States of America) having (a) total assets with
an aggregate net book value in excess of 10% of the aggregate net book
value of the total assets of the Borrower determined on a consolidated
basis, including such Subsidiary (in each case, determined as of the last
day of the most recent fiscal quarter of such Person), or (b) EBITDA in
excess of 10% of EBITDA of the Borrower determined on a consolidated basis,
including such Subsidiary (in each case, for the four consecutive Fiscal
Quarters most recently ended), other than the Santa Anita Subsidiaries, any
Subsidiary that has provided a Guaranty or a Subsidiary that has become a
Relevant Subsidiary within the previous 15 Banking Days;
6.1.19. Environmental Laws. Except for matters identified in the
Environmental Reports, the Registration Statement or in Schedule 6.1.19 of
the Disclosure Letter, as of the date of this Agreement the operation of
the business of the Borrower and the Material Subsidiaries is in compliance
in all material respects with all Environmental Laws and Environmental
Orders. Further, as of the date of this Agreement there are no facts known
by the Borrower which are likely to give rise to a notice of non-compliance
with any Environmental Laws or Environmental Orders in any material respect
in respect of such business;
6.1.20. Environmental Permits. Except for matters identified in the
Environmental Reports, the Registration Statement, as set forth in Schedule
6.1.19 of the Disclosure Letter or where the absence of an Environmental
Permit would not have a Material Adverse Effect on the Borrower, as of the
date of this Agreement all Environmental Permits necessary or required for
the operation of the Core Line of Business of the Borrower and the Material
Subsidiaries have been obtained;
6.1.21. Hazardous Substances. Except for matters identified in the
Environmental Reports, the Registration Statement or as set forth in
Schedule 6.1.19 of the Disclosure Letter, as of the date of this Agreement,
the Real Property does not contain any Hazardous Substances, including any
that were or are located in storage vessels or that have been Released into
the environment on, near, to or from any Real Property, to the extent that
any such matter could reasonably be expected to result in a Material
Adverse Effect to the Borrower or a Material Subsidiary;
6.1.22. Waste. Except for matters identified in the Environmental Reports,
the Registration Statement or in Schedule 6.1.19 of the Disclosure Letter,
as of the date of this Agreement the Borrower has not used any of its
facilities or permitted them to be used to generate, manufacture, refine,
treat, transport, store, handle, dispose of, transfer, produce, process or
recycle waste, and as of the date of this Agreement the Real Property has
not been used by the Borrower or a Subsidiary as a landfill or waste
disposal site, except in compliance in all material respects with all
Environmental Laws and Environmental Orders nor has it engaged in off-site
disposal as of the date of this Agreement that could reasonably be expected
to result in any material liability to the Borrower or any Material
Subsidiary;
6.1.23. Environmental Convictions. Except for matters identified in the
Environmental Reports, the Registration Statement or in Schedule 6.1.19 of
the Disclosure Letter, as of the date of this Agreement the Borrower has
never been convicted of an offence for non-compliance with any
Environmental Laws or Environmental Orders;
6.1.24. Environmental Notice. Except for matters identified in the
Environmental Reports, the Registration Statement or in Schedule 6.1.19 of
the Disclosure Letter, as of the date of this Agreement the Borrower has
not received any notice, whether in writing or verbally, from a
Governmental Body, nor does it have knowledge as of the date of this
Agreement after due
39
inquiry of any facts which could give rise to any notice from a
Governmental Body being issued, that the Borrower is responsible for a
federal, state, provincial, municipal or local clean-up site or corrective
action under any Environmental Laws or Environmental Orders where such
action could reasonably be expected to have a cost in excess of $5,000,000;
6.1.25. Environmental Records. Except for matters identified in the
Environmental Reports or the Registration Statement or Schedule 6.1.19 of
the Disclosure Letter, as of the date of this Agreement the Borrower has
maintained its environmental records, in all material respects, in the
manner and for the time periods required by Environmental Laws and
Environmental Orders and as of the date of this Agreement except for the
work and investigations identified in the Environmental Reports or the
Registration Statement or Schedule 6.1.19 of the Disclosure Letter, has not
conducted any environmental audit of its business, including the Real
Property, which has resulted in the completion of a report describing
issues that are material to the Borrower. For the purposes of this section
6.1.25, an environmental audit shall include, without limitation, any
evaluation, assessment or study performed, including at the request of or
on behalf of a Governmental Body;
6.1.26. Investments. As of the date hereof, the Borrower has no loans to or
investments in any Person in excess of $1,000,000, nor has it given any
guarantee or incurred any liability in connection with the indebtedness of
any Person in excess of $1,000,000, in each case, other than in connection
with the Santa Anita Facility, as described in the Registration Statement
or in Schedule 6.1.26 of the Disclosure Letter or, in the case of the
Borrower, to a Material Subsidiary, or in the case of a Material
Subsidiary, to the Borrower or any other Material Subsidiary;
6.1.27. ERISA. Except as set out in Schedule 6.1.27 of the Disclosure
Letter or as otherwise disclosed in writing by the Borrower to the Agent,
as at the date hereof (a) the Borrower and its ERISA Affiliates are, to
their knowledge as at the date hereof, in compliance in all material
respects with all applicable provisions of ERISA which would result in any
material liability accruing to the Borrower or its ERISA Affiliates, (b)
neither the Borrower nor any ERISA Affiliate has violated any provision of
any Plan, (c) to their knowledge as at the date hereof, no Reportable Event
has occurred and is continuing with respect to any Plan initiated by the
Borrower or any ERISA Affiliate, (d) to their knowledge as at the date
hereof, the Borrower and all ERISA Affiliates have met their minimum
funding requirements under ERISA with respect to each Plan, and (e) each
Plan is able to fulfill its current benefit obligations as they come due in
accordance with the Plan documents.
6.1.28. Investment Company. Neither the Borrower nor any Material
Subsidiary is an "investment company", or an "affiliated person" of, or
"promoter" or "principal underwriter" for, an "investment company", as such
term is defined in the Investment Company Act of 1940, as amended; provided
that with respect to "affiliated persons" this representation is made to
the knowledge of the Borrower, without any investigation, with respect to
the holders of publicly traded securities of the Borrower and as to the
holders of publicly traded securities of Magna International Inc. Neither
the making of any Advances, nor the issuance of any Letters of Credit, nor
the application of the proceeds or repayment thereof by the Borrower, nor
the consummation of the other transactions contemplated hereby, will
violate any provision of such Act or any rule, regulation or order of the
Securities Commission thereunder;
6.1.29. Margin Regulations. The Borrower is not engaged, nor will it
engage, principally or as one of its primary activities, in the business of
extending credit for the purpose of "purchasing" or "carrying" any "margin
stock" within the respective meanings of each of the quoted terms under
Regulation U;
40
6.1.30. Comerica Filings and BNS Filings. Neither the Borrower nor any of its
Subsidiaries has any indebtedness outstanding which is secured by either the
Comerica Filings or the BNS Filings; and
6.1.31. Disclosure. As of the date hereof, all information provided to the
Agent relating to the financial condition, business, affairs and prospects of
the Borrower and the Subsidiaries (other than financial projections),
consisting of those documents and materials made available for review by the
Borrower and referenced in a binder of materials compiled by Torys LLP in
connection with their due diligence review on behalf of Bank of Montreal (but,
for greater certainty, excluding any work product of Torys LLP) which was
forwarded to the Borrower under cover of a memo dated March 20, 2002 from
Torys to the Borrower, together with any information set out in the
Registration Statement and the Disclosure Letter, is true, accurate and
complete in all material respects and omits no material fact necessary to make
such information not misleading in light of the circumstances under which such
information was provided. As of the date hereof, all financial projections
provided by the Borrower to the Agent were prepared in good faith, on the
basis of all known facts and using reasonable assumptions and, as of the date
of this Agreement, the Borrower believes such projections to be fair and
reasonable.
6.2. Survival of Representations and Warranties
The Borrower acknowledges and agrees that the representations and
warranties made by it in this Article 6 shall be deemed to be repeated on the
last day of each Fiscal Quarter, with the same effect as if such
representations and warranties had been made and given on and as of such day,
notwithstanding any investigation made at any time by the Agent or any of the
Lenders or on their behalf, including, without limitation, the due diligence
review referred to in Section 6.1.31; except that if any such representation
and warranty is specifically given as of the date of this Agreement or any
other particular date or particular period of time and relates only to such
date or period of time, then such representation and warranty shall continue
to be given as at such date or for such period of time.
ARTICLE 7.
COVENANTS
7.1. Affirmative Covenants
So long as any Loan remains outstanding or so long as the Borrower has the
right to utilize the Credit Facility, and unless the Agent on behalf of the
Lenders otherwise consents in writing, the Borrower covenants and agrees that:
7.1.1. Punctual Payment. The Borrower shall pay or cause to be paid all
Obligations falling due hereunder on the dates and in the manner specified
herein;
7.1.2. Conduct of Business. The Borrower shall, and shall take all
necessary corporate action to cause each Material Subsidiary to, do or
cause to be done all things necessary or desirable to maintain its
corporate existence in its present jurisdiction of incorporation, to
maintain its corporate power and capacity to own its properties and assets,
and to carry on its Core Line of Business in a commercially reasonable
manner in accordance with past practice;
7.1.3. Preservation of Material Authorizations. The Borrower shall, and
shall take all necessary corporate action to cause each Material Subsidiary
to, preserve, maintain in effect at all times and at all times comply with
all Material Authorizations except where the failure to
41
preserve and maintain a Material Authorization could not reasonably be
expected to have a Material Adverse Effect;
7.1.4. Compliance with Applicable Law and Contracts. The Borrower shall,
and shall take all necessary corporate action to cause each Material
Subsidiary to (a) comply with the requirements of all Applicable Law, and
all obligations which, if contravened, could give rise to a Lien (other
than a Permitted Encumbrance) over any of the Real Property, and all
insurance policies, non-compliance with which could, singly or in the
aggregate, be reasonably expected to have a Material Adverse Effect, and
(b) comply with all contracts (including leases of Real Property) to which
it is a party or by which it or its properties are bound and, with respect
to leases of Real Property, (i) keep such leases in full force and effect
and not allow such leases to lapse or be terminated other than in the
ordinary course of business or any rights to renew such leases to be
forfeited or cancelled other than in the ordinary course of business, and
(ii) notify the Agent of any default by any party with respect to such
leases and take all commercially reasonable steps to cure any such default,
in each case under clause (b) of this section 7.1.4, except to the extent
that the failure to do so could not reasonably be expected to have a
Material Adverse Effect;
7.1.5. Accounting Methods and Financial Records. The Borrower shall, and
shall take all necessary corporate action to cause each Material Subsidiary
to, maintain a system of accounting which is established and administered
in accordance with GAAP and keep adequate records and books of account in
which accurate and complete entries shall be made in accordance with such
accounting principles reflecting all transactions required to be reflected
by such accounting principles;
7.1.6. Maintenance of Real Property. The Borrower shall, and shall take all
necessary corporate action to cause each Material Subsidiary to, maintain
the Real Property owned or leased by it in good repair, working order and
condition in accordance with past practice (reasonable wear and tear
excepted) and from time to time make or cause to be made all necessary and
appropriate repairs, renewals and replacements thereto except, in each
case, where the failure to maintain such Real Property could not, singly or
in the aggregate, reasonably be expected to have a Material Adverse Effect;
7.1.7. Maintenance of Insurance. The Borrower shall maintain on behalf of
itself and the Material Subsidiaries, or shall take all necessary corporate
action to cause the Material Subsidiaries to maintain, insurance with
responsible and reputable insurance companies or associations in such
amounts and covering such risks as is usually carried by companies engaged
in similar businesses and owning similar properties in the same general
areas in which the Borrower or such Material Subsidiary operates; provided,
however, that the Borrower and its Material Subsidiaries may self-insure to
the same extent as other companies engaged in similar businesses and owning
similar properties in the same general areas in which the Borrower or such
Material Subsidiary operates and to the extent consistent with prudent
business practice;
7.1.8. Payment of Taxes. The Borrower shall, and shall take all necessary
corporate action to cause each Material Subsidiary to:
7.1.8.1. pay and discharge all Taxes payable by it;
7.1.8.2. withhold and collect all Taxes required to be withheld and
collected by it and remit such Taxes to the appropriate Governmental
