PARI PASSU AGREEMENT
THIS AGREEMENT DATED _____.
BETWEEN:
BUSINESS DEVELOPMENT BANK OF CANADA, incorporated by Special Act of the Parliament of
Canada, and having its head office at the City of Montreal, in the Province of Quebec, and having a
business centre at _____.
(hereinafter called "BDC")
OF THE FIRST PART
AND:
_____
(hereinafter called the "Joint Lender")
OF THE SECOND PART
AND:
_____
(hereinafter called the "Borrower")
OF THE THIRD PART
W H E R E A S:
A.
By an offer of credit dated _____, BDC has agreed to lend to the Borrower the sum of $_____ (the "BDC
Loan") secured by:
(include security given by all obligants as well as guarantees and security in support of guarantees)
1.
2.
(the "BDC Security").
B.
By an offer of financing dated _____ the Joint Lender agreed to lend to the Borrower the sum of $_____
(the "Joint Lender Loan") secured by:
(include security given by all obligants as well as guarantees and security in support of guarantees)
1.
2.
(the "Joint Lender Security").
C.
(list guarantors and others giving security other than the borrower) are hereinafter collectively referred to
as the “Other Debtors”.
D.
The parties have agreed that their rights, interest and obligations under the BDC Security and the Joint
Lender Security shall be governed by the terms and conditions hereinafter set forth.
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Rev. October 19, 2011
Page 2
NOW THEREFORE THIS AGREEMENT WITNESSETH that, in consideration of the premises and of the mutual
covenants hereinafter set forth and other good and valuable consideration (the receipt and sufficiency of which is
hereby acknowledged), the parties hereto covenant and agree as follows:
1.
PARI PASSU INTEREST OF BDC AND JOINT LENDER
The interest and claims of BDC and the interest and claims of the Joint Lender in the property of or
against the Borrower or the Other Debtors pursuant to the BDC Security and the Joint Lender Security,
respectively, shall rank pari passu, each with the other, on the basis of the amounts outstanding at any
time and from time to time under the BDC Loan and the Joint Lender Loan, respectively, as if the same
and any Security collateral or ancillary thereto had been executed and registered at the same instant in
time and the full amounts secured by the BDC Security and the Joint Lender Security had been advanced
contemporaneously by BDC and the Joint Lender, respectively.
BDC represents that the BDC Loan is a non-revolving Loan which, when fully advanced, will be in the sum
of $_____ only and, accordingly will not include any re-advances of principal.
The Joint Lender represents that the Joint Lender Loan is a non-revolving Loan which, when fully
advanced, will be in the sum of $_____ only and, accordingly will not include any re-advances of principal.
Neither BDC nor the Joint Lender shall make any re-advance of principal without the consent of the other.
2.
DEFAULT AND DEMAND
BDC and the Joint Lender acknowledge and agree that an Event of Default under the BDC Security shall
constitute an Event of Default under the Joint Lender Security and an Event of Default under the Joint
Lender Security shall constitute an Event of Default under the BDC Security.
Either BDC or the Joint Lender may in its absolute discretion, but only after prior notice to the other given
in accordance with this Agreement, make demand upon the Borrower, any Other Debtor or other person
liable for repayment of the indebtedness of the Borrower secured by its Security aforesaid and may
proceed to realize upon its Security as it sees fit.
The Joint Lender shall demand full payment of the Joint Lender Loan if there is an unremedied Event of
Default thereunder and BDC shall have so requested in writing and BDC shall demand full repayment of
the BDC Loan if there is an unremedied Event of Default thereunder and the Joint Lender shall have so
requested in writing.
3.
APPOINTMENT OF A RECEIVER
If payment in full of the Loans or either of them is demanded and BDC or the Joint Lender desires to
appoint a receiver or receiver-manager (hereinafter called the "Receiver"), the party desiring to appoint the
Receiver shall attempt to consult the other by telephone, but shall not be barred from appointing a
Receiver by the failure to contact the other, or by the failure to agree on the appointment of a Receiver
provided always that the Receiver will be a licensed trustee in bankruptcy.
