HomeMy WebLinkAboutCS 47-09
city's REPORT TO
EXECUTIVE COMMITTEE
PICKERING Report Number: CS 47-09
Date: December 14, 2009
95
From: Gillis A. Paterson
Director, Corporate Services Treasurer
Subject: Veridian Inter-Creditor Agreement
Recommendation:
1. That Report CS 47-09 of the Director, Corporate Services & Treasurer regarding
the Veridian - Inter-Creditor Agreement be received;
2. That the Mayor and Clerk be authorized to execute an Inter-Creditor Agreement
in a form substantially as attached hereto and acceptable to the Director,
Corporate Services & Treasurer, between the Toronto Dominion Bank, the Town
of Ajax, the City of Belleville, the Municipality of Clarington, the City of Pickering,
Veridian Corporation and Veridian Connections Inc. ;
3. That the Director, Corporate Services & Treasurer be authorized to undertake
any discussions, negotiations or amendments to agreements necessary in order
to put into effect the wishes of Council as expressed under these and previous
Resolutions regarding this matter; and,
4. That appropriate officials of the City of Pickering be given authority to give effect
thereto.
Executive Summary: The Promissory Notes held by the Shareholders are debt
subordinated to any other debt issued by Veridian Corporation and Veridian
Connections Inc. Execution of this agreement between all parties recognizes the fact,
in a way that makes the Toronto Dominion Bank a party to the subordination, and
ensures any amounts owing the Bank rank before such debt.
This agreement is the same as that approved by Council under Report CS 41-01 in
November, 2001 with the Bank of Nova Scotia.
Financial Implications: Approval of the recommendations allows Veridian to set up
a $40 million term loan credit facility with the Toronto Dominion Bank. Debt under such
a facility will rank ahead of the Promissory Notes issued to Pickering and the other
Shareholder municipalities.
Report CS 47-09 Date: December 14, 2009
Subject: Veridian - Inter-Creditor Agreement Page 2
96
Sustainability Implications: There are no sustainability implications for the City of
Pickering.
Background: Veridian Corporation has arranged bank financing with the Toronto
Dominion Bank. The five-year agreement with the Bank provides up to $40 million in
lines of credit and guarantees for Veridian Corporation and Veridian Connections . This
will provide financing for capital expenditures and investments and guarantees to be
posted with the Independent Market Operator in support of electricity procurement.
The Bank requires an Inter-Creditor Agreement so that it is a party to the agreement
with the municipal shareholders that the $60.8 million Promissory Notes held by the
municipalities are subordinated in rank to this senior Bank debt. In the terms of the
Promissory Notes recently passed by each Council, this subordination feature was
included, as it was in previous Notes, so that Veridian could obtain necessary additional
financing.
Municipal shareholder debt is protected by the Shareholders' Agreement. Veridian
cannot place debt, including Subordinated Promissory Notes, in excess of 70% of the
total capitalization of Veridian. Lending institutions deem this to be an acceptable debt
to capitalization ratio. Veridian's legal counsel has reviewed the Inter-Creditor
Agreement.
It is requested by Veridian that the Council approve the, Inter-Creditor Agreement and
authorize the Mayor and Clerk to execute this agreement.
Attachments:
1. Correspondence from D. Clarke, Executive Vice President, Veridiian
2. Inter-Creditor Agreement
Report CS 47-09 Date: December 14, 2009
Subject: Veridian - Inter-Creditor Agreement Page 3
97
Prepared By: Approved / Endorsed By:
01
Gillis A. Paterson Gillis A. Paterson
Director, Corporate Services & Treasurer ' Director, Corporate Services & Treasurer
GAP:vw
Copy: Chief Administrative Officer
Recommended for the consideration of
Pickering /City oun '
IL
T om s J.'Quinn, D R, C M II
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Chief Administrative
9 8 ATTACHMENT#._LTO REPORT#~:.`I"~'v q
MEMORANDUM
VERIDIAN
C O N N E C T I O N S
To: Gil Paterson, Director, Corporate c:
Services & Treasurer, City of Pickering
Martin de Rond, Director of Legislative
and Information Services/Town Clerk
Town of Ajax
Patti Barrie, Municipal Clerk
Municipality of Clarington
Julie Oram, Director of Corporate
Services, City Clerk
City of Belleville
From: David Clark, Executive Vice President,
Corporate Services and CFO
Veridian Connections Inc.