Body at the time and in the manner required; and
42
7.1.8.3. pay and discharge all obligations incidental to any trust
imposed upon it by statute which, if unpaid, might become a Lien (other
than a Permitted Encumbrance) upon any of its Real Property;
except that no such Taxes or obligations need be paid, collected or
remitted if (i) it is being actively and diligently contested in good
faith by appropriate proceedings, (ii) reserves considered adequate by
the Borrower shall have been set aside therefor on its books, and (iii)
such Taxes or obligation shall not have resulted in a Lien other than a
Permitted Encumbrance, and for which any enforcement proceedings, if
commenced, shall have been stayed and, in any event, appropriate
security shall have been given, if required, to prevent the commencement
or continuation of proceedings;
7.1.9. Inspections. The Borrower shall permit each of the Agent and its
authorized employees, representatives and agents at reasonable times and
during normal business hours, upon giving reasonable notice, to discuss, or
meet at the head office of the Borrower to discuss, with senior management
of the Borrower, the businesses, property, financial condition and
prospects of the Borrower and its Material Subsidiaries;
7.1.10. Notice of Litigation and Other Matters. The Borrower shall, as soon
as practicable after it shall become aware of the same, give notice to the
Agent and the Lenders of the following events:
7.1.10.1. the commencement of any action, proceeding, arbitration or
investigation against or in any other way relating adversely to the
Borrower or any of its Material Subsidiaries or any of their respective
properties, assets or businesses by any Person (including any
Governmental Body) which, if adversely determined, could singly or when
aggregated with all other such actions, proceedings, arbitrations and
investigations reasonably be expected to have a Material Adverse Effect;
7.1.10.2. any insurance claim made by the Borrower or any of its
Material Subsidiaries in excess of $5,000,000;
7.1.10.3. any development which has had or could reasonably be expected
to have a Material Adverse Effect; and
7.1.10.4. any Default or Event of Default;
specifying, in each case, the relevant particulars thereof and the
period of existence thereof and the action taken, being taken or
proposed to be taken by or on behalf of the Borrower or any Material
Subsidiary with respect thereto;
7.1.11. Quarterly Reports. The Borrower shall, as soon as practicable and
in any event within 60 days after the end of each Fiscal Quarter (other
than the Fiscal Quarter ending in December) of each Fiscal Year deliver to
the Agent a quarterly report for such Fiscal Quarter consisting of
consolidated unaudited financial statements for the Borrower (in each case
as at the end of such Fiscal Quarter and the portion of the Fiscal Year
through the end of such Fiscal Quarter) in the form of the quarterly
financial statements filed or, if not yet filed, required to be filed, with
the Securities Commission;
7.1.12. Annual Financial Statements. The Borrower shall, as soon as
practicable and in any event within 120 days after the end of each Fiscal
Year, deliver to the Agent the annual
43
audited consolidated financial statements of the Borrower, in the form of
the annual financial statements filed or, if not yet filed, required to be
filed with the Securities Commission;
7.1.13. Certificate of the Borrower. The Borrower shall deliver or cause to
be delivered to the Agent, together with the report and financial
statements in sections 7.1.11 and 7.1.12, a certificate of the Borrower in
the form attached hereto as Schedule 7.1.13 duly executed by the Chief
Financial Officer or Controller thereof certifying (i) that such financial
statements were prepared in accordance with GAAP (subject to normal year-
end adjustments in the case of interim unaudited financial statements) and
fairly present the financial position and results of operations of the
Borrower on a consolidated basis for the period and as at the date thereof,
(ii) that no Default or Event of Default has occurred hereunder or, if any
Default or Event of Default has occurred, specifying the relevant
particulars and the period of existence thereof and the action taken, being
taken or proposed to be taken by or on behalf of the Borrower or any
Material Subsidiary with respect thereto, (iii) demonstrating in reasonable
detail compliance (or, as the case may be, non-compliance) at the end of
the relevant Fiscal Quarter or Fiscal Year with the covenants contained in
section 7.1.18 and, in each case, where a Material Adverse Change has
occurred, specifying the relevant particulars, the period of existence and
the action taken, being taken or proposed to be taken by or on behalf of
the Borrower with respect thereto;
7.1.14. Public Information. The Borrower shall from time to time deliver to
the Agent copies of all reports, financial statements, information or proxy
circulars and other information sent by the Borrower to its shareholders at
the same time as the Borrower sends such material to its shareholders and
the Borrower shall deliver to the Agent copies of all registration
statements, prospectuses, press releases, material change reports and
similar disclosure documents filed by the Borrower with any securities
regulatory authority (including the Securities Commission) or stock
exchange, provided that if any such reports or disclosures are filed on a
confidential basis, then the Borrower shall not be required to deliver the
same to the Agent until such time as they are no longer filed on a
confidential basis;
7.1.15. Other Financial Information. As soon as practicable following a
request therefor from the Agent on behalf of the Lenders, the Borrower
shall furnish to the Agent such other financial information as the Agent on
behalf of the Lenders may reasonably request from time to time;
7.1.16. Covenant to Guarantee Obligations. At the expense of the Borrower,
to the extent permitted by law, at such time as any new direct or indirect
Relevant Subsidiaries of the Borrower are formed or acquired or any
existing Subsidiary of the Borrower becomes a Relevant Subsidiary (other
than the Santa Anita Subsidiaries) within 15 Banking Days thereafter, cause
such Relevant Subsidiary to duly execute and deliver to the Agent an
agreement, in form and substance satisfactory to the Agent binding it to
the provisions of Article 10 of this Agreement, whereby such Relevant
Subsidiary guarantees the Borrower's Obligations under the Loan Documents
substantively on the terms of the Guaranty. Notwithstanding the foregoing,
if the Relevant Subsidiary is not wholly-owned by the Borrower or its
wholly-owned Subsidiaries, the Borrower will only be required to cause such
Relevant Subsidiary to comply with this Section 7.1.16 if and to the extent
it may do so under Applicable Law and under applicable contractual
obligations without the consent of the other shareholders of such Relevant
Subsidiary (or their respective nominees on the board of directors or
similar managing body of such Relevant Subsidiary). Concurrently with the
delivery of such agreement, the Borrower will deliver to the Agent a signed
copy of a favorable opinion, addressed to the Agent and the Lenders, of
counsel to the Borrower as to such guaranty being the legal, valid and
binding obligation of the Relevant Subsidiary party thereto, enforceable in
accordance with its terms and as to such other matters as
44
were addressed in the opinion of the Borrower's counsel delivered pursuant
to section 8.1.4.5, and subject only to the qualifications set out in such
opinion and to any other qualifications which in the reasonable opinion of
the Borrower's counsel are required by law;
7.1.17. Covenant Regarding Permitted Acquisitions. Within 30 days after the
closing of a Permitted Acquisition, the Borrower shall provide the Agent
and Lender with an Officer's Certificate:
(a) confirming that such Acquisition was a Permitted Acquisition;
(b) attaching a true and complete copy of the purchase (or equivalent)
agreement for such Acquisition, and all written amendments thereto or
waivers of any material provision or condition thereof;
(c) attaching true and complete copies of the financial statements relied
on, if any, by the Borrower or the Material Subsidiary, as applicable,
in entering such agreement;
(d) whether the entity being acquired will constitute a Relevant Subsidiary
or, if not, the basis for such determination; and
(e) confirming the manner in which the Borrower is including the results
from the operations of such Acquisition for purposes of the financial
covenants set forth in section 7.1.18 and confirming such inclusion is
in compliance with section 1.13; and
7.1.18. Financial Covenants. The Borrower shall maintain the following
ratios (measured on a consolidated basis) as at the end of each Fiscal
Quarter:
7.1.18.1. Total Funded Debt to EBITDA. The ratio of (i) Total Funded
Debt less cash reflected on the Borrower's consolidated balance sheet to
(ii) EBITDA shall not be greater than 3.50:1.00.
7.1.18.2. Total Interest Coverage. The ratio of (i) EBITDA less Taxes
and maintenance Capital Expenditures, and as adjusted for working
capital changes, to (ii) Total Interest Expense shall be no less than
1.70:1.00.
For the purposes of this section 7.1.18, (i) Total Funded Debt shall be
measured as at the end of the applicable Fiscal Quarter based on the
consolidated financial statements of the Company and calculated in
accordance with GAAP, and (ii) EBITDA, maintenance Capital Expenditures,
Taxes, working capital changes and Total Interest Expense shall be
measured for the period comprising the applicable Fiscal Quarter and the
three Fiscal Quarters immediately preceding such Fiscal Quarter based on
the consolidated financial statements of the Company and calculated in
accordance with GAAP.
7.1.19. Comerica Filings and BNS Filings. The Borrower shall take
commercially reasonable steps to cause each of the Comerica Filings and the
BNS Filings to be discharged in due course and neither the Borrower nor any
of its Subsidiaries shall incur, create or assume any indebtedness in
favour of any Person which is secured by the Comerica Filings or the BNS
Filings.
45
7.2. Negative Covenants
So long as any Loan remains outstanding or so long as the Borrower has the
right to utilize the Credit Facility, and unless the Agent on behalf of the
Lenders otherwise consents in writing, the Borrower covenants and agrees that
it and each Material Subsidiary shall not:
7.2.1. Encumber Property. Create, grant, assume or suffer to exist any Lien
upon any of its properties or assets, or upon any of the property and
assets of any Material Subsidiary, other than Permitted Encumbrances;
7.2.2. Capital Expenditures. Incur or commit or agree to incur any Capital
Expenditure unless (i) such Capital Expenditure is in respect of the Core
Line of Business carried on by the Borrower or any Subsidiary or in respect
of any real estate owned by the Borrower or any Subsidiary on the date of
this Agreement and (a) was included in a budget delivered to the Agent, or
(b) has been approved by the board of directors of the Borrower or a
Material Subsidiary, as applicable, or (ii) such Capital Expenditure is
approved in writing by the Agent on behalf of the Lenders;
7.2.3. Non-Arm's Length Transactions. Repay any existing indebtedness or
liabilities owed to, or otherwise enter into any transaction or agreement
with, any Affiliate (or any corporation which, after the transaction in
question becomes effective, would become an Affiliate), or permit any
Material Subsidiary to enter into any such transaction, other than (a) with
an Affiliate which is the Borrower or a Material Subsidiary or (b) where
such repayment (or the indebtedness giving rise thereto) or transaction is
approved by the board of directors of the Borrower or (c) where such
transaction constitutes the purchase, sale or lease of assets or the
purchase or provision of services, in each case in the ordinary course of
business and either (x) such transaction is conducted on commercially
reasonable terms and conditions, or (y) if such transaction relates to
sharing facilities or personnel among the Borrower and one or more of its
Affiliates, the related costs are allocated on a reasonable basis;
7.2.4. Amalgamations, etc. Enter into any transaction (including by way of
reorganization, consolidation, amalgamation, liquidation, transfer, sale or
otherwise) whereby the Borrower or all or any other material portion of the
undertaking, property and assets of the Borrower would become the property
of any other Person or permit any Material Subsidiary to enter into any
such transaction, other than in the case of the Borrower, a Material
Subsidiary, or in the case of a Material Subsidiary, the Borrower or any
other Material Subsidiary or, in the case of any such amalgamation, the
continuing corporation resulting therefrom;
7.2.5. Unrelated Business. Other than investments set out in section 6.1.26
or acquisitions or other ventures having an aggregate cost (on a
consolidated basis) of not greater than $5,000,000 (inclusive of any
indebtedness, contingent or otherwise, assumed or incurred in connection
therewith), engage directly or indirectly in any business activity, or
purchase or otherwise acquire any properties or assets, in each case
unrelated to its Core Line of Business;
7.2.6. Restricted Payments. The Borrower will not, and will not permit any
Material Subsidiary to, declare, pay or make, or agree to declare, pay or
make, directly or indirectly, any Restricted Payment, except (a) the
Borrower may declare and pay dividends with respect to its equity
securities payable solely in additional equity securities, (b) any Material
Subsidiary may make Restricted Payments to the Borrower or any Material
Subsidiary and any wholly-owned Material Subsidiary may redeem or
repurchase its own equity securities, (c) the Borrower or any Material
Subsidiary may make Restricted Payments pursuant to and in accordance with
employee
46
share purchase loans, stock option plans (including individual plans),
profit sharing plans and/or other benefit plans, employee incentives and
performance obligations for directors, officers, management, employees or
consultants of the Borrower and its Material Subsidiaries, (d) the Borrower
or any Material Subsidiary may make Restricted Payments for the purposes of
employee and executive recruitment and relocation, (e) the Borrower or any
Material Subsidiary may make payments in respect of indebtedness as set
forth in clause (v) of the definition of Permitted Debt, and (f) the
Borrower or any Material Subsidiary may make any payment in respect of or
relating to indebtedness or a transaction permitted by Section 7.2.3.
