Exhibit 4.5
02/06/03-27
LOAN AGREEMENT
THIS AGREEMENT made as of the 5th day of June, 2003.
B E T W E E N :
MARSOL CANADA CORPORATION
(hereinafter called the "Borrower")
OF THE FIRST PART
A N D :
FIRST TREASURY FINANCIAL INC.,
(hereinafter called the "Lender")
OF THE SECOND PART
A N D :
MARSULEX INC.
(hereinafter called the "Guarantor")
OF THE THIRD PART
WHEREAS the Lender has agreed to lend money to the Borrower subject
to the terms and conditions of this Agreement.
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the
covenants and agreements herein contained and for other good and valuable
consideration (the receipt and adequacy whereof is hereby acknowledged) the
parties hereto agree as follows:
ARTICLE 1.00 - MISCELLANEOUS
1.1 Formal Date
For the purpose of convenience this Agreement may be referred to as
bearing the formal date of the 5th day of June, 2003, irrespective of the
actual date of execution thereof.
1.2 Definitions
For the purposes of this Agreement, unless there is something in the
subject matter or context inconsistent therewith:
(a) "Act" means the Alberta Environmental Protection Act;
(b) "Additional Security" shall have the meaning ascribed
thereto in Section 4.1(b);
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(c) "Advances" means collectively all those advances of monies
made by the Lender to the Borrower under this Agreement, and
"Advance" means any one of such Advances;
(d) "Applicable Canada Bond" means with respect to a prepayment
of an Advance the non-callable Government of Canada bond
denominated in Cdn. currency determined by the Lender as
having a remaining term to maturity closest to the remaining
term to maturity of the Advance in respect of which the
prepayment is to be made;
(e) "Applicable Canada Bond Yield" means with respect to the
prepayment of an Advance, the arithmetic average (rounded to
the nearest 1/100th of 1%) of the respective percentages
determined by the Lender, calculated in accordance with the
generally accepted financial practices, assuming semi-annual
compounding, to be the yield to maturity, expressed as an
annual rate of interest, on the Applicable Canada Bond for
the 3 business days immediately preceding the date of such
prepayment;
(f) "Assignment of Shares" means the assignment by the Guarantor
to the Lender, dated as of the 5th day of June, 2003, of the
interest of the Guarantor in the shares of the Borrower;
(g) "Assignment and Acknowledgement Syncrude" means the
agreement pursuant to which Syncrude Canada Ltd. agrees to
the assignment of the Syncrude Agreements to the Lender;
(h) "Blocked Account" means the special purpose limited access
account of the Guarantor identified as such in the Blocked
Account Agreement, established by and maintained by the
Lender with The Toronto-Dominion Bank;
(i) "Blocked Account Agreement" means the blocked account
agreement entered into as of the date hereof between the
Borrower, the Guarantor and the Lender, as the same may be
amended, modified, supplemented or replaced from time to
time;
(j) "business day" means a day other than Saturday, Sunday or a
statutory holiday, or any other day upon which the Lender is
not open for the transaction of business throughout normal
business hours, at its principal office, in the City of
Toronto;
(k) "Change in Control" means the Guarantor ceases to own or
Control, directly or indirectly, all of the issued and
outstanding shares of the Borrower;
(l) "Closing" means the date of first Advance after satisfaction
of all conditions precedent, delivery of this Agreement and
the Security;
(m) "control" and "controlled" shall have the same meaning as
defined in the Business Corporations Act (Ontario), and
"controlling" shall have a comparable meaning;
(n) "Corporate Distribution" means:
(A) (i) until the Indenture Termination Date, the
declaration by the Borrower of any dividend or
other distribution based on issued shares of the
Borrower to shareholders of the Borrower, other
than the Guarantor or any Subsidiary of the
Guarantor which has entered into a blocked account
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agreement on similar terms to that with the
Guarantor and entered into a blocked account
arrangement providing the Lender with a first
charge security interest in the blocked account and
the funds contained therein; and
(ii) after the Indenture Termination Date, the
declaration by the Borrower of any dividend or
other distribution based on issued shares of the
Borrower to shareholders of the Borrower;
(B) (i) until the Indenture Termination Date, the purchase,
redemption or retirement, by the Borrower, of any
interest in the capital, or subordinated loans of
the Borrower other than capital owned by or
subordinated loans owed to the Guarantor or any
Subsidiary of the Guarantor which has entered into
a blocked account agreement on similar terms to
that with the Guarantor and entered into a blocked
account arrangement providing the Lender with a
first charge security interest in the blocked
account and the funds contained therein, and
excluding payments permitted to be made to Marsulex
under this Agreement or the Marsulex Agreement;
(ii) after the Indenture Termination Date, the purchase,
redemption or retirement, by the Borrower, of any
interest in the capital, or subordinated loans of
the Borrower excluding payments permitted to be
made to the Guarantor under this Agreement or the
Marsulex Agreement;
(C) the payment by the Borrower of any management fee,
consulting fee, or bonus to shareholders of the Borrower or
persons related to such shareholders other than normal
remuneration payable to employees of the Borrower; and
(D) any payment by the Borrower on account of any principal or
interest on any loans or advances owing at any time by the
Borrower to any of its controlled companies or to its, or
their, shareholders, directors or officers, but excluding
(i) trade debt owing to such controlled companies or to its
or their shareholders, directors or officers incurred in the
ordinary course of business, (ii) payments by the Borrower
to the Guarantor to reimburse the Guarantor for amounts
advanced to or invested in connection with the Project and
(iii) prior to the Indenture Termination Date, payments by
the Borrower to the Guarantor or any Subsidiary of the
Guarantor which has entered into a blocked account agreement
on similar terms to that with the Guarantor and entered into
a blocked account arrangement providing the Lender with a
first charge security interest in the blocked account and
the funds contained therein;
(o) "Debt" means, for any person, on a consolidated basis, all
indebtedness of such person for borrowed money, including
borrowings by way of bankers' acceptances or letters of
credit and the maximum amount of all such Debt which is
directly or indirectly guaranteed by such person
(contingently or otherwise) (eliminating from such
calculation where it is duplicative of another person's
debt, any guarantee by such person of another person's
obligations); provided however, that there shall be excluded
therefrom all indebtedness incurred by the Guarantor
pursuant to the Indenture;
(p) "Default" means an event which, with the giving of notice or
the passage of time or the making of any determination or
any combination thereof for herein could become an Event of
Default;
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(q) "Disbursement Trust Account" means an escrow account
established as described in Schedule "H" for the purpose of
holding and advancing cost to complete, cash collateral and
amounts advanced as provided in section 3.4;
(r) "EBITDA" means, for any person, for any period, on a
consolidated basis, net income increased, to the extent
deducted in calculating net income, by the sum of (i)
interest charges, (ii) income taxes paid or accrued in
accordance with GAAP for such period, (iii) depreciation and
amortization expense; and (iv) as to any calculation with
respect to the Guarantor on a consolidated basis, items
classified as unusual non-operating gains or losses in the
audited financial statements, in accordance with GAAP;
(s) "Environmental Laws" means all applicable laws, by-laws,
regulations relating in full or in part to the protection of
the natural environment, including the storage, use,
generation, handling, manufacturing, manufacture,
processing, treatment, release and disposal of "hazardous
substances", "contaminants" and "industrial waste" as
defined in the Alberta Environmental Protection Act;
(t) "Event of Default" means any of the events described in
Section 6.1;
(u) "generally accepted accounting principles" ("GAAP") means
the accounting principles recommended by the Canadian
Institute of Chartered Accountants as provided in the "CICA
Handbook", as the same may be amended, replaced or restated
from time to time;
(v) "Government of Canada Bond Yield" means as the Applicable
Canada Bond Yield is defined at the stated time of
determination.
(w) "Guarantee" means the agreement of guarantee provided by the
Guarantor to the Lender with regard to the obligations of
the Borrower under this Agreement;
(x) "Guarantor" means Marsulex Inc., in its capacity as
guarantor of the obligations of the Borrower under this
Agreement;
(y) "Holdbacks" means those holdbacks as defined in the Builders
Lien Act (Alberta).
(z) "Indebtedness" means and includes all principal, interest,
interest on overdue interest and premium, costs and expenses
payable by the Borrower pursuant to the provisions of this
Agreement and the Security, from time to time outstanding,
and all other monies for the time being and from time to
time owing by the Borrower to the Lender pursuant to this
Agreement;
(aa) "Indenture" means the senior subordinated indenture of the
Guarantor, as Issuer and The Bank of Nova Scotia Trust
Company of New York, as trustee, dated as of June 30, 1998,
as may be amended, refinanced or replaced from time to time
and irrespective of whether such refinancing or replacement
occurs concurrently with the repayment of the Indenture;
(bb) "Indenture Termination Date" means the date upon which the
covenants of Article IV of the Indenture cease to apply;
(cc) "Independent Consultant" means Burns and Roe Entreprises,
Inc., or another independent technical consultant retained
by the Borrower and approved by the Lender responsible for
reviewing and advising the Lender on the Project and for co-
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ordinating the contracts for the Project, and providing
other services in connection with the Project as
contemplated under this Agreement;
(dd) "Interest Rate Differential" means the premium equal to the
difference between (i) the present value of the Loan
interest and the principal payments foregone discounted at
the Government of Canada Bond Yield, (on a compounded
monthly equivalent basis) as determined by the Lender, for
the term from the date of prepayment to the date of original
maturity; and (ii) the face value of the principal amount
being prepaid at the date of prepayment;
(ee) "Letter of Credit" means a letter of credit issued in a form
and content acceptable to the Lender, by a bank listed in
Schedule I to the Bank Act, having assets of not less than
$100,000,000,000 and a current rating for its senior
unsecured or long term debt by Dominion Bond Rating Services
of not less than AA (low);
(ff) "Loan" means the principal amount advanced pursuant to this
Agreement from time to time;
(gg) "Loan Documents" means this Agreement, the Security and the
Marsulex Agreement;
(hh) "Marsulex Agreement(s)" means the agreement(s) of Marsulex
Inc. in relation to the Project, with the Lender, as listed
in Schedule "G";
(ii) "Mortgaged Property" means and includes all the undertaking,
property and assets of the Borrower subject to the Security;
(jj) "Permitted Encumbrances" means any one or more of the
following:
(i) liens for taxes, assessments, governmental charges
or levies not at the time due and delinquent, or
the validity of which is being contested by the
Borrower or the Guarantor in good faith and by
proper legal proceedings which effectively postpone
enforcement of any such lien;
(ii) the lien of any judgment rendered or claim filed
against the Borrower or the Guarantor which the
Borrower or the Guarantor shall be contesting in
good faith by proper legal proceedings, and
provided such proceedings effectively postpone
enforcement of any such lien;
(iii) the reservations, limitations, provisos and
conditions, if any, expressed in any original
grants from the Crown, registered easements, or
statutory exceptions to title, which do not, in the
opinion of counsel for the Lender, impair the use
or materially affect the marketability of the
property;
(iv) liens or rights of distress reserved in, or
exercisable under, any lease for rent, or for
compliance with the terms of such lease;
(v) Inchoate or statutory liens of contractors,
subcontractors, mechanics, workers, suppliers,
materialmen, carriers and others in respect of
construction, maintenance, repair or operation of
assets of the Borrower or the Guarantor, provided
that such liens are related to obligations not due
or delinquent are not registered against title to
any assets of the Borrower or the Guarantor and in
respect of which adequate holdbacks are being
maintained as required by applicable law or such
liens are being contested in good faith
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by appropriate proceedings and in respect of which
there has been set aside a reserve (segregated to
the extent required by GAAP) in an adequate amount
and provided further that such liens do not, in the
Lender's opinion reduce the value of the assets of
the Borrower or the Guarantor or materially
interfere with the use of such assets in the
operation of the business of the Borrower or the
Guarantor;
(vi) Easements, rights-of-way, servitudes, restrictions
and similar rights in real property comprised in
the assets of the Borrower or the Guarantor or
interests therein granted or reserved to other
Persons, provided that such rights do not, in the
Lender's opinion, reduce the value of the assets of
the Borrower or the Guarantor or materially
interfere with the use of such assets in the
operation of the business of the Borrower or the
Guarantor;
(vii) Title defects or irregularities which are of a
minor nature and which, in the Lender's opinion, do
not reduce the value of the assets of the Borrower
or the Guarantor or materially interfere with their
use in the operation of the business of the
Borrower or the Guarantor;
(vii) liens securing appeal bonds and other similar liens
arising in connection with court proceedings
(including, without limitation, surety bonds,
security for costs of litigation where required by
law and letters of credit) or any other instruments
serving a similar purpose;
(ix) Liens given to a public utility or any municipality
or governmental or other public authority when
required by such utility or other authority in
connection with the operation of the business or
the ownership of the assets of the Borrower or the
Guarantor, provided that such Liens do not, in the
Lender's opinion, reduce the value of the assets of
the Borrower or the Guarantor or materially
interfere with their use in the operation of the
business of the Borrower or the Guarantor;
(x) Servicing agreements, development agreements, site
plan agreements, and other agreements with
Governmental Entities pertaining to the use or
development of any of the assets of the Borrower or
the Guarantor, provided same are complied with and
do not, in the Lender's opinion, reduce the value
of the assets of the Borrower or the Guarantor or
materially interfere with their use in the
operation of the business of the Borrower or the
Guarantor including, without limitation, any
obligations to deliver letters of credit and other
security as required;
(xi) Applicable municipal and other governmental
restrictions, including municipal by-laws and
regulations, affecting the use of land or the
nature of any structures which may be erected
thereon, provided such restrictions have been
complied with and do not, in the Lender's opinion,
reduce the value of the assets of the Borrower or
the Guarantor or materially interfere with their
use in the operation of the business of the
Borrower or the Guarantor;
(xii) The right reserved to or vested in any Governmental
Entity by any statutory provision or by the terms
of any lease, licence, franchise, grant or permit
of the Borrower or the Guarantor, to terminate any
such lease, licence, franchise, grant or permit, or
to require annual or other payments as a condition
to the continuance thereof;
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(xiii) Liens in favour of the Lender created by the
Security;
(xiv) as to the Guarantor, Purchase Money Mortgages
without restriction and as to the Borrower,
Purchase Money Mortgages restricted to the
acquisition of non-operating equipment having an
aggregate liability outstanding at any time of not
more than $200,000;
(xv) the Bank Security as defined in section 1.18(b);
and
(xvi) Liens disclosed in Schedule "B".
(kk) "person" includes an individual, a partnership, a joint
venture, a trust, an unincorporated organization or any
other association, a corporation and a government or any
department or agency thereof;
(ll) "Plans and Specifications" means those plans and
specifications for the Project, containing a detailed cost
breakdown (both hard costs and soft costs) of the Project,
as approved by the Independent Consultant;
(mm) "Progress Claim" means a "Progress Claim: Request for
Disbursement", completed and with all referenced attachments
in the form attached as Schedule "K";
(nn) "Progress Report" means a report of the Independent
Consultant approving the Progress Claim including as to the
cost to complete analysis compared to budget;
(oo) "Project" means the project of the Borrower consisting of
the construction of a fertilizer processing plant and the
acquisition of equipment related thereto, in Fort McMurray,
Alberta as described in Schedule "I";
(pp) "Purchase Money Mortgages" means any security interest
charging property acquired, which is granted or assumed or
which arises by operation of law in favour of the transferor
concurrently with and for the purpose of the acquisition of
such property, in each case where (i) the principal amount
secured by the security interest is not in excess of the
purchase price (after any post-closing adjustment) of the
property acquired, and (ii) such security interest extends
only to the property acquired and its proceeds;
(qq) "Real Property" means the lands, premises and interests
therein, comprising the real property held in leasehold
interest and the buildings and structures thereon, of the
Borrower as described in Schedule "A" hereto;
(rr) "Release Date" is the date upon which the Guarantor is
entitled to a release of the Guarantee and security granted
by the Guarantor (other than the Assignment of Shares) in
accordance with Section 4.4;
(ss) "Reserve" means the mandatory reserves described in sections
5.1 (t) and (u);
(tt) "Security" means the Security Agreements, the Guarantee,
Assignment of Shares, and any other instrument or agreement
which purports to secure the Indebtedness provided in
accordance with the terms of this Agreement;
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(uu) "Security Agreements" means the general security agreements
issued by the Borrower and the Guarantor to the Lender and
dated as of the 5th day of June, 2003, and the Blocked
Account Agreement;
(vv) "Shortfall" means the amount by which the amount estimated
by the Independent Consultant as being required to complete
the Project is greater than the amount remaining in the
Disbursement Trust Account;
(ww) "Subsidiary" has the meaning provided in the Business
Corporations Act (Ontario);
(xx) "Syncrude Agreements" means the agreements with Syncrude
Canada Ltd. relating to the Project as listed in Schedule
F", and "Disposal Agreement" means the Syncrude Agreement so
entitled;
(yy) "this Agreement", "hereto", "herein", "hereof", "hereby",
"hereunder" and similar expressions refer to this Loan
Agreement and not to any particular section or other portion
hereof, and include any and every instrument supplemental or
ancillary hereto, or in implement hereof, and the
expressions "article" or "section" followed by a number mean
and refer to the specified article or section of this
Agreement.