Date: November 30, 2009
Re: Inter-creditor Agreement between Veridian Corporation, Veridian Connections
Inc., the City of Pickering, the Town of Ajax, the Municipality of Clarington, the
City of Belleville and the Toronto Dominion Bank
Summary
Veridian is in the process of securing bank financing. Similar to the bank financing Veridian
previously held between 2001 and 2006, an inter-creditor agreement is again required to confirm that
promissory notes held by the shareholders are subordinated to the bank loans advanced to Veridian.
I
The debt financing planned by Veridian supports funding that is required for Veridian's 2009 and
2010 capital investments. This debt financing is part of the 2009 Veridian financial plan which
moved Veridian from a very low debt to capital structure to a debt structure more typical of the
i
industry. Additional dividends were paid 'to shareholders in 2009 as part of this capital structure
change.
This memorandum is a request to the shareholders of Veridian to approve and execute an inter- j
creditor Agreement. Promissory notes that are owed to the shareholders from Veridian are
---subordinate--to_Veridian-obligations--to--a_ny other-financial-institution--or---lender----The-inter-creditor--.---.-----------_---r
99
Date: November 30, 2009 Page.2
Memo re: Inter-creditor Agreement between Veridian Corporation,
Veridian Connections Inc., the City of Pickering, the Town
of Ajax, the Municipality of Clarington, the City of Belleville
and the Toronto Dominion Bank
Agreement provides a confirmation of this subordination to the bank. An inter-creditor agreement
was previously in place with shareholders when Veridian borrowed funds from the Bank of Nova
Scotia between 2001 and 2006.
Background Information Supporting this Request
Veridian has negotiated a credit facility agreement with the Toronto Dominion Bank. The credit
facility agreement provides for a loan facility of $20 million that will be drawn during December to
restore cash balances used to fund distribution business capital expenditures and 2009 dividends
paid to the Veridian shareholders. There is also an uncommitted working capital facility of an
additional $20 million that will be available for Veridian to draw upon for necessary short tern loan
requirements. An inter-creditor agreement is required by Toronto Dominion to document and
commit all parties to the subordination ranking of the shareholder promissory notes to the new
bank debt.
Parties to the proposed inter-creditor agreement are Veridian Corporation and Veridian
Connections Inc, and all parties that hold loans payable by Veridian; the City of Pickering, the
Town of Ajax, the Municipality of Clarington, the City of Belleville and the Toronto Dominion
Bank. This request to execute an inter-creditor agreement has been submitted to each of the
Veridian shareholders. Clarington, Belleville and Ajax will consider the request at their December
14 Council meetings. Pickering will consider the request at their December 21 Council meeting.
The inter-creditor agreement appended to this memorandum has been drafted by Veridian's solicitor
and includes changes and amendments that were requested by the shareholders' Directors of
Finance. Aside from the changes and amendments as requested by the Directors of Finance, the
i
inter-creditor agreement is the same as the previous agreement between Veridian, Veridian
shareholders and the Bank of Nova Scotia that supported bank financing of Veridian between the i
years 2001 and 2006.
Veridian shareholder promissory notes in the amount of $61 million originated at the incorporation
of Veridian and are still in place today. These notes contain a subordination clause where the
shareholders acknowledge that the obligations by Veridian to pay the promissory notes are
postponed and subordinated to the obligations of Veridian to any, other financial institution or
lender. The promissory notes further provide that the shareholders are to provide necessary
documents as may be required to provide for the subordination and postponement.
