Amended and Restated Credit Agreement, dated May 6, 2011, by and among Fenwick Automotive Products Limited, Introcan Inc., Manufacturers and Traders Trust Company, M&T Bank and such other lenders from time to time as may become a party thereto

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4.50%

5.50%

4.50%

 

·

the account arises from a bona fide, fully-completed transaction consisting of the sale of goods or the provision of services by the Material Company to an account debtor and such Material Company is the beneficial owner of all amounts owing under such account;

 

·

the account is subject to a First-Ranking Security Interest held by the Agent pursuant to the Security and is not subject to any other Lien except for Statutory Liens affecting the Material Company which are not at the time overdue (or if overdue the validity of which is being contested in good faith and in respect of which reserves have been established in accordance with GAAP);

 

·

the account debtor is located in Canada or the United States;

 

·

the account debtor is not a Company or a Related Person thereto;

 

·

the account debtor is not a Governmental Authority;

 

·

the account is not in dispute or subject to any defence, counterclaim or claim by the account debtor for credit, set-off, allowance or adjustment; such account is not payable by an account debtor which is (or who together with its Affiliates are) more than ninety (90) days past due (i.e. more than ninety (90) days from the invoice date) or sixty (60) days from the payment dated specified in the invoice with regard to 25% or more of the total accounts owed to the Companies by such account debtor and their Affiliates;

 

·

an invoice relating to the account has been issued by the Material Company and sent to the account debtor;

 

·

the account is not outstanding for more than sixty (60) days from the payment date specified in the invoice;

 

·

the account is not outstanding for more than ninety (90) days from the date of the invoice, regardless of the payment date specified in the invoice, or provided such invoice has been approved by the Agent for such dating, is not outstanding for more than the earlier of one hundred and twenty (120) days past invoice date or ninety (90) days past payment date;

 

·

the account has not been transferred, assigned, or a transaction otherwise completed to funding as a consequence of factoring permitted by the Agent;

 

·

the account is not an account which is subject to the potential for legal or equitable contra by the payor;

 

·

the account debtor is not insolvent or subject to any proceeding under Insolvency Legislation; and

 

·

the account is determined to be ineligible by the Agent, in its sole discretion;

 

·

the Inventory has been acquired such that the relevant Material Company is the beneficial owner of such Inventory;

 

·

the Inventory is subject to a first ranking security interest held by the Agent pursuant to the security and is not subject to any other lien except for Permitted Liens affecting the Material Company which are not at the time overdue (or if overdue the validity of which is being contested in good faith and in respect of which reserves have been established in accordance with GAAP);

 

·

the Inventory is located in Canada or the United States, and provided in transit inventory will be eligible if the in transit the Inventory is insured, has been fully paid for  and title has passed to the Material Company in accordance with industry standards;

 

·

the Inventory has not been classified as slow moving or obsolete inventory based upon the criteria established by the Agent from time to time;

 

·

the Inventory has not been placed with the Material Company on a consignment or reservation of ownership basis;

 

·

the Inventory does not consist of packaging or supplies;

 

·

the Inventory is not located at third party processors or processor warehouses;

 

·

the Inventory is not located at leased locations or third party warehouses other than where a landlord or warehouse bondsman's waiver in form acceptable to the Agent has been provided to the Agent;

 

·

the Inventory is determined to be ineligible by the Agent in its sole discretion;

 

·

such Person ceases to carry on its business; or commits an act of bankruptcy or becomes insolvent (as such terms are used in the BIA as to any Canadian Company and the United States Bankruptcy Code as to any U.S. Company); or makes an assignment for the benefit of creditors, files a petition in bankruptcy, makes a proposal or commences a proceeding under Insolvency Legislation; or petitions or applies to any tribunal for, or consents to, the appointment of any receiver, trustee or similar liquidator in respect of all or a substantial part of its property; or admits the material allegations of a petition or application filed with respect to it in any proceeding commenced in respect of it under Insolvency Legislation or takes any corporate action for the purpose of effecting any of the foregoing; or

 

·

any proceeding or filing is commenced against such Person seeking to have an order for relief entered against it as debtor or to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding-up, reorganization, arrangement, adjustment or composition of it or its debts under any Insolvency Legislation, or seeking appointment of a receiver, trustee, custodian or other similar official for it or any of its property or assets unless (i) such Person is diligently defending such proceeding in good faith and on reasonable grounds as determined by the Required Lenders acting reasonably and (ii) such proceeding does not in the reasonable opinion of the Required Lenders in their sole and absolute discretion materially adversely affect the ability of such Person to carry on its business and to perform and satisfy all of its obligations but in any event it shall be an Insolvency Event if such proceeding or filing has not been dismissed within 45 days of the date such proceeding is commenced or filing is made;

 

·

in the case of a Rollover, the last day of each LIBOR Interest Period shall also be the first day of the next LIBOR Interest Period;

 

·

the last day of each LIBOR Interest Period shall be a LIBOR Business Day and if not, the Borrower shall be deemed to have selected a LIBOR Interest Period the last day of which is the first LIBOR Business Day following the last day of the LIBOR Interest Period selected by such Borrower;

 

·

if the Borrower selects a LIBOR Interest Period for a period longer than 3 months, the last day of such LIBOR Interest Period shall be the date falling 3 months after the beginning of such LIBOR Interest Period and the next LIBOR Interest Period shall begin on such date;  and

 

·

notwithstanding any of the foregoing, the last day of each LIBOR Interest Period shall be on or before the Maturity Date;

(b)

Statutory Liens in respect of any amount which may be overdue but the validity of which is being contested in good faith and in respect of which reserves have been established in accordance with GAAP;

(c)

Liens or rights of distress reserved in or exercisable under any lease for rent not at the time overdue or for compliance with the terms of such lease not at the time in default so long as such liens and other rights are duly subordinated to the Secured Obligations pursuant to a Landlord Agreement   and security deposits given under leases not in excess of six (6) months’ rent;

(d)

Statutory Liens incurred or deposits of cash made or pledged to secure obligations under workers’ compensation legislation or similar legislation, public and statutory warehousemen’s, storers’, repairers’, carriers’ and other similar Liens;

(e)

security given to a public utility or any municipality or government or to any statutory or public authority to secure obligations incurred to such utility, municipality, government or other authority in the ordinary course of business and not at the time overdue;

(f)

Surety or appeal bonds arising out of judgments or awards in respect of which: an appeal or proceeding for review has been commenced; a stay of execution pending such appeal or proceedings for review has been obtained; and reserves have been established in accordance with GAAP;

(g)

the Subordinate Security;

(h)

Permitted Purchase-Money Security Interests;

(i)

the Security;

(j)

Specific Permitted Liens; and

(k)

any Liens from time to time consented to in writing by the Agent;

 

·

any realization thereof, whether occurring as a result of enforcement or otherwise;

 

·

any sale, expropriation, loss or damage or other disposition of the Collateral or any portion thereof; and

 

·

the dissolution, liquidation, bankruptcy or winding-up of any Company or any other distribution of its assets to creditors;

(1)

The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation".  The word "will" shall be construed to have the same meaning and effect as the word "shall".  Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein (including this Agreement) shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented, restated or otherwise modified (subject to any restrictions on such amendments, supplements, restatements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and permitted assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) unless otherwise expressly stated, all references in these Provisions to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, these Provisions, but all such references elsewhere in this Agreement shall be construed to refer to this Agreement apart from these Provisions, (e) any reference to any law or regulation herein shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time and (f) the words "asset" and "property" shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

(2)

If there is any conflict or inconsistency between these Provisions and the other terms of this Agreement, the other terms of this Agreement shall govern to the extent necessary to resolve the conflict or inconsistency.

(a)

Subject to the restrictions contained in this Agreement, the Borrower may receive Advances under the Revolving Facility by any one or more of the following Availment Options (or any combination thereof) in minimum amounts and multiples as provided in Section 3.03:

 

(i)

Swingline Advances under the Swingline in Canadian Dollars or U.S. Dollars, subject to Section 2.09; or

 

(ii)

Canadian Dollar Prime-Based Loans; or

 

(iii)

U.S. Dollar Base Rate Loans; or

 

(iv)

LIBOR Loans in U.S. Dollars with a LIBOR Period of 1, 2, 3 or 6 months, subject to availability; or

 

(v)

Letters of Credit, subject to Section 2.09.

(b)

LIBOR Loans and Letters of Credit available under the Revolving Facility will not be issued with a maturity date later than the Maturity Date.  The Borrower may convert all or any portion of the Outstanding Advances in the form of any above Availment Option into another form of Availment Option, subject to and in accordance with the terms and conditions of this Agreement (but for greater certainty, LIBOR Loans and Letters of Credit may not be converted into another Availment Option prior to the maturity thereof).

(a)

in respect of  Swingline Advances in Canadian Dollars and Canadian Dollar Prime-Based Loans, interest at the Prime Rate plus the Applicable Margin per annum, payable monthly in arrears on the last day of each and every month;

(b)

in respect of Swingline Advances in U.S. Dollars and U.S. Base Rate Loans, interest at the U.S. Base Rate plus the Applicable Margin per annum, payable monthly in arrears on the last day of each and every month;

(c)

in respect of LIBOR Loans, interest at the LIBO Rate plus the Applicable Margin per annum, calculated on the basis of a year of 360 days and payable in arrears in the manner set out in paragraph 3.07;

(d)

in respect of each Letter of Credit, an administrative fee equal to one-eighth of one percent (0.125%) of the face amount of such Letter of Credit (without regard to the number of days to expiry of the Letter of Credit), payable to the Issuing Bank (for its own account) at the time of issuance of the said Letter of Credit by the Issuing Bank;

(e)

in respect of each Letter of Credit, (i) in respect of the period from the date of issuance of such Letter of Credit to the last day of then current Fiscal Quarter (both inclusive), a fee equal to the Applicable Margin multiplied by the face amount of such Letter of Credit multiplied by the number of days in such period and divided by three hundred and sixty-five (365), payable on the last day of such Fiscal Quarter; (ii) in respect of each subsequent Fiscal Quarter (other than the Fiscal Quarter in which the Letter of Credit shall expire), a fee equal to the Applicable Margin multiplied by the face amount of the Letter of Credit multiplied by the number of days in such Fiscal Quarter and divided by three hundred and sixty-five (365), payable on the last day of such Fiscal Quarter; and (iii) in respect of the Fiscal Quarter in which the Letter of Credit shall expire, a fee equal to the Applicable Margin multiplied by the face amount of such Letter of Credit multiplied by the number of days from such day to the date of expiry of such Letter of Credit (both inclusive) and divided by three hundred and sixty-five (365), payable on the last day of such Fiscal Quarter;

(f)

administrative fees charged by the Issuing Bank in accordance with its usual practice in respect of the issuance, amendment and renewal of Letters of Credit;

(g)

a standby fee with respect to the unused portion of the Revolving Facility, calculated on a daily basis as being the difference between the Revolving Facility Maximum Amount and the Outstanding Advances (other than amounts advanced under the Swingline) under the Revolving Facility, multiplied by 0.50% and divided by 365 which standby fee shall be payable quarterly in arrears on the last day of each Fiscal Quarter and also on the Maturity Date;