If any matter arises which requires a direction to be given to the Receiver or approval of any step taken or
any act to be done in and about the management of the receivership then the matter shall be decided
jointly by BDC and the Joint Lender. If BDC and the Joint Lender are unable to agree on the direction to
be given then a trustee licensed under the Bankruptcy and Insolvency Act of Canada independent of the
Receiver and selected by the Receiver shall decide on the direction to be given.
4.
NOTICE OF APPOINTMENT
Following the appointment of a Receiver by BDC or the Joint Lender, the party making the appointment
shall give written notice thereof (hereinafter called the "Notice of Appointment") to the other.
5.
DISTRIBUTION OF PROCEEDS
In the event of enforcement of the BDC Security or the Joint Lender Security, all monies received by the
Receiver, BDC or the Joint Lender, except pursuant to the terms of repayment contained in the BDC
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Rev. October 19, 2011
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Security or the Joint Lender Security prior to either party issuing demand shall be applied and paid as
follows:
6.
(a)
firstly, in payment of all costs, charges and expenses of and incidental to and that may be properly
deducted in connection with such realization procedures as may be taken;
(b)
secondly, in payment of any disbursement made by either BDC or the Joint Lender pursuant to
paragraph 16 hereof;
(c)
thirdly, in payment of the principal sums, interest and arrears of interest and other monies owing
under the BDC Security and the Joint Lender Security, pro rata to BDC and to the Joint Lender on
the basis of the amounts outstanding under the BDC Loan and the Joint Lender Loan,
respectively, as of the date payment in full is demanded by the first of the parties so to demand.
BDC and the Joint Lender shall be at liberty to apply such monies in the manner provided in their
respective Security.
PAYMENT BEFORE AND AFTER DEMAND
Any payment received by either BDC with respect to the BDC Loan or by Joint Lender with respect to the
Joint Lender Loan after either party has made demand for payment of the indebtedness or any portion
thereof secured by the BDC Security or the Joint Lender Security shall be deemed to be the proceeds of
realization and such payment shall be applied in accordance with Clause 5 hereof.
7.
BANKRUPTCY
In the event of the dissolution, liquidation, bankruptcy or winding up of the Borrower or any of the Other
Debtors or distribution of property of the Borrower or any of the Other Debtors among its creditors not
involving a Receiver appointed by BDC or the Joint Lender, the monies received by either BDC or the
Joint Lender upon such dissolution, liquidation, bankruptcy, winding up or distribution of property shall be
adjusted and allocated between BDC and the Joint Lender in the manner set out in Clause 5 hereof. If the
dissolution, liquidation, bankruptcy, winding up or distribution of property of the Borrower or any of the
Other Debtors occurs prior to BDC or the Joint Lender having issued demand for payment in full then the
pro rata distribution to be made pursuant to this Clause 7 in accordance with Clause 5 shall be determined
with reference to the amounts outstanding under the BDC Loan and the Joint Lender Loan at the earlier of
the date of dissolution, liquidation, bankruptcy, winding up of distribution of property of the Borrower or
Other Debtor as the case may be.
8.
EXPENDITURES
Subject to Clauses 9 and 16 hereof, if either of BDC or the Joint Lender wish to expend monies with
respect to inspection or repairs or to incur any other costs contemplated by its respective Security, and
BDC and the Joint Lender are in agreement that the proposed expenditure be made then BDC and the
Joint Lender shall share the cost of each such expenditure pro rata on the basis of the amounts
outstanding under the BDC Loan and under the Joint Lender Loan, respectively, at the time of such
expenditure. BDC and the Joint Lender shall, forthwith, following such expenditure, make all adjustments
or reimbursements between BDC and the Joint Lender as are necessary to result in the pro rata sharing
provided in this Clause 8.
9.
