QUARTER ENDED
SEPTEMBER 30, 2007:
(A)
NET WORTH. FOR EACH FISCAL QUARTER OF BORROWER, MAINTAIN NET WORTH
IN AN AMOUNT EQUAL TO NOT LESS THAN $300,000,000.
(B)
QUARTERLY NET INCOME. FOR EACH FISCAL QUARTER OF BORROWER, EARN
NET INCOME OF NOT LESS THAN $4,000,000.
(C)
ROLLING FOUR QUARTER INCOME. FOR THE MOST RECENTLY ENDED FISCAL
QUARTER OF BORROWER AND THE THREE PRECEDING FISCAL QUARTERS OF BORROWER, EARN
NET INCOME OF NOT LESS THAN $20,000,000.
(D)
MAXIMUM POST SHOCK TEST. CAUSE AT ALL TIMES THE RESULT OF THE FAIR
VALUE, AS SET FORTH IN THE BORROWER'S BALANCE SHEET MOST RECENTLY DELIVERED
PURSUANT TO SECTION 8.4 AND 8.5 HEREOF, OF BORROWER'S PORTFOLIO OF
MORTGAGE-BACKED SECURITIES MINUS ADJUSTED NET PORTFOLIO VALUE OF SUCH
MORTGAGE-BACKED SECURITIES TO BE LESS THAN TWENTY-FIVE PERCENT (25%) OF NET
WORTH AS SET FORTH IN SUCH BALANCE SHEET.
(E)
MAXIMUM INDEBTEDNESS TO TOTAL NET WORTH RATIO. MAINTAIN AS OF THE
END OF EACH FISCAL QUARTER OF BORROWER, A RATIO OF INDEBTEDNESS TO NET WORTH OF
NOT MORE THAN 9.0 TO 1.0.
5.5
EXECUTION OF SUPPLEMENTAL INSTRUMENTS. EXECUTE AND DELIVER TO
BRASCAN FROM TIME TO TIME, UPON DEMAND, AND SUCH OTHER INSTRUMENTS AS BRASCAN
MAY REASONABLY REQUEST, IN ORDER THAT THE FULL INTENT OF THIS AGREEMENT MAY BE
CARRIED INTO EFFECT.
5.6
PAYMENT OF INDEBTEDNESS. PAY, DISCHARGE OR OTHERWISE SATISFY AT OR
BEFORE MATURITY (SUBJECT, WHERE APPLICABLE, TO SPECIFIED GRACE PERIODS AND, IN
THE CASE OF THE TRADE PAYABLES, TO NORMAL PAYMENT PRACTICES) ALL ITS OBLIGATIONS
AND LIABILITIES OF WHATEVER NATURE, EXCEPT WHEN THE FAILURE TO DO SO COULD NOT
REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT OR WHEN THE AMOUNT OR
VALIDITY THEREOF IS CURRENTLY BEING CONTESTED IN GOOD FAITH BY APPROPRIATE
PROCEEDINGS AND BORROWER SHALL HAVE PROVIDED FOR SUCH RESERVES AS BRASCAN MAY
REASONABLY DEEM PROPER AND NECESSARY.
19
5.7
STANDARDS OF FINANCIAL STATEMENTS. CAUSE ALL FINANCIAL STATEMENTS
REFERRED TO IN SECTIONS 8.4, 8.5, 8.6, 8.7 AND 8.8 AS TO WHICH GAAP IS
APPLICABLE TO BE COMPLETE AND CORRECT IN ALL MATERIAL RESPECTS (SUBJECT, IN THE
CASE OF INTERIM FINANCIAL STATEMENTS, TO NORMAL YEAR-END AUDIT ADJUSTMENTS) AND
TO BE PREPARED IN REASONABLE DETAIL AND IN ACCORDANCE WITH GAAP APPLIED
CONSISTENTLY THROUGHOUT THE PERIODS REFLECTED THEREIN (EXCEPT AS CONCURRED IN BY
SUCH REPORTING ACCOUNTANTS OR OFFICER, AS THE CASE MAY BE, AND DISCLOSED
THEREIN).
VI.
NEGATIVE COVENANTS.
Borrower shall not, until satisfaction in full of the Obligations and
termination of this Agreement:
6.1
PROHIBITION ON FUNDAMENTAL CHANGES. ENTER INTO ANY TRANSACTION OF
MERGER OR CONSOLIDATION OR AMALGAMATION, OR LIQUIDATE, WIND UP OR DISSOLVE
ITSELF (OR SUFFER ANY LIQUIDATION, WINDING UP OR DISSOLUTION) OR SELL ALL OR
SUBSTANTIALLY ALL OF ITS ASSETS OR ACQUIRE OR FORM ANY SUBSIDIARIES (OTHER THAN
ANY FINANCE SUBSIDIARIES, ANY SUBSIDIARY FORMED FOR REGULATORY OR STRUCTURING
PURPOSES TO FACILITATE ANY INVESTMENT OR ANY SPECIAL PURPOSE SUBSIDIARY FORMED
TO OWN AND/OR FINANCE REAL PROPERTY ASSETS); PROVIDED, HOWEVER, THAT BORROWER
MAY MERGE OR CONSOLIDATE WITH (X) ANY WHOLLY OWNED SUBSIDIARY, OR (Y) ANY OTHER
PERSON