Veridian continues to operate with a very modest level of debt. The shareholder promissory notes
of $61 million and the planned $20 million Toronto Dominion bank debt that will be drawn in
December 2009 is the only debt owed by Veridian to lenders. The total $81 million in debt is just
47% of the book value of Veridian's $174 million in net assets. Veridian maintains a credit rating
with Dominion Bond Rating Service (DBRS). The current DBRS rating for Veridian is A stable.
100
Date: November 30, 2009 Page 3
Memo re: Inter-creditor Agreement between Veridian Corporation,
Veridian Connections Inc., the City of Pickering, the Town
of Ajax, the Municipality of Clarington, the City of Belleville
and the Toronto Dominion Bank
Veridian's financial plan continues to provide for dividends and interest payments to shareholders
consistent with previous long term projections.
Veridian respectfully requests Council to approve and execute the inter-creditor agreement as
appended.
Davi lark, FCMA, C. Dir,
]I five Vice President, Corporate Services and CFO
Verdian Connections Inc.
C.C.
Debbie Shields, Acting City Clerk, City of Pickering
Rob Ford, Director, Finance/Treasurer, Town of Ajax
Nancy Taylor, Director, Finance/Treasurer, Municipality of Clarington
Marie Marano, Director, Corporate Services, Municipality of Clarington
Brian Cousins, Director of Finance/Treasurer, City of Belleville
I
0 61
ATTACHMENT a TO REPORT #.`f~ '
101
INTER-CREDITOR AGREEMENT
THIS AGREEMENT made as of the day of December, 2009.
BETWEEN:
THE TORONTO-DOMINION BANK, a Canadian chartered
bank
(herein called the "Senior Creditor")
- and -
THE CORPORATION OF THE MUNICIPALITY OF
CLARINGTON, a municipal corporation existing under the laws
of the Province of Ontario
(herein called "Clarington")
-and-
THE CORPORATION OF THE TOWN OF AJAX, a•
municipal corporation existing under the laws of the Province of
Ontario
(herein called "Ajax")
-and-
THE CORPORATION OF THE CITY OF PICKERING, a
municipal corporation existing under the laws of the Province of
Ontario
(herein called "Pickering")
-and-
THE CORPORATION OF THE CITY OF BELLEVILLE, a
municipal corporation existing under the laws of the Province of
Ontario
(herein called "Belleville")
-and-
VERIDIAN CORPORATION, a corporation amalgamated under
the laws of the Province of Ontario
(herein called "VC")
Inter-Creditor Agreement
Execution Copy
102 -2-
-and-
VERIDIAN CONNECTIONS INC., a corporation amalgamated
under the laws of the Province of Ontario
(herein called "VCI")
WHEREAS the Obligors are or may become indebted to each of the Creditors and the
parties hereto desire to enter into this agreement in order to set out their respective rights and
obligations, including the respective priorities of the Creditors in connection with the
indebtedness of the Obligors to them;
NOW THEREFORE THIS AGREEMENT WITNESSES that, in consideration of the
mutual, covenants herein contained and other good and valuable consideration, given by each of
the parties hereto (the receipt and sufficiency of which are hereby acknowledged by all of the
parties hereto), the parties hereto hereby agree with each other as follows:
ARTICLE 1
INTERPRETATION
1.01 Definitions. The following defined terms shall for all purposes of this agreement, or any
amendment hereto, have the following respective meanings unless the context otherwise
specifies or requires or unless otherwise defined herein:
"Business Day" means any day other than a Saturday or Sunday on which banks are generally
open for business in Toronto, Ontario.
"Credit Agreements" means the VC Credit Agreement and the VCI Credit Agreement and
"Credit Agreement" means either of them.
"Creditors" means the Senior Creditor and the Subordinated Creditors and "Creditor" means
any of the Creditors.
"Default" means any of the events of default specified in any Loan Agreement entitling a
Creditor to demand or accelerate payment of any Obligations.
