f8kex10xxvii_pioneer.htm


    Exhibit
10.27

    
 

    
      
        	
                 

              	
                    TRANSFORMATEURS

                    PIONEER

                    TRANSFORMERS

              	
                COMMITMENT LETTER

                July 9, 2009

              


      

COMMITMENT
LETTER

    


    
      	
              NEEDS

            	 	
               

            	 	
              SOURCES

            	 	
               

            	 
	Future
      acquisitions (building & equipment)	 	$	1,750,000	 	Term
      loan facility	 	$	1,750,000	 
	Foreign
      exchange contracts	 	$	500,000	 	Settlement
      risk facility	 	$	500,000	 
	
              Misc
      business expenses

            	 	$	50,000	 	
              Corporate
      MasterCard account

            	 	$	50,000	 
	 	 	$	10,000,000	 	 	 	$	10,000,000	 


    

     

     

    
      	
              DEFINED

              TERMS:

            	
              In
      this Commitment Letter, certain terms used with the upper-case are defined in Schedule
      I hereto. Please refer to such Schedule I for the meaning of such terms.
      All amounts herein are in Canadian dollars
      unless expressly stated otherwise.

            
	 	 
	
              BORROWER:

            	
              PIONEER
      TRANSFORMERS LTD. (“Pioneer”) and/or BERNARD GRANBY REALTY INC.
      (“Bernard”), henceforth collectively, the “Borrower”.

            
	 	 
	
              LENDER:

            	
              BANK
      OF MONTREAL (henceforth, “BMO” or the “Bank”)

            
	
               

               

            	 
	
              CREDIT

              FACILITIES:

            	
              FACILITY A:Revolving overdraft demand loan
      not exceeding CDN$ 7,700,000 or the Equivalent Amount in
    US$.

            
	 	 
	 
      	
              FACILITY B:Non-revolving demand loan(s) up
      to CDN$ 1,750,000.

            
	 	 
	 
      	
              FACILITY C:MasterCard credit cards up to
      CDN$ 50,000 or the Equivalent Amount in US$.

               

            
	 	 
	 
      	
              FACILITY D:Treasury risk management
      facility for foreign exchange forward contracts having an aggregate risk
      content not exceeding CND$ 500,000.

            
	 	 
	
              LOAN
      PURPOSES:

            	
              FACILITY A: To finance ongoing
      operations.

              FACILITY B: To finance future acquisitions
      & working capital injection. 

              FACILITY C: For business
      expenses.

              FACILITY D: To hedge foreign exchange
      risk.

            
	 	 
	
              AVAILABILITY:

            	
              The
      Facilities will be available for drawdown for the specified Loan Purposes
      upon satisfaction of Conditions Precedent. Availability will be by way
      of:

            


    

     

     

    BMO Bank of Montreal

    
      
        
        

      

      
        Page 1 of
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                    TRANSFORMATEURS

                    PIONEER

                    TRANSFORMERS

              	
                COMMITMENT LETTER

                July 9, 2009

              


      

       

      
        	 	FACILITY A (subject
      to monthly Margin Requirement):
	 	 	 	 
	 	 	
                ▪

                 

                ▪

              	
                By way of
      direct advances in CDN$ or USD$ through overdraft in the accounts of the
      Borrower set up for such purpose;

                 

                By way of issue of letters of credit (standby and documentary) and
      letters of guarantee for a maximum term of 365 days, subject to renewal
      and extension.

                 

              
	 	
                FACILITY B (available for drawdown for a period of 12 months):

                 

              
	 	 	
                ▪

                 

                ▪

              	
                By way of direct advances through demand note(s) at variable interest
      and or;

                 

                
                  By way of fixed rate term loans (1 to 5 year
terms).

                

              
	 	
                 

                FACIITY
      C:

                Available
      through use of MasterCard cards issued from time to time by the Bank, at
      its discretion, in accordance with the terms and conditions of the
      MasterCard Card Agreement.

