SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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SCHEDULE 13E-3

(Amendment No. 2)

RULE 13E-3 TRANSACTION STATEMENT UNDER SECTION 13(e)

EXFO, INC.

(Name of Subject Company)

EXFO, INC.

11172239 Canada Inc.

G. Lamonde Investissements Financiers Inc.

9356-8988 Québec Inc.

Germain Lamonde

Philippe Morin

 (Name of Person(s) Filing Statement)

Subordinate Voting Shares without par value

(Title of Class of Securities)

302046107

(CUSIP Number of Class of Securities)

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This statement is filed in connection with (check the appropriate box):

Check the following box if the soliciting materials or information statement referred to in checking box (a) are preliminary copies: ☐

Check the following box if the filing is a final amendment reporting the results of the transaction: ☐

CALCULATION OF FILING FEE

This Amendment No. 2 amends and supplements the Rule 13e-3 Transaction Statement on Schedule 13E-3, together with the exhibits attached hereto (the “Transaction Statement”), filed with the Securities Exchange Commission (the “SEC”) on July 16, 2021 jointly by EXFO, Inc., a corporation existing under the laws of Canada (“EXFO”), and 11172239 Canada Inc. (“Purchaser”), G. Lamonde Investissements Financiers Inc., 9356-8988 Québec Inc., Germain Lamonde, and Philippe Morin (each, a “Filing Person,” and collectively, the “Filing Persons”), as amended by Amendment No. 1, dated August 12, 2021.

The Transaction Statement relates to the plan of arrangement (the “Plan of Arrangement”) contemplated by an arrangement agreement among EXFO, Purchaser and G. Lamonde Investissements Financiers Inc., dated as of June 7, 2021 (as amended by the Amending Agreement dated July 6, 2021, the Second Amending Agreement dated July 12, 2021, and the Third Amending Agreement dated August 9, 2021 (the “Arrangement Agreements”)) pursuant to which Purchaser will acquire all of the outstanding subordinate voting shares of EXFO (the “Subordinate Voting Shares”) not already owned, directly or indirectly, by G. Lamonde Investissements Financiers Inc., 9356-8988 Québec Inc., Germain Lamonde, and Philippe Morin (to the extent an agreement is reached between the Purchaser or any of its affiliates and Philippe Morin such that Philippe Morin will, effective upon closing of the transaction, become a shareholder of the Purchaser) for the per Subordinate Voting Share consideration of $6.25 and EXFO will become a wholly-owned subsidiary of Purchaser. A copy of the Plan of Arrangement is included as Appendix B to the Management Proxy Circular, which is attached as Exhibit (a)(2)(i) to the Transaction Statement (the “Circular”).

Capitalized terms used but not defined in this Amendment No. 2 shall have the meanings given to them in the Transaction Statement.

ITEM 16 – EXHIBITS

Item 16 is hereby amended and supplemented by the addition of the following exhibits thereto:

SIGNATURES

After due inquiry and to the best of our knowledge and belief, the undersigned hereby certify that the information set forth in this statement is true, complete and correct.

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† Previously filed as an exhibit to the Transaction Statement.

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	Items Voted Upon		Voting Results
	1.   Adoption of the Arrangement Resolution		■ The adoption of the Arrangement Resolution was approved pursuant to a vote conducted by ballot;
			■ 332,503,828 votes representing 99.65% of the votes cast by holders of Multiple and Subordinate Voting Shares, voting together as a single class, were voted in favour of the adoption and 1,162,313 votes representing 0.35% of the votes cast were voted against;
			■ 11,684,524 votes (excluding the votes attached to 3,191,666 Subordinate Voting Shares controlled by G. Lamonde Investissements Financiers Inc., 316,247 Subordinate Voting Shares controlled by 9356-8988 Québec Inc., 164,561 Subordinate Voting Shares controlled directly by Germain Lamonde and 716,830 Subordinate Voting Shares controlled directly by Philippe Morin, the Chief Executive Officer of the Corporation) representing 90.95% of the votes cast by holders of Subordinate Voting Shares were voted in favour of the adoption and 1,162,313 votes representing 9.05% of the votes cast were voted against.

AST Trust Company (Canada)
(s) Bertand Gély
Bertrand Gély
Scrutineer
(s) Isabelle Vachon
Isabelle Vachon
Scrutineer

Press Release August 13, 2021

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Exhibit (a)(2)(xiv)

EXFO Announces Receipt of Final Court Approval

 

QUEBEC CITY, Canada, August 20, 2021 – EXFO Inc. (“EXFO” or the “Corporation”) (NASDAQ: EXFO; TSX: EXF) is pleased to announce that the Superior Court of Québec has issued a final order approving the previously announced plan of arrangement with 11172239 Canada Inc. (the “Arrangement”). At the special meeting of EXFO’s shareholders held on August 13, 2021, the special resolution approving the arrangement resolution was approved by 99.65% of the votes cast by shareholders, voting together as a single class, as well as 90.95% of the votes cast by holders of subordinate voting shares, excluding votes attached to the subordinate voting shares held, directly or indirectly, by Germain Lamonde and Philippe Morin.

 

The Arrangement is expected to be completed on or about August 27, 2021, subject to the satisfaction or waiver of customary closing conditions.

 

Further information regarding the Arrangement is provided in the management information circular dated July 15, 2021.

 

Caution Regarding Forward-looking Statements

 

This press release contains forward-looking statements within the meaning of Canadian securities laws. In addition, this press release also contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, and we intend that such forward-looking statements be subject to the safe harbors created thereby. Forward-looking statements are statements other than historical information or statements of current condition. Words such as may, expect, believe, plan, anticipate, intend, could, estimate, continue, or similar expressions or the negative of such expressions are intended to identify forward-looking statements. These statements are based on certain assumptions deemed reasonable by EXFO, but are subject to certain risks and uncertainties, several of which are outside the control of EXFO, which may cause results to vary materially. Such risks and uncertainties include, but are not limited to the following: the possibility that various closing conditions for the transaction may not be satisfied or waived and other risks and uncertainties discussed in documents filed with the U.S. Securities and Exchange Commission. EXFO disclaims any intention or obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, other than as required by securities laws.

 

About EXFO

 

EXFO develops smarter test, monitoring and analytics solutions for fixed and mobile network operators, webscale companies and equipment manufacturers in the global communications industry. Our customers count on us to deliver superior network performance, service reliability and subscriber insights. They count on our unique blend of equipment, software and services to accelerate digital transformations related to fiber, 4G/LTE and 5G deployments. They count on our expertise with automation, real-time troubleshooting and big data analytics, which are critical to their business performance. We’ve spent over 30 years earning this trust, and today 1,900 EXFO employees in over 25 countries work side by side with our customers in the lab, field, data center and beyond.

 

EXFO-C

 

For more information

 

Vance Oliver

Director, Investor Relations

(418) 683-0913, Ext. 23733

Exhibit (b)(i)

 

 

 

Ladies and Gentlemen:

 

You have advised us that 11172239 Canada Inc. (you or the Borrower) intends to acquire 100% of the issued and outstanding subordinate voting shares of EXFO Inc. (the Target) other than Excluded Shares (as defined in the Arrangement Agreement (as defined herein)) by way of a court-approved plan of arrangement pursuant to section 192 of the Canada Business Corporations Act described in the Arrangement Agreement (the Plan of Arrangement), the whole pursuant to the Transaction (as defined herein). Unless otherwise defined herein, capitalized terms used herein shall have the meanings ascribed thereto in the summary of terms and conditions attached hereto as Exhibit A (the Term Sheet).

 

 

We are pleased to inform you that National Bank of Canada (NBC) hereby commits to provide an aggregate principal amount of US$125,000,000 of the credit facilities to be made available to the Borrower (collectively, the Credit Facilities), consisting of a revolving facility in a principal amount of US$50,000,000 and a term loan in a principal amount of US$75,000,000 and, in each case, on the terms described in this letter and in the Term Sheet (together with this letter, the Commitment Letter).

