EXHIBIT 10.1
CREDIT AGREEMENT
dated as of October 26, 2001
Between:
BOWATER PULP AND PAPER CANADA INC.
(as Borrower)
BOWATER INCORPORATED
(as Guarantor)
THE BANK OF NOVA SCOTIA
(as Administrative Agent)
- and -
THE BANKS FROM TIME TO TIME
PARTIES HERETO
==================================================
US$100,000,000 364-DAY
REVOLVING CREDIT
==================================================
THE BANK OF NOVA SCOTIA AND THE TORONTO-DOMINION BANK
(as Co-Arrangers)
MCCARTHY TETRAULT LLP
(Montreal)
TABLE OF CONTENTS
This Table of Contents is not part of the Agreement to which it is
attached but is inserted for convenience of reference only.
Section 1. Definitions and Accounting Matters...........................................1
1.01 Certain Defined Terms........................................................1
1.02 Accounting Terms and Determinations.........................................14
1.03 Types of Loans..............................................................14
Section 2. Commitments, Loans and Prepayments..........................................15
2.01 Commitments, Loans..........................................................15
2.02 Obtaining Borrowings........................................................15
2.03 Changes of Commitments......................................................16
2.04 Facility and Utilization Fees...............................................16
2.05 Lending Offices.............................................................17
2.06 Several Obligations; Remedies Independent...................................17
2.07 Loan Accounts...............................................................17
2.08 Optional Prepayments and Conversions or Continuations of Loans..............18
2.09 Extension of Revolving Credit Termination Date..............................18
Section 3. Payments of Principal and Interest..........................................20
3.01 Repayment of Loans..........................................................20
3.02 Interest and Borrowing Fees.................................................20
Section 4. Payments; Pro Rata Treatment; Computations; Etc.............................21
4.01 Payments....................................................................21
4.02 Pro Rata Treatment..........................................................21
4.03 Computations................................................................22
4.04 Minimum Amounts.............................................................22
4.05 Certain Notices.............................................................22
4.06 Non-Receipt of Funds by the Administrative Agent............................24
4.07 Sharing of Payments, Etc....................................................24
Section 5. Yield Protection, Etc.......................................................25
5.01 Additional Costs............................................................25
5.02 Limitation on Types of Loans................................................27
5.03 Illegality..................................................................28
5.04 Treatment of Affected Loans.................................................28
5.05 Compensation................................................................29
5.06 Foreign Taxes...............................................................30
(i)
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Section 6. Guarantee..................................................................31
6.01 The Guarantee..............................................................31
6.02 Obligations Unconditional..................................................31
6.03 Reinstatement..............................................................32
6.04 Subrogation................................................................32
6.05 Remedies...................................................................32
6.06 Instrument for the Payment of Money........................................33
6.07 Continuing Guarantee.......................................................33
Section 7. Conditions Precedent.......................................................33
7.01 Initial Loan...............................................................33
7.02 Initial and Subsequent Loans...............................................34
Section 8. Representations and Warranties.............................................35
8.01 Corporate Existence........................................................35
8.02 Financial Conditions.......................................................35
8.03 Litigation.................................................................36
8.04 No Breach..................................................................36
8.05 Action.....................................................................36
8.06 Approvals..................................................................37
8.07 Canadian Plans.............................................................37
8.08 Taxes......................................................................37
8.09 Material Agreements and Liens..............................................37
8.10 Environmental Matters......................................................38
8.11 Subsidiaries, Etc..........................................................38
8.12 True and Complete Disclosure...............................................39
Section 9. Covenants of the Borrower and the Guarantor................................39
9.01 Financial Statements, Etc..................................................39
9.02 Litigation.................................................................42
9.03 Existence, Etc.............................................................42
9.04 Insurance..................................................................43
9.05 Prohibition of Fundamental Changes.........................................43
9.06 Limitation on Liens........................................................44
9.07 Consolidated Net Worth.....................................................46
9.08 Total Debt to Total Capital Ratio..........................................46
9.09 Transactions with Affiliates...............................................46
9.10 Use of Proceeds............................................................46
9.11 Indebtedness...............................................................46
9.12 Restrictive Agreements.....................................................48
9.13 Limitation on Lines of Business............................................48
(ii)
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Section 10. Events of Default.........................................................48
Section 11. The Administrative Agent..................................................51
11.01 Appointment, Powers and Immunities........................................51
11.02 Reliance by Administrative Agent..........................................52
11.03 Defaults..................................................................52
11.04 Rights as a Bank..........................................................52
11.05 Indemnification...........................................................53
11.06 Non-Reliance on Administrative Agent and Other Banks......................53
11.07 Failure to Act............................................................53
11.08 Resignation or Removal of Administrative Agent............................54
Section 12. Miscellaneous.............................................................54
12.01 Waiver....................................................................54
12.02 Notices...................................................................54
12.03 Expenses, Etc.............................................................55
12.04 Amendments, Etc...........................................................56
12.05 Successors and Assigns....................................................57
12.06 Assignments and Participations............................................57
12.07 Survival..................................................................58
12.08 Captions..................................................................59
12.09 Counterparts..............................................................59
12.10 Governing Law; Submission to Jurisdiction.................................59
12.11 Waiver of Jury Trial......................................................59
12.12 No Immunity...............................................................59
12.13 Judgment Currency.........................................................60
12.14 Use of English Language...................................................60
12.15 Treatment of Certain Information..........................................61
(iii)
SCHEDULE I Material Agreements and Liens
SCHEDULE II Subsidiaries
SCHEDULE III Litigation
SCHEDULE IV Permitted Dispositions
EXHIBIT A Form of Assignment and Acceptance
EXHIBIT B Form of Opinion of Counsel to the Borrower
EXHIBIT C Form of Opinion of Counsel to the Guarantor
EXHIBIT D Form of Opinion of Special New York Counsel to the Guarantor
EXHIBIT E Form of Opinion of Special Counsel to the Administrative Agent
EXHIBIT F Form of Confidentiality Agreement
(i)
Execution Copy
CREDIT AGREEMENT
THIS AGREEMENT is made as of October 26, 2001, between: BOWATER
PULP AND PAPER CANADA INC., a corporation duly amalgamated and validly existing
under the Canada Business Corporations Act, as borrower (the "Borrower"),
BOWATER INCORPORATED, a corporation duly organized and validly existing under
the General Corporation Law of the State of Delaware, as guarantor (the
"Guarantor"); each of the lenders that is a signatory hereto and is identified
as a "Bank" on the signature pages hereto or that, pursuant to Section 12.06(b)
hereof, shall become a "Bank" hereunder (individually, a "Bank" and,
collectively, the "Banks"); and THE BANK OF NOVA SCOTIA, as administrative agent
for the Banks (together with its successors in such capacity, the
"Administrative Agent").
The Borrower has requested that the Banks make loans to it in an
aggregate principal amount not exceeding US$100,000,000 or the Equivalent Amount
in Cdn Dollars at any one time outstanding to refinance existing indebtedness of
the Borrower and to pay fees and expenses relating thereto, and for the general
corporate purposes of the Borrower. The Banks are prepared to make such loans
upon the terms and conditions hereof and, in particular, upon the Guarantee
given by the Guarantor hereunder. Accordingly, the parties hereto agree as
follows:
Section 1. Definitions and Accounting Matters.
1.01 Certain Defined Terms. As used herein, the following terms
shall have the following meanings (all terms defined in this Section 1.01 or in
other provisions of this Agreement in the singular to have the same meanings
when used in the plural and vice versa):
"Acceptance" shall mean (i) in respect of a Bank which is a
Canadian bank, a non-interest bearing bill of exchange or depository bill drawn
by the Borrower on such Bank, or at the option of that Bank, on another Canadian
Bank, and accepted by such Bank, or, as the case may be, by such other Canadian
bank; and (ii) in respect of a Bank which is not a Canadian bank, a non-interest
bearing promissory note or depository bill, made by a Borrower to the order of
such Bank.
"Administrative Questionnaire" shall mean an Administrative
Questionnaire in a form supplied by the Administrative Agent.
"Affiliate" shall mean any Person that directly or indirectly
controls, or is under common control with, or is controlled by, the Guarantor
and, if such Person is an individual, any member of the immediate family
(including parents, spouse, children and siblings) of such individual and any
trust whose principal beneficiary is such individual or one or more members of
such immediate family and any Person who is controlled by any such member or
trust. As used in this definition, "control" (including, with its correlative
meanings, "controlled by" and "under common control with") shall mean
possession, directly or indirectly, of power to direct or cause the direction of
management or policies (whether through ownership of securities or partnership
or other ownership interests, by contract or otherwise); provided that, in any
event, any Person that owns directly or indirectly securities having 10% or more
of the voting power for the election of directors or other governing body of a
corporation or 10% or more of the
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partnership or other ownership interests of any other Person (other than as a
limited partner of such other Person) will be deemed to control such corporation
or other Person. Notwithstanding the foregoing, (i) no individual shall be an
Affiliate solely by reason of his or her being a director, officer or employee
of the Guarantor or any of its Subsidiaries and (ii) none of the Subsidiaries of
the Guarantor shall be Affiliates.
"Alliance" shall mean Bowater Canadian Forest Products Inc.
(formerly, Alliance Forest Products Inc.), a corporation existing under the laws
of Canada.
"Alliance Arrangement" shall mean the arrangement in respect of
Alliance and its shareholders under the provisions of Section 192 of the Canada
Business Corporations Act, R.S.C. 1985, c. C-44, as amended, on the terms and
conditions set forth in the Plan of Arrangement under and as defined in the
Alliance Arrangement Agreement.
"Alliance Arrangement Agreement" shall mean the Arrangement
Agreement dated as of April 1, 2001 between the Guarantor and Alliance.
"Applicable Lending Office" shall mean, for each Bank and for
each Type of Loan, the "Lending Office" of such Bank (or of an affiliate of such
Bank) as such Bank may from time to time specify to the Administrative Agent and
the Borrower as the office by which its Loans of such Type are to be made and
maintained.
"Applicable Margin" shall mean:
(a) with respect to US Base Rate Loans, 0.0000% per annum, except
that during any Level V Period the rate shall be 0.2550%;
(b) with respect to Cdn Prime Rate Loans, 0.0000% per annum,
except that during any Level V Period, the rate shall be 0.2550%;
(c) with respect to Eurodollar Loans, the rate for such Loan for
each rating level period set forth in the schedule below:
Rating Eurodollar Loans
------ ----------------
Level I Period 0.3150%
Level II Period 0.4200%
Level III Period 0.5250%
Level IV Period 0.6250%
Level V Period 1.0500%
(d) with respect to BA Loans, the rate for such Loan for each
rating level period set forth in the schedule below:
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Rating BA Loans
------ --------
Level I Period 0.3150%
Level II Period 0.4200%
Level III Period 0.5250%
Level IV Period 0.6250%
Level V Period 1.0500%
(e) with respect to LC Loans, the rate for such Loan for each
rating level period set forth in the schedule below:
Rating LC Loans
------ --------
Level I Period 0.3150%
Level II Period 0.4200%
Level III Period 0.5250%
Level IV Period 0.6250%
Level V Period 1.0500%
Any change in the Applicable Margin for any Loan by reason of a change in the
Standard & Poor's Rating or the Moody's Rating shall become effective on the
date two Business Days after the announcement or publication by the respective
rating agencies of a change in such rating or, in the absence of such
announcement or publication, two Business Days after the effective date of such
changed rating.
"Applicable Period" shall mean:
(a) with respect to any Eurodollar Loan, each period commencing
on the date such Eurodollar Loan is made or Converted from a Loan of
another Type or the last day of the next preceding Applicable Period for
such Loan and ending on the numerically corresponding day in the first,
second, third or sixth calendar month thereafter, as the applicable
Borrower may select as provided in Section 4.05 hereof, except that each
Applicable Period that commences on the last Business Day of a calendar
month (or on any day for which there is no numerically corresponding day
in the appropriate subsequent calendar month) shall end on the last
Business Day of the appropriate subsequent calendar month;
(b) with respect to any BA Loan, each period commencing on the
date such BA Loan is made or Converted from a Loan of another Type or the
last day of the next preceding Applicable Period for such Loan and ending
on the numerically corresponding day in the first, second, third or sixth
calendar month thereafter, as the applicable Borrower may select as
provided in Section 4.05 hereof, except that each Applicable Period that
commences on the last Business Day of a calendar month (or on any day for
which there is no numerically corresponding day in the appropriate
subsequent calendar month) shall end on the last Business Day of the
appropriate subsequent calendar month;
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(c) with respect to any LC Loan, the period commencing on the
date of the Letter of Credit and ending up to one year thereafter, as the
Borrower may select as provided in Section 4.05 hereof.
Notwithstanding the foregoing: (i) if any Applicable Period for
any Eurodollar Loan, BA Loan or LC Loan, other than a Term Loan would otherwise
end after the Revolving Credit Termination Date, such Applicable Period shall
end on the Revolving Credit Termination Date; (ii) each Applicable Period that
would otherwise end on a day that is not a Business Day shall end on the next
succeeding Business Day (or, in the case of an Applicable Period for a
Eurodollar Loan, if such next succeeding Business Day falls in the next
succeeding calendar month, on the next preceding Business Day); (iii) if an
Applicable Period in respect of a Term Loan would otherwise commence before and
end after the Maturity Date, such Applicable Period shall end on the Maturity
Date; and (iv) no Applicable Period for any Eurodollar Loan, BA Loan or LC Loan
shall have a duration of less than 30 days and, if the Applicable Period for any
such Loan would otherwise be a shorter period, such Loan shall not be available
hereunder for such period.
"BA Discount", with respect to any Acceptance discounted by a
Bank, shall mean the amount determined by the Administrative Agent as being
equal to the face value of the Acceptance, multiplied by the BA Discount Rate
and by the actual number of days in the period of such Acceptance and divided by
365.
"BA Discount Rate", with respect to any Acceptance, shall mean
(i) in respect of any Bank that is a Canadian Schedule 1 bank, the CDOR Rate for
the Applicable Period and (ii) in respect of any other Bank, the CDOR Rate for
the Applicable Period plus 0.75%.
"BA Loans", shall mean Loans made by the Banks by way of the
discounting of Acceptances in accordance herewith.
"Business Day" shall mean (i) any day on which commercial banks
are authorized or required by law to remain open in Montreal (Quebec), Toronto
(Ontario) and New York City (New York State) and (ii) if such day relates to a
borrowing of, a payment or prepayment of principal of or interest on, a
Conversion of or into, or an Applicable Period for, a Eurodollar Loan or a
notice by the Borrower with respect to any such borrowing, payment, prepayment,
Conversion or Applicable Period, any day on which dealings in US Dollar deposits
are carried out in the London interbank market.
"Canadian Plan" shall mean any plan, program, practice,
arrangement or policy, whether registered or unregistered, written or unwritten,
funded or unfunded, insured or uninsured, that is maintained, administered or
contributed to by the Borrower, the Guarantor or any of their respective
Subsidiaries (or under which the Borrower, the Guarantor or any of their
respective Subsidiaries has or may have any obligation) in respect of employees
or former employees in Canada (or their spouses, beneficiaries or dependents),
and relating to: pensions, supplemental pensions, retirement or retirement
savings, profit sharing or deferred profit sharing, deferred or incentive
compensation, bonuses, death benefits, life or disability insurance, medical or
dental insurance or benefits or other similar employee benefits.
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"Capital Lease Obligations" shall mean, for any Person, all
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) Property to the extent such
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 be the capitalized amount
thereof, determined in accordance with GAAP.
"Cdn Dollars" and "Cdn" shall mean lawful money of Canada.
"Cdn Prime Rate" shall mean, for any day, a rate per annum equal
to the higher of (i) the CDOR Rate plus 5/8% and (ii) the Cdn Reference Rate for
such day. Each change in any interest rate provided for herein based upon the
Cdn Prime Rate resulting from a change in the Cdn Prime Rate shall take effect
at the time of such change in the Cdn Prime Rate.
"Cdn Prime Rate Loans" shall mean Loans that bear interest at
rates based upon the Cdn Prime Rate.
"Cdn Reference Rate" shall mean, for any day, the rate of
interest, expressed as an annual rate, quoted or announced on such day by the
Administrative Agent in Toronto, Ontario, as being its reference rate then in
effect for determining interest rates on commercial loans made in Canada in Cdn
Dollars.
"CDOR Rate" shall mean, for any day, the arithmetic average of
the bankers' acceptances rates for the applicable period which appear on the
Reuter's Screen CDOR Page at 10:00 a.m. Toronto time (as determined by the
Agent), or if such day is not a Business Day, then on the immediately preceding
Business Day; provided however, that if such rates are not available, then the
CDOR Rate for any day shall be calculated as the arithmetic average of the
discount rates applicable to Cdn Dollar bankers' acceptances for the applicable
period as quoted by three major Canadian Schedule 1 banks selected by the
Administrative Agent as of 10:00 a.m. on such day, or if said day is not a
Business Day, then on the immediately preceding Business Day.
"Closing Date" shall mean the date on which this Agreement shall
have been executed and delivered by all parties hereto.
"Commitment" shall mean, for each Bank, the obligation of such
Bank to make Loans in an aggregate amount at any one time outstanding up to but
not exceeding the amount set out opposite the name of such Bank on the signature
pages hereto under the caption "Commitment". The Commitment of each Swingline
Bank is comprised of a Swingline Commitment and a Loan Commitment in the
respective amounts set out opposite the name of each Swingline Bank on the
signature pages hereto under the caption "Commitment".
"Consolidated Net Worth" shall mean, as at any date, the sum, for
the Guarantor and its Consolidated Subsidiaries (determined on a consolidated
basis without duplication in accordance with GAAP), of the following:
(a) the amount of common stock, plus
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(b) the amount of any Preferred Stock, plus
(c) the amount of additional paid-in capital and retained
earnings (or, in the case of an additional paid-in capital or retained
earnings deficit, minus the amount of such deficit), plus
(d) equity adjustments from foreign currency translations (or, in
the case of negative adjustments, minus the amount of such adjustments),
it being understood that such adjustments are to be recharacterized in
accordance with FASB Statement No. 130 as accumulated other comprehensive
income (or deficit), minus
(e) the cost of treasury stock.
"Consolidated Subsidiary" shall mean, for any Person, each
Subsidiary of such Person (whether now existing or hereafter created or
acquired) the financial statements of which shall be (or should have been)
consolidated with the financial statements of such Person in accordance with
GAAP.
"Continue", "Continuation" and "Continued" shall refer to the
continuation pursuant to Section 2.08 hereof of a Eurodollar Loan, a LC Loan or
a BA Loan as a Loan of the same Type from one Applicable Period to the next
Applicable Period.
"Convert", "Conversion" and "Converted" shall refer to a
conversion pursuant to Section 2.08 hereof of one Type of Loans into another
Type of Loans, which may be accompanied by the transfer by a Bank (at its sole
discretion) of a Loan from one Applicable Lending Office to another.
"Default" shall mean an Event of Default or an event that with
notice or lapse of time or both would become an Event of Default.
"Disposition" shall mean any sale, assignment, transfer or other
disposition of any Property (whether now owned or hereafter acquired) by the
Borrower, the Guarantor or any of their respective Subsidiaries to any other
Person excluding any sale, assignment, transfer or other disposition of any
Property sold or disposed of in the ordinary course of business and on ordinary
business terms.
"Environmental Laws" shall mean any and all present and future
Federal, state, provincial, local and foreign laws, rules and regulations, and
any orders or decrees, in each case as now or hereafter in effect, relating to
the regulation or protection of human health, safety or the environment or to
emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals or toxic or hazardous substances or wastes into the
indoor or outdoor environment, including, without limitation, ambient air, soil,
surface water, ground water, wetlands, land or subsurface strata, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants, chemicals or toxic
or hazardous substances or wastes.
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"Equity" shall mean, as at any date, the sum, for the Guarantor
and its Consolidated Subsidiaries (determined on a consolidated basis without
duplication in accordance with GAAP), of the following:
(a) Net Worth, plus
(b) Subordinated Debt
"Equity Rights" shall mean, with respect to any Person, any
outstanding subscriptions, options, warrants, commitments, preemptive rights or
agreements of any kind (including, without limitation, any stockholders' or
voting trust agreements) for the issuance, sale, registration or voting of, or
outstanding securities convertible into, any additional shares of capital stock
of any class, or partnership or other ownership interests of any type in, such
Person.
"Equivalent Amount" shall mean (i) for purposes of Conversions,
the amount of Cdn Dollars into which US Dollars may be converted at the Bank of
Canada's noon mid-point spot rate for such currencies on the previous Business
Day or the amount of US Dollars into which Cdn Dollars may be converted at the
Bank of Canada's noon mid-point spot rate for such currencies on the previous
Business Day and (ii) for all other purposes, on any date, the amount of Cdn
Dollars into which US Dollars may be converted or the amount of US Dollars into
which Cdn Dollars may be converted using the Bank of Canada's noon mid-point
spot rate for such currencies on such date provided in all cases that the
Borrower and the Administrative Agent may agree in advance on an alternative
rate (other than the Bank of Canada's noon mid-point spot rate) to be used for
purposes of the foregoing.
"Eurodollar Loans" shall mean Loans the interest rates on which
are determined on the basis of the rate referred to in the definition of "LIBO
Rate" in this Section 1.01.
"Event of Default" shall have the meaning assigned to such term
in Section 10 hereof.
"Federal Funds Rate" shall mean, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) 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 on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day, provided that (i) if the day for which such rate is to
be determined is not a Business Day, the Federal Funds Rate for such day shall
be such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day and (ii) if such rate is not so
published for any Business Day, the Federal Funds Rate for such Business Day
shall be the average rate charged to the Administrative Agent on such Business
Day on such transactions as determined by the Administrative Agent.
"Foreign Taxes" shall mean, with respect to the Guarantor, all
present and future income, stamp, registration and other taxes and levies,
imposts, deductions, charges, compulsory loans and withholdings whatsoever, and
all interest, penalties or similar amounts with respect thereto, now or
hereafter imposed, assessed, levied or collected by the United States of
America,
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any State thereof and any other foreign jurisdiction, or any political
subdivision or taxing authority thereof or therein, or by any federal or other
association of or with which any such foreign jurisdiction may be a member or
associated, on or in respect of this Agreement, the Loans, the Guarantee granted
by the Guarantor hereunder, the recording, registration, notarization or other
formalization of any thereof, the enforcement thereof or the introduction
thereof in any judicial proceedings, or on or in respect of any payments of
principal, interest, premiums, charges, fees or other amounts made on, under or
in respect of any thereof.
"GAAP" shall mean (i) in the case of the Guarantor and its
Consolidated Subsidiaries, generally accepted accounting principles of the
United States of America and (ii) in the case of the Borrower and its
Consolidated Subsidiaries, Canadian generally accepted accounting principles as
promulgated, from time to time, by the Canadian Institute of Chartered
Accountants, in both cases, applied in accordance with Section 1.02(a) hereof.
"Guarantee" shall mean a guarantee, an endorsement, a contingent
agreement to purchase or to furnish funds for the payment or maintenance of, or
otherwise to be or become contingently liable under or with respect to, the
Indebtedness, other obligations, net worth, working capital or earnings of any
Person, or a guarantee of the payment of dividends or other distributions upon
the stock or equity interests of any Person, or an agreement to purchase, sell
or lease (as lessee or lessor) Property, products, materials, supplies or
services primarily for the purpose of enabling a debtor to make payment of such
debtor's obligations or an agreement to assure a creditor against loss, and
including, without limitation, causing a bank or other financial institution to
issue a letter of credit or other similar instrument for the benefit of another
Person, but excluding endorsements for collection or deposit in the ordinary
course of business. The terms "Guarantee" and "Guaranteed" used as a verb shall
have a correlative meaning.
"Indebtedness" shall mean, for any Person: (i) obligations
created, issued or incurred by such Person for borrowed money (whether by loan,
the issuance and sale of debt securities or the sale of Property to another
Person subject to an understanding or agreement, contingent or otherwise, to
repurchase such Property from such Person); (ii) obligations of such Person to
pay the deferred purchase or acquisition price of Property or services, other
than trade accounts payable (other than for borrowed money) arising, and accrued
expenses incurred, in the ordinary course of business, so long as such trade
accounts payable are payable within 90 days of the date the respective goods are
delivered or the respective services are rendered; (iii) Indebtedness of others
secured by a Lien on the Property of such Person, whether or not the respective
Indebtedness so secured has been assumed by such Person; (iv) obligations
(contingent or otherwise) of such Person in respect of letters of credit or
similar instruments issued or accepted by banks and other financial institutions
for account of such Person; (v) Capital Lease Obligations of such Person; and
(vi) Indebtedness of others Guaranteed by such Person.
"Interest Rate Protection Agreement" shall mean, for any Person,
an interest rate swap, cap or collar agreement or similar arrangement between
such Person and one or more financial institutions providing for the transfer or
mitigation of interest risks either generally or under specific contingencies.