(h)

a standby fee with respect to the Swingline payable to the Swingline Lender, calculated on a daily basis as being the difference between the Swingline Limit and the Outstanding Advances under the Swingline, multiplied by 0.50% and divided by 365 which standby fee shall be payable quarterly in arrears on the last day of each Fiscal Quarter and also on the Maturity Date;

(i)

Upon the occurrence, and during the continuance, of an Event of Default, all Advances under the Revolving Facility then outstanding, and thereafter Advanced, will bear interest at a rate per annum two percent (2%) in excess of the rate of interest then otherwise applicable to such Advances;

(j)

the Revolving Facility can be terminated at any time prior to Maturity Date by the Borrower providing sixty (60) days prior written notice to the Agent, provided that, such termination shall only be effective upon the Borrower paying to the Lenders a termination fee as follows:

 

(i)

if the termination occurs after closing but prior to the first anniversary date of the first Advance under the Revolving Facility then the payment shall be in the amount of one and one half percent (1½%) of the Revolving Maximum Facility Amount; and

 

(ii)

if the termination occurs on or after the first anniversary date of the first Advance under the Revolving Facility and prior to the second anniversary date of the first Advance under the Revolving Facility then in an amount equal to one percent (1%) of the Revolving Maximum Facility Amount;

 

(a)

eighty-five percent (85%) of Eligible Accounts Receivable; plus

 

(b)

the lesser of:

 

(x)

fifty percent (50%) of Eligible Inventory, on a FIFO basis, for raw materials inventory plus sixty percent (60%) of Eligible Inventory, on a FIFO basis, for finished goods inventory valued at lower of cost or market in accordance with GAAP plus twenty-five percent (25%) of Eligible Inventory comprising cores and

 

(y)

eighty-five percent (85%) of the net orderly liquidation value of the Eligible Inventory, including owned cores but excluding non-owned cores, as determined by the most recent appraisal obtained by the Agent, less

 

(c)

the reserves established by the Agent, from time to time, less

 

(d)

the Potential Statutory Priority Amount at such time.

(a)

Letters of Credit may be issued under the Revolving Facility for the account of the Borrower in United States Dollars provided the aggregate face amount of all Letters of Credit outstanding under the Revolving Facility at any time may not exceed $4,000,000. Letters of Credit will not be issued for the purpose of guaranteeing obligations of any Person (except a Company).  Each Letter of Credit shall have a term not in excess of three hundred sixty-four (364) days and in any event shall have a term which ends not less than fifteen (15) days prior to the Maturity.

(b)

Each request for the issuance of a Letter of Credit shall be delivered by the Borrower to the Issuing Bank and the Agent in accordance with the notice requirements set out in paragraph 3.02(a) herein, together with the Issuing Bank’s customary form of application and indemnity agreement completed to its satisfaction and the proposed form of the Letter of Credit (which shall be satisfactory to the Issue Bank and the Agent) and such other certificates, documents and other papers and information as the Issuing Bank may reasonably request.

(c)

The Agent shall notify each Lender of the principal amount, the number, and the expiration date of each Letter of Credit and the amount of such Lender’s participation therein. By the issuance of a Letter of Credit hereunder and without further action on the part of the Issuing Bank or the Lenders, each said Lender hereby accepts from the Issuing Bank a participation (which participation shall be nonrecourse to the Issuing Bank) in such Letter of Credit in such Lender’s Proportionate Share, effective upon the issuance of such Letter of Credit.  Each Lender hereby absolutely and unconditionally assumes, as primary obligor and not as a surety, and agrees to pay and discharge and to indemnify and hold the Issuing Bank harmless from liability in respect of, such Lender’s said Proportionate Share of the amount of any drawing under a Letter of Credit.  Each said Lender acknowledges and agrees that its obligation to acquire participations in each Letter of Credit issued by the Issuing Bank and its obligation to make the payments specified herein, and the right of the Issuing Bank to receive the same, in the manner specified herein, are absolute and unconditional and shall not be affected by any circumstance whatsoever, including the occurrence and continuance of a Default hereunder, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.  The Issuing Bank shall review each draft and any accompanying documents presented under a Letter of Credit and shall notify each said Lender of any such presentment.  Promptly after it shall have ascertained that any draft and any accompanying documents presented under such Letter of Credit appear on their face to be in substantial conformity with the terms and conditions of the Letter of Credit, the Issuing Bank shall give notice to each said Lender and the Borrower of the receipt and amount of such draft and the date on which payment thereon will be made, and each said Lender shall, by 11:00 a.m. Toronto time on the date such payment is to be made, pay its said Proportionate Share of the amount so drawn under the Letter of Credit in immediately available funds, and the Issuing Bank shall make the appropriate payment to the beneficiary of such Letter of Credit.  The Borrower agrees to immediately reimburse each said Lender in an amount equal to the said payment by such Lender with interest thereon payable at the same rate and in the same manner as the Loan under the Revolving Facility.  The obligation of the Borrower under this section to reimburse the said Lenders and the Issuing Bank, as applicable, and the obligation of the Lenders to tender payment or reimbursement to the Issuing Bank for all drawings under Letters of Credit shall be absolute, unconditional and irrevocable and shall be satisfied strictly in accordance with their terms, irrespective of:

 

(i)

any lack of validity or enforceability of any Letter of Credit;

 

(ii)

the existence of any claim, setoff, defence or other right which the Borrower or any other Person may at any time have against the beneficiary under any Letter of Credit, the Issuing Bank or any Lender (other than the defence of payment in accordance with the terms of this Agreement or a defence based on the gross negligence or wilful misconduct of the Issuing Bank or any Lender) or any other Person in accordance with this Agreement or other transaction;

 

(iii)

any draft or other document presented under any Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; and

 

(iv)

any other circumstance or event whatsoever, whether or not similar to any of the foregoing.

(d)

In making any payment under any Letter of Credit (i) the Issuing Bank’s exclusive reliance on the documents presented to it under such Letter of Credit as to any and all matters set forth therein, including reliance on the amount of any draft presented under such Letter of Credit, whether or not the amount due to the beneficiary equals the amount of such draft and whether or not any document presented pursuant to such Letter of Credit proves to be insufficient in any respect, if such document on its face appears to be in order, and whether or not any other statement or any other document presented pursuant to such Letter of Credit proves to be forged or invalid or any statement therein proves to be inaccurate or untrue in any respect whatsoever and (ii) any non-compliance in any immaterial respect of the documents presented under such Letter of Credit with the terms thereof shall, in each case, not be deemed wilful misconduct or negligence of the Issuing Bank or any Lender.

(e)

The Issuing Bank and its correspondents may accept and act upon the name, signature, or act of any party purporting to be the executor, administrator, receiver, trustee in bankruptcy or other legal representative of any party designated in any Letter of Credit in the place of the name, signature, or act of such party.

 

(a)

The Swingline shall be established and maintained by the Swingline Lender.

 

(b)

The Outstanding Advances under the Swingline shall not at any time exceed the Swingline Limit.

 

(c)

The Swingline shall form a part of the Revolving Facility and, except to the extent provided in this section, shall be subject to all terms and conditions of this Article II, specifically including the Revolving Facility Margin Limit.

 

(d)

Subject to paragraph (e) below, Advances to and repayments by the Borrower under the Swingline shall be made by way of Swingline Advances in the following manner.  The Swingline Lender will make Advances into an account designated by the Borrower, from time to time as required in order to honour cheques drawn by the Borrower on such accounts which are presented to the Swingline Lender for payment. As deposits are made into such accounts by the Borrower, the Swingline Lender shall withdraw funds from such accounts from time to time and apply such funds as repayments under the Swingline.

 

(e)

Advances and repayments under the Swingline shall be without notice to or from the Borrower and shall be on a dollar for dollar basis (not subject to multiples).

 

(f)

The Swingline Lender may in its discretion at any time, by written notice to the Borrower, require the Borrower to reduce the Outstanding Advances under the Swingline by a specified amount (in this paragraph called the "Swingline Reduction Amount").  The Borrower agrees to promptly comply with any such request by making a repayment on the Swingline from its own resources or in its discretion and provided the Advance is available on the Revolving Facility by requesting an Advance, the proceeds of which shall be applied to reduce the Outstanding Advances under the Swingline accordingly.  If the Borrower fails to comply with any such request from the Swingline Lender within two (2) Business Days after receipt thereof, the Lenders agree that upon request by the Swingline Lender they will make Advances in an aggregate amount equal to the Swingline Reduction Amount, the proceeds of which shall be applied to reduce the Outstanding Advances under the Swingline.  Any Advance on the Revolving Facility to reduce the Swingline Advance is without effect on the Revolving Facility Maximum Amount.

(a)

Interest at the LIBO Rate plus the Applicable Margin for LIBOR Loans per annum, calculated on the basis of year of 360 days and payable in arrears in the manner set out in paragraph 3.07 (on the conversion of the Term Loan to a U.S. Dollar Base Rate Loan in accordance with Section 3.07(d) and/or Section 3.14 interest shall accrue at the U.S. Dollar Base Rate plus the Applicable Margin for such U.S. Dollar Base Rate Loans per annum, payable monthly in arrears from the last day of each and every month);

(b)

A closing fee payable in connection with the Advance of the Term Loan, which closing fee will be payable as follows:

 

(i)

U.S. $250,000.00 to be paid on or prior to the Closing Date; and

 

(ii)

U.S.$350,000.00 (the "Maturity Date Fee") to be paid on the earlier of the Acceleration Date or the Maturity Date; provided that, if the Agent participates in the extension or refinancing of this Facility (whether or not the borrower under such extension or refinancing is Fenwick, Introcan or Motorcar), the Maturity Date Fee will be credited by the Agent toward the payment of any similar fee payable to the Agent in connection with such refinancing;

(c)

Upon the occurrence, and during the continuance, of an Event of Default, all Obligations  under the Term Loan then outstanding (including all accrued but unpaid interest), will bear interest at a rate per annum equal to two percent (2%) in excess of the rate of interest then otherwise applicable to the Term Loan;

(d)

Outstanding Obligations under the Term Loan may be repaid at any time without penalty in incremental multiples of $250,000 upon written notice to the Agent upon at least one (1) prior Business Day’s notice.

(a)

Unless otherwise indicated, interest on any outstanding principal amount shall be calculated daily and shall be payable monthly in arrears on the last day of each and every month.  If the last day of a month is not a Business Day, the interest payment due on such day shall be made on the next Business Day, and interest shall continue to accrue on the said principal amount and shall also be paid on such next Business Day.  Interest shall accrue from and including the day upon which an Advance is made, and ending on but excluding the day on which such Advance is repaid.  Any change in the Base Rate or the Prime Rate shall cause an immediate adjustment of the interest rate applicable; in each case without the necessity of any notice to the Borrower.