                 
      

                FACILITY D:

                By way of foreign exchange forward contracts for a maximum term of
      365 days for each agreement;

                 

              


      

    

    
      	
              MARGIN

              REQUIREMENT:

            	
              Notwithstanding
      any other provision of this Commitment Letter, the amount at any time
      outstanding under Facility A
      (including the aggregate undrawn amount of all outstanding Letters of
      Credit and Letters of Guarantee) and of all other obligations of the
      Borrower in respect of any Letter of Credit and Letter of Guarantee shall
      not exceed the Borrowing Base. For the purposes hereof, “Borrowing Base”
      shall mean the total of:

               

              80%
      of the Bank’s estimated worth of eligible accounts receivable (excluding
      Excluded Receivables) of the Borrower owing by debtors located in Canada
      and in the United States of America (advances supported by US receivables
      shall be Limited to CDN$ 1,000,0(10); plus

               

              The
      lesser of (i) CDN$ 3500,000 and (ii) 50% of the Bank’s estimated worth of
      eligible inventory, (excluding Excluded Inventory) of the Borrower.
      Eligible inventory shall include work in
      progress supported by booked orders to a maximum of CDN$ 1,000,000;
      less

               

              any
      amount secured by a Lien ranking prior to the security for the benefit of
      the Bank with respect to accounts receivable and/or inventory of the
      Borrower, and all current and past due amounts owed to the various
      governments by the Borrower, including, without limitation, Federal and
      Provincial income taxes, deductions at source, G.S.T., P.S.T., Q.S.T. and
      any other amount that could be considered as prior claim or as a deemed
      trust or as a super priority in favour of the various governments or
      governmental authorities or the payment of which would rank prior to the
      payment of debts and liabilities of the Borrower or any other Obligor
      under or pursuant to the Facilities or the Loan Documents; less Excluded
      Receivables.

               

            


    

     

     

    BMO Bank of Montreal

    
      
        
        

      

      
        Page 2 of
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                    TRANSFORMATEURS

                    PIONEER

                    TRANSFORMERS

              	
                COMMITMENT LETTER

                July 9, 2009

              


      

       

    

    
      	 	
              For
      the purposes hereof, “Excluded Receivables” shall mean accounts receivable
      which the Bank does not, according to its usual practice, consider as an
      eligible receivable, including without limitation, accounts over which the
      Bank does not have a fast ranking Lien, accounts receivable owing by
      debtors located outside of Canada and the United States of America,
      accounts receivable subject to set-off or compensation, accounts
      receivable owing by an affiliate, a shareholder, a director, an officer or
      an employee of the Borrower, accounts receivable which the Bank in good
      faith determines to be not of good quality or collectible in the ordinary
      course of business, accounts receivable subject to undue credit risk,
      accounts in dispute and accounts receivable which remain unpaid for more
      than 90 days from the date of invoice.

               

              For
      the purposes hereof, “Excluded Inventory” shall mean inventory which the
      Bank, in accordance with its usual practice, does not consider as eligible
      inventory, including without limitation, inventory over which the Bank
      does not have a first ranking Lien, 30-day goods, inventory located
      outside the premises of the Borrower or outside of Canada, in transit or
      otherwise not in possession of the Borrower or the relevant Obligor, goods
      on consignment, spare parts and production supplies. Value of inventory
      shall be determined at the lesser of its cost and fair market
      value.

               
      

              FACILITY D:Outstanding foreign exchange
      forward contracts shall riot exceed a risk content of CND$
      500,000.

            
	 	 	 
	
              PROGRESS

              DRAWS:

            	
              Advances
      for Facility B will be available by way of multiple draws for the
      specified Loan Purposes upon satisfaction of Conditions Precedent and
      shall not exceed:

               

              65%
      of land & building (existing + expansion) based on market value as
      determined by a professional evaluation to be remitted to the Lender;
      plus

               

              50%
      of equipment based on market value as determined by a professional
      evaluation to be remitted to the Lender; plus

               

              75%
      of new equipment based on value of invoices before
  taxes.

            
	 	 	 
	
              MATURITY
      AND

              INSTALMENTS:

            	
               

            
	 	
              FACILITY
      A:Repayable on demand (revolving overdraft facility).