1.3 Plurality and Gender, etc.
Words importing the singular number shall include the plural and vice
versa, and words importing the masculine gender shall include the feminine
gender.
1.4 Headings
The Article and section headings are not to be considered part of
this Agreement, are inserted for convenience of reference only, are not
intended to be full or accurate descriptions of the content thereof, and shall
not affect the construction or interpretation of this Agreement.
1.5 Law Applicable
This Agreement shall be construed in accordance with the laws of the
Province of Ontario and shall be treated in all respects as an Ontario
contract.
1.6 Currency
All dollar amounts referred to in this Agreement, and all payments to
be made hereunder, are in Canadian Dollars. All dollar amounts referred to in
this Agreement are expressed in Canadian Dollars.
1.7 Entire Agreement
This Agreement, including the schedules hereto, the Security, and any
agreement collateral hereto or thereto constitutes the entire agreement
between the parties, and may not be amended or modified in any respect except
by written instrument signed by the parties hereto, and all other agreements,
undertakings, representations and writings, oral or written, are entirely
replaced thereby and are no longer effective.
1.8 Successor Legislation
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Any statute referred to herein or in the Security shall be deemed to
include that statute as amended, restated and/or replaced from time to time,
and any successor legislation to the same general intent and effect.
1.9 Assignment
This Agreement shall enure to the benefit of, and shall be binding
upon, the parties hereto and their respective successors and permitted
assigns. This Agreement may be assigned by the Lender, prior to an Event of
Default with the prior written consent of the Borrower, not to be unreasonably
withheld, except as to an assignment under section 7.9 for which no consent is
required, and no consent of the Borrower or Guarantor will be required after
the occurrence of an Event of Default which is continuing, in which event the
Borrower shall attorn in all respects to such assignment and the assignee
thereof. The Borrower may not assign this Agreement without the consent of the
Lender.
1.10 Business Day
If under the provisions of this Agreement any amount is to be paid or
any act or thing is to be done or step is to be taken on a day other than a
business day, then such amount shall be paid or such act, thing or step shall
be done or taken on the next business day.
1.11 Severability
In the event that any one or more provisions contained in this
Agreement, the Security, or any other agreement required hereunder to be
delivered to the Lender, shall be invalid, illegal or unenforceable in any
respect under any applicable law, the validity, legality and enforceability of
the remaining provisions hereof or of the security shall not be affected or
impaired thereby.
1.12 Application of GAAP
All financial statements herein shall, unless otherwise provided, be
interpreted in accordance with generally accepted accounting principles,
consistently applied and, if the Borrower shall have, or, at any time
hereafter shall acquire any Subsidiary, on both a consolidated, or combined
basis, as applicable, and an unconsolidated basis.
1.13 No Set-Off
The obligations of the Borrower to make all payments of principal and
interest and all other amounts hereunder shall be absolute and unconditional
and shall not be affected by any circumstance, including, without limitation,
any set-off, compensation, counterclaim, recoupment, defence or other right
which the Borrower may have against the Lender or anyone else for any reason
whatsoever, subject however, to the right of the Borrower to establish any
claim or defence in a Court of Law and the obligation of the parties hereto to
be bound by any judgement arising therefrom.
1.14 Execution
This Agreement may be executed in one or more counterparts, each of
which when so executed shall constitute an original and all of which together
shall constitute one and the same Agreement.
1.15 Schedules
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The following schedules are incorporated herein and form part of this
Agreement.
Schedule "A" - Real Property
Schedule "B" - Permitted Encumbrances
Schedule "C" - Environmental Reports
Schedule "D" - Actions
Schedule "E" - Form of Certificate of Financial Officer
Schedule "F" - Syncrude Agreements
Schedule "G" - Marsulex Agreements
Schedule "H" - Disbursement Trust Account
Schedule "I" - Project
Schedule "J" - Location of Assets and Chief Executive Offices
Schedule "K" - Progress Claim: Request for Disbursement Form
1.16 Financial Terms and Accounting Rules
All financial terms employed and calculations provided for herein
shall, unless otherwise specifically provided, be interpreted and applied in
accordance with generally accepted accounting principles applied on a
consistent basis, and applicable on both a consolidated, or combined, if
appropriate, and unconsolidated basis.
1.17 Conflict
In the event of any conflict between any term, condition or provision
of this Agreement and those of the Security, then the term, condition or
provision of this Agreement shall govern and without limitation the amount
owing by the Borrower shall not exceed the Indebtedness notwithstanding that
the Security may be expressed to stand as security for an amount greater than
the Indebtedness and provide for a nominal rate of interest higher than the
rate of interest provided for herein.
1.18 Bank Indebtedness
(a) The Borrower does not and shall not have Debt except:
(i) the indebtedness to the Lender under this Agreement,
(ii) indebtedness owing to Marsulex,
(iii) indebtedness in connection with Purchase Money Mortgages permitted
hereunder,
(iv) until the Indenture Termination Date, Debt incurred pursuant to
guarantees of the indebtedness of the Guarantor or any Subsidiary of the
Guarantor which has entered into a blocked account agreement on similar terms
to that with the Guarantor and entered into a blocked account arrangement
providing the Lender with a first charge security interest in the blocked
account and the funds contained therein;
(v) and if agreed under section 3.1(b), the additional term debt with the
Lender of Ten Million Dollars ($10,000,000).
(b) As to the Guarantor:
(i) The Lender hereby acknowledges that the Guarantor has
incurred and may hereafter incur Debt to its banker and
other Persons (which Debt, together with interest, fees,
costs, expenses and premiums with respect thereto is
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called the "Bank Indebtedness"), which Bank Indebtedness is
or may be secured by various security instruments ("Bank
Security"), over all or part of the assets and undertaking
of the Guarantor (which security and any other security now
held or hereafter acquired by its banker or other Persons
("Bank") in respect of all or part of the undertaking,
property and assets of the Guarantor, both present and
future, but shall not include any interest in the shares of
the Borrower, is hereinafter called "Bank Security"; and
(ii) The Lender acknowledges that the Bank Security is a
Permitted Encumbrance and agrees, with respect to the
incurrence of Bank Indebtedness from a Bank prior to the
Release Date, that at any time and from time to time that
the ratio of Debt to EBITDA of the Guarantor does not exceed
2.5:1, calculated for such purposes upon giving effect to
the incurrence of such Bank Indebtedness, at the request of
the Guarantor, to enter into an intercreditor agreement with
such Bank pursuant to which the Lender will covenant and
agree in favour of such Bank, subject to the last sentence
of this section, that (i) the Lender shall not be entitled
to payment with respect to indebtedness owing by the
Guarantor to the Lender (including, under the Guarantee)
after the occurrence of a payment default on the Bank
Indebtedness or any demand or acceleration by the Bank,
prior to the repayment in full of such Bank's Indebtedness,
(ii) that such Bank's Bank Security shall rank in priority
to any security granted by the Guarantor to the Lender,
excluding the pledge of shares in the capital of the
Borrower ("Pledge of Shares") and the Blocked Account and
any funds held therein, both of which shall remain solely
secured to the Lender (the "Lender Security") and (iii) that
the Lender shall not proceed to enforce the Lender Security
prior to the earlier of: (A) repayment in full of such
Bank's Bank Indebtedness, (B) commencement of enforcement
proceedings by the Bank with respect to its Bank Security,
(C) commencement of formal insolvency proceedings with
respect to the Guarantor and (D) passage of a negotiated
conventional standstill period; provided that if the ratio
of Debt to EBITDA, at any time exceeds 2.5:1; then any
further amounts of Bank Indebtedness advanced by such Bank
during the period when such ratio exceeds 2.5:1 shall not be
subject to the postponement and subordination provisions
hereof to the extent of such amounts until the ratio is
returned to 2.5:1 or less than 2.5:1, and the agreement with
such Bank will specifically be subject to compliance with
this covenant. For purposes of this calculation, each of
Debt and EBITDA shall be calculated on a trailing twelve
(12) month basis at the month end of the most recently
completed month immediately preceding the incurrence of such
Bank Indebtedness, adjusted to include the historical EBITDA
of any assets or Person acquired by the Guarantor and any
Debt incurred, assumed or acquired by the Guarantor in
connection with such acquisition and to exclude the EBITDA
of any assets or Person divested by the Guarantor or which
are discontinued operations of the Guarantor, in each case,
calculated on a trailing twelve (12) month basis in the
manner set forth above. The Borrower shall not require the
Lender to subordinate payment of the Indebtedness to payment
of any Bank Indebtedness at any time that the Indenture is
outstanding.
ARTICLE 2.00 - REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties
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Each of the Borrower and the Guarantor represents and warrants to the
Lender, and acknowledges that the Lender is relying on such representations
and warranties in entering into this Agreement and in making Advances
hereunder, as follows:
(a) Status
It has been duly incorporated and organized and is a validly
existing corporation under the laws of its jurisdiction of
incorporation, and has full capacity and power to carry on
its business as presently conducted and to own or lease
property and holds all necessary material licences, permits
and consents to carry on such business in all jurisdictions
in which it does so;
(b) Corporate Power and Authority
It has the power and, in the case of the Borrower, is duly
authorized to borrow the monies herein contemplated, and to
enter into, execute, deliver and perform this Agreement and
the Security;
(c) Non-Violation of Other Instruments and Authorization
(i) The borrowing of money by the Borrower, the
entering into and performance of this Agreement,
the Security and any other agreement collateral
hereto or thereto by the Borrower and the
Guarantor, and the issue of the Security to which
it is a party to be given hereunder does not
conflict, and will not conflict with, and does not
result, and will not result with the passage of
time or otherwise, in a breach or violation of, or
constitute a default under, its articles of
incorporation or its by-laws, or any of the
covenants or the provisions contained in any
agreement to which it is a party, or by which it or
its assets are subject; and
(ii) All necessary steps and proceedings have been
taken, and all consents have been obtained to
authorize the entering into, delivery and
performance of this Agreement and to create and
authorize the issuance, delivery and performance of
the Security;
(d) Valid Security
This Agreement and the Security constitute valid and binding
obligations of the Borrower and Guarantor enforceable
against it in accordance with their respective terms subject
to applicable bankruptcy, insolvency and other similar laws
affecting the enforcement of creditors' rights generally and
to equitable remedies;
(e) Title to Assets and Property
Subject only to the Permitted Encumbrances, it has good and
marketable title to the real properties and good title to
the personal properties owned by it, based on the records
maintained, free and clear of encumbrances or security
interests except as listed in Schedule "B" and no person has
any agreement or right to acquire a material part of such
assets out of the ordinary course of business; the Guarantor
has granted to the Borrower all reasonably necessary rights
or licences to the intellectual property, including patents,
that are required for the Borrower to own and operate the
Project and satisfy the terms of the Syncrude Agreements;
(f) No Default
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It is not in default in the performance or observance of any
of the obligations, covenants or conditions contained in any
material contract, agreement or other instrument to which it
is a party or by which it is bound;
(g) Financial Condition
As at the date hereof, since the date of the audited,
consolidated, financial statements of the Guarantor, dated
as at December 31, 2002, there has occurred no material
adverse change affecting the business or financial condition
or position of the Guarantor;
(h) Financial Information
All balance sheets, earnings statements and other financial
data of the Borrower which have been delivered to the Lender
are true and correct in all material respects as of the
respective dates thereof, have been prepared in accordance
with generally accepted accounting principles consistently
applied, and do fairly present the financial position and
condition of the Borrower as of the respective dates
thereof, and all other information, certificates, schedules,
reports and other papers and data which have been furnished
by the Borrower to the Lender are complete, accurate and
correct in all material respects at the time the same were
furnished subject, in the case of interim statements, to
usual year end adjustments;
(i) No Actions
Except as disclosed in Schedule "D", there are no actions,
suits, judicial or arbitral proceedings pending or to the
knowledge threatened against the Borrower or the Guarantor
in any court or other authority which could reasonably be
expected to result in any material adverse change in the
business or financial condition of the Borrower or the
Guarantor, or which could reasonably be expected to
materially adversely affect the ownership, status or use of
the Mortgaged Property, which have not been reported in the
financial information provided by the Borrower or the
Guarantor to the Lender;
(j) Judgments and Executions
There are no judgments or executions filed or pending
against the Borrower or the Project, and there are no
judgments or executions filed or pending against the
Guarantor which, in any case, could reasonably be expected
to materially adversely affect the Borrower, the Guarantor
or the Project;
(k) Insolvency Proceedings
Neither the Borrower or Guarantor has made any assignment
for the benefit of creditors, nor has any receiving order
been made against it under the provisions of the Bankruptcy
and Insolvency Act, nor has any petition for such an order
been served upon it, nor are there any proceedings in effect
or threatened under the provisions of the Winding-Up and
Restructuring Act (Canada) or the Companies' Creditors
Arrangement Act (Canada), nor has any receiver, receiver and
manager, monitor, custodian or official with similar powers
been appointed by court order or privately respecting the
Borrower or any of its assets or property;
(l) Leases
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The Borrower is in good standing under all leases to which
it is a party, and no right currently exists in any lessor
or lessee thereunder to terminate any such lease, and each
such lease is a valid and binding obligation of the
Borrower;
(m) Taxation Procedures
It has duly and timely filed all tax returns required to be
filed by it, and it has paid all taxes which are due and
payable, and has paid all assessments and reassessments, and
all other taxes, penalties, interest and fines claimed
against it which are due or payable by it on or before the
date other than those in respect of which liability based on
such returns is being contested in good faith and by
appropriate proceedings where adequate reserves have been
established in accordance with GAAP and the effect of such
proceedings is to stay any lien, charge or seizure of
property. Adequate provision and installment payments have
been made for taxes and governmental royalties payable for
the current period for which returns are not yet required to
be filed. Except as disclosed in writing to the Lender, as
at the date hereof there are no agreements, waivers or other
arrangements providing for an extension of time with respect
to the filing of any tax return, or payment of any taxes, or
deficiency;
(n) Employee Payments
It has withheld from each payment to any of its officers,
directors and employees the amount of all taxes, including
but not limited to, income tax and other deductions required
to be withheld therefrom, and has paid the same to the
proper tax or other receiving officers within the time
required under any applicable tax legislation. It is not
subject to any claim by its employees arising from salary or
benefits which have not been paid when due, all such salary
and benefits being paid to date, except where such claims
would not have a material adverse effect;
(o) Ownership or Licence
The Borrower owns or licenses, free of adverse claim other
than Permitted Encumbrances, all material licences, patents,
trademarks, copyright, industrial design, know how, trade
secrets and other industrial and intellectual property used
in connection with its business as presently conducted, and
all such licences are in good standing;
(p) Subsidiaries
The Borrower has no subsidiaries.
(q) Contingent Liabilities and Debt.
The Borrower and the Guarantor have disclosed all contingent
liabilities as at the date hereof in the most recent audited
annual financial statements furnished to the Lender to the
extent such liabilities are required to be disclosed in
accordance with GAAP other than such contingent liabilities
incurred in the ordinary course of business since such date,
and as at the date hereof neither the Borrower nor Guarantor
has incurred any Debt which is not disclosed on or reflected
in those financial statements or otherwise disclosed to the
Lender in writing, other than Debt or contingent liabilities
incurred by it or credit extended to it in the ordinary
course of business.