EXPENDITURES IN REALIZATION
Responsibility for payment of all costs, charges and expenses, properly incurred, of and incidental to such
realization procedures as may be taken by either BDC or the Joint Lender including legal fees and
disbursements and Receivers fees, disbursements, borrowings and Receiver's legal costs as may be
properly included under this Agreement shall be adjusted, allocated and shared by BDC and the Joint
Lender in the manner provided for the division of proceeds of realization as set out in Clause 5(c) hereof.
BDC and the Joint Lender shall forthwith after making such expenditure make all adjustments or
reimbursements between BDC and the Joint Lender as are necessary to result in the pro rata sharing of
such costs required under this Clause 9. BDC and the Joint Lender will share any costs, charges and
expenses of realization including receiver's costs as aforesaid not recoverable from the assets of the
Borrower pro rata on the basis of the formula set out in Clause 5(c) hereof.
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Rev. October 19, 2011
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10.
ADDITIONAL SECURITY
Subject to Clause 15 (b) and to any other agreement between BDC and the Joint Lender, if either BDC or
the Joint Lender takes or holds security whether from the Borrower or third persons in addition to the BDC
Security and the Joint Lender Security for payment of the indebtedness of the Borrower to it under the
BDC Loan or under the Joint Lender Loan, respectively, then such additional security shall be held for the
benefit of both BDC and the Joint Lender in accordance with the terms of this Agreement and the
reference to their respective Securities shall be deemed to include such additional security provided that, it
is understood and agreed by BDC and the Joint Lender that should any of such additional security also
constitute security for other loans to the Borrower or other indebtedness of the Borrower, the payments
received under such additional security after either party has issued demand may be applied on a pro rata
basis to such other loans or indebtedness and to the BDC Loan and the Joint Lender Loan on the basis of
the amounts outstanding as at the date of payment (with the amount so applied to the BDC Loan and the
Joint Lender Loan being for the benefit of BDC and the Joint Lender in accordance with and subject to the
terms of this Agreement).
11.
DISCHARGE, ASSIGNMENT OR AMENDMENT OF SECURITY
Neither BDC nor the Joint Lender shall discharge, surrender or assign in whole or in part its Security
without the prior written consent of the other, save and except that either BDC or the Joint Lender may
discharge its Security in the event of payment in full of that party's Loan.
Except as set forth in the BDC Security or the Joint Lender Security neither BDC nor the Joint Lender shall
change the terms or conditions of its Security without the prior written consent of the other.
12.
NOTICE OF DEFAULT
Each of BDC and the Joint Lender shall give prompt written notice to the other of the occurrence of any of
the following events upon becoming aware of them:
13.
(a)
default by the Borrower in repayment;
(b)
default by the Borrower of any other provision or covenant under its Security, provided that no
liability shall attach to a party failing to give the other party written notice of such default;
(c)
any agreement to amend the terms of its Security.
COVENANTS OF THE BORROWER
The Borrower and the Other Debtors, in consideration of the sum of TEN ($10.00) DOLLARS of lawful
money of Canada now paid to it by each of BDC and the Joint Lender (the receipt and sufficiency of which
is hereby acknowledged), agrees to and will comply with the terms and conditions hereof and authorizes
each of BDC and the Joint Lender to advise the other of the nature and extent of the indebtedness of the
Borrower to such party at any time and from time to time and to apply funds received under the BDC Loan
and the Joint Lender Loan as provided herein and to do all other acts and things as provided in this
Agreement, and the Borrower further agrees that if any term or condition hereof is or shall be inconsistent
with any of the terms or conditions of the BDC Security or the Joint Lender Security then this Agreement
shall prevail and the BDC Security and the Joint Lender Security shall be deemed to be amended to the
extent necessary to give effect to the terms of this Agreement. In particular, without limiting the foregoing:
(a)
it shall be an Event of Default under the Joint Lender Security if there is default under the BDC
Security and it shall be an Event of Default under the BDC Security if there is default under the
Joint Lender Security;
(b)
no prepayment may be made under the BDC Security or the Joint Lender Security except as
permitted under the BDC Security or the Joint Lender Security without the consent of BDC and the
Joint Lender;
(c)
except as set forth in the BDC Security or the Joint Lender Security no change in the terms and
conditions of the BDC Security may be made without the prior written consent of the Joint Lender
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Rev. October 19, 2011
Page 5
and no change in the terms and conditions of the Joint Lender Security may be made without the
prior written consent of BDC.