               

              FACILITY
      B:Interest only for a maximum of 12 months, after which advances will be
      reimbursed as follows:

               

            
	 	▪	Advances
      based on land & buildings: Amortization not to exceed 12 years with
      monthly capital payments plus interest, or fixed monthly payments
      including capital & interest.
	 	▪	Advances
      based on existing and new equipment:  Amortization not to exceed
      5 years with monthly capital payments plus interest, or fixed monthly
      payments including capital & interest.
	 	 	 
	 	
               

            


    

     

     

    BMO Bank of Montreal

    
      
        
        

      

      
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                  TRANSFORMATEURS

                  PIONEER

                  TRANSFORMERS

            	
              COMMITMENT LETTER

              July 9, 2009

            


    

     

    
      	 	
              FACILITY C:Balance payable in full,
      monthly.

               

            
	
              PREPAYMENTS:

            	
              Direct
      advances (including any overdraft) in CDN$ and in US$ bearing interest
      based on the CDN Prime Rate and the US Base Rate respectively may be
      prepaid at any time and from time to time without penalty, subject to any
      applicable of prior notice periods to be determined by the
      Bank.

               

              Advances
      at a fixed rate of interest may be prepaid at any time, subject to
      penalties and to any application of prior notice periods to be determined
      by the Bank.

               

              Any
      outstanding Letter of Credit or Letter of Guarantee may be cancelled upon
      receipt by the Bank of the original thereof (and any amendment thereto)
      and evidence satisfactory to the Bank that the beneficiary has consented
      to such cancellation.

            
	 	 
	
              INTEREST

              RATES:

            	
              FACILITY A:CND Prime Rate and/or US Base
      Rate plus 0.75%, payable monthly in arrears.

               

              FACILITY B:CND Prime Rate plus 1.00%,
      payable monthly in arrears. A fixed rate option is available as per rates
      at loan drawdown or at reservation date.

               

              FACILITY C:Subject to the interest rates
      and fees set from time to time in accordance with the MasterCard Card
      Agreement and related agreements.

            
	 	 
	
              FEES:

            	
              Overdraft
      Facility fee of CND$ 950 payable monthly and subject to annual
      review.

               

              A
      fixed monthly fee of CND$ 350 covering all Banking services, including
      electronic cash management services and wholesale lockbox services);
      Subject to annual review.

               

              The
      Borrower shall pay to the Bank a one time non-refundable Application Fee
      of CDN$ 10,000 equivalent to 10 bps of credit facilities. Such fee shall
      be payable at closing.

               

              AB
      legal and other direct out of pocket costs of the Bank incurred with
      respect to due diligence and preparation of loan documents, arrangement
      expenses and advertising shall be for the account of the Borrower. The
      Borrower agrees to guarantee payment of all such legal fees and other
      direct out of pocket costs upon and by virtue of acceptance hereof by the
      Borrower.

            


    

     

     

    BMO Bank of Montreal

    
      
        
        

      

      
        Page 4 of
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                  TRANSFORMATEURS

                  PIONEER

                  TRANSFORMERS

            	
              COMMITMENT LETTER

              July 9, 2009

            


    

     

    
      	
              SECURITY:

            	
              The following security to be provided by the Borrower shall, unless
      otherwise indicated, support all present and future indebtedness and
      liability of the Borrower to the Bank including without limitation
      indebtedness and liability under guarantees and cash management products.
      Security shall be registered on the Bank’s standard forms, supported by
      resolutions and solicitor’s opinion, all acceptable to the Bank:

               

              a)Revolving overdraft loan facility
      agreement (Facility A).

               

              b)Demand notes (Facility B).

               

              c)Fixed rate term loan agreement(s) when
      and if option is selected.

               

              d)First ranking deed on hypothec on all
      present and future movable and immovable property of the Borrower for the
      amount of CDN$ 10,000,000.

               

              e)Security pursuant to Section 427 of the
      Bank Act on all present and future inventory of the Borrower.

               

              f)First ranking collateral mortgage on the
      land & buildings belonging to the Borrower for the amount of CDN$
      10,000,000.