 

It is hereby agreed that NBC will act as the Administrative Agent of the lending syndicate for the Credit Facilities and National Bank Financial Markets will act as the Lead Arranger and Sole Bookrunner (the Lead Arranger), it being understood that, as part of the syndication process, NBC may, in its discretion, offer titles to any potential Lender as provided under the section below entitled “Syndication”.

 

Notwithstanding anything to the contrary contained in this Commitment Letter and the fee letter of even date herewith (the Fee Letter), but without limiting your obligations to assist with syndication efforts as and to the extent set forth herein, it is understood and agreed that none of the commencement nor completion of the syndication of the Credit Facilities or the receipt of any commitments in connection therewith shall constitute a condition precedent to the availability or initial funding of the Credit Facilities on the Closing Date or at any time thereafter and that neither the commitments hereunder nor the funding of the Credit Facilities on the Closing Date are subject to syndication of the Credit Facilities.

 

 

NBC’s commitments and agreements are subject only to (i) the preparation, execution and delivery by the Borrower and the Guarantors of a definitive Credit Agreement and other related definitive documents (the Finance Documents) on the terms set forth in the Term Sheet and in a form such that they do not impair the availability of the Credit Facilities on the Closing Date if the conditions set forth under “Conditions Precedent to Initial Borrowing” in the Term Sheet are satisfied (or expressly waived by the Administrative Agent) and (ii) the conditions set forth under in this Section 2. Notwithstanding anything in this Commitment Letter, the Fee Letter, the Finance Documents or any other letter agreement or other undertaking concerning the financing of the transactions contemplated hereby to the contrary, the only conditions to availability of the Credit Facilities on the date of the consummation of the Plan of Arrangement and the other elements of the Transaction (the Closing Date) are set forth in this Section 2, it being understood that there are no conditions (implied or otherwise) to the commitments hereunder (including compliance with the terms of this Commitment Letter, the Fee Letter, the Finance Documents or otherwise) other than this Certain Funds Provision (and upon satisfaction or waiver of the Certain Funds Provision, the funding duly requested by the Borrower under the Credit Facilities on the Closing Date shall occur). Notwithstanding anything in this Commitment Letter to the contrary, the only representations the accuracy of which will be a condition to the availability of the Credit Facilities on the Closing Date will be (i) the representations made by the Target in the Arrangement Agreement as are material to the interests of the Lenders (but only to the extent that the Borrower has the right to terminate its obligations to consummate the Plan of Arrangement (or otherwise does not have an obligation to close) under the Arrangement Agreement as a result of a failure of such representations in the Arrangement Agreement to be accurate) (the Acquisition Transaction Representations) and (ii) the Specified Representations (as defined below). As used herein, Specified Representations means representations with respect to the Borrower made by the Borrower in the Credit Agreement relating to incorporation; organizational power and authority to enter into the applicable Finance Documents; due execution, delivery and enforceability of the applicable Finance Documents; no conflicts of the applicable Finance Documents with (i) charter documents or (ii) laws, except to the extent such conflict would not reasonably be expected to have a “material adverse effect” on the Borrower and its subsidiaries (or the Target and its subsidiaries, as the case may be), taken as a whole; creation, validity and perfection of security interests in the collateral of the Borrower (subject to permitted liens and the other provisions set forth in this paragraph and the Term Sheet); and use of proceeds not conflicting with sanctions laws, anti-terrorism laws, and anti-bribery/anti-corruption laws. This paragraph, and the provisions herein, shall be referred to as the Certain Funds Provision.

 

 

The commitments and obligations of NBC set forth in this Commitment Letter will terminate on the earlier of (i) October 31, 2021 (the Availability Expiration Date), and (ii) the termination of the Arrangement Agreement in accordance with the terms thereof.

 

You may also terminate our commitments herein at any time by written notice.

 

Pursuant to the Fee Letter, certain of the fees contemplated therein might become payable upon any such termination and your obligation to pay certain other fees survives any such termination.

 

 

The Lead Arranger reserves the right and intends, prior to or after the execution of the Finance Documents, to syndicate the Credit Facilities to one or more financial institutions (together with NBC, the Lenders).

 

The Lead Arranger, in consultation with you, will manage all aspects of the syndication, decisions as to the selection of potential Lenders to be approached and when they will be approached, when their commitments will be accepted and which Lenders will participate and the final allocations of the commitments among the Lenders, the whole in accordance with a syndication plan agreed upon by the Borrower and the Lead Arranger.

 

The Lead Arranger will perform all functions and exercise all authority as customarily performed and exercised in such capacities, including selecting counsel for the Lenders and negotiating the Finance Documents.  The Lead Arranger will make all decisions to award titles (such as agent, bookrunner, arranger and co-agents) to other Lenders and the awarding of such titles shall not entail for such other Lenders any role with respect to the matters referred to in this paragraph. You agree that no additional agents, co-agents or arrangers will be appointed or other titles conferred without the consent of the Lead Arranger. You agree that NBC will in all cases retain “top left” placement on all marketing materials relating to the Credit Facilities. You agree that no Lender will receive compensation outside the terms contained herein or in the Fee Letter in order to obtain its commitment to participate in the Credit Facility and the Lead Arranger will decide (in consultation with you) what portion, if any, of the fees contemplated herein or in the Fee Letter will be offered to potential Lenders.

 

You understand that we intend to commence the syndication of the Credit Facilities promptly. The syndication efforts will be accomplished by a variety of means, including direct contact during the syndication between you and your senior management, your advisors and affiliates, on the one hand, and the proposed Lenders, on the other hand, and virtual meetings with prospective Lenders at at reasonable times mutually agreed upon.  You agree to cooperate with the Lead Arranger (and cause your advisors to assist us), and you agree to use commercially reasonable efforts to cause the Target to cooperate with the Lead Arranger (but in all instances to the extent practical and appropriate and consistent with the Arrangement Agreement and applicable law), in connection with (i) the preparation of customary information packages reasonably requested by us to successfully complete the syndication, including information with respect to the Borrower, the Target and its business, and financial projections (including updated projections) of the Borrower and the Target after giving effect to the Transaction, (ii) the preparation of a confidential information memorandum and other marketing materials (the contents of which you shall be solely responsible for) to be used in connection therewith, (iii) participation (together with, to the extent practical and appropriate and consistent with the Arrangement Agreement and applicable law, senior management of the Target) in virtual presentations to prospective Lenders at reasonable times mutually agreed upon, and (iv) using your commercially reasonable efforts with a view to the syndication plan and syndication efforts benefiting materially from your existing lending and investment banking relationships.

 

To ensure an orderly and effective syndication of the Credit Facilities, you agree that, during the period from the date hereof until the date of execution of the Credit Agreement, you will not, and you will cause your subsidiaries not to, syndicate or issue, attempt to syndicate or issue, announce or authorize the announcement of the syndication or issuance of, or engage in discussions concerning the syndication or issuance of, any debt instrument, other than the IQ Debt, without the prior written consent of the Lead Arranger.

 

 

Subject to the terms and conditions hereof and of the Fee Letter, you agree to pay the fees contemplated in the Fee Letter.