"Demand" means any notification by any of the Creditors to either Obligor of a demand for
payment under any Loan Agreement.
"Insolvency Legislation" means the Bankruptcy and Insolvency Act (Canada); the Companies'
Creditors Arrangement Act (Canada), the Bankruptcy Code (United States) and any similar
statute or law in any jurisdiction.
"Loan Agreements" means the Senior Loan Agreements and the Subordinated Loan
Agreements and "Loan Agreement" means any one of the Loan Agreements.
"Obligations" means Senior Obligations and the Subordinated Obligations.
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"Obligors" means VC and VCI.
"Senior Loan Agreements" means all documents, instruments and agreements evidencing the
Senior Obligations, including, without limitation, the Credit Agreements.
"Senior Obligations" means all indebtedness, obligations and liabilities, present or future, direct
or indirect absolute or contingent, matured or not, at any time owing by VC or VCI to the Senior
Creditor or remaining unpaid by VC or VCI to the Senior Creditor under or in connection with
the Senior Loan Agreements.
"Subordinated Creditors" means Clarington, Ajax, Pickering and Belleville.
"Subordinated Loan Agreements" means any agreement entered into from time to time
between either Obligor and any of the Subordinated Creditors evidencing any Subordinated
Obligations, including, without limitation, the following:
(a) the third amended and restated term promissory note in the principal amount of
$5,966,000 dated October 31, 2009 and made by VCI in favour of Clarington;
(b) the third amended and restated term promissory note in the principal amount of
$5,588,000 dated October 31, 2009 and made by VCI in favour of Belleville;
(c) the third amended and restated term promissory note in the principal amount of
$14,060,000 dated October 31, 2009 and made by VCI in favour of Ajax;
(d) the third amended and restated term promissory note in the principal amount of
$17,974,000 dated October 31, 2009 and made by VCI in favour of Pickering;
(e) the third amended and restated term promissory note in the principal amount of
$2,206,000 dated October 31, 2009 and made by VC in favour of Belleville;
(f) the third amended and restated term promissory note in the principal amount of
$5,550,000 dated October 31, 2009 and made by VC in favour of Ajax;
(g) the third amended and restated term promissory note in the principal amount of
$7,095,000 dated October 31, 2009 and made by VC in favour of Pickering; and
(h) the third amended and restated term promissory note in the principal amount of
$2,355,000 dated October 31, 2009 and made by VC in favour of Clarington.
"Subordinated Obligations" means all indebtedness, obligations and liabilities, present or
future, direct or indirect, absolute or contingent, matured or not, at any time owing by either
Obligor to any of the Subordinated Creditors or remaining unpaid by either Obligor to any of the
Subordinated Creditors under or in connection with the Subordinated Loan Agreements.
"VC Credit Agreement" means the credit agreement made as of November 12, 2009 between
VC- and the Senior Creditor, as the same may be amended, modified, supplemented or replaced
from time to time.
Inter-Creditor Agreement
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104 -4-
"VCI Credit Agreement" means the credit agreement made as of November 12, 2009 between
VCI and the Senior Creditor, as the same may be amended, modified, supplemented or replaced
from time to time.
1.02 Other Usages. References to "this agreement", "the agreement", "hereof, "herein",
"hereto" and like references refer to this Inter-Creditor Agreement and not to any particular
Article, Section or other subdivision of this Inter-Creditor Agreement. Any references to "this
agreement", the agreement", "hereof', "herein", hereto and like references refer to this
Inter-Creditor Agreement as amended, supplemented or otherwise modified from time to time in
accordance with the terms hereof.
1.03 Plural and Singular. Where the context so requires, words importing the singular
number shall include the plural and vice versa.
1.04 Headings. The division of this agreement into Articles, Sections and the insertion of
headings in this agreement are for convenience of reference only and shall not affect the
construction or interpretation of this agreement.