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(r) Location of Assets, Places of Business.
As at the date of this Agreement, the location of all of the
tangible and intangible property and assets and places of
business of each of the Borrower and Guarantor is ~set out
in Schedule "J ". As at the date of this Agreement, the
registered and chief executive offices of each of the
Borrower and Guarantor are set out in Schedule "J".
(s) No Default or Event of Default.
As at the date of this Agreement, there exists no Default or
Event of Default.
(t) Compliance
Each of the Borrower and Guarantor is in compliance with its
constating documents and is in compliance in all material
respects with all applicable laws, including health, safety
and employment standards, labour codes and Environmental
Laws.
(u) Canadian Pension and Benefit Plans
All material obligations of the Borrower or Guarantor
(including fiduciary, funding, investment and administration
obligations) required to be performed in connection with the
Canadian pension plans and the funding agreements therefor
have been performed in a timely fashion. There have been no
improper withdrawals or applications of the assets of the
Canadian pension plans or the Canadian benefit plans. There
is no proceeding, action, suit or claim (other than routine
claims for benefits) pending or threatened involving the
Canadian pension plans or the Canadian benefit plans, and no
facts exist which could reasonably be expected to give rise
to that type of proceeding, action, suit or claim which
would have a material adverse effect on the business or
financial status of the Borrower. Any Canadian pension plan
is fully funded both on an ongoing basis and on a winding-up
basis (using actuarial methods and assumptions which are
consistent with the valuations last filed with the
applicable Governmental Authorities and which are consistent
with GAAP).
(v) Labour Matters
There are no strikes or other labour disputes against either
Borrower or Guarantor that are pending or, to the knowledge
of the Borrower or Guarantor, threatened. All payment due
from either the Borrower or Guarantor on account of employee
insurance and vacation pay have been paid or accrued as a
liability on its books which would have a material adverse
effect on the business or financial status of the Borrower.
Each of the Borrower or Guarantor is in material compliance
with the terms and conditions of any collective agreements,
consulting agreements, management agreements and employment
agreements, if any.
(w) Trade-marks, Patents, etc.
Each of the Borrower and Guarantor possesses all patents,
industrial designs, trade-marks, trade secrets, know-how,
environmental technology, biotechnology, confidential
information, trade-names, goodwill, copyrights, integrated
circuit topographies, software and all other forms of
intellectual and industrial property, and
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any registrations and applications for registration of any
of the foregoing (collectively, the "Intellectual
Property"), necessary for the conduct of its business.
(x) Processing and Handling of Waste
Except as disclosed in Schedule "C", the processing,
storage, handling and to the extent applicable, disposal of
chemical or waste inventory by the Borrower as to the
~Project are being conducted in all material respects in
accordance with Environmental Laws.
2.2 Real Estate Representations and Warranties
The Borrower also specifically represents and warrants as
follows:
(a) Lease and Right to Occupy
The lease of the Real Property is in good standing, and the
Borrower has taken all steps and actions required on its
part under the lease;
(b) Access
The lease arrangement provides full and unrestricted access
to the Real Property, adequate for all purposes of the
construction, ownership and operation of the Project;
(c) General Environmental Representations
The Borrower represents and warrants to the Lender that as
of the date hereof:
(i) the Borrower is not aware of any environmental
problem or potential problem which materially
adversely affects the Borrower or any of its
assets;
(ii) there is no action or other proceeding which has
been commenced against the Borrower or any asset of
the Borrower with respect to any breach of
Environmental Laws; and
(iii) the Borrower has not used any of the Real Property,
to manufacture, store or otherwise deal with any
contaminants, pollutants, dangerous or toxic
substances, liquid wastes or other hazardous
substances except in material compliance with all
applicable Environmental Laws.
(d) Construction Liens
As at the date hereof, the Borrower has not received any
notice, written or otherwise, of any constructions liens
against the Real Property other than those construction
liens which could arise as to the Project. The Borrower has
taken all reasonable steps so as to ensure no construction
liens will be registered against the Real Property.
2.3 Survival of Representations, Warranties and Covenants
The covenants, agreements, representations and warranties
set forth in this Agreement, and in any certificate or other document
delivered hereunder, shall continue in full force and effect until repayment
in full of all of the Indebtedness, notwithstanding any investigation made
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by the Lender or its counsel, or any other representative of the Lender, or the
making of any Advance hereunder.
ARTICLE 3.00 - REPAYMENT AND INTEREST
3.1 Principal Amount and Payments
Subject to the terms and conditions hereunder, and relying upon the
representations and warranties herein set forth, the Lender hereby agrees to
lend to the Borrower an aggregate principal amount of up to Fifty Million
Dollars ($50,000,000), of which Ten Million Dollars ($10,000,000) will be
advanced only on agreement between the Lender and the Borrower, and
satisfaction of the conditions of this Agreement such to be advanced in two
parts, each as hereinafter described:
(a) Part A Loan - this portion of the Loan will hereafter be referred
to as the "Part A Loan". The Part A Loan will be advanced on Closing to the
Disbursement Trust Account for advance to fund the Project, and will be
repayable, in Canadian Dollars. The Part A Loan will be in the maximum
principal amount of Forty Million Dollars, Canadian funds (Cdn $40,000,000),
and will be advanced as a single advance to the Disbursement Trust Account, to
be released for use in the Project as provided in Section 3.4.
(b) Part B Loan - The Lender may but is not obliged to provide an
additional term loan in an amount of up to Ten Million Dollars ($10,000,000).
If the Borrower wants to borrow such amount it may, if the following
conditions have been satisfied, request such an additional term loan. The
Lender will determine, in its discretion, whether it will advance the further
term loan and set out the terms which will apply to the additional term loan
if the Lender is willing to provide the loan. If the Lender agrees to provide
the additional term loan and the Borrower agrees to the offered terms, then
the loan shall be identified as the "Part B Loan", will be subject to the
terms of this Agreement except as amended by the terms offered by the Lender,
and will be secured by the Security. If the Lender determines not to offer the
additional term loan or the Lender and the Borrower cannot agree on terms for
such additional loan, then the Borrower may not incur additional debt or grant
any additional security to any other person as to the Project.
The conditions which must be satisfied for the Lender to consider
offering the additional term loan are:
(i) construction of the Project has been completed and the first
payment has been made by Syncrude Canada Ltd. to the
Borrower, under the Syncrude Agreements; and
(ii) the Project operating costs have been confirmed and the
Borrower will meet the financial covenants set forth in
section 5.3(a) of this Agreement, on a pro forma basis over
a 15 year test period to be co-terminus with the Loan after
giving effect to the advance of the additional Ten Million
Dollar ($10,000,000) term loan contemplated as the "Part B
Loan". The pro forma will be based on assumptions approved
by the Lender and supported by an opinion of the Independent
Consultant that the assumptions and conclusions are
reasonable;
(iii) the additional financing will not result in the Loan plus
such additional financing exceeding the purchase price then
stipulated for payments by Syncrude Canada Ltd. under the
Syncrude Agreements;
(iv) the Borrower shall have receipt of any requisite approvals
and authorizations; and
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(v) the Guarantor shall have been released under section 4.4.
(c) Proof of Outstanding Loan Amount. The records maintained by the
Lender of the amounts of the Loan advanced to the Borrower in connection with
this Agreement, the amount of advances of the Loan which are outstanding and
the amount of interest and other fees and costs payable and paid under this
Agreement shall constitute prima facie proof thereof in any legal proceedings
or action in respect of this Agreement
3.2 Principal Repayment
(a) The Part A Loan shall be interest only for the period of
time from the advance to the Disbursement Trust Account to
the earlier of: (i) December 15, 2005, and (ii) the date
upon which Syncrude Canada Ltd. is required to commence
payments to the Borrower under the Syncrude Agreements.
(b) The principal amount advanced on the Loan, as to each of the Part
A Loan and Part B Loan, separately, shall, subject to the rights of the Lender
to accelerate the payment pursuant to this Agreement and the Security, become
due and payable in one hundred and eighty (180) equal blended monthly payments
of principal and interest based upon a fifteen (15) year amortization of the
principal amount, established using the interest rate payable on the Loan
pursuant to section 3.8 of this Agreement and shall be payable on the
fifteenth (15th) of each month. The principal balance of the Loan shall be
fully due and payable on the fifteenth (15th) anniversary of the earlier of:
(i) December 15, 2005, and (ii) the date upon which Syncrude Canada Ltd. is
required to commence payments to the Borrower under the Syncrude Agreements.
3.3 Conditions Precedent
The following conditions precedent shall be satisfied prior
to advance of the Part A Loan to the Disbursement Trust Account:
(1) The Security and Additional Security shall be executed by
the Borrower and, where applicable, in registerable form,
and all registrations and other actions required to fully
perfect and maintain the priority of the Security shall have
been successfully completed to the satisfaction of the
Lender's counsel
(2) Legal opinions shall be issued by counsel for the Borrower
and the Guarantor opining :
(i) as to the valid existence and good standing of the
Borrower and the Guarantor;
(ii) as to the due authorization, execution, delivery,
enforceability and validity of the Loan Documents
with respect to the Borrower and the Guarantor;
(iii) that there is no litigation, action, proceedings or
like matter pending with respect to the Project or
the Borrower of which they are aware; and
(iv) and as to such other matters as the Lender and the
Lender's counsel reasonably may specify.
(3) Current Personal Property Security Act searches for the
Borrower and for the Guarantor in those jurisdictions set
out in Schedule "J" together with all
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subordinations, releases and discharges to ensure the first
priority position of the Security on personal property
relating to the Project shall have been completed and
received.
(4) Evidence of insurance as required by this Agreement, and
conforming in all respects to the requirements of the
Lender, shall have been delivered.
(5) The Marsulex Agreements and Syncrude Agreements which shall
be satisfactory to the Lender, shall be executed and in full
force and effect.
(6) Evidence by delivery of the report of the Independent
Consultant that the Project and the operation thereof comply
with all legal requirements, including that all requisite
building permits, and other licenses, certificates,
approvals or consents required of any governmental authority
have been issued without condition and that there is no
litigation, action, citation, injunctive proceedings, or
like matter pending or threatened with respect to the
validity of such matters, shall have been provided to the
Lender.
(7) No expropriation or adverse zoning or usage change
proceeding shall have occurred or shall have been threatened
against the Project; the Project shall not have suffered any
significant damage by fire or other casualty which has not
been repaired; no law, regulation, ordinance, moratorium,
injunctive proceeding, restriction, litigation, action,
citation or similar proceeding or matter shall have been
enacted, adopted, or threatened by any third party or
governmental body, which would have, in the Lender's
judgment, a material adverse effect on the Borrower or the
Project.
(8) Certified copies of the constating documents, including,
without limitation, any letters patent, articles of
incorporation, memorandum of association, articles of
association, certificates of amalgamation, articles of
continuation, articles of amendment and borrowing by-laws of
the Borrower and Guarantor, together with a certificate of
the Borrower and Guarantor certifying that its constating
documents therein described are all of its constating
documents and that other than as therein described such
constating documents have not been amended, shall have been
delivered to the Lender.
(9) Certified resolutions of the directors of the Borrower and
Guarantor confirming that it has been authorized to execute,
deliver and perform its obligations under this Agreement and
the Loan Documents, shall have been delivered to the Lender.
(10) A certificate of status or similar certificate for the
Borrower and Guarantor from the applicable government
ministry, dated not earlier than the Closing, shall have
been delivered to the Lender.
(11) An officer's certificate for the Borrower and Guarantor in
the required form of the Lender shall have been delivered:
(12) Such financial information in connection with the Project or
in respect of the Borrower as may be required by the Lender,
shall have been provided.
(13) The Lender shall be satisfied that the Borrower has paid
when due and in full all employee pensions and benefits
payable by it, including without limitation Workers'
Compensation Board premiums, Employer Health Tax premiums,
Canada Pension Plan contributions and Employment Insurance
Commission premiums, and has remitted when required and in
full all source deductions for income tax, Canada Pension
Plan contributions and Employment Insurance Commission
premiums of its
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employees and all goods and services tax and retail sales
tax paid and received by it.
(14) The Borrower shall have made payments for the Project in the
amount of not less than Twenty-Four Million Dollars
($24,000,000) (provided such may be provided as cash
invested of Sixteen Million Five Hundred Thousand Dollars
($16,500,000) and up to Seven Million Five Hundred Thousand
Dollars ($7,500,000) may be secured by way of a letter of
credit for Project purposes).
(15) Such other documents or items as the Lender or its counsel
reasonably may require shall be delivered to the Lender.
3.4 Release Process: Part A Loan
(A) The Part A Loan will be advanced on Closing to the Disbursement Trust
Account and, except for any advances made to pay interest on the Loan until
the commencement of principal repayments which will be released automatically
on each payment date, will be released from the Disbursement Trust Account
(including for the purpose of reimbursement to the Guarantor for amounts
advanced or otherwise expended for construction of the Project prior to or
following the date of the first advance in excess of the amount of investment
required by the Borrower in section 3.3 (14)) subject to compliance with the
following conditions:
(a) releases shall comply with all holdback requirements of the
Builders Lien Act (Alberta) and Advances and amounts
released under the Part A Loan shall at no time exceed the
lesser of:
(i) the total cost of work in place on the Project,
including soft costs and interest accrued less
holdbacks, and the cost of equipment acquired; and
(ii) the amount which would ensure that the remaining
amount to be released on Part A Loan is sufficient
to satisfy the cost to complete the Project, less
holdbacks and deferred accounts payable.
(b) the Borrower shall have delivered to the Lender a Progress
Claim and a Progress Report;
(c) the Borrower has complied with its obligation to fund any
Shortfall from sources other than the Loan;
(d) no construction liens or other encumbrances other than the
Permitted Encumbrances, are registered against the Project;
(e) the Borrower shall have complied with all relevant
provisions of the Builders Lien Act (Alberta); and
(f) the Project and the Borrower, as applicable, will be in
compliance with the Syncrude Agreements and the Marsulex
Agreements.
(B) The Lender will advance the final Advance of the amounts held back only
upon compliance by the Borrower with the requirements of the Builders Lien Act
(Alberta) permitting final advance of Holdbacks after substantial completion,
subject to the right of the Lender to hold back additional amounts for
finishing Holdbacks as contemplated by the Builders Lien Act (Alberta); and
subject to compliance with the following condition:
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(i) the Borrower, as a condition to receiving the final Advance,
shall deliver to the Lender a copy of a certification or
declaration of the substantial performance of the contracts
between the Borrower and the contractors of the Project, or
the relevant portion thereof, made and published in
accordance with the provisions of the Alberta Builders Lien
Act, and evidence of the issuance of final occupancy
permits.
3.5 Minimum Amounts
Except for the final Advance and advances in respect of interest
payments, each Advance from the Disbursement Account will be in an amount of
not less than One Million Dollars ($1,000,000);
3.6 Interest on Disbursement Account
The Lender shall invest the Disbursement Trust Account in interest
bearing instruments, if agreement can be reached as mutually agreed between
the Lender and the Borrower, and otherwise as determined by the Lender.
Interest accruing on the amounts in the Disbursement Trust Account will be for
the benefit of the Borrower and be held in the Disbursement Trust Account and
paid to the Borrower on the Release Date.
3.7 Shortfall
Any Shortfall of the cost to complete as against the balance
remaining in the Disbursement Trust Account must be advanced by the Borrower
or Guarantor, at the option of the Borrower or Guarantor, as the case may be,
as funds expended for the Project or by drawdown on the Letter of Credit (to
the extent sufficient to satisfy the Shortfall) by the Lender, prior to
advance by the Lender of additional amounts by way of an advance from the
Disbursement Trust Account. The costs and expenses, including all fees,
charged by the Independent Consultant, are required to be paid by the
Borrower. The payments required to be made to the Independent Consultant prior
to Default may be included as a project cost, and included in the
disbursements from the Disbursement Trust Account.
3.8 Advance Process: Part B Loan
The Part B Loan, if made available by the Lender to the Borrower,
will be advanced in a single advance, provided that the Borrower is in
compliance with all terms, conditions, and including specifically the
representations and warranties, of this Agreement, and the conditions set out
in Section 3.1(b) have been fully complied with.