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"Investment" shall mean, for any Person: (i) the acquisition
(whether for cash, Property, services or securities or otherwise) of capital
stock, bonds, notes, debentures, partnership or other ownership interests or
other securities of any other Person or any agreement to make any such
acquisition (including, without limitation, any "short sale" or any sale of any
securities at a time when such securities are not owned by the Person entering
into such short sale); (ii) the making of any deposit with, or advance, loan or
other extension of credit to, any other Person (including the purchase of
Property from another Person subject to an understanding or agreement,
contingent or otherwise, to resell such Property to such Person, but excluding
any such advance, loan or extension of credit having a term not exceeding 90
days representing the purchase price of inventory or supplies sold by such
Person in the ordinary course of business); (iii) the entering into of any
Guarantee of, or other contingent obligation with respect to, Indebtedness or
other liability of any other Person and (without duplication) any amount
committed to be advanced, lent or extended to such Person; or (iv) the entering
into of any Interest Rate Protection Agreement.
"LC Issuing Bank" shall mean The Bank of Nova Scotia and, if The
Bank of Nova Scotia so elects (and such other Bank or Banks agree), The Bank of
Nova Scotia and one or more other Banks designated by the Majority Banks with
the consent of the Borrower; in the event that The Bank of Nova Scotia ceases to
have any Commitment or any outstanding Loans hereunder, the LC Issuing Bank
shall be such Bank or Banks as may be designated by the Majority Banks with the
consent of the Borrower.
"LC Loan" shall mean a Loan made hereunder at the request of the
Borrower by way of the issuance by the LC Issuing Bank of a Letter of Credit.
"Letter of Credit" shall mean a standby letter of credit or
letter of guarantee issued in accordance with the provisions of this Agreement.
"Level I Period" shall mean any period during which (i) no Event
of Default has occurred and is continuing and (ii) the Standard & Poor's Rating
is at or above A- (or any successor rating) or the Moody's Rating is at or above
A3 (or any successor rating).
"Level II Period" shall mean any period, other than a Level I
Period, during which (i) no Event of Default has occurred and is continuing and
(ii) the Standard & Poor's Rating is at or above BBB+ (or any successor rating)
or the Moody's Rating is at or above Baa1 (or any successor rating).
"Level III Period" shall mean any period, other than a Level I
Period or a Level II Period, during which (i) no Event of Default has occurred
and is continuing and (ii) the Standard & Poor's Rating is at or above BBB (or
any successor rating) or the Moody's Rating is at or above Baa2 (or any
successor rating).
"Level IV Period" shall mean any period, other than a Level I
Period, a Level II Period or a Level III Period, during which (i) no Event of
Default has occurred and is continuing and (ii) the Standard & Poor's Rating is
at or above BBB- (or any successor rating) or the Moody's Rating is at or above
Baa3 (or any successor rating).
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"Level V Period" shall mean any period that is not a Level I
Period, a Level II Period, a Level III Period or a Level IV Period.
"LIBO Rate" shall mean, with respect to any Eurodollar Loan for
any Applicable Period therefor, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) appearing on Page 3750 of the Dow Jones
Markets Telerate Service (or on any successor or substitute page of such
Service, or any successor to or substitute for such Service, providing rate
quotations comparable to those currently provided on such page of such Service,
as determined by the Administrative Agent from time to time for purposes of
providing quotations of interest rates applicable to US Dollar deposits in the
London interbank market) at approximately 11:00 a.m. London time on the date two
Business Days prior to the first day of such Applicable Period as the rate for
US Dollar deposits having a term comparable to such Applicable Period, provided
that if such rate does not appear on such page, or if such page shall cease to
be publicly available, or if the information contained on such page, in the
reasonable judgment of the Majority Banks, shall cease accurately to reflect the
rate offered by leading banks in the London interbank market as reported by any
publicly available source of similar market data selected by the Majority Banks,
the LIBO Rate shall mean, for any Applicable Period, the rate per annum (rounded
upwards, if necessary, to the nearest 1/16 of 1%) quoted by the Administrative
Agent at approximately 11:00 a.m. London time (or as soon thereafter as
practicable) two Business Days prior to the first day of such Applicable Period
for the offering by the Administrative Agent to leading banks in the London
interbank market of US Dollar deposits having a term comparable to such
Applicable Period and in the amount of the Eurodollar Loan to be for such
Applicable Period.
"Lien" shall mean, with respect to any Property, any hypothec,
mortgage, prior claim, lien, pledge, charge, assignment, security interest,
reservation of ownership, right of redemption or encumbrance of any kind in
respect of such Property. For purposes of this Agreement, a Person shall be
deemed to own subject to a Lien any Property that it has acquired or holds
subject to the interest of a vendor or lessor under any conditional or
instalment sale agreement, capital lease or other title retention agreement
(other than an operating lease) relating to such Property.
"Loans" shall mean US Base Rate Loans, Cdn Prime Rate Loans,
Swingline Loans, Eurodollar Loans, BA Loans and LC Loans.
"Majority Banks" shall mean Banks having more than 66 2/3% of the
aggregate amount of the Commitments or, if the Commitments shall have
terminated, Banks holding more than 66 2/3% of the aggregate unpaid principal
amount of the Loans.
"Material Adverse Effect" shall mean a material adverse effect on
(i) the Property, business, operations, financial condition, liabilities or
capitalization of the Borrower and its Subsidiaries or the Guarantor and its
Subsidiaries taken as a whole, (ii) the ability of the Borrower or the Guarantor
to perform its obligations hereunder, (iii) the validity or enforceability of
this Agreement, including the Guarantee granted by the Guarantor hereunder, (iv)
the rights and remedies of the Banks and the Administrative Agent hereunder or
(v) the timely payment of the principal of or interest on the Loans or other
amounts payable in connection therewith.
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"Material Indebtedness" shall mean Indebtedness (other than the
Loans), or obligations in respect of one or more Interest Rate Protection
Agreements, of the Guarantor and its Subsidiaries in an aggregate principal
amount exceeding US$50,000,000. For purposes of determining Material
Indebtedness, the "principal amount" of the obligations of any Person in respect
of any Interest Rate Protection Agreement at any time shall be the maximum
aggregate amount (giving effect to any netting requirements) that such Person
would be required to pay if such Interest Rate Protection Agreement were
terminated at such time.
"Maturity Date" shall have the meaning set forth in Section
2.09(d) hereof.
"Moody's" shall mean Moody's Investors Service, Inc. or any
successor corporation thereto.
"Moody's Rating" shall mean, at any time, the then current rating
(including the failure to rate) by Moody's of the Guarantor's senior unsecured
long term public debt.
"Net Worth" shall mean, as at any date, the sum, for the
Guarantor and its Consolidated Subsidiaries (determined on a consolidated basis
without duplication in accordance with GAAP), of the following:
(a) the amount of common shares, plus
(b) the amount of any preferred shares, that does not have any
requirement for the Borrower to purchase, redeem, retire or otherwise
acquire the same on or before the Revolving Credit Termination Date, plus
(c) retained earnings and paid-in surplus (or, in the case of a
retained earning deficit, minus the amount of such deficit)
"Person" shall mean any individual, corporation, company,
voluntary association, partnership, joint venture, trust, unincorporated
organization or government (or any agency, instrumentality or political
subdivision thereof).
"Ponderay" shall mean Ponderay Newsprint Company, a partnership
existing under the laws of the State of Washington.
"Post-Default Rate" shall mean, in respect of any principal of
any Loan or any other amount under this Agreement that is not paid when due
(whether at stated maturity, by acceleration or otherwise), a rate per annum
during the period from and including the due date to but excluding the date on
which such amount is paid in full equal to 2% plus the US Base Rate in the case
of Loans denominated in US Dollars, or the Cdn Prime Rate in the case of Loans
denominated in Cdn Dollars plus, in each case, the Applicable Margin (if any).
"Preferred Stock" shall mean any preferred stock hereafter issued
by the Guarantor that does not have any requirement for the Guarantor to
purchase, redeem, retire or otherwise acquire the same on or before the
Revolving Credit Termination Date.
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"Quarterly Dates" shall mean the quarterly anniversaries of the
Closing Date.
"Property" shall mean any right or interest in or to property of
any kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"Regulatory Change" shall mean, with respect to any Bank, any
change after the date of this Agreement in Federal, provincial or foreign law or
regulations or the adoption or making after such date of any interpretation,
directive or request applying to a class of banks or financial institutions
including such Bank of or under any Federal, provincial or foreign law or
regulations (whether or not having the force of law and whether or not failure
to comply therewith would be unlawful) by any court or governmental or monetary
authority charged with the interpretation or administration thereof.
"Revolving Credit Termination Date" shall mean October 25, 2002,
as such date may from time to time be extended as provided in Section 2.09
hereof.
"Standard & Poor's" shall mean Standard & Poor's Ratings Group, a
division of McGraw Hill, Inc., or any successor corporation thereto.
"Standard & Poor's Rating" shall mean, at any time, the then
current rating (including the failure to rate) by Standard & Poor's of the
Guarantor's senior unsecured long term public debt.
"Subordinated Debt" shall mean the principal amount of the
Indebtedness of the Guarantor or its Subsidiaries having subordination,
conversion and redemption features substantially similar to those attaching to
the Guarantor's since redeemed US$125,400,000 principal amount of 7.50%
convertible unsecured subordinated debentures due on February 8, 2004 or
Indebtedness of the Guarantor or its Subsidiaries that is otherwise subordinated
and postponed in full to the payment of the Indebtedness and Guarantee hereunder
to the satisfaction of the Lenders.
"Subsidiary" shall mean, for any Person, any corporation,
partnership or other entity of which at least a majority of the securities or
other ownership interests having by the terms thereof ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions of such corporation, partnership or other entity (irrespective of
whether or not at the time securities or other ownership interests of any other
class or classes of such corporation, partnership or other entity shall have or
might have voting power by reason of the happening of any contingency) is at the
time directly or indirectly owned or controlled by such Person or one or more
Subsidiaries of such Person or by such Person and one or more Subsidiaries of
such Person. "Wholly Owned Subsidiary" shall mean any such corporation,
partnership or other entity of which all of the equity securities or other
ownership interests (other than, in the case of a corporation, directors'
qualifying shares) are so owned or controlled.
"Swingline Bank" shall mean a Bank which has a Swingline
Commitment hereunder as referred to in the definition of "Commitment" in this
Section 1.01.
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"Swingline Loan" shall mean a Cdn Prime Rate Loan or a US Base
Rate Loan outstanding hereunder as an overdraft on an account maintained by the
Borrower with a Swingline Bank.
"Term Loan" shall have the meaning set forth in Section 2.09(d)
hereof.
"Total Assets" shall mean, at any time, the aggregate book value
of all of the assets of the Guarantor and its Consolidated Subsidiaries at such
time determined on a consolidated basis (without duplication) in accordance with
GAAP.
"Total Capital" shall mean, at any time, Consolidated Net Worth
plus Total Debt.
"Total Debt" shall mean, at any time, the aggregate outstanding
principal amount of all Indebtedness of the Guarantor and its Consolidated
Subsidiaries at such time determined on a consolidated basis (without
duplication) in accordance with GAAP to the extent required to be reflected on a
balance sheet of the Guarantor and its Subsidiaries prepared in accordance with
GAAP; provided that the term "Total Debt" shall include any preferred stock that
does not qualify as Preferred Stock, but shall not include Indebtedness in
respect of commercial documentary letters of credit.
"Type" shall have the meaning assigned to such term in Section
1.03 hereof.
"US Bankruptcy Code" shall mean the Bankruptcy Reform Act of
1978, as amended from time to time, presently codified as Title 11 of the United
States Code.
"US Base Rate" shall mean, for any day, a rate per annum equal to
the higher of (i) the Federal Funds Rate for such day plus 1/2 of 1% and (ii)
the US Reference Rate for such day. Each change in any interest rate provided
for herein based upon the US Base Rate resulting from a change in the US Base
Rate shall take effect at the time of such change in the US Base Rate.
"US Base Rate Loans" shall mean Loans that bear interest at rates
based upon the US Base Rate.
"US Dollars" and "US$" shall mean lawful money of the United
States of America.
"US Reference Rate" shall mean, for any day, the rate of
interest, expressed as an annual rate, quoted or announced on such day by the
Administrative Agent in Toronto, Ontario, as being its reference rate in effect
for determining interest rates on commercial loans made in Canada or in US
Dollars.
"US Revolving Term Credit Agreement" shall mean the Third Amended
and Restated 364-Day Credit Agreement dated as of June 20, 2001 among the
Guarantor and each of the subsidiaries of the Guarantor designated as
"Subsidiary Borrowers" thereunder, as borrowers, each of the lenders that is a
signatory thereto as a "Bank", Bank of America, N.A. as documentation agent,
SunTrust Bank, Nashville, N.A., as syndication agent, and the Chase
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Manhattan Bank, as administrative agent, as same may be amended, supplemented,
restated or otherwise modified from time to time.
1.02 Accounting Terms and Determinations.
(a) Accounting Principles. Except as otherwise expressly provided
herein, all accounting terms used herein shall be interpreted, and all financial
statements and certificates and reports as to financial matters required to be
delivered to the Banks hereunder shall (unless otherwise disclosed to the Banks
in writing at the time of delivery thereof in the manner described in subsection
(b) below) be prepared, in accordance with GAAP applied on a basis consistent
with those used in the preparation of the latest financial statements furnished
to the Banks hereunder. All calculations made for the purposes of determining
compliance with this Agreement shall (except as otherwise expressly provided
herein) be made by application of GAAP applied on a basis consistent with those
used in the preparation of the latest annual or quarterly financial statements
furnished to the Banks pursuant to Section 9.01 hereof unless (i) the Borrower
or the Guarantor, as the case may be, shall have objected to determining such
compliance on such basis at the time of delivery of such financial statements or
(ii) the Majority Banks shall so object in writing within 30 days after delivery
of such financial statements, in either of which events such calculations shall
be made on a basis consistent with those used in the preparation of the latest
financial statements as to which such objection shall not have been made.
(b) Statement of Variations in Accounting Principles. The
Borrower or the Guarantor, as the case may be, shall deliver to the Banks at the
same time as the delivery of any annual or quarterly financial statement under
Section 9.01 hereof (i) a description in reasonable detail of any material
variation between the application of accounting principles employed in the
preparation of such statement and the application of accounting principles
employed in the preparation of the next preceding annual or quarterly financial
statements as to which no objection has been made in accordance with the last
sentence of subsection (a) above and (ii) reasonable estimates of the difference
between such statements arising as a consequence thereof.
(c) Changes in Fiscal Year. To enable the ready and consistent
determination of compliance with the covenants set forth in Section 9 hereof,
neither the Borrower nor the Guarantor will change the last day of its fiscal
year from December 31 of each year, or the last days of the first three fiscal
quarters in each of its fiscal years from March 31, June 30 and September 30 of
each year, respectively without the consent of the Majority Banks, such consent
not to be unreasonably withheld.
1.03 Types of Loans. Loans hereunder are distinguished by "Type".
The "Type" of a Loan refers to whether such Loan is a US Base Rate Loan, a Cdn
Prime Rate Loan, a Eurodollar Loan, a BA Loan or an LC Loan each of which
constitutes a Type. Swingline Loans are either US Base Rate Loans or Cdn Prime
Rate Loans in accordance with the currency in which they are drawn down.
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Section 2. Commitments, Loans and Prepayments.
2.01 Commitments, Loans. Each Bank severally agrees, on the terms
and conditions of this Agreement, to make one or more Loans to the Borrower
during the period from and including the Closing Date to but not including the
Revolving Credit Termination Date in an aggregate principal amount at any one
time outstanding up to but not exceeding the amount of the Commitment of such
Bank as in effect from time to time. Subject to the terms and conditions of this
Agreement, during such period the Borrower may borrow, repay and reborrow the
amount of the Commitments and, both during and after the expiration of such
period, the Borrower may Convert Loans of one Type into Loans of another Type or
Continue Loans of one Type as Loans of the same Type provided, in each case,
that the aggregate principal amount of all Loans at any one time outstanding
shall not exceed the aggregate amount of the Commitments. Loans shall be
available to the Borrower on the terms and conditions of this Agreement, by way
of (i) US Base Rate Loans in amounts of not less than US$5,000,000 and integral
multiples of US$500,000 in excess thereof; (ii) Cdn Prime Rate Loans in amounts
of not less than Cdn $5,000,000 and integral multiples of Cdn $500,000 in excess
thereof; (iii) Swingline Loans in US Dollars or Cdn Dollars in an aggregate
principal amount at any time outstanding of not more than US$15,000,000 or the
Equivalent Amount in Cdn Dollars; (iv) Eurodollar Loans in amounts of not less
than US$5,000,000 and integral multiples of US$500,000 in excess thereof; (v) BA
Loans in amounts of not less than Cdn $5,000,000 and integral multiples of Cdn
$500,000 in excess thereof; and (vi) LC Loans in amounts of not less than
US$5,000,000 or the Equivalent Amount in Cdn Dollars and in an aggregate
principal amount at any time outstanding of not more than US$30,000,000 or the
Equivalent Amount in Cdn Dollars.
2.02 Obtaining Borrowings. The Borrower shall give the
Administrative Agent (which shall promptly notify the Banks) notice of each
borrowing hereunder as provided in Section 4.05 hereof, except in the case of
Swingline Loans which the Borrower may obtain without any prior notice by
drawing cheques or making payments on an operating account maintained with a
Swingline Bank (or another Bank as may be agreed on with such Swingline Bank).
Not later than 1:00 p.m. Eastern time on the date specified for each borrowing
hereunder (other than a Swingline Loan or an LC Loan), each Bank shall make
available the amount of the Loan or Loans to be made by it on such date to the
Administrative Agent, at an account designated by the Administrative Agent to
the Banks, in immediately available funds, for account of the Borrower. The
amount so received by the Administrative Agent shall, subject to the terms and
conditions of this Agreement, be made available to the Borrower, in immediately
available funds, to such account as it shall specify to the Administrative
Agent. The amount of each BA Loan shall be equal to the aggregate face amount of
the Acceptances issued by or on behalf of the Banks to fund such Loan but the
amount that each Bank shall be obliged to make available to the Administrative
Agent and that the Administrative Agent shall be obliged to make available to
the Borrower in accordance with this Section 2.02 shall be equal to the amount
of the BA Loan made by each Bank less the BA Discount and the Applicable Margin.
Each Bank is irrevocably authorized and empowered, for and on behalf of the
Borrower, to complete, execute, endorse and deliver (or record), the Acceptances
to be issued by such Bank to fund a BA Loan made by such Bank. Subject to the
terms and conditions of this Agreement, LC Loans shall be
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available upon the execution and delivery by the Borrower of the LC Issuing
Bank's customary documentation relating to Letters of Credit.
2.03 Changes of Commitments.
(a) Reduction of Commitments. The aggregate amount of the
Commitments shall be automatically reduced to zero at the close of business on
the Revolving Credit Termination Date.
(b) Notice; Minimum Amount. The Borrower shall have the right at
any time or from time to time (i) so long as no Loans are outstanding, to
terminate the Commitments and (ii) to reduce the aggregate unused amount of the
Commitments; provided that (x) the Borrower shall give notice of each such
termination or reduction as provided in Section 4.05 hereof and (y) each partial
reduction shall be in an aggregate amount at least equal to US$5,000,000 or the
Equivalent Amount in Cdn Dollars and in integral multiples of US$5,000,000 or
the Equivalent Amount in Cdn Dollars in excess thereof.
(c) Termination or Reduction Irrevocable. The Commitments once
terminated or reduced may not be reinstated.
2.04 Facility and Utilization Fees.
(a) The Borrower shall pay to the Administrative Agent for the
account of each Bank a facility fee on the amount of such Bank's Commitment as
then in effect, for the period from and including the date of this Agreement to
but not including the earlier of the date such Commitment is terminated and the
Revolving Credit Termination Date, at a rate per annum equal to (i) 0.0600%
during any Level I Period, (ii) 0.0800% during any Level II Period, (iii)
0.1000% during any Level III Period, (iv) 0.1250% during any Level IV Period
and (v) 0.2000% during any Level V Period; provided that if such Bank continues
to have a Loan outstanding after such Bank's Commitment terminates, then such
facility fee shall continue to accrue on the daily aggregate principal amount of
Loans of such Bank from and including the date on which its Commitment
terminates to but excluding the date on which such Bank ceases to have any Loans
outstanding. Accrued facility fees shall be payable on each Quarterly Date, on
the Maturity Date and on the earlier of the date the Commitments are terminated
and the Revolving Credit Termination Date. Any change in a facility fee by
reason of a change in the Standard & Poor's Rating or the Moody's Rating shall
become effective on the date two Business Days after the date of announcement or
publication by the respective rating agencies of a change in such rating or, in
the absence of such announcement or publication, on the date two Business Days
after the effective date of such changed rating.
(b) If, at any time during the period from the Closing Date to
but not including the earlier of the date the Commitments are terminated and the
Revolving Credit Termination Date, the aggregate outstanding principal amount of
all Loans exceeds 33% of the net amount of the Commitments, the Borrower shall
pay to the Administrative Agent for the account of each Bank a utilization fee
at a rate per annum equal to 0.25% of the aggregate outstanding principal amount
of the Loans of such Bank during such time. During the period
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from and including the Revolving Credit Termination Date to but excluding the
date on which the relevant Bank ceases to have any Term Loans outstanding, the
Borrower shall pay to the Administrative Agent for the account of each Bank, a
utilization fee at a rate per annum equal to 0.5% of the aggregate outstanding
principal amount of the Term Loans of such Bank. Accrued utilization fees shall
be payable on each Quarterly Date, on the Maturity Date and on the earlier of
the date the Commitments are terminated and the Revolving Credit Termination
Date.
2.05 Lending Offices. The Loans of each Type made by each Bank
shall be made and maintained at such Bank's Applicable Lending Office in Canada
for Loans of such Type.
2.06 Several Obligations; Remedies Independent. The failure of
any Bank to make any Loan to be made by it on the date specified therefor shall
not relieve any other Bank of its obligation to make its Loan on such date, but
neither any Bank nor the Administrative Agent shall be responsible for the
failure of any other Bank to make a Loan to be made by such other Bank, and no
Bank shall have any obligation to the Administrative Agent or any other Bank for
the failure by such Bank to make any Loan required to be made by such Bank. The
amounts payable by the Borrower at any time hereunder to each Bank shall be a
separate and independent debt and each Bank shall be entitled to protect and
enforce its rights arising out of this Agreement, and it shall not be necessary
for any other Bank or the Administrative Agent to consent to, or be joined as an
additional party in, any proceedings for such purposes.
2.07 Loan Accounts.
(a) Maintenance of Loan Accounts by Banks. Each Bank shall
maintain in accordance with its usual practice an account or accounts evidencing
the indebtedness of the Borrower to such Bank resulting from each Loan made by
such Bank, including the amounts of principal and interest payable and paid to
such Bank from time to time hereunder.
(b) Maintenance of Loan Accounts by Administrative Agent. The
Administrative Agent shall maintain accounts in which it shall record (i) the
amount of each Loan made hereunder to the Borrower, the Type thereof and, in the
case of a Eurodollar Loan, BA Loan and LC Loan, the Applicable Period thereof,
as the case may be, (ii) the amount of any principal or interest due and payable
or to become due and payable to each Bank from the Borrower hereunder and (iii)
the amount of any sum received by the Administrative Agent hereunder from the
Borrower for the account of the Banks and each Bank's share thereof.
(c) Effect of Entries. The entries made in the accounts
maintained pursuant to paragraph (a) or (b) of this Section shall be prima facie
evidence of the existence and amounts of the obligations recorded therein absent
any manifest arithmetical error in such accounts; provided that the failure of
any Bank or the Administrative Agent to maintain such accounts or any error
therein shall not in any manner affect the obligation of the Borrower to repay
the Loans in accordance with the terms of this Agreement.
2.08 Optional Prepayments and Conversions or Continuations of
Loans. Subject to Sections 4.04 and Section 5 hereof, the Borrower shall have
the right to prepay Loans,
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or to Convert Loans of one Type into Loans of another Type or Continue Loans of
one Type as Loans of the same Type, at any time or from time to time, provided
that the Borrower shall give the Administrative Agent notice of each such
prepayment, Conversion or Continuation as provided in Section 4.05 hereof (and,
upon the date specified in any such notice of prepayment, the amount to be
prepaid shall become due and payable hereunder). No Eurodollar Loan, LC Loan or
BA Loan, may be prepaid without the prior consent of the Bank holding such Loan.
Notwithstanding the foregoing, and without limiting the rights and remedies of
the Banks under Section 10 hereof, in the event that any Event of Default shall
have occurred and be continuing, the Administrative Agent may (and at the
request of the Majority Banks shall) suspend the right to Convert any Loan into
a Eurodollar Loan, LC Loan or BA Loan, or to Continue any Loan as Eurodollar
Loan, a LC Loan or BA Loan, in which event all Loans shall be Converted (on the
last day(s) of the respective Applicable Periods) or Continued, as the case may
be, as US Base Rate Loans, in the case of Loans outstanding in US Dollars, and
as Cdn Prime Rate Loans in the case of Loans outstanding as BA Loans.