(b)

Unless otherwise stated, in this Agreement if reference is made to a rate of interest, fee or other amount "per annum" or a similar expression is used, such interest, fee or other amount shall be calculated on the basis of a year of three hundred and sixty (360) days, or, if applicable, in relation to loans based on the Prime Rate, three hundred and sixty-five (365) or three hundred and sixty-six (366) days, as the case may be.  If the amount of any interest, fee or other amount is determined or expressed on the basis of a period of less than one year of three hundred and sixty-five (365) or three hundred and sixty-six (366) days, as the case may be, the equivalent yearly rate is equal to the rate so determined or expressed, divided by the number of days in the said period, and multiplied by the actual number of days in that calendar year.

(c)

Notwithstanding any other provisions of this Agreement, if the amount of any interest, premium, fees or other monies or any rate of interest stipulated for, taken, reserved or extracted under any Loan Document would otherwise contravene the provisions of Section 347 of the Criminal Code (Canada), Section8 of the Interest Act (Canada) or any successor or similar legislation, or would exceed the amounts which any Lender is legally entitled to charge and receive under any law to which such compensation is subject, then such amount or rate of interest shall be reduced to such maximum amount as would not contravene such provision; and to the extent that any excess has been charged or received such Lender shall apply such excess against the Outstanding Advances and refund any further excess amount.

(d)

[Intentionally Deleted]

(a)

The Borrower shall provide written notice to the Agent in respect of Advances, Rollovers, Conversions and Repayments to the extent set out below:

 

(i)

no notice is required for Advances and repayments in respect of Swingline Advances;

 

(ii)

except as provided in clause (i) above, one (1) Business Day’s notice is required before 10:00 a.m. Toronto time in respect of any Advance, Rollover, Conversion or voluntary Repayment; and

 

(iii)

notwithstanding the foregoing, if an Advance relates to the issuance of a Letter of Credit, three (3) Business Days’ notice is required before 10:00 a.m. Toronto time.

(b)

Notice of any Advance, Rollover, Conversion or voluntary Repayment referred to in paragraph (a) above shall be given in the form of a Drawdown Request, Rollover Notice, Conversion Notice or Repayment Notice, as the case may be, attached hereto as Exhibits, and shall be given to the Agent at its address provided herein.

(c)

If notice is not provided as contemplated herein with respect to the maturity of any LIBOR Loan, the Agent may convert such LIBOR Loan upon its maturity into a U.S. Dollar Base Rate Loan.

(d)

Any conversion from one form of Availment Option to another shall be subject to satisfaction of all terms and conditions applicable to the form of the new Availment Option.

(e)

With respect to the Term Loan, no Advance thereunder will be made after the Closing Date and any Repayment of the Term Loan may not be re-borrowed.

(a)

Each request by the Borrower for an Advance or Conversion in the form of a U.S. Dollar Base Rate Loan shall be in a minimum amount of U.S. $1,000,000 and a multiple of U.S. $100,000.

(b)

Each request by the Borrower for an Advance or Conversion in the form of a LIBOR Loan shall be in a principal amount such that each Lender’s Proportionate Share thereof shall be an amount which is not less than U.S. $1,000,000 and in a multiple of U.S. $100,000.

(c)

Upon receipt of a Drawdown Request under the Revolving Facility, the Agent shall promptly notify each Lender of the contents thereof and such Lender’s Proportionate Share of such Advance. Such Drawdown Request shall not thereafter be revocable.

(d)

Each Advance under the Facilities shall be made by the Lenders to the Agent at its address referred to herein or such other address as the Agent may designate by notice in writing to the Lenders from time to time.  Each Lender shall make available its Proportionate Share of each Advance to the Agent.  Unless the Agent determines that any condition of the Advance has not been satisfied or waived, the Agent shall make the funds so received from the Lenders available to the Borrower by 2:00 p.m. (Toronto time) on the requested date of the Advance.  No Lender shall be responsible for any other Lender’s obligation to make available its Proportionate Share of the said Advance.

(e)

All payments of principal, interest and other amounts made by the Borrower to the Agent in respect of the Outstanding Advances shall be paid by the Agent to the respective Lenders in accordance with each Lender’s Proportionate Share thereof.

(a)

All payments of principal, interest and other amounts to be made by the Borrower pursuant to this Agreement shall be made to the Agent at its address provided herein or to such other address as the Agent may direct in writing from time to time.  All such payments received by the Agent on a Business Day before 2:00 p.m. (Toronto time) shall be treated as having been received by the Agent on that day and any payments made after such time on a Business Day shall be treated as having been received by the Agent on the next Business Day.

(b)

Whenever any payment shall be due on a day which is not a Business Day, the date for payment thereof shall be extended to the next succeeding Business Day.  Interest shall continue to accrue and be payable thereon as provided herein, until the date on which such payment is received by the Agent.

(c)

The Borrower hereby irrevocably authorizes the Agent to debit any account maintained by such Borrower with the Agent from time to time in order to pay any amount of principal, interest, fees, expenses or other amounts payable by such Borrower pursuant to this Agreement.

 

(a)

Upon receipt by the Agent from the Borrower of a Drawdown Request, Conversion Notice or Rollover Notice in respect of a LIBOR Loan, the Agent will promptly advise the Borrower of the LIBO Rate, such rate to be determined as at approximately 11:00 a.m. London, England time, two (2) LIBOR Business Days before the commencement of the LIBOR Period for such LIBOR Loan.

 

(b)

No more than five (5) individual Advances made at the LIBO Rate may be in effect at any time under the Revolving Facility.

 

 

(c)

Interest in respect of any LIBOR Loan shall be calculated on the basis of a year of three hundred and sixty (360) days. Interest in respect of any LIBOR Loan with a LIBOR Period of between one (1) and three (3) months (inclusive) shall be payable at the time the principal amount of such LIBOR Loan is payable.  Interest in respect of any LIBOR Loan with a LIBOR Period longer than ninety (90) days shall be payable in arrears every ninety (90) days commencing on the 90th day following the commencement of such LIBOR Period, and also at the time the principal amount of such LIBOR Loan is payable.

 

(d)

The Borrower acknowledges that the ability of the Lenders to maintain or provide any LIBOR Loan and/or to charge interest on any LIBOR Loan at the LIBO Rate is and will be subject to any statute, law, regulation, rule or direction by any Governmental Authority having jurisdiction which may prohibit or restrict or limit such loans and/or such interest.  The Borrower agrees that the Lenders shall have the right to comply with any such requirements and, if the Agent determines it to be necessary as a result of such requirement, the Agent may convert any LIBOR Loan to a U.S. Dollar Base Rate Loan or require immediate repayment of all LIBOR Loans, including accrued interest thereon and all applicable breakage costs pursuant to Section 3.08.

 

(a)

Increased Costs Generally.  If any Change in Law shall:

 

(i)

impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender;

 

(ii)

subject any Lender to any Tax of any kind whatsoever with respect to this Agreement, any Letter of Credit, any participation in a Letter of Credit or any Loan made by it, or change the basis of taxation of payments to such Lender in respect thereof, except the imposition, or any change in the rate, of any Excluded Tax payable by such Lender and without duplication with respect to any Indemnified Taxes or Other Taxes paid or indemnified in accordance with Section 3.11; or

 

(iii)

impose on any Lender or any applicable interbank market any other condition, cost or expense affecting this Agreement or Loans made by such Lender or any Letter of Credit or participation therein;

 

(i)

the Borrower pays the Agent the assignment fee;

 

(ii)

the assigning Lender receives payment of an amount equal to the outstanding principal of its Loans and participations in disbursements under Letters of Credit, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents (including any breakage costs and amounts required to be paid under this Agreement as a result of prepayment to a Lender) from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts);

 

(iii)

in the case of any such assignment resulting from a claim for compensation or payments required to be made, such assignment will result in a reduction in such compensation or payments thereafter; and

 

(iv)

such assignment does not conflict with Applicable Law.

 

(a)

the standby fee payable pursuant to Section 2.6 shall cease to accrue on the unfunded portion of the Commitment of such Defaulting Lender under the Revolving Facility;

 

(b)

the Commitment of such Defaulting Lender under the Revolving Facility shall not be included in determining whether all Lenders or the Required Lenders have taken or may take any action hereunder (including any consent to any amendment or waiver);

 

(c)

if any Swingline Advances or Letters of Credit are outstanding at the time a Lender is a Defaulting Lender, the Borrower shall within one Business Day following notice by the Agent (i) prepay such outstanding Swingline Advances or, if agreed by such Swingline Lender, cash collateralize that portion of  outstanding Swingline Advances that is risk participated to the Defaulting Lender and (ii) cash collateralize that portion of  outstanding Letters of Credit that is risk participated to the Defaulting Lender;

 

(d)

so long as any Lender is a Defaulting Lender, the Issuing Bank shall not be required to issue, amend or increase any Letter of Credit, unless it is satisfied that 100% of the related exposure will be covered by the Commitments of the non-Defaulting Lenders and/or cash collateral will be provided by the Borrower;

 

(e)

any amount payable to such Defaulting Lender hereunder (whether on account of principal, interest, fees or otherwise and including any amount that would otherwise be payable to such Defaulting Lender, shall, in lieu of being distributed to such Defaulting Lender, be retained by the Agent in a segregated account and, subject to any applicable requirements of law, be applied at such time or times as may be determined by the Agent (i) first, to the payment of any amounts owing by such Defaulting Lender to the Agent hereunder, (ii) second, pro rata, to the payment of any amounts owing by such Defaulting Lender to the Issuing Bank and Swingline Lender hereunder, (iii) third, to the funding of any Loan in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, (iv) fourth, if so determined by the Agent, held in such account as cash collateral for future funding obligations of the Defaulting Lender of any Loans under this Agreement and (v) fifth,  to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; and

 

(f)

the Lead Arranger will work with the Borrower to identify and complete steps to replace the Defaulting Lender on a commercially reasonable basis.

 

(a)

Status – It has been duly incorporated and organized, is validly subsisting under the laws of its governing jurisdiction and is up-to-date in respect of all material partnership, corporate or similar material filings.

 

(b)

Information – Schedule 4.01(b) attached hereto contains a list of all Companies as at the date of this Agreement, and the following information in respect of each Company: jurisdiction of incorporation or establishment, present governing jurisdiction, registered office, principal place of business, all locations at which it has places of business or owns assets and its bank accounts.  The Borrower also agrees to provide similar information in respect of all or any of the Companies to the Agent promptly upon its request from time to time.

 

(c)

Corporate Structure  The corporate structure of the Borrower and its Subsidiaries is, as at the Closing Date as set out in Schedule 4.01(c), and, no Person has an agreement or option or any other right or privilege (whether by law, pre-emptive or contractual) capable of becoming an agreement or option, including convertible securities, warrants or convertible obligations of any nature, for the purchase, subscription, allotment or issuance of any unissued shares in the capital of any Company.

 

(d)

No Pending Changes – No Person has any agreement or option or any right or privilege (whether by law, pre-emptive or contractual) capable of becoming an agreement, including convertible securities, warrants or convertible obligations of any nature, for the purchase of any properties or assets of any Company out of the ordinary course of business or for the purchase, subscription, allotment or issuance of any debt or equity securities of any Company except as set out in Schedule 4.01(c).