 

 

You agree to indemnify and hold harmless NBC, the Administrative Agent, the Lead Arranger, the Lenders and each of their respective affiliates and each of their respective officers, directors, employees, agents, advisors and representatives (each, an Indemnified Party) from and against any and all claims, damages, losses (other than lost profits), liabilities and expenses (including, without limitation, reasonable and documented out-of-pocket fees and disbursements of counsel) that may be incurred by or asserted or awarded against any Indemnified Party, in each case arising out of or in connection with or relating to any investigation, litigation or proceeding or the preparation of any defense with respect thereto arising out of or in connection with or relating to the Credit Facilities, this Commitment Letter, the Finance Documents, the Transaction or the transactions contemplated hereby or thereby, or any use made or proposed to be made with the proceeds of the Credit Facilities, whether or not such investigation, litigation or proceeding is brought by you, Target, any of your or Target’s shareholders or creditors, an Indemnified Party or any other person, or an Indemnified Party is otherwise a party thereto and whether or not the transactions contemplated hereby are consummated, except, that the foregoing indemnity will not, as to any Indemnified Party, apply to claims, damages, liabilities, expenses or other losses (i) to the extent that they have resulted from the intentional or gross fault or bad faith of an Indemnified Party (as determined in a final, non-appealable judgment by a court of competent jurisdiction), (ii) arising from a material breach of the obligations of an Indemnified Party under this Commitment Letter or the Finance Documents or (iii) arising out of, or in connection with, any proceeding that does not involve an act or omission by the Borrower and that is brought by an Indemnified Person against any other Indemnified Person. The foregoing provisions in this paragraph shall be superseded in each case, to the extent covered thereby, by the applicable provisions contained in the Finance Documents upon execution thereof and thereafter shall have no further force and effect. In addition, such indemnity shall not, as to any Indemnified Party, be available with respect to any settlements effected without the Borrower’s prior written consent (which consent shall not be unreasonably withheld or delayed), but if settled with your consent, you agree to indemnify and hold harmless each Indemnified Party in the manner set forth above (for the avoidance of doubt, it being understood that if there is a final judgment in any such proceeding, the indemnity set forth above shall apply (subject to the exceptions thereto set forth above)).

 

You agree that no Indemnified Party shall have any liability (whether direct or indirect, in contract, civil liability, tort or otherwise) to you, any of your shareholders or creditors for or in connection with the transactions contemplated hereby, except to the extent such liability is found in a final non-appealable judgment by a court of competent jurisdiction to have directly resulted from (i) an Indemnified Party's intentional or gross fault or bad faith or (ii) the material breach by an Indemnified Party of its obligations under this Commitment Letter or the Finance Documents.

 

In no event, however, shall any person be responsible or liable hereunder for any special, indirect, consequential or punitive damages (including, without limitation, any loss of profit, business or anticipated savings).

 

 

In further consideration of the undertakings of NBC, you hereby agree to pay, or reimburse NBC on the date of execution of the Finance Documents, if it occurs, or on the Availability Expiration Date, and thereafter from time to time, upon presentation of reasonable supporting documentation, all reasonable out-of-pocket expenses (including NBC’s syndication expenses) as well as reasonable fees, disbursements and other charges of legal counsel or other professional appointed by NBC, in each case incurred in connection with the preparation of a quality of earnings report, the Credit Facilities, the preparation and negotiation of this Commitment Letter, the Fee Letter, the Finance Documents or any litigation or enforcement relating thereto. For greater certainty, you acknowledge and agree that your obligations under this paragraph are enforceable and are not in any way diminished whether or not the Closing Date occurs.

 

 

This Commitment Letter and the Fee Letter, the contents thereof and the roles and activities of NBC and of its respective affiliates pursuant hereto or thereto, are confidential and shall not be disclosed by or on behalf of you or any of your affiliates to any person without the prior written consent of NBC, except that you may disclose this Commitment Letter and the Fee Letter to your officers, directors, employees, advisors and auditors, to Target and its officers, directors, employees, advisors and auditors, and then only in connection with the transactions contemplated hereby and on a confidential basis.

 

You may also disclose this Commitment Letter and the Fee Letter as you are required by applicable law or regulation (including securities regulations and stock exchange rules) or compulsory legal process; provided, however, that if disclosure is required by compulsory legal process, you agree to give NBC prompt notice thereof to the extent not prohibited by applicable law, and that any disclosure made pursuant to public filings shall be subject to the prior review of NBC (not to be unreasonably withheld or delayed).

 

NBC agrees that it will treat as confidential all information provided to it by or on behalf of the Borrower, the Target or any of their respective subsidiaries or affiliates, and shall not disclose such information to any person or circulate or refer publicly to such information without the Borrower’s prior written consent; provided, however, that nothing herein will prevent NBC from disclosing any such information (a) pursuant to the order of any court or administrative agency, or otherwise as required by applicable law or compulsory legal process (in which case such Commitment Party agrees to inform you promptly thereof to the extent practicable and not prohibited by applicable law), (b) upon the request or demand of any regulatory authority purporting to have jurisdiction over NBC or any of its affiliates, (c) to NBC’s affiliates and their respective officers, directors, partners, members, employees, legal counsel, independent auditors and other experts or agents who need to know such information and on a confidential basis and who have agreed to treat such information confidentially in accordance with the terms hereof (it being understood that NBC shall be responsible for any breach by any such person (other than legal counsel, auditors and other experts or agents, in each case, operating under rules of professional responsibility or conduct) of the confidentiality provisions hereof applicable to NBC), (d) to potential and prospective Lenders, in each case, who have agreed to keep such information confidential on terms not less favorable than the provisions hereof in accordance with the standard syndication processes of the Lead Arranger or customary market standards for the dissemination of such type of information, (e) for purposes of establishing a “due diligence” defense or (f) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Commitment Letter, the Fee Letter or the transactions contemplated hereby or thereby or enforcement hereof or thereof. NBC’s obligations under this provision shall remain in effect until the earlier of (x) two years after the date hereof and (y) the execution and delivery of the applicable Finance Documents by the parties thereto, at which time any confidentiality undertaking therein shall supersede the provisions in this paragraph.

 

You agree that you will permit NBC to review and approve any reference to it or any of its respective affiliates in connection with the Credit Facilities or the transactions contemplated hereby or thereby contained in any press release or similar public disclosure prior to public release.  You agree that NBC and its respective affiliates may share information concerning you and your subsidiaries and affiliates, among themselves (including their officers, directors, employees and advisors) and with potential Lenders to the extent reasonably necessary in connection with the Credit Facilities and the proposed syndication thereof.  You also agree that, subject to the closing of the Credit Facilities, NBC may publicize the Credit Facilities and its roles, including, without limitation, through reporting to the Loan Pricing Corporation, Bloomberg and other similar agencies, the insertion of standard advertisements (“tombstones”) in various financial publications and any other forms of advertising.

 

 

You represent and warrant that (i) all written information (other than financial projections, budgets and forecasts, information of a general economic or industry nature, and independent third-party generated industry information) (the Information), taken as a whole, provided by you or any of your representatives on your behalf to NBC in connection with the Credit Facilities, when taken together with all reports, statements, schedules and other information included in filings made by the Target with the Canadian Securities Administrators within the three years prior to the date hereof, taken as a whole, is and will be when furnished true, accurate and complete in all material respects and does not and will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein, when taken as a whole, not misleading in light of the circumstances under which such statements were or are made (in each case after giving effect to all supplements and updates provided thereto) and (ii) all financial projections, budgets and forecasts (collectively, the Projections), that have been or will be prepared by you or on your behalf and made available to NBC by you or any of your representatives in connection with the Credit Facilities have been or will be prepared in good faith based upon assumptions believed by the preparer thereof to be reasonable at the time they are prepared, it being understood and agreed that projections and other forward-looking information are as to future events and are not to be viewed as facts, are subject to significant uncertainties and contingencies, many of which are out of the Borrower’s control, that no assurance can be given that any particular projections will be realized and that actual results during the period or periods covered by such projections may differ significantly from the projected results and such differences may be material.

 

You agree that the Projections are an important consideration in the credit analysis conducted by NBC and you agree to supplement the information and Projections provided under or in connection hereunder or in connection herewith from time to time until the Finance Documents become effective to correct any misleading statement immediately when you become aware of such misleading statement.

 

In issuing this Commitment Letter, NBC is relying on the accuracy of the information furnished to it by or on behalf of yourselves and your affiliates without independent verification thereof.

