IPG HOLDINGS LP,
AS BORROWER
-and-
INTERTAPE POLYMER GROUP INC.,
AS GUARANTOR
-and-
THE TORONTO-DOMINION BANK, AS
ADMINISTRATIVE AGENT AND LENDER
as of
December 15, 1997
- ------------------------------------------------------------------------------
CREDIT AGREEMENT
US $100,000,000
- ------------------------------------------------------------------------------
HEENAN BLAIKIE
1250 Rene Levesque Blvd. West
Suite 2500
Montreal (Quebec) H3B 4Y1
Telephone: (514) 846-1212
Telecopier: (514) 846-3427
TABLE OF CONTENTS
1 INTERPRETATION ........................................................ 2
1.1 DEFINITIONS ................................................. 2
1.2 INTERPRETATION ..............................................19
1.3 CURRENCY ....................................................20
1.4 GENERALLY ACCEPTED ACCOUNTING PRINCIPLES ....................20
1.5 DIVISION AND TITLES .........................................20
2 THE CREDIT ............................................................20
2.1 THE FACILITIES ..............................................20
2.2 FACILITY A ..................................................20
2.3 FACILITY B ..................................................21
3 PURPOSE ...............................................................21
3.1 PURPOSE OF THE ADVANCES .....................................21
4 INTERPRETATION ........................................................21
4.1 NOTICE OF BORROWING .........................................21
4.2 LIBOR ADVANCES AND CONVERSIONS ..............................22
4.3 LETTERS OF CREDIT ...........................................22
4.4 CURRENCY ....................................................23
4.5 OPERATION OF ACCOUNTS .......................................23
4.6 LIMITATIONS ON ADVANCES .....................................23
4.7 NETTING .....................................................23
5 INTEREST AND FEES .....................................................23
5.1 INTEREST ON THE US PRIME RATE BASIS .........................23
5.2 PAYMENT OF INTEREST ON THE US PRIME RATE BASIS ..............24
5.3 INTEREST ON THE LIBOR BASIS .................................24
5.4 PAYMENT OF INTEREST ON THE LIBOR BASIS ......................24
5.5 LIMITS TO THE DETERMINATION OF LIBOR ........................25
5.6 FIXING OF LIBOR .............................................25
5.7 INTEREST ON THE LOAN ........................................25
5.8 ARREARS OF INTEREST .........................................25
5.9 MAXIMUM INTEREST RATE .......................................25
5.10 FEES ........................................................25
5.11 INTEREST ACT ................................................26
6 RESTRICTIONS, LIMITATIONS AND MARKET CONDITIONS .......................26
6.1 MARKET FOR LIBOR ADVANCES ...................................26
6.2 SUSPENSION OF LIBOR ADVANCE OPTION ..........................27
6.3 LIMITS ON THE LETTERS OF CREDIT AND LIBOR ADVANCES ..........27
7 CHANGES IN CIRCUMSTANCES, INCREASED FEES AND INDEMNIFICATION ..........27
7.1 ILLEGALITY, INCREASED COSTS .................................27
7.2 INDEMNITY ...................................................29
7.3 WITHHOLDING TAXES ...........................................29
7.4 SURVIVAL ....................................................29
8 PAYMENT, REPAYMENT AND PREPAYMENT......................................30
8.1 REPAYMENT OF THE LOAN .......................................30
8.2 PREPAYMENT, REDUCTION AND CANCELLATION OF THE CREDIT ........30
8.3 PAYMENT OF LOSSES RESULTING FROM A PREPAYMENT ...............30
8.4 IMPUTATION OF PREPAYMENTS ...................................31
8.5 CURRENCY OF PAYMENTS ........................................31
8.6 PAYMENTS BY THE BORROWER TO THE LENDER ......................31
8.7 PAYMENT ON A BUSINESS DAY ...................................31
8.8 PAYMENTS BY LENDER TO THE BORROWER ..........................31
8.9 APPLICATION OF PAYMENTS .....................................31
8.10 NO SET-OFF OR COUNTERCLAIM BY BORROWER ......................32
8.11 DEBIT AUTHORIZATION .........................................32
9 CONDITIONS PRECEDENT ..................................................32
9.1 INITIAL ADVANCE UNDER THE CREDIT ............................32
9.2 CONDITIONS PRECEDENT TO ANY ADVANCE .........................34
10 REPRESENTATIONS AND WARRANTIES ........................................34
10.1 INCORPORATION ...............................................35
10.2 AUTHORIZATION ...............................................35
10.3 COMPLIANCE OF THIS AGREEMENT ................................35
10.4 BUSINESS ....................................................36
10.5 FINANCIAL STATEMENTS ........................................36
10.6 TITLE TO ASSETS .............................................36
10.7 LITIGATION ..................................................36
10.8 TAXES .......................................................37
10.9 INSURANCE ...................................................37
10.10 NO ADVERSE CHANGE ...........................................37
10.11 REGULATORY APPROVALS ........................................37
10.12 COMPLIANCE WITH LAWS ........................................37
10.13 FOREIGN ASSETS CONTROL REGULATIONS, ETC. ....................37
10.14 PENSION AND EMPLOYMENT LIABILITIES, COMPLIANCE WITH ERISA ...38
10.15 PRIORITY ....................................................39
10.16 COMPLETE AND ACCURATE INFORMATION ...........................39
10.17 EVENT OF DEFAULT ............................................39
10.18 AGREEMENTS WITH THIRD PARTIES ...............................40
10.19 ENVIRONMENT .................................................40
10.20 SURVIVAL OF REPRESENTATIONS AND WARRANTIES ..................41
11 POSITIVE COVENTANTS ...................................................41
11.1 PRESERVATION OF JURIDICAL PERSONALITY .......................41
11.2 PRESERVATION OF LICENSES ....................................41
11.3 COMPLIANCE WITH APPLICABLE LAWS .............................41
11.4 MAINTENANCE OF ASSETS .......................................42
11.5 BUSINESS ....................................................42
11.6 INSURANCE ...................................................42
11.7 PAYMENT OF TAXES AND DUTIES .................................42
11.8 ACCESS AND INSPECTION .......................................42
11.9 MAINTENANCE OF ACCOUNT ......................................43
11.10 PERFORMANCE OF OBLIGATIONS ..................................43
11.11 MAINTENANCE OF RATIOS .......................................43
11.12 PAYMENT OF LEGAL FEES AND OTHER EXPENSES ....................43
11.13 FINANCIAL REPORTING .........................................44
11.14 NOTICE OF CERTAIN EVENTS ....................................46
11.15 ACCURACY OF REPORTS .........................................47
11.16 LENDER'S OPTION TO OBTAIN IMPROVED TERMS AND CONDITIONS .....47
11.17 DESIGNATION OF RESTRICTED SUBSIDIARIES ......................47
12 NEGATIVE COVENANTS ....................................................47
12.1 LIQUIDATION, AMALGAMATION, MERGERS, CONSOLIDATIONS AND SALE
OF ASSETS ..............................................48
12.2 LIMITATIONS ON DEBT .........................................49
12.3 BORROWER'S BUSINESS .........................................50
12.4 CHARGES .....................................................51
12.5 RESTRICTED INVESTMENTS AND RESTRICTED PAYMENTS ..............51
12.6 TRANSACTIONS WITH AFFILIATES ................................52
12.7 TERMINATION OF PENSION PLANS ................................53
12.8 OWNERSHIP OF SUBSIDIARIES ...................................53
13 EVENTS OF DEFAULT AND REALIZATION .....................................53
13.1 EVENT OF DEFAULT ............................................53
13.2 REMEDIES ....................................................55
13.3 BANKRUPTCY AND INSOLVENCY ...................................56
13.4 APPLICATION OF PROCEEDS .....................................56
13.5 NOTICE ......................................................56
13.6 COSTS .......................................................56
13.7 RELATIONS WITH THE BORROWER .................................57
14 JUDGMENT CURRENCY .....................................................57
14.1 RULES OF CONVERSION .........................................57
14.2 DETERMINATION OF AN EQUIVALENT CURRENCY .....................57
15 ASSIGNMENT ............................................................58
15.1 ASSIGNMENT BY THE BORROWER ..................................58
15.2 ASSIGNMENTS AND TRANSFERS BY THE LENDER .....................58
15.3 TRANSFER AGREEMENT ..........................................59
15.4 NOTICE ......................................................59
15.5 SUB-PARTICIPATIONS ..........................................59
15.6 GENERAL .....................................................60
TABLE OF CONTENTS
16 RELATIONSHIP WITH AND BETWEEN THE LENDERS .............................60
16.1 ALLOCATION AS BETWEEN THE LENDERS ...........................60
16.2 ACCOUNT OPERATIONS ..........................................61
16.3 SHARING OF INFORMATION ......................................61
16.4 LIABILITY OF THE LENDERS ....................................61
16.5 INTERLENDER AGREEMENT .......................................61
17 MISCELLANEOUS .........................................................62
17.1 NOTICES .....................................................62
17.2 AMENDMENT AND WAIVER ........................................62
17.3 DETERMINATIONS FINAL ........................................62
17.4 ENTIRE AGREEMENT ............................................62
17.5 INDEMNIFICATION AND COMPENSATION ............................63
17.6 BENEFIT OF AGREEMENT ........................................63
17.7 COUNTERPARTS ................................................63
17.8 APPLICABLE LAW ..............................................63
17.9 SEVERABILITY ................................................63
17.10 FURTHER ASSURANCES ..........................................64
17.11 GOOD FAITH AND FAIR CONSIDERATION ...........................64
17.13 INDEMNITY ...................................................64
17.13 JURISDICTION AND SERVICE IN RESPECT OF THE GUARANTOR AND
THE BORROWER ...........................................65
17.14 UNDERTAKING AND REPRESENTATION OF
THE TORONTO-DOMINION BANK ..............................65
17.15 LANGUAGE ....................................................65
18 FORMAL DATE ...........................................................66
18.1 FORMAL DATE .................................................66
SCHEDULE "A" -- LIST OF LENDERS AND PARTICIPATIONS
SCHEDULE "B" -- NOTICE OF BORROWING AND CERTIFICATE
SCHEDULE "C" -- IPG GUARANTEE
SCHEDULE "D" -- TRANSFER AGREEMENT
SCHEDULE "E" -- RESTRICTED SUBSIDIARIES
SCHEDULE "F" -- OFFICER'S CERTIFICATE
SCHEDULE "G" -- OPINION
SCHEDULE "H" -- LITIGATION
SCHEDULE "I" -- ERISA AFFILIATES AND PLANS
SCHEDULE "I-1" -- ERISA DISCLOSURE
SCHEDULE "J" -- EXISTING SECURITY
SCHEDULE "K" -- INTERLENDER AGREEMENT
CREDIT AGREEMENT entered into in the City of New York, State of New York, as
of December 15, 1997,
BETWEEN: IPG HOLDINGS LP, a limited partnership
constituted in accordance with the laws of
the State of Delaware, having its registered
office c/o RL&F Service Corp, One Rodney
Square, Tenth floor, Tenth and King Streets,
in the City of Wilmington, State of Delaware
(hereinafter called the "BORROWER"),
represented herein by its general partner,
INTERTAPE POLYMER INC., having its principal
place of business at 110E Montee de Liesse,
in the City of St. Laurent, Province of
Quebec
PARTY OF THE FIRST PART
AND: INTERTAPE POLYMER GROUP INC., a company
constituted in accordance with the laws of
Canada, having its principal place of
business at 110E Montee de Liesse, in the
City of St. Laurent, Province of Quebec
(hereinafter called the "GUARANTOR")
PARTY OF THE SECOND PART
AND: THE TORONTO-DOMINION BANK, a banking
corporation organized under the laws of
Canada, acting by and through its Houston
Agency, having an office at 909 Fannin
Street, Suite 1700, in the City of Houston,
State of Texas, 77010, acting as
administrative agent and as Lender
(hereinafter called the "LENDER")
PARTY OF THE THIRD PART
WHEREAS the Borrower wishes to borrow certain amounts from the Lender
and the Lender has agreed to lend such amounts to the Borrower, subject to
and in accordance with the provisions hereof;
NOW THEREFORE, THE PARTIES HERETO HAVE AGREED AS FOLLOWS:
1 INTERPRETATION
1.1 DEFINITIONS
The following words and expressions, when used in this Agreement, in the
Schedules hereto or in any deed or agreement supplementary hereto, unless
the contrary is stipulated, have the following meaning:
1.1.1 "ADVANCE" means any advance by the Lender under this
Agreement, including direct Advances by way of US Prime Rate
Advances and Libor Advances, and indirect Advances by way of
Letters of Credit;
1.1.2 "AFFILIATE" means any Person (other than a Restricted
Subsidiary) (i) which directly or indirectly through one or more
intermediaries controls, or is controlled by, or is under common
control with, the Guarantor, (ii) which beneficially owns or holds
5% or more of any class of the Voting Stock of the Guarantor or
(iii) 5% or more of the Voting Stock (or in the case of a Person
which is not a corporation, 5% or more of the equity interest) of
which is beneficially owned or held by the Guarantor or a
Subsidiary. The term "CONTROL" means the possession, directly or
indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership
of Voting Stock, by contract or otherwise;
1.1.3 "AGREEMENT", "CREDIT AGREEMENT", "THESE PRESENTS", "HEREIN",
"HEREBY", "HEREUNDER" and other similar expressions refer
collectively to this Credit Agreement and the Schedules hereto and
include any deed or document which is supplementary or accessory or
which is made in order to complete this Agreement;
1.1.4 "ASSIGNMENT" means an assignment of all or a portion of the
Lender's rights and obligations under this Agreement in accordance
with Sections 15.2 and 15.3, and "ASSIGNEE" has the meaning
ascribed to it in subsection 15.2.1;
1.1.5 "ATC" means American Tape Corporation;
1.1.6 "AVAILABLE CASH" means cash and Cash Equivalents which are
freely available to the Guarantor or the Restricted Subsidiaries,
in that there are no restrictions of any nature whatsoever on the
Guarantor's or the Restricted Subsidiaries' access thereto
including any restrictions arising out of any (i) agreement, (ii)
incorporating, constituting or charter documents, (iii) foreign
exchange or currency controls, (iv) Law, (v) Charge, or (vi)
otherwise;
2
1.1.7 "BRANCH" means the office of the Lender located at 909
Fannin, Suite 1700, Houston, Texas, 77010, or any other office
designated by the Lender from time to time by notice to the
Borrower;
1.1.8 "BUSINESS DAY" means any day, except Saturdays, Sundays and
other days which in New York, New York, London (England) or
Montreal, Quebec, are holidays or a day upon which banks in such
locations are generally not open for business;
1.1.9 "CAPITALIZED LEASE" means any lease (i) the obligation for
Rentals with respect to which is required to be capitalized on a
consolidated balance sheet of the lessee and its Subsidiaries in
accordance with GAAP or (ii) for which the amount of the asset and
liability thereunder as if so capitalized should be disclosed in a
note to such balance sheet;
1.1.10 "CAPITALIZED RENTALS" of any Person means as of the
date of any determination thereof the amount at which the aggregate
Rentals due and to become due under all Capitalized Leases under
which such Person is a lessee would be reflected as a liability on
a consolidated balance sheet of such Person.
1.1.11 "CASH EQUIVALENTS" means, as of the date of any
determination thereof, Investments of the type described in clauses
1.1.75.2, 1.1.75.3 and 1.1.75.4 of the definition of the term
"Restricted Investments".
1.1.12 "CDN. $" means the lawful currency of Canada;
1.1.13 "CHARGE" means any right to any property, or the income
or benefits flowing therefrom, which secures an obligation due to a
Person or a claim of such Person, whether such interest is based on
the common law, statute or contract, and includes any security
interest, hypothec, pledge, pawn, mortgage, privilege, prior claim,
lien, charge, assignment, transfer, cession, encumbrance,
Capitalized Lease, conditional sale or trust receipt or a lease in
which such Person is lessor, consignment or bailment for security
purposes. The term "Charge" shall include reservations,
exceptions, encroachments, easements, rights-of-way, covenants,
conditions, restrictions, leases and other title exceptions and
encumbrances (including, with respect to stock, stockholder
agreements, voting trust agreements, buy-back agreements and all
similar arrangements) affecting property. For the purposes of this
Agreement, the Guarantor or a Restricted Subsidiary shall be deemed
to be the owner of any property which it has acquired or holds
subject to a conditional sale agreement, Capitalized Lease or other
arrangement pursuant to which title to the property has been
retained by or vested in some other Person for security purposes
and such retention or vesting shall constitute a Charge;
3
1.1.14 "CLOSING DATE" means December 15, 1997;
1.1.15 "CODE" means the Internal Revenue Code of 1986, as
amended;
1.1.16 "CONSOLIDATED" means produced by aggregating the
relevant financial statements or accounts of the Subsidiaries (or
other Persons which, in accordance with GAAP, are to be included in
such computation) of a Person on a line-by-line basis (i.e.: adding
together corresponding items of assets, liabilities, revenues and
expenses) with the relevant financial statements or accounts of
such Person, eliminating inter-company balances and transactions
and providing for any Minority Interests, all as determined in
accordance with GAAP; for greater certainty, the Consolidated
ratios contemplated by Section 11.11 with respect to the Guarantor
shall include its Restricted Subsidiaries as well as all
Unrestricted Subsidiaries the Debt of which is guaranteed by the
Guarantor;
1.1.17 "CONSOLIDATED ASSETS" means, as of the date of any
determination thereof, the Consolidated total assets of the
Guarantor and its Restricted Subsidiaries determined in accordance
with GAAP (excluding, in any event, assets or equity attributable
to Unrestricted Subsidiaries);
1.1.18 "CONSOLIDATED CURRENT LIABILITIES" means as of the date
of any determination thereof such liabilities of the Guarantor and
its Restricted Subsidiaries on a Consolidated basis as shall be
determined in accordance with GAAP to constitute current
liabilities (excluding, in any event, liabilities attributable to
Unrestricted Subsidiaries);
1.1.19 "CONSOLIDATED NET INCOME" for any period means the
gross revenues of the Guarantor and its Restricted Subsidiaries for
such period less all expenses and other proper charges (including
taxes on income), determined on a Consolidated basis after
eliminating earnings or losses attributable to outstanding Minority
Interests, but excluding in any event:
1.1.19.1 any gains or losses (i) on the sale or other
disposition of Investments or fixed or capital assets, and
any taxes on such excluded gains and any tax deductions or
credits on account of any such excluded losses or (ii)
attributable to any non-recurring or extraordinary items
including, without limitation, any discontinuance of
operations;
1.1.19.2 the proceeds of any life insurance policy;
1.1.19.3 net earnings and losses of any Restricted
Subsidiary accrued prior to the date it became a Restricted
Subsidiary;
4
1.1.19.4 net earnings and losses of any corporation (other
than a Restricted Subsidiary), substantially all the assets
of which have been acquired in any manner by the Guarantor or
any Restricted Subsidiary, realized by such corporation prior
to the date of such acquisition;
1.1.19.5 net earnings and losses of any corporation (other
than a Restricted Subsidiary) with which the Guarantor or a
Restricted Subsidiary shall have consolidated or which shall
have merged into or with the Guarantor or a Restricted
Subsidiary prior to the date of such consolidation or merger;
1.1.19.6 net earnings of any business entity (other than a
Restricted Subsidiary) in which the Guarantor or any
Restricted Subsidiary has an ownership interest unless such
net earnings shall have actually been received by the
Guarantor or such Restricted Subsidiary in the form of cash
distributions;
1.1.19.7 any portion of the net earnings of any Restricted
Subsidiary which for any reason is unavailable for payment of
dividends to the Guarantor or any other Restricted
Subsidiary;
1.1.19.8 earnings resulting from any reappraisal,
revaluation or write-up of assets;
1.1.19.9 any deferred or other credit representing any
excess of the equity in any Subsidiary at the date of
acquisition thereof over the amount invested in such
Subsidiary;
1.1.19.10 any gain arising from the acquisition of any
Securities of the Guarantor or any Restricted Subsidiary; and
1.1.19.11 any reversal of any contingency reserve, except to
the extent that provision for such contingency reserve shall
have been made from income arising during such period;
1.1.20 "CONSOLIDATED NET WORTH" means, as of the date of any
determination thereof, the consolidated total shareholders' equity
of the Guarantor and its Restricted Subsidiaries, determined in
accordance with GAAP, but, in any event (a) excluding any amount of
such shareholders' equity allocable or attributable to (i) Minority
Interests and (ii) all Restricted Investments by the Guarantor or
any Restricted Subsidiary;
5
1.1.21 "CONSOLIDATED TOTAL CAPITALISATION" means, as of the
date of any determination thereof, the sum of (i) the aggregate
principal amount of Consolidated Funded Debt then outstanding PLUS
(ii) Consolidated Net Worth;
1.1.22 "CURRENT DEBT" of any Person means as of the date of
any determination thereof all Debt of such Person other than Funded
Debt of such Person;
1.1.23 "CREDIT" has the meaning ascribed thereto in Section
2.1 hereof;
1.1.24 "DEBT" of any Person means, as of the date of any
determination thereof (without duplication):
1.1.24.1 all Indebtedness for borrowed money or evidenced
by notes, bonds, debentures or similar evidences of
Indebtedness of such Person;
1.1.24.2 obligations secured by any Charge upon property
owned by such Person or created or arising under any
conditional sale or other title retention agreement with
respect to property acquired by such Person, notwithstanding
the fact that the rights and remedies of the seller, lender
or lessor under any such arrangement in the event of default
are limited to repossession or sale of property including,
without limitation, obligations secured by Charges arising
from the sale or transfer of notes or accounts receivable,
but, in all events, excluding trade payables and accrued
expenses constituting Consolidated Current Liabilities;
1.1.24.3 Capitalized Rentals;
1.1.24.4 reimbursement obligations in respect of credit
enhancement instruments including letters of credit
(excluding, however, short-term letters of credit and surety
bonds issued in commercial transactions in the ordinary
course of business); and
1.1.24.5 (without duplication of any of the foregoing)
Guarantees of obligations of others of the character referred
to hereinabove in this definition;
1.1.25 "DEFAULT" means an event or circumstances, the
occurrence or non-occurrence of which would, with the giving of a
notice, lapse of time or combination thereof, constitute an Event
of Default unless remedied within the prescribed delays or
renounced to in writing by the Lender;
6
1.1.26 "DESIGNATED PERIOD" means, with respect to the Libor
Advance, a period designated by the Borrower in accordance with
Section 4.2;
1.1.27 "DISBURSEMENT PERIOD" means, with respect to each of
the Facilities, the period from the date of the satisfaction of the
conditions precedent set out in Section 9.1 until:
1.1.27.1 with respect to Facility A, the expiry of the
Term; and
1.1.27.2 with respect to Facility B, five (5) Business Days
following the Closing Date;
1.1.28 "EBITDA" means, during a fiscal period, the
Consolidated Net Income of the Guarantor plus Interest Expense,
taxes, depreciation and amortization, calculated on a Consolidated
basis in accordance with GAAP;
1.1.29 "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended, and any successor statute of similar
import, together with the regulations thereunder, in each case as
in effect from time to time. References to sections of ERISA shall
be construed to also refer to any successor sections.
1.1.30 "ERISA AFFILIATE" means any corporation, trade or
business that is, along with the Borrower or the Guarantor, a
member of a controlled group of corporations or a controlled group
of trades or businesses, as described in section 414(b) and 414(c),
respectively, of the Code or Section 4001 of ERISA.
