EXHIBIT 8
[ENGLISH TRANSLATION]
AGREEMENT REGARDING OPERATING CREDIT LINE
LaSociete Desig, Inc. December 22, 2000
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Customer Name Date Year
9300 Henri Bourassa Blvd., W.
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Customer Address
Montreal, Quebec HAS IL5
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Dear Customer:
1. We are pleased to advise that, subject to acceptance by you, we have
established an operating credit line (the "Credit Line") in your favor in the
amount of $350,000 , subject to the terms of this agreement and any Schedule
attached hereto (this "Agreement"). You may utilize the Credit Line at The Bank
of Nova Scotia (the "Bank") at its 1002 Sherbrooke, West Montreal, Quebec,
Canada Branch from time to time, by way of direct advances, to be deposited to
your Account No. __________________, or a replacement account in your name as
agreed by us from time to time ( the "Account"), and/or by way of any other
availment option authorized under this Agreement.
2. Upon the date of acceptance by you of this Agreement, your obligations
to repay your indebtedness and liability:
(a) in respect of direct advances under all existing operating
credit lines and under the Credit Line shall be subject to
this Agreement exclusively; and
(b) in respect of utilizations under any other availment option
authorized under this Agreement shall be subject to any
applicable agreement(s) referred to in Schedule A ("special
Agreement(s)") to which you and the Bank are or may become
parties.
3. You acknowledge that the outstanding principal balance by way of direct
advances owing to the Bank under existing operating credit lines is $ -0- , as
at the close of business on December 21, 2000 which will be adjusted to reflect
direct advances and repayment of direct advances under the existing credit lines
occurring between that date and the date of acceptance of this Agreement. You
acknowledge that the hypothecs or other security interests previously granted to
the Bank to secure existing operating credit lines continue to constitute
security for indebtedness and liability under the Credit Line.
4. The Credit Line may be utilized by:
(a) you notifying the Bank from time to time as to the amounts you
wish to borrow by way of direct advances and the Bank
crediting such amounts to the Account; and/or
(b) you authorizing the Bank to ascertain from time to time the
position between us in respect to the Account and, if such
position is a debit in favor of the Bank or is a credit in
favor of you that is less than any minimum credit position for
the Account as agreed upon between us from time to time, the
Bank is authorized to take a direct advance under the Credit
Line, by crediting the Account, to provide cover for such
debit position or to place the Account in the appropriate
minimum credit position.
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(c) you providing the Bank with the documentation required by the
Bank from time to time to utilize the Credit Line under any
other availment option authorized under this Agreement.
5. You will repay on demand all your indebtedness and liability under the
Credit Line and interest and interest on overdue interest under this Agreement
and you hereby irrevocably authorize and direct us, while the Credit line is in
existence, but the Bank is not as obligated, to apply all amounts standing to
your credit, and above any agreed upon minimum credit position, in the Account
at the end of each business day to repay your indebtedness and liability under
the Credit Line.
6. Amounts may be borrowed, repaid and reborrowed or otherwise utilized or
reutilized under the Credit Line from time to time, provided that, upon our
periodic review of your financial affairs or upon the occurrence of an event of
default, we may refuse to allow you to borrow further by way of direct advances
or to otherwise utilize the Credit line and/or we may terminate the Credit Line
entirely and demand payment of all your indebtedness and liability under the
Credit Line together with interest and interest on overdue interest. A default
shall occur if:
(i) you or any guarantor fail to make when due, either on demand
or on a fixed payment date, by acceleration or otherwise, any
payment of interest, principal, fees commissions or other
amounts payable to the Bank or any other lender;
(ii) you breach any other term or condition contained in this
Agreement or in any other agreement to which you and the Bank
are parties;
(iii) any default occurs under any security under this Agreement or
in any Special Agreement or under any credit loan or security
agreement to which you are a party;
(iv) any bankruptcy, reorganization, compromise, arrangement,
insolvency or liquidation proceedings or other proceedings for
the relief of debtors are instituted by or against you and, if
instituted against you, are allowed against or consented to by
you or are not dismissed or stayed within 60 days after
institution;
(v) a receiver is appointed over any of your property or any
judgment or order or any process of any court becomes
enforceable against you or any of your property or any
creditor takes possession of any of your property;
(vi) any course of action is undertaken by you or with respect to
you which would result in your reorganization, amalgamation or
merger with another corporation or the transfer of all or
substantially all of your assets.
