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SECURITY AGREEMENT
Made as of June 15, 1998
Between
LILY CUPS INC.
as Grantor
and
GENERAL ELECTRIC CAPITAL CANADA INC.
as Lender
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BARRISTERS & SOLICITORS
TABLE OF CONTENTS
RECITALS 1
SECTION 1 -- DEFINED TERMS
1.1 Terms Defined in PPSA........................................1
1.2 Other Defined Terms..........................................2
SECTION 2 -- SECURITY INTEREST
2.1 Grant of Security Interest...................................2
2.2 Set-Off......................................................3
2.3 Exception to Last Day........................................3
2.4 Liability for Deficiency.....................................3
SECTION 3 -- LENDER'S RIGHTS; LIMITATIONS ON LENDER'S OBLIGATIONS
3.1 Continued Liability of Grantor under Licences, etc...........3
3.2 Notice to Account Debtors....................................4
3.3 Verification of Accounts.....................................4
SECTION 4 -- REPRESENTATIONS AND WARRANTIES OF GRANTOR
4.1 Representations and Warranties...............................4
SECTION 5 -- COVENANTS OF GRANTOR
5.1 Covenants....................................................7
(1) Further Assurances; Pledge of Instruments...........7
(2) Maintenance of Records..............................8
(3) Covenants Regarding Patent, Trademark and Copyright
Collateral.......................................8
(4) Indemnification.....................................9
(5) Compliance with Terms of Accounts, etc............ .9
(6) Limitation on Liens on Collateral...................9
(7) Limitations on Disposition..........................9
(8) Further Identification of Collateral...............10
(9) Notices............................................10
(10) Supplier Waiver and Assignment.....................10
SECTION 6 -- AGENT'S APPOINTMENT AS ATTORNEY-IN-FACT
SECTION 7 -- REMEDIES
7.1 Appointment of Receiver.....................................11
7.2 Exercise of Rights by Lender................................11
7.3 Taking Possession of Collateral.............................11
7.4 Rights and Remedies under PPSA..............................12
7.5 Cooperation of Grantor with respect to Taking Possession....12
7.6 Costs.......................................................12
(i)
7.7 Notice of Sale..............................................12
7.8 Intellectual Property Licence...............................12
SECTION 8 -- REINSTATEMENT
SECTION 9 -- MISCELLANEOUS
9.1 Performance by Lender.......................................13
9.2 Extensions, etc.............................................13
9.3 No Waiver...................................................13
9.4 Waiver of Protest...........................................14
9.5 Assignment and Enurement....................................14
9.6 Amendment...................................................14
9.7 Notices.....................................................14
9.8 Remedies Cumulative.........................................14
9.9 Headings....................................................14
9.10 Number and Gender...........................................15
9.11 Severability................................................15
9.12 Extensions..................................................15
9.13 Attachment..................................................15
9.14 Amalgamation................................................15
9.15 Applicable Law..............................................16
9.16 Judgment Currency...........................................16
9.17 Counterparts................................................17
9.18 No Strict Construction......................................17
9.19 Advice of Counsel...........................................17
9.20 Limitation on Lender's Duty in Respect of Collateral........17
9.21 Limitation by Law...........................................17
9.22 Paramountcy.................................................18
9.23 Termination.................................................18
9.24 Copy........................................................18
SCHEDULES
Schedule 4.1(3) - Financing Statements And Filing Jurisdictions
Schedule 4.1(4) - Instruments and Chattel Paper
Schedule 4.1(6) - Offices and Locations of Collateral and Records
Concerning Collateral
Schedule 4.1(9) - Patents, Trademarks and Copyrights
EXHIBITS
Exhibit A - Power of Attorney
Exhibit B - Supplier Waiver and Assignment
(ii)
SECURITY AGREEMENT
This Security Agreement is made as of June 15, 1998, between
LILY CUPS INC., an Ontario corporation,
("GRANTOR")
and
GENERAL ELECTRIC CAPITAL CANADA INC., a Canada corporation, as lender
("Lender") under the Credit Agreement (as defined in Recital A. below)
RECITALS
A. Pursuant to that certain Credit Agreement dated as of the date hereof between
Grantor and Lender (including all annexes, exhibits and schedules thereto, as
from time to time amended, restated, supplemented, replaced or otherwise
modified, the "CREDIT AGREEMENT"), Lender has agreed to make the Loans to
Grantor.
B. In order to induce Lender to enter into the Credit Agreement and the other
Loan Documents and to make the Loans as provided for in the Credit Agreement,
Grantor has agreed to grant a Security Interest in the Collateral (as
hereinafter defined).
FOR VALUE RECEIVED, the parties agree as follows:
SECTION 1 -- DEFINED TERMS
1.1 Terms Defined in PPSA. The terms "ACCOUNTS", "GOODS", "CHATTEL PAPER",
"DOCUMENT OF TITLE", "EQUIPMENT", "INSTRUMENT", "INTANGIBLE", "INVENTORY",
"SECURITY", "PROCEEDS", "ACCESSION", "MONEY", "FINANCING STATEMENT" and
"FINANCING CHANGE STATEMENT" whenever used herein shall be interpreted in
accordance with their respective meanings when used in the Personal Property
Security Act (Ontario), as amended from time to time, which Act, including
amendments thereto and any Act substituted therefor and amendments thereto is
herein referred to as the "PPSA". The term "GOODS" when used herein shall not
include "CONSUMER GOODS" of Grantor as that term is defined in the PPSA. Any
reference herein to "COLLATERAL" shall, unless the context otherwise requires,
be deemed a reference to "COLLATERAL OR ANY PART THEREOF". The term "PROCEEDS"
whenever used herein and interpreted as above shall by way of example include
trade-ins, Equipment, cash, bank accounts, notes, Chattel Paper, Goods,
Contracts rights, Accounts and any other personal property or obligation
received when
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Collateral or Proceeds are sold, exchanged, collected or otherwise disposed of.
1.2 Other Defined Terms. Subject to Section 1.1, all capitalized terms used but
not otherwise defined herein have the meanings given to them in the Credit
Agreement or in Annex A thereto except that SECURITY AGREEMENT means this
security agreement and all schedules attached hereto, as the same may be
amended, restated, supplemented, replaced or otherwise modified from time to
time. All uses of the words "hereto", "herein", "hereof", "hereby" and
"hereunder" and similar expressions refer to this Security Agreement and not to
any particular section or portion of it.
