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EXHIBIT 10.41
LOAN AGREEMENT DATED MAY 4, 2000 AMONG
CANADIAN IMPERIAL BANK OF COMMERCE,
FUTURELINK CORP. (A DELAWARE CORPORATION) AND
FUTURELINK DISTRIBUTION CORP. (AN ALBERTA CORPORATION)
Canadian Imperial Bank of Commerce ("CIBC") agrees to make available the Credit
Facility to FutureLink Corp. ("FLC") and FutureLink Distribution Corp. ("FLDC")
on the following terms and conditions including those provided for in Schedule
"A" attached hereto:
BORROWERS: FutureLink Corp. and FutureLink Distribution Corp.
(hereinafter sometimes collectively referred to as the
"Borrowers" and individually as a "Borrower").
CONFIDENTIALITY: This Loan Agreement, the Security and the terms thereof
together with any confidential information or documents
relating to the Borrowers and any Subsidiary of either
Borrower will be treated in strict confidence by the
Borrowers and CIBC, other than (i) disclosure required by
law or ordered by a Court of competent jurisdiction, (ii)
disclosure to any officer, director, employee, agent,
financial advisor and other professional advisors of the
Borrowers or their respective Subsidiaries or Affiliates
and (iii) disclosure as otherwise permitted in writing by
CIBC.
AMOUNT AND NATURE
OF CREDIT FACILITY: The credit facility (the "Credit Facility") being made
available by CIBC to the Borrower under this Loan Agreement
is a revolving operating loan in the maximum principal
amount of U.S.$10,000,000.
The total Principal Indebtedness outstanding under the
Credit Facility shall not at any time exceed U.S.
$10,000,000.
To determine the Principal Indebtedness outstanding under
the Credit Facility at any time, outstanding borrowings in
Cdn. Dollars or foreign currency will be converted to the
U.S. Dollar Exchange Equivalent in accordance with CIBC
standard banking practice.
PURPOSES: Advances of the Credit Facility shall be used by the
Borrowers only for ordinary working capital and general
operating requirements of the Borrowers. Advances of the
Credit Facility shall not be used to fund acquisitions by
the Borrowers.
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AVAILABILITY: The Credit Facility is available to the Borrowers by way of any
combination of the following Advances:
(a) direct borrowings of Acceptances in Cdn. Dollars by way of
Prime Rate Loans;
(b) direct borrowings and Acceptances in U.S. Dollars by way of
Base Rate Loans;
(c) Cdn. Dollar, U.S. Dollar or foreign currency Letters of
Credit (provided that (i) no Letter of Credit shall be for a
term expiring after the expiration of the availability of
the Credit Facility unless the Borrower has provided to CIBC
cash collateral acceptable to CIBC to cover the Contingent
Exposure under any such Letter of Credit, (ii) no Letter of
Credit shall be outstanding for a term of greater than 365
days; and (iii) the Contingent Exposure under any and all
outstanding Letters of Credit and Acceptances shall not
exceed, at any time, in the aggregate, 50% of the authorized
amount of the Credit Facility);
(d) Hedge Agreements, subject to the prior approval of CIBC and
the provision of appropriate documentation as required by
CIBC including ISDA Agreement (provided that (i) no Hedge
Agreement shall be for a term expiring after the expiration
of the availability of the Credit Facility unless the
Borrower has provided to CIBC cash collateral acceptable to
CIBC to cover the Contingent Exposure under any such Hedge
Agreements and (ii) no Hedge Agreement shall have a maturity
date exceeding 180 days; and
(e) corporate visa account, provided the maximum amount
outstanding on all corporate visa cards at any time shall
not exceed U.S.$100,000.
The availability of the Credit Facility will be limited to a
maximum principal amount of U.S.$5,000,000 until receipt by FLC
of additional Shareholders Equity in a minimum of
U.S.$50,000,000.
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MARGIN REQUIREMENTS: The maximum aggregate principal amount of the Credit
Facility outstanding at any time, including any
Contingent Exposure, shall not at any time exceed the
lesser of:
(a) U.S. $10,000,000; and
(b) the total of:
(i) 75% of Receivable Value; PLUS
(ii) 100% of cash deposits of the Borrowers held
by CIBC; MINUS
(iii) 100% of Deferred Revenue that may be subject
to Priority Claims; MINUS
(iv) 100% of Priority Claims.
REPAYMENT: Subject to compliance by the Borrowers with the terms
and conditions of this Loan Agreement and there
existing no Event of Default or Default, the Credit
Facility shall continue to be available to the
Borrowers and shall be repayable ON DEMAND by CIBC.
Advances of the Credit Facility shall be fully repaid
by the Borrowers for at least fourteen (14) consecutive
days during each fiscal quarter of the Borrowers.
PREPAYMENT AND
CANCELLATION: The Borrowers may permanently prepay and
cancel any Advances, in whole or in part, and may
permanently cancel any unadvanced portion of the Credit
Facility, in whole or in part, at any time upon thirty
(30) days' written notice to CIBC and subject to the
following:
(a) Advances by way of Acceptances may only be paid at
their maturity dates;
(b) the Borrowers will pay any breakage costs incurred
by CIBC in connection with any Hedge Agreements,
Acceptances or like Advances as a result of any
such prepayment and/or cancellations;
(c) the Credit Facility cannot be cancelled with
respect to the Contingent Exposure of CIBC under
any outstanding Letters of Credit unless the
Borrowers have provided to CIBC cash collateral
acceptable to CIBC to cover such Contingent
Exposure; and
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(d) prepayments may otherwise be made without fee,
bonus or penalty.
All prepayments will be applied by CIBC against the
Indebtedness of the Borrowers under the Credit Facility
in inverse order of maturity.
REVIEW: The terms and conditions of the Credit Facility and the
continuance and availability thereof shall be subject
to periodic and at least annual review by CIBC upon
receipt of the information and statements referred to
under the heading "REPORTING REQUIREMENTS" or at such
other time as may be established by CIBC from time to
time by notice in writing to the Borrowers and, in the
course of such review, CIBC shall, if it deems it
appropriate in its sole and absolute discretion based
upon the commercial lending practices and lending
policies of CIBC prevailing at that time (acting
reasonably), have the right to make such amendments to
the terms and conditions of the Credit Facility as it
deems appropriate. The first scheduled review will
occur effective July 31, 2000.
INTEREST RATES AND FEES: The Borrowers will pay to CIBC the following interest
rates and fees in respect of the Credit Facility:
(a) Cdn. Dollar Advances and Acceptances
Prime Rate Loans and Cdn. Dollar Acceptances will bear
interest per annum at the Prime Rate in effect from
time to time plus the applicable Rate Margin
hereinafter referred to. Interest will be determined on
the daily principal amount of Advances by way of Prime
Rate Loans and Cdn. Dollar Acceptances outstanding and
shall be calculated and payable monthly in arrears.
(b) U.S. Dollar Advances and Acceptances
Base Rate Loans and U.S. Dollar Acceptances will bear
interest per annum at the U.S. Base Rate in effect from
time to time plus the applicable Rate Margin
hereinafter referred to. Interest will be determined on
the daily principal amount of Advances by way of Base
Rate Loans and U.S. Dollar Acceptances outstanding and
shall be calculated and payable monthly in arrears.
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(c) Standard Overdraft Rate and Default Rate
If any Advance under the Credit Facility or if the amount of all
Advances under the Credit Facility at any time exceeds any
amount authorized under this Loan Agreement, the rate of
interest applicable to such excess shall be the Standard
Overdraft Rate in affect from time to time, currently a fixed
rate of 21% per year.
During the continuance of an Event of Default, the rate of
interest applicable to all Advances of the Credit Facility shall
be equal to the Standard Overdraft Rate.
(d) Letters of Credit
Fees on Letters of Credit are payable at the time of issuance at
the then prevailing rate as determined by CIBC, currently 3% per
annum or a portion thereof with a minimum of $150 plus
out-of-pocket expenses (cable fees).
(e) Fees
The Borrowers shall pay to CIBC the following fees:
(i) a loan administration fee in the amount of Cdn. $500
per month on Cdn. Dollar Advances;
(ii) a one time loan structuring fee in the amount of .1%
of the maximum amount authorized under the Credit
Facility (receipt of which is acknowledged by CIBC);
(iii) commencing in the year 2001, a review fee of Cdn.
$15,000 payable on each scheduled review date for
the Credit Facility;
(iv) a fee as determined by CIBC in the minimum amount of
Cdn. $1,000 for each amendment or waiver by CIBC of
any material provision or material term of this
Loan Agreement or the Security Documents; and
(v) a late reporting fee of Cdn. $500 per occurrence in
respect of the information
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and documents to be provided to CIBC
under the heading "REPORTING
REQUIREMENTS".
Whenever the interest rate applicable to a particular type
of availment under the Credit Facility is based on the
Prime Rate or the U.S. Base Rate, such interest rate will
change automatically, without notice, whenever the Prime
Rate or the U.S. Base Rate, as the case may be, changes.
RATE MARGIN: The interest rates and stamping fees (in the case of
Acceptances) in respect of Advances under the Credit
Facility will vary and be increased or decreased from time
to time according to the following pricing grid:
<TABLE>
<CAPTION>
RATE MARGIN ON BASE RATE RATE MARGIN ON PRIME
LOANS AND RATE LOANS AND
WORKING CAPITAL RATIO U.S. DOLLAR ACCEPTANCES CDN. DOLLAR ACCEPTANCES
--------------------- ------------------------ -----------------------
<S> <C> <C>
[LESS THAN] 2.5:1 U.S. Base Rate + 3% Prime Rate + 3%
[GREATER THAN OR EQUAL U.S. Base Rate + 2% Prime Rate + 2%
TO] 2.5:1 AND [LESS
THAN] 3.0:1
[GREATER THAN OR EQUAL U.S. Base Rate + 1% Prime Rate + 1%
TO] 3.0:1
</TABLE>
The Working Capital Ratio will be calculated on a monthly
basis based upon the monthly statements and certificate
provided by the Borrowers to CIBC, and will apply to
Advances during the month following provision of such
compliance certificate.