3.9 Compliance with the Interest Act (Canada)
For the purposes of this Agreement, whenever any interest is
calculated on the basis of a period of time other than a calendar year, the
annual rate of interest to which each rate of interest determined pursuant to
such calculation is equivalent for the purposes of the Interest Act (Canada)
is such rate as so determined multiplied by the actual number of days in the
calendar year in which the same is to be ascertained and divided by the number
of days used in the basis of such determination.
3.10 Nominal Rate of Interest
The parties acknowledge and agree that all calculations of interest
under this Agreement and the documents related thereto are to be made on the
basis of the nominal interest rate described herein and not on the basis of
effective yearly rates or on any other basis which gives effect to the
principle of deemed reinvestment of interest. The parties acknowledge that
there is a
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material difference between the stated nominal interest rates and the
effective yearly rates of interest and that they are capable of making the
calculations required to determine such effective yearly rates of interest.
3.11 Criminal Rate of Interest
Notwithstanding the foregoing provisions of this Article 3, the
Borrower shall in no event be obliged to make any payments of interest or
other amounts payable to the Lender hereunder in excess of an amount or rate
which would be prohibited by law or would result in the receipt by the Lender
of interest at a criminal rate (as such terms are construed under the Criminal
Code (Canada)).
3.12 Interest Calculation
The principal amount outstanding from time to time hereunder, as to
the Loan, shall bear interest at a rate of seven point three per cent (7.3%)
per annum, calculated and payable monthly in accordance with this section.
Interest shall be calculated and payable monthly on the daily
outstanding principal, and shall accrue both after and before maturity,
default and judgment, with interest on overdue interest at the same rate
computed from the date of each Advance calculated and payable monthly, in
arrears, on the fifteenth (15th) day of each and every month in each and every
year during the term commencing on June15, 2003. During the period from
June15, 2003 to the first required payment of principal under this Agreement,
payments may be made by release from the Disbursement Trust Account, and
thereafter shall be made by payment in the manner specified in this Agreement.
3.13 Increased Costs, Capital Adequacy, etc.
(a) If any change in law:
(i) subjects the Lender, or any participant in the
syndication of the Loan, to any cost or tax or
changes the basis of taxation of payments due to
the Lender or any participant in the syndication of
the Loan or increases any existing cost or tax on
payments of principal, interest or other amounts
payable by the Borrower to the Lender or any
participant in the syndication of the Loan under
this Agreement (except for increased taxes on the
overall net income, assets or capital of the
Lender);
(ii) imposes, modifies or deems applicable any reserve,
special deposit, regulatory or similar requirement
against assets held by, or deposits in or for the
account of, or loans by, or commitments of, or any
other acquisition of funds for loans by, the Lender
or any participant in the syndication of the Loan
or any drafts accepted by the Lender or any
participant in the syndication of the Loan;
(iii) imposes on the Lender or any participant in the
syndication of the Loan a change in the manner in
which the Lender or any participant in the
syndication of the Loan is required to allocate
capital resources to its obligations under this
Agreement; or
(iv) imposes on the Lender or any participant in the
syndication of the Loan any other cost, tax or
condition with respect to this Agreement,
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and the result of (i), (ii), (iii) or (iv) is, in the
determination of the Lender, acting reasonably, to increase
the cost to the Lender or any participant in the syndication
of the Loan, or to impose a liability on or to reduce the
income or return receivable by the Lender or any participant
in the syndication of the Loan in respect of this Agreement,
the Borrower shall pay to the Lender that amount which
indemnifies the Lender or any participant in the syndication
of the Loan for such additional cost, ~liability or
reduction in income or return ("Additional Compensation").
Upon the Lender having determined that it is entitled to
Additional Compensation, it shall promptly notify the
Borrower. A certificate by a duly authorized officer of the
Lender setting forth the amount of the Additional
Compensation and the basis for it shall be prima facie
evidence, in the absence of manifest error, of the amount of
the Additional Compensation. The Additional Compensation
shall accrue from the date of delivery of the certificate to
the Borrower. If the Lender subsequently recovers all or a
part thereof, it will repay an amount equal to such recovery
to the Borrower. For greater certainty, it is acknowledged
that, if such increased cost, liability or reduction in
income or return is also attributable, in part, to dealings
between the Lender and its other customers, the obligation
of the Borrower under this section to provide compensation
therefor will not arise unless the Lender, as a general
practice, also requires compensation therefor from such
other customers and will not exceed the amount that is
directly proportionate to the extent to which such increased
costs, liabilities or reductions in income or return are
attributable to the Borrower and the Loan made by the Lender
hereunder.
(b) If the Lender notifies the Borrower that Additional
Compensation is owed to the Lender, the Borrower shall have
the right to make payment in full to the Lender in respect
of the Loan which has given rise to the Additional
Compensation on the date specified in such notice, together
with all unpaid interest accrued thereon to the date of
repayment and all other reasonable expenses incurred in
connection with the termination, together with in any case
the Additional Compensation to the date of payment, but
shall not be required to pay any prepayment fee.
3.14 Taxes
Save and except as to any such payment which would arise as a result
of any Lender or any participant in the syndication of the Loan at any time
being, or being deemed to be, a non-resident of Canada (such payment to be
solely and only born by the Lender or any participant in the syndication of
the Loan as is, or is deemed to be, a non-resident of Canada), the following
shall apply as to taxes payable:
(a) Any and all payments by or on account of any obligation of
the Borrower hereunder shall be made free and clear of and
without deduction for any taxes; provided that if the
Borrower shall be required to deduct any taxes from such
payments, then (i) the sum payable shall be increased as
necessary so that, after making all required deductions
(including deductions applicable to additional sums payable
under this Section), the Lender receives an amount equal to
the sum it would have received had no such deductions been
made, (ii) the Borrower shall make such deductions and (iii)
the Borrower shall pay the full amount deducted to the
relevant governmental authority in accordance with
applicable law.
(b) In addition, the Borrower shall pay any such taxes to the
relevant governmental authority in accordance with
applicable law.
(c) The Borrower shall indemnify the Lender and each participant
in the Loan, within 10 days after written demand therefor,
for the full amount of any such taxes paid by the
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Lender, and any penalties, interest and reasonable expenses
arising therefrom or with respect thereto, whether or not
such taxes were correctly or legally imposed or asserted by
the relevant governmental authority. A certificate as to the
amount of such payment or liability delivered to the
Borrower by the Lender, shall be prima facie evidence absent
manifest error.
(d) As soon as practicable after any payment of any such taxes
by the Borrower to a governmental authority, the Borrower
shall deliver to the Lender the original or a certified copy
of a receipt issued by such governmental authority
evidencing such payment, a copy of the return reporting such
payment or other evidence of such payment reasonably
satisfactory to the Lender.
3.15 Prepayment
The Borrower is permitted to prepay the Loan in whole only and
provided the Borrower gives to the Lender thirty (30) days' prior written
notice, and at the time the Borrower makes prepayment pursuant to this
section, the Borrower shall also pay to the Lender a premium equal to the
greater of:
(i) three (3) months' interest calculated in the manner herein
provided on the amount prepaid at the annual rate of
interest herein provided; or
(ii) the Interest Rate Differential, if any and if positive.
3.16 Place and Manner of Payment
The Borrower shall deliver, by cheque or electronic transfer of
funds, to the Lender, the principal and interest due at or before 11:00 p.m.
on the date on which such principal and interest is due at 130 Adelaide St.
W., Suite 2200, Toronto, Ontario, or such other address as the Lender may
advise from time to time. If payment is made by cheque, the Borrower shall
ensure receipt by the Lender on the due date whether by delivery or post, and
in any event, shall, where paid by prepaid post, ensure deposit in a postal
station at least five (5) days prior to the due date, payment to be credited
to the account of the Borrower on the day of receipt only if received prior to
1:00 p.m., and otherwise to be credited on the next business day following
receipt. The receipt of such cheque shall satisfy and discharge the liability
for the principal and interest to the extent of the sums represented thereby,
unless such cheque shall not be paid on presentation.
3.17 No Set-Off
The obligations of the Borrower to make all payments of principal and
interest and all other amounts due thereunder shall be absolute and
unconditional, and shall not be affected by any circumstance, including
without limitation, any set-off, compensation, counter-claim, recoupment,
defence or other right which the Borrower may have against the Lender or
anyone else for any reason whatsoever.
3.18 Interest on Overdue Amounts
If the Borrower fails to pay any installment of interest or principal
on the date on which the same is due, the Borrower shall pay interest on such
overdue amount at a rate per annum equal to the applicable rate of interest
under this Agreement then in effect. At any time, upon a default in the
payment of any other amount (other than principal and interest) due under this
Agreement or any of the other Loan Documents, the Borrower shall pay interest
on such overdue amount (which overdue amount, for greater certainty, shall not
include overdue principal or interest) at a rate per annum equal to the
applicable rate of interest under this Agreement then in effect plus
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2%. Interest on overdue amounts shall be payable on demand and shall be
calculated on a daily basis and compounded monthly from the date such amount
becomes due and payable and for so long as such amount remains unpaid and on
the basis of a year of 365 days. All interest provided for in this Agreement
shall be payable both before and after maturity, default and judgment.
ARTICLE 4.00 - SECURITY
4.1 (a) Security To secure the due and punctual payment of the Indebtedness,
and to secure the due and punctual performance of the Borrower's other
obligations and covenants hereunder, the Borrower shall execute and deliver,
or cause to be executed and delivered the Security to the Lender.
(b) Additional Security In addition to the Security, the Borrower
shall provide, or cause to be provided, to the Lender the following (the
"Additional Security"):
(i) assignment of the Disbursement Trust Account;
(ii) acknowledged assignment of Syncrude Agreements to include;
(a) Syncrude Canada Ltd. to acknowledge the security
interest of the Lender in relevant Syncrude
Agreements;
(b) acknowledgement that no Syncrude Agreements are to
be amended, revised or modified without the
Lender's written consent;
(c) Syncrude Canada Ltd. to provide the Lender with
notice of any defaults by the Borrower;
(d) Syncrude Canada Ltd. covenants to remit any
termination payments owing to the Borrower pursuant
to the Syncrude Agreements directly to the Lender
while any amounts remain outstanding under this
Loan;
(iii) Marsulex Agreement(s) on terms satisfactory to the Lender
shall have been executed and delivered;
(iv) During the period prior to the Release Date, the Guarantor
shall provide the Lender with a Letter of Credit for
$7,500,000 as security for payment of the Shortfall in
accordance with section 3.7(in addition to the expenditure
of an amount of $16,500,000 in the Project) or shall have
$24,000,000 funds expended in the Project instead of
providing the letter of credit. Drawdowns on the Letter of
Credit will be applied to any Shortfall. The balance of the
cash in the Disbursement Trust Account and/or the Letter of
Credit shall be disbursed and/or released to the Borrower or
the Guarantor upon satisfaction of the conditions in section
4.4.
4.2 Discharge
In addition to the release of the security of the Guarantor
contemplated by section 4.4, once the Borrower has satisfied all of its
obligations hereunder, the Lender shall, at the written request, and at the
expense, of the Borrower, discharge all charges and liens under the Security,
and execute and deliver to the Borrower and Guarantor such deeds or other
instruments as shall be required to discharge the charges and liens thereof.
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4.3 Expropriation of Mortgaged Property
If the Borrower receives notice that any part of its property or
assets included in the Mortgaged Property has been, or is to be, expropriated
or taken by similar proceedings, the Borrower shall forthwith deliver to the
Lender a written notice setting out particulars of the expropriation. Subject
to the terms of the Syncrude Agreements, the Borrower shall further cause all
proceeds payable in respect of such expropriation or taking to be paid to the
Lender to be applied as repayment of the Indebtedness, applied firstly to
interest, and thereafter to principal to the extent of the funds received,
unless otherwise agreed by the Lender at its sole option, and shall also pay
any applicable prepayment premium.
4.4 Release of Marsulex Security
The Lender will release the Guarantee and, except as to the pledge of
shares, all security and any letter of credit provided by the Guarantor, but
shall retain the pledge of the shares of the Borrower and the limited
guarantee provided therein, upon satisfaction of the following conditions
precedent:
(a) issuance of the written notification of final acceptance of
the Project by Syncrude Canada Ltd., the payments owing from
Syncrude Canada Ltd. to the Borrower under the Syncrude
Agreement have commenced, with the first such quarterly
payment having been made by Syncrude Canada Ltd.;
(b) written confirmation from the Independent Consultant, in a
form reasonably usual for a performance completion report
that the Project has been substantially completed in
accordance with the Plans and Specifications and that no
outstanding issues have been identified by the Independent
Consultant which could impact the performance of the
Project, and a confirmation that the projections reviewed
prior to the date of this Agreement remain reasonable and
valid;
(c) the Project has been successfully operated for thirty (30)
consecutive days, producing a minimum of seven thousands
tonnes (7,000) of fertilizer meeting the specifications in
the Syncrude Agreements over the said thirty (30)
consecutive day period; and
(d) the Borrower is able to satisfy the Burden Coverage Ratio,
as defined in section 5.3(a) of this Agreement, but
calculated for such purposes as at the end of the most
recently completed fiscal quarter for the fiscal quarter
then ended.
ARTICLE 5.00 - COVENANTS
5.1 Positive Covenants
The Borrower hereby covenants and agrees with the Lender that so long
as any of the Indebtedness remains unpaid or obligations unsatisfied:
(a) To Pay Indebtedness
The Borrower will punctually pay or cause to be paid to the
Lender the Indebtedness at the dates, time and places, and
in the manner provided for herein;
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(b) Notice of Removal of Assets
If at any time or from time to time, the Borrower desires to
remove assets which comprise part or all of the Mortgaged
Property to any jurisdiction other than a jurisdiction in
which the Security is validly registered to create a charge
on that property, the Borrower will, prior to removing such
assets from a jurisdiction in which it is registered to a
jurisdiction in which it would not be registered, give the
Lender ten (10) days' notice thereof, accompanied by a full
description of such assets and the proposed situs thereof,
and shall deliver, prior to the removal of such assets, such
documents and instruments filed or registered pursuant to
applicable law, if required, as may be necessary to preserve
and perfect the Lender's security interest therein in such
other jurisdiction in form and content satisfactory to the
Lender and its counsel, and shall pay all legal and
registration costs in connection therewith;
(c) Notice of Litigation
The Borrower will give the Lender prompt written notice of
any action, suit, litigation or other proceeding which is
commenced or threatened against the Borrower and which
involves either a claim or potential claim in excess of One
Hundred Thousand Dollars ($100,000.00) which is not fully
covered by insurance, except for deductible amounts approved
by the Lender;
(d) Notice of Material Change
The Borrower will give the Lender prompt written notice of
any material adverse change in the business or condition of
the Borrower or until the Release Date, the Guarantor,
financial or otherwise, or of any material loss, destruction
or damage of or to any properties or assets of the Borrower
or until the Release Date, the Guarantor, including notice
of any material demand upon, or material change in the terms
and conditions governing, the operating or similar line of
credit of the Guarantor with its bank;
(e) To File Financial Statements and Certificate of No Defaults
The Borrower shall furnish to the Lender:
(i) within one hundred and twenty (120) calendar days
after the end of each of its fiscal years, annual
financial statements as follows:
(A) audited (and consolidated, if at any time
the Borrower holds an interest in an
entity that would be consolidated under
GAAP), balance sheet of the Borrower,
prepared in accordance with generally
accepted accounting principles applied on
a consistent basis, as at the end of such
year, signed by two (2) directors or, if
the Borrower has only one (1) director, by
that director;
(B) audited (and consolidated, if at any time
the Borrower holds an interest in an
entity that would be consolidated under
GAAP), statements of profit and loss of
the Borrower, surplus, source and
application of funds, prepared in
accordance with generally accepted
accounting principles applied on a
consistent basis for such year, including
therewith, relevant information regarding
dealings with controlled companies; and
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(C) a statement setting out any permitted
sales of the Borrower of fixed assets
charged with the Security, specifically
setting out the date of sale, the purchase
price and the method of payment including
the cost and application of the proceeds
of sale;
(ii) within sixty (60) calendar days after the end of
each fiscal quarter of the Borrower, unaudited
unconsolidated, and consolidated if at any time the
Borrower holds an interest in an entity that would
be consolidated under GAAP, financial statements as
follows:
(A) a balance sheet of the Borrower and its
Subsidiaries, prepared in accordance with
generally accepted accounting principles
applied on a consistent basis;
(B ) statements of profit or loss of the
Borrower and its Subsidiaries, surplus,
source and use of funds, prepared in
accordance with ~generally accepted
accounting principles applied on a
consistent basis, for such period;
(C) comparison of the year to date results,
compared to year to date results for the
immediately previous fiscal year, and
against the budgeted, forecast, results,
provided to the Lender, as required under
the terms of this Section, together with a
written explanation of any variances, as
to either comparison, of more than ten
percent (10%) provided such statement
shall not be required to be delivered
until after the Commencement Date; and
(D) a certificate of the chief financial
officer of the Borrower, setting out, with
calculations appended, basis for
compliance with the financial covenants
required under the terms of this Loan
Agreement in the form attached hereto as
Schedule "F";
(iii) not less than thirty (30) calendar days after each
fiscal year end an annual business plan and monthly
operating budget of the Borrower showing
anticipated capital expenditures for the next
fiscal year; and
(iv) a quarterly report, signed by the chief financial
officer of the Borrower, to the effect that payment
of all Source Deductions (employee income tax, CPP
and EI premiums) is current, and that there are no
arrears, in the form appended hereto as Schedule
"F".
