CANADA-QUEBEC SUBSIDIARY AGREEMENT
ON INDUSTRIAL DEVELOPMENT (1991)
Project No.:
Attention:
Subject: Capital project for the expansion and modernization
of your facility located at St.Jerome, Quebec
Dear Sirs:
In response to your application for financial assistance dated 4 January
1995, the Government of Canada, as represented by the Minister responsible for
Industry Canada, and the Government of Quebec, represented by the Minister of
Industry, Commerce, Science and Technology("the Ministers") hereby offers a
repayable contribution under the Canada-Quebec Subsidiary Agreement on
Industrial Development (1991) to Rayonese Textile Inc. (the Applicant) for
the execution of the project described in Schedule A (the project).
1. The agreement
1.1 This letter of offer, including schedules A, B and C constitutes the
full agreement between the parties once the Applicant has met the
conditions of paragraph 9.2 hereof.
2. The project
2.1 The Applicant shall
.1 complete the project no later than 30 April, 1998.
Initials: Co-Chairman of the Management Committee
Applicant
Project No.:
3. The contribution
3.1 Subject to the other provisions of this agreement,the Minister agrees
to pay to the Applicant the lesser of:
.1 a sum not to exceed 3,618,000 $; or
.2 20% of the eligible capital costs authorized in Schedule A.
3.2 The Minister will not contribute to any costs incurred by the
Applicant prior to 4 Jan. 1995.
3.3 In accordance with the provisions of the Canada-Quebec Subsidiary
Agreement on Industrial Development (1991), the Government of Canada
and the Government of Quebec will each pay their share of the total
contribution, namely fifty percent (50%) each.
4. Representations and undertakings by the Applicant
4.1 Rayonese Textile,Inc.(company name) is an entity duly established
under the Canada Business Corporations Act, is in good standing with
the rules by which it is governed, and is not subject to any
commitment or prohibition that would be violated by the execution of
the project.
5. Payment conditions
5.1 On submission of a documented claim by the Applicant, the Minister
will disburse the contribution in installments covering at least six
(6) months of work and representing at least 20% on the eligible
capital costs incurred and paid by the applicant. The total amount
of the instalments shall not exceed 90% of the authorized contribution.
5.2 The outstanding balance of the contribution will be paid at the
completion date of the project.
Initials: Co-Chairman of the Management Committee
Applicant
Project No.:
6. Conditions related to the disbursement of the contribution
6.1 Financing and Net worth
6.1.1 The applicant agrees to present proof, to the Minister's
satisfaction, that he has obtained the financing for the project
as described in Annex A.
6.1.2 The applicant undertakes to present proof, to the Minister's
satisfaction, that it has a minimum net worth of $6,700,000
prior to the second disbursement of the contribution, and that
it will maintain this net worth for the duration of this
contract.
6.2 The Minister will disburse the contribution to the Applicant
.1 once he is satisfied that the potential adverse environmental
effects of the project are negligible, and
.2 once the Applicant has demonstrated that it has adopted
and applied, in relation to the project, the environmental
protection measures that are satisfactory to all the regulatory
agencies with authority over the Applicant or the project, or
both.
6.3 Prior to the initial disbursement, the applicant must submit a
corporate guarantee executed by its parent, Culp Inc., in
substantially the same form as appears in Annex C attached hereto.
7. Other government assistance
7.1 The Applicant states that it has neither requested nor received any
other financial assistance from the federal, provincial or municipal
government for the purposes of the project.
7.2 The Applicant agrees to disclose without delay, and in all cases no
later than the moment that such assistance is received, any other
assistance granted for the purposes of the project, and the Applicant
acknowledges that the Minister may reduce the amount of the
contribution under this agreement by as much as the amount of the
additional assistance expected or received.
Initials: Co-Chairman of the Management Committee
Applicant
Project No.:
8. Repayment
8.1 If the results are conclusive, the Applicant shall repay the
contribution to the Minister in five annual, equal, consecutive
instalments.
8.2 The first instalment is due and payable one year after the date
of the last disbursement and subsequent instalments are due and
payable at intervals of twelve months thereafter.