EXPENSES: All of CIBC's reasonable out of pocket costs and expenses,
including reasonable legal fees, disbursements and other
costs as between a solicitor and his own client on a full
indemnity basis in connection with the preparation,
negotiation, establishment, operation, administration,
perfection or enforcement of the Credit Facility and this
Loan Agreement, including the Security Documents, are for
the account of the Borrowers and shall be paid by the
Borrowers on demand by CIBC.
SECURITY DOCUMENTS: The Borrowers will provide or cause to be provided to CIBC
and maintain the following documents and securities in
relation to the Credit Facility, all to be in form and
content acceptable to CIBC and CIBC's counsel (acting
reasonably):
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(a) unlimited guarantee and postponement of claim
(collectively, the "Guarantees" and individually, a
"Guarantee") for the full amount of all present and
future Indebtedness of the Borrowers arising under
this Loan Agreement and the Security Documents from
each of FutureLink Pleasanton Corp. ("Pleasanton"),
FutureLink Async Corp. ("Async"), FutureLink Madison
Corp. ("Madison"), FutureLink VSI Corp. ("VSI") and
FutureLink Micro Visions Corp. ("Micro Visions")
(collectively the "Guarantors" and individually a
"Guarantor"). In any computation of the Indebtedness
or other liabilities of a Guarantor under a
Guarantee, the Indebtedness or other obligations that
are the subject of the Guarantee shall be assumed to
be a direct obligation of the Guarantor.
(b) unlimited guarantee and postponement of claim for the
full amount of all present and future Indebtedness of
FLDC arising under this Loan Agreement and the
Security Documents from FLC (the "FLC Guarantee"). In
any computation of the Indebtedness or other
liabilities of FLC under the FLC Guarantee, the
Indebtedness or other obligations that are subject to
the FLC Guarantee shall be assumed to be a direct
obligation of FLC.
(c) if required by CIBC, a demand promissory note
evidencing the full principal amount of the Credit
Facility;
(d) general security agreement providing a first priority
security interest on all present and after-acquired
personal property from each of the Borrowers;
(e) assignment of accounts providing a first priority
security interest on all present and future accounts
receivable from each of the Guarantors;
(f) an hypothecation and pledge by FLC of 65% of the
issued and outstanding Securities in the capital
stock of FLDC and all of the issued and outstanding
Securities in the capital stock of each of the
Guarantors (other than Madison, in
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connection with which FLC hereby
undertakes and agrees to hypothecate and
pledge to CIBC all of the issued and
outstanding Securities in the capital
stock of Madison as soon as reasonably
practical or on demand by CIBC), together
with delivery to CIBC of the original
certificates representing such Securities
duly endorsed in blank or accompanied by
a duly executed stock transfer power of
attorney permitting transfer of such
Securities to CIBC or its nominee;
(g) assignment of fire and all hazards
insurance coverage which is acceptable to
CIBC with CIBC as named insured and first
last payee; and
(h) such other security as may be required by
the Credit Agreement or as may be
reasonably required by the CIBC in
connection with property or assets
subsequently acquired by any of the
Borrowers or the Guarantors or in order
to preserve and protect CIBC's interest
in the assets and property of the
Borrowers and the Guarantors from the
time to time.
(collectively the "Security Documents").
CONDITIONS
OF FUNDING: Conditions Precedent to Drawdown. CIBC's
obligation to provide Advances shall
be subject to the following conditions
precedent being met, unless waived in writing
by CIBC:
(a) CIBC shall have received and found
satisfactory:
(i) a copy certified by a senior officer
of each of the Borrowers and the
Guarantors of all resolutions and other
documents evidencing all necessary
corporate actions and proceedings taken
by each of the Borrowers, the
Guarantors and their directors and
shareholders with respect to the
authorization, execution, delivery and
performance of this Loan Agreement, the
Security Documents and all ancillary
agreements, documents and certificates;
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(ii) a list certified by a senior officer of each of the
Borrowers and the Guarantors of the names and titles
of the officers and directors of the Borrowers and the
Guarantors together with specimen signatures of the
individuals signing this Loan Agreement, the Security
Documents and all ancillary agreements, documents and
certificates;
(iii) true copies certified by a senior officer of each of
the Borrowers and the Guarantors of the constating
documents, the by-laws and any shareholder agreement,
and amendments thereto, of or relating to each of the
Borrowers and the Guarantors; and
(iv) all usual and normal agreements and account
documentation reasonably required by CIBC in respect
of the accounts of the Borrowers to be maintained at
CIBC duly completed and executed by the Borrowers;
(b) CIBC shall have received and found satisfactory a legal
opinion from legal counsel for each of the Borrowers and the
Guarantors concerning the due authorization, execution,
delivery, enforceability, perfection and registration (if
required) of this Loan Agreement and the Security Documents
and as to such other matters of a legal nature as CIBC or its
counsel may reasonably require;
(c) each of the Security Documents or financing statements
relating thereto shall be filed, registered and recorded
where, in the opinion of the Borrowers' counsel or CIBC's
counsel, such filing, registration and recording is required
subject only to such Liens which are acceptable to CIBC;
(d) CIBC shall have been provided with the Security Documents and
all other ancillary agreements, documents and certificates
required hereunder, in form and content satisfactory to CIBC
acting reasonably;
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(e) CIBC shall have been provided with standard sundry, account
and hedging product, agreements and security documentation as
applicable in respect of Acceptances, Letters of Credit,
Hedge Agreements and Corporate Visa including, without
limitation, an ISDA Agreement;
(f) no Event of Default shall have occurred and be continuing and
no Default shall exist; and
(g) completion, to CIBC's satisfaction, of all due diligence with
respect to the Borrowers and their Subsidiaries and their
business and its assets, as CIBC deems appropriate.
REPORTING
REQUIREMENTS: The Borrowers will provide to CIBC:
(a) audited, consolidated financial statements of the Borrowers
within 120 days of the fiscal year-end of the Borrowers;
(b) a summary of Receivable Value together with an aged list of
accounts receivable of the Borrowers and the Guarantors and a
Monthly Statement of Available Credit Limits as at month end
for the immediately preceding month within 30 days of each
month end;
(c) in-house monthly financial statements and a completed
compliance certificate in the form of Schedule "B" attached
hereto (or such other form as CIBC may prescribe) for the
immediately preceding month within 30 days of each month end
or 45 days for the last month of each fiscal quarter;
(d) a copy of the annual report and quarterly reports of FLC to
its shareholders and the notice and proxy information
circular for each annual general meeting and any special
general meeting of FLC;
(e) a copy of all reports and filings with all securities
commissions (or like bodies) where FLC is a reporting issuer
and stock exchanges on which Securities of FLC are listed for
trading;
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(f) an annual business and financial plan and
forecast for the Borrowers including
month-by-month projected balance sheets,
income statements and cash flow projections
for the ensuing fiscal year, within 120 days
of the fiscal year-end of the Borrowers in
form acceptable to CIBC acting reasonably;
and
(g) such other documentation and information
(financial or otherwise) as CIBC may
reasonably request.
INDEMNITY: The Borrowers agree to indemnify and hold CIBC
and its officers, directors, employees and
agents harmless against any and all liabilities
and costs (including all reasonable legal fees,
disbursements and other costs on a solicitor and
his own client full indemnity basis) associated
with or as a result of any of the Borrowers or
their Subsidiaries, breach of or non-compliance
with any legislation, public or private
requirement, regulation, by-law, order, directive
or judgment related to the protection or
enhancement of the environment. This indemnity
will survive the repayment, cancellation or
termination of this Loan Agreement and the Credit
Facility.
OBLIGATIONS JOINT
AND SEVERAL: Unless otherwise stated or the context otherwise
requires, all of the representations, covenants,
agreements and obligations of the Borrowers under
this Loan Agreement and the Security Documents
shall be joint and several on the part of each of
the Borrowers.
NOTICES: Any notice or communication to be given hereunder
and under the Security Documents may be
effectively given by delivering the same at the
addresses hereinafter set forth or by facsimile
or by sending the same by prepaid registered mail
to the parties at such addresses. Any notice will
be deemed to have been given upon actual receipt
thereof. The address and facsimile number of the
parties are:
FutureLink Corp.
6 Morgan
Irvine, CA 92618
Attention: Chief Financial Officer
Facsimile: (949) 837-8387
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FutureLink Distribution Corp.
300, 250 - 6th Avenue S.W.
Calgary, AB T2P 3H7
Attention: Chief Financial Officer
Facsimile: (403) 509-5016
Canadian Imperial Bank of Commerce
Knowledge Based Business
10th Floor, 855 - 2nd Street S.W.
Calgary, AB T2P 2P2
Attention: Director
Facsimile: (403) 221-5333
Any party may from time to time notify
the other, in accordance with the
provisions hereof, of any change of
address or addressee or facsimile
number, which thereafter, until changed
by like notice, will be the address of
such party for all purposes of this Loan
Agreement and the Security Documents.
GENERAL TERMS AND CONDITIONS: Schedule "A" attached hereto contains
definitions, covenants, events of
default, terms and conditions which form
part of this Loan Agreement.
ACCEPTANCE: CIBC and the Borrowers each agree to be
bound by the terms and conditions of
this Loan Agreement.
CANADIAN IMPERIAL BANK FUTURELINK CORP.
OF COMMERCE
By: /s/ [ILLEGIBLE SIGNATURE] By: /s/ RAGHU N. KILANBI
---------------------------- -----------------------------
Name: Name: Raghu N. Kilanbi
Title: Title: Exec. VP & CFO
(corporate seal) (corporate seal)
By: /s/ T. F. FRASER By: /s/ KYLE B. SCOTT
---------------------------- -----------------------------
Name: T. F. FRASER Name: Kyle B. Scott
Title: Commercial Lending Title: VP & Secretary
Specialist
FUTURELINK DISTRIBUTION CORP.