(f) Other Information
The Borrower will promptly furnish the Lender with such
other information respecting the Borrower, its properties,
assets, anticipated contracts, acquisitions, investments,
and other matters and information relating to the Borrower
and its business, as the Lender may from time to time
reasonably request, including specifically any request made
by the Lender for delivery of operating results and balance
sheet information with respect to any Subsidiary, or with
respect to business operation carried out through a joint
venture or limited partnership format;
(g) To Maintain Existence
The Borrower will at all times maintain its corporate
existence;
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The Borrower shall preserve and keep in full force and
effect its corporate status, franchises, rights and
privileges under the laws of the jurisdiction of its
formation, and all qualifications, licenses and permits, in
each case, necessary to the ownership, use and operation of
the Project. The Borrower shall not without the prior
written consent of the Lender wind up, liquidate, dissolve,
reorganize, merge, amalgamate or consolidate with or into,
or convey, sell, assign, transfer, lease, or otherwise
dispose of all or substantially all of its assets, form any
subsidiary or acquire all or substantially all of the assets
of the business of any Person, or permit any Subsidiary of
the Borrower to do so. The Borrower shall conduct business
only in its own name and shall not change its name, or the
location of its chief executive office or principal place of
business unless it (a) shall have notified the Lender of
such change, and (b) shall have taken all actions necessary
or requested by the Lender to file or amend any financing
statement or continuation statement to assure perfection and
continuation of perfection of security interests under the
Security. The Borrower shall maintain its separateness as an
entity, including maintaining separate books, records, and
accounts and observing corporate and partnership formalities
independent of any other entity, shall pay its obligations
with its own funds and shall not commingle funds or assets
with those of any other entity.
(h) To Carry on Business and Abide by Government Regulations
The Borrower will carry on its business in a proper and
efficient manner, and will keep or cause to be kept proper
books of account, and make or cause to be made therein true
and faithful entries of all material dealings and
transactions in relation to its business, and will at all
times abide by all government regulations regarding the
operation of the business of the Borrower;
The Borrower shall observe and comply in all material
respects with all legal requirements applicable to the
ownership, use and operation of the Project. The Borrower
shall maintain the Project in good condition and promptly
repair any damage or casualty. The Borrower shall perform
all work required for the Project in a good and workmanlike
manner. The Borrower shall permit the Lender and its agents,
representatives and employees, upon reasonable prior notice
to the Borrower, to inspect the Project and conduct such
environmental and engineering studies as the Lender may
require, provided such inspections and studies do not
materially interfere with the use and operation of the
Project. The Borrower shall not pay any salaries, bonuses or
other amounts that are commercially unreasonable to any of
its directors, officers or employees;
(i) To Pay Taxes
The Borrower will pay or cause to be paid all taxes, rates,
government fees and dues levied, assessed or imposed upon it
and upon its property or any part thereof, as and when the
same become due and payable, save and except when, and so
long as, the validity of any such taxes, rates, fees, dues,
levies, assessments or imposts is in good faith, by proper
legal proceedings, being contested by it, provided such
proceedings effectively postpone enforcement of any lien
arising from non-payment;
(j) To Insure
(i) Property Cover - The Borrower will insure the
Mortgaged Property, at its own expense, to the full
insurable value thereof, based on full replacement
value, against loss or damage by fire, lightning,
explosion, windstorm,
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aircraft, vehicles or other insurable hazards,
which are now, or hereafter, from time to time may
be, insured against by the terms of a standard
All-Risk property policy of insurance against loss
of, or damage to, property of a class or kind
similar to the Mortgaged Property, including boiler
and machinery insurance, if applicable. To the
extent of its interests as they may appear in this
Agreement, the Lender shall be named as loss payee
to the extent of its interests in the
aforementioned insurance contracts effected by the
Borrower which shall include a standard mortgage
clause.
(ii) Liability - The Borrower shall maintain commercial
general liability insurance with respect to the
Project providing for limits of liability of not
less than $10,000,000 for both injury to or death
of a person and for property damage per occurrence.
(iii) Form and Quality - All insurance policies shall be
endorsed in form and substance acceptable to the
Lender to name the Lender as an additional insured,
loss payee or mortgagee thereunder, as its interest
may appear, with loss payable to the Lender,
without co-insurance or Lender retention or
contribution, under a standard Insurance Bureau of
Canada mortgagee clause. All such insurance
policies and endorsements shall be fully paid for
and contain such provisions and expiration dates
and be in such form and issued by such insurance
companies licensed to do business in the Province
of Ontario as are acceptable to the Lender. Each
policy shall provide that such policy may not be
cancelled or materially changed except upon thirty
(30) days' prior written notice of intention of
non-renewal, cancellation or material change to the
Lender and that no act or thing done by the
Borrower shall invalidate any policy as against the
Lender. Blanket policies will be permitted
confirming the Borrower's right to continue
coverage on a pro-rata pass-through basis provided
that coverage for the Project will not be affected
by loss on other properties or will be immediately
reinstated to ensure coverage as required by this
section is available as to the Project. If the
Borrower fails to maintain insurance in compliance
with this section, the Lender may obtain such
insurance and pay the premium therefor and the
Borrower shall, on demand, reimburse the Lender for
all reasonable expenses incurred in connection
therewith. The Borrower shall assign the policies
or proofs of insurance to the Lender, in such
manner and form that the Lender and its successors
and assigns shall at all times have and hold the
same as security for the payment of the Loan. The
Borrower shall deliver before the Closing Date
copies of all original policies certified to the
Lender by the insurance company or authorized agent
as being true copies, together with the
endorsements required hereunder.
(iv) Adjustment - The Borrower shall give immediate
written notice of any loss to the insurance carrier
and to the Lender. Following the occurrence of an
Event of Default which is continuing, the Borrower
hereby irrevocably authorizes and empowers the
Lender, as attorney-in-fact for the Borrower
coupled with an interest, to make proof of loss, to
adjust and compromise any claim under insurance
policies, to appear in and prosecute any action
arising from such insurance policies, to collect
and receive insurance proceeds, and to deduct
therefrom the Lender's expenses incurred in the
collection of such proceeds. Nothing contained in
this subsection, however, shall require the Lender
to incur any expense or take any action hereunder.
-31-
(iv) Renewal Receipt -The Borrower shall deliver, to the
Lender, within thirty (30) days or such shorter
period of time as is reasonable given market
conditions prior to the expiry of any insurance
policy required hereby, a renewal receipt, binder
or new policy replacing such expiring insurance
policy, or otherwise satisfy the Lender that such
insurance has been renewed; and
(v) Insurance Consultant. The Lender shall be entitled
to retain an insurance consultant mutually agreed
upon between the Lender and the Borrower. The
reasonable costs of the insurance consultant shall
be paid by the Borrower, ~from time to time to
review the insurance policies of the Borrower. The
Borrower agrees to make such changes to their
insurance policies as such insurance consultant may
reasonably require and to the extent changes can
reasonably be effected are in accordance with
market standards;
(vi) Use and Application of Insurance Proceeds. Subject
to the terms of the Syncrude Agreements and
provided such action shall not result in a default
thereunder, prior to the occurrence of an Event of
Default the Borrower shall be entitled to apply
proceeds of property damage insurance to pay costs
of restoration and after the occurrence of an Event
of Default which is continuing, the Lender in its
sole discretion shall be entitled to apply proceeds
of property and boiler and machinery insurance to
repay the Loan, notwithstanding that the Loan may
not then be due and payable, and other amounts
owing under the Security or to pay the costs of
restoration of the Project with respect to which
such proceeds arose;
(k) Further Assurances
At any and all times the Borrower will do, execute,
acknowledge, deliver, file and register, or will cause to be
done, executed, acknowledged, delivered, filed and
registered all and every such further acts, deeds,
conveyances, mortgages, transfers and assurances as the
Lender shall reasonably require for the purpose of giving
effect to this Agreement and shall pay, forthwith, the
reasonable costs and expenses of the Lender in connection
therewith;
(l) Payment of Costs and Expenses
The Borrower will pay or reimburse the Lender and its agent
for all reasonable costs, charges and expenses (including
legal fees and disbursements on a solicitor and his own
client basis) of or incurred by the Lender in connection
with the completion of the loan transaction provided for in
this Agreement and the Security taken in pursuance hereof,
including all reasonable costs of title examination,
compensation of engineers, solicitors, and other advisors as
required, and all costs, charges and expenses of the Lender
in connection with the preparation and registration of any
further security or agreements required as further
assurances or as a consequence of amendment or renewal, the
Lender receiving advice from time to time in connection with
this Agreement including relating to the recovery or
enforcement of repayment of the Indebtedness or any part
thereof, or in connection with the enforcement or
realization of any such Security, and any amount paid to
cure any default which may occur under the Syncrude
Agreements, the lender having the right but not the
obligation to cure any default occurring on the part of the
Borrower under the Syncrude Agreements, and any amount not
so paid shall bear interest at the rate of interest provided
at section 3.3 herein, and shall be payable out of any funds
coming into the possession of the Lender in priority to the
Indebtedness; Until final
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disbursement from the Disbursement Trust Account the
Borrower shall be entitled to include all such ordinary
course costs, charges and expenses incurred in relation to
development of the Project as a cost of the Project;
(m) To Repair
The Borrower will at all times repair and keep in repair and
good order and condition, or cause to be so repaired and
kept in good order and condition, all buildings, erections,
machinery and plant used in or in connection with its
business, up to modern standards of usage, and subject to
section 5.2(a)(i) renew and replace or ~cause to be renewed
and replaced all and any of the same which may become worn,
dilapidated, unserviceable, or destroyed, and at all
reasonable times, within normal business hours, following
reasonable notice to the Borrower, will allow the Lender or
its duly authorized agent access to the Mortgaged Property
in order to view the state and condition of the same;
(n) Use of Proceeds
The Borrower will use the Advances only for the purpose of
payment of construction costs and expenses relating to the
Project, including interest and including costs and expenses
and commitment fees of Lenders, professional advisors and
experts, construction costs, soft costs and costs of
operation of the Project and provided that Advances may be
used to reimburse amounts advanced for such purposes by the
Guarantor in excess of the required amount of the
Twenty-Four Million Dollars ($24,000,000) funds expended in
the Project under section 3.3(14) and from and after the
Release Date in excess of Sixteen Million Five Hundred
Thousand Dollars ($16,500,000) plus any cost overruns;
(o) Change of Address
The Borrower shall notify the Lender of any change of
address of any office or other business location of the
Borrower existing as at the date of execution herein, and of
the location of any new business premises where the Borrower
undertakes its business at any time, subsequent to the date
of execution herein;
(p) Notice of Default
The Borrower shall give prompt written notice to the Lender,
and to any syndicate participant of which it has notice, of
any Default of which it is aware hereunder;
(q) Environmental
The Borrower shall at all times comply with all applicable
Environmental Laws and occupational health and safety laws,
regulations and orders which affect the Borrower or any of
its assets to the standards required by the Syncrude
Agreements. The Borrower shall inform the Lender in writing
of each:
(i) environmental problem which materially adversely
affects the Borrower or any of its assets upon
becoming aware of such problem; and
(ii) legal action or proceeding commenced against the
Borrower with respect to any environmental matter
which may materially adversely affect the Borrower
or any of its assets , promptly upon the Borrower
becoming aware of the commencement of such action
or other proceeding, and will specifically:
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(a) establish and maintain procedures for
monitoring its continued compliance with
applicable Environmental Laws, which
procedures shall include periodic reviews of
such compliance.
(b) If the Borrower (i) receives written notice
that any material violation of any
Environmental Law may have been committed or
is about to be committed by it, (ii) receives
written notice that any administrative or
judicial complaint or order has been filed or
is about to be filed against it alleging
material violations of any Environmental Law
or ~requiring it to take any action of a
material nature in connection with the
release of Hazardous Materials into the
environment, or (iii) receives any written
notice from a governmental authority or other
Person alleging that it may be liable or
responsible for costs in a material amount
associated with a response to or clean-up of
a release of a Hazardous Material into the
environment or any damages caused thereby,
the Borrower shall provide the Lender with a
copy of such notice within 10 business days
of the Borrower's receipt thereof. The
Borrower shall also provide to the Lender, as
soon as practicable after it becomes
available, a copy of any environmental site
assessment or audit report, if any, required
to be submitted to any governmental
authority. If any such assessment or report
estimates the cost of any clean-up or
remedial action required by such governmental
authority, Borrower shall provide evidence
satisfactory to the Lender of disbursements
made from time to time to effect such
clean-up or remedial action within such time
as may be prescribed by such governmental
authority.
(c) The Borrower shall indemnify the Lender and
its respective officers, directors,
employees, agents, representatives, loan
participants, assignees, and the officers
directors, employees of each of them and
shareholders (each, an "Indemnified Person")
and shall hold each of them harmless from and
against any and all losses, liabilities,
damages, costs, expenses and claims
(including legal fees on a solicitor and
client basis) relating to this Agreement or
any other Loan Document and arising in
respect of (i) any violation of an
Environmental Law by it or the Guarantor
including the assertion of any Lien
thereunder, (ii) the presence of any
Hazardous Material affecting any real or
personal property owned by it resulting in
any way from the Borrower's use of such
property, or (iii) the release by it or the
Guarantor of any Hazardous Material into the
environment; provided that the Borrower shall
not be obliged to indemnify any Indemnified
Person for any losses, liabilities, damages,
costs, expenses and claims which have arisen
as a result of the gross negligence or wilful
misconduct of such Indemnified Person. The
Borrower's obligations and indemnification
under this section shall survive the payment
and satisfaction of all Obligations and the
termination of this Agreement. The Lender
shall hold the benefit of this indemnity in
trust for those other Indemnified Persons who
are not parties to this Agreement.
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(r) Inspections
The Borrower shall permit the Lender, at any reasonable
time, within normal business hours following reasonable
notice to the Borrower to reasonable access of all premises
occupied by the Borrower and any Subsidiary, for the
purposes of physical inspection, and shall make available,
all financial and other records, and will permit the Lender,
access to, and the facility to complete, such books and
records, for the purpose of review, and making such copies,
as shall be required by the Lender.
(s) Indemnity for Builders Liens
(A) The Borrower shall indemnify and save harmless the
Lender of and from any loss or costs, whatsoever
arising out of or pursuant to:
(i) any expenses or costs of the Lender in
fulfilling its obligations as a mortgagee
under the provisions of the Alberta
Builders Lien Act;
(ii) any liability of the Lender whatsoever
relating to any non- compliance by the
Borrower in all respects of the provisions
contained in the Alberta Builders Lien
Act; and
(iii) all claims, demands, reasonable costs and
expenses of the Lender, including without
limitation, legal fees and disbursements
on a solicitor and his own client basis,
in respect of the foregoing;
(B) The Borrower will not permit or suffer any judgment
for the enforcement of any builder's, contractor's,
workmen's or other lien or privilege upon or in
respect of any of its property to remain
unsatisfied for a period of thirty (30) days after
the date of such judgment; provided that
non-payment of any such judgment shall be deemed
not to be a breach of this section if the Borrower
shall reasonably desire to contest the same and
shall have provided to the Lender reasonable
security to protect its security described
hereunder and in the Security with regard to the
lien or privilege.