7.2.7. Debt. Create, incur, assume or suffer to exist, any indebtedness
other than Permitted Debt;
7.2.8. Financial Assistance. Provide financial assistance, either directly
or indirectly, by means of a guarantee, provision of security or otherwise
to any Person, except for Permitted Debt or Permitted Encumbrances and any
other obligations which the Borrower may enter into in favour of the
Lenders and except for (i) financial assistance in an amount which does not
exceed $5,000,000 in the aggregate, (ii) financial assistance given by the
Borrower to a Material Subsidiary, or by a Material Subsidiary to the
Borrower or any other Material Subsidiary, and (iii) financial assistance
given to a Subsidiary in connection with either a Permitted Acquisition or
an acquisition or investment not prohibited by this Agreement;
7.2.9. Disposition of Assets. In any Fiscal Year, sell, lease, consign or
otherwise dispose of, or agree to sell, lease, consign or otherwise dispose
of, any assets or property except that the Borrower or any Material
Subsidiary may (i) sell, lease or consign assets or properties in the
ordinary course of business from time to time; (ii) sell, lease or consign
real property (other than Real Property) held for sale or development and
excess racetrack lands; (iii) transfer, abandon, surrender or otherwise
dispose of any fixtures, equipment, machinery, tools, implements,
facilities and appliances which may have become worn out, unserviceable,
obsolete, unsuitable or unnecessary in the conduct of their businesses; and
(iv) sell or otherwise dispose of any Subsidiary (other than a Material
Subsidiary unless the sale or other disposition thereof is in accordance
with section 7.2.10) with negative EBITDA determined, on a consolidated
basis, for the four consecutive fiscal quarters most recently ended;
7.2.10. Change in Ownership of Material Subsidiaries. Sell or otherwise
dispose of any shares in the capital stock of any Material Subsidiary, or
any warrants, rights or options to acquire such stock or permit any
Material Subsidiary to issue, sell or otherwise dispose of any shares in
its capital stock or the capital stock of any other Material Subsidiary or
any warrants, rights or options to acquire such stock except to the
Borrower or another Material Subsidiary;
7.2.11. Acquisitions. Permit or otherwise undertake any Acquisition (other
than a Permitted Acquisition) without the prior written consent of the
Agent (on behalf of the Majority Lenders).
7.3. Environmental Matters
7.3.1. The Borrower shall maintain, for itself and its Material
Subsidiaries, a system to ensure and monitor continued compliance with
Environmental Laws, which shall include reviews of such compliance, and the
maintenance, in all material respects, of environmental documents and
records relating to their respective businesses as required by
Environmental Law.
47
7.3.2. The Borrower shall comply, and shall take all necessary corporate or
other action to cause any of its Material Subsidiaries to comply with all
Environmental Laws except where the failure to do so could not reasonably
be expected to have a Material Adverse Effect.
7.3.3. The Borrower covenants and agrees that it and each Material
Subsidiary shall not cause or permit a Release of any Hazardous Substance
except in compliance, in all material respects, with Environmental Laws or
that would not reasonably be expected to lead to material liability under
Environmental Laws against the Borrower or a Subsidiary.
7.3.4. The Borrower covenants and agrees that it and each Material
Subsidiary shall not knowingly permit, and shall use reasonable commercial
efforts to prevent any person, including but not limited to any invitee,
occupant or tenant of or on any Real Property or any part thereof, to
engage in any activity (or fail to take action), which is likely to lead to
the imposition of material liability under any Environmental Laws against
the Borrower or a Subsidiary which would have a Material Adverse Effect on
the Borrower.
7.3.5. The Borrower shall, and shall take all necessary corporate action to
cause each Material Subsidiary to, promptly remove any Hazardous Substance
(or if removal is prohibited by any Environmental Law, the Borrower or
applicable Material Subsidiary shall take whatever action is required to
ensure compliance with such Environmental Law) from any Real Property (or
neighbouring lands where the Hazardous Substance has come from the Real
Property) to the extent required by Environmental Law where the failure to
do so could reasonably be expected to have a Material Adverse Effect on the
Borrower or any Material Subsidiary.
7.3.6. The Borrower shall provide the Agent with an environmental audit
report (which shall include a report arising from an environmental site
assessment, investigation or environmental review) with respect to any Real
Property or an update of such audit (i) upon the written request of the
Agent on behalf of the Lenders documenting its reasonable opinion that the
Borrower or any Material Subsidiary may not be in material compliance with
this section 7.3; (ii) if such audit is required by any Governmental Body
or (iii) if an Event of Default relating to an environmental matter has
occurred, and the Agent on behalf of the Lenders has made a reasonable
written request to the Borrower for such audit or update to address the
Event of Default within 60 days after such request, and all such audits or
updates thereof shall be at the Borrower's expense.
7.3.7. If the Borrower or any Material Subsidiary (i) receives notice that
any violation of any Environmental Law may have been committed or is about
to be committed by it, (ii) receives notice that any administrative or
judicial complaint or order has been filed or is about to be filed against
it alleging violations of any Environmental Law or requiring it to take any
action in connection with the release of Hazardous Substances into the
environment, or (iii) receives any notice from a Governmental Body or other
Person alleging that the Borrower or any Material Subsidiary may be liable
or responsible for costs associated with a response to or clean-up of a
release of a Hazardous Substance into the environment or any damages caused
thereby, in each case where the ultimate liability of the Borrower or any
Material Subsidiary which may arise from such notice could reasonably be
expected to have a Material Adverse Effect, the Borrower shall, and shall
take all necessary corporate action to cause each Material Subsidiary to,
provide the Agent with a copy of such notice within five days of receipt
thereof. The Borrower shall, and shall take all necessary corporate action
to cause each Material Subsidiary to, also provide to the Agent, as soon as
practicable after it becomes available, a copy of any environmental audit
report, including any report required to be submitted to any Governmental
Body. If any such report estimates the cost of any clean-up or remedial
action, including any approved by a Governmental Body, to be in excess of
$5,000,000, the Borrower shall, and shall take all necessary corporate
48
action to cause each Material Subsidiary to, provide evidence satisfactory
to the Agent, acting reasonably, of disbursements made from time to time to
effect and complete such clean-up or remedial action, including within such
time as may be prescribed by a Governmental Body. The Borrower shall, and
shall take all necessary corporate action to cause each Material Subsidiary
to, provide written evidence to the Agent, including a report which the
Agent and the Lenders shall expressly be entitled to rely on, confirming
the completion of the clean-up or remediation of a site with a cost in
excess of $5,000,000, including any investigations and monitoring.
7.3.8. The Borrower shall, and shall take all necessary corporate action to
cause each Material Subsidiary to, permit the Agent and its authorized
employees, representatives and agents, at reasonable times and during
normal business hours and at the Agent's own cost, upon giving reasonable
notice, to visit and inspect any Real Property where the Agent or any
Lender, in its reasonable opinion, believes that the Borrower or any
Material Subsidiary may not be in compliance with section 7.3.7.
ARTICLE 8.
CONDITIONS PRECEDENT
8.1. Conditions Precedent to Closing
The obligations of the Lenders to make available the Credit Facility or any
part thereof to the Borrower are subject to compliance, on or before the
Closing Date, with each of the following conditions precedent, which
conditions precedent are for the sole and exclusive benefit of the Lenders and
may be waived in writing by the Agent (at the direction of the Lenders in
their sole discretion):
8.1.1. the representations and warranties set out in Article 6 shall be
true and correct on the Closing Date as if made on and as of such date;
8.1.2. no Default or Event of Default shall have occurred and be continuing
nor shall it be reasonably anticipated that there be any Default or Event
of Default immediately after giving effect to the execution of the Loan
Documents;
8.1.3. except as set forth in Schedule 8.1.3 of the Disclosure Letter, no
Material Adverse Change since the date of the Audited Financial Statements
will have occurred;
8.1.4. the Agent shall have received the following in form and substance
satisfactory to the Lenders, acting reasonably:
8.1.4.1. an Officer's Certificate dated the Closing Date certifying that
attached thereto are true and correct copies of the following documents,
and that such documents are in full force and effect, unamended:
8.1.4.1.1. the articles or constating documents of the Borrower and
each Guarantor;
8.1.4.1.2. the by-laws or other organizational documents of the
Borrower and each Guarantor;
8.1.4.1.3. a certificate of incumbency including sample signatures
of officers and directors of the Borrower and each Guarantor who
have executed
49
any of the Loan Documents or any other document delivered to the
Agent under this Article 8; and
8.1.4.1.4. the resolutions or other documentation evidencing that
all necessary action, corporate or otherwise, has been taken by the
Borrower and each Guarantor to authorize the execution, delivery and
performance of the Loan Documents to which it is a party;
8.1.4.2. a certificate of status, certificate of good standing or
similar certificate with respect to the jurisdiction of incorporation of
the Borrower and each Guarantor;
8.1.4.3. an Officer's Certificate dated the Closing Date confirming
sections 8.1.2 and 8.1.3;
8.1.4.4. a three year management financial forecast for the Borrower and
its Subsidiaries on a consolidated basis, with detailed quarterly
covenant calculations, copies of which have previously been delivered to
the Agent;
8.1.4.5. an opinion of Borrower's counsel dated the Closing Date in form
and substance satisfactory to the Agent and Lenders, acting reasonably;
8.1.4.6. the Disclosure Letter in form and substance satisfactory to the
Agent and Lenders, acting reasonably; and
8.1.4.7. such other documentation or information as the Agent and the
Lenders shall have reasonably requested;
8.1.5. the Agent and the Lenders shall have received payment in full of all
reasonable invoiced fees and reimbursable out-of-pocket expenses payable by
the Borrower on or prior to the Closing Date hereunder or under any other
Loan Document, including payment of all reasonable fees, disbursements and
out-of-pocket expenses of counsel to the Agent and the Lenders; and
8.1.6. satisfactory completion of financial, business, legal, regulatory
and environmental due diligence by the Agent and the Lenders, including
(without limitation), in respect of the Borrower's refinancing strategy.
8.2. Conditions Precedent to Advances
The obligation of the Lenders to make any Advances (other than a Rollover
or Conversion) is subject to compliance, on or before the relevant Borrowing
Date, with each of the following conditions precedent, which conditions
precedent are for the sole and exclusive benefit of the Lenders and may be
waived in writing by the Agent (at the direction of the Lenders in their sole
discretion):
8.2.1. in respect only of the initial Advance, an Officer's Certificate
executed by the Chief Financial Officer or Controller of the Borrower and
dated as of the applicable Borrowing Date in respect of such Advance
providing reasonable evidence of compliance by the Borrower of the
financial covenants set forth in section 7.1.18;
8.2.2. the representations and warranties set out in Article 6 shall be
true and correct on the relevant Borrowing Date as if made on and as of
such date except if any such representation and
50
warranty is specifically given in respect of a particular date or
particular period of time and relates only to such date or period of time,
then such representation and warranty shall be true and correct as of the
date given or for the period of time to which it relates;
8.2.3. no Default or Event of Default shall have occurred and be continuing
nor shall it be reasonably anticipated that there will be any Default or
Event of Default immediately after giving effect to the proposed Advance;
8.2.4. no Material Adverse Change shall have occurred since the Closing
Date in the case of the initial Advance and in the case of each subsequent
Advance, since the date of the last Advance;
8.2.5. if applicable, the Borrower shall have executed and delivered such
standard form Letter of Credit Agreements of the L/C Lender as the L/C
Lender may require in respect of such Advance; and
8.2.6. the Agent shall have received a Borrowing Notice dated as of the
relevant Borrowing Date.
ARTICLE 9.