2.09 Extension of Revolving Credit Termination Date.
(a) Request for Extension. The Borrower may, by notice to the
Administrative Agent, which shall promptly notify the Banks, not less than 45
days and not more than 60 days prior to the Revolving Credit Termination Date
then in effect hereunder (the "Existing Revolving Credit Termination Date"),
request that the Banks extend the Revolving Credit Termination Date for an
additional 364 days from the Consent Date (as defined below). Each Bank, acting
in its sole discretion, shall, by notice to the Borrower and the Administrative
Agent given on the date and only the date (herein, the "Consent Date") that is
15 days prior to the Existing Revolving Credit Termination Date (except that, if
such date is not a Business Day, such notice shall be given on the next
succeeding Business Day), advise the Borrower whether or not such Bank agrees to
such extension; provided that each Bank that determines not to extend the
Revolving Credit Termination Date (a "Non-extending Bank") shall notify the
Administrative Agent (which shall notify the Banks) of such fact promptly after
such determination (but in any event no later than the Consent Date) and any
Bank that does not advise the Borrower on or before the Consent Date shall be
deemed to be a Non-extending Bank. The election of any Bank to agree to such
extension shall not obligate any other Bank to so agree. The Guarantor agrees to
each extension of the Revolving Credit Termination Date made pursuant hereto.
(b) Replacement of Non-extending Banks. The Borrower shall have
the right on or before the Existing Revolving Credit Termination Date to replace
each Non-extending Bank with, and otherwise add to this Agreement, one or more
other banks (which may include any Bank, each prior to the Existing Revolving
Credit Termination Date an "Additional Commitment Bank") with the approval of
the Administrative Agent (which approval shall not be unreasonably withheld),
each of which Additional Commitment Banks shall have entered into an agreement
in form and substance satisfactory to the Borrower and the Administrative Agent
pursuant to which such Additional Commitment Bank shall, effective as of the
Existing Revolving Credit Termination Date, undertake a Commitment (and, if any
such Additional Commitment Bank is already a Bank, its Commitment shall be in
addition to such Bank's Commitment hereunder on such date).
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(c) Effectiveness of Extension. If (and only if) the total of the
Commitments of the Banks that have agreed so to extend the Revolving Credit
Termination Date and the additional Commitments of the Additional Commitment
Banks shall be more than 66 2/3% of the aggregate amount of the Commitments in
effect immediately prior to the Consent Date, then, effective as of the Existing
Revolving Credit Termination Date, the Existing Revolving Credit Termination
Date shall be extended to the date falling 364 days after the Consent Date
(except that, if such date is not a Business Day, the Revolving Credit
Termination Date as so extended shall be the next preceding Business Day) and
each Additional Commitment Bank shall thereupon become a "Bank" for all purposes
of this Agreement.
Notwithstanding the foregoing, the extension of the Revolving Credit Termination
Date shall not be effective with respect to any Bank unless:
(i) no Default shall have occurred and be continuing on each of
the date of the notice requesting such extension, on the Consent Date and
on the Existing Revolving Credit Termination Date;
(ii) each of the representations and warranties made by the
Borrower in Section 8 hereof shall be true and complete on and as of each
of the date of the notice requesting such extension, the Consent Date and
the Existing Revolving Credit Termination Date with the same force and
effect as if made on and as of such date (or, if any such representation
or warranty is expressly stated to have been made as of a specific date,
as of such specific date); and
(iii) each Non-extending Bank shall have been paid in full all
amounts owing to such Bank hereunder on or before the Existing Revolving
Credit Termination Date.
Even if the Existing Revolving Credit Termination Date is extended as aforesaid,
the Commitment of each Non-extending Bank shall terminate on the Existing
Revolving Credit Termination Date.
(d) Term-Out Option. If the Revolving Credit Termination Date
shall not have been extended pursuant to Section 2.09(c) hereof, the Borrower
may, by notice to the Administrative Agent not less than 10 days prior to the
Revolving Credit Termination Date convert all Loans made to such Borrower that
are outstanding on the Revolving Credit Termination Date to term loans (each, a
"Term Loan" and collectively, the "Term Loans"). Each Term Loan shall bear
interest, until the payment in full thereof, at the rates provided for in
Section 3.02 and shall otherwise constitute a Loan of the applicable Type for
all purposes of this Agreement. The Borrower hereby unconditionally promises to
pay to the Administrative Agent for account of the Banks the unpaid principal
amount of the Term Loans that are outstanding on the date that is one year after
the Revolving Credit Termination Date (or, if such date is not a Business Day,
the next preceding Business Day) (the "Maturity Date"). Anything in this Section
2.09(d) to the contrary notwithstanding, any such conversion shall be subject to
the conditions precedent that: (i) no Default shall have occurred and be
continuing on the Revolving Credit Termination Date and (ii) each of the
representations and warranties made by the Borrower in Section 8 hereof shall be
true and complete on and as of such Revolving Credit
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Termination Date with the same force and effect as if made on and as of such
date (or, if any such representation or warranty is expressly stated to have
been made as of a specific date, as of such specific date). Each notice of
conversion delivered in accordance with this Section 2.09(d) shall constitute a
certification by the Borrower to the effect set forth in the preceding sentence
(both as of the date of such notice and, unless the Borrower, after delivery of
such notice, otherwise notifies the Administrative Agent prior to the Revolving
Credit Termination Date, as of such date).
Section 3. Payments of Principal and Interest.
3.01 Repayment of Loans. The Borrower hereby promises to pay to
the Administrative Agent for account of each Bank the principal of such Bank's
Loans to such Borrower on the Revolving Credit Termination Date, provided that,
to the extent the Borrower shall have elected to convert any portion of the
outstanding Loans into Term Loans pursuant to Section 2.09(d), such Term Loans
shall mature (and the Borrower hereby unconditionally promises to pay to the
Administrative Agent for the account of each Bank the then unpaid principal
amount of each Term Loan) on the Maturity Date.
3.02 Interest and Borrowing Fees.
(a) Interest. The Borrower hereby promises to pay to the
Administrative Agent for account of each Bank interest on the unpaid principal
amount of each Loan made by such Bank and outstanding as a US Base Rate Loan, a
Cdn Prime Rate Loan or a Eurodollar Loan for the period from and including the
date of such Loan to but excluding the date such Loan shall be paid in full, at
the following rates per annum: (i) during such periods as such Loan is a US Base
Rate Loan, the US Base Rate (as in effect from time to time) plus the Applicable
Margin (if any); (ii) during such periods as such Loan is a Cdn Prime Rate Loan,
the Cdn Prime Rate (as in effect from time to time) plus the Applicable Margin;
and (iii) during such periods as such Loan is a Eurodollar Loan, for each
Applicable Period relating thereto, the LIBO Rate for such Loan for such
Applicable Period plus the Applicable Margin.
(b) The Borrower shall pay to each Bank making a BA Loan, and
each such Bank shall have the right to deduct, from the proceeds of the
Acceptances issued by such Bank or on its behalf, a sum equal to the Applicable
Margin for BA Loans calculated on the basis of the aggregate face amount of the
Acceptances issued by or on behalf of such Bank for the Applicable Period.
(c) Upon the issuance or renewal of each Letter of Credit
hereunder, the Borrower shall pay: (i) to the Administrative Agent, for the
account of each Bank, a fee equal to the Applicable Margin calculated on the
basis of the nominal amount of each such Letter of Credit for the Applicable
Period; and (ii) to the LC Issuing Bank a fronting fee in accordance with the
fee letter between the Borrower and the LC Issuing Bank.
Section 4. Payments; Pro Rata Treatment; Computations; Etc.
4.01 Payments.
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(a) Payment to the Administrative Agent. Except to the extent
otherwise provided herein, all payments of principal, interest and other amounts
to be made by the Borrower under this Agreement shall be made in the currency of
the relevant Loan and all payments of other amounts, except where otherwise
expressly provided, shall be in US Dollars, in all cases, in immediately
available funds, without deduction, set-off or counterclaim, to the
Administrative Agent at an account designated by the Administrative Agent to the
Borrower, not later than 2:00 p.m. Eastern time on the date on which such
payment shall become due (each such payment made after such time on such due
date to be deemed to have been made on the next succeeding Business Day).
(b) Designation of Payee. The Borrower shall, at the time of
making each payment under this Agreement for account of any Bank, specify to the
Administrative Agent (which shall so notify the intended recipient(s) thereof)
the Loans or other amounts payable by such Borrower hereunder to which such
payment is to be applied (and in the event that such Borrower fails to so
specify, or if an Event of Default has occurred and is continuing, the
Administrative Agent may distribute such payment to the Banks for application in
such manner as the Majority Banks, subject to Section 4.02 hereof, may determine
to be appropriate).
(c) Payment of Banks. Each payment received by the Administrative
Agent under this Agreement for account of any Bank shall be paid by the
Administrative Agent promptly to such Bank, in immediately available funds, for
account of such Bank's Applicable Lending Office for the Loan or other
obligation in respect of which such payment is made.
(d) Due Date. If the due date of any payment under this Agreement
would otherwise fall on a day that is not a Business Day, such date shall be
extended to the next succeeding Business Day, and interest shall be payable on
any principal so extended for the period of such extension.
4.02 Pro Rata Treatment. Except to the extent otherwise provided
herein: (a) each borrowing shall be made from the Banks, each payment of
facility fee or utilization fee shall be made for account of the Banks, and each
termination or reduction of the amount of the Commitments shall be applied to
the respective Commitments of the Banks, pro rata according to the amounts of
their respective Commitments and in the event that any Swingline Loan is
outstanding, the Administrative Agent shall be authorized to make adjustments
among the Banks to effect such allocation; (b) the Conversion and Continuation
of Loans of a particular Type (other than Conversions provided for by Section
5.04 hereof) shall be made pro rata among the Banks according to the amounts of
their respective Commitments (in the case of making of Loans) or their
respective Loans (in the case of Conversions and Continuations of Loans), and
the then current Applicable Period for each Loan of such Type shall be
coterminous; (c) each payment or prepayment of principal of Loans by a Borrower
shall be made for account of the Banks pro rata in accordance with the
respective unpaid principal amounts of the Loans held by them; and (d) each
payment of interest or fees on Loans by a Borrower shall be made for account of
the Banks pro rata in accordance with the amounts of interest or fees on such
Loans then due and payable to the respective Banks.
4.03 Computations.
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(a) Interest on Eurodollar Loans, facility fees and utilization
fees shall be computed on the basis of a year of 360 days and actual days
elapsed (including the first day but excluding the last day) occurring in the
period or Applicable Period for which payable. Interest on US Base Rate Loans
and Cdn Prime Rate Loans, as well as the BA Discount Rate, Applicable Margin for
BA Loans, and the fees, as well as the Applicable Margin for LC Loans and the
fees related to the issuance of Letters of Credit shall be computed on the basis
of a year of 365 or 366 days, as the case may be, and actual days elapsed
(including the first day but excluding the last day) occurring in the period or
Applicable Period for which payable. Notwithstanding the foregoing, for each day
that the US Base Rate is calculated by reference to the Federal Funds Rate,
interest on US Base Rate Loans shall be computed on the basis of a year of 360
days and actual days elapsed.
(b) For the purposes of the Interest Act (Canada): (i) any amount
of interest or fees calculated herein on the basis of a period comprising 360,
365 or 366 days and expressed as an annual rate is equal to the said rate of
interest or fees multiplied by the actual number of days comprised within the
calendar year, divided by 360,365 or 366, as the case may be; (ii) the Borrower
waives the benefit of section 13 of the Act, relating to the rate of interest on
judgment debts in certain provinces and territories, excluding the province of
Quebec; and (iii) the parties acknowledge and agree, for the purposes of this
Agreement, that all interest will be calculated using the nominal rate method
and not the effective rate method, that the deemed re-investment principle shall
not apply to such calculations, that there is a material distinction between the
nominal and effective rate of interest, and that they are capable of interest,
and that they are capable of making the calculations necessary to compare such
rates.
4.04 Minimum Amounts. Except for Conversions or prepayments made
pursuant to Section 5.04 hereof, each borrowing, Conversion and partial
prepayment of principal of Loans shall be in aggregate amounts at least equal to
those contemplated by Section 2.01 hereof (and borrowings, Conversions or
prepayments of or into Loans of different Types or, in the case of Eurodollar
Loans, LC Loans and BA Loans, having different Applicable Periods are to be
deemed separate borrowings, Conversions or prepayments for purposes as the case
may be).
4.05 Certain Notices. Notices to the Administrative Agent by the
Borrower of terminations or reductions of the Commitments, and of borrowings,
Conversions, Continuations and optional prepayments of Loans, of Types of Loans
and of the duration of Applicable Periods, shall be irrevocable and shall be
effective only if received by the Administrative Agent not later than 11:00 a.m.
Eastern time on the number of Business Days prior to the date of the relevant
termination, reduction, borrowing, Conversion, Continuation or prepayment or the
first day of such Applicable Period specified below:
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Number of
Business
Notice Days Prior
------ ----------
Termination or reduction
of Commitments 3
Borrowing or prepayment of,
or Conversions into,
US Base Rate Loans and same day
Cdn Prime Rate Loans (other than Swingline
Loans for which no notice is required)
Borrowing of, Conversions into,
Continuations as, or duration of
Applicable Period for, Eurodollar Loans 3
Borrowing of, Conversions into,
Continuations as, or duration of
Applicable Period for, BA Loans 3
Borrowing of, Conversions into,
Continuations as, or duration of
Applicable Period for, LC Loans 3
Each such notice of termination or reduction shall specify the amount of the
Commitments to be terminated or reduced. Each such notice of borrowing,
Conversion, Continuation or optional prepayment shall specify the Loans to be
borrowed, Converted, Continued or prepaid and the amount (subject to Section
4.04 hereof) and Type of each Loan to be borrowed, Converted, Continued or
prepaid (and, in the case of a Conversion, the Type of Loan to result from such
Conversion) and the date of borrowing, Conversion, Continuation or optional
prepayment (which shall be a Business Day). Each such notice of the duration of
an Applicable Period shall specify the Loans to which such Applicable Period is
to relate. The Administrative Agent shall promptly notify the Banks of the
contents of each such notice. In the event that a Borrower fails to select the
Type of Loan, or the duration of any Applicable Period where required, within
the time period and otherwise as provided in this Section 4.05, such Loan will
be automatically Converted into a US Base Rate Loan on the last day of the then
current Applicable Period for such Loan or (if outstanding as a US Base Rate
Loan) will remain as, or (if not then outstanding) will be made as, a US Base
Rate Loan.
4.06 Non-Receipt of Funds by the Administrative Agent. Unless the
Administrative Agent shall have been notified by a Bank or the Borrower (each a
"Payor") prior to the date on which the Payor is to make payment to the
Administrative Agent of (in the case of a Bank) the proceeds of a Loan to be
made by such Bank hereunder or (in the case of a Borrower) a payment to the
Administrative Agent for account of one or more of the Banks hereunder (such
payment being herein called the "Required Payment"), which notice shall be
-24-
effective upon receipt, that the Payor does not intend to make the Required
Payment to the Administrative Agent, the Administrative Agent may assume that
the Required Payment has been made and may, in reliance upon such assumption
(but shall not be required to), make the amount thereof available to the
intended recipient(s) on such date; and, if the Payor has not in fact made the
Required Payment to the Administrative Agent, the recipient(s) of such payment
shall, on demand, repay to the Administrative Agent the amount so made available
together with interest thereon in respect of each day during the period
commencing on the date (the "Advance Date") such amount was so made available by
the Administrative Agent until the date the Administrative Agent recovers such
amount at a rate per annum equal to the Federal Funds Rate if the amount is
denominated in US Dollars, or the Cdn Prime Rate if the amount is denominated in
Cdn Dollars for such day and, if such recipient(s) shall fail promptly to make
such payment, the Administrative Agent shall be entitled to recover such amount,
on demand, from the Payor, together with interest as aforesaid, provided that if
the recipient(s) shall fail to return, and the Payor shall fail to make, the
Required Payment to the Administrative Agent within three Business Days of the
Advance Date, then, retroactively to the Advance Date, the Payor and the
recipient(s) shall each be obligated to pay interest on the Required Payment as
follows:
(i) if the Required Payment shall represent a payment to be made
by the Borrower to the Banks, the Borrower and the recipient(s) shall
each be obligated retroactively to the Advance Date to pay interest in
respect of the Required Payment at the Post-Default Rate (and, in case
the recipient(s) shall return the Required Payment to the Administrative
Agent, without limiting the obligation of the Borrower under Section 3.02
hereof to pay interest to such recipient(s) at the Post-Default Rate in
respect of the Required Payment); and
(ii) if the Required Payment shall represent proceeds of a Loan
to be made by the Banks to the Borrower, the Payor and the Borrower shall
each be obligated retroactively to the Advance Date to pay interest in
respect of the Required Payment at the rate of interest provided for such
Required Payment pursuant to Section 3.02 hereof (and, in case such
Borrower shall return the Required Payment to the Administrative Agent,
without limiting any claim such Borrower may have against the Payor in
respect of the Required Payment).
4.07 Sharing of Payments, Etc.
(a) Offset. The Borrower agrees that, if a Default hereunder
shall have occurred and is continuing, then in addition to (and without
limitation of) any right of set-off, compensation, banker's lien or counterclaim
a Bank may otherwise have, each Bank shall be entitled, at its option, to offset
balances held by it for account of such Borrower at any of its offices, in US
Dollars, Cdn Dollars, or in any other currency, against any principal of or
interest on any of such Bank's Loans to the Borrower or any other amount payable
to such Bank by the Borrower hereunder, that is not paid when due (regardless of
whether such balances are then due to such Borrower), in which case it shall
promptly notify the Borrower and the Administrative Agent thereof, provided that
such Bank's failure to give such notice shall not affect the validity thereof.
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(b) Sharing of Payments. If any Bank shall obtain from the
Borrower payment of any principal of or interest on any Loan owing to it or
payment of any other amount under this Agreement through the exercise of any
right of set-off, compensation, banker's lien or counterclaim or similar right
or otherwise (other than from the Administrative Agent as provided herein), and,
as a result of such payment, such Bank shall have received a greater percentage
of the principal of or interest on the Loans or such other amounts then due
hereunder by the Borrower to such Bank than the percentage received by any other
Bank, it shall promptly purchase from such other Banks participations in (or, if
and to the extent specified by such Bank, direct interests in) the Loans or such
other amounts, respectively, owing to such other Banks (or in interest due
thereon, as the case may be) in such amounts, and make such other adjustments
from time to time as shall be equitable, to the end that all the Banks shall
share the benefit of such excess payment (net of any expenses that may be
incurred by such Bank in obtaining or preserving such excess payment) pro rata
in accordance with the unpaid principal of and/or interest on the Loans or such
other amounts, respectively, owing to each of the Banks. To such end all the
Banks shall make appropriate adjustments among themselves (by the resale of
participations sold or otherwise) if such payment is rescinded or must otherwise
be restored.
(c) Indirect Holders. The Borrower agrees that, if a Default
hereunder shall have occurred and is continuing, then any Bank so purchasing
such a participation (or direct interest) may exercise all rights of set-off,
compensation, banker's lien, counterclaim or similar rights with respect to such
participation as fully as if such Bank were a direct holder of Loans or other
amounts (as the case may be) owing to such Bank in the amount of such
participation.
(d) Other Indebtedness. Nothing contained herein shall require
any Bank to exercise any such right or shall affect the right of any Bank to
exercise, and retain the benefits of exercising, any such right with respect to
any other indebtedness or obligation of the Borrower. If, under any applicable
bankruptcy, insolvency or other similar law, any Bank receives a secured claim
in lieu of a set-off or right of compensation to which this Section 4.07
applies, such Bank shall, to the extent practicable, exercise its rights in
respect of such secured claim in a manner consistent with the rights of the
Banks entitled under this Section 4.07 to share in the benefits of any recovery
on such secured claim.
Section 5. Yield Protection, Etc.
5.01 Additional Costs.
(a) Additional Costs. The Borrower shall pay directly to each
Bank from time to time such amounts as such Bank may reasonably determine to be
necessary to compensate such Bank for any costs that such Bank determines are
attributable to its agreeing to make, making or maintaining of any Eurodollar
Loans, LC Loans or BA Loans, or any reduction in any amount receivable by such
Bank hereunder in respect of any of such Loans (such increases in costs and
reductions in amounts receivable being herein called "Additional Costs"),
resulting from any Regulatory Change that:
(i) changes the basis of taxation of any amounts payable to such
Bank under this Agreement in respect of any of such Loans (other than
taxes imposed on or measured
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by the overall net income of such Bank or of its Applicable Lending
Office for any of such Loans by the jurisdiction in which such Bank has
its principal office or such Applicable Lending Office); or
(ii) imposes or modifies any reserve, special deposit or similar
requirements after the date hereof relating to any extensions of credit
or other assets of, or any deposits with or other liabilities of, such
Bank (including, without limitation, any of such Loans or any deposits
referred to in the definition of "LIBO Rate" in Section 1.01 hereof), or
any commitment of such Bank (including, without limitation, the
Commitment of such Bank hereunder); or
(iii) imposes any other condition affecting this Agreement (or
any of such extensions of credit or liabilities) or its Commitment.
If any Bank requests compensation from the Borrower under this Section 5.01(a),
the Borrower may, by notice to such Bank (with a copy to the Administrative
Agent), suspend the obligation of such Bank thereafter to make or Continue Loans
of the Type with respect to which such compensation is requested, or to Convert
Loans of any other Type into Loans of such Type, until the Regulatory Change
giving rise to such request ceases to be in effect (in which case the provisions
of Section 5.04 hereof shall be applicable), provided that such suspension shall
not affect the right of such Bank to receive the compensation so requested.
(b) Regulatory Changes. Without limiting the effect of the
provisions of paragraph (a) of this Section 5.01, in the event that, by reason
of any Regulatory Change, any Bank either (i) incurs Additional Costs based on
or measured by the excess above a specified level of the amount of a category of
deposits or other liabilities of such Bank that includes deposits by reference
to which the interest rate on Eurodollar Loans is determined as provided in this
Agreement or a category of extensions of credit or other assets of such Bank
that includes Eurodollar Loans or (ii) becomes subject to restrictions on the
amount of such a category of liabilities or assets that it may hold, then, if
such Bank so elects by notice to the Borrower (with a copy to the Administrative
Agent), the obligation of such Bank to make or Continue, or to Convert Loans of
any other Type into, Loans of such Type hereunder shall be suspended until such
Regulatory Change ceases to be in effect (in which case the provisions of
Section 5.04 hereof shall be applicable).
(c) Compensation. Without limiting the effect of the foregoing
provisions of this Section 5.01 (but without duplication), the Borrower shall
pay directly to each Bank from time to time on request such amounts as such Bank
may reasonably determine to be necessary to compensate such Bank for any costs
that it determines are attributable to the maintenance by such Bank (or any
Applicable Lending Office or such bank holding company), pursuant to any law or
regulation or any interpretation, directive or request (whether or not having
the force of law and whether or not failure to comply therewith would be
unlawful) of any court or governmental or monetary authority (i) following any
Regulatory Change or (ii) implementing any risk-based capital guideline or other
requirement (whether or not having the force of law and whether or not the
failure to comply therewith would be unlawful) hereafter issued by any
government or governmental or supervisory authority implementing at the national
level the New
-27-
Basle Capital Accord (as released by the Office of the Superintendent of
Financial Institutions on January 16, 2001, as same may be revised and come into
force in Canada and as same may thereafter be amended, supplemented or replaced
from time to time), of capital in respect of its Commitment or Loans (such
compensation to include, without limitation, an amount equal to any reduction of
the rate of return on assets or equity of such Bank (or any Applicable Lending
Office or such bank holding company) to a level below that which such Bank (or
any Applicable Lending Office or such bank holding company) could have achieved
but for such law, regulation, interpretation, directive or request).
(d) Notification. Each Bank shall notify the Borrower of any
event occurring after the date of this Agreement entitling such Bank to
compensation under paragraph (a) or (c) of this Section 5.01 as promptly as
practicable, but in any event within 45 days, after such Bank obtains actual
knowledge thereof; provided that (i) if any Bank fails to give such notice
within 45 days after it obtains actual knowledge of such an event, such Bank
shall, with respect to compensation payable pursuant to this Section 5.01 in
respect of any costs resulting from such event, be entitled to payment under
this Section 5.01 only for costs incurred from and after the date 45 days prior
to the date that such Bank does give such notice and (ii) each Bank will
designate a different Applicable Lending Office for the Loans of such Bank
affected by such event if such designation will avoid the need for, or reduce
the amount of, such compensation and will not, in the sole opinion of such Bank,
be disadvantageous to such Bank. Each Bank will furnish to the Borrower a
certificate setting forth in reasonable detail the basis and amount of each
request by such Bank for compensation under paragraph (a) or (c) of this Section
5.01. Determinations and allocations by any Bank for purposes of this Section
5.01 of the effect of any Regulatory Change pursuant to paragraph (a) or (b) of
this Section 5.01, or of the effect of capital maintained pursuant to paragraph
(c) of this Section 5.01, on its costs or rate of return of maintaining Loans or
its obligation to make Loans, or on amounts receivable by it in respect of
Loans, and of the amounts required to compensate such Bank under this Section
5.01, shall be conclusive, provided that such determinations and allocations are
made on a reasonable basis.