(C) Indemnity
(i) General. The Borrower shall indemnify the
Lender and each Indemnified Person against
all suits, actions, proceedings, claims,
losses (other than loss of profits), expenses
(including reasonable fees, charges and
disbursements of counsel), damages and
liabilities except environmental liabilities
as provided for under 5.1(q)(ii)(c) (each, a
"Claim") that the Lender may sustain or incur
as a consequence of (a) any default by the
Borrower or Guarantor under this Agreement or
any other Document, or (b) any
misrepresentation by the Borrower or
Guarantor contained in any writing delivered
to the Lender in connection with this
Agreement, or (c) the Lender entering into
this Agreement, or (d) the use of proceeds of
the Loan by the Borrower, or (e) the
operations of the Borrower or Guarantor,
except that no Indemnified Person will be
indemnified for any Claim resulting from its
own gross negligence or wilful misconduct.
(ii) Certificate. A certificate of the Lender, as
the case may be, setting out the basis for
the determination of the amount necessary to
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indemnify the Agent or the Lender pursuant to
this section shall be prima facie evidence,
absent manifest error, of the correctness of
that determination.
(D) Survival. The obligations of the Borrower under
this section are absolute and unconditional and
shall not be affected by any act, omission or
circumstance whatsoever, whether or not occasioned
by the fault of the Lender, except in respect of
gross negligence or wilful misconduct by it or any
Indemnified Person. The obligations of the Borrower
under this section shall survive the repayment of
the other Obligations and the termination of this
Agreement.
(t) Remediation Reserves
The Borrower will be required to fund and maintain a
reserve, under the control of the Lender, for demolition and
remediation of the property if, at any time, the Project is
required by the terms of the Syncrude Agreements to be
removed from the property. The funding will be required to
be made in the amount of $167,500, per annum, payable
quarterly in the amount of $41,875, with the first
installment to be made to a reserve trust account on the
earlier of (i) the 15th day of the month next following the
end of the fiscal quarter in which the first payment is
required to be made by Syncrude to the Borrower under the
Syncrude Agreements and (ii) January 15, 2006, and then to
be made quarterly on the 15th day of the month next
following each fiscal quarter end of the Borrower
thereafter. The extent and nature of the reserve will be
reviewed by the Lender after the third fiscal year of
contribution to determine if adjustment to the amount or
manner of funding is warranted as a result of the
performance of the Project; provided no upward adjustment in
the Reserve shall be made. The determination whether to
allow any reduction or change in the manner of funding is in
the discretion of the Lender.
(u) Syncrude Agreements
At all times fully comply, in all material respects, with
the terms and conditions of the Syncrude Agreements.
(v) Marsulex Agreements
At all time fully comply, in all material respects, with the
terms and conditions of the Marsulex Agreements.
(w) Additional Reserves
The Borrower shall be required to maintain a cash reserve
account in an amount not less than three months principal
and interest payments, which reserve is to funded at earlier
of (i) the time that the first payment is required to be
made by Syncrude under the Syncrude Agreements and (ii)
January 15, 2006 and is to be maintained at the required
amount at all times thereafter.
(x) Government Approvals
Borrower shall obtain, or cause to be obtained (to the
extent not in existence on the Closing Date) and maintain,
by the observance and performance of all material
obligations thereunder and conditions thereof, all
government approvals required for it to carry on its
businesses.
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(y) Auditors
The Borrower shall promptly give notice to the Lender of any
change in its auditors and the reasons for the change.
(z) Canadian Benefit and Pension Plans
Borrower shall perform all obligations (including fiduciary,
funding, investment and administration obligations in all
material respects) required to be performed in connection
with each Canadian pension plan and Canadian benefit plan
and the funding media therefor; make all contributions and
pay all premiums required to be made or paid in accordance
with the terms of the plan and all applicable laws.
(aa) Leases
Maintain the lease of the Real Property in good standing.
(bb) Payment to Blocked Accounts
Distributions and other amounts referred to in Section 3 of
the Blocked Account Agreement shall be paid by the Borrower
into the Blocked Account in accordance with the Blocked
Account Agreement.
5.2 Negative Covenants
The Borrower hereby covenants and agrees with the Lender
that so long as any of the Indebtedness remains outstanding, without the prior
written consent of the Lender, it will not:
(a) Not to Sell Assets or Enter Into Amalgamations and Mergers
(i) sell or dispose of any of its property, assets or
undertaking in any fiscal year having a value of in
excess of $100,000, except property and assets
which are replaced as required by section 5.1(m);
(ii) except with respect to (i) above, sell any portion
of the plant, machinery, equipment, to any
Subsidiary, other than where the Lender is provided
with directly equivalent security with regard to
the asset to be transferred to such Subsidiary;
(b) As to Encumbrances
as to the Guarantor until the Release Date only and as
provided in section 1.18, as to the Borrower for the term of
this Agreement, enter into any agreement to encumber any
asset, or create or permit to exist any mortgage, hypothec,
charge, pledge, lien or encumbrance, or other security
interest, whether by fixed or floating charge, as to the
Borrower which would rank in any respect prior to, or pari
passu with the Security, upon its undertaking, property or
assets, or any part or parts thereof, except for the
Security and Permitted Encumbrances;
(c) Not to Commit Waste
remove or destroy any of its buildings, machinery or any
structure, except in undertaking the Project, comprising the
Mortgaged Property or the plant, machinery
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or fixtures attached or appertaining thereto, or otherwise
forming part of the Mortgaged Property;
(d) Restriction on Corporate Distribution
(i) to the Indenture Termination Date, except as
otherwise permitted in this Agreement, make any
transfer or distribution of assets of the Borrower
or any Subsidiary that are secured by any of the
Security Agreements as a distribution to
shareholders, officers or directors outside of the
ordinary course of employment remuneration of an
officer with the Borrower or such Subsidiary, or
make other Corporate Distributions except the
Borrower may: (i) make the payments permitted by
the terms of the Marsulex Agreement as and when
permitted, and (ii) make payments or distributions
to reimburse Marsulex for amounts advanced or
invested in the Project; and
(ii) after the Indenture Termination Date, except as
otherwise permitted in this Agreement, declare or
pay any dividends, redeem or purchase, for
cancellation or otherwise, any shares of the
Borrower or any Subsidiary, except as otherwise
permitted in this Agreement, make any distribution
of assets as distribution to shareholders, officers
or directors outside of the ordinary course of
employment remuneration of an officer with the
Borrower, or make other Corporate Distributions,
except the Borrower may (i) make the payments
permitted by the terms of the Marsulex Agreement as
and when permitted, (ii) reimburse amounts advanced
or invested in excess of $24,000,000 to reimburse
Marsulex for amounts expended in the Project and
(iii) on or after the Release Date reimburse
Marsulex for amounts advanced to or invested in the
Borrower in excess of $16,500,000 plus any cost
overrun for the Project over the approved budget
by: (A) cancellation of any remaining letter of
credit held for the Project; (B) release of the
remaining amount in the Disbursement Trust Account
which the Borrower may, if there is no Default
which is continuing, then distribute to the
Guarantor; and (C) by distribution of any cash
amounts then held by the Borrower;
(e) Restriction on Sale and Leasebacks
sell, assign or dispose of any property in any transaction
or series of transactions which will conclude with a
reacquisition by the Borrower of the same or similar
property:
(i) subject to any encumbrance to which such property
was not theretofore subject; or
(ii) pursuant to a conditional sale agreement or other
title retention agreement, including a financing
transaction or capital lease arrangement;
(iii) neither the Borrower nor the Guarantor shall,
without the prior written consent of the Lender,
except for Permitted Encumbrances and the
assignment of the Project and Syncrude Agreements
by Marsulex to Marsol (a) directly or indirectly
sell, transfer, convey, mortgage, pledge, or assign
or otherwise transfer or encumber any interest in
the Project or any part thereof; (b) encumber,
alienate, grant or allow to exist a Lien or grant
or allow to exist any other interest in the Project
or any part thereof, whether voluntarily or
involuntarily; (c) permit any preferred equity or
other mezzanine financing for the Borrower, or (d)
enter into or agree to any easement or other
agreement
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granting rights in or restricting the use
or development of any portion of the Project;
(f) Restrictions on Repayment of Subordinated Debt
except as provided in the Marsulex Agreement or otherwise
under the terms of this Agreement, make any payment of
interest, principal or fees on any debt of the Borrower the
payment and security of which is subordinate to the
Indebtedness;
(g) Nature of Business
permit the business to be conducted by the Borrower to be
other than the ownership and operation of the Project;
(h) Facility Alterations
make any material changes, additions, or alterations to the
facilities used for the Project from that contemplated in
the Plans and Specifications submitted to the Lender,
including any change in the usage thereof.
(i) Contingent Liabilities
make any loan to or investment in or enter into any
obligations on behalf of any other person, firm or
corporation, or give any guarantee on behalf of or otherwise
give financial assistance to any other person, firm or
corporation, other than prior to the Indenture Termination
Date, loans to or guarantees of Debt of the Guarantor or any
Subsidiary of the Guarantor which has entered into a blocked
account agreement on similar terms to that with the
Guarantor and entered into a blocked account arrangement
providing the Lender with a first charge security interest
in the blocked account and the funds contained therein,.
(j) Amalgamation and Investment
acquire or enter or amalgamate or merge or enter into any
statutory arrangement with any other corporation or entity
or enter into partnership or syndicate with, any other
corporation or person.
5.3 Financial Covenants
The Borrower hereby covenants and agrees with the Lender, to
be calculated on a consolidated basis, in accordance with generally accepted
accounting principles, as at the end of each fiscal quarter, that so long as
any of the Indebtedness remains outstanding, it will:
(a) Burden Coverage
maintain Burden Coverage of at least 1.3:1 calculated as at
the end of each fiscal quarter for the four fiscal quarters
then ended.
Burden Coverage is defined as the EBITDA of the Borrower
before the distribution payments made to Marsulex by Marsol
under the Marsulex Agreement divided by principal and
interest payments on the Loan. The calculation and
requirement to comply with the Burden Coverage Ratio set out
hereunder commences on the earlier of (i) third fiscal
quarter end of the Borrower following the quarter in which
Syncrude is required to make payments under the Syncrude
Agreements and (ii) December
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31, 2006, for the four fiscal quarters then ended and
thereafter determined at the end of each fiscal quarter of
the Borrower for the four fiscal quarters then ended, if the
calculation hereunder includes a part quarter, then the
calculation shall include the EBITDA and principal and
interest payments on the Loan for such part quarter as if it
is a full quarter by extrapolating the results for the part
quarter over the full quarter on a simple daily multiple
basis.
ARTICLE 6.00 - DEFAULT AND ENFORCEMENT
6.1 Events of Default
Each and every of the following shall be an Event of Default
under this Agreement:
(a) if the Borrower makes default in payment of the principal
and/or interest owing as Indebtedness as and when the same
becomes due under any provision hereof;
(b) if the Borrower shall neglect to carry out or observe any
covenant or condition (other than those relating to the
payment of principal and interest as set forth in (a) and
that in section 5.1(u) which shall be governed by section
6.1(i)) hereunder or if the Borrower or, prior to the
Release Date, the Guarantor shall neglect to carry out or
observe any covenant or condition under the Security,
provided the Borrower and the Guarantor shall, in each case,
have ten (10) days after receipt of notice from the Lender
to remedy such default before the Borrower or the Guarantor,
as the case may be, shall be in Default hereunder, or
provided that such default cannot be cured within such ten
(10) day period and the Borrower or the Guarantor, as the
case may be, so advises the Lender prior to the termination
of such ten (10) day period and provided further that such
default is capable of being cured and the Lender in its sole
discretion is satisfied that the Borrower or the Guarantor,
as the case may be, is diligently ~proceeding to cure such
default, the Borrower and the Guarantor shall have an
additional twenty (20) days to remedy such default before
the Borrower or the Guarantor, as the case may be, shall be
in Default hereunder;
(c) if the Borrower or until the Release Date the Guarantor
ceases, or threatens to cease, carrying on its business or
if a petition shall be filed, an order shall be made or a
resolution be passed for the winding-up or liquidation of
the Borrower or, until the Release Date, the Guarantor, or
the auditor at any time issues an audit report expressing a
"going concern" qualification with respect to the Borrower;
(d) if the Borrower or, until the Release Date, the Guarantor
shall become insolvent, or shall make a bulk sale of its
assets, a general assignment for the benefit of its
creditors, a proposal under the Bankruptcy and Insolvency
Act (Canada), or if a bankruptcy petition shall be filed or
presented with respect to the Borrower or, until the Release
Date, the Guarantor and with respect to such proceeding
instituted against it, such is not removed or discharged or
unstayed prior to the legal effect of such process, or if a
custodian, sequestrator, receiver, receiver and manager, or
any other officer with similar powers shall be appointed of
its properties, or any part thereof of the Borrower or,
until the Release Date, the Guarantor which is, in the
opinion of the Lender, a substantial part thereof;
(e) if any proceedings respecting the Borrower or until the
Release Date the Guarantor are commenced by the Borrower or
the Guarantor under the Companies' Creditors Arrangement Act
(Canada), the Winding-Up and Restructuring Act (Canada), or
any legislation or other provision of law providing for
similar effect;
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(f) if an encumbrancer shall take possession of the property of
the Borrower or until the Release Date the Guarantor or any
part thereof which is, in the opinion of the Lender, a
substantial part thereof, or if a distress or execution or
any similar process be levied or enforced there against the
Borrower or, until the Release Date, the Guarantor, and such
remains unsatisfied for such period as would permit such
property or such part thereof which is, in the opinion of
the Lender, a substantial part to be sold or seized
thereunder;
(g) if default shall occur under any obligation of the Borrower
or until the Release Date the Guarantor to repay borrowed
money or interest thereon to any person which as to the
Guarantor is outstanding in an aggregate amount exceeding
Five Hundred Thousand Dollars ($500,000) and as to the
Borrower is outstanding in an aggregate amount exceeding
Twenty-Five Thousand Dollars ($25,000) and such default is
not waived or rectified within the period provided for
rectification in any governing agreement;
(h) if any of the representations and warranties contained
herein or in any of the Security shall prove to have been
false or misleading in any material respect on the date
hereof or, subject to as hereinafter provided with respect
to the Guarantor, on the date of the making of any Advance
(except to the extent such representation and warranty
specifically relates to a prior date), each representation
and warranty being deemed to be restated as of the date of
each Advance provided that any representation or warranty
made by or with respect to the Guarantor shall not be deemed
to be restated after the Release Date;
(i) if the Borrower or the Guarantor, which is a party thereto,
shall be in default under the Syncrude Agreements at any
time and such default has not been waived or has continued
unremedied for the period set out in such agreement to
rectify the particular default and Syncrude shall have
provided notice of such default to the Borrower or the
Guarantor; or
(j) if, without the prior written consent of the Lender, which
consent shall not be unreasonably withheld or delayed, there
is any Change in Control in the legal or beneficial
ownership of the outstanding shares in the share capital of
the Borrower, as certified to the Lender on the date of
advance, whether or not such is voluntary or involuntary, by
operation of law, order of the Court or otherwise, or if any
of the outstanding shares of the Borrower are pledged,
charged, sold, assigned, transferred, or otherwise
encumbered other than in favour of the Lender, or if
additional shares of the Borrower are issued, such that any
of the foregoing cause a Change in Control of the Borrower
to a Person not controlling the Borrower as of the date
hereof.
6.2 Acceleration on Event of Default
Upon the occurrence of an Event of Default, the Lender may, in
addition to any other rights or remedies provided for herein, in the Security,
at law, or in equity, by written notice to the Borrower, declare the
Indebtedness to be immediately due and payable, and the same shall forthwith
become immediately due and payable, and the Borrower shall forthwith pay to
the Lender the Indebtedness.