(vii) any guarantee of indebtedness and liability under the Credit
Line is withdrawn, determined to be invalid or otherwise
rendered ineffective;
(viii) any adverse change occurs in the financial condition of
yourself or any guarantor of indebtedness and liability under
the Credit Line;
(ix) any adverse change occurs in the environmental condition of:
(a) yourself or any guarantor of indebtedness and
liability under the Credit Line; or
(b) any of the property, equipment or business activitiot
of yourself or any guarantor of indebtedness and
liability under the Credit Line;
and you agree that if any default occurs under this Agreement, we may
immediately exercise all our rights and remedies under any Special Agreement(s)
as if default had occurred under the Special Agreement(s).
In the event where a default arises from the non-fulfillment of an obligation in
a prescribed period of time, you shall be considered in default by the mere
lapse of time, without the necessity of any notice or demand.
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7. Upon failure to pay amounts due to the Bank on demand under the Credit
Line, the Bank shall be entitled at your cost to take such steps as may be
permitted by law or as provided under this Agreement, any Special Agreement or
any other credit, loan or security agreement and as it deems fit to sue for and
recover payment for your indebtedness and liability to the Bank including
realization of any security held. Upon your default and subject to applicable
law, you will pay to us on demand all of our reasonable costs, including, but
not limited to, legal fees and expenses (on a solicitor and his own client
basis) incurred (i) in collecting the balance due to the Bank under the Credit
Line whether or not a legal action is brought against you; and (ii) in
protecting the Bank from any loss which the Bank may suffer as a result of your
default.
8. All amounts borrowed by way of direct advances will bear interest at
the Bank's Prime Lending Rate from time to time plus 1% per annum. (Prime
Lending Rate being a variable per annum reference rate of interest as announced
and adjusted by the Bank from time to time for loans made by the Bank in Canada
in Canadian dollars.) Interest shall be calculated daily for the actual number
of days elapsed and be payable monthly and you authorize the Bank, but the Bank
is not so obligated, to debit the Account or any other account specified by you
monthly in arrears o the 22nd day of each month or if such day is a Saturday,
Sunday or a day on which banks are closed for business, on the first subsequent
business day with the amount of interest accrued and unpaid by you. Interest on
overdue interest amounts shall be calculated at the same rate, but shall be
compounded monthly and be payable on demand, both before and after demand and
judgment.
9. You will provide us with financial and net worth statements and such
other information respecting your financial affairs as we may reasonably require
from time to time. You will cause any guarantor to provide us with financial and
net worth statements and such other information respecting the guarantor's
financial affairs as we may reasonably request from time to time.
10. You agree to:
(a) obey all applicable laws and requirements of any federal,
provincial, or any other governmental authority relating to
the environment and the operation of your business activities;
(b) allow us access at all times to your business premises to
monitor and inspect all property and business activities;
(c) notify us from time to time of any business activity conducted
by you which involves the use of handling of hazardous
materials of wastes or which increases your environmental
liability in any material manner;
(d) notify us of any proposed change in the use or occupation of
your property prior to any change occurring;
(e) provide us with immediate written notice of any environmental
problem and any hazardous materials or substances which have
an adverse effect your property, equipment or business
activities and with any other environmental information
requested by us from time to time;
(f) conduct all environmental remedial activities which a
commercial reasonable person would perform in similar
circumstances to meet its environmental responsibilities and
if you fail to do so, we may perform such activities; and
(g) pay for any environmental investigations, assessments or
remedial activities with respect to any of your property that
may be performed by or for us from time to time.