SECTION 2 -- SECURITY INTEREST
2.1 Grant of Security Interest. As continuing collateral security for the due
payment and performance by Grantor of all of the Obligations, Grantor hereby
grants, assigns, conveys, mortgages, pledges and transfers to Lender, a security
interest (the "SECURITY INTEREST") in the undertaking of Grantor and in all of
Grantor's present and after acquired personal property including, without
limitation, in all Goods (including all parts, accessories, attachments, special
tools, additions, substitutions, replacements for and accessions thereto),
Chattel Paper, Documents of Title (whether negotiable or not), Instruments,
Intangibles, Money and Securities now owned or hereafter owned or acquired by or
on behalf of Grantor (including such as may be returned to or repossessed by
Grantor and including under any trade names, styles or derivations thereof) and
in all Proceeds and renewals thereof, accretions thereto and substitutions
therefor, and including, without limitation, all of the following now or
hereafter owned or consigned by or to, or leased from or to, or otherwise
acquired by or on behalf of Grantor:
(1) all Inventory of whatever kind and wherever situate;
(2) all Equipment (other than Inventory) of whatever kind and wherever
situate, including, without limitation, all machinery, tools,
apparatus, plant, furniture, fixtures and vehicles of whatsoever
nature or kind;
(3) all Accounts, including book debts and generally all debts, dues,
claims, choses in action and demands of every nature and kind
howsoever arising or secured including letters of credit and advices
of credit, which are now due, owing or accruing or growing due to or
owned by or which may hereafter become due, owing or accruing or
growing due to or owned by Grantor ("DEBTS");
(4) all deeds, documents, writings, papers, books of account and other
books and records relating to or being records of Debts, Chattel Paper
or Documents of Title or by which such are or may hereafter be
secured, evidenced, acknowledged or made payable;
(5) all Money, cash or cash equivalents of Grantor;
(6) all contractual rights and insurance claims;
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(7) all Borrower Accounts, and all other deposit and other bank accounts
and all deposits therein; and
(8) all Intellectual Property of Grantor (provided that, notwithstanding
any provision to the contrary herein, the grant of security hereunder
on all Trademarks of Grantor shall be only the grant of a security
interest therein and shall not be an assignment, conveyance or
transfer thereof).
The foregoing undertaking and property are collectively referred to as the
"COLLATERAL".
2.2 Set-Off. In addition, to secure the prompt and complete payment, performance
and observance of the Obligations and in order to induce Lender as aforesaid,
Grantor hereby grants to Lender, a right of set-off against the property of
Grantor held by Lender, consisting of property described above in Section 2.1
now or hereafter in the possession or custody of or in transit to Lender, for
any purpose, including safekeeping, collection or pledge, for the account of
Grantor, or as to which Grantor may have any right or power.
2.3 Exception to Last Day. The Security Interest granted hereby shall not extend
or apply to, and Collateral shall not include, the last day of the term of any
lease of real property or agreement therefor but upon the enforcement of the
Security Interest Grantor shall stand possessed of such last day in trust to
assign the same to any person acquiring such term.
2.4 Liability for Deficiency. If the Collateral is realized upon and the
Security Interest in the Collateral is not sufficient to satisfy all
Obligations, Grantor acknowledges and agrees that, subject to the provisions of
the PPSA, Grantor shall continue to be liable for any Obligations remaining
outstanding and Lender shall be entitled to pursue full payment thereof.
SECTION 3 -- LENDER'S RIGHTS; LIMITATIONS ON LENDER'S OBLIGATIONS
3.1 Continued Liability of Grantor under Licences, etc. It is expressly agreed
by Grantor that, anything herein to the contrary notwithstanding, Grantor shall
remain liable under each of its Contracts and each of its Licences to observe
and perform all the conditions and obligations to be observed and performed by
it thereunder. Lender shall not have any obligation or liability under any
Contract or Licence by reason of or arising out of this Security Agreement or
the granting herein of a Security Interest therein or the receipt by Lender of
any payment relating to any Contract or Licence pursuant hereto. Lender shall
not be required or obligated in any manner to perform or fulfill any of the
obligations of Grantor under or pursuant to any Contract or Licence, or to make
any payment, or to make any inquiry as to the nature or the sufficiency of any
payment received by it or the sufficiency of any performance by any party under
any Contract or Licence, or to present or file any claims, or to take any action
to collect or enforce any performance or the payment of any amounts which may
have been assigned to it or to which it may be entitled at any time or times.
3.2 Notice to Account Debtors. If an Event of Default shall have occurred and be
continuing, Lender may at any time without prior notice to Grantor, notify any
Account Debtors obligated under any Account of Grantor, parties to any Contracts
of Grantor and obligors in
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respect of Instruments and Chattel Paper, that such Accounts and the right,
title and interest of Grantor in and under such Contracts, Instruments and
Chattel Paper have been assigned to Lender, and may notify any such Account
Debtors, such parties to any Contracts of Grantor and such obligors that
payments shall be made directly to Lender. If an Event of Default shall have
occurred and be continuing, upon the request of Lender, Grantor shall so notify
such Account Debtors, parties to Contracts and obligors in respect of
Instruments and Chattel Paper. Grantor acknowledges that any payments on or
other proceeds of Collateral received by Grantor from such Account Debtors,
parties to Contracts or obligors, whether before or after notification of the
Security Interest to such Account Debtors, parties to Contracts or obligors and
whether before or after a Default or an Event of Default, shall be received and
held by Grantor in trust for Lender and shall be deposited into a Borrower
Account pursuant to the terms of Annex C to the Credit Agreement.
3.3 Verification of Accounts. Lender may at any time in Lender's own name or in
the name of Grantor communicate with Account Debtors, parties to Contracts,
obligors in respect of Instruments and obligors in respect of Chattel Paper to
verify with such Persons, to Lender's satisfaction, the existence, amount and
terms of any such Accounts, Contracts, Instruments or Chattel Paper. If an Event
of Default shall have occurred and be continuing, Grantor, at its own expense,
shall cause the independent chartered accountants then engaged by Grantor to
prepare and deliver to Lender at any time and from time to time promptly upon
Lender's request the following reports with respect to Grantor: (1) a
reconciliation of all Accounts; (2) an aging of all Accounts; (3) trial
balances; and (4) a test verification of such Accounts as Lender may request.
Grantor, at its own expense, shall deliver to Lender the results of each
physical verification, if any, which Grantor may in its discretion have made, or
caused any other Person to have made on its behalf, of all or any portion of its
Inventory.