EVENTS OF DEFAULT AND REMEDIES
9.1. Events of Default
The occurrence of any of the following events shall constitute an Event of
Default:
9.1.1. default by the Borrower in payment of any principal when due or any
interest within three Banking Days after the same becomes due or any other
amount within 10 days after notice of non-payment thereof is received by
the Borrower;
9.1.2. default by the Borrower or any Guarantor in the performance or
observance of any covenant, condition or obligation contained in any Loan
Document to which it is a party that does not require the payment of money
to the Agent or any Lender and such default continues for a period of 20
days after the earliest of (x) receipt of notice from the Agent of such
default, and (y) knowledge of the existence of such default by one of the
chief executive officer, chief financial officer, controller, general
counsel or secretary of the Borrower, unless:
(i) such default is not capable of being cured with such 20 day period;
(ii) the Borrower is diligently and in good faith advancing to remedy
such default; and
(iii) such default is in fact remedied within 40 days from expiry of the
original 20 day cure period;
9.1.3. the representation and warranty set out in Section 6.1.4 hereof is
found to be false or incorrect in any material respect so as to make it
materially misleading when made or deemed to have been made or any other
representation or warranty made by the Borrower or any Guarantor herein or
in any Officer's Certificate or other document delivered to the Agent or
any Lender pursuant hereto or in connection with any Loan Document is found
to be false or incorrect in any
51
respect where the consequences of such misrepresentation or breach of
warranty could reasonably be expected to have a Material Adverse Effect;
9.1.4. any event shall occur or condition shall exist, and shall continue
after the applicable grace period, if any, specified in any agreement or
instrument relating to any indebtedness or liability of the Borrower (other
than Obligations) and the effect of such event or condition is to
accelerate the maturity of such indebtedness or liability of the Borrower
or any Material Subsidiary which is outstanding in an aggregate principal
amount exceeding $5,000,000, or any such indebtedness or liability of the
Borrower or any Material Subsidiary which is outstanding in an aggregate
principal amount exceeding $5,000,000 shall be declared to be due and
payable prior to the stated maturity thereof; provided, in each case, that
it shall not be an Event of Default if the Borrower or applicable Material
Subsidiary is diligently contesting such acceleration or declaration in
good faith by appropriate proceedings or has fully repaid the indebtedness
accelerated or declared due;
9.1.5. the Borrower admits in writing or by way of a public or press
announcement its inability to pay its debts generally as they become due or
otherwise acknowledges in writing or by way of a public or press
announcement its insolvency;
9.1.6. the Borrower institutes any proceeding or takes any corporate action
or executes any agreement to authorize its participation in or commencement
of any proceeding:
9.1.6.1. seeking to adjudicate it a bankrupt or insolvent, or
9.1.6.2. seeking liquidation, dissolution, winding up, reorganization,
arrangement, protection, relief or composition of it or any of its
property or debt or making a proposal or application with respect to it
under any law relating to bankruptcy, insolvency, reorganization or
compromise of debts or other similar laws (including, without
limitation, any reorganization, arrangement or compromise of debt under
the laws of its jurisdiction of incorporation);
9.1.7. any proceeding is commenced against or affecting the Borrower:
9.1.7.1. seeking to adjudicate it a bankrupt or insolvent;
9.1.7.2. seeking liquidation, dissolution, winding up, reorganization,
arrangement, protection, relief or composition of it or any of its
property or debt or making a proposal with respect to it under any law
relating to bankruptcy, insolvency, reorganization or compromise of
debts or other similar laws (including, without limitation, any
reorganization, arrangement or compromise of debt under the laws of its
jurisdiction of incorporation); or
9.1.7.3. seeking appointment of a receiver, trustee, agent, custodian or
other similar official for it or for any substantial part of its
properties and assets; and
in each case, such proceeding is not being contested in good faith by
appropriate proceedings or, if so contested, remains outstanding,
undismissed and unstayed more than 45 days from the institution of such
first mentioned proceeding; provided, in each case, the Borrower and its
Material Subsidiaries remain current on their respective payroll
obligations during such contest;
52
9.1.8. any creditor of the Borrower or any other Person shall privately
appoint a receiver, trustee or similar official for any substantial part of
the Borrower's properties and assets having a Replacement Cost greater than
$10,000,000 and such appointment is not stayed and is not being contested
in good faith by appropriate proceedings or, if so contested, such
appointment is not terminated within 45 days from the original date of such
appointment; provided, in each case, the Borrower and its Material
Subsidiaries remain current on their respective payroll obligations during
such contest;
9.1.9. any judgment or order for the payment of money in excess of
$10,000,000 shall be rendered against the Borrower which remains
unsatisfied and (i) executions shall have been levied on any property of
the Borrower by or on behalf of any creditor in reliance on such judgment
or order and (ii) there shall be any period during which a stay of
enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect;
9.1.10. if, at any time after execution and delivery thereof, other than by
reason of a wilful act or omission of the Agent or any Lender, (i) any Loan
Document ceases to be in full force and effect (unless within fifteen days
of notice of the same being given by the Lenders to the Borrower such Loan
Document again has full force and effect); (ii) any Loan Document is
declared by a court or tribunal of competent jurisdiction to be null and
void; or (iii) the validity or enforceability of any Loan Document is
contested by the Borrower; or (iv) the Borrower denies in writing that it
has any or further liability or obligations under any Loan Document
(unless, in the case of an event described in (i) or (ii) above, the
Borrower is able to fully remedy such default within a period of 15 days or
the event is one for which the Lenders is wholly responsible);
9.1.11. except in connection with a transaction permitted under section
7.2.4, the Borrower or any Guarantor ceases or threatens in writing or by
way of public or press announcement to cease to carry on business in the
ordinary course; or
9.1.12. there occurs a Change in Control.
9.2. Remedies Upon Default
Upon the occurrence of any Event of Default, subject to any applicable cure
period, the Agent may, and at the direction of the Majority Lenders shall, by
notice given to the Borrower:
9.2.1. declare the unutilized portion (if any) of the Aggregate Commitment
to be terminated (whereupon the Lenders shall not be required to make any
further Advances);
9.2.2. declare all Obligations to be immediately due and payable; and
9.2.3. take such actions and commence such proceedings as may be permitted
at law or in equity at such times and in such manner as the Lenders in
their sole discretion may consider expedient,
all without, except as may be required by Applicable Law, any additional
notice, presentment, demand, protest, notice of protest, dishonour or any
other action. The rights and remedies of the Agent and the Lenders
hereunder are cumulative and are in addition to and not in substitution for
any other rights or remedies provided by Applicable Law.
53
9.3. Distributions
During the occurrence and continuance of an Event of Default, all
distributions under or in respect of any of the Loan Documents shall be held
by the Agent on account of the Obligations without prejudice to any claim by
the Agent and the Lenders for any deficiency after such distributions are
received by the Agent and the Borrower shall remain liable for any such
deficiency. All such distributions may be applied to such part of the
Obligations as the Lenders may see fit in their sole discretion, or, in the
event the Lenders fail to advise the Agent of their determination, by the
Agent. The Lenders may at any time change any such appropriation of any such
distributions or other moneys received by the Agent and may reapply the same
to any other part of the Obligations as the Lenders may from time to time in
their sole discretion see fit, notwithstanding any previous application.
ARTICLE 10.
GUARANTY
10.1. Guaranty
10.1.1. Each Guarantor hereby unconditionally and irrevocably guarantees
the punctual payment when due, whether at stated maturity, by acceleration
or otherwise, of all Obligations of the Borrower now or hereafter existing
under the Loan Documents, whether for principal, interest, fees, expenses
or otherwise (such Obligations being such Guarantor's "Guaranteed
Obligations"), and agrees to pay any and all expenses (including reasonable
counsel fees and expenses) incurred by the Agent or any Lender in enforcing
any rights under such Guaranty.
10.1.2. Without limiting the generality of the foregoing, each Guarantor's
liability shall extend to all amounts that constitute part of the
Guaranteed Obligations that would be owed by the Borrowers to the Agent or
the Lenders under the Loan Documents but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving the Borrower.
10.1.3. Notwithstanding anything contained herein, in any Guaranty, or in
any of the other Loan Documents to the contrary, if the obligations of any
Guarantor hereunder exceed the limitations imposed under any Fraudulent
Transfer Law, then such obligations of the Guarantor shall be limited to a
maximum aggregate amount equal to the largest amount that would not render
its obligations subject to avoidance as a fraudulent transfer or conveyance
under Section 548 of Title 11 of the United States Code or any applicable
provisions of comparable state law (collectively, the "Fraudulent Transfer
Laws"), in each case after giving effect to all other liabilities of the
Guarantor, contingent or otherwise, that are relevant under the Fraudulent
Transfer Laws (specifically excluding, however, any liabilities of the
Guarantor in respect of indebtedness to the Borrower or any other Person
that is an Affiliate of the Borrower to the extent that such indebtedness
would be discharged in an amount equal to the amount paid by the Guarantor
in respect of the Obligations) and after giving effect (as assets) to the
value (as determined under the applicable provisions of the Fraudulent
Transfer Laws) of any rights to subrogation, reimbursement, indemnification
or contribution of the Guarantor pursuant to Applicable Law or pursuant to
the terms of any agreement.
10.2. Guaranty Absolute
Each Guarantor guarantees that the Guaranteed Obligations will be paid in
accordance with the terms of the Loan Documents, regardless of any law,
regulation or order now or hereafter in
54
effect in any jurisdiction affecting any of such terms or the rights of the
Agent or the Lenders with respect thereto. The obligations of each Guarantor
under this Guaranty are independent of the Guaranteed Obligations or any other
Obligations of the Borrower or any other Guarantor under the Loan Documents,
and a separate action or actions may be brought and prosecuted against such
Guarantor to enforce this Guaranty, irrespective of whether any action is
brought against the Borrower or any other Guarantor or whether the Borrower or
any other Guarantor is joined in any such action or actions. The liability of
such Guarantor under this Guaranty shall be irrevocable, absolute and
unconditional irrespective of, and each Guarantor hereby irrevocably waives to
the extent permitted by applicable law, any defenses it may now or hereinafter
have in any way relating to, any or all of the following:
(a) any lack of validity or enforceability of any Loan Document or any
agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in any other
term of, all or any of the Guaranteed Obligations, or any other
amendment or waiver of or any consent to departure from any Loan
Document, including, without limitation, any increase in the Guaranteed
Obligations resulting from the extension of additional credit to the
Borrower or any of its Subsidiaries, or otherwise;
(c) any change, restructuring or termination of the corporate structure or
existence of the Borrower or any of its Subsidiaries; or
(d) any other circumstance or any existence of or reliance on any
representation by the Agent or any Lender that might otherwise
constitute a defense available to, or a discharge of, the Borrower, any
Guarantor or any other guarantor or surety.
This Guaranty shall continue to be effective or be reinstated, as the case
may be, if at any time any payment of any of the Guaranteed Obligations made,
with respect to the Guarantors is rescinded or must otherwise be returned by
the Agent or any Lender upon the insolvency, bankruptcy or reorganization of
the Borrower or otherwise, all as though such payment had not been made.
10.3. Waiver
Each Guarantor hereby waives promptness, diligence, notice of acceptance
and any other notice with respect to any of the Guaranteed Obligations and
this Guaranty and any requirement that the Agent or any Lender exhaust any
right or take any action against the Borrower or any other Person. Each
Guarantor acknowledges that it will receive direct and indirect benefits from
the financing arrangements contemplated by the Loan Documents and that the
waiver set forth in this section 10.3 is knowingly made in contemplation of
such benefits.
10.4. Continuing Guaranty; Assignments
This Guaranty is a continuing guaranty and shall (a) remain in full force
and effect until the indefeasible payment in full of the Guaranteed
Obligations, (b) be binding upon each Guarantor, its successors and assigns
and (c) inure to the benefit of and be enforceable by the Lenders, the Agent
and their respective successors and assigns. Without limiting the generality
of the foregoing clause (c), any Lender may assign or otherwise transfer all
or any portion of its rights and obligations hereunder (including, without
limitation, all or any portion of its Lender's Commitment and the Advances
owing to it) to any assignee pursuant to and in accordance with section 12.9,
and such assignee shall thereupon become vested with all the benefits in
respect thereof granted to such Lender herein or otherwise.