 

Notwithstanding the foregoing, it is understood that NBC’s commitments hereunder are not subject to or conditioned upon the accuracy of the representations or compliance with the covenants set forth in this Section 9, and notwithstanding anything to the contrary contained in this Commitment Letter or the Fee Letter, the accuracy of such representations or the compliance with such covenants shall not constitute a condition to the availability of the Credit Facilities on the Closing Date or at any time thereafter.

 

 

The agreements of NBC hereunder and of any Lender that issues a commitment to provide financing under the Credit Facilities are made solely for your benefit and your subsidiaries’ benefit, and may not be relied upon or enforced by any other person.  Please note that those matters that are not covered herein or in the attached Term Sheet are subject to mutual agreement of the parties.  The terms and conditions of this Commitment Letter may be modified only by agreement in writing signed by the parties.

 

You acknowledge that NBC or one or more of its respective subsidiaries or affiliates may be providing financing or other services to parties whose interests may conflict with yours.  Be assured, however, that consistent with the longstanding policies of NBC to hold in confidence the affairs of its respective customers, neither NBC nor any of its respective subsidiaries or affiliates, will furnish confidential information obtained with respect to you or your affiliates to any of its other customers.  By the same token, neither of NBC nor any of its respective subsidiaries or affiliates, will make available to you or your affiliates confidential information that it obtained or may obtain with respect to any other customer.

 

 

This Commitment Letter shall be governed by, and construed in accordance with, the laws of the Province of Quebec including the federal laws of Canada applicable therein (but excluding choice of law rules). This Commitment Letter and the Fee Letter set forth the entire agreement between the parties with respect to the matters addressed herein and therein and supersede all prior communications, written or oral, with respect thereto.

 

This Commitment Letter may be executed in any number of counterparts, each of which, when so executed, shall be deemed to be an original and all of which, taken together, shall constitute one and the same Commitment Letter.  Delivery of an executed counterpart of this Commitment Letter by telecopier or electronic mail shall be as effective as delivery of a manually executed counterpart of this Commitment Letter. Delivery of an executed counterpart of this Commitment Letter by telecopier or electronic mail shall be as effective as delivery of a manually executed counterpart of this Commitment Letter. The words “execution,” “execute”, “signed,” “signature,” and words of like import in or related to any document to be signed in connection with this Commitment Letter and the transactions contemplated hereby (including without limitation, amendments, waivers and consents) shall be deemed to include electronic signatures, or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law. For the avoidance of doubt, the foregoing also applies to any amendment, extension or renewal of this Commitment Letter.

 

For purposes of this Commitment Letter and the Fee Letter, National Bank of Canada is acting for itself and for National Bank Financial Inc. National Bank Financial Markets is a trademark of National Bank Financial Inc.

 

Your obligations under the paragraphs captioned "Fees", "Costs and Expenses", "Indemnification" and "Confidentiality" shall survive the expiration or termination of this Commitment Letter.

 

The parties hereto confirm that it is their wish that this letter and all documents relating thereto, including notices, be drawn up in the English language. Les parties aux présentes confirment leur volonté que cette lettre et tout document, incluant tout avis, s’y rapportant soient rédigés en langue anglaise.

 

Please indicate your acceptance of the provisions hereof by signing the enclosed duplicate copy of this Commitment Letter and returning same together with the Fee Letter to Vincent Guimond (email: vincentx.guimond@bnc.ca) and Gabriel Lachance-Dubreuil (email: gabriel.lachancedubreuil@bnc.ca), the whole at or before Noon, Montreal time, on June 7, 2021, the time at which the commitments of NBC set forth above (if not accepted prior thereto) will expire.

 

[Signature page follows]

ACCEPTED AND AGREED, on this 4^th day of June, 2021.

 

 

EXHIBIT A

 

Reference is made to the credit agreement, dated as of December 21, 2017, among Exfo Inc., as borrower, National Bank of Canada, as administrative agent, and the other lenders party thereto from time to time, as amended as of November 29, 2018, November 27, 2019 and May 29, 2020 (the Existing Credit Agreement). Unless otherwise defined herein, capitalized terms used herein shall have the meanings ascribed thereto in the Existing Credit Agreement.

 

The intent of the Borrower and National Bank of Canada is that the Credit Facilities (as defined below) be documented through a credit agreement to be entered into (the Credit Agreement), and such Credit Agreement and all other financing documents accessory thereto (including the guarantees and the security) be based substantially on the terms of the Existing Credit Agreement and the documentation accessory thereto with such modifications and amendments necessary to give effect to the provisions hereof (the Documentation Principles). The Finance Documents (as defined below) shall contain only those payments, conditions to borrowing, mandatory prepayments, representations and warranties, covenants and events of default expressly set forth in this Exhibit A, with standards, qualifications, thresholds, exceptions, “baskets” and grace and cure periods consistent with the Documentation Principles.

 

4.	CREDIT PARTIES	The Borrower and all of its Subsidiaries (collectively, the Credit Parties and each a Credit Party).
5.	LEAD ARRANGER	National Bank Financial Markets (NBF)
6.	SOLE BOOKRUNNER	NBF
7.	ADMINISTRATIVE AGENT	National Bank of Canada (NBC) will act as administrative agent for the Lenders (in such capacity, the Administrative Agent).
8.	CREDIT FACILITIES	•       US$50,000,000 senior secured revolving facility (the Revolving Facility). •       US$75,000,000 senior secured term loan facility (the Term Loan and collectively with the Revolving Facility, the Credit Facilities) A US$5,000,000 swingline facility will be made available by NBC as part of the Revolving Facility (and not in addition thereto).
9.	ACCORDION FEATURE	The Borrower shall have the option to request an increase in the Revolving Facility by an amount not exceeding US$25,000,000.  Each Lender retains the absolute discretion to consent or not to increase its commitment under the Revolving Facility.
10.	LENDERS	NBC and other financial institutions reasonably acceptable to the Lead Arranger, in consultation with Borrower (collectively, the Lenders, and individually, a Lender).
11.	PURPOSE	All advances under the Revolving Facility shall be used by the Borrower to finance the general corporate purposes of the Borrower and the other Credit Parties, including permitted acquisitions, permitted distributions, capital expenditures and investments, but shall not be used to finance the Transaction and the related fees and expenses. The proceeds of the advance of the Term Loan shall be used exclusively to finance the Transaction and the related fees and expenses, on the Closing Date.

12.	CLOSING DATE	Refers to the date of the consummation of the Plan of Arrangement and the other elements of the Transaction, with the initial funding under the Credit Facilities to be effected on the Closing Date (or immediately prior and subject thereto).
13.	MATURITY DATE	Refers to the fifth (5th) anniversary of the Closing Date, subject to any extension of such date.
14.	ANNUAL EXTENSION	Annually, the Borrower shall have the option to request an extension of the Maturity Date of either or both of the Credit Facilities by one (1) year by delivering to the Administrative Agent an extension request.  Each such extension request must be delivered concurrently or within thirty (30) days of the delivery of the annual financial information and must confirm that the maturity date of the IQ Debt is being also extended.
		No Lender is required to consent to any such extension request and the Maturity Date of each of the Credit Facilities can only be extended if Lenders representing at least 75% of the commitments under the relevant Credit Facility consent. The Credit Agreement will contain customary provisions for the replacement of non-extending Lenders where the Majority Lenders (as defined below) have consented to the extension of a Maturity Date.
		Unless otherwise amended, during any extension of the Maturity Date of the Term Loan, the quarterly amortization of the Term Loan will continue at the same amount of 1.25% of the original principal amount of the Term Loan.
15.	AVAILABILITY PERIOD	The Revolving Facility is available during the period (the Revolving Period) from the Closing Date until the Maturity Date. The Term Loan is available for drawing by way of a single disbursement to be made on the Closing Date, subject to the satisfaction or waiver of the conditions precedent set forth below in Section 27 (Conditions Precedent to Initial Borrowing).
16.	REVOLVING AND NON- REVOLVING NATURE	The Revolving Facility shall be available on a revolving basis, such that, during the Revolving Period, any amount repaid may be re-borrowed, subject to the then available amount of the Revolving Facility. The Term Loan shall be available on a non-revolving basis, such that any amount repaid may not be reborrowed.
17.	AVAILABILITY	The Revolving Facility shall be available, at the Borrower’s option (i) in Canadian dollars, by way of prime rate loans, the issuance of banker's acceptances (BAs) or the issuance of letters of credit (LCs), (ii) in US dollars by way of US base rate loans, Libor loans or the issuance of LCs, (iii) in Euros by way of EuroLibor loans and LCs, (iv) in GBP by way of GBP Libor loans and the issuance of LCs.  For the purposes hereof, GBP means the lawful currency of the United Kingdom.  The Credit Agreement will provide for transition provisions from EuroLibor Loans and GBP Libor Loans.