SECTION 4 -- REPRESENTATIONS AND WARRANTIES OF GRANTOR
4.1 Representations and Warranties. Grantor represents and warrants to Lender
that:
(1) Grantor is the sole owner of each item of Collateral in which it
purports to grant the Security Interest hereunder, and has good and
marketable title thereto free and clear of any and all Liens other
than Permitted Encumbrances;
(2) no effective security agreement, financing statement, financing change
statement, equivalent security or Lien instrument covering all or any
part of the Collateral is on file or of record in any public office,
except such as may have been filed (a) in favour of Lender pursuant to
this Security Agreement or the other Loan Documents, and (b) in
connection with any other Permitted Encumbrances;
(3) this Security Agreement is effective to create a valid and continuing
Security Interest in and, upon the filing of the appropriate financing
statements listed on Schedule 4.1(3) hereto, a perfected Security
Interest in favour of Lender on the Collateral. Such Security Interest
is prior to all other Liens, except Permitted Encumbrances that would
be prior to Security Interests in favour of Lender as a
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matter of law, and is enforceable as such as against any and all
creditors of and purchasers from Grantor (other than purchasers of
Goods in the ordinary course of business) subject to (i) applicable
bankruptcy, insolvency, moratorium, reorganization and other similar
laws affecting creditors rights generally, (ii) the equitable and
statutory powers of the courts of appropriate jurisdiction to stay
proceedings before them, to stay the execution of judgments and to
award costs, (iii) the discretion of such courts as to the granting of
remedies of specific performance and injunction and (iv) the
restriction that Canadian courts can only render judgments in Canadian
currency. All action by Grantor necessary or desirable to protect and
perfect the Security Interest on each item of the Collateral has been
duly taken;
(4) Schedule 4.1(4) hereto lists all Instruments and Chattel Paper of
Grantor. All action by Grantor necessary or desirable to protect and
perfect the Security Interest of Lender on each item set forth on
Schedule 4.1(4) (including the delivery of all originals thereof to
Lender and the legending of all Chattel Paper as required by Section
5.1(2) hereof) has been duly taken. The Security Interest of Lender in
the Collateral listed on Schedule 4.1(4) hereto is prior to all other
Liens, except Permitted Encumbrances that would be prior to the
Security Interest in favour of Lender as a matter of law, and is
enforceable as such against any and all creditors of and purchasers
from Grantor subject to (i) applicable bankruptcy, insolvency,
moratorium, reorganization and other similar laws affecting creditors
rights generally, (ii) the equitable and statutory powers of the
courts of appropriate jurisdiction to stay proceedings before them, to
stay the execution of judgments and to award costs, (iii) the
discretion of such courts as to the granting of remedies of specific
performance and injunction and (iv) the restriction that Canadian
courts can only render judgments in Canadian currency;
(5) all Collateral consisting of Intellectual Property applications and
registrations is valid and in good standing and Grantor is the owner
or the authorized licencee, as the case may be, of the applications
and registrations;
(6) Schedule 4.1(6) hereto sets out Grantor's chief executive office,
principal place of business, domicile (for purposes of the Quebec
Civil Code), corporate offices, all warehouses and premises where
Collateral is stored or located, and the locations of all of its books
and records concerning the Collateral;
(7) with respect to the Accounts, except as specifically disclosed on the
most recent Collateral Report delivered to Lender (a) they represent
bona fide sales of Goods or rendering of services to Account Debtors
in the ordinary course of Grantor's business and are not evidenced by
a judgment, Instrument or Chattel Paper; (b) there are no set-offs,
claims or disputes existing or asserted with respect thereto and
Grantor has not made any agreement with any Account Debtor for any
extension of time for the payment thereof, any compromise or
settlement for less than the full amount thereof, any release of any
Account Debtor from liability
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therefor, or any deduction therefrom except a discount or allowance
allowed by Grantor in the ordinary course of its business for prompt
payment and disclosed to Lender; (c) to Grantor's knowledge, there are
no facts, events or occurrences which in any way impair the validity
or enforceability thereof or could reasonably be expected to reduce
the amount payable thereunder as shown on Grantor's books and records
and any invoices, statements and Collateral Reports delivered to
Lender with respect thereto; (d) Grantor has not received any notice
of proceedings or actions which are threatened or pending against any
Account Debtor which might result in any adverse change in such
Account Debtor's financial condition; and (e) Grantor has no knowledge
that any Account Debtor is unable generally to pay its debts as they
become due. Further, with respect to the Accounts (x) the amounts
shown on such records and all invoices, statements and Collateral
Reports which may be delivered to Lender with respect thereto are
actually and absolutely owing to Grantor as indicated thereon and are
not in any way contingent; (y) no payments have been or shall be made
thereon except payments immediately delivered to the Borrower Accounts
or Lender as required pursuant to the terms of Annex C to the Credit
Agreement; and (z) to Grantor's knowledge, all Account Debtors have
the capacity to contract;
(8) with respect to any Inventory scheduled or listed on the most recent
Collateral Report delivered to Lender pursuant to the terms of this
Security Agreement or the Credit Agreement or any other Loan Document,
(a) such Inventory is located at one of Grantor's locations set forth
on Schedule 4.1(6) hereto, (b) no Inventory is now, or shall at any
time or times hereafter be stored at any other location without
Lender's prior consent, and if Lender gives such consent, Grantor will
concurrently therewith obtain, to the extent required by the Credit
Agreement, bailee, landlord and mortgagee agreements, (c) Grantor has
good, indefeasible and marketable title to such property and such
property is not subject to any security interest or other Lien or any
document whatsoever except for the Security Interest granted to Lender
and except for Permitted Encumbrances, (d) except as specifically
disclosed in the most recent Collateral Report delivered to Lender,
such Inventory is Eligible Inventory of good and merchantable quality,
free from all defects and is not excess, obsolete, unsaleable,
shopworn, seconds, damaged or unfit for sale; (e) such property and
all other Collateral are not subject to any licensing, patent,
royalty, trademark, trade name or copyright agreements with any third
parties which would require any consent of any third party upon sale
or disposition of that Collateral , except as disclosed to Lender in
the Credit Agreement and, then, in respect of which Grantor has
delivered to Lender Consents in form and substance satisfactory to
Lender duly executed by such third parties, or the payment of any
monies to any third party as a precondition of such sale or other
disposition, except as disclosed to Lender in writing and, then, in
respect of which Grantor has delivered to Lender Waivers in form and
substance satisfactory to Lender duly executed by such third parties,
and (f) the completion of manufacture, sale or other disposition of
such property by Lender following an
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Event of Default shall not require the consent of any Person and shall
not constitute a breach or default under any contract or agreement to
which Grantor is a party or to which such property is subject;
(9) Grantor does not have any interest in, or title to, any Patent,
Trademark or Copyright except as set forth in Schedule 4.1(9) hereto.
This Security Agreement is effective to create a valid and continuing
security interest in and, upon filing of this Security Agreement with
the appropriate governmental offices, perfected security interests in
favour of Lender, in Grantor's Patents, Trademarks and Copyrights and
such perfected security interests are enforceable as such as against
any and all creditors of and purchasers from Grantor subject to (i)
applicable bankruptcy, insolvency, moratorium, reorganization and
other similar laws affecting creditors rights generally, (ii) the
equitable and statutory powers of the courts of appropriate
jurisdiction to stay proceedings before them, to stay the execution of
judgments and to award costs, (iii) the discretion of such courts as
to the granting of remedies of specific performance and injunction and
(iv) the restriction that Canadian courts can only render judgments in
Canadian currency. Upon filing of the Security Agreement with the
appropriate governmental offices and the filing of appropriate
financing statements listed on Schedule 4.1(3) hereto, all action
necessary or desirable to protect and perfect Lender's security
interest in Grantor's Patents, Trademarks and Copyrights shall have
been duly taken; and
(10) Grantor has delivered to Lender a Supplier Waiver and Assignment,
substantially in the form of Exhibit B, that has been duly executed by
each affiliate of Grantor which supplies Goods to Grantor as of the
Closing Date.