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10.5. Subrogation
No Guarantor will exercise any rights that it may now or hereafter acquire
against the Borrower or any other Guarantor that arise from the existence,
payment, performance or enforcement of any Guarantor's Obligations under this
Agreement or any other Loan Document, including, without limitation, any right
of subrogation, reimbursement, exoneration, contribution or indemnification
and any right to participate in any claim or remedy of the Agent or any Lender
against the Borrower or any other Guarantor or any collateral, whether or not
such claim, remedy or right arises in equity or under contract, statute or
common law, including, without limitation, the right to take or receive from
the Borrower or any other Guarantor, directly or indirectly, in cash or other
property or by set-off or in any other manner, payment or security on account
of such claim, remedy or right, unless and until all of the Loans and all
other amounts payable under this Guaranty shall have been paid in full in cash
and the Aggregate Commitment shall have expired or terminated. If any amount
shall be paid to any Guarantor in violation of the preceding sentence at any
time prior to the payment in full in cash of the Guaranteed Obligations and
all other amounts payable under this Guaranty, such amount shall be held in
trust for the benefit of the Agent and the Lenders and shall forthwith be paid
to the Agent to be credited and applied to the Guaranteed Obligations and all
other amounts payable under this Guaranty, whether matured or unmatured, in
accordance with the terms of the Loan Documents, or to be held as collateral
for any Guaranteed Obligations or other amounts payable under this Guaranty
thereafter arising. If (i) any Guarantor shall make payment to the Agent or
any Lender of all or any part of the Guaranteed Obligations, and (ii) all of
the Guaranteed Obligations and all other amounts payable under this Guaranty
shall be paid in full in cash, the Agent and the Lenders will, at such
Guarantor's request and expense, execute and deliver to such Guarantor
appropriate documents, without recourse and without representation or
warranty, necessary to evidence the transfer by subrogation to such Guarantor
of an interest in the Guaranteed Obligations resulting from such payment by
such Guarantor.
ARTICLE 11.
THE AGENT AND THE ADMINISTRATION OF THE CREDIT FACILITY
11.1. Appointment and Authorization
11.1.1. Each Lender hereby irrevocably appoints and authorizes the Agent to
be its attorney in its name and on its behalf to exercise such rights or
powers granted to such Lender under this Agreement and the other Loan
Documents on the terms hereof and thereof, together with such powers as are
reasonably incidental thereto. Each Lender hereby authorizes the Agent to
execute, as agent for and on its behalf, any of the other Loan Documents
wherein it is expressly stipulated that the Agent is acting in such
capacity, and each Lender agrees to be bound thereby as principal.
11.1.2. As to any matters not expressly provided for by this Agreement or
the Loan Documents (including, without limitation, enforcement thereof),
the Agent shall not be required to exercise any discretion or take any
action, but shall be required to act or to refrain from acting (and shall
be fully protected in so acting or refraining from acting) upon the
instructions of the Majority Lenders, and such instructions shall be
binding upon all of the Lenders. The Agent shall not be required to take
any action which exposes the Agent to liability in such capacity, which
could result in the Agent's incurring any costs and expenses not
contemplated by this Agreement or which is contrary to this Agreement or
Applicable Law.
11.1.3. The Agent shall have no duties or obligations other than as
expressed herein, which duties are solely of a mechanical and
administrative nature. Without limiting the generality of the foregoing,
the Agent does not undertake, and the Lenders relieve the Agent from, any
implied
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duties, responsibilities, obligations or functions and there shall not be
construed against the Agent any implied covenants or terms, whether in
respect of matters arising prior to, on, or following the date of this
Agreement. The relationship between the Agent and the Lenders is that of
agent and principal only, and the Agent shall not have by reason of this
Agreement a fiduciary relationship in respect of any Lenders.
11.2. Duties and Obligations of Agent
Neither the Agent nor any of its directors, officers, agents or employees
(and, for purposes hereof, the Agent shall be deemed to be contracting as
agent for and on behalf of such Persons) shall be liable to any Lender for any
action taken or omitted to be taken by it or them under or in connection with
this Agreement or any of the other Loan Documents (whether before, on or after
the date of this Agreement) except for its or their own gross negligence or
wilful misconduct. Without limiting the generality of the foregoing, the
Agent:
(a) may assume that there has been no assignment or transfer by any Lender
of its rights hereunder unless and until all of the requirements of
section 12.9 have been complied with;
(b) may consult with legal counsel, independent public accountants and
other experts selected by it and shall not be liable for any action
taken or omitted to be taken in good faith by it in accordance with the
advice of such counsel, accountants or experts;
(c) shall incur no liability under or in respect of this Agreement or any
of the other Loan Documents by acting upon any notice, consent,
certificate or other instrument or writing (which may be by facsimile
or other means of electronic communication) believed by it to be
genuine and signed or sent by the proper party or parties or by acting
upon any representation or warranty of the Borrower made or deemed to
be made hereunder or thereunder;
(d) may assume that no Default or Event of Default has occurred and is
continuing unless it has actual knowledge to the contrary;
(e) may rely as to any matters of fact which might reasonably be expected
to be within the knowledge of any Person upon a certificate signed by
or on behalf of such Person;
(f) does not make any warranty or representation to any Lender nor shall it
be responsible to any Lender for the accuracy or completeness of the
data made available to any of the Lenders in connection with the
negotiation of this Agreement, or for any statements, warranties or
representations (whether written or oral) made in or in connection with
this Agreement;
(g) shall not have any duty to ascertain or to enquire as to the
performance or observance of any of the terms, covenants or conditions
of this Agreement or any of the other Loan Documents on the part of the
Borrower or to inspect the property (including the books and records)
of the Borrower or any of its Material Subsidiaries;
(h) shall be fully justified in failing or refusing to take any action
under this Agreement unless it shall first receive such advice or
concurrence of the Majority Lenders as it deems appropriate or it shall
first be indemnified to its satisfaction by the Lenders against any and
all liability and expense which may be incurred by it by reason of
taking or continuing to take such action; and
57
(i) shall not be responsible to any Lender for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of this
Agreement or any of the other Loan Documents or any instrument or
document furnished pursuant hereto or thereto or for any failure of the
Borrower to perform its obligations hereunder.
11.3. Prompt Notice to the Lenders
The Agent shall provide to the Lenders copies of all information, notices
and reports given to the Agent by the Borrower as soon as practicable after
receipt of the same, except information, notices and reports (i) relating
solely to the role of Agent hereunder, (ii) distributed directly by the
Borrower to the Lenders pursuant to this Agreement, or (iii) otherwise
considered by the Agent to be irrelevant or immaterial to the Lenders or to
any particular category or group thereof.
11.4. Agent's Authority to Deal with Borrower
With respect to its own participation in the Credit Facility, the Agent
shall have the same rights and powers under this Agreement as any other Lender
and may exercise the same as though it were not the Agent. The Agent may
accept deposits from, lend money to, and generally engage in any kind of
business with the Company or any Affiliate of any of them and any Person which
may do business with any of them, all as if the Agent were not the Agent
hereunder and without any duties to account therefor to the Lenders or to any
other Person.
11.5. Dealings by Borrower with Agent
Unless otherwise specifically provided herein, the Borrower shall deal with
the Agent in lieu of the Lenders for all purposes of this Agreement. The
Borrower may rely, and shall be fully protected in so relying, without any
obligation to inquire into the correctness thereof, upon any action taken,
notice, direction, waiver, consent, determination, communication or agreement
by the Agent purporting to be on behalf of the Majority Lenders or the Lenders
hereunder, as the case may be, any of which shall, as regards the Borrower, be
deemed to be an action, notice, direction, waiver, consent, determination,
communication or agreement of the Majority Lenders or the Lenders, as
applicable.
11.6. Independent Credit Decisions
Each Lender acknowledges that it has itself been, and will continue to be,
solely responsible for making its own independent appraisal of and
investigations into the financial condition, creditworthiness, condition,
affairs, status and nature of the Company. Accordingly, each Lender confirms
with the Agent that it has not relied, and will not hereafter rely, on the
Agent (i) to check or enquire on its behalf into the adequacy, accuracy or
completeness of any information provided by the Borrower or any other Person
under or in connection with this Agreement or the transactions herein
contemplated (whether or not such information has been or is hereafter
distributed to such Lender by the Agent), or (ii) to assess or keep under
review on its behalf the financial condition, creditworthiness, condition,
affairs, status or nature of the Borrower or any of its Subsidiaries. Except
for notices, reports and other documents expressly required to be furnished to
the Lenders by the Agent hereunder, the Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of the Borrower or its Subsidiaries
which may come into the possession of the Agent or any of its officers,
directors, employees or agents. Each Lender acknowledges that a copy of this
Agreement and each of the other Loan Documents has been made available to it
for review and each Lender acknowledges that it is satisfied with the form and
substance of the same.
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11.7. Indemnification
Each Lender hereby agrees to indemnify the Agent (to the extent not
reimbursed by the Borrower), in accordance with its Rateable Portion, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against
the Agent at any time (including, without limitation, at any time following
repayment in full of all Obligations) in any way relating to or arising out of
this Agreement or any of the other Loan Documents or any action taken or
omitted by the Agent hereunder or thereunder or in respect hereof or thereof;
provided that no Lender shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the Agent's gross negligence or
wilful misconduct. Without limiting the generality of the foregoing, each
Lender agrees to reimburse the Agent promptly upon demand for its Rateable
Portion of any out-of-pocket expenses (including counsel fees) incurred by the
Agent in connection with the preservation of any rights of the Agent or the
Lenders as against the Borrower under, or the enforcement of, or legal advice
in respect of rights or responsibilities under, this Agreement and the other
Loan Documents, to the extent that the Agent is not reimbursed for such
expenses by the Borrower. The indemnity in this section 11.7 shall survive the
payment and satisfaction of all Obligations and the termination of this
Agreement.
11.8. Successor Agent
The Agent may, as hereinafter provided, resign at any time by giving 30
days prior written notice thereof to the Lenders and the Borrower. Upon any
such resignation, the Lenders shall have the right to appoint a successor
agent (the "Successor Agent") which shall be one of the Lenders. If no
Successor Agent shall have been so appointed by the Lenders and shall have
accepted such appointment within 30 days after the retiring Agent's giving of
notice of resignation, then the retiring Agent may, on behalf of the Lenders,
appoint a Successor Agent from among the Lenders acceptable to the Borrower
acting reasonably. Upon the acceptance of any appointment as Agent hereunder
by a Successor Agent, such Successor Agent shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall thereupon be discharged from its
further duties and obligations as Agent under this Agreement. The retiring
Agent shall cooperate with the Successor Agent in the performance of its
duties for a reasonable period of time after such resignation. After any
retiring Agent's resignation hereunder as Agent, the provisions of this
Article 11 shall continue to enure to its benefit as to any actions taken or
omitted to be taken by it while it was Agent hereunder.
11.9. Action by and Consent of Lenders; Waiver and Amendments
11.9.1. Subject to section 11.9.3, where the terms of this Agreement or any
of the other Loan Documents refer to any action to be taken hereunder or
thereunder by the Lenders or to any such action that requires the consent
or other determination of the Lenders, the action taken by and the consent
or other determination given or made by the Majority Lenders shall, except
to the extent that this Agreement expressly provides to the contrary,
constitute the action or consent or other determination of the Lenders
herein or therein referred to, and the Agent may exercise its powers under
section 11.1 based upon such action, consent or other determination.
11.9.2. Subject to section 11.9.3, this Agreement and any other Loan
Document may be amended only if the Borrower and the Majority Lenders so
agree in writing, any consent under this Agreement or any other Loan
Document shall be given only by the Agent (at the direction of the Majority
Lenders) in writing, and any Event of Default may be waived before or after
it
59
occurs only if the Agent (at the direction of the Majority Lenders) so
agrees in writing. Any amendment, consent or waiver so made shall be
binding upon all of the Lenders.
11.9.3. Any amendment or waiver which changes or relates to:
(a) the amount or term of the Loan available hereunder or any Lender's
Commitment;
(b) the amount or dates of payment of principal, interest or fees;
(c) the notice period required for any Advance;
(d) the amount or dates of payment of any fees;
(e) the definition of "Majority Lenders"; or
(f) this section 11.9;
shall require the agreement of all of the Lenders and also (in the case of
an amendment) of the Borrower. An amendment or waiver which changes or
relates to the rights and/or obligations of the Agent shall also require
the agreement of the Agent thereto.
11.9.4. Any waiver and any consent by the Agent or any Lenders under any
provision of this Agreement or any other Loan Document may be given subject
to any conditions thought fit by the Person giving that waiver or consent.
Any waiver or consent shall be effective only in the instance and for the
purpose for which it is given.
11.10. Funding of Advances
11.10.1. Upon receipt of a Borrowing Notice, the Agent shall forthwith
notify each Lender of the proposed Borrowing Date, Rollover Date or
Conversion Date, as the case may be, the principal amount of the relevant
Advance, Rollover or Conversion, as the case may be, such Lender's Rateable
Portion of any Advance, the account of the Agent to be credited by such
Lender (if applicable) and all other relevant particulars thereof
(including, in the case of an issuance of a Letter of Credit, the expiry
date thereof and the name of the beneficiary thereof).