               

              g)Satisfactory letter of opinion from
      notary as to validity and enforceability of the security.

               

              h)Cross guarantees between Pioneer
      Transformers Ltd and Bernard Granby Realty Inc. with required resolutions
      and legal opinions.

               

              i)Bank to be named as loss payee on
      business and fire insurance. Certified copy of policy to be provided.
      Standard mortgage clause to be contained in the policy.

               

              j)Environmental evaluation by a recognized
      firm confirming satisfactory status of the property, and acceptable to the
      Bank.

               

              k)Required
      documentation for foreign exchange forward contracts.

               

              l)Bank’s
      standard application and indemnity agreement for letters of credit,
      letters of guarantee or documentary letter of credit.

               

              m)MasterCard
      Agreement and other related agreements for Facility C.

               

              n)Commercial
      Loan Insurance for principal shareholders & officers to be
      offered.

               

            


    

     

     

    BMO Bank of Montreal

    
      
        
        

      

      
        Page 5 of
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                  TRANSFORMATEURS

                  PIONEER

                  TRANSFORMERS

            	
              COMMITMENT LETTER

              July 9, 2009

            


    

     

    
      	
              CONDITIONS PRECEDENT

              TO DRAWDOWN:

            	Those customarily found in loan documentation for
      credit facility of this nature including, without limitation, the
      following:
	
               

            	 	
              a)Completion of all security documentation and all loan documentation
      in form and substance satisfactory to the Bank’s legal counsel;

               

              b)Receipt of all necessary material governmental, regulatory and
      other third party approvals and compliance with all laws to specifically
      include all appropriate environmental approvals and certificates, to the
      satisfaction of the Bank’s legal counsel;

               

              c)Receipt of professional evaluations for land, buildings, and
      equipment belonging to the Borrower, to the satisfaction of the Bank (for
      Facility B only);

               

              d)Accuracy of representations and warranties;

               

              e)Satisfactory legal opinions relating to all matters considered
      relevant by the Bank, including due authorization, execution, delivery and
      enforceability of the loan and security documentation by the
      Borrower;

               

              f)Release and mainlevée of all prior ranking Liens;

               

              g)Nothing shall have occurred which would have a Material Adverse
      Effect on the business, operations or properties of the Borrower, on the
      rights and remedies of the Lender, or on the ability of the Borrower to
      perform their obligations to the Lender;

               

              h)No default or event of default exists at the time of, or after
      giving effect to the closing and/or disbursement;

               

              i)Due diligence review satisfactory to the Bank including but not
      limited to review of the Borrower’s existing operations and financial
      position, review of contracts, review of historical financial
      information.

               

            
	
              REPRESENTATIONS

              &
      WARRANTIES:

            	
              Usual,
      including confirmation of corporate status and authority, non-violation of
      law or existing agreements, no material litigation, satisfactory insurance
      coverage, continued compliance with environmental regulations and other
      such representations and warranties customarily contained in loan
      agreements for similar financing.

               

            
	
              NEGATIVE

              COVENANTS:

            	
              Usual
      negative covenants for transactions of this nature including but not
      limited to the following and subject to exceptions and limitations to be
      agreed:

               

              · Amalgamate,
      merge or consolidate with any legal entity and cause its subsidiaries to
      wind up, liquidate or dissolve its affairs;

               

              · Change
      the nature of its core business;

               

              · Alter
      its capital structure in a manner that would be materially adverse to the
      Bank or undergo a change of control.

               

              · No
      investments and/or advances to affiliated or related companies without the
      Bank’s prior written consent.

               

            


    

     

     

    BMO Bank of Montreal

    
      
        
        

      

      
        Page 6 of
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                    TRANSFORMATEURS

                    PIONEER

                    TRANSFORMERS

              	
                COMMITMENT LETTER

                July 9, 2009

              


      

       

    

    
      	
              FINANCIAL

              COVENANTS:

            	
              The
      following covenants will be tested annually (based on consolidated
      financial statements of the Borrower):

               

              · Minimum
      Debt Service Coverage Ratio of 1.25

               

              · Minimum
      Current Ratio of 120

               

              · Maximum
      Total Debt to Tangible Net Worth Ratio of 3.00 for the fiscal 2009 and
      reduced to 230 starting in fiscal 2010 (to be tested
      quarterly.)