SECTION 5 -- COVENANTS OF GRANTOR
5.1 Covenants. Grantor covenants and agrees with Lender that from and after the
date of this Security Agreement and until the Termination Date:
(1) Further Assurances; Pledge of Instruments. At any time and from time to
time, upon the written request of Lender and at the sole expense of Grantor,
Grantor shall promptly and duly execute and deliver any and all such further
instruments and documents and take such further actions as Lender may deem
desirable to obtain the full benefits of this Security Agreement and of the
rights and powers herein granted, including (a) using commercially reasonable
efforts to secure all consents and approvals necessary or appropriate for the
assignment to or for the benefit of Lender of any Licence or Contract held by
Grantor or in which Grantor has any rights not heretofore assigned, (b) filing
any financing statements and financing change statements under the PPSA (or
other applicable personal property security laws) with respect to the Security
Interest granted hereunder or under any other Loan Document, (c) transferring
Collateral to Lender's possession if such Collateral consists of Chattel Paper,
Instruments or Securities or if a Security Interest in such Collateral can be
perfected only by possession, or if requested by Lender, and (d) obtaining, or
using commercially reasonable efforts to obtain, waivers of Liens, if any exist,
from landlords, warehousemen and mortgagees in accordance with the Credit
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Agreement. Grantor also hereby authorizes Lender to file any such financing or
financing change statements without the signature of Grantor to the extent
permitted by applicable law. If any amount payable under or in connection with
any of the Collateral is or shall become evidenced by any Instrument, such
Instrument, other than cheques and notes received in the ordinary course of
business, shall be duly endorsed in a manner satisfactory to Lender immediately
upon Grantor's receipt thereof.
(2) Maintenance of Records. Grantor shall keep and maintain, at its own cost and
expense, satisfactory and complete records of the Collateral, including a record
of any and all payments received and any and all credits granted with respect to
the Collateral and all other dealings with the Collateral. All Chattel Paper
shall be marked with the following legend: "This writing and the obligations
evidenced or secured hereby are subject to the security interest of General
Electric Capital Canada Inc..
(3) Covenants Regarding Patent, Trademark and Copyright Collateral.
(a) Grantor shall notify Lender immediately if it knows or has reason to
know that any application or registration relating to any Patent,
Trademark or Copyright (now or hereafter existing) material to the
operation of its business or to Lender exercising any of its rights
and remedies in respect of the Collateral may become abandoned, or of
any adverse determination or development regarding Grantor's ownership
of any Patent, Trademark or Copyright, its right to register the same,
or to keep and maintain the same to the extent same is material to the
Grantor's business or to Lender exercising any of its rights and
remedies in respect of the Collateral.
(b) In no event shall Grantor, either directly or through any agent,
employee, licencee or designee, file an application for the
registration of any Patent, Trademark or Copyright in respect of the
operation of its business with any office or agency without giving
Lender prior written notice thereof, and, upon request of Lender,
Grantor shall execute and deliver any and all security agreements, as
Lender may request to evidence Lender's security interest in such
Patent, Trademark or Copyright, and the Intangibles of Grantor
relating thereto or represented thereby.
(c) Grantor shall take all actions necessary or requested by Lender to
maintain and pursue each application, to obtain the relevant
registration and to maintain the registration of each of the Patents,
Trademarks and Copyrights (now or hereafter existing) which are
material to the operation of its business or to Lender exercising any
of its rights and remedies in respect of the Collateral, including all
filings.
(d) In the event that any of the Patent, Trademark or Copyright
Collateral, which is material to the operation of Grantor's business
or to Lender exercising any of its rights and remedies in respect of
the Collateral is infringed upon, or misappropriated or diluted by a
third party, Grantor shall notify Lender promptly
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after Grantor learns thereof. Grantor shall, unless it shall
reasonably determine that such Patent, Trademark or Copyright
Collateral is in no way material to the conduct of its business or
operations, promptly xxx for infringement, misappropriation or
dilution and to recover any and all damages for such infringement,
misappropriation or dilution, and shall take such other actions as
Lender shall deem appropriate under the circumstances to protect such
Patent, Trademark or Copyright Collateral.
(4) Indemnification. In any suit, proceeding or action brought by Lender
relating to any Account, Chattel Paper, Contract, Document of Title, Intangible
or Instrument for any sum owing thereunder or to enforce any provision of any
Account, Chattel Paper, Contract, Document of Title, Intangible or Instrument,
Grantor will save, indemnify and keep Lender harmless from and against all
expense (including reasonable legal fees and other legal expenses), loss or
damage suffered by reason of any defense, set-off, counterclaim, recoupment or
reduction of liability whatsoever of the obligor thereunder, arising out of a
breach by Grantor of any obligation thereunder or arising out of any other
agreement, indebtedness or liability at any time owing to, or in favour of, such
obligor or its successors from Grantor, except in the case of Lender, to the
extent such expense, loss, or damage is attributable solely to the gross
negligence or willful misconduct of Lender as finally determined by a court of
competent jurisdiction. All such obligations of Grantor shall be and remain
enforceable against and only against Grantor and shall not be enforceable
against Lender.
(5) Compliance with Terms of Accounts, etc. In all material respects, Grantor
will perform and comply with all obligations in respect of its Accounts, Chattel
Paper, Contracts and Licences and all other agreements to which it is a party or
by which it is bound relating to the Collateral.
(6) Limitation on Liens on Collateral. Grantor will not create, permit or suffer
to exist, and Grantor will defend the Collateral against, and take such other
action as is necessary to remove, any Lien on the Collateral except Permitted
Encumbrances, and will defend the right, title and interest of Lender in and to
any of Grantor's rights under the Collateral against the claims and demands of
all Persons whomsoever.
(7) Limitations on Disposition. Grantor will not sell, lease, transfer or
otherwise dispose of any of the Collateral, or attempt to contract to do so
except as permitted by the Credit Agreement.
(8) Further Identification of Collateral. Grantor will, if so requested by
Lender, furnish to Lender, as often as Lender requests (acting reasonably;
provided that, upon the occurrence of a Default or an Event of Default that is
continuing, no limitation shall apply to the frequency of Lender's requests),
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as Lender may reasonably
request, all in such detail as Lender may specify.
(9) Notices. Grantor will advise Lender promptly, in reasonable detail, (i) of
any Lien (other than Permitted Encumbrances) or claim made or asserted against
any of the Collateral, and (ii) of
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the occurrence of any other event which would have a material adverse effect on
the aggregate value of the Collateral or on the Liens created hereunder or under
any other Loan Document.