5.02 Limitation on Types of Loans. Anything herein to the
contrary notwithstanding, if, on or prior to the determination of the LIBO Rate
for any Applicable Period or the BA Discount Rate for any BA Loan:
(a) the Administrative Agent determines, in the case of
Eurodollar Loans, which determination shall be conclusive, that
quotations of interest rates for the relevant deposits referred to in the
definition of "LIBO Rate" in Section 1.01 hereof are not being provided
in the relevant amounts or for the relevant maturities for purposes of
determining rates of interest for Eurodollar Loans as provided herein;
(b) the Administrative Agent determines in the case of BA Loans,
which determination shall be conclusive, that quotations for 30-day
discount rates for Cdn Dollar bankers' acceptances referred to in the
definition of CDOR Rate are not available;
(c) the Majority Banks determine, which determination shall be
conclusive, and notify (or notifies, as the case may be) the
Administrative Agent that the relevant
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rates of interest referred to in the definition of "LIBO Rate" in Section
1.01 hereof upon the basis of which the rate of interest for Eurodollar
Loans for such Applicable Period is to be determined are not likely
adequately to cover the cost to such Banks (or to such quoting Bank) of
making or maintaining Eurodollar Loans for such Applicable Period;
then the Administrative Agent shall give the Borrower and each Bank prompt
notice thereof and, so long as such condition remains in effect, the Banks (or
such quoting Bank) shall be under no obligation to make additional Loans of such
Type, to Continue Loans of such Type or to Convert Loans of any other Type into
Loans of such Type, and each Borrower shall, on the last day(s) of the then
current Applicable Period(s) for the outstanding Loans of such Type, either
prepay such Loans or Convert such Loans into another Type of Loan in accordance
with Section 2.08 hereof.
5.03 Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Bank or its Applicable
Lending Office to honor its obligation to make or maintain Eurodollar Loans or
BA Loans hereunder, then such Bank shall promptly notify the Borrower thereof
(with a copy to the Administrative Agent) and such Bank's obligation to such
Borrower to make or Continue, or to Convert Loans of any other Type into,
Eurodollar Loans or BA Loans, as the case may be, shall be suspended until such
time as such Bank may again make and maintain Eurodollar Loans or BA Loans, as
the case may be, to the Borrower (in which case the provisions of Section 5.04
hereof shall be applicable).
5.04 Treatment of Affected Loans. If the obligation of any Bank
to make a particular Type of Loan or to Continue, or to Convert Loans of any
other Type into, Loans of a particular Type shall be suspended pursuant to
Section 5.01 or 5.03 hereof (Loans of such Type being herein called "Affected
Loans" and such Type being herein called the "Affected Type"), such Bank's
Affected Loans shall be automatically Converted into US Base Rate Loans if the
Affected Loans are denominated in US Dollars, and into Cdn Prime Rate Loans if
the Affected Loans are denominated in Cdn Dollars, on the last day(s) of the
then current Applicable Period(s) for the Affected Loans (or, in the case of a
Conversion as a result of Section 5.01(b) or 5.03 hereof, on such earlier date
as such Bank may specify to the Borrower of such Affected Loans with a copy to
the Administrative Agent) and, unless and until such Bank gives notice as
provided below that the circumstances specified in Section 5.01 or 5.03 hereof
that gave rise to such Conversion no longer exist:
(a) to the extent that such Bank's Affected Loans have been so
Converted, all payments and prepayments of principal that would otherwise
be applied to such Bank's Affected Loans shall be applied instead to its
US Base Rate Loans if the Affected Loans are denominated in US Dollars or
to its Cdn Prime Rate Loans if the Affected Loans are in Cdn Dollars;
(b) all Loans that would otherwise be made or Continued or
Converted by such Bank as Loans of the Affected Type shall be Continued
or Converted, as the case may be, as US Base Rate Loans, if the Affected
Loans are denominated in US Dollars, or Cdn Prime Rate Loans if the
Affected Loans are denominated in Cdn Dollars; and
-29-
(c) if Loans of other Banks of the Affected Type are subsequently
Converted into Loans of another Type, such Bank's US Base Rate Loans or
Cdn Dollar Prime Rate Loans, as the case may be, shall be automatically
Converted on the Conversion date for such Loans of the other Banks into
Loans of such other Type to the extent necessary so that, after giving
effect thereto, all Loans held by such Bank and the Banks whose Loans are
so Converted are held pro rata (as to principal amounts, Types and
Applicable Periods) in accordance with their respective Commitments.
If such Bank gives notice to the Borrower with a copy to the Administrative
Agent that the circumstances specified in Section 5.01 or 5.03 hereof that gave
rise to the Conversion of such Bank's Affected Loans pursuant to this Section
5.04 no longer exist (which such Bank agrees to do promptly upon such
circumstances ceasing to exist) at a time when Loans of the Affected Type made
by other Banks are outstanding, such Bank's US Base Rate Loans or Cdn Dollar
Prime Rate Loans, as the case may be, shall be automatically Converted, on the
first day(s) of the next succeeding Applicable Period(s) for such outstanding
Loans of the Affected Type, to the extent necessary so that, after giving effect
thereto, all Loans held by the Banks holding Loans of the Affected Type and by
such Bank are held pro rata (as to principal amounts, Types and Applicable
Periods) in accordance with their respective Commitments.
5.05 Compensation. The Borrower shall pay to the Administrative
Agent for account of each Bank, upon the request of such Bank through the
Administrative Agent, such amount or amounts as shall be sufficient (in the
reasonable opinion of such Bank) to compensate it for any loss, cost or expense
that such Bank determines is attributable to:
(a) any payment, prepayment or Conversion of a Eurodollar Loan or
a BA Loan made by such Bank to the Borrower for any reason (including,
without limitation, the acceleration of the Loans pursuant to Section 10
hereof) on a date other than the last day of the Applicable Period; or
(b) any failure by the Borrower for any reason (including,
without limitation, the failure of any of the conditions precedent
specified in Section 7 hereof to be satisfied, or the failure of any of
the conditions precedent to the conversion of Loans to Term Loans
pursuant to Section 2.09(d) hereof, to be satisfied) to borrow a
Eurodollar Loan or a BA Loan from such Bank on the date for such
borrowing specified in the relevant notice of borrowing given pursuant to
Section 2.02 or 2.03(b) hereof or to effect a conversion pursuant to
Section 2.09(d) hereof pursuant to a notice given pursuant to Section
2.09(d) hereof; or
(c) any failure for any reason (including, without limitation, as
provided in Section 5.02 or 5.03 hereof) of a Loan of such Bank to the
Borrower to be Continued as or Converted into a Eurodollar Loan or a BA
Loan on the date for such Continuation or Conversion specified in the
relevant notice given pursuant to Section 2.08 hereof.
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5.06 Foreign Taxes.
(a) Payments Free and Clear of Foreign Taxes. All payments on
account of the principal of and interest on the Loans, fees and all other
amounts payable hereunder by the Guarantor to or for the account of the
Administrative Agent or any Bank, including, without limitation, amounts payable
under paragraph (b) of this Section 5.06, shall be made free and clear of and
without reduction or liability for Foreign Taxes. The Guarantor will pay all
Foreign Taxes applicable to it, without charge to or offset against any amount
due to the Administrative Agent or any Bank, prior to the date on which
penalties attach thereto, except for any such Foreign Taxes (other than Foreign
Taxes imposed on or in respect of any amount payable by the Guarantor hereunder)
the payment of which is being contested in good faith and by proper proceedings
and against which adequate reserves are being maintained, so long as no claim
for such Foreign Taxes is made on the Administrative Agent or any Bank.
(b) Indemnification for Foreign Taxes. The Guarantor shall
indemnify the Administrative Agent and each Bank against, and reimburse the
Administrative Agent and each Bank on demand for, any Foreign Taxes applicable
to it and any loss, liability, claim or expense, including interest, penalties
and legal fees, that the Administrative Agent or such Bank may incur at any time
arising out of or in connection with any failure of the Guarantor to make any
payment of Foreign Taxes when due.
(c) Gross-Up for Foreign Taxes. In the event that the Guarantor
is required by applicable law, decree or regulation to deduct or withhold
Foreign Taxes from any amounts payable on, under or in respect of this Agreement
or the Loans, the Guarantor shall (to the fullest extent permitted by applicable
law) promptly pay the Person entitled to such amount such additional amounts as
may be required, after the deduction or withholding of Foreign Taxes, to enable
such Person to receive from the Guarantor on the due date thereof, an amount
equal to the full amount stated to be payable to such Person under this
Agreement. Each Bank shall provide to the Guarantor such forms or certificates
as the Guarantor may reasonably request to establish such Bank's entitlement to
an exemption from or reduction of Foreign Taxes, but no Bank shall be required
to provide any form or certificate if it determines in its discretion that the
provision of such form or certificate could adversely affect it or it is not
legally entitled to provide such form or certificate.
(d) Tax Receipts, Etc. The Guarantor shall furnish to the
Administrative Agent, upon the request of any Bank (through the Administrative
Agent), together with sufficient certified copies for distribution to each Bank
requesting the same (identifying the Banks that have so requested), original
official tax receipts (or certified copies thereof) in respect of each payment
of Foreign Taxes required under this Section 5.06 made by the Guarantor or such
other information, documents and receipts that the Administrative Agent or such
Bank may reasonably require to establish to its satisfaction that full and
timely payment has been made of all Foreign Taxes required to be paid under this
Section 5.06 within 30 days after the date such payment is made.
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Section 6. Guarantee.
6.01 The Guarantee. The Guarantor hereby guarantees to
each Bank and the Administrative Agent and their respective successors and
assigns the prompt payment in full when due (whether at stated maturity, by
acceleration or otherwise) of the principal of and interest on the Loans made by
the Banks to the Borrower, and all other amounts from time to time owing to the
Banks or the Administrative Agent by the Borrower under this Agreement, in each
case strictly in accordance with the terms hereof and free and clear of, and
without reduction or liability for, Foreign Taxes as provided in Section 5.06
hereof (such obligations being herein collectively called the "Guaranteed
Obligations"). The Guarantor hereby further agrees that if the Borrower shall
fail to pay in full when due (whether at stated maturity, by acceleration or
otherwise) any of the Guaranteed Obligations, the Guarantor will promptly pay
the same, without any demand or notice whatsoever, and that in the case of any
extension of time of payment or renewal of any of the Guaranteed Obligations,
the same will be promptly paid in full when due (whether at extended maturity,
by acceleration or otherwise) in accordance with the terms of such extension or
renewal.
6.02 Obligations Unconditional. The obligations of the
Guarantor under Section 6.01 hereof are absolute and unconditional, irrespective
of the value, genuineness, validity, regularity or enforceability of the
obligations of the Borrower under this Agreement or any other agreement or
instrument referred to herein, or any substitution, release or exchange of any
other guarantee of or security for any of the Guaranteed Obligations, and, to
the fullest extent permitted by applicable law, irrespective of any other
circumstance whatsoever that might otherwise constitute a legal or equitable
discharge or defense of a surety or guarantor, it being the intent of this
Section 6.02 that the obligations of the Guarantor hereunder shall be absolute
and unconditional under any and all circumstances. Without limiting the
generality of the foregoing, it is agreed that the occurrence of any one or more
of the following shall not alter or impair the liability of the Guarantor
hereunder, which shall remain absolute and unconditional as described above:
(i) at any time or from time to time, without notice to
the Guarantor, the time for any performance of or compliance with any
of the Guaranteed Obligations shall be extended, or such performance or
compliance shall be waived;
(ii) any of the acts mentioned in any of the provisions of
this Agreement or any other agreement or instrument referred to herein
shall be done or omitted;
(iii) the maturity of any of the Guaranteed Obligations
shall be accelerated, or any of the Guaranteed Obligations shall be
modified, supplemented or amended in any respect, or any right under
this Agreement or any other agreement or instrument referred to herein
shall be waived or any other guarantee of any of the Guaranteed
Obligations or any security therefor shall be released or exchanged in
whole or in part or otherwise dealt with; or
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(iv) any lien or security interest granted to, or in favor
of, the Administrative Agent or any Bank or Banks as security for any
of the Guaranteed Obligations shall fail to be perfected.
The Guarantor hereby expressly waives diligence, presentment, demand of payment,
protest and all notices whatsoever, and any requirement that the Administrative
Agent or any Bank exhaust any right, power or remedy or proceed against the
Borrower under this Agreement or any other agreement or instrument referred to
herein, or against any other Person under any other guarantee of, or security
for, any of the Guaranteed Obligations.
6.03 Reinstatement. The obligations of the Guarantor under
this Section 6 shall be automatically reinstated if and to the extent that for
any reason any payment by or on behalf of the Borrower in respect of the
Guaranteed Obligations is rescinded or must be otherwise restored by a Bank, the
Administrative Agent or any other holder of any of the Guaranteed Obligations,
whether as a result of any proceedings in bankruptcy or reorganization or
otherwise, and the Guarantor agrees that it will indemnify the Administrative
Agent and each Bank on demand for all reasonable costs and expenses (including,
without limitation, fees of counsel) incurred by the Administrative Agent or
such Bank in connection with such rescission or restoration, including any such
costs and expenses incurred in defending against any claim alleging that such
payment constituted a preference, fraudulent transfer or similar payment under
any bankruptcy, insolvency or similar law.
6.04 Subrogation. The Guarantor hereby agrees that, until
the payment and satisfaction in full of all Guaranteed Obligations and the
expiration and termination of the Commitments of the Banks under this Agreement,
it shall not exercise any right or remedy arising by reason of any performance
by it of its guarantee in Section 6.01 hereof, whether by subrogation or
otherwise, against the Borrower or any security for any of the Guaranteed
Obligations.
6.05 Remedies. The Guarantor agrees that, as between the
Guarantor and the Banks, the obligations of the Borrower under this Agreement
may be declared to be forthwith due and payable as provided in Section 10 hereof
(and shall be deemed to have become automatically due and payable in the
circumstances provided in said Section 10) for purposes of Section 6.01 hereof
notwithstanding any stay, injunction or other prohibition preventing such
declaration (or such obligations from becoming automatically due and payable) as
against the Borrower and that, in the event of such declaration (or such
obligations being deemed to have become automatically due and payable), such
obligations (whether or not due and payable by the Borrower) shall forthwith
become due and payable by the Borrower for purposes of said Section 6.01.
6.06 Instrument for the Payment of Money. The Guarantor
hereby acknowledges that the guarantee in this Section 6 constitutes an
instrument for the payment of money, and consents and agrees that any Bank or
the Administrative Agent, at its sole option, in the event of a dispute by the
Guarantor in the payment of any moneys due hereunder, shall have the right to
bring motion-action under New York CPLR Section 3213.
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6.07 Continuing Guarantee. The guarantee in this Section 6
is a continuing guarantee, and shall apply to all Guaranteed Obligations
whenever arising.
Section 7. Conditions Precedent.
7.01 Initial Loan. The obligation of any Bank to make its
initial Loan hereunder is subject to the receipt, on or before November 16,
2001, by the Administrative Agent (with sufficient copies for each Bank that
requests a copy) of the following documents, each of which shall be satisfactory
to the Administrative Agent (and to the extent specified below, to each Bank) in
form and substance:
(a) Corporate Documents. Certified copies of the charter
and by-laws of the Borrower and the Guarantor and of all corporate
authority for the Borrower and the Guarantor (including, without
limitation, board of director resolutions and evidence of the
incumbency, including specimen signatures, of officers) with respect to
the execution, delivery and performance of this Agreement and the Loans
to be made to the Borrower hereunder (and the Administrative Agent and
each Bank may conclusively rely on such certificate until it receives
notice in writing from the Borrower to the contrary);
(b) Officer's Certificate. A certificate of a financial
officer of the Guarantor, to the effect set forth in the first sentence
of Section 7.02 hereof;
(c) Opinion of Counsel to the Borrower. An opinion of
Fraser Milner Casgrain LLP, legal counsel to the Borrower,
substantially in the form of Exhibit B hereto and covering such other
matters as the Administrative Agent or any Bank may reasonably request
(and the Borrower hereby instructs such counsel to deliver such opinion
to the Banks and the Administrative Agent);
(d) Opinion of Counsel to the Guarantor. An opinion of
Anthony H. Barash, Esq., Senior Vice President, Corporate Affairs, and
General Counsel of the Guarantor, substantially in the form of Exhibit
C hereto and covering such other matters as the Administrative Agent or
any Bank may reasonably request (and the Guarantor hereby instructs
such counsel to deliver such opinion to the Banks and the
Administrative Agent);
(e) Opinion of Special New York Counsel to Guarantor. An
opinion of Carter, Ledyard & Milburn, special New York counsel to the
Guarantor, substantially in the form of Exhibit D hereto (and the
Guarantor hereby instructs such counsel to deliver such opinion to the
Administrative Agent and the Banks);
(f) Opinion of Special Counsel to the Administrative
Agent. An opinion of McCarthy Tetrault LLP, special counsel to the
Administrative Agent, substantially in the form of Exhibit E hereto
(and the Administrative Agent) hereby instructs such counsel to deliver
such opinion to the Banks); and
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(g) Other Documents. Such other documents as the
Administrative Agent or any Bank or special New York counsel to the
Administrative Agent may reasonably request.
The obligation of any Bank to make its initial extension of credit hereunder is
also subject to the payment or delivery by the Borrower of such fees and other
consideration as the Borrower shall have agreed to pay or deliver to any Bank or
an affiliate thereof or the Administrative Agent in connection herewith.
7.02 Initial and Subsequent Loans. The obligation of any
Bank to make any Loan (including any initial Loan) upon the occasion of each
borrowing hereunder is subject to the further conditions precedent that, both
immediately prior to the making of such Loan and also after giving effect
thereto and to the intended use thereof:
(a) no Default shall have occurred and be continuing; and
(b) the representations and warranties made by the
Borrower and the Guarantor in Section 8 hereof shall be true and
complete on and as of the date of the making of such Loan with the same
force and effect as if made on and as of such date (or, if any such
representation or warranty is expressly stated to have been made as of
a specific date, as of such specific date).
Each notice of borrowing hereunder shall constitute a certification to the
effect set forth in the preceding sentence (both as of the date of such notice
and, unless the Borrower and the Guarantor otherwise notify the Administrative
Agent prior to the date of such borrowing, as of the date of such borrowing).
Section 8. Representations and Warranties.
Each of the Borrower and the Guarantor represents and
warrants to the Administrative Agent and the Banks that:
8.01 Corporate Existence. Each of the Borrower, the
Guarantor and their respective Subsidiaries: (a) is a corporation, partnership
or other entity duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization; (b) has all requisite corporate or
other power, and has all material governmental licenses, authorizations,
consents and approvals necessary to own its assets and carry on its business as
now being or as proposed to be conducted; and (c) is qualified to do business
and is in good standing in all jurisdictions in which the nature of the business
conducted by it makes such qualification necessary and where failure so to
qualify could have a Material Adverse Effect.
8.02 Financial Conditions. The Guarantor has heretofore
furnished to each of the Banks the following financial statements:
(i) the audited consolidated balance sheets of the
Guarantor and its Consolidated Subsidiaries as at December 31, 1999 and
December 31, 2000, respectively, and the related audited consolidated
statements of operations, capital accounts and cash
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flows of the Guarantor and its Consolidated Subsidiaries for the fiscal
years ended on said respective dates, with the opinion thereon of KPMG
LLP;
(ii) the unaudited consolidated balance sheets of the
Guarantor and its Consolidated Subsidiaries as at June 30, 2001 and the
related unaudited consolidated statements of operations, capital
accounts and cash flows of the Guarantor and its Consolidated
Subsidiaries for the three month period ended on said date;
(iii) a pro forma condensed combined unaudited balance
sheet and statement of operations of the Guarantor and its Consolidated
Subsidiaries as at June 30, 2001, and a pro forma condensed combined
unaudited statement of operations of the Guarantor and its Consolidated
Subsidiaries for the fiscal year ended December 31, 2000, certified by
a financial officer of the Guarantor and prepared under the assumption
that the Alliance Arrangement, and the borrowings contemplated by the
Alliance Arrangement had each been consummated on June 30, 2001 (for
the balance sheet) or January 1, 2000 (for the statement of
operations), and demonstrating the solvency of the Guarantor and its
Consolidated Subsidiaries on a pro forma basis after giving effect to
the Alliance Arrangement; and
(iv) consolidated financial statement projections for the
Guarantor and its Consolidated Subsidiaries given effect to the
Alliance Arrangement and the borrowings contemplated hereunder, which
projections shall cover the three-year period through the fiscal year
ended December 31, 2003.
Such financial statements (other than the projections described in clause (iv))
are complete and correct in all material respects and fairly present the
respective consolidated actual or pro forma (as the case may be) financial
condition of the Guarantor and its Consolidated Subsidiaries, as at said date
and the actual or pro forma (as applicable) consolidated results of their
operations for the fiscal year ended on said date, all in accordance with
generally accepted accounting principles and practices of the United States of
America applied on a consistent basis; and neither the Guarantor nor any of its
Subsidiaries had on the date thereof any material contingent liabilities,
liabilities for taxes, forward or long-term commitments outside the ordinary
course of business or unrealized or anticipated losses from any unfavorable
commitments, except as referred to or reflected or provided for in said balance
sheets as at said date. There has been no material adverse change in the
Property, business, operations, financial condition, liabilities or
capitalization of the Guarantor and its Consolidated Subsidiaries taken as a
whole since the last day of the fiscal year of the Guarantor as to which
financial statements have most recently been delivered pursuant to Section
9.01(c) hereof (or, if no such financial statements have yet been delivered,
since December 31, 2000) and that has not been disclosed to the public or
disclosed to the Lenders in writing.
8.03 Litigation. Except as disclosed to the Banks in
Schedule III hereto, there are no legal or arbitral proceedings, or any
proceedings by or before any governmental or regulatory authority or agency, or
any labor disputes, now pending or (to the knowledge of the Borrower or the
Guarantor) threatened against the Borrower, the Guarantor or any of their
respective Subsidiaries that, if adversely determined, would have a Material
Adverse Effect.
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Without limiting the generality of the foregoing, there are no legal or arbitral
proceedings, or any proceedings by or before any governmental or regulatory
authority or agency, now pending or (to the knowledge of the Guarantor)
threatened against the Borrower, the Guarantor or any of their respective
Subsidiaries.
8.04 No Breach. None of the execution and delivery of this
Agreement, the consummation of the transactions herein contemplated or
compliance with the terms and provisions hereof will conflict with or result in
a breach of, or require any consent under, the charter or by-laws of the
Borrower or the Guarantor, or any applicable law or regulation in any material
respect, or any order, writ, injunction or decree of any court or governmental
authority or agency, or any agreement or instrument in any material respect to
which the Borrower, the Guarantor or any of their respective Subsidiaries is a
party or by which any of them or any of their Property is bound or to which any
of them is subject, or constitute a default under any such agreement or
instrument, or result in the creation or imposition of any Lien upon any
Property of the Borrower, the Guarantor or any of their respective Subsidiaries
pursuant to the terms of any such agreement or instrument.
8.05 Action. Each of the Borrower and the Guarantor has
all necessary corporate power, authority and legal right to execute, deliver and
perform its obligations under this Agreement and, in the case of the Borrower,
to borrow under this Agreement; the execution, delivery and performance by each
of the Borrower and the Guarantor of this Agreement and, in the case of the
Borrower, the borrowings under this Agreement have been duly authorized by all
necessary corporate action on its part (including, without limitation, any
required shareholder approvals); and this Agreement has been duly and validly
executed and delivered by each of the Borrower and the Guarantor and
constitutes, its legal, valid and binding obligation, enforceable against each
of the Borrower and the Guarantor in accordance with its terms, except as such
enforceability may be limited by (a) bankruptcy, insolvency, reorganization,
moratorium or similar laws of general applicability affecting the enforcement of
creditors' rights and (b) the application of general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
8.06 Approvals. No authorizations, approvals or consents
of, and no filings or registrations with, any governmental or regulatory
authority or agency, or any securities exchange, are necessary for the
execution, delivery or performance by the Borrower or the Guarantor of this
Agreement or for the legality, validity or enforceability hereof or thereof, or
for any borrowing by the Borrower under this Agreement.
8.07 Canadian Plans. Each Canadian Plan is and has been in
all material respects, established, qualified, registered, administered and
invested in compliance with all applicable federal and provincial laws
(including, without limitation, the Income Tax Act (Canada) and the Supplemental
Pension Plans Act (Quebec)) and any applicable collective bargaining agreements,
and no event or condition has occurred and is continuing as to which the
Borrower would be under an obligation to furnish a report to the Banks under
Section 9.01(g) hereof. All material obligations of the Borrower and its
Subsidiaries under each Canadian Plan, including contribution obligations, have
been satisfied and there are no outstanding defaults or violations in respect
thereof.
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8.08 Taxes. The Borrower, the Guarantor and their
respective Subsidiaries have filed all Federal income tax returns and all other
material tax returns that are required to be filed by them and have paid all
taxes due pursuant to such returns or pursuant to any assessment received by
them. The charges, accruals and reserves on the books of the Borrower, the
Guarantor and their respective Subsidiaries in respect of taxes and other
governmental charges are, in the opinion of the Borrower and the Guarantor,
adequate.
8.09 Material Agreements and Liens.
(a) Material Agreements. Part A of Schedule I hereto is a
complete and correct list, as of the date of this Agreement, of each credit
agreement, loan agreement, indenture, guarantee, letter of credit or other
arrangement providing for or otherwise relating to any Indebtedness or any
extension of credit (or commitment for any extension of credit) to, or guarantee
by, the Borrower, the Guarantor or any of their respective Subsidiaries the
aggregate principal or face amount of which equals or exceeds (or may equal or
exceed) US$50,000,000, and the aggregate principal or face amount outstanding or
that may become outstanding under each such arrangement is correctly described
in Part A of said Schedule I.