1.1.31 "EXTENSION REQUEST" means a request by the Borrower
and the Guarantor to extend the Term for an additional 12 months,
the whole in accordance with the provisions of Section 2.2;
1.1.32 "EVENT OF DEFAULT" means one or more of the events
described in Section 13.1;
1.1.33 "FACILITY A" means the portion of the Advances
available pursuant to subsection 2.1.1;
1.1.34 "FACILITY B" means the portion of the Advances
available pursuant to subsection 2.1.2;
1.1.35 "FEES" means the fees payable to the Lender in
accordance with the provisions of Section 5.10;
1.1.36 "FIRST CURRENCY" has the meaning ascribed to it in
Section 14.1;
7
1.1.37 "FIXED CHARGES" for any period means on a Consolidated
basis the sum of (i) all Rentals (other than Rentals on Capitalized
Leases) payable during such period by the Guarantor and its
Restricted Subsidiaries, and (ii) all Interest Expense on all
Indebtedness (including the interest component of Rentals on
Capitalized Leases) of the Guarantor and its Restricted
Subsidiaries.
1.1.38 "FUNDED DEBT" of any Person means all Debt of such
Person having a final maturity of one or more than one year from
the date of origin thereof (or which is renewable or extendible at
the option of the obligor for a period or periods of one or more
than one year from the date of origin), including all payments in
respect thereof that are required to be made within one year from
the date of any determination of Funded Debt, whether or not the
obligation to make such payments shall constitute a current
liability of the obligor under GAAP;
1.1.39 "GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" or "GAAP"
means the generally accepted accounting principles acknowledged by
the Canadian Institute of Chartered Accountants and published in
the Canadian Institute of Chartered Accountants' Handbook;
1.1.40 "GUARANTEES" by any Person means all obligations (other
than endorsements in the ordinary course of business of negotiable
instruments for deposit or collection) of such Person guaranteeing,
or in effect guaranteeing, any Indebtedness, dividend or other
obligation of any other Person (the "PRIMARY OBLIGOR") in any
manner, whether directly or indirectly, including, without
limitation, all obligations incurred through an agreement,
contingent or otherwise, by such Person: (a) to purchase such
Indebtedness or obligation or any property or assets constituting
security therefor, (b) to advance or supply funds (i) for the
purchase or payment of such Indebtedness or obligation, or (ii) to
maintain working capital or other balance sheet condition or
otherwise to advance or make available funds for the purchase or
payment of such Indebtedness or obligation, (c) to lease property
or to purchase Securities or other property or services primarily
for the purpose of assuring the owner of such Indebtedness or
obligation, or (d) otherwise to assure the owner of the
Indebtedness or obligation of the Primary Obligor against loss in
respect thereof. For the purposes of all computations made under
this Agreement, a Guarantee in respect of any Indebtedness for
borrowed money which has been guaranteed, and a Guarantee in
respect of any other obligation or liability or any dividend, shall
be deemed to be Indebtedness equal to the maximum aggregate amount
of such obligation, liability or dividend.
1.1.41 "GUARANTOR" means INTERTAPE POLYMER GROUP INC., and any
Person who succeeds to all, or substantially all, of the assets and
business of INTERTAPE POLYMER GROUP INC.;
8
1.1.42 "INDEBTEDNESS" of any Person means and includes all
obligations of such Person which in accordance with GAAP shall be
classified upon a balance sheet of such Person as liabilities of
such Person, and in any event shall include all (a) obligations of
such Person for borrowed money or which has been incurred in
connection with the acquisition of property or assets, (b)
obligations secured by any Charge upon property or assets owned by
such Person, even though such Person has not assumed or become
liable for the payment of such obligations, (c) obligations created
or arising under any conditional sale or other title retention
agreement with respect to property acquired by such Person,
notwithstanding the fact that the rights and remedies of the
seller, lender or lessor under such agreement in the event of
default are limited to repossession or sale of property, (d)
Capitalized Rentals and (e) Guarantees of obligations of others of
the character referred to in this definition.
1.1.43 "INTEREST EXPENSE" for any period means all interest
and all amortization of debt discount and expense on any particular
Indebtedness for which such calculations are being made.
Computations of Interest Expense on a PRO FORMA basis for
Indebtedness having a variable interest rate shall be calculated at
the rate in effect on the date of any determination;
1.1.44 "INVESTMENTS" means all investments, in cash or by
delivery of property made, directly or indirectly in any Person,
whether by acquisition of shares of capital stock, Indebtedness or
other obligations or Securities or by loan, advance, capital
contribution or otherwise; PROVIDED, HOWEVER, that "Investments"
shall not mean or include routine investments in property to be
used or consumed in the ordinary course of business;
1.1.45 "IPG GUARANTEE" means the Guarantee by the Guarantor of
the obligations of the Borrower to the Lender, in the form of
Schedule "C";
1.1.46 "LAWS" or "LAW" means all applicable provisions of all
laws, ordinances, decrees, orders, rules, regulations and
directives of governmental bodies, and all applicable provisions of
treaties as well as all ordinances and other decrees of tribunals
and arbitrators;
1.1.47 "LENDER" means The Toronto-Dominion Bank, acting
through its Houston Agency, and any Assignee, in accordance with
the provisions of Section 15.2;
1.1.48 "LETTER OF CREDIT" means a stand-by letter of credit or
a letter of guarantee issued by the Lender in accordance with the
provisions hereof;
1.1.49 "LIBOR" means, with respect to any Designated Period
relating to a Libor Advance, the interest rate which the Lender or
any Assignee, in accordance
9
with its normal practice, would be prepared to offer to the major
banks in the London interbank market for delivery on the first
day of each of the relevant Rollover Dates for a period equal to
the Designated Period, based on the number of days included in
such periods, in respect of US Dollar deposits in amounts
comparable to each Selected Amount, to become due at or about the
expiry of such Designated Period, determined at or about 11:00
A.M., London, England time, two Business Days prior to a drawdown
date or Rollover Date in accordance with Section 5.6;
1.1.50 "LIBOR ADVANCE" means, at any time, the part of the
Advances with respect to which the Borrower has chosen to pay
interest on the Libor Basis;
1.1.51 "LIBOR BASIS" means the basis of calculation of
interest on the Advances or any part thereof, in accordance with
the provisions of Sections 5.3, 5.5 and 5.6;
1.1.52 "LIKE ASSETS" means, as of the date of any
determination thereof, capital assets, used or to be used by the
Guarantor or any Restricted Subsidiary in the lines of business in
which the Guarantor or such Restricted Subsidiary is engaged as of
the Closing Date or in a business reasonably related thereto;
1.1.53 "LLC DOCUMENTS" has the meaning ascribed to it in
subsection 9.1.3;
1.1.54 "LOAN" means, at any time, the aggregate of the
Advances outstanding in accordance with the provisions hereof,
including the face amount of any Letters of Credit issued in
accordance with the provisions hereof, together with any other
amount in principal, interest and accessory costs payable to the
Lender by the Borrower pursuant hereto;
1.1.55 "LONG-TERM LEASE" means any lease of real or personal
property (other than a Capitalized Lease) having an original term,
including any period for which the lease may be renewed or extended
at the option of the lessor, of more than three years;
1.1.56 "MARGIN" means, with respect to Sections 4.3, 5.1 and
5.10:
10
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of Total Debt to
Consolidated Total Standby Fee with respect US Prime Rate plus Libor plus;
Capitalization to Facility A Letter of Credit Fee
- ---------------------------------------------------------------------------------------------------------------------------------
LESS THAN OR EQUAL TO 30% .12% 0% .95%
- ---------------------------------------------------------------------------------------------------------------------------------
LESS THAN OR EQUAL TO 35% .12% 0% 1.0%
- ---------------------------------------------------------------------------------------------------------------------------------
LESS THAN OR EQUAL TO 40% .15% 0% 1.025%
- ---------------------------------------------------------------------------------------------------------------------------------
LESS THAN OR EQUAL TO 50% .20% 0% 1.062%
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
The foregoing grid also shows the amount of the Standby Fee
referred to in Section 5.10 and the fees payable in respect of
Letters of Credit in accordance with the provisions of Section 4.3,
and will be applicable provided that the ratio of Total Funded Debt
to EBITDA remains below 4:1 at all times, failing which each of the
Margins indicated above other than those dealing with Standby Fees
will increase by .25%, and the applicable Margin dealing with
Standby Fees will increase by .05%.
In addition, once all Loans under Facility B have been repaid and
the Borrower has no further right to borrow under Facility B, the
above grid will be replaced by the following:
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of Total Debt to
Consolidated Total Standby Fee with respect US Prime Rate plus Libor plus;
Capitalization to Facility A Letter of Credit Fee
- ---------------------------------------------------------------------------------------------------------------------------------
LESS THAN OR EQUAL TO 30% .12% 0% .40%
- ---------------------------------------------------------------------------------------------------------------------------------
LESS THAN OR EQUAL TO 35% .12% 0% .50%
- ---------------------------------------------------------------------------------------------------------------------------------
LESS THAN OR EQUAL TO 40% .15% 0% .55%
- ---------------------------------------------------------------------------------------------------------------------------------
LESS THAN OR EQUAL TO 50% .20% 0% .625%
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
The foregoing grid also shows the amount of the Standby Fee
referred to in Section 5.10 and the fees payable in respect of
Letters of Credit in accordance with the provisions of Section 4.3,
and will be applicable provided that the ratio of Total Funded Debt
to EBITDA remains below 4:1 at all times, failing which each of the
Margins indicated above other than those dealing with Standby Fees
will increase by .25%, and the applicable Margin dealing with
Standby Fees will increase by .05%;
1.1.57 "MATERIAL ADVERSE CHANGE" means a material adverse
change in the business, assets, liabilities, financial position,
operating results or business prospects of the Guarantor or any of
the Restricted Subsidiaries, or in the ability of the
11
Borrower or the Guarantor to perform any of its obligations under
this Agreement or under the IPG Guarantee;
1.1.58 "MATERIAL DEBT" means any Debt which has or relates to,
in the aggregate, an unpaid principal amount (or aggregate
liability) of more than US $5,000,000 or an equivalent amount of
money in any other currency;
1.1.59 "MINORITY INTERESTS" means any shares of stock of any
class of a Restricted Subsidiary (other than directors' qualifying
shares as required by law) that are not owned by the Guarantor
and/or one or more of its Restricted Subsidiaries. Minority
Interests shall be valued by valuing Minority Interests
constituting preferred stock at the voluntary or involuntary
liquidating value of such preferred stock, whichever is greater,
and by valuing Minority Interests constituting common stock at the
book value of capital and surplus applicable thereto adjusted, if
necessary, to reflect any changes from the book value of such
common stock required by the foregoing method of valuing Minority
Interests in preferred stock;
1.1.60 "MULTIEMPLOYER PLAN" shall have the same meaning as in
ERISA;
1.1.61 "NET INCOME AVAILABLE FOR FIXED CHARGES" for any period
means the sum of Consolidated Net Income during such period plus
(to the extent deducted in determining Consolidated Net Income),
(a) all provisions for any Federal, state, provincial or other
income taxes made by the Guarantor and its Restricted Subsidiaries
during such period, (b) Fixed Charges of the Guarantor and its
Restricted Subsidiaries during such period and (c) all amortization
expenses.
1.1.62 "NOTE AGREEMENT" means the agreements entered into by
the Guarantor dated as of January 1, 1996, with respect to the
issuance and sale of three series of senior notes in an aggregate
principal amount of US $33,000,000, and "NOTES" means the Notes
issued thereunder;
1.1.63 "NOTICE OF BORROWING" means a notice transmitted to the
Lender by the Borrower in accordance with the provisions of
Sections 4.1, 4.2 or 4.3;
1.1.64 "PARTICIPATION" means the portion of the Credit for
which the Lender is responsible, as set out in Schedule "A" hereof;
1.1.65 "PBGC" means the Pension Benefit Guaranty Corporation
and any entity succeeding to any or all of its functions under
ERISA.
1.1.66 "PERMITTED CHARGES" means the CB/ATC Temporary Charges
(as defined in subsection 9.1.1) and
12
1.1.66.1 any Charge created by law that is assumed in the
ordinary course of business and in order to exercise same,
which has not at such date been registered in accordance with
applicable Laws against the Guarantor or its Restricted
Subsidiaries, which relates to obligations which are not yet
due, which is not related to any loan of money or obtention
of credit and which, in the aggregate, do not affect in a
material way the use, the income or the benefits flowing from
the property so charged in the conduct of the business of
such Person; any Charge resulting from judgments or decisions
which the Borrower has, at such date, appealed or in respect
of which it has sought revision and obtained a suspension of
execution pending the appeal or the revision; any Charge for
taxes, assessments or governmental claims or other
impositions not yet due or matured or in respect of which the
validity at such date has been contested in good faith by the
Borrower before a competent tribunal or other governmental
body in accordance with the provisions of Section 11.7; or
which relates to a deposit of monies or securities in the
ordinary course of business with respect to any Charge
referred to in this paragraph, or to secure workman's
compensation, surety or appeal bonds or security for costs of
litigation;
1.1.66.2 any right of a municipality, governmental body or
other public authority pursuant to any lease, license,
franchise, grant or permit obtained by the Guarantor or a
Restricted Subsidiary, or any right resulting from a
legislative provision, to terminate such lease, license,
franchise, grant or permit, or requiring an annual or
periodic payment as a condition of its extension;
1.1.66.3 any real right granted by the Guarantor or a
Restricted Subsidiary to a public body, or to a municipal or
governmental authority or public utility, or which may be
imposed by one or the other, when required by such body or
authority with respect to the operations of the Guarantor or
a Restricted Subsidiary or in the ordinary course of its
business;
1.1.66.4 real rights granted in favour of municipal
authorities or public utilities on real property acquired
from time to time by the Guarantor or a Restricted Subsidiary
during the Term which do not adversely affect the value or
marketability of the Guarantor's or a Restricted Subsidiary's
real property;
1.1.66.5 minor title defects, homologated lines, zoning and
building by-laws, ordinances, regulations and other
governmental restrictions on the use of property which
customarily exist on properties of Persons
13
engaged in similar activities and similarly situated and
which do not, in any event, materially impair their use in
the operation of the businesses carried on by the
Guarantor or the relevant Restricted Subsidiary;
1.1.66.6 Charges securing Indebtedness of a Restricted
Subsidiary to the Guarantor or to another Wholly-owned
Restricted Subsidiary, or Charges on shares of stock of
Unrestricted Subsidiaries;
1.1.66.7 Charges on assets of the Guarantor or any
Restricted Subsidiary relating to so-called "operating lines"
or short-term or revolving bank facilities to the extent that
such assets consist of inventory or receivables of the
Guarantor or any Restricted Subsidiary;
1.1.66.8 Charges incurred after the Closing Date given to
secure the payment of the purchase price incurred in
connection with (and within twelve months of) the acquisition
after the Closing Date of fixed assets useful and intended to
be used in carrying on the business of the Guarantor or a
Restricted Subsidiary, including Charges existing on such
fixed assets at the time of acquisition thereof or at the
time of acquisition by the Guarantor or a Restricted
Subsidiary of any business entity then owning such fixed
assets, whether or not such existing Charges were given to
secure the payment of the purchase price of the fixed assets
to which they attach so long as they were not incurred,
extended or renewed in contemplation of such acquisition,
provided that (a) the Charges shall attach solely to the
fixed assets acquired or purchased, (b) at the time of
acquisition of such fixed assets, the aggregate amount
remaining unpaid on all Indebtedness secured by Charges on
such fixed assets whether or not assumed by the Guarantor or
a Restricted Subsidiary shall not exceed an amount equal to
the lesser of the total purchase price or fair market value
at the time of acquisition of such fixed assets (as
determined in good faith by the Board of Directors of the
Guarantor), and (c) all such Indebtedness shall have been
incurred within the other applicable limitations of
subsection 11.11.1 and Section 12.2;
1.1.66.9 security which is already encumbering assets
acquired by the Guarantor or a Restricted Subsidiary prior to
the date hereof and described in Schedule "J";
provided that after giving effect to the incurrence of all Debt
secured by such Charges, (a) the aggregate Secured Priority Debt
(as defined in subsection 12.2.1 (c)) shall not exceed 20% of
Consolidated Net Worth, and, together with the aggregate
14
Unsecured Priority Debt (as defined in subsection 12.2.1 (c)),
shall not exceed an amount equal to Cdn. $60,000,000 and (b) all
such Debt shall have been incurred within the other applicable
limitations of subsection 11.11.1 and Section 12.2; provided
further, however, that except for the Charges permitted by
subsection 1.1.66.7, the Guarantor will not, and will not permit
any Restricted Subsidiary to, incur or maintain any such
operating lines or short-term or revolving bank facilities
secured by Charges on any assets of the Guarantor or any
Restricted Subsidiary;
1.1.67 "PERSON" means a moral person, a physical person, a
joint venture, a partnership, a limited liability company, a trust,
an entity without juridical personality, a government or any
ministry, organization or intermediary of such government;
1.1.68 "PLAN" means a "pension plan," as such term is defined
in ERISA, established or maintained by the Guarantor, a Restricted
Subsidiary or any ERISA Affiliate or as to which the Guarantor, a
Restricted Subsidiary or any ERISA Affiliate contributed or is a
member or otherwise may have any liability;
1.1.69 "PRIORITY DEBT" shall have the meaning set forth in
subsection 12.2.1(c);
1.1.70 "QUALIFYING EU JURISDICTION" means any country (other
than Greece) which as of the Closing Date is a member of the
European Union.
1.1.71 "RENTALS" means and includes as of the date of any
determination thereof all fixed payments (including all such
payments which the lessee is obligated to make to the lessor on
termination of the lease or surrender of the property) payable by
the Guarantor or a Restricted Subsidiary, as lessee or sublessee
under a lease of real or personal property, but shall be exclusive
of any amounts required to be paid by the Guarantor or a Restricted
Subsidiary (whether or not designated as rents or additional rents)
on account of maintenance, repairs, insurance, taxes and similar
charges. Fixed rents under any so-called "percentage leases" shall
be computed solely on the basis of the minimum rents, if any,
required to be paid by the lessee regardless of sales volume or
gross revenues;
1.1.72 "REPORTABLE EVENT" has the same meaning as in ERISA;
1.1.73 "RESPONSIBLE OFFICER" means any Senior Financial
Officer and any other officer of the Borrower or the Guarantor with
responsibility for the administration of the relevant portion of
this Agreement;
1.1.74 "RESTRICTED GROUP" means, as of the date of
determination thereof, the Guarantor and its Restricted
Subsidiaries;
15
1.1.75 "RESTRICTED INVESTMENTS" means all Investments, other
than:
1.1.75.1 Investments by the Guarantor and its Restricted
Subsidiaries in and to Restricted Subsidiaries, including,
without limitation, Investments (a) directly out of the
cash proceeds to the Guarantor of the concurrent sale of
shares of capital stock of the Guarantor or (b) pursuant
to a direct share exchange offer by the Guarantor, and
including any investment in a corporation which, after
giving effect to such investment, will become a Restricted
Subsidiary;
1.1.75.2 Investments in commercial paper maturing in 270
days or less from the date of issuance which, at the time
of acquisition by the Guarantor or any Restricted
Subsidiary, is accorded a rating of at least A-2 by
Standard & Poor's Corporation or at least Prime-2 by
Moody's Investors Service, Inc.;
1.1.75.3 Investments in (a) direct obligations of the
United States of America or any agency or instrumentality of
the United States of America, the payment or guarantee of
which constitutes a full faith and credit obligation of the
United States of America or (b) direct obligations of Canada
or any agency or instrumentality of Canada, the payment or
guarantee of which constitutes a full faith and credit
obligation of Canada, in either case, maturing in twelve
months or less from the date of acquisition thereof;
1.1.75.4 Investments in certificates of deposit maturing
within one year from the date of issuance thereof, issued by
a bank or trust company organized under the laws of the
United States, any state thereof or Canada or any province
thereof, having capital, surplus and undivided profits
aggregating at least US $500,000,000 (or its equivalent in
Canadian currency) and whose long-term certificates of
deposit are, at the time of acquisition thereof by the
Guarantor or a Restricted Subsidiary, rated A- or better by
Standard & Poor's Corporation or A3 or better by Moody's
Investors Service, Inc. or Investments in Eurodollar
Certificates of deposit maturing within one year after the
acquisition thereof and issued by a bank in western Europe
or England having capital, surplus and undivided profits of
at least US $1,000,000,000 (or its equivalent in such
country's local currency); and
1.1.75.5 loans and advances (including, without
limitation, loans or advances to employees of the Guarantor
for the purchase by such employee of shares of stock of the
Guarantor by such employee)
16
in the usual and ordinary course of business to officers,
directors and employees for expenses (including moving
expenses related to a transfer) incidental to carrying on
the business of the Guarantor or any Restricted Subsidiary
provided that the aggregate amount of all such loans or
advances shall at no time exceed US $2,000,000;
1.1.76 "RESTRICTED PAYMENTS" means, for any period,
1.1.76.1 the declaration or payment, directly or
indirectly, of any dividend either in cash or property, on
any shares of capital stock of the Guarantor or any
Restricted Subsidiary;
1.1.76.2 the purchase, redemption or retirement, directly
or indirectly, of any shares of capital stock of any class
or of any warrants, rights or options to purchase or
acquire any shares of capital stock of the Guarantor or
any Restricted Subsidiary; and
1.1.76.3 any payment or distribution, directly or
indirectly, by the Guarantor or a Restricted Subsidiary in
respect of its capital stock;
PROVIDED, HOWEVER, that "Restricted Payments" shall not include any
such dividends, purchases, redemptions, retirements or other
distribution by a Restricted Subsidiary to the Guarantor or to a
Wholly-owned Restricted Subsidiary;
1.1.77 "RESTRICTED SUBSIDIARY" means and includes
1.1.77.1 each of the Borrower and its Subsidiaries,
including IPG Holding Company of Nova Scotia ("CANCO") and
IPG Finance LLC notwithstanding the fact that they might be
Unrestricted Subsidiaries under the Note Agreement;
1.1.77.2 IPG (US) Acquisition Corporation, IPG (US)
Holdings Inc., IPG (US) Inc. and ATC, notwithstanding the
fact that they might be Unrestricted Subsidiaries under the
Note Agreement; and
1.1.77.3 any Subsidiary of the Guarantor any of whose
Debt is guaranteed by the Guarantor, notwithstanding the
fact that such Subsidiary might be an Unrestricted
Subsidiary under the Note Agreement;
1.1.77.4 Intertape Polymer Corp., Polymer International
Corp., Intertape Polymer Inc., any other Subsidiary so
described in Schedule "E" hereto and any other Subsidiary
(a) which is organized
17
under the laws of the United States, Puerto Rico, Canada or
any Qualifying EU Jurisdiction or any jurisdiction thereof;
(b) which conducts substantially all of its business and
has substantially all of its assets within the United
States, Puerto Rico, Canada or any Qualifying EU
Jurisdiction; (c) of which more than 80% (by number of
votes) of the Voting Stock is beneficially owned by the
Guarantor or any wholly-owned Restricted Subsidiary, and
(d) which has been designated by the Board of Directors of
the Guarantor as a Restricted Subsidiary in accordance
with Section 11.17;
1.1.78 "ROLLOVER DATE" means, with respect to a Libor
Advance, the date of any such Advance, or the first day of any
Designated Period;
1.1.79 "SECOND CURRENCY" has the meaning ascribed to it in
Section 14.1;
1.1.80 "SECURITY" shall have the same meaning as in Section
2(1) of the Securities Act of 1933, as amended;
1.1.81 "SELECTED AMOUNT" means, with respect to the Libor
Advance, the amount in respect of which the Borrower, has asked, in
accordance with Section 4.2, that the interest payable thereon be
calculated on the Libor Basis;
1.1.82 "SENIOR FINANCIAL OFFICER" means the chief financial
officer, principal accounting officer, treasurer or comptroller of
the Guarantor;
1.1.83 "SUBSIDIARY" means any moral Person in respect of
which the majority of the issued and outstanding capital stock
granting a right to vote in all circumstances is at the relevant
time owned by the Guarantor or one or more of its Subsidiaries and
includes a limited partnership which would be an Affiliate;
1.1.84 "TERM" means the term commencing on the date hereof
and terminating:
1.1.84.1 with respect to Facility A, on December 2, 1999,
subject to extension following an Extension Request (as
defined in Section 2.2) which is accepted by the Lender;
1.1.84.2 with respect to Facility B, on January 31, 1999;
1.1.85 "TOTAL DEBT" means all Debt of the Guarantor and the
Restricted Subsidiaries (and for greater certainty, includes any
Debt of an Unrestricted Subsidiary Guaranteed by the Guarantor) on
a Consolidated basis, less Available Cash;
18
1.1.86 "TRANSFER AGREEMENT" means the form of transfer
agreement annexed hereto as Schedule "D";
1.1.87 "UNRESTRICTED SUBSIDIARY" means any Subsidiary which
is not a Restricted Subsidiary;
1.1.88 "US PRIME RATE" means, on any day, the rate of
interest, expressed as an annual rate, publicly announced or posted
by the Lender or any Assignee as being its reference rate then in
effect for determining interest rates on demand commercial loans
granted in the United States of America in US Dollars to clients of
the Lender or an Assignee, whether or not any such loans are
actually made;
1.1.89 "US PRIME RATE BASIS" means the basis of calculation
of interest on the US Dollar Advances, or any part thereof, in
accordance with the provisions of Sections 5.1, and 5.2;
1.1.90 "US PRIME RATE ADVANCE" means, at any time, the part
of the US Dollar Advances with respect to which the Borrower has
chosen, or, in accordance with the provisions hereof, is obliged,
to pay interest on the US Prime Rate Basis;
1.1.91 "US DOLLARS" or "US $" means the lawful currency of
the United States of America in same day immediately available
funds or, if such funds are not available, the form of currency of
the United States of America which is ordinarily used in the
settlement of international banking operations on the day on which
any payment or any calculation must be made pursuant to this
Agreement;
1.1.92 "US DOLLAR ADVANCES" means, at any time, the total
of all Loans in US Dollars, and includes the amount of all Letters
of Credit denominated in US Dollars;
1.1.93 "VOTING STOCK" means Securities of any class or
classes, the holders of which are ordinarily, in the absence of
contingencies, entitled to elect a majority of the corporate
directors (or Persons performing similar functions);
1.1.94 "WHOLLY-OWNED" when used in connection with any
Subsidiary means a Subsidiary of which all of the issued and
outstanding shares of stock (except shares required as directors'
qualifying shares) shall be owned by the Borrower, the Guarantor
and/or one of its Wholly-owned Restricted Subsidiaries.