By: /s/ RAGHU N. KILANBI
----------------------------
Name: Raghu N. Kilanbi
Title: Exec. VP & CFO
(corporate seal)
By: /s/ KYLE B. SCOTT
----------------------------
Name: Kyle B. Scott
Title: VP & Secretary
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THIS IS SCHEDULE "A" TO THE LOAN AGREEMENT DATED MAY 4, 2000
AMONG CANADIAN IMPERIAL BANK OF COMMERCE,
FUTURELINK CORP. AND,
FUTURELINK DISTRIBUTION CORP.
ARTICLE 1
DEFINITIONS
1.1 DEFINITIONS. The following capitalized words and phrases used in this
Loan Agreement and in all notices and communications made pursuant to this Loan
Agreement have the meanings set out below.
"ACCEPTANCE" means L/C Acceptances or Availed Documentary Collections, or both,
as the case may be.
"ADVANCE" means an advance or an accommodation made available to either of the
Borrowers under the Credit Facility as permitted under this Loan Agreement.
"AFFILIATE" shall have the meaning ascribed thereto in section 2(1) of the
Business Corporations Act (Alberta).
"AVAILED DOCUMENTARY COLLECTION" means a bill of exchange, drawn on either of
the Borrowers' availed by CIBC at the request of a Borrower.
"BANKING DAY" means any day, other than a Saturday or Sunday, on which Canadian
chartered banks are open for domestic and foreign exchange business in Calgary,
Alberta.
"BASE RATE LOAN" means a U.S. dollar loan on which interest is calculated by
reference to the U.S. Base Rate.
"BUSINESS" means the business currently conducted by the Borrowers and their
Subsidiaries.
"CDN. DOLLARS" OR "CDN. $" means lawful money of Canada in same day immediately
available freely transferable funds or, if such funds are not available, the
form of money of Canada that is customarily used in the settlement of
international banking transactions on the date payment is due hereunder.
"CONTINGENT EXPOSURE" means, at the time of determination thereof, the
contingent liability and exposure of CIBC arising or which may arise under and
in respect of any outstanding Acceptances, Letters of Credit or Hedge
Agreements, issued or entered into pursuant to this Loan Agreement, as
determined by CIBC in accordance with CIBC's standard banking practice.
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"CREDIT AGREEMENT" means the Credit Agreement dated April 4, 2000 between CIBC
and FLC pursuant to which CIBC offered to make available the Credit Facility to
the Borrowers, as such Credit Agreement may be supplemented, renewed, amended
or replaced from time to time.
"CURRENT ASSETS" means, as at the date of determination thereof and as
determined in accordance with GAAP on a consolidated basis for the Borrowers
and the Guarantors, cash, accounts receivable, inventory and other assets that
are likely to be converted into cash, sold, exchanged or expended in the normal
course of business within one year or less, excluding amounts due from related
parties and Affiliates.
"CURRENT LIABILITIES" means, as at the date of determination thereof and as
determined in accordance with GAAP on a consolidated basis for the Borrowers
and the Guarantors, debts that are or will become payable within one year or
one operating cycle, whichever is longer, which usually include accounts
payable, current expenses, deferred revenue, and the current portion of long
term debt.
"DEFAULT" means an event or condition the occurrence or existence of which
would, with the lapse of time or the giving of notice or both, become an Event
of Default.
"DEFERRED REVENUE" means, at the time of determination thereof, the "Deferred
Revenue" of the Borrowers and the Guarantors on a consolidated basis determined
in accordance with GAAP.
"DISTRIBUTION" in respect of the Borrowers and its Subsidiaries means:
(a) dividends or other distributions on share capital (including, without
limitation, Preferred Stock and redemptions of mandatory redeemable
Preferred Stock) of a corporation; and
(b) redemption, acquisition or retirement of any shares of its capital or
warrants, rights or other options to purchase any shares of its capital.
"ENVIRONMENTAL LAWS" means all applicable federal, provincial, state, regional,
municipal or local laws with respect to the environment or environmental or
public health and safety matters contained in statutes, regulations, rules,
ordinances, orders, judgments, approvals, notices, permits or policies,
guidelines or directives having the force of law.
"EVENT OF DEFAULT" means an Event of Default as set out in Section 8.1 of this
Schedule "A".
"FUNDED DEBT" means, as at the date of determination thereof and as determined
in accordance with GAAP on a consolidated basis for the Borrowers and the
Guarantors, that portion of the interest bearing debt (including rentals under
capital leases) which comprise as "Funded Debt" in accordance with GAAP.
"FUNDED DEBT TO EQUITY RATIO" means that as at the date of determination
thereof, the ratio of Funded Debt to total Shareholders' Equity.
"GAAP" means generally accepted accounting principles as in effect from time to
time in Canada or the United States.
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"GOVERNMENTAL AUTHORITY" means:
(a) the government of
(i) Canada or any province or other political subdivision thereof, or
(ii) the United States of America or any state or other political
subdivision thereof, or
(iii) any jurisdiction in which the Borrowers or any of their Subsidiaries
conducts all or any part of its business, or which asserts
jurisdiction over any properties of the Borrower or any of its
Subsidiaries; or
(b) any entity exercising executive, legislative, judicial, regulatory or
administrative functions of, or pertaining to, any such government.
"HAZARDOUS MATERIALS" means any substance or mixture of substances which, if
released into the environment, would likely cause, immediately or at some
future time, harm or degradation to the environment or to human health or
safety and includes any substance defined as or determined to be a pollutant,
contaminant, waste, hazardous waste, hazardous chemical, hazardous substance,
toxic substance or dangerous good under any Environmental Laws.
"HEDGE AGREEMENTS" means (i) interest rate swap, interest cap and interest rate
collar agreements, or any similar agreement, option or arrangements designed to
hedge the risk of interest rate fluctuations and volatility, (ii) foreign
currency swap, hedge, exchange or any similar agreement, option or arrangement
designed to hedge the risk of foreign currency exchange fluctuations and
volatility, and (iii) any other derivative agreements or transactions as
approved by CIBC, in each case on terms and conditions acceptable to CIBC
acting reasonably in accordance with CIBC's standard banking practice.
"INDEBTEDNESS" of any Person means, without duplication, (a) all obligations of
such Person for borrowed money which in accordance with GAAP would be included
in determining total liabilities as shown on the liability side of a balance
sheet of such Person as of the date at which Indebtedness is to be determined,
(b) obligations for borrowed money secured by any Lien 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) obligations under
capital leases, (e) guaranties of obligations of others of the character
referred to in this definition and (f) obligations of such Person in respect of
mandatorily redeemable Preferred Stock.
"INTELLECTUAL PROPERTY" means all rights, titles, estates and interests now
owned or hereafter owned or acquired by or on behalf of any of the Borrowers
and their Subsidiaries in any patent, trade mark, service mark, industrial
design, copyright, trade name, design, process, know-how and goodwill and like
intellectual or industrial property, and any license, franchise, permit or
quota of or relating thereto, and all pending applications pertaining thereto.
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"ISDA AGREEMENT" means the most recent version of the International Swap
Dealers Association, Inc. Master Agreement relating to derivatives transactions
in use by CIBC and includes any collateral or other agreements or documents
entered into in accordance therewith.
"L/C ACCEPTANCE" means a draft (as defined under the Bills of Exchange Act
(Canada)) payable to the beneficiary of a documentary L/C which the L/C
applicant or beneficiary, as the case may be, has presented to CIBC for
acceptance under the terms of the L/C.
"LETTER OF CREDIT" OR "L/C" means a documentary or standby letter of credit, a
letter of guarantee, or a similar instrument in form and substance satisfactory
to CIBC.
"LIEN" means, with respect to any Person, any mortgage, lien, pledge, charge,
security interest or other encumbrance, or any interest or title of any vendor,
lessor, lender or other secured party to or of such Person under any
conditional sale or other title retention agreement or capital lease, upon or
with respect to any property or asset of such Person (including in the case of
stock, stockholder agreements, voting trust agreements and all similar
arrangements), other than Permitted Encumbrances.
"LOAN AGREEMENT" means this Loan Agreement, as the same may be supplemented,
amended or restated from time to time in accordance with its terms.
"MATERIAL" means material in relation to the Business, operations, affairs,
financial condition, assets, properties, or prospects of any of the Borrowers
and their Subsidiaries taken as a whole.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the Business,
operations, affairs, financial condition, assets or properties of any of the
Borrowers and their Subsidiaries taken as a whole, or (b) the ability of the
Borrower and its Subsidiaries to perform their respective obligations under
this Loan Agreement or any of the Security Documents, or (c) the validity or
enforceability of this Loan Agreement or any of the Security Documents.
"MONTHLY STATEMENT OF AVAILABLE CREDIT LIMIT" means the CIBC form by that name,
as it may from time to time be changed.
"PERMITTED ENCUMBRANCES" means:
(a) the lien or any right of distress reserved in or exercisable under any
lease for rent and for compliance with the terms of such lease;
(b) security given in the ordinary course of business to a public utility or
any municipality or governmental or other public authority when required by
such utility or municipality or governmental or other authority in
connection with each of the Borrowers and their Subsidiaries and their
respective operations;
(c) all rights reserved to or vested in any governmental body by the terms of
any lease, license, franchise, grant or permit held by any of the Borrowers
and their Subsidiaries or by any statutory provision to terminate any such
lease, license, franchise, grant or permit
<PAGE> 17
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or to require annual or periodic payments as a condition of the continuance
thereof or to distrain against or obtain a lien or any property or assets
of any of the Borrowers or their Subsidiaries in the event of failure to
make such annual or other periodic payments;
(d) liens for taxes and assessments for the then current year which are not
yet due and payable;
(e) purchase money security liens, capital leases, conditional sales agreements
or other title retention mortgages on a property or asset created, issued
or assumed to secure the unpaid purchase price in respect of such property
or asset; and
(f) such other lien, mortgage, charge or encumbrance as may be consented to in
writing by CIBC.