Confidential information has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. Omitted portions are indicated in this document with redactions. Confidential treatment has been requested with respect to this omitted information.

Confidential information has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. Omitted portions are indicated in this document with redactions. Confidential treatment has been requested with respect to this omitted information.

 

 

 

 

 

APPENDIX B

 

 

The relevant margin and stand-by fees in connection with the Credit Facilities shall be determined as follows:

 

 

Where “R” means the Senior Debt to EBITDA Ratio.

 

For the purposes of the determinations required to be made under this Appendix, the Senior Debt to EBITDA Ratio shall be determined on the day (each, a Reset Date) which is three (3) Business Days after the Administrative Agent receives the compliance certificate and the relevant financial statements pursuant to the Credit Agreement, with respect to the fiscal quarter or year most recently ended or the acquisition certificate pursuant to the Credit Agreement.  Any adjustment to the relevant margin and the stand-by fee shall only take place on a Reset Date, except for outstanding BAs, in which case it will only apply on the rollover date.

 

If the Borrower fails to submit to the Administrative Agent the compliance certificate or acquisition certificate, as applicable, by the time required under the provisions of the Credit Agreement, then the relevant margin and the stand-by fee shall be, throughout the period from the date by which the compliance certificate or acquisition certificate should have been delivered until the date which is three (3) Business Days following the date on which the Administrative Agent receives such compliance certificate or acquisition certificate, the rate indicated on Level V in the matrix above.

 

For the purposes of the determinations required to be made under this Appendix, (i) for the period from the Closing Date until the first Reset Date thereafter which relates to a fiscal quarter or year ending after the Closing Date, the relevant margin and the stand-by fee shall be determined based on the pro forma calculation of the Senior Debt to EBITDA Ratio as determined in the compliance certificate delivered as part of the initial conditions precedent, and (ii) for any period during which an event of default has occurred and is continuing, the relevant margin and the stand-by fee shall be the rate determined at Level V of the matrix above plus [Redacted - commercially sensitive information] bps for the relevant margin and plus [Redacted - commercially sensitive information] bps for the stand-by fee.

 

Benchmark rates, such as Libor and CDOR, will be subject to a floor of [Redacted - commercially sensitive information]%.

 

¹The stand-by fee is calculated on the undrawn portion of the Revolving Facility.

² In connection with letters of credit, an additional LC fronting fee of 0.25% is payable to the LC Issuing Lender for its own account and exclusive benefit. Additional administrative fees may be payable in connection with the issuance, renewal, amendment or cancelling of any LC in accordance with the fee schedule of the LC Issuing Lender at the relevant time.

Exhibit (b)(ii)

Commitment Letter – Page 1

Subordinated Debt of US$60,000,000

Convertible Debt of US$12,500,000

Confidential information has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. Omitted portions are indicated in this document with redactions. Confidential treatment has been requested with respect to this omitted information.

 

 

Dear Ladies and Gentlemen,

 

You have advised us that 11172239 Canada Inc. (you or the Borrower) intends to acquire 100% of the issued and outstanding subordinate voting shares of EXFO Inc. (the Target) other than Excluded Shares (as defined in the Arrangement Agreement (as defined herein)) by way of a court-approved plan of arrangement pursuant to section 192 of the Canada Business Corporations Act described in the Arrangement Agreement (the Plan of Arrangement), the whole pursuant to the Transaction (as defined herein). Unless otherwise defined herein, capitalized terms used herein shall have the meanings ascribed thereto in the summary of terms and conditions attached hereto as Exhibit A (the Term Sheet).

 

 

We are pleased to inform you that Investissement Québec (IQ) hereby commits to provide an aggregate principal amount of US$72,500,000 of the credit facilities to be made available to the Borrower (collectively, the Credit Facilities), consisting of a subordinated debt in a principal amount of US$60,000,000 and a convertible debt in a principal amount of US$12,500,000 and, in each case, on the terms described in this letter and in the Term Sheet (together with this letter, the Commitment Letter).

 

 

 

IQ’s commitments and agreements are subject only to (i) the preparation, execution and delivery by the Borrower and the Guarantors of a Definitive Credit Agreement, a Definitive Convertible Debenture and other related definitive documents (the Finance Documents) on the terms set forth in the Term Sheet and in a form such that they do not impair the availability of the Credit Facilities on the Closing Date if the conditions set forth under “Conditions Precedent to Initial Borrowing” and “Conditions Precedent” in the Term Sheet are satisfied (or expressly waived by IQ); and (ii) the conditions set forth under in this Section 2. Notwithstanding anything in this Commitment Letter, the Finance Documents and any other letter agreement or other undertaking concerning the financing of the transactions contemplated hereby to the contrary, the only conditions with respect to availability of the Credit Facilities on the date of the consummation of the Plan of Arrangement and the other elements of the Transaction (the Closing Date) are set forth in this Section 2, it being understood that there are no conditions (implied or otherwise) to the commitments hereunder (including compliance with the terms of this Commitment Letter, the Finance Documents or otherwise), other than this Certain Funds Provision (and upon satisfaction or waiver of the Certain Funds Provision, the funding duly requested by the Borrower under the Credit Facilities on the Closing Date shall occur). Notwithstanding anything in this Commitment Letter to the contrary, the only representations the accuracy of which will be a condition to the availability of the Credit Facilities on the Closing Date will be: (i) the representations made by the Target in the Arrangement Agreement as are material to the interests of IQ (but only to the extent that the Borrower has the right to terminate its obligations to consummate the Plan of Arrangement (or otherwise does not have an obligation to close) under the Arrangement Agreement as a result of a failure of such representations in the Arrangement Agreement to be accurate) (the Acquisition Transaction Representations); and (ii) the Specified Representations (as defined below). As used herein, Specified Representations means representations with respect to the Borrower made by the Borrower in the Credit Agreement and the Convertible Debenture relating to incorporation; the authority to enter into the applicable Finance Documents; due execution, delivery and enforceability of the applicable Finance Documents; no conflicts of the applicable Finance Documents with (i) charter documents or (ii) laws, except to the extent such conflict would not reasonably be expected to have a “material adverse effect” on the Borrower and its subsidiaries (or the Target and its subsidiaries, as the case may be), taken as a whole; in the absence of security interests, subject to permitted liens and the other provisions set forth in this paragraph and the Term Sheet; the use of proceeds not conflicting with Credit Facilities and sanctions laws, anti-terrorism laws and anti-corruption laws. This paragraph, and the provisions herein, shall be referred to as the Certain Funds Provision.

 

 

The commitments of IQ set forth in this Commitment Letter will terminate on the earlier of (i) October 31, 2021 (the Availability Expiration Date), and (ii) the termination of the Arrangement Agreement in accordance with the terms thereof.

 

You may also terminate our commitments herein at any time by written notice.