On the date hereof, the maximum aggregate principal or face
amount of all Indebtedness and all other extensions of credit outstanding (or
that may become outstanding) under each credit agreement, loan agreement,
indenture, guarantee, letter of credit or other arrangement to which the
Borrower, the Guarantor or any of their respective Subsidiaries is a party, or
guarantee by the Borrower, any of its Subsidiaries or the Guarantor, that is not
required to be listed in Part A of Schedule I hereto does not exceed an amount
equal to US$25,000,000.
(b) Material Liens. Part B of Schedule I hereto is a
complete and correct list, as of the date of this Agreement, of each Lien
securing Indebtedness of any Person the aggregate principal or face amount of
which equals or exceeds (or may equal or exceed) US$50,000,000 and covering any
Property of the Borrower, the Guarantor or any of their respective Subsidiaries,
and the aggregate Indebtedness secured (or which may be secured) by each such
Lien and the Property covered by each such Lien is correctly described in Part B
of said Schedule I.
8.10 Environmental Matters. Each of the Borrower, the
Guarantor and their respective Subsidiaries has obtained all environmental,
health and safety permits, licenses and other authorizations required under all
Environmental Laws to carry on its business as now being or as proposed to be
conducted, except to the extent failure to have any such permit, license or
authorization would not have a Material Adverse Effect. Each of such permits,
licenses and authorizations is in full force and effect and each of the
Borrower, the Guarantor and their respective Subsidiaries is in compliance with
the terms and conditions thereof, and is also in compliance with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in any applicable Environmental
Law or in any regulation, code, plan, order, decree, judgment, injunction,
notice or demand letter issued, entered, promulgated or approved thereunder,
except to the extent failure to comply therewith would not have a Material
Adverse Effect.
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8.11 Subsidiaries, Etc. Set forth in Part A of Schedule II
hereto is a complete and correct list, as of the date of this Agreement, of all
of the Subsidiaries of the Guarantor except for unconsolidated special-purpose
Subsidiaries and inactive Subsidiaries awaiting dissolution, together with, for
each such Subsidiary, (i) the jurisdiction of organization of such Subsidiary,
(ii) each Person holding ownership interests in such Subsidiary and (iii) the
nature of the ownership interests held by each such Person and the percentage of
ownership of such Subsidiary represented by such ownership interests. Except as
disclosed in Part A of Schedule II hereto, (x) each of the Guarantor and its
Subsidiaries owns, free and clear of Liens, and has the unencumbered right to
vote, all outstanding ownership interests in each Person shown to be held by it
in said Part A of Schedule II hereto, (y) all of the issued and outstanding
capital stock of each such Person organized as a corporation is validly issued,
fully paid and nonassessable and (z) there are no outstanding Equity Rights with
respect to such Person.
8.12 True and Complete Disclosure. The information,
reports, financial statements, exhibits and schedules furnished in writing by or
on behalf of the Borrower or the Guarantor to the Administrative Agent or any
Bank in connection with the negotiation, preparation or delivery of this
Agreement or included herein or delivered pursuant hereto, when taken as a
whole, do not contain any untrue statement of material fact or omit to state any
material fact necessary to make the statements herein or therein, in light of
the circumstances under which they were made, not misleading. All written
information furnished after the date hereof by the Borrower, the Guarantor or
their respective Subsidiaries to the Administrative Agent and the Banks in
connection with this Agreement and the transactions contemplated hereby will be
true, complete and accurate in every material respect, or (in the case of
projections) based on reasonable estimates, on the date as of which such
information is stated or certified. There is no fact known to the Borrower or
the Guarantor that could have a Material Adverse Effect that has not been
disclosed herein or in a report, financial statement, exhibit, schedule,
disclosure letter or other writing furnished to the Banks for use in connection
with the transactions contemplated hereby.
Section 9. Covenants of the Borrower and the Guarantor.
The Borrower covenants and agrees with the Banks and the
Administrative Agent that, so long as any Commitment or any Loan by the Borrower
is outstanding and until payment in full of all amounts payable by the Borrower
and the Guarantor hereunder:
9.01 Financial Statements, Etc. The Borrower or the
Guarantor, as the case may be, shall deliver to the Administrative Agent (with
sufficient copies for each Bank, which the Administrative Agent shall promptly
furnish to such Bank):
(a) as soon as available and in any event within 60 days
after the end of each of the quarterly fiscal periods of each fiscal
year of the Guarantor, consolidated statements of operations, capital
accounts and cash flows of the Guarantor and its Consolidated
Subsidiaries for such period and for the period from the beginning of
the respective fiscal year to the end of such period, and the related
consolidated balance sheet of the Guarantor and its Consolidated
Subsidiaries as at the end of such period, setting
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forth in each case in comparative form the corresponding consolidated figures
for the corresponding period in the preceding fiscal year;
(b) as soon as available and in any event within 60 days
after the end of each of the quarterly fiscal periods of each fiscal year of the
Borrower, consolidated statements of income, retained earnings and changes in
financial position of the Borrower and its Consolidated Subsidiaries for such
period and for the period from the beginning of the respective fiscal year to
the end of such period, and the related consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as at the end of such period, setting
forth in each case in comparative form the corresponding consolidated figures
for the corresponding period in the preceding fiscal year;
(c) as soon as available and in any event within 120 days
after the end of each fiscal year of the Guarantor, consolidated statements of
operations, capital accounts and cash flows of the Guarantor and its
Consolidated Subsidiaries for such fiscal year and the related consolidated
balance sheet of the Guarantor and its Consolidated Subsidiaries as at the end
of such fiscal year, setting forth in each case in comparative form the
corresponding consolidated figures for the preceding fiscal year, and
accompanied by an unqualified opinion thereon of independent certified public
accountants of recognized national standing, which opinion shall state that said
consolidated financial statements fairly present the consolidated financial
condition and results of operations of the Guarantor and its Consolidated
Subsidiaries as at the end of, and for, such fiscal year in accordance with
GAAP;
(d) as soon as available and in any event within 140 days
after the end of each fiscal year of the Borrower, consolidated statements of
income, retained earnings and changes in financial position of the Borrower and
its Consolidated Subsidiaries for such fiscal year and the related consolidated
balance sheet of the Borrower and its Consolidated Subsidiaries as at the end of
such fiscal year, setting forth in each case in comparative form the
corresponding consolidated figures for the preceding fiscal year, and
accompanied by an opinion thereon of independent certified public accountants of
recognized national standing, which opinion shall state that said consolidated
financial statements fairly present the consolidated financial condition and
results of operations of the Borrower and its Consolidated Subsidiaries as at
the end of, and for, such fiscal year in accordance with GAAP;
(e) promptly upon their becoming available, copies of all
registration statements (other than on Form S-8) and regular periodic reports on
Forms 10-K, 10-Q and 8-K that the Guarantor shall have filed with the Securities
and Exchange Commission (or any governmental agency substituted therefor) as
well as copies of all prospectuses and regular periodic reports made by the
Borrower with any Securities Commission in Canada, including annual information
forms, proxy circulars and material change reports, and other any similar
periodic filings;
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(f) promptly upon the mailing thereof to the shareholders
of the Guarantor or the Borrower generally, copies of all financial statements,
reports and proxy statements so mailed;
(g) as soon as possible, and in any event within ten days
after the Borrower, the Guarantor or any of their respective Subsidiaries knows
or has reason to believe that any of the events or conditions specified below
with respect to any Canadian Plan has occurred or exists, a statement signed by
a financial officer of the Borrower setting forth details respecting such event
or condition and the action, if any, that the Borrower, the Guarantor or the
Subsidiary proposes to take with respect thereto (and a copy of any notice
required to be filed with or given to any governmental authority in Canada by
the Guarantor, the Borrower or any of their respective Subsidiaries with respect
to such event or condition):
(i) the Borrower, the Guarantor or any of their
respective Subsidiaries declares, or any governmental
authority orders, or proposes to order, a full or partial
termination or wind up of a Canadian Plan;
(ii) a failure by the Borrower, the Guarantor or
any of their respective Subsidiaries to make a contribution to
a Canadian Plan in accordance with the terms thereof, any
collective bargaining agreement or under applicable federal or
provincial laws, which failure has not been remedied within 30
days after the Borrower, the Guarantor or the Subsidiary is
notified of such event and which failure could result in a
Material Adverse Effect;
(iii) the adoption of any amendment to any
Canadian Plan that would result in a loss of tax exempt status
of the Plan or the trust or other funding medium maintained in
respect of such Plan, or that increases the funding
obligations under any Canadian Plan, which increase could
reasonably be expected to result in a Material Adverse Effect;
(iv) the institution of any proceeding, action,
suit or claim )(other than routine claims for payment of
benefits) involving any Canadian Plan or its assets; or
(v) any event occurring or condition existing
with respect to any Canadian Plan that has resulted or could
result in any Canadian Plan having its registration revoked or
refused or being placed under the administration of any
governmental or regulatory authority (or their
representatives).
(h) promptly after the Borrower or the Guarantor knows or
has reason to believe that any Default has occurred, a notice of such
Default stating that such notice is a "Notice of Default" and
describing the same in reasonable detail and, together with such notice
or as soon thereafter as possible, a description of the action that the
Borrower has taken or proposes to take with respect thereto; and
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(i) from time to time such other information regarding
the financial condition, operations, business or prospects of the
Guarantor, the Borrower or any of their respective Subsidiaries as any
Bank or the Administrative Agent may reasonably request.
Each of the Borrower and the Guarantor will furnish to the Administrative Agent
(with sufficient copies for each Bank, which the Administrative Agent shall
promptly furnish to such Bank), at the time it furnishes each set of financial
statements pursuant to paragraphs (a) through to (d) above, a certificate of a
financial officer thereof (i) to the effect that no Default has occurred and is
continuing (or, if any Default has occurred and is continuing, describing the
same in reasonable detail and describing the action that the Guarantor or the
Borrower has taken or proposes to take with respect thereto) and (ii) setting
forth in reasonable detail the computations necessary to determine whether the
Guarantor is in compliance with Sections 9.07 and 9.08 hereof as of the end of
the respective quarterly fiscal period or fiscal year.
9.02 Litigation. The Borrower or the Guarantor will
promptly give to the Administrative Agent (which shall promptly furnish the same
to each Bank) notice of all legal or arbitral proceedings, and of all
proceedings by or before any governmental or regulatory authority or agency, and
of all labor disputes, and any material development in respect of such legal or
other proceedings or disputes, affecting the Guarantor or the Borrower or any of
their respective Subsidiaries, except proceedings or disputes that, if adversely
determined, would not have a Material Adverse Effect. Without limiting the
generality of the foregoing, the Borrower or the Guarantor will give to the
Administrative Agent (which shall promptly furnish the same to each Bank) notice
of the assertion of any environmental claim by any Person against, or with
respect to the activities of, the Guarantor, the Borrower or any of their
respective Subsidiaries and notice of any alleged violation of or non-compliance
with any Environmental Laws or any permits, licenses or authorizations, other
than any environmental claim or alleged violation that, if adversely determined,
would not have a Material Adverse Effect.
9.03 Existence, Etc. Each of the Borrower and the
Guarantor will, and will cause each of its Subsidiaries to:
(a) preserve and maintain its legal existence and all of
its material rights, privileges, licenses and franchises (provided that
nothing in this Section 9.03 shall prohibit any transaction expressly
permitted under Section 9.05 hereof);
(b) comply with the requirements of all applicable laws,
rules, regulations and orders of governmental or regulatory authorities
(including, without limitation, any of the foregoing relating to
environmental matters) if failure to comply with such requirements
could have a Material Adverse Effect;
(c) pay and discharge all taxes, assessments and
governmental charges or levies imposed on it or on its income or
profits or on any of its Property prior to the date on which penalties
attach thereto, except for any such tax, assessment, charge or levy the
payment of which is being contested in good faith and by proper
proceedings and against which adequate reserves are being maintained in
accordance with GAAP;
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(d) maintain all of its Properties used or useful in its
business in good working order and condition, ordinary wear and tear
excepted;
(e) keep adequate records and books of account, in which
complete entries will be made in accordance with GAAP consistently
applied; and
(f) permit representatives of any Bank or the
Administrative Agent, during normal business hours, to examine, copy
and make extracts from its books and records, to inspect any of its
Properties, and to discuss its business and affairs with its officers,
all to the extent reasonably requested by such Bank or the
Administrative Agent (as the case may be).
9.04 Insurance. Each of the Borrower and the Guarantor
will, and will cause each of its Subsidiaries to, keep insured by financially
sound and reputable insurers all Property of a character usually insured by
corporations engaged in the same or similar business similarly situated against
loss or damage of the kinds and in the amounts customarily insured against by
such corporations and carry such other insurance as is usually carried by such
corporations.
9.05 Prohibition of Fundamental Changes. Each of the
Borrower and the Guarantor will not, nor will it permit any of its Subsidiaries
to, enter into any transaction of merger or consolidation or amalgamation, or
liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution). Each of the Borrower and the Guarantor will not, nor will it
permit any of its Subsidiaries to, convey, sell, lease, transfer or otherwise
dispose of, in one transaction or a series of transactions, all or a substantial
part of its business or Property, whether now owned or hereafter acquired
(including, without limitation, receivables and leasehold interests, but
excluding any inventory or other Property sold or disposed of in the ordinary
course of business and on ordinary business terms). Notwithstanding the
foregoing provisions of this Section 9.05:
(a) the Borrower and Alliance will amalgamate, effective
January 1, 2002, unless the Borrower acting reasonably determines prior
to that time that the amalgamation will entail adverse income tax or
other adverse fiscal or other consequences for the Borrower, Alliance
or the amalgamated corporation;
(b) any Subsidiary of the Guarantor, other than the
Borrower, may be merged, amalgamated or consolidated with or into: (i)
the Guarantor, if the Guarantor shall be the continuing or surviving
corporation, (ii) the Borrower, if the Borrower shall be the continuing
or surviving corporation, or (iii) another Subsidiary of the Guarantor
other than the Borrower; provided that if any such transaction shall be
between a Subsidiary and a Wholly Owned Subsidiary, the Wholly Owned
Subsidiary (or in the case of an amalgamation, a new Wholly Owned
Subsidiary formed thereby) shall be the continuing or surviving
corporation;
(c) any Subsidiary of the Guarantor other than the
Borrower may sell, lease, transfer or otherwise dispose of any or all
of its Property (upon voluntary liquidation or
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otherwise) to the Guarantor or to the Borrower or any other Wholly
Owned Subsidiary of the Guarantor;
(d) any Wholly Owned Subsidiary of the Guarantor other
than the Borrower may be dissolved or liquidated, so long as any assets
of such Wholly Owned Subsidiary (after settlement of all claims against
such Wholly Owned Subsidiary) shall be transferred in such dissolution
or liquidation to the Guarantor or to the Borrower or any other Wholly
Owned Subsidiary of the Guarantor; and
(e) in addition to the dispositions permitted pursuant to
clauses (b) through (d) of this Section 9.05, the Guarantor or any
Subsidiary of the Guarantor other than the Borrower may sell or
otherwise dispose of Property (including, without limitation, by merger
or consolidation) if, after giving effect to any such sale or
disposition, the book value of such Property, together with the
aggregate book value of the Property so sold or disposed of since
December 31, 1997 does not exceed 20% of Total Assets at the date of
(and before giving effect to) such sale or disposition, provided that
in any event the dispositions set forth in Schedule IV hereto shall be
permitted and shall not to be included in the calculation of aggregate
dispositions otherwise permitted under the foregoing provisions of this
clause (e).
9.06 Limitation on Liens. Each of the Borrower and the
Guarantor will not, nor will it permit any of its Subsidiaries to, create,
incur, assume or suffer to exist any Lien upon any of its Property, whether now
owned or hereafter acquired and, consequently, the Indebtedness of the Borrower
and the Guarantor hereunder shall rank at all times pari passu with all other
unsecured Indebtedness of the Borrower and the Guarantor. Notwithstanding the
foregoing, the Borrower and the Guarantor may, and may permit their respective
Subsidiaries to, create, incur, assume and suffer to exist:
(a) Liens in existence on the date hereof and listed in
Part B of Schedule I hereto;
(b) Liens imposed by any governmental authority for
taxes, assessments or charges not yet due or which are being contested
in good faith and by appropriate proceedings if adequate reserves with
respect thereto are maintained on the books of the Borrower, the
Guarantor or the affected Subsidiaries, as the case may be, in
accordance with GAAP;
(c) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of
business which are not overdue for a period of more than 30 days or
which are being contested in good faith and by appropriate proceedings
and Liens securing judgments but only to the extent for an amount and
for a period not resulting in an Event of Default under Section 10(i)
hereof;
(d) pledges or deposits under worker's compensation,
unemployment insurance and other social security legislation;
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(e) deposits to secure the performance of bids, trade
contracts (other than for borrowed money), leases, statutory
obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of
business;
(f) easements, rights-of-way, restrictions and other
similar encumbrances incurred in the ordinary course of business and
encumbrances consisting of zoning restrictions, easements, licenses,
restrictions on the use of Property or minor imperfections in title
thereto which, in the aggregate, are not material in amount, and which
do not in any case materially detract from the value of the Property
subject thereto or interfere with the ordinary conduct of the business
of the Guarantor, the Borrower or any of their respective Subsidiaries;
(g) Liens on Property of any corporation that becomes a
Subsidiary of the Guarantor after the date of this Agreement; provided
that such Liens are in existence at the time such corporation becomes a
Subsidiary of the Guarantor and were not created in anticipation
thereof;
(h) Liens upon real and/or tangible personal Property
acquired after the date hereof (by purchase, construction or otherwise)
by the Borrower, the Guarantor or any of their Subsidiaries, each of
which Liens either (A) existed on such Property before the time of its
acquisition and was not created in anticipation thereof, or (B) was
created solely for the purpose of securing Indebtedness representing,
or incurred to finance, refinance or refund, the cost (including the
cost of construction) of such Property; provided that no such Lien
shall extend to or cover any Property other than the Property so
acquired and improvements thereon;
(i) Liens securing obligations of the Borrower, the
Guarantor or any of their respective Subsidiaries incurred in
conjunction with industrial revenue bonds or pollution control bonds of
any facilities used by the Borrower, the Guarantor or any of their
respective Subsidiaries;
(j) additional Liens upon real and/or personal Property
created after the date hereof, provided that the aggregate outstanding
principal amount of Indebtedness secured by such Liens, together with
the aggregate principal amount of Indebtedness permitted under Section
9.11(h) hereof, shall not at any time exceed 15% of Total Assets at
such time;
(k) additional Liens upon real and/or personal Property
of the Borrower created after the date hereof, provided that the
aggregate outstanding principal amount of Indebtedness secured by such
Liens shall not at any time exceed 10% of the Borrower's Equity; and
(l) any extension, renewal or replacement of the
foregoing; provided that the Liens permitted hereunder shall not be
spread to cover any additional Indebtedness or Property (other than a
substitution of like Property).
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9.07 Consolidated Net Worth. The Guarantor will not permit
Consolidated Net Worth at any time to be less than (a) US$1,500,000,000 plus (b)
50% of the consolidated net income of the Guarantor and its Consolidated
Subsidiaries for each fiscal quarter of the Guarantor from and including the
first fiscal quarter in 1998 to and including the fiscal quarter ending on (or
most recently ended prior to) such time; provided that, if there is a
consolidated net loss for any such fiscal quarter, consolidated net income for
such fiscal quarter shall, for the purposes of clause (b) of this Section 9.07,
be deemed to be zero.
9.08 Total Debt to Total Capital Ratio. The Guarantor will
not permit the ratio of (a) Total Debt to (b) Total Capital to exceed 0.60 to 1.
9.09 Transactions with Affiliates. Except as expressly
permitted by this Agreement, each of the Borrower and the Guarantor will not,
nor will it permit any of its Subsidiaries to, directly or indirectly: (a) make
any Investment in an Affiliate; (b) transfer, sell, lease, assign or otherwise
dispose of any Property to an Affiliate; (c) merge into or consolidate with or
purchase or acquire Property from an Affiliate; or (d) enter into any other
transaction directly or indirectly with or for the benefit of an Affiliate
(including, without limitation, guarantees and assumptions of obligations of an
Affiliate); provided that (x) any Affiliate who is an individual may serve as a
director, officer or employee of the Borrower, the Guarantor or any of their
respective Subsidiaries and receive reasonable compensation for his or her
services in such capacity, (y) the Borrower, the Guarantor and their respective
Subsidiaries may enter into transactions (other than extensions of credit to an
Affiliate) so long as the monetary or business consideration arising therefrom
would be substantially as advantageous to the Borrower, the Guarantor and their
respective Subsidiaries as the monetary or business consideration which would
obtain in a comparable transaction with a Person not an Affiliate and (z) the
Guarantor and its Subsidiaries other than the Borrower may enter into any of the
transactions described in this Section 9.09 with Ponderay, so long as, in the
case of any Guarantee of the Indebtedness of Ponderay, the ratio, expressed as a
percentage, of such Indebtedness that is Guaranteed to the aggregate outstanding
principal amount of all Indebtedness of Ponderay shall not exceed the ownership
percentage of the Guarantor in Ponderay held through the Guarantor's Wholly
Owned Subsidiary, Lake Superior Forest Products Inc., a corporation existing
under the laws of the State of Delaware.
9.10 Use of Proceeds. The Borrower will use the proceeds
of the Loans hereunder to refinance existing indebtedness of the Borrower, and
to pay fees and expenses relating thereto, and for the general corporate
purposes of the Borrower and its Subsidiaries; provided that neither the
Administrative Agent nor any Bank shall have any responsibility as to the use of
any of such proceeds.
9.11 Indebtedness. The Borrower will not, and the
Guarantor will not permit the Borrower or any of its other Subsidiaries to,
create, incur, assume or permit to exist any Indebtedness (including any
Indebtedness incurred pursuant to a sale or leaseback transaction), except:
(a) Indebtedness of the Borrower or other Subsidiaries of
the Guarantor existing on the date hereof and (to the extent exceeding
the minimum threshold
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requirements set forth in Section 8.09(a)), any assumption or Guarantee
thereof by any other Subsidiary of the Guarantor, and any extensions,
renewals and replacements thereof, so long as (i) the weighted average
life of the maturity of such Indebtedness as so extended, renewed or
refinanced, taken as a whole, is not materially different than such
weighted average life prior to such extension, renewal or refinancing,
(ii) any terms of subordination set forth in such Indebtedness are not
adversely affected thereby in any material respect and (iii) the terms
generally of such Indebtedness as so extended, renewed or refinanced are
not made more restrictive (from the standpoint of the Borrower or the
Guarantor) in any material respect;
(b) Indebtedness under the US Revolving Term Credit
Agreement in a principal amount that shall not exceed the aggregate
principal amount of the Commitments thereunder (and as defined therein)
as at the date hereof, and any extensions, renewals and replacements
thereof, so long as (i) the weighted average life of the maturity of
such Indebtedness as so extended, renewed or refinanced, taken as a
whole, is not materially different than such weighted average life
prior to such extension, renewal or refinancing, (ii) any terms of
subordination set forth in such Indebtedness are not adversely affected
thereby in any material respect and (iii) the terms generally of such
Indebtedness as so extended, renewed or refinanced are not made more
restrictive (from the standpoint of the Borrower or the Guarantor) in
any material respect;
(c) Indebtedness owing by the Borrower or any other
Subsidiary of the Borrower to the Guarantor or any of its Subsidiaries;
(d) Indebtedness of the Borrower or any other Subsidiary
of the Guarantor as an account party in respect of trade letters of
credit;
(e) Guarantees by the Borrower or any other Subsidiaries
of the Guarantor of Indebtedness of other Subsidiaries;
(f) Indebtedness under this Agreement;
(g) Indebtedness of the Borrower or any other
Subsidiaries of the Guarantor in respect of bonds, debentures, notes or
similar instruments in a principal amount up to but not exceeding
$600,000,000 in the aggregate as to all such Subsidiaries, to be
incurred in connection with the refinancing of Indebtedness incurred by
the Guarantor in connection with the Alliance Arrangement; and
(h) other unsecured Indebtedness, provided that the
aggregate outstanding principal amount of such Indebtedness, together
with the aggregate amount of Indebtedness secured by Liens permitted
under Section 9.06(j) hereof, shall not at any time exceed 15% of Total
Assets at such time.
9.12 Restrictive Agreements. Each of the Borrower and the
Guarantor will not, and will not permit any of its Subsidiaries to, directly or
indirectly, enter into, incur or permit to exist any agreement or other
arrangement that prohibits, restricts or imposes any condition upon
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the ability of any of their respective Subsidiaries to pay dividends or other
distributions with respect to any shares of its capital stock or to make or
repay loans or advances to the Borrower, the Guarantor or any other Subsidiary
or to Guarantee Indebtedness of the Borrower, the Guarantor or any other
Subsidiary; provided that the foregoing shall not apply to (x) restrictions and
conditions imposed by law or by this Agreement, (y) restrictions and conditions
existing on the date hereof identified on Part A of Schedule I (but shall apply
to any extension or renewal of, or any amendment or modification expanding the
scope of, any such restriction or condition) and (z) customary restrictions and
conditions contained in agreements relating to the sale of a Subsidiary pending
such sale, provided such restrictions and conditions apply only to the
Subsidiary that is to be sold and such sale is permitted hereunder.