14.
PREPAYMENT
Except as to insurance proceeds, neither BDC nor the Joint Lender shall accept any prepayment:
(a)
except in accordance with the terms of its Security; or
(b)
without the consent of the other.
Any prepayment received by either BDC or the Joint Lender shall be distributed between BDC and the
Joint Lender pro rata according to the principal balances of the BDC Loan and the Joint Lender Loan then
outstanding. Either lender may choose to decline acceptance of its portion of the prepayment if the other
lender is willing to receive that prepayment.
15.
16.
INSURANCE PROCEEDS
(a)
Subject to Clause 15 (b) and 16 hereof, if any proceeds of insurance arising from loss or damage
to assets and property charged under the BDC Security and the Joint Lender Security,
respectively, become payable, such sum shall be apportioned to BDC and the Joint Lender pro
rata on the basis of the formula set out in Clause 1 hereof calculated at the date of the loss to
which the insurance proceeds relate if the loss occurs before demand by either BDC and the Joint
Lender and if after demand then calculated in accordance with Clause 5(c) hereof.
(b)
The proceeds of any mortgage impairment insurance policy or other similar insurance maintained
by BDC or the Joint Lender at its cost, to protect that lender’s advances against any uninsured or
underinsured loss or damage to the assets and property of the Borrower or the Other Debtors,
shall be applied against the advances of the lender placing the insurance and will not be shared
with the other lender.
PAYMENT OF INSURANCE PREMIUMS
If the Borrower fails to pay premiums to maintain insurance on the property charged under the BDC
Security and the Joint Lender Security then:
17.
(a)
BDC and the Joint Lender covenant each with the other to pay the required premium pro rata on
the basis of the amounts outstanding under the BDC Loan and under the Joint Lender Loan,
respectively, at the time the payment is required to be made;
(b)
if either BDC or the Joint Lender fails to pay its share of the premium stated in the preceding
subparagraph then the other may pay the full amount of the required premium;
(c)
in addition to the rights set out in subparagraph 5(b) hereof, the party paying the premium
specified in the preceding subparagraph shall be entitled to a charge on the entire proceeds
payable from such insurance in priority to the party not paying the premium up to the full amount
of its payment unless the party not paying the premium reimburses the other within 14 days of
receipt of a notice from the other party demanding such reimbursement.
INFORMATION
BDC and the Joint Lender are at liberty to advise each other of the particulars of the indebtedness and
obligations of the Borrower to each other and all Security held by each therefor, and the Borrower
authorizes the release of such information.
18.
FURTHER ASSURANCES
Each of BDC and the Joint Lender will do, execute and deliver or will cause to be done, executed and
delivered all such further acts, documents and things as either of them may reasonably require for the
purpose of giving effect to this Agreement.
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19.
TERMINATION
This Agreement shall terminate on the earlier of the day on which the Borrower ceases to be indebted to
either BDC or the Joint Lender in respect of the Loans.
20.
NOTICES
Any notice, direction or other instrument required or permitted to be given under this Agreement shall be in
writing and may be given by delivering it or mailing it by registered mail or sending it by telegram, telex,
telecommunication device or other similar form of communication to the following addresses:
In the case of BDC:
_____
fax: _____
Attention: _____
In the case of the Joint Lender:
_____
fax: _____
Attention: _____
In the case of the Borrower:
_____
fax: _____
Attention: _____
Any notice, direction or instrument as aforesaid shall:
(a)
if delivered, be deemed to have been given and made at the time of delivery;
(b)
if mailed by registered mail and properly addressed, be deemed to have been give and made on
the third Banking Day following the day on which it was mailed;
(c)
if sent by telegraph, telex, telecommunication device or other similar form of communication, be
deemed to have been given and made on the next Banking Day following the day on which it was
sent.