11.10.2. Each Lender shall, not later than 11:00 a.m. (Chicago time) on the
relevant Borrowing Date, credit the Agent's account specified in the
Agent's notice given under this section 11.10 with such Lender's Rateable
Portion of each Advance in immediately available funds. The Agent will, as
soon as reasonably practicable after receiving such funds from the Lenders
and upon fulfilment of all applicable conditions set forth in this
Agreement, make the full amount of such funds available to the Borrower by
crediting the Borrower's account maintained with the Agent at the Branch of
Account (or causing such account to be credited).
11.10.3. Unless the Agent has been notified by a Lender by 10:00 a.m.
(Chicago time) on the proposed Borrowing Date of any Loan requested by the
Borrower that such Lender will not make available to the Agent its Rateable
Portion of such Loan, the Agent may assume that such Lender has made such
portion of the Loan available to the Agent on the Borrowing Date in
accordance with the provisions hereof and the Agent may, in reliance upon
such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent such Lender shall not have so
made its Rateable Portion of a Loan available to the Agent, such Lender
agrees to pay to the Agent forthwith on demand such Lender's Rateable
Portion of the Loan and all reasonable
60
costs and expenses incurred by the Agent in connection therewith together
with interest thereon (at the rate payable hereunder by the Borrower in
respect of such Loan) for each day from the date such amount is made
available to the Borrower until the date such amount is paid to the Agent,
provided, however, that notwithstanding such obligation if such Lender
fails to so pay, the Borrower shall, without prejudice to any rights the
Borrower may have against such Lender, repay such amount to the Agent
forthwith after demand therefor by the Agent. The amount payable to the
Agent pursuant hereto shall be as set forth in a certificate delivered by
the Agent to such Lender and the Borrower (which certificate shall contain
reasonable details of how the amount payable is calculated) and shall be
prima facie evidence of the amount owing. If such Lender makes the payment
to the Agent required herein, the amount so paid (otherwise than in respect
of interest and such costs, charges and expenses of the Agent) shall
constitute such Lender's Rateable Portion of the Loan for purposes of this
Agreement. If the Agent has been notified by a Lender that such Lender will
not make available to the Agent its Rateable Portion of any Loan, the Agent
shall have no obligation to make available such amount to the Borrower
under any provision of this Agreement or any Loan Document.
11.10.4. The failure of any Lender to fund its Rateable Portion of a Loan
shall not relieve any other Lender of its obligation, if any, hereunder to
fund its Rateable Portion of the Loan on the relevant Borrowing Date and
nothing in this Agreement shall limit the rights and remedies that the
Borrower, the Agent or any Lender may have against a defaulting Lender.
11.11. Remittance of Payments
11.11.1. As soon as practicable after receipt of any notice of payment by
the Borrower hereunder, the Agent shall give notice to each Lender of the
amount of the payment to be made to it on such day and all other relevant
particulars of such payment. Subject to section 11.15, as soon as
practicable after receipt of any repayment or prepayment of any Loans under
the Credit Facility or any payment of interest or any other amount payable
by the Borrower hereunder, the Agent shall remit to each Lender its
Rateable Portion of such payment or prepayment and its respective
entitlement, if any, to any other amount payable by the Borrower hereunder.
11.11.2. If the Agent, on the assumption that it will receive on any
particular date a payment of principal, interest or fees hereunder, remits
any amount to the relevant Lender and the Borrower fails to make such
payment, each such Lender agrees to repay to the Agent forthwith on demand
the amount so received by it together with all reasonable costs and
expenses incurred by the Agent in connection therewith (to the extent not
reimbursed by the Borrower) and interest thereon at the rate and calculated
in the manner applicable to the Loan in respect of which such payment was
made for each day from the date such amount is remitted to the relevant
Lender. The amount payable to the Agent pursuant hereto shall be as set
forth in a certificate delivered by the Agent to each such Lender, which
certificate shall be conclusive and binding for all purposes, absent
manifest error.
11.12. Redistribution of Payments
Except as otherwise expressly contemplated in this Agreement, a Lender (a
"Remitting Bank") which obtains any payment (whether voluntary, involuntary,
by way of set-off or otherwise) on account of its portion of a Loan which has
not been repaid to the other Lender in accordance with their respective
Rateable Portions shall, and the Borrower hereby irrevocably authorizes any
such Lender to, remit such payment or portion thereof to the Agent for
redistribution to the Lenders in accordance with their respective Rateable
Portions. In any such case, the Remitting Bank, upon such payment by it to the
Agent, shall be deemed for all purposes not to have received from the Borrower
that payment so remitted
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to the Agent, and the Lenders or Bank (the "Receiving Bank") receiving such
payment or portions thereof upon a redistribution thereof by the Agent shall
be deemed for the purposes hereof to have received such payment or portion
thereof (as the case may be) from the Borrower. If all or part of any such
payment made by such Remitting Bank shall be recovered by the Borrower from
such Remitting Bank, such amount so paid by such Remitting Bank to the Agent
shall forthwith be repaid by the Receiving Bank to the Agent (for the benefit
of the Remitting Bank).
11.13. Notification of Default
Each Lender shall promptly notify the Agent, and the Agent shall promptly
notify each of the Lenders, of any event of which it has actual notice which
constitutes a Default or an Event of Default. The Agent shall not be deemed to
have actual notice of the occurrence of a Default or Event of Default unless
the Agent has received notice from any of the Lenders or the Borrower
referring to this Agreement, describing the default and stating that the
notice is a "Notice of Default".
11.14. Taking and Enforcement of Remedies
11.14.1. Each of the Lenders hereby acknowledges that, to the extent
permitted by Applicable Law, the remedies provided hereunder and under the
other Loan Documents to the Lenders are for the benefit of the Lenders
collectively and acting together and not severally and further acknowledges
that its rights hereunder and thereunder are to be exercised collectively
by the Agent upon the instructions of the Majority Lenders. Accordingly,
notwithstanding any of the provisions contained herein or therein, each of
the Lenders hereby covenants and agrees that it shall not be entitled to
take any action with respect to the Credit Facility, including, without
limitation, any election of remedies in respect of an Event of Default
hereunder, but that any such action shall be taken only by the Agent upon
the instructions of the Majority Lenders as provided herein.
Notwithstanding the foregoing, in the absence of instructions from the
Majority Lenders (or, to the extent section 11.9.3 is applicable, all of
the Lenders) where the Agent has requested instructions and in its sole
opinion the exigencies of the situation warrant such action, the Agent may
without notice to or consent of the Lenders take such action on behalf of
the Lenders as it deems appropriate or desirable in the interests of the
Lenders. Each of the Lenders further covenants and agrees, that, upon any
such instructions being given to the Agent by the Majority Lenders, it
shall cooperate fully with the Agent to the extent requested by the Agent
in any remedial action hereunder including, without limitation, the
appointment of a receiver and manager to act for their collective benefit.
Each Lender covenants and agrees to do all acts and things and to make,
execute and deliver all agreements and other instruments, including,
without limitation, any instruments necessary to effect any registrations,
so as to fully carry out the intent and purposes of this section 11.14.1.
11.14.2. Each Lender hereby covenants and agrees that it has not heretofore
sought, taken, accepted or received and shall not hereafter seek, take,
accept or receive any security for any of the obligations and liabilities
of the Borrower hereunder or under the other Loan Documents or under any
other document, instrument, writing or agreement ancillary hereto or
thereto other than such security as is provided hereunder or thereunder and
shall not enter into any agreement with any of the parties hereto or
thereto relating in any manner whatsoever to the Credit Facility, unless
all of the Lenders shall at the same time obtain the benefit of any such
security or agreement.
11.14.3. Each of the Lenders and the Borrower further covenants and agrees
that all proceeds from the exercise of the rights and remedies provided
hereunder and under the Loan Documents, to the extent permitted by
Applicable Law, are held for the benefit of all of the Lenders and, after
62
deduction therefrom of all costs of enforcement, shall be shared among the
Lenders proportionately based upon the respective aggregate amounts of the
Obligations which are outstanding to each of the Lenders at the relevant
time or times of sharing. To the extent any Lender receives or is entitled
to receive any amount hereunder in excess of the amount of the Obligations
owed to it hereunder it shall hold such excess in trust on behalf of and
for the benefit of the other Lenders entitled thereto.
11.14.4. Each of the Lenders agrees with each of the other Lenders that if
it exercises any right of set-off in accordance with the provisions hereof
(or otherwise pursuant to Applicable Law) in connection with any
Obligations, it shall promptly so advise the Agent and each of the other
Lenders and, to the extent permitted by Applicable Law, the Lenders shall
share all such set-offs in accordance with the provisions of section
11.14.3 hereof, provided that none of the Lenders shall be liable hereunder
to any of the other Lenders by reason of failure to exercise or validly
exercise any right of set-off or by reason of any restriction upon any such
sharing.
11.15. Adjustments to Reflect Rateable Portions
All Loans outstanding under the Credit Facility shall be maintained as
between the Lenders according to their respective Rateable Portions, except to
the extent that the Agent deems any variations therefrom to be immaterial and
except that the L/C Lender shall solely be responsible for making L/C Loans.
The Agent shall determine all adjustments to amounts required to be advanced
by the Lenders or to amounts of payments to which the respective Lenders are
entitled to reflect as nearly as practicable the respective Rateable Portions
of the Lenders under the Credit Facilities.
11.16. No Partnership
Nothing contained in this Agreement and no action taken by the Lenders
pursuant hereto shall be deemed to constitute the Lenders a partnership,
association, joint venture or other collective entity.
ARTICLE 12.
GENERAL
12.1. Reliance and Non-Merger
All covenants, agreements, representations and warranties of the Borrower
made herein or in any other Loan Document or in any certificate or other
document signed by any of its directors or officers and delivered by or on
behalf of either of them pursuant hereto or thereto are material, shall be
deemed to have been relied upon by the Agent and each Lender notwithstanding
any investigation heretofore or hereafter made by the Agent, the Lenders or
Lender's Counsel or any employee or other representative of any of them and
shall survive the execution and delivery of this Agreement and the other Loan
Documents until there are no Loans outstanding and the Lenders shall have no
further obligation to make Advances hereunder. For clarity, this section 12.1
shall in no way affect the survival of those provisions of this Agreement or
any Loan Document which by their terms are stated to survive termination of
this Agreement.
12.2. Confidentiality
Each of the Agent and each of the Lenders will maintain on a confidential
basis (except as otherwise permitted hereunder or as required by Applicable
Law) all information relating to the
63
Borrower and its Subsidiaries provided to it hereunder by the Borrower or any
of its Subsidiaries; provided, however, that this Section 12.2 shall not apply
to any information which (i) was lawfully in the public domain at the time of
communication to the Agent or such Lender, (ii) lawfully enters the public
domain through no fault of the Agent or such Lender subsequent to the time of
communication to the Agent or such Lender, (iii) was lawfully in the
possession of the Agent or such Lender free of any obligation of confidence at
the time of communication to the Agent or such Lender, or (iv) was lawfully
communicated to the Agent or such Lender free of any obligation of confidence
subsequent to the time of initial communication to the Agent or such Lender.
12.3. No Set-Off by the Borrower
The amounts payable by the Borrower hereunder shall be made in full and
shall not be subject to any deduction, withholding, set-off or counterclaim by
the Borrower for any reason whatsoever.
12.4. Employment of Experts
The Agent may, at any time and from time to time, at its cost if not a
responsibility of the Borrower in Section 5.4, retain and employ legal
counsel, independent accountants and other experts in order to perform or
assist it in the performance of its rights and powers under this Agreement or
the other Loan Documents and will advise the Borrower at any time that it
elects to do so.
12.5. Reliance by the Lenders
The Agent and the Lenders shall be entitled to rely upon any schedule,
certificate, statement, report, notice or other document or written
communication (including any facsimile, telex or other means of electronic
communication) of the Borrower believed by them to be genuine and correct.
12.6. Notices
Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be given by facsimile or other means
of electronic communication or by hand-delivery or courier as hereinafter
provided. Any such notice, if delivered by courier, shall be deemed to be
received on the next Banking Day after the date of delivery thereof, or if
sent by facsimile or other means of electronic communication, shall be deemed
to have been received on the day sent if sent prior to 2:00 p.m. (Chicago
time) on any Banking Day or otherwise on the next succeeding Banking Day.