 

(e)

No Conflicts under Material Agreements or Material Permits – Except as disclosed in Schedule 4.01(e), the execution and delivery by each Material Company of those Loan Documents to which it is a party, and the performance of its obligations thereunder, will not conflict with, result in a breach of or require any approval or consent under any Material Agreement or Material Permit, other than consents or approvals which have been obtained unconditionally and without imposition of any material conditions.

 

(f)

No Conflict with Charter Documents – There are no provisions contained in the charter documents, or by-laws of any Material Company, or any partnership agreement, shareholders’ agreement, voting trust agreement or similar agreement relating thereto, which restrict or limit its powers to borrow money, issue debt obligations, guarantee the payment or performance of the obligations of others or encumber all or any of its present and after-acquired property or which would be contravened by the execution and delivery of those Loan Documents to which it is a party or the performance of its obligations thereunder.

 

(g)

Loan Documents – The Borrower has the capacity, power, legal right and authority to borrow from the Lenders, perform its obligations under this Agreement and provide the Security required to be provided by it hereunder.  Each other Material Company has the capacity, power, legal right and authority to guarantee payment to the Agent and the Lenders of the Obligations and to provide the Security required to be provided by it hereunder.  The execution and delivery of the Loan Documents by the Material Companies and the performance of their respective obligations therein have been duly authorized by all necessary action.  This Agreement and the other Loan Documents constitute legal, valid and binding obligations of the Material Companies, enforceable against them in accordance with the terms and provisions thereof, subject to laws of general application affecting creditors’ rights and the discretion of the court in awarding equitable remedies.

 

(h)

Conduct of Business; Material Permits – Each Company is in compliance in all material respects with all Applicable Laws of each jurisdiction in which it carries on business and is duly licensed, registered and qualified to do business and is in good standing in each jurisdiction in which the nature of the business conducted by it or the property owned or leased by it make such qualification necessary, except to the extent that the failure to hold any such licences, registrations and permits would not constitute a Material Adverse Change.  Attached hereto as Schedule 4.01(h) is a true and complete list of all Material Permits, and all such Material Permits are valid and subsisting and in good standing.

 

(i)

Ownership of Assets; Specific Permitted Liens – Each Company owns and possesses its undertaking, property and assets free and clear of any and all Liens except for Permitted Liens. No Company has any commitment or obligation (contingent or otherwise) to grant any Liens except for Permitted Liens. Schedule 4.01(i) attached hereto contains a true and complete list of the Specific Permitted Liens.  No event has occurred which constitutes, or which with the giving of notice, lapse of time or both would constitute, a material default under any said Specific Permitted Lien.

 

(j)

Ownership – Schedule 4.01(j) attached hereto contains a true and complete list of the material assets owned by each Company, identifies by owning Company and the jurisdiction where such are located. The delivery of each Borrowing Base Certificate is a representation and warranty as to the contents thereof, including the status of the Eligible Accounts Receivable and Eligible Inventory as eligible and owned free and clear of Liens.

 

(k)

Leased Properties –Schedule 4.01(k) attached hereto is a true and complete list, with details of the lease terms of the Leased Properties.

 

(l)

Intellectual Property – Each Company, if applicable, possesses or has the right to use all licenses, franchises, permits, registrations, patents, patent rights, trademarks, trademark rights, trade names, trade name rights, service marks, service mark rights, copyrights and other forms of intellectual property material to the conduct of its business, each of which is in good standing in all material respects, and has the right to use such intellectual property without violation of any material rights of others with respect thereto. Schedule 4.01(l) attached hereto contains a true and complete list of all Material Intellectual Property.

 

(m)

Insurance – The Companies have placed insurance, including property, boiler and machinery, business interruption and liability insurance, in appropriate amounts and for appropriate risks as would reasonably be considered prudent for similar businesses. Attached hereto as Schedule 4.01(m) is a true and complete list of all insurance policies held by the Companies.

 

(n)

Material Agreements – Schedule 4.01(n) attached hereto contains a true and complete list of all Material Agreements, including a brief description of the nature of each Material Agreement.  Each said Material Agreement is in good standing and in full force and effect; and none of the Companies is in material breach of any of the terms or conditions contained therein.

 

(o)

Labour Agreements – Except as disclosed in Schedule 4.01(o) attached hereto there are no labour agreements in effect between the Companies and any labour union or employee association and the Companies are not under any obligation to assume any labour agreements to or conduct negotiations with any labour union or employee association with respect to any future agreements; and the Borrower is not aware of any current attempts to organize or establish any such labour union or employee association.  There are no strikes or other labor disputes pending or, to the Borrower’s knowledge, threatened against the Borrower or any of its Subsidiaries.  The required hours worked, payments made to the employees of the Borrower and its Subsidiaries and working conditions are in material compliance with the Fair Labor Standards Act and other applicable law dealing with such matters.

 

(p)

Environmental Laws – Each Company and its business, operations, assets, equipment, property, leaseholds and other facilities is in compliance in all material respects with all Requirements of Environmental Law, specifically including all Requirements of Environmental Law concerning the storage and handling of Hazardous Materials.  Each Company holds all material permits, licenses, certificates and approvals from Governmental Authorities which are required in connection with (i) air emissions; (ii) discharges to surface or groundwater; (iii) noise emissions; (iv) solid or liquid waste disposal; and (v) the use, generation, storage, transportation or disposal of Hazardous Materials.  There has been no material emission, spill, release, or discharge into or upon (i) the air; (ii) soils, or any improvements located thereon; (iii) surface water or groundwater; or (iv) the sewer, septic system or waste treatment, storage or disposal system servicing the premises, of any Hazardous Materials at or from any of the Properties, and except as disclosed in Schedule 4.01(p) attached hereto there has been no complaint, order, directive, claim, citation, or notice from any Governmental Authority or any other Person with respect to (i) air emissions; (ii) spills, releases, or discharges to soils or improvements located thereon, surface water, groundwater or the sewer, septic system or waste treatment, storage or disposal systems servicing any of the Properties; (iii) noise emissions; (iv) solid or liquid waste disposal; (v) the use, generation, storage, transportation, or disposal of Hazardous Materials; or (vi) other Requirements of Environmental Law affecting the Properties or the Companies taken as a whole.  Except as disclosed in Schedule 4.01(p) attached hereto there are no legal or administrative proceedings, investigations or claims now threatened or pending, with respect to the presence on or under, or the discharge, emission, spill, radiation or disposal into or upon any of the Properties, the atmosphere, or any watercourse or body of water, of any Hazardous Material; nor are there any material matters under discussion with any Governmental Authority relating thereto; and there is no factual basis for any such proceedings, investigations or claims.  The Companies have no material indebtedness, obligation or liability, absolute or contingent, matured or not matured, with respect to the storage, treatment, cleanup or disposal of any Hazardous Materials (including without limitation any such indebtedness, obligation, or liability under any Requirements of Environmental Law regarding such storage, treatment, cleanup or disposal).

 

(q)

No Litigation – Except as disclosed in Schedule 4.01(q) attached hereto, there are no claims, actions, suits or proceedings pending, or to the knowledge of the Borrower threatened, against any Company in any court or before or by any federal, provincial, municipal or other Governmental Authority in which the amount claimed is in excess of Five Hundred Thousand Dollars ($500,000).

 

(r)

Pension Plans – The Companies and ERISA Affiliates have not established any Pension Plans except as disclosed in Schedule 4.01(r) attached hereto.  No steps have been taken to terminate any such Pension Plan (in whole or in part), no contribution failure has occurred with respect to any such Pension Plan sufficient to give rise to a Lien under any Applicable Laws of any jurisdiction (other than a Permitted Lien), and no condition exists and no event or transaction has occurred with respect to any such Pension Plan which could result in the incurrence by any Company of any material liability, fine or penalty.  Each such Pension Plan is in compliance in all material respects with all applicable pension benefits and tax laws, (i) all contributions (including employee contributions made by authorized payroll deductions or other withholdings) required to be made to the appropriate funding agency or funding vehicle or losing its qualified status under the Revenue Code in accordance with all Applicable Laws and the terms of such Pension Plan have been made in accordance with all Applicable Laws and the terms of such Pension Plan, except for amounts which are immaterial, (ii) all liabilities under such Pension Plan are funded, on a going concern and solvency basis, in accordance with the terms of the respective Pension Plans, the requirements of applicable pension benefits laws and of applicable regulatory authorities and the most recent actuarial report filed with respect to the Pension Plan, and (iii) no event has occurred and no conditions exist with respect to any such Pension Plan that has resulted or could reasonably be expected to result in such Pension Plan having its registration revoked or refused for the purposes of any applicable pension benefits or tax laws or funding vehicle or losing its qualified status under the Revenue Code or being placed under the administration of any relevant pension benefits regulatory authority or being required to pay any taxes or penalties under any applicable pension benefits or tax laws.

 

(s)

Financial Statements – The most recent Year-End Financial Statements and Interim Financial Statements of the Borrower delivered to the Agent and the Lenders have been prepared in accordance with GAAP (except that in the case of the Interim Financial Statements, subject to normal adjustments and the absence of footnotes) on a basis which is consistent with the previous fiscal period, and present fairly:

 

(i)

its assets and liabilities (whether accrued, absolute, contingent or otherwise) and financial condition as at the dates therein specified;

 

(ii)

its sales, earnings and results of its operations during the periods covered thereby; and

 

(iii)

in the case of the Year-End Financial Statements, its changes in financial position;

 

(t)

Financial and Other Information – All financial and other information provided in writing by or in respect of the Companies to the Agent or the Lenders was true, correct and complete in all material respects when provided.  No information, exhibit, or report furnished by the Borrower to the Agent or the Lenders contains any material misstatement of fact or omits to state a material fact or any fact necessary to make the statement contained therein not materially misleading in the circumstances in which it was made.

 

(u)

Guarantees – No Guarantees have been granted by any Company, except for Guarantees which comprise part of the Security and those listed in Schedule 4.01 (u).

 

(v)

Taxes – Each Company has duly and timely filed all tax returns required to be filed by it, and has paid all taxes which are due and payable by it, (i) except for amounts which are immaterial and (ii) also except for any taxes which are being contested in good faith and in respect of which reasonable reserves have been established.  Each Company has also paid all other taxes, charges, penalties and interest due and payable under or in respect of all assessments and re-assessments of which it has received written notice, (i) except for amounts which are immaterial and (ii) also except for any assessments or re-assessments are being contested in good faith and in respect of which reasonable reserves have been established.  There are no actions, suits, proceedings, investigations or claims pending or, to the knowledge of the Borrower, threatened against any Company in respect of taxes, governmental charges or assessments or any material matters under discussion with any Governmental Authority relating to taxes, governmental charges or assessments asserted by any such Governmental Authority.

 

(w)

Statutory Liens – Each Company has remitted on a timely basis all amounts required to have been withheld and remitted (including withholdings from employee wages and salaries relating to income tax, employment insurance and Canada Pension Plan contributions), goods and services tax and all other amounts which if not paid when due could result in the creation of a Statutory Lien against any of its property, except for Permitted Liens.