9.13 Limitation on Lines of Business. Neither the Borrower
nor the Guarantor will enter into any business, either directly or through any
Subsidiary, to any substantial extent other than those businesses in which the
Borrower, the Guarantor, Alliance and their respective Subsidiaries are engaged
on the date of this Agreement and, in each case, activities directly related
thereto or ancillary, complementary or reasonably related thereto as reasonably
determined by the Borrower or the Guarantor.
Section 10. Events of Default.
If one or more of the following events (herein called "Events
of Default") shall occur and be continuing:
(a) the Borrower shall default in the payment when due
(whether at stated maturity or upon optional prepayment) of any
principal of any Loan payable by it hereunder, or shall default for
three or more Business Days in the payment when due (whether at stated
maturity or upon optional prepayment) of any interest on any Loan or
any fee or any other amount payable under this Agreement; or
(b) any representation, warranty or certification made or
deemed made herein (or in any modification or supplement hereto) by the
Borrower or the Guarantor, or in any certificate furnished to any Bank
or the Administrative Agent pursuant to the provisions hereof, shall
prove to have been false or misleading as of the time made or deemed
made or furnished in any material respect; or
(c) the Borrower, the Guarantor or any of their
respective Subsidiaries shall fail to make any payment (whether of
principal or interest and regardless of amount) in respect of any
Material Indebtedness, when and as the same shall become due and
payable; or
(d) (i) any "Event of Default" (as defined in the US
Revolving Term Credit Agreement) shall occur under the US Revolving
Term Credit Agreement, or (ii) any event or condition occurs that
results in any Material Indebtedness of the Borrower, the Guarantor or
any of their respective Subsidiaries becoming due prior to its
scheduled maturity or that enables or permits (with or without the
giving of notice, the lapse of time or both) the holder or holders of
any Material Indebtedness or any trustee or agent on its
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or their behalf to cause any Material Indebtedness to become due, or to
require the prepayment, repurchase, redemption or defeasance thereof,
prior to its scheduled maturity; provided that this clause (d) shall
not apply to secured Indebtedness that becomes due as a result of the
voluntary sale or transfer of the Property or assets securing such
Indebtedness;
(e) either the Borrower or the Guarantor shall default in
the performance of any of its obligations under any of Sections
9.01(h), 9.05, 9.06, 9.07 or 9.08 hereof; or either the Borrower or the
Guarantor shall default in the performance of any of its other
obligations in this Agreement and such default shall continue
unremedied for a period of 30 days after notice thereof to the Borrower
and the Guarantor by the Administrative Agent or any Bank (through the
Administrative Agent); or
(f) the Borrower, the Guarantor or any of their
respective Subsidiaries shall admit in writing its inability to, or be
generally unable to, pay its debts as such debts become due; or
(g) the Borrower, the Guarantor or any of their
respective Subsidiaries shall (i) apply for or consent to the
appointment of, or the taking of possession by, a receiver, custodian,
trustee, examiner or liquidator of itself or of all or a substantial
part of its Property, (ii) make a general assignment for the benefit of
its creditors pursuant to the Bankruptcy and Insolvency Act (Canada),
(iii) commence a voluntary case under the US Bankruptcy Code, (iv) file
a petition or commence any proceedings (including a notice of intention
to make a proposal) seeking to take advantage of any other law relating
to bankruptcy, insolvency, reorganization, liquidation, dissolution,
arrangement or winding-up, or composition or readjustment of debts, (v)
fail to controvert in a timely and appropriate manner, or acquiesce in
writing to, any petition filed against it in an involuntary case under
the US Bankruptcy Code or any petition for a receiving order under the
Bankruptcy and Insolvency Act (Canada), (vi) take any corporate action
for the purpose of effecting any of the foregoing; or
(h) a proceeding or case shall be commenced, without the
application or consent of the Borrower, the Guarantor or any of their
respective Subsidiaries, in any court of competent jurisdiction,
seeking (i) the reorganization, liquidation, dissolution, arrangement
or winding-up, or the composition or readjustment of the debts of the
Borrower, the Guarantor or any of their respective Subsidiaries, (ii)
the appointment of a receiver, custodian, trustee, examiner, liquidator
or the like of the Borrower, the Guarantor or any of their respective
Subsidiaries or of all or any substantial part of their Property, or
(iii) similar relief in respect of the Borrower, the Guarantor or any
of their respective Subsidiaries under any law relating to bankruptcy,
insolvency, reorganization, arrangement, winding-up, or composition or
adjustment of debts, and such proceeding or case shall continue
undismissed for a period of 60 or more days or (iv) an order, judgment
or decree approving or ordering any of the foregoing shall be entered
against the Borrower, the Guarantor or any of their respective
Subsidiaries; or
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(i) a final judgment or judgments for the payment of
money in excess of US$10,000,000 in the aggregate (exclusive of
judgment amounts fully covered by insurance where the insurer has
admitted liability in respect of such judgment) or in excess of
US$50,000,000 in the aggregate (regardless of insurance coverage) shall
be rendered by one or more courts, administrative tribunals or other
bodies having jurisdiction against the Borrower, the Guarantor or any
of their respective Subsidiaries and the same shall not be discharged
(or provision shall not be made for such discharge), or a stay of
execution thereof shall not be procured, within 30 days from the date
of entry thereof and the Borrower, the Guarantor or the relevant
Subsidiary shall not, within said period of 30 days, or such longer
period during which execution of the same shall have been stayed,
appeal therefrom and cause the execution thereof to be stayed during
such appeal; or
(j) the Borrower shall cease to be a Wholly Owned
Subsidiary of the Guarantor or the Guarantor shall exercise any right
to terminate, suspend or reduce its obligations under Section 5.06 and
Section 6 hereof; or
(k) a reasonable basis shall exist for the assertion (or
there shall have been asserted) against the Borrower, the Guarantor or
any of their respective Subsidiaries, claims or liabilities, whether
accrued, absolute or contingent, based on or arising from the
generation, storage, transport, handling or disposal of hazardous
materials (within the meaning of any Environmental Law) by the
Borrower, the Guarantor or any of their Subsidiaries, or any
predecessor in interest of the Borrower, the Guarantor or any of their
Subsidiaries, or relating to any site or facility owned, operated or
leased by the Borrower, the Guarantor or any of their respective
Subsidiaries, which claims or liabilities (after deducting any portion
thereof which is reasonably expected to be paid by other creditworthy
Persons jointly and severally or solidarily liable therefor), in the
judgment of the Majority Banks are reasonably likely to be determined
adversely to the Borrower, the Guarantor or any of their respective
Subsidiaries, and the amount thereof is, singly or in the aggregate,
reasonably likely to have a Material Adverse Effect; or
(l) During any period of 25 consecutive calendar months,
a majority of the Board of Directors of the Guarantor shall no longer
be composed of individuals (i) who were members of said Board on the
first day of such period, (ii) whose election or nomination to said
Board was approved by individuals referred to in clause (i) above
constituting at the time of such election or nomination at least a
majority of said Board or (iii) whose election or nomination to said
Board was approved by individuals referred to in clauses (i) and (ii)
above constituting at the time of such election or nomination at least
a majority of said Board;
THEREUPON: (1) in the case of an Event of Default other than one referred to in
clause (g) or (h) of this Section 10, (A) the Administrative Agent may and, upon
request of the Majority Banks, shall, by notice to the Borrower, terminate the
Commitments and they shall thereupon terminate, and (B) the Administrative Agent
may and, upon request of Banks having more than 66 2/3% of the aggregate unpaid
principal amount of the Loans, shall by notice to the Borrower declare the
principal amount then outstanding of, and the accrued interest on, the Loans and
all
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other amounts payable by the Borrower or the Guarantor hereunder (including,
without limitation, any amounts payable under Section 5.05 hereof) to be
forthwith due and payable, whereupon such amounts shall be immediately due and
payable without presentment, demand, protest or other formalities of any kind,
all of which are hereby expressly waived by the Borrower and the Guarantor; and
(2) in the case of the occurrence of an Event of Default referred to in clause
(g) or (h) of this Section 10, the Commitments shall automatically be terminated
and the principal amount then outstanding of, and the accrued interest on, the
Loans and all other amounts payable by the Borrower or the Guarantor hereunder
(including, without limitation, any amounts payable under Section 5.05 hereof)
shall automatically become immediately due and payable without presentment,
demand, protest or other formalities of any kind, all of which are hereby
expressly waived by the Borrower and the Guarantor.
Section 11. The Administrative Agent.
11.01 Appointment, Powers and Immunities. Each Bank hereby
irrevocably appoints and authorizes the Administrative Agent to act as its agent
hereunder with such powers as are specifically delegated to the Administrative
Agent by the terms of this Agreement, together with such other powers as are
reasonably incidental thereto. The Administrative Agent (which term as used in
this sentence and in Section 11.05 and the first sentence of Section 11.06
hereof shall include reference to its affiliates and its own and its affiliates'
officers, directors, employees and agents):
(a) shall have no duties or responsibilities except those
expressly set forth in this Agreement, and shall not by reason of this
Agreement be a trustee for any Bank;
(b) shall not be responsible to the Banks for any
recitals, statements, representations or warranties contained in this
Agreement, or in any certificate or other document referred to or
provided for in, or received by any of them under, this Agreement, or
for the value, validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement, or any other document referred to or
provided for herein or for any failure by any Borrower or any other
Person to perform any of its obligations hereunder or thereunder;
(c) shall not be required to initiate or conduct any
litigation or collection proceedings hereunder; and
(d) shall not be responsible for any action taken or
omitted to be taken by it hereunder or under any other document or
instrument referred to or provided for herein or in connection
herewith, except for its own gross negligence or willful misconduct.
The Administrative Agent may employ agents and attorneys-in-fact and shall not
be responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it in good faith.
11.02 Reliance by Administrative Agent. The Administrative
Agent shall be entitled to rely upon any certification, notice or other
communication (including, without
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limitation, any thereof by telephone, telecopy, telegram or cable) reasonably
believed by it to be genuine and correct and to have been signed or sent by or
on behalf of the proper Person or Persons, and upon advice and statements of
legal counsel, independent accountants and other experts selected by the
Administrative Agent. As to any matters not expressly provided for by this
Agreement, the Administrative Agent shall in all cases be fully protected in
acting, or in refraining from acting, hereunder in accordance with instructions
given by the Majority Banks, and such instructions of the Majority Banks and any
action taken or failure to act pursuant thereto shall be binding on all of the
Banks.
11.03 Defaults. The Administrative Agent shall not be deemed to
have knowledge or notice of the occurrence of a Default (other than the
non-payment of principal of or interest on Loans or of facility fee or
utilization fee) unless the Administrative Agent has received notice from a
Bank, the Borrower or the Guarantor specifying such Default and stating that
such notice is a "Notice of Default". In the event that the Administrative Agent
receives such a notice of the occurrence of a Default, the Administrative Agent
shall give prompt notice thereof to the Banks (and shall give each Bank prompt
notice of each such non-payment). The Administrative Agent shall (subject to
Sections 11.01, 11.07 and 12.04 hereof) take such action with respect to such
Default as shall be directed by the Majority Banks, provided that, unless and
until the Administrative Agent shall have received such directions, the
Administrative Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default as it shall deem
advisable in the best interest of the Banks except to the extent that this
Agreement expressly requires that such action be taken, or not be taken, only
with the consent or upon the authorization of the Majority Banks or all of the
Banks.
11.04 Rights as a Bank. With respect to its Commitment and the
Loans made by it, the Administrative Agent in its capacity as a Bank hereunder
shall have the same rights and powers hereunder as any other Bank and may
exercise the same as though it were not acting as the Administrative Agent, and
the term "Bank" or "Banks" shall, unless the context otherwise indicates,
include the Administrative Agent in its individual capacity. The Administrative
Agent and its affiliates may (without having to account therefor to any Bank)
accept deposits from, lend money to, make investments in and generally engage in
any kind of banking, trust or other business with the Borrower, the Guarantor
(and any of their respective Subsidiaries or Affiliates) as if it were not
acting as the Administrative Agent, and the Administrative Agent and its
affiliates may accept fees and other consideration in connection with this
Agreement or otherwise without having to account for the same to the Banks.
11.05 Indemnification. The Banks agree to indemnify the
Administrative Agent (to the extent not reimbursed under Section 12.03 hereof,
but without limiting the obligations of the Borrower under said Section 12.03)
ratably in accordance with the aggregate principal amount of the Loans held by
the Banks (or, if no Loans shall be outstanding, ratably in accordance with
their respective Commitments), for any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind and nature whatsoever that may be imposed on, incurred by or
asserted against the Administrative Agent (including by any Bank) arising out of
or by reason of any investigation in or in any way relating to or arising out of
this Agreement or any other documents contemplated by or referred to herein or
the transactions contemplated hereby (including, without limitation, the costs
and
-52-
expenses that the Borrower is obligated to pay under Section 12.03 hereof but
excluding, unless a Default has occurred and is continuing, normal
administrative costs and expenses incident to the performance of its agency
duties hereunder) or the enforcement of any of the terms hereof or of any such
other documents, provided that no Bank shall be liable for any of the foregoing
to the extent they arise from the gross negligence or willful misconduct of the
party to be indemnified.
11.06 Non-Reliance on Administrative Agent and Other Banks. Each
Bank agrees that it has, independently and without reliance on the
Administrative Agent or any other Bank, and based on such documents and
information as it has deemed appropriate, made its own credit analysis of the
Borrower and the Guarantor and its decision to enter into this Agreement and
that it will, independently and without reliance upon the Administrative Agent
or any other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own analysis and decisions in
taking or not taking action under this Agreement. The Administrative Agent shall
not be required to keep itself informed as to the performance or observance by
the Borrower or the Guarantor of this Agreement or any other document referred
to or provided for herein or to inspect the Properties or books of the Borrower,
the Guarantor or any of their respective Subsidiaries. Except for notices,
reports and other documents and information expressly required to be furnished
to the Banks by the Administrative Agent hereunder, the Administrative Agent
shall not have any duty or responsibility to provide any Bank with any credit or
other information concerning the affairs, financial condition or business of the
Borrower, the Guarantor or any of their Subsidiaries (or any of their
Affiliates) that may come into the possession of the Administrative Agent or any
of its affiliates.
11.07 Failure to Act. Except for action expressly required of the
Administrative Agent hereunder, the Administrative Agent shall in all cases be
fully justified in failing or refusing to act hereunder unless it shall receive
further assurances to its satisfaction from the Banks of their indemnification
obligations under Section 11.05 hereof against any and all liability and expense
that may be incurred by it by reason of taking or continuing to take any such
action.
11.08 Resignation or Removal of Administrative Agent. Subject to
the appointment and acceptance of a successor Administrative Agent as provided
below, the Administrative Agent may resign at any time by giving notice thereof
to the Banks and the Borrower, and the Administrative Agent may be removed at
any time with or without cause by the Majority Banks. Upon any such resignation
or removal, the Majority Banks shall have the right to appoint a successor
Administrative Agent. If no successor Administrative Agent shall have been so
appointed by the Majority Banks and shall have accepted such appointment within
30 days after the retiring Administrative Agent's giving of notice of
resignation or the Majority Banks' removal of the retiring Administrative Agent,
then the retiring Administrative Agent may, on behalf of the Banks, appoint a
successor Administrative Agent, that shall be a bank which has an office
Montreal, Quebec and which has a combined capital and surplus of at least Cdn
$500,000,000. Upon the acceptance of any appointment as Administrative Agent
hereunder by a successor Administrative Agent, such successor Administrative
Agent shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring
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Administrative Agent, and the retiring Administrative Agent shall be discharged
from its duties and obligations hereunder. After any retiring Administrative
Agent's resignation or removal hereunder as Administrative Agent, the provisions
of this Section 11 shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as the
Administrative Agent.
Section 12. Miscellaneous.
12.01 Waiver. No failure on the part of the Administrative Agent
or any Bank to exercise and no delay in exercising, and no course of dealing
with respect to, any right, power or privilege under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege under this Agreement preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
remedies provided herein are cumulative and not exclusive of any remedies
provided by law.
12.02 Notices. All notices, requests and other communications
provided for herein (including, without limitation, any modifications of, or
waivers or consents under, this Agreement) shall be given or made in writing
(including, without limitation, by telecopy) delivered to the intended recipient
as follows:
(a) if to the Borrower, to Bowater Pulp and Paper Canada Inc. at
the address of the Guarantor set out in Section 12.02 (b) below;
(b) if to the Guarantor, to Bowater Incorporated at 55 East
Camperdown Way, Greenville, South Carolina 29602, Attention of Treasurer
(Telecopy No. 864-282-9219; Telephone No. 864-282-9413);
(c) if to the Administrative Agent, to The Bank of Nova Scotia at
40 King Street West, Box 4085, Station "A", Toronto, Ontario, M5W 2X6,
Attention of Bank Finance, Loan Syndications (Telecopy No. 416-866-3329;
Telephone No. 416-933- 1184); and
(d) if to a Bank, to it at its address (or telecopy number) set
forth in its Administrative Questionnaire.
Any party hereto may change its address, telecopier number or telephone number
for notices and other communications hereunder by notice to the other parties
hereto (which notice, in the case of any such change by a Bank, shall be given
by such Bank to the Borrower, the Guarantor and the Administrative Agent).
Except as otherwise provided in this Agreement, all such communications shall be
deemed to have been duly given when transmitted by telecopier or personally
delivered or, in the case of a mailed notice, upon receipt, in each case given
or addressed as aforesaid.
12.03 Expenses, Etc. The Borrower agrees to pay or reimburse: (a)
the Administrative Agent for paying all reasonable out-of-pocket costs and
expenses of the Administrative Agent (including, without limitation, the
reasonable fees and expenses of McCarthy Tetrault LLP, special counsel to the
Administrative Agent) in connection with (i) the
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negotiation, preparation, execution and delivery of this Agreement and the
making of the Loans hereunder and (ii) the negotiation and preparation of any
modification, supplement or waiver of any of the terms of this Agreement
(whether or not consummated); (b) each Bank and the Administrative Agent for
paying its reasonable out-of-pocket costs and expenses (including, without
limitation, the reasonable fees and expenses of its legal counsel) in connection
with (i) any Default and any enforcement or collection proceedings resulting
therefrom, (ii) the negotiation of any restructuring or "work-out" (whether or
not consummated) of the obligations of any Borrower hereunder and (iii) the
enforcement of this Section 12.03; and (c) each Bank and the Administrative
Agent for paying all transfer, stamp, documentary or other similar taxes,
assessments or charges levied by any governmental or revenue authority in
respect of this Agreement or any other document referred to herein.
The Borrower hereby agrees to indemnify the Administrative Agent
and each Bank and their respective directors, officers, employees, attorneys and
agents from, and hold each of them harmless against, any and all losses,
liabilities, claims, damages and expenses incurred by any of them (including,
without limitation, any and all losses, liabilities, claims, damages and
expenses incurred by the Administrative Agent to any Bank, whether or not the
Administrative Agent or any Bank is a party thereto) arising out of or by reason
of any investigation or litigation or other proceedings (including any
threatened investigation or litigation or other proceedings) relating to the
extensions of credit hereunder or any actual or proposed use by the Borrower or
any of its Subsidiaries of the proceeds of any of the extensions of credit
hereunder, including, without limitation, the reasonable fees and disbursements
of counsel incurred in connection with any such investigation or litigation or
other proceedings (but excluding any such losses, liabilities, claims, damages
or expenses incurred by reason of the gross negligence or willful misconduct of
the Person to be indemnified). Without limiting the generality of the foregoing,
the Borrower will indemnify the Administrative Agent and each Bank from, and
hold the Administrative Agent and each Bank harmless against, any losses,
liabilities, claims, damages or expenses described in the preceding sentence
(but excluding, as provided in the preceding sentence, any loss, liability,
claim, damage or expense incurred by reason of the gross negligence or willful
misconduct of the Person to be indemnified) arising under any Environmental Law
as a result of the past, present or future operations of the Borrower or any of
its Subsidiaries (or any predecessor in interest to the Borrower or any of its
Subsidiaries), or the past, present or future condition of any site or facility
owned, operated or leased by the Borrower or any of its Subsidiaries (or any
such predecessor in interest), or any release (within the meaning of any
Environmental Law) or threatened release of any hazardous materials (within the
meaning of any Environmental Law) from any such site or facility, including any
such release or threatened release which shall occur during any period when the
Administrative Agent or any Bank shall be in possession of any such site or
facility following the exercise by the Administrative Agent or any Bank of any
of its rights and remedies hereunder.
12.04 Amendments, Etc. Except as otherwise expressly provided in
this Agreement, any provision of this Agreement may be modified or supplemented
only by an instrument in writing signed by the Borrower, the Guarantor, the
Administrative Agent and the Majority Banks, or by the Borrower, the Guarantor
and the Administrative Agent acting with the consent of the Majority Banks, and
any provision of this Agreement may be waived by the
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Majority Banks or by the Administrative Agent acting with the consent of the
Majority Banks; provided that:
(a) no modification, supplement or waiver shall, unless by an
instrument signed by all of the Banks or by the Administrative Agent
acting with the consent of all of the Banks: (i) increase or extend the
term of the Commitments, or extend the time or waive any requirement for
the reduction or termination of the Commitments, (ii) extend any date
fixed for the payment of principal of or interest on any Loan or any fee
hereunder, (iii) reduce the amount of any such payment of principal, (iv)
reduce the rate at which interest is payable thereon or any fee is
payable hereunder, (v) alter the rights or obligations of the Borrower to
prepay Loans, (vi) alter the terms of any of Sections 2.06, 4.07, 5.06, 6
and 12.03 hereof or this Section 12.04, (vii) modify the definition of
the term "Majority Banks" or modify in any other manner the number or
percentage of the Banks required to make any determinations or waive any
rights hereunder or to modify any provision hereof, or (viii) waive any
of the conditions precedent set forth in Section 7 hereof; and
(b) any modification or supplement of Section 11 hereof, or of
any of the rights or duties of the Administrative Agent hereunder, shall
require the consent of the Administrative Agent.
12.05 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
12.06 Assignments and Participations.
(a) Assignment by the Borrower or Guarantor. Neither the Borrower
or Guarantor may assign all or any portion of its rights or obligations
hereunder without the prior consent of all of the Banks and the Administrative
Agent.
(b) Assignment by the Banks. Each Bank may assign all or any
portion of its Loans and its Commitment but only with the consent of the
Borrower, the Guarantor, the LC Issuing Bank and the Administrative Agent, which
consent may not be unreasonably withheld or delayed; provided that
(i) no such consent by the Borrower, the Guarantor, the LC
Issuing Bank or the Administrative Agent shall be required in the case
of any assignment to another Bank;
(ii) except to the extent the Borrower, the Guarantor, the LC
Issuing Bank and the Administrative Agent shall otherwise consent, any
partial assignment shall be in an amount at least equal to US$5,000,000;
(iii) each such assignment by a Bank of its Loans or Commitment
shall be made in such manner so that the same portion of its Loans and
Commitment is assigned to the respective assignee; and
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(iv) upon each such assignment, the assignor and assignee shall
deliver to the Borrower, the Guarantor, the LC Issuing Bank and the
Administrative Agent an Assignment and Acceptance in the form of Exhibit
A hereto.
Upon each such assignment the assigning Bank shall pay the Administrative Agent
an assignment fee of US$5,000.
(c) Participations. A Bank may sell or agree to sell to one or
more other Persons (each a "Participant") a participation in all or any part of
any Loans held by it, or in its Commitment, provided that such Participant shall
not have any other rights or obligations under this Agreement (the Participant's
rights against such Bank in respect of such participation to be those set forth
in the agreements executed by such Bank in favor of the Participant). All
amounts payable by the Borrower to any Bank under Section 5 hereof in respect of
Loans held by it, and its Commitment, shall be determined as if such Bank had
not sold or agreed to sell any participations in such Loans and Commitment, and
as if such Bank were funding each of such Loan and Commitment in the same way
that it is funding the portion of such Loan and Commitment in which no
participations have been sold. In no event shall a Bank that sells a
participation agree with the Participant to take or refrain from taking any
action hereunder except that such Bank may agree with the Participant that it
will not, without the consent of the Participant, agree to (i) increase or
extend the term of such Bank's Commitment, (ii) extend any date fixed for the
payment of principal of or interest on the related Loan or Loans or any portion
of any fee hereunder payable to the Participant, (iii) reduce the amount of any
such payment of principal, (iv) reduce the rate at which interest is payable
thereon, or any fee hereunder payable to the Participant, to a level below the
rate at which the Participant is entitled to receive such interest or fee, or
(v) consent to any modification, supplement or waiver hereof to the extent that
the same, under Section 12.04 hereof, requires the consent of each Bank.
(d) Information. A Bank may furnish any information concerning
the Borrower, the Guarantor or any of their respective Subsidiaries in the
possession of such Bank from time to time to assignees and participants
(including prospective assignees and participants), subject, however, to the
provisions of Section 12.15(b) hereof.
(e) Assignment to the Borrower or Guarantor. Anything in this
Section 12.06 to the contrary notwithstanding, neither the Borrower nor the
Guarantor shall, and neither the Borrower nor the Guarantor shall permit any of
its Subsidiaries to, acquire (whether by assignment, participation or
otherwise), and no Bank may assign or participate to the Borrower, the Guarantor
or any of their respective Subsidiaries or Affiliates, any interest in any Loan.