1.05 Applicable Law. This agreement shall be governed by and construed and interpreted in
accordance with the laws of the Province of Ontario and the laws of Canada applicable therein.
Any legal action or proceeding with respect to this agreement may be brought in the courts of the
Province of Ontario and, by execution and delivery of this agreement, the parties hereby accept
for themselves and in respect of their property, generally and unconditionally, the non-exclusive
jurisdiction of the aforesaid courts. Each party irrevocably consents to the service of process out
of any of the aforementioned courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to such party to the address prescribed by
Section 6. 10, such service to become effective five Business Days after such mailing. Nothing
herein shall limit the right of any party to serve process in any manner permitted by law or to
commence legal proceedings or otherwise proceed against any other party in any other
jurisdiction.
1.06 Time of the Essence. Time shall in all respects be of the essence of this agreement.
1.07 Paramountcy. In the event of any conflict or inconsistency between the provisions of
this agreement and the provisions of any other agreement which is referred to herein or delivered
pursuant hereto, the provisions of this agreement shall prevail and be paramount.
1.08 No Rights Conferred on the Obligors.. Nothing in this agreement shall be construed as
conferring any rights upon the Obligors or any third party. The terms and conditions hereof are
and shall be for the sole and exclusive benefit of the Creditors.
ARTICLE 2
-CONSENT
2.01 Consent of Creditors. Each Creditor consents to the incurring of the Obligations by the
Obligors and waives any Default that the incurring of the Obligations may have constituted
under the terms of the Loan Agreements.
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ARTICLE 3
PRIORITY OF OBLIGATIONS
3.01 Priority of Obligations. Except as. otherwise expressly provided in Section 3.03, the
Subordinated Obligations shall be and are hereby postponed and made subordinate in right of
payment to the prior payment in full in cash of the Senior Obligations.
3.02 Prohibited Payments to Subordinated Creditors. Except as otherwise expressly
provided in Section 3.03, the Obligors shall not make nor be entitled to make, and the
Subordinated Creditors shall not accept and shall not be entitled to accept, any payment or
prepayment of principal, interest or other amount under the Subordinated Loan Agreements,
whether in the form of cash, securities or otherwise and whether by way of payment, set off or
otherwise.
3.03 Permitted Payments to the Subordinated Creditors. So long as no Bank Default
Notice (as defined below) has been sent by the Senior Creditor and continues to be effective or
no Default would result directly or indirectly from any payment described below, as between the
parties hereto; the Obligors shall be permitted to pay the Subordinated Creditors and the
Subordinated Creditors shall be permitted to receive, regularly scheduled payments on account
of interest in accordance with the Subordinated Loan Agreements.
If a Default occurs and a notice of such Default (a "Bank Default Notice") is sent by or on
behalf of the Bank to the Obligors and the Subordinated Creditors, the payments otherwise
permitted under this Section 3.03 shall not be permitted to be made or received from the date of
the Bank Default Notice until such time as the Default which is the subject of such Bank Default
Notice has been cured or waived.
3.04 Certain Covenants of Subordinated Creditors. The Subordinated Creditors shall not
and shall not be entitled to:
(a) accelerate the time for payment of any of the Subordinated Obligations or
otherwise enforce or take any action to enforce payment of all or any part of the
Subordinated Obligations, whether by way of set off or otherwise, unless and until
all indebtedness of the Obligors to the Senior Creditor under or in connection with
the Credit Agreements has become immediately due and payable pursuant to the
terms thereof;
(b) petition either of the Obligors into bankruptcy or initiate any similar proceeding
under any applicable Insolvency Legislation;
(c) amend,- alter or otherwise modify the Subordinated Loan Agreements; or
(d) hold or obtain any security from the Obligors or any person on their behalf, for
payment or performance of the Subordinated Obligations.
Inter-Creditor Agreement
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1 0 6 -6-
3.05 Distributions.
(a) To the extent not otherwise permitted under the Credit Agreement, the Obligors
shall not make nor be entitled to make, and the Subordinated Creditors shall not
accept nor be entitled to accept the payment of any dividends or other distribution
on or in respect of any shares in the capital of the Obligors.