In addition to the right provided to the Lender to accelerate payment
of the Indebtedness, under the terms of this section 6.2, on the occurrence of
an Event of Default, it is acknowledged that the Lender may, in addition to
any other rights or remedies provided for herein, in the Security, at law, or
in equity, by thirty (30) days written notice to the Borrower, declare the
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Indebtedness to be immediately due and payable, and the same shall forthwith
become immediately due and payable, and the Borrower shall forthwith pay to
the Lender the Indebtedness, if Syncrude Canada Ltd. has not been required to,
or for any reason has not, commenced payments required to be made by Syncrude
Canada Ltd. to the Borrower pursuant to the terms of the Syncrude Agreements
by December 15th, 2006.
6.3 Waiver of Default
The Lender may at any time waive in writing any Default or Event of
Default which may have occurred, provided that no such waiver shall extend to,
or be taken in any manner whatsoever to affect, any subsequent Event of
Default or the rights or remedies resulting therefrom. No delay or failure by
the Lender to exercise any right or remedy hereunder shall impair any such
~right or remedy, or shall be construed to be a waiver of any Event of Default
hereunder or under the Security, or acquiescence therein.
6.4 Indebtedness Due Under Security
An Event of Default hereunder shall also be a default under each
Security instrument.
6.5 Remedies Cumulative
Each of the remedies available to the Lender is a separate remedy and
in no way is a limitation on any one or more of the other remedies otherwise
available to the Lender. The rights and remedies herein expressly specified or
in the Security are cumulative and not exclusive. The Lender may, in its sole
discretion, exercise any and all rights, powers, remedies and recourses
available herein or in the Security, or any other remedy available to it, and
such rights, powers, remedies and recourses may be exercised concurrently or
individually without the necessity of any election.
6.6 Requirement to Pay Directly
The Lender may, only after an Event of Default and while it is
continuing, provide notice to Syncrude under the Syncrude Agreements requiring
payments thereunder to be made directly to the Lender.
ARTICLE 7.00 - ENFORCEMENT OF SECURITY
7.1 Remedies
Whenever the Security has become enforceable, but subject to the
provisions hereof:
(a) The Lender may proceed to enforce its rights by any action,
suit, remedy or proceeding authorized or permitted by law or
by equity, and may file such proofs of claim and other
papers or documents as may be necessary or advisable in
order to have its claims lodged in any bankruptcy,
winding-up or other judicial proceeding relative to the
Borrower;
(b) The Lender may enter into and upon and take possession of
all or any part of the Mortgaged Property, with full power
to carry on, manage and conduct the business and operations
of the Borrower, including the power to borrow monies or
advance its own monies for the purpose of such business
operations, the maintenance and preservation of the
Mortgaged Property or any part thereof, the payment of
taxes,
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wages and other charges ranking in priority to the
Indebtedness and operating expenses. The Lender shall
specifically have the right to exercise the rights and
remedies of the Borrower under any joint venture, limited
partnership, or equivalent agreement or arrangement, and to
exercise the rights pursuant to share pledges held as to the
Subsidiaries. The monies so borrowed or advanced shall be
repaid by the Borrower on demand and until repaid with
interest thereon at the rate per annum provided in section
3.3 hereunder calculated monthly, in arrears, shall form a
charge upon the Mortgaged Property in priority to the
Indebtedness and shall be secured hereby. The Lender shall
have the right to demand and to receive the revenues,
incomes, issues and profits of the Mortgaged Property and to
pay therefrom all of its expenses, charges and advances in
carrying on the business operations or otherwise, of the
Borrower and the payment of all taxes, assessments and other
charges against the Mortgaged Property ranking in priority
to the Indebtedness, or payment of which may be necessary to
preserve the Mortgaged Property, and to apply the remainder
of the monies so received in accordance with the provisions
hereof;
(c) The Lender may, either after entry as provided herein, or
without any entry, and with or without possession or control
of the Mortgaged Property sell and dispose of all the
Mortgaged Property, either as a whole or in separate parcels
at public auction, by tender, or by private contract at such
time and on such terms and conditions, having first given
such notice of the time and place of such sale, as it may
think proper. The Lender may make such sale whether by
auction, tender or private contract, either for cash, upon
credit, or in exchange for bonds, mortgages, stocks or other
securities of another corporation, or partly for one and
partly for the other upon such reasonable conditions as to
terms of payment as it may deem proper, and upon any such
sale, shall be obliged to account to the Borrower only in
relation to monies actually received and only at the time of
receipt. It shall be lawful for the Lender to rescind or
vary any contract of sale that may have been entered into,
and resell with or under any of the powers conferred herein,
to adjourn any such sale from time to time, and to execute
and deliver to the purchaser or purchasers of the said
property, or any part thereof, good and sufficient deed or
deeds for the same, the Lender being hereby irrevocably
constituted an attorney of the Borrower for the purpose
thereof, any such sale made as aforesaid shall be a
perpetual bar both in law and equity against the Borrower
and its assigns and all other persons claiming the said
property or any part or parcel thereof, by, from, through,
or under the Borrower or its assigns, and the proceeds of
any such sale shall be distributed in the manner hereinafter
provided; and
(d) The Lender or any agent or representative thereof, may
become the purchaser at any sale of the Mortgaged Property
whether made under the power of sale herein contained,
pursuant to foreclosure, or other judicial proceedings.
7.2 Remedies Not Exclusive
No remedy for the enforcement of the rights of the Lender shall be
exclusive of, or depend on, any other remedy, but any one or more remedies may
from time to time be exercised independently or in combination.
7.3 Remedies Not Prejudiced by Delay
No delay or omission of the Lender to exercise any remedy shall
impair any such remedy, or shall be construed to be a waiver of any Event of
Default hereunder or under the Security, or acquiescence therein.
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7.4 Borrower to Yield Possession
Upon the occurrence of an Event of Default which is continuing, the
Borrower shall yield possession of the Mortgaged Property and the conduct of
its business in connection therewith to the Lender and agrees to put no
obstacles in the way of, but to facilitate by all legal means, the actions of
the Lender hereunder, and not to interfere with the carrying out of the powers
hereby granted to it. The Borrower shall forthwith, by and through its
officers and directors, at any time upon the occurrence of an Event of Default
which is continuing, and request in writing by the Lender execute such
documents and transfers as may be necessary to place the Lender in legal
possession of the Mortgaged Property and its business in connection therewith,
and thereupon all the powers and functions, rights and privileges of each and
every of its directors and officers shall cease and determine solely with
respect to the possession of the Mortgaged Property, unless specifically
continued in writing by the Lender, or unless the property shall have been
restored to the Borrower.
7.5 Lender Entitled to Perform Covenants
Upon the occurrence of an Event of Default which is continuing, the
Lender may, in its discretion, perform any of the said covenants capable of
being performed by it, and if any such covenant requires the payment or
expenditure of money, the Lender may make payments or expenditure with its own
funds, or with money borrowed by or advanced to it for such purpose, but shall
be under no obligation to do so, and all sums so expended or advanced shall be
at once payable by the Borrower on demand, shall bear interest at the rate of
eighteen per cent (18%) per annum, calculated and payable monthly, in arrears,
until paid, and shall be payable out of any funds coming into the possession
of the Lender in priority to the Indebtedness, but no such performance or
payment shall be deemed to relieve the Borrower from any Event of Default
hereunder.
7.6 The Lender as Agent of Borrower and Power of Attorney
Upon the occurrence of an Event of Default which is continuing, and
written notification by the Lender, the Borrower hereby irrevocably appoints
the Lender to be its attorney, and in its name and on its behalf, to execute
and carry out any deeds, documents, transfers, conveyances, assignments,
assurances, consents and things which the Borrower ought to, or may, sign,
execute and do hereunder, and generally to use its name in the exercise of all
or any of the powers hereby conferred on the Lender, with full power of
substitution and revocation. In the exercise of all of its rights hereunder,
the Lender shall be, so far as concerns responsibility for its action or
inaction, the agent of the Borrower.
7.7 For the Protection of the Lender
In realizing upon the Mortgaged Property, the Lender shall not be
responsible for any loss occasioned by any demand, collection, enforcement,
sale or other realization thereof, or the failure to, or delay in, demand,
collect, enforce or sell any portion, and the Lender shall not be bound to
protect the Mortgaged Property from depreciating in value. Upon any sale or
realization of the Mortgaged Property by way of public auction, the Lender may
become purchaser free from any right or equity of redemption, which right or
equity is expressly waived by the Borrower, and the Lender may, in paying the
purchase price, apply so much of the obligations of the Borrower hereunder on
account of the purchase price as may be necessary for such purpose.
7.8 Charges for Late Payment
Notwithstanding any waiver or enforcement of an Event of Default
hereunder, the Borrower acknowledges that the Lender shall be paid interest on
overdue interest at the applicable
-44-
rate set out in section 3.3 and the sum of Two Hundred and Fifty Dollars
($250.00) in each instance, to compensate for costs, penalties or expenses
caused to the Lender arising as a result of any payment made after its due
date hereunder.
7.9 Lender's Agents
The Lender may appoint any agent or representative to exercise any of
its rights hereunder, provided that it is specifically acknowledged and agreed
that First Treasury Corporation may appoint a management subsidiary to act as
agent or representative of the Lender at any time without formal appointment
or notice to the Borrower at no additional cost to the Borrower. The syndicate
participants, from time to time, may exercise the rights and remedies of the
Lender, directly or by appointment of a participant as a successor or assign
to the Lender on written notice ~provided by the participants in the Loan
holding not less that 66.67% of the outstanding principal amount of the Loan
at the relevant time to the Borrower advising as to what participant will be
so exercising the rights of the Lender.
ARTICLE 8.00 - APPLICATION OF FUNDS
8.1 Appointment of Receiver
If the Security shall become enforceable, the Lender may appoint a
receiver, manager, or receiver and manager of the Mortgaged Property, or any
part thereof (hereinafter called the "Receiver"), and may remove any Receiver
so appointed and appoint another in his stead, and the following provisions
shall take effect:
(a) such appointment may be made at any time after the Security
shall have become enforceable and either before or after the
Lender shall have entered into or taken possession of the
Mortgaged Property or any part thereof, but such appointment
may be revoked upon the direction in writing of the Lender;
(b) every such Receiver shall be vested with all or any of the
powers and discretions of the Lender;
(c) such Receiver may carry on the business of the Borrower or
any part thereof, and may exercise all the powers conferred
upon the Lender hereby;
(d) the Lender may from time to time fix the remuneration of
every such Receiver, which remuneration shall be reasonable,
and direct the payment thereof out of the Mortgaged Property
or the proceeds thereof in priority to payment of the
Indebtedness;
(e) the Lender may from time to time require any such Receiver
to give security for the performance of his duties, and may
fix the nature and amount thereof, but shall not be bound to
require such security;
(f) every such Receiver may, with the consent in writing of the
Lender, borrow money for the purpose of carrying on the
business of the Borrower, for the maintenance of the
Mortgaged Property or any part or parts thereof, or for any
other purposes approved by the Lender, and may issue
security on the Mortgaged Property in priority to the
Security and in the amounts from time to time required to
carry out the duties of the Receiver appointed hereunder,
which shall bear interest as shall be reasonably determined
by the Receiver;
-45-
(g) save so far as otherwise directed by the Lender, all monies
from time to time received by such Receiver shall be paid
over to the Lender; and
(h) every such Receiver shall so far as concerns responsibility
for his acts and omissions in exercising all or any of the
powers and discretions conferred upon him hereunder, be
deemed the agent of the Borrower and not of the Lender.
8.2 Application of Funds
Except as otherwise herein provided and subject to the terms of the
Priority Agreement, the monies arising from any enforcement of the Security
shall be applied as follows:
(a) firstly, in payment of, or reimbursement to the Lender of,
the expenses, disbursements, prepayment bonus, and advances
of the Lender (including the fees and expenses of any
Receiver, agent or representative appointed pursuant hereto
or under the Security and any legal fees with respect
thereto, on a solicitor and client basis) incurred or made
in connection with the enforcement of this Agreement or the
realization of the Security;
(b) secondly, in payment of interest on overdue interest,
interest and principal included in the Indebtedness, in that
order of priority, and in the case of accrued and unpaid
interest in reverse order of maturity; and
(c) the surplus, if any, shall be paid to the Borrower or its
assigns.
8.3 Deficiency
If the monies received by the Lender or any Receiver are insufficient
to repay to the Lender all monies due to it, the Borrower shall forthwith pay
or cause to be paid to the Lender such deficiency.
ARTICLE 9.00 - NOTICES
9.1 Any demand or notice to be given by any party hereto to any other party
shall be in writing and may be given by personal delivery, or except during
any period when postal service is interrupted, by prepaid registered mail or
by telex, telecopy or by other means of instantaneous transmission that
produces a permanent copy ("other communication") addressed as follows:
(a) to the Borrower at: 111 Gordon Baker Road
Suite 300
Toronto, Ontario
M2H 3R1
Attention: Chief Financial Officer
(b) to the Lender at: 130 Adelaide Street West
Suite 2200
Toronto, Ontario
M5H 3P5
and if given by registered mail shall be deemed to have been received by the
party to whom it was addressed on the date falling four (4) business days
following the date upon which it has been deposited in the post office with
postage and cost of registration prepaid, and if personally delivered to an
adult during normal business hours, when so delivered, and if given by other
communication
-46-
the third (3rd) business hour after transmission and confirmation of receipt.
Provided that any of the above-named parties may change the address designated
from time to time, by notice in writing to the other party hereto.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as
of the 5th day of June, 2003.
MARSOL CANADA CORPORATION FIRST TREASURY FINANCIAL INC.
Per: Per:
-------------------------------- ---------------------------
[Authorized Signing Officer] [Authorized Signing Officer]
Per: Per:
-------------------------------- ---------------------------
[Authorized Signing Officer] [Authorized Signing Officer]
MARSULEX INC.
Per:
--------------------------------
[Authorized Signing Officer]
Per:
---------------------------------
[Authorized Signing Officer]
WP/ARM/17111-126/002/ar
SCHEDULE "A"
REAL PROPERTY
PLAN 5157TR
PLANT SITE CONTAINING 835.27 HECTARES (2,064 ACRES) MORE OR LESS EXCEPTING
THEREOUT:
HECTARES (ACRES) MORE OR LESS
A) PLAN 3677TR-TOWER SITE 1.485 3.67 (N.E. 6)
B) PLAN 7821106-STATION SITE 0.166 0.41 (S.W. 7)
C) PLAN 7821055-STATION SITE 0.085 0.21 (S.W. 7)
D) PLAN 8120252-PLANT SITE 5.58 13.78 (N.W. 6 & E1/21)
E) PLAN 8721201-STATION SITE 1.008 2.49 (N.3. 6)
F) PLAN 9823790-ROAD 4.20 10.37 (N.W. 6)
5.87 14.51 (N.E. 6)
EXCEPTING THEREOUT ALL MINES AND MINERALS AND THE RIGHT TO WORK THE SAME.
SCHEDULE "B"
PERMITTED ENCUMBRANCES
MARSULEX INC.
ONTARIO
Registration Number Secured Party Collateral
------------------- ------------- ----------
1. 20000710 1317 1715 5923 (863622819) Xerox Canada Ltd. Equipment, Other
Expiry date: July 10, 2005
2. 19990629 1404 1715 3404 (852537654) Xerox Canada Ltd. Equipment, Other
Expiry date: June 29, 2004
3. 19990503 1342 1398 9090 (850604949) MTC Leasing Inc. Equipment
Expiry date: May 3, 2004 Mailing machine 21272-54547
Box 13 completed
4. 29970306 1906 1529 9746 (828919935) Textron Financial Equipment, Leasing
Corporation (Canada)
Expiry date: March 6, 2007 Amended by 19970326 1936 1529 7968 to add
Assigned by 19971103 0921 motor vehicle description - 1996 Western S02
New debtor added by 20011204 1818 1531 2013 1036 to Hitachi Credit Triaxle Trailer 2W9NAE2U7V2013174
2481 - Chemtrade Logistics Inc. Canada Inc.