(f) Register. The Administrative Agent, acting for this purpose
as an agent of the Borrower, shall maintain at one of its offices in Montreal,
Quebec or Toronto, Ontario a copy of each Assignment and Acceptance delivered to
it and a register for the recordation of the names and addresses of the Banks,
and the Commitments of, and principal amount of the Loans owing to, each Bank
pursuant to the terms hereof from time to time (the "Register"). The entries in
the Register shall be conclusive, and the Borrower, the Guarantor, the
Administrative Agent and the Banks may treat each Person whose name is recorded
in the Register pursuant to the terms hereof as a Bank hereunder for all
purposes of this Agreement, notwithstanding notice to
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the contrary. The Register shall be available for inspection by the Borrower,
the Guarantor or any Bank, at any reasonable time and from time to time upon
reasonable prior notice.
(g) Effectiveness of Assignments. Upon its receipt of a duly
completed Assignment and Acceptance executed by an assigning Bank and an
assignee, the assignee's completed Administrative Questionnaire (unless the
assignee shall already be a Bank hereunder), the processing and recordation fee
referred to in paragraph (b) of this Section 12.06 and any written consent to
such assignment required by paragraph (b) of this Section 12.06, the
Administrative Agent shall accept such Assignment and Acceptance and record the
information contained therein in the Register. No assignment shall be effective
for purposes of this Agreement unless it has been recorded in the Register as
provided in this paragraph.
12.07 Survival. The obligations of the Borrower or Guarantor or
both under Sections 5.01, 5.05, 5.06, and 12.03 hereof and the obligations of
the Banks under Section 11.05 hereof shall survive the repayment of the Loans
and the termination of the Commitments. In addition, each representation and
warranty made, or deemed to be made by a notice of any Loan, herein or pursuant
hereto shall survive the making of such representation and warranty, and no Bank
shall be deemed to have waived, by reason of making any Loan, any Default which
may arise by reason of such representation or warranty proving to have been
false or misleading, notwithstanding that such Bank or the Administrative Agent
may have had notice or knowledge or reason to believe that such representation
or warranty was false or misleading at the time such Loan was made.
12.08 Captions. The table of contents and captions and section
headings appearing herein are included solely for convenience of reference and
are not intended to affect the interpretation of any provision of this
Agreement.
12.09 Counterparts. This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.
12.10 Governing Law; Submission to Jurisdiction.
(a) Laws of Quebec. Subject to Section 12.10(b) hereof, this
Agreement shall be governed by and construed in accordance with the laws of the
Province of Quebec and the federal laws of Canada applicable therein.
(b) Laws of New York. Section 6 of this Agreement shall be
governed by, and construed in accordance with, the laws of the State of New
York.
(c) Submission to Jurisdiction. Each of the Borrower and the
Guarantor hereby submits to the nonexclusive jurisdiction of any court of the
Province of Quebec sitting in Montreal and any New York state court sitting in
New York City for the purposes of all legal proceedings arising out of or
relating to this Agreement, any provisions hereof, or the transactions
contemplated hereby. Each of the Borrower and the Guarantor irrevocably waives,
to the fullest extent permitted by applicable law, any objection which it may
now or hereafter
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have to the venue of any such proceeding brought in such a court and any claim
that any such proceeding brought in such a court has been brought in an
inconvenient forum.
12.11 Waiver of Jury Trial. FOR THE PURPOSES OF THE APPLICATION
OF THE LAWS OF THE STATE OF NEW YORK TO THIS AGREEMENT OR ANY PROCEEDINGS
BROUGHT IN ANY NEW YORK STATE COURT ARISING OUT OF OR RELATING TO THIS
AGREEMENT, EACH OF THE BORROWER, THE GUARANTOR, THE ADMINISTRATIVE AGENT AND THE
BANKS HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY AND ALL RIGHT TO TRIAL BY JURY.
12.12 No Immunity. To the extent that the Guarantor or Borrower,
as the case may be, may be or become entitled, in any jurisdiction in which
judicial proceedings may at any time be commenced with respect to this
Agreement, to claim for itself or its Properties or revenues any immunity from
suit, court jurisdiction, attachment prior to judgment, attachment in aid of
execution of a judgment, execution of a judgment or from any other legal process
or remedy relating to its obligations under this Agreement, and to the extent
that in any such jurisdiction there may be attributed such an immunity (whether
or not claimed), the Guarantor or Borrower, as the case may be, hereby
irrevocably agrees not to claim and hereby irrevocably waives such immunity to
the fullest extent permitted by the laws of such jurisdiction.
12.13 Judgment Currency. The obligation of the Borrower and the
Guarantor under this Agreement to make any payment in US Dollars shall not be
discharged or satisfied by any tender or recovery pursuant to any judgment
expressed in or converted into any other currency or in another place except to
the extent that such tender or recovery results in the effective receipt by the
Bank concerned of the full amount of US Dollars payable to such Bank under this
Agreement. If for the purpose of obtaining judgment in any court it is necessary
to convert a sum due hereunder in US Dollars into another currency (in this
Section 12.13 called the "judgment currency"), the rate of exchange that shall
be applied shall be that at which in accordance with normal banking procedures
the Administrative Agent could purchase US Dollars in the Canadian foreign
exchange market with the judgment currency on the Business Day next preceding
the day on which such judgment is rendered. The obligation of the Borrower or
the Guarantor, as the case may be, in respect of any such sum due from it to the
Administrative Agent or any Bank hereunder (in this Section 12.13 called an
"Entitled Person") shall, notwithstanding the rate of exchange actually applied
in rendering such judgment, be discharged only to the extent that on the
Business Day following receipt by such Entitled Person of any sum adjudged to be
due hereunder in the judgment currency such Entitled Person may in accordance
with normal banking procedures purchase US Dollars in the Canadian Foreign
exchange market with the amount of the judgment currency so adjudged to be due;
and each of the Borrower and the Guarantor hereby, notwithstanding any such
judgment, agrees to indemnify such Entitled Person against, and to pay such
Entitled Person on demand, in US Dollars, the amount (if any) by which the sum
originally due to such Entitled Person in US Dollars hereunder exceeds the
amount of US Dollars so purchased and transferred.
12.14 Use of English Language. This Agreement has been negotiated
and executed in the English language. All certificates, reports, notices and
other documents and
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communications given or delivered pursuant to this Agreement (including, without
limitation, any modifications or supplements hereto) shall be in the English
language, or accompanied by a certified English translation thereof. In the case
of any document originally issued in a language other than English, the English
language version of any such document shall for purposes of this Agreement, and
absent manifest error, control the meaning of the matters set forth therein.
12.15 Treatment of Certain Information.
(a) Use of Information. The Borrower and the Guarantor
acknowledge that from time to time, financial advisory, investment banking and
other services may be offered or provided to the Borrower or the Guarantor or
one or more of their respective Subsidiaries (in connection with this Agreement
or otherwise) by any Bank or by one or more subsidiaries or affiliates of such
Bank and the Borrower and the Guarantor hereby authorize each Bank to share any
information delivered to such Bank by the Borrower or the Guarantor or any of
their respective Subsidiaries pursuant to this Agreement, or in connection with
the decision of such Bank to enter into this Agreement, to any such subsidiary
or affiliate of such Bank, it being understood that any such subsidiary or
affiliate receiving such information shall be bound by the provisions of
paragraph (b) below as if it were a Bank hereunder. Such authorization shall
survive the repayment of the Loans and the termination of the Commitments.
(b) Confidentiality. Each of the Banks and the Administrative
Agent will, and will cause its affiliates, directors, officers, employees and
representatives to, keep confidential, and not publish, disclose or otherwise
divulge and use only in connection with this Agreement any non-public
information furnished by the Borrower or the Guarantor to it in respect of this
Agreement that the Borrower or the Guarantor identifies as being confidential at
the time it furnishes the same, directly or indirectly (collectively, the
"Information"), provided that nothing herein shall limit the disclosure of the
Information (i) after the Information shall have become public (other than
through a violation of this Section 12.15), (ii) to the extent required by
statute, rule, regulation or judicial process, (iii) to counsel for any of the
Banks or the Administrative Agent, (iv) to bank examiners (or any other
regulatory authority having jurisdiction over any Bank or the Administrative
Agent), or to auditors or accountants, (v) to the Administrative Agent or any
Bank, (vi) in connection with any litigation to which any one or more of the
Banks or the Administrative Agent is a party, or in connection with the
enforcement of rights or remedies hereunder, (vii) to a subsidiary or affiliate
of such Bank as provided in paragraph (a) above or (viii) to any assignee or
participant (or prospective assignee or participant) so long as such assignee or
participant (or prospective assignee or participant) first executes and delivers
to the respective Bank a Confidentiality Agreement substantially in the form of
Exhibit F hereto (or executes and delivers to such Bank an acknowledgement to
the effect that it is bound by the provisions of this Section 12.15(b), which
acknowledgement may be included as part of the respective assignment or
participation agreement pursuant to which such assignee or participant acquires
an interest in the Loans hereunder); provided, further, that (x) unless
specifically prohibited by applicable law or court order, each Bank and the
Administrative Agent shall, prior to disclosure thereof, notify the Borrower and
the Guarantor of any request for disclosure of the Information (A) by any
governmental agency or representative thereof (other than any such request in
connection with an examination of the financial condition of such Bank by such
governmental agency) or (B) pursuant to legal process and (y) in no event shall
any Bank or the
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Administrative Agent be obligated or required to return the Information
furnished by the Borrower or the Guarantor. The obligations of each Bank under
this Section 12.15 shall supersede and replace the obligations of such Bank
under the confidentiality letter in respect of this financing signed and
delivered by such Bank to the Borrower or the Guarantor prior to the date
hereof; in addition, the obligations of any assignee that has executed a
Confidentiality Agreement in the form of Exhibit F hereto shall be superseded by
this Section 12.15 upon the date upon which such assignee becomes a Bank
hereunder pursuant to Section 12.06(b) hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered as of the day and year first above written.
BOWATER PULP AND PAPER CANADA INC.,
as Borrower
By: /s/ William G. Harvey
--------------------------------------------
Name: William G. Harvey
Title: Vice President and Treasurer
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BOWATER INCORPORATED,
as Guarantor
By: /s/ David G. Maffucci
-------------------------------------------
Name: David G. Maffucci
Title: Senior Vice President and
Chief Financial Officer
This is a counterpart signature page to the Credit Agreement
dated as of October 26, 2001 between Bowater Pulp and Paper Canada Inc., as
borrower, Bowater Incorporated, as guarantor, The Bank of Nova Scotia as
administrative agent and each of the lenders parties thereto, from time to time,
as Banks.
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THE BANK OF NOVA SCOTIA,
as Administrative Agent
By: /s/ David Maddocks
-------------------------------------------
Name: David Maddocks
Title: Director
By: /s/ Anuj Dhawan
-------------------------------------------
Name: Anuj Dhawan
Title: Associate Director
This is a counterpart signature page to the Credit Agreement
dated as of October 26, 2001 between Bowater Pulp and Paper Canada Inc., as
borrower, Bowater Incorporated, as guarantor, The Bank of Nova Scotia as
administrative agent and each of the lenders parties thereto, from time to time,
as Banks.
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THE BANK OF NOVA SCOTIA,
as a Bank
By: /s/ David Angel
-------------------------------------------
Name: David Angel
Title: Director, Paper and Forest Products
By: /s/ Francois De Broux
-------------------------------------------
Name: Francois De Broux
Title: Managing Director, Paper and Forest
Products
Loan Commitment: US$30,000,000
Swingline Commitment: US$15,000,000
- ---------------------------------------
Commitment: US$30,000,000
This is a counterpart signature page to the Credit Agreement
dated as of October 26, 2001 between Bowater Pulp and Paper Canada Inc., as
borrower, Bowater Incorporated, as guarantor, The Bank of Nova Scotia as
administrative agent and each of the lenders parties thereto, from time to time,
as Banks.
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THE TORONTO-DOMINION BANK
as a Bank
By: /s/ Oana Frumosu
-------------------------------------------
Name: Oana Frumosu
Title: Associate
By: /s/ Catherine McCarthy
-------------------------------------------
Name: Catherine McCarthy
Title: Vice President
Loan Commitment: US$30,000,000
Swingline Commitment: Nil
- --------------------------------------
Commitment: US$30,000,000
This is a counterpart signature page to the Credit Agreement
dated as of October 26, 2001 between Bowater Pulp and Paper Canada Inc., as
borrower, Bowater Incorporated, as guarantor, The Bank of Nova Scotia as
administrative agent and each of the lenders parties thereto, from time to time,
as Banks.
-65-
CANADIAN IMPERIAL BANK OF COMMERCE
as a Bank
By: /s/ Mark Chandler
-------------------------------------------
Name: Mark Chandler
Title: Executive Director
By: /s/ Bill Wolfe
------------------------------------------
Name: Bill Wolfe
Title: Executive Director
Loan Commitment: US$20,000,000
Swingline Commitment: Nil
- --------------------------------------
Commitment: US$20,000,000
This is a counterpart signature page to the Credit Agreement
dated as of October 26, 2001 between Bowater Pulp and Paper Canada Inc., as
borrower, Bowater Incorporated, as guarantor, The Bank of Nova Scotia as
administrative agent and each of the lenders parties thereto, from time to time,
as Banks.
-66-
BANK OF MONTREAL
as a Bank
By: /s/ Bruno Jarry
-------------------------------------------
Name: Bruno Jarry
Title: Director
Loan Commitment: US$20,000,000
Swingline Commitment: Nil
- --------------------------------------
Commitment: US$20,000,000
This is a counterpart signature page to the Credit Agreement
dated as of October 26, 2001 between Bowater Pulp and Paper Canada Inc., as
borrower, Bowater Incorporated, as guarantor, The Bank of Nova Scotia as
administrative agent and each of the lenders parties thereto, from time to time,
as Banks.
SCHEDULE I
MATERIAL AGREEMENTS AND LIENS
- -----------------------------
See Section 8.09 & 9.06(a)
PART A. MATERIAL AGREEMENTS (US MILLIONS, UNLESS OTHERWISE NOTED)
BOWATER INCORPORATED
<Table>
Public Bonds
9.0% Debentures due 8/1/09 $250.0
9.375% Debentures due 12/15/21 $200.0
9.5% Debentures due 10/15/12 $125.0
8.5% Notes due 12/15/01 $18.1
Tax Exempt Bonds
7.75% Solid Waste Recycling Facilities Revenue Bond due 10/1/22 $62.0
7.4% Solid Waste Recycling Facilities Revenue Bond due 12/1/22 $39.5
7.625% Solid Waste Recycling Facilities Revenue Bond due 3/1/16 $30.0
Variable Rate Solid Waste Recycling Facilities Revenue Bond due 6/1/29 $33.5
7.625% Solid Waste Recycling Facilities Revenue Bond due 3/1/06 $6.9
7.4% Solid Waste Recycling Facilities Revenue Bond due 1/1/10 $6.5
Letters of Credit
Supporting Various Insurance Programs $11.2
Supporting Various Rate Solid Waste Recycling Facilities $34.8
Bank Agreements
$350 Million 5-Year Credit Agreement (as of 9/30/01) $337.0
$450 Million 364-day Credit Agreement (as of 9/30/01) $171.0
$500 Million 9-month Bond Bridge Agreement (as of 9/30/01) $500.0
$10 Million Cash Management uncommitted line of credit (as of 9/30/01) $1.5
Guarantees
In connection with Ponderay Newsprint Company $50.0
In connection with the monetization of a timberland note $12.8
In connection with a synthetic lease $115.0
In connection with a letter of credit (employment related) C$22.0
issued by Bowater Pulp and Paper Canada Inc.
Synthetic Lease
$115 Million Facility due April 30, 2006 (as of 9/30/01) $24.2
SCHEDULE I
(Continued)
BOWATER PULP AND PAPER CANADA
<Table>
Public Bonds
10.85% Indenture due 11/30/14 C$125.0
9.25% Indenture due 6/15/02 $59.1
10.25% Indenture due 1/15/03 $7.4
Private Placement Notes
10.625% Series A Note Agreement due 6/15/10 $98.0
10.5% Series B Note Agreement due 6/15/10 $91.8
10.6% Series C Note Agreement due 1/15/11 $70.0
10.26% Series D Note Agreement due 1/15/11 $22.0
Letters of Credit
Supporting employment matters C$23.4
Bank Agreements
C$10 Million Cash Management line of credit (as of 9/30/01) C$3.2
C$5 Million Cash Management line of credit (as of 9/30/01) C$1.5
</Table>
BOWATER MARITIMES INC.
<Table>
Bank Agreements
C$17.3 Million Credit Agreement C$17.3
C$20 Million Cash Management line of credit (as of 9/30/01) C$0.3
CALHOUN NOTE HOLDINGS AT LLC
Note Agreement due 2014 $64.1
CALHOUN NOTE HOLDINGS TI LLC
Note Agreement due 2014 $61.6
</Table>
SCHEDULE I
(continued)
PART B. MATERIAL LIENS (US MILLIONS, UNLESS OTHERWISE NOTED)
BOWATER INCORPORATED
Timber Note Monetizations $176.6
(secured by notes payable by the purchasers of various timberlands)
Synthetic Lease $115.0
(secured by new facilities of Bowater Nuway Inc.)
AVENOR MARITIMES
C$20 Million Cash Management uncommitted line of credit C$20.0
(secured by inventory and book debts, accounts receivable, claims
and demands of Avenor Maritimes Inc.)
Credit Agreement C$10.0
(secured by inventory and book debts, accounts receivable, claims
and demands of Avenor Maritimes Inc. and Assignment of Forest
Management Agreement with the Province of New Brunswick)
BOWATER CANADIAN FOREST PRODUCTS INC.
Amended and Restated Credit Agreement dated as of $0.0
March 27, 1997, as amended and restated of November 30, 1998
Facility has been repaid and liens are in the process of being
released.
SCHEDULE II
SUBSIDIARIES
----------------
See Section 8.11
<Table>
<Caption>
PART A. JURISDICTION OF INCORPORATION
Bowater America Inc. Delaware
Bowater Asia Pte Ltd Singapore
Bowater Canada Inc. Canada
Bowater Canada Finance Limited Partnership New Brunswick
Bowater Canadian Holdings Incorporated Nova Scotia
Bowater Canadian Limited Canada
Bowater Europe Limited United Kingdom
Bowater Finance Company Inc. Delaware
Bowater Foreign Sales Corporation Barbados
Bowater-Halla Paper Co., Ltd Korea
Bowater Japan Limited Japan
Bowater Maritimes Inc.(1) New Brunswick
Bowater Mersey Paper Company Limited(2) Nova Scotia
Bowater Mississippi Holdings Inc. Delaware
Bowater Mississippi LLC Delaware
Bowater Newsprint South LLC Delaware
Bowater Nuway Inc. Delaware
Bowater Pulp and Paper Canada Inc. Canada
Bowater S. America Ltda. Brazil
Bowater South American Holdings Incorporated Delaware
Bowater Ventures Inc. Delaware
Calhoun Newsprint Company(3) Delaware
Carolina Export Corporation Delaware
Cascapedia Booming Company Inc. Canada
Enerpap Inc. Canada
Lake Superior Forest Products Inc, Delaware
Lake Superior Holdings Inc. Delaware
Newsprint South, Inc. Delaware
Bowater Canadian Forest Products Inc. Canada
U.S. Alliance Holding Corp. Delaware
Alliance Forest Products U.S. Corp. Alabama
Coosa Pines Golf Club, Incorporated Alabama
Alliance Forest Products Baie-Trinite Inc. Quebec
Bowater Treated Wood Inc. Quebec
Alliance Forest Products-Mitis Inc. Quebec
9068-9050 Quebec Inc. Quebec
Alliance Forest Products-Guerette Inc. Quebec
Alliance Forest Products (2001) Inc. Canada
Alliance Forest Products-Couturier Inc. New Brunswick
</Table>
SCHEDULE II
(CONTINUED)
Note: Except as otherwise indicated, each of the above entities is a wholly
owned direct or indirect subsidiary of the Guarantor. In addition, Mr. In Yung
Chung has been issued options with respect to an aggregate of 79,120 shares of
common stock of Bowater-Halla Paper Co., Ltd. (representing 10% of its
outstanding shares) with an aggregate exercise price of US$22,500,000. These
options expire July 31, 2003.
In addition, the stock of certain subsidiaries of Bowater Canadian Forest
Products Inc. has been pledged pursuant to an Amended and Restated Credit
Agreement dated as of March 27, 1997, as amended and restated as of November 30,
1998. This facility has been repaid and the liens are in the process of being
released.
(1) 67% owned. The remaining interest is owned 25% by Oji Paper Co., Ltd and
8% by Mitsui & Co., Ltd.
(2) 51% owned. The remaining interest is owned by The Washington Post
Company.
(3) Approximately 51% owned. The remaining interest is owned by Herald
Company, Inc.
SCHEDULE III
Litigation
None
SCHEDULE IV
PERMITTED DISPOSITIONS
SEE SECTION 9.05(F)
Dryden, Ontario - Uncoated Freesheet Mill, Related Sawmills and Timberlands
Great Northern Paper - West Millinocket Mill and Related Assets and Timberlands
Great Northern Paper - Millinocket Mill and Related Assets and Timberlands
Timberlands and Related Conversion Facilities related to Calhoun Newsprint
Company
Timberlands and Related Conversion Facilities that support the Catawba
operations
EXHIBIT A
[Form of Assignment and Acceptance]
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement dated as of October 26, 2001 (as
amended, supplemented or restated, from time to time, the "Credit Agreement"),
among Bowater Pulp and Paper Canada Inc., as borrower, Bowater Incorporated, as
guarantor, the banks party thereto from time to time as lenders, and The Bank of
Nova Scotia, as administrative agent for the said banks. Terms defined in the
Credit Agreement are used herein with the same meanings.
The Assignor named below hereby sells and assigns, without
recourse, to the Assignee named below, and the Assignee hereby purchases and
assumes, without recourse, from the Assignor, effective as of the Assignment
Date set forth below, the interests set forth below (the "Assigned Interest") in
the Assignor's rights and obligations under the Credit Agreement, including the
interests set forth below in the Commitment of the Assignor on the Assignment
Date and Loans owing to the Assignor which are outstanding on the Assignment
Date, together with unpaid interest accrued on the assigned Loans to the
Assignment Date, and the amount, if any, set forth below of the fees accrued to
the Assignment Date for the account of the Assignor. The Assignee hereby
acknowledges receipt of a copy of the Credit Agreement. From and after the
Assignment Date (i) the Assignee shall be a party to and be bound by the
provisions of the Credit Agreement and, to the extent of the Assigned Interests
by this Assignment and Acceptance, have the rights and obligations of a Bank
thereunder and (ii) the Assignor shall, to the extent of the Assigned Interests
by this Assignment and Acceptance, relinquish its rights and be released from
its obligations under the Credit Agreement.
As consideration for the assignment and sale contemplated herein,
the Assignee shall pay to the Assignor on [the Assignment Date], in immediately
available funds, the amounts heretofore agreed between them, taking into account
with respect to BA Loans and LC Loans outstanding on the Assignment Date, (i)
any part of the face value of any Acceptance or Letter of Credit for which the
Borrower may be in default of payment on its maturity date and (ii) the fees
paid by the Borrower in connection with the issuance of Acceptances and Letters
of Credit.
This Assignment and Acceptance is being delivered to the
Administrative Agent together with if the Assignee is not already a Bank under
the Credit Agreement, an Administrative Questionnaire in the form supplied by
the Administrative Agent, duly completed by the Assignee. The
[Assignee/Assignor] shall pay the fee payable to the Administrative Agent
pursuant to Section 12.06(b) of the Credit Agreement.
This Assignment and Acceptance shall be governed by and construed
in accordance with the laws of the Province of Quebec and the federal laws of
Canada applicable therein.
-2-
The terms set forth above and below are hereby agreed to:
[NAME OF ASSIGNOR] , as Assignor
By:
----------------------------------------------
Name:
Title:
[NAME OF ASSIGNEE] , as Assignee
By:
----------------------------------------------
Name:
Title:
Date of Assignment:
Legal Name of Assignor:
Legal Name of Assignee:
Assignee's Address for Notices:
Effective Date of Assignment
("Assignment Date")(1):
Percentage Assigned of
Facility/Commitment(2)
Principal Amount of all Banks
Facility Assigned thereunder)
- ------- ---------------- ----------------------
Commitment Assigned: $ %
Loans:
Fees Assigned (if any):
- ----------------------
(1) Must be at least five Business Days after execution hereof by all required
parties.
-3-
The undersigned hereby consent to the within assignment:(3)
BOWATER PULP AND PAPER CANADA INC.
By:
-------------------------------------
Name:
Title:
BOWATER INCORPORATED
By:
-------------------------------------
Name:
Title:
THE BANK OF NOVA SCOTIA,
as Administrative Agent
By:
-------------------------------------
Name:
Title:
(..continued)
(2) Must be set forth, to at least 8 decimals, as a percentage of the Facility
and the aggregate Commitments of all Banks thereunder.
(3) Consents to be included to the extent required by Section 12.06(b) of the
Credit Agreement.
Exhibit B
October 26, 2001
Each of the Banks party to the
Credit Agreement referred to below
- - and -
THE BANK OF NOVA SCOTIA, as
Administrative Agent for said Banks
1002 Sherbrooke Street West
Suite 300
Montreal, Quebec H3A 3M3
SUBJECT: US$100,000,000 FINANCING OF BOWATER PULP AND PAPER CANADA INC.