 

(x)

No Default, etc. – No Default, Event of Default or Material Adverse Change has occurred and is continuing.

 

(y)

Full Disclosure – There are no facts known to the Borrower which could materially adversely affect the ability of the Companies (taken as a whole) to observe and perform their respective obligations under this Agreement and the Security.

 

(z)

Margin Stock – It is not engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U of the Board of Governors of the U.S. Federal Reserve System), and no part of the proceeds of any Advance or any other extension of credit made hereunder will be used to purchase or carry any such margin stock or to extend credit to others for the purpose of purchasing or carrying any such margin stock.  The extensions of credit under this Agreement shall not violate Regulation U, T or X of said Board of Governors.

 

(aa)

Investment Company – It is not an "investment company’ nor a company "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940, as amended.

 

(bb)

ERISA – Each Plan subject to ERISA and the Revenue Code is in compliance in form and operation in all material respects with ERISA, the Revenue Code and other Applicable Law.  With respect to each such Pension Plan, (i) there is no failure to meet the minimum funding standard of Section 302 of ERISA and Section 412 of the Revenue Code and there has been no waived funding deficiency within the meaning of Section 303 of ERISA or Section 412 of the Revenue Code; (ii) no liability has been, or is reasonably expected to be, incurred to the PBGC or under Title IV of ERISA, other than liability to PBGC for required premiums under Section 4007 of ERISA; (iii) there has been no Reportable Event and no event or condition exists which presents a material risk that the PBGC would institute proceedings to terminate the Plan or would appoint a trustee to administer the Plan; (iv) the present value of all vested benefits does not exceed the fair market value of all Plan assets allocable to such benefits, as determined on the most recent valuation date of the Plan and in accordance with the provisions of ERISA.  None of the Borrower, its Subsidiaries, or any ERISA Affiliate (i) has any unfulfilled obligation to contribute to any Multiemployer Plan; (ii) has incurred or reasonably expects to incur withdrawal liability, as defined in Section 4201 of ERISA, with respect to any Multiemployer Plan; (iii) has received any notification that a Multiemployer Plan is in Reorganization, as defined in Section 4241(a) of ERISA, or is subject to Section 305 of ERISA or Section 432 of the Revenue Code or reasonably expects a Multiemployer Plan to be in Reorganization or subject to the requirements of Sections 305 of ERISA or 432 of the Revenue Code; (iv) has any liability for post-retirement benefits under a Welfare Plan, other than liability for continuation coverage described in Article 6 of Title I of ERISA or as required under U.S. State law requirements for health continuation coverage or (v) has incurred any material liability, and no circumstances exist pursuant to which such liability could be imposed, under Sections 4980B, 4980D or 5000 of the Revenue Code or Sections 409 and 50291 of ERISA.  No Prohibited Transaction has occurred with respect to any Plan.  There is no outstanding material liability with respect to any Pension Plan subject to Title IV of ERISA or any Multiemployer Plan which was previously maintained by or to which contributions were made or required to be made by the Borrower, any of its Subsidiaries or any ERISA Affiliate, or any entity that heretofore was an ERISA Affiliate.

 

(cc)

OFAC – It is not in violation of any of the country or list based economic and trade sanctions administered and enforced by OFAC.  No Company (i) is a Sanctioned Person or a Sanctioned Entity, (ii) has more than 10% of its assets located in Sanctioned Entities, or (iii) derives more than 10% of its revenues from investments in, or transactions with Sanctioned Persons or Sanctioned Entities.

 

(dd)

Non-Arm’s Length Transaction - All material agreements, arrangement or transactions between any Company, on the one hand, and any Associate of, Affiliate of or other Person not dealing at arm’s length with such Company (other than another Company), on the other hand, in existence at the date hereof are set forth on Schedule 4.01(dd), but excluding compensation in the ordinary course of business.

 

(a)

Prompt Payment – in the case of the Borrower, punctually pay all principal, interest and other amounts due hereunder at the times and in the manner specified herein;

 

(b)

Preservation of Existence – maintain its existence in good standing, preserve its rights, powers, licences, privileges, franchises and goodwill, exercise any rights of renewal or extensions of any leases, licences, concessions, franchises or any other rights whatsoever which are material to the conduct of its business, maintain all material qualifications to carry on business in each jurisdiction in which such qualifications are required;

 

(c)

Compliance with Laws – comply in all material respects with all Applicable Laws (specifically including, for greater certainty, all applicable Requirements of Environmental Law), use the proceeds of all Advances hereunder for legal purposes, and obtain and maintain in good standing all material leases, licences, permits and approvals from any and all Governmental Authorities required in respect of its business and operations;

 

(d)

Payment of Taxes, etc. – pay when due all rents, taxes, rates, levies, assessments and governmental charges, fees and dues lawfully levied, assessed or imposed in respect of its property which are material to the conduct of its business, remit on a timely basis all taxes collected or withheld for remittance and deliver to the Agent upon request receipts evidencing such payments; except for rents, taxes, rates, levies, assessments and governmental charges, fees or dues in respect of which an appeal or review proceeding has been commenced, a stay of execution pending such appeal or review proceeding has been obtained, reasonable reserves have been established in accordance with GAAP; and the amounts in question do not in the aggregate materially detract from the ability of the Companies (taken as a whole) to carry on their businesses and to perform and satisfy all of their respective obligations hereunder;

 

(e)

Maintain Records – maintain adequate books, accounts and records in accordance with GAAP;

 

(f)

Maintenance of Properties – keep its property and assets (other than obsolete assets) in good repair and working condition;

 

(g)

Inspection – permit the Agent and its Lenders and their employees and agents, upon reasonable notice, to enter upon and inspect their properties, assets, books and records from time to time on reasonable notice and during normal business hours and in a manner which does not materially interfere with the operations of the Companies, and make copies of and abstracts from such books and records, and discuss their affairs, finances and accounts with any of their officers, directors, accountants and auditors; provided however that such prior notice shall not be required if a Default has occurred and is continuing and specifically there will be field examinations conducted no less often than twice in each Fiscal Year and inventory appraised annually with additional field examinations and appraisals conduced at the discretion of the Agent, each at the cost of the Borrower;

 

(h)

Insurance Coverage – obtain from financially responsible insurance companies and maintain liability insurance, all-risks property insurance on a replacement cost basis (less a reasonable deductible not to exceed amounts customary in the industry for similarly situated businesses and properties); all of which policies of insurance shall be in such amounts as may be reasonably required by the Agent and shall include a standard mortgage clause approved by the Insurance Bureau of Canada (or an equivalent clause in respect of all U.S. Companies); and the interest of the Agent shall be noted as an additional insured on all liability insurance policies and as first mortgagee and loss payee on all other insurance policies; and the Agent shall be provided with certificates of insurance and certified copies of such policies from time to time upon request;

 

(i)

Perform Obligations – fulfill all covenants and obligations required to be performed by it under those Loan Documents to which it is a party, and any other agreement or undertaking now or hereafter made between it and the Lenders or the Agent;

 

(j)

Notice of Certain Events – provide prompt notice to the Agent of: (i) the occurrence of any material Default or Event of Default (for greater certainty, whether or not such Default or Event of Default is continuing); (ii) the incorrectness of any representation or warranty contained herein in any material respect; (iii) any material contravention of or non-compliance by any Material Company with any terms and conditions of any Loan Document; (iv) any Material Adverse Change; (v) any  litigation which is material in relation to the Companies taken as a whole or in which the amount claimed is in excess of Two Hundred Fifty Thousand Dollars ($250,000); and (vi) any notice of default, termination or suspension received by any Company in respect of any material Debt or in respect of any Material Agreement or Material Permit;

 

(k)

ERISA – in the case of the U.S. Companies, promptly pay and discharge all obligations and liabilities arising under ERISA of a character which if unpaid or unperformed could result in the imposition of a Lien other than a Permitted Lien against any of its properties; promptly notify the Agent of (i) the occurrence of any Reportable Event with respect to a Plan, (ii) receipt of any notice from the PBGC of its intention to seek termination of any Plan or appointment of a trustee therefor, (iii) its intention to terminate or withdraw from any Plan subject to Title IV of ERISA including any complete or partial withdrawal from a Multiemployer Plan, and (iv) the occurrence of any event with respect to any Plan which would result in the incurrence by it or any Subsidiary of any material liability, fine or penalty, or any material increase in its contingent liability with respect to any post-retirement Welfare Plan benefit;

 

(l)

Patriot Act – in the case of the U.S. Companies, the Borrower acknowledges and agrees that pursuant to the provisions of the USA Patriot Act (Title III of the Pub. L. 107-56) signed into law October 26, 2001 (the "Patriot Act"), the Agent and any Lender may be required to obtain, verify and record information with respect to the Companies; and the Borrower hereby agrees to cooperate with the Agent and each Lender and provide them with all information they may require in order to fulfil their obligations under the Patriot Act; and without limiting the generality of the foregoing, the Borrower agrees to use commercially reasonable efforts to obtain the consent of any of their respective officers, directors and employees whose consent to the disclosure of any such information is required under applicable privacy legislation in Canada;

 

(m)

Delivery of Share Certificates – deliver all original share certificates representing shares in the capital of any Company which are subject to the Security together with a duly completed stock transfer power of attorney;

 

(n)

Further Information – provide the Agent and the Lenders with such further information concerning the Companies as they may reasonably require from time to time, specifically including without limiting the generality of the foregoing particulars of material intellectual property owned or licenced by the Companies;

 

(o)

Bank Accounts – except as agreed to in writing by the Agent, and as to the Mexican Company, maintain all of the Companies’ bank accounts with M&T Bank on the basis of blocked accounts, lock box, collection and disbursement accounts as required by the Agent, from time to time, and cause all collections to be directed to and promptly deposited in the form received to the blocked accounts or lock box as directed by the Agent;

 

(p)

Affiliate Transactions  No Material Company shall engage in any transaction with any Affiliate on terms that are less favorable to such Material Company than those that might be obtained at the time from unaffiliated third parties, provided that the foregoing restrictions shall not apply to (a) transactions exclusively among Material Companies permitted by this Agreement and (b) usual and customary indemnification obligations in the organizational documents of Material Companies related to acts and omissions of their officers and directors;

 

(q)

Location of Assets - Except as to any assets held at the Mexico Company and except for any Collateral in transit in the ordinary course of business, acquire any Collateral outside of the jurisdictions identified in Schedule 4.01(b) or move any Collateral from one jurisdiction to another jurisdiction where the movement of such Collateral would cause the Lien of the Security over such Collateral to cease to be perfected under Applicable Law, or suffer or permit in any other manner any of its Collateral to not be subject to the Lien of the Security or to be or become located in a jurisdiction as a result of which the Lien of Security over such Collateral is not perfected, unless (i) (a) the Company has first given thirty (30) days prior written notice thereof to the Agent, and (b) the applicable Company has first executed and delivered to the Agent all Security and all financing or registration statements in form and substance satisfactory to the Agent which the Agent or its counsel, acting reasonably, from time to time deem necessary or advisable to ensure that the Security at all times constitutes a perfected first priority Lien (subject only to Permitted Liens) over such Collateral notwithstanding the movement or location of such Collateral as aforesaid together with such supporting certificates, resolutions, opinions and other documents as the Agent may deem necessary or desirable in connection with such security and registrations or (ii) the assets are relocated to the Mexico Company on a temporary basis for remanufacturing in the ordinary course;