8.3 Repayments of the contribution shall be made directly to each
government in proportion to its share of the contribution.
9. General conditions
9.1 By accepting this offer, the Applicant certifies that, except as
previously declared to the Ministers, it has made no contractual
commitment concerning the project prior to submitting the application
for financial assistance.
9.2 A copy of this offer, duly signed, including the initialed schedules
which are an integral part hereof, must be returned within 60 days of
its date of issue to the address shown below. The offer shall become
null and void after the said 60 days.
For further information, please contact H. Gilles Lefabyre,
the designated spokesperson, by telephone at (514)283-3667/283-5103; or in
writing, at the following address:
Industry Canada
5, Place Ville-Marie
7th floor
Montreal (Quebec)
H3B 2G2
Initials: Co-Chairman of the Management Committee
Applicant
Project No.:
Yours truly,
Denise Boudrias Michel La Salle
Co-Chairmen of the Management Committee
We have read the terms and conditions set out in this offer and the
schedules, and we hereby accept the offer.
Accepted on 19 .
Rayonese Textile, Inc.
(company name)
By Franklin N. Saxon
(signature)
Company seal
Vice President and Chief Financial Officer
(title)
p.s. The applicant must initial all pages of this offer and the
attached schedules
Enclosures
Schedule A -- Project description and funding
Schedule B -- General conditions, representations and warranties
Schedule C --
CANADA-QUEBEC SUBSIDIARY AGREEMENT
ON INDUSTRIAL DEVELOPMENT (1991)
Project No.:
SCHEDULE A
PROJECT DESCRIPTION AND FUNDING
PURPOSE OF PROJECT
The purpose of this project is to increase productivity and product
quality. The total eligible cost of the project is estimated at $18,090,000.
$, broken down as follows:
Adjustable Other
Building Costs Costs
Enlargement of Building $1,500,000
Equipment
28 Loans $15,330,000 $4,320,00
2 Compressors 660,000
1 Slasher 600,000
$16,590,000 $4,320,000
Total $18,090,000 $4,320,000
Total Cost of Project $22,410,000
FINANCING
Long term debt $16,119,000
Working Capital 2,673,000
Subsidiary Agreement 3,618,000
TOTAL $22,410,000
Initials: Co-Chairman of the Management Committee
Applicant
SCHEDULE B
CANADA-QUEBEC SUBSIDIARY AGREEMENT
ON INDUSTRIAL DEVELOPMENT (1991)
Project No:
GENERAL CONDITIONS, UNDERTAKINGS AND REPRESENTATIONS
1. Definitions
Unless the context dictates otherwise, the following terms have the stated
meaning for the purposes of this agreement:
1.1 "Project": the work to be undertaken as per the Applicant's request
and summarized in Schedule A.
1.2 "Application": means the written request by the Applicant to the
Minister for financial assistance for the project under this agreement
(SAID 91) and any other document provided subsequently by the
Applicant or its representative.
1.3 "Parties": means the Minister and the Applicant.
1.4 "Eligible capital costs": means reasonable costs which are directly
related to the project and are entered in the Applicant's capital
accounts in accordance with the standards of the Canadian Institute of
Chartered Accountants (CICA).
1.5 "Starting date of project": means the date on which the work
actually begins.
1.6 "Completion date of the project": means the date on which:
.1 all the assets for which the Ministers have contributed or
agreed to contribute funding are used in the facility and will
continue to be so used for the foreseeable future;
.2 the facility or the part of the facility for which the
assistance specified in the letter of offer was provided, has
been utilized for not less than 30 consecutive working days in
the provision of marketable services or the production of
marketable goods in commercial quantities; and
Initials: Co-chairman of the Management Committee
Applicant
Project No.:
1.7 "Net worth" means the total of:
a) the share capital of the applicant, or the proprietor's or
partner's capital accounts;
b) the earned surplus, contributed surplus or other surplus account
of the applicant;
c) the deficit accounts of the applicant;
d) loans from shareholders to the applicant that are subordinated
to all other liabilities for the duration of the contract;
e) subject to the consent of the Ministers, all loans provided to
the applicant, other than shareholder loans, that are
subordinated to all other liabilities for the duration of the
contract, less any amounts included in a) and e) above which,
in the opinion of the Ministers, unreasonably inflate the net
worth.