(b) The Obligors shall not make nor be entitled to make, and the Subordinated
Creditors shall not accept nor be entitled to accept the redemption, retraction,
purchase, retirement or other acquisition, in whole or in part, of any shares in the
capital of the Obligors or any securities, instruments or contractual rights capable
of being converted into, exchanged or exercised for shares in the capital of the
Obligors, including, without limitation options warrants conversion or exchange privileges and similar rights. Notwithstanding the foregoing, the Subordinated
Creditors shall be entitled to convert their interest under the Subordinated Loan
Agreements as provided for therein.
3.06 Effect of Non-Compliance.
(a) In the event any prepayments or other payments are made to or received by the
Subordinated Creditors in contravention of this agreement, the Subordinated
Creditors shall hold such prepayments or payments in trust for the Senior Creditor
and shall not commingle such proceeds with any of their own funds and shall
forthwith pay such prepayments or payments to the Senior Creditor to be applied
by the Senior Creditor in reduction of the Senior Obligations.
(b) Any action taken or thing done by any Subordinated Creditors in contravention of
this agreement shall be null and void and of no effect:
ARTICLE 4
REMEDIES
4.01 Remedies. The Obligors and the Subordinated Creditors hereby agree that all covenants,
provisions and restrictions contained herein are necessary and fundamental in order to establish
the respective priorities of the Creditors in connection with the Obligations, and that a breach by
any of the Obligors or the Subordinated Creditors of any such covenant, provision or restriction
would result in damages to the Senior Creditor that could not adequately be compensated by
monetary award. Accordingly, it is expressly agreed by the Obligors and the Subordinated
Creditors that in addition to all other remedies available to it including, without limitation, any
action for damages, the Senior Creditor shall be entitled to the immediate remedy of a restraining
order, interim injunction, injunction or other form of injunctive or other relief as may be decreed
or issued by any court of competent jurisdiction to restrain or enjoin the Obligors or the
.Subordinated. Creditors from breaching any such covenant, provision or restriction.
4.02 Default Notice. Each Creditor agrees to give written notice to each other Creditor
simultaneously with or immediately after the delivery to either of the Obligors of any written
notice of a Demand or a Default. Failure of a Creditor to give notice as provided in this
Section 4.02 shall not affect the priorities established or other agreements provided for herein,
Inter-Creditor Agreement
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1 07
nor shall such Creditor be liable for failure to give any such notice nor shall any such failure in
any way limit or derogate from the obligations of the other Creditors.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE SUBORDINATED CREDITORS
5.01 Representations and Warranties of the Subordinated Creditors. Each of the
Subordinated Creditors hereby represents and warrants to the Senior Creditor as follows and
acknowledges and confirms that the Senior Creditor is relying upon such representations and
warranties in extending credit to VC under the Senior Loan Agreements:
(a) each Subordinated Creditor is a municipal corporation duly incorporated and
organized and validly -subsisting under the laws of its jurisdiction of
incorporation. Each Subordinated Creditor has all requisite corporate capacity,
power and authority to enter into, and carry out the transactions contemplated by,
this agreement;
(b) all necessary action, corporate or otherwise, has been taken to authorize the
execution, delivery and performance of this agreement by each Subordinated
Creditor and each Subordinated Creditor has duly executed and delivered this
agreement. This agreement is a legal, valid and binding obligation of the
Subordinated Creditor, enforceable against each Subordinated Creditor by the
Senior Creditor in accordance with its terms.
ARTICLE 6
MISCELLANEOUS
6.01 Consent of the Obligors. Each Obligor, by its execution hereof, hereby agrees to be
bound by, and shall act in accordance with, the terms, provisions and intent of this agreement.