 

(r)

Further Assurances - provide the Agent and the Lenders with such further documentation and other assurances as they may reasonably require from time to time in order to ensure ongoing compliance with the terms of this Agreement and any other Loan Document;

 

(a)

Debt – create, incur or assume any Debt, except (i) Permitted Funded Debt (ii) Intercorporate Debt owing to the Borrower and Subsidiaries not to exceed that listed in Schedule 4.01(dd), provided such Debt is subordinated and postponed to the Facility Debt in form and substance satisfactory to the Agent, (iii) Debt owing to Motorcar (or any Subsidiary thereof),  provided such Debt (A) is subordinated and postponed to the Facility Debt on terms and conditions substantially similar to the Motorcar Subordination Agreement, (B) matures no earlier than three (3) months after the Maturity Date, and (C) is on terms and conditions substantially similar to those contained in the Amended and Restated Debenture in the amount of US$14,863,155.23 dated as of May 6, 2011 issued by Fenwick to Motorcar (including with respect to payment of principal and interest and rate of interest)and (iv) Permitted Purchase Money Security Interest;

 

(b)

Liens – grant or suffer to exist any Lien in respect of any of its property including without limitation, the Excluded Assets, except Permitted Liens;

 

(c)

Disposition of Assets – directly or indirectly sell or otherwise dispose of any of its assets, except as follows: (i) a Company may transfer assets to a Material Company; and (ii) the Companies may sell or otherwise dispose of inventory in the ordinary course of business and (iii) a Company may sell or dispose of any of its assets to the extent that the proceeds of such sale or disposition are to be applied to the purchase price of replacement property, and (iv) a Company may sell or dispose of obsolete, worn out or surplus property, whether now owned or hereafter acquired, in the ordinary course of business, and (v) the Companies may sell or dispose of assets which are immaterial or no longer used or useful to their business, provided that the aggregate value of all such assets which are sold or otherwise disposed of shall not exceed Five Hundred Thousand ($500,000) in each Fiscal Year (and for greater certainty, a sale and lease back transaction shall not be considered a disposition of assets in the ordinary course of business);

 

(d)

Guarantees – become obligated under Guarantees except: (i) Guarantees which comprise part of the Security; (ii) Guarantees in respect of the Subordinate Debt; (iii) Guarantees in respect of contractual obligations incurred by any Company in the ordinary course of business; and (vi) Guarantees listed in Schedule 4.01(u);

 

(e)

Investments – make or acquire any Investments, except for: (i) in Material Companies (provided that such Material Companies have provided all Security required to be provided by them hereunder); (ii) Investments in deposit receipts, term deposits, guaranteed investment certificates or other debt obligations issued by a Lender or by a financial institution acceptable to the Required Lenders; (iii) Investments in treasury bills or other evidence of debt obligations issued directly or guaranteed by the Government of Canada or any province thereof or by the United States of America or any state thereof;

 

(f)

Acquisitions – make any Acquisitions;

 

(g)

Distributions – make any Distributions except for Distributions made to Motorcar for the sole purpose of paying the direct expenses incurred on behalf of and for the benefit of the Borrower, including for remuneration of employees of Motorcar (or its Subsidiaries) that provide services to the Companies (in an amount equal to the proportionate share of the relevant employees remuneration for the services so provided) and such other Distributions as specifically permitted herein;

 

(h)

Subordinate Debt – make any payments in respect of the Subordinate Debt or amend the Subordinate Credit Agreement (increasing the interest rate applicable thereto) except as may be permitted by the Intercreditor Agreement;

 

(i)

Changes – materially change the nature of the Business, amend its constating documents (or partnership agreement, as applicable) or change its corporate name;

 

(j)

No Consolidation, Amalgamation, etc. - consolidate, amalgamate or merge with any other Person, export a corporation into a jurisdiction outside of Canada or the United States of America or any state thereof, enter into any corporate reorganization or other transaction intended to effect or otherwise permit a change in its existing corporate or capital structure, liquidate, wind-up or dissolve itself, or permit any liquidation, winding-up or dissolution unless prior written approval has been received from the Required Lenders and such documentation as is required by Agent’s counsel is delivered concurrently with such transaction. Notwithstanding the foregoing, (A) a Company may consolidate, amalgamate or merge with another Company or liquidate, wind-up or dissolve itself into another Company or (B) a Company may change its capital structure  in each case subject to (i) their existing no Default or Event of Default, (ii) the Agent being provided with no less than thirty (30) Business Days prior written notice of the occurrence of such event, (iii) concurrent with such event, the Agent being provided with such additional Loan Documents that it requires in connection with such event including any Equity Interests arising therefrom, (iv) the Agent being provided with such legal opinions as it requires, acting reasonably, and (v) the impact of such event not having any negative impairment on the Security granted in favour of the Lenders and the obligations of the Companies pursuant to the Loan Documents in effect at such time;

 

(k)

Fiscal Year – change its Fiscal Year;

 

(l)

Dealing with Related Persons – enter into any material contract with any Related Person unless all terms and conditions thereof (specifically including the price) are commercially reasonable;

 

(m)

Use of Advances – use the proceeds of any Advance for any purposes other than those expressly contemplated in this Agreement (and without limiting the generality of the foregoing, the proceeds of any Advance will not be used to fund any operations in, finance any investments or activities in, or make any payments to, a Sanctioned Person or a Sanctioned Entity);

 

(n)

Currency Hedging Agreements – enter into or be a party to any Currency Hedging Agreement, unless:

 

(i)

such Currency Hedging Agreement is entered into with a Lender, or with any other Person on an unsecured basis;

 

(ii)

if such Currency Hedging Agreement is with a Lender, the Borrower shall execute an ISDA agreement and all other documentation as may be required by such Lender;

 

(iii)

such Currency Hedging Agreement is entered into for the purpose of hedging against the risk of fluctuations in currencies, and not for speculative purposes; and

 

(iv)

the maturity date of such Currency Hedging Agreement is not later than the Maturity Date;

 

(o)

No New Subsidiaries - create or acquire any Subsidiary after the date of this Agreement unless: (a) such Subsidiary exists pursuant to the laws of Canada or any Province of Canada (other than Quebec unless appropriate Security has been provided to the Agent and the Agent is satisfied with the enforceability of the guarantee to be provided thereby) or any State of the United States; (b) all of the issued and outstanding capital of such Subsidiary is owned by a Company; (c) such new Subsidiary provides a legal, valid and enforceable guarantee in favour of the Agent for and on behalf of the Lenders and security in form and substance satisfactory to the Lenders; (d) all of the issued and outstanding Equity Interests of such new Subsidiary are pledged to the Agent and (e) all resolutions (corporate, shareholder or otherwise) required by the Agent are delivered to the Agent, and in each case appropriate legal opinions are delivered by Borrower’s counsel to the Lenders;

 

(p)

Interest Rate Hedging Agreements – enter into or be a party to any Interest Rate Hedging Agreement, unless:

 

(i)

such Interest Rate Hedging Agreement is entered into with a Lender, or with any other Person on an unsecured basis;

 

(ii)

if such Interest Rate Hedging Agreement is with a Lender, the Borrower shall execute an ISDA agreement and all other documentation as may be required by such Lender;

 

(iii)

such Interest Rate Hedging Agreement is entered into for the purpose of hedging against the risk of fluctuations in interest rates, and not for speculative purposes; and

 

(iv)

the maturity date of such Interest Rate Hedging Agreement is not later than the Maturity Date;

 

(q)

Intercorporate Debt – amend the Intercorporate Debt or any Debt owing to Motorcar (or any Subsidiary of Motorcar), without first obtaining the prior written consent of the Agent.

 

(r)

Transfers of Business and Assets - make any transfer, assignment, alienation, or otherwise, of any business, assets, or fund, to any Company, which does not provide a valid first registered security interest on all of the assets of such Company in favour of the Agent and Lenders, other than temporary relocation to the Mexico Company for remanufacturing in the ordinary course, and as to the Flow-Pro operational relocation to Mexico the Agent, acting reasonably, has approved such relocation after review of an updated financial forecast reflecting the relocation;

 

(s)

Mexico - allow the subsidiary incorporated, formed and operating in Mexico to enter into any funded debt, provide any security for funded debt, or engage in any transaction which would lead to any lien, charge or encumbrances as to the assets of such Subsidiary;

 

(t)

Flow-Pro Inc.- make any further advances or Distributions to, or Investments in, Flow-Pro Inc. other than in the ordinary course of business as per usual past practices (and not to fund profit and loss statement losses) except for advances, Distributions or Investments to fund net losses not to exceed (i) US $350,000.00 for the three (3) month period from the Closing Date and ending July 31, 2011 and (ii) US$700,000.00 (in the aggregate) for the six (6) month period from the Closing Date to October 31, 2011; and

 

(u)

Pledge of Shares – Each of the Administrative Agent and the Lenders acknowledges that Union Bank, N.A. and Branch Banking & Trust Company, as lenders (the "Motorcar Lenders") under a Revolving Credit and Term Loan Agreement dated October 28, 2009, as amended, and pursuant to the Security Agreement executed by Motorcar in connection therewith, have been granted a security interest in substantially all of the assets of Motorcar, including the stock of Fenwick and Introcan.  Except for the security interest, and the benefits and rights granted to the Motorcar Lenders under the Security Agreement, as described in the preceding sentence, neither Fenwick nor Introcan shall allow any shareholder of Fenwick and/or Introcan, as applicable, to grant any lien, charge, pledge, voting restriction, encumbrance or security interest in any of the Equity Interests of Fenwick and/or Introcan, as applicable.

Fenwick’s Fixed Charge Coverage Ratio as at the end of each Fiscal Quarter, determined on a rolling four (4) quarter basis, shall be not less than 1.1:1 for all periods measured as at March 31, 2012 to the Maturity Date, with the first measurement period being the four (4) quarters ending June 30, 2012;

(c)

not make Capital Expenditures in any Fiscal Year in an amount exceeding the amount determined annually, based upon the budget provided by Fenwick’s to the Agent, as approved by the Agent.

(d)

The Borrowers shall maintain at all times excess unused borrowing availability under the Revolving Facility in an amount of $2,500,000.00; for the purpose of this Section 5.03(d) "availability" shall mean (A) the sum of 100% of Eligible Accounts Receivable plus the lesser of (i) 100% of Eligible Inventory, on a FIFO basis or (ii) 100% of the net orderly liquidation value of the Eligible Inventory, as determined by the most recent appraisal obtained by the Agent less (B) the full amount of all Advances under the Revolving Facility, including all issued Letters of Credit, as at the date of such calculation.