Notice of change of address shall also be governed by this section 12.6.
Notices and other communications shall be addressed as follows:
(a) if to the Borrower or any Guarantor:
Magna Entertainment Corp.
337 Magna Drive
Aurora, Ontario
L4G 7K1
Attention: Chief Financial Officer
And Attention: Corporate Secretary
Facsimile number: (905) 726-7172
64
(b) if to the Agent:
Bank of Montreal
115 South LaSalle 17W
Chicago, Illinois
60603
Attention: Manager, Client Services
Facsimile number: (312) 293-8965
(c) if to the Lenders:
Bank of Montreal
115 South LaSalle 17W
Chicago, Illinois
60603
Attention: Manager, Client Services
Facsimile number: (312) 293-8965
(d) if to the Arranger:
Bank of Montreal
115 South LaSalle 17W
Chicago, Illinois
60603
Attention: Manager, Client Services
Facsimile number: (312) 293-8965
12.7. Time
Time is of the essence of the Loan Documents.
12.8. Further Assurances
Whether before or after the happening of an Event of Default, the Borrower
shall at its own expense do, make, execute or deliver, or cause to be done,
made, executed or delivered by its Subsidiaries or other Persons, all such
further acts, documents and things in connection with the Credit Facilities
and the Loan Documents as the Agent may reasonably require from time to time
for the purpose of giving effect to the Loan Documents all within a reasonable
period of time following the request of the Agent.
12.9. Assignment
12.9.1. This Agreement and the other Loan Documents shall enure to the
benefit of and be binding on the parties hereto and thereto, their
respective successors and any assignee or transferee of some or all of the
parties' rights or obligations under this Agreement and the other Loan
Documents as permitted under this section 12.9.
65
12.9.2. The Borrower shall not assign or transfer all or any part of its
rights or obligations under this Agreement or any of the other Loan
Documents without the prior written consent of all of the Lenders, which
consent may be arbitrarily withheld and any such assignment without consent
shall be null and void.
12.9.3. Any Lender (a "Grantor") may grant participations in all or part of
its rights and obligations in respect of the Credit Facility and the Loan
Documents to any other Person (a "Participant"), at such times and upon
such terms as it may deem fit, without any obligation to obtain any consent
of the Borrower, provided in each case that:
(a) the Grantor shall remain fully liable for all of its obligations and
responsibilities hereunder to the same extent as if such participation
had not been granted; and
(b) the Grantor shall administer the participation of the Participant and
neither the Participant nor the Borrower shall have any rights against
or obligations to, or deal directly with, each other in respect of the
participation of the Participant.
12.9.4. Any Lender (an "Assignor") may assign or transfer all or part of
its rights in respect of the Credit Facility and the Loan Documents to, and
may have its corresponding obligations in respect thereof assumed by any
other Lender or any Affiliate of the Assignor or any Person (the
"Assignee") at such times and upon such terms as it may deem fit, in each
case, but only after obtaining the prior written consent of the Borrower
(which consent shall not be unreasonably withheld or delayed and shall be
provided as soon as practicable, and provided further that the Borrower's
consent shall not be required if an Event of Default has occurred and is
continuing), provided in each case that:
(a) without the Borrower's further prior written consent, no such
assignment shall be permitted that would cause the Borrower to be
obligated to make any payments under section 3.5, 3.6 or 3.7 arising on
and as at the date of, and as a result of, such assignment that it was
not otherwise obligated to pay to the Assignor on such date or would
not be obligated to pay on such date but for such assignment;
(b) the Assignor and the Assignee shall enter into an assignment and
assumption agreement (the "Assignment Agreement") substantially in the
form of Schedule 12.9.4, or otherwise in form and substance
satisfactory to the Agent and the Assignor, whereby inter alia the
Assignee agrees to be bound by this Agreement and all Loan Documents
relating to the obligations of the Lenders in the place and stead of
the Assignor to the extent that the rights and obligations of the
Assignor shall have been assigned to and assumed by the Assignee, and
shall deliver a copy of the Assignment Agreement so executed to the
Agent;
(c) the Assignor shall pay to the Agent for the Agent's own account an
administrative fee of $3,500 concurrently with the delivery of the
Assignment Agreement to Agent;
(d) the Agent shall execute the Assignment Agreement and shall notify the
Borrower of the proposed Assignee and the rights and obligations to be
assigned or transferred to the Assignee. Subject to the required
consent (if any) of the Borrower to the assignment or transfer, the
Agent and the Borrower shall execute and deliver the Assignment
Agreement, and the Agent shall then deliver a copy of the executed
Assignment Agreement to the Assignee and the Assignor. The Borrower
shall execute and deliver such other assurances as may be reasonably
requested by the Agent to confirm the release and discharge provided
for in clause (e) below;
66
(e) upon execution of the Assignment Agreement by the Assignor, the
Assignee, the Agent and (if the consent of the Borrower is required)
the Borrower, the assignment or transfer to the Assignee shall be
effective upon the date provided in the Assignment Agreement, and the
Assignee shall thereafter be and be treated as a Lender for all
purposes of this Agreement and the other Loan Documents and shall be
entitled to the full benefit hereof and thereof to the extent of such
benefits as are transferred to it by the Assignor and subject to the
obligations of the Assignor to the same extent as if the Assignee were
an original party in respect of the rights and obligations transferred
to and assumed by it, and the Assignor in respect of such assignment
shall be released and discharged accordingly other than in respect of
claims of the Borrower or a Guarantor against the Assignor relating to
an event or circumstances arising, existing or occurring prior to such
assignment;
(f) as soon as practicable after the assignment or transfer shall have
become effective the Agent shall prepare and distribute to the Lenders
and to the Borrower an amendment to Schedule 1.1.59 reflecting the
adjustments to the Lender's Commitments after such transfer or
assignment, to which amendment the Borrower hereby agrees; and
(g) the Assignee (other than an Assignee that is an Affiliate of the
Assignor) of any Loan outstanding hereunder shall be entitled to
receive the principal monies and all interest and all other monies
owing under this Agreement in respect thereof free from all equities or
rights of set-off or counterclaim between the Borrower and the original
Lender or Lender that advanced such Loan and any intermediate Person
entitled thereto and all Persons may act accordingly.
12.9.5. the Borrower and each of the Lenders hereby consent to each and
every assignment or transfer which may be made on or after the date hereof
in accordance with the terms of section 12.9.4 and to the release and
discharge of every Assignor provided for in clause (e) thereof; and
12.9.6. any assignment, transfer or grant by a Lender as contemplated by
this section 12.9 will not constitute a repayment by the Borrower to the
Grantor or Assignor, as the case may be, of the assigned or participated
portion of the Credit Facility, nor an Advance to the Borrower by the
Assignee or Participant, as the case may be, and the parties acknowledge
that the Borrower's obligations hereunder with respect to the assigned,
transferred or participated portion of Loans will continue and not
constitute new obligations.
12.10. Exchange of Information
Each Lender may provide to any proposed assignee or participant such
information concerning the financial position and the operations of the
Company as, in the opinion of such Lender, may be relevant or useful in
connection with the Credit Facility or any portion thereof proposed to be
acquired by such assignee or participant, provided that each recipient of such
information agrees not to disclose such information to any other Person and to
be bound by the terms of section 12.2.
12.11. Counterparts
This Agreement may be signed in any number of counterparts, each of which
shall be deemed to be an original, but all such separate counterparts shall
together constitute one and the same instrument. Delivery of an executed
counterpart of a signature page to this Agreement by telecopier shall be
effective as delivery of a manually executed counterpart of this Agreement.
67
12.12. Entire Agreement
The Loan Documents constitute the entire agreement between the parties
hereto pertaining to the matters therein set forth and supersede and replace
any prior understandings or arrangements pertaining to the Credit Facility.
There are no warranties, representations or agreements between the parties in
connection with such matters except as specifically set forth or referred to
in the Loan Documents.
12.13. Liability of Arranger
The Borrower, Agent, each Guarantor and each Lender acknowledges and agrees
that the Arranger has only acted in an administrative capacity to facilitate
the establishment and/or maintenance of the Credit Facility and has no
responsibility to any of them for (a) the adequacy, accuracy, completeness and
reasonableness of any representation, warranty, undertaking, agreement or
statement contained in this Agreement or any Loan Document, or (b) any loss,
cost, expense, damage or liability suffered or incurred by any of them;
provided, however, that the Arranger shall have the full benefit of any
indemnity of the Borrower or Guarantor provided hereunder or under any Loan
Document, including (without limitation) section 3.8 hereof.
68
IN WITNESS WHEREOF this Agreement has been executed by the parties hereto
as of the date first written above.
MAGNA ENTERTAINMENT CORP., as Borrower
By: ------------------------------------
Name:
Title:
By: ------------------------------------
Name:
Title:
BAY MEADOWS OPERATING COMPANY LLC, as
Guarantor, but only with respect to
Article 10 and all other provisions
related thereto
By: ------------------------------------
Name:
Title:
By: ------------------------------------
Name:
Title:
MEC PENNSYLVANIA RACING, INC., as
Guarantor, but only with respect to
Article 10 and all other provisions
related thereto
By: ------------------------------------
Name:
Title:
By: ------------------------------------
Name:
Title:
WASHINGTON TROTTING ASSOCIATION, INC.,
as Guarantor, but only with respect to
Article 10 and all other provisions
related thereto
By: ------------------------------------
Name:
Title:
By: ------------------------------------
Name:
Title:
MOUNTAIN LAUREL RACING, INC., as
Guarantor, but only with respect to
Article 10 and all other provisions
related thereto
By: ------------------------------------
Name:
Title:
By: ------------------------------------
Name:
Title:
GULFSTREAM PARK RACING ASSOCIATION,
INC., as Guarantor, but only with
respect to Article 10 and all other
provisions related thereto
By: ------------------------------------
Name:
Title:
By: ------------------------------------
Name:
Title:
PACIFIC RACING ASSOCIATION, as
Guarantor, but only with respect to
Article 10 and all other provisions
related thereto
By: ------------------------------------
Name:
Title:
By: ------------------------------------
Name:
Title:
MEC LANDHOLDINGS (CALIFORNIA) INC., as
Guarantor, but only with respect to
Article 10 and all other provisions
related thereto
By: ------------------------------------
Name:
Title:
By: ------------------------------------
Name:
Title:
BANK OF MONTREAL, acting through its
Chicago lending office, as Lender
By: ------------------------------------
Name:
Title:
By: ------------------------------------
Name:
Title:
BANK OF MONTREAL, acting through its
Chicago lending office, as Agent
By: ------------------------------------
Name:
Title:
By: ------------------------------------
Name:
Title:
BMO NESBITT BURNS, a division of Bank
of Montreal, as Arranger
By: ------------------------------------
Name:
Title:
By: ------------------------------------
Name:
Title:
SCHEDULE 1.1.8
Applicable Margin and Stand-by Fee
Pricing will be on the following grid based on calculation of the ratio of (i)
Total Funded Debt less cash to (ii) EBITDA:
- -------------------------------------------------------------------------------
Total Funded
Debt less cash to
EBITDA(R) Base Rate LIBOR Stand-By Fee
- -----------------------------------------------------------------------------------------------------
R(less than)1.5 +0.50% +1.50% 0.35%
- -----------------------------------------------------------------------------------------------------
1.5(less than or =)R(less than)2.0 +1.00% +2.00% 0.40%
- -----------------------------------------------------------------------------------------------------
2.0(less than or =)R(less than)2.5 +1.25% +2.25% 0.45%
- -----------------------------------------------------------------------------------------------------
2.5(less than or =)R(less than)3.0 +1.50% +2.50% 0.50%
- -----------------------------------------------------------------------------------------------------
3.0(less than or =)R(less than)3.5 +1.75% +2.75% 0.50%
- -----------------------------------------------------------------------------------------------------
R(greater than or =)3.50 +2.00% +3.00% 0.625%
- -----------------------------------------------------------------------------------------------------
SCHEDULE 1.1.18
Borrowing Notice
TO: Bank of Montreal, as Agent (the "Agent")
Re: Magna Entertainment Corp.
Reference is made to a credit agreement (the "Credit Agreement") dated as
of April 16, 2002 between Magna Entertainment Corp., as Borrower, the
Guarantors, the Lenders, the Agent and the Arranger. All terms used in this
Borrowing Notice which are defined in the Credit Agreement have the meanings
attributed thereto in the Credit Agreement.