11. If you notify us of any specified activity or change and provide us
with any information pursuant to paragraph 10(c), (d) or (e), or if we receive
any environmental information from other sources, we, in our sole discretion,
may decide that an adverse change in your environmental condition or any of your
property, equipment or business activities has occurred which decision shall
constitute, in the absence of manifest error, conclusive
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evidence of the adverse change. Following this decision being made by us, we
shall notify you of our decision concerning the adverse change.
12. If we decide or are required to incur expenses in compliance or to
verify our compliance with applicable environmental or other regulations, you
shall indemnify us in respect of such expenses, which constitute further
advances by us to you under this Agreement.
13. The Bank will maintain records of your indebtedness and liability to
the Bank under the Credit Line and such records shall evidence such indebtedness
and liability. The Bank shall render a monthly statement of account of your
indebtedness by way of direct advances under the Credit Line. In the absence of
manifest error such statement shall be considered conclusively binding upon you
as to your indebtedness and liability to the Bank by way of direct advances
under the Credit Line unless you notify the Bank to the contrary with in thirty
(30) days from the date on which the statement was sent to you, provided that
any error by the Bank in keeping its records or in the statement shall not
effect your obligation to ay or repay your indebtedness and liability under the
Credit Line.
14. The terms and conditions of this Agreement including, but not limited
to, the annual percentage rate specified in paragraph 8, may be amended at any
time by the Bank by mailing or delivering notice in writing of the amendment to
you. If the Bank mails the said notice in writing by ordinary mail, it shall be
effective from the date of mailing. Please acknowledge acceptance of the terms
and conditions of this Agreement by signing and delivering to the Bank a copy
hereof.
15. The parties require that this Agreement and all related documents be
drawn in English.
The Bank appreciates this opportunity to be of service to you.
Yours truly,
THE BANK OF NOVA SCOTIA
Per /s/Authorized Signatory
ACCEPTED this 22nd day of December, 2000
La Societe Desig Inc.
(NAME OF CUSTOMER)
/s/ Authorized Signature
AUTHORIZED SIGNATURE)
/s/Authorized Signature
(AUTHORIZED SIGNATURE)
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SCHEDULE A
This Schedule is part of the Agreement regarding Operating Credit Line dated
December 22, 2000 between The Bank of Nova Scotia and La Societe Desig, Inc.
(the "Customer").
[ ] The Credit Line is subject to provisions of a Commitment letter dated
_______________, ____, as it may be amended from time to time.
OR
[X] The Credit Line is subject to the following additional terms and
conditions:
AVAILMENT OPTIONS
The Credit Line may also be utilized by way of the following options, provided
that the total amount outstanding by way of direct advances and other availment
options does not exceed the principal amount of the Credit Line:
[ ] Bankers' Acceptances in Canadian Dollars in multiples of $100,000
(subject to a minimum availment amount of $200,000) and having terms of
maturity of 30 to 180 days without grace. Availment is subject to
completion of Agreement regarding Bankers' Acceptance in a form
satisfactory to the Bank.
Fees: The Bank's Commercial/Corporate/Government Bankers'
Acceptance fee (delete whichever is not applicable), plus
_____% per annum (subject to revision at any time), subject
to a minimum fee of $200.00 per availment, payable at the
time of each availment.
[ ] Commercial Letters of Credit/Letter of Credit Acceptances with expiry
dates not to exceed _____ days from date of issuance. Drafts are to be
payable at eight and/or up to _____ days sight. Availment is subject to
completion of Agreement for Commercial Letter of Credit in a form
satisfactory to the Bank.
Fees: The Bank's Commercial/Corporate/Government Bankers'
Acceptance fee (delete whichever is not applicable), plus
_____% per annum (subject to revision at any time), subject
to a minimum fee of $200.00 per availment, payable at the
time of each availment.