(10) Supplier Waiver and Assignment. Grantor will use all commercially
reasonable efforts to deliver to Lender a Supplier Waiver and Assignment,
substantially in the form of Exhibit B, that has been duly executed by each
Affiliate of Grantor which supplies Goods to Grantor after the Closing Date and
from whom Lender has not received a duly executed Supplier Waiver and
Assignment.
SECTION 6 -- AGENT'S APPOINTMENT AS ATTORNEY-IN-FACT
On the Closing Date, Grantor shall execute and deliver to
Lender a power of attorney (the "POWER OF ATTORNEY") substantially in the form
attached hereto as Exhibit A. The power of attorney granted pursuant to the
Power of Attorney is a power coupled with an interest and shall be irrevocable
until the Termination Date. The powers conferred on Lender under the Power of
Attorney are solely to protect Lender's interests in the Collateral and shall
not impose any duty upon Lender to exercise any such powers. Lender agrees that
(a) it shall not exercise any power or authority granted under the Power of
Attorney unless an Event of Default has occurred and is continuing, and (b)
Lender shall account for any money received by Lender in respect of any
foreclosure on or disposition of Collateral pursuant to the Power of Attorney
provided that Lender shall not have any duty as to any Collateral, and Lender
shall be accountable only for amounts that it actually receives as a result of
the exercise of such powers. NEITHER LENDER NOR ANY OF ITS AFFILIATES, OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES SHALL BE RESPONSIBLE TO GRANTOR
FOR ANY ACT OR FAILURE TO ACT UNDER ANY POWER OF ATTORNEY OR OTHERWISE, EXCEPT
IN RESPECT OF DAMAGES ATTRIBUTABLE SOLELY TO THEIR OWN GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT AS FINALLY DETERMINED BY A COURT OF COMPETENT JURISDICTION,
NOR FOR ANY PUNITIVE, EXEMPLARY, INDIRECT OR CONSEQUENTIAL DAMAGES.
SECTION 7 -- REMEDIES
7.1 Appointment of Receiver. In addition to all other rights and remedies
granted to it under this Security Agreement, the Credit Agreement, the other
Loan Documents and under any other instrument or agreement securing, evidencing
or relating to any of the Obligations, if any Event of Default shall have
occurred and be continuing, Lender may appoint or reappoint by instrument in
writing, any person or persons, whether an officer or officers or an employee or
employees of Lender or not, to be a receiver or receivers (hereinafter called a
"RECEIVER", which term when used herein shall include a receiver and manager) of
Collateral (including any interest, income or profits therefrom) and may remove
any Receiver so appointed and appoint another in its stead. Any such Receiver
shall, so far as concerns responsibility for its acts, be deemed the agent of
Grantor and not of Lender, and Lender shall not be in any way responsible for
any misconduct, negligence or non-feasance on the part of any such Receiver, its
servants, agents or employees. Subject to the provisions of the instrument
appointing it, any such Receiver shall have power to take possession of
Collateral, to preserve Collateral or its value, to carry on or
-11-
concur in carrying on all or any part of the business of Grantor and to sell,
lease, license or otherwise dispose of or concur in selling, leasing, licensing
or otherwise disposing of Collateral. To facilitate the foregoing powers, any
such Receiver may, to the exclusion of all others, including Grantor, enter
upon, use and occupy all premises owned or occupied by Grantor wherein
Collateral may be situate, maintain Collateral upon such premises, borrow money
on a secured or unsecured basis and use Collateral directly in carrying on
Grantor's business or as security for loans or advances to enable the Receiver
to carry on Grantor's business or otherwise, as such Receiver shall, in its
discretion, determine. Except as may be otherwise directed by Lender, all Money
received from time to time by such Receiver in carrying out its appointment
shall be received in trust for and paid over to Lender. Every such Receiver may,
in the discretion of Lender, be vested with all or any of the rights and powers
of Lender.
7.2 Exercise of Rights by Lender. Upon and during the continuance of an Event of
Default, Lender may, either directly or through its agents or nominees, exercise
any or all of the powers and rights given to a Receiver by virtue of Section
7.1.
7.3 Taking Possession of Collateral. Lender may take possession of, collect,
demand, xxx on, enforce, recover and receive Collateral and give valid and
binding receipts and discharges therefor and in respect thereof and, upon and
during the continuance of an Event of Default, Lender may sell, licence, lease
or otherwise dispose of Collateral in such manner, at such time or times and
place or places, for such consideration and upon such terms and conditions as to
Lender may seem reasonable. Lender shall use reasonable care with respect to the
Collateral in its possession or under its control. Lender shall not have any
other duty as to any Collateral in its possession or control or in the
possession or control of any agent or nominee of Lender, or any income thereon
or as to the preservation of rights against prior parties or any other rights
pertaining thereto except solely to the extent Lender has thereto agreed under
the last sentence of Section 6 and under Section 9.20.
7.4 Rights and Remedies under PPSA. In addition to those rights granted herein
and in any other agreement now or hereafter in effect between Grantor and Lender
and in addition to any other rights Lender may have at law or in equity, Lender
shall have, both before and after an Event of Default, all rights and remedies
of a secured party under the PPSA. However, Lender shall not be liable or
accountable for any failure to exercise its remedies, take possession of,
collect, enforce, realize, sell, lease, licence or otherwise dispose of
Collateral or to institute any proceedings for such purposes. Furthermore,
Lender shall have no obligation to take any steps to preserve rights against
prior parties to any Instrument or Chattel Paper whether Collateral or Proceeds
and whether or not in Lender's possession and shall not be liable or accountable
for failure to do so.
7.5 Cooperation of Grantor with respect to Taking Possession. After and during
continuance of an Event of Default, Grantor acknowledges that Lender or any
Receiver appointed by it may take possession of Collateral wherever it may be
located and by any method permitted by law and Grantor agrees upon request from
Lender or any such Receiver to assemble and deliver possession of Collateral at
such place or places as directed.
-12-
7.6 Costs. Grantor agrees to be liable for and to pay all costs, charges and
expenses reasonably incurred by Lender or any Receiver appointed by it, whether
directly or for services rendered (including reasonable legal and auditors'
costs and other legal expenses and Receiver remuneration), in operating
Grantor's accounts, in preparing or enforcing this Security Agreement, taking
and maintaining custody of, preserving, repairing, processing, preparing for
disposition and disposing of Collateral and in enforcing or collecting
indebtedness and all such costs, charges and expenses, together with any amounts
owing as a result of any borrowing by Lender or any Receiver appointed by it, as
permitted hereby, shall be a first priority security interest on the proceeds of
realization, collection or disposition of Collateral and shall be secured
hereby.
7.7 Notice of Sale. Lender will give Grantor such notice, if any, of the date,
time and place of any public sale or of the date after which any private
disposition of Collateral is to be made as may be required by the PPSA.