If at the time of mailing of a notice or between the time of mailing and the actual receipt of the notice, a
mail strike, slowdown or other labour dispute occurs which might affect the delivery of the notice by the
mails then the mailed notice will only be effective if actually delivered; provided that the party which mailed
the notice may provide another notice in accordance with the terms of this Agreement. Any party may
give written notice of change of address in the same manner, in which event such notice shall thereafter
be given to is as above provided at such changed address.
21.
WAIVER OF DEFAULT
The waiver of or acquiescence to, by either BDC or the Joint Lender, any default by the other or the
Borrower under any provision of this Agreement shall be deemed not to be a waiver under the provision in
respect of any subsequent default thereunder and shall similarly be deemed not to be a waiver under any
other provision hereof or of any subsequent default thereunder by any of the parties hereto.
22.
COUNTERPARTS
This agreement may be executed in several counterparts, each of which when so executed shall be
deemed to be an original and such counterparts together shall constitute one and the same document.
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Rev. October 19, 2011
Page 7
23.
INTERPRETATION
Unless there is something in the subject matter or the context inconsistent therewith, in this Agreement:
(a)
24.
the term "Banking Day" shall mean any day except:
(i)
a Saturday or Sunday, or
(ii)
a legal holiday for the Joint Lender or BDC in _____;
(b)
the term "Event of Default" shall mean any event which constitutes a default under the terms of
the BDC Security or the Joint Lender Security, and which entitles BDC or the Joint Lender to
demand payment in full of all amounts secured by the BDC Security or the Joint Lender Security
and to commence action to enforce the Security of the BDC Security or the Joint Lender Security;
(c)
the term "Security" means the BDC Security or the Joint Lender Security as the context may
require;
(d)
The term "Loan" means the BDC Loan or the Joint Lender Loan as the context may require and
"Loans" mean both of the BDC Loan and the Joint Lender Loan.
HEADINGS
The headings of this Agreement form no part of this Agreement and shall be deemed to be inserted for
convenience of reference only.
25.
PROPER LAW
The proper law of this Agreement is the laws of the Province of _____.
26.
BINDING EFFECT
This Agreement shall enure to the benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns.
IN WITNESS WHEREOF the parties have executed these presents as of the day and year first above written.
SIGNED by BDC in the presence of:
BUSINESS DEVELOPMENT BANK
OF CANADA by its authorized signatories
_______________________
Name
_______________________
Address
____________________________
_______________________
Occupation
(as to both signatures)
____________________________
SIGNED by the Joint Lender in the presence of:
_____
by its authorized signatory(ies)
_______________________
Name
_______________________
Address
____________________________
_______________________
Occupation
(as to both signatures)
____________________________
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Rev. October 19, 2011
Page 8
(include Borrower and Other Debtors)
SIGNED by the Borrower in the presence of:
_____
by its authorized signatory(ies)
_______________________
Name
_______________________
Address
____________________________
_______________________
Occupation
(as to both signatures)
____________________________
SIGNED in the presence of:
_____
by its authorized signatory(ies)
_______________________
Name
_______________________
Address
____________________________
_______________________
Occupation
(as to both signatures)
____________________________
SIGNED in the presence of:
_____
by its authorized signatory(ies)
_______________________
Name
_______________________
Address
____________________________
_______________________
Occupation
(as to both signatures)
____________________________
SIGNED in the presence of:
_______________________
Name
____________________________
_____
_______________________
Address
____________________________
_____
_______________________
Occupation
(as to both signatures)
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Rev. October 19, 2011
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