"PERSON" means an individual, partnership, corporation, limited liability
company, association, trust, unincorporated organization, or a government or
agency or political subdivision thereof.
"PREFERRED STOCK" means any class of capital stock of a corporation that is
preferred over any other class of capital stock of such corporation as to the
payment of dividends or the payment of any amount upon liquidation or
dissolution of such corporation.
"PRIME RATE" means the variable reference rate of interest per year declared by
CIBC from time to time to be its prime rate for Cdn. Dollar loans made by CIBC
in Canada.
"PRIME RATE LOAN" means a Cdn. dollar loan on which interest is calculated by
reference to the Prime Rate.
"PRINCIPAL INDEBTEDNESS" means at any time the aggregate outstanding principal
amount of all Indebtedness owed by the Borrowers to CIBC under this Loan
Agreement, including any Contingent Exposure.
"PRIORITY CLAIMS" means any amount owing to a creditor of any of the Borrowers
and the Guarantors that ranks, or may rank, equal to or in priority to the
security in favour of CIBC created by the Security Documents, which may include
unremitted source deductions and taxes, other amounts owing to governments and
governmental bodies and amounts owing to creditors who may claim priority under
the Bankruptcy and Insolvency Act (Canada) or equivalent legislation in the
United States or under a purchase money security interest in inventory or
equipment (as such terms are defined in the Personal Property Security Act
(Alberta)).
"QUICK RATIO" means, at the time of determination thereof, the ratio of all
cash PLUS accounts receivable TO Current Liabilities of the Borrowers and the
Guarantors on a consolidated basis.
"RECEIVABLE VALUE" means, at the time of determination, the total value of
those of the Borrowers' and the Guarantors' trade accounts receivable,
including accounts domiciled in the United States of America and Canada, that
are subject to the Security Documents, other than those accounts (i)
outstanding for 90 days or more, unless owned by a Government Authority of
Canada or the United States of America or by a Person rated BBB or better by
the Dominion Bond Rating Service, in
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which case the amount is allowable until outstanding for 120 days, (ii) owing
by Persons who are an Affiliate of any of the Borrowers or the Guarantors; and
(iii) that CIBC may from time to time designate.
"SECURITIES" has the meaning attributed thereto in the Securities Act
(Alberta).
"SHAREHOLDERS' EQUITY" means paid-in capital, retained earnings and attributed
or contributed surplus.
"STANDARD OVERDRAFT RATE" means the variable or fixed reference interest rate
per year declared by CIBC from time to time to be its standard overdraft rate
on overdrafts in Cdn. dollar or U.S. dollar accounts maintained with CIBC in
Canada.
"SUBSIDIARY" shall have the meaning ascribed thereto in section 2(4) of the
Business Corporations Act (Alberta).
"U.S. BASE RATE" means the variable reference interest rate per year as
determined by CIBC from time to time to be its base rate for U.S. Dollar loans
made by CIBC in Canada.
"U.S. DOLLAR EXCHANGE EQUIVALENT" means, with reference to an amount (the
"original amount") expressed in a currency other than U.S. Dollars the amount
expressed in U.S. Dollars which CIBC would be required to pay in Toronto,
Ontario at the opening of business on the date specified, in order to purchase
the original amount, in accordance with CIBC's usual foreign exchange practice.
"U.S. DOLLARS" or "U.S. $" means the lawful money of the United States of
America in same day immediately available freely transferable funds, or, if
such funds are not available, the form of money of the United States of America
that is customarily used in the settlement of international banking
transactions on the date payment is due hereunder.
"WORKING CAPITAL RATIO" means, as at the date of any determination, the ratio
of Current Assets to Current Liabilities.
1.2 NUMBER. Wherever the context of this Loan Agreement so requires, a term
used herein importing the singular shall also include the plural and vice versa.
1.3 MONETARY REFERENCES. Whenever an amount of money is referred to in this
Loan Agreement and in any of the documents delivered pursuant to this Loan
Agreement, such amount shall, unless otherwise expressly stated, be in Canadian
dollars.
1.4 TIME. Time shall be of the essence in this Loan Agreement.
1.5 GOVERNING LAW. This Loan Agreement shall be governed by and interpreted
and construed in accordance with the laws of the Province of Alberta.
1.6 ENUREMENT. This Loan Agreement shall be binding upon and shall enure to
the benefit of the Borrowers and CIBC and their respective successors and
permitted assigns.
<PAGE> 19
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1.7 AMENDMENTS. This Loan Agreement may only be amended by an instrument in
writing signed by each of the Borrowers and CIBC.
1.8 NO WAIVER.
(a) No waiver by any of the Borrowers or CIBC of any provision or of the
breach of any provision of any of this Loan Agreement or the Security
Documents shall be effective unless it is contained in a written
instrument duly executed by an authorized officer or representative of
such party. Such written waiver shall affect only the matter specifically
identified in the instrument granting the waiver and shall not extend to
any other matter, provision or breach.
(b) The failure of CIBC to take any steps in exercising any right in respect
of the breach or nonfulfillment of any provision of any of this Loan
Agreement or the Security Documents by any of the Borrowers or the
Guarantors shall not operate as a waiver of that right, breach or
provision, nor shall any single or partial exercise of any right preclude
any other or future exercise of that right or the exercise of any other
right, whether in law or otherwise.
1.9 SEVERABILITY. If the whole or any portion of this Loan Agreement, the
Security Documents or the application thereof to any circumstance shall be held
invalid or unenforceable to an extent that does not affect the operation of
this Loan Agreement or the Security Documents in a fundamental way, the
remainder of the provision in question, or its application to any circumstance
other than that to which it has been held invalid or unenforceable, and the
remainder of this Loan Agreement or the Security Documents, shall not be
affected thereby and shall be valid and enforceable to the fullest extent
permitted by law.
1.10 ACCOUNTING TERMS AND PRINCIPLES. Except as otherwise expressly provided,
all accounting terms, principles and calculations applicable to this Loan
Agreement, including the financial statements of the Borrowers and the
Guarantors shall be interpreted, applied and calculated, as the case may be,
in accordance with GAAP. The basis of accounting shall be applied and made on a
consistent basis and shall not be changed in any material respect unless agreed
to by CIBC in writing.
ARTICLE 2
FUNDING AND OTHER MECHANICS
2.1 FUNDING OF ADVANCES. Where applicable, all Advances requested by the
Borrowers shall be made available by deposit of the applicable funds into the
appropriate account of the appropriate Borrower with CIBC for value on the
Banking Day on which the advance is to take place.
2.2 EXCHANGE RATE FLUCTUATIONS. If as a result of currency fluctuation the
U.S. Dollar Exchange Equivalent of the Principal Indebtedness at any time
exceeds the then applicable amount authorized under the Credit Facility (the
"Excess"), the Borrower shall forthwith pay the Excess to CIBC as a repayment
of principal.
<PAGE> 20
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ARTICLE 3
CALCULATION OF INTEREST AND FEES
3.1 RECORDS. CIBC shall maintain records, in written or electronic form,
evidencing all Advances and all other Indebtedness owing by the Borrowers to
CIBC under this Loan Agreement. CIBC shall enter in such records details of all
amounts from time to time owing, paid or prepaid by the Borrower to CIBC
hereunder. The information entered in such records shall constitute prima facie
evidence of the Indebtedness of the Borrowers to CIBC under this Loan Agreement.
3.2 PAYMENT OF INTEREST AND FEES.
(a) INTEREST. Except as expressly stated otherwise herein, all Prime Rate Loans
and Base Rate Loans from time to time outstanding hereunder shall bear
interest, as well after as before maturity, default and judgment, with
interest on overdue interest, at the applicable rates. Interest payable at
a variable rate shall be adjusted automatically without notice to the
Borrowers whenever there is a variation in such rate.
(b) CALCULATION OF INTEREST. Interest on Prime Rate Loans and Base Rate Loans
shall accrue and be determined daily and be calculated and payable on such
Banking Day as is customary for CIBC having regard to its then existing
practice. Interest on Prime Rate Loans and Base Rate Loans shall be
calculated on the basis of a 365 or 366 day year, as applicable.
(c) INTEREST ACT (CANADA). For the purposes of the Interest Act (Canada) and
all other applicable laws which may hereafter regulate the calculation or
computation of interest in this Loan Agreement, the annual rates of
interest and fees applicable to Prime Rate Loans and Base Rate Loans, are
the rates as determined under this Loan Agreement multiplied by the actual
number of days in a period of one year commencing on the first day of the
period for which such interest or fee is payable and divided by 365 or 366
(for a leap year).
3.3 CONVERSION TO ANOTHER CURRENCY. A conversion of an Advance from one
currency to another currency shall not be made by a netting out of funds unless
otherwise agreed to by CIBC.
3.4 WAIVER OF JUDGMENT INTEREST ACT (ALBERTA). To the extent permitted by
applicable law, the provisions of the Judgment Interest Act (Alberta) shall not
apply to this Loan Agreement and the Security Documents and are hereby expressly
waived by the Borrowers and the Guarantors.
3.5 DEEMED REINVESTMENT NOT APPLICABLE. For the purposes of the Interest Act
(Canada), the principle of deemed reinvestment of interest shall not apply to
any interest calculation under this Loan Agreement and the rates of interest
stipulated in this Loan Agreement are intended to be nominal rates and not
effective rates or yields.
<PAGE> 21
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ARTICLE 4
GENERAL PROVISIONS RELATING TO LETTERS OF CREDIT
4.1 CONDITIONS PRECEDENT TO ISSUANCE. CIBC will issue in accordance with the
terms of this Loan Agreement Letters of Credit under the Credit Facility on
behalf of either of the Borrowers to be used by the Borrower in the ordinary
course of its Business and upon execution by the Borrower of such other standard
bank documents relating thereto as are reasonably required by CIBC.