1.2 INTERPRETATION
Unless stipulated to the contrary, the words used herein which indicate
the singular include the plural and vice versa and the words indicating
masculine include the feminine and vice versa. In addition, (a) the word
"INCLUDES" (or "INCLUDING") shall be interpreted to mean "INCLUDES
19
(OR INCLUDING) WITHOUT LIMITATION", and (b) where any provision in this
Agreement refers to action to be taken by any Person, or which such
Person is prohibited from taking, such provision shall be applicable
whether the action in question is taken directly or indirectly by such
person.
1.3 CURRENCY
Unless the contrary is indicated, all amounts referred to herein are
expressed in US Dollars.
1.4 GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
Unless the Lender shall otherwise expressly agree or unless otherwise
expressly provided herein, all of the terms of this Agreement which are
defined under the rules constituting Generally Accepted Accounting
Principles shall be interpreted, and all financial statements to be
prepared hereunder shall be prepared, in accordance with Generally
Accepted Accounting Principles.
1.5 DIVISION AND TITLES
The division of this Agreement into Articles, Sections and subsections
and the insertion of titles are for convenience of reference only
and shall not affect the meaning or interpretation of this Agreement.
2 THE CREDIT
2.1 THE FACILITIES
Subject to the provisions hereof, the Lender agrees to make available to
the Borrower, individually and not jointly and severally or solidarily
with any future Assignee, its Participation in the Credit, which Credit
consists of:
2.1.1 a maximum amount of $50,000,000 under Facility A; and
2.1.2 a maximum amount of $50,000,000 under Facility B;
for a total of up to US $100,000,000 (the "CREDIT").
2.2 FACILITY A
All Advances borrowed under Facility A may be repaid and re-borrowed by
the Borrower at all times during the Term. The Lender may, in its
absolute discretion, agree to extend the Term in respect of Facility A
for a further period of 12 months, provided that the Borrower
20
makes a request to the Lender not more than 90 days prior to the
then-current expiry of the Term (the "EXTENSION REQUEST"). The Lender
undertakes to respond to such request within a delay not exceeding 45
days from receipt thereof. If the Lender fails to so respond, the
Lender shall be deemed to have refused to grant any such extension.
2.3 FACILITY B
All Advances available to the Borrower under Facility B may be drawn by
way of one single Advance during the Disbursement Period, and may not be
re-borrowed by the Borrower during the Term. However, the Borrower may
convert from one form of Advance to another subject to the provisions of
this Agreement.
3 PURPOSE
3.1 PURPOSE OF THE ADVANCES
All Advances made by the Lender to the Borrower in accordance with the
provisions hereof (a) under Facility A, shall be used by the Borrower
(directly or indirectly) exclusively to acquire the shares of ATC and for
general corporate or business purposes, and (b) under Facility B, shall
be used by the Borrower, directly or indirectly, exclusively to refinance
existing Funded Debt of ATC and for general corporate or business
purposes. No proceeds of any Advance will be used to acquire any equity
security of a class which is registered pursuant to Section 12 of the
Securities Exchange Act of 1934 or any "margin stock", as defined in
Federal Reserve System Board of Governors Regulation U.
4 ADVANCES, CONVERSIONS AND OPERATION OF ACCOUNTS
4.1 NOTICE OF BORROWING
Subject to the applicable provisions of this Agreement, at all times
during the relevant Disbursement Period, the Borrower shall be entitled
to draw upon the Credit, on one or more occasions, up to the maximum
amount of the Credit, provided that at least one (1) Business Day prior
to the day on which any US Prime Rate Advance is required, the Borrower
shall have provided to the Lender an irrevocable telephone notice at or
before 10:00 A.M., New York time, on any Business Day, followed by the
delivery on the same day of a written notice of confirmation
substantially in the form of Schedule "B". Notices in respect of Libor
Advances and Letters of Credit shall be made in accordance with the
provisions of Sections 4.2 and 4.3, respectively.
21
4.2 LIBOR ADVANCES AND CONVERSIONS
On any Business Day during the Term, upon an irrevocable telephone notice
to the Lender given prior to 10:00 A.M., NEW YORK time at least three
Business Days prior to the date of a proposed Libor Advance or a Rollover
Date, followed by the delivery on the same day of a written notice of
confirmation substantially in the form annexed hereto as Schedule "B",
the Borrower may request that a Libor Advance be made, that one or more
Advances not borrowed as Libor Advances be converted into one or more
Libor Advances or that a Libor Advance or any part thereof be extended,
as the case may be. The Lender shall determine the LIBOR which will be
in effect on the date of the Advance or the Rollover Date, as the case
may be (which in such case must be a Business Day), with respect to the
Selected Amount or to each of the Selected Amounts, as the case may be,
having a maturity:
4.2.1 under Facility A, of 30, 60, 90 or 180 days; and
4.2.2 under Facility B, of 30, 60 or 90 days;
from the date of the Advance or the Rollover Date, as the case may be.
However, if the Borrower has not delivered a notice to the Lender in a
timely manner in accordance with the provisions of this Section 4.2, the
Borrower shall be deemed to have chosen to have the interest on the
amount of such Advance calculated on the US Prime Rate Basis.
4.3 LETTERS OF CREDIT
As part of the Credit available hereunder, the Borrower may cause to be
issued by the Lender one or more Letters of Credit in a maximum aggregate
amount outstanding at any time not exceeding:
4.3.1 Under Facility A, US $10,000,000; and
4.3.2 Under Facility B, US $20,000,000;
and for a duration not exceeding the lesser of one (1) year from the date
of issuance or the remaining duration of the Term, subject to the
signature by the Borrower of the Lender's standard documentation then
currently used in connection with letters of credit. The Borrower shall
pay non-refundable fees in respect of any such Letters of Credit equal to
the rate per annum indicated in the definition of "Margin" multiplied by
the face amount thereof, subject to a minimum fee for each Letter of
Credit in an amount of $250, payable in advance. The Guarantor expressly
acknowledges that it will remain liable hereunder irrespective of the
fact that it has not executed such documentation together with the
Borrower. For greater certainty, each of the Borrower and the Guarantor
acknowledge that any Letters of Credit issued under Facility B must be
issued during the relevant Disbursement Period, since Facility B is not
revolving in nature.
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4.4 CURRENCY
Subject to the provisions of Section 2.1, at any time during the relevant
Disbursement Period the Borrower may borrow, on one or more occasions, up
to the maximum amount of the Credit in US Dollars.
4.5 OPERATION OF ACCOUNTS
The Lender shall maintain in its books at the Branch a record of the
Loan, including the Letters of Credit issued by the Lender at the request
of the Borrower, attesting as to the total of the Borrower's indebtedness
to the Lender in accordance with the provisions hereof. These accounts
or registers shall constitute, in the absence of manifest error, PRIMA
FACIE proof of the total amount of the indebtedness of the Borrower to
the Lender in accordance with the provisions hereof, of the date of any
Advance made to the Borrower and of the total of all amounts paid by the
Borrower from time to time with respect to principal and interest owing
on the Loan and the fees and other sums exigible in accordance with the
provisions hereof.
4.6 LIMITATIONS ON ADVANCES
Any amount of the Credit available under Facility A and Facility B shall
cease to be available at the expiry of the Term.
4.7 NETTING
On the date of any Advance or on a Rollover Date, the Lender shall be
entitled to net amounts payable on such date by the Lender to the
Borrower against amounts payable on such date by the Borrower to the
Lender.
5 INTEREST AND FEES
5.1 INTEREST ON THE US PRIME RATE BASIS
The principal amount of the US Dollar Advances which at any time and from
time to time remains outstanding and in respect of which the Borrower has
chosen or, in accordance with the provisions hereof, is obliged to pay
interest on the US Prime Rate Basis, shall bear interest, calculated
daily, on the daily balance of such Loan, from the date of the Advance up
to and including the day preceding the date of repayment in full (whether
in accordance with Article 8 or Article 14, as the case may be) of the US
Dollar Advances at the annual rate (calculated based on a 365 or 366 day
year, as the case may be) applicable to each of such days which
corresponds to the US Prime Rate at the close of business on each of such
days, plus the Margin; provided that in the event that the US Prime Rate
is, for any period, less than the Federal Funds Effective Rate plus the
Margin then applicable to Libor Advances, US Base Rate
23
shall be deemed to be equal to the Federal Funds Effective Rate plus the
greater of .50% or the Margin then applicable to Libor Advances. For the
purposes hereof, the term "FEDERAL FUNDS EFFECTIVE RATE" means, for any
period, a fluctuating interest rate per annum (calculated based on a 360
day year) equal, for each day during such period, to the weighted average
of the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by Federal Funds brokers as published for
such day (or, if such day is not a Business Day, for the next preceding
Business Day) by the Federal Reserve Bank of New York or, for any day on
which such rate is not so published for such day by the Federal Reserve
Bank of New York, the average of the quotations for such day for such
transactions received by the Lender from three Federal Funds brokers of
recognized standing selected by the Lender. If for any reason the Lender
shall have determined (which determination shall be conclusive, absent
manifest error) that it is unable to ascertain the Federal Funds
Effective Rate for any reason, including without limitation, the
inability or failure of the Lender to obtain sufficient bids or
publications in accordance with the terms hereof, the Lender's US Prime
Rate will apply.
5.2 PAYMENT OF INTEREST ON THE US PRIME RATE BASIS
The interest payable in accordance with Section 5.1 and calculated in the
manner hereinabove described is payable to the Lender monthly, in arrears,
on the last day of each month.
5.3 INTEREST ON THE LIBOR BASIS
The principal amount of the Libor Advances which at any time and from
time to time remains outstanding shall bear interest, calculated daily,
on the daily balance of such Libor Advances, from each Rollover Date, at
the annual rate (calculated based on a 360-day year) applicable to each
of such days which corresponds to the LIBOR applicable to each Selected
Amount, plus the Margin, and shall be effective as and from each Rollover
Date up to and including the date prior to the next Rollover Date.
5.4 PAYMENT OF INTEREST ON THE LIBOR BASIS
The interest payable in accordance with the provisions of Section 5.3 and
calculated in the manner hereinabove set out on the amount outstanding
from time to time is payable to the Lender, in arrears,
5.4.1 on the next Rollover Date when the Designated Period is 30
to 90 days,
5.4.2 when the Designated Period exceeds 90 days, on the first
Business Day following each period of 90 days during such
Designated Period and at the next Rollover Date, if the Designated
Period is more than 90 days and is not a multiple of 90 days.
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5.5 LIMITS TO THE DETERMINATION OF LIBOR
Nothing herein contained shall be interpreted as authorizing the
Borrower, with respect to the determination of LIBOR, to choose a
Selected Amount with respect to each Designated Period of less than
US $1,000,000 or a greater amount other than in whole multiples of
US $100,000.
5.6 FIXING OF LIBOR
LIBOR shall be transmitted to the Borrower by the Lender at approximately
11:00 A.M., New York time, two Business Days prior to:
5.6.1 the date on which the Libor Advance is to be made; or
5.6.2 the relevant Rollover Date.
5.7 INTEREST ON THE LOAN
Where no specific provision with respect to interest on an outstanding
portion of the Loan is contained in this Agreement, the interest on such
portion of the Loan shall be calculated and payable on the US Prime Rate
Basis.
5.8 ARREARS OF INTEREST
Any arrears of interest or principal shall bear interest at a rate that
is two percent (2%) per annum higher than the rate of interest payable in
respect of the relevant principal amount of the Loan and shall be
calculated and exigible on the same basis.
5.9 MAXIMUM INTEREST RATE
The amount of the interest or fees exigible in applying this agreement
shall not exceed the maximum rate permitted by Law. Where the amount of
such interest or such fees is greater than the maximum rate, the amount
shall be reduced to the highest rate which may be recovered in accordance
with the applicable provisions of Law.
5.10 FEES
The Borrower shall pay the following fees (the "FEES") to the Lender:
5.10.1 a Standby Fee equal to the percentage set out in the
definition of "Margin", multiplied by an amount equal to the
unused portions of Facility A of the Credit, calculated daily and
payable monthly in arrears based on a 365/366 day year on the last
day of each calendar month or on such other date as the Lender may
determine, commencing in respect of the month ending on December
31, 1997;
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5.10.2 an arrangement fee: (a) in respect of Facility A, equal
to .35% of the Credit available under Facility A, being an amount
of US $175,000, payable to the Lender upon the signature hereof,
and (b) in respect of Facility B, equal to .35% of the Credit
available under Facility B, being an amount of US $175,000,
payable to the Lender upon the signature hereof; and
5.10.3 in the event of any syndication, assignment or granting
of participations in accordance with the provisions of Section
15.2, an annual agency fee in an amount to be negotiated at the
time.
However, notwithstanding the provisions of subsection 5.10.2 hereof, if
by March 31, 1998 the Guarantor and the Restricted Subsidiaries have not
completed a private placement and remitted the proceeds thereof to the
Lender in full payment of the Loans under Facility B, the Borrower and
the Guarantor shall pay to the Lender an additional fee equal to .35% of
the Credit under Facility B.
5.11 INTEREST ACT
5.11.1 For the purposes of the Interest Act of Canada, any amount
of interest or fees calculated herein using 360, 365 or 366 days
per year and expressed as an annual rate is equal to the said rate
of interest or fees multiplied by the actual number of days
comprised within the calendar year, divided by 360, 365 or 366,
as the case may be.
5.11.2 The parties agree that all interest in this Agreement will
be calculated using the nominal rate method and not the effective
rate method, and that the deemed re-investment principle shall not
apply to such calculations. In addition, the parties acknowledge
that there is a material distinction between the nominal and
effective rates of interest and that they are capable of making
the calculations necessary to compare such rates.
6 RESTRICTIONS, LIMITATIONS AND MARKET CONDITIONS
6.1 MARKET FOR LIBOR ADVANCES
If at any time or from time to time: (a) as a result of market
conditions, there exists no appropriate or reasonable method to establish
LIBOR, for a Selected Amount or a Designated Period, or (c) US Dollar
deposits are not available to the Lender in such market in the ordinary
course of business in amounts sufficient to permit it to make the Libor
Advance, for a Selected Amount or a Designated Period, the Lender shall
so advise the Borrower and the Lender shall not be obliged to honour any
notices of borrowing in connection with any Libor Advances, and
26
the Libor Advance option shall thereupon be suspended upon such notice by
the Lender to the Borrower.
6.2 SUSPENSION OF LIBOR ADVANCE OPTION
If a notice has been given by the Lender in accordance with Section 6.1,
the Libor Advance, or any part thereof, as the case may be, shall not be
made (whether as an Advance, a conversion or an extension) by the Lender
and the right of the Borrower to choose that Advances be made or, once
made, be converted or extended into the Libor Advance shall be suspended
until such time as the Lender has determined that the circumstances
having given rise to such suspension no longer exist, in respect of which
determination the Lender shall advise the Borrower within a reasonable
delay, and the Borrower shall within ten (10) days following receipt of a
demand to such effect, pay to the Lender the amounts referred to in
Section 7.2.
6.3 LIMITS ON THE LETTERS OF CREDIT AND LIBOR ADVANCES
Nothing in this Agreement shall be interpreted as authorizing the
Borrower:
6.3.1 to borrow by way of Libor Advances, nor as obliging the
Lender to accept such Notices of Borrowing in respect of Libor
Advances, for a Designated Period; nor
6.3.2 to cause to be issued Letters of Credit;
maturing on a date which results in a situation where the Credit cannot
be reduced as required by this Agreement, or on a date which is after
the expiry of the Term.
7 CHANGES IN CIRCUMSTANCES, INCREASED FEES AND INDEMNIFICATION
7.1 ILLEGALITY, INCREASED COSTS
If the Lender, acting reasonably, determines (which determination shall
be attested to by a certificate submitted to the Borrower and which shall
be final and binding between the parties hereto in the absence of
manifest error) that i) the adoption by a governmental or international
authority (including the Bank for International Settlements (the "BIS"))
of a law, directive, requirement or guideline, whether or not having the
force of law, ii) any modification to a law, directive or guideline,
whether or not having the force of law, or to the interpretation or
application of same by a tribunal or governmental or international
authority (including the BIS) or other body charged with such
interpretation or application, or iii) any quashing by a tribunal or
other governmental or international authority or body (including the BIS)
of an interpretation of any law, directive, requirement or guideline,
whether or not having the force of law:
27
7.1.1 has rendered or will render it illegal or contrary to any
law, directive or guideline for the Lender to maintain or to give
effect to all or part of the obligations stipulated in this
Agreement, including the obligation to make or maintain all or any
part of a Libor Advance pursuant to the terms hereof, then the
obligation of the Lender to maintain or to give effect to such
part of its obligations, will become null and, subject to the
provisions of the particular law, directive or guideline and of
Section 7.2 with respect to losses, costs and expenses, if the
Loan affected is a Libor Advance, the Borrower may convert the
principal amount thereof into a US Prime Rate Advance, and pay the
interest accrued thereon, or may reimburse the particular Libor
Advance in whole with interest accrued thereon.
Such conversion or reimbursement shall be made at the expiry of
the relevant Designated Period which is the last to expire prior
to the effective date of such adoption, change or quashing, or,
if in the judgment of the Lender, an immediate conversion or
reimbursement is necessary, immediately upon demand by the Lender;
or
7.1.2 i) has imposed, modified or deemed applicable any loan
ceiling with respect to the Lender, or imposed, modified or deemed
applicable any special tax, reserve, deposit, capital adequacy or
similar requirement with respect to the assets held by, deposited
at or used for the purchase of funds, or to the loans made by the
Lender, or ii) changes the basis of taxation on payments made to
the Lender under this Agreement (other than a change affecting the
taxes based on net profits or capital of the Lender), or iii)
imposes upon the Lender any other monetary conditions or
restrictions with respect to this Agreement, all or any part of a
Loan, as the case may be, or any other document, effect or
operation contemplated hereby, and if the result of any of the
foregoing is to increase the cost to the Lender of making or
maintaining any Loan, or any part thereof, as the case may be, or
to reduce any amount otherwise receivable by the Lender hereunder
with respect thereto, then, in any such case, the Borrower shall
promptly pay to the Lender, within 10 Business Days from demand,
such additional amounts necessary to compensate the Lender for
such additional cost or reduced amount receivable as is determined
in good faith by the Lender. The Lender shall use reasonable
efforts to advise the Borrower of any event described in this
Section 7.1 within a reasonable delay. If the Lender becomes
entitled to claim any additional amounts pursuant to this Section
7.1, it shall promptly notify the Borrower of the event by reason
of which it has become so entitled and provide reasonable
particulars of the calculation of such amount. A certificate of
the Lender as to any such additional amounts payable to it shall
be conclusive and binding in the absence of manifest error.
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7.2 INDEMNITY
The Borrower shall indemnify the Lender against and hold the Lender as
well as its directors, officers or employees harmless from any loss or
expense, including without limitation any loss or expense arising from
interest or fees payable by the Lender to lenders of funds obtained by it
in order to make or maintain any Advance and any loss or expense incurred
in liquidating or re-employing deposits from which such funds were
obtained, which the Lender may sustain or incur as a consequence of any
i) default by the Borrower in the payment when due of the amount of or
interest on any Loan or in the payment when due of any other amount
hereunder, ii) default by the Borrower in obtaining an Advance after the
Borrower has given notice hereunder that it desires to obtain such
Advance, iii) default by the Borrower in making any voluntary reduction
of the outstanding amount of any Loan after the Borrower has given notice
hereunder that it desires to make such reduction, and iv) the payment of
any Libor Advance otherwise than on the maturity date thereof (including
without limitation any such payment required pursuant to Section 8.1 or
upon acceleration pursuant to Section 13.2). A certificate of the Lender
providing reasonable particulars of the calculation of any such loss or
expense shall be conclusive and binding in the absence of manifest error.
If the Lender becomes entitled to claim any amount pursuant to this
Section 7.2, it shall promptly notify the Borrower of the event by reason
of which it has become so entitled and reasonable particulars of the
related loss or expense.
7.3 WITHHOLDING TAXES
The Borrower and the Guarantor, for the benefit of the Lender and any
Assignees which are residents, citizens or domestic corporations of the
United States of America at the time of any payment made by the Borrower
or the Guarantor hereunder (the "RELEVANT HOLDERS"), agree that in the
event any such payments made by the Borrower or the Guarantor under this
Agreement are subject to any present or future tax, duty, assessment,
impost, levy or other similar charge (a "RELEVANT TAX") imposed, levied,
collected, assessed, deducted or withheld by the government of Canada (or
any authority therein or thereof) or by the government of any other
country or jurisdiction (or any authority therein or thereof) other than
the United States from or through which payments hereunder are actually
made (each a "TAXING JURISDICTION"), the Borrower or the Guarantor will
pay to the Relevant Holder such additional amounts as may be necessary in
order that the net amounts paid to such Relevant Holder pursuant to the
terms of this Agreement after imposition of any such Relevant Tax
(including, without limitation, any Relevant Tax on such additional
amount) shall be not less than the amounts specified in this Agreement
to be then due and payable (after giving effect to the exclusion for
Relevant Taxes imposed by the government of the United States as
described above).
7.4 SURVIVAL
Without prejudice to the survival or termination of any other agreement
of the Borrower or the Guarantor under this Agreement, the obligations of
the Borrower under Sections 7.2 and 7.3
29
shall survive the payment of principal and interest on all Loans and the
termination of the Credit.