7.8 Intellectual Property Licence. For the purpose of enabling Lender to
exercise rights and remedies under Section 7 hereof at such time as Lender shall
be lawfully entitled to exercise such rights and remedies, Grantor hereby grants
to Lender an irrevocable, non-exclusive licence (exercisable without payment of
royalty or other compensation to Grantor) to use, license or sublicense any
Intellectual Property now owned or hereafter acquired by Grantor, and wherever
the same may be located, and including in such licence access to all media in
which any of the licenced items may be recorded or stored and to all computer
software and programs used for the compilation or printout thereof.
SECTION 8 -- REINSTATEMENT
This Security Agreement shall remain in full force and effect
and continue to be effective should any petition be filed by or against any
Grantor for liquidation or reorganization, should any Grantor become insolvent
or make an assignment for the benefit of any creditor or creditors or should a
receiver or trustee be appointed for all or any significant part of any
Grantor's assets, and shall continue to be effective or be reinstated, as the
case may be, if at any time payment and performance of the Obligations, or any
part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or
must otherwise be restored or returned by any obligee of the Obligations,
whether as a "voidable preference", "fraudulent conveyance," or otherwise, all
as though such payment or performance had not been made. In the event that any
payment, or any part thereof, is rescinded, reduced, restored or returned, the
Obligations shall be reinstated and deemed reduced only by such amount paid and
not so rescinded, reduced, restored or returned.
SECTION 9 -- MISCELLANEOUS
9.1 Performance by Lender. Upon Grantor's failure to perform any of its duties
hereunder, Lender may, but shall not be obligated to, perform any or all of such
duties, and Grantor shall pay to Lender, forthwith upon written demand therefor,
an amount equal to the expense incurred by Lender in so doing plus interest
thereon from the date such expense is incurred until it is paid
-13-
at an annual rate of interest equal to the Index Rate plus 4.50%, as determined
by Lender on the basis of a three hundred and sixty-five (365) day year, in each
case for the actual number of days occurring in the period for which such
interest is payable. The Index Rate shall be determined in accordance with the
Credit Agreement. For the purposes of the Interest Act (Canada), such rate of
interest shall be equivalent to a rate based on a calendar year equal to such
rate of interest multiplied by the actual number of days in the calendar year of
calculation and divided by three hundred and sixty-five (365).
9.2 Extensions, etc. Lender may grant extensions of time and other indulgences,
take and give up security, accept compositions, compound, compromise, settle,
grant releases and discharges and otherwise deal with Grantor, debtors of
Grantor and with Collateral and other security as Lender may see fit without
prejudice to the liability of Grantor or Lender's right to hold and realize the
Security Interest. Furthermore, Lender may demand, collect and xxx on Collateral
in Grantor's name and may endorse Grantor's name on any and all cheques,
commercial paper, and any other Instruments and any Securities pertaining to or
constituting Collateral.
9.3 No Waiver. No delay or omission by Lender in exercising any right or remedy
hereunder or with respect to any of the Obligations shall operate as a waiver
thereof or of any other right or remedy, and no single or partial exercise
thereof shall preclude any other or further exercise thereof or the exercise of
any other right or remedy. Furthermore, Lender may remedy any default by Grantor
hereunder or with respect to any Obligations in any reasonable manner without
waiving the default remedied and without waiving any other prior or subsequent
default by Grantor. All rights and remedies of Lender granted or recognized
herein are cumulative and may be exercised at any time and from time to time
independently or in combination.
9.4 Waiver of Protest. Grantor waives protest of any Instrument constituting
Collateral at any time held by Lender on which Grantor is in any way liable and,
subject to Section 7.7 hereof, notice of any other action taken by Lender.
9.5 Assignment and Enurement. To the extent permitted by the Credit Agreement,
this Security Agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns. In any action
brought by an assignee of this Security Agreement and the Security Interest or
any part thereof to enforce any rights hereunder, Grantor shall not assert
against the assignee any claim or defence which Grantor now has or hereafter may
have against Lender. No sales of participations, other sales, assignments,
transfers or other dispositions of any agreement governing or instrument
evidencing the Obligations or any portion thereof or interest therein shall in
any manner affect the Security Interest granted to Lender hereunder. Grantor may
not assign, sell, hypothecate or otherwise transfer any interest in or
obligation under this Security Agreement.
9.6 Amendment. No modification, variation or amendment of any provision of this
Security Agreement shall be made except by a written agreement, executed by the
parties hereto and no waiver of any provision hereof shall be effective unless
in writing.
-14-
9.7 Notices. Except as otherwise provided herein, whenever it is provided herein
that any notice, demand, request, consent, approval, declaration or other
communication shall or may be given to or served upon any of the parties by any
other party, or whenever any of the parties desires to give and serve upon any
other party any communication with respect to this Security Agreement, each such
notice, demand, request, consent, approval, declaration or other communication
shall be in writing and shall be given in the manner, and deemed received, as
provided for in the Credit Agreement.
9.8 Remedies Cumulative. This Security Agreement and the security afforded
hereby is in addition to and not in substitution for any other security now or
hereafter held by Lender and is intended to be a continuing security agreement
and shall remain in full force and effect until all Obligations and any
extensions or renewals thereof together with interest accruing thereon shall be
paid in full. No single or partial exercise by Lender of any right or remedy
precludes or otherwise affects the exercise of any other right or remedy to
which that party may be entitled.
9.9 Headings. The headings used in this Security Agreement are for convenience
only and are not to be considered a part of this Security Agreement and do not
in any way limit or amplify the terms and provisions of this Security Agreement.
9.10 Number and Gender. When the context so requires, the singular number shall
be read as if the plural were expressed and the provisions hereof shall be read
with all grammatical changes necessary dependent upon the person referred to
being a male, female, firm or corporation.
9.11 Severability. Wherever possible, each provision of this Security Agreement
shall be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Security Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity without invalidating
the remainder of such provision or the remaining provisions of this Security
Agreement. This Security Agreement is to be read, construed and applied together
with the Credit Agreement and the other Loan Documents which, taken together,
set forth the complete understanding and agreement of Lender and Grantor with
respect to the matters referred to herein and therein.
9.12 Extensions. Nothing herein contained shall in any way obligate Lender to
grant, continue, renew, extend time for payment of or accept anything which
constitutes or would constitute Obligations.
9.13 Attachment. The Security Interest created hereby is intended to attach when
this Security Agreement is signed by Grantor and delivered to Lender.
9.14 Amalgamation. Grantor acknowledges and agrees that in the event it
amalgamates with any other corporation or corporations it is the intention of
the parties hereto that the term "Grantor" when used herein shall apply to each
of the amalgamating corporations and to the amalgamated corporation, such that
the Security Interest granted hereby:
(1) shall extend to "Collateral" (as that term is herein defined) owned by
each of the
-15-
amalgamating corporations and the amalgamated corporation at the time
of amalgamation and to any "Collateral" thereafter owned or acquired
by the amalgamated corporation, and
(2) shall secure the Obligations of each of the amalgamating corporations
and the amalgamated corporation to Lender at the time of amalgamation
and all Obligations of the amalgamated corporation to Lender
thereafter arising. The Security Interest shall attach to "Collateral"
owned by each corporation amalgamating with Grantor, and by the
amalgamated corporation, at the time of the amalgamation, and shall
attach to any "Collateral" thereafter owned or acquired by the
amalgamated corporation when such becomes owned or is acquired.