4.2 PAYMENTS PURSUANT TO LETTERS OF CREDIT. The appropriate Borrower shall
forthwith reimburse CIBC for any payment made by it pursuant to a Letter of
Credit, either by (i) payment thereof in full, (ii) utilization of another
Advance under the Credit Facility, or (iii) a combination of such payment and
utilization. Each such payment will bear interest, with interest on overdue
interest, from the date of disbursement to the date of reimbursement at the rate
applicable from time to time to Prime Rate Loans.
ARTICLE 5
INCREASED COSTS
5.1 CHANGES IN LAW.
(a) If due to either:
(i) the introduction of, or any change in, or in the interpretation of any
law, whether having the force of law or not, resulting in the
imposition or increase of reserves, deposits or similar requirements
by any central bank or administrative body charged with the
administration thereof; or
(ii) the compliance with any guideline or request from any central bank or
other administrative body which CIBC, acting reasonably, determines
that it is required to comply with,
there shall be any increase in the cost to CIBC of agreeing to make or
making, funding or maintaining this Loan Agreement or there shall be any
reduction in the effective return to CIBC thereunder, then, subject to the
paragraph below, the Borrowers shall, within two (2) Banking Days after
being notified by CIBC of such event, pay to CIBC quarterly in arrears,
that amount (the "Additional Compensation") which CIBC, acting
reasonably, determines shall compensate it, after taking into account all
applicable taxes, for any such increased costs or reduced returns incurred
or suffered by CIBC.
(b) If Additional Compensation is payable pursuant to the above paragraph, the
Borrowers shall have the option to prepay or cancel any amount of the
Principal Indebtedness owed to CIBC, subject to provisions of this Loan
Agreement.
5.2 CHANGES IN CIRCUMSTANCES. Notwithstanding anything to the contrary herein
contained, if on any date CIBC determines in good faith, which determination
shall be conclusive and
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binding on the parties, and provided written notice is given to the Borrowers
that its ability to maintain, or continue to offer any Advance has become
unlawful or impossible due to:
(a) any change in applicable laws, or in the interpretation or administration
thereof by authorities having jurisdiction in the matter; or
(b) the imposition of any condition, restriction or limitation upon CIBC which
is outside of its control,
then, in any such case, the Borrowers shall forthwith repay to CIBC all
principal amounts affected thereby, together with all unpaid interest accrued
thereon to the date of repayment and all other expenses incurred in connection
with the termination of any such Advance. Subject to the terms of this Loan
Agreement in respect of the Credit Facility, the Borrowers may utilize such
other form of Advance not so affected in order to make any required repayment
and, after any such repayment, the Borrowers may elect to re-borrow the amount
repaid by way of some other Advance upon complying with applicable requirements
thereof.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF THE BORROWER
6.1 REPRESENTATIONS AND WARRANTIES. The Borrowers hereby jointly and severally
represent and warrant to CIBC, so long as any Indebtedness remains outstanding
to CIBC, that:
(a) ORGANIZATION, POWER AND AUTHORITY. Each of the Borrowers is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation, and is duly registered or qualified as a
foreign or extra-provincial corporation and in good standing in those other
jurisdictions where it carries on business or owns assets and is in good
standing in each jurisdiction in which such registration or qualification
is required by law except to the extent that the failure to be so
registered, qualified or in good standing would not have a Material Adverse
Effect. Each of the Borrowers has the corporate power and authority to own
or hold under lease the properties it purports to own or hold under lease,
to transact the business it transacts and proposes to transact, to execute
and deliver this Loan Agreement and the Security Documents and to perform
the provisions hereof and thereof. Each of the Borrowers is subject to the
relevant commercial law and civil law of the Province of Alberta and Canada
which is applicable in such Province and is generally subject to suit and
it is not immune nor do any of its properties or revenues enjoy any right
of immunity on the date hereof from any judicial proceedings, including
attachment prior to judgment, attachment in aid of execution, execution of
judgment or otherwise.
(b) AUTHORIZATION, ETC. This Loan Agreement and the Security Documents (as
applicable) have been duly authorized by all necessary corporate action on
the part of the Borrowers and the Guarantors and their respective
directors, and this Loan Agreement and the Security Documents constitute
legal, valid and binding obligations of the Borrowers and the Guarantors
enforceable against the Borrowers and the Guarantors in accordance with
their respective terms.
<PAGE> 23
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(c) ORGANIZATION, POWER AND AUTHORITY OF GUARANTORS. Each of the Guarantors is
a corporation duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation, and is duly registered or
qualified as a foreign or extra-provincial corporation in those other
jurisdictions where it carries on business or owns assets and is in good
standing in each jurisdiction in which such registration or qualification
is required by law except to the extent that the failure to be so
registered, qualified or in good standing would not have a Material Adverse
Effect. Each of the Guarantors has the corporate or other power and
authority to own or hold under lease the properties it purports to own or
hold under lease, to transact the business it transacts and proposes to
transact and to execute and deliver its Guarantee and to perform the
provisions thereof. No Subsidiary of either of the Borrowers is a party to,
or otherwise subject to, any legal restriction or any agreement (other than
this Loan Agreement and customary limitations imposed by corporate law
statutes) restricting the ability of such Subsidiary to pay dividends out
of profits or make any other similar distributions of profits.
(d) AUTHORIZED AND ISSUED CAPITAL. FLC is the sole legal and beneficial owner
of all of the issued and outstanding shares in the capital of FLDC and each
of the Guarantors, each of which is a wholly owned Subsidiary of FLC. The
authorized capital of FLDC consists of an unlimited number of Class A
Common Shares, Class B Common Shares and First Preferred Shares and the
issued capital of FLDC consists of 3,321,275 Class A Common Shares. The
authorized capital of Pleasanton consists of and the issued capital of
Pleasanton consists of 1,500 shares of common stock. The authorized capital
of Async consists of 1,500 shares of common stock and the issued capital of
Async consists of 500 shares. The authorized capital of Madison consists of
1,500 shares of common stock. The authorized capital of VSI consists of
1,500 shares of common stock and the issued capital of VSI consists of 100
Shares. The authorized capital of Micro Visions consists of 1,500 shares of
common stock and the issued capital of Micro Visions consists of 500
Shares.
(e) RESTRICTIONS ON TRANSFER: There exist no restrictions on transfer of any
shares in the capital stock of FLDC or any of the Guarantors other than
obtaining the consent to any such transfer of the board of directors of
FLDC or the applicable Guarantor.
(f) FINANCIAL STATEMENTS. The Borrowers have delivered to CIBC copies of their
financial statements. All of said financial statements (including in each
case the related schedules and notes) fairly present in all material
respects the consolidated financial position of the Borrowers and their
Subsidiaries as of the respective dates specified in such financial
statements and the consolidated results of their respective operations and
cash flows for the respective periods so specified and have been prepared
in accordance with GAAP consistently applied throughout the periods
involved except as set forth in the notes thereto (subject, in the case of
any interim financial statements, to normal year-end adjustments).
(g) COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC. The execution, delivery and
performance by the Borrowers and the Guarantors of this Loan Agreement and
the Security Documents (as applicable) will not (i) contravene, result in
any breach of, or
<PAGE> 24
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constitute a default under the constating documents of the Borrowers or the
Guarantors, (ii) conflict with or result in a breach of any of the terms,
conditions or provisions of any order, judgment, decree, or ruling of any
court, arbitrator or Governmental Authority applicable to the Borrowers or
the Guarantors, or (iii) violate any provision of any law, statute or other
rule or regulation of any Governmental Authority applicable to the
Borrowers or the Guarantors. None of the Borrowers or the Guarantors is in
default under any term of any agreement or instrument to which it is a
party or by which it is bound, or any order, judgment, decree or ruling of
any court, arbitrator or Governmental Authority or is in violation of any
applicable law, ordinance, rule or regulation (including without limitation
Environmental Laws) of any Governmental Authority that, individually or in
the aggregate, could reasonably be expected to have a Material Adverse
Effect.
(h) GOVERNMENTAL AUTHORIZATIONS, ETC. No consent, approval or authorization
of, or registration, filing or declaration with, any Governmental Authority
is required to be obtained by any of the Borrowers or the Guarantors in
connection with the execution, delivery or performance by any of the
Borrowers or the Guarantors of this Loan Agreement or the Security
Documents, other than such as have been obtained.
(i) LITIGATION: OBSERVANCE OF AGREEMENTS, STATUTES AND ORDERS. There are no
actions, suits or proceedings pending or threatened against or affecting
either of the Borrowers or any of their Subsidiaries or any property of the
Borrowers or their Subsidiaries in any court or before any arbitrator of
any kind or before or by any Governmental Authority that, individually or
in the aggregate, could reasonably be expected to have a Material Adverse
Effect other than such as have been disclosed in writing to CIBC. Neither
of the Borrowers nor any of their Subsidiaries is in default under any term
of any agreement or instrument to which it is a party or by which it is
bound, or any order, judgment, decree or ruling of any court, arbitrator or
Governmental Authority or is in violation of any applicable law, ordinance,
rule or regulation (including without limitation Environmental Laws) of any
Governmental Authority, which default or violation, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
(j) TAXES AND REMITTANCES. Each of the Borrowers and each of their
Subsidiaries have filed all tax returns that are required to have been
filed in any jurisdiction, and have paid all taxes shown to be due and
payable on such returns and all other taxes and assessments levied upon
them or their properties, assets, income or franchises (including value
added taxes), to the extent such taxes and assessments have become due and
payable and before they have become delinquent, and have remitted when due
to the appropriate Governmental Authority all required amounts relating to
employee deductions, except for any taxes and assessments (i) the amount of
which is not individually or in the aggregate Material or (ii) the amount,
applicability or validity of which is currently being contested in good
faith by appropriate proceedings and with respect to which any of the
Borrowers or their Subsidiaries, as the case may be, has established
adequate reserves in accordance with GAAP. The Borrower knows of no basis
for any other tax or assessment that could reasonably be expected to have a
Material Adverse Effect. The charges, accruals and reserves on the books of
each of the Borrowers and their Subsidiaries in respect of U.S.