8 PAYMENT, REPAYMENT AND PREPAYMENT
8.1 REPAYMENT OF THE LOAN
The Borrower hereby agrees to repay the Loan on the last day of the Term.
However, if the Guarantor or the Restricted Subsidiaries complete a
private placement as contemplated, the proceeds thereof shall promptly be
used to prepay the Loans under Facility B, subject to the provisions of
Section 8.2 with respect to such prepayment.
8.2 PREPAYMENT, REDUCTION AND CANCELLATION OF THE CREDIT
On any Business Day during the Term, after having given notice to the
Lender at least five (5) days prior to the proposed prepayment, the
Borrower may repay or prepay in minimum amounts of US $1,000,000, or in
whole multiples of such amount, all or part of the principal amount of
the Loan, provided that in respect of the Libor Advance, no repayment
may be made on a day other than a Rollover Date, save as provided in
Sections 7.2 and 8.3, with, in each case, all interest accrued and unpaid
on the amounts so prepaid. However, the Borrower may not, in respect of
Facility B at any time during the Term, again borrow all or part of the
Loan repaid, whether such payment was a prepayment or otherwise.
In addition, the Borrower may, upon the same notice, cancel any portion
of the Credit under Facility A which has not been drawn by the Borrower.
No Standby Fee (described in Section 5.10) shall be payable in respect of
any portion of the Credit so cancelled as and from the effective date of
its cancellation. The Borrower shall not be permitted to draw Advances
in respect of any portion of the Credit so cancelled. If necessary in
connection with such cancellation or reduction, the Borrower shall repay
all or any part of the Loan, provided that in respect of a Libor
Advance, no repayment may be made on a day other than a Rollover Date,
save as provided in Section 7.2 and in Section 8.3, with all interest
accrued and unpaid on the amounts so prepaid.
8.3 PAYMENT OF LOSSES RESULTING FROM A PREPAYMENT
If a prepayment in respect of the Libor Advance is made on a date other
than a Rollover Date, simultaneously with such prepayment, the Borrower
shall pay to the Lender the losses, costs and expenses suffered or
incurred by the Lender with respect to such prepayment, which are
referred to in Section 7.2.
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8.4 IMPUTATION OF PREPAYMENTS
Any prepayment made in accordance with Section 8.2 shall be imputed
firstly to Facility B, and secondly to Facility A.
8.5 CURRENCY OF PAYMENTS
All payments, repayments or prepayments, made hereunder shall be made in
US Dollars.
8.6 PAYMENTS BY THE BORROWER TO THE LENDER
All payments to be made by the Borrower in connection with this
Agreement shall be made in funds having same day value to the Lender at
the Branch, or at any other office or account in Canada or the United
States of America designated by the Lender. Any such payment shall be
made on the date upon which such payment is due, in accordance with the
terms hereof, no later than 11:00 A.M., NEW YORK time.
8.7 PAYMENT ON A BUSINESS DAY
Each time a payment, repayment or prepayment is due on a day which is
not a Business Day, it shall be made on the previous Business Day.
8.8 PAYMENTS BY LENDER TO THE BORROWER
Any amounts payable to the Borrower shall be paid by the Lender on a
Business Day, in funds having same day value, to the Borrower's account
located at Toronto Dominion Bank, 31 West 52nd Street, 19th floor, New
York, New York.
8.9 APPLICATION OF PAYMENTS
Except as otherwise indicated herein or as otherwise determined by the
Lender, all payments made to the Lender by the Borrower shall be applied
by the Lender as follows:
a) to the fees, costs, expenses and accessories contemplated by
Article 7, Section 13.6 and Section 16.5;
b) to all amounts due under Article 5 hereunder;
c) to the repayment of the principal amount of the Loan subject,
in the case of prepayments, to the imputation rules set out in
Section 8.4;
d) to any other amounts due pursuant to this Agreement.
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8.10 NO SET-OFF OR COUNTERCLAIM BY BORROWER
All payments by the Borrower shall be made free and clear of and without
any deduction for or on account of any set-off or counterclaim.
8.11 DEBIT AUTHORIZATION
The Lender is hereby authorized to debit the Borrower's, the Guarantor's
and the Restricted Subsidiaries' account or accounts maintained from
time to time at the Branch or elsewhere, and to set off and compensate
against any and all accounts, credits and balances maintained at any
time by the Borrower, the Guarantor or the Restricted Subsidiaries for
the amount of any interest or any other amounts due and owing hereunder
from time to time payable by the Borrower to the Lender, in order to
obtain payment thereof. The Lender agrees to give notice of any such
debit, set off or compensation within a reasonable delay thereafter,
provided that the failure to give such notice shall not invalidate any
action taken by the Lender nor render it liable to the Borrower, the
Guarantor or the other Restricted Subsidiaries.
9 CONDITIONS PRECEDENT
9.1 INITIAL ADVANCE UNDER THE CREDIT
The obligation of the Lender to make an initial Advance under the Credit
is conditional upon each of the following conditions having been
satisfied, together with the conditions set out in Section 9.2:
9.1.1 all Charges on the property of the Guarantor and the
Restricted Subsidiaries, other than Permitted Charges, shall have
been discharged; provided that the Charges in favour of Comerica
Bank may continue to charge the property of ATC if the Lender is
in possession of an authorized, valid undertaking from Comerica
Bank to discharge such Charges within a delay not exceeding
30 days from the Closing Date (the "CB/ATC TEMPORARY CHARGES");
9.1.2 each of this Agreement and the IPG Guarantee shall have
been executed and delivered;
9.1.3 a Guarantee by IPG Finance LLC of the obligations of the
Borrower to the Lender, substantially in the form of the IPG
Guarantee, together with an assignment of all amounts owing to
IPG Finance LLC from IPG (US) Acquisition Corporation and ATC
(collectively the "LLC DOCUMENTS"), shall have been executed and
delivered;
9.1.4 the Guarantor and the Restricted Subsidiaries shall have
obtained all necessary governmental, regulatory and other
approvals (including Federal Trade
32
Commission approval) and all Laws, including environmental Laws,
shall have been complied with;
9.1.5 the Lender shall have received evidence satisfactory
to it that:
a) ATC's Funded Debt will remain as Funded Debt and not
be accelerated or otherwise become payable as a result of
the contemplated acquisition of ATC; and
b) ATC's Debt will rank PARI PASSU with the Loans
hereunder, subject to the provisions of subsection
12.2.1 (c);
9.1.6 the opening balance sheet of each of the Borrower
and its Subsidiaries and IPG (US) Acquisition Corporation and its
Subsidiaries shall have been delivered to the Lender, and shall
be satisfactory to it;
9.1.7 the results of the due diligence conducted by the
Lender concerning ATC's operations, including site visits,
accounts receivable audit, environmental due diligence, base-case
PRO FORMA statements and the assumptions contained therein, shall
be completely satisfactory to the Lender, acting reasonably;
9.1.8 each of the Guarantor and the Borrower shall have delivered
to the Lender a certificate in the form of Schedule "F" signed by
a Responsible Officer stipulating and certifying that:
a) such officer has taken cognizance of all the terms and
conditions of this Agreement and of all contracts,
agreements and deeds pertaining hereto; and
b) no Default or Event of Default has occurred nor exist
hereunder; and
c) each of the Guarantor and its Restricted Subsidiaries
holds the permits, licences and authorizations required in
order to permit it to possess its property and its real
estate and to carry on its business in the manner in which
it is being carried on at present;
9.1.9 there shall have been delivered to the Lender a written
undertaking from each of the Borrower's Subsidiaries, IPG Finance
LLC and Canco, as well as from IPG (US) Acquisition Corporation,
IPG (US) Holdings Inc. and IPG (US) Inc., pursuant to which each
of them undertakes that for so long as the Borrower or the
Guarantor has any obligations to the Lender hereunder:
33
a) it shall not carry on any business, except for the
purposes of the acquisition of ATC;
b) it shall not, individually or collectively, incur or
have at any time any Indebtedness in excess of an aggregate
amount of US $100,000;
c) IPG Finance LLC shall not assign or transfer, other
than to the Lender and to Comerica Bank (with respect to
the Borrower's operating facility with Comerica Bank), its
rights against ATC or IPG (US) Acquisition Corporation with
respect to amounts owed to it from either or both of them;
9.1.10 the Borrower shall have delivered to the Lender the
favourable legal opinion of the counsel to the Borrower and the
Guarantor, addressed to the Lender and its counsel, substantially
in the form set forth in Schedule "G" and covering as well such
other ancillary matters as pertain to the transactions
contemplated hereunder and the acquisition of ATC, as required by
the Lender, acting reasonably.
9.2 CONDITIONS PRECEDENT TO ANY ADVANCE
The obligation of the Lender to make any Advance under the Credit is
conditional upon each of the following conditions having been satisfied:
9.2.1 the representations and warranties contained in this
Agreement shall continue to be true and correct (except where
stated to be made as at a particular date); and
9.2.2 the Borrower shall have paid all amounts due to the Lender
up to the date of any proposed Advance, whether on account of
Fees, disbursements or related matters;
9.2.3 nothing shall have occurred since December 31, 1996 which
would constitute a Material Adverse Change;
9.2.4 no Default shall have occurred and be continuing and no
Event of Default shall have occurred.
10 REPRESENTATIONS AND WARRANTIES
For so long as the Loan or any other amounts payable to the Lender hereunder
remain outstanding and unpaid, or the Borrower is entitled to borrow
hereunder (whether or not the conditions precedent to such borrowing have or
may be satisfied) each of the Guarantor and the Borrower hereby represents
and warrants to the Lender that:
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10.1 INCORPORATION
The Guarantor and each of the Restricted Subsidiaries is a corporation
duly incorporated or a limited partnership or limited liability company
duly constituted, and is organized, validly existing and in good standing
under the Laws of its jurisdiction of incorporation or constitution and
of all jurisdictions in which it carries on business. The Guarantor and
each of the Restricted Subsidiaries has the capacity and power, whether
corporate or otherwise, to hold its assets and carry on the business
presently carried on by it or which it proposes to carry on hereafter in
each jurisdiction where such business is carried on.
10.2 AUTHORIZATION
The Borrower has the power and has taken all necessary steps under the Law
in order to be authorized to borrow hereunder and to execute and deliver
and perform its obligations under this Agreement in accordance with the
terms and conditions thereof and to complete the transactions contemplated
herein. This Agreement has been duly executed and delivered by duly
authorized officers of the Borrower and is a legal, valid and binding
obligation of the Borrower, enforceable in accordance with its terms.
The Guarantor has the power and has taken all necessary steps under the
Law in order to be authorized to provide the IPG Guarantee and to execute
and deliver and perform its obligations under this Agreement and the IPG
Guarantee in accordance with the terms and conditions thereof and to
complete the transactions contemplated in the IPG Guarantee and herein.
Each of this Agreement and the IPG Guarantee has been duly executed and
delivered by duly authorized officers of the Guarantor, and is a legal,
valid and binding obligation of the Guarantor, enforceable in accordance
with its terms.
IPG Finance LLC has the power and has taken all necessary steps under the
Law in order to be authorized to provide the LLC Documents and to execute
and deliver and perform its obligations under the LLC Documents in
accordance with the terms and conditions thereof and to complete the
transactions contemplated in the LLC Documents. Each of the LLC Documents
has been duly executed and delivered by duly authorized officers of IPG
Finance LLC, and is a legal, valid and binding obligation of IPG Finance
LLC, enforceable in accordance with its terms.
10.3 COMPLIANCE OF THIS AGREEMENT
The execution and delivery of and performance of the obligations under
this Agreement and the IPG Guarantee in accordance with their respective
terms and the completion of the transactions contemplated therein and
herein do not require any consents or approvals which have not been
obtained, do not violate any Laws, do not conflict with, violate or
constitute a breach under the documents of incorporation or by-laws of
the Guarantor or the Restricted
35
Subsidiaries or under any agreements, contracts or deeds to which the
Guarantor or any of the Restricted Subsidiaries is a party or binding
upon it or its assets and do not result in or require the creation or
imposition of any Charge whatsoever on the assets of the Guarantor or any
of the Restricted Subsidiaries, whether presently owned or hereafter
acquired, save for the Permitted Charges.
10.4 BUSINESS
The Guarantor currently operates as a holding company. ATC currently
operates the business of manufacturing and distributing masking tape. Each
of the Borrower and its Subsidiaries and IPG (US) Acquisition Corporation
and its Subsidiaries was created for the purpose of facilitating the
acquisition of ATC and none of them, other than ATC, carries on any
business.
The Borrower is not engaged in the business of extending credit for the
purpose of purchasing or carrying margin stock, and no proceeds of any
Advances will be used for a purpose which violates, or would be
inconsistent with, Federal Reserve System Board of Governors Regulation G,
U or X. Terms used in this Section or in Section 3.1 of this Agreement for
which meanings are provided in Federal Reserve System Board of Governors
Regulation G, U or X or any regulations substituted therefor, as from time
to time in effect, have the meaning so provided.
10.5 FINANCIAL STATEMENTS
The Consolidated financial statements dated December 31, 1996 have been
prepared in accordance with GAAP applied on a consistent basis throughout
the periods specified (except as noted thereon) and are an accurate
representation of the financial position of the Guarantor and the
Restricted Subsidiaries to which they relate as of the respective dates
specified and the results of their operations and changes in financial
position for the respective periods specified.
10.6 TITLE TO ASSETS
The Guarantor and each of the Restricted Subsidiaries has good, valid and
marketable title to all of its real property and valid title to all of its
other material properties and assets, free and clear of any Charges other
than Permitted Charges.
10.7 LITIGATION
Except as set out in Schedule "H" annexed hereto, on the date hereof,
there are no actions, suits or legal proceedings instituted or pending
nor, to the knowledge of the Guarantor and each of the Restricted
Subsidiaries, threatened, against any of them or their property before any
court or arbitrator or any governmental body or instituted by any
governmental body which, if decided against the Guarantor or any of the
Restricted Subsidiaries, could, individually or in the aggregate,
constitute a Material Adverse Change.
36
10.8 TAXES
The Guarantor and each of the Restricted Subsidiaries has filed within the
prescribed delays all federal, provincial or other tax returns which it is
required by Law to file and all taxes, assessments and other duties levied
by the various governmental authorities with respect to the Guarantor and
each of the Restricted Subsidiaries have been paid when due, except to the
extent that (a) payment thereof is being contested in good faith by the
Guarantor or any of the Restricted Subsidiaries in accordance with the
appropriate procedures, for which adequate reserves have been established
in the books of the Guarantor or the Restricted Subsidiaries, as the case
may be, and (b) the outcome of such contestation, if decided against the
Guarantor or such Restricted Subsidiaries, could not, individually or in
the aggregate, reasonably be expected to result in a Material Adverse
Change.
10.9 INSURANCE
The Guarantor and each of the Restricted Subsidiaries have contracted for
the insurance coverage described in Section 11.6.
10.10 NO ADVERSE CHANGE
No Material Adverse Change, considered on a Consolidated basis, has
occurred from December 31, 1996 to the Closing Date.
10.11 REGULATORY APPROVALS
Neither the Guarantor nor any of the Restricted Subsidiaries is required
to obtain any consent, approval, authorization, permit or licence, nor to
effect any filing or registration with any federal, provincial or other
regulatory authority in connection with the execution, delivery or
performance, in accordance with their respective terms, of this Agreement,
any borrowings hereunder and the granting of the IPG Guarantee or any
other Guarantee.
10.12 COMPLIANCE WITH LAWS
Each of the Guarantor and the Restricted Subsidiaries is in material
compliance with all requirements of applicable Laws and with all of the
material conditions attaching to its permits, authorizations, licenses,
certificates and approvals, including without limitation its articles of
incorporation and by-laws.
10.13 FOREIGN ASSETS CONTROL REGULATIONS, ETC.
Neither the transactions contemplated hereby nor its use of the proceeds
of any Advances hereunder will violate the Trading with the Enemy Act, as
amended, or any of the foreign assets control regulations of the United
States Treasury Department (31 CFR, Subtitle B,
37
Chapter V, as amended) or any enabling legislation or executive order
relating thereto. The Guarantor and the Restricted Subsidiaries are in
compliance with the Cuban Liberty and Democratic Solidarity (LIBERTAD)
Act, 22 U.S.C. Sections 6021 ET SEQ.
10.14 PENSION AND EMPLOYMENT LIABILITIES, COMPLIANCE WITH ERISA
10.14.1 Except as disclosed in subsection 10.14.3, neither the
Guarantor nor any of the Restricted Subsidiaries has any unfunded
pension liabilities, whether valued on a going concern or a wind-up
basis, and all compensation obligations (including wages,
salaries, commissions and vacation pay) to current employees and to
former employees of the Guarantor and the Restricted Subsidiaries
have been paid or accrued in full.
10.14.2 Each of the Guarantor, the Borrower and each ERISA
Affiliate has operated and administered each Plan in compliance
with all applicable laws except for such instances of noncompliance
as have not resulted in and could not reasonably be expected to
result in a liability in excess of US $2,500,000. Neither the
Guarantor nor any ERISA Affiliate has incurred any liability
pursuant to Title I or IV of ERISA or the penalty or excise tax
provisions of the Code relating to employee benefit plans (as
defined in section 3 of ERISA), and no event, transaction or
condition has occurred or exists that could reasonably be expected
to result in the incurrence of any such liability by the Guarantor
or any ERISA Affiliate, or in the imposition of any Charge on any
of the rights, properties or assets of the Guarantor or any ERISA
Affiliate, in either case pursuant to Title I or IV of ERISA or to
such penalty or excise tax provisions or to section 401(a)(29) or
412 of the Code, other than such liabilities or Charges as would
not, individually or in the aggregate, be expected to result in a
liability in excess of US $2,500,000.
10.14.3 Except as disclosed on Schedule "I-1" hereto, the
present value of the aggregate benefit liabilities under each of
the Plans (other than Multiemployer Plans), determined as of the
end of such Plan's most recently ended plan year on the basis of
the actuarial assumptions specified for funding purposes in such
Plan's most recent actuarial valuation report, did not exceed the
aggregate current value of the assets of such Plan allocable to
such benefit liabilities. The term "BENEFIT LIABILITIES" has the
meaning specified in section 4001 of ERISA and the terms "CURRENT
VALUE" and "PRESENT VALUE" have the meaning specified in section
3 of ERISA.
10.14.4 The Guarantor, the Borrower and the ERISA Affiliates
have not incurred withdrawal liabilities (and are not subject to
contingent withdrawal liabilities) under section 4201 or 4204 of
ERISA in respect of Multiemployer Plans that individually or in the
aggregate would be expected to result in a liability in excess of
US $2,500,000.
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10.14.5 The expected post-retirement benefit obligation
(determined as of the last day of the Guarantor's and its
Subsidiaries most recently ended fiscal year in accordance with
Financial Accounting Standards Board Statement No. 106, without
regard to liabilities attributable to continuation coverage
mandated by section 4980B of the Code) of the Guarantor and its
Subsidiaries has been disclosed in the appropriate financial
statements and, in any event, would not be expected to result in a
liability in excess of US $2,500,000.
10.14.6 The execution and delivery of this Agreement and the
borrowings hereunder will not involve any transaction that is
subject to the prohibitions of section 406 of ERISA or in
connection with which a tax could be imposed pursuant to section
4975(c)(1)(A)-(D) of the Code with respect to the employee benefit
plans of the Guarantor or any ERISA Affiliate.
10.14.7 Schedule "I" sets forth all ERISA Affiliates and all
"employee benefit plans" maintained by the Guarantor (or any
"affiliate" thereof) or in respect of which the Notes could
constitute an "employer security" ("EMPLOYEE BENEFIT PLAN" has the
meaning specified in section 3 of ERISA, "AFFILIATE" has the
meaning specified in section 407(d) of ERISA and section V of the
Department of Labor Prohibited Transaction Exemption 95-60 (60 FR
35925, July 12, 1995) and "EMPLOYER SECURITY" has the meaning
specified in section 407(d) of ERISA).
10.15 PRIORITY
The rights of the Lender hereunder, under the IPG Guarantee and under the
LLC Documents rank, and shall continue to rank, at all times during the
Term, at least PARI PASSU with all of the Indebtedness of the Guarantor
and each of the Restricted Subsidiaries, save and except as permitted
pursuant to subsection 12.2.1 (c).
10.16 COMPLETE AND ACCURATE INFORMATION
All of the information, reports and other documents and all data, as well
as the amendments thereto, provided to the Lender by or on behalf of the
Guarantor and the Restricted Subsidiaries were, at the time same were
provided, and are at the date hereof, complete, true and accurate in all
material respects.
10.17 EVENT OF DEFAULT
There exists no Default or Event of Default hereunder.
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10.18 AGREEMENTS WITH THIRD PARTIES
Each of the Guarantor and the Restricted Subsidiaries is in compliance in
all material respects with each and every one of its obligations under
agreements with third parties to which it is a party or by which it is
bound, the breach of which could reasonably be expected to result in a
Material Adverse Change.
10.19 ENVIRONMENT
10.19.1 There are no existing claims, demands, damages,
expenses, suits, proceedings, actions, negotiations or causes of
action of any nature whatsoever, whether threatened or pending,
arising out of the presence on any property owned or controlled by
the Guarantor or the Restricted Subsidiaries, either past or
present, of any hazardous substance or hazardous waste, or out of
any past or present activity conducted on any property now owned by
the Guarantor or the Restricted Subsidiaries, whether or not
conducted by the Guarantor or the Restricted Subsidiaries,
involving hazardous substances or hazardous waste which would
reasonably be expected to result in a Material Adverse Change;
10.19.2 To the best of the knowledge of the Borrower and the
Guarantor, after due enquiry:
(a) there is no hazardous substance or hazardous waste
existing on or under any property of the Guarantor or
any of the Restricted Subsidiaries which constitutes a
violation of any ordinance, statute or law for which an
owner or person in control of a property may be held
liable and which could reasonably be expected to result
in a Material Adverse Change;
(b) the business of the Guarantor and each of the
Restricted Subsidiaries is being carried on so as to
respect in all material ways the rules and regulations
applicable to environmental and health and safety
matters; and
(c) no contaminant, pollutant, toxic substance or
material or dangerous waste has been spilled or emitted
in reportable quantities into the environment from any
property owned or controlled by the Guarantor or any of
the Restricted Subsidiaries which could reasonably be
expected to result in a Material Adverse Change.
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10.20 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
All of the statements contained in any certificate, attestation, financial
statements, reports, statements, data or other documents delivered to the
Lender by or on behalf of the Borrower, including under or pertaining to
this agreement or any other document contemplated hereby, and any
amendments thereto, or pertaining to any transactions contemplated therein
or hereby, constitute representations and warranties made hereunder,
subject to the limits and restrictions stipulated herein. All of the
representations and warranties made hereunder are true and correct at the
date hereof, shall be true and correct at the date of any Advance
hereunder, shall survive the execution and delivery of this agreement, any
investigation by or on behalf of the Lender or the making of any Advance
hereunder, and none of same are nor shall be waived, except in writing.
11 POSITIVE COVENANTS
For so long as the Loan remains outstanding and unpaid, or the Borrower is
entitled to borrow hereunder (whether or not the conditions precedent to such
borrowing have or may be satisfied) and unless the Lender shall otherwise agree
in writing, each of the Borrower and the Guarantor, for itself and each of the
other Restricted Subsidiaries and with respect to itself and each of the other
Restricted Subsidiaries, agrees as follows:
11.1 PRESERVATION OF JURIDICAL PERSONALITY
It shall do or cause to be done all things necessary to preserve and
maintain its existence in full force and effect.
11.2 PRESERVATION OF LICENSES
It shall maintain in effect and obtain, where necessary, all such
authorizations, approvals, licences or consents of such governmental
agencies, whether federal, state, provincial or local, which may be or
become necessary or required for the Guarantor and the Restricted
Subsidiaries to satisfy their obligations hereunder and under the IPG
Guarantee.