Amended by 19990323 1830
1531 4241 to reflect change
of name of secured party to
Associates Capital Limited
5. 19960927 1919 1529 2636 (825233994) Rentway Inc. Equipment, MV included - 1 1996 Western Rock
Bit Company MC331 Tanker 2W9NAE2U1T2013166
Expiry date: September 27, 2003
6. 19921001 2147 1513 2942 (802487232) PHH Canada Inc. Equipment, Other, MV included
Expiry date: October 1, 2004 Amended by 19990910 1043 1529 1539 to add
(originally 1996) general collateral description to
registration: All present and future motor
Renewed for 3 years by 19960905 1855 vehicles (including, without limitation,
1529 9932 passenger automobiles, trucks, truck
tractors, truck trailers, truck chassis, or
Renewed for 5 years by 19990910 1043 truck bodies), automotive equipment
1529 1538 (including, without limitation, trailers,
boxes and refrigeration units) and
Partial discharge registered by 2000525 materials-handling equipment leased from time
1828 1531 2020 - to discharge 1997 to time by the secured party to the debtor,
Chrysler Intrepid together with all present and future
attachments, accessions, appurtenances,
Amended by 20010312 1436 1530 6074 to accessories and replacement parts, and all
update serial number collateral proceeds of or relating to any of the
description: foregoing
1 2000 Ford Ranger 1FTYR10U3YTB49286
Further amended by 20000403 1437 1530 5758 to
Partial discharge registered by add serial number collateral description:
20010529 1811 1531 1574 - to discharge 1 1997 Chrysler Intrepid
1997 Vision and 1999 Ford Windstar 2C3HH46F7VH663748;
1 1998 Dodge RAM
Amended by 20010803 1803 1531 6179 to 3B7HC12Y8WG109734;
add additional debtors: Chemtrade 1 1997 Vision 2E3HD56F2VH657766;
Logistics Income Fund 1 1999 Ford Windstar
2FMZA5143XBB33228;
Amended by 20010809 1037 1529 8459 to 1 1999 Pontiac Grand Prix
add additional debtor: Chemtrade 1G2WJ52M3XF328612
Logistics Inc.
7. 19920731 2204 1513 0908 (802278045) PHH Canada Inc. Equipment, Other, MV included
Expiry date: July 31, 2005 (originally Amended by 19990910 1043 1529 1549 to add
1997) general collateral description to
registration: All present and future motor
Renewed for 3 years by 19970624 1855 vehicles (including, without limitation,
1531 8633 passenger automobiles, trucks, truck
tractors, truck trailers, truck chassis, or
Renewed for 5 years by 20000613 1806 truck bodies), automotive equipment
1531 2083 (including, without limitation, trailers,
boxes and refrigeration units) and
Amended by 20010803 1803 1531 6180 to materials-handling equipment leased from time
add additional debtors: Chemtrade to time by the secured party to the debtor,
Logistics Income Fund together with all present and future
attachments, accessions, appurtenances,
Amended by 20010809 1037 1529 8460 to accessories and replacement parts, and all
include additional debtors: Chemtrade proceeds of or relating to any of the
Logistics Inc. foregoing
BRITISH COLUMBIA
Registration Number Secured Party Collateral
------------------- ------------- ----------
1. 874118A First Treasury Financial All present and after acquired personal
Inc. property
Expiry date: February 10, 2023
2. 49801A GE Railcar Services Inc. Rolling Stock Cars
Expiry date: November 5, 2011
3. 8830542 General Electric Capital Suzuki Grand Vitara
Vehicle and Equipment
Expiry date: May 20, 2004 Leasing Inc.
GE Capital Vehicle and
Equipment Leasing Inc.
4. 7575294 PHH Vehicle Management Motor Vehicles, (including, without
Services Inc. limitation, passenger automobiles, trucks,
Expiry date: March 31, 2003 truck tractors, truck trailers, truck
chassis, or truck bodies), automotive
Debtors: Marsulex Inc.; Chemtrade equipment (including, without limitation,
Logistics Inc.; Chemtrade Logistics trailers, boxes and refrigeration units) and
Income Fund materials-handling equipment leased from time
to time by the secured party to the debtor,
together with all present and future
attachments, accessions, appurtenances,
accessories and replacement parts, and all
proceeds of or relating to any of the
foregoing
ALBERTA
Registration Number Secured Party Collateral
------------------- ------------- ----------
1. 03021021922 First Treasury Financial All present and after acquired personal
Inc. property of the debtor
Expiry date: February 10, 2023
2. 02081603876 Capital Industrial Sales & 1986 Clark GPS30MB GP138MB02046425FA
Services
Expiry date: February 16, 2003
Garage Keepers Lien
3. 01103127245 GE Railcar Services Inc. Rolling Stock Cars
Expiry date: October 31, 2011
4. 99092012279 Ikon Office Solutions, Inc. Canon LC9000S Fax UYG35518
Expiry date: September 20, 2003
5. 98033109376 PHH Vehicle Management "Motor vehicles (including, without
Services Inc. limitation, truck tractors, truck trailers,
Expiry date: March 31, 2003 truck chassis or truck bodies), automotive
equipment (including, without limitation,
Debtors: Marsulex Inc. trailers, boxes and refrigeration units) and
materials-handling equipment leased by the
Additional debtors added by 01080322504 debtor from the secured party together with
- Chemtrade Logistics Income Fund; all attachments, accessions, appurtenances,
Chemtrade Logistics Inc. accessories or replacement parts. Proceeds -
all of the debtor's present and after
acquired personal property including,
without limitation, goods, securities,
instruments, documents of title, chattel
paper, intangibles and money.
1995 Dodge 3B7HC13Y5SM143642;
1997 Vision 2E3HD56F3VH657761;
2001 Chevrolet Venture
1GNDX03E01D164810;
2001 Honda Accord
1HGCG55411A809926
SASKATCHEWAN
Registration Number Secured Party Collateral
------------------- ------------- ----------
1. 117348834 GE Railcar Services Inc. Rolling stock cars
Expiry date: November 14, 2011
MARSOL CANADA CORPORATION
None
SCHEDULE "C"
ENVIRONMENTAL REPORTS
Nil
SCHEDULE "D"
ACTIONS
Nil
SCHEDULE "E"
FORM OF CERTIFICATE OF CHIEF FINANCIAL OFFICER
(pursuant to Section 5.1(e)(iv)
COMPLIANCE CERTIFICATE (QUARTERLY)
TO: First Treasury Financial Inc. (Lender)
FROM: Chief Financial Officer, Marsol Canada Corporation (Borrower)
Pursuant to the terms and conditions outlined in the Loan Agreement
dated June , 2003 between the Borrower and the Lender at section 5.1(e)(iv),
we provide and attest to the following information for the fiscal quarter
ended being the quarter of
our fiscal year.
CONDITIONS/COVENANTS ($000):
All covenants set out in this schedule are determined on the basis of the
consolidated financial statements of the Borrower and measured quarterly
unless otherwise stated.
1) SECTION 5.3(a) BURDEN COVERAGE SHALL NOT REDUCE BELOW 1.3 :1:
(Yes ____ or No ____ ).
CALCULATION
2) The Borrower is in compliance with Sections 5.1 and 5.2 of the Loan
Agreement
(Yes ____ or No ____ ).
If no specify section which is not in compliance with explanation:
3) Source Deductions are all current: (Yes ____ or No ____ )
4) Attach an explanation for any covenant breaches.
The undersigned, having the authority to complete and execute this
Certificate, declares this information to be true and accurate, understanding
that FTFI relies on this information to provide its Credit Facilities.
DATED this day of , 2003
By:
------------------------------------
per:
-----------------------------------
(signature)
SCHEDULE "F"
SYNCRUDE AGREEMENTS
1. License agreement between Syncrude Canada Ltd. and Marsulex Inc. for
an ammonium sulphate scrubber process, dated as of December 29,
2000.
2. Ammonium Sulphate Process Guarantee agreement between Marsulex Inc.
and Syncrude Canada Ltd., dated as of December 29, 2000.
3. Lease agreement made pursuant to the Land Titles Act (Alberta)
between Marsulex Inc. as tenant and Syncrude Canada Ltd. as
representative of an agent for the landlords, dated December 29,
2000.
4. Disposal agreement between Syncrude Canada Ltd. and Marsulex Inc.,
made December 29, 2000, Syncrude operates an oil sands plant near
Mildred Lake, Alberta.
SCHEDULE "G"
MARSULEX AGREEMENTS
Service Performance Agreement between Marsulex and the Lender dated as of June
5, 2003
SCHEDULE "H"
DISBURSEMENT TRUST ACCOUNT
Disbursement Trust Account located at:
The Toronto-Dominion Bank
Account No.
Transit No. :
SCHEDULE "I"
PROJECT
By the terms of the Syncrude Agreements and an engineering services agreement
dated December 13, 1999, entered into between Syncrude Canada Ltd. ("SCL") and
the Guarantor, the Guarantor agreed to construct, own, operate and maintain an
ammonium sulphate fertilizer plant (the "Fertilizer Plant") at the SCL
refinery at Mildred Lake, Alberta. This project is part of a refinery
expansion by SCL to reduce ammonia and sulfur emissions released during the
refining of oil sands bitumen into crude oil. The Fertilizer Plant will
convert slurry produced by a flue gas desulphurization unit into a saleable
fertilizer product. The Guarantor assigned all of the rights and assets of the
Fertilizer Plant to the Borrower. The Borrower and SCL will work together to
maximize revenue by optimizing the marketing and distribution of the finished
fertilizer product. The Borrower will administer any contract with the
marketer and distributor of the product fertilizer including collecting and
accounting for the revenue derived from the sale of the product and paying all
marketing fees. In return, SCL will pay the Borrower a disposal fee for
processing the slurry into saleable fertilizer.
SCHEDULE "J"
LIST OF ASSETS AND CHIEF EXECUTIVE OFFICES
Marsulex Inc.
1. 111 Gordon Baker Road
Suite 300
Toronto, Ontario
M2H 3R1
with assets located in British Columbia, Alberta and Saskatchewan,
Oregon, Ohio and Illinois
Marsol Canada Corporation
1. 111 Gordon Baker Road
Suite 300
Toronto, Ontario
M2H 3R1
with assets located in Alberta
SCHEDULE "K"
PROGRESS CLAIM: REQUEST FOR DISBURSEMENT FORM
PROGRESS CLAIM: REQUEST FOR ADVANCE
TO: FIRST TREASURY FINANCIAL INC. ("Lender")
Date: o
Advance: o
Requested Advance Date: o
FROM: MARSOL CANADA CORPORATION ("Borrower")
The Borrower hereby requests an advance from the "Disbursement Trust Account"
(the "Advance") of o dollars ($o), pursuant to the terms of the Loan Agreement
dated Juneo, 2003 (the "Loan Agreement") between the Borrower and the Lender
for work completed as part of the Project. Such amount represents costs
attributable to work completed, less holdbacks and other amounts required to
be withheld under the Builders Lien Act (Alberta). Attached, as Exhibit 1 is
the Progress Report Certificate of the Independent Engineer. Terms used herein
with initial capital letters and not defined herein shall have the meanings
ascribed to them in the Loan Agreement.
The Borrower hereby certifies to the Lender that:
1. The representations and warranties of the Borrower contained in the
Loan Agreement are true and accurate in all respects as of the date
hereof, except to the extent that they specifically relate to a prior
date.
2. No event or condition has occurred and is continuing or would result
from this Disbursement which constitutes, or which could reasonably be
expected to result in, an Event of Default by the Borrower under the
Loan Agreement.
3. The Project has not been damaged by fire or other casualty and no part
of the Project has been expropriated and no proceedings therefor are
pending.
4. Construction of the Project is progressing satisfactorily so as to
ensure the timely completion thereof on or prior to the dates required
under the agreement with Syncrude Inc., and is in accordance with the
Plans and Specifications.
5. The requirements of the Builders Lien Act (Alberta) are being met and
no lien has been registered and no notice of a lien has been received
by the Borrower.
6. Any and all funds previously received by advance from the Disbursement
Trust Account have been expended or are being held in trust solely for
the purpose of paying costs for the Project; no item or construction
cost previously certified to the Lender in a Request for a Advance
remains unpaid as of the date of this certificate (except to the
extent so held in trust); and no part of said
funds has been nor any part of the funds to be received pursuant to
this Request for Advance shall be used for any other purpose.
7. The Project Cost Summary follows, including calculation of the
Advance requested :
------------------------------------------------------------------
Project Budget $56,553,425
------------------------------------------------------------------
Latest estimate of Project Cost $o
------------------------------------------------------------------
Projected Overruns (if any) $o
------------------------------------------------------------------
------------------------------------------------------------------
Costs to Date $o
------------------------------------------------------------------
Less holdbacks $o
------------------------------------------------------------------
------------------------------------------------------------------
Less Equity in Project (Cash and L.C.[NTD: what $o
letter of credit is this?])
------------------------------------------------------------------
Less total of previous Advances $o
------------------------------------------------------------------
Less Projected Overruns (if any) $o
------------------------------------------------------------------
Plus Holdbacks to be Released (if any) $o
------------------------------------------------------------------
Current request for Advance $o
------------------------------------------------------------------
8. The contracts listed in Exhibit 1:
(a) have been certified as substantially complete and a period of
45 days has elapsed with no notice of lien being received or
registered; or
(b) the rights of all potential lien claimants thereunder have
expired in accordance with the Builders Lien Act (Alberta).
Therefore holdbacks in the amount of $ o can now be released, and such
amount has been included in the Advance requested.
MARSOL CANADA CORPORATION
Per:
--------------------------------
Name:
Title:
Exhibit 1
PROGRESS REPORT CERTIFICATE [No.] OF INDEPENDENT ENGINEER
Date: o
TO: FIRST TREASURY FINANCIAL INC. ("Lender")
CC: MARSOL CANADA CORPORATION ("Borrower")
FROM: BURNS AND ROE ENTERPRISES, INC. ("Independent Engineer")
The Borrower is requesting an advance from the "Disbursement Trust Account"
for work completed to [Month] o, 2003, as part of the construction of the
Fertilizer Plant at Fort McMurray (the "Project") pursuant to the terms of the
Loan Agreement dated Juneo, 2003 (the "Loan Agreement") between the Borrower
and the Lender.
Such amount represents costs attributable to work completed, less holdbacks
and other amounts required to be withheld under the Builders Lien Act
(Alberta) and in relation to which a request for disbursement has not
previously been made. Terms used herein with initial capital letters and not
defined herein shall have the meanings ascribed to them in the Loan Agreement.
The Independent Engineer hereby certifies to the Lender that:
1. The Project has not been damaged by fire or other casualty and no part
of the Project has been expropriated and no proceedings therefor are
pending.
2. Construction of the Project is progressing satisfactorily so as to
ensure the timely completion thereof on or prior to the dates required
under the agreement with Syncrude Inc., and is in accordance with the
plans and specifications.
3. The requirements of the Builders Lien Act (Alberta) are being met and
nothing has occurred subsequent to the date of the Loan Agreement
which has resulted or may result in the creation of any lien (other
than Permitted Encumbrances as defined in the Loan Agreement), charge
or encumbrance upon the Project
4. The Project Costs to the date of the Advance Request are summarized as
follows:
------------------------------------------------------------------
Project Budget $56,553,425
------------------------------------------------------------------
Latest estimate of Project Cost $o
------------------------------------------------------------------
Projected Overruns (if any) $o
------------------------------------------------------------------
------------------------------------------------------------------
Costs to Date $o
------------------------------------------------------------------
Less holdbacks $o
------------------------------------------------------------------
Plus Holdbacks to be Released (if any) $o
------------------------------------------------------------------
Net Costs to Date $o
------------------------------------------------------------------
5. The work for which the disbursement from the Disbursement Trust
Account is requested is outlined in Exhibit 1 to this report.
6. The contracts listed in Exhibit A
(a) have been certified as substantially complete and a period of
45 days has elapsed with no notice of lien being received or
registered; or
(b) the rights of all potential lien claimants thereunder have
expired in accordance with the Builders Lien Act (Alberta).
Therefore holdbacks in the amount of $_________________ can now be
released, and such amount has been included in the Advance requested.
BURNS AND ROE ENTERPRISES, INC.
Per:
-----------------------------
Name:
Title:
EXHIBIT A
[List of contracts for which lien rights have expired and for which holdback
money is requested for release]
s