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federal, state or other taxes, if any, and in respect of Canadian, Alberta
and other provincial income and other taxes for all fiscal periods are
adequate.
(k) TITLE TO PROPERTY; LEASES. Each of the Borrowers and their Subsidiaries
have good and sufficient title to their respective properties in each case
free and clear of Liens. All leases are valid and subsisting and are in
full force and effect in all material respects.
(l) LICENSES, PERMITS, ETC. Except as disclosed in writing to CIBC and to the
best of the knowledge of each of the Borrowers and their Subsidiaries after
due inquiry:
(i) the Borrowers and their Subsidiaries own or possess all licenses,
permits, franchises, authorizations and Intellectual Property without
known conflict with the rights of others;
(ii) no product of either of the Borrowers or any of their Subsidiaries
infringes any license, permit, franchise, authorization, patent,
copyright, service mark, trademark, trade name or other right owned
by any other Person; and
(iii) there is no violation by any Person of any right of either of the
Borrowers or any of their Subsidiaries with respect to any
Intellectual Property.
(m) EXISTING INDEBTEDNESS; FUTURE LIENS. Neither of the Borrowers nor any of
their Subsidiaries is in default and no waiver of default is currently in
effect, in the payment of any principal or interest on any Indebtedness of
either of the Borrowers or any of their Subsidiaries and no event or
condition exists with respect to any Indebtedness of either of the
Borrowers or any of their Subsidiaries that would permit (or that with
notice or the lapse of time, or both, would permit) one or more Persons to
cause such Indebtedness to become due and payable before its stated
maturity or before its regularly scheduled dates of payment. Except as
disclosed in writing to CIBC, neither of the Borrowers nor any of their
Subsidiaries has agreed or consented to cause or permit now or in the
future (upon the happening of a contingency or otherwise) any of their
respective property, whether now owned or hereafter acquired, to be subject
to a Lien.
(n) ENVIRONMENTAL MATTERS. Neither of the Borrowers nor any of their
Subsidiaries has knowledge of any claim or has received any notice of any
claim, and no proceeding has been instituted raising any claim against
either of the Borrowers or any of their Subsidiaries or any of their
respective real properties now or formerly owned, leased or operated by any
of them or other assets, alleging any damage to the environment or
violation of any Environmental Laws. Except as otherwise disclosed to CIBC
in writing:
(i) neither of the Borrowers nor any of their Subsidiaries has knowledge
of any facts which would give rise to any claim, public or private,
of violation of Environmental Laws or damage to the environment
emanating from, occurring on or in any way related to real properties
now or formerly owned, leased or operated by any of them or to other
assets or their use; and
(ii) neither of the Borrowers nor any of their Subsidiaries has stored
any Hazardous Materials on real properties now or formerly owned,
leased or operated by any of
<PAGE> 26
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them or has disposed of any Hazardous Materials in a manner contrary
to any Environmental Laws.
(o) INTELLECTUAL PROPERTY. Except as disclosed in writing to CIBC and to the
best of the knowledge of the Borrowers after due inquiry:
(i) each of the Borrowers and their Subsidiaries (as the case may be) has
good title to the Intellectual Property in Canada and the United
States of America as required by law;
(ii) the Intellectual Property is valid and subsisting and all
registrations and recordings of the Intellectual Property as required
by law are valid and subsisting and in full force and effect as of
the date of this Loan Agreement;
(iii) none of the Intellectual Property has lapsed, been dedicated to the
public, nor has any Intellectual Property been infringed by any other
Person nor are either of the Borrowers or any of their Subsidiaries
infringing similar rights of any other Person; and
(iv) as of the date of this Loan Agreement, neither of the Borrowers nor
any of their Subsidiaries has any pending applications for
registration or recording in Canada or the United States of America
of any Intellectual Property, other than as required by law.
(p) OPERATION OF PROPERTIES. The property of each of the Borrowers and their
Subsidiaries have been and shall continue to be operated and maintained, as
the case may be, in a good and workmanlike manner in accordance with sound
industry practice and in accordance with all applicable laws.
(q) INFORMATION. All material factual information heretofore or
contemporaneously furnished by or on behalf of any of the Borrowers or
their Subsidiaries to CIBC in connection with this Loan Agreement and the
Credit Facility is true and accurate in all material respects and none of
the Borrowers or their Subsidiaries are aware of any omission of any
material fact which renders such factual information incomplete or
misleading in any material way.
(r) NO DEFAULT. No Event of Default or Default has occurred.
(s) SUBSIDIARIES. Neither of the Borrowers has direct or indirect Subsidiaries
other than the Guarantors and as otherwise disclosed in writing to CIBC as
of the date hereof.
6.2 ACKNOWLEDGEMENT. The Borrowers acknowledge that CIBC is relying upon the
representations and warranties in this Article 6 in making the Credit Facility
available to the Borrowers.
6.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties set forth above shall survive and continue beyond the making of any
loan or advance under the Credit Facility or the giving or taking of any
Security Documents, notwithstanding any
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investigations or examinations made by CIBC or its representatives or solicitors
and shall terminate only on repayment in full of the Credit Facility and the
discharge of all other obligations of the Borrowers and the Guarantors (as the
case may be) to CIBC under this Loan Agreement and the Security Documents.
ARTICLE 7
COVENANTS OF THE BORROWER
7.1 AFFIRMATIVE COVENANTS. While any Indebtedness under this Loan
Agreement is outstanding or any Advances or Credit Facility remain available to
the Borrowers, except with the written consent of CIBC (which consent will not
be unreasonably withheld or delayed), the Borrowers hereby covenants with CIBC
that:
(a) PUNCTUAL PAYMENT. The Borrowers shall pay or cause to be paid all
Indebtedness and other amounts payable under this Loan Agreement or the
Security Documents punctually when due.
(b) NOTICE OF EVENT OF DEFAULT. The Borrowers shall notify CIBC of the
occurrence of any Event of Default or Default forthwith upon becoming
aware thereof and specify in such notice the nature of the event and the
steps taken or proposed to be taken to remedy the same.
(c) NOTICE OF ENVIRONMENTAL DAMAGE. The Borrowers shall, promptly upon
acquiring knowledge thereof, notify CIBC of the discovery of any
Hazardous Material or of any Material release of Hazardous Material into
the environment from or upon the land or property owned, operated or
controlled by either of the Borrowers or any of their Subsidiaries.
(d) ADDITIONAL ENVIRONMENTAL INFORMATION. The Borrowers shall upon the
request of CIBC make available for discussion with CIBC and a nominee of
the Borrowers at all reasonable times and on reasonable prior notice the
individuals who were involved in the preparation of any environmental
certificate given hereunder.
(e) REPORTING OBLIGATIONS. The Borrowers shall comply on a timely basis with
all of their reporting obligations under this Loan Agreement and shall
provide to CIBC, at the request of CIBC acting reasonably, such other
documentation and information concerning the Borrowers and each of their
Subsidiaries and their respective business as CIBC may require.
(f) COMPLIANCE WITH LAW. The Borrowers will, and will cause each of their
Subsidiaries to, comply with all laws, ordinances or governmental rules
or regulations to which each of them is subject, including, without
limitation, Environmental Laws, and will obtain and maintain in effect
all licenses, certificates, permits, franchises and other governmental
authorizations necessary to the ownership of their respective properties
or to the conduct of their respective businesses, in each case to the
extent necessary to ensure that non-compliance with such laws,
ordinances or governmental rules or regulations or
<PAGE> 28
16
failures to obtain or maintain in effect such licenses, certificates,
permits, franchises and other governmental authorizations could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(g) INSURANCE. The Borrowers will, and will cause each of their Subsidiaries
to, maintain, with financially sound and reputable insurers, insurance with
respect to their respective properties and businesses against such
casualties and contingencies, of such types, on such terms and in such
amounts (including deductibles, co-insurance and self-insurance, if
adequate reserves are maintained with respect thereto) as would a prudent
owner of such properties and business.
(h) MAINTENANCE OF PROPERTIES. The Borrowers will, and will cause each of their
Subsidiaries to, maintain and keep, or cause to be maintained and kept,
their respective properties in good repair, working order and condition
(other than ordinary wear and tear), so that the business carried on in
connection therewith may be properly conducted at all times provided that
this subsection shall not prevent the Borrowers or any of their
Subsidiaries from discontinuing the operation and the maintenance of any
of its properties if such discontinuance is desirable in the conduct of its
business and the Borrower has concluded that such discontinuance could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(i) PAYMENT OF TAXES AND CLAIMS. The Borrowers will, and will cause each of
their Subsidiaries to, file all tax returns required to be filed in any
jurisdiction and to pay and discharge all taxes shown to be due and payable
on such returns and all other taxes, assessments, governmental charges, or
levies imposed on them or any of their properties, assets, income or
franchises (including value added taxes), to the extent such taxes and
assessments have become due and payable and before they have become
delinquent and all claims for which sums have become due and payable that
have or might become a Lien on properties or assets of either of the
Borrowers or any of their Subsidiaries and shall remit when due to the
appropriate Governmental Authority all required amounts relating to
employee deductions; provided that neither of the Borrowers nor any of
their Subsidiaries need pay any such tax or assessment or claims if (i) the
amount, applicability or validity thereof is contested by a Borrower or a
Subsidiary on a timely basis in good faith and in appropriate proceedings,
and the Borrower or such Subsidiary has established adequate reserves
therefor in accordance with GAAP on the books of the Borrower or such
Subsidiary or (ii) the nonpayment of all such taxes and assessments in the
aggregate could not reasonably be expected to have a Material Adverse
Effect.
(j) CORPORATE EXISTENCE, ETC. The Borrowers will at all times preserve and keep
in full force and effect or cause to preserve and keep in full force and
effect their corporate existence and the corporate existence of each of
their Subsidiaries and all rights and franchises of the Borrowers and their
Subsidiaries.