11.3 COMPLIANCE WITH APPLICABLE LAWS
It shall conduct its business in a proper and efficient manner and shall
keep or cause to be kept appropriate books and records of account, in
compliance with the Law, and shall record or cause to be recorded
faithfully and accurately all transactions with respect to its business in
accordance with GAAP applied on a consistent basis, and shall comply with
all material requirements of Law and with all the conditions attaching to
its permits, authorizations, licences, certificates and approvals including
the Occupational Safety and Health Act of 1970, as amended and ERISA.
41
11.4 MAINTENANCE OF ASSETS
It shall maintain or cause to be maintained in good operating condition all
of its assets used or useful in the conduct of its business, as would a
prudent owner of similar property, whether same are held under lease or
under any agreement providing for the retention of ownership, and shall
from time to time make or cause to be made thereto all necessary and
appropriate repairs, renewals, replacements, additions, improvements and
other works.
11.5 BUSINESS
It will continue to carry on substantially the same type of business
currently carried on and activities which are ancillary, incidental or
necessary to its ongoing business as presently conducted, and will not
change the nature of its business activities as described in Section 10.4
without the prior written consent of the Lender.
11.6 INSURANCE
It will maintain insurance coverage by financially sound and reputable
insurers in such forms and amounts and against such risks as are customary
for corporations of established reputation engaged in the same or a similar
business and owing and operating similar properties in accordance with good
business practice and, in any event, in amounts and against risks
acceptable to the Lender, acting reasonably.
11.7 PAYMENT OF TAXES AND DUTIES
It shall pay all taxes, assessments and other governmental duties which are
imposed on it or on its income or profits or its assets, when due and
payable, provided that no such tax, assessment or duty need be paid if (a)
it is being contested in good faith by appropriate proceedings promptly
initiated and diligently conducted and (b) such reserves or other
appropriate provision, if any, as shall be required by GAAP shall have been
made therefor, and (c) the outcome of such contestation, if decided
adversely to the Guarantor or the Restricted Subsidiaries, would not
reasonably be expected to result in a Material Adverse Change, considered
on a Consolidated basis.
11.8 ACCESS AND INSPECTION
It shall allow the employees and representatives of the Lender, during
normal business hours, to have access to and inspect, in conjunction with
the Guarantor, the assets of the Guarantor and the Restricted
Subsidiaries, to inspect and take extracts from or copies of the books and
records of the Guarantor and the Restricted Subsidiaries and to discuss the
business, assets, liabilities, financial position, operating results or
business prospects of the Guarantor and the Restricted Subsidiaries with
the principal officers of the Guarantor and the Restricted
42
Subsidiaries and, after obtaining the approval of the Borrower which
shall not be unreasonably withheld, with the auditors of the Borrower.
11.9 MAINTENANCE OF ACCOUNT
It shall maintain an operating account at each Branch at all times during
the Term.
11.10 PERFORMANCE OF OBLIGATIONS
It shall perform all obligations in accordance with usual and customary
business terms, except to the extent that the non-fulfilment of same would
not reasonably be expected to result in a Material Adverse Change,
considered on a Consolidated basis, and except where the same are being
contested in good faith, if the outcome of such contestation, if decided
adversely to the Guarantor or the Restricted Subsidiaries, would not
reasonably be expected to result in a Material Adverse Change, considered
on a Consolidated basis. Notwithstanding the foregoing contained in this
Section 11.10, it shall punctually pay all amounts due or to become due
under this Agreement.
11.11 MAINTENANCE OF RATIOS
The Guarantor shall maintain:
11.11.1 at all times during the Term, a ratio of Consolidated
Funded Debt to Consolidated Total Capitalization not exceeding 50%;
11.11.2 a Consolidated ratio (determined as of the end of each
fiscal quarter of the Guarantor) of Net Income Available for Fixed
Charges to Fixed Charges for the immediately preceding period of
four consecutive fiscal quarters including the fiscal quarter
ending on the calculation date (taken as a single accounting
period) at not less than 2.0 to 1.0; and
11.11.3 at all times during the Term, a minimum Consolidated
Net Worth of Cdn. $200,000,000;
For greater certainty and without limiting any provision of this Agreement,
each of the Borrower and the Guarantor acknowledges that the failure to
respect any of the foregoing financial ratios at any time during the Term
constitutes a material breach of this Agreement.
11.12 PAYMENT OF LEGAL FEES AND OTHER EXPENSES
Whether the transactions contemplated by this Agreement are concluded or
not and whether or not any part of the Credit is actually advanced, in
whole or in part, the Borrower shall pay all reasonable costs relating to
the Credit, including in particular:
43
11.12.1 the reasonable legal fees and costs incurred by the
Lender (including those incurred by Comerica Bank) for the
negotiation, drafting, signing, registration, publication and/or
service of this Agreement and the IPG Guarantee as well as any
amendments, renunciations, consents or examinations pertaining to
this Agreement and the IPG Guarantee; and
11.12.2 all reasonable fees, including reasonable legal fees
and costs, incurred by the Lender to preserve, enforce or exercise
its rights hereunder or under the IPG Guarantee following an
action, a Default or an omission of the Guarantor or of a
Restricted Subsidiary.
All amounts due to the Lender pursuant hereto shall bear interest on the
US Prime Rate Basis from the date of their disbursement by the Lender or
from the date of their undertaking until the Borrower has repaid same in
full, with interest on unpaid interest, as in the case of the US Prime
Rate Advances, taking into account such modifications as may be necessary.
The obligations of the Borrower under this Section 11.12 shall subsist
notwithstanding the full repayment of the Loan under the provisions hereof.
11.13 FINANCIAL REPORTING
For so long as the Loan or any other amounts payable to the Lender
hereunder remain outstanding and unpaid, or the Borrower is entitled to
borrow hereunder (whether or not the conditions precedent to such
borrowing have or may be satisfied) and unless the Lender shall otherwise
agree in writing, each of the Guarantor and the Borrower agrees to provide
or cause to be provided to the Lender and so undertakes:
11.13.1 QUARTERLY STATEMENTS
Within 60 days after the end of each fiscal quarter of each fiscal
year of the Guarantor (other than the last quarter), the unaudited
Consolidated and unConsolidated balance sheet of the Guarantor and
each of the Restricted Subsidiaries which carries on business as at
the end of such quarter and the related Consolidated statements of
earnings and changes in financial position, prepared in accordance
with GAAP, for the period then ended, in each case with comparative
figures for the same period for the immediately preceding fiscal
year, accompanied by a certificate of the Senior Financial Officer
of the Guarantor and setting forth the information necessary to
determine whether the Guarantor has complied with the covenants
contained in Section 11.11, certifying that each of the Guarantor
and the Borrower is in compliance with all of its covenants
hereunder and that no Default or Event of Default has come to the
attention of such Senior Financial Officer of the Guarantor signing
the certificate, after due inquiry, or if a Default or Event of
Default has
44
occurred, setting out the relevant particulars thereof, the period
of existence thereof and what action the Guarantor has taken or
proposes to take with respect thereto.
11.13.2 ANNUAL STATEMENTS
Within 120 days following the end of each fiscal year of the
Guarantor:
(a) the audited Consolidated balance sheet of the
Guarantor as at the end of such year and the related
Consolidated statements of earnings and changes in
financial position for such fiscal year, together with
comparative figures for the immediately preceding
year, the whole as certified without qualification by
a reputable firm of independent chartered accountants
acceptable to the Lender, together with the unaudited
unConsolidated balance sheet of the Guarantor and each
Restricted Subsidiary as at the end of such year and
the related unConsolidated statements of earnings and
changes in financial position for such fiscal year,
together with comparative figures for the immediately
preceding year, and any audited statements of any
Restricted Subsidiary which may be prepared; and
(b) a certificate of a Senior Financial Officer
setting forth the information necessary to determine
whether the Guarantor has complied with the covenants
contained in Section 11.11, and certifying that each
of the Guarantor and the Borrower is in compliance
with all of its covenants hereunder and that no
Default or Event of Default has come to the attention
of the Senior Financial Officer of the Guarantor
signing the certificate, after due inquiry, or if a
Default or Event of Default has occurred, setting out
the relevant particulars thereof, the period of
existence thereof and what action the Guarantor has
taken or proposes to take with respect thereto.
11.13.3 OTHER INFORMATION
a) BUDGET: Within 60 days following the end of each fiscal
year of the Guarantor, the annual Consolidated pre-tax
operating forecast and the Consolidated Capital Expenditures
budget of the Guarantor;
b) AUDIT REPORTS: Promptly upon receipt thereof, one copy
of each interim or special audit made by independent
accountants of the books of the Guarantor or any Restricted
Subsidiary and any management letter received from such
accountants;
45
c) GOVERNMENTAL AND OTHER REPORTS: Promptly upon their
becoming available, one copy of each financial statement,
report, notice or proxy statement sent by the Guarantor to
stockholders generally and of each regular or periodic
report, and any registration statement or prospectus filed by
the Guarantor or any Subsidiary with any securities exchange
or any governmental regulatory body including, but without
limitation, the Guarantor's Form 20F and unaudited quarterly
reports, and copies of any orders in any proceedings to which
the Guarantor or any of its Subsidiaries is a party, issued
by any governmental agency having jurisdiction over the
Guarantor or any of its Subsidiaries;
d) UNRESTRICTED SUBSIDIARIES: Within the respective periods
provided in subsections 11.13.1 and 11.13.2, financial
statements of the character and for the dates and periods as
in said subsections 11.13.1 and 11.13.2 above, covering each
Unrestricted Subsidiary (or groups of Unrestricted
Subsidiaries on a consolidated basis);
e) OTHER INFORMATION: From time to time and upon demand by
and reasonable notice from the Lender, the data, reports,
statements, documents or other additional information
pertaining to the business, assets, liabilities, financial
position, operating results or business prospects of the
Guarantor or any of the Restricted Subsidiaries, as well as
any documents, writings or books of account in connection
therewith, as the Lender may request, acting reasonably.
11.14 NOTICE OF CERTAIN EVENTS
The Borrower and the Guarantor shall advise the Lender forthwith upon the
occurrence of any of the following events:
11.14.1 The commencement of any proceeding or investigation by
or before any governmental body and any action or proceeding before
any court or arbitrator against the Guarantor, the Restricted
Subsidiaries, or any of their property, assets or activities which,
in the event that a decision is rendered which is adverse to them,
could constitute a Material Adverse Change;
11.14.2 Promptly upon the occurrence thereof, written notice of
(a) a Reportable Event with respect to any Plan; (b) the
institution of any steps by the Guarantor, the Borrower, any ERISA
Affiliate, the PBGC or any other person to terminate any Plan; (c)
the institution of any steps by the Guarantor or any ERISA
Affiliate to withdraw from any Plan; (d) a non-exempt "prohibited
transaction" within the meaning of Section 406 of the ERISA in
connection with any Plan; (e) any material increase in the
contingent liability of the Guarantor or any Subsidiary with
respect to any post-retirement welfare liability; or (f) the taking
of any action by, or
46
the threatening of the taking of any action by, the Internal
Revenue Service, the Department of Labour or the PBGC with respect
to any of the foregoing;
11.14.3 The occurrence of any Material Adverse Change
(considered on a Consolidated basis) which is known to the Borrower
or the Guarantor, acting reasonably;
11.14.4 Any Default or Event of Default, specifying in each
case the relevant details and the action contemplated in this
respect.
11.15 ACCURACY OF REPORTS
All information, reports, statements and other documents and data provided
to the Lender, whether pursuant to this Article or any other provisions of
this Agreement shall, at the time same shall be provided, be true, complete
and accurate in all material respects to the extent necessary to provide
the Lender with a true and accurate understanding of their effect.
11.16 LENDER'S OPTION TO OBTAIN IMPROVED TERMS AND CONDITIONS
The Lender shall immediately be notified of the terms and conditions of
any Debt to be created by the Borrower or the Guarantor. The Lender shall
have the option to require the Borrower and the Guarantor to amend this
Agreement to incorporate the provisions of any such agreement relating to
Debt if the Lender so wishes, it being understood that the provisions which
may be so incorporated shall not extend to pricing, Margins and, with
respect to any demand facilities, the maturity date of such facilities.
11.17 DESIGNATION OF RESTRICTED SUBSIDIARIES
The Guarantor may designate any Subsidiary a Restricted Subsidiary by
giving written notice to the Lender that the Board of Directors of the
Guarantor has made such designation, provided, however, no Subsidiary may
be designated a Restricted Subsidiary unless, at the time of such
designation and after giving effect thereto, no Default or Event of Default
shall exist. Any such designation shall be irrevocable.
12 NEGATIVE COVENANTS
For so long as the Loan or any other amounts payable hereunder to the Lender
remain outstanding and unpaid, or the Borrower is entitled to borrow hereunder
(whether or not the conditions precedent to such borrowing have or may be
satisfied), each of the Borrower and the Guarantor, for itself and each of the
other Restricted Subsidiaries and with respect to itself and each of the other
Restricted Subsidiaries, agrees that it shall not do any of the following:
47
12.1 LIQUIDATION, AMALGAMATION, MERGERS, CONSOLIDATIONS AND SALE OF
ASSETS
12.1.1 Consolidate or amalgamate with or be a party to a
merger with any other corporation, or sell, lease or otherwise
dispose of all or any substantial part (as defined in subsection
12.1.4) of Consolidated Assets; provided, however, that:
(a) any Restricted Subsidiary may merge or amalgamate or
consolidate with or into the Guarantor or any Wholly-owned
Restricted Subsidiary so long as in any merger or
consolidation involving the Guarantor, the Guarantor shall be
the surviving or continuing corporation;
(b) the Guarantor may consolidate or amalgamate or merge
with any other corporation if (i) in the case of any
consolidation or merger, the purchasing, surviving or
continuing corporation shall be the Guarantor, or in the case
of any amalgamation, the Guarantor's existence shall continue
with the amalgamation and all obligations hereunder and under
the IPG Guarantee shall constitute obligations of the
amalgamated entity and (ii) at the time of such amalgamation,
consolidation or merger after giving effect thereto, no
Default or Event of Default shall have occurred and be
continuing; and
(c) any Restricted Subsidiary may sell, lease or otherwise
dispose of all or any substantial part of its assets to the
Guarantor or any Wholly-owned Restricted Subsidiary.
12.1.2 Permit any Restricted Subsidiary to issue or sell any
shares of stock of any class of such Restricted Subsidiary
(including as "stock" for the purposes of this Section 12.1, any
warrants, rights or options to purchase or otherwise acquire stock
or other Securities exchangeable for or convertible into stock) to
any Person other than the Guarantor or a Wholly-owned Restricted
Subsidiary, except for the purpose of qualifying directors, or
except in satisfaction of the validly pre-existing preemptive
rights of minority shareholders in connection with the simultaneous
issuance of stock to the Guarantor and/or a Restricted Subsidiary
whereby the Guarantor and/or such Restricted Subsidiary maintain
their same proportionate interest in such Restricted Subsidiary.
12.1.3 Sell, transfer or otherwise dispose of any shares of
stock of any Restricted Subsidiary (except to qualify directors)
and will not permit any Restricted Subsidiary to sell, transfer or
otherwise dispose of (except to the Guarantor or a Wholly-owned
Restricted Subsidiary) any shares of stock of any other Restricted
Subsidiary, unless:
(a) simultaneously with such sale, transfer, or
disposition, all shares of stock of such Restricted
Subsidiary at the time owned by the Guarantor and by
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every other Restricted Subsidiary shall be sold, transferred
or disposed of as an entirety; and
(b) such sale or other disposition does not involve a
substantial part (as hereinafter defined) of the assets of
the Guarantor and its Restricted Subsidiaries;
provided, however, that nothing in subsections 12.1.3 and 12.1.4
shall permit any disposition by the Guarantor of any of the limited
partnership units or other interest in the Borrower, the
disposition by the Borrower of the shares of Canco, any disposition
of the shares of IPG Finance LLC by Canco, or any disposition of
the shares of IPG (US) Holdings Inc. or IPG (US) Inc..
12.1.4 As used in this Section 12.1, a sale, lease or other
disposition of assets shall be deemed to be a "substantial part" of
the assets of the Guarantor and its Restricted Subsidiaries if the
book value of such assets, when added to the book value of all
other assets sold, leased or otherwise disposed of by the Guarantor
and its Restricted Subsidiaries (other than in the ordinary course
of business) during the 12-month period ending with the date of
such sale, lease or other disposition, exceeds 10% of Consolidated
Assets, determined as of the end of the immediately preceding
fiscal quarter.
For the purpose of making any determination of "substantial part",
any sale, lease or other dispositions of assets of the Guarantor
and its Restricted Subsidiaries shall not be included if and to the
extent the net proceeds are segregated from the general accounts of
the Guarantor and any Restricted Subsidiary, invested in Cash
Equivalents until applied in accordance with clauses (1) or (2)
below, and either (1) within one year after such sale, lease or
other disposition, are used to acquire Like Assets, or (2) within
one year after such sale, lease or disposition, are applied to the
optional prepayment of Indebtedness for borrowed money on a PARI
PASSU basis with all other lenders owed any such Indebtedness for
borrowed money.
12.2 LIMITATIONS ON DEBT
12.2.1 Create, assume or incur or in any manner become liable
in respect of any Debt, except:
(a) Funded Debt of the Guarantor and its Restricted
Subsidiaries permitted by subsection 11.11.1;
(b) Current Debt of the Guarantor or any Restricted
Subsidiary, provided that during the twelve-month period
immediately preceding the date of any determination
hereunder, there shall have been a period of 30 consecutive
days
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during which Current Debt of the Guarantor and its
Restricted Subsidiaries shall be an amount no greater than
the amount of additional Funded Debt that could have been
issued on each such day of said 30-day period within the
limitations of subsection 12.2.1(a);
(c) in addition to the limitations with respect to Debt
pursuant to the foregoing paragraphs (a) and (b), in the case
of (i) unsecured Debt of any Restricted Subsidiary
("UNSECURED PRIORITY DEBT") and (ii) Debt of the Guarantor
and its Restricted Subsidiaries secured by Permitted Charges
("SECURED PRIORITY DEBT", and, collectively with the
Unsecured Priority Debt being herein referred to as
"PRIORITY DEBT"), at the time of issuance of any such
Priority Debt and after giving effect thereto and the
application of the proceeds thereof, (x) the aggregate
principal amount of Priority Debt shall not exceed an amount
equal to Cdn. $60,000,000, (y) the aggregate amount of
Secured Priority Debt shall not exceed 20% of Consolidated
Net Worth and (z) all such Priority Debt shall have been
incurred within the other applicable limitations of this
Section 12.2; and
(d) Debt of a Restricted Subsidiary to the Guarantor or to
a Wholly-owned Restricted Subsidiary.
12.2.2 Any corporation which becomes a Restricted Subsidiary
after the date hereof shall, for all purposes of this Section 12.2,
be deemed to have created, assumed or incurred at the time it
becomes a Restricted Subsidiary all Debt of such corporation
existing immediately after it becomes a Restricted Subsidiary.
12.2.3 If the Guarantor or any Restricted Subsidiary incurs
additional Debt in excess of Cdn. $50,000,000 in connection with an
acquisition which is permitted as a Restricted Investment, such
Debt shall be Funded Debt and shall be subject to terms and
conditions no more restrictive than those contained in the Note
Agreement.
12.2.4 The Borrower shall not, individually or collectively
with its Subsidiaries, IPG Finance LLC and Canco, as well as with
IPG (US) Acquisition Corporation, IPG (US) Holdings Inc. and IPG
(US) Inc., incur or have at any time any Indebtedness in excess of
an aggregate amount of US $100,000, save with respect to the
liability of the Borrower in respect of the Loan.
12.3 BORROWER'S BUSINESS
Permit any of the Borrower, Canco or IPG Finance LLC to carry on any
business, other than taking such steps as may be necessary to maintain its
existence or to hold securities of Restricted Subsidiaries.
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12.4 CHARGES
Create, incur, assume, enter into or permit to subsist, directly or
indirectly, any Charge on its or their property or assets, whether now
owned or hereafter acquired, or upon any income or profits therefrom, or
transfer any property for the purpose of subjecting the same to the
payment of obligations in priority to the payment of its or their general
creditors, or acquire or agree to acquire, or permit any Restricted
Subsidiary to acquire, any property or assets upon conditional sales
agreements or other title retention devices, except Permitted Charges, and
only to the extent that the aggregate amount secured by Permitted Charges
does not exceed 20% of Consolidated Net Worth, and, together with the
aggregate Unsecured Priority Debt (as defined in subsection 12.2.1 (c)),
does not exceed Cdn. $60,000,000.
12.5 RESTRICTED INVESTMENTS AND RESTRICTED PAYMENTS
Make any Restricted Investment or Restricted Payment, if, after giving
effect thereto, the sum of:
12.5.1 the aggregate amount of Restricted Payments made during
the period from and after January 1, 1996 to and including the date
of the making of the Restricted Payment in question, plus
12.5.2 the aggregate amount of all Restricted Investments made
by the Guarantor or any Restricted Subsidiary during said period
would exceed the sum of (a) Cdn. $85,000,000 plus (b) 75% of Consolidated
Net Income for such period, computed on a cumulative basis for said entire
period (or if such Consolidated Net Income is a deficit figure for any
fiscal period within such period, then minus 100% of such deficit) plus (c)
an amount equal to the aggregate net cash proceeds received by the
Guarantor from the issuance or sale after the Closing Date (other than to
the Guarantor or any Subsidiary) of shares of common stock of the Guarantor
(such sum described in clauses (a), (b) and (c) being referred to as the
"AVAILABLE POOL").
In addition to and not in limitation of the foregoing restrictions, the
Guarantor will not, and will not permit any Restricted Subsidiary to make
any Investment in or make any Restricted Payment to, any Unrestricted
Subsidiary:
12.5.3 not engaged in a business substantially related to the
business of the Guarantor and its Restricted Subsidiaries if, after
giving effect thereto, the sum of (a) all Investments in such
Unrestricted Subsidiaries made by the Guarantor and its Restricted
Subsidiaries during the period from and after January 1, 1996 plus
(b) the aggregate amount of Restricted Payments made by the
Guarantor and its Restricted Subsidiaries to such Unrestricted
Subsidiaries during the period from and after
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January 1, 1996, would exceed an amount equal to the Available Pool
minus Cdn. $70,000,000; or
12.5.4 if, after giving effect thereto, the sum of (a) all
Investments in such Unrestricted Subsidiaries made by the Guarantor
and its Restricted Subsidiaries during the period from and after
January 1, 1996 plus (b) the aggregate amount of Restricted
Payments made by the Guarantor and its Restricted Subsidiaries to
such Unrestricted Subsidiaries during the period from and after the
Closing Date, would exceed US $20,000,000.
In addition to the foregoing restrictions, the Guarantor will not make any
Restricted Payments or any Restricted Investment if, at the time thereof or
after giving effect thereto, any Default or Event of Default shall exist.
The Guarantor will not declare any dividend which constitutes a Restricted
Payment payable more than 60 days after the date of declaration thereof.
For the purposes of this section 12.5, the amount of any Restricted Payment
declared, paid or distributed in property shall be deemed to be the greater
of the book value or fair market value (as determined in good faith by the
Board of Directors of the Guarantor) of such property at the time of the
making of the Restricted Payment in question.
In valuing any Restricted Investments for the purpose of applying the
limitations set forth in this Section 12.5, such Restricted Investments
shall be taken at the original cost thereof, without allowance for any
subsequent write-offs or appreciation or depreciation therein, but less any
amount repaid or recovered on account of capital or principal.
For the purposes of this Section 12.5, at any time when a corporation
becomes a Restricted Subsidiary, all Restricted Investments of such
corporation at such time shall be deemed to have been made by such
corporation, as a Restricted Subsidiary, at such time.