[ ] Letters of Guarantee. Each availment is subject to completion of an
Application and Agreement for Irrevocable Standby Letter of
Credit/Letter of Guarantee in a form satisfactory to the Bank.
Commission: The applicable commission or commissions charged by
the Bank for Letters of Guarantee as agreed between
you and the Bank from time to time.
[ ] Standby Letters of Credit. Each availment is subject to completion of
an Application and Agreement for Irrevocable Standby Letter of
Credit/Letter of Guarantee in a form satisfactory to the Bank.
Commission: ______% per annum calculated on the issue amount on
the basis of a calendar year for the actual number
of days elapsed from and including the date of
issue to the termination date, subject to the
Bank's minimum fee as well as revision at any time,
payable upon issuance.
Your obligations to repay your indebtedness and liability under any Agreement
regarding Bankers' Acceptance, Agreement for Commercial Letter of Credit
Application and Agreement for Irrevocable Standby Letter of Credit/Letter of
Guarantee entered into with the Bank will be subject to the terms of those
Special Agreements and not this Agreement.
SECURITY
The following security, evidenced by documents in form satisfactory to the Bank
and registered or recorded as required by the Ban, is to be provided prior to
any advances or availment being made under the Credit Line:
[ ] General Assignment of/Hypothec on Book Debts.
[ ] Security under Section 427 of the Bank Act with appropriate insurance
coverage assigned/hypothecated to the Bank.
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[ ] Assignment/Hypothec of insurance over: Inventory $__________
Buildings $___________ Equipment & Furniture $____________
[ ] Security Agreement/Hypothec over all inventories.
[ ] General Security Agreement/Hypothec over all of your property and
undertaking.
[ ] Postponement Agreement covering an amount of $_______________.
[ ] Assignment of Life Insurance - Face Value $________________
[ ] Guarantees:
Name Amount
[ ] Collateral Mortgage/Hypothec in the amount of $____________ providing a
________ fixed charge over certain lands known as _____________________
____________ (prior encumbrances $_______________) with replacement
cost fire insurance coverage, loss. If any, payable to the Bank as
mortgages.
[ ] Demand Debenture in the principal amount of $_______________ secured
by a ________ fixed charge/hypothec over lands known as _____________
________________________________ (prior encumbrances $________________)
together with a fixed/floating charge/hypothec over all other assets
now or hereafter acquired with replacement cost fire insurance
coverage, loss. If any, payable to the Bank as mortgagee/hypothecary
creditor.
[X] Moveable hypothec agreement over the Company's universality of goods.
CONDITIONS
Until all the debts and liabilities under the Credit Line have been discharged
in full, the following conditions will apply in respect to the Credit Line.
[X] Direct advances, Bankers' Acceptances, Letter of Credit Acceptances,
Letters of Guarantee (delete whichever is not applicable) are not to
exceed the "Borrowing Base" which is defied as the aggregate of
[X] 75% * of good quality accounts receivable (excluding accounts over
90 days, off-sets and inter-company accounts); * 75% Canadian
Dollars plus 50% American Dollars.
[ ] ___% of inventory;
less security interests or charges held by other parties and specific
payables which have or may have priority over the Bank's security.
[ ] Advances against inventory are limited to $_______________.
[ ] The aggregate of
[ ] ______% of good quality accounts receivable (excluding
accounts over 90 days, off-sets and intercompany accounts);
[ ] _____% of inventory;
is to provide full cover/ a margin of ____% (delete whichever is not
applicable) at all times, over direct advances, Bankers' Acceptances,
Letter of Credit Acceptances, Letters of Guarantee (delete which ever
is not applicable), security interests or charges held by other parties
and specific payables which have or may have priority over the Bank's
security.
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[ ] The maximum inventory allocation is $_____________.
[X] Current ratio must exceed 1.50 : 1 at all times.
[ ] Working capital is to be maintained at all times in excess of $_______.