2. Duration of the agreement
2.1 The effective date of the agreement is the date on which the Minister
receives a duly completed and signed copy hereof.
2.2 This agreement shall terminate on the later of the two dates below:
.1 36 months after the project completion date, to the satisfaction
of the Ministers; or
.2 when the sums owed to the government under this agreement have
been paid in full.
Initials: Co-Chairman of the Management Committee
Applicant
Project No.:
3. Disbursement
3.1 The Applicant must submit a claim in writing for each instalment of the
contribution. In support of each claim, it shall submit supporting
documentation in respect of the major costs claimed, a copy of its latest
audited annual financial statements and, where requested, an auditor's
certificate or other documents showing compliance with the terms and
conditions of payment.
3.2 No claim for payment from the Applicant shall be accepted more than
twelve (12) months after the project completion date.
4. Reports
4.1 The Applicant shall promptly provide the Ministers with all the reports
he requests on the progress and results of the project.
4.2 The Applicant shall give any authorized representative reasonable
access to its premises, books and other records for the purposes of
inspecting and evaluating the progress and the results of the project.
4.3 As soon as possible after the end of each financial year, as long as
the agreement is in force, the Applicant shall provide the Ministers with
a copy of its audited annual financial statements and its interim
half-yearly financial statements as promptly as possible.
5. Undertakings by the Applicant
5.1 For the duration of this agreement, the Applicant commits to
.1 take every necessary measure to maintain its corporate existence and
legal competence and to inform the Minister of any failure to do so;
Initials: Co-Chairman of the Management Committee
Applicant
Project No.:
.2 take every necessary measure to carry out the project successfully
and in compliance with the time frame and costs agreed, in workmanlike
fashion and employing qualified personnel;
.3 co-operate fully with the Ministers, and more specifically, provide,
immediately and free of charge, all pertinent information relating to
the project and the Applicant which the Ministers may request;
.4 immediately advise the Minister of any fact or event which is liable
to compromise the success of the project immediately or in the long
term;
.5 obtain and maintain in effect, while the agreement is in force, an
insurance policy, satisfactory to the Minister, on the assets
acquired for the purposes of the project; the Applicant shall, in the
event of loss, notify the Minister in writing within 30 days following
the said loss that the insurance settlement will be assigned, in a
delay judged reasonable by the Ministers, to the reconstruction or
repair of the assets necessary for the project, failing which, the
Applicant shall reimburse the contribution received.
5.2 For the duration of this agreement, the Applicant undertakes not to
.1 amend the project with respect to its ownership, cost, funding,
scope, date of completion, location or any other aspect, without
the Minister's prior written consent;
.2 take actions or make any decisions that might compromise the
success of the project or the Applicant's financial viability;
.3 sell or otherwise dispose of assets necessary for carrying out
or operating the project, or cease to use any asset which has
been paid for in part through financial assistance under this
agreement, without the prior written consent of the Ministers;
.4 move the assets to be used for the project off the premises
described herein.
Initials: Co-Chairman of the Management Committee
Applicant
Project No.:
6. Default
6.1 While the provisions of this agreement are in effect, any of the
following events, without being restrictive, shall constitute default:
.1 the Applicant becomes bankrupt or insolvent, is placed under
receivership, or files for protection under any statute relating
to bankrupt or insolvent debtors;
.2 an order is made or a resolution passed for the winding up of
the Applicant, or the Applicant is dissolved;
.3 in the opinion of the Ministers, the Applicant has ceased to do
business in Quebec, its business operations have been suspended,
it has transferred its activities outside Quebec, or it has
disposed of assets for which funding was granted hereunder;
.4 the Applicant has submitted false or misleading information
which played a significant role in the Minister's decision to
grant the assistance;
.5 in the opinion of the Ministers, a material adverse change has
occurred in the Applicant's corporate risk;
.6 the Applicant has failed to abide by a major undertaking set
out in this agreement;
.7 in the opinion of the Ministers, the Applicant has made a
significant change to the project without obtaining his prior
written consent;
.8 the Applicant made unauthorized substantial contractual
commitments prior to the date on which the Ministers received
its application for assistance;
Initials: Co-Chairman of the Management Committee
Applicant
Project No.:
.9 in the opinion of the Ministers, the Applicant has failed to
carry out the project promptly and, among other things, has not
met the deadlines specified herein, except where, in the
Minister's opinion, the circumstances of such a situation were
beyond the Applicant's control;
.10 the Applicant has not met the terms and conditions of repayment
set forth in the letter of offer;
.11 the total eligible costs is inferior to $ 10 million at the
completion date of the project.