12.6 TRANSACTIONS WITH AFFILIATES
Enter into or be a party to any transaction or arrangement with any
Affiliate (including, without limitation, the purchase from, sale to or
exchange of property with, or the rendering of any service by or for, any
Affiliate), except in the ordinary course of and pursuant to the reasonable
requirements of the Guarantor's or such Restricted Subsidiary's business
and upon fair and reasonable terms no less favourable to the Guarantor and
such Restricted Subsidiary than would obtain in a comparable arm's-length
transaction with a Person other than an Affiliate.
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12.7 TERMINATION OF PENSION PLANS
Withdraw, or permit any Subsidiary to withdraw, from any Multiemployer
Plan or permit any employee benefit plan maintained by it to be terminated
if such withdrawal or termination could result in withdrawal liability (as
described in Part 1 of Subtitle E of Title IV of ERISA) or the imposition
of a Charge on any property of the Guarantor or any Subsidiary pursuant to
section 4068 of ERISA.
12.8 OWNERSHIP OF SUBSIDIARIES
Permit each of Intertape Polymer Inc. and Intertape Polymer Corporation to
be other than Wholly-owned Subsidiaries, or at any time own less than 80%
of the Voting Stock of its Restricted Subsidiaries, together with such
Securities of the Restricted Subsidiaries as are necessary to provide
the Guarantor with an economic interest of not less than 80% of each
Restricted Subsidiary.
13 EVENTS OF DEFAULT AND REALIZATION
13.1 EVENT OF DEFAULT
The occurrence of any of the following events during the Term shall
constitute an Event of Default unless remedied within the prescribed
delays or renounced to in writing:
13.1.1 If the Borrower fails to make any payment of interest
or principal with respect to the Loan when due, or fails to pay any
other amount due to the Lender within two (2) Business Days after
notice thereof; or
13.1.2 If the Guarantor or any one or more of the Restricted
Subsidiaries fails to respect any of its other obligations and
undertakings hereunder or under the IPG Guarantee or another
undertaking of the Guarantor or any of the Restricted Subsidiaries
with respect to the Loan not otherwise contemplated by this Section
13.1 and has not remedied the Default within ten (10) days
following the date on which the Lender has given written notice to
the Borrower; or
13.1.3 If the Guarantor or any of the Restricted Subsidiaries
(a) is generally not paying, or admits in writing its inability to
pay, its debts as they become due; or (b) commits another act of
bankruptcy within the meaning of the Bankruptcy and Insolvency Act
(Canada); or (c) makes an assignment in favour of its creditors; or
(d) files or consents to the filing of a petition for a receiving
order or a proposal within the meaning of the Bankruptcy and
Insolvency Act (Canada); or (e) is insolvent or bankrupt, or makes
a motion to a tribunal to name a trustee, receiver, liquidator or
sequestrator with respect to its property; or (f) files or consents
in any way to the
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filing of a petition for relief or reorganization or arrangement,
or otherwise commences a proceeding with respect to itself or its
property under the provisions of any law contemplating
reorganizations, proposals, rectification, compromise or
liquidation, in any jurisdiction whatsoever (hereinafter in this
subsection 13.1.3 called a "PROCEEDING"); or (g) is the object of a
Proceeding which is not settled or withdrawn within a delay of five
(5) Business Days; or (h) if a trustee, receiver, liquidator or
sequestrator with respect to the Guarantor, any of the Restricted
Subsidiaries or any of their property is named; or (i) if the
Guarantor or any of the Restricted Subsidiaries consent, approve or
accept any Proceeding or the nomination of any trustee, receiver,
liquidator or sequestrator with respect to it or its property;
provided that, if a Proceeding is commenced against the Guarantor
or a Restricted Subsidiary, the Borrower or the Restricted
Subsidiaries shall have the right to contest in good faith, if the
Lender is absolutely satisfied, in its complete discretion, that
the repayment of the Loan, the interest and the accessories
relating thereto and the ability of the Borrower and the Guarantor
to service their Debt shall not be compromised; or
13.1.4 If property of the Guarantor or any of the Restricted
Subsidiaries having a total value of more than US $2,500,000 is the
object of a seizure or of a taking of possession or other
Proceeding by a creditor, provided that if such legal proceedings
are commenced against the Guarantor or a Restricted Subsidiary, the
Guarantor or the Restricted Subsidiary shall have the right to
contest in good faith, if the Lender is absolutely satisfied, in
its complete discretion, that the repayment of the Loan, the
interest and the accessories relating thereto and the ability of
the Borrower and the Guarantor to service its Debt will not be
compromised; or
13.1.5 If any statement, attestation, financial statement,
report, data, representation or warranty which was given by, for
the account of or in the name of the Guarantor or any of the
Restricted Subsidiaries to the Lender, with respect to this
Agreement or the IPG Guarantee, is revealed to be false, misleading
or incomplete in any material respect at any time, or if the
auditors certifying the financial statements in accordance with
subsection 11.13.2 insert a material qualification in their
opinion; or
13.1.6 If the Guarantor or any of the Restricted Subsidiaries
is in default with respect to any Material Debt (other than amounts
due to the Lender hereunder), if:
(a) such default was caused by the failure to make any
payment of an amount in excess of US $5,000,000 when due, and
such default is not remedied within ten (10) days of its
occurrence; or
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(b) such default could permit the creditor of such
obligations to cause an amount in excess of US $5,000,000 to
become due and payable prior to its stated maturity or
scheduled payment date; or
13.1.7 If a judgment is rendered by a competent tribunal
against the Guarantor or any of the Restricted Subsidiaries in an
aggregate amount in excess of US $2,500,000 (net of applicable
insurance coverage pursuant to which liability is acknowledged in
writing by the insurer to the Agent on behalf of the Lender) and
remains undischarged for a period ending not more than five (5)
Business Days before the date on which such judgment becomes
executory;
13.1.8 If IPG Finance LLC assigns or transfers any of its
rights against ATC or IPG (US) Acquisition Corporation with respect
to amounts owed to it from either or both of them, other than to
the Lender;
13.1.9 If the Notes become payable in advance following a
Change in Control, as defined in the Note Agreement;
13.1.10 If in the opinion of the Lender, acting in good faith,
there is a Material Adverse Change, on a Consolidated basis.
13.2 REMEDIES
If an Event of Default occurs under subsection 13.1.3, the Loans shall
immediately become due and exigible, without presentation, demand, protest
or other notice of any nature, to which the Borrower hereby expressly
renounces. If any other Event of Default occurs and is continuing, the
Lender may declare immediately due and exigible, without presentation,
demand, protest or other notice of any nature, to which the Borrower
hereby expressly renounces, notwithstanding any provision to the contrary
effect in this Agreement or in the IPG Guarantee:
13.2.1 the entire amount of the Loan, including the amount
corresponding to the face amount of all Letters of Credit then
outstanding, in principal and interest, notwithstanding the fact
that one or more of the holders of the Letters of Credit issued
pursuant to the provisions hereof have not demanded payment in
whole or in part or have demanded only partial payment from the
Lender. Neither the Guarantor nor the Borrower shall have the
right to invoke against the Lender any defence or right of action,
indemnification or compensation of any nature or kind whatsoever
that the Borrower may at any time have or have had with respect to
any holder of one or more of the Letters of Credit issued in
accordance with the provisions hereof. Any amounts paid to the
Lender in respect of any outstanding Letters of Credit shall be
retained by the Lender to be applied against such Letters of Credit
when payment thereon is requested, with any balance, after payment
of all Loans, to be returned to the Borrower; and
55
13.2.2 an amount equal to the amount of losses, costs and expenses
assumed by the Lender and referred to in Section 7.2; and
the Credit shall cease and as and from such time shall be annulled, and the
Lender may exercise all of its rights and recourses under the provisions of
this Agreement and the Guarantee. For greater certainty, from and after
the occurrence of any Default or Event of Default, the Lender shall not be
obliged to make any further Advances under the Credit.
13.3 BANKRUPTCY AND INSOLVENCY
If the Guarantor or any of the Restricted Subsidiaries files a notice of
intention to file a proposal, or files a proposal under the Bankruptcy and
Insolvency Act, or files a petition under the US Bankruptcy Code, or if the
Guarantor or any of the Restricted Subsidiaries obtains the permission of a
Canadian court to file a Plan of Arrangement under the Companies' Creditors
Arrangements Act, and if a stay of proceedings is obtained or ordered under
the provisions of any such statute, without prejudice to the Lender's
rights to contest such stay of proceedings, each of the Borrower and the
Guarantor covenants and agrees to continue to pay interest on all amounts
due to the Lender. In this regard, each of the Borrower and the Guarantor
acknowledges that permitting the Borrower to continue to use the proceeds
of the Loan constitutes valuable consideration provided after the filing of
any such proceeding in the same way that permitting the Borrower to use
leased premises constitutes such valuable consideration.
13.4 APPLICATION OF PROCEEDS
The Lender may apply the proceeds of realization of the property of the
Borrower and the Guarantor, and of any credit or compensating balance, in
reduction of the part of the Indebtedness of the Borrower to the Lender
(in principal, interest or accessories) which the Lender judges
appropriate.
13.5 NOTICE
Except where otherwise expressly provided herein, no notice or demand of
any nature is required to be given to the Borrower or the Guarantor by the
Lender in order to put the Borrower and the Guarantor in default, which
shall occur by the simple lapse of time granted to execute an obligation or
by the simple occurrence of a Default.
13.6 COSTS
If an Event of Default occurs, and within the limits contemplated by
Section 11.12, the Lender may impute to its account and pay to other
persons reasonable sums for services rendered with respect to the
realization, recovery, sale, transfer, delivery and obtention of payment,
and may
56
deduct the amount of such costs and payments from the proceeds
which it receives therefrom. The balance of such proceeds may be held by
the Lender and, when the Lender decides it is opportune, acting reasonably,
may be applied to the account of the part of the Indebtedness of the
Borrower and the Guarantor to the Lender which the Lender deems preferable,
without prejudice to the rights of the Lender against the Borrower and the
Guarantor for any loss of profit.
13.7 RELATIONS WITH THE BORROWER
The Lender may grant delays, take security or renounce thereto, accept
compromises, grant acquittances and releases and otherwise negotiate with
the Borrower and the Guarantor as it deems advisable without in any way
diminishing the liability of the Borrower or the Guarantor.
14 JUDGMENT CURRENCY
14.1 RULES OF CONVERSION
If for the purpose of obtaining judgment in any court or for any other
purpose hereunder, it is necessary to convert an amount due, advanced or to
be advanced hereunder from the currency in which it is due (the "FIRST
CURRENCY") into another currency (the "SECOND CURRENCY") the rate of
exchange used shall be that at which, in accordance with normal banking
procedures, the Lender could purchase, in the Canadian money market or the
Canadian exchange market, as the case may be, the First Currency with the
Second Currency on the date on which the judgment is rendered, the sum is
exigible or advanced or to be advanced, as the case may be. Each of the
Borrower and the Guarantor agrees that its obligations in respect of any
First Currency due from it to the Lender in accordance with the provisions
hereof shall, notwithstanding any judgment rendered or payment made in the
Second Currency, be discharged by a payment made to the Lender on account
thereof in the Second Currency only to the extent that, on the Business Day
following receipt of such payment in the Second Currency, the Lender may,
in accordance with normal banking procedures, purchase on the Canadian
money market or the Canadian foreign exchange market, as the case may be,
the First Currency with the amount of the Second Currency so paid or which
a judgment rendered exigible; and if the amount of the First Currency which
may be so purchased is less than the amount originally due in the First
Currency, each of the Borrower and the Guarantor agrees as a separate and
independent obligation and notwithstanding any such payment or judgment to
indemnify the Lender against such deficiency.
14.2 DETERMINATION OF AN EQUIVALENT CURRENCY
If, in its discretion, the Lender chooses or, pursuant to the terms of this
Agreement, is obliged to choose the equivalent in Canadian Dollars of any
securities or amounts expressed in US
57
Dollars or the equivalent in US Dollars of any securities or amounts
expressed in Canadian Dollars, the Lender, in accordance with the
conversion rules as stipulated in Section 14.1:
14.2.1 on the date indicated in the Notice of Borrowing as the
date of a request for an Advance; and
14.2.2 at any other time which in the opinion of the Lender is
desirable;
may, using the spot rate of the Lender on such date, determine the
equivalent in Canadian Dollars or in US Dollars, as the case may be, of any
Security or amount expressed in the other currency pursuant to the terms
hereof. Immediately following such determination, the Lender shall inform
the Borrower and the Guarantor of the conclusion which the Lender has
reached.
15 ASSIGNMENT
15.1 ASSIGNMENT BY THE BORROWER
The rights of the Borrower under the provisions hereof are purely personal
and may not be transferred or assigned, and the Borrower may not transfer
or assign any of its obligations, such assignment being null and of no
effect opposite the Lender and rendering any balance outstanding of the
amounts referred to in Section l3.2 immediately due and exigible at the
option of the Lender and further releasing the Lender from any obligation
to make any further Advances under the provisions hereof.
15.2 ASSIGNMENTS AND TRANSFERS BY THE LENDER
15.2.1 The Lender may transfer 50% of its Participation under
Facility B to Comerica Bank at any time. If by March 31, 1998, the
Guarantor and the Restricted Subsidiaries have not completed a
private placement and remitted the proceeds thereof to the Lender
in full payment of the Loans under Facility B, the Lender may, at
its own cost, assign or transfer to a financial institution
entitled to lend money in Canada (the "ASSIGNEE") in accordance
with this Article 15 any or all of its rights, benefits and
obligations under Facility A and/or Facility B hereunder with the
prior consent of the Borrower, which will not be unreasonably
withheld or delayed. After the occurrence of a Default, the Lender
may transfer all or any part of its rights, benefits and
obligations hereunder to any Person, without the consent of the
Borrower, but upon notice to the Borrower.
15.2.2 Any such assignment or transfer shall be for a minimum
amount of US $5,000,000 and in multiples of US $1,000,000
thereafter, of any of Facilities A or B.
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15.2.3 Notwithstanding subsection 15.2.1, the Lender shall be
entitled to assign or transfer, at its own cost, in accordance with
the other provisions of this Section 15 (including 15.5), its
rights, benefits and obligations hereunder, in whole or in part, to
a parent, a Subsidiary or an Affiliate of the Lender, provided that
there are no resulting adverse tax consequences for the Borrower.
15.3 TRANSFER AGREEMENT
If the Lender wishes to assign or transfer all or any of its rights,
benefits and obligations hereunder in accordance with Section 15.2, then
such assignment or transfer shall be effected by the delivery by the Lender
to the Borrower of a duly completed and executed Transfer Agreement
whereupon, to the extent that in such Transfer Agreement the Lender seeks
to assign or transfer its rights and obligations hereunder:
15.3.1 the Lender shall be released from further obligations
to the Borrower with respect to the portion of the obligations of
the Lender assumed by the Assignee;
15.3.2 the Assignee shall assume the obligations of the Lender
and acquire the rights of the Lender in respect of the Borrower and
the Guarantor, without novation of the Borrower's obligations;
15.3.3 the Lender and the Assignee shall acquire the same
rights and assume the same obligations between themselves as they
would have acquired and assumed had the Assignee been an original
party hereto with the obligations assumed and the rights acquired
by it as a result of such assignment or transfer; and
15.3.4 the Borrower and the Guarantor shall execute such
documents and perform such acts as may be required to give effect
to the transfer or assignment.
15.4 NOTICE
The Lender shall promptly deliver a copy of any Transfer Agreement to the
Borrower and the Guarantor.
15.5 SUB-PARTICIPATIONS
The Lender may, at its own cost, grant one or more sub-participations in
its rights, benefits and obligations hereunder, provided that,
notwithstanding any such sub-participation, the Lender shall remain,
insofar as the Borrower is concerned, as the Lender responsible hereunder,
and the Borrower shall not be obliged to recognize any such sub-participant
as having the rights against it which it would have if it had been a party
hereto.
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15.6 GENERAL
Notwithstanding anything contained in this Article:
15.6.1 the Lender shall act as agent (the "AGENT") for each
Assignee and, in this connection, with respect to all decisions,
notices and other matters relating to anything referred to in this
Agreement, the Borrower shall only be obliged to give notice to or
request consents from the Lender;
15.6.2 subject to the provisions of the interlender agreement
referred to in subsection 15.6.5, all decisions to be taken by the
Lender with respect to any matter referred to in this Agreement
must be taken by the Lender and the Assignee(s) and must first be
approved by a majority of the Lender and the Assignee(s), acting
together, holding at least 66 2/3% of the Credit;
15.6.3 following any assignment, the term "Lender" shall mean,
as the context allows, the Lender in its role as Agent or the
Lender and the Assignees collectively;
15.6.4 the Borrower and the Guarantor shall pay an agency fee
to be negotiated between them and the Lender;
15.6.5 the Lender and the Assignee(s) shall enter into an
interlender agreement on terms and conditions to be negotiated
among them; and
15.6.6 the amounts payable by the Borrower under this
Agreement shall not increase, whether in respect of withholding on
account of taxes or otherwise, as a result of any such assignment
or transfer to an Assignee which is organized under the laws of a
jurisdiction outside of the United States of America, unless such
Assignee provides the Borrower with an IRS Form 4224 certifying
that the interest paid to such Assignee is in connection with a
U.S. trade or business conducted by the Assignee and therefore
exempt from U.S. withholding taxes.
16 RELATIONSHIP WITH AND BETWEEN THE LENDERS
In the event that Comerica Bank (herein ("CB") takes a 50% Participation under
Facility B, the following provisions shall apply:
16.1 ALLOCATION AS BETWEEN THE LENDERS
All Advances made under Facility A shall be made solely by TD. All
Advances made under Facility B shall be allocated between TD and CB in
accordance with their respective Participations, and any prepayments will
be allocated accordingly. The Borrower shall request
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its initial Advance equally from both Lenders under Facility B, and will
ensure that all renewals and conversions of such Advances are effected
with the Lender which made such initial Advance.
16.2 ACCOUNT OPERATIONS
The Borrower will maintain accounts at a branch of each of the Lenders and
will deal with each Lender separately with respect to the administration of
Advances and Loans, including Advances by way of Letter of Credit. The
Fees payable in respect of Facility B pursuant to subsection 5.10.2 shall
be paid to the Lenders in accordance with their respective Participations.
16.3 SHARING OF INFORMATION
The Borrower and the Guarantor hereby authorize the Lenders to provide each
other with any and all documentation and information which they have at any
time concerning the financial position of any of the Guarantor and its
Subsidiaries.
16.4 LIABILITY OF THE LENDERS
No Lender shall have any responsibility, (a) to the Borrower or the
Guarantor on account of the failure of any other Lender to perform its
obligations hereunder, or (b) to any other Lender on account of the failure
of the Borrower to perform its obligations hereunder.
Each Lender severally represents and warrants to the other that it has made
its own independent investigation of the financial condition and affairs of
the Borrower and the Guarantor in connection with the making and
continuation of its Participation in the Loan hereunder and has not relied
on any information provided to such Lender by another Lender in connection
herewith, and each Lender represents and warrants to the other that it
shall continue to make its own independent appraisal of the
creditworthiness of the Borrower and the Guarantor while the Loan is
outstanding or the Lenders have any obligations hereunder.
16.5 INTERLENDER AGREEMENT
The Lenders shall enter into an interlender agreement substantially in the
form of Schedule "K" in order to govern their relationship hereunder.
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17 MISCELLANEOUS
17.1 NOTICES
Except where otherwise specified herein, all notices, requests, demands or
other communications between the parties hereto shall be in writing and
shall be deemed to have been duly given or made to the party to whom such
notice, request, demand or other communication is given or permitted to be
given or made hereunder, when delivered to the party (by certified or
registered mail, postage prepaid, or by telegraph, telex, facsimile or by
physical delivery) to the address of such party and to the attention
indicated under the signature of such party or to any other address which
the parties hereto may subsequently communicate to each other in writing.
Any notice given by mail is deemed to have been received on the second
Business Day following the day on which the envelope containing the notice
has been deposited in a post office or in a mail box in the United States
of America. If normal postal or telegraph service is interrupted by
strike, work slow-down, fortuitous event or other cause, the party sending
the notice shall use such services which have not been interrupted or shall
deliver such notice by messenger in order to ensure its prompt receipt by
the other party.
17.2 AMENDMENT AND WAIVER
The rights and recourses of the Lender under this Agreement and the IPG
Guarantee are cumulative and do not exclude any other rights and recourses
which the Lender might have, and no omission or delay on the part of the
Lender in the exercise of any right shall have the effect of operating as a
waiver of such right, and the partial or sole exercise of a right or power
will not prevent the Lender from exercising thereafter any other right or
power. The provisions of this Agreement may only be amended or waived by
an instrument in writing (and not orally) in each case signed by the
requisite majority of Lenders, as will be determined in accordance with the
provisions of the interlender agreement to be entered into between them.
17.3 DETERMINATIONS FINAL
In the absence of any manifest error, any determinations to be made by the
Lender in accordance with the provisions hereof, when made, are final and
irrevocable for all parties.
17.4 ENTIRE AGREEMENT
The entire agreement between the parties is expressed herein, and no
variation or modification of its terms shall be valid unless expressed in
writing and signed by the parties. All previous agreements, promises,
proposals, representations, understandings and negotiations between the
parties hereto which relate in any way to the subject matter of this
Agreement are hereby deemed to be null.
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17.5 INDEMNIFICATION AND COMPENSATION
In addition to the other rights now or hereafter conferred by law and those
described in Section 8.11, and without limiting such rights, if a Default
or Event of Default should occur, the Lender is hereby authorized by the
Borrower and the Guarantor, at any time and from time to time, subject to
the obligation to give notice to the Borrower and the Guarantor
subsequently and within a reasonable delay, to indemnify, compensate, use
and allocate any deposit (general or special, term or demand, including,
without limitation, any debt evidenced by certificates of deposit, whether
or not matured) and any other debt at any time held or due by the Lender to
the Guarantor or the Restricted Subsidiaries or to its or their credit or
its or their account, with respect to and on account of any obligation and
indebtedness of the Borrower and the Guarantor to the Lender in accordance
with the provisions hereof or the IPG Guarantee, including, without
limitation, the accounts of any nature or kind which flow from or relate to
this Agreement, whether or not the Lender has made demand under the terms
hereof or have declared the amounts referred to in Section 13.2 as exigible
in accordance with the provisions of that Section and even if such
obligation and Debt or either of them is a future or unmatured Debt.
17.6 BENEFIT OF AGREEMENT
This Agreement shall be binding upon and ensure to the benefit of each
party hereto and its successors and permitted assigns.
17.7 COUNTERPARTS
This Agreement may be signed in any number of counterparts, each of which
shall be deemed to constitute an original, but all of the separate
counterparts shall constitute one single document.
17.8 APPLICABLE LAW
This Agreement, its interpretation and its application shall be governed by
the Laws of the State of New York.
17.9 SEVERABILITY
Each provision of this Agreement is separate and distinct from the others,
such that any decision of a court or tribunal to the effect that any
provision of this Agreement is null or unenforceable shall in no way affect
the validity of the other provisions of this Agreement or the
enforceability thereof. Any provision of this agreement which is
prohibited or un-enforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render
63
unenforceable such provision in any other jurisdiction. To the extent
permitted by applicable Laws, the Guarantor and the Restricted
Subsidiaries hereby waive any provision of any Laws which renders any
provision hereof prohibited or unenforceable in any respect.
17.10 FURTHER ASSURANCES
The Guarantor covenants and agrees on its own behalf and on behalf of each
of the Restricted Subsidiaries that, at the request of the Lender, the
Guarantor and each of the Restricted Subsidiaries will at any time and from
time to time execute and deliver such further and other documents and
instruments and do all acts and things as the Lender in its reasonable
discretion requires in order to evidence the indebtedness of the Borrower
and the Guarantor under this Agreement, under the IPG Guarantee, or
otherwise.