[ ] Tangible Net Worth (TNW) is to be maintained in excess of $__________
at all times. TNW is defined as the sum of share capital earned and
contributed surplus and postponed funds less (i) amounts due from
officers/affiliates, (ii) investment in affiliates, and (iii)
intangible assets as defined by the Bank.
[X] The ratio of Debt (including deferred taxes) to Tangible Net Worth is
not to exceed ________ : 1.
[X] No transfer of property, merger, acquisition. No change in nature of
the business which would trigger a default under the agreement.
REPORTING
Until all debts and liabilities under the Credit Lie have been discharged in
full, you will provide the Bank with the following:
[X] Annual Financial Statements - audited/prepared* within 90 days of your
fiscal year end.
[X] Interim Financial Statements - monthly/quarterly* within 60 days of
period end.
[X] Statement of Security/Borrowing Base Calculation* monthly/quarterly*
within ____ days of period end.
[X] Non-consolidated financial statements for Central Point Technologies
within 90 days of fiscal year end.
[X] Monthly borrowing base within 20 days of the end of the period.
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CUSTOMER'S INITIALS
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SCHEDULE B
RE: U.S. DOLLAR ADVANCES
To: THE BANK OF NOVA SCOTIA
1. Subject to the terms of the Agreement dated December 22, 2000 (the
"Agreement") between THE BANK OF NOVA SCOTIA (the "Bank") and La Societe Desig,
Inc. (the "Customer"), providing for a credit line in favor of the Customer, the
credit line may also be utilized by the Customer borrowing, in Canada, U.S.
dollars as Base Rate Advances subject to the terms of this Schedule.
2. Each Base Rate Advance shall bear interest at the Ban's Base Rate in
Canada from time to time plus 1% per annum. (Base Rate I Canada is a variable
par annum reference rate of interest as announced and adjusted by the Bank from
time to time for loans made by the Bank in Canada in U.S. dollars.) Interest
shall be calculated and payable in the same manner and at the same times as set
out in the Agreement but interest computed with reference to Base Rate in Canada
shall be calculated o the basis of a 360 day year. Each rate of interest
respecting a Base Rate Advance, expressed as an annual rate for purposes of the
Interest Act shall be such rate multiplied by 365, or, where the period for
which interest is being calculated includes February 29th, 366, and divided by
360.
3. All payments to the Bank with respect to Base Rate Advances shall be
made in U.S. dollars and the Customer's obligation to make such payments shall
not be discharged or satisfied by any tender or recovery pursuant to any
judgment expressed in or converted into Canadian dollars except to the extent to
which such tender or recovery shall result in the effective receipt by the Bank
of the full amount of U.S. dollars so payable or expressed to be payable
hereunder and, accordingly, the obligation of the Customer shall be enforceable
as an alternative or additional cause of action for the purpose of recovery in
Canadian dollars of the amount (if any) by which such effective receipt shall
fall short of the full amount of U.S. dollars so payable or expressed to be
payable hereunder and shall not be affected by any judgment being obtained for
any other sums due hereunder or under the Agreement.
4. The exchange equivalent of U.S. dollars in Canadian dollars shall be
determined by the Bank in accordance with its normal practices from time to
tome. The aggregate of utilizations outstanding under the credit line in
Canadian dollars and in the exchange equivalent in Canadian dollars of U.S.
dollar utilizations shall not exceed the Canadian dollar amount of the credit
line as stated in the Agreement, any excess outstanding under the credit line
resulting therefrom to be repaid upon demand.
5. The Bank and the Customer hereby approve of the terms hereof and same
shall constitute a __________________ to the Agreement and all terms of the
Agreement of general application shall continue in full force and effect. This
Schedule shall replace any existing U.S. Dollar Advances Schedule. [Quebec Only)
The parties have requested that this Agreement and all related documents be
drawn up in English.
THE BANK OF NOVA SCOTIA
Per: /s/Authorized Signatory
ACCEPTED this 22nd day of December, 2000.
La Societe Desig Inc.
By: /s/Authorized Signatory
/s/Authorized Signatory