 

 

Unless the express consent from IQ is obtained, the Borrower and the shareholders thereof  agree, for a 120-day period upon acceptance hereof, to engage in no discussions, to lead no negotiation and not to enter into any agreement, with anyone other than IQ (with the exception of the Senior Credit Facilities) with respect to the financing of the Transaction in any form, through share purchases or otherwise. This non-standing binding provision will terminate upon completion of the 120-day period stipulated herein.

 

 

Confidential information has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. Omitted portions are indicated in this document with redactions. Confidential treatment has been requested with respect to this omitted information.

 

 

The Borrower acknowledges that the Lender is entitled to non-refundable commitment fees of US$[Redacted - commercially sensitive information] fully earned and payable on (subject to the occurrence of) the Closing Date, it being agreed, however, that if the Shareholders of the Target refuse the Transaction, only [Redacted - commercially sensitive information] ([Redacted - commercially sensitive information]) of such fees will be payable, from the announcement of the refusal of the privatization offer.

 

 

You agree to indemnify and hold harmless IQ and its officers, directors, employees, agents, advisors and representatives (each, an Indemnified Party) from and against any and all claims, damages, losses (other than lost profits), liabilities and expenses (including, without limitation, reasonable and documented out-of-pocket fees and disbursements of counsel) that may be incurred by any Indemnified Party, opposed to an Indemnified Party or awarded against any Indemnified Party, in each case arising out of or in connection with or relating to any investigation, litigation or proceeding or the preparation of any defense with respect thereto arising out of or in connection with or relating to the Credit Facilities, this Commitment Letter, the Finance Documents, the Transaction or the transactions contemplated hereby or in these other documents, or any use made or proposed to be made of the proceeds of the Credit Facilities, whether or not such investigation, litigation or proceeding is brought by you, the Target, any of your shareholders or creditors or any of the Target’s shareholders or creditors, an Indemnified Party or any other person, or an Indemnified Party is otherwise a party thereto and whether or not the transactions contemplated hereby are consummated. However, the foregoing indemnity will not, as to any Indemnified Party, apply to claims, damages, liabilities, expenses or other losses (i) to the extent that they have resulted from the intentional or gross fault or bad faith of an Indemnified Party (as determined in a final, non-appealable judgment by a court of competent jurisdiction), (ii) arising from a material breach of the obligations of an Indemnified Party under this Commitment Letter or the Finance Documents or (iii) arising out of, or in connection with, any proceeding that does not involve an act or omission by the Borrower and that is brought by an Indemnified Person against any other Indemnified Person. The foregoing provisions in this paragraph shall be superseded in each case, to the extent covered thereby, by the applicable provisions contained in the Finance Documents upon execution thereof and thereafter shall have no further force and effect. In addition, such indemnity shall not, as to any Indemnified Party, be available with respect to any settlements effected without the Borrower’s prior written consent (which consent shall not be unreasonably withheld or delayed), but if settled with your consent, you agree to indemnify and hold harmless each Indemnified Party in the manner set forth above (for the avoidance of doubt, it being understood that if there is a final judgment in any such proceeding, the indemnity set forth above shall apply (subject to the exceptions thereto set forth above)).

 

 

You agree that no Indemnified Party shall have any liability (whether direct or indirect, in contract, civil liability, tort or otherwise) to you, any of your shareholders or creditors for or in connection with the transactions contemplated hereby, except to the extent such liability is found in a final non-appealable judgment by a court of competent jurisdiction to have directly resulted from (i) an Indemnified Party's intentional or gross fault or bad faith or (ii) the material breach by an Indemnified Party of its obligations under this Commitment Letter or the Finance Documents.

 

In no event, however, shall any person be responsible or liable hereunder for any indirect or punitive damages (including, without limitation, any loss of profit, business or anticipated savings).

 

 

In further consideration of the undertakings of IQ, you hereby agree to pay, or reimburse IQ on the date of execution of the Finance Documents, if it occurs, or on the Availability Expiration Date, and thereafter from time to time, upon presentation of reasonable supporting documentation, all reasonable out-of-pocket expenses as well as reasonable fees, disbursements and other charges of legal counsel or other professional appointed by IQ, in each case incurred in connection with the preparation of a quality of earnings report, the Credit Facilities, the preparation and negotiation of this Commitment Letter, the Finance Documents or any litigation or enforcement relating thereto. For greater certainty, you agree that that your obligations under this paragraph are enforceable and are not in any way diminished whether or not the Closing Date occurs.

 

 

This Commitment Letter, the contents thereof and the roles and activities of IQ pursuant hereto or thereto, are confidential and shall not be disclosed by or on behalf of you or any of your affiliates to any person without the prior written consent of IQ. However, you may disclose this Commitment Letter to your officers, directors, employees, advisors and auditors, to the Target and its officers, directors, employees, advisors and auditors, and then only in connection with the transactions contemplated hereby and on a confidential basis.

 

You may also disclose this Commitment Letter as you are required by applicable law or regulation (including securities regulations and stock exchange rules) or compulsory legal process; provided, however, that if disclosure is required by compulsory legal process, you agree to give IQ prompt notice thereof to the extent not prohibited by applicable law, and that any disclosure made pursuant to public filings shall be subject to the prior review of IQ (not to be unreasonably withheld or delayed).

 

 

IQ agrees that it will treat as confidential all information provided to it by or on behalf of the Borrower, the Target or any of their respective subsidiaries or affiliates, and shall not disclose such information to any person or circulate or refer publicly to such information without the Borrower’s prior written consent; provided, however, that nothing herein will prevent IQ from disclosing any such information (a) pursuant to the order of any court or administrative agency, or otherwise as required by applicable law or compulsory legal process (in which case we will inform you promptly thereof to the extent practicable and not prohibited by applicable law), (b) upon the request of any regulatory authority purporting to have jurisdiction over IQ, (c) to the Government of Québec, to IQ’s affiliates, officers, directors, partners, members, employees, legal counsel, independent auditors and other experts or agents who need to know such information and on a confidential basis and who have agreed to treat such information confidentially in accordance with the terms hereof (it being understood that IQ shall be responsible for any breach by any such person (other than legal counsel, auditors and other experts or agents, in each case, operating under rules of professional responsibility or conduct) of the confidentiality provisions hereof applicable to IQ), (d) for purposes of establishing a “due diligence” defense or (e) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Commitment Letter or the transactions contemplated hereby or thereby or enforcement hereof or thereof. IQ’s obligations under this provision shall remain in effect until the earlier of: (x) two years after the date hereof and (y) the execution and delivery of the applicable Finance Documents by the parties thereto, at which time any confidentiality undertaking therein shall supersede the provisions in this paragraph.

 

You agree that you will permit IQ to review and approve any reference to it in connection with the Credit Facilities or the transactions contemplated hereby or thereby contained in any press release or similar public disclosure prior to public release. You also agree that, subject to the closing of the Credit Facilities, IQ may publicize the Credit Facilities and its roles, including, without limitation, through reporting to the Loan Pricing Corporation, Bloomberg and other similar agencies, the insertion of standard advertisements (“tombstones”) in various financial publications and any other forms of advertising.

 

 

You represent and warrant that: (i) all written information (other than financial projections, budgets and forecasts, information of a general economic or industry nature, and independent third-party generated industry information) (the Information), taken as a whole, provided by you or any of your representatives on your behalf to IQ in connection with the Credit Facilities, when taken together with all reports, statements, schedules and other information included in filings made by the Target with the Canadian Securities Administrators within the three years prior to the date hereof, taken as a whole, is and will be when provided true, accurate and complete in all material respects and does not and will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein, when taken as a whole, not misleading in light of the circumstances under which such statements were or are made (in each case after giving effect to all supplements and updates provided thereto) and (ii) all financial projections, budgets and forecasts (collectively, the Projections), that have been or will be prepared by you or on your behalf and made available to IQ by you or any of your representatives in connection with the Credit Facilities have been or will be prepared in good faith based upon assumptions believed by the preparer thereof to be reasonable at the time they are prepared, it being understood and agreed that projections and other forward-looking information are as to future events and are not to be viewed as facts, are subject to significant uncertainties and contingencies, many of which are out of the Borrower’s control, that no assurance can be given that any particular projections will be realized and that actual results during the period or periods covered by such projections may differ significantly from the projected results and such differences may be material.