Ladies and Gentlemen:
We have acted as Counsel to Bowater Pulp and Paper Canada Inc. (the "BORROWER")
and are delivering this opinion pursuant to Section 7.01(c) of the credit
agreement dated as of October 26, 2001 (the "CREDIT AGREEMENT"), between the
Borrower, Bowater Incorporated (the "GUARANTOR"), the banks party thereto (the
"BANKS") and The Bank of Nova Scotia, as administrative agent (the
"ADMINISTRATIVE AGENT"), providing for loans to be made by said Banks to the
Borrower in an aggregate principal amount not exceeding US$100,000,000. The
Banks and the Administrative Agent are referred to herein collectively as the
"CREDIT PARTIES". All capitalized terms used but not defined herein have the
respective meanings given to such terms in the Credit Agreement.
For the purposes of the opinions expressed below, we have examined:
(i) the Credit Agreement; and
(ii) such corporate records, agreements and instruments of the
Borrower and such other documents and records as we have
deemed necessary as a basis for the opinions expressed below.
In our examination, we have assumed the genuineness of all signatures, the
authenticity and completeness of all documents submitted to us as originals, the
conformity with authentic original documents of all documents submitted to us as
certified, facsimile or photocopied copies, the accuracy and completeness of the
records, certificates and documents examined by us, as well as the accuracy and
correctness of all facts set forth or reflected therein and the legal capacity
of all individuals.
In rendering the opinions expressed below, we have assumed, with respect to all
of the documents referred to in this opinion letter, that, except to the
extent set forth in the opinions expressed below as to the Borrower:
(i) such documents have been duly authorized by, have been duly
executed and delivered by, and constitute legal, valid,
binding and enforceable obligations of, all of the parties to
such documents;
(ii) all signatories to such documents have been duly authorized;
and
(iii) all of the parties to such documents are duly organized and
validly existing and have the power and authority (corporate
or other) to execute, deliver and perform such documents.
With regard to all matters of fact referred to herein, we have relied
exclusively upon the officer's certificates attached hereto as Schedule A and
have made no other enquiries. Furthermore, any reference herein to matters or
information of which we have knowledge refers only to actual knowledge of R.
Jamie Plant.
Based upon and subject to the foregoing and subject also to the comments and
qualifications set forth below, and having considered such questions of law as
we have deemed necessary as a basis for the opinions expressed below, we are of
the opinion that:
2. The Borrower is a corporation duly constituted, organized, validly
existing under the Canada Business Corporations Act and in good standing with
respect to the filing of annual corporate information returns pursuant to the
Canada Business Corporations Act.
3. The Borrower has all necessary corporate power, authority and capacity
to (i) carry on its business and to own its property and assets, (ii) to
execute, delivery and perform its obligations under the Credit Agreement and
(iii) to borrow under the Credit Agreement.
4. The execution, delivery and performance by the Borrower of the Credit
Agreement and the performance by the Borrower of its obligations thereunder
have been duly authorized by all necessary corporate action on the part of the
Borrower.
5. The Credit Agreement has been duly executed and delivered by duly
authorized representatives of the Borrower.
6. The Credit Agreement constitutes legal, valid and binding obligations
of the Borrower, enforceable against the Borrower in accordance with its terms.
7. No authorization, approval or consent of, and no filing or
registration with, any governmental or regulatory authority or agency is
required on the part of the Borrower for the execution, delivery or performance
by the Borrower of, or for the legality, validity or
2
enforceability of, the Credit Agreement or for any borrowing by the Borrower
under the Credit Agreement.
8. The execution, delivery and performance by the Borrower of, and the
consummation by the Borrower of the transactions contemplated by, the Credit
Agreement do not and will not (a) conflict with or result in a breach of any
provision of the constating document or by-laws of the Borrower, (b) conflict
with or result in a breach of any applicable law, statute, rule or regulation
in force in the Province of Quebec in any material respect, (c) conflict with
or result in a breach of any order, writ, injunction or decree of any court or
governmental authority or agency or any arbitral award applicable to the
Borrower of which we have knowledge (after due inquiry) or (d) result in a
breach of, constitute a default under, require any consent under, or result in
the acceleration or required prepayment of any indebtedness pursuant to the
terms of, any agreement or instrument of which we have knowledge (after due
inquiry) to which the Borrower is a party or by which the Borrower is bound or
to which the Borrower is subject or result in the creation or imposition of any
Lien upon any Property of the Borrower or any of its Subsidiaries pursuant to
the terms of any such agreement or instrument.
9. Except as set forth in Schedule III to the Credit Agreement, we have
no knowledge (after due inquiry) of any legal or arbitral proceedings, or any
proceedings by or before any governmental or regulatory authority to agency,
now pending or threatened against the Borrower or any of its Subsidiaries or
any of the respective Properties that, if adversely determined, could have a
Material Adverse Effect.
The foregoing opinions are subject to the following comments and
qualifications:
(i) we express no opinion with respect to Section 6 of the Credit
Agreement or any obligations or other matters in respect of
the Guarantor;
(ii) the enforcement of the Credit Agreement or any judgment
arising out of or in connection therewith are subject to and
may be limited by applicable bankruptcy, insolvency,
moratorium, reogranization, prescription or other similar laws
affecting creditors' rights generally;
(iii) we express no opinion with respect to any provisions of the
Credit Agreement which purport (i) to enable any of the Credit
Parties to recover from a party any costs in excess of the
legal tariff or any fines, penalties or costs levied against
or imposed upon such other party by applicable law or by order
of a court or (ii) to waive the rights of any party under any
legislation which may not be derogated from;
(iv) enforcement of claims may become barred under applicable
statutes of a limitation or as a result of extinctive
prescription and may be subject to counter claims or set offs;
3
(v) the question of whether or not any of the provisions of the Credit
Agreement which may be rendered invalid on account of illegality may be
severed from the other provisions thereof in order to save those other
provisions would be determined by a court in its discretion;
(vi) the Currency Act (Canada) precludes a Canadian court from giving a
judgment for an amount expressed in a currency other than Canadian
currency. In respect of the foregoing, Article 3161 of the Civil Code
of Quebec provides as follows:
"3161. Where a foreign decision orders a debtor to pay a sum of money
expressed in foreign currency, a Quebec authority (for example, a
Quebec Court) converts the sum into Canadian currency at the rate of
exchange prevailing on the day the decision became enforceable at the
place where it was rendered.
The determination of interest payable under a foreign decision is
governed by the law of the authority that rendered the decision until
its conversion."
(vii) taking into consideration Section 347 of the Criminal Code (Canada)
and the definition given to "interest payments" therein, any interest
payment claimed in virtue of the Credit Agreement exceeding 60% per
annum would result in a criminal infraction rendering the recipient of
the payment subject to the penalties provided for in said Section 347;
(viii) we express no opinion as to the effectiveness of any provision of the
Credit Agreement which purport to allow for the compensation or
set-off of unmatured or unliquidated claims;
(ix) in the event that litigation should ensue outside Quebec, the Credit
Parties may be subject to Section 2 of the Business Concerns Records
Act (Quebec) which provides that "Subject to section 3, no person
shall, pursuant to or under any requirement issued by any legislative,
judicial or administrative authority outside Quebec, remove or cause
to be removed, or send or cause to be sent, from any place in Quebec
to a place outside Quebec, any document or resume or digest of any
document relating to any concern"; for the purposes of the Business
Concerns Records Act (Quebec), "document" means any account, balance
sheet, statement of receipts and expenditure, profit and loss
statement, statement of assets and liabilities, inventory, report any
other writing or material forming part of the records or archives of a
business concern;
(x) the obligations of the Borrower pursuant to the Credit Agreement and
the enforceability thereof are subject to all qualifications which, by
law, equity or usage, are incidental thereto by their nature,
including without limitation:
4
FRASER MILNER CASGRAIN LLP PAGE 5.
(A) the parties must have exercised and must continue to exercise
good faith in the negotiation, implementation and enforcement
of the Credit Agreement;
(B) equitable remedies such as specific performance and injunctive
relief which may be ordered by a court in its discretion and
accordingly may not be available as a remedy in an action
brought to enforce rights under the Credit Agreement;
(C) the powers of the courts to stay proceedings before them and
to stay the execution of judgments;
(D) the discretion that a court may reserve to itself to decline
to hear an action if it is contrary to public policy for it to
do so or if it is not the proper forum to hear such action;
(E) limitations which may be imposed by law on the effectiveness
of terms exculpating a party from a liability resulting from
gross negligence or wilful misconduct;
(F) the discretion that a court may reserve to itself to impose
restrictions on the rights of creditors to enforce immediate
payment of amounts stated to be payable on demand and to
decline to be bound by determinations of fact stated to be
conclusive by the contracting parties; and
(G) limitations upon the right of a party to the Credit Agreement
to enforce its rights thereunder on the basis of a purely
technical default, such as the failure to timely produce a
document.
The foregoing opinions are limited to matters involving the laws of the
Province of Quebec and the federal laws of Canada applicable therein and we do
not express any opinion as to the laws of any other jurisdiction. We undertake
no, and expressly disclaim any, obligation to advise you of any change in any
matters set forth herein.
At the request of our client, this opinion letter is, pursuant to Section
7.01(c) of the Credit Agreement, provided to you by us in our capacity as
Counsel to the Borrower and may not be relied upon, used, published or
communicated by any Person for any purpose other than in connection with the
transactions contemplated by the Credit Agreement without, in each instance,
our prior written consent.
Yours very truly,
EXHIBIT C
[Form of Opinion of Corporate Counsel to the Guarantor]
__________, 2001
Each of the Banks party to the
Credit Agreement referred to
below
and
The Bank of Nova Scotia, as
Administrative Agent for said Banks
1002 Sherbrooke Street West
Suite 300
Montreal, Quebec
H3A 3M3
Ladies and Gentlemen:
RE: US$100,000,000 FINANCING OF BOWATER PULP AND PAPER CANADA INC.
I am the Senior Vice President, Corporate Affairs, and General Counsel
of Bowater Incorporated, a corporation organized under the laws of Delaware
(the "Company") and I am delivering this opinion pursuant to Section 7.01(d) of
the Credit Agreement dated as of October 26, 2001 (the "Credit Agreement"),
between Bowater Pulp and Paper Canada Inc. (the "Borrower"), the Company, as
Guarantor, the banks party thereto (the "Banks") and The Bank of Nova Scotia,
as Administrative Agent, providing for loans to be made by said Banks to the
Borrower in an aggregate principal amount not exceeding US$100,000,000 and
providing for a Guarantee by the Company. All capitalized terms used but not
defined herein have the respective meanings given to such terms in the Credit
Agreement.
In rendering the options expressed below, I have examined:
(i) the Credit Agreement; and
(ii) such corporate records, agreements and instruments of the
Company and such other documents and records as I have deemed
necessary as a basis for the opinions expressed below.
In my examination, I have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all documents
submitted to
me as originals and the conformity with authentic original documents of all
documents submitted to me as certified, facsimile or photocopied copies. When
relevant facts were not independently established, I have relied upon statements
of governmental officials and upon representations made in or pursuant to the
Credit Agreement and certificates of appropriate representatives of the Company.
In rendering the opinions expressed below, I have assumed, with
respect to all of the documents referred to in this opinion letter, that,
except, to the extent set forth in the opinions expressed below as to the
Company:
(i) such documents have been duly authorized by, have been duly
executed and delivered by, and constitute legal, valid, binding and
enforceable obligations of, all of the parties to such documents;
(ii) all signatories to such documents have been duly authorized;
and
(iii) all of the parties to such documents are duly organized and
validly existing and have the power and authority (corporate or other)
to execute, deliver and perform such documents.
Based upon and subject to the foregoing and subject also to the
comments and qualifications set forth below, and having considered such
questions of law as I have deemed necessary as a basis for the opinions
expressed below, I am of the opinion that:
1. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
2. The Company has all necessary corporate power,
authority and capacity to (i) carry on its business and to own its
property and assets and (ii) execute, deliver and to perform its
obligations under the Credit Agreement.
3. The execution, delivery and performance by the
Company of the Credit Agreement and the performance by the Company of
its obligations thereunder have been duly authorized by all necessary
corporate action on the part of the Company.
4. The Credit Agreement has been duly executed and
delivered by duly authorized representatives of the Company.
5. The execution, delivery and performance by the
Company of, and the consummation by the Company of the transactions
contemplated by, the Credit Agreement do not and will not (a) violate
any provision of the charter or by-laws of the Company, (b) violate any
law, rule or regulation applicable to the Company in any material
respect, (c) violate any order, writ, injunction or decree of any court
or governmental authority or agency or any arbitral award applicable to
the
-2-
Company of which I have knowledge (after due inquiry) or (d) result in a breach
of, constitute a default under, require any consent under, or result in the
acceleration or required prepayment of any indebtedness pursuant to the terms
of, any agreement or instrument of which I have knowledge (after due inquiry) to
which the Company is a party or by which the Company is bound or to which the
Company is subject or result in the creation or imposition of any Lien upon any
Property of the Company or any of its Subsidiaries pursuant to the terms of any
such agreement or instrument.
6. Except as set forth in Schedule III to the Credit Agreement, I
have no knowledge (after due inquiry) of any legal or arbitral proceedings, or
any proceedings by or before any governmental or regulatory authority or agency,
now pending or threatened against the Company or any of its Subsidiaries or any
of their respective Properties that, if adversely determined, could have a
Material Adverse Effect.
I am admitted to the practice of law in the State of California
and, pursuant to a limited certificate to practice law, in the State of South
Carolina. The foregoing opinions are limited to matters involving the Federal
laws of the United States of America, the Delaware General Corporation Law and
the law of the State of South Carolina and I do not express any opinion as to
the laws of any other jurisdiction.
At the request of my client, this opinion letter is, pursuant to
Section 7.01(d) of the Credit Agreement, provided to you by me in my capacity as
Senior Vice President, Corporate Affairs, and General Counsel of the Company and
may not be relied upon, used, published or communicated by any Person for any
purpose other than in connection with the transactions contemplated by the
Credit Agreement without, in each instance, my prior written consent
Very truly yours,
-3-
EXHIBIT D
[Form of Opinion of Special New York Counsel to the Guarantor]
____________ __, 2001
Each of the Banks party to the
Credit Agreement referred to
below
and
The Bank of Nova Scotia, as
Administrative Agent for said Banks
1002 Sherbrooke Street West
Suite 300
Montreal, Quebec
H3A 3M3
Re: US$100,000,000 Financing of Bowater Pulp and Paper Canada Inc.
--------------------------------------------------------------
Ladies and Gentlemen:
We have acted as special New York counsel to Bowater Incorporated, a
corporation organized under the laws of Delaware (the "Company") and we are
delivering this opinion pursuant to Section 7.01(e) of the Credit Agreement
dated as of October 26, 2001 (the "Credit Agreement"), by and among Bowater
Pulp and Paper Canada Inc. (the "Borrower"), the Company, as Guarantor, the
banks party thereto (the "Banks") and The Bank of Nova Scotia, as
Administrative Agent, providing for loans to be made by said Banks to the
Borrower in an aggregate principal amount not exceeding US$100,000,000 and
providing for a Guarantee by the Company. All capitalized terms used but not
defined herein have the respective meanings given to such terms in the Credit
Agreement.
In rendering the opinions expressed below, we have examined:
(i) the Credit Agreement; and
(ii) such corporate records, agreements and instruments of
the Company and such other documents and records as we have
deemed necessary as a basis for the opinions expressed below.
In our examination, we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals and the
conformity with
authentic original documents of all documents submitted to us as certified,
facsimile or photocopied copies. When relevant facts were not independently
established, we have relied upon statements of governmental officials and upon
representations made in or pursuant to the Credit Agreement and certificates of
appropriate representatives of the Company. We have also relied, with your
permission, on the opinion of Anthony H. Barash, Esq. dated the date hereof and
addressed to you with respect to those matters contained in said opinion on
which we do not express our opinion herein.
In rendering the opinions expressed below, we have assumed, with
respect to all of the documents referred to in this opinion letter, that:
(i) such documents have been duly authorized by, have
been duly executed and delivered by, and (except to the
extent set forth in the opinion below as to the Company)
constitute legal, valid, binding and enforceable obligations
of, all of the parties to such documents;
(ii) all signatories to such documents have been duly
authorized; and
(iii) all of the parties to such documents are duly
organized and validly existing and have the power and
authority (corporate or other) to execute, deliver and perform
such documents.
Based upon and subject to the foregoing and subject also to the
comments and qualifications set forth below, and having considered such
questions of law as we have deemed necessary as a basis for the opinions
expressed below, we are of the opinion that:
1. The Credit Agreement constitutes the legal, valid and
binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other
similar laws relating to or affecting the rights of creditors generally
and except as the enforceability of the Credit Agreement is subject to
the application of general principles of equity (regardless of whether
considered in a proceeding in equity or at law), including, without
limitation, (a) the possible unavailability of specific performance,
injunctive relief or any other equitable remedy and (b) concepts of
materiality, reasonableness, good faith and fair dealing.
2. No authorization, approval or consent of, and no
filing or registration with, any governmental or regulatory authority
or agency is required on the part of the Company for the execution,
delivery or performance by the Company of, or for the legality,
validity or enforceability of, the Credit Agreement as to the Company.
3. The execution, delivery and performance by the
Company of the Credit Agreement do not and will not violate any
applicable law, rule or regulation in any material respect.
2
The foregoing opinions are subject to the following comments and
qualifications:
A. Clause (iii) of the second sentence of Section 6.02
of the Credit Agreement may not be enforceable to the extent that the
Guaranteed Obligations are materially altered.
B. The enforceability of provisions in the Credit
Documents to the effect that terms may not be waived or modified except
in writing may be limited under certain circumstances.
C. We express no opinion as to (i) the effect of the
laws of any jurisdiction in which any Bank is located (other than the
State of New York) that limit the interest, fees or other charges such
Bank may impose, and (ii) Section 6.06 of the Credit Agreement.
The foregoing opinions are limited to matters involving the Federal
laws of the United States of America, the Delaware General Corporation Law and
the law of the State of New York and we do not express any opinion as to the
laws of any other jurisdiction. We express no opinion as to whether a Federal
court would accept jurisdiction over a proceeding arising out of or relating to
the Credit Documents.
At the request of our client, this opinion letter is, pursuant to
Section 7.01(e) of the Credit agreement, provided to you in our capacity as
Special New York Counsel of the Company and may not be relied upon, used,
published or communicated by any Person for any purpose other than in
connection with the transactions contemplated by the Credit Agreement without,
in each instance, our prior written consent.
Very truly yours,
3
EXHIBIT E
[FORM OF OPINION OF SPECIAL
COUNSEL TO THE ADMINISTRATIVE AGENT]
______________, 2001
Each of the Banks party to the
Credit Agreement referred to
below
and
The Bank of Nova Scotia, as
Administrative Agent for said Banks
1002 Sherbrooke Street West
Suite 300
Montreal, Quebec
H3A 3M3
Ladies and Gentlemen:
RE: US$100,000,000 FINANCING OF BOWATER PULP AND PAPER CANADA, INC.
We have acted as special counsel to The Bank of Nova Scotia
("ScotiaBank") in connection with the Credit Agreement dated as of October 26,
2001 (the "Credit Agreement") between Bowater Pulp and Paper Canada Inc. (the
"Borrower"), Bowater Incorporated (the "Guarantor"), the banks party thereto
(the "Banks") and ScotiaBank, as administrative agent (the "Administrative
Agent"), providing for loans to be made by said Banks to the Borrower in an
aggregate principal amount not exceeding US$100,000,000. All capitalized terms
used but not defined herein have the respective meanings given to such terms in
the Credit Agreement. This opinion letter is being delivered pursuant to
Section 7.01(f) of the Credit Agreement.
For the purposes of the opinion expressed below, we have examined an
originally executed copy of the Credit Agreement.
In rendering the opinion expressed below, we have assumed that the
parties to the Credit Agreement have the requisite corporate capacity, power
and authority to enter into the Credit Agreement and to perform their
respective obligations thereunder, that each such party has duly authorized,
executed and delivered the Credit Agreement and that the Credit Agreement
constitutes legal, valid, binding and enforceable obligations of each party
thereto.
Based upon and subject to the foregoing and subject also to the
comments and qualifications set forth below, and having considered such
questions of law as we have deemed necessary as a basis for the opinion
expressed below, we are of the opinion that the Credit Agreement constitutes
legal, valid and binding obligations of the Borrower, enforceable against the
Borrower in accordance with its terms.
The foregoing opinion is subject to the following comments and
qualifications:
A. We express no opinion with respect to Section 6 of
the Credit Agreement;
B. Pursuant to the Currency Act (Canada), a court in
Canada will render judgment only in lawful money of Canada;
C. The rights and remedies of the parties to each of the
documents mentioned herein are subject to any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally;
D. We express no opinion as to any stipulation providing
that a determination made unilaterally by a party shall be final and
binding upon another party; and
E. Our opinion as to the enforceability of the Credit
Agreement refers to the legal character of the principal obligations
undertaken thereunder and does not mean that each provision thereof
will be enforceable in all circumstances; and
The foregoing opinion is limited to matters involving the laws of the
Province of Quebec and the federal law of Canada applicable therein, and we do
not express any opinion as to the laws of any other jurisdiction.
This opinion is provided by us in our capacity as special counsel to
the Administrative Agent and may not be relied upon by any Person for any
purpose other than in connection with the transactions contemplated by the
Credit Agreement without, in each instance, our prior written consent.
Very truly yours,
-2-
EXHIBIT F
[Form of Confidentiality Agreement]
CONFIDENTIALITY AGREEMENT
[Date]
[Insert Name and
Address of Prospective
Participant or Assignee]
Dear Ladies and Gentlemen:
Re: Credit Agreement dated as of October 26, 2001 (as modified and
supplemented and in effect from time to time, the "Credit
Agreement"), among Bowater Pulp and Paper Canada Inc. (the
"Borrower"), Bowater Incorporated (the "Guarantor"), the banks
party thereto and The Bank of Nova Scotia, as Administrative
Agent.
As a Bank party to the Credit Agreement, we have agreed with the
Borrower pursuant to Section 12.15 of the Credit Agreement to use reasonable
precautions to keep confidential, except as otherwise provided therein, all
non-public information identified by the Borrower as being confidential at the
time the same is delivered to us pursuant to the Credit Agreement (collectively,
the "Information").
As provided in said Section 12.15, we are permitted to provide
you, as a prospective [holder of a participation in the Loans (as defined in the
Credit Agreement)] [assignee Bank], with the Information subject to the
execution and delivery by you, prior to receiving the Information, of a
Confidentiality Agreement in this form. The Information will not be made
available to you until your execution and return to us of this Confidentiality
Agreement.
Accordingly, in consideration of the foregoing, you agree for the
benefit of the Borrower, the Guarantor and us to keep confidential, and to not
publish, disclose or otherwise divulge, the Information (and to cause your
officers, directors, employees, agents and representatives to keep confidential,
and to not publish, disclose or otherwise divulge, the Information) and, at the
Borrower's request (except as provided below), promptly to return to the
Borrower or destroy the Information and all copies thereof, extracts therefrom
and analyses or other materials based thereon, except that you shall be
permitted to disclose Information (i) to such of your officers, directors,
employees, agents and representatives as need to know such Information in
connection with the proposed [participation] [assignment] mentioned above; (ii)
to the extent required by applicable laws or regulations or by any subpoena or
similar legal
-2-
process, or requested by any bank regulatory authority, provided that, unless
specifically prohibited by applicable law or court order, you agree, prior to
disclosure thereof, to notify the Borrower of any request for disclosure of any
Information (A) by any governmental agency or representative thereof (other than
any such request in connection with an examination of your financial condition
by a governmental agency) or (B) pursuant to legal process; (iii) to the extent
such Information (A) becomes publicly available other than as a result of a
breach of this Confidentiality Agreement, (B) becomes available to you on a
non-confidential basis from a source other than the Administrative Agent, any
Bank or us (C) was available to you on a non- confidential basis prior to its
disclosure to you by us; (iv) to the extent the Borrower shall have consented to
such disclosure in writing; or (v) pursuant to the immediately succeeding
paragraph of this Confidentiality Agreement. You further agree that you will use
the Information (except to the extent the conditions referred to in subclauses
(A), (B) and (C) of clause (iii) above have been met and as otherwise provided
in this paragraph) only to evaluate the proposed [participation] [assignment] in
respect of the Credit Agreement.
Notwithstanding anything to the contrary contained above, if you
become [a holder of a participation in the Loans under the Credit Agreement, you
will be entitled (subject to the requirements hereof) to retain all Information
and to use it in monitoring and servicing such participation and in exercising
your rights with respect thereto] [an assignee Bank pursuant to Section 12.06(b)
of the Credit Agreement, you will be able to retain all Information pursuant and
subject to Section 12.15 of the Credit Agreement, which shall supersede your
obligations under this Confidentiality Agreement on the date upon which you
become such a Bank].
This Agreement shall be governed by the laws of the Province of
Quebec and the federal laws of Canada applicable therein.
Please indicate your agreement to the foregoing by signing as
provided below the enclosed copy of this Confidentiality Agreement and returning
the same to us.
Very truly yours,
[INSERT NAME OF BANK]
By
---------------------------------------
The foregoing is agreed to
as of the date of this letter.
[INSERT NAME OF PROSPECTIVE
PARTICIPANT OR ASSIGNEE]
By
-----------------------------