(a)

a summary listing of accounts receivable of the Material Companies (segregated by general ledger classification and identifying the accounts receivable which constitute Eligible Accounts Receivable, and a certified summary listing of aged accounts payable including, if any, a schedule of contra accounts (such summaries to be in form and substance satisfactory to the Agent and to include such additional information as may be required by the Agent) , a report of all sales, collections, credit adjustments and any other material information pertaining to  all accounts receivable of the Material Companies (the "Sales and Collections Report"), a Cash Flow Report in the form of Exhibit I attached hereto and a Borrowing Base Certificate in the form of Exhibit F attached hereto certified by the President, Chief Financial Officer or other senior officer of the Borrower acceptable to the Required Lenders on a weekly basis by no later than the Tuesday following the immediately preceding week; provided that notwithstanding that the Borrowing Base Certificate will be provided on a weekly basis pursuant to this Section 5.04(a), information with respect to inventory will be calculated and provided on a bi-weekly basis;

(b)

a summary listing of inventory of the Material Companies, segregated by inventory classification, location and aging, such to be reflected in the Borrowing Base Certificate in the form of Exhibit F attached hereto, certified as required by Section 5.04(a);

(c)

the unaudited consolidating Interim Financial Statements of Fenwick by the 30th day after the end of each month in each year, accompanied quarterly by the 60th day after the end of the Fiscal Quarter, with a delivery of the unaudited consolidating Interim Financial Statements for each Fiscal Quarter end by a Compliance Certificate certified by the Chief Financial Officer or other senior officer of the Borrower acceptable to the Required Lenders in the form of Exhibit G attached hereto which shall evidence compliance with all financial ratios and amounts set out in Section5.03 herein in respect of such month (including all supporting calculations) and set out the details of any permitted Distributions paid in the relevant Fiscal Quarter, accompanied by management’s discussion and analysis which shall include an analysis of any material variances in the financial results in such month from the projections contained in the most recent Annual Forecast presented to the Lenders;

(d)

the annual audited consolidated Year-End Financial Statements of the Borrower by the 120th day after the end of each Fiscal Year, accompanied by a Compliance Certificate certified by the Chief Financial Officer or other senior officer of the Borrower acceptable to the Required Lenders in the form of Exhibit G attached hereto which shall evidence compliance with all financial ratios and amounts set out in Section 5.03 herein in respect of such Fiscal Year (including all supporting calculations), accompanied by management’s discussion and analysis which shall include an analysis of any material variances in the financial results in such Fiscal Year from the projections contained in the most recent Annual Forecast presented to the Lenders;

(e)

the Annual Business Plan for each Fiscal Year by no later than thirty (30) days after the commencement of such Fiscal Year;

(f)

such additional information and documents as the Agent or the Lenders may reasonably require from time to time.

 

(a)

a Guarantee from each Material Company in respect of all Secured Obligations, each such Guarantee to be in an unlimited amount unless otherwise agreed by the Agent on behalf of the Lenders;

 

(b)

a general security agreement, debenture, movable hypothec or similar form of security from each Canadian Company and United States Company creating a security interest in respect of all of its present and future real and personal property, assets and undertaking, specifically including its intellectual property and all shares, partnership interests and other equity interests held by such Material Company in the capital of any other Company other than Excluded Assets;

 

(c)

a negative covenant and pledge from all Companies located outside of Canada and the United States;

 

(d)

a negative covenant and pledge from Motorcar pursuant to which Motorcar confirms and agrees that it will not grant any lien, encumbrance, charge or security interest in and to the Equity Interests of Fenwick and/or Introcan;

 

(e)

postponements and subordination agreements as required by the Agent based upon the existing and outstanding indebtedness of the Material Companies;

 

(f)

assignments of the interest of each Material Company in all policies of insurance held by it (specifically including the right to receive any refunds of premiums paid thereunder), which requirement shall be satisfied if the Agent’s interest as first mortgagee and loss payee is recorded on such policies; and

 

(g)

such other security relating to the Companies as may be reasonably required by the Agent and the Lenders from time to time.

(a)

The Security shall be in form and substance satisfactory to the Agent. The Agent may require that any agreement comprising part of the Security shall be governed by the laws of any jurisdiction considered by the Agent to be appropriate.

(b)

The Security shall be registered by the Borrower where necessary or desirable to record and perfect the charges contained therein, as determined by the Agent, in order to create in favour of the Agent a First-Ranking Security Interest in the property, assets and undertaking of the Material Companies.

 

(a)

if no Event of Default has occurred and is continuing at such time, and such proceeds relate to the loss of or damage to property and are less than $250,000, the Lenders agree to consent to the payment of such proceeds to such Material Company if:

 

(i)

such property has been repaired or replaced and the proceeds will reimburse the Material Company for payments it has made for such purpose; or

 

(ii)

the Material Company confirms in writing to the Agent that it will forthwith use such proceeds to repair or replace such property; and

 

(b)

in all other circumstances the Lenders may in their discretion (which may be determined by the Required Lenders, it being understood that not all Lenders are required to make such determination) require such insurance proceeds to be paid to the Agent and applied to the Obligations, or may permit such insurance proceeds to be paid to such Material Company subject to any terms and conditions the Lenders may impose.

 

(a)

the conditions precedent in Section 7.02 shall have been satisfied;

 

(b)

the Lenders shall have completed and shall be satisfied with their due diligence in respect of the Companies, specifically including that the Agent shall have completed, to its satisfaction, an initial and take down field audit in accordance with its usual practice;

 

(c)

no litigation shall directly or indirectly affect the Companies except litigation disclosed in Schedule 4.01(q) and any other litigation in which the amount claimed is less than Two Hundred Fifty Thousand Dollars ($250,000);

 

(d)

the Companies shall have obtained insurance in respect of their property, business and assets, the terms and conditions of which shall be acceptable to the Required Lenders;

 

(e)

the Borrower shall have completed and delivered to the Lenders an environmental questionnaire in the Agent’s usual form, which shall disclose no environmental issues or concerns inconsistent with the representations and warranties set out herein;

 

(f)

all Loan Documents required to be provided at the time of the first Advance shall have been executed and delivered, all registrations necessary or desirable in connection therewith shall have been made and all legal opinions and other documentation required by the Lenders in connection therewith shall have been executed and delivered, all in form and substance satisfactory to the Agent and the Lenders in their sole discretion;

 

(g)

the Agent and the Lenders shall have received satisfactory evidence that there are no Liens affecting the Companies or their respective assets, except Permitted Liens;

 

(h)

all Security required pursuant to the terms hereof shall have been delivered to the Agent;

 

(i)

the Agent shall have received an officer’s certificate and certified copies of resolutions of the board of directors of each Material Company concerning the due authorization, execution and delivery of the Loan Documents to which it is a party, and such related matters as the Agent and the Lenders may reasonably require;

 

(j)

the Agent shall have received a certificate of status, certificate of compliance or similar certificate for each Material Company issued by its governing jurisdiction and each other jurisdiction in which it carries on business or holds any material assets;

 

(k)

the Agent shall have received an opinion from the solicitors for each Material Company regarding its corporate status, the due authorization, execution, delivery and enforceability of the Loan Documents provided by it, and such other matters as the Agent and the Lenders may reasonably require;

 

(l)

payment of all amounts and fees (including reasonable fees of Lenders’ counsel and agent counsel) payable to the Lenders or the Agent;

 

(m)

a Borrowing Base Certificate for the Borrower calculating the Borrowing Base as at   April 29, 2011; shall have been delivered to the Agent;

 

(n)

a Compliance Certificate calculated as at May 6, 2011 confirming on a pro forma basis that the Borrower is in compliance with all financial covenants and certifying conditions precedent shall have been delivered to the Agent;

 

(o)

no Default or Event of Default has occurred and is continuing or would result from making the Advance and an officer of the Borrower shall have certified the same to the Lenders;

 

(p)

no Material Adverse Change has occurred and a senior officer of the Borrower shall have certified (on behalf of the Borrower) as such to the Lenders;

 

(q)

the Borrower shall have delivered to the Agent its audit for the Fiscal Year ending March 31, 2010, on the basis of an unqualified audit report;

 

(r)

at the Closing Date, the Borrower will have excess unused borrowing availability under the Revolving Facility in an amount of $10,500,000.00; for this purpose "availability" shall mean the lesser of the Revolving Facility Maximum Amount and the Revolving Facility Margin Limit less the full amount of the Advances under the Revolving Facility, including issued Letters of Credit, at the Closing Date, less obligations payable under the Vendor Payment Plan less delinquent tax obligations and less unpaid fees and expenses owed to the Agent, and any others in connection with the transaction;

 

(s)

a take down field examination shall have been conducted prior to the Closing Date with respect to the Collateral and such field examination shall be satisfactory to the Agent, acting reasonably;

 

(t)

the Agent shall have received a plan, such plan to the satisfactory to the Agent, acting reasonably, from the Borrower with respect to the payment of certain current and all past due payables (the "Vendor Payment Plan") of the Material Companies (past due payables being such payables that have been due and payable for over sixty (60) days), which plan shall set out in sufficient detail the name of the vendor to be paid, the amount of the applicable payments and the dates on which payments shall be made, in whole or in part, will be made;

 

(u)

the Agent shall have received evidence, in form and substance satisfactory to the Agent, acting reasonably, of the conversion of the Debt more particularly set out on Schedule 7.01(u) hereto to shares in the capital of Fenwick; and

 

(v)

the Agent shall have received, in from and substance satisfactory to the Agent, acting reasonably, copies of all documentation confirming that Motorcar (or a wholly owned Subsidiary of Motorcar) is the legal and beneficial owner of 100% of the issued and outstanding Equity Interests of each of Fenwick and Introcan.

 

(a)

the representations and warranties in Article 4 shall be true and correct in all material respects as if made on the date of such Advance (except for any such representations and warranties which are specifically expressed to have been given only as at the date of this Agreement in which case they shall be true as of the date of this Agreement);

 

(b)

any additional Security required to be provided at the time of such Advance shall have been executed and delivered and all registrations necessary or desirable in connection therewith shall have been made, and any other documentation required by the Agent shall have been executed and delivered, all in form and substance satisfactory to the Agent;

 

(c)

no Default or Event of Default shall have occurred and be continuing, nor shall the making of the Advance result in the occurrence of any Default or Event of Default;

 

(d)

the Borrower shall have given a Drawdown Request to the Agent in accordance with the notice requirements provided herein (except in respect of Advances in the form of Swingline Advances);

 

(e)

since the date of the most recent Interim Financial Statements delivered to the Agent, no Material Adverse Change shall have occurred;

 

(f)

no third party demand or garnishment order for payment to any Governmental Authority shall have been received by the Agent or any Lender in respect of any Company;

 

(g)

the Borrower shall have provided a Borrowing Base Certificate in accordance with paragraph 5.04(a); and

 

(h)

the Agent and the Lenders shall have received such additional information and documents as they may reasonably require.