6.2 In the event of default or, if the Minister deems that default is
likely to occur, he may exercise any or all of the following
measures:
.1 suspend the contribution for an indefinite period;
.2 demand the immediate total or partial repayment, with or without
interest, of any contribution received by the Applicant;
.3 cancel the full amount or a part of the contribution;
.4 apply an interest rate equivalent to the higher of the
prevailing Bank of Canada rate, plus 3%, or the prevailing fixed
rate of the Societe de developpement industriel du Quebec, on
any late payment as of the date on which any such amount
becomes due and payable.
.5 demand that the Applicant transfers to the Ministers all rights
and privileges arising in connection with the work carried out;
.6 ask the Applicant to provide any and all guarantees and security
that he deems appropriate in respect of his present or potential
claim and to draw up at its own expense all the necessary
documents for this purpose within five days of his request.
Initials: Co-Chairman of the Management Committee
Applicant
Project No.:
7. Quebec and Canadian goods and services
7.1 When purchasing goods or services for use in the project, the
Applicant shall use Quebec and Canadian carriers, suppliers,
manufacturers and subcontractors to the extent that such goods and
services are available and competitively priced.
8. Other terms and conditions
8.1 No member of the Parliament of Canada or the National Assembly of
Quebec shall be admitted to any share or part of the agreement or to
any benefit arising therefrom.
8.2 This agreement shall not be assigned without the prior written consent
of the Ministers.
8.3 The proposed project shall comply with all applicable federal and
provincial laws and regulations, in particular those relating to the
environment.
8.4 The Applicant agrees to indemnify and save harmless the parties, their
officers, servants and agents against any and all claims and demands
by third parties arising out of the implementation of the project.
The parties acknowledge further that nothing in this agreement shall
be construed as creating a partnership, joint venture or agency
relationship between the government and the Applicant.
8.5 If any amendment becomes necessary during the term of this contract,
the Applicant shall make a written request to the Ministers to that
effect. In turn, the Ministers shall inform the Applicant of his
decision in writing.
8.6 The Applicant undertakes to inform the Ministers without delay of any
change or event that may have a significant effect on the costs,
timetable or nature of the project.
Initials: Co-Chairman of the Management Committee
Applicant
Project No.:
8.7 The Applicant has the legal competence and authority to operate its
business and to sign this letter of offer.
8.8 This agreement is subject to and shall be construed in accordance
with the laws of the province of Quebec, and the parties hereto
acknowledge the jurisdiction of the Superior Court and the appeal
courts of Quebec for the resolution of any disputes arising from the
agreement.
9. Contract language
9.1 Les parties aux presentes acceptent que ce contrat de meme que tous
les documents, y compris les avis s'y rattachant, soient rediges en
francais seulement.
The parties hereto agree that this agreement and all other documents
relating hereto, including related notices, be written in French only.
10. Announcements and ceremonies
10.1 The Applicant hereby agrees that, unless otherwise indicated, a public
announcement may be made by the Ministers, or on their behalf, giving
the Applicant's name, address and type of business, the estimated cost
of the project, the amount and form of assistance, and a brief
description of the project.
10.2 The Ministers shall inform the Applicant promptly in writing of the
date on which the public announcement is to be made, and the
Applicant shall maintain the confidentiality of this agreement until
such date;
10.3 The Applicant shall notify the Ministers in writing, at least 14 days
in advance, of any official ceremony organized in connection with the
project.
10.4 The Applicant hereby consents to the participation by the Ministers or
their representatives in any official ceremony.
Initials: Co-Chairman of the Management Committee
Applicant