(k) GUARANTEES. The Borrowers will ensure that the obligations under this Loan
Agreement and the Security Documents including all obligations and
liabilities of the Borrowers or the Guarantors under the Guarantees and the
FLC Guarantee are and at all times shall remain direct obligations of the
Borrowers and the Guarantors, as the case may be.
<PAGE> 29
17
(l) INSPECTION. The Borrowers shall permit or cause to permit the
representatives of CIBC:
(i) No Default - if no Default or Event of Default then exists, at the
expense of CIBC and upon reasonable prior notice to the Borrowers to
visit the principal executive office of any of the Borrowers and
their Subsidiaries, to discuss the affairs, finances and accounts of
the Borrowers and their Subsidiaries with the Borrowers' and its
Subsidiaries' officers, and its independent chartered accountants,
and to visit the other offices and properties of either of the
Borrowers and their Subsidiaries, all at such reasonable times and as
often as may be reasonably requested in writing; and
(ii) Default - if a Default or Event of Default then exists, at the
reasonable expense of the Borrowers, to visit and inspect any of the
offices or properties of either of the Borrowers or any of their
Subsidiaries, to examine all their respective books of account,
records, reports and other papers, to make copies and extracts
therefrom, and to discuss their respective affairs, finances and
accounts with their respective officers and independent chartered
accountants (and by this provision the Borrowers authorize said
accountants to discuss the affairs, finances and accounts of the
Borrowers and their Subsidiaries), all at such times and as often as
may be reasonably requested.
(m) ACQUISITIONS. Subject to section 7.2, the Borrowers will provide prior
written notice to CIBC of any acquisition by either of the Borrowers or any
of their Subsidiaries of any other Person, with full particulars of the
acquisition.
7.2 NEGATIVE COVENANTS. While any Indebtedness under this Loan Agreement and
the Security Documents is outstanding or any of the Advances or Credit Facility
remain available to the Borrowers, and except with the prior written consent of
CIBC (which consent will not be unreasonably withheld or delayed), the Borrowers
covenants with CIBC that:
(a) CHANGE IN BUSINESS. Neither of the Borrowers will and will not permit any
Subsidiary of either of the Borrowers to make any Material change in the
nature of their respective Business as carried on at the date hereof.
(b) MERGER, ETC. Other than acquisitions of any Person that carries on the same
or similar Business or corporate reorganizations of any of the Borrowers or
their Subsidiaries which would not have a Material Adverse Effect, neither
of the Borrowers will and will not permit any Subsidiary of either of the
Borrowers to merge or amalgamate with or into or acquire any other Person
or enter into partnership or syndicate with any Person.
(c) LIENS. Neither of the Borrowers will and will not permit any Subsidiary of
either of the Borrowers to create, cause, permit or permit to subsist any
Lien of any kind or nature, against any of their respective assets or
properties, which ranks or purports to rank in priority to or pari passu
with the Security Documents or any item thereof.
(d) SALE OF PERSONAL PROPERTY. Neither of the Borrowers will and will not
permit any Subsidiary of either of the Borrowers to sell, transfer or
dispose of any of their respective
<PAGE> 30
18
personal property, except in the course of their respective usual and
ordinary day to day business and operations.
(e) SALE OF REAL PROPERTY. Neither of the Borrowers will and will not permit
any Subsidiary of either of the Borrowers to sell, transfer or dispose of
any of their respective real property, except in the ordinary course of
their respective business.
(f) NON ARM'S LENGTH SALE. Neither of the Borrowers will and will not permit
any Subsidiary of either of the Borrowers to sell, transfer or dispose of
any of their respective property to a Person with whom it does not deal at
arm's length (as defined in the Income Tax Act (Canada) unless such sale,
transfer or disposition is for cash consideration and at market value.
(g) USE OF PROCEEDS. Neither of the Borrowers will and will not permit any
Subsidiary of either the Borrowers to use or permit the use of the proceeds
of the Credit Facility for other than the purposes authorized herein.
(h) REPURCHASE OF SHARES. Neither of the Borrowers will and will not permit
any Subsidiary of either of the Borrowers to redeem or purchase any of its
outstanding Securities or share capital or reduce its capital in any
manner.
(i) LOANS. Other than in respect of intercompany accounts among any of the
Borrowers and their Subsidiaries, neither of the Borrowers will and will
not permit any Subsidiary of either of the Borrowers to make any loan or
advance to or investment in or give any guarantee or financial assistance
on behalf of or enter into any other such transaction with any other
Person.
(j) DISTRIBUTIONS. Other than in respect of intercompany accounts among any
of the Borrowers and their Subsidiaries, either of the Borrowers will and
will not permit any Subsidiary of either of the Borrowers to pay, repay or
undertake to pay or repay any shareholders' loan, or make or pay any
Distribution.
(k) FUNDAMENTAL CHANGES. Neither of the Borrowers will and will not permit
any Subsidiary of either of the Borrowers to undertake any fundamental
changes, corporate reorganizations, amendments to capital or amendments to
their respective constating documents or by-laws.
(l) SHARE ISSUANCE. FLDC will not and the Borrowers will not permit any
Subsidiary of either of the Borrowers to issue or commit to issue any
Securities or allow any transfer of shares in the capital stock of the
Guarantors or any direct or indirect change in control of any of its
subsidiaries.
(m) CHANGE IN MANAGEMENT. Neither of the Borrowers will and will not permit
any Subsidiary of either of the Borrowers to make any change in its senior
management of which, in the opinion of CIBC, could cause a Material
Adverse Effect.
<PAGE> 31
19
(n) BANKING BUSINESS. Neither of the Borrowers nor any of the Canadian
Subsidiaries of either of the Borrowers will conduct any banking business
in Canada with any financial institution other than CIBC.
7.3 FINANCIAL COVENANTS. While any indebtedness under this Loan Agreement is
outstanding or any of the Advances remain available to the Borrowers and
except with the consent of CIBC, the Borrowers and the Guarantors covenant
with CIBC that:
(a) QUICK RATIO. The Borrowers will at all times keep and maintain a
Quick Ratio of no less than one decimal eight to one (1.8:1).
(b) FUNDED DEBT TO EQUITY RATIO. The Borrowers shall at all times keep
and maintain a Funded Debt to Equity Ratio at not greater than forty
one hundredths to one (0.40:1).
(c) SHAREHOLDERS' EQUITY. The Borrowers will at all times keep and
maintain Shareholders' Equity at not less than U.S. $175,000,000.
ARTICLE 8
EVENTS OF DEFAULT
8.1 EVENT OF DEFAULT. An "Event of Default" shall exist under this Loan
Agreement if any of the following conditions or events shall occur and be
continuing:
(a) INCORRECT REPRESENTATIONS. If any representation or warranty made to
CIBC by the Borrowers hereunder shall prove to have been incorrect in
any material respect when so made or deemed to have been repeated as
herein provided.
(b) FAILURE TO PAY PRINCIPAL INDEBTEDNESS. If either of the Borrowers
make default in the due and punctual payment of any Principal
Indebtedness owing under or pursuant to this Loan Agreement or the
Security Documents as and when the same becomes due and payable,
whether at maturity or otherwise.
(c) FAILURE TO PAY INTEREST. If either of the Borrowers make default in
the due and punctual payment of any interest owing under or pursuant
to this Loan Agreement or the Security Documents for more than seven
(7) Banking Days after the same becomes due and payable.
(d) BREACH OF COVENANTS. Except for an Event of Default set out in
subsections 8.1(b) and (c) above, if any of the Borrowers or the
Guarantors defaults in the performance or observance of any covenant,
obligation or condition to be observed or performed by it under or
pursuant to this Loan Agreement, the Security Documents or any other
agreement now or hereafter made by any of the Borrowers or the
Guarantors with CIBC, and such default continues for a period of 30
days after notice is given to the Borrowers by CIBC.
(e) INSOLVENCY. If a judgment, decree or order of a court of competent
jurisdiction is entered against any of the Borrowers or the
Guarantors, (i) adjudging it bankrupt or insolvent, or
<PAGE> 32
20
approving a petition seeking its reorganization or winding-up under the
Bankruptcy and Insolvency Act (Canada), the Companies' Creditors
Arrangement Act (Canada) or any other bankruptcy, insolvency or analogous
law of Canada or the United States of America or any state thereof, or
(ii) appointing a receiver, trustee, liquidator, or other Person with like
powers, over all, or substantially all, of its property or (iii) ordering
the involuntary winding up or liquidation of affairs or (iv) if any
receiver or other Person with like powers is appointed over all, or
substantially all, of its property, unless such appointment is stayed and
of no effect against this Loan Agreement and the Security Documents and
the rights of CIBC thereunder.
(f) WINDING-UP. If (i) an order or a resolution is passed for the
dissolution, winding-up, reorganization or liquidation of any of the
Borrowers or the Guarantors, pursuant to applicable laws, or (ii) the
Borrower or the Guarantor institutes proceedings to be adjudicated
bankrupt or insolvent, or consent to the institution of bankruptcy or
insolvency proceedings against it under the Bankruptcy and Insolvency Act
(Canada), the Companies' Creditors Arrangement Act (Canada) or any other
bankruptcy, insolvency or analogous law of Canada or the United States of
America or any state thereof, or (iii) any of the Borrowers or the
Guarantors consents to the filing of any petition under any such law or to
the appointment of a receiver, or other Person with like powers, over all,
or substantially all, of such party's property, or (iv) any of the
Borrowers or the Guarantors makes a general assignment for the benefit of
creditors, or becomes unable to pay its debts generally as they become
due, or (v) any of the Borrowers or the Guarantors takes or consents to
any action in furtherance of any of the aforesaid purposes.
(g) OTHER INDEBTEDNESS. Any of the Borrowers or the Guarantors is in default
of any payment of principal or interest in regard to any indebtedness
whatsoever owed by any of them after the expiry of any applicable grace
period and demand therefor, whether incurred before or after the date
hereof, to any Person other than CIBC, where the outstanding principal
amount of such Indebtedness is in the aggregate, at any time more than
U.S. $1,000,000.