               

            
	
              REPORTING

              REQUIREMENTS:

            	The
      Borrower shall deliver to the Bank the following:
	 	
               

              a)From Pioneer Transformers Ltd.: Signed, aged lists of
      accounts receivable, accounts payable (including declaration of any deemed
      touts) and inventory are to be provided by the 20th day of each month.
      Inventory lists are to be provided on the Bank’s standard form.

               

              b)From Pioneer Transformers Ltd.: Quarterly in-house financial
      statements within 45 days of quarter end.

               

              c)Annual audited financial statements of the Borrower
      (non-consolidated + consolidated) within 120 days of fiscal year
end.

               

              d)Annual forecasts to be provided at time of annual review including
      income statement, balance sheet and cashflow.

               

              e)Other documents as the Bank may reasonably require from time to
      time.

               

            
	
              EVENTS
      OF

              DEFAULT:

            	
              Those
      customarily found in loan documentation for similar financing including
      but not limited to failure to pay principal and interest when due;
      representations and warranties materially incorrect; breach of covenants
      and security undertakings; Material Adverse Change; failure to comply with
      the terms of other financing agreements of the Borrower (with notice and
      cure periods as applicable); cross-default to material obligations of the
      Borrower, bankruptcy/insolvency of the Borrower, non-compliance with any
      environmental regulation imposed by any government or its agency, change
      of ownership - either directly or indirectly; merger with any other
      corporation or person.

               

            
	
              BANKING

              SERVICES:

               

            	
              The
      borrower agrees to maintain bank accounts only with the Bank of
      Montreal.

            
	
              GOVERNING

              LAW:

            	
              The
      laws of the Province of Québec and the laws of Canada applicable therein
      shall apply subject to the right of the Bank to subject any security to
      the laws of the jurisdiction which the Bank deems most
      appropriate.

               

            


    

     

     

    BMO Bank of Montreal

    
      
        
        

      

      
        Page 7 of
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                  TRANSFORMATEURS

                  PIONEER

                  TRANSFORMERS

            	
              COMMITMENT LETTER

              July 9, 2009

            


    

     

    
      	 	 
	
              LANGUAGE

              CLAUSE:

            	
              The
      parties hereby confirm their express wish that this Commitment Letter and
      all documents and agreements directly or indirectly related thereto,
      including notices, be drawn up in the English language. Notwithstanding
      such express wish, the parties agree that any of such documents,
      agreements and notices or any part thereof may be drawn up in the French
      language. Les parties reconnaissent leer volonté expresse que le present
      Sommaire des termes et conditions ainsi que tons les documents et
      conventions qui s’y rattachent directement ou indirectement, y compris les
      avis, soient rédigés en langue anglaise. Nonobstant telle volonté
      expresse, les parties conviennent que n importe quel desdits documents,
      conventions et avis ou toute panic de ceux-ci puissent etre rédigés en
      langue française.

               

            
	
              ACCEPTANCE:

            	
              This
      Commitment Letter is open for acceptance until close of business on August
      7, 2009 after which date. it will automatically become null and void
      unless accepted as provided for below or unless such delay has been
      extended in writing by the Bank. This Commitment Letter may be accepted by
      signing the attached copy in the space provided for herein and returning
      it to the Bank.

            


    

    


     

    BMO Bank of Montreal

    
      
        
        

      

      
        Page 8 of
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                  TRANSFORMATEURS

                  PIONEER

                  TRANSFORMERS

            	
              COMMITMENT LETTER

              July 9, 2009

            


    

     

     

    ACCEPTANCE

     

    We hereby
accept the foregoing terms and conditions.

     

    This
3 day
of    August  2009.