6.02 Information Exchange. Each Creditor agrees to disclose to each other Creditor upon
reasonable request from time to time the aggregate amounts then owing by the Obligors to it and
whether it has any actual knowledge of any Default. Each Obligor hereby consents to each
Creditor providing the other Creditor with such information, financial or otherwise, regarding the
Obligors and the Creditors' respective Obligations as may be deemed advisable by the Creditors
from time to time.
6.03 Non-Impairment of the Senior Creditors' Rights. No right of the Senior Creditor to
enforce its rights hereunder shall at any time or in any way be prejudiced or impaired by any act
or failure to act on the part of the Obligors or by any act or failure to act by the Senior Creditor,
or by any non-compliance by the Obligors or the Subordinated Creditors with the terms of this
agreement, regardless of any knowledge thereof which the Senior Creditor may have or be
otherwise charged with. Without the Subordinated Creditors' consent, the Senior Creditor may
extend, renew, modify, or increase the Senior Obligations or amend or waive the terms of the
Senior Loan Agreements and otherwise deal freely with VC, all without affecting the liabilities
and obligations of the Obligors and the Subordinated Creditors hereunder and without causing or
constituting a breach of or default under any of the Subordinated Obligations. Notwithstanding
the foregoing, the Senior Creditor agrees to provide the Subordinated Creditors with prior written
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108 -s-
notice of any such extension, renewal, modification, amendment or increase in the Senior
Obligations in accordance with the notice provisions contained in Section 17 hereof provided
that the inadvertent failure to provide such notice shall not result in any liability of the Senior
Creditor to the Subordinated Creditors.
6.04 Waivers and Amendments. No failure or delay by the Senior Creditor in exercising any
right hereunder shall operate as a waiver of such right nor shall any single or partial exercise of
any power or right preclude its further exercise or the exercise of any other power or right. Any
term, covenant, condition or obligation of this agreement. may only be amended with the written
consent of all of the parties hereto or compliance therewith may only be waived (either generally
or in a particular instance and either retroactively or prospectively) by the Senior Creditor in
writing and in any such event the failure to observe, perform or discharge any such term,
covenant, condition or obligation, so amended or waived (whether such amendment is executed
or such consent or waiver is given before or after such failure), shall not be construed as a breach
of such term, covenant, condition or obligation.
6.05 Liability of Subordinated Creditors. - The Senior Creditor hereby acknowledges and
agrees that, except as may be expressly provided for herein, the Subordinated Creditors are not
and will not be liable in any way for payment or performance of the Senior Obligations.
6.06 Severability. Each provision of this agreement is intended to be severable and if any
provision is illegal, invalid or unenforceable, such illegality, unenforceability or invalidity shall
not affect the validity of this agreement or the remaining provisions.
6.07 Counterparts. This agreement may be executed in any number of counterparts, all of
which shall be deemed to be an original and such counterparts taken together shall constitute one
agreement, and any of the parties hereto may execute this agreement by signing any such
counterpart.
6.08 Further Assurances. The parties hereto agree to execute and deliver such further and
other documents and perform and cause to be performed such further and other acts and things as
may be necessary or desirable in order to give full effect to this agreement and every part thereof.
No party to this agreement shall take any action whereby the priorities and rankings set out in
this agreement might be impaired or defeated.
6.09 Assignment. This agreement shall enure to the benefit of and shall be binding upon the
respective successors (including, without limitation, any trustee in bankruptcy or liquidator) and
permitted assigns of the parties hereto. The Subordinated Creditors shall not assign any of their
rights and obligations hereunder or under the Subordinated Loan Agreements. The rights and the
obligations of the Senior Creditor hereunder may be assigned by the Senior Creditor in whole or
in part without the consent of the other parties hereto but only in connection with or as part of an
assignment by the Senior Creditor of its rights under the Credit Agreement.
6.10 Entire Agreement. This agreement contains the entire understanding of the parties with
respect to the priority of the Obligations and supersedes any prior agreements, undertakings,
declarations, representations and understandings, both written and verbal, in respect of the
priority of the Obligations. There are no restrictions, agreements, promises, warranties,
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covenants or undertakings relating to the priority of the Obligations other than those set forth in
this agreement.