17.11 GOOD FAITH AND FAIR CONSIDERATION
Each of the Borrower and the Guarantor acknowledges and declares that it
has entered into this Agreement freely and of its own will. In particular,
each of the Borrower and the Guarantor acknowledges that the Agreement was
negotiated by it and by the Lender in good faith, and that there was no
exploitation of the Borrower or the Guarantor by the Lender, nor is there
any serious disproportion between the consideration provided by the Lender
and that provided by the Borrower and the Guarantor.
17.12 INDEMNITY
Each of the Guarantor and the Borrower agrees to indemnify and defend the
Lender and its directors, officers, agents and employees from, and hold
each of them harmless against, any and all losses, liabilities, claims,
damages or expenses of any kind which at any time or from time to time may
be asserted against or incurred or paid by any of them for or in connection
with: (i) the participation of the Lender in the transactions contemplated
by this Agreement, (ii) the role of the Lender in any investigation,
litigation or other proceeding brought or threatened relating to the
Credit, (iii) any liability arising directly or indirectly from or relating
to the presence on or under or the release or migration from any property
or into the environment of any hazardous material, and/or (iv) the
compliance with or enforcement of any of their rights or obligations
hereunder, including without limitation:
17.12.1 the fees and disbursements of counsel; and
17.12.2 the costs of defending, counterclaiming or claiming
over against third parties in respect of any action or matter and
any cost, liability or damage arising out of any settlement;
64
other than losses, liabilities, claims, damages or expenses incurred by
reason of the gross negligence or willful misconduct of the indemnified
party, as determined by a final judgment of a court of competent
jurisdiction.
17.13 JURISDICTION AND SERVICE IN RESPECT OF THE GUARANTOR AND THE
BORROWER
Any legal action or proceeding with respect to this Agreement or any
document related thereto may be brought in the courts of the State of New
York or of the United States of America for the Southern District of New
York, and, by execution and delivery of this Agreement, the Borrower and
the Guarantor hereby accepts for itself and in respect of its property,
generally and unconditionally, the jurisdiction of the aforesaid courts.
Each of the Borrower and the Guarantor hereby irrevocably and
unconditionally waives any objection, including, without limitation, any
objection to the laying of venue or based on the grounds of forum non
conveniens, which it may now or hereafter have to the bringing of any
action or proceeding in such respective jurisdictions. Each of the
Borrower, the Guarantor and Lender hereby irrevocably and unconditionally
waives trial by jury.
Each of the Borrower and the Guarantor further consents that all service
of process may be made by delivery to it at the address of the Borrower or
the Guarantor, as the case may be, set forth on the signature page hereof
or to its agent referred to below at such agent's address set forth below
and that service so made shall be deemed to be completed upon actual
receipt. Each of the Borrower and the Guarantor for itself hereby
irrevocably appoints CT Corporation System with an office on the date
hereof at 1633 Broadway, New York, New York, 10019, as its agent for the
purpose of receiving service of any process within the State of New York.
Nothing contained in this Section 16.13 shall affect the right of the
Lender to serve legal process in any other manner permitted by Law or to
bring any action or proceeding in the courts of any jurisdiction against
the Borrower or the Guarantor or to enforce a judgment obtained in the
courts of any other jurisdiction.
17.14 UNDERTAKING AND REPRESENTATION OF THE TORONTO-DOMINION BANK
The Toronto-Dominion Bank shall provide the Borrower with an IRS Form 4224
certifying that, and represents to the Borrower and the Guarantor that,
the interest paid to it hereunder is in connection with a U.S. trade or
business conducted by it and therefore exempt from U.S. withholding taxes.
17.15 LANGUAGE
The parties acknowledge that they have required that the present
agreement, as well as all documents, notices and legal proceedings
entered into, given or instituted pursuant hereto or relating directly or
indirectly hereto be drawn up in English. Les parties reconnaissent avoir
exige la redaction en anglais de la presente convention ainsi que de tous
documents executes,
65
avis donnes et procedures judiciaires intentees, directement ou
indirectement, relativement ou a la suite de la presente convention.
18 FORMAL DATE
18.1 FORMAL DATE
For the purposes of convenience, this Agreement may be referred to as
bearing Formal Date of December 15, 1997 notwithstanding its actual date
of signature.
IN WITNESS WHEREOF THE PARTIES HERETO HAVE SIGNED THIS AGREEMENT ON THE DATE
AND AT THE PLACE FIRST HEREINABOVE MENTIONED.
IPG HOLDINGS LP, represented by its INTERTAPE POLYMER GROUP INC.
General Partner, INTERTAPE POLYMER INC.
Per:_____________________________ Per:_____________________________
Per:_____________________________ Per:_____________________________
Address:- Address: 110 E Montee de Liesse
- - St. Laurent, Quebec
- - H4T 1N4
Attention: Chief Financial Officer Attention: Chief Financial Officer
Telephone: ( )_____-________ Telephone: ( )_____-________
Fax: ( )_____-________ Fax: ( )_____-________
66
THE TORONTO-DOMINION BANK
Per:_____________________________
Address: 909 Fannin, Suite 1700
Houston, Texas, 77010
ATTENTION: MANAGER, CREDIT ADMINISTRATION
Tel: (713) 653-8250
Fax: (713) 951-9921
67
SCHEDULE "A" - LIST OF LENDERS AND PARTICIPATIONS
FACILITY A
MAXIMUM
LENDER PARTICIPATION (%) PARTICIPATION ($)
- ------ ---------------- -----------------
THE TORONTO-DOMINION BANK 100% US $50,000,000
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _
FACILITY B
MAXIMUM
LENDER PARTICIPATION (%) PARTICIPATION ($)
- ------ ---------------- -----------------
THE TORONTO-DOMINION BANK 100% US $25,000,000
SCHEDULE "B" - NOTICE OF BORROWING AND CERTIFICATE
TO: [LENDER]
Attention:
FROM: IPG HOLDINGS LP
DATE:
1) This Notice of Borrowing and Certificate is delivered to you pursuant to
the credit agreement (the "CREDIT AGREEMENT") dated as of December 15, 1997.
All defined terms set forth in this Notice of Borrowing and Certificate shall
have the respective meanings set forth in the Credit Agreement.
2) We hereby request an Advance under Facility___ (INDICATE A OR B) pursuant
to Sections_________ of the Credit Agreement as follows:
(a) Date of Advance: ___________________________________________________
(b) Amount of Advance: _________________________________________________
(c) Type of Advance: ___________________________________________________
(d) Designated Period(s) (if any): _____________________________________
(e) Maturity Date(s) (if applicable): __________________________________
(f) Payment Instruction (if any): ______________________________________
3) We have understood the provisions of the Credit Agreement which are
relevant to the furnishing of this Notice of Borrowing and Certificate. To
the extent that this Notice of Borrowing and Certificate evidences, attests
or confirms compliance with any covenants or conditions precedent provided
for in the Credit Agreement, we have made such examination or investigation
as was, in our opinion, necessary to enable us to express an informed opinion
as to whether such covenants or conditions have been complied with.
4) WE HEREBY CERTIFY THAT, in our opinion, as of the date hereof:
(a) All of the representations and warranties of the Borrower contained
in Article 10 of the Credit Agreement are true and correct on and as of the
date hereof, except for those, if any, that expressly relate to an earlier
date, as though made on and as of the date hereof.
(b) All of the covenants of the Borrower contained in Articles 11 and
12 of the Credit Agreement together with all of the conditions precedent to
an Advance and all other terms and conditions contained in the Credit
Agreement have been fully complied with.
(c) No Event of Default has occurred and no Default has occurred and is
continuing.
Yours truly,
IPG HOLDINGS LP, represented by its
General Partner, INTERTAPE POLYMER INC.
Per:_____________________________
Title: __________________________
SCHEDULE "C" - IPG GUARANTEE
GUARANTEE entered into in the City of Montreal, Province of Quebec, as of
December 15, 1997,
BY: INTERTAPE POLYMER GROUP INC., a
company constituted in accordance with
the laws of Canada, having its
principal place of business at 110E
Montee de Liesse, in the City of St.
Laurent, Province of Quebec
(hereinafter called the "GUARANTOR")
IN FAVOUR OF: THE TORONTO-DOMINION BANK, a banking
corporation organized under the laws of
Canada, acting by and through its
Houston Agency, having an office at 909
Fannin Street, Suite 1700, in the City
of Houston, State of Texas, 77010
(hereinafter called the "LENDER")
WHEREAS pursuant to the Credit Agreement entered into among the
Borrower, the Guarantor and the Lender dated as of December 15, 1997 (the
"CREDIT AGREEMENT"), the Guarantor has agreed to provide the Lender with a
guarantee of the obligations of IPG Holdings LP (the "BORROWER") to the
Lender;
NOW THEREFORE, THE PARTIES HERETO HAVE AGREED AS FOLLOWS:
1 GUARANTEE
1.1 GUARANTEE
For valuable consideration, the undersigned (herein referred to as the
"GUARANTOR") hereby solidarily (jointly and severally) guarantees to the
Lender (at the address set out in the Credit Agreement or such other address
as the Lender may advise the Guarantor in writing), forthwith after demand
therefor (at the Guarantor's address specified in the Credit Agreement or
such other address as the Guarantor may advise the Lender in writing),
payment of all present and future debts and liabilities, and the performance
of all obligations of every nature, absolute or contingent, direct, indirect
or otherwise, in any currency, now or at any time and from time to time
hereafter due or owing by the Borrower to the Lender, whether arising under
the Credit Agreement, from dealings between the Lender and the Borrower, or
from any other dealings by which the Borrower may become in any manner
whatever liable to the Lender (the "OBLIGATIONS"). The Guarantor expressly
renounces to the benefits of division and discussion.
1.2 GUARANTEE ABSOLUTE:
The liability of the Guarantor hereunder shall be absolute and unconditional
and shall not be affected by:
(a) any lack of validity or enforceability of any agreements between the
Borrower and the Lender; any change in the time, manner or place of
payment of or in any other term of such agreements or the failure on
the part of the Borrower to carry out any of its obligations under
such agreements;
(b) any impossibility, impracticability, frustration of purpose,
illegality, FORCE MAJEURE or act of government;
(c) the bankruptcy, winding-up, liquidation, dissolution or insolvency of
the Borrower, the Lender or any other Person;
(d) any lack or limitation of power, incapacity or disability on the
part of the Borrower or of the directors, partners or agents thereof
or any other irregularity, defect or informality on the part of the
Borrower in its obligations to the Lender;
(e) any change or changes in the name, corporate existence or structure
of the Borrower or the Guarantor;
(e) any other law, regulation or other circumstance which might
otherwise constitute a defence available to, or a discharge of, the
Borrower in respect of any or all of the Obligations.
1.3 RECOVERY AS PRINCIPAL DEBTOR
Any amount which may not be recoverable from the Guarantor by the Lender
on the basis of a guarantee shall be recoverable by the Lender from the
Guarantor as principal debtor in respect thereof and shall be paid to the
Lender forthwith after demand therefor.
2 DEALINGS WITH BORROWER AND OTHERS
2.1 NO RELEASE
The liability of the Guarantor hereunder shall not be released,
discharged, limited or in any way affected by anything done, suffered or
permitted by the Lender in connection with any duties or liabilities of the
Borrower to the Lender or any security therefor including any loss of or in
respect of any security received by the Lender from the Borrower or others.
Without limiting the
2
generality of the foregoing and without releasing, discharging, limiting or
otherwise affecting in whole or in part the Guarantor's liability hereunder,
without obtaining the consent of or giving notice to the Guarantor, the
Lender may discontinue, reduce, increase or otherwise vary the credit of the
Borrower in any manner whatsoever and may:
(a) grant time, renewals, extensions, indulgences, releases and
discharges to the Borrower;
(b) take or abstain from taking or enforcing securities or collateral
from the Borrower or from perfecting securities or collateral of the
Borrower;
(c) accept compromises from the Borrower;
(d) apply all money at any time from the Borrower or from securities upon
such part of the Obligations as the Lender may see fit or change any
such application in whole or in part from time to time as the
Lender may see fit; for greater certainty, the Lender may at any
time and from time to time, to the fullest extent permitted by law,
set-off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness
at any time owing by the Lender to or for the credit of the Guarantor
against any and all of the liabilities of the Borrower, whether or
not the Lender shall have made any demand under this guarantee. The
Lender shall promptly notify the Guarantor after any such set-off
and application, provided that the failure to give such notice shall
not affect the validity of such set-off and application. The rights of
the Lender under this paragraph are in addition to other rights and
remedies (including without limitation, other rights of set-off)
which the Lender may have; and
(f) otherwise deal with the Borrower and all other persons and
securities as the Lender may see fit, acting reasonably.
2.2 NO EXHAUSTION OF REMEDIES
The Lender shall not be bound or obligated to exhaust its recourse
against the Borrower or other persons or any securities or collateral it may
hold or take any other action before being entitled to demand payment from
the Guarantor hereunder.
2.3 ACCOUNTS BINDING UPON THE GUARANTOR
Any account settled or stated in writing by or between the Lender and
the Borrower shall be accepted by the Guarantor as conclusive evidence,
absent manifest error, that the balance or
3
amount thereby appearing due by the Borrower to the Lender is so due.
2.4 NO SET-OFF
In any claim by the Lender against the Guarantor, the Guarantor may not
assert any set-off or counterclaim that the Guarantor or the Borrower may
have against the Lender. In particular, any loss of or in respect of any
securities received by the Lender from the Borrower or any other person, and
the failure to perfect any mortgage, hypothec, prior claim or security
interest of any nature whatsoever, whether occasioned through the fault or
negligence of the Lender or otherwise, shall not discharge, limit or lessen
the liability of the Guarantor under this guarantee.
3 CONTINUING GUARANTEE
This Guarantee shall be a continuing guarantee of the Obligations and
shall apply to and secure any ultimate balance due or remaining due to the
Lender under or as contemplated by the Credit Agreement or otherwise and
shall not be considered as wholly or partially satisfied by the payment or
liquidation at any time of any sum of money for the time being due or
remaining unpaid to the Lender. This Guarantee shall continue to be effective
even if at any time any payment of any of the Obligations is rendered
unenforceable or is rescinded or must otherwise be returned by the Lender
upon the occurrence of any action or event including the insolvency,
bankruptcy or reorganization of the Borrower or otherwise, all as though such
payment had not been made. The Guarantor expressly waives the provisions of
Articles 2353, 2362 and 2366 of the Civil Code of Quebec (the "CCQ").
4 RIGHT TO PAYMENTS
Should the Lender receive from the Guarantor one or more payments on
account of the liability under this guarantee, the Guarantor shall not be
entitled to claim repayment against the Borrower or the Borrower's estate
until the Lender's claims against the Borrower have been paid in full. In the
event of the liquidation, winding-up or bankruptcy of the Borrower (whether
voluntary or compulsory); or if the Borrower shall make a sale of an
enterprise within the meaning of articles 1767 et seq. CCQ or a bulk sale of
any of the Borrower's assets within the meaning of any applicable legislation
of any other province of Canada or under the Uniform Commercial Code of the
USA; or should the Borrower make any proposal, composition or scheme of
arrangement with its creditors; then, in any of such events the Lender shall
have the right to rank for its full claim and receive all dividends or other
payments in respect thereof until its claim has been paid in full and the
Guarantor shall remain liable up to the amount guaranteed, less any payments
made by the Guarantor, for any balance which may be owing to the Lender by
the Borrower; and in the event of the valuation by the Lender of any security
held in respect of the Borrower's debts, or of the retention by the Lender of
such security, such valuation and/or retention shall not, as between the
Lender and the Guarantor, be considered as a purchase of such security, or as
4
payment or satisfaction or reduction of the Borrower's liabilities to the
Lender, or any part thereof.
5 TAXES
All payments to be made hereunder by the Guarantor shall be made free
and clear of deduction for any present or future tax, levy, impost, duty,
charge, assessment or fee of any nature (including interest, penalties and
additions thereto) that is imposed by any government or other taxing
authority ("TAXES"). If any Taxes are imposed and required to be withheld
from any payment hereunder, the Guarantor shall (a) increase the amount of
such payment so that the Lender will receive a net amount (after deduction of
all taxes, including any Taxes on the amount of any such increase) equal to
the amount due hereunder, (b) pay such Taxes to the appropriate taxing
authority for the account of the Lender and (c) as promptly as possible
thereafter, send the Lender an original receipt showing payment thereof,
together with such additional documentary evidence as the Lender may from
time to time reasonably require. If the Guarantor fails to perform its
obligations under parts (b) or (c) of the preceding sentence, the Guarantor
shall indemnify the Lender for any incremental taxes, interest or penalties
that may become payable by the Lender as a consequence of such failure.
6 SUBROGATION
To the fullest extent permitted by law, the Guarantor hereby irrevocably
waives any claim or other rights that it may now or hereafter acquire against
the Borrower that arise from the existence, payment, performance or
enforcement of the Guarantor's obligations under this Guarantee including,
without limitation, any right of subrogation, reimbursement, exoneration,
contribution or indemnification and any right to participate in any claim or
remedy against the Borrower or any collateral securing any obligation of the
Borrower, whether or not such claim, remedy or right arises in equity or
under contract, statute or common law, including, without limitation, the
right to take or receive from the Borrower, directly or indirectly, in cash
or other property or by set-off or in any other manner, payment or security
on account of such claim, remedy or right. If any amount shall be paid to the
Guarantor in violation of the preceding sentence at any time prior to the
indefeasible cash payment in full of the Obligations and all other amounts
payable under this Guarantee, such amount shall be held in trust for the
benefit of the Lender and shall forthwith be paid to the Lender to be
credited and applied to the Obligations and all other amounts payable under
this Guarantee.
5
7 GENERAL
7.1 REPRESENTATIONS AND WARRANTIES
The Guarantor reiterates the representations and warranties to the Lender it
made in the Credit Agreement (which representations and warranties will be
deemed to be repeated by the Guarantor on the date of any advance made by the
Lender to the Borrower).
7.2 PAYMENT OF FEES AND COSTS
The Guarantor agrees to pay on demand all out-of-pocket expenses (including
the reasonable fees and expenses of the Lender's counsel) in any way relating
to the enforcement or protection of the rights of the Lender hereunder.
7.3 CURRENCY
(a) Each payment to be made under this guarantee will be made in US
Dollars (the "SPECIFIED CURRENCY"). To the fullest extent
permitted by applicable law, any obligation of the Guarantor to make
payments under this guarantee in the Specified Currency will not be
discharged or satisfied by any tender in any currency other than the
Specified Currency.
(b) To the fullest extent permitted by applicable law, if any judgment
or order expressed in a currency other than the Specified Currency
is rendered (i) for any payment of any amount owing in respect of
this Guarantee or (ii) in respect of a judgment or order of another
court for the payment of any amount described in (i) above, the
Lender, after recovery in full of the aggregate amount to which they
are entitled pursuant to the judgment or order, will be entitled to
receive immediately from the Guarantor the amount of any shortfall
of the Specified Currency received by the Lender as a consequence of
sums paid in such other currency and will refund promptly to the
Guarantor any excess of the Specified Currency received by the
Lender as a consequence of sums paid in such other currency if such
shortfall or such excess arises or results from any variation between
the rate of exchange at which the Specified Currency are converted
into the currency of the judgment or order for the purposes of such
judgment or order and the rate of exchange at which the Lender is
able, acting in a reasonable manner and in good faith, in converting
the currency received into the Specified Currency, to purchase the
Specified Currency with the amount of the currency of the judgment or
order actually received by the Lender. The term "rate of exchange"
includes, without limitation, any premiums and costs of exchange
6
payable in connection with the purchase of or conversion into the
Specified Currency.
(c) To the fullest extent permitted by applicable law, the indemnities
in this Section 7.3 constitute separate and independent obligations
of the Guarantor from the other obligations in this Guarantee, will
be enforceable as separate and independent causes of action, will
apply notwithstanding any indulgence granted by the Lender and will
not be affected by judgment being obtained or claim or proof being
made for any other sums due in respect of this guarantee.
(d) For the purposes of this Section 7.3, it will be sufficient for a
party to demonstrate that it would have suffered a loss had an
actual exchange or purchase been made.
7.4 DISCHARGE
The Guarantor will not be discharged from any of its obligations
hereunder except by a release or discharge signed in writing by the Lender.
7.5 ENTIRE AGREEMENT
This Guarantee, together with the Credit Agreement, constitutes the
entire agreement between the Guarantor and the Lender with respect to the
subject matter hereof and cancels and supersedes any prior understandings and
agreements between such parties with respect thereto. There are no
representations, warranties, terms, conditions, undertakings or collateral
agreements, express, implied or statutory, between the parties except as
expressly set forth herein. The Lender shall not be bound by any
representations or promises made by the Borrower to the Guarantor and
possession of this Guarantee by the Lender shall be conclusive evidence
against the Guarantor that the Guarantee was not delivered in escrow or
pursuant to any agreement that it should not be effective until any condition
precedent or subsequent has been complied with and this Guarantee shall be
operative and binding notwithstanding the non-execution thereof by any
proposed signatory.
7.6 AMENDMENTS AND WAIVERS
No amendment to this Guarantee will be valid or binding unless set forth
in writing and duly executed by the Guarantor and the Lender. No waiver of
any breach of any provision of this Guarantee will be effective or binding
unless made in writing and signed by the party purporting to give the same
and, unless otherwise provided in the written waiver, will be limited to the
specific breach waived.
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7.7 SEVERABILITY
If any provision of this Guarantee is determined to be invalid or
unenforceable in whole or in part, such invalidity or unenforceability will
attach only to such provision or part thereof and the remaining part of such
provision and all other provisions hereof will continue in full force and
effect.
7.8 INTERPRETATION
If more than one guarantor executes this instrument the provisions
hereof shall be read with all grammatical changes thereby rendered necessary
and each reference to the Guarantor shall include the undersigned and each
and every one of them severally and this guarantee and all covenants and
agreements herein contained shall be deemed to be solidary.
7.9 ADDITIONAL RIGHTS
This agreement is in addition and supplemental to all other guarantees
and/or postponement agreements (whether or not in the same form as this
instrument) held or which may hereafter be held by the Lender.
7.10 COLLATERAL AGREEMENTS
There are no representations, collateral agreements or conditions with
respect to this instrument or affecting the Guarantor's liability hereunder
other than as contained herein or in the Credit Agreement.
7.11 GOVERNING LAW
This agreement shall be governed by and construed in accordance with the
laws of the Province of Quebec.
7.12 BENEFIT OF THE GUARANTEE
This agreement shall extend to and enure to the benefit of the
successors and assigns of the Lender and shall be binding upon the Guarantor
and the successors of the Guarantor.
7.13 LANGUAGE
The Guarantor acknowledges that it has required that the present
agreement, as well as all documents, notices and legal proceedings entered
into, given or instituted pursuant hereto or relating directly or indirectly
hereto be drawn up in English. Le soussigne reconnait avoir exige
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la redaction en anglais de la presente convention ainsi que de tous documents
executes, avis donnes et poursuites judiciaires intentees, directement ou
indirectement, relativement ou a la suite de la presente convention.
7.14 EXECUTED COPY
The Guarantor acknowledges receipt of a fully executed copy of this
Guarantee.
IN WITNESS WHEREOF the Guarantor has executed this Guarantee on the date and
at the place first hereinabove mentioned.
INTERTAPE POLYMER GROUP INC.