     

    


     

    PIONEER
TRANSFORMERS LTD

     

    By:  
/s/  Nathan J.
Mazurek            ,
president

    duly authorized

     

    By: 
 /s/  Nathan J.
Mazurek            ,
president

    duly authorized

     

     

     

     

     

    
BMO Bank of Montreal

    
      
        
        

      

      
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                  TRANSFORMATEURS

                  PIONEER

                  TRANSFORMERS

            	
              COMMITMENT LETTER

              July 9, 2009

            




     

    SCHEDULE
I

    


    DEFINITIONS

     

    “CDN$”
means lawful money of Canada.

     

    “Current
Ratio” means the ratio of current assets to• current liabilities at such time,
all as shown on the financial statements in accordance with GAAP.

     

    “Debt
Service Coverage Ratio” means total earnings before depreciation and interest
less unfinanced capital expenses divided by annual interest expenses, current
portion of long-term debt, dividends, purchase, redemption, defeasance,
retirement or other acquisition of any shares of any class of capital stock of
the Borrower.

     

    “Equivalent
Amount” means, on any date, the amount in CDN$ or US$, as the case may be, which
would be obtained on the conversion of an amount in US$ or any other currency to
CDN$ or an amount in CDN$ or any other currency into US$, respectively, at the
Bank of Canada noon spot rate for the purchase of US$ or such other currency
with CDN$ or for the purchase of CDN$ or such other currency with US$,
respectively, as quoted or published or otherwise made available by the Bank of
Canada on such date.

     

    “GAAP”
means generally accepted accounting principles in Canada in effect from time to
time, applied in a consistent manner from period to period.

     

    “Indebtedness”
means the indebtedness of any Obligor and includes, without duplication (in each
case, whether such obligation is with full or limited recourse):

     

     

    
      	a)	
              any
      obligation of such Obligor for borrowed money;

               

            
	b)	
              any
      obligation of such Obligor evidenced by a bond, debenture, note or other
      similar instrument;

               

            
	c)	
              any
      obligation of such Obligor to pay the deferred purchase price of property
      or services, except a trade account payable that arises in the ordinary
      course of business;

               

            
	d)	
              any
      obligation of such Obligor as lessee under any capital
      lease;

               

            
	e)	
              any
      obligation of such Obligor to reimburse any other person in respect of
      amounts drawn or drawable under any letter of credit or other guarantee
      or-under any bankers’ or trade acceptance issued or accepted by such other
      person, whether contingent or non-contingent;

               

            
	f)	all
      obligations of such Obligor to purchase, redeem, retire, decrease or
      otherwise make any payment in respect of any capital stock of or other
      ownership or profit interest in such Obligor or any other person, valued,
      in the case of redeemable preferred stock, at the greater of its voluntary
      liquidation reference plus accrued and unpaid
  dividends;


    

    
       

      BMO Bank of Montreal

      
        
        

      

      
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                  TRANSFORMATEURS

                  PIONEER

                  TRANSFORMERS

            	
              COMMITMENT LETTER

              July 9, 2009

            


    

     

    
      	g)	
              
                any obligation of such Obligor to purchase securities or other
      property that arises out of or in connection with the sale of the same or
      substantially similar securities or property;

              

            
	 	 
	h)	
              
                any Indebtedness of others secured by a Lien on any asset of such
      Obligor;

              

            
	 	 
	i)	
              any Indebtedness of others guaranteed by such Obligor,
and

            
	 	 
	j)	
              all obligations and liabilities of such Obligor in respect of
      “Specified Transactions” (as such term is defined in the 1992
      Multicurrency — Cross Border Master Agreement published by the
      International Swaps and Derivatives Association,
Inc.).

            


    

     

    “Lien”
means a mortgage, hypothec, legal hypothec, prior claim, pledge, lien, charge or
encumbrance, whether fixed or floating, on, or any Security Interest in any
property, whether immovable or real, movable or immovable, or mixed, tangible or
intangible or a pledge for hypothecation thereof or trust or presumed or deemed
mist or any other mechanisms of right benefiting the holder thereof or any
conditional sale agreement or other title retention agreement or equipment trust
relating thereto or any lease relating to property which would be required to be
accounted for as a capital lease on the balance sheet.