 

 

You agree that the Projections are an important consideration in the credit analysis conducted by IQ and you agree to supplement the information and Projections provided under or in connection hereunder or in connection herewith from time to time until the Finance Documents become effective to correct any misleading statement immediately when you become aware of such misleading statement.

 

In issuing this Commitment Letter, IQ is relying on the accuracy of the Information furnished to it by or on behalf of yourselves and your affiliates without independent verification thereof.

 

Notwithstanding the foregoing, it is understood that IQ’s commitments hereunder are not subject to the accuracy of the representations or compliance with the covenants set forth in this Section 9, and notwithstanding anything to the contrary contained in this Commitment Letter, the accuracy of such representations or the compliance with such covenants shall not constitute a condition to the availability of the Credit Facilities on the Closing Date or at any time thereafter.

 

 

Subject to reasonable notice to the Borrower, IQ may, at any time, assign to any other entity controlled by the Government of Quebec, in whole or in part, its rights and obligations under this Commitment Letter. Except for the foregoing, the parties’ rights and obligations under this Commitment Letter may not be assigned, in whole or in part.

 

 

The agreements of IQ hereunder are made solely for your benefit and your subsidiaries’ benefit, and may not be relied upon or enforced by any other persons. Please note that those matters that are not covered herein or in the attached Term Sheets are subject to mutual agreement of the parties.  The terms and conditions of this Commitment Letter may be modified only by agreement in writing signed by the parties.

 

You acknowledge that IQ may be providing financing or other services to parties whose interests may conflict with yours.  Be assured, however, that consistent with the longstanding policies of IQ to hold in confidence the affairs of its respective customers, IQ will not provide confidential information obtained with respect to you or your affiliates to any of its other customers. By the same token, IQ will not make available to you or your affiliates confidential information that it obtained or may obtain with respect to any other customer.

 

 

This Commitment Letter shall be governed by, and construed in accordance with, the laws of the Province of Quebec including the federal laws of Canada applicable therein (but excluding its conflicts of laws provisions). This Commitment Letter sets forth the entire agreement between the parties with respect to the matters addressed herein and therein and supersede all prior communications, written or oral, with respect thereto.

 

This Commitment Letter may be executed in any number of counterparts, each of which, when so executed, shall be deemed to be an original and all of which, taken together, shall constitute one and the same Commitment Letter.  Delivery of an executed counterpart of this Commitment Letter by fax or electronic mail shall be as effective as delivery of a manually executed counterpart of this Commitment Letter.

 

 

The words “execution,” “execute”, “signed,” “signature,” and words of like import in or related to any document to be signed in connection with this Commitment Letter shall be deemed to include electronic signatures, or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, particularly Parts 2 and 3 of the Personal Information Protection and Electronic Documents Act (Canada) and the other similar federal and provincial laws based on the Uniform Electronic Commerce Act of the Uniform Law Conference of Canada or of its Uniform Electronic Evidence Act, as the case may be. For more accuracy, the foregoing also applies to any amendment, extension or renewal of this Commitment Letter.

 

Your obligations under the paragraphs captioned "Non-Standing Binding Provision", "Fees", "Costs and Expenses", "Indemnification" and "Confidentiality" shall survive the expiration or termination of this Commitment Letter.

 

Please indicate your acceptance of the provisions hereof by signing the enclosed duplicate copy of this Commitment Letter and returning it to Hugues Francoeur (email: Hugues.Francoeur@invest-quebec.com) and Francine Laurent (email: Francine.Laurent@invest-quebec.com), no later than 5:00 p.m., Montréal time, on June 11, 2021, the time at which the commitments of IQ set forth above (if not accepted prior thereto) will expire.

 

[Signature pages follow]

 

 

Sincerely,

 

INVESTISSEMENT QUÉBEC
Per:	/s/ Justin Savaria
	Name: Justin Savaria Title:   Senior Director, Financing
Per:	/s/ Bicha Ngo
	Name: Bicha Ngo Title:   Senior Executive Vice-President, Private Equity

 

 

	11172239 CANADA INC.
	Per :	/s/ Germain Lamonde
		Name:  Germain Lamonde Title:     President
	Per :
		Name: Title:

 

Term Sheet

 

See attached.

 

 

This Term Sheet refers to the credit agreement dated December 21, 2017 entered into between EXFO Inc., as borrower, National Bank of Canada, as administrative agent, and the other lenders party thereto from time to time, as amended as of November 29, 2018, November 27, 2019 and May 29, 2020 (the Existing Senior Credit Agreement). Unless otherwise defined herein, capitalized terms used herein shall have the meanings ascribed thereto in the Existing Senior Credit Agreement.

 

The intent of the Borrower and Investissement Québec is that the Subordinated Loan (as defined below) be documented through a credit agreement (the Credit Agreement).

 

3.	GUARANTORS		Subsidiaries of the Borrower that, in the aggregate and combined with the Borrower, represent at least 75% of the consolidated assets and EBITDA (as defined below) of the Borrower (such subsidiaries being collectively referred to herein as the Guarantors). Where at any time such threshold is not met, the Borrower shall cause additional subsidiaries to become Guarantors (the Borrower and the Guarantors are collectively referred to as the Material Credit Parties and each, a Material Credit Party). It is expected that, within five (5) Business Days following the Closing Date, the following subsidiaries of the Borrower will become Guarantors: EXFO America Inc., EXFO Service Assurance Inc. and Ontology-Partners UK.
4.	CREDIT PARTIES		The Borrower and all of its Subsidiaries (collectively, the Credit Parties and each a Credit Party).
5.	CREDIT FACILITY		Unsecured Subordinated Loan up to US$60,000,000 (the Subordinated Loan).
6.	LENDER		Investissement Québec (the Lender).
7.	PURPOSE		The Borrower must use the proceeds of the Subordinated Loan exclusively to finance the Transaction and the related fees and expenses, on the Closing Date.
8.	CLOSING DATE		Refers to the date of the consummation of the Plan of Arrangement and the other elements of the Transaction (la Closing Date), with the Subordinated Loan disbursement on the Closing Date (or immediately prior).
9.	MATURITY DATE		Refers to the date falling 66 months after the Closing Date, subject to any extension of such date (the Maturity Date).
10.	AVAILABILITY PERIOD		The Subordinated Loan is available by way of a single disbursement to be made on the Closing Date, subject to the satisfaction or waiver of the conditions precedent set forth below in section 19 (Conditions Precedent to Borrowing).
11.	NON-REVOLVING NATURE		The Subordinated Loan shall be available on a non-revolving basis, such that any amount repaid may not be reborrowed.