Per: __________________________________
Per: __________________________________
ACCEPTED AND AGREED as of December 15, 1997:
THE TORONTO-DOMINION BANK, acting
by and through its Houston Agency
Per: __________________________________
Per: __________________________________
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SCHEDULE "D" - TRANSFER AGREEMENT
TO: ____________________ (the "AGENT"), ____________________ (the "BORROWER")
and ____________________ (the "GUARANTOR")
WHEREAS the Borrower entered into a Credit Agreement dated as of December
15, 1997 (the "CREDIT AGREEMENT") with the Agent, as [Agent and] Lender,
whereby the Agent agreed to provide the Borrower with certain credit
facilities; and
WHEREAS pursuant to and in accordance with Article 15 of the Credit
Agreement the Lender may, without the prior consent of the Borrower, assign
or transfer all or any part of its rights, benefits and obligations under the
Credit Agreement by duly completing, executing and delivering to the Agent
and to the Borrower this Transfer Agreement; and
WHEREAS ____________________ (the "TRANSFEROR") wishes to assign or
transfer to ____________________ (the "ASSIGNEE") the rights, benefits and
obligations of the Transferor under the Credit Agreement specified herein;
WHEREAS the Borrower has consented in writing to such assignment or
transfer pursuant to the provisions of the Credit Agreement; and has
reiterated its consent hereby;
NOW THEREFORE in consideration of the foregoing and of one dollar ($l.00) and
other good and valuable consideration, the receipt of which is hereby
acknowledged, the signatories hereto agree as follows:
1. All capitalized terms defined in the Credit Agreement and not otherwise
defined herein have the same meaning as in the Credit Agreement.
2. The Transferor assigns and transfers to the Assignee the following
rights, benefits and obligations (the "TRANSFER"):
(description of the transferred rights, benefits and obligations,
indicating retained interest or fees, if applicable, extent of the
Assignee's interest and any applicable arrangements if any Libor
Advances or Letters of Credit are outstanding at the time of the
Assignment)
(the "TRANSFERRED RIGHTS" and the "TRANSFERRED OBLIGATIONS", as applicable).
3. The Assignee accepts the Transfer and assumes the Transferred
Obligations without novation (the "ASSUMPTION"). The Borrower and the
Guarantor each release the Transferor from all obligations and liabilities
associated with the Transferred Rights and acknowledge the assumption by the
Assignee of the Transferred Obligations.
4. The Transfer and the Assumption are governed by and subject to Article
15 of the Credit Agreement.
5. The Assignee acknowledges and confirms that it has not relied upon and
that neither the Transferor nor the Agent has made any representation or
warranty whatsoever as to the due execution, legality, effectiveness,
validity or enforceability of the Credit Agreement or any other documentation
or information delivered by the Transferor or the Agent to the Assignee in
connection therewith or for the performance thereof by any party thereto or
for the performance of any obligation by any Restricted Subsidiary or for the
financial condition of the Guarantor or of any Restricted Subsidiary. All
representations, warranties and conditions expressed or implied by law or
otherwise are hereby excluded.
6. The Assignee represents and warrants that it has itself been, and will
continue to be, solely responsible for making its own independent appraisal
of and investigation into the financial condition, creditworthiness, affairs,
status and nature of the Guarantor and the Restricted Subsidiaries and has
not relied and will not hereafter rely on the Transferor and/or the Agent to
appraise or keep under review on its behalf the financial condition,
creditworthiness, affairs, status or nature of the Guarantor or the
Restricted Subsidiaries. The Assignee acknowledges and agrees that it has no
right to obtain any non-public information directly from the Guarantor and
the Restricted Subsidiaries and that it will request any information it
requires solely from the Agent.
7. Each of the Transferor and the Assignee represents and warrants to the
other and to the Agent and the other Lender(s), if any, and the Guarantor and
the Borrower, that it has the right, capacity and power to enter into the
Transfer and the Assumption in accordance with the terms hereof and to
perform its obligations arising therefrom, and all action required to
authorize the execution and delivery hereof and the performance of such
obligations has been duly taken.
8. This Transfer Agreement shall be governed by and construed in accordance
with the laws of the State of New York, USA.
DATED this day of , 19 .
[BORROWER] (TRANSFEROR)
per: ___________________ per: ___________________
per: ___________________
[LENDER/AGENT] (ASSIGNEE)
per: ___________________ per: ___________________
SCHEDULE "E" - RESTRICTED SUBSIDIARIES
Intertape Polymer Inc. ("IPI")
IPG Holdings LP ("LP")
IPG Holdings Company of Nova Scotia ("NS ULC")
IPG Finance LLC ("LLC")
IPG (US) Holdings Inc.
IPG (US) Inc.
Intertape Polymer Corp. ("IPC")
IPG (US) Acquisition Corporation
STC Tape Inc. ("STC")
American Tape ("ATC")
Tape ACQ
Tape Inc.
TAPE FSC Inc.
Polymer International Corp. ("PIC")
IFCO MFG (USA)
ICS Inc. (USA)
Cajun Bag Corp. (Augusta, USA)
SCHEDULE "F" - OFFICER'S CERTIFICATE
[SAME FOR BORROWER]
I, the undersigned, ____________________, the ____________________ of
Intertape Polymer Group Inc. (the "GUARANTOR"), do hereby certify as follows:
a) I have taken cognizance of all the terms and conditions of the
Credit Agreement (the "CREDIT AGREEMENT") dated as of December 15,
1997 entered into among the Borrower, the Guarantor and The
Toronto-Dominion Bank, as well as of the Guarantee (as defined in the
Credit Agreement) and all other contracts, agreements and deeds
pertaining thereto; and
b) no Default or Event of Default has occurred nor exists thereunder;
and
c) each of the Borrower and the Restricted Subsidiaries holds the
permits, licences and authorizations required in order to permit it
to possess its property and its real estate and to carry on its
business in the manner in which it is being carried on at present.
Executed at the City of ____________________, ____________________ this
_th day of December, 1997.
____________________
[Name of Officer]
SCHEDULE "G" - OPINION
____________________, 199_
THE TORONTO-DOMINION BANK
____________________
____________________
_____________
- - and -
HEENAN BLAIKIE
Suite 2500
1250 Rene Levesque Blvd. W.
Montreal, Quebec
H3B 4Y1
Dear Sirs:
RE: IPG HOLDINGS LP AND INTERTAPE POLYMER GROUP INC.
We have acted as counsel to IPG Holdings LP (the "BORROWER") and Intertape
Polymer Group Inc. (the "GUARANTOR") as well as to the Restricted
Subsidiaries in connection with a Credit Agreement bearing formal date of
December 15, 1997 (the "CREDIT AGREEMENT") entered into among the Borrower,
the Guarantor and The Toronto-Dominion Bank (the "LENDER"), providing for a
Credit made available to the Borrower in an aggregate amount of up to US
$100,000,000. The terms used herein which are defined in the Credit
Agreement have the respective meanings set forth in the Credit Agreement and
this opinion is delivered to you in accordance with the provisions of
subsection 9.1.8 of the Credit Agreement.
In this connection, we have examined such certificates of public officials,
such certificates of officers of the Borrower and the Guarantor and originals
or copies certified to our satisfaction of all such corporate documents and
records of the Guarantor and the Restricted Subsidiaries, and all of such
other documents, records and papers, as we have deemed relevant and necessary
as a basis for our opinions hereinafter set forth. We have also made such
other investigations as we have deemed relevant and necessary in order to
enable us to render our opinions herein set forth.
Without restricting the generality of the foregoing, we have examined the
following documents:
a) The Credit Agreement;
b) The IPG Guarantee;
c) The Guarantee and assignment by IPG Finance LLC ("LLC") in favour of the
Lender (the "LLC DOCUMENTS");
d) Documents pertaining to the acquisition by one of the Guarantor's
Restricted Subsidiaries of all of the issued shares of the capital stock of
ATC;
In making our examination of the foregoing documents, we have assumed the
genuineness of all signatures not known to us, the authenticity of all
documents tendered to us as originals, the conformity to the originals of all
documents submitted to us as certified or photostatic copies and the legal
competency of any individual executing such documents.
Based on the foregoing, we are of the opinion that:
1. Each of the Guarantor, the Borrower and the other Restricted Subsidiaries
is a corporation or limited partnership duly incorporated or constituted
and organized, validly existing and in good standing under the Laws of
its jurisdiction of incorporation or constitution and of all jurisdictions
in which it carries on business. The Guarantor and each of the Restricted
Subsidiaries has the capacity and power, whether corporate or otherwise,
to hold its assets and carry on the business presently carried on by it or
which it proposes to carry on hereafter in each jurisdiction where such
business is carried on.
2. The Borrower has the power, capacity and authority to borrow all amounts
contemplated under the Credit Agreement, as well as to execute and
deliver and perform its obligations under the Credit Agreement, and has
taken all necessary steps under the Law in order to be authorized to
borrow thereunder and to execute and deliver and perform its obligations
thereunder in accordance with the terms and conditions thereof and to
complete the transactions contemplated therein. The Credit Agreement has
been duly executed and delivered by duly authorized officers of the
Borrower and is a legal, valid and binding obligation of the Borrower,
enforceable in accordance with its terms.
3. The Credit Agreement has been duly executed and delivered by duly
authorized officers of the Borrower and the Guarantor and is a legal,
valid and binding obligation of the Borrower and the Guarantor,
enforceable in accordance with its terms.
4. The Guarantor has the power, capacity and authority to, and has taken
all necessary steps under the Law in order to be authorized to, provide
the IPG Guarantee and to execute and deliver and perform its obligations
under the Credit Agreement and the IPG Guarantee in accordance with the
terms and conditions thereof and to complete the transactions contemplated
in the IPG Guarantee and in the Credit Agreement.
5. Each of the Credit Agreement and the IPG Guarantee has been duly executed
and delivered by duly authorized officers of the Guarantor, and is a
legal, valid and binding obligation of the Guarantor, enforceable in
accordance with its terms.
6. LLC has the power, capacity and authority to, and has taken all necessary
steps under the Law in order to be authorized to, provide the LLC
Documents and to execute and deliver and
perform its obligations under the LLC Documents in accordance with the
terms and conditions thereof and to complete the transactions contemplated
in the LLC Documents.
7. Each of the LLC Documents has been duly executed and delivered by duly
authorized officers of LLC, and is a legal, valid and binding obligation
of LLC, enforceable in accordance with its terms.
8. The execution and delivery by the Borrower, the Guarantor and the other
Restricted Subsidiaries of the Credit Agreement, the IPG Guarantee and
the LLC Documents and all other agreements and instruments referred to
therein do not conflict with, or result in a breach of, the terms,
conditions or provisions of, or constitute a default under, or result in
any violation of any of the terms or provisions of, the constating
documents or by-laws of the Borrower, the Guarantor or any of the other
Restricted Subsidiaries or, to the best of our knowledge after due
enquiry, under any agreements, contracts or deeds to which the Borrower,
the Guarantor or any of the other Restricted Subsidiaries is a party or
binding upon it or its assets and do not result in or require the creation
or imposition of any Charge whatsoever on the assets of the Borrower, the
Guarantor or any of the other Restricted Subsidiaries, whether presently
owned or hereafter acquired, save for the Permitted Charges.
9. The acquisition of ATC was effected in accordance with all applicable
Laws. All of the issued shares of ATC are owned by one or more Restricted
Subsidiaries of the Guarantor.
10. The structure established in order to acquire ATC, including the
constitution of the Borrower and its Subsidiaries and _________ and its
Subsidiaries was established solely for the purpose of such acquisition
and to our knowledge, none of the Persons referred to carry on any
business other than in connection with the aforesaid acquisition.
11. Neither the Borrower, the Guarantor nor any of the other Restricted
Subsidiaries is required to obtain any consent, approval, authorization,
permit or license, nor to effect any filing or registration with any
federal, provincial or other regulatory authority in connection with the
execution, delivery or performance, in accordance with their respective
terms, of the Credit Agreement, the IPG Guarantee or the LLC Documents,
or any borrowings under the Credit Agreement.
12. Based on search reports concerning _________________, _________________,
_________________ and _________________, all Debt of the Guarantor,
considered on a Consolidated basis, is subject to no Charge, other than
the Permitted Charges.
13. [PARI PASSU NATURE OF DEBT?]
14. To the best of our knowledge, after making reasonable enquiries, there is
no litigation threatened or pending against the Borrower, the Guarantor
or the other Restricted Subsidiaries other than the litigation described
in Schedule "H" to the Credit Agreement.
In connection with the foregoing opinions:
a) As to the enforceability of the obligations of the Borrower, the Guarantor
or LLC in specific documents, we are not opining upon the question of
whether or not the remedy of specific
performance or injunctive or other equitable relief would be available,
inasmuch as the availability of such remedies is subject to the
discretion of the court before which any proceedings for such remedy may
be brought;
b) we have assumed that the Credit Agreement, the IPG Guarantee and the LLC
Documents have been duly authorized, executed and delivered by the parties
thereto other than the Borrower, the Guarantor and LLC.
The foregoing opinions extend only to the laws of the State of New York and
the laws of the United States of America applicable therein.
Finally, the enforceability of the Credit Agreement, the IPG Guarantee and
the LLC Documents is subject to such limitations and prohibitions of
enforceability as may exist or may be enacted in laws relating to bankruptcy,
insolvency, liquidation, reorganization, moratorium or other laws of general
application affecting the enforceability of creditors' rights and may only be
relied upon by the parties to whom they are addressed for the purposes of the
transactions herein contemplated.
Yours truly,
SCHEDULE "H" - LITIGATION
None
SCHEDULE "I" - ERISA AFFILIATES AND PLANS
- - Intertape Polymer Inc. employer funded defined contribution pension plan.
- - Intertape Polymer Group USA Retirement Plan (401K).
- - Tape Inc. retirement plan (401K).
SCHEDULE "I-1" - ERISA DISCLOSURE
RE: AMERICAN TAPE COMPANY HOURLY EMPLOYEES PENSION PLAN
Based on asset and liability information provided in the January 1, 1997
valuation report, the plan on an ongoing (funding) basis is underfunded by
approximately $615,000. This is based on an actuarial value of assets of
$3,739,424 and an actuarial liability of $4,354,147.
On a termination basis, the plan would be underfunded by approximately
$1,714,000. This is based on a market value of assets of $4,286,019. An
estimated liability of $6,000,000.
SCHEDULE "J" - EXISTING SECURITY
SCHEDULE "K" - INTERLENDER AGREEMENT
INTERLENDER AGREEMENT entered into in the City of New York, State of New
York, as of ______________________, 1997.
BETWEEN: THE TORONTO-DOMINION BANK, a banking
corporation organized under the laws of
Canada, acting by and through its
Houston Agency, having an office at
909 Fannin Street, Suite 1700, in the
City of Houston, State of Texas, 77010
(hereinafter called "TD")
AND: COMERICA BANK, a Michigan banking
corporation, having a branch at ______,
__th floor, in the City of ___________,
State of ________ (hereinafter called
"CB")
(CB and TD are herein collectively
called the "LENDERS")
WHEREAS TD entered into a Credit Agreement as of December 15, 1997 with
IPG HOLDINGS LP (hereinafter called the "BORROWER") and INTERTAPE POLYMER
GROUP INC. (hereinafter called the "GUARANTOR") (hereinafter called the
"CREDIT AGREEMENT"); and
WHEREAS CB has become an Assignee under the Credit Agreement, and the
Lenders desire to establish certain rights and obligations as between
themselves;
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
1 INTERPRETATION
Capitalized terms not otherwise defined herein have the meaning ascribed to
them in the Credit Agreement.
2 PARTICIPATIONS OF TD AND CB
2.1 Each of the Lenders agrees to make its Participation available to the
Borrower. The Lenders agree, as between themselves, that each of them
will make the Advances (including by way of Letters of Credit) provided
for in the Credit Agreement, as requested by the Borrower, to the extent
of their respective Participations.
2.2 Each of the Lenders will maintain its own accounts and administer its
own Advances.
2.3 The Lenders acknowledge that the allocation of the Advances under
Facility B as between the Lenders may not always be PRO RATA to the
Participations of the Lenders, the whole as contemplated by Section 16.1
of the Credit Agreement. Notwithstanding that at any time the allocation
of the Loans as between the Lenders may not be in proportion to their
respective Participations, the Lenders will share the risks and suffer
any losses on a PARI PASSU basis in any distribution of any amounts paid
by, or arising out of the proceeds of realization of the property of, the
Borrower and the Guarantor. Each of the Lenders acknowledges that based
on the respective Participations of TD and CB in Facility B of the Credit
as at the Closing Date, any such proceeds would be shared on the basis of
50% for TD and 50% for CB.
3 AMENDMENTS TO THE CREDIT AGREEMENT WITH RESPECT TO FACILITY B
If the Borrower from time to time submits a written request to the Lenders:
a) that the amount of the Credit available under Facility B be
increased and such request is accompanied by a proposed
allocation of the requested increase as between the Lenders by
way of increased Participations; or
b) that any of the terms of the Credit Agreement affecting
Facility B be changed;
each of the Lenders will, within 30 days following the receipt of such
notice, advise the other in writing whether or not it agrees to the
proposed increase or change, and the following provisions will apply:
3.1 if each Lender agrees to the proposed increase or change within the said
(30) day delay, they will advise the Borrower thereof and will negotiate
and will enter into the appropriate amendment to the Credit Agreement and
the Lenders will amend this Interlender agreement accordingly;
3.2 if each Lender refuses the proposed increase or change, they will advise
the Borrower thereof;
3.3 if only one of the Lenders agrees to the proposed increase or change to
the Credit Agreement in connection with Facility B, the Lender who so
agrees (the "AGREEING LENDER") will be entitled to negotiate arrangements
with the Borrower to take over the position of the other Lender (the
"REFUSING LENDER") with respect to Facility B and if an agreement is
reached between the Agreeing Lender and the Borrower within 60 days
following the receipt by the Lenders of the request, and the Refusing
Lender is advised thereof by the Agreeing Lender within that delay, the
Refusing Lender will cease to participate in the Credit available under
Facility B. Once all amounts owing to the Refusing Lender have been paid
in full and the Refusing Lender has received the appropriate
indemnifications with respect to any of its then outstanding Letters of
Credit under Facility B, the Refusing Lender will enter into an Assignment
in favour of the Agreeing Lender. If no agreement is reached between the
Agreeing Lender and
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Borrower within the said 60 day period, the Lenders will advise the
Borrower that the request has been refused.
4 SHARING OF INFORMATION
Each Lender will, if requested by the other(s) provide such information as it
has received from the Borrower as the other may request and each of the
Lenders shall promptly give notice to the other of any Default of which it
becomes aware under the Credit Agreement and of any information it receives
which might reasonably be considered to be materially adverse to the
Borrower. It is agreed that failure to provide notice of such Default or such
materially adverse information will not result in any liability on the part
of the Lender which fails to give such notice or information to the other
Lender.
5 DEFAULTS
5.1 If a Lender discovers or believes that a Default or an Event of Default
has occurred, it will forthwith so advise the other in writing.
5.2 If a Default exists which requires the giving of a notice in order to
give rise to an Event of Default, either of the Lenders desiring that
the notice be given will notify the other thereof in writing. If the
holders of Participations representing 66 2/3% of the Credit under
Facility B (the "MAJORITY LENDERS") agree, the Lenders may give the
required notice.
Notwithstanding the foregoing, the decision to waive the Default or Event
of Default in respect of any of the following matters, and the decision
to amend the Credit Agreement in respect of any of the following matters,
shall require the unanimous consent of the Lenders: (i) any extension of
the date for, or alteration in the amount, currency or mode of
calculation or computation or any payment of principal or interest or
other amount, (ii) any increase in the Participation of a Lender, (iii)
any extension of any maturity date, (iv) any change in the terms of this
Section, (v) any change in the manner of making decisions among the
Lenders, (vi) the release of the Borrower or the Guarantor, in whole or
in part, (vii) any change in or any waiver of the conditions precedent
provided for in Article 9 of the Credit Agreement, or (viii) any amendment
to this Section 5.2.
5.3 None of the Lenders will make any Advances to the Borrower (including by
the issuance of any Letter of Credit) at a time when a Default or an
Event of Default should be invoked, unless it is determined by a decision
of the Majority Lenders to withdraw the notice invoking the Event of
Default or the Default or, in the case of a Default, the Default has been
remedied.
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5.4 Should there occur an Event of Default and a Lender has so notified the
other in writing, the Lenders will consult with each other as to what
steps, if any, should be taken. If the Majority Lenders desire that a
demand should be made under the Credit Agreement, the Lenders will make
a joint demand or give the appropriate notice of enforcement within 5
Business Days of the receipt of such a notice. However, no demand will
be made if the other Lender (the "SUPPORTING LENDER") desires not to so
proceed and the Supporting Lender agrees to pay the other Lender (the
"RETIRING LENDER") the entire amount of the Loan due to it under the
Credit Agreement and undertakes to indemnify and hold the Retiring
Lender harmless from any liability under any outstanding Letter of
Credit. The Supporting Lender will make payment to the Retiring Lender
and will provide the appropriate indemnification documentation by the
time demand was otherwise to have been made hereunder, and the Retiring
Lender will enter into an Assignment in favour of the Supporting Lender.
5.5 Neither of the Lenders will make any demand for payment under the Credit
Agreement except as provided for in the immediately preceding paragraph.
5.6 Within 5 Business Days following the making of any demand for payment
under the Credit Agreement, the Lenders will make adjustments between
themselves so that their Loans to the Borrower will be PRO RATA to their
respective Participations in the Credit. They will make further such
adjustments between themselves as and when any Letters of Credit mature.
5.7 Any amounts received by any of the Lenders from or for the account of
any of the Borrower or the Guarantor after the making of a demand for
payment will be distributed as follows:
5.7.1 Firstly, in payment of all costs and expenses incurred in the
making of the demand for payment and enforcement of the Credit
Agreement;
5.7.2 Secondly, in payment to the Lenders, PRO RATA, of the Loans of
the Borrower to each of them under the Credit Agreement, as at the
date of the making of a demand for payment (as adjusted pursuant to
section 5.6 and otherwise in due course between the Lenders),
taking account of all Advances, interest, and Fees, but excluding
any amounts referred to in subsection 5.7.4 hereof;
5.7.3 Thirdly, in payment to the Lenders, PRO RATA, of any interest
accrued after the date of the making of demand for payment on the
amounts referred to in subsection 5.7.2;
4
5.7.4 Fourthly, in payment of the Lenders, PRO RATA, of any
indebtedness of the Borrower to each of them in respect of Advances
made at a time when a Default or Event of Default has occurred and
has been invoked and notice invoking such Default has not been
withdrawn or the Default has not been remedied; and
5.7.5 Fifthly, in payment to the Lenders, PRO RATA, of any Indebtedness
of the Borrower or the Guarantor to them in respect of loans,
advances and credit facilities other than under the Credit
Agreement.
6 NO RIGHTS IN FAVOUR OF THE BORROWER OR THE GUARANTOR
Nothing herein contained will be deemed to restrict, lessen or prejudicially
affect the rights of the Lenders as against the Borrower or the Guarantor,
and without limiting the generality of the foregoing, nothing herein
contained will be interpreted as constituting a stipulation for the benefit of
any of the Borrower or the Guarantor.
7 GENERAL
7.1 This agreement will continue in full force and effect until terminated
by the mutual consent of the Lenders or until such time as the Credit
Agreement has terminated and there remains nothing further owing
(including contingently) to each of the Lenders thereunder.
7.2 Any notices required or permitted to be given hereunder shall be in
writing and may be given in accordance with the provisions of the Credit
Agreement.
7.3 This Agreement will enure to the benefit of and be binding upon the
Lenders and their respective successors and assigns.
7.4 The preamble hereof shall form part of these presents as if recited at
length herein.
7.5 This agreement is made pursuant to the laws of the State of New York and
will be construed, interpreted, performed and enforced in accordance
therewith.
7.6 The parties acknowledge that they have required that this agreement and
all related documents be drawn up in English. Les parties reconnaissent
avoir exige que la presente convention et tous les documents connexes
soient rediges en anglais.
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EXECUTED AT THE CITY OF ___________________, as of _________________, 1997.
THE TORONTO-DOMINION BANK COMERICA BANK
Per: _______________________ Per: _______________________
Per: _______________________ Per: _______________________
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