6.11 Notices. Except as otherwise provided herein, all notices and other communications
provided for herein shall be in writing and shall be personally delivered to an officer or other
responsible employee of the addressee or sent by telefacsimile, charges prepaid, at or to the
applicable addresses or telefacsimile numbers, as the case may be, set out opposite the relevant
party's name below or at or to such other address or addresses, telefacsimile number or numbers
as any party hereto may from time to time designate to the other parties in such manner. Any
communication which is personally delivered as aforesaid shall be deemed to have been validly
and effectively given on the date of such delivery if such date is a Business Day and such
delivery was made during normal business hours of the recipient; otherwise, it shall be deemed
to have been validly and effectively given on the Business Day next following such date of
delivery. Any communication which is transmitted by telefacsimile as aforesaid shall be deemed
to have been validly and effectively given on the date of transmission if such date is a Business
Day and such transmission was made during normal business hours of the recipient; otherwise, it
shall be deemed to have been validly and effectively given on the Business Day next following
such date of transmission.
In the case of the Senior Creditor: The Toronto-Dominion Bank
South-East Commercial Banking Centre
2 King Street East
Oshawa, Ontario
L1H 7L3
Attention: Director, Corporate Banking]
Telefax: (905) 576-9147
In the case of the Obligors: Veridian Corporation/Veridian Connections Inc.
55 Taunton Road East
Ajax, Ontario
LIT 3V3
Attention: Vice-President, Corporate Affairs and
Secretary Treasurer
Telefax: (905) 619-0210
In the case of Clarington: The Corporation of the Municipality of Clarington
40 Temperance Street
Bowmanville, Ontario
L1C 3A6
Attention: Mayor
Telefax: (905) 623-5717
Inter-Creditor Agreement
Execution Copy
1 0 -10-
In the case of Ajax: The Corporation of the Town of Ajax
65 Harwood Avenue South
Ajax, Ontario
L 1 S 2H9
Attention: Mayor
Telefax: (905) 683-1061
In the case of Pickering: _ The Corporation of the City of Pickering
1 The Esplanade
Pickering, Ontario
LIV 3P4
Attention: Mayor
Telefax: (905) 420-9695
In the case of Belleville: The Corporation of the City of Belleville
459 Sidney Street
Belleville, Ontario
K8N 2Y7
Attention: Mayor
Telefax: (613) 967-3209
6.12 Termination of Agreement. This agreement shall terminate and shall be of no further
force or effect upon the earlier to occur of:
(a) all Senior Obligations being repaid in full and all commitments of the Senior
Creditor under the Senior Loan Documents having been terminated; and
(b) the written agreement of the Senior Creditor to such effect.
Inter-Creditor Agreement
Execution Copy
-11-
IN WITNESS WHEREOF the parties hereto have executed this agreement.
THE TORONTO-DOMINION BANK
By:
Name:
Title:
By:
Name:
Title:
THE CORPORATION OF THE
MUNICIPALITY OF CLARINGTON
By:
Name:
Title:
By:
Name:
Title:
THE CORPORATION OF THE TOWN OF
AJAX
By:
Name:
Title:
By:
Name:
Title:
THE CORPORATION OF THE CITY OF
PICKERING
By:
Name:
Title:
By:
Name:
Title:
Inter-Creditor Agreement
Execution Copy
-12-
112
THE CORPORATION OF THE CITY OF
BELLEVILLE
By:
Name:
Title:
By:
Name:
Title:
VERIDIAN CORPORATION
By:
Name:
Title:
By:
Name:
Title:
VERIDIAN CONNECTIONS INC.
By:
Name:
Title:
By:
Name:
Title:
::0DMA\PCD0CS\T0R01 \4211456\1
Inter-Creditor Agreement
Execution Copy