     

    “Loan
Documents” means, collectively, this Commitment Letter, the Credit Agreement,
the Security Documents and all other documents, instruments and agreements
executed and delivered by any Obligor in connection directly or indirectly with
this Commitment Letter, the Facilities or otherwise referred to or contemplated
under or by this Commitment Letter or any such documents, instruments or
agreements.

     

    “Material
Adverse Event” means a material adverse change in or effect on, either
individually or in the aggregate, the business, assets, liabilities, financial
positions or operating results of the Obligors taken as a whole or which
adversely affects or could reasonably be expected to adversely affect the
ability of any Obligor to perform any of its obligations under or pursuant to
the Facilities and this Commitment Letter or the other Loan Documents in
accordance with their respective terms or the validity or enforceability of any
of the Loan Documents.

     

    “Person”
means any individual, corporation, company, partnership, association, trust or
joint venture.

     

    “Prime Rate” means
the variable
annual rate of interest established by the Bank from time to time as the
reference rate of interest it will use at such time to determine interest rates
for loans in CDN$ to its Canadian commercial borrowers in Canada and designated
as its Prime
Rate.

     

    “Security
Documents” means the collective reference to all present and future documents,
agreements and instruments pursuant to which an Obligor grants a Security
Interest to or for the benefit of the Bank, alone or together with any other
person or persons, in any of its assets securing all or part of the obligations
of the Borrower under or pursuant to the Facilities and this Commitment Letter
or any other Loan Documents.

     

    “Security
Interest” means a hypothec, mortgage, pledge, fixed or floating charge,
assignment by way of security or any other security interest securing payment or
performance of an obligation.

     

    BMO Bank of Montreal


    
      
        
        

      

      
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                      TRANSFORMATEURS

                      PIONEER

                      TRANSFORMERS

                	
                  COMMITMENT LETTER

                  July 9, 2009

                


        

      

       

      “Subordinated
Debt” of a Person means indebtedness of such Person for borrowed money
(including principal and accrued interest), which is validly and effectively
subordinated and postponed in right of payment of principal, interest and
premium if any, to the payment in full of all amounts owing from time to lime
under or pursuant to any of the Facilities by way of an agreement in form and
substance satisfactory to the Lender and is unsecured on the property of such
Person, provided (a)
that such indebtedness is treated as subordinated debt in accordance with
GAAP, (b) without limiting the foregoing, the Lender shall be satisfied with the
covenants and default clauses in the agreement pursuant to which such
indebtedness is created, and (c) the terms of the instrument evidencing such
indebtedness or under which such indebtedness is outstanding reflect the
provisions of this definition to the satisfaction of the
Lender.

    

     

    “Tangible
Net Worth” of a Person means, as of any date, the sum of Shareholders’ Equity of
such Person and the Subordinated. Debt of such Person, less, without
duplication, any goodwill, organizational expenses, trademarks, trade names,
copyrights, patents, patent applications, licenses, deferred costs, deferred
charges, and any other assets that am properly classified as “intangible” less
amounts due by directors, officers and other Persons related to the Borrowers
and its Affiliates, all determined as of such date in accordance with GAAP and
to the satisfaction of BMO acting reasonably.

     

    “Total
Debt” of a Person shall mean the total amount of liabilities of such Person,
plus the amount of all cheques in circulation less deferred taxes and
Subordinated Debt of such Person.

     

    “Total
Debt to Tangible Net Worth Ratio” means the ratio of Total Debt to Tangible Net
Worth, in accordance with GAAP.

     

    “US Base
Rate” means the variable annual rate of interest established by the Bank from
time to time as being the reference rate of interest it will use at such time in
Canada to determine rates of interest on US$ commercial loans to Canadian
residents in Canada and designated as its US Base
Rate.

     

    “US$”-means
lawful money for the time being of the United States of America in same day
immediately available funds or, if such funds are not available, the form of
money of the United States of America which is customarily used in the
settlement of international banking transaction on that day.

     

    

      BMO Bank
of Montreal

    

    
      
        
        

      

      
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