12.	AVAILABILITY AND INTEREST RATE		The Subordinated Loan is available in US dollars only. A first tranche of US$40,000,000 of the Subordinated Loan (Tranche 1) shall bear interest at the annual rate of 10.0%, payable quarterly, and a second tranche of US$20,000,000 of the Subordinated Loan (Tranche 2) shall bear interest at the annual rate of 11.5%, capitalized monthly. In the case of an event of default, including failure to repay at maturity, the annual interest rate applicable to Tranche 1 shall be increased by 3.00%, calculated daily.   Notwithstanding the foregoing, the Lender grants an interest standstill for the first 12 months for Tranche 1. Interest on Tranche 1 shall be capitalized monthly during this standstill period.
13.	VOLUNTARY PREPAYMENTS		Voluntary prepayment is authorized every year without penalty for 15% of the annual balance of the Subordinated Loan, non cumulative from one year to the other.   Full voluntary prepayment of the Subordinated Loan in an amount exceeding 15% a year shall be authorized, contingent on the payment of the following penalties according to the principal balance of the Subordinated Loan including any capitalized portion of the interest:

	Full prepayment penalty according to the year in which the payment was made
	Year	1	2	3	4	5 and more
	Penalty	[Redacted – commercially sensitive information]		[Redacted – commercially sensitive information]	[Redacted – commercially sensitive information]	[Redacted – commercially sensitive information]

Prepayment   The amount payable by the Borrower in cases of prepayment of the Subordinated Loan during the first two years following the Closing Date, is equal to the greater of the following two (2) amounts, calculated on the prepayment amount:   (a)   [Redacted - commercially sensitive information]% of the prepayment amount if the Subordinated Loan is repaid during the first year following the Closing Date and [Redacted - commercially sensitive information]% of the prepayment amount if the Subordinated Loan is repaid during the 2nd year following the Closing Date; and

---

Project Frontenac
Term Sheet - Page 4

Project Frontenac
Term Sheet - Page 5

 

6.    receipt by the Lender of all information with respect to the Material Credit Parties reasonably requested by them in writing at least five (5) Business Days prior to the disbursement under any applicable “know your client” and anti-money laundering rules and regulations; 7.     the Lender shall have received the documentation relating to the Senior Credit Facilities on the terms set forth herein; 8.     execution of a satisfactory intercreditor agreement among the National Bank of Canada, as Administrative Agent of the Senior Lenders, the Lender and the Borrower; 9.    the Lender shall have received a pay-out letter detailing the amounts outstanding under the Existing Senior Credit Agreement and confirming that, upon payment of such amounts on the Closing Date, all amounts outstanding under the Existing Senior Credit Agreement will have been repaid in full, the credit facilities therein provided will be cancelled and terminated and all guarantees and liens, if any, granted in connection therewith will be released, it being understood that National Bank of Canada is the administrative agent under the Existing Senior Credit Agreement and will be issuing such pay-out letter; 10.   the Lender is satisfied that the Senior Credit Facilities have been disbursed in full or will be disbursed concurrently as the disbursement under the Subordinated Loan; 11.   the Lender shall have received a draw request; 12.   the Lender shall have received a flow of funds with payment directions with respect to the use of the funds, which shall reflect (together with the Borrower’s other sources of funds for the Transaction) : (i)        the repayment of the existing debt in full under the Existing Senior Credit Agreement; (ii)      the payment to the “Depositary” (as defined in the Arrangement Agreement) of the “Consideration” (as therein defined) in accordance with the Arrangement Agreement; et (iii)     the payment of all fees then due and payable.

 

			13.  a compliance certificate (including pro forma calculation of the financial covenants as at the end of the most recent quarter for which the Target has released financial statements) showing, pro forma the Plan of Arrangement, the Transaction and the financing thereof, a Senior Debt to EBITDA Ratio of [Redacted - commercially sensitive information] or less, a Total Debt to EBITDA Ratio of [Redacted - commercially sensitive information] or less and a Fixed Charge Coverage Ratio equal to or more than [Redacted - commercially sensitive information]; 14.   the Acquisition Transaction Representations shall be true and correct in all material respects (without duplication of any materiality qualifiers contained therein) on the Closing Date (except in the case of any Acquisition Transaction Representation which expressly related to a given date or period, which representation shall be true and correct in all material respects (without duplication of any materiality qualifiers contained therein) as of the respective date or respective period, as the case may be); 15.  the Specified Representations shall be true and correct in all material respects (except for representations and warranties that are already qualified by materiality, which representations and warranties shall be true and correct after giving effect to such materiality qualifier) on the Closing Date or, in the case of any Specified Representation which expressly related to a given date or period, as of the respective date or respective period, as the case may be; provided, that to the extent that any Specified Representation is qualified by or subject to a “material adverse effect”, “material adverse change” or similar term or qualification, the definition thereof shall be the definition of “Material Adverse Effect” (as defined in the Arrangement Agreement); and 16.   no insolvency event shall have occurred with respect to the Borrower or the Target.
20.	REPRESENTATIONS AND WARRANTIES		Substantially similar to those set forth in the Existing Senior Credit Agreement.

 Confidential information has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. Omitted portions are indicated in this document with redactions. Confidential treatment has been requested with respect to this omitted information.

 

 

 

 

Schedule A (Part 2)

 

 

 

In some cases set out below, the applicable terms and conditions are substantially the same as set out in Part 1 of this Schedule A, relating to the US$60,000,000 subordinated debt, subject to specific adjustments relating to the convertible nature of the debt.

 

1.	BORROWER		The Borrower is as defined in Part 1 of this Schedule A, relating to the US$60,000,000 subordinated debt.
2.	TRANSACTION		The Transaction, Target, Arrangement and Arrangement Agreement are as defined in Part 1 of this Schedule A, relating to the US$60,000,000 subordinated debt.
3.	GUARANTORS		The guarantors are the same as stated in Part 1 of this Schedule A, relating to the US$60,000,000 subordinated debt.
4.	INSTRUMENT		Unsecured convertible debenture in a maximum amount of US$12,500,000 and a minimum amount of US$5,000,000 (the Convertible Debenture). The Convertible Debenture may be issued only to the extent that the subordinated debt is drawn for the maximum amount of US$60,000,000.
5.	LENDER		The Lender is as defined in Part 1 of this Schedule A, relating to the US$60,000,000 subordinated debt.
6.	PURPOSE		The Borrower must use the proceeds of the Convertible Debenture exclusively to finance the Transaction and the related fees and expenses, on the Closing Date.
7.	CLOSING DATE		The Closing Date is as defined in Part 1 of this Schedule A, relating to the US$60,000,000 subordinated debt.
8.	MATURITY DATE		The Maturity Date of the Convertible Debenture falls on the expiry of a period of 66 months after the Closing Date, subject to any extension of such date agreed to in writing by the Lender (in each case, the Maturity Date).

9.	INTEREST RATE		The Convertible Debenture shall bear interest at an annual rate of 8%, calculated daily and capitalized annually. The interest shall be payable in full on the Maturity Date (or when repayment of the principal amount of the debenture is required by the Lender following the occurrence of a default).  In case of an event of default, including failure to repay at maturity, the annual interest rate applicable shall be 15%, calculated daily.
10.	NO PREPAYMENT		No prepayment of the Convertible Debenture (principal or interest) is authorized (except by agreement).
11.	PAYMENT ON MATURITY		On the Maturity Date, the Borrower shall repay in full all amounts due and outstanding under the Convertible Debenture, including principal amount, interests and costs.
12.	MANDATORY REPAYMENTS		Notwithstanding the Maturity Date, the Lender may demand payment in full of all the amounts due and owing pursuant to the Convertible Debenture: (i) following an Event of Default; (ii) upon a Liquidity Event (as defined below).
13.	CONVERSION		The total principal amount and capitalized interest (and not less than this total) is convertible into voting participating common shares of the Borrower at the option of the Lender: (i) at any time as of the 30th month following the date of the Convertible Debenture; and (ii) at any time even before the 30th month following the date of the Convertible Debenture, in the event a Liquidity Event (as defined below) occurs with respect to the Borrower.  For the current year, the capitalized interest is pro-rated on the basis of the number of days elapsed up to the conversion date. A Liquidity Event means a change of control, an amalgamation, a merger, a combination agreement, a plan of arrangement, a public offering or a sale of a substantial  portion of the assets or the intellectual property of the Borrower (pursuant to a definition to be refined in the final Convertible Debenture text), through a single transaction or a series of consecutive transactions.

Confidential information has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. Omitted portions are indicated in this document with redactions. Confidential treatment has been requested with respect to this omitted information.

Confidential information has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. Omitted portions are indicated in this document with redactions. Confidential treatment has been requested with respect to this omitted information.

 

 

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