The Borrower hereby requests a Loan as follows:
1. Type of Loan: ---------------------------------------
2. Amount of Loan: ---------------------------------------
3. Borrowing Date: ---------------------------------------
4. Interest Period or Letter
of Credit term, as applicable: ---------------------------------------
5. Payment instructions (if any): ---------------------------------------
-------------------------------------------------------------------------
6. If Rollover or Conversion of another /Loan, provide details of other
Loan:
A. Rollover or Conversion: ---------------------------------------
B. Type of old Loan: ---------------------------------------
C. Type of new Loan: ---------------------------------------
D. Amount: ---------------------------------------
E. Interest Period: ---------------------------------------
All of the representations and warranties of the Borrower in Article 6 of
the Credit Agreement are true and correct on the date hereof as if made on and
as of the date hereof except if any such representation and warranty is
specifically given in respect of a particular date or particular period of
time and relates only to such date or period of time, then such representation
and warranty shall be true and correct as of the date given or for the period
of time to which it relates. This statement shall not apply in connection with
any Rollover or Conversion.
No Default or Event of Default has occurred and is continuing nor is it
reasonably anticipated that any Default or Event of Default will occur
immediately after giving effect to the aforementioned Loan. This statement
shall not apply in connection with any Rollover or Conversion.
Except as disclosed in writing by the Borrower to the Agent, no Material
Adverse Change since the date of the last Advance (or, in the case of the
initial Advance, December 31, 2001) has occurred. This statement shall not
apply in connection with any Rollover or Conversion.
DATED this . day of . , . .
MAGNA ENTERTAINMENT CORP.
By: ------------------------------------
Name:
Title:
By: ------------------------------------
Name:
Title:
2
SCHEDULE 1.1.59
Lender's Commitments
Lenders Lender's Commitment
- ------- -------------------
Bank of Montreal, through its Chicago lending office $75,000,000
-----------
Aggregate Commitment $75,000,000
===========
SCHEDULE 7.1.13
Form of Certificate of the Borrower
To: Bank of Montreal, as Agent
And To: Bank of Montreal, as Lender
. {Add all other Lenders}
This certificate is furnished pursuant to section 7.1.13 of that certain
credit agreement (the "Credit Agreement") dated as of April 16, 2002 between
Magna Entertainment Corp. (the "Borrower"), the Guarantors, the Lenders, the
Agent and the Arranger. All terms used in this Officer's Certificate which are
defined in the Credit Agreement have the meanings attributed thereto in the
Credit Agreement.
MAGNA ENTERTAINMENT CORP. HEREBY CERTIFIES THAT:
1. It has complied with all covenants contained in the Credit Agreement, and
all of its representations and warranties are repeated as of the last day
of the accounting period to which this certificate relates, with the same
effect as if made and given on and as of such day; except that if any such
representation and warranty is specifically given in respect of a
particular date or particular period of time and relates only to such date
or period of time, then such representation and warranty shall continue to
be given as at such date or for such period of time;
2. The Borrower has no knowledge of the existence of, any Default or Event of
Default under the Loan Agreement during or at the end of the accounting
period covered by the attached financial statements or as of the date of
this certificate, except as set forth below.
Described below are the exceptions if any to this Paragraph 2 by specifying
the relevant particulars and the period of existence thereof and the action
taken, being taken or proposed to be taken by or on behalf of the Borrower or
any Material Subsidiary with respect thereto:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
3. The Borrower has no knowledge of, any Material Adverse Change since the
date of the last financial statements delivered to the Agent pursuant to
the Credit Agreement, except as set forth below.
Described below are the exceptions if any to this Paragraph 3 by specifying
the relevant particulars and the period of existence thereof and the action
taken, being taken or proposed to be taken by or on behalf of the Borrower
with respect thereto:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
4. The financial statements attached hereto for the [Fiscal Quarter/Fiscal
Year] ended , were prepared in accordance with GAAP
(subject to normal year-end adjustments in the case of interim unaudited
financial statements) and fairly present the financial position and results
of operations of the Borrower on a consolidated basis for the period and as
at the date thereof.
5. Set forth below are the calculations of and financial information
evidencing the Borrower's compliance with the financial covenants contained
in section 7.1.18 of the Credit Agreement, all of which computations are
true, complete and correct:
(a) Total Funded Debt less cash to EBITDA
Total Funded Debt $
-----
Less Cash $
-----
EBITDA $
-----
Ratio to 1.00
-----
(b) Total Interest Coverage
EBITDA $
-----
Less Taxes $
-----
Less Maintenance Cap. Ex. $
-----
Adjust for Working Capital Changes $
-----
Total Interest Expense $
-----
Ratio to 1.00
-----
For the purposes of this Paragraph 7, Total Funded Debt shall be measured
as at the end of the applicable Fiscal Quarter based on the consolidated
financial statements of the Company attached hereto and calculated in
accordance with GAAP, and EBITDA, maintenance Capital Expenditures,
Taxes, working capital changes and Total Interest Expense shall be
measured for the period comprising the applicable Fiscal Quarter and the
three Fiscal Quarters immediately preceding such Fiscal Quarter based on
the consolidated financial statements of the Company attached hereto and
calculated in accordance with GAAP.
The foregoing certifications, and the computations and financial statements
delivered with this certificate in support hereof, are made and delivered this
day of , .
MAGNA ENTERTAINMENT CORP.
By: ------------------------------------
Name:
Title:
2
SCHEDULE 12.9.4
Assignment and Assumption Agreement
ASSIGNMENT AND ASSUMPTION AGREEMENT
.
as Assignor
- and -
.
as Assignee
- and -
BANK OF MONTREAL, ACTING THROUGH ITS
CHICAGO LENDING OFFICE
as Agent
- and -
MAGNA ENTERTAINMENT CORP.
as Borrower
- -------------------------------------------------------------------------------
ASSIGNMENT AND ASSUMPTION AGREEMENT
- -------------------------------------------------------------------------------
Dated as of . , .
ASSIGNMENT AND ASSUMPTION AGREEMENT
This Assignment and Assumption Agreement is made as of . , . (the
"Assignment Date") among . (the "Assignor"), a Lender under the Credit
Agreement referred to and defined hereafter, . (the "Assignee"), Bank of
Montreal, acting through its Chicago lending office, as Agent (the "Agent")
and Magna Entertainment Corp. (the "Borrower").
RECITALS:
A. Pursuant to a credit agreement dated as of April 16, 2002 (as amended,
supplemented and restated from time to time, the "Credit Agreement") among the
Borrower, the Guarantors, the Agent, the Arranger and the financial
institutions specified therein as Lenders (collectively, the "Lenders"), the
Lenders have provided the Credit Facility to the Borrower;
B. The Assignor has agreed to assign and sell to the Assignee . % of its
right, title and interest in and to the Credit Facility, including without
limitation . % of the Loans outstanding thereunder (the "Assigned Interest"),
and the Assignee has agreed to accept and purchase the Assigned Interest and
to assume all liabilities and obligations of the Assignor in respect of the
Assigned Interest, all effective as of the Assignment Date;
C. The Borrower has requested that the Assignee enter into an agreement
pursuant to section 12.9.4 of the Credit Agreement and the Borrower has agreed
to acknowledge the release and assumption of the Assigned Interest hereunder.
NOW THEREFORE, in consideration of the foregoing premises, the sum of
$10.00 now paid by the Assignor to the Assignee and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Definitions. All terms defined in the Credit Agreement which appear
herein without definition shall have the meanings attributed thereto in the
Credit Agreement.
2. Conveyance of Assigned Interest. The Assignor hereby assigns, sells,
conveys and transfers to the Assignee all of its undivided interest in and to
the Assigned Interest, effective as of the Assignment Date, without recourse,
representation or warranty of any kind except as expressly set forth in
section 4.1 hereof.
3. Assumption. The Assignee hereby accepts and purchases the Assigned
Interest, effective as of the Assignment Date, and the Assignee hereby agrees
to be bound by the terms and conditions of the Credit Agreement and the other
Loan Documents as if it was an original lender and acknowledges and expressly
assumes in the name, place and stead of the Assignor all obligations and
liabilities attaching to the Assigned Interest and agrees to perform the
terms, conditions and agreements on its part to be performed as a Lender in
respect thereof under the Credit Agreement and the other Loan Documents.
4. Representations of Assignor.
4.1 The Assignor hereby represents and warrants and the Borrower hereby
acknowledges that:
4.1.1 as of the Assignment Date, the types of Loans outstanding and the
outstanding principal amount under the Assigned Interest and interest
and fees accrued and unpaid in respect thereof are as set forth on
Schedule "A" hereto; and
4.1.2 as of the Assignment Date, there are no outstanding Borrowing Notices
[except as follows: . ]. [Note: This Agreement may need to be
modified if the Assignment Date occurs during an Interest Period or
at such time as a Letter of Credit is outstanding.]
4.2 The Assignor hereby represents and warrants to the Assignee that:
4.2.1 the Assignor has full power and authority and has taken all action
necessary to execute and deliver, to perform its obligations under
and to consummate the transactions contemplated by this assignment
and assumption agreement and any and all other documents and
instruments to be delivered by it in connection with this assignment
and assumption agreement; and
4.2.2 the Assignor is the sole legal and beneficial owner of the Assigned
Interest, and the Assigned Interest is free and clear of any Liens
created by the Assignor in respect of the Assigned Interest.
2
4.3 It is understood and agreed that, except for the representations and
warranties set forth herein, the assignment and assumption made
hereunder are without recourse to the Assignor and the Assignor makes
no further representations or warranties whatsoever, express or
implied.
5. Representation of Borrower. The Borrower hereby consents to the
assignment of the Assigned Interest to the Assignee and represents and
warrants that, as of the Assignment Date, no Default or Event of Default has
occurred and is continuing.
6. Release by the Borrower. The Borrower hereby acknowledges the release of
the Assignor from all obligations and liabilities relating to the Assigned
Interest in respect of the period from and after the Assignment Date and
acknowledges the assumption of all such liabilities and obligations by the
Assignee, effective as of the Assignment Date.
7. Assignor's and Assignee's Commitment. As of and from the Assignment
Date, and after giving effect to the increase in the Lender's Commitment of
the Assignee, the Lender's Commitment of the Assignor and Assignee and the
Loans outstanding thereunder shall be as set forth in Schedule "B" hereto.
8. Assignee's Acknowledgement. The Assignee hereby acknowledges that it has
received a copy of the Credit Agreement, the other Loan Documents and such
other documents and information as it has deemed appropriate to make its own
credit analysis and determination to enter into this assignment and assumption
agreement.
9. Recognition as Lenders. The parties hereto acknowledge that the Assignee
is, by virtue of compliance with, and subject to, the terms and provisions of
section 12.9.4 of the Credit Agreement, as of and from the Assignment Date, a
Lender under and as defined in the Credit Agreement for the purposes thereof
and for the purposes of all other Loan Documents.
10. Notice. The Assignee's address for notice is as follows: . .
11. Governing Law. This assignment and assumption agreement shall be
governed by and construed in accordance with the laws of the State of New
York.
12. Enurement. This assignment and assumption agreement shall enure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns.
13. Counterparts. This assignment and assumption agreement may be signed in
any number of counterparts, each of which shall be deemed an original, but all
such separate counterparts shall constitute one and the same instrument.
3
IN WITNESS WHEREOF the parties have executed this assignment and assumption
agreement under the hands of their proper officers duly authorized in that
behalf as of the date first above written.
[ASSIGNOR], as Assignor
Per:------------------------------------
Authorized Signing Officer
Per:------------------------------------
Authorized Signing Officer
[ASSIGNEE], as Assignee
Per:------------------------------------
Authorized Signing Officer
Per:------------------------------------
Authorized Signing Officer
MAGNA ENTERTAINMENT CORP.
Per:------------------------------------
Authorized Signing Officer
Per:------------------------------------
Authorized Signing Officer
BANK OF MONTREAL, acting through its
Chicago lending office, in its
capacity as Agent
Per:------------------------------------
Authorized Signing Officer
Per:------------------------------------
Authorized Signing Officer
4
Schedule "A"
[insert type and principal amount of Loans outstanding and interest/fees in
relation thereto]
Schedule "B"
Assignor's Commitment and Loans Commitment Loans
- ------------------------------- ---------- -----
Lender's Commitment $ . $ .
Assignor's Commitment and Loans Commitment Loans
- ------------------------------- ---------- -----
Lender's Commitment $ . $ .