9.15 APPLICABLE LAW.
(1) This Security Agreement shall be conclusively deemed to be a
contract made under, and shall for all purposes be governed by, and construed
and interpreted in accordance with, the laws of the Province of Ontario and the
federal laws of Canada applicable therein in effect from time to time,
including, where applicable, the PPSA, without prejudice to or limitation of any
other rights or remedies available under the laws of any jurisdiction where
property or assets of Grantor may be found. Grantor hereby expressly submits to
the non-exclusive jurisdiction of the courts of the Province of Ontario in
connection with any action, suit or proceeding relating to this Security
Agreement, or any other instrument or document referred to herein or related
hereto.
(2) Grantor hereby irrevocably waives any objection which it may now or
hereafter have to the laying of venue of any suit, action or proceeding arising
out of or relating to this Security Agreement or any instrument or document
referred to herein or related hereto brought in any court sitting in the
Province of Ontario and hereby further irrevocably waives any claim that any
such suit, action or proceeding brought in any such court has been brought in an
inconvenient forum.
(3) Notwithstanding anything to the contrary in this Security
Agreement, Lender may xxx Grantor in any jurisdiction where Grantor or any of
its assets may be found and may serve legal process upon Grantor in any other
manner permitted by law.
(4) Because disputes arising in connection with complex financial
transactions are most quickly and economically resolved by an experienced and
expert person and the parties wish applicable provincial and federal laws to
apply, the parties desire that disputes arising hereunder or relating hereto be
resolved by a judge applying such applicable laws. Therefore, the parties hereto
waive all right to trial by jury in any action, suit or proceeding brought to
resolve any dispute, whether sounding in contract, tort, or otherwise, between
Lender and Grantor arising out of, connected with, related to, or incidental to
the relationship established in connection with, this Security Agreement or any
of the other documents or the transactions related hereto or thereto.
-16-
9.16 JUDGMENT CURRENCY.
(1) If, for the purpose of obtaining or enforcing judgment against
Grantor in any court in any jurisdiction, it becomes necessary to convert into
any other currency (such other currency being hereinafter in this Section 9.16
referred to as the "JUDGMENT CURRENCY") an amount due in Canadian Dollars, the
conversion shall be made at the rate of exchange specified by Lender as being
the rate available to Lender in Toronto, Ontario on the Business Day immediately
preceding (a) the date of actual payment of the amount due, in the case of any
proceeding in the courts of the Province of Ontario or in the courts of any
other jurisdiction that will give effect to such conversion being made on such
date, or (b) the date on which the judgment is given, in the case of any
proceeding in the courts of any other jurisdiction (the applicable date as of
which such conversion is made pursuant to this Section 9.16(1) being hereinafter
in this Section 9.16 referred to as the "JUDGMENT CONVERSION DATE").
(2) If, in the case of any proceeding in the court of any jurisdiction
referred to in Section 9.16(1), there is a change in the rate of exchange
available to Lender between the Judgment Conversion Date and the date of actual
receipt for value of the amount due, Grantor shall pay such additional amount
(if any, but in any event not a lesser amount) as may be necessary to ensure
that the amount actually received for value in the Judgment Currency, when
converted at the rate of exchange specified by Lender as being the rate
available to Lender on the date of payment, will produce the amount of Canadian
Dollars which could have been purchased with the amount of the Judgment Currency
stipulated in the judgment or judicial order at the rate of exchange on the
Judgment Conversion Date.
9.17 Counterparts. This Security Agreement may be executed in any number of
separate counterparts each of which shall collectively and separately constitute
one and the same agreement.
9.18 No Strict Construction. The parties hereto have participated jointly in the
negotiation and drafting of this Security Agreement. In the event an ambiguity
or question of intent or interpretation arises, this Security Agreement shall be
construed as if drafted jointly by the parties hereto and no presumption or
burden of proof shall arise favouring or disfavouring any party by virtue of the
authorship of any provisions of this Security Agreement.
9.19 Advice of Counsel. Each of the parties represents to each other party
hereto that it has discussed this Security Agreement and, specifically, the
provisions of Section 9.15, with its counsel.
9.20 Limitation on Lender's Duty in Respect of Collateral. Lender shall use
reasonable care with respect to the Collateral in its possession or under its
control. Lender shall not have any other duty as to any Collateral in its
possession or control or in the possession or control of any agent or nominee of
Lender, or any income thereon or as to the preservation of rights against prior
parties or any other rights pertaining thereto except solely to the extent
Lender has thereto agreed under the last sentence of Section 6.
-17
9.21 Limitation by Law. All rights, remedies and powers provided in this
Security Agreement may be exercised only to the extent that the exercise thereof
does not violate any applicable provision of law and all the provisions of this
Security Agreement are intended to be subject to all applicable mandatory
provisions of law that may be controlling and to be limited to the extent
necessary so that they shall not render this Security Agreement invalid,
unenforceable, in whole or in part, or not entitled to be recorded, registered
or filed under the provisions of any applicable law.
9.22 Paramountcy. To the extent of any conflict or inconsistency between the
provisions of the Credit Agreement and this Agreement, the provisions of the
Credit Agreement shall prevail, provided that, for greater certainty, there
shall not be any such conflict and inconsistency unless Grantor cannot comply
with all relevant provisions.
9.23 Termination. This Security Agreement shall terminate on the Termination
Date.
9.24 Copy. Grantor hereby acknowledges receipt of a copy of this Security
Agreement.
The parties have executed this Security Agreement.
LILY CUPS INC.
By: /s/ Xxxxx Xxxxx
---------------
Name: Xxxxx Xxxxx
Title: Vice-President, Finance
GENERAL ELECTRIC CAPITAL CANADA INC.