(h) JUDGMENTS. Judgment or judgments for the payment of money aggregating in
excess of U.S. $1,000,000 (excluding any insured portions thereof for
which an insurer has admitted liability) shall be rendered by a court of
competent jurisdiction against any of the Borrowers or the Guarantors and
such Person shall not discharge the same or provide for its discharge in
accordance with its terms, or procure a stay of execution thereof, within
30 days from the date of entry thereof.
8.2 REMEDIES. Upon the occurrence of an Event of Default, CIBC may forthwith
terminate the Credit Facility and any further obligation to provide Advances or
to grant any further credits or accommodations to the Borrowers under the Credit
Facility and the Principal Indebtedness together with unpaid accrued interest
thereon, any Contingent Exposure and any other amounts owing under or pursuant
to this Loan Agreement, contingent or otherwise, will be immediately due and
payable, whereupon the Borrowers shall be obligated without grace period to
forthwith pay or make arrangements acceptable to CIBC for payment of, such
amounts to CIBC and CIBC may exercise any and all rights, remedies, powers and
privileges afforded by applicable law or under any and all other instruments,
documents and agreements made to secure or assure
<PAGE> 33
21
payment and performance of the obligations of the Borrowers under this Loan
Agreement, including, without limitation, the Security Documents.
8.3 WAIVERS. An Event of Default may only be waived in writing by CIBC.
8.4 DEFAULT RATE. Upon the occurrence of an Event of Default and for so long as
such Event of Default is subsisting, the interest rates applicable to each
outstanding Advance shall be equal to the greater of the interest rate then
applicable to each such outstanding Advance or the Standard Overdraft Rate,
effective immediately upon the occurrence of such Event of Default and for so
long as such Event of Default is subsisting.
ARTICLE 9
ASSIGNMENT
9.1 ASSIGNMENT OF INTERESTS. The rights and obligations of the Borrowers under
this Loan Agreement are not assignable, in whole or in part, without the prior
written consent of CIBC.
ARTICLE 10
MISCELLANEOUS
10.1 TELEPHONE INSTRUCTIONS. Any oral instructions given by the Borrowers in
relation to this Loan Agreement shall be at the risk of the Borrowers, and CIBC
shall have no liability for any error or omission in such verbal instructions
or in the interpretation or execution thereof by CIBC provided CIBC acted
without gross negligence in the circumstances.
10.2 NO PARTNERSHIP, JOINT VENTURE OF AGENCY. The Borrowers agrees that nothing
contained in this Loan Agreement nor the conduct of any party shall in any
manner whatsoever constitute or be intended to constitute any party as the agent
or representative or fiduciary of the other, constitute or be intended to
constitute a partnership or joint venture between CIBC and the Borrowers.
10.3 FURTHER ASSURANCES. The Borrowers shall, from time to time forthwith at
CIBC's request and at the Borrower's cost and expense, do, make, execute and
deliver, or cause to be done, made, executed and delivered, all such further
documents, financing statements, assignments, acts, matters and things which may
be reasonably required by CIBC with respect to this Loan Agreement and the
Security Documents or any part thereof and to give effect to any provision
thereof.
10.4 WAIVER OF LAWS. To the extent legally permitted, the Borrowers hereby
irrevocably and absolutely waive the provisions of any applicable law which may
be inconsistent at any time with, or which may delay or limit in any way, the
enforcement of this Loan Agreement and the Security Documents in accordance
with their terms.
10.5 ATTORNMENT AND GOVERNING LAW. The Borrowers do hereby irrevocably submit
and attorn to the non-exclusive jurisdiction of the courts of the Province of
Alberta for all matters
<PAGE> 34
22
arising out of or relating to this Loan Agreement and the Security Documents or
any of the transactions contemplated thereby. Unless otherwise expressly stated
therein, this Loan Agreement and each of the Security Documents shall be
governed by and construed in accordance with the laws of the Province of
Alberta.
10.6 INTEREST ON PAYMENTS IN ARREARS. Except as otherwise provided in this
Loan Agreement, interest shall be paid by the Borrowers on amounts for which
CIBC has actually incurred an out-of-pocket expense and for which CIBC has an
obligation under this Loan Agreement to reimburse such amounts to any third
party incurring the expenses, interest shall be payable on such amount at the
CIBC Prime Rate plus 2% per annum from and including the day on which the amount
was incurred to but excluding the day on which the amount is reimbursed.
10.7 PAYMENTS DUE ON BANKING DAY. Whenever any payment hereunder shall be
due on a day other than a Banking Day, such payment shall be made on the next
succeeding Banking Day and such extension of time shall in such case be included
in the computation of payment of interest thereunder.
10.8 APPLICATION OF PROCEEDS. Except as otherwise agreed to by CIBC in its
sole discretion and as otherwise expressly provided hereunder, all payments made
by or on behalf of either of the Borrowers under this Loan Agreement or any
Security Documents, after demand for or acceleration of the Principal
Indebtedness, shall be applied by CIBC in the following order:
(a) in payment of any amounts due and payable by way of recoverable
expenses;
(b) in payment of any amounts by way of any fees (other than standby
fees);
(c) in payment of any amounts due and payable as and by way of interest or
standby fees, including any interest on overdue amounts;
(d) in payment of the Principal Indebtedness; and
(e) in payment of all other Indebtedness under this Loan Agreement.
10.9 COUNTERPARTS AND FACSIMILE DELIVERY. This Loan Agreement and the
Security Documents may be (i) executed in counterpart, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same instrument and (ii) delivered by facsimile, provided
that as soon as reasonably practicable after any such facsimile delivery, each
party agrees to execute and deliver to the other an original of this Loan
Agreement and the Security Documents, as applicable. Delivery of an executed
counterpart of a signature page of any of this Loan Agreement and the Security
Documents by facsimile or photocopy shall be effective as delivery of an
original executed counterpart.
10.10 WHOLE AGREEMENT. This Loan Agreement, the Credit Agreement, the
Security Documents, and all further documents and agreements contemplated hereby
constitute the entire agreement between the parties hereto pertaining to the
Credit Facility and supersedes all other prior agreements among all the parties
in respect of the subject matter of this Loan Agreement.
<PAGE> 35
23
10.11 CONFLICTING PROVISIONS. In case of any conflict or inconsistency
between any provisions of this Loan Agreement and any provision of the Credit
Agreement, any item of the Security Documents or any other agreement by any of
the Borrowers in favour of CIBC, the provisions of this Loan Agreement shall
govern and prevail and the conflicting or inconsistent provision shall be
deemed to be amended to be consistent with the provisions hereof.
<PAGE> 36
THIS IS SCHEDULE "B" TO THE LOAN AGREEMENT DATED MAY 4, 2000
AMONG CANADIAN IMPERIAL BANK OF COMMERCE,
FUTURELINK CORP. AND
FUTURELINK DISTRIBUTION CORP.
FUTURELINK DISTRIBUTION CORP/FUTURELINK CORP.
COMPLIANCE CERTIFICATE
FOR THE MONTH ENDED:
TO: Canadian Imperial Bank of Commerce (CIBC)
RE: Loan Agreement dated between CIBC and FutureLink
Distribution Corp/FutureLink Corp. (Credit Agreement)
This Compliance Certificate is delivered to CIBC pursuant to the Loan
Agreement. Unless otherwise indicated, capitalized terms defined in the Loan
Agreement have the same meanings when used herein.
I am the duly appointed of FutureLink Distribution
Corp/FutureLink Corp. and hereby certify in such capacity for and on behalf of
the Borrowers, and not in my personal capacity, as follows:
1. As the date hereof, the following are applicable to FutureLink Corp. in US
dollars on a consolidated basis:
Available Credit Limit
<TABLE>
<S> <C> <C> <C>
75% of Receivable Value
-----------
Accounts Receivable
-----------
(-) accounts with A/R (greater than) 90 days
-----------
(+) BBB or Gov't A/R
[greater than] 90 days [less than] 120 days
(-) A/R -- Employees
-----------
(-) A/R -- Related Companies
-----------
(+) Cash Deposits with CIBC
-----------
(-) Deferred Revenue subject to Priority Claims
-----------
(-) Priority Claims
-----------
Available Credit Limit
-----------------------
Lesser of sum of above or $10,000,000*
*maximum $5,000,000 until receipt of
$50,000,000 US in fresh cash equity
</TABLE>
Quick Ratio
<TABLE>
<S> <C> <C> <C>
Quick Assets
-----------
Cash
-----------
Accounts Receivable
-----------
Current Liabilities
-----------
Quick Ratio
-----------------------
Covenant minimum 1.8:1
</TABLE>
<PAGE> 37
2
<TABLE>
<S> <C> <C> <C>
Minimum Shareholder's Equity
Shareholder's Equity
Covenant ---------------
minimum $175,000,000
Funded Debt to Shareholder's Equity Ratio
Funded Debt ---------------
CIBC Loans ---------------
Other Senior Debt ---------------
Capitalized Lease Obligations ---------------
Shareholder's Equity ---------------
Funded Debt to Shareholder's Equity Ratio ---------------
Covenant maximum 0.40:1
Clean Period
Length of Clean Period ---------------
Commenced ---------------
Completed ---------------
Covenant minimum 14 days
</TABLE>
2. All terms, covenants and conditions of the Loan Agreement and Security
Documents are being complied with in all material respects.
3. No event of Default or event or condition which, with the passing of time
or giving of notice, or both, would constitute and Event of Default has
occurred, other than those that have been expressly disclosed in writing
to, and which have been waived by, CIBC.
The undersigned officer acknowledges that CIBC is relying on this Compliance
Certificate in connection with Advances made under the Loan Agreement.
Dated at Calgary, Alberta this day of .
--------- -------- --------
FUTURELINK DISTRIBUTION CORP./FUTURELINK CORP.
Per:
---------------
Name:
---------------
Title:
---------------