 

(a)

the Borrower fails to pay any Interest due hereunder when such Interest is due or fails to pay any principal or other amount hereunder when due;

 

(b)

any material representation or warranty provided by Company to the Agent or the Lenders herein or in any other Loan Document was incorrect in any material respect on the date on which such representation or warranty was made;

 

(c)

the Borrower is not in compliance with any of the financial covenants set out in Section 5.03 or fails to deliver any Interim Financial Statement or Annual Financial Statement when due pursuant to Section 5.04;

 

(d)

the Borrower fails to perform or comply with any of the negative covenants set out in Section 5.02;

 

(e)

any Company fails to perform or comply with any of its covenants or obligations contained in this Agreement, the Security or any other agreement made between it and any Lenders (other than those set out in paragraphs (a), (b), (c) and (d) above) after receipt of notice of such non-compliance from the Agent;

 

(f)

any Company is in default in the payment of any indebtedness under any Material Agreement relating to Funded Debt which involves an amount or potential liability equal to or greater than $500,000 or there is any other default under any such agreement related Funded Debt that allows the holders, or with the giving of notice or passage of time would allow the holders, of such Funded Debt to accelerate the obligations thereunder; or any Material Company agrees to the surrender or termination of any Material Agreement prior to the expiry date expressly set out therein (unless it is concurrently replaced by another Material Agreement containing substantially similar terms);

 

(g)

an Insolvency Event occurs in respect of any Company;

 

(h)

any Person takes possession of any property of a Company that is material to its financial condition, undertaking or operations by way of or in contemplation of enforcement of security; or a distress or execution or similar process is levied or enforced against any such property; except to the extent that: such matter is being diligently contested by such Company in good faith and on reasonable grounds; such Company provides the Agent with all information relating to such matter as it may reasonably request from time to time; a reserve satisfactory to the Agent has been established; and the amount in dispute is not material, as determined by the Agent (and without restricting the generality of the foregoing, an amount in dispute in excess of $500,000; shall be deemed to be material);

 

(i)

one or more final judgments or decrees for the payment of money shall have been obtained or entered against any one or more of the Companies in excess of $500,000; in the aggregate and shall not be paid, discharged, vacated, bonded or stayed within forty-five (45) days;

 

(j)

any Governmental Authority shall take any action to condemn, seize or appropriate any property of any Material Company that is material to the financial condition, business or operations of the Material Companies taken as a whole;

 

(k)

any Loan Document or any material provision thereof is or is declared by any court of competent jurisdiction to be unenforceable, or any Material Company terminates or purports to terminate its liability under any Loan Document or disputes the validity or enforceability of such Loan Document;

 

(l)

any agreement which comprises part of the Security granted by a Material Company ceases to constitute a valid First-Ranking Security Interest in respect of the property intended to be subject thereto;

 

(m)

any Material Company which is presently a Subsidiary of the Borrower ceases to be a Subsidiary of the Borrower (except as a result of an amalgamation or merger with another Material Company or a winding-up into another Material Company), unless the Lenders in their discretion otherwise agree in writing;

 

(n)

the occurrence of a Change of Control;

 

(o)

any report of the Borrower’s auditors in the Year-end Financial Statements contains a going-concern qualification or other qualification relating to the creditworthiness of the Borrower on a consolidated basis;

 

(p)

any of the following events shall occur or exist under ERISA with respect to any U.S. Company or any ERISA Affiliate: any Reportable Event shall occur; complete or partial withdrawal from any Multiemployer Plan shall occur; any Prohibited Transaction shall occur; or with respect to a Plan subject to Title IV of ERISA, a notice of intent to terminate the Plan shall be filed, or the Plan shall be terminated; or circumstances shall exist which constitute grounds entitling the PBGC to institute proceedings to terminate the Plan, or the PBGC shall institute such proceedings; and in each case above, such event or condition, together with all other events or conditions, if any, could subject such U.S. Company to any tax, penalty, or other liability which would reasonably be expected to result in a Material Adverse Change; or

 

(q)

an event occurs which in the reasonable opinion of the Required Lenders constitutes a Material Adverse Change.

 

(i)

if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest,

 

(ii)

the provisions of this Section shall not be construed to apply to (x) any payment made by any Company pursuant to and in accordance with the express terms of this Agreement or (y) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or participations in disbursements under Letters of Credit to any assignee or participant, other than to any Company or any Affiliate of a Company (as to which the provisions of this Section shall apply); and

 

(iii)

the provisions of this Section shall not be construed to apply to (w) any payment made while no Event of Default has occurred and is continuing in respect of obligations of the Borrower to such Lender that do not arise under or in connection with the Loan Documents, (x) any payment made in respect of an obligation that is secured by a Permitted Lien or that is otherwise entitled to priority over the Borrower’s obligations under or in connection with the Loan Documents, (y) any reduction arising from an amount owing to a Company upon the termination of derivatives entered into between the Company and such Lender, or (z) any payment to which such Lender is entitled as a result of any form of credit protection obtained by such Lender.

 

(i)

shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;

 

(ii)

shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for in the Loan Documents), but the Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Agent to liability or that is contrary to any Loan Document or Applicable Law; and

 

(iii)

shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Affiliates that is communicated to or obtained by the person serving as the Agent or any of its Affiliates in any capacity.

(a)

Any amendment to this Agreement and the granting of any waiver or consent by the Lenders relating to the following matters shall require the unanimous agreement of the Lenders:

 

(i)

decreases in interest rates and standby fees in respect of the Facilities or fees payable to Lenders in respect of Letters of Credit;

 

(ii)

changes in the principal amount of credit available under the Facilities (other than as to sub-line allocations), changes in the amount of any Lender’s Commitment;

 

(iii)

extensions of the Maturity Date of the Facilities;

 

(iv)

extensions of the scheduled dates for payments of principal, interest, fees and other amounts hereunder or the scheduled amounts of Repayments hereunder;

 

(v)

releases of all or substantially all of the Security;

 

(vi)

the definitions of "Required Lenders" and "Proportionate Share"; and

 

(vii)

this Section and any other provision of this Agreement which requires the unanimous consent of the Lenders in connection with any action to be taken or consent to be provided by the Lenders.

(b)

Except for the matters described in paragraph (a) above, any amendment to this Agreement shall be effective if made among the Borrower, the Agent and the Required Lenders, and for greater certainty any such amendment which is agreed to by the Required Lenders shall be final and binding upon all Lenders.

(c)

The Agent may from time to time without notice to or the consent of the Lenders execute and deliver releases of the Security or any portion thereof in respect of any item of Collateral (whether or not the proceeds of sale thereof are received by the Agent) which the Companies are permitted to dispose of without obtaining the prior written consent of the Required Lenders; and in providing any such releases the Agent may rely upon and assume the correctness of all information contained in any certificate or document provided by the Borrower, without further enquiry.

(d)

Except for the matters which require the unanimous consent of the Lenders as set out above, any action to be taken or decision to be made by the Lenders pursuant to this Agreement (specifically including for greater certainty the issuance of written notice to the Borrower of the occurrence of a Default, the issuance of a demand for payment of the Obligations, a decision to make an Advance despite any condition precedent relating thereto not being satisfied, the provision of any waiver in respect of a breach of any covenant shall be effective if approved by the Required Lenders; and any such decision or action shall be final and binding upon all the Lenders.

 

(i)

firstly, in payment of all costs and expenses incurred by the Agent in connection with such administering this Agreement and other Loan Documents and the enforcement of rights of realization, including legal, accounting and receivers’ fees and disbursements;

 

(ii)

secondly, against the Obligations (each Lender being entitled to receive a share thereof equal to the portion of the Obligations then owing to such Lender divided by the aggregate amount of the Obligations); and

 

(iii)

thirdly, if all obligations of the Borrower listed above have been paid and satisfied in full, any surplus Proceeds of Realization shall be paid in accordance with Applicable Law.

 

(a)

all statements, certificates, consents and other documents which the Agent purports to deliver to a Company on behalf of the Lenders shall be binding on each of the Lenders, and none of the Companies shall be required to ascertain or confirm the authority of the Agent in delivering such documents;

 

(b)

all certificates, statements, notices and other documents which are delivered by a Company to the Agent in accordance with this Agreement shall be deemed to have been duly delivered to each of the Lenders; and

 

(c)

all payments which are delivered by the Borrower to the Agent in accordance with this Agreement shall be deemed to have been duly delivered to each of the Lenders.

 

(a)

any failure by the Borrower to pay and satisfy its obligations hereunder including, without limitation, any costs or expenses incurred by reason of the liquidation or re-employment in whole or in part of deposits or other funds required by the Lenders to fund or maintain the Facilities or as a result of such Borrower’s failure to take any action on the date required hereunder or specified by it in any notice given hereunder;

 

(b)

any investigation by Governmental Authorities or any litigation or other similar proceeding related to any use made or proposed to be made by such Borrower of the proceeds of any Advance;

 

(c)

any instructions given to any Lender to stop payment on any cheque issued by the Borrower or to reverse any wire transfer or other transaction initiated by such Lender at the request of such Borrower; and

 

(d)

any other matter related to or arising out of this Agreement, the other Loan Documents, the extensions of credit contemplated hereby, including the exercise of any rights or remedies.

 

(a)

any losses suffered by them for, in connection with, or as a direct or indirect result of, the failure of any Company to comply with all Requirements of Environmental Law;

 

(b)

any losses suffered by the Indemnitees for, in connection with, or as a direct or indirect result of, the presence of any Hazardous Material situated in, on or under any property owned by any Company or upon which it carries on business, specifically including any diminution in value of the business, property and assets of such Person; and

 

(c)

any and all liabilities, losses, damages, penalties, expenses (including reasonable legal fees) and claims which may be paid, incurred or asserted against the Indemnitees for, in connection with, or as a direct or indirect result of, any legal or administrative proceedings with respect to the presence of any Hazardous Material on or under any property owned by any Company or upon which it carries on business, or the discharge, emission, spill, radiation or disposal by any Company of any Hazardous Material into or upon any Land, the atmosphere, or any watercourse or body of water; including the costs of defending and/or counterclaiming or claiming against third parties in respect of any action or matter and any cost, liability or damage arising out of a settlement entered into by the Indemnitees of any such action or matter;

 

(a)

to the Borrower:

 

1100 Caledonia

 

Toronto, ON

 

M6A 2W5

 

Attention: President

 

Facsimile: 416. 787.7621

 

with a copy to :

 

Michael Umansky

 

2929 California Street

 

Torrance, CA 90503 USA

 

Tel: 310 ###-###-####

 

Fax: 310 ###-###-####

 

 

Attention: John R. MacLeod

 

Facsimile: 416 ###-###-####

 

 

Attention: Maryanne Gruys

 

Facsimile: 410 ###-###-####

 

(a)

This Agreement supersedes all discussion papers, term sheets and other writings issued by the Agent or the Lenders prior to the date hereof relating to the Facilities; and this Agreement and any other documents or instruments contemplated herein or therein, together with any written agreement with the Agent relating to Agent fees and any agreement with the Agent as to amendments required for syndication, shall constitute the entire agreement and understanding among the Borrower, the Lenders and the Agent relating to the subject-matter hereof.

 

(b)

Except in accordance with the Agreement, no provision of this Agreement, or any other document or instrument in existence among the parties may be modified, waived or terminated except by an instrument in writing executed by the party against whom such modification, waiver or termination is sought to be enforced.