By: /s/ Xxxxxx Xxxxxxxxx
--------------------
Name:
Duly Authorized Signatory
SCHEDULE 4.1(3) - FINANCING STATEMENTS AND FILING JURISDICTIONS
Ontario: Reference File No.: 841238352
Registration No.: 980529 0000 0000 0000
(5 years)
Quebec: Primary Hypothec No.: 00-0000000-0000
Floating Hypothec No.: 00-0000000-0000
(10 years)
SCHEDULE 4.1(4) - INSTRUMENTS AND CHATTEL PAPER
None
4.1(4)-1
SCHEDULE 4.1(6) - OFFICES AND LOCATIONS OF COLLATERAL
AND RECORDS CONCERNING COLLATERAL
1. Chief Executive Office: 000 Xxxxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxx
X0X 0X0
2. Principal Place of Business: 000 Xxxxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxx
X0X 0X0
3. Domicile (for purposes of the Quebec Civil Code):
000 Xxxxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxx
X0X 0X0
4. Corporate Offices: 000 Xxxxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxx
X0X 0X0
5. Warehouses: (a) 0000 Xxxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxx
(b) 000 Xxxxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxx
6. Other Premises at Which Collateral is Stored or Located:
(a) Xxxxxxx Carting
0 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxx
X.X.X. 00000
(b) Xxxxxxx Cartage
0000 Xxxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxx
X0X 0X0
4.1(6)-1
7. Locations of Records Concerning Collateral:
(a) 0000 Xxxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxx
(b) 000 Xxxxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxx
4.1(6)-2
SCHEDULE 4.1(9) - PATENTS, TRADEMARKS AND COPYRIGHTS
[Attached]
4.1(9)-1
EXHIBIT A
POWER OF ATTORNEY
This Power of Attorney is executed and delivered by Lily Cups
Inc., an Ontario corporation ("GRANTOR"), to General Electric Capital Canada
Inc., a Canada corporation (hereinafter referred to as "Attorney"), as Lender
under a Credit Agreement and a Security Agreement, both dated as of June 15,
1998, and other related documents (the "LOAN DOCUMENTS"). No person to whom this
Power of Attorney is presented, as authority for Attorney to take any action or
actions contemplated hereby, shall be required to inquire into or seek
confirmation from Grantor as to the authority of Attorney to take any action
described below, or as to the existence of or fulfilment of any condition to
this Power of Attorney, which is intended to grant to Attorney unconditionally
the authority to take and perform the actions contemplated herein, and Grantor
irrevocably waives any right to commence any suit or action, in law or equity,
against any person or entity which acts in reliance upon or acknowledges the
authority granted under this Power of Attorney. The power of attorney granted
hereby is coupled with an interest, and may not be revoked or cancelled by
Grantor without Attorney's written consent.
Grantor hereby irrevocably constitutes and appoints Attorney
(and all officers, employees or agents designated by Attorney), with full power
of substitution, as Grantor's true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of Grantor and in the
name of Grantor or in its own name, from time to time in Attorney's discretion,
to take any and all appropriate action and to execute and deliver any and all
documents and instruments which may be necessary or desirable to accomplish the
purposes of the Loan Documents and, without limiting the generality of the
foregoing, Grantor hereby grants to Attorney the power and right, on behalf of
Grantor, without notice to or assent by Grantor, and at any time, to do the
following: (a) change the mailing address of Grantor, open a post office box on
behalf of Grantor, open mail for Grantor, and ask, demand, collect, give
acquittances and receipts for, take possession of, endorse any invoices, freight
or express bills, bills of lading, storage or warehouse receipts, drafts against
debtors, assignments, verifications, and notices in connection with any property
of Grantor; (b) effect any repairs to any asset of Grantor, or continue or
obtain any insurance and pay all or any part of the premiums therefor and costs
thereof, and make, settle and adjust all claims under such policies of
insurance, and make all determinations and decisions with respect to such
policies; (c) pay or discharge any taxes, liens, security interests, or other
encumbrances levied or placed on or threatened against Grantor or its property;
(d) defend any suit, action or proceeding brought against Grantor if Grantor
does not defend such suit, action or proceeding or if Attorney believes that
Grantor is not pursuing such defense in a manner that will maximize the recovery
to Attorney, and settle, compromise or adjust any suit, action, or proceeding
described above and, in connection therewith, give such discharges or releases
as Attorney may deem appropriate; (e) file or prosecute any claim, litigation,
suit or proceeding in any court of competent jurisdiction or before any
arbitrator, or take any other action otherwise deemed appropriate by Attorney
for the purpose of collecting any and all such money due to Grantor wherever
payable and to enforce any other right in respect of
A-1
Grantor's property; (f) cause the chartered public accountants then engaged by
Grantor to prepare and deliver to Attorney at any time and from time to time,
promptly upon Attorney's request, the following reports: (1) a reconciliation of
all accounts, (2) an aging of all accounts, (3) trial balances, (4) test
verifications of such accounts as Attorney may request, and (5) the results of
each physical verification of inventory; (g) communicate in its own name with
any party to any Contract with regard to the assignment of the right, title and
interest of such Grantor in and under the Contract and other matters relating
thereto; and (h) execute, in connection with any sale provided for in any Loan
Document, any endorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral and to otherwise direct such sale or
resale, all as though Attorney were the absolute owner of the property of
Grantor for all purposes, and to do, at Attorney's option and Grantor's expense,
at any time or from time to time, all acts and other things that Attorney
reasonably deems necessary to perfect, preserve, or realize upon Grantor's
property or assets and Attorney's Liens thereon, all as fully and effectively as
Grantor might do. Grantor hereby ratifies, to the extent permitted by law, all
that said Attorney shall lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, this Power of Attorney is executed by
Grantor, and Grantor has caused its seal to be affixed pursuant to the authority
of its board of directors as of this 15th day of June, 1998.
LILY CUPS INC.
By: /s/ Xxxxx Xxxxx (CS)
---------------
Title: Vice-President, Finance
A-2
EXHIBIT B
SUPPLIER WAIVER AND ASSIGNMENT
To: GENERAL ELECTRIC CAPITAL CANADA
INC., as lender ("LENDER") under the Security Agreement (as
hereinafter defined).
This Waiver and Assignment is delivered to you pursuant to
Section 5.1(10) of the Security Agreement dated as of June o, 1998 between Lily
Cups Inc. ("GRANTOR") and Lender (as amended, restated, supplemented and
otherwise modified, the "SECURITY AGREEMENT").
For good and valuable consideration, the undersigned hereby
agrees with Lender as follows:
1. The undersigned shall not, without the prior written specific consent of
Lender, exercise any of its rights under Section 81.1 of the Bankruptcy and
Insolvency Act (Canada) (the "BIA") as a "supplier" within the meaning of
Section 81.1 of the BIA with respect to any goods sold and delivered by the
undersigned to Grantor (including, without limitation, any right to deliver a
demand for repossession pursuant to section 81.1(a) of the BIA) or any other
repossession or similar right of the undersigned arising by contract or under
any other applicable law, (including, without limitation, the Civil Code of
Quebec) with respect to goods of Grantor (collectively, "REPOSSESSION RIGHTS").
2. Without limiting the requirement of a consent of Lender being obtained under
Section 1 above prior to the exercise of any Repossession Rights, the
undersigned hereby assigns and transfers to Lender all Repossession Rights of
the undersigned and all goods and proceeds of such goods (in any form, including
accounts receivable or money) received or receivable by the undersigned in
connection with any exercise of its Repossession Rights and hereby appoints
Lender as its attorney for the purpose of exercising such Repossession Rights,
which may or may not be exercised by Lender in its sole discretion.
Dated this day of __________, 199_
[NAME OF SUPPLIER]
By:
Name:
Title:
Acknowledged this __ day of __________ 199__
B-1
GENERAL ELECTRIC CAPITAL CANADA INC.
By:
Name:
Title:
